Latin America rises up

While Bush pursues his global mission, big changes are happening in his own backyard. A region Washi

When George W Bush came to office in 2000, the first foreign leader he met was the president of Mexico, Vicente Fox. Bush, from his Texas background, proclaimed a new era in US-Latin relations - faute de mieux, perhaps, given his then limited experience of the wider world. It was to be based not on the old model of US domination, but on the partnership of the Free Trade Area of the Americas - billed by its admirers as the first step to creating a stable, democratic hemisphere in which increasingly prosperous nations would act in partnership under the benevolent leadership of Uncle Sam.

Five years on, by means that were little dreamt of in 2000, Bush is busy spreading his ideas of prosperity and democracy in places as distant as Georgia and Ukraine, Afghanistan and Iraq, Saudi Arabia and Sudan. Meanwhile, the Latin American project is in tatters. He failed to win the region's support for the war on terror or the Iraq invasion; the negotiations on the free-trade deal are stalled, and early this month his administration suffered a serious humiliation at an Organ- isation of American States (OAS) summit in that most Latino of American states, Florida, when the OAS rebelled against an important Bush proposal. While Washington has been looking elsewhere, a slow revolution in its own backyard has changed the geopolitical map, perhaps for ever.

The OAS has never been regarded as an outfit with many teeth. Set up by the US in 1948, its brief was to "combat communism in Latin America", and for most of its existence it has been a virtual instrument of US foreign policy. (It approved the US overthrow of the Arbenz government in Guatemala in 1954, expelled Cuba in 1962 and supported the US invasion of the Dominican Republic in 1965.) But in recent weeks, the US has suffered two important defeats in the OAS, enough to signal that something unusual is going on. The first was the US failure, for the first time in history, to impose its candidate as secretary general this year. Having failed to muster support for the former president of El Salvador Francisco Flores, Washington next gave its support to the Mexican foreign minister, Luis Ernesto Derbez. His rival was the Chilean interior minister Jose Miguel Insulza, whose candidacy was backed by Hugo Chavez, Venezuela's populist president and Washington's current Latin bugbear.

When Condoleezza Rice went on a five-day tour of Latin America in April, shortly after Donald Rumsfeld had been on a similar mission, she stopped off in Mexico to heap praise on Derbez. On a later stop in Santiago, Rice snubbed Insulza publicly. When it came to the appointment, though, it was Rice who was snubbed. Through five rounds of voting, the 34 OAS members stubbornly failed to endorse Derbez and in the sixth, in an unprecedented show of defiance to Washington's will, they chose Insulza.

It was a measure of how much regional influence Washington has lost under George W Bush and of the diminishing sympathy in Latin America for Washington's usual tactics - the latest manifestation of which is its desire to unseat Hugo Chavez. The Bush administration has made several attempts to solve its Chavez problem, the most embarrassing of which was the bungled April 2002 coup, backed by Washington, which ended in humiliation when Chavez supporters turned out in his defence.

Chavez's highly public friendship with Fidel Castro is a red rag to Washington, where defeating the "Cuban-Venezuelan axis" (as Otto Juan Reich, until recently Bush's senior State Department official on Latin America, called it recently) is "an urgent necessity". But how to do it? More than 50 years of sanctions, punctuated by attempts at more direct intervention, have failed to dislodge Castro. The debacle in Venezuela - a country riding high on soaring oil prices and impervious to economic threat - has left Washington with few weapons. The OAS, the traditional tool of US policy in the region, began to look like a last resort.

But there was another humiliation when the 35th meeting of the OAS General Assembly in Fort Lauderdale, Florida, which wrapped up on 7 June, refused to back the Bush proposal that the OAS should engage countries "where democracy is under threat" or, as Rice had put it, that the "OAS has to be a valid instrument to help the countries of America whose democracies are in peril". It was not enough, Rice said, that governments be democratically elected (as Chavez has been, more than once); they must also govern in a democratic manner - a reference to Chavez's populist style.

But OAS members are no longer willing to sanction intervention against governments the US does not like. Even Mexico, still the US's closest ally, spoke up against the US and supported instead the Chilean proposal to reaffirm OAS principles of self-determination and non-intervention, and to insist that the OAS not act unless invited to do so by the country concerned. It was a revolt, and another sign of a waning influence that touches economic, security and diplomatic policy.

