[A-List] Petras - US/Latin American relations

[Tony B.]

US-Latin American Relations

A Time of Rising Militarism, Protectionism and Pillage

By James Petras

Introduction

May 14, 2009 "Information Clearing House" -- One of the most striking aspect 
of contemporary US-Latin American relations is the profound divergence 
between the hopes, expectations and positive image of the Obama regime and 
the policies, strategies and practices which are being pursued. Many 
so-called progressive North American commentators and not a few Latin 
American writers have ignored the most elementary features of US foreign 
policy, and focused exclusively on the highly deceptive rhetoric of "change" 
and "new beginnings." A serious understanding of US foreign policy toward 
Latin America requires a discussion of the main objectives of the Obama 
regime, the global priorities of imperial policy in times of multiple wars 
and world depression.

US tactics and strategy toward the region becomes relevant, only if we take 
account of the recent historical, economic and political changes in Latin 
America and the evolving political alignments.

A realistic assessment of US policy by necessity must go beyond policy 
pronouncements and Washington's 'projection of power' to an analysis of its 
existing capabilities and the resources available to implement Obama's 
agenda for Latin America. In evaluating Washington's policy the key is to 
analyze its coherence and feasibility in light of its political diagnosis of 
Latin America. This provides a basis for determining the compatibility or 
conflict of interests between the two regions. A basic question arises: How 
do the Obama regime's policies, objectives, and available resources square 
with the development needs of different Latin American countries in a time 
of deepening world depression?

To answer that question, requires we examine the recent policies and 
political alignments in Latin America. It would be utterly foolish to over 
or underestimate the degree of US "hegemony" or Latin American "autonomy," 
especially in light of major shifts in power relations over the past two 
decades, and continuing today.

Latin America's relations with the US are decisively influenced by internal 
events, including class conflicts, which determine the correlation of 
political forces, as well as external events such as US intervention and 
outward expansion, and world market conditions. The shifts in Latin America's 
political-economic relations can be divided into distinct periods, which 
provide an overview of the relative degree of hegemony and autonomy with 
regard to the US empire.

The Changing Contours of US-Latin American Relations: 1990-2009

Any "general overview" of US-Latin American relations is subject to 
exceptions and variations in particular country experiences, even as it 
highlight 'dominant trends' in the region.

The first two decades from 1980-2000 establish certain parameters for recent 
policies particularly the conflicts and divergences of interests.

The period from 1980-1999 was defined for Washington and Wall Street as the 
'Golden Age' in US-Latin American relations. The regimes accepted and 
promoted US hegemony, following the precise terms of the IMF, the Washington 
Consensus and a US centered model of capital accumulation.

This included the lifting of trade barriers, the privatization of public 
enterprises (including banks, oil wells, mines, factories and telecoms) and 
their subsequent denationalization or transfer to US and European 
multinational corporations (MNCs).

The US and EU took over these public enterprises at exceptionally favorable 
prices and terms, which led to the massive transfer of profits, interest and 
'rent' payments to the MNCs and provided them with extensive leverage over 
the entire financial/credit-system and access to local savings in the Latin 
American countries.

On the political level, the incumbent regimes embraced and promoted the US 
sponsored free market ideology known as "neo-liberalism" and backed US 
diplomatic and political intervention in the region as well as overseas.

The plunder of public treasuries and private savings by the MNCs and the 
resulting concentration of wealth and political power polarized society and 
precipitated major political economic crises. This led to popular upheavals 
throughout most of the region during the period from 2000-2004. Latin 
America witnessed the ousting of several US client regimes, serious 
widespread questioning of the free market ideology and a growing potential 
for radical structural changes.

As a consequence of the new correlation of forces, US political power 
declined and its influence was largely confined to political and economic 
elites at the margins of governance and under political siege from mobilized 
movements and disaffected electorates.

The 'third period' reflected 'hybrid regimes', which spoke to the populist 
demands and critiques of 'neo-liberalism' (empire-centered economic 
structures and policies) without actually reversing any of the unpopular 
structural/property legacies imposed by the earlier client regimes. The rise 
and consolidation of a wide range of highly differentiated 'center-left 
regimes' benefited from world economic conditions, especially high commodity 
prices, which facilitated social welfare programs and economic recovery as 
well as the relative 'decline' of US political power. This decline was 
intensified by the US involvement in a series of prolonged wars in the 
Middle East and South Asia and its 'global war on terror'.

