Latin America - Between Populism and Imperialism (Part I)

Is the US losing its grip over its own backyard? As military and economic power is advancing all over the planet a series of victories of “Left” governments have created new pressures for it in South America and the Caribbean. Following the electoral victory in Brazil of the so-called Workers Party headed by Luiz Ignacio da Silva, “Lula”, in Venezuela Chavez’ successful defence of his regime against a US-inspired coup confirmed in a referendum in 2004 plus the electoral victories of Gutierrez in Ecuador, Vasquez in Uruguay, Kirchner in Argentina, Morales in Bolivia and Michele Bachelet in Chile in the last few months, it looks as though the political complexion of Latin America is changing. The victory of Evo Morales last year was the victory of the sixth Latin American Presidential candidate in the last seven years who has explicitly campaigned against the so-called “Washington Consensus” of "neo-liberalism".

US Hypocrisy

Just how disastrous unregulated free market policies have been for Latin America is never faced up to by the US Government. When Bush went to South America in November to try to secure agreement on a Free Trade Area of the Americas (FTAA or Alca in Spanish) he was not only greeted by strikes and hostile demonstrations but also found that there was strong opposition to the US amongst many Latin American governments. The leaders of Argentina, Brazil, Paraguay, Uruguay and Venezuela (the so-called Mercosur countries) (1) declared that:

The conditions do not exist to attain a hemispheric free trade accord that is balanced and fair with access to markets that is free of subsidiaries and distorting practices.

It is no secret that they thought it was the US which was operating the “distorting practices”. This is not surprising given that Latin America has been the testing ground for all kinds of neo-liberal experiments in the last few decades which have brought social disaster to much of the continent. At Mar del Plata in Argentina, Bush tried to play the “democracy and freedom” card that he is using to justify “regime change” in the Middle East. However it doesn’t sound so plausible in a continent where the US has regularly conspired to overthrow democratically elected governments from Cuba to Chile over the last century. Indeed US policy was summed up when a Secretary State said of the Nicaraguan dictator Somoza in the 1950s and 1960s that

He might be a son-of-a-bitch but he is our son-of-a-bitch.

The CIA overthrow of the democratically-elected Allende government in Chile in 1973, the financing of death squads in Central America and Colombia (the armed forces in guerrilla clothes) and the continual interference of the US-dominated IMF in the economic management of Latin American countries, all demonstrate that ‘freedom’ and 'democracy’ are only convenient slogans behind which lies US expansionism. It is the same with the so-called “war on terrorism”. Whilst the US is “hunting ‘em down” in Afghanistan and Iraq it is also protecting characters like Luis Posada Carriles and Orlando Bosch who are both self-confessed terrorists who blew up an airliner of Cubana de Aviación in October 1976. Even though Bosch was known to the Justice Department as someone who “has been involved in terrorist attacks abroad and has advocated bombings and sabotage”, he was given an immediate residence permit by the Bush Administration. Carriles, as an anti-Castro thug, was so confident of immunity that he gave a press conference in Florida. This so blatantly exposed the Bush government as a supporter of terrorism that he was “arrested” and placed in comfortable detention facilities awaiting deportation “to a country of his choice”. It seems that the “our son-of-a-bitch” ideology extends to terrorism too. (2) Compare that with the “extraordinary rendition” or the treatment of suspects in Guantanamo Bay and US imperialism just appears as hypocritical as ever, particularly in Latin America.

Castro’s Cuba and US Policy

It is perhaps one of the greatest ironies of the present day that the policies of the state since 1992 have done more to keep Fidel Castro in power than anything else. He has been an irritant to the US ever since the famous stand-off over the Missile Crisis in 1962. Although they agreed to take away the missiles the quid pro quo was a guarantee that there would be no more Bay of Pigs-style invasions of Cuba. However despite Castro’s support for guerrilla war all over the continent the US has managed to ensure that whatever short-term alliances Cuba has made in the region they have always managed to isolate the Cuban regime (either by using the military to overthrow the democratically elected “socialist” government of Allende in Chile or by fomenting their own guerrilla campaign, the Contras, against the regime of the Sandinistas in Nicaragua).

In the late 80s it was already clear that the favourable trade relations with the USSR, which had sustained Castro in power, were beginning to unravel. The collapse of the Soviet Union and the Yeltsin takeover in Russia saw an end to the generous treatment (worth $6 billions a year at its height) which Cuba had received through various trade agreements.

