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Latin America: a set-back for the neo-liberals?

By Luc DeMaret, ICFTU OnLine...., 309/971203/LD, 3 December 1997

Brussels, December 3, 1997 (ICFTU OnLine) 1998 may prove to be a turning point for Latin America, where neo-liberalism is fast losing popularity.

The recent victories of the opposition parties in Argentina and Mexico, and US President Bill Clinton's failure to get carte blanche from his Congress for the negotiation of trade treaties, particularly in Latin America, are all signs that the neo-liberal model is facing a mounting popular challenge, with the trade unions leading the way.

The successful campaign run by the AFL-CIO in the United States to reject the Fast Track option for the President is certainly a turning point. By refusing to include provisions on fundamental workers' rights and environmental protection measures in his proposal, Mr. Clinton was unable to get a majority in Congress to support his request to be allowed to negotiate trade treaties with Chile and other Latin American countries alone, and to leave the nation's representatives with the power simply to reject or accept his decisions, but not to make any amendments. Buoyed by its recent victory in the dispute between the Teamsters and the United Parcels Service, the AFL-CIO threw itself into the battle and has won - at least for the present, as Bill Clinton has announced he will withdraw his request and try again next year.

The episode is by no means insignificant. It signals that the rapid accumulation of free trade agreements and corporate-led globalisation will by substantially slowed says the Washington-based Institute of Political Studies. Jérôme Livinson, former adviser to the Inter-American Development Bank, believes the neo-liberal model has exhausted itself.

The next set-back will no doubt be in Latin America. While economic growth in the region is set to continue in 1998 at an average rate of more than 4 per cent, benefiting indirectly from Asia's financial crisis, inequalities are growing. Per capita income is due to grow by 3 per cent in the region, but because of the gap that already exists between rich and poor, the rich will see a more substantial rise in their income than the poor estimates the weekly Foreign Report.

Privatisations are also due to continue, bringing with them a sharp rise in unemployment. More than 60 million Latin Americans have no social security cover and 52 per cent of the working age population is in the informal sector. And that trend is set to increase. According to the International Labour Office (ILO) out of every 100 new jobs created, 80 will be in the informal economy.

There is likely to be a mounting popular challenge across the continent, at a time when the trade unions are steadily broadening the scope of their demands and forming alliances with popular movements. The role of the trade unions in society is going to get bigger predicts Luis Anderson, General Secretary of the ORIT. The strikes by the Argentinian trade unions in protest at President Menem's austerity measures no doubt contributed to the defeat suffered by the Peronist party in the last elections.

In Brazil, two days after the announcement last month of cost-cutting plans (which will mean 30,000 job losses in the civil service in 1998) by President Cardoso, thousands of Brazilians came out into the streets in response to a call by the national trade union centre, the CUT.

The Dominican Republic, which is due to record the highest level of growth next year, at 8 per cent, is also in the grip of social unrest, with workers demanding pay rises, price controls for basic foods, and better social security. After several general strikes, which resulted in at least four deaths, demonstrations are also foreseen for next February.

In several countries, forthcoming elections are like to give further weight to criticisms of the prevailing neo-liberal orthodoxy. Presidential elections are due to take place in Brazil, Venezuela, Colombia and Ecuador, and legislative elections in Paraguay. Argentina will be caught up in the campaign for the 1999 Presidential election.

While it is too early to speak of a change of direction, the social dimension will be high on the agenda in most countries in the region. To illustrate the point, the Americas Summit to be held in Santiago, Chile, on April 18 and 19, 1998, will take as its theme the strengthening of democracy and the fight against poverty.