84 Henry Kissinger

veloped and a long way from sharing in advanced technology and the Internet. In that Latin America, the gap between the political and the economic worlds is flagrant. There the chasm between rich and poor is growing. In some countries—Venezuela, for example—populist, in essence authoritarian, movements are challenging democratic institutions. In others—Colombia being the most flagrant case—leftist guerrillas, backed by resources from the narcotics trade, are undermining national cohesion. A new form of nationalism may emerge, seeking national or regional identity by confronting the United States. In its deepest sense, the challenge of Western Hemisphere policy for the United States is whether it can help bring about the world envisioned by the Free Trade Area of the Americas, or whether the Western Hemisphere, for the first time in its history, will break up into competing blocs; whether democracy and free markets will remain the dominant institutions, or whether there is a gradual relapse into populist authoritarianism, at least in some countries.

This challenge is all the more serious because, at least since the Monroe Doctrine, the United States has thought of itself as having a special role in the Western Hemisphere. For its part, Latin America has gone along with the convenient principle of a Pan-American community, though it has far from agreed to the U.S. definition of the responsibilities and inhibitions it implied. In any event, the nature of that special role is undergoing a profound change because, starting in the 1980s, a political and economic transformation took place in Latin America no less far-reaching than the one which occurred at about the same moment in Eastern Europe and the Soviet Union.

As it emerged from World War II, and for three decades thereafter, Latin America was a region of authoritarian regimes—many of them military, some of them maintaining their power by repressive methods. Only Costa Rica and Colombia had, to a degree, an uninterrupted record of civilian governance.

Starting in the 1980s, civilians elected by votes based on wide suf-
frage replaced military leaders; human rights began to enjoy protec-
tion from those in authority; legislatures regained the power of

*Does America Need a Foreign Policy?* 85

initiative. The fact of some backsliding—and of the egregious long-standing exception of Cuba—does not gainsay the remarkable choice of the democratic alternative throughout Latin America.

The triumph of the ballot has been matched by equally impressive advances on the economic front. Until the watershed events of the 1980s, virtually all the nations of Latin America were afflicted by profligate public sector deficits, unemployment (sometimes disguised by bloated public payrolls), inefficient state-owned enterprises, protective tariffs, and uncompetitive economies. Starting in the 1980s, led by Argentina, Brazil, Mexico, and Chile, central governments and provinces throughout the hemisphere began shedding businesses suited to private enterprise and potentially subject to the disciplines of the marketplace. Inflation has been greatly reduced. Global competitiveness is improving. Free trade throughout the hemisphere has become, at least formally, the objective of all the nations of the region.

In their relations with one another, the nations of Latin America have undergone equally profound transformations. Argentina and Brazil have opted out of what, for a time, seemed ominously to be the beginning of a nuclear arms race. Both have formally promised to abandon any aspiration to build nuclear devices or delivery systems. In this, they have joined Mexico, which declared its commitment to forgo a nuclear capability a decade earlier. The rest of Latin America has followed suit. There is no competitive military buildup in the region nor any prospect of one. In short, the key nations of Latin America exhibit a host of traits likely to make them prime candidates for full-fledged membership in the group of developed nations: a growing tradition of representative government and open societies, a commitment to universal education, and equal and efficient administration of justice.

## NEW CHALLENGES

At this writing, these hopeful prospects describe a vision, but not yet a reality; to achieve it, a second stage of domestic change and reform is necessary. The rudiments of democracy are everywhere

86 Henry Kissinger

(again, except in Cuba). But in no country is it beyond challenge—as recent events in Peru and Venezuela demonstrate, not to speak of Haiti where even the pretense of democracy is vanishing. The first phase of privatization, fiscal reform and tariff reduction, has taken place. But the hard work of rooting out corruption, establishing judicial security, and delivering public services efficiently and equitably has only begun. In several countries, notoriously Colombia but also Mexico and several of the Caribbean ministates, the commercialization of the narcotics industry has brought official corruption to new heights. Indeed, in Colombia, the central government has formally ceded public control of specific territory to radical guerrillas. Similarly, Peru and Ecuador are unable or unwilling to assert sovereignty over significant parts of their territory. Violence is mounting nearly everywhere in Latin America, and public security has become a growing problem.

Public services, most conspicuously education and public health, rank far below the standards of other Western nations—and not primarily because of inadequate funding. In several countries, expenditures per public school student are equal to Europe's. If Latin America is to maintain and enhance its global competitive position, a thorough reform and modernization of educational policies and practices are imperative.

Equally vital to modernization is the reform of the systems of justice and of the legal codes. In some countries, justice is for sale and heavily influenced by the political leadership. Property titles are insecure. Dispute resolution by the courts is idiosyncratic and unpredictable, giving rise to the sense that the legal system is inadequate to the challenge of protecting persons or property.

All these shortcomings are thrown into sharp relief by the process of globalization. As industrialization moves people from the countryside to the cities, traditional support systems are weakened and gradually evaporate. Income gaps that were bearable in rural societies turn into challenges to the political order. Whatever the gains from productivity and export earnings, if they are not translated into economic benefits for the majority of the population and if the fiscal prudence demanded by the international financial

Does America Need a Foreign Policy? 87

markets is perceived to be bearing most heavily on the disadvan-
taged, the political system becomes vulnerable to challenge.

The gap between the economic and the political worlds is the
Achilles' heel of the process of globalization. As I shall describe in
Chapter 6, globalization carries with it the risk that developing
countries evolve into two-tiered economies. Perhaps 20 percent of
their economies will be part of the international system, typically as
components of large multinationals. The rest—and perhaps the
majority of their populations—could be left behind, without access
to the income, jobs, and opportunities generated by globalization.
This dichotomy produces a potential for resentment, backlash
against the United States, and social unrest, especially if, in a reces-
sion, the American economy has a harder landing than generally
forecast.

