S. AMERICAN INSTABILITY IS TROUBLING TO ANALYSTS

Political Volatility May Challenge U.S. Outreach

BOGOTA, Colombia - As the United States launches a $1.3 billion
program to bring Colombia's drug and insurgency problems under
control, dangerous social and political trends are developing in
nearby countries that threaten to turn the entire region into a
tinderbox, senior U.S. officials say.

These officials and some of their Latin American counterparts warn
that the next U.S. administration will confront a number of serious
challenges concentrated in the Andean region of South America. Most of
the problems, they say, are independent of the mess that already
awaits the next administration in war-racked Colombia.

The military unrest and political upheaval that led to last month's
ouster of President Alberto Fujimori in Peru offer only a glimpse of
the problems on the horizon, U.S. and Latin American officials say.
There remains a high potential for coups, armed rebellions, refugee
crises and social unrest extending from Bolivia all the way to the
Panama Canal.

"All of these issues highlight the fact that the roots of democracy
maybe aren't running as deeply as everyone thought," said a senior
Pentagon official in Washington.

Signs Of Discontent

In the last year alone, the region has witnessed an army-backed coup
and indigenous uprising in Ecuador, a military split in Peru and armed
confrontation between peasant farmers and troops in Bolivia. There are
increasing signs of military disgruntlement with Venezuelan President
Hugo Chavez. There also are growing border tensions between the
government of Venezuela and some of its neighbors. In Panama, business
and political leaders have openly discussed the possibility of
forcefully ousting President Mireya Moscoso, whose government is mired
in economic problems and the growing presence of Colombian insurgents
in southern Darien province.

"Some of the political unrest ... is a slightly delayed reaction to
all the economic difficulties in the last few years they've had down
there," the Pentagon official added. "Every one of those economies is
in the tank.

"If you have a very strong political foundation and strong commitment
to democracy, you can handle an economy that's in the tank. If you
don't, then ... all bets are off."

In the middle of all this, senior U.S. officials say, are signs of
increasing adventurism by Cuba's Communist government and a close
alliance developing between Cuban leader Fidel Castro and Mr. Chavez
of Venezuela.

The two governments are sharing intelligence and cooperating on
security matters and have even begun offering those services to other
governments interested in distancing themselves from the United States.

"I think it's fair to say that we are increasingly concerned with
Venezuela's behavior," said the senior Pentagon official. "My concern,
and I think other folks' concern, is that Chavez is your basic
1960s-style demagogue, and Fidel Castro is his role model. Chavez is
the only person in the world currently alive who is using Fidel Castro
as a role model, but nevertheless, he seems to be doing that."

Mr. Chavez, a former army colonel who was jailed after a failed
military coup in 1992, has engineered a wholesale replacement of his
country's constitution, along with the legislature, judiciary,
executive branch and labor-union leadership.

He has used bellicose language regarding a border dispute with
neighboring Guyana, extended the declared limits of Venezuelan
territorial waters beyond those recognized by other nations, and
offered quasi-diplomatic status in Caracas to leaders of Colombia's
biggest guerrilla group.

Defending Venezuela

Mr. Chavez held a news conference last week to deny accusations that
Venezuela had encouraged rebellions in Ecuador and Bolivia this year.
At the same time, Mr. Chavez criticized Colombian President Andres
Pastrana's treatment of the guerrillas and the $7.5 billion program,
Plan Colombia, aimed at dislodging the drug-trafficking network that
helps fund the nation's main insurgent groups.

"Does anyone think that negotiations for peace will be strengthened
with more weapons, armed men and munitions?" Mr. Chavez commented last
week in a public critique of Plan Colombia. He also lashed out at the
Clinton administration and said he hopes the next administration
"doesn't have agitators, professional liars ... as high officials."

Despite repeated demands by Mr. Pastrana's government that Venezuela
stop meddling in Colombia's internal affairs, Mr. Chavez has
persisted. Colombia finally withdrew its ambassador to Caracas in
protest last month.

"Overheated rhetoric, time and time again ... is not helpful," the
Pentagon official said. "Even if their actions are OK, there has been
an excess in rhetoric coming out of the Venezuelan government,
anti-U.S. if you will. Of course, we also watch their actual behavior
... and we are clearly concerned about their intervention or what they
are up to regarding some of their neighbors, in particular Colombia."

Emboldened by Venezuela's leadership role in the Organization of
Petroleum Exporting Countries, and with the economy experiencing a
boost from high oil prices, Mr. Chavez has assumed a more forceful
position in regional affairs, even to the point of urging other
nations to reject U.S. advice and military assistance.

