Feature

The Merchant of Death

Russian entrepreneur Viktor Bout has made millions as the world's most efficient postman, able to deliver any kind of cargo -- especially illicit weapons -- anywhere in the world. How was he able to build his intricate underground network? By exploiting cracks in the anarchy of globalization.

In many ways, Viktor Bout is a prototypical, modern-day, multinational entrepreneur. He is smart, savvy, and ambitious. He’s good with numbers, speaks several languages, and knows how to seize opportunities when they arise. According to those who've met him, he’s polite, professional, and unassuming. Bout has no known political agenda. He loves his family. He's fed the poor. And through his hard work, he's become extraordinarily wealthy. During the past decade, Bout’s business acumen has earned him hundreds of millions of dollars. What, exactly, does he do? Former colleagues describe him as a postman, able to deliver any package virtually anywhere in the world.

Not yet 40 years old, the Russian national also happens to be the world's most notorious arms trafficker. He, more than almost anyone else, has succeeded in exploiting the anarchy of globalization to get goods -- usually illicit goods -- to market. He's a wanted man, desired by those who require a small military arsenal and pursued by law enforcement agencies who want to bring him down. Globe-trotting weapons merchants have long flooded the Third World with AK-47s, rocket-propelled grenades, and warehouses of bullets and land-mines. But unlike his rivals, who tend to carve out small regional territories, Bout’s planes have dropped off his tell-tale military-green crates from jungle landing strips in the Congo to bleak hillside runways in Afghanistan. He has developed a worldwide network of logistics, maneuvering through a maze of brokers, transportation companies, financiers, and weapons manufacturers -- both illicit and legitimate -- to deliver everything from fresh-cut flowers, frozen poultry, and U.N. peacekeepers to assault rifles and surface-to-air missiles across four continents.

His client list for weapons is long. In the 1990s, Bout was a friend and supplier to the legendary Ahmed Shah Massoud, leader of the Northern Alliance in Afghanistan, while simultaneously selling weapons and aircraft to the Taliban, Massoud's enemy. His fleet flew for the government of Angola, as well as for the UNITA rebels seeking to overthrow it. He sent an aircraft to rescue Mobutu Sese Seko, the ailing and corrupt ruler of Zaire, even though he had supplied the rebels who were closing in on Mobutu’s last stronghold. He has catered to Charles Taylor of Liberia, the Revolutionary Armed Forces of Colombia, and Libyan strongman Col. Muammar el-Qaddafi.

Bout's customers are not exclusively corrupt Third-World leaders. He built his fortune by flying tons of legitimate cargo, too. These included countless trips for the United Nations into the same areas where he supplied the weapons that sparked the humanitarian crises in the first place. He's done business with Western governments, including the United States. Over the past several years, the U.S. Treasury Department has tried to put Bout out of business by freezing his assets and imposing other sanctions on him, his business associates, and his companies. But the Pentagon and its contractors in Iraq and Afghanistan have simultaneously paid him millions of dollars to fly hundreds of missions in support of postwar reconstruction in both countries. In an age when the U.S. president has divided the world into those who are with the United States and those who are against it, Bout is both.

International officials believe that Bout's business practices -- in particular, his refusal to discriminate among those who are willing to pay the right price -- are, in fact, illegal. Peter Hain, then the British Foreign Office minister responsible for Africa, stood in Parliament in 2000 to lash out against those violating U.N. arms sanctions. He singled out Bout, dubbing him Africa's "merchant of death." But Bout's deals often fall into a legal gray area that global jurisprudence has simply failed to proscribe. It’s not for lack of trying. His peripatetic aircraft appear in little-noticed U.N. reports documenting arms embargo violations in Liberia, the Democratic Republic of the Congo, Angola, and Sierra Leone. U.S. spy satellites have photographed his airplanes loading crates of weapons on remote airstrips in Africa. American and British intelligence officials have eavesdropped on his telephone conversations. Interpol has issued a "red notice," requesting his arrest on Belgian weapons trafficking and money-laundering charges.

Yet Bout has managed to elude authorities over and over again. Laws simply do not address transnational, nonstate actors such as Bout. His most egregious illegal acts have included multiple violations of U.N. arms embargoes, a crime for which there is no penalty and for which there is no enforcement mechanism. Today, Bout lives openly in Moscow, protected by a Russian government unconcerned by the international outcry that surrounds him and his business empire.

INTERNATIONAL MAN OF MYSTERY

Much of Viktor Bout's early history is either unknown or of his own making. He is married and has at least one daughter; that much is true. His older brother Sergei works for him. But any other personal information is clouded in mystery. Even his place of birth is unclear. According to his official Russian passport, Bout was born on Jan. 13, 1967, in the faded Soviet outpost of Dushanbe, Tajikistan. But during a 2002 radio interview in Moscow, Bout said he was born near the Caspian Sea in Ashgabat, Turkmenistan. A 2001 South African intelligence report lists him as Ukrainian. He is known to carry more than one passport and use an array of aliases, including Vadim S. Aminov, Victor Anatoliyevitsch Bout, Victor S. Bulakin, and the sardonic favorite of his American pursuers, Victor Butt.