Moreover, domestic savings cannot be expected to provide the
investment required to take the region to the next stage of growth.
As a result, many of the most productive assets in Latin America are
likely, sooner or later, to be owned by foreigners. Economists may
react with enthusiasm to this demonstration of the efficiency of the
market, but some Latin American political leaders will be tempted
to exploit the public perception of de facto erosion of national sov-
ereignty and merge it with the assault on the market-oriented polit-
ical system.

Such has been the case in the Andean countries. In each of them,
the military has assumed a new prominence. Presidents have con-
centrated power in their hands at the expense of the elected legisla-
tures. Individual liberties and press freedoms have been curtailed,
and institutional crisis is rife. This is particularly ominous in
Venezuela, where a populist former army officer, Hugo Chávez,
has exploited the public resentment with corruption and inequality
and tried to channel it into a challenge to United States policies and
prescriptions to remarkable demagogic advantage. Chávez has
abolished many of the constitutional and democratic restraints of
the Venezuelan political system; the laudable objective of eliminat-
ing corruption and nepotism has been turned into a platform for a
populist military autocracy. The rise in the price of oil, Venezuela's

88 Henry Kissinger

principal export, has enabled Chávez to avoid the consequences of
his flirtation with Fidel Castro and his anti-American and, to some
extent, anti-capitalist slogans of a kind that seemed to be tran-
scended by the transformations of the 1980s.

As part of the same process, Peru is emerging from Alberto Fuji-
mori's combination of personal autocracy, nepotism, and market
economics to an as yet undefined alternative. Alan García, whose
statist approach ruined Peru's economy and paved the way for Fuji-
mori, has returned from exile, and other contestants will watch the
evolution in neighboring countries closely before they choose their
own course.

Similarly, Ecuador has experimented with, and rejected, more
chiefs of state in recent years than its bewildered citizens care to re-
member—and, in the midst of the crisis, decided to abandon its
currency and dollarize the country's financial system. Neither glob-
alization nor democracy has brought stability to the Andes.

Is Chávez a relic of a bygone era or the augury of a new style in
Latin American politics? Is he inheriting Castro's mantle, or is he a
passing phenomenon? Does the globalized economy provide
enough psychological and political fulfillment to sustain democra-
tic institutions, or does it create a vacuum for a new cycle of semi-
authoritarian populism? Will the upcoming generation of young
political leaders seek to follow the radical populist style of Chávez
or of Brazil's Fernando Henrique Cardoso's emphasis on democ-
racy and free markets? The answers to these questions, and
America's role in dealing with them, will shape the future of Latin
America.

The United States cannot directly affect internal developments
in Peru, Venezuela, and Ecuador. The attempts by the Clinton ad-
ministration to do so usually occurred when a governmental crisis
was already in full train and was arguably made, if anything, worse
by heavy-handed American pronouncements. In the short term,
the best option for the United States is to push the emergence of
the Free Trade Area of the Americas proclaimed at the Miami sum-
mit of 1994 as the underpinning for the democratic market-
oriented alternative.

Does America Need a Foreign Policy? 89

IS THERE A ROAD OUT OF CHAOS?

PLAN COLOMBIA

Colombia is a country rife with ambiguity. It has a long history of uninterrupted democracy; for much of the last half-century, its leaders have been impeccably civilian and emerged from periodic elections though, for much of the period, the political parties have conspired to alternate in the exercise of power. Colombia also largely avoided the cycle of boom and bust afflicting its neighbors. Through prudent fiscal management, it essentially escaped the Latin American debt crisis of the 1980s and required no restructuring of its international debt.

But Colombia also has a tradition of extreme violence. For the past half-century, it has found itself torn by a vicious civil war. Part of the reason for the endemic violence is that Colombia is highly heterogeneous. Different cultures in various parts of the country amount, in fact, to different societies: the highlands, where most of the people of European origin live; the coastal plains, inhabited by many of the descendants of slaves brought to the country in the nineteenth century; and the forested regions, where vestiges of the original Indian culture survive.

The civil war, originally started by radical Marxist groups, has merged with the narcotics industry, supplying much of the illegal drugs consumed in the United States. The narcotics producers finance the guerrillas who, in return for the weapons they are thus able to acquire, supply safe havens for narcotics production. As a result, the guerrillas are, in many respects, better financed than the government. The government has thus far been unable to break the resulting military stalemate; its frustrations have reached a point where it has granted the guerrillas safe havens. Parts of the country are thus, in effect, governed by radical groups determined to overthrow the central government and by narcotics producers openly flouting the national legislation.

In the process, Colombia finds itself trapped in the classic dilemma of guerrilla warfare. The guerrillas do not have to fight except when they are fairly sure they have the upper hand—especially when they operate out of safe havens. And they do not have to win

90 Henry Kissinger

battles; their goal is to inflict casualties that will cumulatively sap
the government's staying power and its base of political consent.
Guerrillas generally win so long as they do not lose and, conversely,
the government loses if it does not win—that is, if it does not de-
roy the guerrillas.

Historically, guerrilla wars, like civil wars, have ended either in
total victory for one side or in the utter exhaustion of both sides.
Negotiations between the parties almost never conclude in com-
promise—though they continue to rank as a favorite prescription of
North American advisors urging “political” outcomes. Nor have
they succeeded in Colombia despite the government’s strenuous at-
tempts and the extraordinary step of ceding substantial territory to
the two major guerrilla bands.

