Latin American and Caribbean Unity
This talk was given to the VII Social Summit for Latin American and Caribbean Unit, via video feed.
(Caracas, Venezuela, 9-24-08) During the past decade, Latin America
has become the most exciting region of the world. The dynamic has very
largely flowed from right where you are meeting, in Caracas, with the
election of a leftist president dedicated to using Venezuela's rich
resources for the benefit of the population rather than for wealth and
privilege at home and abroad, and to promote the regional integration
that is so desperately needed as a prerequisite for independence, for
democracy, and for meaningful development. The initiatives taken in Venezuela
have had a significant impact throughout the subcontinent, what has now
come to be called "the pink tide." The impact is revealed within the
individual countries, most recently Paraguay,
and in the regional institutions that are in the process of
formation. Among these are the Banco del Sur, an initiative that was
endorsed here in Caracas a year ago by Nobel laureate in economics Joseph Stiglitz; and the ALBA, the Bolivarian Alternative for Latin America and the Caribbean, which might prove to be a true dawn if its initial promise can be realized.
The ALBA is often described as an alternative to the US-sponsored "Free Trade Area of the Americas,"
though the terms are misleading. It should be understood to be an
independent development, not an alternative. And, furthermore, the
so-called "free trade agreements" have only a limited relation to free
trade, or even to trade in any serious sense of that term; and they are
certainly not agreements, at least if people are part of their
countries. A more accurate term would be "investor-rights
arrangements," designed by multinational corporations and banks and the
powerful states that cater to their interests, established mostly in
secret, without public participation or awareness. That is why the US executive regularly calls for "fast-track authority" for these agreements – essentially, Kremlin-style authority.
Another
regional organization that is beginning to take shape is UNASUR, the
Union of South American Nations. This continental bloc, modeled on the
European Union, aims to establish a South American parliament in Cochabamba, a fitting site for the UNASUR parliament. Cochabamba was not well known internationally before the water wars of 2000. But in that year events in Cochabamba
became an inspiration for people throughout the world who are concerned
with freedom and justice, as a result of the courageous and successful
struggle against privatization of water, which awakened international
solidarity and was a fine and encouraging demonstration of what can be
achieved by committed activism.
The
aftermath has been even more remarkable. Inspired in part by
developments in Venezuela, Bolivia has forged an impressive path to
true democratization in the hemisphere, with large-scale popular
initiatives and meaningful participation of the organized majority of
the population in establishing a government and shaping its programs on
issues of great importance and popular concern, an ideal that is rarely
approached elsewhere, surely not in the Colossus of the North, despite
much inflated rhetoric by doctrinal managers.
Much the same had been true 15 years earlier in Haiti, the only country in the hemisphere that surpasses Bolivia in poverty – and like Bolivia, was the source of much of the wealth of Europe, later the United States. In 1990, Haiti's first free election took place. It was taken for granted in the West that the US
candidate, a former World Bank official who monopolized resources,
would easily win. No one was paying attention to the extensive
grass-roots organizing in the slums and hills, which swept into power
the populist priest Jean-Bertrand Aristide. Washington
turned at once to undermining the feared and hated democratic
government. It took only a few months for a US-backed military coup to
reverse this stunning victory for democracy, and to place in power a
regime that terrorized the population with the direct support of the US government, first under president Bush I, then Clinton. Washington
finally permitted the elected president to return, but only on the
condition that he adhere to harsh neoliberal rules that were guaranteed
to crush what remained of the economy, as they did. And in 2004, the
traditional torturers of Haiti, France and the US,
joined to remove the elected president from office once again,
launching a new regime of terror, though the people remain
unvanquished, and the popular struggle continues despite extreme
adversity.
