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Venezuela and Hugo Chavez: Reflections from the Mar del Plata Summit

By John Sweeney

Mar del Plata, November 12 - Venezuelan President Hugo Chavez returned from the Fourth Summit of the Americas held Nov. 4-5 in the Argentine tourism resort of Mar del Plata crowing that Latin America had achieved a great victory against U.S. President George W. Bush. Chavez declared from Argentina that the proposed Free Trade Area of the Americas (FTAA) was buried and U.S. imperialism was repulsed by a united region. That’s a wildly inaccurate claim.

The FTAA negotiations are stalled. However, the U.S.-backed hemispheric free trade initiative is not dead and buried. In the official statement issued at the summit’s conclusion, 29 countries strongly endorsed the FTAA. Only five countries opposed the FTAA: Venezuela and Mercosur (Brazil, Argentina, Paraguay and Uruguay).

This outcome was a huge geopolitical setback for Brazil’s ambitions to expand Mercosur. It was also a tremendous setback for Chavez’s plans to expand the Bolivarian revolution regionally with Cuban support.

Many summits have been held regionally in the past two years by entities like Mercosur, the Andean Community, the Group of Rio, the annual Ibero-American events sponsored by Spain, the Caribbean Community (Caricom), the Association of Caribbean States and Venezuela’s regional energy summits to create PetroCaribe and PetroAmerica. Brazil and Venezuela in particular have been very eager promoters of these summits, where the U.S. isn’t even an invited observer. There also have been several mini-summits like the one Chavez hosted earlier this year for the prime minister of Spain and the presidents of Colombia and Brazil.

All this Latin American summitry has focused on strengthening regional integration, merging Mercosur and the Andean Community, creating the South American Community of Nations, etc. Also, Chavez in the past year has allocated over 300,000 b/d of Venezuelan crude oil and refined products for sale under very preferential payment schemes to Cuba and other Caribbean countries, Argentina, Uruguay and Paraguay, among others. He has purchased over $800 million of Argentine government debt, and has pledged to invest more than $6 billion regionally mainly in oil refining ventures.

Despite Brazil’s aggressive efforts in the past two years to advance its Mercosur ambitions, however, and despite Chavez’s liberal use of Venezuela’s oil wealth to buy strategic political alliances, 29 heads of state in Latin America and the Caribbean still very much want their countries to be trade partners of the United States in a hemispheric FTAA. Bush personally may be an unpopular U.S. president throughout Latin America, but 29 heads of state won’t let personal feelings get in the way of a free trade agreement with the U.S. if and when the opportunity presents itself.

President Chavez was delighted with the Mar del Plata summit. Apparently he believes that leading a noisy anti-American protest against President Bush in a soccer stadium packed with between 25,000 and 40,000 people (reports of the crowd’s size vary) has consolidated his status as Latin America’s new radical socialist revolutionary leader. Chavez was the only Latin American head of state at the so-called “people’s summit” where several hundred protesters eventually rampaged through downtown Mar del Plata destroying stores and fighting with police. At the stadium, Chavez gave a two-hour speech to an adoring crowd of perfect Latin American idiots in which he repeated his claims that the U.S. plans to kill him and invade Venezuela. Then he declared that the FTAA would be buried in Mar del Plata.

If a picture is worth a million words, a new revolutionary wall poster was created in Mar del Plata: “El Comandante” Chavez flanked by Maradona the crackhead and Evo Morales the coca grower, blaming the U.S. government and capitalist democracy (i.e. neoliberalism) for Latin America’s chronic economic and social malaise.

If the FTAA is not dead and buried, however, it’s certainly not in good health either. Relations between the governments of the United States and Latin America are also hurting. Even solid U.S. allies in the region like Mexico, Colombia, Chile and El Salvador are unhappy with the Bush administration. Major U.S. news media like The New York Times and the Washington Post reported Bush’s trip to Argentina, followed by stops in Brazil and Panama, as a major failure because there were no breakthroughs on the FTAA. However, that assessment by the media is inaccurate.

The State Department never said the president expected to restart the FTAA negotiations in Mar del Plata. Bush knows he doesn’t have the time left in office and that he lacks the political capital to jump-start a process that has been stalled since before he was elected to his first term in November 2000. Assistant Secretary of State for Western Hemisphere Affairs Thomas Shannon told U.S. journalists on the flight from Washington, D.C. to Mar del Plata that President Bush would attend the summit to work jointly with his colleagues on moving the regional trade and development agenda in a positive direction.

