Heritage Foundation Leadership for America

While the United States is preoccupied with the war on terrorism and promoting democracy in the Middle East, Latin America has drifted out of the U.S. sphere of influence, seeking an increasingly indepen­dent political course, electing leftist presidents, and forging links with undemocratic countries like Cuba, China, and Iran. Although elections decide leaders in every country except Cuba and market principles are gaining acceptance throughout the region, broad majorities seem disenchanted with those reforms, and some are opting to return to familiar traditions of populism and dictatorship.

America’s long-standing principles of supporting democratic reform, helping to open economies, and maintaining security links are still valid. As the Bush Administration has improved trade relations in Latin America and sustained programs to combat drug smug­gling and terrorism, however, U.S. engagement lacks commitment and a clear strategy. Instability and decay­ing quality of life in some countries could affect U.S. cit­izens through declining export markets, resource constraints, and increased migration to the north.

To regain influence and foster a more prosperous, stable hemisphere, the United States should recom­mit to a three-part strategy of:

• Broader democratic reforms,
• Economic restructuring to establish truly compet­itive markets, and
• Greater collaboration to fight transnational crime and terrorism.

To facilitate the implementation of this strategy, the U.S. should:

• State clear objectives and ensure that actions match words,
• Target support for better governance and an open economy,
• Eliminate self-imposed roadblocks to better relations, and
• Revive lagging public diplomacy efforts.

Inching Forward, Looking Back

Despite outward appearances of modernity, Latin America is in the midst of a relatively recent transition away from authoritarian rule and planta­tion economies. Most countries adopted republi­can constitutions after gaining their independence from Europe in the 1800s, but authority remained concentrated in powerful presidencies patterned after colonial viceroys. Only a few countries like Colombia, Costa Rica, and Uruguay developed durable democracies. Twenty years ago, when fal­tering economies and social upheaval triggered change, only six out of 23 Latin American countries could be classified as democratic. Now all except Cuba celebrate competitive elections, and most have adopted some aspects of market economies.

Yet according to a 2005 Latinobarómetro poll, only 31 percent of citizens in the 18 Latin Ameri­can countries surveyed said that they are satisfied with democracy, although they still preferred it to authoritarianism by a margin of 53 percent to 15 percent. Beyond elections, they viewed democratic institutions as generally weak or non-functioning. Only 34 percent of respondents said that they were aware of their rights and obligations as citizens, and a similar percentage felt that their justice systems functioned effectively. As few as 27 percent thought that their markets worked, although 63 percent still preferred them to state-run economies. Mean­while, unemployment, poverty, and high crime rates ranked as top concerns.^[1]

Behind the Numbers.Poll responses show that partial reforms have not produced expected changes. Powerful presidencies still impose agen­das that are out of touch with public desires while subservient legislatures and judiciaries fail to curb their excesses. National ministries often usurp local authorities. Where power is concentrated at the national level, decisions flow through a small number of hands, creating bottlenecks. In most countries, party leaders, not voters, choose candi­dates who are placed on party lists and elected according to the proportion of votes collected by each party. The result is arbitrary rule with a dem­ocratic veneer.

In general, poor public education contributes to poverty and blocks social mobility while, in coun­tries like Cuba and Venezuela, indoctrination mas­querading as education helps to ensure a subservient public. Inadequate investment in pri­mary and secondary schools, scarce teaching mate­rials, reliance on rote memorization instead of critical thinking, and lack of accountability at the local level contribute to low academic attainment and seem to go hand in hand with low productivity. (See Table 1.)

* The Corruption Index ranks countries on a scale of 1 to 10, with 1 being the most corrupt.
** Percent of school-age population.

Note: Shading indicates two or more instability risk factors such as high poverty, low educational attainment, unfree political system, or unfree economy.

Sources: Freedom House, Freedom in the World 2005 (Washington, D.C.: Rowman & Littlefield Publishers, 2005); Marc A. Miles, Kim R. Holmes, and Mary Anastasia O’Grady, 2006 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2006), at http://www.heritage.org/index; Transparency International, “Corruption Perceptions Index 2005,” at http://www.transparency.org/policy_and_research/surveys_indices/cpi/2005 (February 16, 2006); World Bank, World Development Indicators Online, at http://devdata.worldbank.org/wdi2005/Section1.htm (March 2, 2006); U.S. Central Intelligence Agency, The World Factbook, at http://www.cia.gov/cia/publications/factbook (March 2, 2006); Economist Intelligence Unit, Country Reports, 2004–2005; Organisation for Economic Co-operation and Development, Main Economic Indicators; U.S. Agency for International Development, “Haiti: FY 2001 Program Description and Activity Data Sheets,” at http://www.usaid.gov/pubs/bj2001/lac/ht/haiti_ads.html (March 2, 2006); and International Monetary Fund, “Honduras: Enhanced Initiative for Heavily Indebted Poor Countries,” Country Report No. 05/386, October 2005, p. 13.

