Belated Attention to Beleaguered Region

An important change in U.S. policy toward Latin America may be taking place, but it will be too little and too late if it is not followed by a much sharper focus in Washington on the nature and depth of Latin America’s profound crisis.

The signs of a possible policy transformation abound. Treasury Secretary Paul H. O’Neill’s trip this week to Brazil, Argentina and Uruguay suggests that the secretary is finally focusing on averting immediate catastrophe in our neighborhood. The administration is making awkward efforts to backtrack from O’Neill’s earlier, ill-considered remarks, which suggested that international financial assistance to emerging-market countries in crisis carried the risk that the funds would be diverted by corrupt officials.

The administration’s announcement that it is making available $1.5 billion in short-term loans to help overcome Uruguay’s banking crisis and the International Monetary Fund agreement to provide a $30-billion emergency loan to Brazil suggest that Washington now understands the dangers of an accelerating contagion in our hemisphere. And potentially most important, congressional approval of trade promotion authority (previously called “fast track�) gives the administration a needed tool to craft policies for Western Hemisphere economic integration.

But these positive signals come after growing problems in Latin America went unaddressed during the Bush administration’s first 18 months--first because of ideological complacency and then because of the Sept. 11 attacks.

In his first months in office, President Bush lavished welcome rhetorical attention on Latin America, the one major region where the newly elected president, devoid of significant international experience, apparently felt comfortable.

But the administration seemed largely content to express its satisfaction with the region’s turns toward market economies and democratic politics and to express a long-term commitment to free trade throughout the Americas.

Lacking was a recognition that democratic governments in Latin America were crumbling, market economies were failing and promising free trade in the future did not respond to today’s deep anxieties. The administration voiced its solidarity with Latin America but did not heed its distress. After the Sept. 11 terrorist attacks, the region virtually disappeared from the administration’s radar screen.

Latin America today is in critical condition. Economically, the region as a whole is expected to register negative growth of almost 1% this year; the collapse in Argentina is far worse. Millions of Latin Americans are dropping from the middle class into painful poverty. Unemployment rates are rising, crime is exploding, desperation and resentment are growing.

Politically, the stability ushered in by Latin America’s historic transition toward democratic governance is at grave risk. Argentina has run through five presidents in a year. Venezuela’s president, strongman Hugo Chavez, has survived an attempted coup, but the country’s power structure and much of its population are aligned against him. Peru’s Alejandro Toledo has seen his approval ratings collapse.

Bolivia’s Congress has just installed a president who won only one-fifth of the popular vote, and his leading rival opposes U.S. policies. Colombia’s presidential inauguration this week was marred by a massive bombing that killed 19. In Brazil, the heir apparent to Fernando Henrique Cardoso, the champion of U.S.-endorsed market reforms, has slipped to third place in the opinion polls, behind two candidates who reject Washington’s approaches.

The U.S. is not mainly responsible for Latin America’s problems, and U.S. policies alone will not reverse the vicious cycle of poverty, crime, drugs, injustice and oppression.

But our mantra of free markets and democracy is not an adequate response. The resources, leadership and influence of the United States will be needed to help refocus attention on the issues Latin America has to face: how to correct for the market’s effect on income distribution; how to improve productivity and competitiveness; how to develop human resources; and how to rebuild trust in political institutions and the rule of law.