Following a 19-day tour of Latin America ahead of the first-ever Arab-South American summit, Al-Ahram 's taskforce, headed by Ibrahim Nafie, ponders the lessons Al-Ahram has just returned from a 19-day tour of five Latin American states: Mexico, Venezuela, Brazil, Argentina and Chile. During the tour the Al-Ahram team was struck by the great hopes these countries have pinned on the Arab-South American summit due to be held in the Brazilian capital, Brasilia, on 10-11 May. The officials we met were unanimous in their enthusiasm for the prospects the summit offers of closer cooperation between the Arab and South American worlds and the benefits this holds for both regions. This applied even to Mexico, which as a North American country will not participate in the summit, which is limited to South American nations. When asked why he thought Latin American countries outside South America had been excluded Mexican President Vicente Fox responded that it was not so much a matter of exclusion but rather that the framework was not comprehensive enough. He hoped that in the future such summits would include all Latin American nations. South American leaders' hopes for the conference are reflected in the fact that the 12 Latin American countries participating will be represented at the highest level. At the same time they have stated bluntly that they will be deeply disappointed if the Arabs do not participate with an equally high-level of representation. Only if the Arabs reciprocate their enthusiasm will it be possible to work effectively together not only in the political and economic domains but also in the social, cultural and civilisational realms. The South American participants have many projects in mind to help promote strong ties at many levels. They hope for nothing less than the development of a sophisticated model of peaceful co-existence and cooperation between civilisations. If in promoting this endeavour South American nations are inspired by their appreciation of the historical role of Arab civilisation we should recognise, too, that in their melding of peoples of diverse ethnic origin and religious affiliation Latin America itself offers a model of intercultural harmony and understanding. Perhaps this is why they were somewhat perplexed by our question regarding the situation of Arabs and Muslims in their countries following 11 September 2001. Arabs and Muslims are thoroughly assimilated into these societies, a fact confirmed by South American citizens of Arab origin who stated repeatedly that they have never encountered the anti-Arab or anti-Muslim hostility that has become increasingly common in Europe and the US. South American leaders have formulated a comprehensive vision for this summit, which they regard as an important step towards shaping a new geo-strategic map of the world. While they stress that they have no intention of provoking confrontation with the US, they feel it vital that leaders of the South explore ways to cooperate to offset Washington's attempts to establish its global hegemony and to counter many of the American policies with which they disagree. They further stress that theirs is not an anti-American message but rather a universal humanitarian one, emanating from their belief in the value of, and urgent need to restore respect for, the provisions of international law and the principles of international legitimacy. Indeed, it was this conviction that compelled Mexico, a member of NAFTA, and Chile, which has a free trade agreement with Washington, to reject the proposed US- British resolution to use force against Iraq. Their humanitarian outlook has also guided their attitude towards a universal definition of terrorism. Hunger, not terrorism, is the foremost threat to mankind, they maintain. In addition, any definition of terrorism must draw a clear distinction between terrorism and a people's legitimate right to resist foreign occupation. Latin American states are among the most ardent proponents of the democratisation of the UN. This international body, they maintain, must be reformed and developed so as to render it more representative of the international community. Similarly, they urge the creation of a new multi-polar order as an alternative to the current trend towards unipolar hegemony. At the same time South American states are far from being obstructionist, let alone isolationist; they are fully engaged in the international order, each according to its circumstances and capacities. Chile, for example, is working steadfastly towards assimilation in the global market and may well hold a record number of bilateral free trade agreements. With a population of 15 million, Chile offers a relatively small market -- unlike Brazil with 184 million -- and is thus driven to search for export markets as a crucial means by which to sustain its economic growth. Brazil has taken a different tack. It feels that priority should be given to South American regional integration, which it believes will afford the continent stronger leverage in negotiations over inter-regional frameworks such as the FTAA. For a similar reason, Brazil places heavy emphasis on South-South dialogue. Brazilian President Lula Da Silva is passionate about this. In the course of explaining to the Al-Ahram team the importance of closer South-South cooperation he bounded up to the map on the wall in order to demonstrate his point graphically: "We communicate with each other via Europe and the US. When we want to visit one another, we always stop in Europe first and sometimes we just stop there!" In general, South American leaders regard us as their partners, with shared responsibilities and interests. Theirs is not a winner-take-all competitive approach to international relations but one founded on the belief that constructive cooperation between equal partners yields benefits for all. We hope, therefore, that the Arabs accord the South American summit initiative the high level of involvement it merits. It will be useful to recall, in this regard, that Latin American countries have undertaken pioneering efforts in economic and political development. These are nations that within