Since the 1998 election of Venezuelan President Hugo Chávez, the poor majorities of a number of Latin American countries have begun to reject politicians from traditional parties who support the neoliberal model known as the Washington consensus. And following Chávez’s lead, two other leaders are seriously considering constituent assemblies to rewrite their constitutions in order to make government more representative and responsive to the interests of the people.

Three presidents who promised more independent economic and foreign policies are Brazil’s Luiz Inácio Lula da Silva, elected in 2002; Argentina’s Néstor Kirchner, elected in the aftermath of the 2001 economic crash; and Uruguay’s Tabaré Vázquez, elected in 2004. Chávez and Bolivian President Evo Morales, who was sworn in on January 22, represent a definitive break with Washington as well as with their countries’ ruling elites. There is a possibility that two more nationalist leaders may win this year: Mexico’s Andrés Manuel López Obrador, who is leading the polls ahead of elections in July, and Peru’s Ollanta Humala, who has a tough fight ahead against his nearest rival, the rightist Lourdes Flores, in elections on April 9. Morales and Humala are both openly aligned with Venezuela and Cuba and are committed to more state control over mining and gas resources and to new constitutions.

In order to understand why there is widespread rejection of neoliberalism today it is useful to review some aspects of Latin America’s post-colonial history. Ever since most of the region won its independence from Spain and Portugal in the 1820s, it has been the object of attempts by the United States to exercise hegemony over it. President James Monroe sent a warning to the European powers on 2 December 1823, not to attempt to re-colonize the newly independent states: “We should consider any attempt on their part to extend their system to any portion of this hemisphere as dangerous to our peace and safety.” But this warning wasn’t intended to help the people achieve true independence as much as to allow the U.S. an open field without competition.

European colonialism was replaced in the 20th century by U.S. neocolonialism, a system which enabled U.S. corporations to transfer Latin America’s wealth to the United States without ruling them directly. Propped up by the U.S., local elites replaced colonial viceroys and ran each country for their own profit on the condition that they subjected their economies to the will of transnational corporations. The rulers allowed these companies to extract raw materials and monopolize infrastructure, vital industries, land and banks while they kept labor oppressed. On the other end of the production process, Latin American markets were kept open to foreign companies’ goods. This neocolonial system was backed up by military force, as 33-year Marine veteran Maj. Gen. Smedley Butler famously stated in the 1930s:

“I served in all commissioned ranks from Second Lieutenant to Major-General. And during that period, I spent most of my time being a high class muscle-man for Big Business, for Wall Street and for the Bankers. In short, I was a racketeer, a gangster for capitalism…

“I helped make Mexico, especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I brought light to the Dominican Republic for American sugar interests in 1916.” [1]

The history of U.S. support for rightist forces and dictatorships in Latin America is long. The CIA overthrew Guatemalan President Jacobo Arbenz in 1954 at the request of United Fruit Company. Alfredo Stroessner served as dictator of Paraguay from 1954 to 1989 with the blessing of the U.S. Washington backed coups in the Dominican Republic in 1962, Brazil and Bolivia in 1964, and Argentina in 1966. The 1970s saw long term military regimes being installed in Latin America: in 1973 the Anaconda and Kennecott copper companies and International Telephone and Telegraph requested that President Nixon overthrow Chilean President Salvador Allende, and ruthless dictatorships were likewise installed in Uruguay in 1973 and Argentina in 1976.