The deliberate obfuscation has made it difficult to track Bout, his partners, and his business. He says he was an Air Force officer and has acknowledged graduating from the prestigious Soviet Military Institute of Foreign Languages in Moscow in the late 1980s. He reportedly speaks fluent English, French, Portuguese, Uzbek, and several African languages. U.N. officials say he worked as a translator for peacekeepers in Angola in the late 1980s. Several reports tie him to Russian organized crime. Although British and South African intelligence reports say that Bout was stationed in Rome with the KGB from 1985 to 1989, he has strenuously denied any intelligence background. But military language school was a known training ground for the GRU (or Main Intelligence Directorate) -- the vast, secretive, Soviet military intelligence network that oversaw the Cold War flow of Russian arms to revolutionary movements and communist client states in the Third World.

Whether or not he was a secret agent, by the time the Cold War ended, Bout had struck out on his own and was ready to salvage the remaining scraps of the Soviet empire. The entire Soviet Air Force was on life support, as money for maintenance and fuel evaporated. Thousands of pilots and crew members were suddenly unemployed. Hundreds of lumbering old Antonov and Ilyushin cargo planes sat abandoned at airports and military bases from St. Petersburg to Vladivostok, their tires frayed and their worn frames patched with sheet metal and duct tape.

Moving quickly, Bout acquired cargo planes destined for the junkyard. By his own account, Bout, then 25, bought his first trio of old Antonovs for $120,000, hiring crews to fly cargo on a maiden flight to Denmark, then on longer-distance routes to Africa and the Middle East. But his business and financial associates tell a different version. "The GRU gave him three airplanes to start the business," said one European associate who knew Bout in Russia and worked with him in Africa. "He had finished language school, but he had learned to fly. The planes, countless numbers of them, were sitting there doing nothing. They decided, let's make this commercial. They gave Viktor the aircraft and in exchange collected a part of the charter money."

Bout's initial stock in trade was the supply of guns and ammunition abandoned in arsenals around the former Soviet bloc. Many had airstrips built inside their compounds, making loading easy. Guards were often unpaid and their commanders were willing to sell the weapons for a fraction of the market value. This availability of weapons was married to an instant clientele of former Soviet clients, unstable governments, dictators, warlords, and guerrilla armies clamoring for steady supplies across Africa, Asia, and Latin America. "He had a logistics network, the best in the world," says Lee S. Wolosky, a former staff member at the National Security Council (NSC) who led the United States' interagency efforts to track Bout in the late 1990s. "There are a lot of people who can deliver arms to Africa or Afghanistan, but you can count on one hand those who can deliver major weapons systems rapidly. Viktor Bout is at the top of that list."

By the late 1990s, Bout had perfected his modus operandi -- the ability to move his aircraft ahead of government efforts to ground them. To obtain permission to fly internationally, an aircraft must be registered in a country where its maintenance records and airworthiness are certified. Each country in the world has a series of call letters assigned to it, so the country of origin of any aircraft should be immediately identifiable by matching call letters on a plane's tail. By repeatedly registering planes in different countries, Bout was able to avoid local aviation rules, inspections, and oversight. According to a December 2000 U.N. investigation, Bout often registered his planes in Liberia, a nation that had sold its aircraft registry to business associates who helped Bout set up the aviation and holding companies he used for arms trafficking. Run from Kent, England, the Liberian "Aircraft Registration Bureau" offered a full range of services, without anyone ever inspecting the aircraft. This included the "creation of a company name; air operator’s certificate (no restrictions); full aircraft/company documentation; ferry permits and crew validations," the U.N. report noted. That same group controlled the registry of Equatorial Guinea, so when international pressure mounted on Liberia to decertify Bout’s aircraft, he simply reregistered them, a process that took only a few hours through a series of phone and computer transactions.

Although Bout's aircraft were registered and reregistered in far-flung corners of the world, they almost all operated out of Sharjah, a small desert sheikdom in the United Arab Emirates (UAE) that serves as a central base for flights to and from the former Soviet bloc, the Middle East, Central Asia, and Africa. There, Bout continued to muddle his company structures. The aircraft registered in Equatorial Guinea operated under the name Air Cess, and those registered in the Central African Republic flew for Central African Airlines. Although the two airlines had different addresses, they had the same Sharjah phone numbers.