The 'third period' featured an increase in the relative autonomy of Latin 
America aided by huge windfall profits from exceptional prices and expanding 
markets in Asia, and from the regional political-economic initiatives of 
Venezuela's Chavez government.

The end of the primary commodity boom and the emergence of a world-wide 
depression mark the beginning of the fourth period. Two contradictory 
phenomena impacted on US-Latin American relations. Because the US was the 
epicenter of the world economic crisis and its financial and investment 
institutions turned insolvent, finance and investment fled or were 
repatriated, weakening the US presence in Latin America and its economic 
leverage in a region with huge foreign reserves. Secondly, the 
over-extension of US military forces in other regions (Middle 
East/Asia/Eastern Europe) lessened its capacity for military intervention in 
Latin America. While developments in the world-economic and military 
situation opened opportunities to exercise greater Latin American autonomy, 
the decline of export markets, the drying up of credit markets and foreign 
capital inflows exposed the vulnerability of the 'center-left' regimes with 
their dependency on 'export strategies'. The contradictory features of the 
'fourth period' shaped the framework for contemporary US-Latin American 
relations and define some of the key issues facing Latin American rulers and 
the Obama regime.

Rising Militarism, Financial Protectionism and Declining Trade

The policies of the Obama regime toward Latin America are negatively framed 
by its three top policy priorities. The Obama regime's foreign policy builds 
and expands the military-driven empire building of his predecessors. 
Contrary to the hopes and expectations of many of his progressive and 
leftist advocates of peace, Obama has staffed his regime with committed 
militarists, Zionists and Cold Warriors. The major difference between Obama 
and Bush's policy is the diplomatic language, which accompanies empire 
building and the scope and depth of military activity. Obama has adopted a 
rhetoric of 'reconciliation,' 'negotiation' and 'change' as opposed to Bush's 
overtly bellicose rhetoric of confrontation, even as Obama has accelerated 
and extended military activities beyond the Bush regime.

A systematic analysis of the Obama regime's policies reveals the overriding 
emphasis on projecting military power as the main instrument for sustaining 
the empire throughout the world.

South Asia

The Obama regime has increased US military forces in Afghanistan by over 
40% - by 21,000 troops added to the current 38,000 - and increased financing 
for doubling the size of the Afghan mercenary army and police to over 
200,000. Washington has extended the field of warfare in Pakistan, escalated 
its bombing attacks in the Swat Valley on a daily basis and increased 
cross-border commando operations. The Obama regime has formally extended the 
US war-zone deeper into Pakistan territory and extended its reach into 
Pakistan intelligence institutions.

Despite Obama's intense pressure on the European Union and its allies and 
clients around the world, few countries have pledged combat forces in 
support of Obama's military strategy. Just as during the Bush era, Obama 
unilaterally pronounces a major military escalation and then expects his 
allies to follow. The Obama military and intelligence apparatus has moved 
even more intrusively into Pakistani institutions with the clear intent to 
purge nationalist officers and select officials who will more aggressively 
repress the communities, organizations and leaders opposed to US 
intervention in Pakistan, Afghanistan and the Middle East. Iraq

The contrast between Obama's diplomatic rhetoric of military withdrawal and 
military escalation is most blatant in the case of Iraq. The Obama regime 
has extended the time frame of US military occupation and increased funding 
for permanent military bases and related infrastructure. His military 
strategy envisions a massive mercenary Iraqi army and police force to 
control the population and repress any nationalist resistance. Obama will 
double the number of Iraqi mercenaries spread throughout the country under 
the Pentagon's command.

