Diplomatic Diary: Missing In Action

Washington has a new favorite parlor game this holiday season. Its name: Where's Otto?--a spin-off on the children's classic "Where's Waldo?" Its aim: to guess the fate of the fiery official who has been leading U.S. foreign policy from Canada to Argentina.

Otto Reich once reigned supreme in the State Department, heading up its regional bureau for the western hemisphere. There he maintained the Bush administration's hard-line opposition to Cuba's Fidel Castro. And it was there that he kept close contact with the leaders of Venezuela's abortive coup against President Hugo Chavez in April.

Now, as Venezuela suffers another political crisis--in the form of a two-week-old strike designed to oust Chavez yet again--Reich is caught in a twilight zone. Sitting in a small office, five floors below his old digs, he has no bureau to control and Congress and the White House have yet to decide his future.

It's not just Reich who is missing in action. For Latin American diplomats, Reich's murky position only confirms their fears that the Bush administration is providing little leadership for the troubled region.

Wherever Reich lands, the problems in Latin America are fast encroaching on other U.S. priorities in the Persian Gulf. The widespread strikes in Venezuela have pushed crude oil prices to more than $30 a barrel, some 50 per cent higher than last year. As the White House considers war in Iraq, the last thing it needs is an oil market in turmoil.

As if to underscore the lack of direction, the White House was itself forced to backtrack on its Venezuelan policy statements. Ari Fleischer, the White House press secretary, had called for "early elections" in Venezuela last week to resolve its political crisis. This week he refined that position by calling for "the will of the people to be heard".

It all sounded too familiar. Back in April, Fleischer blamed Chavez for his own departure from office, appearing to back an unconstitutional coup. As a result, the administration spent months attempting to kill rumors that it had secretly aided the coup, not least through Reich's phone calls with the coup plotters.

This time around, it's not just Venezuela. Brazil is lurching towards its own debt crunch, while Argentina continues to suffer a collapse of confidence in both its economy and political system.

Latin American officials are desperate for a higher level of engagement by the Bush administration, pleading openly for a new economic policy in Washington to halt their debt crises. "We need a new round of Brady bonds!" one ambassador pressed a senior administration official at a Christmas party last week.

Named after Nicholas Brady, Treasury Secretary in the first Bush administration, Brady bonds restructured Latin American debt that threatened not just the region's governments but also the U.S. banks that fell over themselves to lend them money in the 1980s.

However, those Latin American governments are facing something of a power vacuum at both the departments of Treasury and State. Paul O'Neill was pushed out of his job as Treasury Secretary earlier this month, at a time when the White House has yet to decide on Otto's whereabouts.

Nobody inside the Bush administration knows where Reich will end up. At the State Department, officials say Reich's future lies with the White House. At the White House, officials say the process to determine his future is "completely opaque." In the meantime, Reich is available for "special purposes and general advice" to Secretary of State Colin Powell, and his bureau is being run by his deputy, Curtis Struble, a career diplomat rather than a political appointee like his boss.

Indeed, politics lie at the heart of Reich's runaround. Nominated in March 2001, the Cuban-born Reich was always a controversial choice for a region that President Bush boasted would become a high priority for his new administration.

For his liberal enemies, Reich was a lightning rod for criticism because of his anti-Castro fervor and his role in the bitter ideological battles of the 1980s. During the Reagan years he worked on public diplomacy--otherwise known as propaganda--against Nicaragua's Marxist government. It was then that he became enmeshed in the Iran-contra scandal for his relatively minor role in what one congressional investigation called "covert propaganda" promoting the contra guerrillas.

The 1980s scandals only partly explain what Reich calls the "vitriol" that has washed over him in the last two years. Reich is one of the most undiplomatic people in charge of diplomacy and he seems to revel in that role. He particularly loves to direct interviewers to his cover story in NEWSWEEK's Latin American edition, which carried the headline "Bush's Point Man: Can This Right-Wing Ideologue Douse the Flames in Colombia and Venezuela?"

When I spoke to him in the middle of his confirmation battles earlier this year, Reich railed against his liberal critics, describing them as "completely wrong about Latin America for many decades". But, he added with a glint of mischief, "We live in a democracy. People have a right to be wrong."

Who did he have in mind? Well, chief among Reich's eternally "wrong-headed" critics is Senator Christopher Dodd, the Connecticut Democrat. Dodd told the Wall Street Journal that Reich was "not qualified" for the job, citing his lack of "good management skills [and] sound judgment" amid several other character flaws. In January, President Bush kept Reich in place as a recess appointment, but that ran out when Congress left town last month.

If Reich was praying for salvation from the newly Republican-controlled Senate, those hopes have been dashed in recent days.

Richard Lugar, the Indiana Republican who will take over the Senate's powerful foreign relations committee next month, told reporters that he had recently delivered a blunt message to Powell.

"You are tied up with Iraq and North Korea and the Palestinian-Israeli situation," he told Powell. "South America is big--you have these potential failures of the economies in Argentina and Brazil. You need a big lever." "You mean Otto is not a big lever?" Powell asked.

"Yes," shot back Lugar.

"Maybe the president wants to use up a lot of political capital calling everybody on the committee," Lugar explained afterwards. "But I don't think that would be a good idea."

Among those lobbying hard to save Reich is the president's brother, Governor Jeb Bush of Florida, whose Cuban-American supporters have long championed Reich inside the administration.

But for Latin America's diplomats in Washington, the only question is when--not if--Reich will be replaced. The way this parlor game is being played out, Reich could still end up in the president's National Security Council, a White House position that does not need Senate confirmation. Ambassadors speculate that could pave the way for John Maisto, currently senior director for the western hemisphere in the White House, to move to a senior State Department position. Or another high-profile career diplomat, such as Anne Patterson, U.S. ambassador to Colombia, could take over Reich's old job.

The name game might be fun inside the Beltway, but to a region on the brink it all looks deadly serious. Reich's fate is as uncertain as U.S. policy towards its own hemisphere. Will this administration back a regional economic restructuring? Will it stand on the sidelines while the political crises play themselves out?

For a White House that prides itself on forging a coherent foreign policy, the situation in Latin America looks almost Clintonian. Never mind where Otto is. Where's the administration?

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