In fact, Bush spent most of his time at the summit listening to windy speeches by all of the region’s heads of state. He also reaffirmed the U.S. view that freedom, development and prosperity can best be achieved through free trade, open economies and democratic governance. Bush confirmed the U.S. commitment to hemispheric free trade, and warned that the rise of revolutionary populism leads to authoritarian outcomes in which freedom and prosperity are crushed. Significantly, while Bush kept a low profile at Mar del Plata, Mexican President Vicente Fox carried the flag for hemispheric free trade. However, Fox is a lame duck president with less than a year left in power.

Bush’s stop in Brazil reaffirmed the geopolitical importance that the State Department assigns to Brazil as a regional leader and linchpin of stability. In sharp contrast to Chavez’s antics in Mar del Plata, Brazilian President Luiz Inacio “Lula” da Silva obtained from Bush an explicit acknowledgement that the unresolved issue of U.S. agricultural subsidies has undercut the FTAA negotiations and is affecting the World Trade Organization’s (WTO) Doha Round of negotiations. After meeting with da Silva, Bush declared that the U.S. was prepared to work jointly with Brazil at the Doha Round on dismantling agricultural subsidies globally.

"A successful Doha Round will open up markets for farm products, and services, and industrial goods across this hemisphere and across the globe,” President Bush said in Brazil. “Under Doha, every nation will gain -- and the developing world stands to gain the most. The World Bank estimates that if the Doha Round passes, 300 million people will be lifted from poverty. My administration has offered a bold proposal for Doha that would substantially reduce agricultural tariffs and trade-distorting subsidies in a first stage -- and over a period of fifteen years, eliminate them altogether.”

While Chavez won cheers from idiots for trashing Bush and free trade in Mar del Plata, da Silva got from Bush both an important U.S. admission on subsidies and a U.S. political commitment to work with Brazil at the WTO to dismantle subsidies not only in the U.S., but throughout the world.

Bush places a lot of importance on keeping schedules and timetables, so he wasn’t pleased by delays in the summit’s scheduled events. The debate among presidents was vigorous. The official state dinner on November 4 did not start until after 10 p.m. and Bush didn’t return to his presidential quarters until past 12:30 a.m., nearly four hours after he normally goes to bed. To make up the “lost time” Bush tried to get out of the November 5 luncheon with the other heads of state. However, disagreements over whether or not to include any mention of the FTAA in the summit’s final official declaration kept the presidents at the negotiating table through lunchtime. Bush was visibly annoyed at the delays and insisted on leaving Mar del Plata as scheduled shortly after 4 p.m. local time on November 5, leaving behind senior State Department officials to ensure the final declaration would include mention of the FTAA.

The final declaration had 29 countries supporting the FTAA, while the “Five Musketeers” – Mercosur plus Venezuela – declared their opposition to the FTAA until the playing field is equal for everyone.

All things considered, the FTAA isn’t buried yet, most of the region wants to sign trade deals with the U.S., and President Bush achieved as much as any U.S. president reasonably could expect during the trip. Bush knows that his Latin America policy is in trouble, but with Shannon at the State Department and Steve Hadley at the National Security Council he obviously expects that the situation will improve in coming months. Since Shannon took over the Latin America portfolio at the State Department, the U.S. government successfully stopped a constitutional coup in Nicaragua against President Enrique Bolanos. Shannon and Hadley will strengthen the Bush administration’s Latin America policy. However, major breakthroughs are unlikely.

Bush is a sorely wounded president at home. New public opinion polls released while Bush was traveling in Latin America show that for the first time a majority of voters have misgivings about the Iraq war. A majority reportedly also have doubts about the president’s personal honesty and integrity. The Iraq war is now in its third year and over 2,000 U.S. citizens have died, with no end to the conflict in sight. War fatigue has set in and will intensify as the body count continues to grow. Bush’s determination to “stay the course” in Iraq, as he puts it, will be undone politically by the rising U.S. body count.

Bush also confronts a growing political scandal that reaches deep into the White House. Vice President Dick Cheney’s chief of staff is under federal indictment for allegedly leaking the name of covert CIA agent Valerie Plame to the news media, and Bush is under growing political pressure to fire his chief of staff Karl Rove. These pressures will increase in coming months as the news media starts to focus more on issues like the alleged existence of a secret “enemies list” with more than 30,000 names that Rove has been compiling since Bush was Governor of Texas. Bush likely will also come under fire following a Washington Post report that the U.S. maintains a network of secret prisons outside the United States where terrorism suspects are held and interrogated indefinitely. Bush also has many other domestic political headaches on the horizon, including a housing bubble that could burst sooner than many expect with disastrous consequences for millions of middle class homeowners that dipped into their home equity to pile up mountains of personal debt.

The point is that Bush may have a substantially better foreign policy team in place for Latin America, but he will be too occupied with domestic political issues in coming months to pay any attention to Latin America.