Iran

The most striking policy adopted by the Obama regime toward Iran is his 
adding new and even harsher sanctions to the existing economic embargo. 
Obama continues to threaten Iran with a pre-emptive military assault in line 
with the contingency war plans developed by top Pentagon officials held over 
from the Bush regime. In pursuit of this saber-rattling posture, Obama 
appointed two of the most bellicose Israeli-American ideologues, includng 
Dennis Ross, as chief emissary to Iran and Stuart Levey to the Treasury in 
charge of imposing economic sanctions. Washington is making a major 
diplomatic effort to isolate Iran, through negotiations with Syria, Russia 
and China. In the face of these 'facts on the ground' Obama's public 
rhetoric about offering Iran a 'new policy,' is blatant propaganda stunt. 
The massive US air and naval armada off the coast of Iran continues to 
threaten Teheran with a blockade or even massive air and naval strikes. The 
Obama regime continues to fund and train terrorist groups to infiltrate Iran 
from their bases in Iraq and Pakistan and to attack Iranian government 
facilities and officials. Israeli military threats to strike Iran are made 
more probable with the Obama regime's transfer of new military technology, 
including the most advanced anti-missile system and 'bunker-buster' bombs 
designed to destroy underground Iranian government facilities.

Palestine/South Lebanon/Syria

The Obama regime's military policy is clearly evidenced in its unconditional 
backing of Israel's murderous military assault on Gaza, its selective 
assassination of Palestinian activists in the West Bank and its threats 
against Hezbollah.

The Obama regime, together with both houses of Congress, has backed every 
Israeli act of war- including its brutal economic blockade of Gaza and the 
systematic eviction of Palestinian residents in occupied East Jerusalem and 
the West Bank. The Obama administration is deeply infested with prominent 
pro-Israel Zionists at all levels precluding any change in Washington's 
robust military ties even with the far right militarist Netanyahu-Lieberman 
regime.

East Africa

Obama's regime continues to pursue a confrontational policy toward Muslim 
Sudan by funding the armed separatists in South Darfur and by a recently 
reported air attack on a Sudanese military convoy. In the face of its failed 
military intervention in Somalia by its Ethiopian proxy, Washington has 
opted for a new Somali client coalition backed by African mercenaries from 
Uganda. Russia/Eastern Europe

Under Obama, the provocative military encirclement of Russia continues via 
the recruitment of new client NATO 'members' among the former Soviet 
Republics and the building of bases on the very frontiers of Russia. Obama 
combines a double discourse of diplomatic conciliation while building new 
military bases, missile sites and advanced radar stations from Poland 
southward toward Ukraine and Georgia. Washington's 'diplomatic overtures' to 
Russia are driven by its logistical needs in Iraq, Afghanistan and Pakistan 
and especially its war preparations toward Iran. The Obama regime is 
demanding that Russia provide logistical support for the US/NATO 
Afghan-Pakistan war and occupation while demanding Russia cancel its sale of 
advanced missiles as well as its nuclear power plant contract agreement with 
Iran in exchange for US 'good will'...

China

Although the Obama regime is acutely aware of its dependence on China's 
continued financing of the US economic deficits, it has nevertheless engaged 
in a high risk naval confrontation in China's off shore economic zones. 
Recent Pentagon reports on Chinese military preparedness are laced with 
lurid Cold War rhetoric designed to inflate China's 'threat' to US dominance 
in Asia and its 'lack of transparency'. Once again, the Obama regime 
presents the double discourse of friendly diplomacy and aggressive 
militarist policies.

China faces a US military encirclement along an arc of US bases from 
Afghanistan, Pakistan, Japan, to South Korea, as well as a new military 
doctrine labeling China a 'threat' to be 'contained' in Asia.

Obama's Latin American Policy

To decipher the real content of the Obama regime's policy to Latin America 
one needs to look at the foreign policy priorities, the allocations of 
financial resources and public policy commitments and ignore its 
inconsequential diplomatic rhetoric. The first major pronouncement, in line 
with its global military policies, was to militarize the US-Mexican 
frontier, allocating nearly one-half billion dollars in military and related 
aid to the right wing Calderon regime. The entire focus of White House 
policy toward the Mexican and Colombian regimes over the problem of 
narcotics and narco-violence is military -ignoring its socio-economic 
structural roots:

Millions of young Mexican peasant and small farmers driven into bankruptcy, 
unemployment and poverty by the North American Free Trade Agreement NAFTA), 
created a large pool of recruits for the narco traffickers.

The expulsion of hundreds of thousands of Mexican immigrant workers from the 
US and the new militarized borders has closed off a major escape for Mexican 
peasants fleeing destitution and crime. In contrast to the formation of the 
European Union, which provided tens or billions to the less competitive 
countries, like Spain, Greece, Portugal and Poland, entering the European 
Union, the US has provided Mexico with no compensatory funds to upgrade its 
productive competitiveness and provide needed employment for its people.