All this has turned Colombia into the most menacing foreign
policy challenge in Latin America for the United States. A collapse
of governance threatens. Self-appointed paramilitaries are con-
ducting open warfare against the guerrillas, and law and order is
well on the way to a total breakdown. For the United States, the
consequences of such an outcome would be grave. National disin-
tegration in Colombia would be a body blow to the economic
progress of the region, would generate a wave of refugees that
would inevitably reach the shores of Colombia's neighbors and the
United States, and would end even the limited measures of drug
trafficking control that presently exist in the country. It would leave
a radical Marxist government backed, at least for the moment, by
narcotics money in the largest and most traditional nation in the
Andes. This crisis is several orders of magnitude more serious than
the instability in Haiti, which precipitated the Clinton administra-
tion's maladroit intervention, or in Panama, which triggered a mil-
itary response by the George H. W. Bush administration.

There can be little question that the United States has an inter-
est in the reestablishment of stability in Colombia. It should do
what it can to help build a government there capable of enforcing
its own laws against poppy and coca production, against drug pro-
cessing plants, and against the elaborate transport systems devised
to move drugs from Colombia for distribution and consumption in

Does America Need a Foreign Policy? 91

the United States. This is why, in its last months, the Clinton administration put forward, under the slogan "Plan Colombia," a program of major assistance. A projected $1.2 billion is to be spent for advanced helicopters and other equipment, with American advisors training Colombian officers for fighting the guerrilla war. The purpose is to destroy the drug segment of the guerrilla movement, leaving the guerrillas either to wither away or negotiate their way out.

Unfortunately, the almost exclusive emphasis of Plan Colombia on a military solution virtually invites failure. To assist the Colombian government to assert its own authority over the drug-producing guerrilla areas, to control the processing and transport systems, and to win the triangular war with the guerrillas and the paramilitary forces, much more is needed than attack helicopters and a handful of battalions of troops subjected to a short course of American instruction. The drug growers, largely small dirt farmers, must be given wider opportunities for alternative crops. United States assistance to Colombia for alternative agriculture has been pitifully small compared to the military aid. Yet it is the economic desperation of the Colombian farmer that makes him an easy target for the drug producers.

Then, too, the right-wing paramilitary organizations must be brought to heel. The human rights of those living in the zones of violence must be protected not only from the guerrillas but also from the self-appointed private security forces that justify their existence by the ineffectiveness of governmental policing and security forces. Wholesale reform of the institutions of criminal justice is essential.

In these circumstances, Plan Colombia bears within it the same fateful momentum which drove America's engagement in Vietnam first to stalemate and then to frustration: at the outset, the United States limits its involvement to training and the provision of vital military equipment—in this case, large attack helicopters. But once the effort goes beyond a certain point, the United States, to avoid the collapse of the local forces in which it has invested such prestige and treasure, will be driven to take the field itself.

92 Henry Kissinger

When the stakes are this high, it is dangerous to undertake the enterprise without the support of at least some of the major Latin American countries. Hemispheric cooperation, however, has been sorely lacking with respect to Plan Colombia. Under Hugo Chávez, Venezuela, which has a long frontier with Colombia, sympathizes with the radical guerrillas and opposes even an indirect American presence near its borders. Brazil, with another long border, has so far been noncommittal with respect to the U.S. role. Peru and Ecuador are too preoccupied with their domestic problems to lend active assistance. Colombia's neighbors generally fear the plan's success almost as much as its failure. They are concerned that, if the narcotics industry is pushed out of Colombia, it will move into Ecuador, Peru, and Brazil and protect the coca crops with its own armed forces which then will turn into guerrilla movements. Many of them fear a leftist government in Bogotá more tolerant of the drug cartel less than they do narcotics centers on their own soil.

As an alibi for their reluctance to cooperate, the Latin American governments tend to cite U.S. hypocrisy, claiming that the United States is more prepared to fight the drug war on foreign soil than to curb its domestic consumption. Latin America's criticisms of the U.S. emphasis on the problem of supply have merit, as does its emphasis on the shortcomings of the United States's domestic war on drugs. Yet this does not alter the reality that the effect of the drug culture is even more corrosive in Latin America than in the United States. In highly centralized systems like those of Latin America, corruption associated with the drug trade inevitably reaches high government officials and the criminal justice system. In a decentralized system like that of the United States, corruption focuses on the local level. In Latin America, the trade in illegal drugs is politically destabilizing; in the United States, it is a political embarrassment and a social crisis. Nevertheless, both regions will pay an enormous price—not the least of which will be the corrosive influence on the bilateral relationship—if the problem is not dealt with cooperatively.

The new administration has no more important task than to ob-

Does America Need a Foreign Policy? 93

tain Latin American cooperation for a program which combines the military aspects of Plan Colombia with a farsighted social program of agricultural and judicial reform. An important first step is the expanded cooperation between Mexico and the United States in stemming the flow of drugs from Colombia through Mexico to the United States. As Mexican President Vicente Fox has stated, this program of cooperative control could be extended to Central America and Colombia. The other countries, especially Colombia's neighbors, should grasp the fact that they will not be able to avoid the growing danger of the Colombian government disintegrating or losing control over more and more of its countryside. At some point, it may conclude that it has no alternative but to negotiate an agreement with the guerrillas that will become the final step on the road to losing control altogether. And the impact of such a collapse and the emergence of a radical government financed by drug money would prove devastating to other countries in the region.

The decision of the Clinton administration to resist such an outcome, unilaterally if necessary, is understandable. But so is the concern of those who see the same danger looming at the end of a prolonged and inconclusive anti-guerrilla/anti-drug effort. As someone who served in an administration which inherited a stalemated war in Vietnam, begun as an effort to use American technology to defeat indigenous guerrillas, I am perhaps excessively sensitive to the prospect of a conflict launched with noble motives but likely to end in stalemate, disillusionment, and an even greater threat to stability and security.

