What's up down South

Posted: Apr 24, 2006 12:05 AM

In this country, we tend to see events in Latin America as single trends. In the 1970s, there were military and authoritarian governments. In the 1980s, populist governments produced hyperinflation and economic stagnation. In the 1990s, there was the Washington Consensus: electoral democracy, strong currencies, freer trade, privatization of state-owned firms. Now, we tend to see a trend toward leftist populism personified by Venezuela's Hugo Chavez.

But that's not the whole picture. For that, keep in mind the statement that Ronald Reagan made after his first multi-country trip to the region, a statement that almost every American tourist finds himself mouthing: Every country is different.

Yes, Chavez is a threat. His authoritarian rule in Venezuela has hurt its economy, but his oil revenues have allowed him to subsidize Fidel Castro in Cuba and to help elect the coca growers' union head Evo Morales in Bolivia. He will probably have another ally if Ollanto Humala wins the runoff election in Peru and renounces the pending free-trade agreement with Washington. But Chavez needs to sell his oil, and that keeps his country hardwired into the global economy.

In other countries, the Washington Consensus seems alive. The idea that Latin America is trending left owes much to the victories of Lula da Silva in Brazil in 2002 and Michele Bachelet in Chile earlier this year. But Lula has followed responsible economic policies, and Brazil has provided constructive leadership in the Doha round of world trade talks.

Brazil, with half of South America's population, has also quietly used its weight to exert a cautionary influence on Chavez. Lula has scandal problems and may or may not be re-elected this year, but in any case Washington will have a responsible government to work with. Bachelet is continuing Chile's vital center-left tradition, and its economy is growing, thanks in large part to its free trade agreement with the United States.

In contrast, Argentina's Nestor Kirchner has been flirting with the kind of populist policies that have prevented his country from reaching its potential in the past. But Argentina has less demographic weight than Colombia, South America's second most populous country, where center-right incumbent Alvaro Uribe has been conducting a successful campaign against the FARC guerrillas and seems likely to be re-elected by a landslide later this year.

Approval of the Central American Free Trade Agreement earlier this year has the region into a closer economic alignment with the United States -- the downside is that the Sandinistas might win, for the first time, a free election in Nicaragua.

The big question mark, however, is Mexico. Vicente Fox's victory in 2000 ended the 71-year rule of the PRI party, but Fox has had a disappointing record. He squandered the momentum of his first year by seeking a settlement with the theatrical Zapatista rebels in Chiapas, and has been unable to get repeal of the laws that prevent foreign investment in Mexico's rotting oil-producing infrastructure.

Mexico's Congress, previously a PRI rubber stamp and now split between three parties, has had difficulty being a functional legislature. Mexico's economy, yoked to the United States by NAFTA, is growing, but not so rapidly as to reduce northward immigration. The big threat here is former Mexico City Mayor Andres Manuel Lopez Obrador, the left-wing PRD candidate who has been leading in the polls for the July election. As mayor, Lopez Obrador showed little respect for property rights. But he is supported, perhaps as an insurance measure, by billionaire Carlos Slim. And his lead has diminished after PAN candidate Felipe Calderon began running ads warning that he could be another Hugo Chavez.

Left-wing populism is evidently not a selling point, even in Mexico, with its tradition of anti-yanqui rhetoric.

It's a mixed picture, and one with real dangers, especially if Lopez Obrador wins and turns out to be more like Chavez than like Lula. But it's also one with genuine upsides, notably the emergence of a responsible center-left tradition.

The Washington Consensus still has more life than a focus on Chavez would suggest, and Latin America is enjoying 4 percent economic growth. So be prepared for disappointments, but remember that we still have many good neighbors to the south.