- The Washington Times - Monday, August 8, 2005

This report reflects the consensus of the Inter-American Dialogue’s 100 members from the United States, Canada and more than 20 countries of Latin America and the Caribbean. Former President Fernando Henrique Cardoso of Brazil and CARE President Peter D. Bell serve as co-chairmen. Other members include a dozen former presidents, as well as former Cabinet ministers, sitting governors, congressional leaders, corporate chief executive officers and distinguished academics and journalists. The Inter-American Dialogue is the leading U.S. center for policy analysis and debate on Western Hemisphere affairs. Dialogue reports aim to generate new policy ideas and practical proposals for action directed to government and private decision-makers.

After five years of stagnation, most economies in Latin America and the Caribbean resumed a healthy pace of growth in 2004. This welcome break in Latin America’s economic clouds also has starkly exposed the many daunting challenges still confronting the region. So far, the economic rebound has not eased the political turmoil or moderated the social tensions affecting many of the region’s countries.

Moreover, too many of Latin America’s economic booms have turned into busts for anyone to predict with confidence that the region is on a permanent course of growth. Most of Latin America’s economies are far better managed today than in the past, but sustained economic success will require substantially larger investments in education and infrastructure, increased national savings and improved tax collection, better-managed anti-poverty programs, and expanded trade and investment. Some countries — Chile, particularly — have made progress, but Latin America has fallen behind the rest of the world on virtually all of these fronts.

In the past half-dozen years, Latin America has become more politically unsettled, socially troubled and difficult to govern — even as democratic politics have shown remarkable resilience.

Two Latin American countries — Venezuela and Haiti — today hardly qualify as democracies. In Venezuela, Mr. Chavez maintains a significant measure of popular support and has managed to win a long series of elections. But he has eliminated most checks on his power and stifled the activities of opposition groups. He has packed the Supreme Court with his supporters, harassed civil society groups and secured congressional approval for laws curtailing freedom of the press.

Haiti may not yet be a failed state, but it is perilously close. Last year, the democratically elected, although increasingly violence-prone and corrupt, government of Jean-Bertrand Aristide was forced from power by armed bands. Today, more than a year after his ouster, Haiti’s political system barely functions and remains dangerously polarized, its economy is stagnant, jobs are scarce, and social needs go largely unmet.

Bolivia, Ecuador and Nicaragua each retain many of the features of a functioning democracy and constitutional order. But weak institutions, fractious politics and deep social divisions have left democratic rule under continuing threat. After violent confrontations forced two presidents from office in the past two years, Bolivia’s politics have settled down in preparation for year-end elections. The hostility and distrust among different regions and ethnic groups, however, continue to block economic progress and threaten the unity of the country.

In April, Lucio Gutierrez became Ecuador’s third elected president in a row to be driven from office by popular demonstrations. The country’s political parties consistently break the democratic rules as they jockey for power. Like those of Bolivia, Ecuador’s politics are dangerously polarized along ethnic and regional lines. Nicaragua’s elected president can barely govern the nation. An alliance of corrupt legislators from both the left and right have taken control of the National Assembly and the country’s judicial system.

Although they are not confronting crises, the politics of several other countries are troubled and could deteriorate. In Peru, despite several years of strong economic growth, President Alejandro Toledo is rejected by more than 80 percent of voters. Guatemala remains an ethnically divided country. Governments in Honduras and El Salvador are challenged by the growing size and virulence of youth gangs and the violent backlash they are provoking.

The political news from Latin America is not uniformly bad. Indeed, it is surprisingly robust in a number of countries. Notwithstanding the poor economic and social performance of many of Latin America’s democratic governments in the past two decades, a solid majority of the region’s people still consider democracy the best form of government.

Illiteracy in Latin America and the Caribbean has been cut by more than half since 1980, and primary school enrollments have jumped to 95 percent. Infant mortality has dropped by about 60 percent, and life expectancy rose by six years to 72. Still, the gap between rich and poor remains worse than in any other region of the world — dividing and polarizing the populations of many countries, leaving citizens with tenuously shared values and many divergent interests. The problems are compounded in countries where racial and ethnic differences reinforce economic and social inequality.

Governments can make progress toward greater equity and fairness, but they must make politically difficult decisions — to curb subsidies to the middle class and wealthy and reallocate the resources to poorer groups, to make high-income groups pay their taxes, to end discrimination against indigenous groups and African descendants, and to widen opportunities for women.

Everywhere in Latin America, highest priority needs to be given to education. School enrollments have expanded dramatically, but the quality of education remains mediocre.

On international tests, Latin American students score in the bottom tier. Instead of promoting social mobility, education reinforces national inequalities.

Along with economic failure and joblessness, street crime and violence have most discredited democratic governments in the region. Not much progress can be expected in Latin America’s battle against violent crime unless the nations of the region begin to grow steadily, curb unemployment and deal effectively with other social problems.

Governments also must find a way to address the corruption, disarray and inadequate financing that plague their police forces and judicial systems. Every country needs to do more to battle the illicit drug trade.

Latin America’s relations with the United States are strained, and hemispheric cooperation is faltering. Negotiations toward the Free Trade Agreement of the Americas have been stalled for years. Four presidential summit meetings held since 1994 have not produced much progress toward a common inter-American agenda. Disagreements among member states are obstructing the work of the Organization of American States on issues of democracy, elections and human rights.

Still, the United States and the nations of Latin America, with the exceptions of Cuba and Venezuela, have not become adversaries. They continue to work together on a great variety of fronts. Regardless of their dissatisfaction with recent U.S. foreign policy, most nations of the hemisphere want to strengthen their relations with Washington.

Ratification of the Central American Free Trade Agreement is an important sign of continuing U.S. commitment to regional free trade — Washington’s most promising opportunity for engaging Latin America.

Still, the Bush administration has not yet demonstrated either the interest or capability to pursue a longer-term cooperative policy in the Americas that would mobilize the support of Latin American nations and help buttress democracy and economic progress in the region.

Latin America’s future depends on many factors. A vibrant world economy would certainly increase the likelihood for steady growth — which would, in turn, improve prospects for democratic stability and social advance. A more engaged and cooperative United States could play a helpful role in Latin America.

But Latin America’s longer-term prospects will depend mostly on whether the region’s governments are able to take the measures necessary to make their own economies and societies stronger, more resilient and more just. Latin America confronts four interlinked challenges that must be addressed in tandem. Latin American nations today need to achieve sustained, robust economic expansion over many years. Without economic progress, the region cannot deal meaningfully with its central problems of poverty and inequality, crime and violence, and political and institutional instability. Yet unless effective measures are taken now to begin addressing these problems directly, Latin America’s growth will continue to be hobbled.

Economic success and social advance will require fundamental changes — including new measures to expand foreign trade; greater investments in energy, communications and transportation; mechanisms to bolster national savings and increase tax revenue; and effective programs to reduce poverty. Improving the dismal quality of education across Latin America demands particular attention. Latin America’s future can be brighter, but only if the region’s nations do a better job of managing their economies, strengthening their institutions and — most of all — serving the needs of their citizens.

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