Is Latin America Really Turning Left?

In recent years, "the left" has come to power all across Latin America, but is it actually making waves, or is it politics as usual?

A new series of social and national polarities in the Western
Hemisphere has dominated political life over the past few years. At
the beginning of the new millennium the national confrontation was
between Cuba and the US/EU, and the social confrontations between the
rural/indian and urban/unemployed movements and a continent-wide
collection of neo-liberal regimes. This polarization resulted from the
previous 25 years (between 1975-2000), the “Golden Age” of imperial
pillage. Immense legal and illegal transfersof property, wealth,
profits, interest and royalty payments flowed from Latin America to
the US and the EU. The most lucrative public enterprises, valued at
more than $350 billion dollars, were privatized without any of the
constitutional niceties and eventually ended up in the hands of US,
Spanish and other European multi-national corporations and banks.
Presidential decrees by-passed congress and the electorate and
dictated privileged place for foreign capital. Protests by Congress,
the electorate, and national auditors were ignored.

The “Golden Age” of multinational capital coincided with the reign of
kleptocratic electoral regimes hailed in European and North American
political circles and echoed in the mass media as the era of
“Democracy and Free Markets”. The US/EU MNCs and Banks’ plunder
between 1975 and 2005 was worth over $950 billion dollars. Plunder
without development inevitably led to a general socio-economic crisis
and near collapse of the imperial-centered model of capitalist
accumulation in Argentina (1998-2002), Ecuador (1996-2006) Bolivia
(2002-2005), and Brazil (1998-2005). Beginning in the early 1990’s
extra-parliamentary socio-political movements emerged throughout most
of Latin America and were accompanied by large-scale popular
uprisings, deposing ten incumbent neo-liberal client “Presidents”
installed under the patronage of the US/EU: Three in Ecuador and
Argentina, two in Bolivia, one each in Venezuela and Brazil.

In retrospect, it is clear that the new wave of potentially
revolutionary socio-political movements reached their pinnacle of
power by 2002. With support, widespread legitimacy, facing a corrupt,
discredited and internally divided bourgeois political class and
crisis-ridden economies, the socio-political movements were in a
strong position to initiate comprehensive structural changes, if they
could transform social power into state power.

But the mass movements faltered, their leaders stopped at the gates of
the Executive palace. Instead they looked upward toward new and
recycled “center-left” electoral politicians to replace the old,
discredited parties and leaders of the neo-liberal right. By 2003, the
social movements began to ebb, as many leaders were co-opted by the
new wave of self-described “center-left” politicians. The promises of
“social transformations” were reduced to patronage, subsidies and
orthodox macro-economic policies following the same neo-liberal dogma.
Yet, in some countries, the mass struggles of the 1990’s/2002 led to
new political regimes, which were neither US clients nor free of
neo-liberal influence,namely,Venezuela and

By 2006 a new configuration emerged in which national polarizations to
a significant extent overshadowed social class divisions. The new
international divide found the EU and the US on one side and Cuba,
Venezuela and Bolivia on the other. This primary polarization finds
expression in Latin America between, on the one hand, a “New Right”
neo-liberal pole of ex-leftists and pseudo-populist Central and South
American clients, and, on the other hand, of national-populists in
Bolivia-Venezuela. In between are a large group of countries, which
can move in either direction. The “New Right-Free Market” advocates
include the Lula regime in Brazil, the outgoing President Fox in
Mexico, five Central American regimes, the Vazquez government in
Uruguay, the Uribe “State Terrorist” regime in Colombia, the Bachelet
and soon-to-depart Toledo governments in Chile and Peru.

“In between” is the Kirchner government in Argentina reflecting a
desire to deepen commercial ties with Venezuela, neutralize internal
nationalist-populist pressures and promote a mixed national-foreign
capitalist alliance with the US, EU and China. Ecuador, the Caribbean
countries, Nicaragua and possibly Peru are sites of competition.
Because of petroleum subsidies, the entire Caribbean (with the
exception of the Dominican Republic) has refused to politically
support the EU/US against Venezuela/Bolivia, even as they seek to
promote market access to northern markets. Outside of Europe and North
America, in the non-aligned movement, China, Russia, Iran and some of
the Arab oil producing states have taken overtly or discretely the
side of the Cuban-Venezuelan-Bolivian nationalist alliance.

