[A-List] Petras - US/Latin American relations
tal1 at cogeco.ca
Sun May 17 21:47:03 MDT 2009
US-Latin American Relations
A Time of Rising Militarism, Protectionism and Pillage
By James Petras
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
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.
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.
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.
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
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
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'...
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
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
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
(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
(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
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
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
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
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
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
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
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.
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
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
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