Toward the Next American Century: Building a New Partnership withLatin America

Report Americas

Toward the Next American Century: Building a New Partnership withLatin America

February 4, 1992 40 min read Download Report
Michael G.
Senior Fellow and Director of Government Finance Programs

(Archived document, may contain errors)

TOWARD THE NEXT AMERICAN CENTURY BUILDING A NEW PART" E WlTH LATINAMERICA J INTRODUCTION The ofthe COM war is farcing the.united states to re- its policy towardLatin America and the Caribbean and redefine its interests in the mgion U.S. policy toward the Americas after World War XI was to pvent the spread of With the communist thmt now largely defeated, however, the U.S. no longer nnAn to focus primdy OII containing communism. Instead, America can con centrate moxc on eJrpanding he trade throughout the hcmisphue, promoting free marlas, fighting the nmumcs ~an d su~gthegrowthofdem~in stitntions.While dty concerns such as Fidel Casm's Cuba, the Haitian military PI aadhd still remain, they are not, nor should they be, the driving f- of America's policy towd Latin America Washington, for the time being a! least, has been liberated from the worry that a major overseas enemy power will gain a strwghold in this hemisphere and usc that position to harm the U.S.

Fundamental Change. George Bush sccms to understand that U.S. relations with Larin America have changed fundamentally. More than any previous Presi dent, he has demonstrated a commitment to forging a constructive and mutually beneficial relationship with t he region. He has opened free trade area talks with HehaslauachedwhathecallstheEnterprisefortheAm~~Initiative AI whichpromisesto~te ah trade zone from AlaskatotheTiemrdel Fwgo at the southcill tip of South America, spuf investment in the region, and tackl e the debt problem. And he has stepped up U.S. COOPCf8tioll with Peru and other south Amencan countiics in the campaign to curb the illegal drug uade s~-spansandcommunism.

Communists Isolated. Bush is right to emphasize the importance of Latin America to t he U.S. The collapse of the Soviet Union has isolated the communists in Latin America The January 16 peace accord between the government of El Sal vador and the communist guenillas would not have happened if Moscow were still in the business of sponsoring communist subversion in Latin America. Cut off from their overseas lifeline, Latin American communists will not be able to destabilize the hemisphere and block efforts by the U.S. to spread democracy and create free trade and free markets.

America, making Buenos Aires, Mexico City, Santiago, and other capitals much more willing to cooperate with Washington.

America is because North, Central, South America, and the Caribbean may be on the verge of becoming an economic giant. After the North American Free T rade Agreement (NAFI'A) between the U.S Canada, and Mexico is signed and ap proved, other free trade area agreements will likely follow with such countries as Chile, Colombia, Costa Rica, and Venezuela.

If as expected, still others join, this could create a vast free trade ma encom passing all of the Americas. This could be an insurance policy against protec tionism in Asia and Europe. For one thing, a free trade ma of the Americas would induce countries in Asia and Europe to keep their markets open to U. S goods; otherwise they might not be able to compete with the new vibrant economies of the Americas. For another thing, the vast free trade area would cre ate new markets in this hemisphere for U.S. goods if Asian and European markets were closed to U.S. p roducts. A free trade area of the Americas also could in crease investment opportunities for U.S. businesses and develop more secure and cheaper somes of raw materials such as oil for the U.S.

And if the U.S. is worried about competing with Japan, then an Americas free trade area would create the economic muscle that would ensure U.S. victory in the competition.

Security and Threats. Finally, Latin America is still very important to U.S security. The Panama Canal remains critical to U.S. security and trade . And al though less tlmatening than before, Cuba could erupt into violence as Castro tries to hold onto power, pouring thousands of refugees into the seas off Florida, and possibly even unleashing some desperate Cuban attack on U.S. territory. In stabili t y in Haiti, meanwhile, creates a huge refugee problem for the U.S. And il legal drug smugglers are joining forces with such terrorists as the Maoist Sender0 Luminoso (Shining Path) in Peru to kill Americans and terrorize democratically elected governments revolutionary changes which a~ occurring in the Americas. The 21st century could be the next American century, not just for the U.S but for all the Americas. If the U.S. and its Latin American partners could create a free trade zone from Alaska to the sou t hern tip of South America, some 700 million people The end of the Cold War, meanwhile, has boosted U.S. prestige in Latin Another reason why Bush is right to emphasize the importance of Latin The Bush Administration has what is truly a historic opportunit y to advance the 2twice the population of the European Community, would become part of an in creasingly prosperous economic community.

While Bush is off to a good start in this task, much more needs to be done. He must make sure that Congress approves the free trade accord with Mexico and that the Enterprise for the Americas Initiative is not suffocated by bureaucratic in ertia, a lack of planning, and increasing protectionism in the U.S. Congms.

To ensure that the bold U.S. experiment in Latin American po licy succeeds Bush should Complete qulckiy the North American FreeTrade Agreement (NAFTA ber one priority in Latin America. The trade pact will help the U.S. compete against the European Community and East Asia in the production and export of goods and se rvices by creating a zone of 360 million people with a combined an nual economic output of over $6 trillion Convene a summit of Lath American leaders to promote the Enterprlse for the Amerlcas Initiatlve.

Among the Latin American participants should be lea ders of the free market revolutions of the reg Argentine President Carlos Menem, Chilean President Patricio Aylwin, Mexican Resident Carlos Salinas de Gortari, and Venezuelan President Carlos Andm Perez. Such a summit would make the EA1 a project of all o f the Americas, not just of the U.S. Latin American leaders who could give the EAI new life with new ideas and proposals Create an Enterprlse for the Americas Initiative task force of U.S. off iciais to The task force should consist of relevant assistant s ecretaries from the Depart ments of Commerce, Defense, Education, Justice, State, and Treasury, plus ofi cials from the U.S. Trade Representative's office, the Environmental Protection Agency, the Drug Enfarcement Administration

EA and the Immigration and Naturalization Service (INS The task force should be chaired by Under Secretary of theTreasury for International Affairs David Mulford. Its purpose is to push the EAI through the bureaucracy, to coordinate the various policies from the different agencies , convince Congress of the Initiative's merits, and to high light the political importance of the initiative Negotiate as many free trade agreements as'possibie with Latin American Free trade is infectious. Already Chile and other countries want to negotia te free trade area agreements WAS) with the U.S. The Bush Administration should take them up on their offers Make acceptance of the "index of Economic Freedom" a precondition of foreign aid.

