Intelligence Brief: Rumsfeld Visits Paraguay and Peru

Agosto 2005

Drafted By: Dr. Michael A. Weinstein

In an attempt to reverse the cycle of instability that has erupted in the Andean states of South America and that continues to intensify, U.S. Secretary of Defense Donald Rumsfeld visited Paraguay and Peru on August 16-18.

The pressing reason for Rumsfeld's trip is the deterioration -- from Washington's viewpoint -- of the political situation in Bolivia, where President Carlos Mesa resigned earlier in the summer after the country was torn apart by autonomy movements in its relatively prosperous south and mass populist direct action in its poverty stricken north. Washington's primary concern is the escalating support for Evo Morales, the charismatic leader whose base among the northern coca growers has widened to include significant portions of Bolivia's indigenous majority and whose Movement Toward Socialism, which falls in line with the cooperativist ideology of Venezuela's President Hugo Chavez, commands the most significant bloc in the Bolivian Congress. [See: "Intelligence Brief: Bolivia"]

Washington, which has accused Caracas and Havana of lending support to Morales, fears that populist movements opposed to its strategic aims now have a genuine chance to come to power in the Andean states and institute socialist economic models in place of neo-liberal capitalist free trade, thereby excluding U.S. influence in the region. Although Bolivia is the proximate threat, Peru and Ecuador are also experiencing increasing instability from populist pressures. In Peru, three coca-growing regions have passed ordinances permitting free cultivation of the crop, and, in Ecuador, protestors in the country's oil-rich Amazon region have occupied petroleum facilities -- cutting off the flow of crude oil -- to advance their demands that transnational oil companies increase their spending on infrastructure improvements and social programs.

The overriding aim of Rumsfeld's trip to Paraguay and Peru, where he met with the countries' presidents and defense officials, was to persuade them to increase military cooperation with Washington and to create a coalition geared to isolating Caracas in the hemisphere. Subsidiary goals were to encourage Asuncion's crackdown on smuggling, the drug trade and financial support for Middle Eastern Islamist groups operating in Paraguay's region bordering Brazil and Argentina, and to bolster Lima's commitment to curb coca production for export. The present strategic importance of Paraguay and Peru for Washington is enhanced by the fact that they border Bolivia.

Rumsfeld's attempt at military diplomacy represents a shift in Washington's policy toward Caracas that had been restrained after Chavez survived a U.S.-supported coup in 2002. Despite deteriorating relations between Washington and Caracas -- evidenced by Chavez's suspension of military and drug enforcement cooperation with the U.S. -- the policy of restraint might have continued had it not been for Andean instability. Already stymied in its efforts to create a hemispheric trading bloc dominated by the U.S., Washington now faces the possibility of more hostile regimes in the hemisphere. [See: "Venezuela's Hugo Chavez Makes His Bid for a Bolivarian Revolution"]

Judging by the results of his visits, Rumsfeld failed to make headway for Washington's aims in Asuncion and Lima, where he met with counter-agendas and demands that Washington will be unlikely able to fulfill.

Paraguay

Paraguay, which accepts U.S. military aid to modernize its army and hosts a U.S. military mission devoted to civil affairs and to helping the country in its efforts to police the tri-border region, presented the most favorable opportunity for expanding Washington's influence in South America. Asuncion, however, is not firmly in Washington's camp; President Nicanor Duarte Frutos pursues a dual-track foreign policy dedicated to maintaining cooperative relations with Washington, but also committed to integrating into the Mercosur trading bloc, led by Brazil, which competes with U.S. designs for hemispheric trade. The southern cone states composing Mercosur have been unwilling to follow Washington's call to isolate Caracas, and Rumsfeld was unable to drive a wedge into that stance in Asuncion.

Rumsfeld's visit to Paraguay was preceded by rumors that he would push Duarte to allow the U.S. to have a permanent military base in the country for the purpose of "monitoring" Mercosur. After his talks with Rumsfeld, Duarte made it clear that "no world power is going to install any military base in Paraguay." He added that "Latin America has to integrate, form a power bloc without any kind of prejudices or exclusionary visions." Having shown his resistance to isolating Caracas, Duarte concluded by posing a counter-agenda to Washington's, calling on the U.S. to expand its markets for Paraguay's organic sugar, deregulate its markets for meat, and lower its tariffs on garments.

In Asuncion's view, Washington is welcome to keep helping Paraguay modernize its military, but deeper ties will have to be paid for with economic concessions.

Peru

In Peru, Rumsfeld could not hope for movement toward support of Washington's aims. The country's president, Alejandro Toledo, has suffered an implosion of credibility, with his approval rating at eight percent, after a wave of corruption and sex scandals that have inspired an outbreak of regionalism. Faced with a fractious Congress, Peru's prime minister and cabinet resigned the week before Rumsfeld's visit after Toledo made an unpopular appointment in order to shore up support from a small party. Having refused to accept a U.S. troop presence in Peru unless Washington accedes to the jurisdiction of the International Criminal Court, Lima had the cover to resist deepening military ties with Washington.

Following the pattern set by Duarte, Toledo stressed that the focus of his talks with Rumsfeld was not strategic, but economic. Lima wants Washington to conclude a promised free trade agreement with it, claiming that progress on the coca problem depends on opening up markets in the U.S. for alternative crops. In addition, Lima says that it cannot make progress against coca production and trafficking unless Washington provides it with more money. Statements following the talks did not mention isolating Caracas, and Rumsfeld failed to address Lima's trade and aid agenda. Although Toledo has been pro-Washington, his political position is too weak and Peru's political class is too divided for Lima to make any major policy shifts.

The Bottom Line

Washington's efforts to reverse the cycle of instability in the Andes and the attendant rise of populist movements, and to form a coalition to isolate Caracas, met with failure in Asuncion and Lima, where economic demands trumped strategic concerns. [See: "Cycle of Instability in the Andes: Bolivia, Ecuador and Peru"]

Look for Washington to face increasing difficulties in achieving its strategic aims in South America, as even governments that are willing to cooperate with the U.S. raise the economic price for strategic support and are drawn closer to emerging power blocs in the region that compete with Washington. Given domestic pressures in the U.S., Washington will not have the ability to pay the price demanded by states that it has deemed its potential allies.