Last November, Rumsfeld attempted to revive an approach to Latin America not seen since the 1980s. At a conference of defence ministers of the Americas in Quito, Ecuador, he invoked the attacks of 11 September 2001 to justify a new defence accord that would have allowed the creation of multinational forces capable of intervening anywhere in the region. He also encouraged member states to follow the US lead and use their armed forces for domestic surveillance and security. Arguing that worries about internal security were the chief obstacle to investment in Latin America, he urged governments to consider "defence-related aspects of open-market development".

"We have had to conduct an essential re-examination of the relationships between our military and our law-enforcement responsibilities in the United States," Rumsfeld said. "The complex challenges of this new era and the asymmetric threats we face require that all elements of state and society work together. Our citizens depend on us to clearly define the roles, the missions, and the responsibilities of our various security forces." Looking at the region, he said: "Now democracy in the region is troubled as citizens increasingly question the concrete benefits they can enjoy under democracy and economic orthodoxy, and populism regains a foothold."

Rumsfeld's argument met with a stony reception in a hemisphere that had failed to support the US invasion of Iraq, and where there are clear memories of the 1970s - the last time the US organised cross-border security co-operation, in the form of Operation Condor. The campaigns of terror against leftist movements in Latin America of which Operation Condor was a part resulted in the torture and murder of tens of thousands of people.

By the 1990s, Latin America's US-supported military dictatorships had given way to elected governments, most of which implemented the economic policies of the Washington consensus - privatisation and economic liberalism. More than a decade later, however, there is widespread disillusionment with the failure of such policies to help the region's poor.

Argentina, which under Carlos Menem was the poster child of the International Monetary Fund, collapsed in 2001 in the biggest loan default in history, reducing much of the once-prosperous middle classes to rummaging through dustbins to survive. In Brazil, the left-wing government of Luis Ignacio "Lula" da Silva has disappointed its supporters by following a liberal economic agenda and failing in its promises to the poor. Elsewhere, social programmes have been cut back and most people see little benefit from IMF policies. Against this backdrop, whatever questions hang over Hugo Chavez's political style, the poor of Latin America see him as a latter-day hero and leaders are grateful for the favourable deals on oil he has extended to many.

But it is not just that US tactics no longer chime with the Latin mood. A new force has quietly been growing in Latin America, offering broader perspectives for a region once heavily dependent on the US for its economic development. While the US has been trying to promote its Free Trade Area of the Americas, negotiations for which are currently suspended, Latin America has seen a growth of internal economic integration and a steady advance in trade and investment with the EU and Asia. Last year, Latin American exports to Asia rose by 34 per cent to $14bn, a factor that helped to explain a regional growth rate of 5.5 per cent. By far the biggest element in that trade is China. For Beijing, Hugo Chavez's politics are irrelevant: he is a source of oil. Venezuela produces 2.5 million barrels of oil a day and supplies the US with between 13 and 15 per cent of its oil imports. But China has invested more than $1bn in petroleum projects in Venezuela and wants to invest nearly $350m to extract oil from eastern Venezuelan oilfields, as well as an additional $60m in natural gas wells.

Last November, the Chinese president, Hu Jintao, toured Latin America and his triumphant progress was a handy reckoner of the growth of China's influence and the corresponding waning of US power. His first stop was Brazil, where he built on the success of Lula's visit to China in May 2004. (The two had issued a statement in Beijing that talked of "the democratisation of international relations and global multi-polarisation" - Chinese code for ending US domination of world affairs.)

In Brazil, Hu signed a memo in which Brazil recognised China's "full market economy status" - something the US has resisted. Behind the memo lies Lula's hostility to the FTAA and desire to build a counterweight to US influence in Mexico and central America. For his part, Hu wants allies to help China resist US trade pressure on anti-dumping; and China and Brazil have been working together at the World Trade Organisation, countering several US initiatives.

After his success in Brazil, Hu continued to Argentina, where he promised a ten-year investment programme worth $20bn to develop railways, telecommunications, hydrocarbon fuels and space technology. Next stop was Chile, where he agreed to start negotiations to establish a free trade area. He signed strategic partnerships with Argentina and Mexico, finishing in Cuba, where he discussed investment in a nickel mine, biotechnology and telecoms. In total, Hu announced investments in the region worth $100bn over the next ten years. While Washington has been making war, its backyard has quietly been looking east.

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