The Foreign Service Journal, April 2006

Some blame Latin America’s continuing economic and social distress on the United States, accusing Washington of foisting unwise policies on the region. Among other steps, the United States joined with international lending organizations in the early 1990s in making 10 recommen- dations comprising what is commonly known as the “Washington Consensus.” Its main themes included calls for open markets, free trade and privatization. The Washington Consensus: Still Valid? U.S. support for privatization is based on the notion that the transfer of money-losing, state-owned firms to private hands can yield huge benefits if they are run effi- ciently by their new proprietors. The results of privati- zation have been mixed. The poorest results have occurred when privileged elites that buy these state enti- ties are granted monopoly control, thus perpetuating the inefficiencies and other drawbacks that the process was supposed to resolve. American officials say the “Washington Consensus” con- cept remains valid. The problem, they say, is often in its implementation. Properly carried out, the policies can help lift countries from poverty. “For the most part, they are motherhood and apple pie,” says John Williamson of the Washington-based International Institute for Economics, and an architect of the Washington Consensus. Hakim, the Inter-American Dialogue president, says there are many reasons why Latin America lags behind. Most countries “are caught in a slow-growth trap, a con- sequence of the region’s low educational standards, paltry investment in technology and infrastructure, pitifully low rates of saving, derisory levels of tax collection and politically divisive inequalities.” Haiti, which has drifted from one crisis to another over the past two decades, exemplifies the problem. Not surprisingly, election outcomes in Latin America in recent years reflect the broad discontent with those in charge. In 1998, Venezuelans eager for change turned to Hugo Chavez, electing the former army officer and architect of a failed military coup in 1992. They reject- F O C U S A P R I L 2 0 0 6 / F O R E I G N S E R V I C E J O U R N A L 23