Nikolas Kozloff

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An image flashes across the screen of pretty young women. They’re dressed in red T-shirts, wave a red flag, and run towards the camera. A voice intones, “Let us all participate in the great party of hope! Change is coming!” The image then shifts to a dapper young man with glasses who is thronged by enthusiastic crowds.

Meet Mauricio Funes, bane of the U.S. foreign policy establishment and the likely next President of El Salvador as of March, 2009. Funes’ party, the FMLN (or Farabundo Martí National Liberation Front), is running television ads such as these in an effort to appeal to the young generation and roll back the political right which has dominated the country’s politics for decades.

Funes is a former commentator for CNN International and for years had a popular daily show called The Interview with Mauricio Funes which wasbroadcast on national television. Well known amongst his compatriots, he is arguably El Salvador’s most respected journalist. A frequent critic of government abuses, Funes quickly developed a reputation as a political crusader.

As the so-called “Pink Tide” sweeps through South America 2009 is fast sizing up as a momentous political year for El Salvador, a Massachusetts sized nation of some six 6 million people. Like Barack Obama, Funes is poised, youthful and inspiring. He even has a similar campaign slogan: “Cambio” or “Change.” Like the presumptive nominee of the Democratic Party, Funes is already drawing large crowds. He is currently leading in public opinion surveys against his main political rivals.

The U.S. left doesn’t know much about Funes, but that’s hardly surprising given the political trends of the past fifteen years. During the 1980s, in the midst of the country’s civil war, the FMLN was a cause célèbre for the U.S. left. But once the U.S.-backed counter-insurgency war ended and FMLN guerrillas demobilized and formed their own political party, radicals focused their attention elsewhere. El Salvador dropped off the media horizon.

The small Central American nation is about to leap back into the headlines, however.

A victory for the FMLN would further embolden Hugo Chávez of Venezuela and continue Central America’s drift towards the center left, already underway with the return of Daniel Ortega of the Sandinista Party in Nicaragua and the election of Álvaro Colom Caballeros in Guatemala. If a solid pro-Chávez column of smaller nations emerges in the region this could prove to be a difficult pill for Washington to swallow.

ARENA: “The Reds Will Die”

When you consider just how entrenched the right wing has become in El Salvador, Funes’ political rise is even more remarkable.

Ever since 1992, the year El Salvador’s horrific civil war ended, ARENA (or Nationalist Republican Alliance) has reigned supreme in election after election. The party was founded by right wing death squad leader Roberto D’Aubuisson, held to be one of the intellectual authors behind the assassination of Archbishop Oscar Romero in 1980. Many see ARENA, whose party colors are red, white and blue, as modeled on the U.S. Republican party but with even stronger nationalist overtones.

The hymn of the party touts El Salvador as the tomb where “the Reds will die.”

By the early 1990s, with the international left now ignoring the political story in El Salvador, ARENA consolidated its control through the ballot box.

Remaking the Party

Fearing relatiation from Washington, Funes has bent over backwards to placate the U.S. He has, for example, met with State Department officials as well as members of Congress and reassured them that he is no radical.

Meanwhile, Funes has declared that El Salvador should not scrap use of the dollar by returning to its previous currency, the colón. Funes says that "dollarization" and the adoption of the Central American Free Trade Agreement in 2006 have had negative effects, such as inflation and unfavorable competition for small-scale farmers, but that it is too late to scrap these policies.

The former media commentator seeks to remake the FMLN into a pragmatic political party. At rallies, he doesn't sing the party's anthem or wear the traditional red colours, preferring to campaign in a crisp white guayabera shirt. It’s a symbolic move designed to contrast himself with many in the party who still wear fatigues and brandish pictures of Che Guevara and Soviet flags at campaign rallies.

ARENA President Antonio Saca, whose term ends next year, has questioned the FMLN's supposed moderation. "If it flies like a duck, swims like a duck and eats like a duck, it's a duck. The FMLN is a communist party. Its ideas haven't changed," he has remarked.

Demonizing Funes by Linking Him to Chávez

Despite such dismissive rhetoric, ARENA is fearful that Funes may not go down to electoral defeat like his FMLN predecessors. Facing a possible debacle in March, the Salvadoran right and Washington have gone into overdrive, trying to tarnish Funes by linking him to Hugo Chávez of Venezuela. ARENA in fact has accused Funes of being a “little Chávez.”

Earlier this year, U.S. Director of National Intelligence Michael McConnell warned Congress that he expected Chávez to provide "generous campaign funding" to Funes. Similar U.S. national security reports, later exposed as false and comprised of politically-manipulated intelligence, were used by the Bush White House to justify its preemptive war against Iraq in 2003.