The military aspect of Plan Colombia and its unilateral execution by the United States is at best a way to buy time for a hemispheric, multilateral social and political program. But what if the Latin American countries refuse to go along? Given the importance of Colombia and the dangers associated with its collapse, a substantial assistance program is appropriate. But the United States must not cross the line to an advisory effort that makes it a participant in the conflict. Training of Colombian military personnel should take place in the United States or at nearby bases, for example, in Panama. The purposes and equally the limits of such a pro-

U.S. $10.00

94 Henry Kissinger

gram need to be clearly defined. And the inevitable national debate must be conducted with some understanding of local realities, especially since guerrilla groups have learned to exploit Western human rights concerns to trigger intervention (as in Kosovo) or to induce withdrawal (as in Vietnam).

Before the United States becomes too deeply enmeshed unilaterally, the new administration should define its objectives: Are they stabilization of the military situation or victory? And what is the difference? What is the danger that military stabilization is the prelude to a prolonged defeat? If victory is the objective, what is its definition, how long will it take, and what effort will it require? How far can we go alone? Above all, the administration must explain to the public what it faces, lest we drift into decisions on a largely tactical basis that permit neither success nor extrication.

## THE PROMISE OF THE WESTERN HEMISPHERE

Ironically, President Clinton, whose frantic quest for a foreign policy legacy shadowed his last months in office, may well have created his most enduring legacy in the early months of his presidency when he gave his support to free trade in the Americas. In 1993, Clinton shepherded through Congress the ratification of NAFTA —the North American Free Trade Agreement embracing Canada, Mexico, and the United States—that had been negotiated during the terms of his predecessors.

NAFTA has proved to be of lasting benefit to each of the partners. United States trade with Mexico exceeds trade with Japan and with all of Europe. Over 70 percent of Mexico's exports goes to the United States. The access to the North American market that NAFTA guaranteed has encouraged a substantial influx of fresh capital into the country. This trend would surely be repeated elsewhere if free trade between the NAFTA countries and Latin America were implemented. NAFTA was a crowning achievement of foreign policy, especially if its principles can now be extended to embrace the rest of the hemisphere.

In a seminal speech to the December 1994 Miami summit, Pres-

95

ident Clinton proposed precisely such a step by transforming uni-
lateral proposals similar to those of Presidents Ronald Reagan and
George H. W. Bush for free trade in the Americas into a formal un-
dertaking by all the heads of state of the hemisphere. Clinton de-
scribed NAFTA as the vital first step for a new kind of community
of nations, built on a common base of democratic values, drawn to-
gether by the free exchange of goods, services, and capital, dedi-
cated to human rights, and committed to the preservation of their
common environment.

A Western Hemisphere Free Trade Area is important for eco-
nomic reasons as well. The FTAA would be an incentive for other
nations to move forward with the global effort to expand free trade
in the agricultural, communications, and service sectors while
strengthening the bargaining position of the Western Hemisphere
vis-à-vis other regions. The issue is not theoretical; a series of tight
deadlines are driving the trade negotiations. The next summit of
the Americas is, at this writing, scheduled for Quebec City on April
20-22, 2001, and will be followed by the FTAA negotiations slated
for November 2002 and co-chaired by Brazil and the United
States. These are planned to be concluded by 2005. Mercosur, a
Latin American trading bloc, has opened negotiations on free trade
with the European Union with a target date of 2004-2005. If the
United States fails to pursue a clear and forward-looking policy, the
nations of the Western Hemisphere will negotiate competitively
with other regional groupings or organize themselves in smaller
groups to the exclusion of the United States. Both these options are
contrary to the U.S. national interest.

Yet this is what has been happening since the Clinton adminis-
tration defaulted on its own farsighted vision. It failed to imple-
ment its promise to Chile for early access to NAFTA, and it
ignored feelers from Argentina in the same direction during Carlos
Menem's presidency. The practical expression of this retreat from
its own initiatives was the Clinton administration's refusal to ask
Congress for renewal of the fast-track authority which lapsed in
1994. That authority, under which U.S. trade negotiations had
been conducted since 1974, enabled the president to negotiate an

97

pean agreement on the ground that its impact would reduce the in-
fluence of the United States:

The strengthening of ties with Mercosur is of strategic impor-
tance and must, in case of a country that has a global vision as
France does, prevail over other considerations (e.g., differences
in agricultural policy). Because when it comes to building a new
multipolar order that can limit the United States' natural hege-
mony, Europe will have to make some concessions.¹

Some Latin American proponents of Mercosur have not hesitated to associate themselves with this sentiment.

With the prospects of the FTAA stalled, trade negotiations in the
hemisphere have languished, submerged by bureaucratic disputes
which occasionally serve as a proxy for an incipient contest between
NAFTA and Mercosur. The danger of continued drift is that Latin
America's integration will evolve its own rhythm without reference
to, and perhaps even inimically toward, a larger hemisphere struc-
ture. This would not be simply a setback to U.S. economic
prospects in a market of four hundred million people, which ac-
counts for 20 percent of its overseas trade, but, above all, to its
hopes for a world order based on a growing community of democ-
racies in the Americas and Europe.

NAFTA AND MERCOSUR

In the absence of a dynamic and forward-looking United States policy, Mercosur may turn into a replica of those trends in the European Union that define Europe's political identity in distinction to the United States, if not in outright opposition to it. Especially in Brazil, there are leaders attracted by the prospect of a politically unified Latin America confronting the United States and NAFTA. "Mercosur is a destiny for us," Brazil's President Cardoso has said, "while the FTAA is an option."²

But if the leaders of the Western Hemisphere do not find a way
to reconcile the "destiny" and the "option"—even more, if they are

98 Henry Kissinger

treated as incompatible—societies with comparable histories and free institutions would be repeating in the twenty-first century the same self-destructive course that depleted their substance in the twentieth. At this writing, Brazil and the United States find themselves in tacit competition, obscured by the reluctance to make it explicit and the realization that open conflict would run counter to their economic necessities. For its part, the United States has no reason to be the first to abandon the road to partnership. It has everything to gain from strengthening its bilateral relations with its neighbors to the south, especially with the principal nations of Mexico, Brazil, and Argentina, while at the same time carrying out an intensive diplomacy to bring both NAFTA and Mercosur into a Western Hemisphere free trade area.

