Year 501: World Orders Old & New

To help commemorate 20 years of publication, we are running a series featuring memorable articles from the past, leading up to our official birthday in January 2008. We are reprinting them in the original magazine format. In this issue, we are featuring a portion of Noam Chomsky’s series on Year 501 from the March 1992 issue.   —Eds.



SINCE ITS LIBERATION from Spanish rule, Latin America has faced many problems. One of the most grave was foreseen by the Liberator, Simon Bolivar, in 1822: “There is at the head of this great continent a very powerful country, very rich, very warlike, and capable of anything.” Citing this comment, Latin America scholar Piero Gleijeses observes that, “In England, Bolivar saw a protector; in the United States, a menace.” Naturally so, given the geopolitical realities. 

The United States was ambivalent about the independence of the Spanish colonies. “In the Congressional debates of the period,” Gleijeses notes, “there was much more enthusiasm for the cause of the Greeks than that of the Spanish Americans.” One reason was that Latin Americans “were of dubious whiteness,” at best “from degraded Spanish stock,” unlike the Greeks, who were assigned a special role as the Aryan giants who created civilization, in the revision of history constructed by European racist scholarship (the topic of Martin Bernal’s Black Athena). Yet another reason was that, unlike the Founding Fathers, Bolivar freed his slaves, thus becoming a rotten apple that might spoil the barrel, a virus that might infect others, to borrow the terminology of U.S. planners in the modern period, expressing their concerns over the threat to “stability” caused by a dangerous good example. 

A still more fundamental issue was brought forth by the major intellectual reviews of the day. They concluded that, “South America will be to North America…what Asia and Africa are to Europe”—our Third World. This perception retains its vitality through the 20th century. Commenting on Secretary of State James Baker’s efforts to enhance “regional problem-sharing” through the hemisphere, Times correspondent Barbara Crossette notes, “The realization in the United States and throughout the hemisphere [by the sectors that matter, at least] that European and Asian trading blocs can be best tackled by a large free-trade area in this part of the world”: our Third World, in what Roosevelt’s Secretary of War, Henry Stimson, called “our little region over here which never has bothered anybody” when he was explaining in May 1945 why all regional systems must be dismantled in the interests of liberal internationalism, apart from our own, which are to be extended. 

The World Bank is less sanguine about the prospects. A recent report concludes that the U.S. will gain more than Latin America from free trade agreements than Latin America, apart from Mexico and Brazil, and that the region would do better with a customs union on the model of the European Community (EC), with a common external tariff, excluding the U.S.—something definitely not in the cards. 

In the 19th century, there was a problem in establishing U.S. dominance of the hemisphere: the British deterrent. But the conception of “our confederacy” as “the nest from which all America, North and South, is to be peopled” (Thomas Jefferson) was firmly implanted, along with the Jeffersonian corollary that it is best for Spain to rule until “our population can be sufficiently advanced to gain it from them piece by piece.” 

There were internal conflicts over the matter. American merchants “were eager to contribute to the cause of freedom—as long as the rebels were able to pay, preferably cash,” Gleijeses notes. And the well-established tradition of piracy provided a reservoir of American ship owners and seamen (British too) who were happy to offer their services as privateers to attack Spanish shipping, though extension of their terrorist vocation to American vessels led to much moral outrage and a government crackdown. Apart from England, liberated Haiti also provided assistance to the cause of independence, but on the condition that slaves be freed. Haiti, too, was a dangerous rotten apple, punished for independence with huge reparations to France, the former colonial power, and a half-century of ostracism and non-recognition by the U.S. (last to relent among the major powers), later Woodrow Wilson’s destructive rampage and other such benefits, until this very moment. 

The concept of Pan-Americanism advanced by Bolivar was diametrically opposed to that of the Monroe Doctrine at the same time. A British official wrote in 1916 that while Bolivar originated the idea of Pan-Americanism, he “did not contemplate the consummation of his policy under the aegis of the United States.” In the end, it was “Monroe’s victory and Bolivar’s defeat,” Gleijeses comments. 