Nevertheless, ARENA President Antonio Saca pounced on the report, remarking that this act of “interference” would be “unacceptable.” He even ordered an investigation into the matter and, in another high profile move, recalled El Salvador's diplomatic envoy from Caracas.

On the other hand, Saca apparently views electoral intervention by the United States government as not only acceptable, but welcomed. In a November 2007 press conference with President Bush, Saca stated that the U.S. "can help out a lot in preventing citizen support for certain proposals in the upcoming elections."

Funes has denied any links to the Venezuelan government, and Chávez has scoffed at McConnell’s accusations. The Venezuelan leader said the FMLN needed no extra financial support as it was a "solid" and "well-organized" party with popular backing. Chávez described the “gringo” allegations as just another U.S. attempt to discredit him and cause divisions in the region. "It's a lie,” Chávez said. “We don’t need to do that, and they don’t need it.”

History Repeating Itself

It’s not the first time that Bush and the Salvadoran right have played the Chávez card.

During the 2004 presidential election in El Salvador, the Bush administration was nervous the left might win as Schafik Handal, the FMLN candidate, opposed the Central American Free Trade Agreement (CAFTA) and was threatening to withdraw El Salvador's troops from Iraq. As payback for U.S. support for the counter-insurgency war of the 1980s, ARENA sent 381 soldiers to Iraq in the early stages of the war. Salvadoran troops generally refrained from front-line fighting and were instead delegated to humanitarian and reconstruction efforts.

In March, 2003 Special White House Assistant Otto Reich, an implacable Chávez foe who met with Dictator-For-a-Day Pedro Carmona in the run-up to the 2002 coup in Venezuela, declared that the United States would reevaluate its relationship with "an El Salvador led by a person who is an admirer of Fidel Castro and Hugo Chávez." The red-baiting tactics instilled fear in the Salvadoran electorate, which no doubt worried about a return to combative relations with the United States. Handal went down to crushing defeat, winning just 38% of the vote to ARENA candidate Saca’s 58%.

Entrenched Trade Relationship

With a more charismatic, media-savvy candidate at the helm, 2009 could be different for the FMLN. But if Funes were to actually win, what might be the future of Salvadoran-U.S. relations?

The FMLN leader would find it difficult, if not impossible, to take an antagonistic position towards the United States. The young politician would enter office with El Salvador’s trade relations with the United States already well established: in 2006 the two countries signed a free trade agreement providing El Salvador with preferential access to U.S. markets.

El Salvador exports everything from textiles to apparel to shoes and processed foods to the United States, and Funes certainly wouldn’t want to jeopardize such a vital trade relationship. Indeed, right now the U.S. is El Salvador’s most important market, purchasing 57.1% of the Central American nation’s goods. El Salvador in turn receives more than 40% of its imports from the U.S.

The Iraq-El Salvador Connection

Nevertheless, Funes may take some punitive measures against Washington. He has stated for example that one of his first decisions as President would be to withdraw Salvadoran troops from Iraq. ARENA is now paying a high political price for its loyalty to Washington: polls have shown that a majority of the Salvadoran people oppose their country’s troop presence in the Middle East.

While other Central American countries such as Nicaragua and Honduras have long since withdrawn their forces, El Salvador is holding firm and is currently the only Latin American country with forces still deployed in Iraq. ARENA’s position is that Salvadoran forces will continue their service in Iraq until they “finish what [they have] started.”

Were the Salvadoran troops to leave, such a development would prove insignificant from a military point of view. However, Funes would succeed in making a symbolic and political point: that El Salvador is no longer Washington’s lackey in Central America.

Chávez and FMLN: Furthering Ties through Oil

In another worrying development for Washington, Funes has said that he would seek friendly ties to Venezuela. For the two Latin American nations, oil might prove to be highly instrumental in solidifying ties. Recently, Chávez has undertaken an alliance with Sandinista leader Daniel Ortega by agreeing to supply the Central American nation with discounted oil. El Salvador is not an oil producer and a Funes administration would no doubt welcome any Venezuelan assistance to meet its energy needs.

Indeed, the FMLN has been steadily building up its relationship with the Chávez government over the last several years. At the local level FMLN mayors set up ENEPASA, a joint venture energy company which signed an energy deal with Venezuela in 2006. The initiative is designed to provide less expensive fuel to El Salvador’s drivers.

Clearly there was more to the deal than just providing cheap gas.

The FMLN seeks to rebuff ARENA President Saca and his neo-liberal economic approach by laying the groundwork for closer integration through ALBA, the Bolivarian Alternative to the Americas. The plan, initiated by Chávez several years ago, seeks to counteract the corporately driven U.S. Free Trade Area of the Americas and promote barter trade and solidarity amongst left wing Latin American countries.

