Thursday, March 16, 2006

Washington and Latin America: Losing Interest in Each Other?

Opinion polls show that Latin Americans have an increasingly negative opinion of the United States, coupled with growing doubts about the success of Washington-affiliated political and economic reforms during the 1990s. Accordingly, the region may experience a shift towards left-leaning regimes. Venezuela is the most extreme example, but non-orthodox candidates won in Bolivia and could win in Peru. In fact, populist pressures could have an impact on elections in Mexico and Brazil as well.

Peter Hakim argues that the gap between the U.S. and Latin America is partly a reaction by Latin America to the United States’ post 9/11 foreign policy agenda. Latin America was not central to the global war on terrorism. Moreover, China captured the economic imagination of the U.S. For Hakim, though, Latin America itself bears some responsibility for Washington’s lack of interest in the region. Latin America’s slow growth reflects its failure to fully implement the so-called Washington Consensus – not the failure of Washington Consensus policies. In brief, the United States lost interest in Latin America both because US foreign policy changed (the pressing need to fight terrorism) and because Latin America failed to implement the economic reforms needed to compete with China.

Arminio Fraga partially corroborates Peter Hakim’s arguments on the role of Latin American governments. Like Hakim, he believes that Latin American countries (apart from Chile) failed to implement the main aspects of the ‘Washington Consensus’ and as a result, failed to credibly consolidate macroeconomic stability and support sustained growth. At the same time, he does not believe that Chavez, Morales and Kirchner necessarily represent Latin America’s future either. The course that Latin America’s leading nations – Brazil and Mexico – adopt in their upcoming elections will matter far more. If these countries succumb to the ‘populist way’ the current modest – but still positive – economic achievements will be lost. At the same time, Fraga recognizes that both countries need to take additional steps to reduce poverty and inequality, in order to prevent broad neo-populist ‘left wing coalitions’ from becoming a reality in the near future.

In contrast, Carol Graham argues that Latin America new leaders (Lula, Bachelet and Kirchner) closely resemble the ‘new left’ of Tony Blair in England and Felipe Gonzales in Spain. In her opinion, South American leaders might adopt a ‘third way’ set of policies to address poverty and inequality, combining market and social concerns and emphasizing the positive long-terms impact on economic growth that these policies should bring to South American countries. Indeed, Roberto Zagha, Gobind Nankani and Indermit Gill argue that sustainable growth in Latin America could be achieved when these countries implement policies that specifically address decreasing poverty and inequality.

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