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Statement of Michael Shifter
Vice President for Policy, Inter-American Dialogue
Adjunct Professor, Georgetown University
Before the House Committee on Foreign Affairs
"South America and the US: How to Fix a Broken Relationship"
June 19, 2007

The US relationship with South America is urgently in need of repair. The strain and mistrust between Washington and most South American capitals has grown considerably over the past several years. As was made clear at the General Assembly meeting of the Organization of American States in Panama earlier this month, working together with our closest neighbors to effectively address even such questions as threats to press freedom - the most essential element of democracy - is very difficult in the midst of such heightened tension and political disarray. Further, the 2005 election of the OAS's Secretary General was itself a measure of the hemisphere's deep and bitter divisions. And the latest Summit of the Americas gathering in Argentina in November 2005 was notable for its sour mood and lack of consensus on key policy questions. The dramatic drop in US credibility and the deterioration in its relations with South America should be of utmost concern - and calls for an improvement in the quality of policy attention devoted to the region.

How did the US get to this point?

In my judgment, three sets of factors have contributed to the slide in US relations with South America. The first and most immediate has to do with some of the misguided policies the Bush administration has pursued towards the region over the past several years. The second factor, perhaps even more significant, concerns the Bush administration's global policies, particularly in the Middle East, that have been immensely unpopular in South America and have alienated the region from Washington. And, finally, the worsening US-South America relationship stems from deeper, more structural changes linked with globalization, that go beyond any single administration, and that reflect a move towards greater independence and distance from Washington's agenda.

For most of the Bush administration - and particularly since the terrorist attack on September 11, 2001 - there have been considerable distractions drawing the administration's attention away from South America. To be sure, some decisions have been taken in response to evolving situations in Venezuela, Colombia, Bolivia, Argentina and Brazil, but there has been an absence of any coherent framework or vision to guide those decisions. The policy has been reactive and ad hoc, often resulting in serious errors. At times, the US has been indifferent to South American concerns; at other times, when its agenda is clear, it has been overbearing. In either case, the costs have been enormous and have only widened the rift in inter-American relations.

In 2002, for example, the Bush administration failed to respond to an appeal for modest support from a close ally, former Bolivian president Gonzalez Sanchez de Lozada, who warned that his government would be in trouble if aid was not forthcoming. In October 2003, that government faced enormous social unrest and fell. To be sure, it may have fallen regardless, but an unresponsive Washington sent a message to the region that when things get tough for a friend, the US is not prepared to be helpful. The US was similarly cavalier in the face of Argentina's financial crisis in late 2001.

Even more costly have been serious missteps in dealing with Hugo Chavez, the main adversary of the US in South America. The US lost considerable credibility on the democracy question in April 2002, when it expressed its delight at the short-lived coup against Chavez. It has been hard to square that initial position (which was later corrected) with the US claim that it is defending interruptions in democratic, constitutional governments. In general, the US policy towards Venezuela under Chavez has been inconsistent and contradictory. Sometimes the US has been confrontational -- at other times too passive. The approach has showed little strategic thought, and has been ineffective. The occasional tit-for-tat rhetorical exchanges with Chavez have been counterproductive and have only bolstered his popularity. Our friends in the region have also resented the US pressure on them to stand up and condemn Chavez. Looking for a South American leader to play the role of the anti-Chavez has proved futile and self-defeating.

The core problem over the past several years is that what the US has most wanted from South America - opposing the fiercely anti-US Chavez, becoming reliable partners in the US-led war on terror, lowering tariffs to open up trade and investment - has been notably out of sync with what South America has most wanted from the US - greater attention to the region's acute social agenda, reduced agricultural subsidies, and more liberal immigration laws. It is essential for both Washington and South American governments to attempt to bridge that wide gap and focus on pursuing common interests.

Beyond failing to respond more constructively to South America's highest priorities, some of Washington's policies in recent years have further exacerbated the relationship. That the US has withheld some aid to roughly a dozen Latin American countries for refusing to sign an Article 98 agreement giving exemption to all US citizens before the International Criminal Court has caused considerable irritation and has hurt US credibility on rule of law issues. And even though immigration questions are higher on the agenda in Mexico and Central America than in South America, hard-line measures from Washington, such as building a "wall" on the US-Mexico border, have significant and negative repercussions even in the most distant areas of the continent.