Bout's first known weapons flights were to Afghanistan's Northern Alliance in 1992. Three years later, a MiG fighter jet, flown by the Taliban, intercepted a hulking freighter leased by Bout for delivery of several million rounds of ammunition to the government in Kabul. Taliban soldiers seized the aircraft’s cargo and imprisoned its crew. Bout negotiated with the mullahs for months. Finally, after a year, the crew pulled off what appeared to be a miraculous escape, outwitting their captors by flying the Ilyushin out of Kandahar. But skeptical Western intelligence officials and Bout’s rivals later suggested the crew’s release was tied to Bout’s secret work for the mullahs. After all, in 1995, Sharjah had established a free trade zone that soon became known for its lax oversight and close ties to Islamist radicals. Because the UAE was one of only three countries (along with Pakistan and Saudi Arabia) to recognize the Taliban government in Afghanistan, Sharjah became the main shopping center for the regime, where it was able to purchase everything from weapons and satellite telephones to refrigerators and generators.

Soon, a covert business relationship was established between the Taliban and Bout's network. Bout's avionics and maintenance crews serviced planes flown by Ariana Afghan Airways, the national carrier then controlled by the mullahs. Starting in 1998, according to aircraft registration documents found in Kabul by Afghan officials, Bout's operation and allied air firms based in Sharjah sold the Taliban military a fleet of cargo planes that was used to haul tons of arms and matériel into Afghanistan. U.S. officials concluded that the planes also ferried militant operatives, narcotics, and cash. It was a lucrative venture. Western officials estimate the Taliban paid Bout more than $50 million during the years it ruled Afghanistan.

BOMBS AND RICE

While developing his ties with the Taliban, Bout was also perfecting his sanctions-busting business to the south. Throughout the 1990s, his aging fleet was crisscrossing Africa with weapons for all sides of some of the continent’s most gruesome conflicts. "[There was] Sierra Leone and Liberia, a real bleed-out across West Africa," recalls Gayle Smith, who was senior director for African Affairs at the NSC at the time. "The Congo and Angola were still unresolved. And Sudan was heating up. Any one of these conflicts would have been all-consuming by itself. But they were happening all at once, and Bout was a common denominator."

U.N. investigators uncovered a small slice of his activities in Angola. From July 1997 to October 1998, Bout's airplanes flew 37 flights from Burgas, Bulgaria, to Lomé, Togo, with weapons destined for the UNITA rebels in Angola. The cargo included 20,000 82-mm mortar bombs, 6,300 antitank rockets, 790 AK-47s, 1,000 rocket launchers, and 15 million rounds of ammunition. The total value of the shipments was estimated at $14 million.

Bout's real money came when he realized he could fly lucrative commercial cargo on the flights back from the weapons deliveries. His most profitable enterprise was flying gladiolas purchased for $2 in Johannesburg and resold for $100 in Dubai.

Ever on the lookout for a good business opportunity, Bout even took part in humanitarian operations. In 1993, he flew Belgian peacekeepers to Somalia as part of "Operation Restore Hope," using TransAvia Export Cargo Company, one of his first ventures. A year later, his aircraft flew 2,500 French troops into Rwanda to help slow the ethnic slaughter there. In 2000, he transported hostage negotiators to the Philippines, where European tourists were being held by the terrorist group Abu Sayyaf. He also frequently carried relief supplies from the World Food Programme to impoverished areas in Africa. And in the wake of the massive Indian Ocean tsunami of 2004, his planes delivered humanitarian goods and services to Sri Lanka.

THE HUNT FOR VIKTOR BOUT

Ironically, it was Bout's humanitarian flights delivering European aid that eventually led authorities to his illicit activities. Bout decided to expand his network northward in 1995, setting up several airfreight operations in Ostend, Belgium, where Belgian intelligence began investigating him for possible gunrunning. Meanwhile, the CIA was picking up the first reports of his activities in the Great Lakes region of East Africa. And British intelligence officials in Sierra Leone, worried about how their growing peacekeeping force there would contend with the country’s steady weapons flow, quietly set their sights on him, too. "The difference between Bout and the others was that Bout was an integrated operation," says Johan Peleman, a Belgian researcher who was hired by the United Nations to help investigate Bout. "He can source the arms, he organizes the transport, and he can source the financing." His genius was his ability to provide a door-to-door operation from the arsenal to the buyer.

By the late 1990s, Bout had emerged as the personification of the new transnational threat -- a highly mobile global enabler, skilled at leveraging his assets and loyal to no country, deftly operating in several continents and shrugging off international standards. The U.S. government, in particular, grew frustrated by the limitations of international law. After all, domestic laws could not extend to Bout's foreign arms deliveries. To apply pressure, U.S. officials turned to South Africa, where some of Bout’s planes had been based, and to Belgium, where police had targeted his companies as part of a wide-ranging money-laundering investigation. But despite high-level requests, South African officials declined to prosecute Bout due to lack of evidence, and the Belgians and Americans failed to find common ground on how to build a case.