When FMLN mayors signed the agreement in Caracas, Chávez suggested that money the Salvadoran municipalities saved on energy could be used to subsidize public transport and food prices. Under the terms of the agreement, cities pay 60% of their fuel bill within 90 days. The rest may be paid in barter for agricultural and other locally made products or in cash over a 25-year period.

Chávez used the moment to criticize U.S. trade deals like the Central America Free Trade Agreement (CAFTA). "They're making deals with the devil, the devil himself," Chávez said, in one of his typical rhetorical flourishes.

Over the past two years, Venezuela has exported thousands of barrels of diesel to El Salvador under the new deal. The oil is sold by gas stations bearing a special non-corporate, “white flag” emblem.

The Legacy of Neo-Liberalism: Organized Crime and Maquiladoras

There is little doubt that under a Funes administration, much of the energy integration with Venezuela would continue. But how likely is a Pink Tide sweep in Central America in the first place and a decisive FMLN win in 2009?

Judging from recent political trends, ARENA’s political monopoly is jeopardized. The Salvadoran people are tired of the right’s relentless charge towards neo-liberal policies including privatization and shredding of labor protections for public sector workers. In particular, ARENA’s recent attempt to privatize the health care system proved deeply unpopular and was beaten back by the likes of doctors and nurses supported by the FMLN.

Poverty is soaring and organized crime has reached epidemic proportions in the country. In response, the police and military have allegedly organized vigilante groups that orchestrate “social cleansing” of criminals. In a move to further emulate the Republican Party in the U.S., ARENA instituted draconian anti-terror legislation based on the USA Patriot Act in 2006. ARENA uses the anti-terror legislation to pick up and jail political activists who protest unpopular government moves such as the privatization of water resources.

The agricultural sector meanwhile has been flooded by cheap goods from the U.S. and hasn’t been able to compete; in desperation cooperative farmers have been selling off the land and sending their children to the U.S. to look for work. Remittances from Salvadorans working in the United States are an important source of income for many families and total almost $4 billion a year. According to the United Nations Development Agency, an estimated 22.3% of families receive such remittances.

For those who don’t receive money from their loved ones abroad in the U.S., one of the few options left is to seek work in the maquiladora sweat shops. These dismal sewing factories employ hundreds of thousands of workers and pay laborers a scant 80 cents an hour. Employees have been exposed to horrible conditions such as unhealthy air and water, large amounts of forced overtime and frequent dismissals for those who get the wrong idea and support labor unions.

The Road to 2009

Because of ARENA’s pursuit of such unpopular policies, the stage seems set for a big left win in March.

What might we expect from a Funes administration? Though Funes has distanced himself somewhat from the party rank and file, there is a great ideological affinity between Venezuela and the FMLN. Funes would probably seek to put a break on the neo-liberal policies of the past, and has said that he supports the notion of government-funded social programs like those backed by Chávez and his allies.

"Up until now, I haven't been the hunter being hunted," political novice Funes has said. "But if I myself say that public figures need to be scrutinized, how can I reject that same scrutiny?"

Expect more than mere scrutiny in the following months.

Having fought for twelve long years to defeat the FMLN militarily, Washington is not about to give up now. Count on ARENA and its U.S. patrons in the White House to launch an all out red-baiting assault to prevent the FMLN from coming to power through the ballot box and thereby halting the further spread of the Pink Tide which is sweeping through Central America.

Now that Robert Gates has been confirmed by the Senate, the question becomes: what does the emergence of the new Defense Secretary mean for Latin America? Under Gates’ disgraced predecessor Donald Rumsfeld, the U.S. pursued a bellicose stance towards leftist regimes such as Venezuela. Rumsfeld led the charge against Venezuelan President Hugo Chavez, remarking that "He’s a person who was elected legally, just as Adolf Hitler was elected legally."

Predictably, Venezuela’s response was not long in coming. Vice-president José Vicente Rangel categorized Rumsfeld’s statements as "desperate" and "irrational." He strongly attacked the U.S. Defense Secretary, commenting that it was Bush, not Chavez, who most resembled Hitler. "If some politician or President can be compared with Hitler, it is Bush, because he [Bush] has invaded countries, he has massacred people, he has created prisons in various parts of the world," Rangel said.

Undeterred, the indefatigable Rumsfeld barreled onwards, making completely unsubstantiated claims that Chavez had sought to foment unrest in Bolivia. At one point, he told reporters in Paraguay that "there certainly is evidence that both Cuba and Venezuela have been involved in the situation in Bolivia in unhelpful ways."