Cuba: The Bad Example 

THE STATUS OF CUBA was of particular significance, another illustration of the resilience of traditional themes. The U.S. was firmly opposed to the independence of Cuba, “strategically situated and rich in sugar and slaves.” Jefferson advised President Madison to offer Napoleon a free hand in Spanish America in return for the gift of Cuba to the United States. Secretary of State John Quincy Adams, the author of the Monroe Doctrine, described Cuba as “an object of transcendent importance to the commercial and political interests of our Union.” He, too, urged Spanish sovereignty until Cuba would fall into U.S. hands by “the laws of political…gravitation,” a “ripe fruit” for harvest. Support for Spanish rule was near universal in the Executive and Congress. European powers, Colombia, and Mexico were approached for assistance in the endeavor of blocking the liberation of Cuba. A prime concern was the democratic tendencies in the Cuban independence movement, which advocated abolition of slavery and equal rights for all, unlike the U.S., which, in its Constitution, designated Black slaves as less than human. There was again a threat that “the rot might spread,” even to our own shores. 

By the end of the 19th century, the U.S. was powerful enough to ignore the British deterrent and conquer Cuba, just in time to prevent the success of the indigenous liberation struggle. Standard doctrines provided the justification for relegating Cuba to virtual colonial status. Cubans were “ignorant niggers, half-breeds, and dagoes,” the New York press observed, “a lot of degenerates…no more capable of self-government than the savages of Africa,” the military command added. The U.S. imposed the rule of the white propertied classes, who had no weird notions about democracy, freedom, and equal rights, and were thus not degenerates. The “ripe fruit” was converted to a U.S. plantation, terminating the prospects for successful independent development. In the 1930s FDR cancelled the “good neighbor policy” to overturn a civilian government regarded as a threat to U.S. commercial interests. The Batista dictatorship served those interests loyally, thus enjoying full support. 

Castro’s overthrow of the dictatorship in January 1959 soon elicited U.S. hostility and a return to the traditional path. By late 1959, the CIA and the State Department concluded that Castro had to be overthrown. One reason, State Department liberals explained, was that “our business interests in Cuba have been seriously affected.” A second was the rotten apple effect: “The United States cannot hope to encourage and support sound economic policies in other Latin American countries and promote necessary private investments in Latin America if it is or appears to be simultaneously cooperating with the Castro program,” the State Department concluded in November 1959. But one condition was added: “In view of Castro’s strong though diminishing support in Cuba, it is of great importance, however, that the United States government not openly take actions which would cause the United States to be blamed for his failure or downfall.” As for Castro’s support, public opinion studies provided to the White House (April 1960) concluded that most Cubans were optimistic about the future and supported Castro, while only 7 percent expressed concern about communism and only 2 percent about failure to hold elections. Soviet presence was nil. “The liberals, like the conservatives, saw Castro as a threat to the hemisphere,” historian Jules Benjamin observes, “but without the world communist conspiracy component.” 


By October 1959, planes based in Florida were carrying out strafing and bombing attacks against Cuban territory. In December CIA subversion was stepped up, including a supply of arms to guerrilla bands and sabotage of sugar mills and other economic targets. In March 1960 the Eisenhower administration formally adopted a plan to overthrow Castro in favor of a regime “more devoted to the true interests of the Cuban people and more acceptable to the U.S.,” emphasizing again that this must be done “in such a manner as to avoid any appearance of U.S. intervention.” 

That dictate remained in force as the U.S. advanced toward the traditional goal of preventing Cuban independence. Crucially, the ideological institutions must suppress the record of aggression, campaigns of terror, economic strangulation, and the other devices employed by the lord of the hemisphere in its dedication to “the true interests of the Cuban people.” Cuba’s plight must be attributed to the “demon” Castro and “Cuban socialism” alone. Castro bears full responsibility for the “poverty, isolation and humbling dependence” on the USSR, the New York Times editors inform us, concluding triumphantly that “the Cuban dictator has painted himself into his own corner,” without any help from us. That being the case, by doctrinal necessity, we should not intervene directly as some “U.S. cold warriors” propose: “Fidel Castro’s reign deserves to end in home-grown failure, not martyrdom.” Taking their stand at the dovish extreme, the editors advise that we should continue to stand aside, watching in silence as we have been doing for 30 years, so the naive reader would learn from this (quite typical) version of history, crafted to satisfy doctrinal demands. 