The US thought that this was its big chance at last to finish Castro off. The US Congress decided to screw up the sanctions regime that it had operated against Cuba since 1962. The Torricelli Act in 1992 and the Helms-Burton Act of 1996 both put penalties on any company or state which traded with the island. As the Cuban economy reached the point of collapse they simply furnished Castro with a scapegoat, if not an explanation, for the economic disaster. As the Castro regime has been built on populist anti-American nationalism the vast majority of Cubans had no difficulty in blaming imperialism for their economic plight. It has also played well on the international stage. Every year the UN votes to condemn the sanctions by massive majorities (3) and every year the US ignores the vote. All this at a time when Cuba’s GDP had halved and, according to some analysts, (4) was less than that of India at the time.

The survival of the Cuban economy in this period is due to three factors. The first is that most goods are provided via ration books (the tarjeta). Cuba has the most equitable distribution of wealth in Latin America (although the Communist Party élite have access to more and better services) and this is something which prevented social breakdown when Castro announced ration cuts in the early 1990s (as well as an increase in social security). Second, Castro abandoned what had been the highest degree of state ownership of the means of production in the world. About 80% of the land was state-owned in 1990 but by the end of the decade less than 40% was in state hands. By profit-sharing with small farmers and taxing more profitable agricultural enterprises the state became financially more solvent. The most important fact though was the growth of tourism. Castro signed hundreds of deals with foreign tourist companies to build an infrastructure. Today tourism earns $1.8 billions whilst sugar, the old mono-cultural money earner, only realised $600 millions. In fact the almost total lack of investment in Cuban constant (fixed) capital over the last twenty years is evident everywhere in the piles of rusting machines without parts.

There have been other important economic changes. The Armed Forces budget has been cut by a third as Cuba’s sons are no longer sent to die for Soviet imperialism in Africa, has settled its debts with Japan, and trade agreements, involving barter and loans, have been signed with, France Spain and Canada. Most significant of all though has been the agreements signed with the Chavez Government in Venezuela since the one thing that Cuba lacks most is energy (power cuts remain in force every day). The advent of Chavez and the US attempts to oust him are reminiscent of their treatment of Cuba and once again it has backfired.

Chavez and the Bolivarian Revolution

The real reason for the wave of anti-US electoral victories stems from the consequences of the capitalist crisis in Latin America. In social terms Latin America remains the area of the world with the greatest disparity of wealth. Basically despite all the hyperbole about “revolution” (used to describe the literally hundreds of military coups that have occurred since the criollos won independence from Spain in the early nineteenth century) little has changed in wealth distribution. (5) Towards the end of the post war boom in the 1960s a new middle class was beginning to emerge but in the face of the world capitalist crisis since 1973 it has all but disappeared. Today Latin America as a whole has an estimated population of 500 millions of which 240 millions live below the poverty line (i.e. have less than $1 a day to live on). In Brazil (which is fairly representative of the continent) in 1990 a quarter of the population did not reach the linea de indigencia. That means they are literally starving. (6)

In Venezuela, despite high oil prices for most of the period 1970-98, the actual per capita income fell 35%. Given that its distribution of income was typical of Latin America where the top 20% of the population possess 78 times more wealth than the bottom 80% it is not surprising that a populist movement should arise. Hugo Chavez had tried to take power in 1992 in a military coup and his televised speech denouncing neo-liberalism at his trial launched his political career. He was eventually elected by a landslide on a populist platform. He took office in February, 1999. As Venezuela is the richest oil-producer in Latin America, which supplies the US with 15% of its crude oil, it is a key state for the US. Chavez could not nationalise the oil industry as the previous regime had already done it in 1975. In fact he has changed the state’s relationship with the oil companies. He encouraged foreign oil companies to invest more in Venezuela without having to go through a state intermediary. This is more “liberal” than Mexico or Saudi Arabia. He also has the US over a barrel (pun intended). Unless investment in new sources is carried through, the already high price of oil will become astronomical and world economic activity would become even more arthritic than it is now. Chavez knows they need Venezuela’s reserves (280 billion barrels of untapped heavy crude are said to lie to the north of the Orinoco River) and so he has taken the opportunity to scrutinise the oil companies and to increase their taxes from 1% to 30%. (7) A crippling oil strike by those who worked in the industry was seen down in 2002-3 and, despite its effect, Chavez clung on to power. The failure of the strike allowed Chavez to sack 18,000 oil workers and thus made him more reliant on foreign firms but the increased revenue has allowed him to set up ambitious social programmes which have encouraged the development of cooperatives and the nationalisation of firms where the owners have gone bankrupt. The Iraq War has also helped since it has helped to put the oil price up to $60 a barrel (when Chavez had long argued that $20 to $28 would be a good level). Venezuela stills produces about half a billion barrels less than its OPEC quota.

