HAVANA — Two decades after Latin America embarked on sweeping free-market reforms, leaders across the continent are scaling back those initiatives as their economies stall, unemployment and poverty rise, and popular protests spread.
Economic crises are hammering countries from Argentina to Brazil to Bolivia. Uruguay on Thursday was hit by looting and demonstrations over a government order closing the nation's banks, part of a backlash against free-market policies.
Prodded by the United States, Latin American leaders sold off billions of dollars worth of state-owned industries, lowered trade barriers and slashed bloated government bureaucracies. A half-dozen years of sustained economic growth followed.
But that growth has evaporated, and politicians across the continent are feeling the heat from voters convinced that the free-market policies have merely enriched corrupt politicians and greedy multinational corporations at the expense of the poor.
Even as President Bush looks to carry out an ambitious free-trade agenda that would include new agreements with Latin American nations, the region's leaders are reconsidering the U.S. economic model.
Peru's president, Alejandro Toledo, recently reversed himself and suspended the sale of two regional power facilities after two protesters were killed in huge demonstrations. Similar protests against the privatization of a state telephone company in Paraguay left two people dead and forced the government to halt the sale.
Argentina has suffered though five presidents since its economic collapse several months ago left half the country in poverty. Brazil--the region's economic powerhouse--is laboring under $250 billion in foreign debt, a falling stock market and sinking investor confidence.
U.S. Treasury Secretary Paul O'Neill, who enraged Brazilians this week when he said he was reluctant to support further assistance to the region because it could be diverted to "Swiss bank accounts," is scheduled to travel to Brazil, Argentina and Uruguay next week.
His comments, which were later softened by U.S. officials, sent Brazil's financial markets into a tailspin and contributed to the widespread perception that the United States is insensitive to Latin America's crisis.
On Thursday in Washington, O'Neill said there was no "magic bullet" to solve the region's economic crisis, but he pledged "support for Brazil and other nations that take appropriate steps to build sound, sustainable and growing economies."
Latin American leaders blamed
Many economists and other experts blame the economic crisis on the nations themselves, arguing that Latin American leaders lacked the political will to fully implement the often painful free-market reforms.
"The issue is the quality of governance and the people who Latin Americans choose to lead them," said Mark Falcoff, a Latin America expert at the American Enterprise Institute, a Washington think tank. "The quality of governance is mediocre."
But many of the leaders say the economic crisis has been exacerbated by the United States' and other developed nations' protectionist policies that block access to Latin American exports. They are particularly angry at a recent move by the Bush administration to protect the U.S. agricultural industry through increased subsidies.
"Today it is clear that globalized trade benefits some, but not others," Ecuador's president, Gustavo Noboa, said in a speech last week at a gathering of South American leaders.
"Latin America continues to be marked by its extreme vulnerability, today sharpened by the persistence of protectionist policies and subsidies in industrialized countries."
The depth of anger was reflected by the South American leaders' views of the debate over giving the White House so-called fast-track authority to negotiate new international trade agreements. Bush, who won that authority Thursday with a 64-34 vote in the Senate, says it will help the White House negotiate a 34-nation Free Trade of the Americas agreement.
But South American leaders responded to House approval of the fast-track measure last week with distrust, pledging first to increase their own trade ties before beginning talks with the United States.
Latin America has long suffered through boom-and-bust economic cycles, though the current crisis is the most severe since many nations made the transition from military dictatorship to democracy during the past two decades.
After steady growth in the 1970s, fueled by banks and international lending agencies that poured hundreds of billions of dollars into the region, most South American economies collapsed in the 1980s under the weight of foreign debt and decades of economic mismanagement.