All of this is familiar in Latin America, not least in Bolivia,
the scene of today's most intense and dangerous confrontation between
popular democracy and traditional US-backed elites. Archaeologists are
now discovering that before the European conquest, Bolivia had a
wealthy, sophisticated and complex society – to quote their words, "one
of the largest, strangest, and most ecologically rich artificial
environments on the face of the planet, with causeways and canals,
spacious and formal towns and considerable wealth," creating a
landscape that was "one of humankind's greatest works of art, a
masterpiece." And of course Bolivia's vast mineral wealth enriched Spain and indirectly northern Europe,
contributing massively to its economic and cultural development,
including the industrial and scientific revolutions. Then followed a
bitter history of imperial savagery with the crucial connivance of
rapacious domestic elites, factors that are very much alive today.
Sixty years ago, US planners regarded Bolivia and Guatemala as the greatest threats to its domination of the hemisphere. In both cases, Washington
succeeded in overthrowing the popular governments, but in different
ways. In Guatemala, Washington resorted to the standard technique of
violence, installing one of the world's most brutal and vicious
regimes, which extended its criminality to virtual genocide in the
highlands during Reagan's murderous terrorist wars of the 1980s – and
we might bear in mind that these horrendous atrocities were carried out
under the guise of a "war on terror," a war that was re-declared by George Bush in September 2001, not declared, a revealing distinction when we recall the implementation of Reagan's "war on terror" and its grim human consequences.
In Guatemala, the Eisenhower administration overcame the threat of democracy and independent development by violence. In Bolivia, it achieved much the same results by exploiting Bolivia's economic dependence on the US, particularly for processing Bolivia's
tin exports. Latin America scholar Stephen Zunes points out that "At a
critical point in the nation's effort to become more self-sufficient
[in the early 1950s], the U.S. government forced Bolivia to use its scarce capital not for its own development, but to compensate the former mine owners and repay its foreign debts."
The economic policies forced on Bolivia
in those years were a precursor of the structural adjustment programs
imposed on the continent thirty years later, under the terms of the
neoliberal "Washington
consensus," which has generally had disastrous effects wherever its
strictures have been observed. By now, the victims of neoliberal market
fundamentalism are coming to include the rich countries, where the
curse of financial liberalization is bringing about the worst financial
crisis since the Great Depression of the 1930s and leading to massive
state intervention in a desperate effort to rescue collapsing financial
institutions.
We
should note that this is a regular feature of contemporary state
capitalism, though the scale today is unprecedented. A study by two
well-known international economists 15 years ago found that at least
twenty companies in the top Fortune 100 would not have survived if they
had not been saved by their respective governments, and that many of
the rest gained substantially by demanding that governments "socialise
their losses." Such government intervention "has been the rule rather
than the exception over the past two centuries," they conclude from a
detailed analysis. [Ruigrok and von Tulder]
We
might also take note of the striking similarity between the structural
adjustment programs imposed on the weak by the International Monetary
Fund, and the huge financial bailout that is on the front pages today
in the North. The US
executive-director of the IMF, adopt ing an image from the Mafia,
described the institution as "the credit community's enforcer." Under
the rules of the Western-run international economy, investors make
loans to third world tyrannies, and since the loans carry considerable
risk, make enormous profits. Suppose the borrower defaults. In a
capitalist economy, the lenders would incur the loss. But really existing capitalism functions
quite differently. If the borrowers cannot pay the debts, then the IMF
steps in to guarantee that lenders and investors are protected. The
debt is transferred to the poor population of the debtor country, who
never borrowed the money in the first place and gained little if
anything from it. That is called "structural adjustment." And taxpayers
in the rich country, who also gained nothing from the loans, sustain
the IMF through their taxes. These doctrines do not derive from
economic theory; they merely reflect the distribution of
decision-making power.
The
designers of the international economy sternly demand that the poor
accept market discipline, but they ensure that they themselves are
protected from its ravages, a useful arrangement that goes back to the
origins of modern industrial capitalism, and played a large role in
dividing the world into rich and poor societies, the first and third
worlds.
