The deepening economic crisis in Latin America is forcing the region to realise that the First World wants to block migration to safeguard its own security, writes Hisham El-Naggar from Buenos Aires Viewed from Washington and Seville -- where Europe's rulers met to discuss ways of closing their doors to "economic migrants" -- Latin America looks like an economic experiment gone wrong. After years of faithfully carrying out the policy prescriptions the finest minds of the First World have been dictating to them, many countries in the region find themselves caught in the quicksand of stagnation and inflation. As with the victims of treacherous desert soil, the Latin Americans' attempts to free themselves -- following International Monetary Fund (IMF) directives -- seem to make them sink deeper. The question is being asked all over Latin America: does anybody really care? Is the developed world, to which Latin Americans felt they almost belonged, turning its back on them, dismissing them as if they were hopelessly problem-ridden? In a sense, this "almost belonging" to the developed world -- which Latin Americans like to call "the First World" -- is the key to the region's problems. The Latin American elite, European by cultural and often ethnic affiliation, is accustomed to hobnobbing with its First World counterparts. Its technocrats flock to European and American universities. They have assumed they understood the essential culture of the world's powers that be; what is more, they have supposed that those powers have understood them. As Latin America appears to be on the brink of what may be its worst crisis, one that is more widespread than the pundits have been inclined to believe, a sense of helplessness and isolation is enveloping the region. This week, there have been unmistakable signs that the Argentine crisis is spreading like wildfire as far afield as Mexico. Brazil's country risk approached the 1800 basis point mark and its currency slid to all-time lows despite a $10 billion disbursement on a previously agreed IMF credit line. Uruguay's country risk likewise shot up and its currency fell sharply as soon as the government allowed it to float freely. Its banking system appears to have been severely shaken. Paraguay's currency hit an all-time nadir and its financial system is tottering. However alarming these signals, one might say they have surfaced in Argentina's neighbours, countries with unstable economies. Alas, even Mexico and Chile, the continent's success stories, are beginning to feel the impact of a crisis from which they thought they could dissociate themselves. Both countries' currencies are losing value, and Mexico's country risk has risen from the enviably low level of 227 basis points in April to a less enviable 323. To make matters worse, the crisis is unfolding in the face of near-universal indifference, which at times could be taken for outright hostility, from the First World. Brazil's woes have deepened considerably since Paul O'Neill, the US treasury secretary, said that giving that country credit would be a waste of American tax payers' money. It was this kind of "tough love" which pushed Argentina over the brink. Will it do the same to Brazil? One can perhaps understand why the cultural affinity which lulled many Latin Americans into a false sense of security may be the very thing that is making the world's rich nations jettison them unceremoniously. To some people in the First World, Latin Americans are blameworthy not only for failing, but also for providing uncomfortable parallels to the rich countries' own situation. "If people so 'like us' can fail so miserably, they must be shown to be different," the leaders of the world's opulent societies must be thinking. Hence the insistence that Latin America is corrupt, inefficient and unstable. Of course, if that is true now it was also true during the 1990s, when speculative capital was flowing into the region. Similar adjectives have in the past been applied to some of the latecomers to the European Union. But it's amazing what easy access to a prosperous trade area and generous subsidisation of still inefficient economic sectors can do for some people. This is what Latin Americans are complaining about. Whereas efficiency can best be attained through specialisation in the areas where one has a comparative edge, Latin American producers find export markets closed to them. When it comes to the agricultural products that give Latin American nations a solid advantage -- it is common to find that the very countries which scream loudest about the sanctity of free trade have imposed heavy import duties, and stringent quotas. They have also heavily subsidised homegrown products. This is not to deny that Latin Americans must shoulder some of the blame for the conditions that have made them prone to shattering crises. They are addicted to foreign capital flows, mostly of the speculative variety. But an addict could not be an addict if there were no pusher wanting to grow rich by catering to his addiction. There are many who suspect that the developed world's interest in Latin America is restricted to protecting the speculative capital which has brought the region such uneven prosperity and so much woe. But as the region deteriorates further, millions of people will find it hard to resist the lure of the First World and the migration problem could worsen.