Rumsfeld’s comments prompted concern on Capitol Hill, even amongst fellow Republicans. Senator Arlen Specter, a member of the Committee on the Judiciary of the U.S. Congress, grew alarmed that Rumsfeld’s hot headed stance towards Chavez was complicating joint U.S.-Venezuelan counter-narcotics efforts. In a letter to Rumsfeld, Specter said diplomatically, "it may be very helpful to U.S. efforts to secure Venezuela’s cooperation in our joint attack on drug interdiction if the rhetoric would be reduced."

Gates’ Predecessor: Ratcheting Up the Pressure on Venezuela

Even as the U.S. moved to arm the Colombian army to the teeth, Rumsfeld blamed Venezuela for destabilizing the Andean region. "I can’t imagine why Venezuela needs 100,000 AK-47’s.," he said during a news conference in Brasília. "I just hopethat it doesn’t happen I can’t imagine that if it did happen, that it would be good for the hemisphere," he added.

Needless to say, that kind of rhetoric didn’t help to smooth tensions. For years, authorities in Caracas have been worried about the lawless and violent 1,200 mile Colombian-Venezuelan border. Political violence from Colombia has spilled across the border, with the U.S.-funded Colombian military and right wing paramilitaries routinely making incursions into Venezuelan territory.

The paramilitaries, allegedly tied to the Colombian armed forces, have pursued refugees into Venezuela, where they have killed or kidnapped those fleeing the violence. Even worse, the Chavez government claims that Colombian paramilitaries have fired on Venezuelan security forces. Ongoing clashes have led to the untimely deaths of Venezuelan military personnel. Chavez has claimed, plausibly, that he needs to modernize the army so as to defend Venezuela’s westernmost frontier.

Chávez, angered by the ex-Secretary of Defense’s efforts to demonize Venezuela, called Rumsfeld a "war dog." In yet another memorable Chavez quip the Venezuelan President remarked, "The dog says in a cynical way that he knows no one who is threatening Venezuela, so he does not know himself. We should give the little dog a mirror so that he can see his face."

Rangel added to the anti-Rumsfeld broadside in Venezuela by remarking that the U.S. Defense Secretary was "The Lord of War." He then pointed to U.S. hypocrisy as regards arms buildups. "In Venezuela," he declared, "we are worried about the elevated military spending by the United States, which stands around 450 billion dollars what are they fearing in order to justify such high military spending?"

Gates: Bombing Nicaragua

On the surface at least, Gates’ ascendancy would seem to underscore a move away from the aggressive foreign policy espoused by neo-conservatives. Chavez himself has rejoiced in Rumsfeld’s political demise. The Venezuelan leader beamed as he read aloud a news story about the ex-Defense Secretary’s resignation. "Heads are beginning to roll," he said during a news conference. "It was about time he resigned. The president should resign now."

Chavez should think twice, however, before rushing into celebration. Robert Gates’ background suggests that he may pursue just as aggressive a policy as his predecessor in Latin America. Of particular concern is Nicaragua, where the Sandinistas recently returned to power under the leadership of Daniel Ortega. Given Gates’ historic opposition to the Sandinistas, it’s possible that the U.S. may try to destabilize the poverty-stricken Central American country once again.

In 1984, Gates, who was then CIA Deputy Director, recommended to his boss, William Casey, that the United States use air strikes to destroy Nicaragua’s "military buildup." In his memo, Gates remarked that he was advocating "hard measures" that "probably are politically unacceptable."

That kind of rhetoric and approach suggests that Gates may prove just as bellicose as the neo-conservatives. When he was queried about the Gates memo, Thomas Blanton, Director of the National Security Archive in Washington, D.C. (an organization pledged to uncovering and declassifying information at the highest level of government), remarked "It sounds like Donald Rumsfeld. It shows the same kind of arrogance and hubris that got us into Iraq."

Speaking to the Los Angeles Times, Blanton added that Gates’ advocacy of bombing Nicaragua was extreme at the time. "It sure wasn’t a mainstream opinion," he said. "Most Americans thought we shouldn’t be doing anything in Nicaragua. How possibly was our national security interest at stake?"

When Congress forbade funding the Nicaraguan Contras, Ronald Reagan used the proceeds of arms sales to Iran to fund the rebels. According to documents, Gates apparently knew about Oliver North’s efforts to raise money for the Contras; critics claim that the new Secretary of Defense did not undertake sufficient measures to stop the scheme from going ahead. Independent Counsel Lawrence E. Walsh, who investigated the Iran Contra scandal, remarked that Gates was "less than candid" about his role in the affair but did not bring charges.

