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Latin America-2001 Overview

Wednesday, January 2, 2002

* Region deteriorating in almost every respect

* U.S. policy - when there is one - is listless, ill-informed and counter-productive

* Reich appointment would have a chilling impact on U.S.-Latin American policy

* Argentine meltdown biggest Latin American story of the year

* "Terrorism" factor is today's guiding star for U.S. policymakers, carrying with it ominous implications

However rosy the Bush administration has seen Latin American realities in its relatively episodic sorties into the subject during the past year, Washington is barely aware that the region, beneath the surface, is going through deeply troubled times. In most instances, the White House appears to be tuned out on the region's potentially explosive daily facts of life. In countries such as Mexico, Ecuador, Peru, Argentina, as well as those of Central America and the Caribbean, the area has been marked by serious economic setbacks, with Argentina at the point of unraveling. Washington's response to such a malaise is a cliché-filled booster affirmation of faith in the free market, privatization and structural reforms.

Argentina's present crisis and the ascent of Eduardo Duhalde as its latest president represent a lethal challenge to the Washington Consensus (the U.S.-IMF approach to market and structural reforms), as well as privatization and deflation in general. This challenge, unless effectively addressed, could result in a major confrontation between the OECD nations and the third world

Latin America also has experienced elections highlighted by public disillusionment over the inadequate choices being provided them, government inaction on pressing human rights agendas (as is the case in Guatemala, Chile and Colombia), continued crippling levels of hemisphere-wide corruption, implicit threats posed by an unregenerate military, the existence of venal judiciaries and bureaucracies, and the ongoing misuse of natural resources verging on ecocatastrophe in such countries as Mexico, Ecuador and Brazil.

Unquestionably, dominating the year were the September 11 terrorist attacks on the United States, which have had a drenching impact on the entire region. Perhaps the most significant new development flowing from these traumatic events was Washington introducing the "terrorism" factor as among the most important and most ubiquitous motivating factors on its regional agenda. This new prism for Washington's area vision, which has taken the place of the Cold War as the lodestone for U.S. policy, has begun to strain regional diplomatic ties and cast a foreboding shadow over a series of Washington's bilateral relations with hemispheric partners through its overuse and misuse. Among many other instances of terrorism's improper call to arms, the U.S. has mobilized the "terrorism" theme in Nicaragua against the FSLN presidential candidate Daniel Ortega, in regard to Venezuela's Hugo Chavéz, and in the anti-guerrilla war in Colombia.

Political Stability Although procedural democracy by way of free elections appears to have been instituted throughout most of Latin America, this achievement is far less than meets the eye, as significant barriers remain in the realization of "fair and just" political systems. Only rarely does one find well-prepared candidates of established personal rectitude who are prepared to articulate their position on substantive issues. Even more rare is the ability of such candidates to have adequate access to an unmuzzled media as well as the ability to implement their campaign proposals once in office by accommodating legislative processes. In appearance, the democratic process allegedly in existence looks authentic; in reality, it often provides only a cover for venal practices by the leadership, while the population's suffering is unbearable.

Fraud, corruption and cronyism are daily facts of life among the area's political elites, while the public becomes increasingly skeptical and alienated from the shallow democratic politics it sees in action. Due to extreme economic exigencies in a number of Latin American countries, many citizens, as is the case in Argentina, could, at the point of desperation, be persuaded to forget the military's grim recent history and come to favor a uniformed man on horseback as an alternative to inefficient and ineffective civilian rule. In fact, most Latin American political systems feature the bare forms of democracy but not its substance - procedural democracy but certainly not the real thing. Kleptocracies rule the region, with not a single Latin American country a paragon of civil society. Meanwhile, Washington remains blind, and the best that it can do is to offer the appalling candidacy of Otto Reich to be the Assistant Secretary of State for Inter-American Affairs.

Argentina In addition to an almost complete economic collapse which led to bloody rioting and eventually forced President Fernando De la Rúa from office, along with his short-lived successor, President Adolfo Rodriguez Saá, the nation now faces a stormy, if not doomed, future as it awaits its fifth president in several weeks. The country's main party, the Justicialistas (Peronists), remains divided among itself while its power brokers attempt to negotiate with the former ruling Alianza coalition, led by De la Rúa's shattered Radical Civic Party, which is now cooperating with the Peronists, but which has lost much of its constituency. Before leaving office, De la Rúa had seen the resignation of several of his top executives over the past months, including the early departure of Vice President Carlos "Chacho" Alvarez, who was angered by the president's refusal to dismiss corrupt officials.

