Latin American Spring and global recession


Evo Morales’ presidential election win in Bolivia at the end of 2005, heralded an unprecedented series of  electoral  challenges to US and other foreign influence in Latin America through 2006. The year’s changes have brusquely disrupted domination by local elites identified with foreign corporations, the agenda of foreign governments and of the international financial organizations those governments control. The elections make possible for the first time in decades concerted combination by Latin American and other countries  to defend their peoples’ interests against the imperial powers of US, Europe and their Pacific allies. As the year ends, elections have now taken place in Colombia, Peru, Mexico, Brazil, Nicaragua, Ecuador and Venezuela.

Corrupt, repressive local oligarchies foisted their fascist candidate of choice on people in both Colombia and Mexico. In Peru, centrist opportunist Alan Garcia barely scraped a win even with reluctant support from the country’s reactionary oligarchy.  In Mexico, the supreme federal electoral tribunal acknowledged the elections were vitiated by fraud, but declared for the ruling PAN party’s candidate Felipe Calderon regardless. Fraud tainted Alan Garcia’s election win in Peru as well, although not in a way that permitted  losing candidate Ollanta Humala the kind of mass protest campaign mounted by Andres Manuel Lopez Obrador in Mexico.

By contrast, in Brazil, Nicaragua, Ecuador and Venezuela the victorious candidates won by very clear margins in elections almost universally accepted as legitimate. All the new presidents in those countries are committed in varying degrees to a strong social agenda, inimical to US political and economic domination and in favour of regional integration, prioritizing more or less greater redistribution of resources in favour of the impoverished majority. However, only in Venezuela does the re-elected president there enjoy clear majority support in the legislature. One needs to look beyond the fatuous “pink tide” pap-reporting of corporate mainstream news media to get some idea of what Latin America‘s new political configuration might mean.

Terror, corruption, repression

In Colombia, narco-terror President Alvaro Uribe won re-election by a substantial margin in a country traumatised by civil war. Like his patron George W. Bush, Uribe is finding that a second term in office can incur the consequences of accumulated hubris. Currently, Uribe’s administration is struggling to minimize damage from scandals that have only confirmed what most people already knew very well concerning its links to drugs-dealing paramilitary terrorist organizations. Three members of Colombia‘s Congress have been arrested accused of illegal support for the Colombian paramilitary death squads. Over 50 members of the country’s two house Congress may be implicated as well as the country’s Defence Minister and close relatives of the Foreign Minister. (1)

Revelations by Senator Miguel de Espriella have been followed by threats of further revelations from paramilitaries participating in the bogus, revolting “peace talks” between these murderers themselves and the very authorities who organised them in the early 1990s and with whom they have been working ever since. The scandal seems to mark a vicious power struggle between the country’s old guard oligarchy and more recent upstarts exploiting their power base in the paramilitary bands the oligarchy created and nurtured. Colombia offers a vision at once frightening and sobering of the kind of desperate civil conflict that might await Mexico if the illegitimate Calderon regime insists on pushing through its corrupt, viciously exclusive economic programme.

The recent reprise in Oaxaca of mass indiscriminate imprisonment, wanton murder, and premeditated wholesale assault and rape perpetrated earlier in the year in Atenco is likely to be only a taste of what is to come. Protected by the army, Calderon skulked into office, literally by the back door, and named notorious human-rights-violating hardmen in key ministerial posts. Up until now the mass resistance organized by Andres Manuel Lopez Obrador has not suffered the kind of extremely violent assaults launched against protestors in Oaxaca. That restraint is unlikely to last when Calderon and the ruthless oligarchy he fronts for find their plans for grand larceny on a national scale – such as privatization of the State oil company PEMEX – frustrated both in the country’s political structures, in the streets and in the campo. (2)

In Peru, chameleon Alan Garcia is haunted by human rights abuses committed during his previous presidential term in the 1980s. Back then his government oversaw mass murder by the security forces in Peru‘s prisons of hundreds of people accused of links to the Sendero Luminoso guerrilla movement. He left office amid much speculation about corruption including rumours of a secret deal permitting Alberto Fujimori to install his own corrupt, murderous terror regime, run by Fujimori together with the sinister Vladimiro Montesinos, currently imprisoned in Peru on narcotics and corruption charges. After submerging Peru‘s majority deeper in poverty and hyperinflation in the 1980s, Garcia has now veered to the other extreme and installed IMF-loyalist and banker Luis Carranza as economy minister. Garcia has little support in Peru‘s impoverished rural departments as recent protests made clear. His APRA party made a miserable showing in recent municipal elections in which the main political parties generally lost local representation.

