A Volcano Is Rumbling in the South

After President Bush took office last year, the first world leader he welcomed to the White House was his Mexican counterpart, Vicente Fox. Vowing that affairs south of the border would now be America’s first priority, and suggesting that the Clinton administration had ignored the region, the Bush White House promised an era of unprecedented goodwill and cooperation toward Latin America.

Then came Sept. 11. And in its wake, as the administration’s focus turned eastward and inward, no one in Washington seemed to notice--or very much care anymore--that Latin America was dizzily dancing with catastrophe, courting an unprecedented economic and political crisis. So profound is that crisis that if the continental trend line continues, the greatest foreign policy debacle of this administration will take place right next door.

In a move laden with symbolism, Fox has canceled a meeting with Bush that had been scheduled for next week, protesting the Texas execution of a convicted killer who held Mexican nationality. The White House insists this small flap in no way interferes with “an excellent professional relationship and a strong friendship” between the two presidents. But the timing of Fox’s cancellation seems to crystallize the mounting frustration of an entire continent over its relationship with the United States.

Twenty years of American economic and political prescriptions for the region can now be safely deemed a resounding failure. The so-called Washington Consensus of privatized market economies, free trade and democracy has collapsed with infinitely more noise and drama than even our own corporate domestic debacles, a la Enron or WorldCom.

After marching under U.S. direction for the last two decades, more Latin Americans than ever find themselves at the precipice of a dark abyss. Economic decline, unemployment and political instability have buffeted just about every nation on the southern continent and left tens of millions of people with no notion of a future. As Chilean novelist Ramon Diaz Eterovic recently put it, “Latin America today is a volcano of pent-up pain.”

Consider this bleak panorama:

Once-proud Argentina finds itself in possible death throes as a nation. Anarchy knocks at the gates as the currency fails, the banks are shuttered and the political class completely discredited.

Tiny, ordinarily placid Uruguay, sometimes called the Switzerland of Latin America, just went through its own currency scare and even a fit of street rioting.

The biggest economy in Latin America, Brazil, finds that its own currency has slipped by as much as 20%. And as a left-of-center presidential candidate nears victory this October, some American officials can find nothing better to do than to trash-talk the country’s future.

Venezuela, once awash in petrodollars, elected an unpredictable radical populist after its old U.S-supported political establishment engaged in a spate of kleptomania. A deeply polarized, highly unstable political atmosphere was further aggravated when the Bush administration stood on the sidelines cheering a failed coup attempt earlier this year.

In Peru, succeeding American administrations supported former President Alberto Fujimori because of his commitment to free-market policies. But when Fujimori fled the country after he was caught stealing an election and running a secret spying operation, the U.S. switched its support to the new president, Alejandro Toledo. But now, after a year in office, Toledo has slipped to a dangerous 16% poll rating, the electorate angry over his pro-Washington economic policies of privatization.

In Bolivia, where the political class faces mounting rejection, the anti-American radical left made enormous gains in just-concluded presidential elections.

After $2 billion in U.S. military and economic support, Colombia’s civil war is bloodier than ever. And the White House now finds itself supporting the newly inaugurated President Alvaro Uribe, who pledges an escalation in the fighting and a rollback of political freedoms.

Even Chile, the most stable of Latin American economies and held up as a showcase by Washington, has evolved into one of the most socially unequal countries in the hemisphere and now finds itself haunted by what appears to be permanent unemployment levels of near 10%. There was street rioting recently over increases in bus fares.

There is a message in this mess: What has been tried has not worked. But the Bush administration, just as its predecessor, seems incapable of accepting the obvious.

The U.S. has responded to this crisis, to the degree that there is any response, by appointing a tainted and highly controversial Cold War ideologue of the Iran-Contra era, Otto J. Reich, as the State Department’s political point man on Latin America.

On the economic front, Treasury Secretary Paul H. O’Neill has engaged in nothing short of public slapstick. First he roils the entire continent by saying Argentina and Brazil should be denied international bailouts lest the money wind up in “Swiss bank accounts.” Then the next week he flies to the region and heartily endorses the same International Monetary Fund loan programs.

For the president’s part, he seems content that Congress has cleared the way for fast-track approval of his Free Trade Area of the Americas, a proposal to create a hemispheric free market pact stretching from Argentina to Alaska.

Indeed, much like Dorothy in “The Wizard of Oz,” Bush seems to think that all he needs to do is click his heels three times to be safely back home to hemispheric harmony: free trade, market economies, democracy. Click, click, click.

The beginning of the solution resides in Washington recognizing that trying to dictate Latin America’s terms of development doesn’t work. Repeating the mantras of the last two decades will no longer cut it. More likely, such dogmatic insistence will only further fan flames of discontent and render the continent even more antagonistic to the U.S.

When frustrated Latin American nations wander from Washington’s prescribed path, as Brazil now seems intent on doing, the U.S. should be accommodating and flexible rather than stubbornly obstructionist and hostile. Instead of trying to undermine popular left-of-center candidates like Luis Ignacio Lula da Silva--now leading in the Brazilian presidential race--the U.S. should seek common ground with them. Washington should not continue to lecture its southern neighbors that all will be saved when and if its vaunted Free Trade Areas of the Americas is achieved. Such pacts tend to codify and institutionalize already unequal power relationships, tying each individual nation into a more dependent relationship with the U.S., and on trading terms always more favorable to the more powerful partner.

We need to offer Latin America a better choice than the current one of either benign neglect or acquiescence to unfair international economic pacts. Instead of promoting free-trade treaties that steeply benefit U.S. corporate interests, we should be bolstering Latin America’s own trade round tables, like the Andean Pact and Mercosur.

Latin America needs to be more integrated, more united, more capable of solving its own problems--and more independent of the United States. It must emerge as its own regional bloc, with its own defined interests so it can negotiate on a dignified basis, much as the European Union does with Washington. The U.S., in turn, must take the risk of dealing with Latin America on its terms rather than always on ours, honoring its agenda without assuming that our southern neighbors will forever be our “junior” partners.

Unfortunately, it would be naive to believe that this administration, with its brazen and often reckless unilateralist bent, is willing to reverse what has been a century-long policy of paternalistic Latin America policy.

But it’s just as delusional to think that all those rumblings we’re starting to hear again from the south are somehow going to magically dissipate.