Situation doesn’t look good for poor

By Freedom Newspapers

The election of Rafael Correa, an advocate of socialist policies who, naturally, is called a “populist” or “reformer” in most news stories, as president of Ecuador is at least a setback for more open trade. And open trade is the most effective way for Latin America to climb out of poverty.

Since Ecuador, unlike Venezuela, does not have vast petroleum revenue into which the government taps first, Correa is unlikely to be able to turn his more radical notions into policies. But his election is a troubling portent for the region.

The electoral takeover of the U.S. Congress by Democrats, many of whom also are skeptical of free-trade policies, suggests a new era of hostility to international trade is in the offing. That would be tragic for Latin America.

Correa, 43, who received a Ph.D. in economics at the University of Illinois, opposes free-trade pacts with the United States and has promised not to renew U.S. rights to a military base used for anti-drug-trafficking operations. He has threatened to renege on foreign debts. He also has vowed to revamp Ecuador’s political system by convening a “constituent assembly” to replace the existing Congress and rewrite the constitution.

That would make Ecuador the third country in South America to reject the baby steps toward market economies and free trade that some Latin American countries have embraced. Venezuela’s Hugo Chavez, buffered by petrodollars, has been most openly anti-American, referring again Sunday to President Bush as the “devil.” Evo Morales in Bolivia uses similar rhetoric but his government doesn’t have the money to keep his extravagant promises and has already run into popular opposition.

Correa, who came in second in the preliminary election to Alvaro Noboa, probably the richest man in Ecuador and an advocate of more trade, may not be able to overcome the country’s endemic political instability. Ecuador has had seven presidents in the past eight years, and Correa has little support in Congress.

Meanwhile Peru and Colombia, their leaders having come to believe that, as Milton Friedman said a few weeks before his recent death, that “free trade is the most important single way to promote economic growth,” look forward to permanent ratification of trade agreements that will significantly reduce U.S. tariffs on their exports, benefiting both South American producers and U.S. consumers. But if the new Democratic majority in Congress stymies those agreements, Peruvian and Colombian political leaders could be discredited at home.

Thus we are at a delicate moment in Latin America. Blustering from the likes of Hugo Chavez can do little to harm the core interests of the United States. But hostility to international trade could make the plight of Latin America’s poor significantly worse, if that is possible.