The Index is a system for monitoring a nation's progress in free market reforms. All foreign aid to the region should be conditioned on whether the recipient countries are pursuing the reforms listed in the Index. These include privatization of state-owned enterprises, lower tax rates, and free trade. Only by c This pa c t between the U.S Canada, and Mexico should be Washington's num coordinate poilcy and promote the E,A on Capitol Hili Countries 3 sing the Index can Washingto9 be assured that U.S. aid is contributing to free narket reforms. isolate Cuba and Haiti 4merica . It is in the U.S. interest that their dictators are ousted and that iemocratic stability take root. To do this, Washington should continue the trade mbargoes and other sanctions against Cuba and Haiti, while enlisting the help of regional leaders like Ar g entinas Menem, Mexicos Salinas, and Venezuelas Perez in pressuring Castm to reform his communist system. Since a negotiated solution to the Haiti crisis is increasingly remote, the U.S. should enlist support From regional democracies for a possible milita r y intervention in Haiti to restore democracy and help demilitarize the country Strengthen democratic reforms in El Salvador, Nicaragua, Panama, and other Partly through U.S. efforts, democracy has come to these war-tom countries of Central America. The U. S . has a security interest in helping these nascent democracies work, and in preventing the civil wars and dictatorships that plagued the region in the 1980s from returning. The U.S. therefore, should promote military reform and free market policies in the s e countries and offer modest aid to fund such reforms. Washington too must maintain its military assistance programs to help host governments safeguard against drug trafficking and the resurgence of ternxist threats Protect antbdrug, counterterrorism, and military assistance programs from congressional cuts The Bush Administration in 1991 spent approximately $373 million in the war on drugs, terrorism, and military assistance in Latin America and has requested 445 million for 19

92. This money is to be used for helicoptexs, surveillance planes, patrol boats, and other equipment, plus education and training programs.

Congress wants to cut this assistance, arguing that El Salvador, Peru, and some other Latin American countries abuse human rights. They also fear that American forces will become overly involved in helping fight the regions insurgencies.

Human rights abus es in these nations, however, are not as serious as congres sional liberals claim. What is more important is that terrorism and illegal drug smuggling be curtailed Explore and promote free market-based solutions for protecting the environ ment Latin Ameri c a has many environmental problems. The clearing of the Amazon rain forest and Mexico Citys polluted air and water are only two of the most well known: To combat pollution and the hasty depletion of natural resources, the Bush Administration should press L a tin American countries to adopt free market solutions to environmental problems. Examples: Washington should encourage Latin American governments to expand private property rights, privatize state owned industries, and channel funds into research programs to develop market based solutions to environmental problems. The U.S. and otherwestern nations also should pursue aggressively debt-for-nature swaps, by which it and other These two Caribbean island nations are the last remaining dictatorships in Latin Ce n tral American countries 4 countries holding the huge foreign debts of Latin American countries could can cel their interest payments on restructured debt, allowing them to be paid instead to special funds for environmental programs Y Make the Organization of American States (OAS) more effective Now that Latin American countries are generally more willing to cooperate with the U.S. on a host of issues, the Washington, D.C.-based Organization of American States can become more effective. The OAS, for example , could declare an embargo onCuba as it has done with Haiti and could call for democratic and human rights reforms in Cuba. This would diffuse criticism by Castro that the U.S. is seeking to dictate events in Cuba NORTH AMERICAN FREE TRADE AGREEMENT Latin A merica is experiencing a free market revolution unparalleled almost anywhere in the world. Statist and populist regimes in Argentina and Mexico gave way in the 1980s to governments committed to free trade, the privatization of state-owned industry, lower taxes, and the free market deregulation of the economy.

The most impressive example of Latin America's free market revolution is the negotiations for a free trade area among the U.S Canada, and Mexico. The three countries began talks last June 12 on the No rth American Free Trade Agreement-or NAFI'A-which would remove all tariffs on goods and ser vices among them. A free trade pact between Canada and the U.S. be came law on January l 19

89. The NAFI'A will build on this U.S Canadian accord, creat ing the wo rld's largest open market, consist ing of 360 million people, with an ixonomic output of more than $6 trillion. It I 5 I dso is expected to ac celerate North America's economic growth, bolster its global economic com petitiveness, create new jobs, and imp r ove the standard far its citizens This trading zone will be 25 percent larger in gross domestic product GDP) than the European Community and thus give North America enough economic muscle to challenge the emerging unified market in Europe and an East Asian market dominated by Japan.' The NAFTA will offer Americans cheaper goods, increase U.S. exports to Mexico and make U.S. exparts more affordable for the South America: The New Trade Frontier Soale 1000 miles I I rest of the world It also will cr eate jobs for Americans, reduce illegal immigra tion from Mexico, help fight drug trafficking in Mexico,pd serve as a model for similar amments with other Latin American countries.

Special Relationship. In fact, if there is a case for a special U.S. relati onship with any country, it is with Mexico. Bordering the U.S. for nearly 2,000 miles rich in resources, and home to 88 million people, Mexico will affect the U.S profoundly during the next century. An economically thriving and politically democratic Mexi c o can benefit the U.S. enormously, just as an impoverished and chaotic Me ico can create serious economic, social, and even security problems for the U.S. 5 _c 1 2 3 Michael G. Wilson Promoting Rosperity on Both Sides of the Border InterAmerican Opporruni ries Briejlig Vol. 1, No. 1 (AprilFlay 1991 p. 1.

For more infonnation see Wesley Smith Rem Six Myths About the U.S.-Mexico FreeTrade Accord Heritage Foundation Bockgrounder No. 818, March 22,1991.

Bunon Yale Pines Ten Rinciples of ConserVative Fmign Poli cy Heritage Foundation Talking Poinrs, April 1991 7 I 5d 2 The NAFTA is central to the future of U.S.-Mexico relations. If completed, the free trade pact would help bring the Mexican economy to a First World level. It would improve U.S.-Mexico cooperation on many important issues, such as stop ping the flow of illegal drugs into American cities, controlling violence on the U.S.-Mexican border, cleaning the environment, curtailing illegal immigration and protecting patents, copyrights, and other intellectua l property rights. If, how ever, the negotiations were to collapse, U.S.-Mexican relations would undoubted ly sour. It would also be a terrible blow to U.S. efforts to spread free trade throughout Latin America THE ENTERPRISE FOR THE AMERICAS 1NITIA.TIVE T h is dream of a free trade area spanning all the Americas is embodied in Bush's Enterprise for the Americas Initiative (EAI Announced on June 27 1990, the EA1 is designed to expand trade and investment ties between the U.S and Latin American and Caribbean n a tions The'EAI is the most comprehensive U.S. policy initiative for Latin America ever announced by Washington If successful, it will form the backbone of U.S Latin American relations. In contrast to previous U.S. policy proposals for the region, such as J ohn F. Kennedy3 1961 Alliance for Progress, which sought to prove economic standards and bolster democracy through foreign assistance the EAI relies primarily on trade and investment, not aid.