In the 1970s U.S. banks had an excess of oil money, and a strategy was devised to recycle these petrodollars and plunder Latin America at the same time. The new racketeers didn’t wear a Marine uniform and arrive in a gunboat, but wore a suit and tie and arrived at the airport with briefcases containing an offer which was impossible to refuse. The National Security Agency sent “economic hit men” to pressure countries to accept loans from the World Bank and the Inter-American Development Bank for large infrastructure projects built by U.S. contractors. The exaggerated rate of growth projected by the EHM always failed to materialize because the ulterior goal was not development, but to saddle a country with an unpayable debt. [2]

Former EHM John Perkins, to whom we owe this information, says that when economists like him failed to convince presidents to go along with the racket, the “jackals” – the CIA – moved in to remove them. In 1981 two presidents were assassinated in quick succession by bombs placed on their aircrafts: Ecuadorian President Jaime Roldós and Panamanian President Omar Torrijos. Perkins places responsibility for the killings with the Reagan administration, allegedly because the leaders angered the principals of corporations tied to the U.S. government. [3]

Over the past 20 years Latin America has grown poorer than ever due to neoliberal economics, devised by U.S. economists in the 1980s. The objectives of the neoliberal model are the same old colonial goals – to increase foreign ownership of countries’ infrastructure, industries and resources and force open their markets.

The first weapon the U.S. used to force neoliberalism on Latin America was its debt, and by the early 1980s, the trap set by the NSA was sprung. Record borrowing by the Reagan administration caused interest rates to rise worldwide as countries tried to compete with the U.S. for capital. High interest rates and soaring inflation combined with deteriorating export prices and purchasing power (terms of trade) to plunge the Third World into a debt crisis, which began in 1982. [4] Desperately in need of new loans and investments to meet their obligations, countries were forced to accept IMF conditionalities. [5]

The IMF imposed identical structural adjustments on each country, which included “rapid privatization of government-owned enterprises, reductions in subsidies for basic goods and agricultural inputs, hikes in interest rates, budget cuts resulting in public sector layoffs and reduced availability of government services, deregulation of trade and investment rules to entice foreign businesses, and a strong export orientation, meaning an emphasis on agricultural commodities from tropical zones and the cheap labor of desperate people.” [6]

The second weapon of neoliberalism is trade agreements, which reduce tariffs to the detriment of small farms and manufacturers, and give foreign corporations the right to sue governments over profits “lost” to regulations or protectionism. Depending on how they are negotiated, trade agreements can also be used to force the privatization of certain government services.

Here is how historian Richard Gott describes the effects of neoliberalism in Bolivia, specifically on the plateau of El Alto, which is home to nearly a million Indians:

“[It] succeeded in destroying the country’s agricultural system and its embryonic industries, and closing down the state-owned tin mines – once the source of the wealth of Spain. This predictable disaster brought hundreds of thousands of workless but highly politicised families to live at the gates of the capital city, from where they have been able to hold it to ransom at will.” [7]

Venezuela’s capital, Caracas, is also surrounded by legions of poor migrants from the provinces, and it was this disorganized army which marched on the presidential palace and supported junior officers to reverse the 2002 U.S.-backed coup against Chávez.

But just because the people of Latin America are poor doesn’t mean their countries are poor in resources. [8] Venezuela has struggled with a poverty rate of 80% and its health and education services have heretofore been inaccessible to a large percentage of the population in spite of having considerable petroleum and gas reserves. The country imports most of its food, but there are many rivers which could be used for irrigation. Chávez has succeeded in seizing control of the state-owned oil company and putting the revenues at the service of the poor in the areas of housing, education, health and food security. He is also carrying out a land reform program to increase food self-sufficiency.

The possibilities for regional cooperation and integration are only limited by leaders’ goodwill. Chávez has used the country’s oil to assist Cuba [9], the Caribbean and Ecuador, and used oil revenues to buy $2.4 billion of Argentina’s debt. Since Cuba is the region’s leader in human development, Chávez has taken advantage of the revolution’s expertise to eradicate illiteracy in Venezuela and provide badly needed health care. There are 20,000 Cuban medical personnel in Venezuela and 12,000 Venezuelans received free eye surgery in Cuba in 2005. On his part, Chávez has signed eight bilateral agreements of cooperation with Bolivia, which range from the sale of 200,000 barrels of diesel fuel a day at special prices to the purchase of soy beans and chicken from Bolivia. With a $30 million donation, Venezuela’s assistance package is worth over $180 million in the first year.