Finally, in February 2002, the Belgian government issued an international arrest warrant for Bout, charging him with laundering $325 million between 1994 and 2001. But by then, Bout was safe in Moscow. Asked if Bout was in the country when the arrest warrant was issued, the Russian foreign ministry said no, even though Bout was giving live radio interviews from studios in downtown Moscow. The next day, officials grudgingly acknowledged he might be in Russia but said they had seen no evidence that he had committed any crime, and therefore could not act.

FLYING UNDER THE RADAR

Any momentum to scuttle Bout’s business empire quickly fizzled in the wake of the 9/11 terrorist attacks. The Bush administration was almost immediately preoccupied by its invasion of Afghanistan and its wider war on terror. In April 2003, soon after the United States invaded Iraq, American officials began laying the groundwork for a massive commercial airlift. The U.S. military and the thousands of private contractors hired to restore Iraq's shattered infrastructure needed supplies for their mission. By the summer, Antonovs were roaring into Baghdad's cratered airport, ferrying everything from tents and video players to armored cars and refurbished Kalashnikovs.

But to their embarrassment, U.S. officials later learned that many of the Russian planes were operated by companies and crews working for Viktor Bout. His planes were flying Federal Express shipments for the U.S. Air Force, tents for the U.S. Army, and oil field equipment and personnel for KBR, a Halliburton subsidiary. In the months that followed, Bout's flagship firm flew hundreds of sorties in and out of Baghdad, earning millions of dollars from U.S. taxpayers.

How Bout's empire forged its secret U.S. contacts is unclear. But, as U.S. intelligence and military officials believe, the reason may be as simple as Bout's having the foresight to position his aircraft in the region. He was able to make his services available in the massive confusion that surrounded the supply operation, when no one had time to check the credentials of the many air operations vying for contracts.

As Bout’s contracts became public, and the possible legal implications of continuing to deal with him were explained by the U.S. Treasury Department, the military lurched toward a response. Air Force officials reacted quickly, revoking the fuel allowance and persuading Federal Express to sever its contract. But the U.S. Army and other defense agencies insisted they had no responsibility to scrutinize second-tier subcontractors. Bout’s flights for KBR continued well into late 2005, and even expanded to include flights into Bagram Airfield in Afghanistan. Several well-known Bout firms were finally banned from Iraq early this year by military officials. But Bout was suspected of shifting his operations to new firms, and U.S. officials fear that those companies may try to land lucrative U.S. contracts again.

On April 26, 2005, then Assistant Treasury Secretary for Terrorist Financing Juan Zarate announced new U.S. economic sanctions against 30 companies in Bout's financial orbit. Although Bout was not designated as a terrorist himself, Zarate noted that he had profited from supplying the Taliban with military equipment when it ruled Afghanistan -- a relationship that connected Bout, at least indirectly, to Osama bin Laden and al Qaeda. Therefore, U.S. entities were now banned from doing business with any of Bout's companies, even indirectly. Eight months later, the U.S. list was adopted by the full U.N. Security Council's Liberia committee -- a move not impeded by the Russian delegation. In theory, the international sanctions should have put an end to Bout’s trafficking.

Yet investigators have discovered several newly formed Bout enterprises operating aircraft that are still registered to Air Cess and other companies. Human rights monitors have heard that his planes flew into the northern part of the Democratic Republic of the Congo this year. And in January, one of Bout's carriers, Irbis Air Company, bid on a contract with Halliburton in Iraq. Despite the UAE's assurances that it has grounded his fleet, Bout often exploits the fact that U.S. military air controllers on duty in Sharjah, who control traffic into Iraq, rotate jobs every six months. His businesses -- including new shell companies registered in Moldova and elsewhere in Eastern Europe -- apply for contracts before the new person has time to find out who is designated or what to watch for. "It is a constant fight, because the military wants to fly stuff and the new people are under pressure, and tracking aircraft ownership is, frankly, not a priority," said a U.S. official involved in the Bout hunt.

Conceding their difficult straits, U.S. officials admit that there is no clear evidence that Bout's air fleet has been diminished or his activities slackened as a result of the sanctions. "You never can say with 100 percent certainty that he is gone," says Zarate -- who is now President George W. Bush's chief counterterror deputy at the NSC. "He is very, very good at doing his business." The Europeans find it equally hard. "He doesn’t go away. He just keeps changing his aircraft and registrations, hoping that he will outlast the interest in following him," says a European military intelligence source. "So far, he is right."

THE SIEVE OF GLOBALIZATION

Today, international efforts to pursue Bout have largely been abandoned. The CIA no longer has personnel specifically tasked with following his activities. The Belgian money-laundering investigation has stalled over internal feuding and lack of government interest. Only the British maintain an active intelligence effort to track him, and even that effort is greatly reduced.