In October's compulsory legislative elections, Argentines voiced their disapproval over the turmoil and the economy's continued slide by resorting to a voto bronca in which upwards of 30 percent of Buenos Aires voters either left the ballot blank, filled in the names of cartoon characters or wrote angry messages to politicians such as "stop stealing." They further demonstrated their personal condemnation of De la Rúa by heavily voting for the opposition Justicialista party in the elections, in spite of its unsavory reputation highlighted by the gargantuan levels of corruption of the preceding Menem presidency. With De la Rúa's departure, it became the task of interim President Rodriguez Saá and the Justicialistas to lead the nation out of insolvency and deal with De la Rúa's de facto default on the country's $132 billion debt. However, Rodriguez Saá also resigned after the Peronist bosses broke with him in light of their decision that he was not content to serve as an interim president but wanted to run again for a full term.

The Peronist bosses then turned to Duhalde, a tired politician who had been trounced by De la Rúa in the presidential race, whose advent was far from universally greeted by the populace. Although Duhalde's shallow populism and his ostensible repudiation of neo-liberal reforms may win him some respite, the nation could angrily turn against him if the economy does not improve and jobs are not created.

Peru After former President Alberto Fujimori fled Peru about a year ago, allegations of fraud and state-sponsored terrorism were lodged against him, based upon damning evidence involving his chief intelligence officer and confidante Vladimiro Montesinos. As a result, the nation experienced a period of protracted political turmoil. Presidential elections held last spring, in which Alejandro Toledo emerged victorious, formally ended Fujimori's term. Residual effects of the Fujimori scandal added to the population's traditional cynicism regarding its expectations of a low level of moral probity from its officials, an attitude that poses no small challenge to the Toledo administration. In fact, according to the APOYO polling firm, Toledo's approval rating has fallen from 59 percent in his first month in office to only 32 percent by mid-November, and is heading downward. Complaints about his presidential style - his extremely high salary, tardiness, and allegations of nepotism and seemingly indifference to the poverty that the population is experiencing - have overshadowed his yet unfulfilled promises to improve Peru's devastated economy.

Venezuela Only three years after his landslide election victory in 1998, Venezuelan President Hugo Chavéz now faces the ominous threat of a possible military coup as a result of a major disaffection on the part of much of the population, particularly the upper and middle classes. The populist president has managed to alienate nearly every group in the country by a stream of insults (sometimes more than justified, his partisans would say), directed against the Catholic Church, the business sector, labor groups and the media. Under his leadership, the oil-rich country has witnessed significant discord, prompting the Miami Herald's hyperbole in describing Chavéz as "one of the most disastrous presidents Latin America has produced." While he still enjoys solid support in the streets among the poor, middle-class Venezuelans have publicly demonstrated against the economic policies of their controversial president. Meanwhile, discontent has increased within the military, making it unlikely that Chavéz would be able to use the armed forces to quell protests if they got out of hand. But even many of Chávez's critics are wary of a military takeover, fearful that it would canonize his sainthood in the eyes of the poor, with State Department officials declaring that a coup would not have Washington's backing.

Honduras Honduras, hobbled by a weak economy and a poverty of civic virtue, was the scene of intense political jockeying as the traditional ruling Liberal Party attempted to use its legislative majority to continue its persistent winning streak in the November 25 presidential election. But even the promise of hastily drafted give-away policies to the poor could not attract sufficient support for the party's candidate Rafael Pineda, as he was handily defeated by opposition leader Ricardo Maduro, a political newcomer who was successful in attracting voters with his strong anti-crime platform. Maduro faces a daunting task in a country where over 2,000 inhabitants are murdered yearly. Such rampant killings even forced him to prematurely leave his election victory festivities in order to attend the funeral of one of his congressional candidates, who was one of 28 Hondurans murdered during the election weekend. Many voters identified with Maduro, whose own son was gunned down in 1997, and pledged to back his zero-tolerance, anti-crime program.

Nicaragua As November 4 presidential elections loomed in Nicaragua, the issues of corruption, mismanagement, and poverty emerged as definitive reasons for a change in political leadership. But the prospective re-emergence of former revolutionary leader Daniel Ortega, head of the Sandinista Party, had alarmed U.S. government officials who were outspoken in their fears that another Ortega administration would prove harmful to U.S. interests. This led the State Department's Lino Gutierrez and U.S. ambassador Oliver Garza to directly intervene in the election on behalf of conservative candidate Enrique Bolaños. Fueled by entirely inappropriate subtle allegations linking Ortega to terrorism, the State Department eventually was successful in generating additional support for Bolaños, who was the candidate of the ruling Liberal Constitutional Party, and was able to swamp Ortega in the presidential ballot. Critics contend that Nicaraguan voters were unduly persuaded by the heated U.S. rhetoric against Ortega, and fault Washington for its lack of sufficient concern for the massive corruption of Bolaños' ruling party, in which the candidate served as vice president.