Macro Success, Micro Duress.By adopting the broad liberal economic recommendations known as the “Washington consensus” in the 1980s, Latin America escaped hyperinflation and acute under­development. However, most Latin American economies are still manipulated to shield state or family-owned monopolies while placating the mid­dle class and the poor with social programs. Increased trade helps already established industries and contributes to economic growth, but it fails to create enough jobs to keep up with population growth. As a result, some 44 percent of Latin Amer­icans live in poverty.^[2]

In general, weak property rights keep the poor from titling real estate, denying rights to sell or use it as collateral. Almost all Latin American constitu­tions make subsurface resources such as minerals and oil the property of the state and ripe for misap­propriation by corrupt officials. Lacking adequate revenue, governments fail to support adequate security forces to project state authority, leaving vast rural tracts potentially at the mercy of crimi­nals, subversives, or terrorists. Priorities such as border control, disaster preparedness, and infra­structure maintenance also suffer.

Demographics and Globalization

Expanding population spells trouble for societies lacking competitive markets. The Population Ref­erence Bureau estimates that the population of Latin America and the Caribbean will grow from 559 million in 2005 to more than 700 million in 2025.^[3] Economies that rely on raw materials exports and estate-based agriculture cannot pro­vide enough new employment to satisfy demand. Adding millions of new adults to the labor force each year will quickly exhaust the supply of jobs in a region where official unemployment already hovers around 10 per­cent and underemployment (where reported) is between 20 percent and 50 percent.^[4]

As other developing coun­tries advance with more schools and better curricula, most of Latin America will continue to spend meager amounts on out­dated public education systems that rely on rote memorization and authoritarian teaching techniques. Secondary school attendance rose from 29 per­cent in 1990 to 65 percent in 2001.^[5] However, the Partner­ship for Educational Revitaliza­tion in the Americas found in its 2001 report that most of the region was spending less than $1,000 per pupil per year in primary and secondary schools compared to about $6,000 in Canada and the United States.^[6] With local workers less prepared than those in industrialized countries, not enough jobs avail­able, and large wage differentials between the region and the United States,^[7] Latin America’s jobless and underemployed will continue to migrate northward.

Source: World Bank, World Development Indicators Online, at http://devdata.worldbank.org/wdi2005/Section1.htm (March 2, 2006); U.S. Central Intelligence Agency, The World Factbook, at http://www.cia.gov/cia/publications/factbook (March 2, 2006); Economist Intelligence Unit, Country Reports, 2005, and Country Profiles, 2003–2004 and 2004–2005; U.S. Census Bureau, “Cumulative Estimates of Population Change for Metropolitan Statistical Areas and Rankings: April 1, 2000 to July 1, 2004,” at http://www.census.gov/population/www/estimates/metropop//table07.csv (February 11, 2006); and Global Insight, “The Role of Metro Areas in the U.S. Economy,” U.S. Conference of Mayors, January 13, 2006, at http://www.usmayors.org/74thWinterMeeting/metroeconreport_January2006.pdf
(February 7, 2006).

China. Since the 1990s, the People’s Republic of China has become a major player in the Western Hemisphere. Capitalist reforms have transformed it into a hybrid economy that incorporates some market principles. It is now the world’s fourth largest econ­omy and has a gross domestic product of $1.6 trillion, which is growing about 9 percent per year according to the World Bank. However, China does not have sufficient oil, natural gas, or mineral resources to sat­isfy its energy and manufacturing needs. It needs trade partners to buy its electronics, apparel, toys, and footwear, and it would like to compete with the United States in America’s backyard.

To do so, China has positioned itself to take advantage of Washington’s waning interest in Latin American ties. It collaborates on spy satellite tech­nology with Brazil and is cultivating military ties with other South American states.^[8] It has pursued petroleum partnerships with Venezuela, Ecuador, Colombia, Argentina, Brazil, and even Mexico. To obtain other commodities, China offers tempting investments in infrastructure. However, by encour­aging dependence on commodity sales, China could be retarding industrialization and job growth in Latin America. Moreover, China’s state-to-state business deals are reinforcing the region’s culture of monopolies and anti-competitive practices.

Diverging Paths

Despite the efforts of the great liberators of the 19th century, Latin America has never been unified under a single banner, but a new order is emerging on the heels of presidential elections in 2005 and 2006. More countries are electing leftist govern­ments as opposed to centrist or conservative ones. For the most part, moderate socialist governments are beginning to bridge the gap between traditional dictatorships and liberal democracies, blending state intervention with politics of choice. These include the governments of Brazil, Chile, Costa Rica, Uruguay, and even Mexico, which has a con­servative president.

Elections have also produced a small but poten­tially growing number of hard-left regimes in which the majority of voters are poor and undered­ucated. These governments—characterized by cen­tralized rule, polarization between leaders and opponents (typically considered enemies), and state control of major resources and industries— are opposed to free trade, representative democ­racy, and U.S. influence in the region.

Cuba’s New Friends.Isolated and broke in the 1990s after the loss of subsidies from the Soviet Union, Cuba’s dictatorship has gained a new lease on life thanks to generous oil concessions from Venezuela. This alliance has given Fidel Castro breathing room and a renewed respect from Latin Americans who admire his longevity and fierce independence from the United States. How long the revival will last is uncertain. Castro appears to suffer from Parkinson’s disease, and his brilliant if eccentric leadership of the hemispheric left appears to be nearing an end.