Mexico already enjoys a special relationship with the United States and is its second largest trading partner. NAFTA, attacked at the time of its creation on both sides of the Rio Grande as an impossible marriage of the rich and poor, has turned into an astonishing success. As a result, Mexico has been dramatically reinventing itself. In the old Mexico, business—including the business of government—was dominated by a self-perpetuating political elite; newcomers were distinctly unwelcome. The old Mexico, more concerned with past grievances than future opportunities, was self-absorbed and locked into cycles of boom and bust, of progress and corruption. It looked northward with a mixture of envy and fear, congenitally opposed to whatever the United States advocated in international affairs and, at the same time, comfortable in the knowledge that any security challenge to the Western Hemisphere would, in the end, be dealt with by the “Colossus of the North.”

Today competition and transparency have replaced monopoly and secret dealings in almost every aspect of life, and most Mexicans appear eager to embrace reform. In part, this reflects the enormous historical, economic, technological, and cultural forces that are reshaping societies everywhere. But, to a considerable extent, the transformation reflects experiences unique to Mexico. President Carlos Salinas de Gortari, who came to power in 1988 in a tainted election, fostered economic liberalization that gave freer

*Does America Need a Foreign Policy?* 109

preserve special trading arrangements with their neighbors in Mercosur. The nations of the hemisphere should resist the temptation of reversing the dictum of British Foreign Secretary George Canning, who welcomed the Monroe Doctrine by stating that the New World had been called into being to redress the balance of the old. Is the European Union now to be called into being to encourage and then exploit a rivalry between Western Hemisphere blocs? Rather than using Europe as a counterweight to NAFTA, the goal should be to unite NAFTA, Mercosur, and the European Union in an Atlantic free trade area.

The Western Hemisphere thus represents a microcosm of the international challenges facing the United States. It illustrates the opportunities of a global economy based on market forces, but also the need to close the gap between the economic and the political structures of globalization. There is the reality that economic growth requires reform and that reform presupposes a stable, legitimate, and democratic political structure with transparent institutions and an independent judicial system. There have emerged new threats to security and to the stability of societies in the narcotics industry, terrorism, and guerrilla movements. But there is also the prospect of a regional structure embracing the entire Western Hemisphere to usher in a new period of growth and democracy. And, beyond it, there is the prospect of an Atlantic free trade area. Much depends on whether the United States can provide the statesmanship this opportunity demands.

108 Henry Kissinger

fiscal reform, Argentina's potential should spark a substantial re-
covery. The United States should do its utmost to help overcome
the short-term crisis.

In the long term, the most important issue before Argentina, as for all the nations of the hemisphere, is the prospect for Western Hemisphere free trade. Argentina is, in a sense, a proxy for the rest of the region. More sharply than most, it illustrates the consequences and potential benefits which would accrue from the commercial integration of Latin America and North America. Argentina's export opportunities in the United States and Canada would be greatly enhanced. It would become, as Mexico did when it joined NAFTA, vastly more attractive to direct foreign investment. This would relieve Argentina of its presently excessive reliance on external borrowings. Finally, a successful free trade arrangement for the Americas might in turn be the key with which to unlock the European market to Argentine agricultural products, particularly beef and grain, which are now turned aside by the European Union's Common Agricultural Policy.

But, by the same token, this opportunity for Argentina presents a
political dilemma. To opt for the FTAA without qualification might
put Mercosur at risk and, with it, the significant benefits Argentina
enjoys through access to the Brazilian market. It could, in a broader
sense, be a body blow to its political links with Brazil, now at a level
of cordiality unprecedented between the two superpowers of South
America.

The challenge to the statesmen of the hemisphere: to build a
free trade system in a way which benefits all the nations without a
confrontation between NAFTA and Mercosur. There is no point in
a competition for preeminence between Brazil and the United
States. The United States has no reason to oppose a Mercosur that
represents a regional trading unit. And Brazil does not need con-
frontation with the United States to define its eminence, nor
should it seek the role to which its qualities entitle it by dividing the
Western Hemisphere into rival groupings. Argentina and the other
nations of the region should be able to participate in the general
Western Hemisphere free trade arrangement and, at the same time,

toric experience of all Argentines. In the process, by the mid-1990s, he had made the country a major leader of the movement toward democracy in the region, allied his nation with the United States in international peacekeeping efforts, and abandoned every element of Peronism except its name.

Had the United States at that moment possessed fast-track au-
thority and invited Argentina either into NAFTA or into a bilateral
trade agreement, chances are that Menem would have eagerly
accepted, and a new impetus would have been given both to the
Argentine economy and to the FTAA. But with the Clinton admin-
istration stalling on implementing its own proposals, Argentina
concentrated on membership in Mercosur without, however, en-
dowing it with the political character Brazil sought.

Events gave Argentina no rest. Menem's bid for a third term as president was broadly unpopular, and the election in 2000 went to Fernando de la Rua, an impeccably honest, able, decent democratic leader without Menem's boldness. And just as de la Rua took office, the international environment turned bleak. The dollar, to which the Argentine peso and therefore Argentine exports were tied, rose. Brazil, Argentina's major export market, ran into economic difficulties and devalued its currency, reducing at a single stroke Argentina's export earnings. After the Miami summit, the move toward free trade for the hemisphere had been submerged in seemingly endless technical negotiations of a complexity which only passionate bureaucrats could tolerate. Argentina's political and economic progress stalled.