Economy This was a trying year for Latin American economies. The global economic slowdown, accelerated by the September 11 terrorist attacks on the United States, affected every nation in the hemisphere to some degree. Travel fears, raised by new security threats, have caused tourism-based economies such as those in the Caribbean to suffer grievous consequences resulting from a devastating loss in tourism revenue. Increased insurance costs, coupled with the general economic uncertainty that has stalled consumer spending worldwide, translated into a chain reaction of downturns in business volume that in turn prompted a steep spike in unemployment and common crime. Further intensifying the situation, Hurricanes Iris and Michelle devastated Central America and the Caribbean. The impact of these natural disasters on the region's agricultural sectors multiplied the strain on its already shaky economies.

Argentina Economic woes in Argentina worsened. In its fourth year of recession, even after the allocation of $40 billion in recent IMF-led bailout packages, Argentina remained perilously close to economic collapse. Just before he resigned from office, President Fernando De la Rúa, desperate for a solution regarding the country's crippling debt, proposed a debt swap hinging on lowering interest-servicing payments on bonds and restructuring the debt. The proposed swap initially faced stiff resistance from the international bondholders who held the majority of the debt, as they considered it to be tantamount to default. De la Rúa faced additional opposition from the country's governors, many of whom characterized the debt swap plan as a default on the federal government's $22 billion in obligations to the provinces. De la Rúa's plan finally gained an important victory on November 23 when he won support from Argentina's domestic banks and private pension-fund companies. But after the IMF and the U.S. refused last-minute pleas for aid, and with rioters in the streets, the President declared a state of siege as a result of the December protests that eventually brought down his government. As the ranking Justicialista political figures wrangle among themselves, no clear solution to the country's economic and political institutional woes is readily discerned, in spite of newly inaugurated President Eduardo Duhalde's commitment to deal with the plight of Argentina before he authorizes the resumption of national debt repayment.

Trade Influential international trade meetings concluded this year with steps taken toward achieving further trade liberalization measures and greater consideration for the plight of third-world countries, including those of Latin America. Yet disagreements remain over the role of developing countries regarding the trade agenda, the depth of the inclusion of labor and environmental standards in trade agreements, the amount of public access to the trade process, and the ability of such countries as Brazil to ship their agricultural and industrial products to the U.S. without encountering dumping charges invoking countervailing tariffs.

Summit of the Americas The Third Summit of the Americas held in April in Ottawa saw renewed pressure to move forward with the Free Trade Area of the Americas (FTAA), though significant obstacles remain to its implementation by the 2005 deadline. All of the leaders of the Western Hemisphere, save Cuba, have proclaimed their desire to achieve a FTAA, yet several developing nations continued to have serious reservations over the draft proposal as it stands.

Brazil in particular is reluctant to agree to the FTAA as now envisaged, fearing that competition from U.S. imports and restrictions on Brazilian exports to this country were prejudicial to its developing an industrial base and expanding its crucial agriculture export sector. Brazil was the key player in blocking U.S. proposals to move forward the 2005 deadline to 2003, and successfully pushed its own proposal to allow negotiations to proceed within sub-regime trading blocs instead of the country-by-country basis preferred by Washington. Recent trade disputes with Canada, regarding issues from beef exports to airline subsidies, have harmed trade relations between these important trading partners and caused observers to take seriously existing obstacles to the creation of a hemispheric trade zone.

NAFTA In July, trade ministers from the U.S., Canada and Mexico clarified interpretations of NAFTA's controversial Chapter 11 on investments, a provision long criticized by trade pact opponents as being anti-democratic and undermining strong labor and environmental standards. Under its new language, private foreign companies are prevented from filing lawsuits against governments under the premise that enforcement of environmental regulations threatens expropriation of their future profits. Public access to the deliberation of disputes was also granted under the new trade guidelines, a change from the secrecy that previously enshrouded these powerful tribunals. However, some critics assert that the new clarifications do not go far enough, since they do not ensure that strong labor and environmental standards will be protected nor do they allow for public participation or the right to appeal the findings of the dispute process.