The U.S. concern for “the true interests of the Cuban people” merits no comment. The concerns over public opinion in Cuba and Latin America, and crucially the “true interests” of U.S. business, have always been real enough. The former are understandable in light of the public opinion polls just cited or the Latin American reaction to the Agrarian Reform Law of May 1959, acclaimed by one UN organization as “an example to follow” in all Latin America. Or by the conclusion of the World Health Organization’s representative in Cuba in 1980 that “there is no question that Cuba has the best health statistics in Latin America,” with the health organization “of a very much developed country,” despite its poverty. Or by the interest in Brazil and other Latin American countries in Cuban biotechnology, unusual if not unique for a small and poor country. It is not Castro’s crimes that disturb the rulers of the hemisphere, who cheerfully support the Suhartos and Saddam Husseins and Gramajos, however grotesque their crimes, as long as they perform their service role. Rather, it is the elements of success that arouse fear and anger and the call for vengeance, a fact that must also be suppressed by ideologists, not an easy task, given the overwhelming evidence confirming this primary principle of world order. 

Sabotage, terror, and aggression were escalated further by the Kennedy administration, along with the kind of economic warfare that no small country can long endure. Cuban reliance on the U.S. as an export market and for imports had, of course, been overwhelming and could hardly be replaced without great cost. In February 1962 the Kennedy administration imposed an embargo, breaking all economic, commercial, and financial relations. Theoretically, medicines and some food were exempt, but food and medical aid were denied after Cyclone Flora caused death and destruction in October 1963. Standard procedure, incidentally: consider Carter’s refusal to allow aid to any West Indian country struck by the August 1980 hurricane unless Grenada was excluded (they refused and received no aid), or the U.S. reaction when Nicaragua was fortuitously devastated by a hurricane in 1988—any weapon is permissible against the perpetrators of the crime of independence. The Kennedy admin- istration also sought to impose a cultural quarantine to block the free flow of ideas and information to the Latin American countries, whose unwillingness to emulate U.S. controls on travel and cultural interchange always greatly troubled the Kennedy liberals, as did their legal systems, requiring evidence for crimes by alleged “subversives” and their excessive liberalism generally. 

After the Bay of Pigs failure, the Kennedy terrorist attacks escalated further, reaching quite remarkable dimensions (“Operation Mongoose”). They are largely dismissed in the West, apart from some notice of the assassination attempts, one of them implemented on the very day of the Kennedy assassination. The operations were formally called off by Lyndon Johnson, who is reported by aides to have condemned the Kennedy programs as “a damned Murder Inc.” The terrorist operations continued, however, and were escalated by Nixon. Subsequent terrorist operations are attributed to renegades beyond CIA control, whether accurately or not, we do not know. One high Pentagon official of the Kennedy-Johnson administrations, Roswell Gilpatric, has expressed his doubts. The Carter administration, with the support of U.S. courts, condoned hijacking of Cuban ships in violation of the anti-hijacking convention that Castro was respecting. The Reaganites rejected Cuban initiatives for diplomatic settlement and imposed new sanctions on the most outlandish pretexts, often lying outright, a record reviewed by Wayne Smith, who resigned as head of the U.S. Interests Section in Havana in protest. 

In the 1980s the U.S. barred from the U.S. industrial products containing any Cuban nickel, an effort to block a major Cuban export. It prohibited a Swedish medical supply company from providing equipment to Cuba because one component is manufactured in the U.S. Aid to the former Soviet Union is conditioned on suspension of commercial relations with Cuba. In early 1991 the U.S. resumed Caribbean military maneuvers, including rehearsal of a Cuba invasion, a standard technique of intimidation. In mid-1991, the embargo was tightened further, cutting remittances that Cuban-Americans are permitted to send to relatives, among other measures. Legislation now under consideration calls for extending the embargo to U.S. subsidiaries abroad and the barring of ships from U.S. ports for six months after any landing in Cuba, as well as seizure of cargo if they enter U.S. territorial waters. The ferocity of the hatred for Cuban independence is extreme and scarcely wavers across the narrow mainstream spectrum. 