The highly militarized Colombian regime, notorious for its violation of 
human rights, is currently the biggest recipient of US military aid in Latin 
America. Under Plan Colombia, the US financed counter-insurgency program, 
Bogota has received over 5 billion dollars, the most advanced military 
technology and thousands of American military advisers and sub-contracted 
mercenaries. The Obama's support for the right-wing Colombian regime is his 
response to the emergence of democratically elected populist and radical 
governments in Ecuador and Venezuela.

Obama's policies toward Latin America are driven by his extension of the 
military defense/priorities of the Bush Administration, including the 
economic embargo of Cuba and its virulent hostility toward Venezuelan 
nationalism. There are no new economic initiatives. Beyond the rhetorical 
support for free trade, Obama upholds past quotas and tariffs on more 
competitive imports from Brazil, even adding new protectionist measures 
against Mexican trucks and truck drivers.

Obama's relentless pursuit of military-driven empire building while in the 
midst of an ongoing and deepening domestic economic depression forms the 
basis for understanding Washington's contemporary relation with Latin 
America today. His regime's military approach to Latin America is reflected 
in his inability or unwillingness to allocate economic resources and 
underscores his concern to sustain two major US clients, Colombia and Mexico 
through military aid programs. Obama's limited interest and sparse 
commitment of economic resources to Latin America reflects the very low 
foreign policy priority it has in the current White House. Latin America is 
a fifth level priority after the US domestic economic depression, the Middle 
East and South Asian wars, coordinating economic policies with the European 
Union and formulating economic strategies and military relations with Russia 
and China. With these priorities, the Obama regime has little time, 
interest, or programmatic offerings to help Latin America cope with the 
onset of the economic recession.

At the most basic level the Obama regime is following a three-fold strategy 
of (1) retaining support from rightist regimes (Colombia, Mexico and Peru); 
(2) increasing influence on 'centrist regimes' (Brazil, Argentina, Chile, 
Uruguay and Paraguay); and (3) isolating and weakening leftists and populist 
governments (Cuba, Venezuela, Ecuador, Bolivia and Nicaragua).

What is most striking about the supposedly "progressive" Obama regime's 
policy for Latin America are the continuities with the previous reactionary 
Bush administration in almost all strategic areas. These include:

(1)Latin America's very low priority in US global policy;
(2)The US emphasis on military ("security") drug enforcement collaboration 
over any long term socio-economic poverty alleviation and drug addiction 
treatment programs;
(3)Its close collaboration with the most rightwing regimes in the region 
(Mexico and Colombia);
(4)The continuation of the US economic embargo of Cuba, despite the loss of 
its last two Latin American backers;
(5)Obama's double discourse of talking free markets while practicing 
protectionism;
(6)The US financing and strengthening the role of the IMF as an instrument 
of imperial expansion;
(7)The US policy of driving a wedge between 'centrist regimes' (Lula in 
Brazil, Fernandez in Argentina, Vasquez in Uruguay and Bachelet in Chile) 
and 'left and center-left nationalist regimes', (Chavez in Venezuela, 
Morales in Bolivia, Correa in Ecuador and Ortega in Nicaragua) and (8)Its 
support for separatist regional elites' actions to destabilize center-left 
governments operating from their traditional far right-wing bases in Sta 
Cruz (Bolivia), Guayaqul (Ecuador) and Maracaibo (Venezuela).

In other words the Obama regime has embraced overall the strategic agenda of 
the Bush Administration essentially intact, while making several secondary 
changes having to do with adaptations based on the decline of US power. In 
addition, Obama has facilitated a few major negative changes, which go 
further than the Bush administration in harming Latin America's financial 
and trading position. While reiterating the anachronistic demands for Cuba 
to convert to capitalism (dubbed a "democratic transition") as a condition 
for ending the US embargo, Obama has slightly eased travel restrictions for 
US-based Cuban families to visit relatives in Cuba and send them money. The 
State Department relies less on confrontational diplomatic language and has 
made overt gestures to centrist regimes, including White House meetings with 
Lula Da Silva (March 2009) and Vice President Biden's attendance at a 
meeting with centrist Presidents (March 27-28, 2009) in Chile. Obama's 
resort to "soft power", which is not backed by any new economic initiatives 
and which continues the basic policies of his predecessor has not gained him 
new allies.

