[Marxism] Bush heading into den of leftists

Walter Lippmann walterlx at earthlink.net
Mon Oct 31 06:37:31 MST 2005

(They keep trying to pit Lula against Chavez, and therefore by
implication against Cuba, but without any success up to now, 
though not for lack of wishing and trying, as this indicates:

("Bolivia, where street protests have forced two presidents from 
office in the past 18 months, is considered particularly worrisome. 
U.S. officials accuse Chavez and Cuba's Fidel Castro of seeking to 
use proxies such as coca farmer-turned-opposition leader Evo Morales 
to turn Bolivia into a Marxist, anti-American state. Even leftists 
such as da Silva and Kirchner, who rely on Bolivia for natural gas, 
have expressed concerns about a potential economic collapse in 
Bolivia and the splintering of democratic institutions.")

Bush heading into den of leftists

At Latin summit, he faces resurgent bloc 	
By Colin McMahon
Tribune foreign correspondent

October 31, 2005

BUENOS AIRES -- For a guy with the headaches President Bush faces,
quiet time away and a pleasant visit with friends might be just the
ticket. Too bad Bush is booked for South America this week.

The fourth Summit of the Americas will bring Bush into territory that
is not quite enemy but far less allied than before. Half the
hemisphere's leaders have changed since Bush took office in 2001
promising to make Latin America a priority. The region's politics
have changed too.

A resurgent left is reshaping Latin America. This year alone, leftist
protests toppled governments in Ecuador and Bolivia. A socialist took
power for the first time in Uruguay. And Venezuelan President Hugo
Chavez, swimming in oil profits and brimming with bravado, is
rallying the region against the United States and its economic

All told, more than 320 million Latin Americans have seen their
nations turn to the left in recent years--in Brazil, Argentina,
Chile, Uruguay, Bolivia, Ecuador, Peru and Venezuela.

Yet this turn is not nearly so dramatic as some had feared and others
had hoped. So far, complex economic and political realities have
softened Latin America's leftist wave.

"The elections in Uruguay and elsewhere have been a referendum
against failed policies. People have started looking for
alternatives," said Ernesto Talvi, an economist and executive
director of the think tank CERES in Montevideo. "But I don't think
they are looking for alternatives that revert us to the failed
policies of the past."

Markets failed the poor

During the 1990s and early in this decade, free-market policies--low
tariffs, fiscal discipline, privatization--remade Latin American
economies. But they failed to significantly reduce poverty or expand
the middle class. Poor and working-class voters felt robbed by
relentless austerity measures, the loss of state jobs and the cutting
of government subsidies.

Leftist precepts that analysts had written off only a decade ago
underwent a revival. And so did anti-Americanism. Growing numbers of
Latin Americans came to accuse Washington of imperialism in foreign
policy and of pushing neo-liberal economic policies that enrich the
United States and the region's elite at the expense of the masses.

Bush in particular is identified with the policies that have come
under criticism. Suspicion from fellow leaders and derision from
protesters will greet the American president at the summit, which
starts Friday in Argentina. But most of the hemisphere still looks to
the United States for leadership, aid and investment.

This presents the Bush administration with an opportunity but also a
thorny foreign policy challenge. Push its agenda too much, as the
United States is accused of doing in confronting Chavez in Venezuela,
and Washington is seen as meddling. Stand too far back, as the United
States is accused of doing regionally since the Sept. 11 attacks, and
Washington is seen as abandoning Latin American nations trying to do
the right thing on human rights, trade and immigration.

U.S. officials acknowledge that the so-called pink tide rolling
across Latin America has a mellow tint.

A few governments have raised tariffs to protect domestic industries,
but there has been no wholesale return to protectionism. Social
spending is rising, but treasuries remain committed to fiscal
discipline. Leaders across the region extol the importance of
attracting capital and investment, and last year two nations with
left-of-center leaders, Brazil and Chile, recorded the highest
percentage increases in foreign investment. Economic opportunity is
hardly washing away.

Some left-of-center presidents, such as Brazil's Luiz Inacio Lula da
Silva, have even come under criticism for being too conservative.

Brazilian turnabout

During his long career as a labor leader and his unlikely slog to the
presidency of Brazil, da Silva railed against the free-market
economic policies that have transformed his nation. But as the
elected leader of the world's fifth most-populous country, da Silva
is gambling that fiscal discipline and free markets will spur
sustained growth, create jobs and provide the revenue da Silva's
government needs to address Brazil's crushing social inequalities.

"Lula changed," said Marcilio Marques Moreira, a former finance
minister who also was Brazil's ambassador to the United States. "I
don't know if it was by conviction or by pragmatism, but in the
process there was a certain type of conversion, at least in economic

This conversion breaks the heart of da Silva's leftist allies. But da
Silva's orthodox policies are credited with stabilizing Brazil's
economy--and helping to insulate da Silva from an all-out political
attack--during a corruption scandal that threatened his government.

That scandal has cost da Silva standing and influence in the region,
and Chavez has benefited.

Because of the value of Venezuela's oil, Chavez for now can afford to
challenge economic liberalism and even chase off some foreign
investors. The Venezuela leader has won many fans with his calls for
a "Bolivarian revolution" that would restore a large state role to
national economies.