As of this writing, Argentina is seeking to pull itself out of this
tailspin. Domingo Cavallo has been entrusted with another oppor-
tunity to rescue the Argentine economy on the basis of a program
of national unity. His record alone inspires confidence, and there
are also long-term factors favoring Argentina's recovery. The dollar
is weakening, and dollar-obligation interest rates have gone down
while Brazil's import prospects are improving as the Brazilian econ-
omy once again gains momentum. Export prices for Argentina
have gone up. If the national unity program manages to bring about

106 Henry Kissinger

turmoil repeatedly just when success was in sight. A sophisticated governing class was nevertheless unable to keep successive governments from thwarting the prospects opened up by its vast riches.

Perón placed the dominant sectors of the economy under government control, saddled the nation with an unsustainable program of social welfare for the workers to ensure his own popularity, and proclaimed a foreign policy defined by strident anti-Americanism. Overturned by the military and exiled to Spain in 1955, Perón was swept back into power in 1973 as a result of the inability of his successors to manage the country. But he died in 1975 and left the ruins to his utterly unprepared second wife. Even after Perón's death, Peronism commanded the loyalties of at least 40 percent of the population, effectively precluding reform. Peronista governments would not, and non-Peronista governments could not, move toward democracy and reform. By the mid-1970s, Argentina was essentially without government. The military finally invited Señora Perón to leave in 1976, to be replaced by a directory of generals and admirals also unequal to the challenge. They intensified the state's grip on economic activity, ran up vast budget deficits, and then, in an act of desperation, invaded the Falkland Islands.

The humiliating defeat of the Argentine forces provided, ultimately, a national catharsis. The military retired to barracks, and elections were held for a civilian government. President Raúl Alfonsín, however, proved unable to turn the economy around; inflation hit new heights and employment new lows. When Carlos Menem came to office as head of the Peronista party, the nation was ready for strong medicine though, given Menem's Peronist background, few expected him to be the one to prescribe it. As it turned out, Menem's courage and uncanny instincts surprised the nation. Early in his administration, with the advice and counsel of one of the towering figures of the Latin American economic revolution, Domingo Cavallo, Menem turned Argentine history on its head, tied the peso to the dollar, dismantled state-owned enterprises, and brought the public sector budget under control and inflation to its knees. He created a new Argentina, utterly different from the his-

Does America Need a Foreign Policy? 105

rus, and steel exports. For its part, Brazil should remember that its traditional diplomatic style works better with Americans than the French method of facts accomplis. Given the differences between Europe and Latin America over agricultural policy, the European option is a negotiating ploy rather than a long-range policy.

The United States should pay no heed to the advocates of delaying the building of the FTAA until Mercosur is fully elaborated. Rather, the two efforts should proceed in tandem. Hemisphere-wide trade should not be made dependent on the pace of integration of either regional grouping. Pending the completion of the FTAA, the United States should remain open to bilateral trade arrangements between appropriate Latin American countries and NAFTA as the best way to accelerate the momentum toward an overall Western Hemisphere system and as a major step toward a new international order. The ultimate compromise would be an arrangement in which Brazil goes along with the FTAA while the United States places no obstacles in the way of Mercosur.

In many respects, the role of Argentina will be crucial in shaping this evolution. That Argentina should play so important a part in Western Hemisphere relations would have seemed inconceivable a few decades ago. For most of its history, Argentina did not look north but east toward Europe. Blessed with vast resources and a talented population, it had, before the advent of the Perón dictatorship, the sixth largest per capita income in the world. Within the Western Hemisphere, it emphasized its distinctiveness, disdainful of its neighbors to the north and resentful of the United States's dominant role without, however, going beyond an attitude of descending aloofness.

The advent of the dictatorship of Juan Perón ended Argentina's claim to uniqueness. For the last half-century, Argentina has been a land of paradoxes. For a long time, the richest country of Latin America with the highest literacy rate and the most substantial middle class, it has also generated the most bizarre forms of governance under the influence of the first Mrs. Perón and the governance of the second. As if afraid of stability, it has thrown itself into

U.S. $30.00

Can. $44.50

UK. $20.00

104 Henry Kissinger

down the hemisphere-wide free trade idea in order to solidify Mercosur; bind Argentina, Paraguay, and Uruguay to it; and oblige the United States to deal with a regional bloc rather than with individual countries.

From a strictly geographical perspective, Mercosur makes sense. But as long as the monetary systems of its two largest members, Brazil and Argentina, are at odds with Brazil having a floating currency and Argentina tying the peso to the dollar, significant institutional integration will be slow and tensions inevitable. In any event, Brazil's neighbors are unlikely to subordinate their eagerness for close relations with the United States to theories of Latin American solidarity.

The United States has no reason to oppose Mercosur so long as it functions as a partner to NAFTA in the process of creating a Free Trade Area of the Americas. But it is another matter if Mercosur, even before it is fully formed, is turned into an effort to exclude the United States from bilateral dealings with traditional friends or if it were to pursue internal arrangements similar to some of those developing in the European Union which, in the economic and political fields, tend to confront the United States with a series of faits accomplis. This would introduce a rigidity and a confrontational style into the Western Hemisphere relationships inimical to the fulfillment of its historic promise and practices.

If matters are allowed to drift, all this has the makings of a potential contest between Brazil and the United States over the future of the Southern cone of the Western Hemisphere. Such an outcome would be an indictment of statesmanship on both sides. It should be possible to restore a large degree of the traditional intimacy between the two countries once both realize that a conflict between them can have no winners. The United States, in its dealings with Brazil, needs to display greater sensitivity to the sense of dignity of a society on the verge of becoming a major power. This means restraint in hortatory diplomacy and in the attempt to impose every American preference via sanctions. It also requires a commitment to resolve the existing bitter trade disputes over Brazilian sugar, cit-

Does America Need a Foreign Policy? 103

of its population (upward of 150 million at the turn of the century),
and the partners it could enlist in Mercosur.