However, there is one set of 'changes' resulting directly and indirectly 
from the US depression and Obama's gigantic deficit financing, which has a 
very negative impact on Latin America's economic recovery. The Obama regime 
is absorbing most of the Hemisphere's credit to aid the financial bailout. 
This policy makes it difficult for Latin American exporters to finance their 
sales. Moreover, the Obama regime's demands on the financial sector to 
expand their capital reserves and to direct their lending to the American 
domestic market has led banks to repatriate capital from their Latin 
American subsidiaries at the expense of Latin American borrowers - extending 
and deepening the recession in Latin America.

The Obama regime's diplomatic and linguistic changes and affirmation of free 
trade have little substance: the White House continues the double discourse 
of talking up "free trade" while introducing a new and more virulent 
financial protectionism. In addition to the twenty billion dollar subsidies 
to agricultural exporters, the Democrats have pushed the "Buy American" 
provisions in Federal procurement policy and multi billion dollar subsidies 
to the auto industry.

Latin America faces a rising tide of US protectionism as the Obama regime 
reacts to the domestic economic depression by forcing Latin America to seek 
new trading partners, to protect their internal markets and to seek new 
sources for trade and credit.

Latin America Faces the World Crisis

Throughout Latin America, the economic depression is wrecking havoc on the 
economy, the labor market, trade, credit and investment. All the major 
countries in the region are headed toward negative growth, and experiencing 
double digit unemployment, rising levels of poverty and mass protests. In 
Brazil in late March and early April, a coalition of trade unions, urban 
social movements and the rural landless workers movement convoked large 
scale demonstrations - including participation from the union confederation, 
CUT, which is usually allied with Lula`s Workers Party.

Unemployment rates in Brazil have risen sharply, exceeding 10%, as massive 
lay-offs hit the auto and other metallurgical industries. In Argentina, 
Colombia, Peru and Ecuador, strikes and protests have begun to spread in 
protest over rising unemployment, the increase of bankruptcies among 
exporters facing world-wide decline in demand and unable to secure 
financing.

The more industrialized Latin American countries, whose economies are more 
integrated into world markets and have followed an export growth strategy, 
are the ones most adversely affected by the world depression. This includes 
Brazil, Argentina, Colombia and Mexico. In addition, countries dependent on 
overseas remittances and tourism, like Ecuador, the Central American and 
Caribbean countries and even Mexico, with their 'open' economies, are badly 
hit by world recession.

While the US financial collapse did not have a major and immediate impact on 
Latin America- largely because the earlier financial crashes in Argentina, 
Mexico, Ecuador and Chile led their governments to impose limits on 
speculation - the indirect results of the US crash, especially with regard 
to the credit freeze and the decline of world trade, has brought down 
productive sectors across the board. By mid-2009, manufacturing, mining, 
services and agriculture, in the private and public sector were firmly in 
the grip of a recession.

The vulnerability of Latin America to the world crises is a direct result of 
the structure of production and the development strategies adopted the 
region. Following the 'neo-liberal' or empire-centered 'restructuring' of 
the economies which took place between the mid-1970s through the 1990s, the 
economic profile of Latin America was characterized by a weak state sector 
due to privatization of all key productive sectors. The de-nationalization 
of strategic financial, credit, trading and mining sectors increased 
vulnerability as did the highly concentrated income and property ownership 
held mainly by small foreign and domestic elite. These characteristics were 
further exacerbated by the primary commodity boom between early 2003 until 
the middle of 2008. The regimes' further shift toward an export strategy 
relying on primary products set the stage for a crash. As a result of its 
economic structure Latin America was extremely vulnerable to the decision 
taken by US and EU policy makers in charge of key economic sectors. 
De-nationalization denied the state the necessary levers to meet the crisis 
by reversing the direction of the economy.

Structural changes imposed by the IMF/World Bank and its domestic 
'neo-liberal' ruling class partners 'opened' the countries to the full blast 
of the world depression while dismantling the very state institutions which 
could have protected the economy or at least avoided the worst effects of 
the crisis.

