A New U.S. Face

The impact of career diplomat Tom Shannon's appointment as chief U.S. envoy to Latin America will be watched with great interest over 2006. He follows in the wake of two hardliners - Otto Reich and Roger Noriega. Initially pledging to assuage tensions with Venezuela under the incumbent leftist and strongly anti-U.S. president Hugo Chavez, Shannon rapidly switched to a more Noriega-like approach. He recently called on Latin America to isolate the anti-capitalist president with a speech that could have been written by Noriega himself. The year 2006 is therefore unlikely to see the United States soften its line with regard to Venezuela. Left-of-centre governments, set to dominate in forthcoming elections, will, however, be in no hurry to isolate oil-rich Venezuela. Chavez has earnestly courted them with 'petro-diplomacy', with considerable success.

The Rise of Anti-U.S. Sentiment?

The IV Summit of the Americas that brought together the Western Hemisphere heads of states (apart from Cuba) was the setting for the expression of rising anti-U.S. sentiment. This was fundamentally embodied by the holding of a parallel Summit - or 'counter-Summit' - where anti-globalisation militants gathered to protest against the Free Trade Area of the Americas (FTAA) and the meddling of the United States in the region. Attended by core anti-U.S. figures such as Chavez and Bolivia's then-frontrunner (now president-elect) Evo Morales, the counter-summit attracted thousands. Protests - often violent - and anti-Bush pamphlet drops in Argentina raise the key question of how the United States is perceived in Latin America. After more than a decade of U.S.-led pro-market policies that failed to resolve the issues of chronic poverty, Latin Americans are becoming wary of the superpower's role in the region. The well-known Chilean-based Latinobarómetro Corporation, which conducts yearly surveys of political opinion in the region, shows that 61% of Latin Americans in general have a positive opinion of the United States, a seven-percentage-point decline since 2000. The overall score bodes well for the United States, but disaggregated figures reveal that Central American nations lead the 'positive mood' camp, while Argentina and Uruguay register regional lows, with only 32% and 38% of their population having a good image of the United States. What is more, the trust Latin Americans afford the United States is very low: only 34% of Latin Americans have 'some or a lot' of trust in the United States and 61% have 'no or little' trust. The coming year and the pursuit of U.S. trade initiatives are likely to fuel discontent further in some regions and in some segments of the population. In the run-up to the implementation of the Central America Free Trade Agreement with the Dominican Republic (CAFTA-DR), for instance, Guatemala suffered an inordinate amount of violence, while Peru saw large doses of widespread strikes as a result of the Andean-U.S. FTA.

A certain distancing from the United States has also been reflected in the political class with the rise of Morales, Chavez and more recently the Peruvian presidential candidate, ultranationalist Ollanta Humala. Not only are such self-confessed adversaries of the United States emerging, but exclusively Latin American projects are also taking shape. The most recent is the creation of the Southern American Community of Nations (CSN), formally announced in December 2004 with the aim of merging the Andean Community with Mercosur. The ultimate goal is to fashion a European Union (EU)-like community within South America. The CSN is set to encounter difficulties, but it does attest to a regional focus in politics and economics. Meanwhile, bilateral summits between Argentina and Venezuela, and Argentina and Brazil, where leaders pledge to foster sub-regional integration, also point to a greater 'southern' emphasis.

This is by no means a homogenous stance. Central America and Mexico are set to remain closely tied to the United States, while Mercosur members concentrate on widening and strengthening the bloc in the sub-continent. At the same time other countries enjoy 'unique' relations with the superpower - such as Colombia heavily relying on the United States' military and financial assistance - and try to juggle both U.S.-led and regionally-led schemes. There are thus notable variations between Latin American nations in the degree of emphasis they give to U.S. policies, both in internal and external matters. A general feeling of estrangement prevails, though the attitude of some countries or blocs gives the lie to the notion of a single common stance on U.S.-Latin American relations.

U.S. Loses OAS Power Struggle

Divergent stances towards the United States were also reflected in the election of a new secretary-general for the Organization of American States (OAS). The vote decisively broke with 60 years of history, as the U.S. favourite did not win the post. The initially U.S.-backed candidate, former Salvadoran president Francisco Flores, stepped down due to a lack of support and the United States' second choice, Mexican Foreign Minister Luis Ernesto Derbez, abandoned the race as voting ended in deadlock. His exit paved the way for the victory of Chile's Interior Minister Jose Miguel Insulza. The OAS vote mirrored regional divisions, with Central America, Mexico (and others) throwing their weight behind the United States, while left-leaning governments supported the Chilean candidate. For the first time, the Western Hemisphere could not consensually agree on a U.S.-backed candidate, revealing split loyalties. The spread of regional trade agreements further illustrates the conflicting regional dynamics vis-à-vis the U.S. government in Washington.

Trade Diplomacy in 2006

Some CAFTA Success...

CAFTA-DR is undeniably the United States' major trade success. The arrangement is no longer an elusive prospect, and despite rumours of a possible delay in its implementation - scheduled for 1 January 2006 - it will certainly come into force during 2006.