This wonderful anti-market system designed by self-proclaimed market enthusiasts is now being implemented in the United States,
to deal with the very ominous crisis of financial markets. In general,
markets have well-known inefficiencies. One is that transactions do not
take into account the effect on others who are not party to the
transaction. These so-called "externalities" can be huge. That is
particularly so in the case of financial institutions. Their task is to
take risks, and if well-managed, to ensure that potential losses to themselves will be covered. To themselves. Under
capitalist rules, it is not their business to consider the cost to
others if their practices lead to financial crisis, as they regularly
do. In economists' terms, risk is underpriced, because systemic risk is
not priced into decisions. That leads to repeated crisis, naturally. At
that point, we turn to the IMF solution. The costs are transferred to
the public, which had nothing to do with the risky choices but is now
compelled to pay the costs – in the US,
perhaps mounting to about $1 trillion right now. And of course the
public has no voice in determining these outcomes, any more than poor
peasants have a voice in being subjected to cruel structural adjustment
programs.
A
basic principle of modern state capitalism is that cost and risk are
socialized, while profit is privatized. That principle extends far
beyond financial institutions. Much the same is true for the entire
advanced economy, which relies extensively on the dynamic state sector
for innovation, for basic research and development, for procurement
when purchasers are unavailable, for direct bail-outs, and in numerous
other ways. These mechanisms are the domestic counterpart of imperial
and neocolonial hegemony, formalized in World Trade Organization rules
and the misleadingly named "free trade agreements."
Financial
liberalization has effects well beyond the economy. It has long been
understood that it is a powerful weapon against democracy Free capital
movement creates what some international economists have called a
"virtual parliament" of investors and lenders, who can closely monitor
government programs and "vote" against them if they are considered
irrational: for the benefit of people, rather than concentrated private
power. They can "vote" by capital flight, attacks on currencies, and
other devices offered by financial liberalization. That is one reason
why the Bretton Woods system established by the US and UK
after World War II instituted capital controls and regulated
currencies. The Great Depression and the war had aroused powerful
radical democratic currents, taking many forms, from the anti-fascist
resistance to working class organization. These pressures made it
necessary to permit social democratic policies. The Bretton Woods
system was designed in part to create a space for government action
responding to public will – for some measure of democracy, that
is. John Maynard Keynes, the British negotiator, considered the most
important achievement of Bretton Woods to be establishment of the right
of governments to restrict capital movement. In dramatic contrast, in
the neoliberal phase after the breakdown of the Bretton Woods system,
the US Treasury now regards free capital mobility as a "fundamental
right," unlike such alleged "rights" as those guaranteed by the
Universal Declaration of Human Rights: health, education, decent
employment, security, and other rights that the Reagan and Bush
administrations have dismissed as "letters to Santa Claus,"
"preposterous," mere "myths."
In
earlier years the public had not been much of a problem. The reasons
are reviewed by Barry Eichengreen in his standard scholarly history of
the international monetary system. He explains that in the 19th
century, governments had not yet been "politicized by universal male
suffrage and the rise of trade unionism and parliamentary labor
parties." Therefore the severe costs imposed by the virtual parliament
could be transferred to the general population. But with the
radicalization of the general public during the Great Depression and
the anti-fascist war, that luxury was no longer available to private
power and wealth. Hence in the Bretton Woods system, "limits on capital
mobility substituted for limits on democracy as a source of insulation
from market pressures." It is only necessary to add the obvious
corollary: with the dismantling of the system from the 1970s,
functioning democracy is restricted. It has therefore become necessary
to control and marginalize the public in some fashion, processes that
are particularly evident in the more business-run societies like the United States. The management of electoral extravaganzas by the Public Relations industry is one illustration.
The
primary victims of military terror and economic strangulation are the
poor and weak, within the rich countries themselves and far more
brutally in the South. But times are changing. In Venezuela, in Bolivia,
and elsewhere there are promising efforts to bring about desperately
needed structural and institutional changes. And not surprisingly,
these efforts to promote democracy, social justice, and cultural rights
are facing harsh challenges from the traditional rulers, at home and
internationally.