EAI's three goals are 1) tocreate a free trade zone in the Amer icas 2) to stimulate fareign investment in the region and 3) to cancel some 12 billion in U.S government loans to countries that start to pursue free market reforms. The Bush plan has received strong sup port throughout the Americas The goal of expanding t rade is critically impor tant to the U.S. Some 25 percent of U.S. job growth between 1987 and 1989 was in the ex ful, the EA1 will create a 700 million person hemi sphere-wide free trade port sector. If success Chart 1 U.S. Merchandise Exports in 1900 Lat i n American Market Larger Than Japanese Bllllonr of US. Dollan Ofl I U.B. exportr .m j..l l W. Europe 113 I 11 1 9 Japan 849 s p 100 L. Amerlca 864 Mexico E. Europe $4 0 U88R E.rhrn MWIIEO Japan Lrtln Woahrn EUrOD Amrrlor EUWO Souroar Survey of Current Bus lne8r. Department of Commerce Hrrltrgr DrtrChrrt zone with the combined annual economic output of some $7 trillion, as compared to $5.8 trillion for the European Community and $2.6 trillion for Japan and the Western Pacific.

The best route for creating this free trade zone is for the U.S. to negotiate a series of bilateral free trade area (FTA) accords with Latin American countries.

Washington also will seek to negotiate free trade pacts with blocs of countries such as the Central American nations. After M exico, Chile is next in line for an FTA with the U.S. because it has moved farther and faster than any other Latin American country in promoting free market reforms.

The U.S. also could negotiate with regional free trade blocs, such as South Americas Sout hern Cone Common Market (MERCOSUR), formed in March 1991 among Argentina, Brazil, Paraguay, and Ur~guay Already, the Bush Ad ministration has signed free trade framework agreements with every major 4 country in the Americas.

These agreements establish bil ateral trade and invest ment councils to negotiate the step-by-step elimination of specific trade baniers or the resolution of trade problems. These agreements also set out general prin ciples of trade relations be tween two countries, estab lish trade di spute mechanisms, and create working groups to deal with the impact of free trade on thev ouseconomicsec tors.

The second EAI goal of ex panding U.S. investment will be met by establishing a new 1.5 billion investment fund to be administered by the Inter-A merican Develop Y Chart 2 U.S. Direct Investment in Latin America Since 1983, Total Investment Has Tripled Bllllon8 of Current Dollar8 A 880 880 840 820 0 I I I I I I I I I I I 1080 1082 1084 1086 1068 1000 Noto: Lath Amerlce lncludee Central Amerlce, Sou th Amerlce end the Cerlbbean Seeln.

Bouror: US. Department 01 Commerce. Hrritaar DataChai 4 For more information see Michael G. Wilson, A U.S. Role in Chiles Democratic and Economic Reforms Heritage Foundation Buckgrounder No. 837, June 20,1991.

The presidents of Argentina, Brazil, Paraguay, and Uruguay signed on March 26,1991, theTreaty of Asuncion by 1994, will have a population of 190 million and a total GDP of $416 billion.

Enterprise for the Americas: TheTrade Initiative Fact Sheet, Washingt on, D.C Office of the United States Trade Representative, July 3,1990 5 which formalizes an agreement to form a Southern Cone Common Market. This free trade area, to be completed 6 ment Bank (IDB whose members are governments from the Americas and Western Europe. The IDB loans money to governments and private enterprises to promote economic development in Latin America? The purpose of the EA1 in vestment fund will be to support free market reforms in Latin America and to cre ate a more favorable investment climate in the region. The loans will pay for tech nical advice and financial support for privatization programs; worker training education, and health projects; and the modernization of transportation systems and port facilities The U.S. would contribute $100 million a year to the fund and would seek matching grants from Japan and Europe.8 The U.S. Congress, how ever, has yet to appropriate money for the fund for fiscal 1992, thereby risking Japanese and European participation.

The U.S. has a direct stake in opening up in vestment opportunities in Latin America. Over 25 percent of all American exports go to overseas af filiates of U.S. companies worldwide U.S. fums in Latin America will broaden this overseas market for U.S. goods.

Foreign investment oppor tunities, moreover allow U.S. companies to be come more competitive globally by taking ad vantage of "co-produc tion" opportunities and lower wage rates in foreign countries. Co production is a process by which a company can use the best resources from s e veral countries to produce a more competi tive and higher quality Chart 3 Latin American Imports From Industrial Countries U.S. Dominates Europe, Japan 1989 Other United State8 3 Not01 Latlri America !ncIudea Central Amerlce, South 8ourol: Unltad Natlons. Horltrgo DmtaChmrt Amarica and Ihe Carlbbern Basin good. Because of liberalized investment laws in Chile, for example, total U.S direct investment in Chile surged from $47 million in 1984 to $1.3 billion in 1990, a 2,751 percent increase or 44 times as fa s t as the growth of direct U.S. in vestment worldwide 7 8 The IDB is a multilateral lending institution that provides loans to Latin American countries The Enterprise for the Americas Initiative: Issues for Congress CRS Issue Brit$ July 17,1991, p. 5 9 The economic stagnation that hangs over much of Latin America will disappear only when the third EA1 goal of reducing the regions foreign debt is met. The Latin American debt crisis of the early 1980s stunted economic growth throughout the region and curtaile d trade and investment opportunities. By the md of the 1980s,iatin Americas external debt totaled some $450 billion fie U.S. lost an es timated $130 billion in trade opportunities in Latin America between 1982 and 1988, mainly because of the debt crisis.

Americas trade with its southern neighbors, meanwhile, fell from a surplus of $3 billion in 1981 to a deficit peaking at $18 billion in 1984 Now, however, the regions economies have improved and stabilized.

U.S. merchandise exports to Latin America have climbed from $31 billion in 1986 to an estimated 62 billion in 1991, creat ing an estimated 620,000 additional U.S. jobs.

Moreover, the U.S. com Chart 4 U.S. Trade with Latin America Export Surge All But Eliminates Deficit Billion8 of Current Dollar8 80 I I 1 401ia1 1 I I I 1 li I Ell U.S. Export8 U.