As this policy has evolved, Brazil has become increasingly sen-
sitive to real or perceived slights from the United States. Lead-
ing personalities are suspicious that the FTAA is designed to the
unilateral benefit of the United States; that concerns about envi-
ronmental conditions are a subterfuge for diminishing Brazilian
sovereignty over the Amazon; and that the United States uses an-
tidumping and labor standards as a pretext for protectionism.
Progress toward the FTAA requires a major effort to put relations
with Brazil on a new basis.³

Such an effort is all the more important because, in the 1990s,
Brazil joined the wave of political and economic restructuring that
had started with Mexico and Chile. Under the leadership of a re-
markable president, Fernando Henrique Cardoso, Brazil reduced
its hyperinflation of as much as 40 percent a month to well below 10
percent a year. As a result, groups with fixed incomes, previously
the victims of inflation, were rising into the middle class and con-
tributing not only to economic growth but to political stability.
State-owned enterprises were systematically privatized; trade bar-
riers were reduced, if not always at a pace desired by U.S. trade ne-
gotiators; foreign investment was encouraged; government was
confined to sectors governments are uniquely equipped to handle;
economic growth was increasingly left to market forces.

Brazilian industry, which had been parochial and protectionist,
became more and more international. With a growth rate of 4 per-
cent, financial stability, a large internal market, and a stable govern-
ment, Brazil was being transformed into one of the major economic
and political countries of the twentieth century. From that position
of strength, Brazil—with its adroit diplomatic style cushioning a
purposeful policy—has set about to extract from the United States
something of the same preeminence in hemispheric affairs it had
sought to achieve through the special consultative arrangement
which had aborted two decades earlier.

Perceiving existing inter-American institutions as a means to
buttress United States domination, Brazil has also tried to slow

102 Henry Kissinger

States as similar to the twin-pillars concept put forward by President Kennedy for the Atlantic partnership. Brazil saw itself as organizing Latin America while the United States performed the same task in North America, the two enterprises to work in harmony through frequent exchanges aimed at articulating a common set of purposes. The theoretical sovereign equality of each Latin American nation postulated by the inter-American system was not part of Brazil's foreign policy vocabulary.

As late as 1976, during the presidency of Gerald Ford, the United States accorded Brazil a special consultative status. Asked by the chairman of the House Foreign Affairs Committee, Thomas "Doc" Morgan, whether the United States was thereby elevating Brazil to the status of a world power, I replied:

> Mr. Chairman, this agreement does not make Brazil a world power. Brazil has a population of 100 million, vast economic resources, a very rapid rate of economic development. Brazil is becoming a world power, and it does not need our approval to become one, and it is our obligation in the conduct of foreign policy to deal with the realities that exist.

The special relationship then established did not prosper, however. The existence of a military regime in Brazil after 1964, growing concerns about its authoritarian tendencies, and U.S. trade legislation produced a series of irritations which intensified during the Carter administration. A hiatus in United States-Brazil intimacy of nearly a decade followed, and Brazil began to look elsewhere. By the 1980s, it had, in effect, decided that the vagaries of U.S. domestic politics and its own growing strength and self-confidence made it inappropriate to rely on a special honorific status in essence bestowed by the United States. Brazil replaced the policy of exclusive reliance on the United States with a deliberate effort to multiply its diplomatic and economic options and to influence the United States through the richness of its alternatives. Brazil henceforth would seek to forge a dominant position in Latin America on its own, relying on the vibrancy of its economy, the size

Does America Need a Foreign Policy? 101

United States even while geographic propinquity and economic re-
ality imposed close cooperation. It is only lately that a special
friendship has emerged. By contrast, until very recently, Brazil was
by tradition the closest ally of the United States in the Americas.
Geographic remoteness kept the two countries from impinging on
each other until the last half-century and then not in a manner that
encroached on Brazil's perception of its sovereignty.

Moreover, unlike the other Latin American states, Brazil is of
continental dimensions. To be sure, its people did not, until the
second half of the last century, develop the country by exploring its
interior, as the settlers of North America did, but instead clung to a
strip of the coast as if determined to keep open the link to the Old
World.

Nevertheless, Brazil's vastness has conferred on its institutions
and policy a self-assurance that freed it from the self-assertiveness
imposed by the compulsion to propitiate a restive national con-
sciousness. Prior to its national independence, Brazil was not so
much a colony as the largest part of the single kingdom of Portugal.
For nearly a generation, while Napoleon occupied Portugal and for
some time afterward, Rio de Janeiro was the capital of the Por-
tuguese empire. This history has spawned Latin America's most ef-
fective foreign service—well trained, multilingual, pursuing the
Brazilian national interest with a combination of charm, persis-
tence, and a careful assessment of international realities. Once when
I described a certain group of countries to a Brazilian foreign minis-
ter as respecting only strength, my interlocutor replied: “Yes, espe-
cially in those who are strong.”

Thus, for the greater part of its history as a sovereign state, Brazil
insisted on a special relationship with the United States and was ac-
corded as much. It acted as the same kind of ally of the United
States that Britain became in Europe after the Second World War.
A Brazilian division fought in Italy at the side of the Allies in World
War II; Brazilian troops joined U.S. forces in the occupation of the
Dominican Republic in 1965, and the entire force was ostensibly
led by a Brazilian general.

Throughout Brazil viewed its relationship with the United

100 Henry Kissinger

judicial system. The country's physical infrastructure has not kept up with the new economic opportunities. And the Mexican educational system is inadequate for the needs of the twenty-first century.

