Latin America has Moved


During his recent trip to Latin America, the first since 2005, president Bush went to extraordinary lengths to downplay the real reason for the tour: Chávez.  The week long trip spanned five countries-Mexico, Guatemala, Brazil, Colombia and Uruguay-and was portrayed as a good will tour to remind the region of the deep U.S. commitment to poverty eradication, social justice, hemispheric integration and, in Bush’s own words, “that we care.”  But the trip was about more than just showing that “we care.”  The trip’s real purpose was to re-establish the declining U.S. influence in the region and to find a way to counter Venezuelan president Hugo Chávez’ efforts to integrate Latin America on its own terms.

In many ways, the timing of Bush’s visit revealed the extent to which his policy in the Middle East has become a liability both for himself and for the Republican Party in general.  Undersecretary of State Nicholas Burns said 2007 will be “a year of engagement” in Latin America and Bush went on the offensive stating that the U.S. doesn’t receive enough credit for its “generosity” to the region.  “The American tax payer has been very generous about providing aid in our neighbourhood,” Bush said, “and most of that aid is social justice money.”

Bush’s claims rely on ignoring the history of U.S.-Latin American relations and interpreting aid figures at face value.  While the U.S. is no doubt the highest source of funding for the region, much of it is out of self-interest.  Bush’s “social justice money” is often tied to strict conditionalities intended to persuade countries to adopt policies convenient to the U.S.  In recent years, thanks largely to Chávez’ efforts, this key U.S. policy instrument has lost its leverage.

With the 2008 Presidential race off to an early start, the Republican Party can’t afford to look like it’s neglected the region;  especially if its attributed to its failure in Iraq.  For instance, presidential candidate Hillary Clinton has already tried to cash in on Bush’s disengagement.  Right after announcing her bid for the presidency Clinton related the Bush administration’s quagmire in Iraq  to the current situation in Latin America: “Look at what’s happening in Latin America,” Clinton said, “where we are seeing anti-American regimes gain ground.  We don’t engage with bad guys, so we don’t engage with, you know, Chávez and try to, you know, see if there is any way to pull him back, or at least prevent others from following his lead.”

But the wane of U.S. influence in the region is not the result of simple disengagement.  The rising anti-Americanism is much more deeply rooted and will likely only increase if equated to the broader U.S. “war on terror.”  During his trip Bush would have been wise to bare in mind that anti-Americanism is the result of decades of U.S. political interventions and the failure of its free-market policies.  More importantly, he should have remembered that most Latin Americans would probably prefer U.S. neglect to its often tough love.

With Friends Like These, Who Needs Enemies?

From the Monroe Doctrine in 1823-president James Monroe’s proclamation that Latin America  was in need of “protection” from British investment and European influence-to the International Monetary Fund’s Structural Adjustment Programs of the 1980s and ’90s, U.S. engagement with Latin America has begged the question: “with friends like these, who needs enemies?”

In the mid 19th century the U.S. went to war with Mexico and took half of its national territory.  During the dawn of the 20th century President Teddy Roosevelt’s corollary to the Monroe Doctrine asserted the U.S.’s “right” to police the western hemisphere through political and military interventions.  Then during the Cold War the U.S. backed and funded an extensive roster of military dictatorships, death squads and paramilitaries whose bloody legacies persist to this day.  In other words, for most of the history of U.S. engagement in the region, Latin America has been approached as a battleground and at times a playground for broader American geopolitics.

Following the Latin American debt crisis of 1982, most Latin American countries were in some way tied to IMF policies.    While some countries were swindled into accepting IMF reforms out of simple financial necessity, other less fortunate countries (like Chile in 1973) were forced at gunpoint.  The countries under IMF tutelage were instructed to pursue radical political and economic restructuring programs according to the principles of neo-liberalism: fiscal austerity, privatization, the liberalization of trade and investment flows and export-led growth.  IMF officials justified slashing social spending and eroding labor rights with the rhetoric of short term pain for long term gain.

But the long term gain never came and poverty and inequality only worsened.  Countries dependent on a single industry were repeatedly crushed by price fluctuations in the world market.  While some countries experienced modest financial stability and growth rates, most have only recently returned to pre-1980 growth and wages, leading many scholars and analysts to label the 1990s as “the lost decade.”

The Caracas Consensus

Since his election in 1998, Venezuelan President Hugo Chávez has used Venezuela’s massive oil reserves, the largest in  Latin America, to position himself as a major player in the region’s geopolitics.  His constant attacks on President Bush, bold hemisphere-wide political initiatives and ample funding of Latin American countries on preferential terms have led to what some analysts refer to as “the Caracas Consensus.”  In the 2005 Summit of the Americas, Chávez, along with Brazil’s Luis Inacio “Lula” da Silva and Argentina’s Nestor Kirchner, crushed any U.S. hopes of establishing a free-trade area of the Americas.  As an alternative, he’s pitching the ALBA, the Bolivarian Alternative for the Americas (named after the Latin American liberator, Simon Bolivar).