There has never been any effort to conceal the fact that the disappearance of the Soviet deterrent and the decline of East bloc economic relations with Cuba enables the U.S. to achieve its longstanding aims through economic warfare or other means. In atypical reaction, the editors of the Washington Post urge that the U.S. seize the opportunity to crush Castro: “For his great antagonist, the United States, to give relief and legitimacy to this used-up relic at this late hour would be to break faith with the Cuban people—and with all the other democrats in the hemisphere.” Pursuing the same logic, the editors, through the 1980s, called upon the U.S. to coerce Nicaragua until it was restored to the “Central American mode” of the Guatemalan and Salvadoran death squad “democracies,” observing their admirable “regional standards”; and scoffed at Gorbachev’s “New Thinking” because he had not yet offered the U.S. a free hand to achieve its objectives by the means condemned by the World Court (in a judgment that discredited the Court, by the standards of American liberalism). The Post speaks for the people of Cuba just as State Department liberals did in the Eisenhower and Kennedy years; as William McKinley spoke for “the vast majority of the population” of the Philippines who “welcome our sovereignty” and whom he was “protecting…against the designing minority”; and as his proconsul Leonard Wood spoke for the decent (i.e., wealthy European) people of Cuba who favored U.S. domination or annexation and had to be protected from the “degenerates.” The U.S. has never been short of good will for the suffering people of the world who have to be protected from the machinations of evil-doers. As for the Post’s love of democracy, charity dictates silence. Its peers scarcely differ. 

The Cuban record demonstrates clearly, once again, that the Cold War framework was scarcely more than a pretext to conceal the standard U.S. refusal to tolerate Third World independence, whatever its political coloration. Traditional policies remain beyond serious challenge within the mainstream. We can anticipate, then, efforts of the usual kind to ensure that the “ripe fruit” drops into the hands of its rightful owners or is pulled more vigorously from the tree. A cautious policy would be to tighten the stranglehold, resorting to economic and ideological warfare (and perhaps more) to punish the population while intimidating others to refrain from interfering. As suffering increases, it is assumed, so will protest, repression, more unrest, etc., in the predictable cycle. At some stage, internal collapse will reach the point where the Marines can be sent in cost-free to “liberate” the island once again, restoring the old order while the commissars chant odes to our grand leaders and their righteousness. Inability to manufacture a pre-election economic recovery, even if only on paper, might accelerate the process with the hope of deflecting popular attention by a foreign policy triumph. But it is unlikely that the Bush administration [Bush I] will veer far from the policies outlined in its early National Security Policy Review, which concluded that the U.S. must avoid combat when confronting “much weaker enemies,” defeating them “decisively and rapidly” because domestic “political support” is so thin. 

The “Natural Boundaries” of the South 

ROUNDING OUT THE natural boundaries” was the task of the colonists in their home territory, but the “natural boundaries” of the South also have to be defended. Hence the unremitting dedication to the task of ensuring that no sector of the South goes a separate way and the near-hysteria, evident even in the internal record, if some tiny deviation is detected. All must be properly integrated into the global economy dominated by the state capitalist industrial societies. The servants must “fulfill their major function” as sources of raw materials and markets, as the State Department put it years ago; they must be protected from “communism,” the technical term for social transformation “in ways that reduce their willingness and ability to complement the industrial economies of the West,” in the words of an important scholarly study of the 1950s. 


In this broader framework, the Cold War can be understood, in large measure, as an interlude in the North-South conflict of the Colombian era, unique in scale, but similar in character to other episodes. The Third World, historian Leften Stavrianos observes, “made its first appearance in Eastern Europe,” which began to provide raw materials for the growing textile and metal industries of England and Holland as far back as the 14th century and then followed the (now familiar) path towards underdevelopment as trade and investment patterns took their natural course. Russia was so vast and militarily powerful that its subordination to the economy of the West was delayed, but by the 19th century it was well on the way towards the fate of the South, with deep and widespread impoverishment and foreign control of key sectors of the economy. 

The Bolshevik takeover in October 1917, which quickly aborted the incipient socialist tendencies and destroyed any semblance of working class or other popular organization, extricated the USSR from the Western-dominated periphery, setting off the inevitable reaction, beginning with immediate military intervention. These were, from the outset, the basic contours of the Cold War. 

