Furthermore, because of the uncertainty of Sino-Latino relationships, China is unlikely to challenge the United States directly in this hemisphere in the near future. Both China and the United States place higher priorities on other issues. The Sino-US relationship is complex and includes sensitive issues such as Taiwan, nuclear non-proliferation, pandemics, North Korea, Europe’s interest in selling arms to China, and cooperation in the war on terrorism.

The biggest single challenge to the United States in the hemisphere is Venezuelan President Hugo Chávez. He never misses an opportunity to lambast the United States with anti-US rhetoric. For some in Latin America, Chávez is a David slinging taunts at the US Goliath, but the United States should approach the Venezuela situation with neither fear nor alarm.

The United States should not expect Latin American countries to defend it or its policies against Chávez, not because other Latin American countries agree with Chávez but because Chávez has offered cooperation to so many of them. In addition to subsidized petroleum, he has offered to build oil and gas pipelines to Argentina, Colombia, and Central America. Even if only some of these “Bolivarian” projects get built, they will contribute to energy cooperation in Latin America. Venezuela’s influence and the willingness of Latin American nations to work with it despite US disapproval is only another symptom of the region’s increasing independence.

The United States should bear the following realities in mind. Venezuela is an undiversified economy dependent on one commodity. Economies that depend on one or few commodities make little effort to undertake economic reform. They breed corruption, are usually unstable, and tend to grow more slowly than more diversified economies. While nobody in the hemisphere should be complacent about Chávez, he has raised high expectations in Venezuela, expectations that he will not be able to satisfy. Chávez’s impact on the region will be far smaller than many fear.

Both China and Chávez strike fear in the minds of many US policymakers. It is important to keep in mind, though, that four decades of dealing with the Soviet Union, Cuba, and other communist enemies within the hemisphere has given the United States plenty of experience in managing unfavorable situations in Latin America. Furthermore, China is not another Soviet Union, and Chávez, though he aspires to be, is not another Castro. Part of the reason is that global geopolitics has morphed from Cold War era confrontation to post-Cold War engagements. As a result, even if Chávez and China wished to emulate Castro and the USSR, respectively, they would have trouble doing so.

And finally, keeping in mind that US interests in the region have changed, US policymakers should realize that China and Chávez present fewer obstacles to the current goals of the United States than the USSR and Castro presented to the Cold War goals of resisting communism. As a result, the United States should not be overly anxious about Chávez and China.

How to Help: Promoting Globalization

Once the United States realizes what it should not do concerning Latin America, it then must determine what it should do to promote growth, stability, and democracy. One way it can help is by promoting globalization. It is globalization, not the Cold War, that has been the dominant force for change in the world in the past 50 years. Globalization, like a force of nature, can sweep aside antiquated and dysfunctional customs, institutions, and ways of thinking. No leader or nation can stop it without incurring unacceptable costs.

Globalization may be a force, but, if shaped and directed, it need not be a blind force. And while it brings its own problems, globalization can provide extraordinary benefits to peoples and nations, such as ideas, goods, jobs, and higher standards of living. David Dollar, a World Bank economist, calculates that globalization has raised 375 million people out of extreme poverty over the past 20 years.

The Free Trade Area of the Americas (FTAA) agreement offers a way for countries in the region to increase trade within the hemisphere. It will create more jobs, attract more investment, and in the process strengthen their ability and confidence to compete in a global world. Today, all Latin American nations seek investment, growth, and stability. The best way to achieve these goals is for the United States and Latin America to pursue the implementation of the FTAA before the Trade Promotion Authority expires in 2007.

In trade negotiations, the expectation of important benefits such as economic growth, job creation, and poverty reduction can create momentum, leading to surprising breakthroughs and reforms. The US signature of an FTA with Chile stimulated a number of other countries in the region to negotiate FTAs with the United States as well. To obtain such a treaty, they must carry out reforms. These reforms, in turn, would be locked in by the negotiated agreement with the United States and would create stability and attract investment.

Trade, once an exotic appetizer, is now the main course in promoting growth. Many US analysts readily confess their disappointment with how little Latin America has done, relative to other parts of the world, to meet these challenges. The United States should design programs to help middle-income countries in Latin America become more competitive. Some suggest new US economic initiatives to persuade regional leaders to focus on the issues that foster investment and growth and reduce poverty. This assistance, however, should be offered only after the countries, on their own, have achieved progress in reforms that contribute to competitiveness, such as reducing corruption, increasing regulation, ensuring property rights and access to credit for the poor, reforming the judiciary system, respecting the sanctity of contracts, strengthening the rule of law, taxing citizens more equitably, and reducing tax evasion.

How to Help: Tackling Poverty

Reducing poverty in the region should be a priority not only for those countries but also for the United States. Latin America has the highest level of wealth inequality among the world’s regions. According to Anthony Wayne, US Assistant Secretary of State, 13 million people escaped poverty in 2004 and 2005, but 200 million people are still living on as little as one or two US dollars a day. The most unequal countries, such as Argentina, Brazil, Colombia, and Mexico, should balance growth with wealth redistribution. Redistributive measures could include cash transfers to farmers hurt by more open trade, equal access to education, and construction of public infrastructure. Again, these redistributive measures should depend on local initiative and funds.