Gates, SAIC and Venezuela

The question now is whether Gates has changed his views regarding Latin America or still wants to provoke confrontation with leftist regimes. That issue has now become a prominent one, given the reemergence of Gates’ old nemesis, Daniel Ortega. Though Ortega has jettisoned much of his earlier anti-U.S. rhetoric, the Sandinista leader has cultivated a budding alliance with Venezuelan president Hugo Chavez (for a detailed analysis of these developments, see my earlier Counterpunch piece, "In Nicaragua, a Chavez Wave?"). Nicaragua is dirt poor and wracked by debt, but Ortega can now count on oil shipments from Venezuela, a country which is wielding its political influence throughout the region.

Blanton has claimed that it would be a mistake to look at Gates’ 22-year old memo as a reflection of his current day thinking. When Gates came under scrutiny for his alleged role in Iran Contra and his bid to become CIA Director in 1987 proved unsuccessful, the ambitious intelligence man became, in the words of the Los Angeles Times, "chastened" and his earlier arrogance was "diminished." According to Blanton, Gates changed once he became CIA Director in 1991. "Very possibly," noted Blanton, "the Robert Gates nominated for secretary of Defense is the Robert Gates who is the best CIA director we ever had, and not the Robert Gates who was a ‘mini-me’ Rumsfeld."

Gates’s background, however, suggests that he may not significantly alter Rumsfeld’s Venezuela policy. In 1993 Gates left government after working 27 years in the intelligence business. But, he was never far from the corridors of power. Gates joined SAIC (Science Applications International Corp.), a shady contractor for the Pentagon, CIA and other federal agencies, where he served on the board of directors. SAIC, which reported $7.5 billion in earnings in 2005, is involved in everything from intelligence gathering to Iraqi reconstruction for the Pentagon.

Gates’ tenure at SAIC should give Chavez pause. As I document at great length in my book, Hugo Chavez: Oil, Politics, and the Challenge to the U.S. (recently released by St. Martin’s Press), SAIC has played a dodgy role in Venezuela. In 1996, SAIC signed a joint venture with PdVSA (the Venezuelan state oil company) to handle the firm’s IT operations.

According to Chavez, however, the joint venture, called Informatica, Negocios y Tecnologia (known by its Spanish acronym INTESA), had ties to the CIA. SAIC, charged Chavez, was using INTESA as a means of conducting espionage. During the confrontational oil lock-out of 2002-3, when the Venezuelan opposition sought to bring the economy to a halt and force Chavez from power, PdVSA sustained serious damage to its IT system. The Chavez government claimed that INTESA was involved in the sabotage. When the lock-out fizzled, Chavez promptly discontinued INTESA.

Gates Sails through Senate Confirmation

Though Gates’s tenure on SAIC’s board of directors proved brief, he maintained ties to the company even after leaving when he joined the advisory board for VoteHere, an electronic voting machine firm tied to SAIC. Given his past involvement with SAIC, one would think that the Senate would have at least touched on the issue during the extraordinarily brief one day confirmation hearing.

I have reviewed the transcript from the hearing and neither the words "SAIC" nor "Venezuela" was broached by any Senator (not to mention Nicaragua). Gates was resoundingly confirmed by a vote of 95-2 in his new position. The two dissenting votes, in fact, did not come from Democrats but from pro-war Republican Senators Rick Santorum and Jim Bunning, who disliked Gates’ criticism of the war in Iraq.

The Democrats, coasting on their recent victory in the mid-term elections, had the opportunity during Tuesday’s confirmation hearing to show the American public that they were concerned about the direction of U.S.-Latin American relations. Though Rumsfeld, through his public utterances, did much to erode trust between Venezuela and the United States, the new Secretary of Defense could chart a new course. By failing to question Gates on his past or his views on Latin America, the Democrats have signaled that they are not overly concerned with reining in Bush’s hawkish foreign policy in the region.

Initially, it seemed as if Chavez was perfectly poised to capitalize on a wave of anti-American discontent felt throughout the hemisphere. But then, a series of dramatic reversals cast doubt on Chavez's ambitions to become a truly hemispheric leader and a lightning rod against U.S. influence.

 

Over the last few months, I had begun to doubt whether Venezuelan President Hugo Chavez would indeed have the kind of political staying power that I described in my book, Hugo Chavez: Oil, Politics, and the Challenge to the U.S. (recently released by St. Martin's Press).

Initially, it seemed as if Chavez was perfectly poised to capitalize on a wave of anti-American discontent felt throughout the hemisphere. Throughout South America, Chavez exchanged oil for political influence with newly emerging leftist regimes in Uruguay, Argentina, and Brazil; the election of Evo Morales in Bolivia, a key Chavez ally, seemed to underscore Venezuela's rising influence.