Until that moment arrives, populist imitators from Caracas to Buenos Aires are swaying masses of poor and working-class voters who see avenues for social mobility blocked in existing corporatist societies. Since 1990, numerous leftist parties around the hemisphere have joined the Foro de São Paulo, an organization that, like Castro, opposes representative democracy, market economies, and U.S. influence.

Venezuelan President Hugo Chávez has become Castro’s most ardent follower and affluent sup­porter. Elected in 1998, Chávez has gradually constrained opponents and allowed Cuban moni­tors to form a shadow government within his own regime. He has supplied Cuba with subsidized petroleum since October 2000 and used oil profits to buy Argentine and Ecuadoran debt.^[9] His lar­gesse allegedly has helped to finance the cam­paigns of like-minded populist nationalist candidates in other countries. Yet, despite its oil riches, Venezuela has one of the higher poverty rates in Latin America.^[10]

A less strident member of Castro’s anti-U.S. alli­ance is Argentine President Néstor Kirchner, who has aligned Argentina with Cuba and Venezuela to gain access to easy credit and discount oil. In November 2005, he simultaneously hosted the Organization of American States Summit of the Americas and a “People’s Summit,” at which agita­tors demonstrated against President George W. Bush. Further north, Bolivian President Evo Morales received help from the Cuban and Venezuelan embassies during his 2005 campaign and has vowed to become “Washington’s worst nightmare.”^[11] Morales has since retreated from such harsh rhetoric, but he named a hard-line leftist cabinet and report­edly is creating a Cuban-trained security force paral­lel to the existing police and military.

In Peru, Ollanta Humala, a former army lieuten­ant colonel, is tapping discontent among Peru’s majority poor and running even in the polls with conservative Lourdes Flores Nano for the April 9 presidential election. A self-described nationalist, Humala admires Chávez and, like Chávez, once led a revolt against his government. Politics seems to run in the family—his older brother Ulises has also entered the presidential race, claiming to be an ultra nationalist. Last year, another brother com­mandeered a rural police station in an escapade that left four officers dead.

Thanks to quirky candidates, Ecuador could turn more toward Cuba and Venezuela following elec­tions in October 2006. Former Economy Minister Rafael Correa—a critic of free trade and close ties with the United States—is running against an indig­enous mayor, a banana magnate, and former Presi­dent Lucio Gutierrez, who was dismissed from office last April by the national legislature. Ecuador is a major South American oil producer, and govern­ment officials claim that Venezuela is funding politi­cians who want to realign Ecuador with Chávez.

In Nicaragua, former comandante and perennial Sandinista Party Chief Daniel Ortega is making his fourth presidential re-election bid in a vote slated for November 2006. The Sandinistas deposed dic­tator Anastasio Somoza in 1979 and imposed their own authoritarian regime. In 1990, under pressure from U.S.-backed counterrevolutionaries, Ortega permitted elections, which he lost. On leaving office, Ortega and close associates reportedly looted the central bank and seized hundreds of mil­lions of dollars in property. Thanks to a devil’s bar­gain with former President Arnoldo Alemán, the Sandinistas control the electoral tribunals and courts, increasing chances for a rigged vote.^[12]

Potential Flash Points

The combination of personalistic populism, endemic poverty, and marginally educated popula­tions poses problems for both the hemisphere and the United States.

Venezuela.Financed by huge government-con­trolled oil reserves, President Chávez sees himself taking over Fidel Castro’s leadership of the Latin American left and strengthening hemispheric ties to such rogue nations as Iran and North Korea. Emboldened by defeating an August 2004 recall vote by padding the electoral rolls and intimidating opponents, Chávez has consolidated his single-party rule, eliminating internal checks on his pow­ers. A new “social responsibility” law permits the government to close radio and television stations for airing content “contrary to national security.” A strengthened criminal code imposes jail sentences for even mildly protesting the actions of public offi­cials.^[13] Meanwhile, prosecutors are rounding up opposition leaders for show trials conducted by provisional, handpicked judges.

Outside Venezuela’s borders, Chávez is threaten­ing non-leftist states. In July 2005, he inaugurated a regional satellite television network called Telesur that airs Marxist propaganda and bashes Colombia for its relations with the United States. He is friendly with the Revolutionary Armed Forces of Colombia (FARC) narcoguerrillas and wants Wash­ington to end counterdrug efforts there. He opposes the proposed Free Trade Area of the Amer­icas while advocating his own Bolivarian Alterna­tive for the Americas (ALBA), a notional aid distribution network to be financed largely by Ven­ezuelan oil profits.