To its credit, the Bush administration has recently benefited from greater professionalism and has improved the tone and style of its policymaking towards South America. An attempt has been made to be more attentive to the region's core concerns, including social inequalities, governance problems, and energy challenges. The trade deals negotiated with Peru and Colombia were important advances. That President Bush openly recognized the centrality of social injustice before and during his March visit to the region, and has undertaken a promising initiative on ethanol production with Brazil, is indeed welcome. But these steps, though positive, are too minor and peripheral to make a significant dent in the continuing, strained relationship with South American countries.

For that to happen, Washington will also have to seriously address the second and third factors that account for the deterioration in relations with South America. In this age of globalization and rapid communication, what the US does or does not do in other parts of the world has a huge impact on perceptions in this hemisphere. The Iraq war - a largely unilateral, military action - particularly touched a nerve in Latin America, even South America, given the historical record and baggage of US intervention in the region. The preemption doctrine, though just formalized in September 2002, has long been a reality in this hemisphere. Moreover, it is hard to overstate the sensitivity and reaction in much of Latin America to the revelations of US treatment of prisoners in Guantanamo. The perceived US departure from basic international norms and standards and its disdain for multilateralism in recent years, has had an immense cost in this hemisphere.

Finally, and fundamentally, most US policymakers still fail to grasp that the forces of globalization have inspired all of the countries in this hemisphere to seek greater elbow room from Washington. Signs persist that the US regards Latin America as its "strategic preserve" or "backyard." Washington still reflexively assumes that Latin Americans should understand and support our interests and objectives, since they are, we presume, intrinsically good. The profound disappointment felt towards Mexico and Chile when, as non-permanent members of the UN Security Council, they failed to support the US in its Iraq position, illustrates the unfortunate tendency.

But if one looks at South America - at the relationships worldwide that have been forged by Brazil and Chile, the myriad options facing governments throughout the continent and especially the growing role of China and other world powers in the region - it is clear that the traditional mindset that Latin America is a stepchild of US foreign policy has little to do with current political and economic realities. South American governments should be viewed as partners. Their own particular needs, interests, and agendas deserve respect. There will inevitably be closer cooperation on some issues than on others - just like with other US partners in the world.

What are the current challenges for US policy in South America?

The US confronts a variety of critical tests in South America. Though each country is, in its own way, wrestling with the social agenda and seeking to diversify its foreign policy, one finds enormous differences among the governments. It is far too simplistic to refer, as many analysts have, to a shift or turn to the left in the region.

Venezuela under Chavez poses a sui generis challenge. By now, after nearly nine years in power, the autocratic and anti-US character of Chavez's regime is clear. With a lot of money at his disposal thanks to high energy prices, Chavez is intent on constructing a counterweight to US power, in Latin America and throughout the world. That is an essential part of his mission, and he is pursuing it with growing belligerence. His "success" derives from his astuteness as a tactician, excellent communication skills, as well as the good fortune of having an inept and fractured domestic opposition and a US government with no consistent policy to deal with him. He also benefits enormously from a region in disarray, with severe governance challenges and acute problems of social inequality and injustice. Chavez's rhetoric finds resonance in some quarters of the region, as he has identified a legitimate grievance among the poor, which is part of the basis of his appeal. It is clear, however, that he is not able to devise a sustainable solution to those problems, and the model of governance he is promoting comes with an unacceptably high political cost.

For the US, which continues to receive some 12 percent of its oil imports from Venezuela, Chavez's actions in three key respects should be of particular concern. First, his 21st century socialism clearly means that he is the sole power and decision maker in Venezuela. Chavez's arbitrary decision not to renew the license for the popular Radio Caracas TV (RCTV), which went off the air on May 27, reveals his drive for absolute control and desire to suppress any competing or independent source of political or economic power. The concentration of power, free from any checks and balances or minimal constraints on his decisions, is bound to result in increased abuses.

