US-Latin American Relations Heading South
by Charles Lemos, Fri Dec 18, 2009 at 10:40:14 PM EST
The US Under-Secretaty of State for Latin American Affairs Arturo Valenzuela has set off a firestorm in Buenos Aires when making remarks critical of Argentina's legal protections for foreign investment. The remarks have so angered the Argentines that Foreign Minister Jorge Taiana sought out Secretary of State Hillary Clinton on the margins of the World Climate Conference in Copenhagen to lodge a protest.
What set off the fireworks were comments by the Under-Secretary in Buenos Aires as his initial trip to region since being confirmed was wrapping up Wednesday. Valenzuela relayed some criticism he had heard from the representatives of US companies doing business in Argentina about the local investment climate.
"I noticed a change: In 1996 there was much more enthusiasm and intentions to invest; today I heard concerns about legal insecurity and concerns about economic management; unless there are changes, the expected investments can't be carried out," he told local press on Wednesday. Valenzuela was also the Under-Secretary for Latin American Affairs during the Clinton Administration, the hey-day of the neo-liberal Washington Consensus when free markets economic policies were all too often rammed down Latin America's throats.
That comparison to 1996 and the criticism of legal protection regime for foreign investment (inseguridad jurídica) is what triggered a ferocious response not just from the Argentine government of Cristina Fernández de Kirchner but from various sectors within Argentina that has been front-page news for the last two days.
Most searing were the comments of former President Néstor Kirchner (2003-2007), whose administration stabilized the economy after the crash, who opined that Valenzuela came to visit "the neo-liberal parties and not the Argentine people."
"These are the declarations of a man who does not recognize the reality that Argentina has lived, he overlooks or dismisses the failed enterprises, the unemployment and the indigency that the attitudes, policies and politics of 1996 generated," affirmed Kirchner to radio networks.
Referring to the numerous on-going bailouts in the United States, the former President and husband of the current one added that "Valenzuela would do well pay attention to the drama in his own country where there prevails a doctrine of unforseeability that rescues failed institution after failed institution" adding that Argentina does not need more "viceroys" on lecture tours.
In hindsight, it was perhaps a mistake to nominate the Chilean-born Georgetown University professor Arturo Valenzuela for this post. His ties to the Clinton Administration and the Washington Consensus run too deep and across much of Latin America, anything that reeks of neo-liberalism is automatically disqualified. It speaks volumes, however, that Obama Administration is preaching free markets and giving lectures on the free flow of capital to Latin America.
Nonetheless, there are a few other issues driving the increasing bitterness in US-Latin American relations. The failure to restore Manuel Zelaya to power in Honduras has not only upset the usual suspects of Hugo Chávez, Rafael Correa, Daniel Ortega and Evo Morales but also the more pragmatic Luiz Ignácio da Silva (Lula) in Brazil who is refusing to recognize the newly elected government of Porfirio Lobo. So far only, Panamá, Costa Rica, Perú, the Dominican Republic and Colombia have recognized the results of the election but Lobo is currently on a good will tour of the region in hopes of gaining diplomatic recognition. However, Lula's spokesman Marcelo Baumbach said Monday that "The president's position is clear. Brazil does not intend to recognise a government elected in a process that was organised by an illegitimate government." Lula has also said he has no interest in talking to Lobo.
The other major sore point is the ten-year US-Colombia bases agreement that was recently signed in October. The agreement has aroused the natural bellicosity of Hugo Chávez who now see plots against his regime afoot everywhere. This week Chávez accused the Netherlands of allowing the US to use the Nederland Antilles (Aruba, Bonaire, and Curaçao) as a staging area for troops. Chávez's own paranoia aside, the US-Colombia agreement has aroused general rebuke across the region. Only Perú has been mildly supportive.
Still, Washington's relations with Caracas are arguably worse now than they were under the Bush Administration. While the US-Colombia agreement has clearly angered Chávez, there are other factors that plague the relationship. A July 2009 US Government Accountability Office (GAO) report on Venezuelan drug-trafficking found that the influx of cocaine into Venezuela from Colombia had increased fourfold from 2004 to 2007 due to corruption at high levels of the Venezuelan government. US officials have long accused the Chávez regime of turning a blind eye to the increasing drug flows via Venezuela and allegations that the Venezuelan military is aiding the FARC in Colombia. As the charges escalate, Venezuela has refused, in turn, to cooperate with US counternarcotics programs maintaining that Venezuela has its own programs in place but Chávez has also on more than one occasion claimed that DEA is simply a front for the CIA.