8. Import8 Trade Deflolt Nota: Latin America includes Central America, South America end the Caribbean Basin Souroe: U.S. Department 01 Commerce. Heribao DwtrChart man& a 57 percent share of the Latin American market, compared to 29 percent for Europe and 11 percent for Japan. Last year, the U.S. trade deficit with Latin America was only 1.6 million Debt Swaps. The Bush Administration plans to reduce Latin Americas foreign debt through a variety of means. It pl a ns, for example, to reduce or forgive some 12 billion of government-to-government debt on a case-by-case basis. Under the EA1 debt program, the U.S. will negotiate reductions on the principal of Latin American debt and accept interest payments on the rest r uctured debt in local cur rency. This method is called a debt-for-nature swap because the debt is swapped for or invested in some project to clean the environment. It is similar to the debt-for-equity swaps used successfully in the late 1980s in Chile and Mexico; there foreign investors purchase part of a countrys debt from a creditors bank and exchange the debt for local currency, bonds, or state-owned equity shares from the debtor government. Debt-for-equity swaps also should be advanced under the EA1 to help the regi ns largest debtor nations, including Ar gentina, Brazil, Colombia, and Mexico. B rC.

To mark the first anniversary of the EAI, Chile last June 27, became the first country to benefit from the EAIs debt reduction program. The U.S. canceled ap proximately 15.7 million of its $39.3 million food aid debt. Also because of the EAI, Chile now pays the interest on its remaining $23.6 million food aid debt, not to the U.S. Treasury, but to local Chilean environmental projects. The White House is expe c ted to ask Congress to approve legislation forgiving even larger portions of Chiles debt to the U.S which totals $448 million9 The U.S. and Forelgn Aid The driving force behind most U.S. aid to theThird World traditionally has been political rather than e conomic. Foreign assistance often was used as bribe money, designed to purchase favors in countries deemed strategically important to the U.S or to help prevent communist, pro-Soviet forces from gaining power.

With the Cold War over, however, Washington is rethinking its aid policy not only in Latin America, but also throughout the globe.

The poverty that Latin America has endured for decades is the result mainly of failed statist and socialist economic policies and of government corruption. Yet blame also must be Western nations and multilateral institutions like the World Bank, the International Monetary Fund (IMF and the Inter-American Development Bank (IDB). These nations and institutions have poured billions of dollars into the region since t he 1960s. This money merely kept the failing economic system afloat, nothing was done to change the economic dynamics. As the leading aid donor to the Americas and supporter of the World Bank and the IMF, the U.S. cannot escape blame. The more than $400 b illion that Washington has given to the developing world since World War II reflects U.S. generosity and concern. But it also reflects a flawed policy, because much of the money has been misspent and stolen by cmpt officials.

Private Sector Channels. The B ush Administration has been changing how U.S. aid is given to Latin America. U.S. financial assistance increasingly is chan neled through private sectq projects. It is used to support free market reforms and programs to attract foreign investment, helping fund private programs to improve transportation systems, worker training programs, and port facilities.

This year, the U.S. will give ab out $1.8 billion in aid to Latin America. Some 1.4 billion will be for economic development and humanitarian aid. Some $400 million will be security assistance to supply helicopters and weapons, training and military exchange programs. This form of aid is vital to Peru and other fragile democracies that are fighting illegal drug traffickers and communist insurgencies 9 Lauren Weiner, Bush Forgives $15 million in debts to reward Chile, The WashingfonTimes, June 28,1991 11 THE SWEEP OF DEMOCRACY THROUGH LATI N AMERICA The Western Hemisphere today is on the verge of becoming the worlds first completely democratic hemisphere. Except for Cuba and Haiti, democracies flourish throughout all of North, Central, South America, and the Caribbean. Bold actions by Washin gton, including the December 20,1989, invasion of Panama to oust dictator Manuel Antonio Noriega and the decade-long U.S. support of the Contra freedom fighters in Nicaragua helped to pave the way for democracy in the region.

While there is little that Was hington can do directly to spearhead democracy in the developing world, and while it should not launch a crusade for democracy Washington quietly and effectively can help create the conditions in which it can flourish. This includes pushing for free trade and free markets because they create the wealth, the domestic stability, and the respect for law that are the necessary preconditions for the growth of democratic institutions From Military Rule to Democracy: A Decade of Democratic Reforms The past decade has witnessed the most widespread revolution of democracy in the history of mankind. While the most dramatic example may be the collapse of the East bloc and the Soviet Union, this revolution actually began in Latin America in the early 1980s. Examples: A rgentina became democratic in 1983 Uruguay in 1985, Paraguay in 1989, Nicaragua in 1990, and Chile in 19

