OTTO REICH TACKLES A BIG REPAIR JOB, HEMISPHERE POLICY

Otto Reich, President Bush's new Assistant Secretary of State for Western
Hemisphere Affairs, sat down with me on Tuesday and talked about the
administration's vision for Latin America and the Caribbean. What emerged
was clear: after eight years of drift, serious policy makers are back in
charge. "Dialoguing" with gun-toting power seekers and propping up corrupt
regimes is out, which may help explain why the Reich nomination ran into so
much political flak from the Senate left, forcing the president to put him
in office through a recess appointment.

What remains murky, however, in light of domestic protectionist pressures
on the administration, is whether Mr. Bush will have the nerve and
political skill to deliver on the centerpiece of his hemisphere policy,
which calls for freer trade. Without rapid trade liberalization, the rest
of the administration's goals for the region become exponentially more
difficult, maybe even impossible.

After a rather promising start to the 1990s decade, Latin America and the
Caribbean steadily slouched toward chaos, partly because there was no
meaningful leadership from the U.S. When Bill Clinton announced in 1994
that there would be a Free Trade Area of the Americas, unilateral trade
opening stopped dead, with Latins preferring to hold all tariffs as chips
for future negotiations. Institutional and economic reform ground to a halt
in most nations. Then the trade agenda stalled.

The Clinton sleaze factor also came into play, making some of the most
decadent of Latin American governments seem not so bad by comparison. Today
the region is mired in crime and characterized by financial instability,
trade protectionism, economic malaise, political upheaval, terrorism, and
now, an officially recognized war in Colombia.

Fortunately none of this seems to discourage Mr. Reich, who goes about his
new job with Reaganesque optimism and a love of liberty born of his early
life as a Cuban subject to Fidel Castro's tender mercies. He wants to be
tough on terrorism and he speaks passionately about free trade. Mr. Bush's
March visit to Monterrey, Lima and San Salvador, he says, is a signal to
Latin America that despite the heavy attention to the war in Afghanistan,
helping the region advance ranks high on the Bush agenda.

Mr. Reich began his remarks by noting that in the president's priorities
for the Western Hemisphere "the common denominator is freedom." That might
sound like political boilerplate, but Mr. Reich is really talking about an
essential for economic development. "Political and economic freedom," he
says, "translate into economic opportunity, and the vehicle we plan to use
to drive that is the Free Trade Area of the Americas. For that, of course,
you need Trade Promotion Authority."

"We want security. This is the fight against terrorism. And we want
governmental integrity. That's the fight against corruption and the proper
use of governmental resources. Not just avoiding malfeasance but being
efficient and utilizing market forces, less government intervention in the
economy and more attention to private enterprise and individual initiative."

"Supporting democracy," he says, "is not just having an election every four
years and forgetting what happens in between. We want to try to support the
strengthening of democratic institutions." And "governmental integrity is a
very important component because corruption is one of biggest obstacles to
economic development. . . the problem with corruption is that not only does
it steal resources from the people but it corrodes the confidence of the
people in their institutions." He says that one of the administration's
tools to fight this will be a practice of the revoking of U.S. visas of
government officials who have stolen from the public purse.

Freedom, trade openness and good governance, these ideas are hardly new.
But they were not advanced much during the Clinton years. Besides
equivocation on trade, there was a remarkably close relationship between
the U.S. administration and some dubious regimes, such as the Menem
government in Argentina. Mr. Clinton's "Special Envoy to Latin America" was
Thomas "Mack" McLarty, a close crony who spoke no Spanish. In Haiti, Joseph
P. Kennedy II and former Democratic National Committee finance man Marvin
Rosen went into business with Haitian President J.B. Aristide, whose
Lavalas party was noted for its ruthlessness toward any political
opposition. For whatever reason, Mr. Clinton never could make a very good
case against corruption to Latin leaders.

Thankfully for 7 million Haitians, the Bush policy with regard to Mr.
Aristide, whose style of government has been condemned by both left- and
right-of-center figures, is markedly different from the Clinton policy. "We
are trying to use our resources to bring about political and economic
reforms from the government of Jean Bertrand Aristide," says Mr. Reich,
"although, frankly, I have to admit, very unsuccessfully so far. He doesn't
seem to be responsive to almost anything, any outside pressure or inside
pressure. He wants to put pressure on us to give him more money without
maintaining reform."

Secretary of State Colin Powell went to Haiti as a private citizen to help
in the U.S. effort to return Mr. Aristide to power. "He has said he has a
right to be disappointed at what has happened there," Mr. Reich says.
"There isn't democracy, there isn't economic development, there's a great
deal of crime, a great deal of corruption and allegations of narcotics
trafficking."

On Colombia, Mr. Reich says, "We've asked for $98 million dollars to defend
the Cano Limon pipeline because it represents such a large amount of income
to the government of Colombia. They lose $40 million a month from the
sabotage of the pipeline." Congress has not yet approved that request but
Mr. Reich detects a mood of realism among members he has met with since
Colombia's decision to end the "peace process" a week ago. They "understand
that there's no daylight between narcotics traffickers and the terrorists
in Colombia; that these are not insurgents, these are terrorist groups;
that they represent a danger to the region."

It's refreshing to hear a U.S. official condemn Mr. Aristide and Colombia's
guerrillas. But as Mr. Reich says, the U.S. wallet also has limits. This
reinforces the fact that the bulk of the burden of change is on the
shoulders of wealth-creating trade. An administration that placates
protectionists is not likely to be able to lead the region to open markets,
security and strong democracy. Either Mr. Bush will lead on trade or Latin
America will founder.

Ms. O'Grady edits the Americas.