Just as almost everywhere else, corruption is prevalent throughout Latin America but the degree to which its benefits are guaranteed by murderous organized violence against the dispossessed in Mexico and Colombia sets those countries very much apart. Mexico and Colombia receive practically unqualified support from the US authorities and their European and Pacific colleagues despite the blatant electoral fraud in Mexico and the naked narco-terror of Alvaro Uribe’s regime. Peru’s Alan Garcia, recently reconciled with Venezuela’s Hugo Chavez after differences during Peru’s hard-fought  election campaign, will most probably try to bolster his precarious popular support by trying to meet campaign commitments he made to economically vulnerable groups. He may well stick only loosely to the neo-liberal Pacific Rim corporate consensus promoted by the United States from Mexico City down to Santiago in Chile. If he tries to push through a hard neo-liberal corporate agenda he will certainly provoke the mobilisation of the kind of popular coalition that almost denied him the presidency this year and which helped Rafael Correa win the presidency in neighbouring Ecuador in November.

Prague Spring in Latin America?

Trade and investment are the economic key to Latin American countries’ efforts to defeat the imperialist designs of the US and its European and Pacific allies. A recent vote in the US Congress on the Andean Trade Preference and Drug Eradication Act seems to have extended that measure’s preferential terms for 6 months to all four participating countries, Bolivia, Colombia, Ecuador and Peru. The ATPDEA was first agreed in the early 1990s ostensibly to promote measures against drug production, mainly cocaine, and to promote US-Andean trade. In practice, it served both as a pretext to legitimise a US military and intelligence presence in the area aimed principally against the Colombian FARC guerrillas and as a way of getting the Andean countries hooked on favourable trade terms so as to soften them up for full-blown “free trade” treaties with the US.

Against vigorous popular opposition, the Peruvian and Colombian governments have already signed up for these trade-in-your-sovereignty treaties with the US – although Congress has yet to ratify them and may even refuse to do so if the Democrats decide it suits them to hang tough against George Bush’s failed-state regime. But Ecuador and Bolivia both reject the prospect of such treaties on the grossly prejudicial terms offered by US trade negotiators. The renewal of the ATPDEA (3) has sent feathers flying in the corporate one-party State cockpit  in Washington. Some wanted to condition renewal on commitments from Bolivia and Ecuador to future “free trade” agreements. Others argued that renewal is vital to counteract the influence of trade initiatives from Venezuela and Cuba like ALBA (the Bolivarian Alternative for the Americas) as well as already mooted bilateral cooperation agreements between Venezuela, Bolivia and Ecuador. The precarious future of broad US military presence in the region is also a factor, since Ecuador’s president-elect Rafael Correa has already declared that his government will not renew the lease on the strategic US coastal and air base at Manta when that expires in 2009.

When Bolivia‘s president Evo Morales stated that other South American countries had committed to absorbing Bolivian manufactures, jewellery, furniture and textiles should these be blocked from entry to the US (4), he signalled regional governments’ determination to insist on reaching terms of trade in the interests of their  peoples. A major factor facilitating moves towards greater economic autonomy is increased investment from China. China‘s leader Hu Jintao visited various Latin American countries at the end of 2004 and negotiated investment deals initially worth at least US$50bn and perhaps as much as US$100bn in years to come. While this is still less than half current US direct investment in the region it dramatically increases Latin American countries’ economic options and invites a fundamental rethink in US and European economic strategies in the region.

Foreign investment – a mixed bag

The growing non-traditional investment presence in Latin America of countries like China and, on a smaller scale, other countries like Russia, India and Iran is most obvious in Venezuela. Computer assembly, vehicle production and arms manufacture accompany cooperation in oil and gas extraction technology and cooperation on satellite ventures. Brazil‘s Embraer, now a major world aerospace manufacturer, runs a joint aircraft production plant in China. The Chinese oil company Sinopec is helping Cuba explore for oil. An Indian multinational recently signed a deal with the Bolivian government to exploit the country’s vast Mutun iron ore reserves. That Mutun deal was much criticised by analysts who argued that Bolivia would have done better to build up its own iron ore processing capacity rather than contract out that processing wholesale to a foreign multinational. (It may be worth noting here that Indian and Brazilian multinational companies are currently competing against each other in a takeover battle for the British Corus steel company).

