[Marxism] Wall Street crisis deepens divisions in South America

[Louis Proyect]

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/30/AR2008093002813_2.html

U.S. Crisis Deepens Divisions in S. America

By Joshua Partlow
Washington Post Foreign Service
Wednesday, October 1, 2008; A13

RIO DE JANEIRO, Sept. 30 -- As his popularity has surged and his 
nation's booming economy has lifted thousands from poverty, Brazilian 
President Luiz Inácio Lula da Silva has largely refrained from the angry 
criticism of the United States that can be heard nearly any day from 
other South American leaders.

Not this time.

Last week, Lula told the U.N. General Assembly that the "boundless 
greed" of a few should not be shouldered by all, and on Monday he said 
emerging economies had done their best to have "good fiscal policy" and 
"can't be turned into victims of the casino erected by the American 
economy."

"This crisis belongs to the American bankers, to the European bankers. 
It doesn't belong to the Brazilian bankers," Lula said Monday. "It's not 
fair for Latin American, African and Asian countries to pay for the 
irresponsibility of sectors of the American financial system."

The U.S. financial crisis has stung emerging markets and angered leaders 
who have swallowed American advice about fiscal responsibility for 
years. In Latin America, where several leaders have made their 
ideological differences with the United States a central part of their 
rhetoric, the crisis appears to have further degraded U.S. credibility.

"They've always been critical of the U.S. for its negative agenda, drugs 
and immigration, but the economy was seen as the one positive thing, and 
this crisis probably puts that in a different light," said Michael 
Shifter, vice president for policy at Inter-American Dialogue in Washington.

Across Latin America, there is a growing division between countries that 
embrace certain U.S.-backed free-market policies, often referred to as 
the "Washington consensus," and those that renounce them. The leading 
anti-U.S. spokesman is President Hugo Chávez of Venezuela, who traveled 
to Brazil on Tuesday and urged Latin American countries to continue 
disconnecting from the U.S. economy, which he called a "wagon of death."

"The world will never be the same after this crisis," Chávez told 
reporters in Manaus, where he met with Lula and Bolivia's President Evo 
Morales. "A new world has to emerge, and it's a multipolar world."

Chávez predicted oil prices would drop to between $80 and $95 a barrel 
as a result of the financial turmoil. He also said the crisis shows why 
it is urgent to speed the creation of a Latin American regional 
development bank, known as Bank of the South.

Morales said that in Bolivia, companies are nationalized so that people 
can have money, while the United States "wants to nationalize debt and 
the crisis of the people that already have money."

Bolivia's finance minister, Luis Alberto Arce, said in an interview that 
countries such as Bolivia with few ties to international capital markets 
have just started to feel the impact of the crisis. But if the United 
States doesn't bolster its economy quickly, he said, Latin American 
countries can expect declines in commodities prices, exports and 
remittances from relatives living abroad.

In Argentina, the world's third-largest exporter of soy and wheat and 
second-largest exporter of corn, concerns are focused primarily on 
falling commodity prices and the potential for economic slowdown after 
several years of strong growth. Argentine President Cristina Fernández 
de Kirchner said Monday in Buenos Aires that "old paradigms are changing."

"We need to have an open mind about the possibility of intelligent 
interaction between the government and the markets. And forget the 
theory that the markets have to do all or nothing, and vice versa," she 
said.

Some analysts and economists worried that the countries that sometimes 
express antagonism toward the U.S. economic model and emphasize more 
state intervention -- Venezuela, Bolivia, Ecuador and to a certain 
extent Argentina -- would exploit the crisis for political benefit.

"I hope that McCain and Obama understand well there is a very, very 
important debate that will become critical next year, about the ideology 
of economic development -- whether the state should lead development or 
whether the market should be the main force," said Carlos Langoni, a 
former Brazilian central bank president, referring to U.S. presidential 
candidates John McCain and Barack Obama.

After a sharp drop in the stock market and a devaluation of the local 
currency against the U.S. dollar, both measures rebounded slightly in 
Brazil on Tuesday. Since a large percentage of Brazilian exports goes to 
China, the fate of that economy is of more immediate importance than 
what happens in the United States. Still, some economists are predicting 
that Brazil's growth rate, projected to be about 5 percent this year, 
could fall as low as 2 percent in 2009 if a recession takes hold in the 
United States.

"For Brazil, this is a very low rate. Brazil was beginning a cycle of 
sustainable growth," Langoni said. "This would be a very serious drawback."

Special correspondents Brian Byrnes in Buenos Aires and Andres Schipani 
in La Paz contributed to this report.