South American woes are our woes too
August 11, 2002
While most of us follow the dangerous and deteriorating situation in the Middle East, several South American countries are beset by intractable economic and political problems. Among the besieged nations are the three countries that U.S. Treasury Secretary Paul O’Neill visited last week: Argentina, Brazil and Uruguay.
Argentina is facing a national bank failure; the leading presidential candidate in economically challenged Brazil is an anti-American leftist; and Uruguay received a $1.5 billion emergency loan from the U.S. last Monday to save the tiny nation from economic collapse. Although all three countries look to us for solutions to their economic problems, our ability to provide relief is limited at best.
Several other South American countries are in trouble including Colombia, Peru and Venezuela, where I lived and worked for several years. At least 14 people died in Bogota last Wednesday as Colombia inaugurated a new, hard-line president, Alvaro Uribe; he takes office in a country on the brink of civil war. Peru is attempting to climb out of a painful economic recession, and Venezuelans are taking to the streets in a running battle over whether left-leaning President Hugo Chavez, Fidel Castro’s best friend, should resign in the wake of a bloody coup attempt earlier this year.
Treasury Secretary O’Neill began his trip in Brazil, where he met with outgoing President Fernando Cardoso and pledged U.S. support for an international “bailout” that would enable Brazil to pay down its $250 billion debt and save its plunging currency. On Wednesday, Brazil signed a $30 billion bailout package with the International Monetary Fund, the largest such transaction in IMF history.
Foreign investors are nervous because the front-runner in Brazil’s next presidential election, scheduled for this October, is Luis Inacio da Silva, a left-wing ideologue with an anti-American agenda. Writing in the conservative Weekly Standard, former U.S. National Security Council staffer Constantine Menges predicted that a da Silva victory would be “a major setback for freedom” that could “increase dramatically the threat of terrorist attacks in the United States” — not a very encouraging prospect.
O’Neill’s next stop was Uruguay, where President Jorge Batlle thanked him for our emergency loan, which was the first time the Bush administration has provided direct economic support to a country in financial crisis. The Federal Reserve loan is to be repaid within days once Uruguay receives new financing from international lending institutions.
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Argentina, O’Neill’s final stop, is an economic basket case that defaulted on its $141 billion public debt last December. Late last month, a four-year economic tailspin exploded into violence with large-scale labor protests and scattered supermarket lootings. Prior to his departure, the outspoken O’Neill contributed to the unrest by declaring that the U.S. was unwilling to grant aid to countries only to see it end up in Swiss bank accounts, an obvious allusion to corruption charges filed against former Argentine President Carlos Menem. After he arrived in Buenos Aires, however, O’Neill supported an IMF loan package for Argentina.
According to Business Week magazine, “Latin Americans continue to believe that Washington has largely turned a blind eye to the region’s mounting problems of swooning currencies, international debt and a surge of populist sentiment….” In the same article, noted Argentine economist Carlos Escudee said that “no amount of public mea culpas by O’Neill would alter Latin America’s perception that the U.S. lets Latin America fend for itself while it focuses on its own domestic economic problems and the war on terrorism,” which shouldn’t surprise anyone. O’Neill didn’t issue any mea culpas and Prof. Escudee didn’t mention the Uruguayan bailout.
It was my experience that the Latin Americans criticized us when we intervened in their affairs, and when we didn’t in a “damned if you do, damned if you don’t” approach to international relations. If we made an emergency loan, it was too late and it wasn’t enough; and if we didn’t make the loan, that proved we didn’t care. It was a difficult public affairs dilemma.
In the case of Argentina, bilateral relations were so good during the 1990s that “American chic” invaded cosmopolitan Buenos Aires, where English words like “shopping” and “fashion” became part of the local lexicon. But as Latin America’s third largest economy suffers its worst collapse since the Great Depression, anti-American sentiment is on the rise as looters and rioters have attacked McDonald’s and other American symbols.
In June, the Washington Post quoted critics who claimed the U.S. “is going it alone … just as Latin America is confronting some of its worst political and economic turmoil since the end of the Cold War.” Well, maybe, but much of that turmoil is home-grown and for the most part Latin Americans have only themselves to blame for their own problems.
As for Colombia, Peru and Venezuela, we’ll deal with them in a future column.
Guy W. Farmer, a semi-retired journalist and former U.S. diplomat, resides in Carson City.
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