The Good Neighbor Strategy

By Moises Naim

A presidential election too close to call. Aggrieved voters in the streets. Partisans exchanging accusations of fraud and demanding manual recounts. Lawyers drooling in expectation of weeks of court fights.

Sound familiar? It should. Mexico City today feels a lot like Tallahassee, Fla., six year ago. But Mexico's election is about much more than who will become the country's next President, and its result will have lasting implications for Latin America as a whole. In 2000, although U.S. voters were choosing between two very different presidential candidates, only a minority felt that the outcome would drastically alter the basic foundations of the nation. Not so for Mexicans. Voters believed the election would not only decide who would run the country for six years but also, more fundamentally, what kind of political and economic system Mexico would have. The platforms of the two leading candidates--the conservative Felipe Calderon and the leftist Andres Manuel Lopez Obrador--differed on the roles of the state vs. the market, the nature of political institutions, how to fight poverty and what kinds of links Mexico should have with the rest of the world.

That clash of visions is not confined to Mexico. Similar battles are raging throughout Latin America, which is witnessing the rise of a generation of politicians seeking to capitalize on frustration with the free-market, pro-American policies commonly pursued in the region in the 1990s, when much was promised and little was accomplished in terms of raising living standards. The leader of this turn toward populism is Venezuelan President Hugo Chavez, who has cast himself as the heir to Fidel Castro, using his country's oil bonanza to purchase political influence all over the continent. But in recent months, the Chavez movement has run up against opposition from forces that view it as wrongheaded, militaristic and undemocratic. In Mexico's election, as in Peru's last month, Chavez turned out to be more of a liability than an asset to the leftist candidate carrying his banner.

That ambivalence provides an opportunity for the U.S. The issues fueling the Chavez movement--poverty, inequality, exclusion, corruption and widespread frustration--haven't gone away. Despite the perorations of populists like Chavez and Castro, Latin America's maladies are not made in Washington but are self-inflicted wounds originating in the predatory elites that control policymaking in places like Buenos Aires, Caracas, Brasilia and Mexico City. Those are problems for which Washington has never had the skills or the means to influence. On the whole, the U.S. is better off letting Latin Americans figure out how to solve Latin America's problems.

But indifference has its costs too. After Sept. 11, the U.S.'s priorities of fighting Islamic terrorism and waging wars in Afghanistan and Iraq have led the Bush Administration to ignore Latin America as mostly irrelevant, which has allowed leaders like Chavez to attack U.S. policies at will and sully Washington's reputation in the region. But the U.S. can still repair much of the damage--if it takes two bold initiatives that would break through the shortsighted policies that limit its opportunities in Latin America.

The first step toward draining the appeal of Chavezism and restoring the U.S.'s image in Latin America would be to unilaterally lift the embargo on Cuba. The U.S. embargo has never worked as a tool to weaken Castro. Instead it has provided him with a wonderful excuse to hide his failures and justify the island's dire poverty and harsh political repression. The embargo is even less effective now that Cuba is so deeply intertwined economically and politically with Venezuela and other countries in the region. Embargoing Cuba without cutting off its ties to other countries is akin to staging an embargo against Portugal that ignores its ties to the rest of Europe. The U.S. embargo on Cuba has enormous political costs for the U.S. and no benefit other than pleasing a portion, but not all, of Cuban-American voters. Moreover, for the U.S. to maintain an embargo on Cuba while embracing Vietnam--a communist state with which the U.S. fought a long and costly war--and promoting trade and investment with Hanoi represents a blatant double standard that provides ammunition to U.S. detractors everywhere.

Another strategic surprise would be to engage the largest, most influential country in South America: Brazil. For decades U.S. policy toward Latin America has been driven by emergencies and a small-country bias: Cuba, the tiny Central American nations, Grenada and Haiti have all consumed far more of Washington's time and resources than giant Brazil, which was too big, remote and independent to be a pawn in the cold war. The only significant departure from the U.S.'s small-country bias has been with Mexico, first in the creation of NAFTA and then when Washington bailed the country out after its financial crash in 1994. Paying attention to Brazil would involve offering an attractive trade agreement that would grant freer access to the U.S. market for Brazilian steel, shoes, orange juice, ethanol and other products that currently face import barriers. The costs for the U.S. economy would be relatively minimal. For Brazil, such a deal would stimulate exports, drive investment and lift the economy.

Even more important, such an approach would reward and support a country (and a government) that is providing a powerful counterexample to the populist policies that are gaining favor in the region. That could be a very inclusive initiative: any Latin American country could be invited to join the two leading nations in the western hemisphere in this agreement. To be eligible, countries would need to adopt pro-poor, growth-inducing economic reforms that spur competition and open markets. They would also be required to enact political reforms that strengthen democratic practices and institutions. It could be a powerful stimulus for positive change, since few countries in the region could afford to be left out of an economic arrangement that included Brazil and the U.S.

Would this Administration be willing to pursue either of these moves? At this stage it doesn't seem likely. The first measure would provoke howls from many Cuban exiles in Florida, while the second would irk U.S. business interests that would face competition from Brazilian imports. But if Richard Nixon could go to China, perhaps George W. Bush could discover Brazil--and stop making a failed Caribbean dictator an important element of U.S. policy. It could be that an embattled, second-term U.S. President looking for a legacy other than a botched attempt at installing democracy in faraway lands could warm up to the idea of leaving a permanent, positive mark in his country's own neighborhood.

Moises Naim is editor in chief of Foreign Policy magazine and author of Illicit: How Smugglers, Traffickers and Copycats Are Hijacking the Global Economy