Although the highway from Caracas to its inter­national airport is in disrepair, Chávez has report­edly committed more than $3 billion per year in aid to Latin American neighbors.^[14] Moreover, he has proposed two energy cartels, PetroCaribe and PetroSur, to integrate Latin America’s state hydro­carbon industries. He is also stocking up on rifles, buying armored vehicles, and acquiring attack helicopters from Russia. And in May 2005, despite controlling the world’s seventh largest oil and tenth largest natural gas reserves, Chávez announced plans to acquire nuclear technology from Iran, fueling fears that he may try to develop a nuclear bomb.^[15]

Within the United States, Chávez’s government has paid lobbyists up to $100,000 per month to polish his image before the public and U.S. Con­gress. It reportedly funds the Venezuela Informa­tion Office, a public relations firm registered under the Foreign Agents Registration Act. Although they claim no direct link to the Venezuelan state, pro-Chávez activist groups called “Bolivarian Circles” have surfaced in Miami, Chicago, and other cit­ies.^[16] After years of persuading fellow OPEC (Orga­nization of Petroleum Exporting Countries) members to suppress petroleum production to raise prices,^[17] Chávez has negotiated with selected Members of the U.S. Congress to sell small amounts of heating oil at a discount to poor neigh­borhoods in northern U.S. cities, helping them to gain political clout.^[18] Although Chávez complains that outsiders meddle in Venezuelan politics, he is trying to drive a wedge between American voters and their government.

Colombia.With help from the United States, Europe, and Japan, Colombia is successfully prose­cuting a 20-year-old war on drug traffickers and ending a 40-year guerrilla insurgency. Coca and heroin cultivation, homicides, kidnapping, massa­cres, and sabotage against infrastructure are down, while desertions and demobilizations from rural irregular armies have increased following passage of a justice and peace incentives law.

For progress to become irreversible, Colombia needs to expand its security forces by at least half to pressure guerrillas and paramilitaries into com­plete demobilization. It also needs to assume greater responsibility for intelligence and coca eradication missions, which are now being man­aged by U.S. contractors. Colombia currently lacks air mobility and maritime patrol assets (light cargo transports and surveillance platforms) as well as integrated intelligence capabilities. Unless these shortfalls are addressed, progress could stall. Venezuela’s arms buildup and continuing support for guerrillas could further complicate Colombia’s prospects for peace.

Andean Region.The heartland of South Amer­ica is resource rich, but its societies are fragmented into minority elites and large indigenous and rural populations that have only recently gained suffrage and access to education. Bolivia, Colombia, Ecua­dor, and Peru have poverty rates above 45 percent. (See Table 1.) All have secondary school enrollment rates of only about 50 percent, except Bolivia, which increased attendance in the 1990s through investments in education. Most leaders still believe that social programs that put food on tables and roofs over heads are all that the poor really want, but continued migration to the United States and Europe proves otherwise. Coca production has risen steadily in Bolivia since 2002 and could rebound in Peru as well. Bilateral free trade agree­ments between the United States and these nations could create opportunities, but Andean societies need to better educate workers and liberalize econ­omies to take maximum advantage.

Central America.Despite elections and market openings, Central America’s public institutions are still too weak and corrupt to deal with changes brought on by globalization: rural migration to cities, the need for more industrial jobs, rising gang violence, and transnational crime. Poverty is not as high as it is in the Andean region, but sec­ondary school enrollment runs from a low of 29 percent of the student-age population in Guate­mala to a high of only 62 percent in Panama. According to the Inter-American Development Bank, Central America and the Dominican Repub­lic now depend on $12 billion in remittances from migrants living in the United States and Europe. If economies fail to produce opportunities and jobs and if governments cannot protect citizens, dissat­isfied citizens will vote for populist demagogues or migrate elsewhere.

Mexico.Following the end of 71 years of single-party rule and more than a decade of free trade with the United States and Canada under the North Amer­ican Free Trade Agreement (NAFTA), broad-based prosperity continues to elude most Mexicans. Energy and telecommunications remain in the hands of monopolies, and one-fifth of Mexico’s labor force is tied up in an 80-year-old dysfunctional land tenure system. In recent years, the Mexican economy has cre­ated only 200,000–500,000 jobs per year. This is insufficient for the 1 million workers who now enter the workforce annually, leaving many to seek employ­ment in the United States.

President Vicente Fox has done much to open Mexico’s economy, but a divided congress has thwarted his attempts to privatize state monopolies, improve access to credit, and curb corruption. Next July, voters might replace him with the populist former mayor of Mexico City, Andrés Manuel López Obrador, whose economic proposals are as yet unclear. Running neck and neck in the polls is Felipe Calderón, the candidate of Fox’s conservative National Action Party. Regardless of who wins, Mexi­can lawmakers could still block substantive reforms.

With his economic plans frustrated at home, Fox insists that jobless Mexicans have a right to seek employment in the United States. Despite collaboration on other issues, the Fox and Bush Administrations have come to an impasse on migration. Members of the U.S. Congress are advocating tighter controls to reduce flows and punitive measures against employers who hire undocumented workers. President Bush wants a guest worker program that will direct them toward legal entry points and encourage Ameri­can employers to pay taxes. If reforms are blocked by recalcitrant lawmakers on both sides, collabo­ration on other matters may halt as well.

Haiti.Haiti has suffered a perpetual political cri­sis for most of its 200-year history. Prime Minister Gérard Latortue, his coalition cabinet, and multina­tional peacekeeping forces are trying to help Haiti recover from years of despotic rule under former President Jean-Bertrand Aristide, who resigned in February 2004. After the Bush Administration gave Aristide safe passage to the Central African Repub­lic, it helped to arrange for peacekeeping forces, a transition government, and elections in the belief that elections would put Haiti back on a demo­cratic trajectory.

