Bullish on Latin America

Myles Frechette, a native of Chile, is a former U.S. ambassador to Colombia and Cameroon. In town recently to speak to the Orlando Committee on Foreign Relations, he discussed U.S.-Latin American relations with Sentinel senior editorial writer Paul Owens.

Question: In recent years, Latin America has elected a series of leftist leaders who at best want to distance their policies from the United States, and at worst, are openly hostile. How should Washington respond?

Myles Frechette: I think that we should try to work with these leaders if it's humanly possible. We ought to understand that they want to help their own people. They will be judged by whether they do or not, not whether they stand on some corner and shout slogans against the United States. The Cold War is over.

What's the best way for those leaders to help their people?

The biggest game in town is globalization. There are no new gimmicks in economics. With globalization you can grow, you can get rid of poverty, you can have stability. Yes, it's scary, but there really aren't many alternatives that make any kind of sense.

The United States ought to have a little more self-confidence, not only in the rules of economics but in the fact that the biggest force for change since World War II is globalization, and the biggest force for change in Latin America today is globalization.

What's the best example of the potential of globalization in Latin America?

Chile. They did it, not because we urged them. It was because everyone in Chile, from the far left to the far right, said we're going to go to an open-market economy. We're going to trade all over the world. They're doing it, and it's working.

All of Latin America's leaders, even President Hugo Chavez of Venezuela, understand they have to attract investment from abroad. And they're not going to get investment in Latin America unless it is protected. Capital is a coward. It doesn't go where it doesn't feel safe.

How can Latin America's leaders go about attracting foreign investment?

There is no substitute in economics for doing basic things that strengthen your system. You have to do all kinds of reform. You have to have judicial reform — property titles, the rule of law, the sanctity of contracts. You have to end corruption. You have to make sure people pay their taxes. It's time for these countries to do some things that make them capable of dealing with competitiveness on a global scale.

What can the United States government do to encourage necessary reforms in Latin America?

The United States can do what it's done for the poorest countries. It's called the Millenium Challenge account. If a poor country practices good governance, then the United States will give them assistance to proceed.

My idea is to apply the same principle to middle-income countries, including those in Latin America. If they are prepared, on their own, to take concrete steps to put themselves in a better position to be competitive on a global basis, then the United States would recognize the progress they've made and give them some assistance to proceed further.

You're also an advocate of the Free Trade Area of the Americas, which would span the entire Western hemisphere. Didn't that idea stall in last year's Summit of the Americas?

Twenty-nine of the 34 countries endorsed the idea at the summit. The best way to move forward is to do an FTAA with those countries. It will improve regional trade and give them self-confidence. The bigger the free-trade area, the more benefits for all the members. I think President Bush ought to do the Free Trade Area of the Americas right away, before he loses trade-promotion authority next year.

You sound bullish on Latin America.

I feel hopeful for the region. We should not refuse to work with leftist leaders. What if they still follow more or less orthodox economic methods, build some jobs, build some growth, and also do more to reduce poverty? Terrific, right?