In addition, Venezuela -- even Latin America -- is too small a stage for Chavez's ambitions and appetites. Through the political use of considerable petrodollars, he is attempting to spread his influence throughout Latin America, in pursuit of his Bolivarian vision. In South America, his closest ally is Bolivian president Evo Morales, who has joined with Chavez (along with Cuba's Fidel Castro and Nicaragua's Daniel Ortega) in the Bolivarian Alternative for the Americas (ALBA), a response to the stalled Free Trade Area of the Americas (FTAA). Ecuador's Rafael Correa is also forging a closer relationship with Chavez in a variety of areas.

All three cases are examples of the rise of resource nationalism in the region, an effort to extract more favorable terms from foreign companies in the petroleum and natural gas sectors. The Venezuelan, Bolivian and Ecuadoran governments also reject the political establishments in those countries, and appeal to those who have been previously excluded from decision-making or denied the fruits of economic development. New political forces are taking advantage of the failure of traditional parties, widespread social frustration and availability of resources from energy windfalls to refashion institutions that bear less and less resemblance to liberal, representative democracy. Though Correa and even Morales should not be regarded as Chavez's clients - both are pressing the US Congress for extension of trade preferences that are due to expire at the end of the month -- there are clearly shared interests and an alignment on key questions among the three governments.

Most other South American governments tend to indulge Chavez, chiefly for pragmatic economic and political reasons. As governments exploring and exercising their options in the global economy, what Chavez has to offer is clearly of interest. In addition, Chavez has some limited constituencies in countries like Brazil and Argentina. At the same time, most governments are palpably uncomfortable with Chavez's brand of confrontational, divisive politics. For the most part, they are interested in pursuing cooperation with the US in a variety of areas, including trade, energy and counter-narcotics. Chavez has a disruptive effect on inter-American relations. His actions and decisions - leaving the Andean Community when Peru and Colombia made trade deals with the US, for example - aim to pit countries against the US, and make carrying out the US agenda in the region more difficult. Still, other South American governments - even Colombia's, despite security concerns on the border - are pragmatic in dealing with him.

To protect himself from a possible decision by the US to stop importing Venezuelan oil, Chavez is trying to diversify markets. At present, he sells some 60 percent of oil exports to the US. China is a high priority for Chavez, and in fact Venezuelan oil exports to that country increased tenfold between 2004 and 2006. Still, experts agree that it is unlikely Chavez will be able to shift the market to China, at least in the near term, due to the serious technical and economic obstacles in doing so.

Of greater concern for the US is Chavez's effort to protect himself from what he views as a possible US-led military action against Venezuela. As a result of this perceived invasion, he has been using oil money to purchase arms and prepare the population for a possible military confrontation. Russia has already provided Venezuela with Kalashnikov rifles, Sukhoi fighter jets, and Russian military helicopters, and there is currently some discussion about Venezuela purchasing several state-of-the-art Russian submarines.

Chavez has also developed a closer political and economic alliance with Iran. The two governments share a similarly defiant posture towards the US and, as members of the Organization of Petroleum Exporting Countries (OPEC), have a keen interest in coordinating energy policies and keeping oil prices high. Although there are limits to consolidating the Venezuela-Iran relationship, the alliance does inject an additional geopolitical dimension in the South America's politics that should be of concern to Washington and warrants careful vigilance.

Colombia, too, poses a major test and challenge for the United States. Since 2000, Colombia has received some $4.5 billion in US security aid, making it the largest recipient outside of the Middle East. Under the government of Alvaro Uribe, there have undeniably been important security gains, a reduction in homicides, kidnappings and other atrocities. The results in fighting drugs - the chief aim of US aid - have been far more disappointing. It is hard to claim great success in achieving Plan Colombia's original, anti-drug goals. Still, in part thanks to US support, the Colombian state has managed to reassert its authority and better protect its citizens. The problem, however, is that high levels of violence persist, and recent revelations, and arrests, reveal that there are disturbing links between Colombia's paramilitary forces - guilty of human rights violations and involved in the drug trade - and political figures, some close to the Uribe administration. It is essential to bring all of these connections to light as well as to work with Colombia to clean out the political system and help deal effectively with all illegal armed groups, and in strict accordance with the rule of law.

