Date: Mon, 18 Oct 1999 22:34:10 -0500 (CDT)
From: Bill Koehnlein <firstname.lastname@example.org>
Subject: Latin America: The Neoliberal Disorder
Date: Sun, 17 Oct 1999 23:38:35 -0400
From: International Viewpoint <email@example.com>
Subject: [FI-P] Latin American 'disorder'/Ernesto Hererra
The balance of forces in Latin America is changing. Political,
economic, social and political factors are creating a generalised
crisis of government. After years of neoliberalism, the landscape is
changing again. The United States have reaffirmed their role as the
indispensable nation. But in their own back yard, they
lack what Zbigniew K. Brzezinski calls a
geopolitical pivot- a
state like Israel, ready to ensure the economic, political and
military domination of the region on behalf of the world powers.
There are already clear signs of
disorder in Colombia,
Venezuela and Ecuador. The next 12 months contain a number of
potentially destabilising events:
platformsfor military intervention and domination of the region.
But the crisis of the region's bourgeois leaderships is mainly the result of the brutal effects of the international economic crisis.
Latin America is also witnessing massive popular resistance-on isolated issues-which is changing the political strategies and programmatic proposals of most of the continent's left wing forces. Recent months have seen a wave of social explosions, strikes, land occupations, protest marches and violent confrontations.
Colombia is in a pre-revolutionary situation. The state is in deep crisis. It is caught between a powerful guerrilla movement and strong trade union and peasant struggles on one side, and a range of far right paramilitary groups and drug barons on the other side. All this, of course, during the deepest economic crisis of recent decades.
In Venezuela, all the institutions of the old political order are collapsing, and being replaced by a new regime which has enthusiastic, mass support. Chavez' populism is a double-sided thing. One the one hand, he is dismantling the clientelist state of the traditional parties, and transforming the country's relationship with the United States. On the other hand, he is applying an austerity plan which will facilitate foreign capital's entry into the oil industry and other strategic sectors of the economy.
There are significant-though less mediatised-conflicts in other countries. Tens of thousands of Brazilian peasants and workers have organised marches demanding the resignation of president Fernando Henrique Cardoso.
Ecuador has been shaken by insurrectional riots. The government has been forced to suspend all foreign debt repayments-a first in Latin America, forcing the IMF to make a very tactical response. The debt question will be increasingly debated in the other countries of Latin America.
There are no signs of weakening of the major strike at Mexico's main
university, UNAM. The indigenous people and the Zapatista rebels of
Chiapas state are also continuing their protests. Chile's leaders
reconciliation, but Mapuche peasants and a range of
trade unions have united with human rights groups to demand that the
dictator Pinochet face trial.
Peruvians have massively rejected president Fujimori's attempts to extend his term of office. Here too, the level of trade union and peasant protests is increasing.
In all these countries, there are some common threads of opposition:
Structural Adjustment Programmes; to privatisation
imposed by the IMF, World Bank, and InterAmerican Development Bank; to
the expropriation of people's rights, intensified by unlimited
flexibilisation of working conditions; growing unemployment and job
precarity; low salaries. There are anti-neoliberal struggles, with an
anti-capitalist dynamic, in Argentina, Bolivia, Panama, Nicaragua and
In Latin America today,
class identity is not expressed in the
same way as in previous decades. Today's struggles involve a wide
social subjects. But, looking more closely, the urban
and rural working people are the key, central element of these new
forms of resistance.
But these new struggles involve new social groups which have suffered
from the neoliberal counter reforms. More than ever before, small
business people, shopkeepers, small farmers, and impoverished
middle class groups have taken part in protest activities.
Before the Brazilian crisis of January 1999, Latin America was expected to record a 1% economic growth (CEPAL). But the collapse of Brazil's *real* plan worsened the economic climate for the whole region. In April, the World Bank predicted a 0.8% contraction in economic activity. In May, ALADI predicted a 1.6% contraction.
opening up of the region's economies since 1990 has created
all kinds of disequilibrium between countries with very different
productivity levels, and very different levels of foreign investment.
Loans and financial investments have been much more important than
foreign direct investment. Most foreign interest has been focused on
the wave of privatisation. The much-promised influx of capital, and
increase in total investments, has simply not materialised. CEPAL
estimates that two thirds of the foreign direct investment has been
purchase of existing facilities, rather than creation of new units
According to an economist from Brazil's Getulio Vargas foundation,
investments have been concentrated in the service sector-which does
not generate new foreign currency earnings. There has been a
massive transfer of
public property to the private sector, and
the imperialists have tightened their control in the process. In many
Latin American countries, strategic economic sectors are now directly
controlled by a small group of financial institutions, based in the G7
Earnings from privatisation have been used to pay the foreign debt. Argentina has used 57% of its US$39.6bn from privatisation in 1989-98 to meet its foreign debt obligations.
