Thread: U.S.-Latin relations head south-Blame it on Bush

U.S.-Latin relations head south
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Washington's influence in politics, economics wanes as nations tilt left


08:47 PM CDT on Saturday, May 28, 2005


By BRENDAN M. CASE and LAURENCE ILIFF / The Dallas Morning News


MEXICO CITY – As the U.S. government fights for hearts and minds throughout the Islamic world, Uncle Sam is losing sway in what he used to call his own back yard.

Latin America, long dominated by the U.S. both politically and economically, is increasingly going its own way.

Oil-rich Venezuela's firebrand president, Hugo Chávez, is shipping crude to Cuba, cutting energy deals with China and fighting a war of words with the Bush administration.

Brazilian President Luiz Inácio Lula da Silva is becoming a self-styled leader of the Third World, rejecting much of Washington's economic advice and foreign policy.

The trend might soon arrive at Texas' doorstep, as Mexico City's popular left-wing mayor, Andrés Manuel López Obrador, surges in opinion polls ahead of Mexico's July 2006 presidential election.

It all adds up to a widening rift between the United States and Latin America just when democracy and free trade were supposed to bring the hemisphere together.

As a result, U.S. plans for a trade deal encompassing the area from Alaska to Argentina are on hold at a time when American companies are keenly seeking new export markets. U.S. economic policy prescriptions are in disrepute in Latin America, and other outside powers, such as Europe and China, are making political and commercial inroads.

"Within my lifetime of monitoring events in Latin America for almost 50 years, I have never seen the U.S. so isolated," said Larry Birns, director of the Council on Hemispheric Affairs, a Washington-based research group that is frequently critical of the Bush administration.

Over the last half-decade, Latin nations increasingly have turned to leftist presidents in a backlash against "neo-liberal" or market-oriented economic policies championed by Washington and development agencies dominated by the U.S., such as the World Bank and the International Monetary Fund.

Many Latin Americans blame free trade and government spending cutbacks for the region's middling to dreadful economic results of late. They see widespread corruption plaguing the sale of state-owned companies. And poor education systems fail to equip many people with the tools to control their futures.

A measured shift

To be sure, except for Mr. Chávez, most "new left" leaders are striking for moderation. They call for a larger economic role for the state, and fighting poverty is a keystone of their rhetoric. But their rise doesn't necessarily herald a return to the charismatic caudillos, out-of-control government spending and soaring inflation. And few Latin countries seriously consider closing off their economies or nationalizing industries nowadays.

Chile's socialist president, Ricardo Lagos, signed a free-trade agreement with the United States. In Brazil, Mr. da Silva backed away from radical policies in his 2002 campaign when the country seemed headed for an economic crisis.

"The political shift is something to keep an eye on, but I don't think it's something that's going to deter investment," said Manuel Rajunov, a partner at law firm Jackson Walker LLP in Dallas, who advises U.S. companies operating in Latin America. "The world is driven by trade now."

Nevertheless, a brief tour of the hemisphere shows many Latin American countries increasingly defying Washington's wishes:

•Mr. Chávez is raising taxes on foreign oil and gas companies in Venezuela, including Irving-based Exxon Mobil Corp. Venezuela remains a major oil supplier to the U.S., but Mr. Chávez is opening the doors to Chinese oil and gas companies and says he aims to sell more oil to China.

"He has said several times that he wants to lessen Venezuela's dependence on the U.S. as a customer," said Peyton Feltus, president of Randolph Risk Management in Dallas.

•Mr. da Silva, widely known as "Lula," has put the U.S.-backed Free Trade Agreement of the Americas, or FTAA, on the back burner. He also wants a permanent seat for Brazil on the U.N. Security Council as he seeks to make Latin America's most populous nation a larger international player. In May, his summit of 12 South American countries and 22 Arab nations issued a statement denouncing U.S. economic sanctions against Syria.

•Several years after Argentina defaulted on more than $100 billion in bonds, left-wing President Néstor Kirchner agreed to repay only about 33 cents on the dollar. His tough stance persuaded everyone from U.S. financial institutions to European retirees to accept the deal. This spring, Mr. Kirchner called for a boycott of the Royal Dutch/Shell Group's Argentine affiliate to protest a gasoline price increase. He won – Shell's sales fell, and it recently backed away from its price increases.