In parallel with that growing commercial power and confidence, Latin America‘s technological prowess is also clear. Apart from the well-established skills base in agriculture, in steel and manufacturing and in oil and gas technologies, both Brazil and Argentina have successful nuclear industries. Argentina, for example, is likely to operate a contract shortly to overhaul a nuclear reactor in Libya.(5) Complementing all the foreign investment are local integration processes advocated most strongly by Venezuela and Brazil and supported by Argentina, Bolivia and now very probably Ecuador as well. A typical example of this rapidly advancing trend was the recent inauguration of a gas liquefaction plant in Bolivia as a joint venture between Bolivia and Venezuela, part of a planned US$1.2bn investment program run by Bolivia’s state YFPB copmany and Venezuela’s State PDVSA.(6)

Despite such promising signs of growing autonomy, Latin American economies remain overwhelmingly dependent on raw materials exports. Latin America (mainly Chile and Peru) exports 40% of the global supply of copper and 47% of the global supply of soya, (mainly from Argentina, Brazil and Paraguay). China‘s current voracious demand for raw materials is buoying up prices for the moment and gives Latin American countries much-needed leverage in negotiations with the United States and Europe. Chile negotiated a mutually beneficial trade agreement with China that came into effect in October this year. Even so, the OECD reports (7) that from 2001 to 2005, the main investors in Latin America were from the US, Holland, Spain, France and Canada.

Principal targets for companies from these countries have been industries like tourism, banking and telecommunications, manufacturing and natural resources, mainly oil, gas and minerals. Mexico and Brazil have been the main beneficiaries. Overall direct foreign investment in Latin America has declined by about 4% from 12% in the 1980s to 8% now as a proportion of global investment overall. Such figures are misleading in that much of the so-called investment through the 1990s and in recent years was largely attributable to merger and acquisition activity, a lot of it fuelled by the privatization of State resources under the edicts of the IMF and the World Bank.

Coupled with that, deregulation of capital controls meant that most of the profits from all that artificial investment activity fled Latin America for major global financial centres and the plethora of international offshore tax havens. The kind of foreign investment that countries chase after matters at least as much as the nominal amounts on offer. The reason gargantuan infrastructure programs like Plan Puebla Panama and IIRSA (South American Regional Infrastructure Initiative) depend almost entirely on Inter-American Development Bank loans is that private corporations and multinational companies refuse to invest in them. So local populations get saddled with massive debt to cover risks private capital refuses to touch. The massive dishonest corporate propaganda machine trumpeting the wonders of “free market” capitalism falls silent when shareholders fear losing their shirts. Then it is suddenly time for international financial institutions to approve corporate welfare “regional development plans” and other interventions not-so-abhorrent-to-all-true-believers, so long as they are funded by reluctant, impoverished tax-payer philanthropists.

In any case, China’s efforts to increase its presence in South America should boost levels of real investment in technology and infrastructure and combine with the investment potential of current integration initiatives to reshape traditional investment patterns in Latin America. The huge challenge facing progressive governments in Latin America is to guarantee a dramatic improvement in the redistribution of the wealth resulting from such changes. If one asks the question “why are the United States and its European and Pacific allies politically hostile to Venezuela and Bolivia (and now Ecuador) but friendly with Mexico and Colombia?” almost all of the answer is based in that economic reality. The old rules of the game are changing because Latin American governments can now work together and play three giant customers against each other. It is much harder for Europe and the US to run their traditional debt-aid-and-trade extortion racket to divvy up Latin American resources between themselves now a third major player has dealt themselves in.

Dollar decline, same old sham diplomacy

How long the current buoyancy of raw materials and energy prices sustaining healthy Latin American economic prospects will last is anyone’s guess. So much depends on the US economic love-hate relationship with China. The decline of the dollar has been the theme of endless speculation for years. Right now it looks as though the global central banks cartel is managing markets convincingly enough to be able to deliver a managed dollar devaluation allowing foreign buyers to soak up worth-less-and-less US Treasury paper liquidity with relatively limited recessionary effects. Some analysts expect the dollar to make a stately decline through 2007, others optimistically argue that the current drop in value is a speculative blip, for example an arbitrage by speculators on statistical values of the Yen against the Euro.(8) A less sanguine view was recently offered by Gabriel Kolko(9) suggesting that financial markets, especially financial derivatives markets, are so out of control that a market induced crash could plunge the world’s economies into recession at any moment.