the past two decades emerged from the clutches of military dictatorships to true democratic freedom. They did not import their democracies ready-made from abroad, but rather built democratic systems to suit their particular needs and circumstances. In view of how deeply torn their societies were after the long struggle against the juntas this was no easy task. As a first step there had to be a form of reconciliation with the brutal past, entailing acknowledgement of the enormous human rights abuses perpetrated under the military regimes as well as an acknowledgement of the tactical mistakes committed by the advocates of democracy. In Chile, alone, 28,000 people received compensation for torture to which they had been subjected under General Pinochet. Simultaneously, Chileans put into effect the lessons they had learned from the Salvador Allende experience (1971-73). They realised how important it was for a government that is bent on introducing a far-reaching economic and social transformation of the society to count on the backing of a large majority of the population. South American countries have initiated ambitious reform and development projects, but their ambition has been tempered by realism. Their developmental goals are set on the basis of thorough feasibility studies. Realisable targets are set within strict timeframes. We could not help but be impressed during our many meetings with South American officials by their command of details, dates and figures. There was none of the endless waffle and glittering promises that too often accompanies such discussions. In Venezuela, for example, they have put into effect an ambitious literacy programme as part of an overall socio- economic reform programme. In explaining the programme officials said that by the end of May 1,300,000 people will have passed through the programme and that, three months later, they hope to have eradicated illiteracy completely. Latin America has shown great creativity in formulating original but viable solutions to complex and longstanding problems. Successful family support projects in Brazil, the dairy project in Mexico and housing projects in Chile are only a few examples of experiences on which we might draw to solve the similar problems plaguing our own societies. But there is much more we can learn from the Latin American experience and one matter that merits close inspection is the instrumental role played by the left. Seven South American countries, including Venezuela, Brazil, Argentina and Chile, are led by left-wing parties yet this has not prevented them from pursuing market economy policies and assimilating into the global economy. But then we must bear in mind that we are talking about a very specific left. The Latin American left has an applied approach to theory and principle which has enabled it to formulate and implement the policies best suited to particular conditions. As a result it sees no conflict between economic deregulation and simultaneously implementing ambitious social programmes aimed at improving standards of living and empowering the underprivileged. Perhaps Chilean President Ricardo Lagos best encapsulated this approach when he said that while his government followed a market economy policy, the policy's heart was "pink". In other words, it is guided by the spirit of social justice and rooted in the democratic choices of citizens. It is up to the citizen, in a democracy, to decide what goods are social goods. And once a good is democratically determined to be a social one, then it should be made available to everybody, Lagos told us. The history of Latin American economic reform began in the early 1990s, in response to the hyperinflation that had swept the region in the 1980s. All countries followed essentially the same course, which was to reduce state intervention in the national economy, privatise public services and industries, lift restrictions on foreign trade and generally give greater rein to free market mechanisms. Although these policies initially proved successful -- economic growth rates soared and inflation declined dramatically -- the success did not last long. By the mid-1990s almost all of Latin America was plunged into a debilitating foreign debt crisis. Currencies bottomed out and economic growth rates plummeted, sometimes into negative figures. Although this economic crisis did not last as long as the problems of the 1980s, it brought the region to the threshold of a new phase in economic development, one encouraged by the rise of the left to power in many countries. When asked which was more effective, a market economy or centralised planning, China's late leader famously retorted: "It doesn't matter whether the cat is black or white. What is important is that it can catch rats." Clearly, as Latin America moved into the 21st century it produced many effective cats, black, white and in between. As a member of NAFTA Mexico was able to capitalise on its strong economic links with the US and Canada as it made a decisive shift to liberal economic policies aimed at reversing the effects of the debilitating crisis that rocked its economy in the mid-1990s. The policies proved remarkably successful. Within the space of a decade Mexico achieved such a level of industrial development that it no longer had to rely on oil and cash crops as its major source of income. By the beginning of the 21st century Mexican exports had climbed above $160 billion, approximately 80 per cent of which are manufactured goods. In spite of this astounding recovery the Mexican venture was not without drawbacks. For one, the Mexican economy had perhaps become too dependent on foreign markets, with export and import trade accounting for 55 per cent of its GDP (as opposed to 20 per cent in the case of the US, for example). Moreover, some 82 per cent of Mexico's exports are directed towards the US market, which leaves the Mexican economy vulnerable to economic fluctuations in the US. A second problem is that while Mexico was able to attract high levels of direct foreign investment following its entry into NAFTA, most of this was concentrated in the north of the country, in