Gloomy Prospects From Latin America’s Summit : Hemisphere: Democracy is holding, but the economic miracle remains elusive.

The 30-odd Latin American and Iberian heads of state and government gathered today in Salvador de Bahia, Brazil, are quite a different group than those who met in Madrid last year and in Guadalajara in 1991. This is a summit of far less confident leaders, a reflection of how the so-called Latin American miracle has lost its luster.

Some of the heads of state who preened at the last two summits are no longer heads of anything. Brazil’s Fernando Collor de Mello has been impeached for corruption and faces criminal charges; he may be reading about the next summit in jail. Carlos Andres Perez of Venezuela, one of the sponsors of the summit idea, has been removed from office too, also on charges of corruption. Jorge Serrano Elias of Guatemala, who manipulated last year’s meeting into endorsing his “intellectual” summit of the Americas in Guatemala last April, was caught with his hand in the till also; he is now in exile in Panama.

This year, the longevity award goes again to Fidel Castro. He has outlasted every other leader in the Americas--and survived the unrelenting hostility of nine U.S. presidents--proving the durability that a legitimate revolution confers upon its jefe, aged and authoritarian as he might be.

The Bahia summit comes at a time when the optimism and heady expectations of the past few years are sputtering out. The expectations were understandable. After a decade of economic stagnation, Latin America seemed to be emerging as a hot prospect, doing what everyone said should be done: Open up to trade and investment; privatize state-owned industries; be friendly with the United States; embrace democratic rule. In the glorious aftermath of the fall of the Berlin Wall, this was the land of the future.

Today, three broad traits characterize the region’s lackluster situation (Chile, which is increasingly a case apart, being the exception).

After a smattering of economic growth in a few of the larger nations, recession has set in, partly as a product of world trends, partly for local reasons. Regardless of previous situations, regardless even of whether the “right” policies were fully implemented, in Mexico, Colombia and Peru (to name but three countries), economic stagnation is now the rule. Low or negative per-capita growth, rising unemployment, cutbacks in government spending and the growing presence and consequences of drug trafficking are all the byproducts of this sorry state of affairs. In Central America and the Caribbean, the situation is different only by degree.

In those countries where there is growth--Argentina, Venezuela--it has been accompanied by a dramatic widening of social disparities. Aggregate statistics, while impressive, mask severely deteriorating living standards for what is probably the majority of the population. In an impoverished middle-class Argentina, or in an oil-rich but typically Third World Venezuela, the implementation of trickle-down policies has ushered in results not unlike those they delivered in the United States: growth and prosperity for some, deprivation and injustice for most. Except that in Latin America all of this takes place without a safety net, and in societies that were already grossly unequal.

Finally, Latin America is rediscovering that, whatever it does, certain internal and international realities cannot be modified easily, if at all. The huge inflow of speculative foreign investment into Latin America, for example, hailed as part of the “miracle,” has been attributed to economic reforms. But recent studies are showing that the in-rush of resources is much less policy- and country-specific and much more a result of the conjunction of low yields in the industrialized nations and high ones in the stock exchanges of Mexico City, Buenos Aires and Sao Paulo. The best proof lies in the fact that Brazil, which is generally considered a laggard in the rush toward liberalization and privatization, is as much a magnet for speculative investment as are “model pupils” such as Mexico or Argentina.

In fact, the host country of the Bahia summit is the sleeper of the hemisphere. In another of the region’s endless paradoxes, this year Brazil, the supposed basket case of Latin America’s economies, will grow more than Mexico and Argentina, the presumed success stories. Mexico, the jewel in the neo-liberal crown, will run a trade deficit of around $20 billion; Brazil, the plodder, will enjoy a trade surplus of around $20 billion, one of the highest in the world after Japan. And it will have built up reserves higher than Mexico’s or Argentina’s despite having privatized less--and making less of a fuss about it.

The picture painted at the Bahia summit is not a pretty one, although the staying power of democracy in the hemisphere, despite all its shortcomings, is encouraging. That picture has a moral to it: It takes more than free markets and fair elections to make a miracle.