Despite the imminent completion of CAFTA-DR, the road to sealing the deal with El Salvador, Honduras, Guatemala, Nicaragua and the Dominican Republic was rocky. Amid intense and often violent protests from the local populations and a worrying political paralysis in Nicaragua, the small Central American economies struggled to ratify the treaty. More importantly, the sub-region's strongest economic player, Costa Rica, has to date failed to consent formally to the agreement. It is presently being discussed in the country's Congress, but there are intense societal divisions. The predominant sentiment that the country has performed perfectly well without the deal is impeding its approval. As the deadline looms, most countries - except for El Salvador and to a lesser extent the Dominican Republic and Honduras - remain embroiled in debates over how best to harmonise legislation and to prepare structurally for the agreement's consequences. As things stand, CAFTA-DR's essential prerequisites are yet to be fully implemented in most countries. Some leaders have even suggested holding off until Costa Rica is ready to join them. The self-imposed date for the scheme to come into force could thus be forced back, but a date beyond 2006 is unlikely.

...While Andean FTA Drifts

The future of the Andean FTA is much bleaker than its Central American equivalent. Negotiations were initiated 18 months ago, but talks between the United States, Colombia, Ecuador and Peru finally broke down in 2005. The countries largely laid the blame on the United States' 'inflexible' stance on the notoriously controversial themes of intellectual property (IP) and the agricultural sector. The stalling of talks led to the fragmentation of the Andean bloc, with each nation continuing negotiations individually, which arguably weakens their bargaining capability with the superpower. Pressed by its own political agenda, Peru alone secured a bilateral FTA with the United States. It seems that 2006 will see Ecuador and Colombia following the same route. Peru and the United States are unlikely to wait for Ecuador and Colombia to ratify the deal. The coming year will thus be marked by more dual approaches, adding to pre-existing bilateral FTAs with the United States that involve Chile and Mexico. Resistance from Ecuador and Colombia does not automatically signify disaffection with the United States in itself, but it does signal a will to preserve some sectors of the national economies and strike a fair deal with the superpower. The whole situation contrasts with the near-100% embrace of the Washington Consensus in Latin America from the late 1980s to the 1990s. A relative distancing is observed, notably - and more markedly - on the issue of FTAA.

Wider FTAA Will Remain Elusive

The IV Summit of the Americas was a watershed for this U.S.-led trade initiative in Latin America. The FTAA has proved elusive since its proposal in 1994, and President Bush had pledged to revive negotiations decisively for the scheme in 2005-2006. The Summit, held at Mar del Plata (Argentina) from 4-5 November 2005, did not go as planned as far as the United States is concerned. President Bush's aspirations were crucially opposed by the richer southern economic bloc - the South American Common Market (Mercosur) comprising Argentina, Brazil, Paraguay and Uruguay - and, quite unsurprisingly, by oil-rich Venezuela. The latter, a noted opponent of the United States, is set to become a full member of Mercosur in 2006. In a similar stance to that of the Andean nations, regional powerhouses Brazil and Argentina decided not to proceed with the FTAA unless the issue of the United States' heavy subsidies to its agricultural producers was addressed. The Mercosur-Venezuela alliance successfully blocked the inclusion of a firm date for the instigation of FTAA negotiations, leaving the scheme suspended for now. Although FTA projects have frequently encountered opposition and delays, the Summit may be considered a turning point for the United States in its influence on the region, since all previous encounters traditionally found the 34 heads of state unanimously endorsing the scheme. An FTAA is not 'buried' per se, as hoped for by President Chavez, but the U.S. administration did register a setback in its hemispheric ambitions. Brazil, in particular, seems keen - and has enough weight - to march to its own tune without departing drastically from the U.S. agenda.

Key Predictions for 2006

From a general perspective, the trade ambitions, OAS elections and widespread protests of 2005 witnessed a reconfiguration of hemispheric powers and popular aspirations. The events revealed that the United States is still heavily influential in the region, but losing ground on some aspects and in some countries.

More Regional Focus: The current preference of South American nations for sub-regional integration and co-operation is undeniably tied to the presence of leftist - or left-of-centre - governments in the region. The plethora of elections in the region will be the key driver behind the maintenance or the waning of this increasingly region-focused stance - concomitant with a relative distancing from U.S. goals. Considering the imminent implementation of the CAFTA-DR in 2006, Central American nations are creating further links with the superpower and, in effect, 'looking north'. The fact that many contests remain open-ended obscures a wider perspective on U.S.-Latin American relations. In any case, some projects such as the CSN and the widening of the wealthy Mercosur bloc have gained momentum in the last year. The coming year should witness more countries in the region building on this new pattern and adopting this new position towards the United States.

Shannon Goes for Noriega's Approach: As mentioned above, Tom Shannon will be another key element determining the future direction of U.S.-Latin American relations. It now seems that Tom Shannon and Chavez will maintain hostile positions for 2006 and the hopes of milder rhetoric will rapidly wither. Radicalisation of the incumbent Venezuelan administration will be tied to Shannon's own comments and vice versa.

Co-operation on Drugs Continues: The United States is at this stage unlikely to amend its supply-side approach to combating the drugs trade, nor will it amend the certification process by which U.S. aid to countries is contingent upon their collaboration in the counter-narcotics effort. Andean countries and Central America are the chief aid recipients of the scheme: Colombia is the uncontested leader, and this is unlikely to change. The U.S.-promoted fumigation of plantations of coca and amapola - the raw materials for cocaine and heroin - will continue to foster destabilisation in the Andean basin, as Ecuador protests against the chemical effects of fumigation just over the border in Colombia, and as pro-coca cultivation leaders gain a foothold in the Peruvian and Bolivian political landscape. The question of counter-narcotics co-operation between the United States and Venezuela, which was blacklisted by the United States in a highly politically charged move, is likely to be hindered by the current state of relations between the two countries. Venezuela's removal from the blacklist is set to be tied more to the softening of Chavez's administration (unlikely) than to the actual effort of the country in the area.

Contact: Raul Dary

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