Occupied elsewhere, the United States has let its interest in Latin America slip. Partial political and economic reforms have failed to realize the expected progress toward prosperity. As a result, some countries in the region are turning back toward populism and forging links with undemo­cratic adversaries like Cuba, China, and Iran.

Although the Bush Administration has made impressive gains in concluding trade pacts and helping the Andean region combat drug smug­gling and terrorism, its policies lack commitment and a guiding strategy. Growing instability and decaying quality of life could affect America through declining export markets, resource con­straints, and increased migration to the north. To regain influence and foster a more prosperous, stable hemisphere, the United States should revive a strategy of promoting:

• Democratic reforms beyond elections,
• Open markets beyond free trade, and
• Day-to-day collaboration in fighting transna­tional crime and terrorism.

Discontent. All Latin American countries except Cuba celebrate competitive elections, and most have adopted some aspects of market economies. Yet citizens now tell pollsters that they are dissatis­fied with democracy, although they still prefer it to dictatorship. Only 27 percent believe that markets actually work, although a solid majority prefer them to state-run economies.

Such responses suggest partial progress has not produced expected results. Powerful presidents still impose personal agendas on weak legislatures and judiciaries, and poorly performing education systems contribute to poverty and low social mobility. Increased trade helps established indus­tries and contributes to growth but fails to create jobs where burdensome regulations and weak rule of law cripple small businesses.

Looming Troubles. Expanding populations pose problems for societies that lack competitive markets. The population of Latin America and the Caribbean is expected to grow by 140 million people in the next 20 years. Economies that rely on exports of raw materials and estate-based agriculture cannot pro­vide enough new employment to satisfy demand.

Elections have produced a growing number of left-leaning governments. Brazil, Chile, and Uru­guay are similar to Europe's social democracies. Other countries are inspired by Cuban dictator Fidel Castro. Venezuela now features authoritarian rule, restricts liberties, and is opposed to free trade and U.S. influence. Bolivia's new populist president might follow suit, and populist-leftist candidates are running for president in Peru and Nicaragua.

Boosting prospects for crisis, Venezuelan Presi­dent Hugo Chávez is buying arms to scare demo­cratic neighbors such as Colombia and has announced plans to acquire nuclear technology from Iran. He is also seeking to unite Latin America in a new energy alliance to manipulate hydrocar­bon sales to the United States and other nations that he considers adversaries.

Colombia needs to expand its security forces to force illegal rural armies to demobilize. President Vicente Fox's attempts to liberalize Mexico's econ­omy and reform its government have been thwarted by a divided congress. Mexico and the United States have since reached an impasse on migrant labor. Instability in Haiti continues despite peacekeeping forces, a transition government, and recent elec­tions. Cuba's economy has been strengthened by subsidized oil from Venezuela, but Castro's death could lead to a breakdown of order or a massive release of asylum-seekers to the United States, pos­ing hard decisions for U.S. officials.

An Opportunity Agenda. President George W. Bush won congressional approval for trade promo­tion authority, concluded a free trade agreement with Chile in 2003, and concluded a similar pact with the Dominican Republic and five Central American states (DR-CAFTA) in 2005. Yet U.S. programs to strengthen democracy have been intermittent, public diplomacy has been neglected, security assistance to help Colombia to combat narcoguerrillas lags, and the Administration has no clear energy policy.

To guard against greater troubles on America's southern flank, the Bush Administration needs com­mitment and a strategy to help neighbors develop societies in which investments will grow and people will want to live. Its policies therefore should:

• Bolster homegrown efforts to improve gover­nance by strengthening citizen control of polit­ical parties now dominated by founder- owners, establishing links between legislators and constituent districts, enhancing separation of powers, and promoting equal treatment of all citizens under the law.
• Foster free markets by pursuing pending bilat­eral free trade accords with Panama and the Andean countries of South America. Beyond trade, America should urge stronger property rights, simpler commercial codes, competitive banking, and models for privatization that cre­ate truly competitive industries.
• Improve security through regional coopera­tion. To counter today's transnational threats, the United States should encourage regional partnerships based on day-to-day military-to-military and law enforcement-to-law enforce­ment cooperation.

Conclusion. Washington needs to reengage Latin America to offset the influence of Hugo Chávez and Fidel Castro. Specifically, the United States should defend principles of free choice in Venezuela, sustain progress against narcoterrorism in Colombia, support institution-building in Haiti, develop a post-Castro engagement plan for Cuba, and promote reforms to move the region's energy sector away from state ownership and politiciza­tion. As Latin Americans try to sort out their poli­tics, the United States must help to shape events there in a way that enables hemispheric neighbors to become more stable and prosperous.

Stephen Johnson is Senior Policy Analyst for Latin America in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Stud­ies, at The Heritage Foundation.