Uncle Sam visits his restive neighbours

Nov 7th 2005
From The Economist Global Agenda

The fourth Summit of the Americas showed that Latin America’s relations with the United States are not as good as they were, but not as bad as Venezuela’s Hugo Chávez would like

THE heads of government of the 34 countries in the Americas that claim to be democracies gathered on Friday November 4th in Mar del Plata, an Argentine resort. Two among them dominated the proceedings: George Bush and Venezuela’s Hugo Chávez. That is not because they were the wisest leaders present or because they were the richest, although the United States’s economy dwarfs all others in the region and Mr Chávez commands windfall oil wealth. Mr Bush and Mr Chávez stole the limelight mainly because they represent opposite poles of a strident hemispheric debate.

At the first Summit of the Americas, in Miami in 1994, all the region’s governments signed up to a common vision of democracy and free trade. That consensus was starting to fray by the third summit, in Quebec in 2001; now at Mar del Plata, the fourth, it has unravelled. The gathering’s worthy official theme was to promote employment. But how? The plan for a Free Trade Area of the Americas (FTAA), originally due to come into effect this year, has stalled, as Mr Bush admitted even before the summit, saying that the Doha round of world trade talks should take precedence. Brazil echoed this sentiment at Mar del Plata, saying it wanted to see the outcome of negotiations at the World Trade Organisation (WTO) before moving forward on a regional agreement. Argentina also demurred. With three out of Latin America's four biggest economies reluctant, hopes for a regional agreement were dashed.

Mr Chávez, whose commitment to democracy is ambiguous, is peddling a “Bolivarian Alternative for the Americas”, named for South America’s independence hero. It consists mainly of offers of cheap oil and a rhetorical declaration against poverty. So far it has been endorsed only by Cuba’s Fidel Castro who, as a dictator, was excluded from the summit. But Mr Chávez’s populist nationalism has an appeal in some Andean countries, where democracies are shaky and societies are riven by inequality. He expressed his opposition to Mr Bush by leading a protest outside the summit, at which tens of thousands joined him in condemning America. Elsewhere, demonstrators turned violent, throwing rocks and smashing windows.

Latin America is in an anti-yanqui mood, if slightly less so than a couple of years ago. The Iraq war was unpopular in the region, and there is disillusion with free-market reforms that are seen as having been sponsored by the United States. Peter Hakim of Inter-American Dialogue, a think-tank in Washington, DC, says that relations between the United States and Latin America have reached their lowest point since the cold war.

Recently, the superpower has been paying more attention to its neighbours. So far this year both Condoleezza Rice, the secretary of state, and her deputy, Robert Zoellick, have visited the region, and Donald Rumsfeld, the defence secretary, has done so twice. Roger Noriega, widely seen as a Cuba-obsessed ideologue, was replaced as the State Department’s top man for Latin America by Thomas Shannon, a career diplomat. In the view of Mr Hakim, Mr Shannon has a “much better sense of what’s important to the region”. There is even a glimmer of civility between the United States and Cuba. Mr Castro recently accepted an American offer to send three aid officials to assess hurricane damage—though that offer was withdrawn last week after the Cuban leader appeared to backtrack.

These gestures do not seem to have much substance behind them, in any case. In July, the United States Congress narrowly ratified a free-trade agreement with Central America and the Dominican Republic. But talks on a similar accord with Colombia and Peru are moving slowly.

Mr Chávez may feel he is winning friends faster. One of them, Evo Morales, a leader of the indigenous coca growers, could win Bolivia’s presidential election next month, and Mr Chávez is trying to buy influence elsewhere. This year Venezuela has bought $950m of bonds from cash-strapped Argentina. It has also talked of buying an Argentine nuclear-power plant and Ecuadorean bonds.

Mr Chávez hopes to form a “new axis” with Argentina and Brazil. Venezuela wants to become a full member of Mercosur, the trade group those countries lead, in December. That would be a coup for Mr Chávez but a setback for Mercosur, which already has difficulty sticking to its rules.

Yet even though many governments are happy to take Venezuela’s cash, it is easy to exaggerate the country’s influence. While flirting with Mr Chávez, Argentina was keen to run a well-behaved summit and had hoped for some semblance of consensus. Néstor Kirchner, Argentina’s president, who would like a new financing agreement with the International Monetary Fund next year, has been careful not to pick fights with Mr Bush.

To strengthen such moderation, the American president stopped in Brazil on his way home from the summit. He and his Brazilian counterpart, Luiz Inácio Lula da Silva, are not soul mates. Mr da Silva denounces the invasion of Iraq, yearns for a “new geography” that would dilute American power and has resisted the FTAA. Bilateral relations are merely “correct”, in the description of Rubens Barbosa, a former Brazilian ambassador to the United States. Yet the Americans regard Brazil, South America’s biggest country by far, as a swing vote in a shaky region and have consistently praised its orthodox economic policies. Lula “occupies a unique position in the hemisphere”, said Mr Bush.

And so the “working visit” was an amicable one. The United States has recently signalled new flexibility on issues important to Brazil, such as farm trade. In a speech to Brazilian political, business and religious leaders, Mr Bush reiterated in the strongest terms an offer to make substantial cuts in agricultural tariffs. America is grateful that Brazil has led a United Nations peacekeeping mission in Haiti. A “strategic dialogue” is “developing gradually”, says a senior Brazilian diplomat. Irritants, such as a dispute over American cotton subsidies, are being kept under control.

But thawing relations were of little help to Mr Bush as he sought to draw Latin America into the FTAA. American presidents flailing at home have often sought foreign-policy coups to deflect from their domestic despairs, but Mr Bush won no trade victories to counterbalance his poor personal ratings. Indeed, the cause of trade liberalisation seems to be endangered around the world. America and China signed a deal this week to restrict the free flow of Chinese textiles, similar to the agreement struck by the European Union and China earlier this year. And Mr da Silva is not the only one worrying about progress in the WTO talks, which are now only a little over a month away from the deadline for reaching substantial agreement. Mr Bush has been pushing for big cuts in rich-world farm subsidies but Europe is dragging its feet, and it is not clear that even the proposal offered by the Americans will be enough to appease the developing countries that broke up a WTO summit two years ago in Cancún over the issue.

But in the longer term, the United States hopes that Brazil will help in reining in Mr Chávez and stabilising neighbouring democracies. In his Brazilian speech, Mr Bush made pointed remarks aimed at the Venezuelan leader, contrasting those who follow the American-supported “vision of hope” with those who would roll back the hard-won democratic gains of the past 20 years. Venezuela’s membership of Mercosur would come with a commitment to maintaining democracy. But the best antidote to chavismo would be progress against poverty and inequality. That will take time.

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