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03.21.11

Why Obama's Trip Will Pay Off

Fighting back against much criticism, the president’s five-day tour continues today in Chile, where the export business is booming. Mac Margolis on why Washington needs to pay attention.

In the argot of the wonks and wizards of geopolitics, Latin America has rarely been a game changer. “A dagger pointed at the heart of Antarctica,” Henry Kissinger famously put it. Barack Obama might beg to differ.

Even before Air Force One left Washington Friday night, critics had slammed the trip as symbolic, at best, and at worst a distraction from urgent matters of state. Flying south may do little for the U.S. president’s sagging ratings at home, but the five-day tour that began in Brazil, continues today in Chile and will end tomorrow in El Salvador has given him a publicity bump abroad that— if played right—could bring him, and America, some lasting dividends.

Gallery: Obama’s Trip to Brazil

That much was clear in the short weekend the First Family spent on the ground in Brazil, where the U.S. brand had lost much of its appeal over the past decade. Obama had few major policy initiatives, no good news on lowering U.S. trade barriers, and only generic support of the rising powerhouse to win a permanent seat on the United Nations Security Council. While he talked up a “Green Energy” partnership with Brazil, U.S. energy Secretary Steven Chu did not make the plane.

And yet in less than 48 hours, he and First Lady Michelle Obama cut a wide swath of cheer and goodwill from the power corridors of Brasilia to the favelas of Rio de Janeiro of the sort usually reserved for conquering soccer heroes. Even when his handlers, probably on security concerns, swapped an open-air address in downtown Rio for an invitation-only speech in the belle époque Theatro Municipal, the Cariocas approved. “God Bless You,” read a hand painted banner hung from a veranda on handsome Flamengo beach.

The afterglow may carry on in Chile. Though only the eighth largest economy in the region, Chile has always stood out in a continent of giants. It grew by 5.2 percent last year, bouncing back from a severe recession in 2009. Once a stain on the hemisphere for the 17-year dictatorship of General Augusto Pinochet, this sliver of land along the spine of the Andes has emerged as a resilient democracy where pragmatism and political plurality have prevailed over ideological divisions. Chile’s “successful transition to democracy and sustained economic growth make it a model for the region and the world,” as Obama announced on the eve of his trip.

That was not always a given. Many Chileans held their breath last year when conservative business tycoon Sebastián Piñera took office, ending two decades of center-left political rule. But stable, prosperous Chile barely missed a beat, even as the economy struggled to recover from the world financial crisis and a devastating 8.8 magnitude earthquake and tsunami early last year.

That’s largely because there’s little argument over the basic rules of economic and political engagement in Chile, where open markets, fiscal prudence and targeted anti-poverty spending have set the pace in South America. Countering Latin America’s spendthrift populism, Chile pioneered counter-cyclical fiscal policy—saving money when the economy is booming and spending during a recession—which helped the region weather the global economic crash better than almost any other region.

This has not been lost on Washington. Though Chile’s cross Pacific trade is booming, Chile exports more goods to the U.S. than any country other than China. Two-way trade was $10 billion in 2010, thanks largely to a Free Trade Agreement between Santiago and Washington.

That’s the kind of large round number that Obama is hoping might turn heads in the U.S. Congress, where two other free trade agreements, with Colombia and Panama, have languished for years. It’s no coincidence that Obama chose Santiago as the venue to deliver a speech celebrating the 50th anniversary of the Alliance for Progress, the bold John F. Kennedy era policy meant to boost development and cooperation across the Americas.

Whether anyone in Washington will be listening is another story.

A longtime correspondent for Newsweek, Mac Margolis has traveled extensively in Brazil and Latin America. He has contributed to The Economist, The Washington Post, and The Christian Science Monitor, and is the author of The Last New World: The Conquest of the Amazon Frontier.