 

But then, a series of dramatic reversals cast doubt on Chavez's ambitions to become a truly hemispheric leader and a lightning rod against U.S. influence.

Chavez's Reversals, from Peru to the United Nations

 

In Peru, Chavez openly endorsed the nationalist candidate Ollanta Humala in the country's presidential election. But Chavez's strategy backfired when Humala's opponent, Alan Garcia, charged that the Venezuelan leader was interfering in Peru's internal politics. Garcia successfully exploited the issue to his advantage and went on to beat Humala in last April's election.

 

In Mexico, pro-business PAN candidate Felipe Calderon ran a negative campaign against his leftist challenger Andres Manuel Lopez Obrador. In his TV ads, Calderon linked Obrador to Hugo Chavez, proclaiming "Lopez Obrador is a danger to Mexico." Though Lopez Obrador cried fraud in Mexico's July presidential election, the Electoral Tribunal ruled that Calderon had won the election and rejected Obrador's allegations. Calderon is set to assume office in December.

 

The next set back for Chavez came in Ecuador, where the Venezuelan leader's would be protégé, Rafael Correa, went down in defeat in the first round of the country's presidential election last month. A Correa win would have added another oil-rich country to Chavez's anti-American alliance.

 

Correa, a leftist economics professor, denied that Chavez had funded his campaign and the Venezuelan leader, chastened by his defeats in Mexico and Peru, was uncharacteristically quiet about the Ecuador election.

 

However, it's no secret that the two had a personal rapport. Correa in fact visited Chavez's home state of Barinas in August, where he met with the Venezuelan leader and spent the night with Chavez's parents. Correa, who opposes an extension of the U.S. lease at an air base in Manta, which serves as a staging ground for drug surveillance flights, has nothing but contempt for George Bush.

 

When he was recently asked about Chavez's "devil" diatribe against the U.S. president at the United Nations, Correa remarked amusingly, "Calling Bush the devil offends the devil. Bush is a tremendously dimwitted President who has done great damage to the world."

 

But Correa was shocked by a strong last minute showing by his challenger, pro-U.S. banana magnate Alvaro Noboa. Like Lopez Obrador, Correa has cried foul and declared that his campaign might have fallen victim to electronic fraud on the country's voting machines. He will face off with Noboa in another runoff election in November.

 

Then there was Venezuela's failed bid to secure a non permanent seat on the United Nations Security Council. When the United States proposed its own candidate, Guatemala, things turned ugly. Chavez characterized the race as a struggle against U.S. domination throughout Latin America; Venezuelan diplomats went so far as to describe Guatemala as a U.S. stooge.

But in the end, Venezuela failed to come up with the requisite votes. Chavez could take some satisfaction that Guatemala too failed to come up with the necessary votes at the United Nations, and had to withdraw in favor of Panama.

 

The reality, however, is that despite Chavez's frenetic shuttle diplomacy throughout Africa and calls for Third World solidarity, he could not muster more votes than a small Central American country with very little regional influence and an appalling human rights record.

It was hardly an impressive showing.

The Chavez-Ortega Alliance

 

Events in Nicaragua, however, suggest that it won't be so easy for the Bush administration to roll back Chavez's ambitions. It now seems as if the Sandinista candidate Daniel Ortega will cruise to victory in the country's presidential election and avoid a run off. As of Monday night, preliminary results show Ortega with about 40 percent of the vote, more than enough to avoid a future runoff.

 

For the White House, it's a nightmare that officials had long sought to avoid.

 

Though Ortega, who was president from 1985 to 1990 during the U.S.-fueled Contra War, is a pale shadow of his former self, having jettisoned his leftist rhetoric and hostility towards his northern neighbor, nevertheless Washington must now recognize that it has patently failed to isolate Chavez diplomatically. Nicaragua now seems poised to join the wave of left leaning regimes throughout the hemisphere inspired by Chavez.

 

When Ortega traveled to Venezuela for a meeting with Chavez last year, the friendship between the two began to bear fruit. During the meeting at Miraflores, the presidential palace, Ortega remarked that Latin American unity was necessary to confront globalization. He added that Chavez's electoral victory convinced him that revolutionary change could be achieved through the ballot box. "I thought that they were going to overthrow Chavez," Ortega remarked, "and that he would meet the same fate as Salvador Allende."

 

Ortega later alarmed Washington by remarking that if he won the election he would make sure that Nicaragua would join ALBA, Chavez's Bolivarian Alternative for The Americas. Chavez's trading plan, which is designed to sideline traditional corporate interests and Bush's Free Trade Agreement of The Americas (FTAA), is based on barter agreements between Latin American countries. Recently, to the chagrin of U.S. policymakers, Bolivia joined Venezuela and Cuba in ALBA.