In the meantime, Bout lives in a luxury apartment complex in Moscow, where he is occasionally spotted eating out at fancy sushi bars. Richard Chichakli, Bout's American business partner, also moved to Russia, using frequent flier miles to buy a ticket out of Texas after his assets were frozen in April 2005 by U.S. officials, who suspected he was running some of Bout's businesses from the United States. In theory, neither of them is allowed to go abroad because of a U.N. travel ban. But U.S. officials involved in the Bout hunt say there were credible Bout sightings earlier this year in Beirut. Meanwhile, the Russian government declines to answer any questions about Bout, who reportedly has cultivated close ties with senior military and other government officials in Moscow.

Bout himself has said that he did not know -- nor did he have any legal or ethical obligation to know -- the contents of the long, green crates he ferried into war zones. Strict economic calculations, not ideology, have been the guiding star of Bout's operations. But what motivates a man to shove such moral implications aside? Is it the quest for wealth? The adrenaline rush of operating in dangerous circumstances? The knowledge that some of the world's most powerful people rely on you? "No one else would deliver the packages," says one of Bout’s South African associates. "You never shoot the postman."

Perhaps the existence of the merchant of death says more about the world today than it does about the man himself. The halting efforts to disrupt his activities tell a chastening story of the failure of nations. Indeed, Viktor Bout is a product of the convergence of history and opportunity, an entrepreneur who saw a chance to turn an incredible profit in a rapidly changing world. In the Cold War, each side was able to enforce adherence to ideological imperatives by controlling the supply and demand of just about everything. When the Berlin Wall came down, so did the controls, and the market was thrown open to those who could seize the moment. Bout grasped that his services could be useful to any party desperately seeking the weapons he could provide. With a growing number of failed and failing states dependent on inexpensive and readily available weapons, Bout was able to craft a transglobal network to meet this market. "If you look at all of Bout’s various escapades, how easy it was for him to move weapons, get end-user certificates, and change aircraft registration," says Michael Chandler, a retired British colonel who led a U.N. panel on the Taliban and al Qaeda, "you get an amazing picture of how corrupt many parts of the world are."

Even in today's new world order, where the United States is the sole superpower and old ideologies are diminished, governments have yet to come to grips with the emergence of transnational criminal groups. These armed, nonstate actors disregard borders, dispassionately working with the Taliban and the U.S. military and other unlikely bedfellows, breeding instability and violence for personal profit, not ideology. Traffickers like Bout invented new rules as they went along. Rather than being impediments to the flow of weapons, arms embargoes simply allowed them to jack up prices. International "name and shame" campaigns, with no enforcement ability, served only to advertise their services.

Many arms control experts say that if Bout's empire were finally brought to heel, the international weapons business would simply fragment into smaller fiefdoms, similar to the way that the Colombian Cali and Medellín cocaine cartels disassembled in the 1990s after their leaders were killed. What they fail to mention, though, is that the net production of cocaine did not diminish, and the shrunken, tight-knit cartels proved equally difficult to dismantle. Indeed, in today's world, any attempt to halt illicit activities -- whether it's trafficking by Viktor Bout or by someone else -- can truly be read as the second labor of Hercules. Whenever the hydra's head is cut off, two more grow in its place.

Feature

The Lost Continent

For decades, Latin America's weight in the world has been shrinking. It is not an economic powerhouse, a security threat, or a population bomb. Even its tragedies pale in comparison to Africa's. The region will not rise until it ends its search for magic formulas. It may not make for a good sound bite, but patience is Latin America's biggest deficit of all.

Latin America has grown used to living in the backyard of the United States. For decades, it has been a region where the U.S. government meddled in local politics, fought communists, and promoted its business interests. Even if the rest of the world wasn't paying attention to Latin America, the United States occasionally was. Then came September 11, and even the United States seemed to tune out. Naturally, the world's attention centered almost exclusively on terrorism, the wars in Afghanistan, Iraq, and Lebanon, and on the nuclear ambitions of North Korea and Iran. Latin America became Atlantis -- the lost continent. Almost overnight, it disappeared from the maps of investors, generals, diplomats, and journalists.

Indeed, as one commentator recently quipped, Latin America can't compete on the world stage in any aspect, even as a threat. Unlike anti-Americans elsewhere, Latin Americans are not willing to die for the sake of their geopolitical hatreds. Latin America is a nuclear-weapons free zone. Its only weapon of mass destruction is cocaine. In contrast to emerging markets like India and China, Latin America is a minor economic player whose global significance is declining. Sure, a few countries export oil and gas, but only Venezuela is in the top league of the world’s energy market.