The successful election on February 7, 2006, which returned former President Rene Preval to office, is a positive step but may not be enough to bring lasting peace or economic progress. Aristide’s corruption left a bankrupt government, and inter­national support needed for reconstruction is only trickling in. Recently, a U.S.-funded assessment team concluded that without “a firm international commitment, any new government will be ill-pre­pared to address the country’s critical economic, institutional, and infrastructural needs.”^[19] Haiti’s tiny 4,000-member police force cannot possibly address continuing violence and unrest between rival gangs. Moreover, migrant outflows and the growing presence of violent narcotraffickers in Haiti could threaten the stability of the neighboring Dominican Republic.

Cuba.Fidel Castro’s 47-year-old stranglehold on this island nation still blocks the dreams and aspirations of 11 million citizens. Although no longer a direct threat to the United States since losing its Soviet sponsor, Cuba remains hostile, sharing electronic espionage and warfare capabil­ity with China and offering support for interna­tional terrorists and guerrilla groups. Nearly 80 years old, Fidel counsels Venezuela’s Hugo Chávez as well as hopeful imitators like Bolivia’s Evo Morales. However, his incapacitation or death would remove the force of personality that holds together the Cuban state and energizes the region’s revolutionary movements.^[20]

Anticipating that eventuality, Fidel has named his brother, First Vice President and Minister of the Armed Forces Raúl Castro, as his successor. How­ever, Raúl is uncharismatic, aging, and reportedly an alcoholic.^[21] Cuban Vice-President Carlos Lage suggested a curious alternative during a visit by Hugo Chávez in October 2005—co-rule of Cuba by Venezuelan President Chávez—but that seems unlikely given Cuban national pride.^[22] In any case, discontent with any successor regime could lead to a breakdown of order or even a massive exodus of asylum seekers to the United States similar to the Mariel Boatlift in 1980, which would force U.S. officials to make some hard decisions.

Hydrocarbon Blues.The Western Hemisphere consumed about 30 million barrels of oil per day in 2004, of which the United States used more than 20 million barrels, two-thirds of it imported.^[23] As global economies expand, car ownership will rise and new factories will require more energy. As an example of the nexus between growth and energy consumption, China’s petroleum use increased by 15 percent in 2004.^[24]

Without significant discoveries of new reserves or technological advances, the world will face an energy crunch. The United States has estimated reserves of 21 billion barrels of oil (in decline since the 1970s) and 192 trillion cubic feet of natural gas. Canada has 178 billion barrels of oil and 56 trillion cubic feet of gas. Mexico has only 15 billion barrels of oil and 16 trillion cubic feet of gas.^[25] These and other known global reserves might last for 30 years or more, barring no new discoveries.

Venezuela has an estimated 77 billion barrels of oil and supplies about 7 percent of U.S. needs.^[26] On a 2004 visit to Beijing, President Chávez said that shifting exports to China will help to end dependence on sales to the United States. Follow­ing a February 2006 incident in which Venezuela and the United States expelled diplomats, he threatened to shut down refineries that the state oil company, Petroleos de Venezuela, S.A. owns in America. “It would cost me nothing to sell oil to other countries in the world,” he said.^[27]

Chávez would like to put other state hydrocar­bon industries under his control and has offered his PetroCaribe and PetroSur energy cartels as vehicles. He has announced a preposterous $20 billion, 5,000-mile gas pipeline from Venezuela to Argen­tina^[28] and is advising President Evo Morales on nationalizing Bolivia’s gas industry. Such carteliza­tion would turn Latin American energy resources into political tools, promoting corruption and mis­management while blocking incentives for needed foreign investment. With hydrocarbon supplies endangered by dictators or tied up in cartels and further development discouraged by taxes, fuel prices have nowhere to go but up.

Missed Opportunities, Muddled Objectives

Historically, U.S. engagement with Latin Amer­ica has been erratic, and it remains so today. The last time the U.S. government committed to a spe­cific strategy toward Latin America was during the Reagan Administration in the 1980s, when defeat­ing the Soviet Union and halting its advances in Central America were part of a comprehensive effort to win the Cold War. The United States con­ducted coordinated political, military, economic, labor, diplomatic, and even public relations efforts that helped to end an insurgency in El Salvador and a Marxist revolution in Nicaragua.

The succeeding George H. W. Bush Administra­tion was pulled in different directions by the breakup of the Soviet Union and the Iraqi invasion of Kuwait. It shifted democracy aid to Eastern Europe, even though Latin America’s political reforms had barely gone beyond elections. To his credit, President Bill Clinton won passage of NAFTA. Yet budget cuts prompted him to reduce Andean counternarcotics efforts even as President Jean-Bertrand Aristide’s persistent lobbying goaded him into invading Haiti in 1994 to restore the ousted leader to power. By 2000, a spike in narco­terrorism and reform failures in Haiti forced the White House to reverse course.^[29]

President George W. Bush promised a “Century of the Americas” but tabled that idea to conduct the global war on terrorism and try to democratize the Middle East following the September 11 terrorist attacks on the United States. Still, the Bush White House made impressive advances on free trade. The President won congressional approval for trade promotion authority, concluded a free trade agree­ment with Chile in 2003, and concluded a similar pact with the Dominican Republic and five Central American states (DR–CAFTA) in 2005. Uruguay has approved a bilateral investment treaty with the United States, and trade promotion accords have been successfully negotiated with Colombia and Peru. A hemispheric free trade agreement may be possible if the United States and Brazil finally aban­don their agricultural subsidies or if the issue is resolved in World Trade Organization negotiations.