the so-called "Maquiladora" industries located near the border with the US. This has given rise to sharp regional disparities in income and standards of living. According to Mexican sources per capita income in the north of the country is as high as $15,000, as compared with $4,000 in the southern provinces. Given that the south, too, has the highest concentration of Mexico's indigenous peoples, with age-old resentments against the central government, the situation is potentially explosive. Although Mexican officials readily admit to these problems, they believe that they will be solved over time as the industrialisation and economic growth in the north makes its way to the south of the country. Chile presents another success story of liberal economic planning. Chile began to liberalise its economy in the 1980s, a direction the current government has pursued. Today, the government intervenes in the economy only in the form of anti-trust actions or to regulate the availability of essential commodities. In general, therefore, it is the private sector and what it can produce that steers the economy. The philosophy behind this is that because the domestic market is relatively small economic growth is contingent upon expanding market opportunities abroad and enhancing the competitiveness of domestic production. In this regard, we note that, at six per cent, Chile has one of the world's lowest average rates of customs duty in the world which is why it is rarely reluctant to enter into free trade agreements with other countries. Chile has free trade agreements with NAFTA, the EU and South Korea and is currently in the process of joining MERCOSUR, which includes Brazil, Argentina, Uruguay and Paraguay. What distinguishes the Chilean experience from the Mexican is Chile's success in diversifying markets with the result that it is far less dependent on the US. Nevertheless, there remains a major weak point in the Chilean economy, which is its heavy reliance on copper exports. Although it has made considerable inroads in diversifying its industrial and agricultural exports, copper still accounts for 40 per cent of the country's export trade. The economy thus remains vulnerable to fluctuations in the international price of copper. Nevertheless, Chilean officials are optimistic that continued economic development will gradually resolve this problem. If Brazil and Argentina have also moved towards market economies, they have been more cautious in their approach. Brazil, as we have said, has shown little enthusiasm for negotiations over its entry into the FTAA and is unlikely to change its position until the US shows greater flexibility with regard to Brazil's needs, especially as pertain to its agricultural sector. Under its current president, Lula Da Silva, Brazil is ardently pushing for economic integration within South America and closer South-South cooperation as a means to strengthen Third World countries' bargaining power vis-�-vis the north. In addition to playing a crucial role on behalf of the Third World in WTO negotiations, Brazil was one of the founding nations of the G20, which includes such major Third World countries as Egypt, India and China, and thus represents more than half the population of the world. Although it has pursued a somewhat different course from that of Mexico and Chile, over the past two years Brazil has engineered unprecedented advances in economic and social development. Last year it recorded $96.5 billion in export trade, 55 per cent of the total manufactured goods. What sets Brazil apart is the increasing domestic component in these manufactures, as well as its entry into high-tech industries such as airplane manufacture. In addition, Brazil has a vibrant research and development sector. It is now a leading pioneer in alternative fuel, and at the forefront of genetic research. Although Venezuela has seen considerable development in its private sector it remains heavily dependent on petroleum exports, which account for about 80 per cent of the volume of its export trade and half of the national budget. Public expenditures on health, education and housing represent a high ratio of the GDP -- in this sense Venezuela resembles Arab oil- producing nations. The difference is that it also possesses a large base of other resources that, if well exploited, could reduce its dependency on oil. American hostility towards the current Venezuelan leadership has propelled it towards more radical stances than other South American countries. Venezuelan leaders make no secret of their opposition to the FTAA and preference for regional frameworks such as MERCOSUR. Argentina presents a completely different case. Throughout the 1990s Argentina was the most radical of the South American nations in liberalising its economy, implementing IMF recipes for privatisation and trade deregulation at a pace that saw inflation and unemployment rise to astronomical heights. The economy imploded, with the result that 52 per cent of the population sank beneath the poverty line. Hardly surprising, then, that Argentinean officials are among the most outspoken critics of the kind of neo-liberal economics espoused by the IMF. Despite differences between these countries' approaches to economic development, they emerged from their bitter experiences in the 1980s and 1990s having learned three important lessons. The first is the need for disciplined fiscal policy in order to avert any reversion to the nightmare of hyperinflation. As Chilean President Lagos put it, "there is no left or right to fiscal discipline. It is just something that must be done." The second is the need for flexibility in monetary policies, especially with regard to exchange rates, a lesson driven home by the drastic fall of the Mexican peso in the mid-1990s and the consequent debt crisis that spread throughout South America. The third is the need to balance economic with social reforms aimed at alleviating poverty, combating unemployment and enhancing educational services as a means to sustain and promote economic and social progress. With contributions by Hani Shukrallah, Emad Gad, Mohamed Abdel-Hadi and Magdi Sobhi