The Failure of Neoliberalism

The significant point is that Venezuela has power and it has already entered into a strong alliance with Cuba since Washington’s failed attempts to dispose of Chavez. Chavez and Castro are said to converse every evening by telephone and Chavez is now bankrolling a joint trading agreement known as the Bolivarian Alliance (Alba) (8). This has been set up in direct competition with the US attempts at trade agreements. At the November 2005 Mar del Plata meeting referred to at the start of this article Alba had its first success. Standing right next to Bush, the host President Nestor Kirchner delivered a stinging attack on the IMF (for which read “the USA”), and all the trouble it had inflicted on Argentina before and after the collapse. Kirchner had been given $900 millions by Chavez (who had arrived at the meeting carrying a shovel “to bury Alca”) to help pay off Argentina’s debts. Within a month (on 15th December 2005) Kirchner was to announce to an astonished world that Argentina had paid back $9.8 billion dollars in loans to the IMF and therefore was now free of its influence. He stated that:

the IMF has acted towards our country as a promoter and a vehicle of policies that caused poverty and pain among the Argentine people.

He was no doubt thinking that the IMF did not give Argentina a single peso after the economy collapsed at the end of 2001. Indeed the IMF demanded $4 billions in repayments in the worst year of Argentina’s crisis in 2002. And IMF policies were behind the disaster that Argentina faced in the first years of this century. Whilst the US flourishes on the worst budget deficit in history the IMF (run mainly by the US) runs round telling Latin American (and other) governments that the road to “development” means having a “balanced budget” and “fiscal discipline”. The IMF calls on Latin American governments to persuade them to drop all protection for their citizens in order to attract foreign investment but these “benign” investors then start speculating with the local currency and this begins to undermine any attempt by local firms to produce and sell anything since they do not have a stable currency with which to operate. Neither the EU nor the US would ever allow itself to be put in this position.

Kirchner is no radical or socialist. He has risen through the ranks of the Peronist Movement as a “grey” figure who was not averse to clientelismo (i.e. doing favours for his cronies and ensuring his own appointments). What he has done is to realise that the $178 billions of debt that Argentina had when he took office was paradoxically a weapon in his negotiations with international creditors. The discussion was no longer about the terms of repayment but how much of the debt could be recovered by creditors. 76% of it was replaced by long-term bonds which covered only one third of the value of its debt. The IMF was prepared to settle its debt as it hates to have bad debts on its books (as it is bad for its image!). In the past the outcome of such a policy would have been a period of autarky but Chavez’ oil money beckons and not just for Argentina. Uruguay and Brazil are either also negotiating loans or have received them. This is why Venezuela has been let into Mercosur, and Chavez hopes to build a wider anti-American regional system.

The Victory of “the Cocalero”

But the latest opportunity for the Bolivarian Alliance is Bolivia.

Bolivia is the poorest country in Latin America and in December Evo Morales the leader of the MAS (Movement Towards Socialism) was elected President. Again the answer to the question as to why the first indigeno, (9) and former leader of the coca-growers (cocaleros) union, had won a landslide victory has to be seen in the state of the economy. For the last quarter of a century Bolivia has been an experimental ground for free market policies which have not only seen the gulf between rich and poor get wider but overall has lowered the per capita GDP of the country. It now stands at $2,800 compared to a Latin American average of $8,200 (whilst it is $42,000 for the USA).

Once again the IMF has been the animator of reforms in which just about everything has been privatised (including the Social Security system). In some ways the roots of the victory of Morales go back to the fight of local people in Cochabamba against Bechtel when it was handed the water privatisation contract in 1999. Since then the country has been in revolt and a succession of the old guard Presidents have failed to stop the agitation (in which hundreds have been killed). Morales’ victory was assured when parts of the army called for him to be allowed to assume power. These are the nationalist officers who are not clear where Bolivia is going but are prepared to fight to keep its territorial integrity in the face of the rich white separatist movements in the oil and gas regions of Santa Cruz and Tarija. Morales is in a difficult position in that the popular movement is expecting immediate improvements in living conditions but he is not clear how to deliver them. He has toned down the rhetoric and warned that Bolivia’s current institutions could take 50 to 100 years to dismantle. His one hope may be Chavez. If the current programme which uses Cuba’s greatest national resource (its doctors) allied to the oil revenue of the Chavez regime can bring some immediate (if cosmetic) benefits in health (already 800 cataract operations have been carried out by Cuban doctors in Venezuela) then Morales may gain some breathing space. Ultimately though he will have to take on the traditional elite who will resent even the mildest reforms. In that case the issue will be decided by the current political infighting that is going on inside the armed forces.

