�The International Monetary Fund on August 3 offered Brazil a $15 billion credit line but told Argentina no more money was coming. The `reward Brazil, punish Argentina� approach, prompted by mixed signals from the United States, the Fund�s main contributor, has perplexed Latin American analysts.

�`The Fire Department has been called into South America, but instead of attacking the source of the conflagration, they�ve gone to the apartment on the next floor and given the people there a fire extinguisher�, said Gustavo Franco, an ex-president of Brazil�s central bank.

�Mr. Bush and his team came to the White House with reservations about the role of the IMF and the notion of bailouts. That is a sharp contrast with the Clinton administration, which worked with the fund to design emergency rescue packages for Mexico in 1994 and for Brazil in 1999.

�This time, the US and the Fund seem to have decided that Brazil, the world�s eighth largest economy, cannot be allowed to founder. But Argentina is seen as less conscientious, and far less important. (This isn�t new: Henry A. Kissinger is said to have once dismissed Argentina as `a dagger pointed at the heart of Antarctica.�)�

This is but a vignette of what seems to be shaping in Washington�s foreign policy. Disheartened by the spread of financial distress throughout the excessively deregulated and globalized world - no engine is left to pull the stalled cars out of the ditch - the lone superpower is turning its back on the mess to which it contributed so imperially, and relapsing into its historic isolationism. Or is it that it hopes to control the planet less expensively from outer space?

�In mid-July Condolezza Rice, the White House�s National Security adviser, said that no new assistance was in the works for the Argentine. Another administration official argued. `They have a plan, it�s a workable plan, and now they have to cut spending and put policies in place that attract investors. Nobody can do that for them.��

�Treasury Secretary Paul H. O�Neill, though, was telling a damaging story to investors. With his lack of sympathy and knowledge, he has helped torpedo investors� interest. `They don�t have any export industry to speak of at all. And they like it that way. Nobody forced them to be what they are,� he told the British Economist. Argentine�s supporters have noted that the US, for all the talk of free trade, continue to placate domestic lobbies with high tariffs on many Argentine products.

�But there is also a feeling of betrayal. No Latin American country�s foreign policy has been more aligned with that of the US over the past decade than Argentine�s. The country participated in the Gulf War and tied its currency to the US dollar until recently, requiring a US dollar for every peso issued. That hardly helped exports.�

The Bush administration has still to realize how intimately all Latin American countries empathize when any of them is perceived to be wronged at the hands of the gringos. And it takes little for economic difficulties in Tierra del Fuego to work their way to the American border - in sympathy rather than by strictly economic sequence.

�At the moment, the Bush administration doesn�t have a policy and the political will to put the money that is needed on the table,� said Mr. Franco, the former Brazilian central bank chief. `Without those two things in tandem, I don�t see a solution. We�re thankful here in Brazil for the $15 billion we�ve been offered,� but it doesn�t resolve anything.��

William Krehm

�from Economic Reform, September 2001