In September, a US Treasury Department investigation into money laundering in Miami led authorities to bank accounts in the Principality of Andorra, nestled in the Pyrénées. According to the Diari d'Andorra, officials of the Unit for the Prevention of Money Laundering (UPB) blocked the assets "after relevant inquiries and after certifying the existence of the accounts and the information received from the United States." The frozen bank accounts belonged to people with close ties to the Venezuelan President. The report, which cites official Andorran sources, noted there were "billions of US dollars of doubtful origins (in the Miami accounts) with possible links to the financing of terrorism." Among the organizations that US officials suspect might have benefitted from this assistance are the Colombian Revolutionary Armed Forces (FARC), the Islamic groups Hezbollah, Hamas and Al Qaeda, Iran's Revolutionary Guard and the Basque separatist group ETA. Moreover the United States has expressed concerned that Venezuela could supply the Islamic Republic of Iran with uranium from recently-discovered deposits. Chávez dismisses the charges but didn't help matters when in one of his weekly television programs jokingly asked his Defense Minister if he had shipped the uranium to Iran.
The situation has reached the level of absurdity. A comment by Secretary of State Clinton at a State Department forum on US relations with Latin America set off another unexpected volley of reaction. "If people want to flirt with Iran they should take a look at what the consequences might well be for them. And we hope that they will think twice," she said. "We can only say that is a really bad idea for the countries involved," Clinton warned.
The Secretary received an earful in return. Chávez lashed out declaring her statement as "signs of an imperialist offensive" which aims to stop the growth of progressive forces in the region and recover control over its "backyard". Speaking at the summit of the Bolivarian Alliance for the Peoples of Our America (ALBA) as it met in Havana, Chávez insisted that the statements were an "open threat, an indication of the coming imperialist offensive." Bolivian President Evo Morales rejected Clinton's comments and reiterated he would not accept any kind of threat or warning from the US government adding that a US invasion of Latin America would lead to a "second Vietnam."
Even Brazil, where cooler heads prevail, is openly dismissive of Obama overtures. In November, President Obama wrote to Brazil's President Luiz Inácio Lula da Silva on the eve of a visit from Iranian President Mahmoud Ahmadinejad, reiterating the US position on Iran's nuclear program, and urging the Brazilian leader to back it. Instead Lula gave Ahmadinejad the red-carpet treatment at their meeting telling him Brazil supports Iran's nuclear program "for peaceful means." Later in early December Lula went even further suggesting in Berlin that US should first get rid of their nuclear arsenals before trying to prevent Iran from building its own atomic weapons.
And Lula was openly critical of the US-China agreement not to set targets on carbon emissions reached at the APEC meeting. Moreover issues such as Cuba remain a thorn with an increasingly exasperated Latin America failing to see any movement in US-Cuban relations and holding the Obama Administration responsible. Whatever optimism there was in the region that Obama would lift the embargo unilaterally has faded now almost a year into his term. Furthermore, there is a developing consensus in the region that the United States isn't doing enough to curb its perceived voracious consumption of illicit drugs and that the drug trade is destabilizing regimes from México to Argentina. And then in both Colombia and Panamá, complaints center on signed Free Trade Agreements (FTAs) that have yet to be ratified. The Colombia FTA was signed November 2006 and the Panamá FTA in June 2007 and the view gaining currency is why bother with the United States.
No doubt much of the current dynamic can be traced back to the Bush Administration, when Latin America, apart from perhaps Colombia, was largely ignored. The failure of neo-liberalism set in motion a process that has moved the continent leftward, albeit with two very distinct economic models and varying adherence to democratic norms. But the continent also learned to say no and to make due without if not ignore the United States while seeking alternative arrangements. Though the US remains the largest trading partner with the region with an exchange of goods valued at $560 billion in 2008, trade between Latin America and China has skyrocketed from $10 billion in 2000 to $140 billion in 2008. China is now Brazil's largest export market and Chile's largest trading partner in each case supplanting the United States. And countries as diverse as Colombia, Perú, Ecuador, Costa Rica and Argentina have all signed trade agreements with Beijing. And while the United States seeks to lecture Latin America, China does not.