Privatization led to the concentration of income, lessened local demand and 
heightened dependence on export markets while depriving the state of levers 
to control investment and savings, which could counteract the decline of 
overseas inflows of capital and the collapse of its overseas markets.

Denationalization facilitated the outflow of capital especially in the 
financial sector, deepened the credit crises and adversely affected the 
balance of payments. Foreign ownership made Latin American countries subject 
to strategic economic decisions made by overseas economic elites looking at 
the costs and benefits to their economic empires. For example, in Brazil the 
closing of US-owned auto factories and the mass firings of workers are based 
on 'global market' cost calculations, totally divorced from the needs of the 
Brazilian labor market.

The 'export strategy' was dependent on the state subsidizing the expansion 
of agro-business plantations producing staples for export markets. This came 
at the expense of small farmers, landless peasants and rural workers, 
weakening the domestic market as an alternative to a collapsing overseas 
markets, increasing dependence on food imports and undermining food 
security.

Export strategies depend on holding down labor costs, wages and salaries, 
thus weakening domestic demand and making employment dependent on the 
fluctuations of overseas demand. Specialized production in a vast complex 
international division of labor is central to the multinational corporation. 
This has dramatically reduced the national diversification of industry and 
integral manufacturing where all components of a product are produced within 
a single geographic region. Under the current division of labor, a Brazilian 
manufacturer of car brakes is totally dependent on external demand 
determined by the MNC. The strategic disadvantages of this 'specialization' 
in a global capitalist chain of production have become strikingly evident in 
this depression.

Despite these deep structural weaknesses, inherited from previous regimes, 
the current center-left regimes in Latin American have not moved toward any 
structural changes to decrease their economic vulnerabilities, with the 
partial exception of Chavez's Venezuela.

The March 2009 summit of self-styled 'third way' regimes (plus the 
Obama-Biden and British Labor governments) met in Santiago, Chile where they 
studiously avoided even mentioning the flawed internal structures which have 
brought on the economic crises and promise to deepen it.

The consensus proposals of the "third way" regimes repeated anachronistic 
appeals for greater capital flows divorced from reality of the current 
crises. They called on the US, EU and Japan to resurrect collapsing markets 
and to promote trade. Specifically the Santiago meeting called for increased 
funding for the Inter American Development Bank (IDB, BID in Spanish), and 
encouraged the G20 leaders to promote stimulus packages and to pledge 
against protectionism. They called on Latin American regimes to increase 
spending and liquidity, to lower interest rates and to prop up, financial 
institutions and promote exporters.

The center-left regimes meeting in Santiago made no mention of plans to 
increase domestic demand through intervention in the labor market by 
preventing industrialists from firing workers. They did not mention 
increasing the minimum wage. They avoided any discussion on increasing 
demand in the rural areas through income generating agrarian reforms. They 
did not consider establishing publicly funded import substitution 
industrialization, which could generate employment for workers dismissed 
from export sectors.

In the face of rising food prices, no provisions were proposed to subsidize 
low income families, the unemployed, children and pensioners on fixed 
income. The center-left regimes' proposals demonstrated high structural 
rigidity and their incapacity to break with failed strategies tied to the 
powerful agro-mineral export ruling class. Instead their proposals reaffirm 
their dependence on the 'expansionary' stimulus programs of the ruling 
classes in the US and Europe. Their repeated calls for 'free trade' and 
appeals to avoid 'protectionism' fell on deaf ears as all the imperial 
countries follow a dual policy of promoting free trade for their dynamic 
overseas multinationals and protectionism for their financial and troubled 
manufacturing sectors at home.

While eschewing any structural domestic changes that would favor unemployed 
workers, peasants, public employees and small businesses, they persist in 
following policies favoring the bankers, export elites and multi-national 
corporations. The main economic focus of Latin America's center-left regimes 
is not internal reform; it is the pursuit of new overseas markets and 
investors.