Intersecting with the nationalist divisions are class polarizations,
The strongest points of inflexion are found in Ecuador, Venezuela,
Colombia, Costa Rico, Mexico, Bolivian Paraguay and more recently
Brazil. In Ecuador, CONAIE has rebuilt its mass base (after the
debacle of supporting pseudo-populist Gutierrez for president in 2002)
and in alliance with mass urban trade unions has been effective in
defeating the US-backed free trade agreement (ALCA) and canceling oil
contracts with Occidental Petroleum, a US oil company. In Venezuela,
there is a dual polarization: on the one hand between the working
class and urban poor against the pro-US local landowners, business and
media elite, and, on the other hand, within the broad spectrum of
Chavez supporters, between wealthy state directors, elite bureaucrats,
“national” business people and National Guard Generals and trade
unions, landless farmers, urban slum-dwellers and underemployed
“informal workers”. In Bolivia, the class contradictions remain mostly
latent because of the ‘national polarization”, but find expression in
the conflict between orthodox macro-economic policies of the Morales
regime and the paltry pay increases given to low-paid educational,
health and other public sector workers.

In countries where the polarization between Latin American nationalism
and EU/US imperialism is strongest, the class struggle, at least
temporarily, is subdued. In other words: the nationalist struggle
subsumes the class struggle with the promise that greater national
control will result in increased state resources and subsequently to
redistributive measures.

In Brazil, class conflict has declined as a result of the
subordination of the traditional trade union confederation (CUT) and
to a certain extent, the MST (Rural Landless Workers Movement), to the
neo-liberal Lula regime. Nevertheless, because of Lula’s savage
reduction of public employees’ pensions and opposition to substantial
wage and minimum wage increases, the trade unions representing public
employees, metal workers and civil construction workers founded a new
dynamic labor confederation CONLUTA in May (5-7) 2006. With over 2700
delegates from 22 states representing nearly 1.8 million workers,
CONLUTA represents an alternative social pole for the tens of millions
of Brazilian workers and poor abandoned by Lula’s embrace of bankers,
agro-business and foreign MNCs. CONLUTA has adopted a social-movement
type of organization including employed and unemployed workers
organizations, neighborhood and rural workers movements, students,
women, ecology and landless workers organizations within its operating
structure. Representation at the Congress was based on direct
elections from democratic assemblies. The emergence of a new
mass-based labor confederation represents the first major break within
the neo-liberal “center-left” Lula regime. As such it portends a
revitalization of working class politics and poses a real alternative
to the receding power of the pro-regime confederation .

Realities and Myths of International Tensions

There are great many misunderstandings and confusion both on the Right
and Left regarding the nature of the conflicts between Latin American
nationalists and US/EU states and multi-national corporations. The
first point of clarification is over the nature of the nationalist
measures adopted by President Chavez of Venezuela and President
Morales of Bolivia. Both regimes have not abolished most of the
essential elements of capitalist production, namely private profits,
foreign ownership, profit repatriation, market access or supply of
gas, energy or other primary goods, nor have they outlawed future
foreign investments.