90. Only 37 percent of the regions 357 million people in 1980 were governed by democratically elected leaders. Today, over 96 percent of the regions es timated 450 million inhabitants live under democratic governments Many of the new democratic leaders of Latin America-including Carlos Menem of Argentina, Alfred0 Cristiani of El Salvador, and Albert0 Fujimori of Peru-were elected not so much because of t h eir political platforms, but because of widespread voter disappointment in the failed socialist economic policies of their predecessors. In El Salvador, for example, the left-of-center Christian Democratic party lost the presidency to the conservative Alf r ed0 Cristiani of the National Republican Alliance (ARENA) party in March 1989 not only because of voter disaffection with the governments handling of the war against the com munist guerrillas, but also because of the publics perception that Christian Demo c ratic President Napoleon Duartes socialist economic policies were a failure. Argentinas Menem was elected in May 1989 because of opposition to Raul Alfonsins terrible economic record of high inflation, economic recession and high unemployment 10 Keith L. M iceli, Executive Vice President of the Association of American Chambers of Commerce in Latin America,Testimony before the House Subcommittee on Western Hemisphere Affairs, September 27,1990, pp 1-2 12 Selected Countries of Central America, South America a n d The Caribbean Argentina Type of Government: RepuMic Area: 1,068,000 sq. miles Trade with US 2.8 billion (1990 Type of Governpnt: Parliamentary Area: 8,862 sq. miles Trade with US 155 million Belize Bolivia Type of Government: Republic Area: 424,000 sq. m iles Trade with US 348 million Type of Government: Federal Republic Area: 3,285,000 sq. miles Trade with U.S 13.6 billion Type of Government: Republic Area: 292,183 sq. miles Trade with US 3.2 billion Type of Government: Republic Area: 439,600 sq. miles T r ade with US 5.4 billion Type of Government: Democratic Republic Area: 19,724 sq. miles Trade with US 2 billion Type of Govern Communist Dictatorship Area: 42,792 sq. miles Trade wlth US 0 Dominican Republlc Type of Government: Republic Area: 18,810 sq. mi l es Trade with U.S 3.5 billion Type of Government: Republic Area: 109,454 sq. miles Trade with US 2.2 billion Type of Government: Republic Area: 8,121 sq. miles Trade with US 81 1 million Brazil Chile Colombia Costa Rlca Cuba Ecuador El Salvador Guatemala T ype of Government: Republic Area: 42,030 sq. miles Trade with U.S 1.6 billion Type of Government Military Dictatorship Area: 1,0,710 sq. miles Trade with U.S 834 million (Trade Embargo Haiti Placed on Haiti Following Sept. 30 Coup Honduras Type of Governm e nt Republic Area: 43,266 sq. miles Trade wlth U.S 1.1 billion Type of Government: Parliamentary Area: 4,242 sq. miles Trade with U.S 1.6 billion Type of Government: Federal Republic Area: 761,400 sq. miles Trade with U.S 59.1 billion Type of Government: ' R epublic Area 49,985 sq. miles Trade wlth U.S 83 million Type of Government: Republic Area: 30,185 sq. miles Trade wlth US 1.1 billion Type of Government: Republic Area: 157,000 sq. miles Trade with U.S 363 million Type of Government: Republic Area: 496,10 0 sq. miles Trade wlth US 1.6 billion Type of Government: Republic Area: 68,020 sq. miles Trade with US 481 million Type of Government: Republic Area: 352,050 sq. miles Trade with U.S 13 billion Jamaica Mexico Nicaragua Panama Pa rag uay Peru Uruguay Venez u ela 13 Mindful. of how they came into office, these and other democratic leaders of Latin America see their top priority as turning around their moribund economies but they also understand that doing so is the best way to engender the growth of democratic institutions PROTECTING U.S. SECURITY INTERESTS IN THE AMERICAS With the end of the Cold War and the halting of most former-Soviet and East em European support for revolutionary movements in the Americas U.S. security efforts in the region should focus ma i nly on combatting drug traffkking and ter rorism. After the Sandinista regime in Nicaragua collapsed in February 1990 Cuba remained as the sole communist dictatorship in Latin America. It is also in creasingly alone globally. Since last Augusts failedputs c h in Moscow, fmer Soviet and Russian officials have been turning against Castro. Former Soviet President Wail Gorbachev vowed on September 11,1991, to remove all of the Kremlins estimated 7,000 military and intelligence personnel from Cuba and end Moscows economic subsidy of Castro. Total Soviet economic subsidies to Cuba for 1991 fell to $1.7 billion from $4.5 billion in 1989.Then last November 19 Russian President Boris Yeltsin signed a decree freezing all negotiations on all fu ture Russian oil exports agreements with Cuba.

The other major communist threats in Latin America are the Farabundo Marti National Liberation Front (FMLN) in El Salvador, and the guerrilla insurgencies in Colombia, Guatemala, and Peru. Despite the historic January 16 peace agree m ent signed between the (lristiani government and the Salvadoran rebels, the FMLN will remain a threat to El Salvadors stability until they are demobilized and fully incorporated back into society Targeting Americans. Terrorism against American targets rem a ins a threat in the region. In 1990, roughly two-thirds of all anti-U.S. terrorist attacks worldwide took place in Latin America. U.S. citizens, businesses, and diplomatic interests were the principal targets. Terrorists appear to be targeting the U.S. ma i nly be cause of Washingtons stepped-up campaign against the international narcotics trade and because of its support for the regions increasingly conservative, pro fnx market democracies. The Shining Path and Tupac Amaru Revolutionary Movement (MRTA) in 1 990 launched roughly twenty attacks against the U.S.

Embassy, American banks, and other U.S. interests in Peru. Despite this high number of attacks, only two American were killed in the region in 1990-one in Panama City, Panama, and the other in Cuzco, Per u. The danger to Americans however, remains unabated. This January 12, the Maoist Shining Path in Peru claimed responsibility for shooting down a UH-1H-helicopter .with a Soviet-made surface-to-air missile, killing all three Americans aboard 11 Pattans of Global Temrism: 1990, Washington, D.C United States Department of State, April 1991, pp 18-19 14 U.S. citizens are.not the only foreign targets. Last July 12, the Shining Path ex ecuted three Japanese enginsrs working at an agricultural research facility i n Huaral Peru, a town fifty miles North of Lima. In Peru and Colombia, terrorist groups enriched by involvement in drug trafficking have launched attacks against international oil companies and other enterprises. There also is evidence that Arab terrorist s , including the Libyan-backed Abu Nidal Organization, are expanding into Latin America.12 During the Persian Gulf war, several bombings occurred against U.S. and European targets; responsibility was claimed by Arab terrorist PUPS U.S.-Latin American Anti- N arcotics Cooperation Latin America is the major supplier of illegal drugs to the U.S. It is estimated by U.S. government officials that all of the cocaine, 7 1 percent of the marijuana and 25 ercent of the heroin smuggled into the U.S. today originate in t he regi0nf3 Because of this, the Bush Administration has made the fight against the Latin American drug trade a major component of its foreign policy. Cooperation with Mexico in the war on drugs, for example, has improved dramatically over the past few ye ars. With the help of U.S. intelligence information, airplanes helicopters, and training, Mexico seized more drugs between 1988 and 1992 than during all previous Mexican governments combined.

The key component to U.S. drug war in South America goes by the name of the Andean Initiative. This five-year 2.2 billion program, originated at the Andean Drug Summit between Bolivia, Colombia, Peru, and the U.S. in Cartagena Colombia, on February 15,19

90. At this meeting, Bush discussed coordination ef forts to com bat the drug trade in these Andean countries and pledged strong U.S anti-drug support. Through the Andean Initiative, the U.S. provides economic military, and law enforcement assistance and training to battle the drug cartels.

Through a March 1990 agreeme nt, for example, the U.S. gave some $19 million in equipment and training to Peru's National Police to support counter-narcotics operations in the upper Hualluga Valley in Central Peru TOWARD THE NEXT AMERICAN CENTURY The collapse of the Soviet empire and the defeat of communism allow the U.S to forge a new policy toward the Americas. The region's move toward democracy and free markets may very well make the 21 st century the century of all the Americas. North, Central, and South America could join with th e Caribbean in a vast free trading market. It should be the aim of U.S. Latin American policy to transform this dream into a reality 12 Robert S. Gmberger and John Walcott More U.S. Firms, Individuals Targeted as Terrorism Spreads in Latin America The Wall Sfreef Journal, February 2,1989 13 For more information see The National Narcotics Inlelligence Consumers Committee Report 1990, U.S. Drug Enforcement Administration, June 1991 15 While the Bush Administration already has begun this task, much more needs to be done. The Bush Administration should Complete quickly the North American FreeTrade Agreement (NAFTA).