In early April, Latin American leaders and their business elite met with 
their Arab counterparts in Qatar to expand investments and trade through 
joint ventures. Similar missions to China, Russia and Japan have led to 
investments almost exclusively in capital intensive extractive industries 
(petroleum and minerals) and mechanized export agriculture. Inter-regional 
trade via MERCOSUR has been highly asymmetrical as evidenced by Argentina's 
$4 billion dollar trade deficit with Brazil. The center-left is structurally 
incapable of recognizing that the world depression has in large part 
undermined the 'export strategy'; that the elites cannot overcome their 
internal contradictions and class constraints by 'exporting' their way to 
economic recovery. The search for new markets and investors in Asia and 
Middle East may provide a limited boost to the export enclaves but they will 
have little or no impact on the industry, service and related sectors, which 
employ the mass of workers and employees. Moreover, the Middle East and 
Asian countries are in serious crises as trade (both imports and exports), 
manufacturing and employment decline. Moreover China has opted for a vast 
economic stimulus plan based on increasing domestic demand. Asia can provide 
Latin American regimes with little relief from the crises.

The one country absent from the Santiago meeting of the center-left regimes 
was Venezuela, in part because President Chavez has pursued an alternative 
economic strategy to the world depression.

Chavez strategy includes the nationalization of key economic sectors like 
and oil and gas, which increases state revenue; protection of strategic 
social sectors/food processing and distribution sectors; and the expansion 
of agrarian reform to increase local production of food. The government has 
a program of subsidized food prices, a 20% increase in the minimum wage to 
cushion the effects of inflation and public spending on labor intensive 
infrastructure projects which has resulted in a drop in unemployment with 
the creation of 280,000 new jobs in Jan-Feb 2009.

Chavez is pursuing a radical Keynesian program, which depends on large scale 
public investments to expand the domestic market and social subsidies 
targeting a large swath of the lower classes. His state investment policy 
relies on the 'cooperation' of the still-dominant private sector, especially 
finance, construction, agro-mining and manufacturing, either via financial 
incentives and state contracts or through threats of intervention or 
nationalization.

Chavez' domestic structural reforms are complemented by his promotion of 
regional political-economic pacts, like PETROCARIBE and ALBA, with Bolivia, 
Cuba, Nicaragua and several Caribbean and Central American states. He is 
counting on the growing financial and investment agreements with China, 
Middle East, especially Iran, and Russia, particularly in joint ventures in 
the petroleum and mining sectors. While Chavez' strategy represents a clear 
break with and alternative to the center-left 'export-elite' centered 
approach, it still confronts a series of serious contradictions. Venezuela 
is over-dependent on a single export (petroleum) for 75% of its foreign 
exchange earnings and a single market (the US). Secondly it is rapidly 
depleting its foreign reserves. Thirdly, its efforts to promote regional 
integration have not prospered as the principle countries in Latin America 
look toward the G20 for salvation. State intervention and nationalization 
have increased national leverage over the economy but has not confronted the 
mal-distribution of income, property and power. As a result, a wave of 
worker/employee strikes in education, mining, smelting and manufacturing 
have hit the economy.

Equally serious a 30% rate of inflation has eroded buying power for those 
with fixed incomes and salaries undermining recent increases in the minimum 
wage. Increases in the price of foodstuffs, over 90% of which are imported, 
adversely affects the balance of payments. The immediate future could pose a 
threat to the social stability of the Venezuela.

Latin America and the Deepening Depression

The participation of several major Latin American countries in the G20 
meeting in London, April 2, 2009, and the subsequent agreements reveal the 
political bankruptcy of the current political leadership. The declaration of 
a major new "stimulus" package was belied by the fact that most of the funds 
cited ($1.1 trillion dollars) were already allocated before the meeting and 
would have no effect. The actual amount of 'new money' was only a "fraction" 
($250 billion dollars) and mostly geared to rescuing the financial sector.

The G20 solemn agreement to oppose protectionist legislation was belied by 
an OCED report that 17 of the 20 countries have recently adopted measures 
protecting local industries and restricting overseas financing. The biggest 
winner at the G20 was the IMF, which was promised an additional $500 billion 
dollars to provide credit lines and financing. Given the US-EU dominance of 
the IMF and given its past history of imposing restrictive conditions 
favoring the imperial countries, the strengthening of the IMF poses a major 
obstacle to any progressive Latin American recovery. The high expectations 
of Latin America's center/left and rightist regimes that G20 would provide a 
meaningful stimulus were dashed.