In fact Venezuela’s huge Orinoco heavy oil fields, the richest
reserves of oil in the world, are still owned by foreign capital. The
controversy over President Chavez’ radical economic measures revolves
around a tax and royalty increase from less than 15% to 33% – a rate
which is still below what is paid by oil companies in Canada, the
Middle East and Africa. What produced the stream of vitriolic froth
from the US and British media (Wall Street Journal, Financial Times,
etc) was not a comparative analysis of contemporary tax and royalty
rates, but a retrospective comparison to the virtually tax-free past.
In fact Chavez and Morales are merely modernizing and updating
petrol-nation state relations to present world standards; in a sense
they are normalizing regulatory relations in the face of exceptional
or windfall profits, resulting from corrupt agreements with complicit
state executive officials. The harsh reaction of the US and EU
governments and their energy MNCs is a result of having become
habituated to thinking that exceptional privileges were the norm of
‘capitalist development’ rather than the result of venal officials. As
a result they resisted the normalization of capitalist relations in
Venezuela and Bolivia in which state-private joint ventures and profit
sharing , common to most other countries. It is not surprising that
the president of Royal Dutch Shell, Jeroen van der Veer, advised his
oil colleagues that the nationalist position of oil rich countries and
their redrawing of contracts is a “new reality” that international
energy companies have to accept. Van der Veer, the realist, puts the
nationalist reforms in perspective: “In Venezuela we were one of the
first to renegotiate. Under the circumstances we are quite satisfied
we can work our future there. We have harmony with the government,
which is very important. In Bolivia, I assume we will come to a
solution” (Financial Times, May 13, 2006 page 9). Likewise Pan Andean
Resources (PAR), an Irish gas and energy company stated it could
successfully operate in Bolivia following Morales “nationalization”
declaration. David Horgan, President of PAR, in justifying a joint
venture in gas with the Bolivians, stated, “We don’t really care what
precedents it (PAR’s gas agreement with the Bolivian state) sets. What
the majors (big oil companies) see as a problem, we see as an
opportunity” (Financial Times, May 13, 2006).

In fact in Bolivia on May 29, 2006, the Morales government announced
the winning bid to the world’s biggest private mining companies
competing to exploit state-owned Mutun with 40 billion tons of iron
ore. The new terms of the Bolivian government as outlined by its
principle ideologue, Vice President Linera, provides judicial and
stable guarantees for all investments, in exchange for a profit
sharing and joint management schemes. Clearly the big mining
corporations are part of the “realist” school of reaping big profits
of strategic high-prices raw materials in exchange for paying higher
taxes and including Bolivian technocrats in their management team.

The major points of conflict are not capitalism’s aversion to
socialism, nor even private ownership versus nationalization of
property, let alone social revolution leading to an egalitarian
society. The major conflicts are over: 1) Increases in taxation,
prices and royalty payments, 2) the conversion of firms to joint
ventures, 3) representation on corporate boards of directors, 4)
distribution of shareholdings between foreign appointed and
state-appointed executives, 5) the legal right to revise contracts, 6)
compensation payments for presumed assets and 7) management of
distribution and export sales.

These proposed regulations and reforms may increase state reserves and
influence but none of these points of conflict involve a revolutionary
transformation of property or social relations of production. The
proposed changes are reforms, which resonate with the policies
undertaken by European social democratic parties between 1946 and the
1960s and by most of the world’s oil producing countries in the
1970’s, including Arab monarchies and Islamic and secular republics.
In fact earlier political regimes in both Venezuela (1976) and Bolivia
(1952 and 1968) took far more radical measures in nationalizing
petroleum and other mining sectors.

Venezuela has increased royalty and tax payments of international
petroleum companies because they were far below global levels. Except
for a few smaller operations which refused the new rules of the game
and were expropriated, none of the biggest firms were seized, nor were
worker-employer relations altered in the (PVDSA) state firm or in any
of the foreign companies. Their conventional vertical structures
remain intact as many rank and file trade unionists complain. Over the
past three years all the major US/EU petrol firms operating in
Venezuela have been earning record profits exceeding their historical
highs by several billion (Euros or dollars). Bolivarian revolutionary
discourses notwithstanding, none of the oil majors has indicated any
intention of abandoning lucrative arrangements with the Venezuelan
state, despite the heated rhetorical ejaculations from Washington or

The US and EU conflict with Venezuela is over politics and ideology as
much as it is over the power and profits of their oil companies. They
object that Venezuela’s mixed economy, higher tax model will replace
the de-regulated, low tax, privatization and denationalization model
prevalent in Latin America since the 1970’s and currently being
promoted elsewhere (Libya, Iraq, Indonesia, Brazil and Mexico). The
key problem is that President Chavez, operating from a strong national
economic and political base, resulting from the added oil resources,
has argued for greater regional integration – free of US/EU
domination. This has angered Washington and Brussels, as they fear
that greater Latin American integration may limit future market and
investment penetration. In world politics Chavez’ embrace and defense
of self-determination of all nations, has put him in opposition to the
US military intervention in Iraq, US/EU occupation of Afghanistan and
their joint war threats against Iran. Chavez’ position is in part due
to US involvement in a failed military coup in his country in 2002.