The logic was not fundamentally different from the case of Grenada or Guatemala, but the scale of the problem was. It was enhanced after Russia’s leading role in defeating Hitler left it in control of Eastern and parts of Central Europe, separating these regions too from the domains of Western control. A tiny departure from subordination is intolerable, a huge one far less so, particularly when it threatens “stability” through the rotten apple effect. Still more ominous was the fact that the insubordinate deviant was able to lend support to those targeted for subversion or destruction by the global enforcer, while its military capacity was so enormous as to deter U.S. intervention elsewhere. Under such circumstances, “coexistence” is even more out of the question than in the case of Guatemala, Chile, Grenada, Nicaragua, Laos, and so on. “Detente” could be entertained as an option only if it entailed Soviet disintegration and withdrawal from the world scene. As noted earlier, even as the Soviet Union collapsed through the 1980s, the test of Gorbachev’s “New Thinking” was his willingness to allow the U.S. to have its way everywhere, without impediment; failing that criterion, his gestures are meaningless, more communist aggressiveness. 

For such reasons, the U.S. rejected out of hand Stalin’s proposals for a unified and demilitarized Germany with free elections in 1952, Khrushchev’s call for reciprocal moves after his radical cutbacks in Soviet military forces and armaments in 1961-63 (well-known to the Kennedy administration, but dismissed), Gorbachev’s proposals for dismantling Cold War confrontation in the 1980s, indeed any possibility of reduction of tension, short of the return of the miscreants to their service role. 

The Soviet Union reached the peak of its power by the late 1950s, always far behind the West. The Cuban missile crisis, revealing extreme Soviet vulnerability, led to a huge increase in military spending, leveling off by the late 1970s. The economy was then stagnating and the autocracy unable to control internal dissidence. By the 1980s, the system collapsed and the core countries, always far richer and more powerful, “won the Cold War.” Much of the Soviet empire is likely to return to its traditional Third World status, following something like the Latin American model. 

A 1990 World Bank report describes the outcome in these terms: “The Soviet Union and the People’s Republic of China have until recently been among the most prominent examples of relatively successful countries that deliberately turned from the global economy,” relying on their “vast size” to make “inward-looking development more feasible than it would be for most countries,” but “they eventually decided to shift policies and take a more active part in the global economy.” A more accurate rendition would be that their “vast size” made it possible for them to withstand the refusal of the West to allow them to take part in the global economy on terms other than traditional subordination; that is, the “active part in the global economy” imposed on the South by the world rulers. 

Following the standard prescriptions, tendered in this case by Harvard economist Jeffrey Sachs, Poland has seen “the creation of many profitable private businesses,” the knowledgeable analyst Abraham Brumberg observes, along with “a drop of nearly 40 percent in production, enormous hardships and social turmoil,” and “the collapse of two governments.” In 1991 alone Gross Domestic Product (GDP) declined 8-10 percent with an 8 percent fall in investment and a near doubling of unemployment. Russia has been going the same way. Economic and finance minister Yegor Gaidar warned of a further drop of 20 percent in production in coming months, with the “worst period” still ahead. Light industrial production fell by 15-30 percent in the first 19 days of January while deliveries of meat, cereals, and milk fell by a third or more and worse is predicted. 

Western ideologists are impressed with Poland’s “successes,” but concerned that economic irrationality might impede further progress. Under the heading “Factory Dinosaurs Imperil Poland’s Economic Gain,” New York Times correspondent Stephen Engelberg looks at “a worst-case instance of how the industrial legacies of the communist system threaten to drag down economic reform plans in Poland and other Eastern European nations”: the city of Rzeszow, dependent on an aircraft manufacturer for employment, tax revenues, even heat from industrial by-products. The free market policies have “brought cities like Warsaw or Cracow alive with commerce,” Engelberg notes, doubling the number of private businesses (the numbers of those too impoverished to buy even basic goods do not reach threshold). But this welcome progress is threatened by calls for government intervention to rescue enterprises suffering from the collapse of the Soviet Union (loss of markets, unpaid debts, etc.) and to meet minimal human needs. No less ominous is the “social unrest from the workers” who now have a measure of control in factories and even go on strike to prevent closure of plants that might be rescued by “government-guaranteed loans to rebuild foundries.” The Solidarity Union calls on the government “to forgive overdue taxes and place big new airplane orders for the Polish army.” A Solidarity leader says that “the Government has to make a decision whether or not it needs an aircraft industry or whether it has to be restructured or whether one-half should produce aviation and the rest something else.” But Western analysts understand that such decisions are not for the Poles to make; they are to be made by the “free market”—or more accurately, the corporations that dominate it. And no embarrassing questions are raised about the fate of the U.S. aircraft industry or advanced industry in general, without the huge public subsidy to create and maintain it; or about the Chrysler bail-out or Reagan’s rescue of Continental Illinois Bank (“the largest government nationalization in American history,” economist Howard Wachtel comments); or the hundreds of billions of taxpayer dollars to pay off S&L managers and investors, freed from both regulation and risk by the genius of Reaganomics; and so on through the functioning parts of the economy. We put aside the question of how “economic irrationality” of the kind denied to the Third World created an economy in which Americans no longer pursue their comparative advantage in exporting furs. 

