Despite the widespread adoption of democratic elections and civilian rule, and despite the development of nascent market economies, Latin America is less stable and prosperous than it was 10 years ago. If the Bush Administration wants to help alleviate some the problems in the Western Hemisphere before they demand attention as the Middle East does, it must begin to support deeper reforms, update its security policy, and better articulate its interests in the region.

Reforms on Hold
Today, all of the countries in the hemisphere hold competitive elections except Cuba and Haiti, and most have at least tried to adopt market economic principles. But elections alone have failed to provide checks and balances. Half of the region remains plagued by laws that block competition, leaders that misuse public funds, and inadequate guarantees of property rights, and the lack of authority in vast rural areas makes Latin America attractive to smugglers and terrorists.

Potential Flashpoints
In July 2000, Mexico elected its first opposition party president in 71 years, but a Congress mostly opposed to him complicates prospects of enacting reforms. High taxes, regulations that favor existing monopolies, lack of affordable credit, and an inefficient energy sector contribute to unemployment and worker migrations to the United States.

Colombia is beginning to make progress against rural terrorist groups, but Venezuelan President Hugo Chávez is reportedly granting haven to Colombian rebels and international terrorists in Venezuela and is restricting civil liberties and access to foreign exchange and increasing the risk of civil conflict. Sagging employment has eroded the political bases of the presidents of Bolivia, Ecuador, and Peru. Central America is threatened by rising crime and the possible return of populist dictators. Brazil and Argentina remain on the edge of financial default, and repressive regimes in Cuba and Haiti are poised to send more refugees to the U.S.

Diverted Attention
The Bush Administration has recovered momentum on liberalizing hemispheric trade relations and provided more comprehensive support for Colombia's war on drug trafficking and terrorist groups. Last year, Congress granted President George W. Bush trade promotion authority, enabling him to sign into law a bilateral free trade agreement with Chile. But distracted by the war on terrorism in the Middle East, the Administration took two and a half years to assemble its Latin America team, leaving Congress and the foreign affairs bureaucracy to manage hemispheric issues almost as they had under the previous Administration.

Support for ongoing political and economic reforms has no clear priority among a range of foreign assistance programs and uncertain conditions for backing loans to countries from multilateral lending institutions. Coordination on assistance is sometimes lacking between the Administration and U.S. overseas missions, as well as among U.S. federal agencies. Public diplomacy and foreign broadcasting have not been integrated into reform promotion strategies.

Washington's hemispheric defense approach is still based on military assistance programs that donate equipment, fund exercises, and provide conventional military training. Counternarcotics and counterterrorism, which require unconventional military and civilian cooperation, are the major security concerns. Finally, the Administration has been reluctant to criticize poor governance and economies supported by unsustainable debt.

Re-Energizing Engagement
To guard against a rollback of governance and market reforms and encourage renewed progress, the Bush Administration should:

• Retake the lead in developing U.S.-Latin America policy by giving the Assistant Secretary of State for Western Hemisphere Affairs authority to formulate plans, set priorities, enhance interagency coordination, and communicate needs to Congress.
• Reorder priorities. Mexico--America's closest neighbor and second largest trading partner--should be at the top of the U.S. legislative agenda. Next should be Colombia, whose drug traffickers and terrorist groups affect the rest of the hemisphere. Engaging Cuban dictator Fidel Castro should be last, though supporting Cuba's dissidents should remain important.
• Improve support for democratic governance and market reforms. Help should go primarily to countries where it can leverage existing desires to achieve self-sufficiency. Coordination among other agencies with foreign affairs missions must improve, and public diplomacy and foreign broadcasting efforts must be integrated into support plans.
• Accelerate negotiations on free trade. New bilateral and subregional free trade accords with the United States could help create a virtual Free Trade Area of the Americas in anticipation of a real agreement.
• Develop a new security strategy that confronts today's hybrid security threats, takes advantage of the growth of fledgling democracies, and encourages subregional partnerships based on routine military-to-military, civilian agency-to-civilian agency cooperation that promote common standards and protocols.
• Articulate U.S. interests in Latin America. The Administration should end its silence on the need for local policies that will help each country become more self-sustaining.

Conclusion
While the Bush Administration can take credit for reviving the hemispheric free trade agenda and enhancing counternarcotics efforts, two and a half years have lapsed with little progress on reforms and defense. If Washington remains passive, U.S. exporters will face declining markets, more complicated and costly criminal and terrorist threats, and fewer reliable allies in international forums. Better governance, free markets, a modern strategy to improve regional security, and clear communication of U.S. interests are the keys to peace and prosperity.

Stephen Johnson is Senior Policy Analyst for Latin America in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.