Not even Latin America's disasters seem to elicit global concern anymore. Argentina experienced a massive financial stroke in 2001, and no one abroad seemed to care. Unlike prior crashes, no government or international financial institution rushed to bail it out. Latin America doesn’t have Africa's famines, genocides, an HIV/AIDS pandemic, wholesale state failures, or rock stars who routinely adopt its tragedies. Bono, Bill Gates, and Angelina Jolie worry about Botswana, not Brazil.

But just as the five-year-old war on terror pronounced the necessity of confronting threats where they linger, it also underscored the dangers of neglect. Like Afghanistan, Latin America shows how quickly and easy it is for the United States to lose its influence when Washington is distracted by other priorities. In both places, Washington’s disinterest produced a vacuum that was filled by political groups and leaders hostile to the United States.

No, Latin America is not churning out Islamic terrorists as Afghanistan was during the days of the Taliban. In Latin America, the power gap is being filled by a group of disparate leaders often lumped together under the banner of populism. On the rare occasions that Latin American countries do make international news, it's the election of a so-called populist, an apparently anti-American, anti-market leader, that raises hackles. However, Latin America’s populists aren't a monolith. Some are worse for international stability than is usually reported. But some have the potential to chart a new, positive course for the region. Underlying the ascent of these new leaders are several real, stubborn threads running through Latin Americans’ frustration with the status quo in their countries. Unfortunately, the United States' -- and the rest of the world's -- lack of interest in that region means that the forces that are shaping disparate political movements in Latin America are often glossed over, misinterpreted, or ignored. Ultimately, though, what matters most is not what the northern giant thinks or does as much as what half a billion Latin Americans think and do. And in the last couple of decades, the wild swings in their political behavior have created a highly unstable terrain where building the institutions indispensable for progress or for fighting poverty has become increasingly difficult. There is a way out. But it's not the quick fix that too many of Latin America's leaders have promised and that an impatient population demands.

THE LEFT TURN THAT WASN'T

In the 1990s, politicians throughout Latin America won elections by promising economic reforms inspired by the "Washington Consensus" and closer ties to the United States. The Free Trade Area of the Americas offered hope for a better economic future for all. The United States could count on its neighbors to the south as reliable international allies. In Argentina, for example, the country's political and military links with the United States were so strong that in 1998, it was invited to become part of a select group of "major non-NATO allies." Today, however, President Néstor Kirchner nurtures a 70-percent approval rating by lobbing derision and invective against the "empire" up north. His main ally abroad is Venezuelan President Hugo Chávez, not George W. Bush. Nowadays, running for political office in Latin America openly advocating privatization, free trade, or claiming the support of the U.S. government is political suicide. Denouncing the corruption and inequality spurred by the "savage capitalism" of the 1990s, promising to help the poor and battle the rich, and disparaging the abusive international behavior of the American superpower and what is seen as its "globalization" ruse is a political platform that has acquired renewed potency throughout the region. In nearly every country, these ideas have helped new political leaders gain a national following and in Argentina, Bolivia, and Venezuela, even to win the presidency. In most other countries, notably in Mexico, Peru, Ecuador, and Nicaragua, proponents of these views enjoy wide popular support and are a fundamental factor in their countries’ politics.

So what happened? The first alarm bells sounded with the election in rapid succession of Chávez in Venezuela in 1998, Luiz Inácio "Lula" da Silva in Brazil in 2002, Kirchner in Argentina in 2003, and Tabaré Vázquez in Uruguay in 2004. All of them represented left-of-center coalitions and all promised to undo the “neoliberal excesses” of their predecessors. All of them also stressed the need to reassert their nations' independence from the United States and limit the superpower's influence.

Yet, none of these new presidents really delivered on their more extreme campaign promises, especially their plans to roll back the economic reforms of the 1990s. Brazil's Lula has followed an orthodox economic policy, anchored in painfully high interest rates and the active promotion of foreign investments. In Argentina, the only significant departure from the economic orthodoxy of the 1990s has been the adoption of widespread price controls and a disdainful attitude toward foreign investors.

In Venezuela, the rhetoric (and sometimes the deeds) are more in line with rabid anti-American, anti-free trade, and anti-market postures. Chávez routinely denounces free-trade agreements with the United States: He has been known to say that "[c]apitalism will lead to the destruction of humanity," and that the United States is the "devil that represents capitalism." Chávez's anti-trade posture conveniently glosses over the reality that Venezuela enjoys a de facto free trade agreement with the United States. In fact, America is the top market for Venezuela’s oil. During Chávez’s tenure, Venezuela has become one of the world’s fastest-growing markets for manufactured American products. And even the capitalist devils that are the objects of Chávez's wrath aren’t suffering as much as might be expected. As the Financial Times reported in August, "Bankers traditionally face firing squads in times of revolution. But in Venezuela, they are having a party." Local bankers close to the regime are reaping huge profits. Foreign bankers who cater to the wealthy return from trips to Caracas with long lists of newly acquired clients in need of discreet "asset management" abroad.

