SOUTH AMERICAN PRESIDENTS ASSESS REGIONAL PROBLEMS.

Much of Latin America is experiencing increasing economic, social, and political instability. A recent UN Development Program (UNDP) report confirms that most countries have seen declines in the categories that make up its human development index (HDI). Meanwhile, Latin America's leaders, dealing with growing anger at home, gathered in Guayaquil, Ecuador, for the II Meeting of South American Presidents and expressed their irritation with US protectionism, the abuses of globalization, and the tyranny of a world financial system that they say threatens their democracies.

As the leaders gathered, they were mindful of old and new storms, including the financial collapse in Argentina that is spreading to Brazil and Uruguay; the aftermath of the April attempted coup in Venezuela with thinly veiled US approval; violent anti-government and anti-privatization protests in both Peru and Paraguay; and an expanding war in Colombia that is spilling into neighboring countries.

Since the Sept. 11 attacks in the US, there has also been a growing perception in Latin America that the administration of US President George W. Bush is more and more disengaged from the region.

The agenda of the July 26-27 meeting was devoted to integration, security, and democracy. Many leaders noted that the free-market reforms implemented in the last 20 years have failed in their promise to lift all boats. Although Latin American countries have lowered trade barriers and carried out other reforms, they have not seen the hoped for economic growth or a greater access to US and European markets.

Six of the 10 presidents at the summit are scheduled to leave office by early 2003, which may have contributed to their candor about perceived problems.

"Latin America continues to be marked by its extreme vulnerability, today sharpened by the persistence of protectionist policies and subsidies in industrialized countries," Ecuadoran President Gustavo Noboa said at the opening session. "It is clear that global trade benefits some, but not others."

Brazil's President Fernando Henrique Cardoso went further, saying he does not believe conditions exist for finalizing the hemispheric Free Trade Area of the Americas (FTAA), especially when the US is closing its doors and increasing its protectionist measures and farm subsidies.

"They speak of integration [of our economies] as if we are the ones who don't want it, when it is we who most want a democratic integration that tears down trade barriers--but all of them, not just the ones that interest the powerful," said Cardoso. He said he does not see the will among the countries of the industrialized North to "modify the current path of the global economy."

"We witnessed the fall of the Berlin Wall but have not seen the transformation of the UN into a tool for building a multipolar world," Cardoso said. "We are in a world governed by a global directorate, the G-8, who fear meeting openly because people distrust them, and, when they meet behind closed doors, they do nothing that benefits the people."

Participants said the best way to promote development is for developed countries to open their markets to Latin American products without tariffs or other protectionist barriers. "We aren't asking for aid but for trade," said Chilean Foreign Minister Soledad Alvar.

Some were quite blunt in calling for the US to preach less about free trade and buy more from the region.

"I've gotten so many pats on the back from the US government that I have a backache," Ecuador's Foreign Minister Heinz Moeller told Guayaquil's Expreso newspaper. "These offers mean nothing. Action means something."

Efforts against drugs and terrorism linked to trade

The presidents committed themselves to the anti-narcotics fight, "taking into account the principle of shared responsibility" between producing and consuming countries, but they also tied the drug war to a need for greater liberalization of markets for alternative products.

In a news conference at the end of the meeting, Noboa said that, "just as they ask us not to plant drug crops, they should buy the alternative crops." Otherwise, he said, it is hypocritical of drug-consuming countries like the US to demand eradication of coca fields.

Noboa said the presidents were determined not to become involved in the Colombian conflict. "No country will involve itself in the Colombian matter, and there will be no continental force created for that purpose," said Noboa.

The newspaper Jornal do Brasil had reported in mid-July that the US was pushing for the creation of such a force.

In the summit's final document, the Guayaquil Consensus on Integration, Security, and Infrastructure for Development, the 10 presidents agreed to speed up negotiations to achieve full integration before year end between the Comunidad Andina de Naciones (CAN) and MERCOSUR, the Southern Cone Common Market, with the goal of forging a united front before the creation of the FTAA.

The strong criticism against the FTAA and the US expressed by many leaders was toned down in the final document. The criticisms had centered on the increased US restrictions on imports and the hesitation of the US and the multilateral lending organizations to help countries in economic crisis, particularly Argentina.

Leaders look at privatization 

Privatization has been a demand of multilateral lenders for assistance and has become a highly controversial issue in Latin America. There was much talk inside and outside the meetings about how countries are responding to growing public opposition to privatization.

In much of the privatization in Latin America, state monopolies have become private monopolies through processes in which the citizens had no participation and no mechanisms for regulation or oversight were set up.

Corruption within the privatization process has also been a serious problem. Deputy Javier Diez Canseco says that, in Peru between 1992 and 2000, 228 state companies were privatized for a combined US$9.2 billion, but only US$3.3 billion entered the treasury.

In many instances, after privatization, rates have skyrocketed and people could not pay for the services. In the 12 largest countries in the region, said a World Bank report in 2000, a third of the population earns US$2 a day or less. In those same countries, the combined electric and water bill in a poor barrio could run US$40 a month.

While rates have soared, promises of expanded service have gone unfulfilled despite extraordinary earnings by many companies that bought the public utilities. In 2001, Spanish communications giant Telefonica reported 43.1% profits on its Latin American operations, with 11% of that in Argentina where the company is being investigated for alleged bribes of US$6 million to judges to approve higher rates.

Growing public anger at privatization imposed by the International Monetary Fund (IMF) is increasing, and public protests in Peru and Paraguay have recently forced the governments to backtrack on planned privatizations.

UNDP reports declines in Latin America

Just before the presidents' summit, the UN Development Program (UNDP) released its yearly human development report. Nearly all countries in Latin America and the Caribbean suffered declines in the HDI established by the UNDP. The index, used to rank 173 nations, is based on a series of social indicators, including life expectancy at birth, literacy rates among adults, school attendance at all levels, and per capita income.

The report, released July 24, is based on data from 2000. An update would likely lower the position of several countries on the list, particularly Argentina, which is submerged in the economic, social, and political crisis that exploded in December 2001.

Chile, ranked 38, and the Bahamas, 41, were the only countries in the region that improved their ranking. Barbados stayed the same at 31, while all other countries dropped in their rankings compared with the previous UNDP annual report. Haiti, the country with the worst human development performance in the region, fell from 134 to 146.

The report says that the percentage of people living on less than US$1 a day in Latin America and the Caribbean remained practically unchanged between 1990 and 1999--around 16% of the total population. But the actual number of people living in poverty has risen by 3 million.

One major problem in Latin America is the staggering income disparity, one of the worst in the world. While in the US, the richest 20% of people has nine times the income of the poorest 20%, in several Latin American countries the ratio is about 30-1. Even in those Latin American countries whose economies have grown, the poor have seen minor--if any-- economic gains.

Another major problem is massive corruption and the absence of an effective system of checks and balances. With weak institutions and widespread corruption, opening the economy is not enough, UN economists say. [Sources: Notimex, 07/25/02, 07/26/02; Inter Press Service, 07/24/02, 07/26/02, 07/27/02; Associated Press, Spanish news service EFE, 07/25/02, 07/27/02; The Miami Herald, 07/27/02; El Nuevo Herald (Miami), The Financial Times (London), 07/29/02]