"Undoubtedly, he has created a sense of independence and independent
action in Latin America that is very well-liked" by other nations in
the region, a senior Andean region official said. By offering security
assistance and low-priced oil sales to friendly nations, Mr. Chavez is
gaining popularity at a time when the United States is trying
unsuccessfully to rally support behind Plan Colombia.

"So the influence of Venezuela is likely to increase as the other
relationships are fostered," the official said.

But the public sparring is making other nations in the region nervous,
said Deputy Foreign Minister Luis Gallegos of Ecuador, who warned that
the destabilizing effects of Colombia's drug and insurgency problems
already are testing the nerves, if not the resources, of Colombia's
neighbors.

"Aside from this security issue, we have a very complex regional
situation, which is not only a Colombian or Ecuadoran affair, or just
an Andean affair, it is a hemispheric, regional affair," he said. The
solution will not come from bellicose pronouncements, either by the
United States or Venezuela, but through dialogue and cooperation, he
said.

Independent political analysts say that the region's turmoil and the
rise of leaders such as Mr. Chavez are not entirely coincidental events.

"If you look at the Andean region in particular, it's really hard to
single out why so many countries are in such deep crisis all at once,"
said Coletta Youngers, a human rights activist and specialist in
Andean political affairs. "But what you can say is that ... the heyday
of the democratization and economic growth of the late '80s and early
'90s is over throughout the region.

"Throughout Latin America you see growing discontent with increasing
economic disparities and the growing number of people living in
poverty, the lack of trickle-down that would allow people to climb out
of poverty," she explained. "That has led to an increasing willingness
to support what I call authoritarian, populist leaders who appeal to
people's frustration."

Long-Term Drawbacks

The promise of Mr. Chavez and Mr. Fujimori to restore order, oust
corrupt officials and help the poor, Ms. Youngers said, was "very
attractive in the short term, but in the long term creates very
serious problems in terms of democratic consolidation. So I think the
trend of the future is increasingly toward political unrest and
instability and increasing threats to what had been a trend of
deepening democracy."

Adding to the tensions are the potential "spillover" effects that
Colombia's neighbors are expecting once the U.S.-backed Colombian
military unleashes two of its newly trained counternarcotics
battalions next month in areas where drug-crop cultivation and
guerrilla activity are prevalent.

Ecuador expects thousands of refugees to cross its borders from
Colombia, putting additional strains on an already cash-strapped
government, Mr. Gallegos said. With U.S. assistance, the government
has launched a $400 million plan to develop Ecuador's northern border
region with Colombia into a manufacturing and commercial belt capable
of employing Colombian refugees as well as Ecuador's jobless.

"We recognize that this is more a social issue than merely one of
arms," Mr. Gallegos said.

Ecuador also is allowing the United States to base counternarcotics
operations from a military base in the northern town of Manta.

Panama, however, has consistently rejected U.S. overtures to provide
military hardware, training and security assistance under Plan
Colombia. Both governments say there is lingering animosity and
distrust related to the decades of U.S. military presence of Panama
before last year's handover of the Panama Canal.

Heightened Divisions

But the divisions became most apparent last month when Panama hosted a
hemispheric summit, and Ms. Moscoso's government pointedly accepted
security assistance from Cuba while the United States stayed away.

She accepted Cuban advice to shut down traffic in various parts of
Panama City, close schools and even allow Cuban agents to conduct
security sweeps through apartment buildings in a five-block radius
from where the summit was held, according to a source involved in
planning the summit.

"I always tell the Panamanians, if and when you're ready, give me a
call," the senior U.S. official said. "But in the interim period,
you've picked the Venezuelans and the Cubans to be your pals. I
question your judgment of friends, but there you are. I don't see
anything else we can do about it."

Other U.S. officials say they are exasperated, especially considering
that Panama has no military force and that its national police force
is overwhelmed by a larger and more heavily armed force of Colombian
guerrillas and paramilitary fighters based in the Darien jungle.
Illegal arms bound for Colombia are flooding into the country,

One U.S. official in the region warned that Panama's citizens
ultimately could suffer the consequences of Ms. Moscoso's decisions to
reject U.S help.

"Our arrangements with Colombia do not require Panama to become
involved. But Panama has to be concerned with its own security and
with potential spillover, whether it's on the security side or the
drug-trafficking side," the official said.

"If Plan Colombia succeeds - that is, if the Colombian government
succeeds in getting a handle on the problems there - there will be
impact on the neighboring countries," the official said. "If Plan
Colombia fails to get a handle on that problem, there will be an
impact on the neighboring countries. In either case, and if Panama
does not have a better fix on what its responses will be, it will go
badly for Panama."