Completing the free trade pact between the U.S Canada, and Mexico should be Washingtons top priority in Latin America. The NAlTA will eliminate most tariff and non-tariff barriers between the countries and allow for the free trade of goods and services from the Yukon in Alaska to the Yucatan in Mexico. So doing it will spur the economic growth that creates jobs throughout North America. The US Commer ce Department estimates that roughly 538,000 American jobs are tied to U.S. exports to Mexico. Half of these jobs are a direct consequence of the trade liberalization that Mexico has pursued since 19

86. NAFTA, moreover, will help the U.S. compete against the European Community and East Asia. It will cre ate a free trading zone of 360 million people with a combined annual economic output of over $6 trillion.

The NAFTA will serve as the cornerstone for the Enterprise for the Americas and other free trade ag reements in the region. It also will help lock into place the sweeping market refms that have taken place under Mexican president Carlos Salinas de Gortari and will encourage continued democratic progress in Mexico.

Strategically, the NAFTA will bolster U .S. security interests by providing for a more prosperous and stable Mexico on Americas southern 1,933-mile border Convene a summit of Latin American leaders to promote the U.S. Enterprise So far, the EA1 has not been coordinated sufficiently with Latin A m erican na tions. While Latin American lenders strongly support the Bush plan, they com plain that they have little input in the development of the plan. They also fear that the growing protectionist mood in the U.S. will kill the EAI To correct these prob l ems, Bush should announce that the U.S. invites Latin American leaders to meet at a summit in the U.S. to discuss the EAI. A prelimi nary conference could be held in a Latin American capital such as Santiago, and should be attended by the free market lead ers of Latin America-Menem of Ar gentina, Aylwin of Chile, Salinas of Mexico, Perez of Venezuela, and many others. This meeting would set an agenda for the full summit sometime next year.

Leaders at the EA1 preparatory conference could focus on six key are as for the Americas Initlatlve Promoting free trade and market policies Establishing a timetable for signing free trade agreements with the U.S and each other Developing a multilateral investment fund for the EA1 with Japanese and European participation S p eeding up debt-for-equity and debt-for-nature swap programs; and 16 5) Building the political and public support needed to promote the EA1 in the U.S. and Latin America 6) Helping address the regions security problems Besides getting Latin American countr i es involved in the EAI, a regional sum mit would transform the EA1 from a U.S. to an all-American initiative Create an Enterprise for the Americas Initiative (EAI) task force of U.S. officials This interagency committee should consist of the relevant assi s tant secretaries from the Departments of Commerce, Defense, Education, Justice, State, and Treasury, plus officials from the U.S. Trade Representatives office, the Environ mental Protection Agency, the Drug Enforcement Administration, and the Im migration and Naturalization Service. Its chairman should be Under Secretary of theTreasury for International Affairs David Mulford. Its purpose should be to cut through bureaucratic red tape, to coordinate the policies of the different depart ments and to promote the EA1 on Capitol Hill. By making a senior member of the Treasury Department chairman, the EA1 task force should benefit politically from having the White Houses attention.

As a start, this task force should ask the International Trade Commission, an in dependent and bipartisan U.S. government agency that rules on disputes concern ing trade and reports on the effects and benefits of freer trade, to prepare studies on what im p act the EAI could have on the U.S. and Latin America. Creation of an EA1 task force, meanwhile, would demonstrate to Latin American govern ments confidence that Washington is serious about the EA1 and would signal to Congress that the Bush Administration i ntends to move ahead with the plan Negotiate as many free trade agreements as possible with Latin American personnel on quickly concluding the trade pact with Canada and Mexico, it should not ignore other countries seeking to negotiate free trade pacts wi t h the U.S. Already, in fact, the U.S. has signed free trade framework agreements with all major Latin American countries. These agreements have launched talks on lowering trade barriers and expanding investment. They also have created trade and investment working groups to monitor commerce and promote free trade policies leading to an eventual FTA. Chile, Colombia, Costa Rica, and Venezuela, for example, are ready to begin FTA negotiations with Washington im mediately U.S. Trade Repmentative Carla Hills an d the Department of Commerce curiously, balk at beginning fiee trade talks immediately with these countries.

They want to postpone such talks with other Latin American countries until after the NAFTA is ma& law, probably in early 19

93. They complain that they are short of personnel, and that they need to concentrate on Mexico and on the Uruguay Round of the multilateral international trade talks, the so-called General Agreement onTariffs and Trade (GATT The Bush Administration, moreover, ap to coordinate policy.


While the Bush Administration should concentrate the bulk of its resources and 17 parently fears that free trade accords could become an issue in this year's presidential campaign would be a mistake. First, the U.S. government has suff icient resources to negotiate FI'As with any country ready to do so, like Chile. Second, these negotiations should be completed while Bush still has the special trade negotiat ing power granted by Congress known as fast track authority. Congress granted t his to Bush last June, and it expires in May 19

93. Under fast track authority, Con gress agrees to vote either yes or no on a trade accord. This means that Congress will not amend such an accord Third, the sooner the U.S. strikes free trade agreements wit h its key trading partners in Latin America, the sooner the U.S. economy will rebound. For every 1 billion that the U.S. exports, 20,000 American jobs are created. It is estimated that roughly 8 million U.S. jobs are export-dependent Fourth, American labo r groups will not be as opposed to free trade negotia tions with Chile and other Latin American countries as they are with Mexico. The AFLCIO, for example, maintains that it would not be as concerned with FTAs with Chile and Costa Rica as it has been with M exico. Chile and Costa Rica pose little threat to the U.S. auto industry and other labor intensive industries, which labor unions seek to protect with tariffs and other barriers to free trade Fifth, the political mood in Latin America now supports free tr a de with the U.S. An October 1991 Gallup Poll revealed, for example, that about 65 percent of the Mexican population supports free trade with the U.S. Similar support is found throughout the region. If Washington stalls, this mood may shift K Make the Inde x of Economic Freedom a precondition of foreign aid country's progress in developing a market economy. First proposed by The Heritage Foundation in 1988, the Index gauges such factors as the status of property rights, the extent of economic regulation, the size of the state sector in the economy, the rate of taxation, and trade p~licy Nations that score high on the Index clearly are pursuing policies that will build free markets. A report ac companying the fiscal 1992 Foreign Aid Authorization Bill requires the U.S.