The economies of Eastern Europe stagnated or declined through the 1980s, but went into free fall as the IMF regimen was adopted with the end of the Cold War in 1989. By the fourth quarter of 1990, Bulgaria’s industrial output (which had previously remained steady) had dropped 17 percent, Hungary’s 12 percent, Poland’s over 23 percent, Romania’s 30 percent. The UN Economic Commission for Europe expects a further decline of 20 percent for 1991, with the same or worse likely in 1992. One result has been a general disillusionment with the democratic opening and, in fact, growing support for the former Communist parties. In Russia the economic collapse has led to much suffering and deprivation, as well as “weariness, cynicism, and anger, directed at all politicians, from Yeltsin down,” Brumberg reports, and particularly at the ex-Nomen- klatura who, as predicted, are taking on the role of Third World elites serving the interests of the foreign masters. In public opinion polls, half the respondents considered the August 1991 Putsch illegal, one-fourth approved, and the rest had no opinion. 

Support for democratic forces is limited, not because of opposition to democracy, but because of what it becomes under Western rules. It will either have the very special meaning dictated by Western needs or it will be the target of destabilization, subversion, strangulation, and violence until the proper “mode” and “standards” are restored. Exceptions to the pattern are rare. 

Loss of faith in democracy is of small concern in the West, though the “bureaucratic capitalism” that might be introduced by the Communists-turned-yuppies is a potential problem. In the Western doctrinal system, democratic forms are acceptable as long as they do not challenge business control. But they are secondary: the real priority is integration into the global economy with the opportunities this provides for exploitation and plunder. 

With IMF backing, the European Community (EC) has provided a clear test of good behavior for Eastern Europe: a demonstration that “economic liberalization with a view to introducing market economies” is irreversible. There can be no attempts at a “third way” with unacceptable social democratic features, let alone workers’ control, that is, more substantive steps towards democracy and freedom. The chief economic adviser to the EC, Richard Portes, defined acceptable “regime change” not in terms of democratic forms, but as “a definitive exit from the socialist planned economy—and its irreversibility.” One recent IMF report, Peter Gowan notes, “concentrates overwhelmingly on the Soviet Union’s role as a producer of energy, raw materials, and agricultural products, giving very little scope for the republics of the former Soviet Union to play a major role as industrial powers in the world market.” Transfer of ownership to employees, he notes, “has commanded strong popular support in both Poland and Czechoslovakia,” but is unacceptable to the Western overseers, conflicting with the free market capitalism to which the South must be subjected. 




The South, that is. Conforming to the general practice of the leading industrial societies, the EC has raised barriers to protect its own industry and agriculture, thereby closing off the export market that might enable the East bloc to reconstruct its economies. When Poland removed all import barriers, Gowan notes, the EC refused to reciprocate, continuing to discriminate against half of Polish exports. The EC steel lobby called for “restructuring” of the East European industry in a way that would incorporate it within the Western industry; and the European chemical industry warned that construction of free market economies in the former Soviet empire “must not be at the expense of the long-term viability of Western Europe’s own chemical industry.” Of course, none of the state capitalist societies accept the principle of free movement of labor, a sine qua non of free market ideology. The errant Eastern European sectors of the Third World are to return to their service role. Their resources must be free for exploitation and they must provide cheap skilled labor for Western investors, supplying the markets of the core industrial societies. 