Lagging Commitment.Blocked by Congress on a number of occasions, the Bush Administration took two-and-a-half years to assemble a Latin Amer­ica team and continued Clinton-era tactics rather than embarking on a strategic agenda. Personnel choices reflected pressure from domestic constituen­cies to fill some positions and a desire to maintain the status quo by placing career officers in other positions. Support for programs to strengthen democracy has been switched on and off, depending on available funds, while big-ticket public health and environmental aid programs continue. Disarray following the 1999 merger of the U.S. Information Agency into the Department of State still inhibits public diplomacy, academic exchanges, and support for civil society programs.

Poor public relations has magnified perceptions that the United States is disinterested in Latin Amer­ica. Although six Latin American states supported the Bush Administration’s decision to liberate Iraq— El Salvador even provided peacekeeping troops— U.S. Middle East policies are poorly perceived throughout the region. When an uprising tempo­rarily removed Venezuela’s president from power in 2002, the Administration fumbled for words, sug­gesting complicity. Subsequently, Secretary of State Colin Powell asked former President Jimmy Carter to head an electoral observation mission to Venezu­ela that blessed a flawed recall vote on President Chávez’s rule.^[30] In 2005, the U.S. House of Repre­sentatives passed a measure to halt illegal migration by building a fence between the United States and Mexico, which was roundly condemned by Latin American allies.^[31]

In the background, security assistance to help Colombia combat narcoguerrillas is on the chop­ping block. Plagued by wing cracks, aging P-3 maritime patrol aircraft operated by the United States have not been replaced. The State Depart­ment’s Bureau of International Narcotics and Law Enforcement Affairs has lost 11 spray planes used to fumigate coca fields since 2000, while only three have been replaced. Colombia lacks ade­quate fixed-wing transport and maritime patrol aircraft, and its helicopters need maintenance.^[32] Little noticed, U.S. Air Force radar surveillance that tracks drug trafficking planes and boats along the U.S. Gulf coast has steadily declined to the point that a gap in coverage now stretches from Texas to Puerto Rico.^[33]

Source: Stephen Johnson, The Heritage Foundation.

In 2005, the President replaced Secretary of State Powell with National Security Adviser Condoleezza Rice, who brought in a new Assistant Secretary and a Senior National Security Council Adviser for Western Hemisphere Affairs. Despite fresh personnel, the Administration still leans toward a default agenda to complete the remaining trade agreements with Andean states while further diplomatic efforts and resources remain focused on the Middle East.

Coordination Problems.Former Administrator Andrew Natsios hoped to prune the U.S. Agency for International Development (USAID) into a lean emer­gency response agency. That never happened, nor was the White House ever able to get it to focus on lever­aging political and economic reforms that would allow sectoral development to have a more lasting effect. On January 18, 2006, Secretary Rice named Randall Tobias to replace Natsios and presented a plan to move the Administrator’s office into the State Department to better align development programs with U.S. foreign policy. Untouched are other federal agencies that conduct proprietary foreign assistance programs such as Health and Human Services, Hous­ing and Urban Development, the Treasury Depart­ment, and the Departments of Justice and Defense.

In 2004, the White House and Congress created the Millennium Challenge Corporation to sidestep USAID’s cumbersome procedures and directly reward developing nations for improving governance and lib­eralizing economic policy. To receive a Millennium Challenge Account (MCA) grant, countries must meet specific criteria and then negotiate a mutually accept­able development project with the United States. The lapse between eligibility and award disbursal can be lengthy, during which time governments can change hands and policies change. Bolivia is a case in point. It has been eligible for a $598 million grant since 2004 for 1990s-era economic, education, and political reforms. No award has yet been made, and now Pres­ident Morales plans to reverse the policies that quali­fied Bolivia for its grant.

Single-interest diplomacy and shortsighted use of sanctions to leverage foreign actions have led Wash­ington down blind alleys. For instance, U.S. insis­tence on coca crop eradication—to the exclusion of helping Bolivia confront growing political, social, and economic problems—contributed to that gov­ernment’s breakdown in 2003 and the election of a new populist president opposed to crop control. In another example, Congress and the White House agreed to use security assistance as a bargaining chip to get foreign governments to sign an agreement exempting U.S. servicemen from prosecution under the controversial new International Criminal Court.^[34] In countries like Costa Rica where there is little public support for leaders to sign such a pact, the United States cannot help security forces to staunch the flow of arms and drugs transiting their borders unless President Bush signs a waiver, which would immediately weaken incentives for other countries to join such an agreement.^[35]

An Opportunity Agenda

The late Senator Paul Coverdell (R–GA) com­mented before the Council on Foreign Relations in April 2000 that three general problems affect much of Latin America: fragile democracies, failure to develop broad-based economic growth, and inadequate defenses against emerging threats—with each of these problems related to the other two.^[36] That observation is still valid today. Yet as time passes with little to show for superficial changes, some citizens are returning to the failed but familiar solutions of the past, such as betting their hopes on populist strongmen.

