Foreign policy challenge in Latin America

Washington will be faced with a major foreign policy challenge in Latin America when left-wing labor leader Luiz Inacio Lula de Silva becomes president of Brazil on New Year's Day. And "Lula," as he is popularly known, faces his own challenges in dealing with poverty, inequality and economic problems in South America's biggest democracy.

Lula and his Workers Party won the Brazilian presidency on his fourth try for that office. In a recent editorial, the Washington Post asserted that his victory "could mark a turning point for Latin America .... If (Lula) chooses to emphasize policies that address Brazil's poverty and inequality without jeopardizing its stability, he may blaze a trail for other Latin American populists (like Venezuela's Hugo Chavez and Ecuador's president-elect, Lucio Gutierrez), who seek pragmatic alternatives to failed statism."

Lula's challenge is enormous in Brazil, where the richest tenth of the population controls 47 percent of the national income. But, according to the Post, "this injustice has little to do with the pro-trade, pro-market policies that leftists traditionally blame. Rather ... (it) reflects the government's failure to secure a fair distribution of the things needed to earn a living," like education and land.

Moises Naim, the brilliant Peruvian economist who edits Foreign Policy magazine, believes that the United States, acting in its own self-interest, can play a key role in helping Lula address Brazil's economic and social problems. In the November/December issue of his magazine, Naim urged President Bush to propose a new bilateral trade deal to Brazil in order "to jolt Latin America out of its drift toward political morass and economic chaos."

"Bush should offer the next president of Brazil freer access to the U.S. market for Brazilian shoes, sugar, textiles, steel, soybeans, citrus fruits, ethanol and other products that now face all kinds of import barriers," Naim wrote. "Such a deal could boost yearly Brazilian exports by up to $5 billion." He added that the U.S. should also back a major anti-poverty program designed by Brazilians and implemented through international lending agencies.

"In exchange, President Bush should demand that Brazil open market sectors that restrict foreign imports or investors and commit to fiscal and monetary goals designed to ensure economic stability," the editor continued. "Few countries in the hemisphere could afford to be excluded from such a deal." Bush should act, Naim argued, "because by now he should have learned how costly and dangerous U.S. disengagement from troubled regions (like the Middle East) can be." Just last week, the Bush administration took a tentative first step in Brazil's direction by pledging support for Lula's social agenda, starting with the fight against hunger.

In a Washington Post interview, Lula sought to reassure U.S. investors that he isn't a dangerous, left-wing radical. "You can tell American investors and the American people that we will fulfill all the contracts that the Brazilian government has signed," he told the Post's Lally Weymouth. "I recognize the importance of the United States in the world and in relationship to Brazil. It's our main trading partner and we intend to improve our relationship with the U.S."

Lula's comments to the Post were in marked contrast to his presidential campaign statements. The conservative Weekly Standard described his platform as one "that blended promises of radical economic redistribution, anti-Americanism, militarism and a return to the protectionist policies of the past." The Weekly Standard is convinced that "the giddy, hopeful 1990s are now truly over" in Latin America, and that the region faces "devaluation, inflation and turmoil" in the 21st century. So who's right about Brazil's future -- the optimists at Foreign Policy and the Washington Post, or the pessimists at the Weekly Standard?

I'm siding with the optimists. As I've written before, when it comes to Latin America, I always hope for the best while expecting the worst. This has certainly been true in oil-rich Venezuela, where I served for seven years during my diplomatic career. When I left Venezuela the first time, in 1970, democracy was flourishing and the oil was flowing. But when I returned in 1986, world oil prices had declined, leading to economic, political and social chaos under President Hugo Chavez, a Fidel Castro clone who promotes class warfare between the haves and the have-nots of his once-prosperous nation.

So will President Lula be a mirror image of the failed President Chavez? Not necessarily. In his recent Post interview, Brazil's president-elect rejected such comparisons. "It is not possible to make any kind of comparison between Lula and Chavez," he told Ms. Weymouth. "We have structures in Brazilian society that are much more institutionalized than in Venezuela. I remember telling President Chavez, 'I would advise you to be more political. A president cannot fight with everybody at the same time.'" Good advice!

For now, I share the Post's upbeat assessment of Brazil's next president. "If Mr. da Silva (Lula) announces plans to fulfill his populist mandate by concentrating on education, land reform and pensions, Brazil's prospects will be brighter," the newspaper commented. "There is no reason why caring about poor people should involve abandoning sound economic policies." Now that would represent a promising new approach for Brazil and the rest of Latin America. I hope Lula can make it happen.

Guy W. Farmer, a semi-retired journalist and former U.S. diplomat, lived and worked in Latin America for nearly 20 years during his Foreign Service career.