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Bush and the Latin Club

When he took office, President Bush came in like a lion, vowing to end an era of financial bailouts of other countries. Such largess doesn't work, it rewards profligacy and excessive risk-taking, it erodes faith in markets, and so on, he argued.

This week, Mr. Bush was lamblike, and agreed to let the International Monetary Fund bail out Latin America's biggest economy, Brazil, with the largest IMF loan ever, $30 billion.

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Just what political pressures and burdens of leadership turned him around is still not clear. It could be the possibility of US banks losing some $20 billion if Brazil tanks. Maybe Brazilians made a good case that the two leading presidential candidates, both leftists, won't buck IMF economic discipline once one of them is in office next year.

Or perhaps the IMF itself has learned from past bailout mistakes in Indonesia and elsewhere and tailored a viable recovery for Brazil, which has already done much under conservative leaders to curtail spending.

And then, too, Bush must realize by now that more and more Latin Americans are losing faith in past promises of better economies through more open markets.

With his new authority from Congress to negotiate trade pacts, the president needed to save Brazil so he could more quickly create a free-trade zone for the Americas.

Just as the European Union is pushing itself east to include former communist states, so, too, must the United States help stabilize its southern neighbors through a regional, NAFTA-like trade deal.

But Bush is not out of the bushes yet. Argentina, having defaulted on debt to official creditors last year, could default to private creditors soon. Yet its politics still is mired in spend, spend, spend. The US can afford to be a lion toward countries that won't join the emerging club of economically responsible nations.


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