Cuba will also help Bolivia by educating an additional 5,000 Bolivian medical students on the island (there are already 497) and by providing free eye surgery in Bolivia to an estimated 50,000 patients per year. Cuba will also offer technical assistance in energy conservation, sports and a literacy campaign.

Bolivia has long been one of the poorest and least developed Latin American countries, with an infant mortality rate of 53 deaths per 1,000 live births (as compared to Cuba’s 6.33). In the 1990s, large natural gas reserves were discovered (727.2 billion cu m proved, second only to Venezuela) but the residents of El Alto don’t have gas for heating or cooking. [10] Mass organizations carried out militant protests to force the resignation of the last two presidents, and they will back Morales as long as he is true to his promises – but no longer. Their principal demand, along with representation in the government for the 60% Indian majority, is the re-nationalization of gas and oil, privatized in 1996 under pressure from the IMF, the World Bank and the U.S. embassy. [11] Morales says he intends to seize oil and gas reserves owned by international companies, leaving other assets such as pipelines and refineries in the hands of foreign operators. “The state will exercise its right of ownership and that means it will decide on the use of those resources,” he said.

Morales is walking a fine line and will be under enormous pressure to give in to the demands of international capital. He reassured jittery business leaders in Spain that although there would be nationalization, it would take place without confiscating or expropriating property. He also hinted that the Spanish energy company Repsol-YPF would lead a “reinvestment phenomenon” in Bolivia. In a gesture of solidarity, Prime Minister Jose Luis Rodriguez Zapatero forgave most of Bolivia’s $120 million debt in order, he said, to help pay for education and the planned literacy campaign. [12]

Mexico is another rich country with a huge external debt ($149.9 billion) and low spending on health and education. The infant mortality rate is 21, adult literacy is 90.5%, and enrollment in secondary schools is a low 60%. Approximately 26% of the people live on less than $2 per day. [13]

The North American Free Trade Agreement devastated the agricultural sector – it is estimated that around 50,000 farmers are forced off their lands every year. In the past decade 3.7 million commercial farms disappeared, leaving only 300,000. [14] Mexico has a net migration rate of -4.57 migrants/1,000 population, [15] which has been a major embarrassment for President Fox, given his inability to obtain from his friends in Washington an amnesty or work program for the approximately five million undocumented Mexicans in the U.S. To the contrary, border security is being increased, and Mexicans are dying in record numbers trying to enter the U.S. [16] This year’s presidential frontrunner, Lopez Obrador, promised to change “the neoliberal economic model in effect in Mexico because it has failed, battered the poor and led to massive emigration.” [17] But populist rhetoric notwithstanding, he is likely to do little without pressure from mass organizations. Under the leadership of Delegado Cero (formerly Marcos), the Zapatista Army is now touring the country trying to organize just such a movement.

Uruguay’s economic crisis of 1999-2002, which was partly a result of Argentina’s crisis, propelled the “socialist” Tabaré Vázquez to power. In 2002 unemployment rose to nearly 20%; inflation surged and the external debt doubled and now stands at $12.8 billion. Vázquez entered office in 2005 constrained by a deal his predecessor worked out with the IMF in 2003 to manage the debt payments, and he appears to be relying on luring foreign investment to improve the economy, which has recovered somewhat. But the president has offered nothing new.

Brazilian President Lula da Silva is the biggest disappointment of the new Latin American leadership. A former union leader, his election led Brazil’s poor to hope for change, but his party has become involved in corruption scandals and the president has shown himself to be more interested in pleasing big business, paying the external debt and trying to get on the UN Security Council than helping landless peasants or poor workers.

The new nationalist leaders – who don’t include Chilean President-elect Michelle Bachelet due to her pro-Washington positions – ally themselves with the national bourgeoisie and pursue conservative economic policies while they do nothing for poor. But they are an improvement over the brutal dictatorships of the past. They aren’t torturing and disappearing opponents and they aren’t letting their foreign relations be dictated by the State Department and their military forces be trained by counterinsurgency experts. Kirchner and Lula have maintained good relations with Cuba and Venezuela, although the State Department is trying to use them to put pressure on Morales.

