Panama: Letter from Panama (Quarterly Regional Round-Up)

Last Updated: 1 August 2005
Article by Derek Sambrook

The People’s Servant

There is an increasing awareness in Latin America of a clash between liberal democracy and populism and there is no greater proponent of the latter than Hugo Chávez. His closest ally is Fidel Castro and he has proudly declared himself a Fidelista, a follower of Fidel Castro. The United States of America is alarmed by such developments after having spent decades trying to ensure that South America would not have another Cuba. George Bush has been adamant that Latin American countries have, in his words, "an obligation to promote and defend" democracy in the region. Condoleezza Rice, the president’s secretary of state, has been even more forthright: "There are clearly some troubled democracies in Latin America". Venezuela found that statement provocative and this particular variety of rice to be unpalatable, prompting harsh words from Hugo Chávez who saw this as foreign interference.

Besides Cuba, Venezuela is securing closer ties with China which also worries the US. Hugo Chávez has also attempted to spread his "Bolívarian revolution", named after the president’s hero, Simón Bolívar, throughout the region. General Bolívar defeated the Spanish army in a protracted war between 1810 and 1821 and became known as El Libertador (the liberator) who created Greater Colombia which at one time comprised Venezuela, Colombia, Ecuador, Bolivia, Panama and Peru. The General’s military skills, however, were far greater than his political abilities and although he dominated Venezuelan affairs until 1820, he was replaced by an illiterate but cunning rebel general, José Antonio Paez.

The Venezuelan president has appealed to the masses with his economic vision and has not concentrated on the slow but steady strengthening of institutions that creates the conditions leading to permanent growth in investment but, as Charles de Gaulle once noted, "in order to become the master, the politician poses as the servant". Hugo Chávez presides over a political system that concentrates power but which has no checks and balances in place. He exercises personal control over Venezuela’s main institutions, including the armed forces, state radio and television as well as the state oil monopoly. His own political party, The Fifth Republic Movement, plays a secondary role and the backbone of his support comes from the armed forces; a high number of serving and retired officers hold key positions in his administration.

This backdrop has made Washington look askance at all the other left-wing governments in Latin America, namely, Argentina, Brazil, Chile and Uruguay. But although crude oil has produced crude politics in Venezuela, things change and the present situation there should not be allowed to affect the long-term strategy for future regional relationships.

The Countries God Made

Those other 4 countries with left-wing governments have, in varying degrees, also developed relations with China, a country that is considered by the US as an interloper, intruding into Washington’s historical sphere of influence. Furthermore, China is competing with the US for oil and natural resources and Washington can see that US power, including the role of protector, is diminishing in east Asia after over half a century’s prominence. Today, China has increasing influence supported by its military, boosted by its economy and encouraged by its growing political clout. One political observer believes that November, 2004, will be viewed by future historians as the seminal moment when China’s economic power changed the global political balance. That was the month that Hu Jintao, the president of China, toured Latin America on a commodities shopping spree and, at the same time, made alliances with some governments that are not particularly comfortable with president Bush.

It would be a mistake in the current situation for the US to look at South America’s other left-wing governments and see the face of Hugo Chávez because there is a distinction to be made. The government headed by Hugo Chávez has more of the characteristics of the military regimes that leftist governments south of Caracas vigorously opposed in their fight for democracy. Their source of inspiration is more likely to have been Adam Smith’s doctrine of free enterprise rather than the revolutionary convictions of the late and legendary Che Guevara, the Argentinean-born doctor who was also a staunch ally of Fidel Castro. Not unlike Hugo Chávez, Che Guevara dreamt of social revolution and proceeded to launch one in Bolivia – a charge being levelled today against the Venezuelan president – only to be injured in a gun battle and afterwards executed by Bolivian troops backed by America’s Central Intelligence Agency. Bolivians at present are in political limbo with a caretaker president, Eduardo Rodriguez, (Bolivia’s head of the supreme court) committed to holding elections within 6 months. His appointment followed the resignation of Carlos Mesa after recent violent protests in La Paz over a period of 3 weeks. The country, according to the World Bank, is the poorest one in the Americas, excluding Haiti, and the Guinness Book of World Records says that it has had more changes of government (188 in 157 years) than any other country in history. Bolivia, in some ways, is distinctly different to the rest of Latin America, with some countries, such as Peru, seemingly caught in a vacuum between the 16th and 21st centuries; Argentina, meanwhile, yearns to be a part of Europe. But Bolivia does not try to be anything other than itself.

Don Quixote had his windmills and his creator, Miguel de Cervantes, once aspired to become, but never did, mayor of La Paz. Like Simón Bolívar, politics was not where his talents lay. When reflecting on developments in Latin America it is well to be reminded of something Cervantes wrote: "Every one is as God made him and often times a good deal worse". In Latin America, as elsewhere, the same can be said of countries.

Letter from Panama is published by Trust Services, S. A. which is a British- managed trust company licensed under the fiduciary laws of Panama. It is written by Derek Sambrook, our Managing Director, who is a former member of the Latin America and Caribbean Banking Commission as well as a former offshore banking, trust company and insurance regulator. He has over 35 years private and public sector experience in the financial services industry. Our website provides a broad range of related essays.

Engaging an offshore representative is an important decision and we advise all persons to seek appropriate legal and tax advice from professionals licensed to render such advice before making offshore commitments.

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