At the same time, Mexico is uniquely positioned to benefit from its ties with the United States. No other country with such a large population shares as long a border with such a rich neighbor. But if geography were enough, Mexico would long since have been an economic success. Two changes have presented it with a new window of opportunity: NAFTA and globalization.

NAFTA has generated trade and investment exceeding the most optimistic forecasts due, in part, to the record growth in the United States. But it is also because Mexico is well positioned to take advantage of globalization. For the tools of the new globalized economy arrive in Mexico nearly at the same time and almost at the same cost as they do in the industrialized countries. With technology the key to growth, any country prepared to learn to use it can succeed, especially when, as in Mexico, there is a preponderance of young people who have grown up with computers and the Internet. With 65 percent of the Mexican population under thirty years of age, Mexico could emerge as a major factor in the world economy, provided it radically transforms its educational system, reforms its public finance, and manages to control the narcotics trade—goals Fox has made prime priorities.

Mexican realities thus mesh with early evidence of the priorities of the George W. Bush administration. As a former governor of Texas, President Bush has personally experienced the importance to the United States of a healthy, creative, and productive Mexico. And he has responded by acknowledging Mexico's priority on his foreign policy agenda, which includes as a major item joint efforts with Canada to integrate NAFTA into a hemispheric Free Trade Area by 2005.

Reaching that goal will depend to a large extent on another quite different special relationship—that between the United States and Brazil. The evolution of Brazil's foreign policy has been, in many respects, the opposite of Mexico's. The greater part of Mexico's history was marked by a mixture of suspicion and resentment of the

96 Henry Kissinger

agreement and submit it to Congress for approval or rejection
without the possibility of amendment.

The Clinton administration recoiled from acting on its convictions because it found both U.S. political parties split between groups rejecting an institutional connection with the rest of the world and others seeking to impose U.S. standards unilaterally (especially labor and environmental criteria). As a result, a U.S. president lacked the authority for the first time in more than two decades to pursue either the expansion of NAFTA beyond Canada and Mexico or negotiations with the other regional groupings. In the absence of fast-track authority, interlocutors know that negotiations would be unending and burdened with the risk that any deal reached might be amended by Congress and then need to be renegotiated.

This paralysis is all the more debilitating because it occurred simultaneously with the emergence of Mercosur, linking Brazil, Argentina, Paraguay, and Uruguay in a South American free trade area under the leadership of Brazil. Chile, tired of waiting for the long-promised access to NAFTA, has become an associate member of Mercosur, as has Bolivia; Venezuela and Peru have expressed strong interest. Like every new trading bloc, Mercosur affirms that its intentions are nondiscriminatory; the reality is otherwise. It is the defining characteristic of a trading bloc that its internal barriers are lower than its external ones; its bargaining position depends on its ability to grant or withhold benefits that its own members enjoy as of right.

It is precisely with this siren song that Europe beckons beyond the Atlantic. On a visit to Latin America in March 1997, French President Jacques Chirac urged on his hosts that the future of Latin America was not to the "North," meaning NAFTA and the United States, but with Europe. Other self-proclaimed European anti-hegemonists—the code word for those in favor of reducing American power and influence—have elaborated the same theme. A good example is an interview in December 2000 with the then president of the Council of the European Union (of foreign ministers)—the Portuguese António Guterres—defending an agricultural Euro-

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******************* - ******************* - 212 759 0042- *******************

KISSINGER ASSOCIATES, INC.
350 PARK AVENUE, 26TH FLOOR
NEW YORK, NY 10022
(212) 759-7919
FACSIMILE: (212) 759-0042

NO. OF PAGES: 1 (including cover)

DATE: June 8, 2001

RECIPIENT

NAME: Jon Faulkner, Hotel Guest, Room 1504
Regent Hotel

FAX NO: 011/852/2739-4546

SENDER

NAME: Theresa Cimino

Sir:

Mr. Korda called back to say he doesn't see any reason why not to grant both
Colombian papers permission to print the Latin American chapter. To recap:

El Espectador, which claims to be the second largest daily newspaper in
Colombia, wants to print a translation (their own) in its Sunday edition.

Semana, a weekly news magazine that claims to be the Colombian
 equivalent of Newsweek or Time, wants to print the chapter in English
 alongside the story it is doing about the chapter. (The story will appear in
 Spanish.) The article is scheduled to run in next week's issue, which will
 be on newsstands Monday.

Mr. Korda reiterated that if this is something you would like to do, he doesn't see any
harm in going ahead with it. He will speak with Marie Floro (who is in charge of
rights) at Simon & Schuster first thing Monday morning. He said if there is a
problem, they can always correct it "after the fact".

I am still here at the office in the event you would like to give Jon a message to
convey to me.

Thank you,

[16]

Theresa Cimino

To: marie.florio@simonandschuster.com
Subject: Requests received today

Hi, Marie--

I left a voice mail for you but never heard back, so I thought I had better try an e-mail. We received two requests from Colombian publications that want to print Dr. Kissinger's chapter on Latin America (Ch. 3). They both need quick answers:

-El Espectador claims to be the second largest Colombian daily newspaper. It wants to run a translation (their own) of the Latin American in its Sunday edition. Deadline is midnight tonight. Run it over number of days.

-Semana is the Colombian equivalent to Newsweek or Time. It is running a story (not a review, but a "story", I am told) on the Latin American chapter and wants to print the chapter in its entirety IN ENGLISH. The story itself will appear in Spanish. Deadline is tonight as well, as they want it to run in next week's issue that comes out on Monday.

We've got a call in to Mr. Korda at home in the country but haven't heard back. Could you call me at work at (212) 759-7919 or on my cellular phone (201) 689-1622 once you get this message? Dr. Kissinger is eager to get your opinion on these.

Thank you,
Theresa