TPT May 2007

From the Americas

Why this very conspicuous open-handedness on the part of the Venezuelan president? Writing in the Washington Post, Juan Forero and Peter S Goodman explain: “[Mr] Chávez has long pledged to buck Washington-backed economic policies in Latin America. Now, two months after winning reelection and consolidating his hold on the country with new powers to rule by decree, he is strengthening economic ties in the region in a bid” to curb the reach of the US government in the region. (‘Chávez Builds His Sphere of Influence,’ February 23) Long neglected by US President George W Bush, whose foreign- affairs focus lies elsewhere, Latin America is already broadly disillusioned with its big neighbour to the North. But the Post writers say that economists and other observers of Venezuela’s affairs believe that, for Mr Chávez, the goal is “nothing less than to kill the so-called Washington consensus” : the economic recommendations of the International Monetary Fund (IMF) and the US Treasury which push governments to limit spending, raise interest rates, and open their economies to foreign trade and investment. While the amount of Venezuelan aid to neighbours is hard to quantify, it would appear that the country puts its money where its president’s mouth is. Venezuela’s central bank recorded billions spent on foreign bonds and other investments in the first nine months of 2006, dwarfing the amount the United States offers in assistance to all of Latin America. As for Mr Chávez’s vision of a Latin America independent of the US, the Venezuelan model, predicated on a break with all multinational institutions with Washington ties, has plainly gathered steam in some countries. Last year, Argentina paid off the last of the $10 billion it owed the IMF. It was aided by Venezuela, which had bought $2.5 billion in Argentine debt. Also in 2006, after spending nearly two decades under the strictures of an IMF program, Bolivia let its agreement with the fund end. Meanwhile, Venezuela has committed more than $140 million in loans and grants while pledging to invest as much as $1.5 billion in Bolivia’s gas industry in coming years. Bolivian leaders said Venezuelan aid comes with fewer strings attached. “In the case of the United States, we’re locked into specific areas – aid for roads, aid for health, aid for electricity,” vice president Álvaro García Linera told the Post in an interview in his office in La Paz. The Venezuelan aid “allows [Bolivia] greater flexibility to choose projects with more productive impact, especially those ventures that include a state presence.” • While President Chávez of Venezuela frequently takes his anti-Washington show on the road in Latin America, some of the region’s most important economies – Mexico, Brazil, Chile, Colombia, and Peru – maintain solid relations with multilateral lenders and continue to follow market-oriented principles, such as welcoming foreign investment, limiting government spending and attacking inflation. And the Washington Post article cited above notes that it is by no means certain that the Venezuelan president is well regarded by the people he visits, even if their governments are happy to accept his aid. According to a recent survey of 20,200 people in 18 Latin American countries by Latinobarómetro, a Chilean polling firm, most of those polled lumped Mr Chávez with US President Bush and Cuba’s Fidel Castro as bad leaders. They cited Brazil’s Luiz Inacio Lula da Silva and Chile’s Michelle Bachelet as the best.

US Foreign policy

Russia’s President Putin sounds a note heard at the White House

“The Bush administration has decided to reach out more often and more intensively to Russia at a time when the leadership in Moscow is harshly criticizing American policy and some scholars say the United States has not sufficiently tended to an important relationship.” (‘US Moves to Soothe Growing Russian Resentment,’ March 6) This assertion, by Washington reporters Thom Shanker and Helene Cooper of the New York Times, reflects the belated awakening by President George W Bush to the fact that President Vladimir V Putin is seriously dissatisfied with him. While Mr Putin is not alone in holding that view, recent remarks of his have been unusually pointed and direct. On February 10, in Munich, the Russian leader used a keynote address at a security conference to accuse the US of overstepping itself to impose its will on the world through the unilateral application of military power. Specific grievances were American plans to base elements of a missile defense system in Eastern Europe, and Washington’s support for expanding the North Atlantic Treaty Organization. Taken together, these policies have induced unease and indignation in a Russia newly flush with petrodollars. Initially it was believed by American political analysts that the speech was intended for Russian domestic consumption. But many Russia experts in the US came to believe that Mr Putin was speaking to the United States and its NATO allies. “We weren’t paying attention,” Russia scholar Michael A. McFaul, a professor at Stanford University (Palo Alto, California), told the Times. “We were distracted, busy, with other problems in the world, in particular Iraq. The administration is now put in a position of playing defense.” Senior Bush administration officials, acknowledging the utility of franker dialogue with Russia on American foreign policy and national security plans, now seek fuller engagement with Russian leaders. By calling for private discussions they hope to demonstrate that the United States is exerting itself to promote the relationship.

Latin America Venezuela spends on its neighbours to counter US influence

President Hugo Chávez of Venezuela recently announced that his government would build an oil refinery in Nicaragua. Venezuela has also pledged to provide Ecuador with $1 billion in credit, a very significant cushion if, as threatened, that country’s government should default on foreign debt payments. And, together with President Mahmoud Ahmadinejad of Iran, Mr Chávez has announced a $2 billion international investment fund for Latin America.

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M ay /J une 2007