Agency of International Development to use a common standard for evaluating and comparing countries' progress in adopting policies that promote individual economic freedom. This standard, which by and large is the Index, then becomes the criterio n for deciding whether and how to grant those countries foreign aid. So far, however, Congress has not voted on the 1992 Foreign Aid Re-Authorization Bill. Bush should press Congress to approve the Index and instruct AID to use it to decide whether to gra n t aid to Latin American countries Delaying FTA negotiations until after the November 1992 election, however The Index of Economic Freedom is a device for measuring and evaluating a 14 Charles L. Heatherly and Burton Yale Pines, eds Mandate for Leadership 1 11: Policy Strategies for the 1990s Washington, D.C The Heritage Foundation, 1988 pp. 665-684 18 isolate Cuba and Haiti While the Bush Administration should work to fortify democracy and en courage democratic reforms throughout Latin America, Washington s pecifically should seek to bring political freedom to the people of Cuba and Haiti old trade embargo of Cuba, Castro has survived. The loss of help from Moscow and Eastern Europe, however, is bringing Castros Cuba to its economic knees.

To hasten Castros d ownfall, the U.S. must refrain from compromising with Havana or liberals in the U.S. Congress on loosening the trade embargo, which prohibits all U.S. trade with Cuba. The U.S. also should continue banning the travel of American citizens to Cuba. Trade an d tourism dollars could give the Castro dictatorship new life, just before it dies, thereby prolonging the suffering and misery of the Cuban pple. Moreover, the U.S. should enlist the support of such Latin American leaders as Argentinas Menem and Mexicos S a linas to fur ther isolate the dictator economically and diplomatically. Public denunciations by such leaders, combined with trade restrictions, would accelerate Castros downfall. Washington also should encourage the Organization of American States OAS) to send delegations to Cuba to inspect human rights conditions, meet with Cubas fledgling democratic movement inside Cuba, pressure Castro to hold elec tions, and place a hemisphere-wide trade embargo on Cuba as it has done with Haiti Though the U.S. has tri e d to isolate Castro economically through a thirty-year The Bush Administration, for the most part, has responded wisely to the Sep tember 30 coup in Haiti. Washington cut off the $85.5 million in U.S. economic and military aid that Haiti was receiving ann u ally. Washington also froze Haitis financial assets in the U.S and worked closely with the Organization of American States to isolate the new Haitian military junta economically by placing a trade embargo on the country. The U.S. should continue pressing, together with Caribbean Basin nations, for a return to a civilian government in Haiti. Due to the failm of negotiations to =store democracy in Haiti, the Bush Administration also should explm OAS support for a possible multilateral military action in Hait i . Such a move could be needed to demilitarize the country and stop the flow of some 2,000 Efugees leaving Haiti every day for Florida Resembling Castro. The Bush Administration, however, made a mistake in identifying U.S. policy so closely with ousted lea d er Jean Bertrand Aristide. To compound the error, the Administration is insisting that Aristides return to power is a precondition for normalizing relations with Port-au-Prince. Yet, Aristides ac tions in the months before his departure from power began t o resemble those of Castro. Aristide fostered class violence, promoted lynchings, encouraged attacks against political opponents, and created a personal militia. As a result, the Haitian people may not want him back. They should be allowed to say so throug h some foxm of referendum, possibly organized by the OAS 19 Strengthen democratic reforms in El Salvador, Nicaragua, Panama, and other The U.S. ouster of the drug-running Panamanian dictator Manuel Antonio Noriega from Panama in December 1989 and the elect o ral defeat of the com munist Sandinistas in Nicaragua in February 1990 have alleviated U.S. security concerns in Central America So, too, has the peace agreement signed this January 16 by the government of El Salvador and the communist guerrillas of the F MLN.

This does not mean, however, that the U.S. can ignore Central America. The area is still deeply impoverished and highly unstable. Washington has a stake in helping foster a stable and economically prosperous Central America. At risk in the region is a return to civil war and insurgency. Such turmoil could spill over into Mexico leading to political instability and economic problems. It also could escalate the number of refugees seeking assylum in the U.S Moreover, drug trafficking is becoming a seriou s problem in Central America.

If democracy and free markets take mot, however, then the region can become a key player in the Enterprise for the Americas Initiative. Washington must main tain its $42.5 million in military sales and training for El Salvador s security for ces at least until the FMLN guerrilla forces are more fully incorporated into society and have been disarmed. At that point, the U.S. should channel more of this aid toward market-based economic development programs and post-war reconstruct i on efforts. Washington, too, must continue pressuring the Salvadoran military to carry out badly needed reforms, including cuts in the size of the 58,000-man armed forces, civilian control over police and intelligence forces, and greater respect for human rights. Finally, Washingtons $200 million economic aid package to the Cristiani government in El Salvador should partially be directed toward providing private property rights to discontented peasants, former guerrillas, and military personnel released fr om duty.

The Bush Administration also must help push the democratic reforms in Nicaragua and Panama. The U.S. has a special interest in seeing that Violeta Chamms government in Nicaragua and Guillermo Endaras government in Panama succeed. To help, Washingt on should condition aid on, and assist with the demilitarization of both of these countries. In Nicaragua, the U.S. must make it clear to the Sandinistas that the Chamorro government has Washingtons full support and that attempts to undermine the fragile new democracy could trigger a U.S. response. In Panama, Washington should continue helping the civilian security forces to mot out former Noriega supporters, as well as bolster anti-nar cotics cooperation with the Endara government.

X Protect anti=drug, co unterterrorism, and military training programs from con With communism on the wane in Latin America, the security interests of the U.S. in this region will be focused on countering terrorist attacks on American citizens and interests, and fighting the war against drugs. The U.S. last year spent approximately $373 million to combat illegal drugs and terrorism in Latin Central American countries gressional cuts 20 America. The Bush Administration has requested some $445 million for fiscal 19

92. The majority of this aid goes to training and educating Latin Americas anti drug and military forces, giving them communication and intelligence gathering equipment, computers, jeeps, helicopters, patrol boats, radar technology uniforms, and weapons; and covering the costs of U.S. anti-drug personnel deployed to the region Boost for Human Rights. The full $445 million quested by Bush for security assistance to Latin America is needed to curtail terrorism, and illegal drug traffick ing, and to further professionalize t h e regions armed forces. This amount, how ever, should be re-evaluated and possibly diminished as security threats in the region continue to diminish. Yet Congress is trying to cut Latin American security assistance too quickly. Many congressional liberals and self-proclaimed human rights groups cite alleged human rights violations in El Salvador, Peru, and other countries as justification for aid suspension or termination. The State Department however, argues that the cutoff of such aid will only make matt ers worse. Greater contact with the U.S. armed forces and continued military grants, sales and train ing will help bolster respect for human rights among Latin American security for ces, as well as help counter the drug trade and terrorism.

