A 'New Deal' for Latin America

As president Bush flew around Latin America this week, he was looking for a way to turn attention away from his negative poll ratings in the region that are as bad as they are for Hugo Chávez. One answer would be to pledge a hemisphere-wide partnership to end extreme poverty in rural Latin America before 2015.

The overwhelming misery of millions of rural peasants - who comprise the majority of Latin America's indigenous peoples - is a basic reason why Chávez's populism and revolutionary bombast have produced such an echo in Bolivia, Ecuador, and Peru, where there have been decades of rural abandonment and indigenous exclusion.

In some ways, Bush can reach into US history to the Depression and recall the determined effort of President Franklin Roosevelt to bring water, basic sanitation, housing, roads, and electricity to rural communities. Rural infrastructure investment suddenly took off through the rural electrical cooperatives, power projects such as the Tennessee Valley Authority, and government-financed jobs programs that built farm-to-market roads and more than 78,000 bridges.

That vision is now underpinned by recent World Bank studies, InterAmerican Development Bank concepts, and Non-Governmental Organization reports. All of them have found that in addition to fairer access to land, physical infrastructure projects, credit and technical help, and commercial and human capital investment have essentially bypassed rural Latin America. Overall investment has been half what it should have been, given the size of agriculture in the economy, according to the World Bank.

And the return is two for one, which adds a fair economic argument to the political case for new investment by the Latin countries themselves in the rural areas, with some US and other donor support. World Bank economists found that for every 1 percent invested in rural economic growth, such as agriculture investment or natural resource conservation, there would be a two-fold increase in the contribution to national economic growth and a two-fold reduction in its contribution to reducing national poverty rates.

Rural development should have been the focus when Bush talked with President Lula of Brazil and Alvaro Uribe of Colombia. It is in the rural areas of Colombia, Bolivia, and Peru where coca cultivation occurs, and those areas have not received their fair share of infrastructure investment and broad development support. That targeting also would fit nicely with Bush's plans to promote biofuels development.

For Colombia and the United States, it is time to shift away from an 80/20 military/economic split. Colombia needs to launch a nationwide strategy for integrated infrastructure investment, governance and social programs to address the extreme poverty of many rural indigenous and Afro-Colombian communities. That package has to be available immediately after the the Revolutionary Armed Forces of Colombia guerrillas are no longer present.

Recent statistics show that in the Andean countries more than 80 per cent of the rural population lives in poverty. In Bolivia, Ecuador, Guatemala, Mexico, and Peru, 80 percent of the indigenous population are poor and over half are among the extreme poor.

The inequality in the region is the most garish worldwide. The World Bank states that the "richest one-tenth of the population in Latin America and the Caribbean earn 48 percent of total income and the poorest tenth earn only 1.6 percent." In Bolivia, the richest one-tenth earn on the order of 140 times the bottom one-tenth. The World Bank report on inequality found that indigenous men earn between 35 percent to 65 percent less than white men in seven countries with the highest indigenous population and that families headed by indigenous women had the least access to potable water, sanitation, jobs, or education.

Seventy years ago, in the United States, the government and its people decided that recovery from the Depression required bringing rural families, many living in extreme poverty, out of the cold. That investment has helped make the United States an agricultural giant, but probably even more important, it bridged some of the urban/rural divide. Acting to give the rural poor in Latin America, a clear sign that government cares about them would not be a bad message for President Bush to carry on this trip.