The FTAA will remain stalled and Bush will remain distracted. How about Latin America? Miami Herald columnist Andres Oppenheimer said that Mar del Plata demonstrated there are now two Americas. “Barring a surprise turnaround at a meeting scheduled for an indefinite date next year, pending the result of worldwide trade negotiations within the World Trade Organization, we are heading to a formal partition of the hemisphere,” he said.

Some U.S. policy experts also had a grim view of the summit’s outcome. "The big consensus item 11 years ago has completely fallen apart. The question is will the US now turn away from Latin America or will it redouble efforts to rebuild the trust that has dissipated?" said Michael Shifter at the Inter-American Dialogue, a Washington-based think tank.

However, no one at Mar del Plata – including Bush, Chavez and the other Latin American and Caribbean heads of state – addressed the real issue confronting Latin America. Jeffrey Garten, the Juan Trippe professor at the Yale School of Management (jeffrey.garten@yale.edu) described the issue succinctly:

“Instead of focusing on the urgent need for dramatic social and economic reform,” he wrote in a column entitled “Plummet of the Americas,” Latin American leaders at the summit “likely will be thinking about the 19 major elections taking place in the next 18 months. They will also be taking credit, no doubt, for buoyant economic conditions, even though so much of the real credit goes to forces beyond their control--low interest rates, near-record flows of capital into emerging markets and soaring demand from China for commodities such as oil, copper, meat products and soybeans.”

“If they were really honest with themselves, the summiteers would acknowledge that they've lost their way. Mired in theorizing about this or that model, they don't seem to have the practical capacity to focus on the hard realities. Their countries cannot compete in basic manufacturing with the developing nations of East Asia and Eastern Europe, or in high technology with the United States, the European Union, Japan, or even South Korea. This leaves them dependent on exporting food and other raw materials, and hostage to the cyclical swing of commodity prices, just as they have been for centuries.”

“If global interest rates tighten, as seems likely, the region's high external debt service will come under increasing pressure. If the dollar declines, under the pressure of widening U.S. deficits, Latin American currencies will rise, undermining their export competitiveness. If China's import boom continues to level off, high commodity prices will subside. Though last year Latin America's GNP grew nearly 5 percent, its fastest rate in 25 years, many experts say it needs to grow 6 to 10 percent in order for prosperity to spread as widely as it has in Asia today.”

“It's not enough for the region to do well by its own standards, since it is in a race with other emerging-market economies for capital, technology and talent. In the 1990s, productivity grew at a 0.7 percent rate in Latin America, compared with 2.7 percent in Asia, and trade represented 45 percent of its GDP, compared with 80 percent for Asia. In the World Economic Forum's latest ranking of the 50 most competitive countries, Asia had seven entries and Latin America had one: Chile at number 23. Statistics on national savings, infrastructure investment, income inequality, education, crime and corruption tell a similarly depressing story.”

“The IMF, the InterAmerican Development Bank and many governments and think tanks have given Latin American leaders reams of advice on how to improve growth and social equity. But with weak political institutions and mounting social tension, it is unlikely regional leaders can act in time. It's doubtful that most of them fully realize how fast global investment is moving to the most efficient, productive and entrepreneurial markets. This is a winner-take-all global environment, and Latin America is playing a losing game.”

“Even the exceptions prove the rule. Yes, many Latin American governments have stabilized their currencies and their debts. Chile is on an ascending track, and Intel and Microsoft recently announced plans to establish wireless capabilities all over Brazil. But all this pales compared with feverish progress in the Pacific, where billions of dollars are pouring into high-tech industrial parks and enterprise zones, new factories and universities.”

“It is possible that a robust world economy will throw out a lifeline of continued growth and trade liberalization for a while longer. But if the continent is to have a real future, it needs a Latin version of Margaret Thatcher to take a blowtorch to the barricades blocking open markets and social mobility.”

None of the Latin American and Caribbean heads of state at the summit in Mar del Plata have the political will to blow away the barricades to open markets and social mobility in Latin America. Instead, populism is the driving political force in the region today, and populism is breeding more personal insecurity and increasing government corruption. Perhaps some dark horses will emerge regionally in coming years from a new generation of leaders, but no one stood out in Mar del Plata as a leader capable of blazing the way towards economic development, social mobility and political freedom.

If a message can be inferred from the way Bush sat silently, listening to his hemispheric colleagues argue about the FTAA and other models at Mar del Plata, it is this: The U.S. government will continue to advance U.S. strategic interests in the Americas. These interests include security, free trade and supporting democracy. However, it is up to individual Latin American governments and voters to choose their own future. If they make the wrong electoral choices, they will suffer the consequences and the rest of the world won’t waste time and resources pitying the region.



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