On the left, Fidel Castro and like-minded allies in Latin America cite China 
as an alternative market and investment partner. Yet China's overseas 
investments are almost always directed to the extractive export sectors 
(minerals, petrol) and, to a lesser degree, agriculture. As a result, 
Chinese investment in Latin America has created few jobs while favoring 
sectors that pollute the environment. Latin America's export profile with 
China is reduced to a primary goods monoculture, highly vulnerable to the 
fluctuations of world prices. Moreover, China's trade agreements with Latin 
America include the import of Chinese manufactured good produced by 
non-union, super-exploited workers which undermines any recovery of Latin 
America's manufacturing sector.

Latin American leaders, who look to China to pull them out of the 
depression, are committed to a neo-colonial style recovery based on a raw 
material export model. Likewise, the turn to Russia as a new market and 
stimulus is a highly dubious proposition, given Russia's petrol-gas 
dependent economy, its lack of competitive industries and above all its 
deepening depression with an economic decline of over 7% for 2009. The Latin 
American leaders' search for a new stimulus package from the US and EU or 
new trade alternatives with China and Russia are desperate efforts to save 
the failing elite export model. The idea promoted by Brazil that since the 
imperial countries caused the world depression, they should provide the 
solution, is a non-sequitor, especially in light of their incapacity to 
stimulate their own economies. The US promotion of the IMF is directed 
toward undermining any progressive Latin American policies and independent 
regimes, and not helping them recover from the crisis.

Conclusion

Because of the Obama regime's profound and costly commitment to 
military-driven empire building and the multi- trillion dollar refinancing 
of its banking sector (while backing credit-financing protectionism), Latin 
America's ruling classes cannot expect any "stimulus package" from US.

The deep political divisions between the US and Latin America (and between 
the classes within Latin America), divergent national and class strategies 
preclude any 'regional strategy'. Even among the left nationalist regimes, 
apart from some limited complementary initiatives among the ALBA countries, 
no regional plan exists. In this regard it is a serious mistake to write or 
speak about a "Latin American" problem, or initiative. What we can observe 
today is a generalized breakdown of the export-driven model and divergent 
social responses, between income protecting policies of Venezuela and export 
subsidy policies of Brazil, Argentina and Chile, Peru and Colombia. 
Throughout the recession, these center-left regimes have demonstrated a high 
degree of structural rigidity, making no effort to deepen and expand the 
domestic market and public investment, let alone nationalize bankrupt 
enterprises. The crisis highlights the process of de-globalization and the 
increasing importance of the nation state.

The deepening economic crisis adversely affects incumbent regimes, whether 
they are center-left or right, and strengthens their opposition. In 
Argentina the right and far-right have dominated the streets, with a growing 
power base in the 'interior' among the Argentine agrarian elite and the 
middle class in Buenos Aires. The progressive trade union, CTA, which has 
organized strikes and protests, is not connected with any new left 
alternative political organization.

Brazil has witnessed similar protests by social movements and trade unions 
against rising unemployment of over 10% and the decline in export-oriented 
industries. But the principle political beneficiary of the declining 
popularity of Lula's self-styled "Worker's Party" is the Right.

In contrast, the center-left will benefit where rightist regimes are 
currently in power - namely Mexico, Colombia and Peru. But as is the case 
elsewhere, the mass movements lack an organized political response to a 
collapsing capitalism.

Moreover neither Cuba nor Venezuela offers a 'model' for the rest of Latin 
America. The former is highly dependent on a vulnerable tourist economy 
while the latter is a petrol economy. Given the systemic collapse of 
capitalism, these countries will need to move beyond 'piecemeal reforms'(such 
as Chavez food subsidies) and piecemeal nationalizations and toward the 
socialization of the financial, trade and manufacturing sectors.

Mass protests, general strikes, and other forms of social unrest are 
beginning to manifest themselves throughout the continent. No doubt the US 
will intensify its support for rightist movements in opposition and its 
existing rightist clients in power. US 'hegemony' over the Latin American 
elite is still strong even as it is virtually non-existent among the mass 
organizations in civil society. Given the overall militarist-protectionist 
posture of the Obama regime, we can expect intervention in the form of 
covert operations as class struggle escalates and moves toward a socialist 
transformation.