In conditions like these, Latin America's governments have their hands tied. How can they develop elements of national sovereignty in the face of such imperialist domination? If there is strong pressure from the mass movements, of course, there may be all kinds of unorthodox, nationalist responses to the crisis. Already in Ecuador, the Mahuad government has been obliged to reschedule payment on its Brady Bonds. Venezuela's Chavez government may also try to renegotiate the terms of the country's dependence.
But any serious attempt of this kind would need organised, determined, sustained popular support. And neither the continent's leaders, nor the institutionalised opposition parties, are ready for such a movement. After all, no-body doubts the determination of the imperialists, and their clear intention to consolidate their reconquest of the Latin American economies.
The transfer of wealth from Latin American workers to the banks of the
imperialist countries takes a very brutal form. It is hardly
surprising that the same mechanism is reproduced inside each
country. According to the latest report from the InterAmerican
Latin America and the Caribbean is the region
with the greatest inequality of income distribution, and the region
where the richest in society receive the greatest share of the wealth
produced... 40% of national income is in the hands of the richest
The Bank can give all the technical explanations it wants. But it
cannot hide the social results of a continental
system in which one third of the continent's population-or 150 million
people-live on less than US$2 per day. The buying power of Latin
America's average minimum wage is 27 times lower than in 1980. And
many people earn much less than the legal minimum wage. In the huge
informal sector, average income fell by 1% during the
good years 1990-98. And this is the sector where most new jobs
have been created, according to an International Labour Organisation
report (Lima, August 1999).
What kind of market are we talking about, if more than one third of
the Latin American population is excluded from the market by
poverty?, asked Mexican economist Diana Alarcon, in a July 1999
interview with the Argentine magazine Tres puntos.
political challenge is to incorporate the poor into the market. If we
want to improve the mediocre growth rates of recent years, we need to
take steps towards income redistribution. Alarcon is a respected
employee of the InterAmerican Development Bank. But her words could
also have come from the IMF or the World Bank. Global financial
institutions are increasingly willing to take preventative measures to
channel and reduce the popular struggles which they expect to develop
as a result of their own political actions.
But the central axis of all activity is still the
adjustment of Latin America, to suit the needs of the imperialist
heartlands. Enrique Iglesias, president of the InterAmerican
Development Bank, told the Brazilian newspaper Folha de Sao Paulo that
privatisation at the municipal and state level [Brazil is a federal
republic] can support and complete the administrative, institutional
and financial reforms. It will liberate the energies of the private
sector, attract new resources, technology and management know-how. It
will help build a more balanced relationship between public
institutions and civil society. Efficient governments, with resources,
would be able to handle fiscal autonomy [a sharp reduction in federal
tax redistribution] and concentrate on basic needs like health and
education. Privatisation would strengthen national and provincial
economies. It would be a long-term instrument of development, and of
macroeconomic stabilisation. These are the essential conditions for
reducing our vulnerability, within an international marketplace that
is less predictable and less rational than we imagined.
second generation of reforms would be accompanied by state
in cooperation with the private sector. The state
and its private partners would intervene through social security
programmes focused on the very poorest layers of society. They would,
of course, also co-operate in installing regulatory systems
alongside privatisation, will ensure competition. The state will also
work with industrialists to develop education programmes that are
adapted to companies' technological needs.
So we should have no illusion about the economic and social content of
the new programmes which Joseph Stiglitz is trying to popularise on
behalf of the World Bank. Popular mobilisation is essential. But so is
a continental debate on the alternative policies we should be
struggling for. The
chapter headings of such an alternative
programme could be taken from the slogans of the various social
movements already struggling against Structural Adjustment Programmes,
against IMF/WB control over the economy, against the usurious foreign
debt system, and in defence of health, housing, education, work,
salary and job security, human and social rights, democracy and
It is time for a new look at the relationship between market and
democracy, and a redefinition of the role of the state, in response to
the opening of the national economy to global pressures. The various
sectors of the left each have their own demands. What we need to do
now is bring these demands together, in a real debate about growth,
the different models of development, the context of capitalist
globalisation, and the various
projects. Many of these projects imply some level of relative
deconnection from the global economy-asserting national and
regional autonomy, in order to meet local needs, rather than simply
follow the agenda of global capital.