Another positive outcome of the coming to power of more independent governments in Latin America is that it appears to be forcing the U.S. to reduce its military influence in the region. The U.S. military was embedded in the Venezuelan armed forces and in spite of requests by the government it didn’t leave Venezuela until after the coup. Washington uses military aid and the training of officers in order to control Latin America’s armed forces, as was shown when the head of the Bolivian army handed over 28 surface-to-air missiles to the U.S. in the face of a possible Morales victory. In a change of strategy, the Department of Defense is now relying more on missiles and unmanned aircraft based in “Cooperative Security Locations” in Colombia, Ecuador, El Salvador, Aruba – and now in Paraguay near the Bolivian border, although what it is hoping to accomplish with these bases is unclear. [18]

Each Latin American country has its own distinctive history and its own political, economic, social and cultural conditions. One shouldn’t make the mistake of assuming that an event in one country is a predictor of what will happen in another, nor that there won’t be competition and conflict between countries or setbacks in the face of opposition by the U.S. and local elites. But the overall trend of Latin America’s new-found independence movement, while born of abysmal injustice, is the most positive news in decades.

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Endnotes

1. Maj. Gen. Smedley Butler, War is a Racket (Los Angeles: Feral House, 2003).

2. John Perkins, Confessions of an Economic Hit Man (San Francisco: Berrett-Koehler, 2004).

3. Roldós tried to regain control of the country’s oil by writing a new hydrocarbons law and ordered out a Rockefeller-financed “missionary” group which was moving Indians off lands that the oil companies wanted. Torrijos angered Bechtel because he was considering hiring a Japanese contractor to build a new, modern canal. But perhaps more importantly, the Reagan administration wanted to get around the 1977 treaty returning the Panama Canal to Panama and keep the School of the Americas and a Southern Command tropical warfare center in the country. See Confessions of an Economic Hit Man.

4. Jackie Roddick, The Dance of the Millions (London: Latin America Bureau, 1988).

5. “Meanwhile, the debt burden has risen to unprecedented levels. In 1987, Latin America and the Caribbean together owed a total of US$410 billion, and paid US$30.1 billion in annual interest charges – nearly four times as much as they owed in 1977, and nearly four times as much in interest payments.” The Dance of the Millions, 7-8.

6. Soren Ambrose and Njoki Njoroge Njeju, “Heartache and Hope in Africa,” Multinational Monitor, July/August, 2005, 32.

7. Richard Gott, “A seismic upheaval among Latin America’s Indians,” The Guardian, June 11, 2005.

8. “Collectively, by 1987, the countries of the region had easily repaid all the millions they were loaned during the 1970s… Even discounting profit remittances by multinationals, the West has made a profit on recycling the oil funds of the 1970s, roughly equivalent to the entire GDP of a Colombia or a Venezuela in 1985.” [$20.4 billion] The Dance of the Millions, 14.

9. http://www.granma.cu/ingles/2004/febrero/mar3/6cinica-i.html.

10. CIA World Factbook.

11. “Bolivia Insurrection,” Multinational Monitor, July/August, 2005, 7.

12. “Bolivia necesita socios y impresarios, no dueños,” La Jornada, 5 January, 2006.

13. UN 2004 Human Development Report.

14. La Jornada, 3 January, 2005.

15. CIA World Factbook.

16. More than 2,500 migrants have died since the border patrol started keeping records in 1998; 460 died in the last fiscal year, www.polisci.ucsd.edu/cornelius/latimes10-1-05.pdf.

17. “AMLO se registra como candidato,” La Opinión, 9 January, 2006.

18. Benjamin Dangl, “Bolivia’s Trial by Fire,” Monthly Review, Jan. 12, 2006, http://mrzine.monthlyreview.org/dangl120106.html.

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Diana Barahona is an independent journalist living in Southern California. She can be reached at dlbarahona@cs.com

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