August 9 2002

Southern Flank — U.S. Latin Interests in Jeopardy While Bush Looks Elsewhere

By Francisco Jose Moreno and Alejandro Eggers Moreno

A basic requirement of war is to secure one’s flanks. While engaging the enemy at the front, one’s sides and rear become vulnerable. This vital military principle is as important today as it has ever been.

As the United States battles terrorism in Afghanistan, Pakistan, the Philippines and at home, frets about China, Iran and the Middle East, keeps North Korea in check and prepares for a potential battle with Iraq, it is leaving its southern flank — Latin America — virtually unattended.

Crisis seems endemic to Latin America, so it may feel understandable that Washington has paid so little attention to the region. This is unfortunate, and dangerous, because there is a tidal wave of change sweeping the area that threatens American political influence and economic interests, and that, if not checked, will drag in the U.S. militarily.

—Bolivia is turning away from American-sponsored anti-drug and free market policies and has just vested considerable popular support on a coca grower turned politician who barely lost this week to the U.S. favorite for president.

—In Peru, the government is suspending the coca eradication program that was one of the few relative successes of the U.S. war on drugs. Peru’s U.S.-educated president has been forced to make a cabinet shift away from supporters of free market policies.

—Paraguay’s president was forced to call a state of emergency this month after anti free-market protesters launched bloody riots.

—In Colombia, where the lines between drug trafficking and warfare have become impossible to disentangle, the new president advocates doubling the size of the army for an all-out attack on well-entrenched guerrillas that, if supported by the United States, will sooner or later lead to direct American involvement.

—Politically unstable Ecuador becoming the setting for confrontations between Colombian guerrillas and their paramilitary enemies.

—Venezuela, America’s second-largest foreign oil supplier and next-door neighbor to Colombia, went through a failed coup last April and is now on the verge of civil war.

—Brazil, the largest economy in the region and the most important country in South America, has seen its currency, the real, reach an all-time low against the dollar. Its stock market has sunk to depths that indicate a massive exodus of investors. The outlook for Brazil’s future has been downgraded by the major credit ratings agency Moody’s, with the accompanying fear that the nation might follow Argentina into default. Two leftist political candidates lead the field in opinion polls for presidential elections in October, which also makes investors shaky.

—Argentina, once considered the sophisticated, middle class model for the region, appears to be unraveling entirely since its financial crash, taking neighboring Uruguay down with it.

Any one of these crises by itself — with the exception of Brazil — would not necessarily ring alarm bells. All of them, however, are occurring simultaneously. They share the same causes and they are moving in the same anti-American, anti-free market direction. In a world where technology and precedent give reason for concern about the ease with which the global disgruntled can join forces to target perceived enemies, this Latin picture deserves much more attention than it has been given.

The southern turmoil comes primarily from measures mandated by the United States, directly and through international agencies, that gave a free rein to predatory investment without regard for their effects on the real economy, on social stability, or on their inevitable political blowback. The architects of this policy, which was uncritically adopted after the collapse of the Soviet Union, acted more as hawkers for financial interests than as statesmen or responsible advocates of market economics. They didn’t heed Milton Friedman’s warning that “there is an intimate connection between economics and politics...”

This imposition has decimated the flourishing middle classes of Argentina and Venezuela, threatens that of Uruguay and has thwarted the growth of middle classes in the rest of region. Ultimately, the equation is a simple one. The United States, with multiple commitments and vast but limited resources, needs allies in other countries to keep those countries politically friendly and economically engaged. It is the middle classes of those countries, as they grow and prosper, that increasingly share American values and interests. Weakening this middle class jeopardizes U.S. security.

What made Latin America a dependable partner during the Cold War was the anti-communist and the pro-American feelings of its middle class. The opposition of the professional and local business people is what kept the area from responding, despite pressing internal problems, to leftist anti-Americanism or to Che Guevara’s call for a regional insurrection. The United States, in turn, did not force them to structure their economies to the benefit of international banking interests and a handful of local individuals.

If the recent decision to bail out Uruguay with a bridge loan of $1.5 billion and the conciliatory remarks from Treasury Sec. Paul O’Neil concerning Brazil are simply window-dressing measures — if they do not signal a willingness to recapture some of the former wisdom and flexibility of American policy for Latin America — the United States may find its southern flank under attack.

Francisco Jose Moreno and Alejandro Eggers Moreno are president and vice president, respectively, of Strategic Assessments, a consulting firm in Agoura, Calif., and Washington, D.C. Francisco Jose Moreno taught political science at New York University for 21 years and was vice president for Latin America for Philip Morris International for 13 years.

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