World Trade Organization Still smarting from its disastrous Seattle meeting in 1999, the WTO gathering that took place under antiseptic conditions in Doha, Qatar in November saw a welling demand for increased inclusion of the economic interests of developing nations. Led by India and Brazil, the developing nations gained concessions from the U.S. and other industrialized nations on their right to relax intellectual patents held by multinational drug companies on pharmaceuticals governing the production of generic formulas for national health emergencies like the HIV/AIDS pandemic. The Doha meeting also marked the entry of China and Taiwan to the WTO, a move welcomed for its potential of widening market access, but also a cause for growing anxieties over prospects of even greater competition from cheap labor. Though the Doha session produced agreements on new trade liberalization rounds, the future meetings will likely be contentious, as agriculture subsidies and anti-dumping measures, used as protectionist devices by the EU and the U.S., will be on the negotiating table.

Trade Promotion Authority Though the U.S. is a major proponent of trade liberalization, the past difficulties over obtaining trade promotion authority (TPA), formerly known as fast-track, have hindered its leadership on trade issues. A number of TPA proposals faced dim prospects for passage in the House of Representatives over the summer, but following the September 11 attacks, the issue was revived by the Bush Administration, which characterized TPA as a necessary measure to combat terrorism. At the beginning of December, H.R. 3005, sponsored by Rep. Bill Thomas (R-CA), was passed by the House by a one-vote margin. Opponents of the Thomas measure felt that it was inadequate because it did not mandate the inclusion of labor and environmental standards in the text of trade agreements. The Bush administration, late in the day, had launched a successful drive to achieve TPA in the House, arguing that it would play a significant role in expediting the White House trade agenda, particularly over such upcoming negotiations as FTAA and new WTO rounds. The Senate vote, scheduled for the beginning of the year, is currently being seen as being very close.

Human Rights Human rights violations are a recurring theme throughout the modern history of many Latin American countries. Though not as gruesome or extensive as violations which occurred during the era of military dictatorships in the 1980s, such abuses continue to plague the region, with allegations of police brutality and torture having tainted the criminal justice system in many nations. Civil unrest in nations such as Jamaica, Ecuador, Honduras, Mexico and Bolivia has led to fear among their citizens that repression could return. Other countries have witnessed a rise in power of organized crime, particularly those linked to drug trafficking and militant movements, as in Colombia, Jamaica and Mexico. Despite continued assurances from a number of Latin American leaders, the world is not entirely convinced of the validity of their efforts to combat human rights violations.

Mexico President Vicente Fox's campaign promise to improve Mexico's poor human rights record has produced few results. With the recent murder of Mexican human rights lawyer Digna Ochoa, added to the assassination of two judges and an attempt on the life of a government witness, the Fox administration has swiftly lost ground in its war against organized crime as well as in its ability to thwart political assassinations. Rights activists have criticized Attorney General Rafael Macedo de la Concha, a former military general, for giving primacy to protecting the interests of the armed forces instead of aggressively investigating cases of their human rights abuses. Following a report drafted by the National Commission on Human Rights, Fox announced on November 27 the creation of a special prosecutor to investigate human rights violations committed during the country's so-called "dirty war" of the late 1960s and early 1970s. He also announced the formation of a committee to oversee compensation to be provided to victims' families. This landmark decision was reached after the Commission found that state security forces were responsible for many of the "forced disappearances" that occurred during the guerra sucia. Though Fox has pledged to bring the perpetrators of violence to justice, a good deal of skepticism remains among Mexicans as well as international observers that this will occur any time soon.

Chile The crusade to bring General Augusto Pinochet to justice ended in failure after nearly three years of legal wrangling, when a Chilean appeals court ruled July 9 that the former Chilean dictator was mentally unfit to stand trial for human rights abuses committed during his almost 17 years of rule. The Court's judgment demonstrated the leverage still exercised by the military within the Chilean judicial and political system and caused an outcry among human rights activists worldwide, who demanded that Pinochet be held responsible for the thousands of Chileans and foreign nationals who were tortured and killed during his reign.

Colombia Colombia continues to be entrenched in a precarious human rights situation as the government, guerrillas, rightwing paramilitaries and drug lords fight for paramountcy. In an attempt to appease the Revolutionary Armed Forces of Colombia (FARC), President Andres Pastrana three years ago ceded a demilitarized zone the size of Switzerland in hopes of expediting peace negotiations, but the rebels have not ended their operations, recently assassinating a high-ranking former cabinet minister. Neither has the rightwing paramilitary AUC, which is responsible for 80 percent of all rights violations in the country. The Pastrana administration continues to search for a peaceful resolution, but talks have constantly been stalled. On October 7, a skeptical Pastrana announced his decision to prolong the demilitarized zones until January 20, 2002 in an attempt to reassert his commitment to a peaceful solution to the conflict, though many are pessimistic that the possibility for peace exists.