Although some of these populist leaders have so far failed to live up to the radical economic changes they promised on the campaign trail, the gaps between incendiary rhetoric and actual practice have been far narrower in the region’s foreign policies -- especially in Venezuela and its relations with the United States. President Chávez, easily the world’s most vocal anti-American leader, has called President George W. Bush, among other things, a "donkey," "a drunkard," and "an assassin." Not even Osama bin Laden has spouted such vitriol. Chávez has embraced Cuban leader Fidel Castro as his mentor and comrade-in-arms, and in so doing, he has become the region's most visible leader since Che Guevara. Like Che, Chávez often seems hell-bent on sparking an armed confrontation to further his revolution; he calls Saddam Hussein a "brother," and is arming new local militias with 100,000 AK-47s to repel the "imminent" U.S. invasion. His international activism now routinely takes him around the world. In Damascus this summer, Chávez and Syrian President Bashar Assad issued a joint declaration stating that they were "firmly united against imperialist aggression and the hegemonic intentions of the U.S. Empire."

The main concern is not just that Chávez is developing close ties with prominent U.S. foes worldwide, but rather his efforts to refashion the domestic politics of his neighboring countries. His persona and his message are certainly attractive to large blocs of voters in other countries. Politicians elsewhere in Latin America who emulate him and his platforms are gaining popularity, and it's hard to imagine that Chávez is refraining from using his enormous oil wealth to support their political ascendancy. The international concern about trends in Latin America peaked in late 2005, as 12 presidential elections were scheduled for the ensuing months. In several countries -- Bolivia, Costa Rica, Ecuador, Mexico, Nicaragua, and Peru -- leftist candidates with Chávez-sounding platforms stood a good chance of winning.

Yet that expectation did not come to pass. So far, the only election where a Chávez ally has won is Bolivia. There, Evo Morales, the leader of the coca growers, announced that he would become "the United States' worst nightmare," and quickly proceeded to enter into a close alliance with Venezuela and Cuba. But the election of Chávez-backed candidates turned out to be more the exception than the rule. Surprisingly, running for office with too close an identification with Chávez or his policies has become an electoral kiss of death. Not even his promises of supplying cheap oil and financial aid if his candidate won were enough to compensate for the strong voter backlash against a foreign president openly trying to influence the outcome of national elections.

But the electoral defeat of candidates running on platforms perceived to be too extreme or too close to Chávez does not mean that the ideas they represent are unappealing. Latin American voters are aggrieved, impatient, and eager to vote for new candidates who offer a break with the past and who promise a way out of the dire present.

IF NOT LEFT, THEN WHERE?

Since the late 1990s, Latin American political systems have been rocked by a wide variety of frustrations. Therefore lumping the different types of discontent under generic "leftist" or "populist" monikers is misleading. Indeed, in today's Latin America, some of the grievances are clearly anti-market, while others are rooted in dissatisfactions caused not by overreliance on the market but by governmental overreach. Curbing corruption, for example, is a strong political demand that is unlikely to be satisfied by increasing the economic activities controlled by an already overwhelmed and corrupt public sector. Other grievances unite the far left and the far right. Economic nationalists who resent the market-opening reforms that allow foreign products to displace locally made ones include both right-wing business groups who profited handsomely from the protectionism, as well as leftist labor leaders who have seen their ranks shrink as local factories went out of business, unable to compete with foreign imports.

The responses to these political demands have also been varied. Some leaders, like Chávez and Kirchner, are behaving in a traditional, populist fashion, relying on massive and often wasteful public spending, on prices kept artificially low through governmental controls, or the scapegoating of the private sector to cement their popularity. Many others, however, like Lula in Brazil, Vicente Fox in Mexico, Alvaro Uribe in Colombia, or Ricardo Lagos in Chile have been models of more responsible economic governance and have shown a willingness to absorb the costs of unpopular but necessary economic policies.

What unites almost all Latin American countries, however, are two long-standing trends that multiply and deepen the variety of the grievances that are sprouting throughout the region: Prolonged mediocre economic performance, and the decay of traditional forms of political organization, and political parties in particular.

Latin America has suffered from slow economic growth for more than a quarter-century. Episodes of rapid growth have been short lived and often ended in painful financial crashes with devastating effects on the poor and the middle class. Economic growth in Latin America has been slower than it was in the 1960s and 70s, worse relative to all other emerging markets in the world, and unremittingly less than what the region itself needs to lift the poor standard of living of most of the population. This economic disappointment has become increasingly unacceptable to voters who have been promised much and gotten little and who have become better informed than ever about the standards of living of others at home and abroad. Latin Americans are fed up. Naturally, the frustrations produced by the wide gap between expectations and reality and between the living standards of the few who have so much and the many who have almost nothing create fertile ground for the fractious politics that make governing so difficult. Inevitably, political parties, and especially those in power, have suffered tremendous losses in loyalty, credibility, and legitimacy. Some of this disrepute is well deserved and often self-inflicted, as most political parties have failed to modernize their thinking or replace their ineffectual leaders. Corruption, patronage, and the use of politics as the fastest route for personal wealth are also rampant. 

