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U.S. influence in Latin America waning?

R. Viswanathan

The message from the Mar del Plata Summit is clear: Latin America cannot be taken for granted.

THE MESSAGE that came out clearly from the fourth summit meeting of the Americas held in Mar del Plata, Argentina, last weekend was that the United States was unable to get the Latin Americans to move towards a Free Trade Area of the Americas. The FTAA is the U.S.' grand vision of creating a single market from Alaska to Argentina. The summit could not reach a consensus on when and how to resume the stalled negotiations.

The FTAA was the most important project and goal set during the first Summit in Miami in 1994 at Washington's initiative. The deadline for conclusion of the negotiations was January 2005. After several rounds of negotiations in the last 10 years, there is a deadlock. While Mercosur countries have major problems with the U.S. on the issues of agriculture and market opening, President Chavez of Venezuela came to the summit vowing to bury the FTAA once and for all, as part of his crusade against "neoliberalism." While no one takes seriously the Bolivarian Alternative for FTAA proposed by Mr. Chavez, the Latin Americans are equally sceptical about the recipe being offered by George W. Bush.

Growing autonomy

The FTAA negotiations are indicative of the diminishing influence of the U.S. and the growing autonomy of Latin America. At the beginning of the FTAA negotiations, the U.S. had put two conditions: first, all the sub-regional groups such as Mercosur and Andean Community should be dissolved; secondly, each country should negotiate in its individual capacity and not as part of any sub-regional group. The Latin Americans said "no" to both these conditions and the U.S. had to back down. This was perhaps the turning point when the Latin Americans successfully stood up to the U.S., asserting with confidence the determination to pursue their own agenda.

The new confidence comes mainly from their collective strength arising from regional integration. For example, Brazil gets more weight when speaking on behalf of Mercosur than as an individual country. Although the regional groups have their own problems of consolidation, they have come to stay for good and the leaders have realised the advantages of collective strength. This realisation is behind the launch of the South American Community of Nations in December 2004. This new entity will cover all the 13 countries of South America and will become even more formidable.

Regional integration is not just about acquiring political clout. It has changed economic orientation too. For example, Mercosur membership has made Brazil more important for Argentina in trade than the U.S.In economic terms, the U.S.' importance for Latin America has come down. China is emerging as a major trade partner and investor in the region. The Chinese President announced in November 2004 that trade with Latin America would reach $100 billion in the next three years from $30 billion in 2004 and that China would invest $100 billion in the coming decade. More Latin American Presidents and business delegations visited China than the U.S. in the last two years. China has replaced the U.S. as the largest consumer of Chilean copper. Venezuela is trying to reduce its dependence on the U.S. market for its oil by diversifying to new markets, including China. It is to be noted that one of the main reasons for the exemplary performance of many Latin American economies in 2004 was the high demand and prices for their commodities offered by the Chinese market.

Rise of the Left

Another reason for the divergence in approach between North and South America is ideological. The Left is rising across Latin America and has taken over the governments in Brazil, Argentina, Chile, Uruguay, and Venezuela among others. The Leftist candidates — Lopez Obrador in Mexico and Eva Morales in Bolivia — are leading in the opinion polls for next year's Presidential elections those countries. These governments worry more about their own fundamental problems of poverty and unemployment, rather than about the U.S. priorities of the Iraq war and terrorism. They are disenchanted with the Washington Consensus that has failed to help them solve their core development problems. The host of the summit, President Nestor Kirchner of Argentina, put it bluntly in his inaugural address that "U.S. foreign policy in the region had done little but foster poverty and instability in some countries." The Latin Americans are also disappointed that the region is low on the priority list of U.S. foreign policy objectives particularly after September 2001. They have realised that they should find solutions to their problems without depending too much on the U.S. For instance, in the first quarter of this year, the Argentinians managed to reschedule $80 billion of their debt, forcing the creditors to agree to receive 30 cents for a dollar. They managed this without the support of the U.S. or the International Monetary Fund.

The Mar del Plata summit has confirmed the trend of declining influence of the U.S. in Latin American affairs and the increasing assertiveness of the Latin Americans in pursuing their own agenda with more confidence. The message is loud and clear: Latin America cannot be taken for granted any longer and it cannot be forced into following the agenda of others indiscriminately. Stephen Hadley, the U.S. National Security Adviser, told the media after the summit: "Bush listened as well as expressed the U.S. views. His approach is not to try and dominate but to participate as one of equals and listen." This was music to the ears of the Latin Americans who had been at the listening end in the past.

(The author is with the Ministry of External Affairs. The views expressed here are personal.)

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