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US Acts to Counter Venezuela's Clout in Latin America

07 March 2007

President Bush's latest aid package for Latin America is aimed at combating poverty and strengthening democracy across the region. But some regional experts say the plan, announced just days before Mr. Bush's trip to Latin America, is designed to blunt Venezuela's growing clout on the continent.

The announcement of the aid package showed a new side to the administration's relation with the region, which has typically focused on strengthening business ties and trade agreements. It also comes at a time when a key U.S. opponent, Venezuela's President Hugo Chavez, is seeking to increase his nation's outreach on the continent.

Since taking office in 1999, President Chavez has vowed to improve social conditions for the poor majority in his country through a series of anti-poverty, health and education programs. Supporters say the programs have been a success in the oil-rich nation, partly thanks to a rise in oil prices around the globe.

Jorge Castaneda, former foreign affairs minister for Mexico, says the relative success of the Venezuelan programs is unique to Latin America.

"You have a situation now where they have a social policy which means taking basic social services to the urban poor in Latin America," he said. "Health, education, water, controlled prices. It can't last forever, but it's a lot better than what many of these neighbors have elsewhere in Latin America."

Castaneda says some of these Venezuelan programs are modeled after similar ones in Cuba. The Communist government in Cuba has long prided itself on education, health and literacy programs for residents on the island, as well as initiatives to send teams of doctors to emergency zones around the world.

And just like Cuba, Castaneda says Venezuela is looking to export its social program to countries, such as Bolivia, Ecuador, and Nicaragua. At the same time, Caracas has lent its financial backing to Argentina to issue a joint bond for $1.5 billion.

Venezuela's new efforts come at a time of major changes in the international aid and finance sectors, says Albert Fishlow, director of the Institute for Latin American studies at Columbia University. He says there are more possible sources of finance than ever before. The needs in Latin America, he says, have changed.

"You don't have much need, I would argue, for massive flows," he said. "And that is for the good, because every time the United States promises it's going to do something, it never does. And the most obvious and saddest case is the Millennium Project."

Fishlow and others have criticized the U.S. Millennium Challenge Corporation, saying it has been too slow to fulfill its promises. The agency was created in 2004 to increase U.S. aid spending by $5 billion over the following year.

Officials at the Millennium Corporation say they have already signed deals worth more than $1 billion with 11 nations, including El Salvador, Nicaragua and Honduras. And days before launching a tour of Latin American nations, President Bush unveiled a new set of aid spending, especially targeted to Latin America.

"In the coming years, these agreements will provide a total of $885 million a year in new aid, so long as these countries continue to meet the standards of the Millennium Challenge program."

Under the terms of a Millennium Challenge agreement, recipient nations must show a commitment to certain policies, such as political and economic freedom, anti-corruption measures and other reforms.

Similar conditions have been common with loans from the International Monetary Fund and other Western agencies. In contrast, Venezuela has not tied its foreign spending to political conditions or promised reforms, says Mark Weisbrot, co-director of the Center for Economic and Policy Research in Washington.

"So the Venezuelan government is providing an alternative source of financing, but it's not even trying to tell any of these countries what to do," he said.

Weisbrot says the absence of conditions makes Venezuela's spending attractive to other nations in the region. At the time, he said it represents a threat to U.S. leaders who fear losing influence to Venezuela's President Chavez and leftist leaders in the region.

"They do think these countries are pursuing reckless, populist policies, and they will eventually learn their lessons," he added. "In the meantime, the loss of influence for the United States is a major concern to the leaders of the Bush administration, the Congress, and most of the think tanks here."

During his Latin America tour, President Bush is expected to seek support from Brazilian President Luiz Inacio Lula da Silva to help counter Venezuela's influence. But experts say that Brazil views both the United States and Venezuela as important partners, and is unlikely to take sides against the other now.

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