The situation is reminiscent of Japan in the 1930s or of the Reagan-Bush Caribbean Basin Initiative, which encourages open export-oriented economies in the region while keeping U.S. protectionist barriers intact, undermining possible benefits of free trade for the targeted societies. As noted earlier, the patterns are as pervasive as they are understandable. 

The U.S. has watched developments in Eastern Europe with some discomfort. Through the 1980s, it sought to impede the dissolution of the Soviet empire and East-West trade relations. In August 1991 George Bush urged Ukraine not to secede just before it proceeded to do so. One reason for this ambivalence is that after a decade of spend-and-borrow economic mismanagement, the U.S. is deeply in debt at every level: federal, state, corporate, household, and the incalculable debt of unmet social and infrastructure needs. It is not well-placed to join German-led Europe and Japan in the project of despoiling the newly opening sectors of the South. 

Some Free Market “Successes” 

IT WOULD ONLY BE fair, however, to add that the IMF-World Bank recipe now being imposed on the former Soviet empire has its successes, at least in Latin America. Bolivia is a highly-touted triumph, its economy rescued from disaster by the harsh but necessary stabilization program prescribed by its expert advisers, now plying their craft in Eastern Europe (notably, Jeffrey Sachs). Public employment was sharply cut, the national mining company was sold off leading to massive unemployment of miners, real wages dropped, rural teachers quit in droves, regressive taxes were introduced, the economy shrank, as has productive investment, and inequality increased. In the capital, economist Melvin Burke writes, “street vendors and beggars contrast with the fancy boutiques, posh hotels, and Mercedes-Benzes.” Real per capita GNP is three-fourths what it was in 1980, and foreign debt absorbs 30 percent of export earnings. As a reward for this economic “miracle,” the IMF, Interamerican Development Bank and Paris Club of creditor governments (G-7) offered Bolivia extensive financial assistance, including secret salary payments to government ministers to make up for their reduced incomes. 

The successes are that prices stabilized and exports are booming. About two-thirds of the export earnings are now derived from coca production and trade, Burke estimates. The drug money explains the stabilization of currency and price levels, he concludes. About 80 percent of the $3 billion in annual drug profits is spent and banked abroad, mainly in the U.S., providing a lift to the U.S. economy as well. Drug launderers and bankers, needless to say, are not targets of the U.S.-sponsored drug war. This profitable export business “obviously serves the interests of the new illegitimate bourgeoisie and the ‘narco-generals’ of Bolivia,” and “also apparently serves the United States national interest, inasmuch as money laundering has not only been tolerated by the United States, but has, in fact, been encouraged.” It is “the poor peasant coca growers” who “struggle to survive against the combined armed might of the United States and the Bolivian military,” Burke writes. There are always plenty more to ensure that the economic miracle will continue, with the applause of the international economists. 

Achievements have also been recorded elsewhere, thanks to timely U.S. intervention and expert management. Take Grenada. After its liberation in 1983, it became the largest per capita recipient of U.S. aid (after Israel, a special case), as the Reagan administration proceeded to make it a “showcase for capitalism.” The austerity programs brought with them the usual disaster, condemned even by the private sector they are designed to benefit. But there is one bright spot in the generally dismal picture, Ron Suskind reports in a front-page Wall StreetJournal article headlined “Made Safe by Marines, Grenada Now is Haven for Offshore Banks.” The economy may be “in terrible economic shape,” as the head of a local investment firm and member of Parliament observes—thanks to USAID-run structural adjustment programs, the Journal fails to add. But the capital, St. George, “has become the Casablanca of the Caribbean, a fast-growing haven for money laundering, tax evasion, and assorted financial fraud,” with 118 offshore banks, one for every 64 residents. Lawyers, accountants, and some businesspeople are doing well, as, doubtless, are the foreign bankers, money launderers, and drug lords.  

