The creation of the new institution symbolizes a major step toward the increased political and economic independence of South American nations, and toward a more peaceful and egalitarian Western hemisphere.

The populist resurgence taking place in the Andes has been hogging the attention of analysts so much lately that no one seems to have noticed the major shift occurring in Western hemispheric relations. While political scientists nervously contemplate the so-called “crisis of representative democracy” taking place in the Andes (a suspicious assessment, which implies that representative democracy existed there in the first place), they have failed to notice the rapidly declining power of the United States within the region, and what it means for the system of hemispheric relations.

The decline of US power within the region is largely a result of the end of the Cold War. As an all-consuming fear of terrorism replaced the constant threat of World War III, Latin America lost much of its strategic importance in the eyes of US policymakers, who have had their hands full coordinating two Middle Eastern wars. A half-hearted policy of support for trade liberalization and the hemispheric trend toward democracy followed, with few tangible results.

The lack of a strong US presence in the region, coupled with the total discrediting of the South American far-right in the wake of the collapse of the military dictatorships of the 1960s-1980s, has led to a flourishing of center-left and populist governments. All of them have been eager to implement macroeconomic and social policies independent of the “Washington Consensus,” the term coined to describe the package of neo-liberal reforms adopted by most South American governments in the 1990s in reaction to hyperinflationary crisis. Argentina and Brazil have paid their debts to the IMF, Ecuador is threatening to default, and Bolivia and Venezuela have embarked on ambitious plans of nationalization.

American power has declined within hemispheric intergovernmental organizations as well. Take, for example, the election of the current OAS General Secretary. Traditionally a US prerogative, in 2005 a block of center-left Latin American governments, along with populist Hugo Chávez, forced the election of Chilean Interior Minister José Miguel Insulza, overriding the Bush Administration’s first two choices. The proposed Free
Trade Area of the Americas, originally Bush’s priority for the region, has stalled for so long that a CAFTA-NAFTA bloc in the North paired against an enlarged MERCOSUR looks the more likely option these days.

The equalizing of power relationships within the hemisphere and the decline of South America as a region of strategic interest for the United States has also had the welcome effect of minimizing the politics of intervention. While Hugo Chávez regularly accuses the Bush Administration of planning to overthrow him, it is unlikely that the US government has the power to do so without the overt use of force - an extremely unlikely scenario. The aborted coup attempt against Hugo Chávez in April of 2002, which the Bush Administration welcomed without openly supporting, seemed to confirm that the region’s history of clandestine cooperation between American agents and local conservatives has fizzled out.

But neither has the recent decline of US power in South America led to an era of unprecedented pan-South Americanism. In some instances, the realignment of regional power relationships of the 21st century has exposed tensions between South American nations that were so long overshadowed by the imbalanced relationship between South America, collectively, and the United States. The controversy over the recent nationalization of Bolivian gas provides a telling example. Despite the anti-Americanism that invariably accompanies Latin American nationalism, the primary loser in the deal was PETROBRAS, the Brazilian national producer. This produced an ironic situation which had a center-left administration led by former communist Lula da Silva playing the role of foreign exploiter. The dispute was resolved with a minimum of open conflict, but the future promises similar chaffing as Venezuela and Brazil assume leadership roles that were previously reserved for the United States alone.

A similar fissure marked the debate over the role of the new Banco del Sur. A group of Andean nations led by Venezuela wanted the bank to replace the Western bail-out institutions entirely, while a group led by Brazil wanted the bank to function as one more in a series of financial institutions in order to maintain harmonious, if more independent, relations with international creditors. The final version of the deal reflects the latter mission statement, but there can be no doubt that the purpose of the bank is to decrease economic dependence on, and political subjection to, the United States.

All of this is good news for observers of South American politics. No one country possesses enough power to exercise region-wide hegemony or to use force to achieve its foreign policy objectives. Consequently, diplomacy is now the necessary means of exchange. And never before have such a wide variety of political philosophies been represented on such equal footing – from the populism of the Andes, to the conservatism of Colombia and the United States, to the center-left governments of the Brazil and the Southern Cone. Such developments should provide some consolation to those who have criticized the wildly imbalanced relationship between the US and Latin America for decades, even if it comes at a time when they are busy worrying about the future of South American democratic consolidation.

Scott Mainwaring, et al, The Crisis of Democratic Representation in the
Andes. Stanford, CA:  Stanford UP, 2006.

Joshua Goodman. "Colombia Congress OKs Trade Pact with US." AP.  14 June
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"Leading from the south." The Economist. 7 May 2005, p.35.

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Peter Schrank, "Venezuela and Brazil battle quietly over the shape of a planned regional development bank." The Economist.  10 May 2007.

"El Banco del Sur arrancaría a fin de mes." El Clarón. 13 June 2007.  
<http://www.clarin.com/diario/2007/06/13/elpais/p-02006.htm>

"Bolivia pagó primera cuota a Petrobras por refinerías." El Universo
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