Roll Over, Monroe

From Tijuana to Tierra Del Fuego, American rivals are making rapid inroads into a region that the United States has long regarded as its natural sphere of influence. Though the United States remains Latin America's largest trading partner by far, Russia, China and Iran are cutting deals, opening up new markets and building diplomatic ties. Even North Korea has forged diplomatic relations with Guatemala and the Dominican Republic in recent weeks as Washington's focus remains stuck on the Middle East. "The Monroe Doctrine that the United States has had for nearly two centuries has completely gone out the window," says Alejandro Sánchez, a research fellow at the Washington-based Council on Hemispheric Affairs.

That frank recognition shows just how much U.S. clout has waned in Latin America in today's global era. In the early 20th century, Washington regularly sent in Marines to prop up friendly dictators and defend U.S. companies in the region. During the cold war, U.S. administrations used the Organization of American States to fight Latin communists. After the collapse of the Soviet Union in 1991, the United States pulled back on the hardball geopolitical games as Latin governments rushed to embrace a Washington-backed free-market economic model. Clinton administration officials concentrated on counternarcotics initiatives and the promotion of free trade, and George W. Bush kicked off his first term heralding the dawn of a century of the Americas.

Now Latin America is free to pick its friends, and the rise of populists and pragmatists is sounding the death knell for U.S. hegemony. In Venezuela Hugo Chávez is pushing to create a multipolar balance of power designed explicitly to diminish Washington's authority. Soaring oil prices helped solidify his clout, and while many of Chávez's neighbors are skeptical of him, they are aggressively diversifying away from the United States for their own reasons. In recent years Chile has ratified its status as Latin America's leading economic showcase by signing free-trade agreements with China, South Korea, Japan and the European Union. In 2005, a summit in Brazil drew delegations from 22 Arab countries and a dozen Latin American nations. Over the past 15 months, Iran's President Mahmoud Ahmadinejad made three trips to Latin America and signed dozens of cooperation agreements with Chávez. Last year Russia sold $3 billion worth of Russian arms to Chávez, Moscow's best client in a region that is now its third largest arms market worldwide. Caracas has also announced plans to buy five submarines for an undisclosed total price estimated at between $2 billion and $3 billion.

The momentum has shifted away from the United States, particularly to China. In November 2004, President Hu Jintao visited Argentina, Brazil, Chile and Cuba, promising to invest $100 billion over 10 years. Much of that has failed to materialize, in part because the Chinese are working on a longer time frame than many expected, says Shanker Singham, an international trade lawyer in Washington, D.C. But China has a ravenous appetite for Chile's copper, Brazil's iron ore and Argentina's soybeans, and since 2001 its bilateral trade with Latin America quadrupled to $78.8 billion, overtaking Japan in 2004 as the region's third largest trad-ing partner after the United States and the EU. Now Americans are beginning to lose markets for their exports, says Claudio Loser, president of the Washington-based economic consulting firm Centennial Group Latin America. "And they're losing influence," he says, "in the sense that the more Latin America diversifies its exports and imports, the less the United States can influence matters from an economic point of view."

Washington is trying to make up for lost time. The Bush administration signed free-trade agreements with three Latin American countries in the past 20 months, which it argues are vital to contain the region's avowedly anti-American regimes. U.S. Trade Representative Susan Schwab says the agreements are "not just in our national economic interest but are also in our foreign-policy interest." Yet with Democrats in particular scrutinizing pending deals with Colombia and Panama, and presidential candidates Hillary Clinton, Barack Obama and John Edwards sounding protectionist notes, it's not clear that Washington is on course to regain its lost momentum. James Monroe may be rolling in his grave. But the fact is that most Latin Americans don't miss him.