China's grip on Latin America is gaining on that of United States

When historians in the future look back at the year 2005, they will describe it as the year in which the United States lost much of its once almighty influence in Latin America, and former outsiders -- such as China -- began to play a modest but rapidly growing role in hemispheric affairs.
Some researchers are likely to say the loss of U.S. clout in the region was due to the rise of hostile regional subpowers, such as oil-rich Venezuela, which won growing influence thanks to a combination of checkbook diplomacy and populist demagoguery.
Others will say it was a self-inflicted retrenchment, because the United States lost interest in a region stuck with 19th century anti-free-market ideologies at a time when China, India and the former Eastern Europe were embracing capitalism -- and U.S. corporations -- with near religious zeal.
Growth lags in region
Whichever the case, the fact is that Latin America's economy grew by a reasonably healthy 4.3 percent in 2005, but below the 5.7 percent combined average growth of all developing countries, and even more significantly behind China's 9 percent growth, or India's 7 percent growth, according to United Nations figures.
Politically, it wasn't a happy year for U.S.-Latin American ties. The Bush administration failed to get a majority at the 34-country Organization of American States for two successive Washington-backed candidates to head the group, and irked Mexico by supporting a congressional bill to build a 700-mile fence along the U.S.-Mexico border.
And while Washington signed a free trade deal with Central America and the Dominican Republic, and managed to get 29 countries in the region to support continuation of free-trade negotiations during a 34-country summit in Mar del Plata, Argentina, President Bush was publicly humiliated by Argentina's President Nestor Kirchner and Venezuela's authoritarian president Hugo Chavez in widely broadcast speeches in which they blamed Washington for the region's ills.
Chavez gains clout
Historians will agree that Chavez was the most visible -- although not necessarily respected -- regional leader in 2005, thanks to his country's phenomenal oil revenues, and to Brazilian President Luiz Inacio Lula da Silva's gradual loss of leadership in South America. Lula da Silva was weakened by domestic corruption scandals, and Chavez was quick to fill that void.
While Chavez's "Bolivarian Revolution" failed to reduce poverty -- as Venezuela's own National Statistics Institute reported early in the year -- Chavez made headlines writing fat checks to his neighbors. He offered to buy more than $1 billion of Argentina bonds and $500 million of Ecuadorean bonds, and committed $50 million to social programs in the Caribbean. In addition, Chavez launched the Petrocaribe and Petrosur regional oil production projects, and created the Telesur regional news network to challenge U.S.-generated newscasts in the region.
Meantime, China was emerging as one of the largest trade partners of South American countries such as Brazil, Argentina, Chile and Peru. While press reports about China's alleged intention to invest up to $100 billion in Latin America over the next five years turned out to be wild exaggerations, China's imports of raw materials from South America are expected to reach the $100 billion-a-year mark by the end of this decade.
Gloomy prediction
By the end of the year, Peter Hakim, head of the Inter-American Dialogue research group, was forecasting that U.S.-Latin American relations would continue to worsen in 2006.
"The region will remain peripheral to the central concerns of U.S. foreign policy," Hakim wrote in the January 2006 issue of Foreign Affairs magazine. "At best, the region will sustain its recent modest economic growth, but will not offer the trade and investment opportunities that U.S. businesses find in Asia or Central Europe."
What will historians conclude? That the United States lost ground in Latin America in 2005 and countries in the region continued lagging behind China, India and Central European countries that were reducing poverty at record rates by becoming increasingly competitive in the global economy.
But while Chavez was grabbing the headlines, Chile, Brazil and other countries were becoming increasingly successful players in the global economy, scoring better results than Venezuela in reducing poverty and influencing others in the region to follow their lead. That may be the real story of 2005, and the U.S. retrenchment may be an asterisk. But I better leave that up to historians.
X Andres Oppenheimer is a Latin America correspondent for the Miami Herald. Distributed by Knight Ridder/Tribune Information Services.