For the first time in half a millennium, South America
is beginning to take its fate into its own hands. There have been
attempts before, but they have been crushed by outside force, as in the
cases I just mentioned and other hideous ones too numerous and too
familiar to review. But there are now significant departures from a
long and shameful history. The departures are symbolized by the UNASUR
crisis summit in Santiago
just a few days ago. At the summit, the presidents of the South
American countries issued a strong statement of support for the elected
Morales government, which as you know is under attack by the
traditional rulers: privileged Europeanized elites who bitterly oppose
Bolivian democracy and social justice and, routinely, enjoy the firm
backing of the master of the hemisphere. The South American leaders
gathering at the UNASUR summit in Santiago declared "their full and
firm support for the constitutional government of President Evo
Morales, whose mandate was ratified by a big majority" —
referring, of course, to his overwhelming victory in the recent
referendum. Morales thanked UNASUR for its support, observing that "For
the first time in South America's history, the countries of our region
are deciding how to resolve our problems, without the presence of the United States."
A matter of no slight significance.
The significance of the UNASUR support for democracy in Bolivia is underscored by the fact that the leading media in the US
refused to report it, though editors and correspondents surely knew all
about it. Ample information was available to them on wire services.
That has been a familiar pattern. To cite just one of many examples, the Cochabamba
declaration of South American leaders in December 2006, calling for
moves towards integration on the model of the European Union, was
barred from the Free Press in the traditional ruler of the
hemisphere. There are many other cases, all illustrating the same fear
among the political class and economic centers in the US that the hemisphere is slipping from their control.
Current developments in South America are of historic significance for the continent and its people. It is well understood in Washington
that these developments threaten not only its domination of the
hemisphere, but also its global dominance. Control of Latin America was
the earliest goal of US foreign policy, tracing back to the earliest days of the Republic. The United States
is, I suppose, the only country that was founded as a "nascent empire,"
in George Washington's words. The most libertarian of the Founding
Fathers, Thomas Jefferson, predicted that the newly liberated colonies
would drive the indigenous population "with the beasts of the forests
into the Stony Mountains," and the country will ultimately be "free of blot or mixture," red or black (with the return of slaves to Africa after eventual ending of slavery). And furthermore, it "will be the nest, from which all America, North and South, is to be peopled," displacing not only the red men but the Latin population of the South.
These aspirations were not achieved, but control of Latin America
remains a central policy goal, partly for resources and markets, but
also for broader ideological and geostrategic reasons. If the US cannot control Latin America,
it cannot expect "to achieve a successful order elsewhere in the
world," Nixon's National Security Council concluded in 1971 while
considering the paramount importance of destroying Chilean democracy.
Historian David Schmitz observes that Allende "threatened American
global interests by challenging the whole ideological basis of American
Cold War policy. It was the threat of a successful socialist state in Chile
that could provide a model for other nations that caused concern and
led to American opposition," in fact direct participation in
establishing and maintaining the terrorist dictatorship. Henry
Kissinger warned that success for democratic socialism in Chile might have reverberations as far as southern Europe – not because Chilean hordes would descend on Madrid and Rome,
but because success might inspire popular movements to achieve their
goals by means of parliamentary democracy, which is upheld as an
abstract value in the West, but with crucial reservations.
Even mainstream scholarship recognizes that Washington
has supported democracy if and only if it contributes to strategic and
economic interests, a policy that continues without change through all
administrations, to the present.
These
pervasive concerns are the rational form of the domino theory,
sometimes more accurately called "the threat of a good example." For
such reasons, even the tiniest departure from strict obedience is
regarded as an existential threat that calls for a harsh response:
peasant organizing in remote communities of northern Laos, fishing cooperatives in Grenada,
and so on throughout the world. It is necessary to ensure that the
"virus" of successful independent development does not "spread
contagion" elsewhere, in the terminology of the highest level planners.