It is hard to survey South America and analyze challenges for the region, and for US policy, without according high priority to Brazil. As a significant regional power with a pragmatic government and growing global connections and aspirations, Brazil needs to play a critical role in pushing a more constructive South American agenda. No matter what the issue -- energy, trade, democratic setbacks, the drug trade, or the environment - finding common ground between Washington and Brasilia is central to enhancing the prospects for effective solutions. Although there are apt to be key, continuing differences with the United States on important policy questions - trade, for example - there are other areas such an a shared interest in alternative energy and ethanol production that offer real opportunities for a more strategic collaboration. Brazil may pose the greatest test for US policy, given South America's changing landscape.

How can the US repair the damage?

The countries of South America are unlikely to become a top-tier priority for Washington any time soon. Other regions in the world are understandably, and manifestly, of higher priority. Still, it is possible and desirable from the perspective of US interests and values to devote more serious, sustained attention to the challenges in the region, in a spirit of genuine partnership. The costs of not doing so are considerable.

• The pursuit of our interests will be handicapped until we fathom that the new realities in our hemisphere require an honest give and take, that trust must be earned, and all must benefit to be able to work together effectively. Long-term cooperation can only be based on activities that serve the interests of others as well as our selves.
• On Venezuela, the US should adopt a firm and consistent strategy in dealing with the challenge posed by Chavez. It should only support democratic and constitutional means. It should avoid going for Chavez's bait, and should drop its unrealistic expectation that South American governments will unite and stand up to him.
• The best way for the US to deal with Chavez - to put him on the defensive and offset his influence - is be engaged in the region and pursue a positive agenda. Unfortunately, that is happened too infrequently in recent years. The focus on a more strategic partnership with Brazil - starting with collaboration on energy but extending to other areas - is an essential part of such an approach. Pursuing a more independent energy policy - reducing dependence on Venezuelan oil - deserves high priority.
• Another critical challenge for the US moving forward is to strengthen policy instruments that more effectively respond to the region's social agenda. Beyond enlarging conventional aid programs, some consideration should be given to incorporating serious compensation packages into trade agreements, and expanding eligibility for Millennium Challenge Account support to particularly distressed regions in middle-income countries. Proposals even for modest Social Investment and Development funds for South America also merit attention.
• The US should also seriously rethink its counter-drug approach in the region. More resources and emphasis should be given to social development programs and a higher-level political focus on multilateral cooperation among the affected countries. Too often, governments look to Washington, not to each other, to deal with this serious problem.
• Congress should back the pending trade agreements with Peru, Colombia, and Panama, along the lines of the recent agreement reached between the White House and Congress. Otherwise, lingering doubts about the US being a reliable partner will multiply. An effort should be made to amend the agreements to include labor provisions. If it is not feasible to approve the Colombia deal soon, it should be put off, with the aim of working towards a revised agreement and eventual approval. The ATDPEA to Ecuador and Bolivia should also be extended for another year. The alternative would result in greater unemployment and poverty in those countries and harden the position of those governments towards the US. In the long run this would be detrimental to US interests.
• The Congress should authorize continuing aid to enable the Colombian government to consolidate its gains and end the continuing, drug-fueled armed conflict that has taken such a tremendous toll in the country. Security aid remains important, though some reallocation of funds towards support for judicial authorities and other democratic institutions in Colombia is essential as well.
• Liberal immigration reform, and especially a humane way to deal with illegal residents already in the United States, should be adopted, in part to improve US relations with Latin America, even countries of South America. The construction of a wall on the US-Mexico border is broadly seen as an affront and has wide, negative implications throughout the continent.
• The US should close down the base at Guantanamo. That decision would be well-received throughout South America and would send a positive signal that the US is sensitive to international public opinion and is prepared to take steps to repair the damage to its image and standing.

It is important to approach the policy challenge towards South America realistically, with no illusions. Resources and policy instruments are limited for the US today. The days of ambitious programs like the Alliance for Progress are over. Our interests have never precisely coincided with those of South America, and are unlikely to ever line up perfectly.

But there have been moments in the not too distant past - the 1990s - when there was much more trust, goodwill, and cooperation in inter-American affairs than there is today. With a commitment to restoring that confidence and a full recognition that our southern neighbors are independent global actors that will want to maximize their options, the US can pursue policies that will make a real difference, both for South America and our own interests.