A more cynical spin might be that the US government is using global dependency on the dollar to intimidate competitors into doing what it wants – a kind of US economic water-torture, drip by drip. The managers of the US corporate one party State also know domestic hard times are very likely on the way and, by smart not-so-coincidence, already have in place the repressive legislation necessary to manage any burgeoning domestic dissent or revolt, having scrapped the Constitution in favour of Patriot Acts 1 and 2. While China‘s investment in Latin America may be welcome, countries like Mexico and the Central American republics see China as much as a competitor as a potential benefactor. All are heavily dependent on domestic US consumer demand. The threat of global recession is a powerful one that despìte its “free market” gobbledy-gook the US government is well able and willing to manipulate in its favour. In some ways China’s investment in Latin America might best be viewed as a race against time to diversify available markets for its goods away from North America, as much as an accompaniment to vacuuming up the continent’s natural resources.

Along with the unfavourable global economic realities that seem to have overtaken United States government policy has appeared a superficial softening in US diplomacy. Thomas Shannon, Assistant Secretary of State for Western Hemispheric Affairs, has recently declared US government readiness to work with Daniel Ortega and with Hugo Chavez following their presidential election victories in Nicaragua and Venezuela respectively. But that apparent change of heart in the Bush regime line towards democratically elected ideological opponents is barely even press-release-deep. When one returns to consider US and European Union policy in Latin America the stark reality remains unchanged. Mass murderer Augusto Pinochet and his sister-in-arms Jean Kirkpàtrick may be dead now but their nefarious criminal ideological legacy abides.

Blatant electoral fraud and mass human rights abuses in Mexico go practically unchallenged by the imperial powers. Colombia more clearly than ever is ruled by narcotics, death-squad gangsters but still receives billion-dollar funding from the US and the mildest of admonishments from Europe. The US still refuses to meet its international obligations and return self-confessed mass murderer Luis Posada Carriles to Venezuela to stand trial for the bombing of a civilian airliner. Terrorist camps in Florida continue to train assassins for terror attacks in Cuba and Venezuela, with the complicity of the US authorities. The European Union stays mum – so much for the “war on terror”. One can only hope Latin America’s Spring endures longer than the one in then Czechoslovakia and is not frozen stiff by the United States and its European and Pacific allies manipulating global “free markets” so as to manage economic downturn as a variation on Clausewitz’s “politics by other means”. This may be to overstate the empire’s capacity to turn wishes into reality. But its agents never stop scheming. With their power and control in decline, they will seek to preserve every advantage they can.

toni solo is an activist based in Central America – contact via www.tonisolo.net

Notes

1. “Colombian scandal weakens push for economic reform”, Hugh Bronstein  (Alertnet Reuters)November 27th 2006
“Actitud paramilitares complica aún más situación gobierno colombiano” Prensa Latina, December 7th 2006
“¿No existen las responsabilidades políticas?”, Jorge Enrique Robledo, Argenpress.info 04/12/2006
“Conexiones “ocultas””, José María Carbonell, Anncol, 29/11/2006
“Narco Parlamento Colombiano”, Miguel Suarez, Anncol 29/11/2006
“El país de los escándalos”, Reinaldo Spitaletta, Argenpress.info 30/11/2006
“Uribe Vélez no es aliado de los paramilitares…”,  Por la boca muere el pez/Juan Leonel Londoño/Luís Pedro Lizcano,Anncol, 2/12/2006

2.”Repression on the Menu in Mexico” John Ross, Counterpunch, December 4th 2006
“The Dirty War of Oaxaca”, Barucha Calamity Peller, Counterpunch, December 2nd/3rd 2006
“The Coup d’Etat in Mexico”, Al Giordano, Narco News, November 29th 2006

3. “Preferential US-Andean Deals Face Uncertain Future”, Emad Mekay, Inter Press Service 20th November 2006
“Renovación de las preferencias arancelarias Para Bolivia y Ecuador es otro precio” Asociacion de Prensa Mercosur, 6/12/2006
“EE.UU. amplía plazo preferencial a Bolivia y países andinos”, Prensa Latina, 09-12-2006

4.”Afirma Morales que encontró mercado en países sudamericanos”, Prensa Latina, 09-12-2006

5.”Argentina modernizará un reactor nuclear en Libia”, XINHUA, Argenpress, 04/12/2006)

6. “Chávez y Morales inaugurarán en Bolivia planta de gas”, Prensa Latina 3/12/2006

7. “China, a helping hand?” Javier Santiso, Policy Insight No.23, OECD Development Centre

8. “Dollar decline? What dollar decline? It’s arbitrage.” David Andrew Taylor, Seeking Alpha, 4/12/2006  (http://usmarket.seekingalpha.com/article/21656)

9. “Factors in our colossal mess”, Gabriel Kolko, Counterpunch, 25th/26th November 2006 (http://www.counterpunch.org/kolko11252006.html)

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