Chávez has exerted greater state control over Venezuela’s oil industry and demanded higher royalties from multinational energy companies operating in the country.  He’s used the increased Venezuelan share of the oil wealth to fund ambitious social programs both at home and abroad.  Also, much of the money has been spent positioning Venezuela as an alternative to the U.S.-backed IMF and World Bank.

Venezuela’s alternative funding has generated quite a lot of support and popularity for Chávez.  Its aid to Bolivia is now so high that it rivals that of the U.S.   Its loans with preferential interest rates have allowed countries like Ecuador and Argentina to pay back their debt to the IMF and spend more on social services.  In Ecuador, for instance, Venezuelan funds have allowed social spending, at 38% of the 2007 budget, to finally catch up to foreign debt payments.

More importantly, Venezuela, Bolivia, Ecuador and Argentina recently announced the imminent creation of the Banco del Sur, or Bank of the South.  The U.S. will exert no influence over this new multilateral financial institution unlike the IMF, World Bank or Inter-american Development Bank.

Bush would rather take a harder line towards Venezuela and the ALBA–as exhibited by his administration’s support of the short-lived coup against Chávez in 2002–but he has few options left and far too much to lose.  Venezuelan crude oil accounts for roughly 11% of U.S. imports and Petroleos de Venezuela, the Venezuelan state-owned energy company, owns several refineries in the U.S.

Last year a report by the Government Accountability Office, the investigative branch of Congress, estimated that if Venezuela were to suddenly cease exporting oil, the U.S. could experience a reduction of its gross national product of up to $23 billion.

Visiting Friends

Bush’s visit to Guatemala was of strategic importance since the country’s long conservative streak is up in the air due to the proximity of the presidential elections and the possibility of a victory by a center-left candidate.  Guatemala’s presidential elections are set for this September and a main contender is Rigoberta Menchu, a tremendously popular indigenous leader who won the Nobel Peace Prize in 1992 for her work towards advancing human rights.  While Menchu has generally insisted that she is not leftist and has adhered to non-ideological rhetoric, her victory would likely lead to closer ties between Guatemala and Bolivia, which itself elected an indigenous president, Evo Morales, in 2005.

In Colombia, Bush reassured his strongest ally in the region, conservative president Alvaro Uribe, that the U.S. will continue to send military aid its way.  Colombia is the largest recipient of U.S. assistance in Latin America and is also waiting for the U.S. congress to approve a recently signed Free Trade Agreement and a new increased aid package.  In this context, much of Bush’s visit revolved around convincing Uribe that the Democrat takeover of Congress will not affect Colombia’s relations with the U.S or the pending trade agreement.

Bush’s tour ended in Mexico where he traveled the country for two days with the recently elected conservative President Felipe Calderon.  This last stop was purely diplomatic and largely intended for American audiences since no formal agreements were signed or were even under consideration.  Though Calderon campaigned on the basis of deepening Mexico’s relationship with the U.S. through greater economic integration, his meeting with Bush surprisingly highlighted more differences on policy matters than agreements.

Where drug eradication and illegal immigration were concerned, Calderon politely praised Bush on his initiative but nevertheless expressed a divergence of opinion from current U.S. policies.  Calderon is strongly opposed to building a wall along the Mexico-U.S. border and, to his credit, advocated greater measures to funnel investment towards poverty alleviation in Mexico.  Similarly, Calderon also urged the U.S. to decrease its demand for illegal drugs, arguing that current efforts to limit supply can only accomplish so much.

Unlike Bush, Calderon was not too shy to utter Chávez’ name and, remarkably, he seems to have moderated his stance on the Venezuelan leader since his campaign last summer.  Calderon stated that Mexico would remain neutral and that he would seek closer ties with Venezuela.  In this respect, Bush did not encounter the staunch anti-Chávista he probably expected.  During the presidential elections last summer, Calderon attacked his opponent, the leftist Andres Manuel Lopez Obrador, of having close ties to Chávez, calling him a danger to Mexico.  It is likely that Calderon only invoked Chávez in order to exert pressure on Bush to reconsider his immigration and counter-narcotic policies.  Whether or not this move is sincere or only intended as political leverage is unclear, but the gesture in itself nevertheless constitutes yet  another blow to Bush’s efforts to contain and isolate Venezuela.

The Search for Allies

In Brazil, the most touted policy agenda was in the realm of energy cooperation.  Though the emphasis was seemingly on the development of alternative energy resources, such as Brazilian sugar-cane-based ethanol, Bush’s visit to Brazil was ultimately intended to make an ally out of president Lula to counter Chávez’ influence.  These efforts, however, were unsuccessful.

Lula’s governing style and ideological roots are different from those of Chávez and has shown far more willingness to engage the U.S. diplomatically than other countries in the region.  Although Lula rose to political prominence as a leftist labour union leader, he recently commented in an interview that he no longer considers himself a socialist.  But Brazil’s economic and political ties to Venezuela, Bolivia and Argentina are too strong to be weakened solely through investment in ethanol and slight ideological differences.  Brazil receives most of its coal from reserves in Venezuela and nearly all of its natural gas from Bolivia.  More importantly, the four countries have recently made deals in ambitious energy integration projects like new gas and oil pipelines and refineries.

