Bloomberg | 30 January 2007
Chavez, Morales, Correa Bypass U.S. in Deals With Iran, China
By Bill Faries
Jan. 30 (Bloomberg) — When Ecuadorean President Rafael Correa was inaugurated on Jan. 15, the only head of state from outside Latin America to attend was Iran’s Mahmoud Ahmadinejad. The U.S. sent Commerce Secretary Carlos Gutierrez.
Ahmadinejad’s appearance — part of a tour that included pledges of aid and trade with Ecuador, Venezuela and Nicaragua — was the latest example of moves by Latin American leaders to embrace Iran and another U.S. rival, China, as the Bush administration is preoccupied with the war in Iraq.
The region is responding to the overtures: Presidents including Correa, 43, Venezuela’s Hugo Chavez and Bolivia’s Evo Morales are bypassing the U.S. in reaching trade accords and strengthening diplomatic and commercial ties with nations that compete with, or are hostile toward, U.S. interests.
``Iraq sucks all the oxygen, money, troops and interest out of the air,’’ said Senator Joseph Biden, a Delaware Democrat and chairman of the Foreign Relations Committee.
President George W. Bush, who entered office in 2001 saying Latin America would be ``fundamental’’ to his presidency, has so far failed to achieve two cornerstones of his agenda: a free- trade agreement of the Americas and new immigration laws that would allow undocumented residents to obtain legal status.
Cuts in Aid
The administration, which has directed almost $400 billion toward Iraq since the 2003 invasion, sought $822 million to fund U.S. Agency for International Development programs in Latin America and the Caribbean in the current fiscal year. That’s 8.3 percent below the 2003 budget, according to figures from USAid, the main pipeline for non-military U.S. foreign aid.
``Hostility to the U.S. is very high in Latin America,’’ said Peter Hakim, president of the Inter-American Dialogue, a Washington-based policy-research group. ``The U.S. is seen either as indifferent to Latin America or trying to take advantage.’’
Hakim blames the anger on the U.S. failure to deliver on trade and immigration. Hostility to the Iraq war — only seven of the 34 Latin American and Caribbean nations backed the U.S. invasion, he estimates — and Bush’s focus on border control since the Sept. 11 attacks are also straining relations, he said.
Much of that hostility has been stoked by Venezuela’s Chavez, 52, who has inherited from ailing 80-year-old Cuban leader Fidel Castro the role of the region’s chief U.S. antagonist.
Bush as `The Devil’
Chavez, who has called Bush ``the devil,’’ said on Jan. 9 he was nationalizing Venezuela’s largest phone company and utilities, in which U.S. companies including AES Corp. and Exxon Mobil Corp. have stakes. He signed $11 billion in commercial accords with China. And his energy minister said Iran plans to spend as much as $10 billion on Venezuelan projects even as the U.S. seeks to restrict trade with the Middle Eastern nation for its nuclear program.
U.S. officials say that, despite Iraq, Latin America ranks high on their agenda. They cite the Central American Free Trade Agreement, which grants duty-free access on trade among the U.S. and five nations in that region. And they say overall assistance is higher than under President Bill Clinton if it counts programs such as the Millennium Challenge Corp., a Bush initiative that aids poor countries that improve their economic and legal systems.
``We’ve increased financial assistance, implemented free- trade deals such as Cafta and are committed to the young democracies flourishing in this hemisphere,’’ said White House spokesman Gordon Johndroe. ``Our policies in this important region go well beyond one man,’’ he said, meaning Chavez.
Millennium Challenge aid may be worth $850 million over five years to El Salvador, Honduras and Nicaragua, though as of December, just $8.4 million had been delivered. Prodded by the U.S. Treasury Department, the Washington-based Inter-American Development Bank will forgive as much as $3.5 billion in debt owed by Bolivia, Guyana, Haiti, Honduras and Nicaragua.
Bush devoted almost half his Jan. 23 State of the Union message to Iraq and the war on terrorism and never mentioned Latin America.
His plan to create a hemispheric free-trade zone has bogged down over agricultural subsidies; Brazil, Latin America’s largest economy, has led opposition to any deal that fails to lower subsidies in the U.S. Trade agreements with Colombia and Peru have also stalled.
In the State of the Union address, Bush did renew his campaign for a comprehensive overhaul of U.S. immigration laws, an issue of keen interest to Latin American nations. But he faces an uphill fight on his bid to create a guest-worker program allowing illegal immigrants to obtain legal status.
Almost 80 percent of the approximately 12 million ``unauthorized migrants’’ in the U.S. are from Latin America, estimates the Pew Hispanic Center.
The president signed legislation last year funding construction of fences along the U.S.-Mexico border — a measure that Chris Sabatini, policy director at the Council of the Americas in New York, describes as ``poisonous’’ in Latin America.
``The U.S. needs to engage Latin America more on issues that matter to Latin America,’’ Sabatini said, citing food subsidies, poverty alleviation and immigration.
Latin leaders are filling a void left by the U.S. with their own trade and political agreements. China has emerged as a major importer of iron ore, soy and copper, all of which fuel Latin America’s economic growth. In September, China’s state-run Xinhua News Agency reported first-half trade with Brazil may reach $20 billion this year, up 35 percent from 2006. U.S. trade with Brazil in 2006 was about $42 billion, according to the U.S. Census Bureau.
Venezuela and Iran agreed in December to jointly construct and service offshore oil and natural-gas platforms.
New Nicaraguan President Daniel Ortega, 61, who led the Sandinista government that clashed with the U.S. in the 1980s, called Ahmadinejad his ``brother’’ during the Iranian leader’s visit. Ortega agreed to reopen diplomatic relations with Iran, and said after he and Ahmadinejad toured a Managua shantytown that they would work together to reduce poverty in Nicaragua.
Bolivia’s Morales, 47, hosted a December summit where 12 regional heads of state agreed to build an economic union, partly to improve their bargaining power with the U.S., Europe and China.
Rejecting the U.S. plan for a free-trade agreement of the Americas, the governments of Venezuela, Bolivia, Nicaragua and Cuba created a ``People’s Free Trade Agreement’’ to exchange goods and services.
Assistant U.S. Secretary of State Thomas Shannon, whose portfolio includes Latin America, said the U.S. is preparing for a ``year of engagement’’ in the region, after a visit last year by Secretary of State Condoleezza Rice.
``It became evident to us that our message wasn’t getting through,’’ Shannon told the Council of the Americas in a speech last month in New York.