The U.S. liberation of Panama recorded a similar triumph. Guillermo Endara, sworn in as president at a U.S. military base on the day of the invasion, would receive 2.4 percent of the vote if an election were held, recent polls indicate. His government designated the second anniversary of the U.S. invasion a “national day of reflection.” Thousands of Panamanians “marked the day with a ‘black march’ through the streets of this capital to denounce the U.S. invasion and the Endara economic policies,” the French press agency reported. Marchers claimed that U.S. troops had killed 3,000 people and buried many corpses in mass graves or threw them into the sea. The economy has not recovered from the battering it received from the U.S. embargo and the destructive invasion. But some indicators are up. The General Accounting Office reported that drug trafficking “may have doubled” since the invasion while money laundering has “flourished,” as was predicted at once by everyone who paid attention to the practices and commitments of the tiny white elite whom the U.S. restored to their traditional rule. Increased drug trafficking and the economic crisis have also contributed to “an unprecedented increase in drug consumption, especially among the poor and the young,” the Christian Science Monitorreports. 




Another triumph of free market democracy was recorded in Nicaragua where the Chamorro government and U.S. Ambassador Harry Shlaudeman signed accords, opening the way for the U.S. Drug Enforcement Agency (DEA) to operate in Nicaragua “in an attempt to control the growing drug trafficking problem” (Central America Report, Guatemala). The DEA agent in Costa Rica declared that Nicaragua is now “being used as a corridor for transferring Colombian cocaine to the United States” and a Department of Justice prosecutor added that the Nicaraguan financial system is laundering drug money. There is also a growing drug epidemic within Nicaragua, fueled by the high level of drug use by recent returnees from Miami as well as the continued economic decline and the new avenues for drug trafficking since the U.S. regained control. “Since the installation of the Chamorro government and the massive return of Nicaraguans from Miami,” CAR reports, “drug consumption has increased substantially in a country long free from drug usage.” Miskito leader Steadman Fagoth accused two members of the Chamorro cabinet, his former contra associate, Brooklyn Rivera, and the minister of fishing for the Atlantic Coast, of working for the Colombian cartels. The Nicaraguan delegate to the Ninth International Conference on the Control of Drug trafficking in Colombia in April 1991 alleged that Nicaragua “has now become a leading link in cocaine shipments to the U.S. and Europe.” 

A conference attended by government officials and nongovernmental organizations in Managua in August 1991 concluded that the country now has 250,000 addicts and is becoming an international bridge for drug transport, though the rate of addiction is still below the rest of Central America (400,000 addicts in Costa Rica, 450,000 in Guatemala, 500,000 in El Salvador). Nicaraguan addiction is increasing among young people, particularly with the return of many from years in Miami. A conference organizer commented, “In 1986 there wasn’t one reported case of hard drugs consumption” while “in 1990 there were at least 12,000 cases.” And 118 drug dealing operations were identified in Managua alone, though it is the Atlantic Coast that has become the international transit point for hard drugs, with increasing addiction there as a consequence. U.S. journalist Nancy Nusser reports from Managua that cocaine has become “readily available only since President Violeta Chamorro took office in April 1990,” according to dealers. “There wasn’t any coke during the Sandinistas’ time, just marijuana,” one dealer said. Carlos Hurtado, currently minister of government, said that “the phenomenon of cocaine trafficking existed before, but at a low level.” Now it is burgeoning, primarily through the Atlantic Coast, according to “a ranking Western diplomat with knowledge of drug trafficking” (probably from the U.S. Embassy) who describes the Coast now as “a no man’s land.” 

Drugs are becoming “the newest growth industry in Central America,” CAR reports, as a result of the “severe economic conditions in which 85 percent of the Central American population live in poverty” and the lack of jobs, particularly in neoliberal Nicaragua. But the problem has not reached the level of Colombia where security forces armed and trained by the U.S. are continuing, perhaps even escalating, their rampage of terror, torture, and disappearances, targeting political opposition figures, community activists, trade union leaders, human rights workers, and the peasant communities generally, while U.S. aid “is furthering the corruption of the Colombian security forces and strengthening the alliance of blood between right-wing politicians, military officers, and ruthless narcotics traffickers,” according to human rights activist Jorge Gmez Lizarazo, a former judge. The situation in Peru is still worse. 

These are only symptoms of much deeper malaise in Latin America and in the South more generally. The challenge of the 500-year war, moral and cultural no doubt, but with institutional roots, will determine, finally, whether and how these problems can be addressed.