Beyond cooperation in ethanol, it’s unclear what Bush could offer Brazil to convince it to alter its hemispheric strategy.  Brazil is a cornerstone of Mercosur, a Latin American trading bloc made up of Argentina, Brazil, Paraguay, Venezuela and Uruguay with a strict policy forbidding the adoption of free trade agreements with the U.S.  Also, Brazil’s firm stance against U.S. agricultural subsidies represents a major obstacle to closer political ties.

U.S. interest in Brazilian ethanol stems in part from a seemingly growing–albeit token–recognition of the geopolitical implications of renewable energy sources.  Together Brazil and the U.S. account for 70% of the world’s ethanol production.  If ethanol were to emerge as a dominant alternative to fossil fuels the two countries would find themselves in a strategic advantage to dictate world prices.  Furthermore, the U.S has recently announced a plan to lower its dependence on oil-based energy 20% by 2017, an initiative largely dependent on Brazilian ethanol.

But the proposed ethanol ventures are either wildly optimistic or merely symbolic.  The U.S. goals for 2017 would require a monumental increase of Brazilian output.  Brazil currently produces about 17.5 billion liters of ethanol a year while the proposed U.S. initiative would require imports of roughly 132 billion liters.  It’s also worth noting that 90% of Brazil’s current production is geared towards domestic consumption, meaning that any large scale increase in exports would directly compete with domestic markets.

What all this suggests is that Lula’s meeting with Bush will not significantly alter Brazil’s immediate hemispheric strategy and diplomatic ties with Venezuela, Bolivia and Argentina.  Some may point to Bolivia’s recent nationalization of its gas industry, which led to price increases for Brazil, as evidence of strains in their relations and a possible opening for the U.S.  While it’s true that Brazil was far more reluctant than Argentina to accept the price hike, most of the apprehension was due to dissent from within Petrobras, the Brazilian state-owned energy company, than from Lula himself.  In fact, Lula has referred to Bolivia’s “sovereign right” to charge a higher price for gas on several occasions.

After meeting with Bush, Lula made an explicit point out of stating that the Mercosur remains Brazil’s most important hemispheric commitment.  He also announced an upcoming trip to Venezuela in April.

The wild card in this case is Uruguay.  President Tabaré Vazquéz has exhibited a diplomatic style more in line with Lula and Chile’s Michelle Bachelet than Chávez’.  Uruguay is currently seeking a free trade agreement with the U.S. and Bush will probably exploit this fact to secure an informal “understanding” concerning Chávez, Morales and Kirchner.  Argentina-Uruguay relations are particularly sour right now due to a controversial paper-pulp mill on the two countries’ border.  This rift could potentially widen if the Bush administration plays its cards right but, like most Latin American leaders, Vazquéz is wise enough to realize that if he wants to get anything meaningful from the U.S. he’s probably better-off negotiating with Congressmen from the Democratic party.

Bush’s visit was tremendously unpopular in Uruguay and Vázquez was the subject of harsh and widespread criticism from within his own political coalition, the Frente Amplio.  For instance, Marina Arismeni, the minister of social development, stated that “Mr. Bush represents all that is most execrable, murderous and warmongering in the world.”  Similarly, the Communist Party introduced a motion into the Frente Amplio leadership to officially condemn Bush’s visit.

Vázquez used the controversy generated by the visit to castigate Argentina and their other fellow Mercosur members.  During his joint press conference with president Bush, Vázquez spoke of a more free and open Mercosur, alluding to the rules prohibiting members from signing free trade agreements with the U.S.  Uruguay’s textile industry has struggled to remain competitive lately since most of its international competitors enjoy Free Trade Agreements with the U.S.  Cheaper access to U.S. markets, in this context, could represent a major political victory for Vázquez.

In terms of actual agreements, however, Bush and Vázquez did not discuss much, at least in public.  Curiously, the proposed free trade agreement was not on the agenda.  Instead, the two leaders discussed bilateral trade agreements for specific industries such as beef, dairy and rice to name a few.  Following up on what seemed like the tour’s theme, Bush promised to buy all of Uruguay’s ethanol production.  Also, much like Lula, Vázquez urged Bush to terminate U.S. agricultural subsidies.

The seeming lack of concrete agreements and issues on the agenda during Bush’s stop in Uruguay suggests that the real discussions took place in private.  The two presidents reportedly share a passion for fishing and spent a few hours alone out on Vázquez’ boat.  What was discussed during those hours is pure speculation but a good guess would invariably have a lot to do with Chávez.  Yet, whatever the outcome of those candid talks, there is little the U.S. could offer Uruguay to compensate for alienating its neighbors and Mercosur partners.

When asked if the trip is an “anti-Chavez tour,” Bush dodged the question, saying “the trip is to remind people that we care.”  If history and recent experience have taught us anything, it is that Latin America is better off when the U.S. doesn’t care.  The region is now increasingly looking towards Europe and China for trade and investment and U.S. policy-makers have none of the clout they once had.  James Monroe would’ve been appalled.

 Juan Antonio Montecino is a student at the University of British Columbia and a contributor to Foreign Policy in Focus.

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