In a blow to US interests in Latin America, Colombia last month elected a former Marxist guerrilla as its next president. Voters in Mexico, Chile, Bolivia, Argentina, Chile, Peru and Honduras are turning to left-wing populists to solve their economic problems. This strengthened the Marxist troika of Cuba, Venezuela and Nicaragua.
The administration has relied heavily on foreign aid — in large part — to alleviate the region’s poverty and advance American interests. Obviously, this strategy failed.
Last March, President Biden called Colombia “the keystone, in my opinion, of the whole hemisphere, north and south”. US assistance reflects Colombia’s importance to US security. In 2020 alone, Bogota received $813 million in aid to fight drug trafficking, feed 2 million Venezuelan refugees, and improve the agriculture and health, environment, and food sectors. governance of the country, as well as mine clearance. Over the past five years, Colombia has received $3 billion in aid from Washington and more than $4 billion from the World Bank and the Inter-American Development Bank.
This aid cycle is repeated in country after country. Take El Salvador, Honduras and Guatemala. The three small states of the Northern Triangle have a combined population of just 33 million, but since 2015 they have received $3 billion in US foreign aid and billions more from multilateral banks. These figures exclude resources from Europe, faith-based donors, foundations and corporate philanthropy. They also do not include the $22 billion in remittances (mostly from the United States) received in 2020.
Then there are the Andean states of Peru, Bolivia and Ecuador. Since 2015, they have received nearly $16 billion in foreign aid and soft loans.
Why have these massive aid flows failed to stem the poverty at the root of this leftist push? Because of Mr. Biden’s disastrous climate policies. These policies caused the price of fertilizers, electricity and transportation to skyrocket, triggering runaway inflation that plunged Latin Americans into poverty and hunger.
As oil prices rise, resource-rich Latin America should generate substantial revenues. Instead, their export earnings are shrinking as global investors and multilateral banks bow to political pressure from the White House and shut down their fossil fuel portfolios. This, combined with the region’s socialist policies that encourage capital outflows and discourage foreign investment, has created a veritable storm of poverty.
Mexico now derives from oil exports only half of what it spends to subsidize domestic fuel prices. Colombia, South America’s biggest oil producer and second-largest coal producer, sees its new green president promising to phase out oil and mining altogether – an approach his predecessor rightly called “absolute suicide”. Banks have halted funding for oil exports to Ecuador, Latin America’s fifth-largest oil producer, amid violent protests by environmental extremists demanding fuel subsidies.
The result is billions in lost export revenue and billions more in import costs for fuel, food and everything else because of the climate agenda. Poverty in the hemisphere is increasing, leading to more political unrest. Nevertheless, last month the industrialized countries of the Group of Seven, including the United States, pledged to end public financing of fossil fuel projects abroad, a true death sentence for poor countries rich in resources.
Mr. Biden’s climate illusion extends to foreign aid. The U.S. Agency for International Development has announced that it will “mobilize $150 billion in public and private climate finance by 2030” from a magic pot. USAID “is now a climate agency”. The main US foreign aid agency is colluding with green energy activists to destroy the region’s development prospects, tie up trillions of dollars of productive industrial assets in developing countries and exacerbate food insecurity . All of this is done in response to the West’s net zero carbon emissions dictate to the developing world.
The financial blow of the climate agenda on poor countries is well known. At the climate summit in Glasgow, Scotland, last year, it was estimated that “more than $750 billion a year” would be needed to cover the costs of developing countries transitioning to fossil fuels. Renewable energy, on the other hand, will not propel developing countries to prosperity. The solution? More help!
Congress shouldn’t reward failed policies with more help. This should end the climate crusade that threatens the security of the American hemisphere. Yet the House Appropriations Committee recently allocated $64.6 billion for global foreign aid spending, a 15% increase from last year. Worse still, spending is doubling on aid strategies that hurt economic growth, earmarking $3.6 billion “to address the climate crisis.”
Colombia is expected to receive an additional $487.4 million in economic and development aid. Congress should reconsider the wisdom of sending more aid to a country that plans to cut its main source of foreign revenue. Indeed, any aid to the region should be conditional on countries’ commitments to pro-growth strategies, otherwise our aid will have no impact on poverty reduction in the hemisphere.
In the end, everyone loses to Mr. Biden’s climate dogmatism. Latin Americans are being forced to bear the financial brunt of the clean energy transition, while American taxpayers shell out billions in aid that cannot remotely offset the economic losses caused by the climate agenda.
• Max Primorac, former acting chief operating officer of USAID, is the acting director of the Allison Center for Foreign Policy at The Heritage Foundation.