But it is also true that governing in a region where the political attitudes of large swaths of the population are imbued with rage, revenge, and impatience, and where the machinery of the public sector is often broken, is bound to end in failure. Because the region is resource-rich, the most common explanation for poverty amid so much imagined wealth is corruption. End the corruption and the standard of living of the poor will more or less automatically improve, goes the thinking. This assumption of course ignores the fact that a nation's prosperity depends more on being rich in competent public institutions, rule of law, and a well-educated population than in exportable raw materials.

Moreover, while the widespread presence and ravaging effects of corruption are indisputable, the reality is that poverty in Latin America owes as much, if not more, to the region's inability to find ways to compete more effectively in a globalized economy than to the pervasive thievery of those in power. It is hard to argue that China or India or the fast-growing economies of East Asia are substantially less corrupt than Latin America. Yet their growth rates and their ability to lift their populations out of poverty have been better than those of Latin America. Why? The fact is that the region's democracy and activist politics make its wages too high to compete with the low-wage Asian economies. Latin America's poor educational systems and low level of technological development make it unable to compete effectively in most international markets where success is driven by know-how and innovation. With its high wages and low technology, Latin America is having a hard time fitting into the hypercompetitive global economy. That fact gets far less attention than others that are more urgent, visible, or politically popular. Yet many of these problems -- unemployment, poverty, slow economic growth -- are manifestations of national economies that are ill-suited to prosper under the conditions prevalent in today's world.

THE WAITING GAME

Like all fundamental development problems, Latin America's global competitive shortcomings cannot be reduced simply or quickly. The specific reasons behind a country's disadvantageous position in the global economy vary. Alleviating them requires simultaneous efforts on many fronts by different actors over a long period. And herein lies a central difficulty besetting all attempts to create positive, sustained change in Latin America: They all take more time than voters, politicians, investors, social activists, and journalists are willing to wait before moving on to another idea or another leader.

Latin America's most important deficit is patience. Unless the patience of all influential actors is raised, efforts will continue to fail before they are fully tested or executed. Investors will continue to ignore good projects that cannot offer quick returns, governments will only pick policies that can generate rapid, visible results even if they are unsustainable or mostly cosmetic, and voters will continue to shed leaders that don’t deliver soon enough.

Reducing the patience deficit is impossible without alleviating Latin America's most immediate and urgent needs. But it is a mistake to assume that sustainable improvements will only occur as a result of radical, emergency measures. Large-scale social progress will require years of sustained efforts that are not prematurely terminated and replaced by a new, "big-bang" solution. Continuous progress demands the stability created by agreement on a set of basic shared goals and ideas among major political players. In the past, this patience was either ruthlessly forced on the population by military governments or induced by the adoption of a similar ideology shared by influential social groups. Both approaches are highly problematic and not viable in the long run.

Therefore, rather than seeking ideological consensus or forcing ideological hegemony, Latin Americans should build from what exists and seems to be working, rather than dismiss what already exists just because its champions are political competitors. Only those individuals and organizations who are able to bridge ideological divides and bring together different approaches will fix Latin America’s long-standing problems. And give them time.

It's not as though there's no precedent for this kind of progressive governance. Former Presidents Fernando Henrique Cardoso in Brazil and Lagos in Chile integrated different ideological perspectives and developed pragmatic approaches to balance conflicting demands. Both came from socialist backgrounds and while in office made enormous and often successful efforts to fight poverty and improve social conditions. But they were also quite sensitive about the need to maintain economic stability -- which often meant painful cuts in public spending -- and to foster an attractive business environment for investors. Although neither Cardoso nor Lagos was able to drastically overhaul his nation's poor social conditions, both easily rank among the most effective and successful presidents of the last decade -- anywhere. They made far more progress in alleviating poverty in their countries than any of the more strident Latin American revolutionaries whose radical efforts on behalf of the poor so often ended up creating only more poverty and inequality.

It is natural for Latin American citizens and politicians to be captivated by promises that seem too good to be true. People who find themselves in dire straits naturally want extreme, quick solutions. Latin Americans have been experimenting with brutal, heavy-handed swings in their political economies since the 1970s. Yet, this search for silver-bullet solutions, though understandable given the grave problems of the region, is mistaken. Latin Americans must learn that, precisely because their illnesess are so acute, the solutions must be, paradoxically, more tempered. It might seem counterintuitive to reject the promises of the men and women offering radical change for a region so used to failure and neglect. But it may be the only way to lift millions out of poverty. And in the process, get Latin America back on the map.