Such concerns have motivated US military intervention, terrorism, and economic warfare throughout the post-World War II era, in Latin America
and throughout much of the world. These are leading features of the
Cold War. The superpower confrontation regularly provided pretexts,
mostly fraudulent, much as the junior partner in world control appealed
to the threat of the West when it crushed popular uprisings in its much
narrower Eastern European domains.
But times are changing. In Latin America,
the source is primarily in moves towards integration, which has several
dimensions. One dimension of integration is regional: moves to
strengthen ties among the South American countries of the kind I
mentioned. These are now just beginning to reach to Central America,
which was so utterly devastated by Reagan's terror wars that it had
mostly stayed on the sidelines since, but is now beginning to move. Of
particular significance are recent developments in Honduras, the classic "banana republic" and Washington's major base for its terrorist wars in the region in the 1980s. Washington's Ambassador to Honduras,
John Negroponte, was one of the leading terrorist commanders of the
period, and accordingly was appointed head of counter-terrorist
operations by the Bush administration, a choice eliciting no
comment. But here too times are changing. President Zelaya declared
that US aid does not "make us vassals" or give Washington the right to humiliate the nation, and has improved ties with Venezuela, joining Petrocaribe, and in July, joining the Alba as well.
Regional
integration of the kind that has been slowly proceeding for several
years is a crucial prerequisite for independence, making it more
difficult for the master of the hemisphere to pick off countries one by
one. For that reason it is causing considerable distress in Washington, and is either ignored or regularly distorted in the media and other elite commentary.
A
second form of integration is global: the establishment of South-South
relations, and the diversification of markets and investment, with China
a growing and particularly significant participant in hemispheric
affairs. Again, these developments undercut Washington's ability to
control what Secretary of War Henry Stimson called "our little region
over here" at the end of World War II, when he was explaining that
other regional systems must be dismantled, while our own must be
strengthened.
The third and in many ways most vital form of integration is internal. Latin America
is notorious for its extreme concentration of wealth and power, and the
lack of responsibility of privileged elites for the welfare of the
nation. It is instructive to compare Latin America with East Asia. Half a century ago, South Korea was at the level of a poor African country. Today it is an industrial powerhouse. And much the same is true throughout East Asia. The contrast to Latin America is dramatic, particularly so because Latin America
has far superior natural advantages. The reasons for the dramatic
contrast are not hard to identify. For 30 years Latin America has
rigorously observed the rules of the Washington consensus, while East Asia
has largely ignored them. Latin American elites separated themselves
from the fate of their countries, while their East Asian counterparts
were compelled to assume responsibilities. One measure is capital
flight: in Latin America, it is on the scale of the crushing debt,
while in South Korea
it was so carefully controlled that it could bring the death
penalty. More generally, East Asia adopted the modes of development
that had enabled the wealthy countries to reach their current state,
while Latin America adhered to the market principles that were imposed on the colonies and largely created the third world, blocking development.
Furthermore, needless to say, development of the East Asian style is hardly a model to which Latin America,
or any other region, should aspire. The serious problems of developing
truly democratic societies, based on popular control of all social,
economic, political and cultural institutions, and overturning
structures of hierarchy and domination in all aspects of life, are
barely even on the horizon, posing formidable and essential tasks for
the future.
These are huge problems within Latin America. They
are beginning to be addressed, though haltingly, with many internal
difficulties. And they are, of course, arousing bitter antagonism on
the part of traditional sectors of power and privilege, again backed by
the traditional master of "our little region over here." The struggle
is particularly intense and significant right now in Bolivia, but in fact is constant in one or another form throughout the hemisphere.
The problems of Latin America and the Caribbean
have global roots, and have to be addressed by regional and global
solidarity along with internal struggle. The growth of the social
forums, first in South America, now
elsewhere, has been one of the most encouraging steps forward in recent
years. These developments may bear the seeds of the first authentic
international, heralding an era of true globalization – international
integration in the interests of people, not investors and other
concentrations of power. You are right at the heart of these dramatic
developments, an exciting opportunity, a difficult challenge, a
responsibility of historic proportions.