 

Chavez, Ortega and ALBA

 

"Without a doubt," Ortega declared during a Cuban summit meeting with Morales, Castro and Chavez, "we have to look towards the south, we have to look towards integration, and ALBA is an open door, it is Latin American and Caribbean integration."

 

Ortega later added that he opposed U.S.-backed trade deals. "Central America's trading future lies not with the U.S. but with Venezuela, Brazil and Argentina," he said.

 

Ortega, smarting from three successive electoral defeats after the fall of the Sandinistas from power, added that he was "convinced after 16 years of neo liberal policies in Nicaragua that the conditions are ripe for the Sandinista Front to retake power, now via the ballot box."

In the Plaza de La Revolucion in Havana, Chavez approached Ortega and remarked, "Daniel, we are inviting you next year to come here as the president of Nicaragua."

 

According to Ortega, Chavez followed up on his promising words by offering to help Nicaragua join in ALBA. Speaking before hundreds of workers in Managua, Ortega said that Chavez and the president of the Venezuelan Economic and Social Development Bank (known by its Spanish acronym Bandes) had pledged to help open a development bank in Nicaragua. "Venezuela is willing to provide support so that this bank will become a reality and campesinos will have credits and a secure market," Ortega told supporters.  According to Ortega the Venezuelan aid formed part of ALBA.

Chavez, Ortega and CAFTA

 

In seeking to recruit Ortega for his ALBA scheme, Chavez found a willing ally in Ortega. Indeed, Nicaragua's experiment in "neo-liberal" economics since the fall of the Sandinistas in 1990 has not been a very happy one. Like Venezuela, which experienced political unrest as a result of neo liberal policies pushed by Washington, Nicaragua has been buffeted by "savage capitalism," as Ortega has put it.

 

Today, Nicaragua is a bleak place. Per capita income is a paltry $700 and more than 70% of the population lives on less than $2 a day. Successive governments have failed to restore Managua from a 1972 earthquake. Within yards of the presidential palace lie slums and empty buildings; beggars and barefoot children splash around in the gutters of Managua instead of heading to class.

 

Like Chavez, Ortega has spent a lot of time over the past years criticizing U.S.-led free trade deals. For example, the Sandinista led the charge against CAFTA, the Central American Free Trade Agreement. Ortega pledged to pull Nicaragua out of CAFTA and "end savage capitalism when we win." CAFTA, Ortega argued, was an effort by the U.S. to exploit poor countries in a rush to the bottom and cheap labor.

 

"Bush is taking up CAFTA," Ortega remarked in an interview with the Christian Science Monitor, "because it is his way of keeping Central America from looking south." Ortega furthermore suggested that Washington was seeking to splinter Nicaragua's solidarity with the Left in Latin America such as Chavez's regime.

 

CAFTA was pushed ruthlessly by U.S. trade representative Robert Zoellick over the objections of labor, environmentalists and human rights groups [for more on Zoellick, see my profile of the diplomat in my book].

 

"CAFTA is the opportunity of a lifetime," Zoellick remarked in an address given at the Heritage Foundation. "If we retreat into isolationism, Daniel Ortega, Hugo Chavez and others like them, leftist autocratswill advance."

 

Zoellick's efforts to link Ortega and Chavez in order to ram through CAFTA were echoed by paranoid, red baiting Republicans in the House and Senate. Oklahoma Republican James Inhofe warned his fellow Senators: "These Communists, these enemies of the United States, Chavez, Ortega, and Castro, are all in opposition to CAFTA. If you want to be on their side, you would vote against CAFTA."

 

In the House, Republican Rep. Mike Kirk of Illinois took the fear mongering prize by arguing that Chavez was "Venezuela's Mussolini." Chavez, claimed Kirk, was purchasing weapons in order to fight a new war in Central America. "Let us enact a free trade agreement with Central America to lock in democratic growth and stability," Kirk exclaimed, "and let us make sure that President Hugo Chavez's Venezuelan agents find no fertile ground in America's back yard."

 

In the end CAFTA passed narrowly in Congress. In Nicaragua, CAFTA was opposed by the Sandinistas in the National Assembly as well as key figures in civil society, including the president of the country's largest agricultural organization, who warned that the agreement would give rise to greater poverty in the countryside.

 

According to experts, CAFTA stood to encourage the growth of more maquiladora assembly plants, but any positive benefit would be offset by the loss in farm jobs as a result of the influx of cheap U.S. agricultural goods. Despite domestic opposition, Nicaragua passed CAFTA in October 2005.