Relations with the United States The terrorist attacks against the United States on September 11 changed nearly every transnational relationship it enjoyed within the international community and seriously affected its immigration flows from the southern latitude. Americans today are not only distrustful of outsiders who are resident in this country, but also are extremely wary of the porosity of U.S. borders. Pushed by its constituents, Congress is now in the process of endorsing a tightening of U.S. borders. Amid reports that terrorists may have crossed into the United States from Canada or fled to Mexico, the 2,000-mile border with Mexico and the over 4,000-mile border with Canada have come under intensive scrutiny from U.S. officials. Critics say that customs agents and immigration officials seem to have now created a serious impediment to trade due to their escalation of inspections and other surveillance activities. Since 87 percent of Canada's exports come into the U.S., Ottawa continues to press Washington to rethink the new restrictions in order to expedite the movement of goods and individuals.

Mexico Unprecedented talks between Mexico and the U.S. concerning immigration reform were thwarted by the September 11 terrorist attacks. President Fox had advanced his agenda to create an expanded guest workers program, while proposing to grant immunity to undocumented Mexicans currently working within U.S. borders. However, this progress was halted after the terrorist attacks, as the White House instead turned its attention to the tightening of borders as a security precaution. In late November, the two governments cautiously began another round of talks in an attempt to reactivate the bilateral immigration agenda, with some Congressional leaders predicting the passage of a version of immigration reform sometime next year.

Cuba Another important area of reform halted by the attacks was the potential repeal of the U.S. travel ban to Cuba. Congress, for the past two years, had been pushing hard for such a repeal and support on Capital Hill was growing. After passing in the House as an amendment to a 2002 fiscal bill for the Treasury, the issue landed in the hands of a joint House and Senate conference committee. The legislation was later derailed by the events of September 11, which created an inhospitable political environment for controversial measures. Observers accuse the Bush administration of manipulating the "terrorism" factor in order to keep measures in place to curtail unauthorized travel of American citizens to Cuba for political reasons. Consequently, adamant White House opposition persuaded House-Senate conferees to remove the amendment at an October 25 meeting. It is certain, however, that this issue will resurface in future debate, possibly bringing supporters of the repeal into direct confrontation with the White House.

A surprising new development in the U.S.-Cuba relationship occurred after Hurricane Michelle devastated the island nation. The two countries discussed first a gift, then the potential purchase of U.S. food and medicine by the Cuban government. The eventual deal, as it was worked out, could have had major implications for the future of the bilateral relationship. Beginning at a relatively low diplomatic level, bona fide dialogue, which would focus on chipping away at the four-decade old anachronistic trade embargo rather than seeking its immediate abrogation, could have been a major step to improved U.S.-Cuban relations. However, the White House was quick to indicate that amplifying its relationship with Havana was not on its agenda.

Environment The United Nations deemed the year 2001 as the "Year of Ecotourism" - bringing attention to global environment concerns. Costa Rica continues to be a leader in promoting sustainable development, with Guyana and Brazil promoting debt-for-nature swaps. Though these initiatives show some promise, they remain overshadowed by the horrific environmental degradation still occurring in the region.

Ecuador An environmental disaster 600 miles off the coast of Ecuador caused a major uproar among the local population. The government's delay in handling the oil spill in the Galapagos Island further exacerbated the ecological catastrophe. Over 200,000 gallons of diesel and fuel were spilled into the waters surrounding the fragile islands, distressing the entire food chain throughout the archipelago, as well as grievously damaging the tourism industry, which is an integral part of the Ecuadorian economy.

Brazil Brazil's rainforests and wildlife repeatedly have been devastated by ecological catastrophes. Illegal logging, wildlife smuggling and oil spills have plagued the nation, causing environmental leaders to propose new ways to combat the depletion of natural resources which are an essential part of the Brazilian economy. The evolving plan would extend the swapping of foreign debt for ecological protection, effectively helping developing countries like Brazil to ease their financial burdens while at the same time saving such precious resources as the rainforests. The proposal, made by Brazil's environmental minister Jose Sarney Filho at the 13th Forum of Latin American and Caribbean Environment Ministers, will likely be taken to the UN-sponsored 2002 World Summit for Sustainable Development.

COHA Research Group, Katherine Duckworth and Sarah Staton, lead researchers at the Washington D.C.-based Council on Hemispheric Affairs

The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being "One of our nation's most respected body of scholars and policy makers."

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