Besides pressing Congress for full funding of its Latin American security assis tance program, the Bush Administration should ensure that the money approved by Congress is wisely spent. One of the best security assistance programs is the International Mil i tary Education and Training (IMET) program, which helps train and educate armed and security forces in Latin America, making them more professional and less likely to abuse human rights. Washington should also share its expertise in such activities as int elligence gathering, criminal investigation hostage rescue, surveillance, demolition, search and destroy missions, and armed field operations against drug traffickers and terrorists.

Finally, the U.S. should provide the regions armed forces with helicopter s coastal and river patrol boats, spare parts for their U.S.-manufactured planes, com munications equipment, night vision gear, small arms, machine guns, jeeps, field uniforms, packs, boots, and maps. This equipment does not need to be new and could be su rplus equipment retired from the U.S. amed services. This would reduce the cost to the U.S. taxpayer.

X Explore and promote free market-based solutions to protecting the environ Latin America has abused its environment for decades by socialist style economic policies and military dictators who care little for the environment.

Some 14 percent of the Amazon rain forest, for example, has been destroyed.

To combat pollution in Latin American, the Bush Administration should press Latin American countries to ad opt free market solutions to environmental problems. Washington, for example, should encourage Latin American countries to guarantee private property rights; privatize state-owned industries, which pol lute more than private industries; and invest money i n to research programs that explore market-based solutions to environmental protection. The U.S. and other ment 21 countries holding the huge foreign debts of Latin American countries also could cancel their interest payments on restructured debt, allowing t he sums to be paid instead to a special privately managed fund for environmental programs. This debt reduction method, called debt-for-nature swaps, has been used successful ly in Chile and Mexico. The U.S. should challenge the OAS to get more involved in creating free market solutions to environment problems. The OAS, for ex ample, could be asked to establish a free market environmental task force to ex plore ways to clean the environment without destroying jobs and slowing economic growth Make the Organi zation of American States (OAS) more effective cal, and security concerns in the Americas. It often also has criticized U.S policies and actions in the region, including the U.S. 1989 liberation of Panama.

Yet it was the OASs own inability to resolve the P anama crisis that eventually forced the U.S. to take action to protect the regions security interests of the Cold War and the mounting acceptance in the Americas for free market policies and democracy, the OASs .rhetoric and actions increasingly have sup p orted U.S. interests and foreign policy positions. Most recently, the OAS has worked to bring stability to post-war Nicaragua, has sought to counter illegal arms flows in Central America, has taken a more active stance in developing counter-narcotics poli c ies, and has defended democracy, especially in Haiti where it is acting as an intermediary between Aristide and the military to bring democracy back to the country diplomatically and financially when in its interests. By working more closely with the OAS, Washington can seek to use its clout in the region to promote democratic stability, the EN, anti-drug efforts, and human rights. The U.S how ever, always should retain the right to act unilaterally, as it did in Panama, and should never give any country o r organization a veto over its actions. This would make America look weak and paralyze U.S. foreign policy The OAS traditionally has been ineffective in helping resolve economic, politi A new role for the OAS may be evolving. Over the past two years, with t he end The U.S. should welcome these developments and support OAS action CONCLUSION The end of the Cold War and the near-global defeat of communism give the U.S. an unprecedented opportunity to enter into a partnership for economic growth and democracy wi t h its southern neighbors. Not only has Latin America gone through a dramatic democratic and free market transformation, it stands poised to forge a hemisphere-wide free trade zone. If properly cultivated by the Bush Administration, free markets and democr a cy could blossom fully in the region.This, obviously, would benefit the U.S. economy and safeguard Washingtons security interests in Latin America. The next century may indeed be the American century, not just for the U.S but for all of the Americas 22 Th e success or failm of Latin Americas reforms are vitally important to U.S economic and security interests. If they prove successful and lasting, the region could become an increasingly important market for U.S. goods and investment and an important new sou r ce of raw materials. If the free market and democratic revolutions fail in Latin America, the region could be destabilized by guerrilla in surgencies, terrorism, increased levels of drug trafficking, military coups, and could be an even larger source of i llegal immigration and refugees to the U.S.

Fostering Economic Prosperity. The Bush Administration can fortify free markets, democracy, and regional security in the Americas by quickly completing the North American FreeTrade Agreement talks with Canada and Mexico. A North American free trade pact will lead the way for similar agreements with other countries in the hemisphere, and will demonstrate that Washington has genuine interests in improving its relations with its neighbors. Bush also must work with t h e regions leaders to promote and forge the Enterprise for the Americas Initiative (EAI To this end he should ask that a summit of Latin American leaders convene sometime this year to discuss ways to promote the free trade vision implicit in the EAI. This will assure the U.S. new and dynamic markets throughout Latin America and the Caribbean and help spread economic prosperity and stability in the region.

Bush also should tackle the security problems that still plague the region. He should continue to help Latin American countries wage their wars against illegal drug traffickers and tenwrists. The Bush Administration must maintain its security assistance budget for the regions trouble spots, including Colombia, El Salvador and Peru, to guarantee that progre s s made to date is not reversed, or that problems that plague these countries do not spread to their neighbors. He also should con tinue the trade embargo on Cuba and Haiti, while distancing himself from former Haitian leader Jean Bertrand Aristide, who sh owed himself to the less than a true democrat while in office.

Finally, Bush should explore exciting new free market means to clean the en vironment in Latin America. One of these is the so-called debt-for-nature swaps whereby the interest on foreign debt is forgiven and turned over to a fund to finance environmental projects.

These policies would inaugurate and shape a new era in U.S.-Latin American relations, as well as repsent a sign of good faith toward the region. By contrast indifference or inaction by Washington could result in a setback for free markets democracy, and security in the hemisphere. The inter-American community today stands on the brink of a prosperous and stable decade. For Washington to miss this opportunity would be one of-the polic y failures of this century.

Michael G. Wilson Policy Analyst 23


Michael G.

Senior Fellow and Director of Government Finance Programs