In addition to foreign policy priorities elsewhere in the world, the Bush Administration needs a com­mitment and a firm strategy to guard against trouble on America’s southern flank. Demographic pres­sures, the rise of competitive economies in Asia, and populism’s spreading appeal portend growing prob­lems that will affect the United States and neighbor­ing democracies through declining export sales, threats from terrorist insurgencies, rising crime, and increased illegal migration. As a world power that depends increasingly on markets and the well-being of other nations for its economic strength, the United States has an interest in helping its neighbors follow proven pathways to peace and prosperity.

Progress is possible if the President delegates authority to his Latin America team to act and coor­dinate with more agility than it has in the past. Ide­ally, it should recommit the United States to policies that will create opportunities so that the region can be a place where investments grow and people would want to live. Specifically, such policies should:

• Promote deeper political reforms.America’s diplomacy and financial support should bolster homegrown efforts to improve governance by strengthening citizen control of political parties now dominated by founder–owners, establish­ing links between legislators and constituent dis­tricts, enhancing the separation of powers, and promoting equal treatment of all citizens under the law. Continued judicial reforms can help to modernize criminal codes, separate prosecuto­rial and judicial functions, and establish system­atic rules of evidence to strengthen courts and make them more transparent. Such U.S. actions as revoking visas and freezing stateside assets of corrupt politicians and businessmen can help to curb corruption throughout the region.
• Foster free markets.The White House should vigorously pursue pending bilateral free trade accords with Panama and the Andean countries of South America. Congress should approve the recently negotiated bilateral investment treaty with Uruguay. It should be willing to abolish counterproductive subsidies for American agri­cultural products to advance negotiations on the Free Trade Area of the Americas. Beyond trade, U.S. diplomacy and assistance should help to strengthen property rights, simplify business licensing for small enterprises, encourage banking competition to make credit more affordable, and provide models for priva­tization that create truly competitive industries.
• Improve security through regional coopera­tion.To counter today’s transnational threats, the United States should encourage regional partner­ships based on day-to-day military-to-military and law enforcement–to–law enforcement coop­eration to promote common standards and proto­cols. Congress should amend the Foreign Assistance Act of 1961 to allow targeted U.S. sup­port for training and assisting foreign police to ensure their inclusion in a broad range of pro­grams. U.S. Northern Command, in concert with America’s traditional partner Canada, should invite Mexican defense forces to participate in activities that help maintain continental security, while U.S. Southern Command should continue to cooperate and train with military forces of friendly governments in the Caribbean and Cen­tral and South America. The Department of Homeland Security should help to improve liai­son between American law enforcement agencies, border patrols, customs officials, and community police and their Latin American counterparts.
• To strengthen implementation of these policies, the Bush Administration and Congress should:
• State clear objectives and goals.During his first term, President Bush emphasized trade as the route to stability and prosperity. Since the beginning of reconstruction in Iraq, the White House has developed a global democracy agenda as part of what it calls “transformational diplomacy.”^[37] Democracy, free markets, and security cooperation are three pillars that should be mentioned in every speech on Latin America to eliminate speculation that U.S. pol­icies lack consistency.
• Eliminate barriers to better ties.Various U.S. government agency activities should mesh. The U.S. Broadcasting Board of Governors does not fund Latin American radio and television pro­gramming that could enhance USAID develop­ment programs, and development programs do not always match U.S. foreign policy goals. Folding USAID’s leadership into the State Department will not help as much as would the President’s tasking Cabinet secretaries to ensure better interagency cooperation, many of whom administer their own foreign aid programs. The Millennium Challenge Account process must be streamlined so that awards can be made when they will have the most beneficial impact. U.S. lawmakers should amend sanctions against countries that refuse to sign Article 98 agreements to give the White House discretion on what assistance to withhold. Finally, Con­gress should avoid earmarking aid measures to give the Administration more flexibility to implement immediate policy priorities.
• Revive public diplomacy efforts.State Depart­ment public diplomacy should expand people-to-people programs to bring diverse sectors of Latin America and the United States together. Academic exchange opportunities for working-class and indigenous students, books for librar­ies, and civic education teaching materials for schools can help to counter anti-American rheto­ric that pervades educational institutions in the region. U.S.-supported binational centers that teach English and showcase U.S. culture lost funding in the 1990s. Centers that still exist in Latin American deserve renewed support.

To address specific countries and issues of concern, the Administration should take the following actions:

• Venezuela.U.S. diplomats must avoid responding to Hugo Chávez’s provocations, which he uses to show followers that he can bully other countries. Meanwhile, Washington should support Venezuelan democrats by urg­ing continued international scrutiny of human rights under Venezuela’s emerging police state and by pressing U.S. allies to voice concerns about Chávez’s dictatorial policies. To counter­act his interventions in other Latin American countries, the United States must be more visi­bly engaged with hemispheric neighbors to occupy voids that Chávez might fill. Addition­ally, the Administration should expand Voice of America programming to balance regional pro­paganda broadcasts by Venezuela’s Telesur sat­ellite television network.
• Colombia.The United States should maintain current levels of security assistance to help Colombian forces demobilize illegal rural armies and secure borders. Such support must include funding to replace lost aircraft and to develop a marine patrol capability. It must also encourage Colombia to assume greater respon­sibility for crop eradication and intelligence gathering. Congress should amend the Foreign Terrorist Act to permit public and private assis­tance to demobilization efforts to promote a peaceful settlement of Colombia’s 40-year internal conflict. USAID should shift develop­ment assistance from flawed crop substitution programs, which could be better managed by other donors, to crucial justice system reforms.
• Mexico.To help Mexico become a more equal partner in prosperity and security, the United States should press its leaders to open markets and improve schools to increase employment. In exchange for a guest worker program to help absorb Mexico’s labor surplus and impose con­trol over America’s southwest border, the United States should ask the Mexican government to accelerate economic reforms to open closed commercial sectors and enable the growth of competitive enterprise. To improve cooperation on security matters, the Pentagon could invite Mexican soldiers to participate in North Ameri­can military exercises. The Department of Homeland Security could establish exchanges for Mexican law enforcement, immigration, and justice system personnel through existing public diplomacy and USAID programs.
• Central America.The Bush Administration should encourage Central American leaders to take advantage of trade opportunities by open­ing economies through competitive transparent banking, strengthening property rights, and establishing the rule of law. U.S. support can improve public education by facilitating public– private partnerships to provide textbooks and supplies. The Department of Homeland Secu­rity’s U.S. Immigration and Customs Enforce­ment agency should work with local U.S., Central American, and Mexican law enforce­ment authorities to share information on migrants and criminals returned to their coun­tries of origin. The United States should con­tinue training for community policing and fund a proposed International Law Enforcement Academy in El Salvador, ensuring adequate oversight by user governments and local partici­pation in developing curricula.
• Haiti.The United States should organize a donor-nation supervisory council to advise and monitor Haiti’s reconstruction for at least the next decade. Resources to help interim Prime Minister Gérard Latortue rebuild public institutions are coming in dribs and drabs, and this hampers both planning and progress. The Haiti International Assessment Committee sponsored by the International Republican Institute recommends “democratic deliveries” to quickly improve daily life, such as road improvements to facilitate intercity commerce, port enhancements to expand trade capacity, electrical cooperatives to restore energy distribution, and vocational skills training to improve worker employability.^[38] This Carib-bean nation of 8.4 million needs a security force five times its current 4,000-member strength to provide for public safety. Trade preferences like those in the 2004 Haiti Economic Recovery Opportunity Act, which died in the 108th Con­gress, could supply opportunities for badly needed employment.
• Cuba.The Bush Administration should con­tinue sanctions against the Castro regime, but it should also provide and encourage third-party support for dissidents, human rights monitors, and independent journalists. As Castro’s biolog­ical clock winds down, Washington should step up informal contacts with different sectors of Cuban society, using third-country nationals as necessary, to gauge the direction of a possible succession or transition. Meanwhile, the Bush Administration should define a set of post-Cas­tro engagement principles and communicate them directly to the Cuban people, encouraging Canada and European allies to do likewise. U.S. officials could also consider blockading Cuban waters if a surviving authoritarian regime sud­denly urges thousands of citizens to flee to the United States. Such a blockade could save lives and perhaps hasten the end of a despotic regime.
• Energy.The best way to avoid energy shortfalls is to foster competition and let markets respond to needs. First, the United States should press supplier nations to liberalize their foreign investment laws, break up state monopolies, phase out state ownership of energy resources, and reduce government intervention. Second, America could cut tariffs (currently 54 cents per gallon) on imported ethanol derived from cane sugar. Brazil has reduced its dependence on foreign oil by more than half by developing “flexible-fuel” vehicles that run on any combi­nation of gasoline and ethanol. Currently, 4 million such cars are on U.S. roads.^[39] Finally, allowing rising oil prices to shape consumer choices would increase demand for both explo­ration and new technology.

Conclusion

Democratic reforms have unleashed powerful forces in Latin America. A few countries have embraced the politics of free choice all along, but many are only now opting for institutional gover­nance over personalistic rule. Those that have traveled further down that road, like Chile, have become more prosperous. Where political and economic freedoms have been superficial or recent, as they have been in Venezuela or Bolivia, citizens are following populist demagogues who seize treasuries, squander resources, and confuse followers with hateful rhetoric.

As far back as the First International Conference of American States in 1890, the United States has generally encouraged regional cooperation and the development of democratic systems. Support for that approach has waxed and waned, but that does not mean that Washington can be complacent. More than 500 million people in Latin America and the Caribbean are linked to the United States through common geography. Moreover, Latin America is an important trade partner, with U.S.– Latin America merchandise trade totaling $409 bil­lion in 2004.^[40] The United States also needs its neighbors’ support in international bodies, such as the United Nations, and in shared tasks such as international peacekeeping.

Even as many Latin American countries are trying to sort out their politics, demographic pressures are working against them. Migration from rural areas to cities and from cities to other countries are com­pounding problems. Distant powers like China are exploiting political backwardness to gain economic clout. As important as the Middle East is to the United States, so too is Latin America. The United States should help to shape events there so that its neighbors will become more stable and prosperous.

Stephen Johnson is Senior Policy Analyst for Latin America in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.