•In Bolivia, lawmakers recently passed a sharp tax increase on companies exploiting its vast gas reserves. Angry street protesters have been calling for the outright nationalization of hydrocarbon reserves. And waiting in the wings is Bolivian socialist and coca-leaf growers' leader Evo Morales, a strong contender for the presidency in 2007.

•Washington has long had effective control over who heads the Organization of American States, which is largely underwritten by U.S. taxpayers. This year, however, many Latin American countries went against a U.S.-backed candidate to elect José Miguel Insulza, a leftist from Chile, as the organization's new boss.

•Meanwhile, China's appetite for Brazilian soybeans, Chilean minerals and other Latin exports has boosted the Asian giant's political clout. European Union officials seek to strengthen ties with the region's Mercosur trade bloc.

Secretary of State Condoleezza Rice visited Latin American nations in April, saying the United States has good relations with Brazil and "wonderful relations with the Venezuelan people," and is keeping an eye on political instability in Ecuador and Bolivia.

In Brazil, she called for more progress on the FTAA, predicting that free trade would bring the U.S. and Latin America closer.

"It stands for the desire to see a freer trading, more integrated Western Hemisphere in which you would have the power of this hemisphere from Canada to Chile," she told an interviewer with TV Globo.

Politically, though, the distance between Washington and Latin America is growing. A 2004 Latinobarómetro survey in 18 nations found that just 15 percent of respondents agreed with the U.S. role in Iraq.

The gap could grow wider still.

Just beyond the border ...

In Mexico, Mr. López Obrador enjoys a 70 percent approval rating in the capital he runs, and he leads presidential preferences in what is expected to be a close three-man race.


While calling for stepped-up efforts to fight poverty, Mr. López Obrador also describes himself as a moderate. He has said he will keep spending under control, abide by the North American Free Trade Agreement and seek partnerships with the private sector.

As mayor, Mr. López Obrador engineered a public-private partnership to restore buildings and attract jobs to the capital's downtown area. His business counterpart on that project: Mexican billionaire Carlos Slim Helú, the fourth-richest man in the world, according to Forbes magazine.

The political center "is where it happens, because there is no answer except a balance between the public and the private sector," said Daniel Lund, head of the Mexico City polling firm MUND Americas, who has done consulting work for Mr. López Obrador.

Not everyone is sold on the mayor's approach. Rivals accuse Mr. López Obrador of burdening Mexico City with too much debt in order to pay for double-decker highways and other construction projects, although advisers blame his predecessors for most of the debt.

Some warn that overeager government spending could destabilize the economy and send yet more emigrants to the U.S. illegally.

Fate of democracy

Latin America's left-right gap might not be the key divide. More important is how institutional democracy appears to be strengthening in some countries and weakening in others, experts say.

"Chávez and some of the others are old-style populists," said Amaury de Souza, a political scientist with MCM Consultores, a Rio de Janeiro consulting firm.

"It's the willful destruction of institutions to boost your own power. The problem is that there's a deterioration of democratic institutions. They're collapsing in Venezuela, Ecuador and Bolivia," he said.

Elsewhere, however, institutions appear to be strengthening. Presidents now share power with legislators, judges, central bankers and private investors, who can move their money anywhere.

In the end, Latin America's latest political trend might simply reflect an elusive quest for broad-based prosperity in societies defined by stark economic inequality – a mighty challenge for a region struggling for a place in the global economy.

"Reform has not been enough to give people a sense that progress is possible, and democracy is not yet profound," Fernando Henrique Cardoso, Brazil's president from 1994 to 2002, said recently. "The people have elections but not a say in contributing to the destiny of their country."


Staff writer Jim Landers in Brazil and The Associated Press contributed to this report.

E-mail bcase@dallasnews.com and liliff@dallasnews.com

No loss. We don't need them anyway. Let them be responsible for their own economies for a change. Let them better their own countries and relationships with their own people. Just shoo and begone.