But elsewhere the new leftists are wary of isolating their countries
from international credit markets and foreign capital. They are
searching for a Latin American third way between unfettered
capitalism and state-dominated socialism. They see private business
as the engine of growth, but they are not content to leave job
creation to the unforgiving market. They believe in free trade but
want safeguards to make sure trade is fair.

This may not work, and most Bush administration officials and
conservative economists say it will not. They blame corruption and
poor execution of market policies, not the policies themselves, for
their failure across Latin America. But the hardships and
inequalities across Latin American have convinced most voters and the
new breed of leftist leaders that the economic orthodoxy of the
so-called Washington Consensus has failed them.

Holding off the radicals

The challenge now is for the new leftists to make their way work
before radical approaches gain more favor. In some countries, the
throwing out of the old has coincided with the rise of new political
movements with a strong populist bent and a fervent anti-American
agenda. Their commitment to electoral democracy is at best unproven.

So far, the Latin American third way is being built most convincingly
by the market-minded socialists running Chile.

Chile has one of the world's most open economies, according to an
annual international survey by the conservative Heritage Foundation.
And it is the region's beacon for free traders. The left-of-center
government of President Ricardo Lagos has aggressively pursued trade
deals with countries in Europe, Asia and North America, and Chile's
economy has grown more robustly and consistently than any other in
the region.

Trade between Latin America and the United States has grown steadily
every year since 2001 and has risen to a historic high. But trade
between Chile and the United States has positively soared. A
bilateral agreement that went into effect in 2004 between the United
States and Chile spurred U.S. exports to that country by 33 percent
last year, according to U.S. government statistics.

Chile, however, departs occasionally from orthodox neo-liberalism. It
has placed limits on how quickly investors can move money in and out
of the country, for example, to encourage long-term direct investment
and advance "growth with equity."

At the same time, the Lagos government has expanded social programs.
In the last 15 years, Chile has slashed the poverty rate to 18
percent of the population from 40 percent. And by doing so, Chile's
leadership has brought voters on the far left more toward the center.

"We are being very aggressive in liberalizing and opening the
economy," said Chilean Foreign Minister Ignacio Walker. "But we never
lose sight that liberalization is the means and not the ends in
itself--the means to achieve equitable and sustainable growth."

Argentina is more complex. President Nestor Kirchner's government
flirts with price controls, protectionism, currency manipulation and
other state interventions that dismay free marketers. But Kirchner
has been far more fiscally conservative than his 1990s predecessors,
who became darlings of the financial markets even as Argentina was
borrowing its way toward a collapse that threw millions of its
citizens into poverty.

"It is impossible to conceive of a country without fiscal discipline,
correct administration, the care of reserves," Kirchner told the
Buenos Aires newspaper Pagina 12, sounding more like a neo-liberal
than a leader of his Peronist party.

Since Argentina defaulted more than three years ago on $100 billion
in loans and interest, Kirchner has taken a hard line in dealing with
creditors and foreign investors. Economists and other Latin
governments are closely watching whether he can hold that hard line
while ensuring that Argentina gets the capital it needs to continue
its recovery.

Already leftists in Brazil, Ecuador and Bolivia are calling for their
nations to follow Argentina's lead. They want to suspend debt
payments and force renegotiations on private creditors and
multinational lenders. But even left-of-center economists agree that
such moves carry great risks. The populism espoused by Chavez and
advocated by his followers would severely damage most Latin American
economies by shutting them off from foreign investment, economists

Bolivia, where street protests have forced two presidents from office
in the past 18 months, is considered particularly worrisome. U.S.
officials accuse Chavez and Cuba's Fidel Castro of seeking to use
proxies such as coca farmer-turned-opposition leader Evo Morales to
turn Bolivia into a Marxist, anti-American state. Even leftists such
as da Silva and Kirchner, who rely on Bolivia for natural gas, have
expressed concerns about a potential economic collapse in Bolivia and
the splintering of democratic institutions.

Bush administration officials say a government's political shade is
less of an issue than a nation's democratic stability. For one thing,
the soundness of institutions matters more to investors than whether
a government calls itself left or center or right. Foreign investors
seek such qualities as consistent and transparent taxes and
regulations, and a judicial system not overrun by corruption. The
governments that deliver, no matter what their shade, are deemed
suitable partners.

Rice `not worried'

"I am certainly not worried about the rise of left-of-center
governments," Secretary of State Condoleezza Rice declared before the
June summit of the Organization of American States.

But in an interview with the Miami Herald that was released by the
State Department, Rice made clear that not all left-of-center
governments were viewed the same way. She offered indirect if not
exactly veiled criticism of Chavez. And she praised the Brazilians
under da Silva: "They have been absolutely committed to a social
agenda ... but doing it in a way that is responsible economically."

Da Silva has stuck with his current economic policy even under
extreme pressure from his Workers Party base to employ populist and
socialist remedies for Brazil's widespread poverty. That shows how
deeply certain principles of the Washington Consensus have penetrated
Latin American political and economic thinking.

"When Lula came into office, there was a lot of fear about how the
government would manage the economy and a lot of confidence about how
ethical the government would be," said Ricardo Ribeiro, an economist
and political analyst with MCM Consultants in Sao Paulo. "It is
ironic that we are seeing just the opposite."


cmcmahon at tribune.com

Copyright C 2005, Chicago Tribune

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