The Federalist Society address.

APRIL 26, 2007

PROFESSOR BAKER: My name is John Baker. I teach at LSU Law School and I direct the Hemispheric Trade Program there.

I'm going to give a little longer introduction in a few minutes, but to accommodate Ambassador Bolton, who has been so kind as to come and open this program for us, I want to get right to his remarks. The great thing about having someone like Ambassador Bolton is you really don't have to introduce him. And so, therefore, the only thing I'm going to say about him are two things you may not know that connect with our subject today.

Long before he became really famous, he was still well known in conservative circles. Among his other positions, he was Assistant Administrator for Programming Policy Coordination at the United States Agency for International Development (USAID) in the early 1980s, and then he was General Counsel from 1974 to 1981, as well.

So without further ado, let me introduce someone who certainly needs no introduction to this audience: Ambassador John Bolton.

(Applause)

AMBASSADOR BOLTON: Thank you very much, John. It's a pleasure to be here. The Federalist Society has been something that I've been pleased to participate in for many years. It's a critically important institution. One of the things that I've been especially happy to see is it has expanded its interest in international subjects and its international activities. I think it is a very important direction to go in.

I want to talk a little bit about issues of international security and how they affect economic development, because the connection is very real in many respects, especially in Latin America today where the direction things are going is not terribly promising and where I think a number of initiatives and successes over recent years now are threatened because of the developments relating to political and security issues.

I think this goes critically to the likelihood of success of initiatives to develop systems of property and the rule of law, because they are directly related to the attractiveness that systems having these attributes have for foreign trade and investment. I think the correlation is very clear in a time of supposed increased globalization. In fact, there are many areas and many countries that, not having established clear systems of property rights and independent judiciaries and strong rule of law, are not benefiting from globalization, not benefiting from the increased trade and investment that comes from it, and, therefore, are sources of information and political support for the people around the world who, for all kinds of different reasons, don't like globalization to begin with--people who are fundamentally statist in their orientation, or nationalistic, but don't equate the benefits of broadly liberal international trade order in the same way that at least people in the United States predominantly do.

I think in Latin America, we came through a decade in the 1990s--late 1980s or early 1990s--of enormous promise and opening to the possibility of greater hemispheric integration where you saw a lot of longstanding historical attitudes in both Latin America, the Caribbean, and the United States disappearing. It was a time when I think a lot of state owned enterprises were being divested, (1) where the strictures against private foreign investment were falling, (2) where there were possibilities where the two of them were combined, where telecommunications systems were being privatized and opened to foreign and, especially, American investment. (3)

In my personal view, by the mid-1990s, I really thought that we had not only moved beyond the Cold War in global international terms but that the Western Hemisphere had moved past a lot of strongly held, historically derived views that really inhibited closer relations between the United States and Latin American, Central American, and Caribbean governments, which, I think, had those trends persisted, would have been to the benefit of everyone at a time when NAFTA was being negotiated and approved, when the possibility of additional bilateral and trade agreements seemed to be making a lot of progress, when--this will take you back fifteen years or more--when the Southern Common Market (MERCOSUR) was not seen as something that was directed against the United States but was seen as a way of reducing trade barriers, at least in partial terms, that would help open up hemispheric trade more generally. (4)

I know that, now that I'm back at the American Enterprise Institute for Public Policy Research (AEI), there is a very strong view held by most of the people at AEI who study international trade that these bilateral or plurilateral trade agreements are not to be preferred when you look at global rounds like Doha or other rounds in the World Trade Organization (WTO). (5) I understand that point of view intellectually. I think when you look as a practical political matter at changing some of these historically derived attitudes that, sometimes, bilateral or regional trade agreements are actually ways of breaking existing habits of thinking. Ultimately, you want to do it on a global basis, but it's not a zero sum game.

Anyway, my impression, pretty strongly, in the mid-1990s was that there was an awful lot of progress being made in terms of opening up Latin America to foreign investment--especially from North America--and that the prospect of closer integration economically and politically was very strong. And I think that it would have had, had it continued, a very powerful, positive impact on the economies of Latin American countries and, therefore, on the lives of their citizens, which would have been a good thing for everybody.

It looked, with the end of the Cold War, frankly, that the divisions caused by Cold War tensions--the efforts of the then-Soviet Union through Castro and his regime in Cuba--were going to disappear, that these external political issues would no longer be a factor inhibiting closer relations in this hemisphere and that, in the absence of some external political rationale, people could make essentially economic decisions on essentially economic terms.

That happy forecast--maybe I was the only one who believed in it, but I think it was more broadly shared than that--has obviously come unstuck, for a variety of reasons, in the hemisphere, some of which have to do with international economic factors like the debt crisis and related events. But a lot of it has to do with the internal politics of many of the Latin American countries, and perhaps, and undoubtedly in its most acute form, in Venezuela.

The issue that we face now, I think, is not the more optimistic view of how to increase hemispheric integration but the opposite: how to prevent not only political instability in many Latin American countries but a reversion to if not completely autarkic economic principles at least resistance to increased international involvement. And I think that has its corollary effect in domestic policy in the Latin American countries by the decreased world willingness to create systems of property rights and rule of law institutions that would permit the development of more integration into the international commercial economy.

Now, Hugo Chavez obviously is complex in many respects, although he is also kind of quintessentially Venezuelan. I remember my only visit to Venezuela was in January of 1992, right after Venezuela had been elected to the Security Council. (6) So I went down in the Bush 41 administration for consultations on what their membership would involve, and I remember very vividly being driven to the presidential compound to meet with Carlos Andr6s Perez, who was the president then. And as we drove up, I could see that the walls of the compound had obviously been splattered with bullets. You could see the very distinctive impact of the bullet and the plaster cracking around it.

Of course, I'd known that there had been a coup attempt the week before--this was visible evidence of that coup--led by a disaffected army officer named Hugo Chavez. (7) So, they quite properly put him in jail at the time but, obviously, not long enough--he came back. (8) If you look at the political situation in Venezuela now, for those who study it closely, I think they would say that the opposition to Chavez is so divided, (9) that Chavez himself is so artful at using the Venezuelan oil revenues to spread around to the poor people, the unemployed, and the disaffected, (10) and having packed the military to his satisfaction, (11) it's hard now to see how Venezuela breaks out of Hugo Chavez's rule.

The democratic alternative doesn't seem open. The United States had an opportunity to support a countercoup against Chavez a few years ago and declined that opportunity because of our devotion to supposedly the democratic processes, which Chavez, having avoided a countercoup, was then, in turn, able to frustrate even more. (12) I think the pessimistic, but I think also realistic, prospect is that Venezuela is stuck with Chavez for the foreseeable future. And as long as the oil prices remain where they are, (13) he has a funding source that is completely independent of any potential democratic control. Even if his opponents could succeed in getting a majority in the Venezuelan Congress, he has a source of revenue utterly independent of their taxation authority. So what that means is that the happy prospect of avoiding a hemispheric troublemaker has fallen by the wayside.

And while it's true that Chavez's ideology is incoherent, to state it most bluntly, that doesn't mean that he is potentially less of a problem than Castro was. Although, as someone described Chavez, he's sort of like Castro without brains, he is nonetheless dangerous despite that. He may not have a coherent Marxist ideology, but he's got enough of a view on key issues that he's obviously going to be a problem. And unlike Castro, he has his own source of financing.

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