Socialism and Revolution

It will have become obvious that we have been discussing recent developments in Latin America from the point of view of those who wield power. We have by no means exhausted all that can be said on this subject. The various anti neo-liberal politicians that have gained some degree of power in the different countries actually defy bracketing since they all are responding to the attempts by capitalism to solve its global crisis in Latin America by cutting back on social spending in different ways. What is common to them all is the utter barbarism and degradation that capitalism has visited on these societies. The total failure of the capitalist social and economic system is nowhere more clearly revealed.

However Latin America is also a great place for political hyperbole. As we noted above, every general who overthrew another general did not just carry out a “coup d’etat” but proclaimed “a revolution”. Nowadays the hyperbole is on the Left. Every leader who makes some gestures towards the unbearable poverty of the masses is hailed as a “socialist” by all kinds of Left organisations especially in the USA and Europe. Whereas the first hyperbole is farce this second is a crime. After the collapse of Stalinism it may have been supposed that the identification of socialism with state ownership would have been eradicated. Far from it. Every Right wing commentator in the US agrees with every old Stalinist, and nearly-as-old Trotskyist, that Castro, Chavez, Morales etc are “socialist”. Every move of social mobilisation from on high is greeted as if it was a genuine mass movement from below instead of as a social mobilisation by a regime. Socialism has nothing to do with state ownership of the means of production. Socialism can only come about through a movement which first overthrows the capitalist state, then establishes its own semi-state which withers away with the last vestiges of class rule, and then the way is open for a truly new mode of production to arise based on the common and free association of all producers. Socialism is neither a state in which the secret police is everywhere as with the G2 in Cuba, nor is it one which does deals with multinationals.

Some Trotskyists pour scorn on this position (which was that of Marx and Engels and even Lenin). They argue that what is happening in, e.g Venezuela, is a real step forward, and that inevitably the contradictions of the situation of someone like Chavez will dialectically lead to the revolution. This only shows that they have learned nothing from the past. They once fawned over Tito, Ben Bella in Algeria even, in some cases Ayatollah Khomeini in Iran as real anti-imperialists and all were the gods that failed. Anti-imperialism which is only anti-americanism is not socialism. And socialism cannot be created from above. It can only be the result of genuine mass movement which is not based on “the people” but on the self-conscious activity of the one class which is globally exploited, the working class. It is to the prospects of the working class in Latin America that we will turn in our next issue.

Article continues on in RP#40:


(1) Mercosur is “The Common Market of the South” and was set up in direct opposition to the North American Free Trade Area (NAFTA) in the 1990s. Venezuela became a full member in December after the failure of the Buenos Airs talks on the FTAA. Bolivia, Chile, Ecuador, Peru and Colombia are associate members of Mercosur.

(2) For more on the terrorism of Western democracy see “Terrorism and Democracy: Imperialism’s Final Frontier” in Internationalist Communist 23.

(3) In 2003 it was 179 votes to 3 (the three are always the USA, Israel plus one other, currently the former US colony of the Marshall Islands)

(4) Although statistics in Latin America tend to be so politicised that no really reliable figure exists (so treat even the ones in this article as illustrative!).

(5) Criollos are the descendants of the white Spanish land-holding elite who then led the break with Spain and established republics in which they dominated through the triumvirate of landowners, Army and Church.

(6) Figures from CEPAL (Centre for the Study of Latin America) and UNCLA (United Nations Commission for Latin America) which remain the most reliable sources.

(7) Even this does not compare with the 90% tax Putin imposed on foreign oil companies revenues last year.

(8) Alba is not only the Spanish for “dawn” but contrasts neatly with the Spanish acronym of the US proposed Free Trade Area of the Americas or Alca.

(9) Indian, or member of the pre-Spanish Conquest population of South America. Morales is an Aymara speaker, the other widely-spoken Indian language is Quechua.

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