Efforts to Demonize Ortega and Chavez

 

Despite its CAFTA public relations victory, the Bush administration was clearly still worried and kept up the pressure on Ortega during the run up to the presidential election. Paul Trivelli, the U.S. Ambassador to Nicaragua, warned that Ortega's victory would signify "the introduction of a Chavez model" in Nicaragua.

 

Meanwhile the conservative press flew into a tirade against Ortega, with the Washington Times remarking that "Ortega will take Nicaragua out of CAFTA and into Mr. Chavez's Bolivarian Alternative for the Americas, and almost synonymous with this is a move to nationalize industry, much like Evo Morales did in Bolivia."

 

The Washington Post was similarly hostile, remarking in an editorial that Ortega "is about to return to power and increase the alliance with non-democratic countries [such as] Venezuela." The Post, interestingly criticized the Bush administration for reacting too slow to the Chavez and Ortega threat.

 

On the pages of National Review, Otto Reich, a former State Department official who dealt with Venezuelan opposition conspirators in the run up to the coup against Chavez in 2002, remarked that "The emerging axis of subversion forming between Cuba and Venezuela must be confronted before it can undermine democracy in Nicaragua."

 

As per the case in Peru, the Nicaraguan right sought to link its Sandinista opposition to Chavez in an effort to instill fear in voters. Presidential candidate Jose Rizo remarked that Chavez and Ortega were "a threat to regional and hemispheric stability," and claimed that the Venezuelan leader was financing Ortega's campaign [both Venezuela and Ortega deny the accusation]. "Ortega will become Chavez's lieutenant in Central America and the Caribbean in the same way that he represented the extinct and failed Soviet Bloc," Rizo added.

Ortega Unlikely to Radicalize

 

Unlike Peru however the opposition's strategy of trying to scare Nicaraguan voters proved unsuccessful and at long last Ortega has prevailed in his drive to reach the presidency. Despite the hyperbolic claims by the U.S. and conservative politicians in Nicaragua however, Ortega is hardly in a position to become Chavez's steward overnight. Unlike Venezuela, Nicaragua is poor and foreign investment and aid accounts for 35 percent of the budget. That money could disappear if Ortega started to radicalize the country and expropriate industry.

 

In an effort to appease jittery investors, Ortega recently signed a pro-business pact in which he pledged to promote the private sector. Though he has spoken about the need to renegotiate aspects of CAFTA, Ortega now says he will build on free trade agreements. Ortega will have to tread lightly: the U.S. is Nicaragua's largest trading partner and accounts for about one fifth of the country's imports and approximately a third of its exports. About 25 wholly or partially owned subsidiaries of U.S. corporations operate in Nicaragua.

 

With so much at stake, Ortega has predictably moderated his rhetoric by stating that he would work with the International Monetary Fund, the World Bank, and Inter American Development Bank.

 

Carlos Fernando Chamorro, son of former president Violeta Chamorro and editor of the weekly Confidencial newspaper, is not too concerned about a radical Ortega agenda. He argues that Ortega is a pragmatist and will try to appease the United States. Observers believe that the right wing Liberal Constitutionalist Party (known by its Spanish acronym PLC), the main opposition to the Sandinistas, will hold onto its many seats in the National Assembly following this election, which would further complicate any radical agenda.

 

But, Chavez's Oil Diplomacy in Central America Could Be a Factor

 

Nevertheless, Chavez seems to be trying hard to bring Nicaragua into its political orbit. Chavez has enhanced his stature in South America by trading oil for other goods, and seems to be pursuing a similar strategy in Nicaragua. Venezuela has in fact already provided cheap fuel to Nicaragua through Sandinista mayors. Speaking on his television and radio program Alo, Presidente!, Chavez told Ortega that Nicaragua could pay for Venezuelan oil with meat, milk, cheese and other goods.

 

Ortega and Chavez have held personal discussions about setting up a mixed Venezuelan-Nicaraguan company that would import the cheap oil. Chavez is apparently willing to invest in Nicaragua to set up necessary oil infrastructure. Best of all, Chavez's offer could prove politically beneficial to Ortega since restive students have protested any move to raise transportation costs. Farmers meanwhile would not have to increase their production costs.

What does it all add up to? Despite some setbacks, Chavez stands to at least gain some diplomatic and political leverage in Central America. Ortega will be hampered in bringing about radical change, but will at least look upon Venezuela as an important regional ally and friend. Try as it might, the Bush administration has not been able to isolate Chavez. To the contrary, the U.S., through its efforts to demonize both Chavez and Ortega, has unwittingly brought them together.