In summary, the conflict is between democratically elected nationalist
leaders supporting a mixed economy to finance social welfare against
the US and EU empire building, interventionist policies intent on
preserving the “Golden Age” of pillage of unregulated privatized
economies and their privileged excessively low tax payments in
exploiting energy resources.

The burgeoning international conflict between Bolivia-Brazil,
Spain/Argentina and their backers in the US/EU follows a similar
pattern to Venezuela’s conflict with the US. First the attempt by the
propagandists of the foreign oil corporations to picture President
Morales as a “disciple” or “follower” of Chavez, and his nationalist
policies as merely a genuflection to Chavez’s projections of power.
There is no basis for claims of external machinations. Opposition and
general strikes occurred throughout Bolivia during the very
privatization process in 1996, two years before Chavez was elected.
Opposition to the private gas agreements intensified in 2003 via a
popular uprising that overthrew the President (Sanchez de Losada)
calling for the nationalization of gas and oil. In 2004 a referendum
was approved by 80% of the electorate, which called for an increase in
tax and royalty payments and state control. Unlike Venezuela, Morales
faces intense pressure internally from all the trade unions and mass
organizations to follow up his electoral promises. President Morales’
entire socio-economic reform programs and the political stability and
legitimacy of his regime depends on securing additional tax revenues
from the MNCs. Given the fact that he inherited a very large budget
deficit and a substantial foreign debt (which he feels obligated to
pay) and is committed to an IMF style austerity program, his only
solution is more oil and gas revenue. Most important of all, given
that Morales was elected on the basis of “bringing dignity to the
Indian people” he can not ignore the arrogance with which the petrol
and gas companies defiantly shunted aside his initial proposals to
negotiate new tax rates and joint ventures. With the financial and
political backing of oil rich Venezuela, Morales declared the
“nationalization” as a pressure tactic to force the companies to
negotiate. Just as President Chavez’ socio-economic policies were
radicalized by the US supported military coup and executive elites oil
lockout, Morales radicalized his tactics to secure economic
concessions and serious negotiations from the gas and oil MNCs.

The goal of Morales is to negotiate in good faith and to secure some
type of profit sharing and tax increases. Continued intransigence from
oil and gas companies, an “all or nothing” policy could radicalize the
electoral base of his regime. “Those who make reforms impossible, make
revolution inevitable”. Of course, Bolivia under Morales is very far
from adopting a revolutionary anti-capitalist program. Even the
increase in tax revenue to 82% is a “transitory” measure to be
negotiated. Yet he has demonstrated a willingness to mobilize the
state and extend its influence over the operations of the
corporations. He has clearly established that the existing oil
contracts are unconsititutional.

By the second week of May, the major gas and oil companies still
failed to recognize that they have more to gain from negotiating with
Morales than heating up the social movements. At most negotiations
will likely result in an increase of tax and royalty revenues –
probably to 50%. The purchase price of gas would rise modestly, and
some sort of joint state-private management accords would be signed.
The Brazilian and EU political leaders and energy executives could
move from “confrontation” to “negotiations” and co-optation.Instead
Morales’ proposed joint ventures and mixed economy faces pressures
from the IMF, Solbes, Spanish Finance Minister and Amorin, Brazil’s
Foreign Minister, to pay market value for any shares ­ potentially
bankrupting the state. Threats of judicial and diplomatic ruptures
continue to be used to limit any effective state control over the gas
enterprises. Meanwhile, Zapatero, Spanish Prime Minister and President
Da Silva of Brazil, relying on negotiations, ‘insider’ pressure and
state aid play the role of “good cop” in watering down even further
Morales’ reforms.

Whatever the overall settlement, the key will be in the details: More
specifically in the specific operational procedures, control over
information, production and commercialization processes, where it can
be expected that the incumbents executives will do every thing
possible to undermine effective state control. While political and
economic polarizations at the international level intensifies, an
internal crisis is building up within the US. The military debacle in
Iraq has led to two-options: a withdrawal to rebuild imperial power
and plans for a new aerial war against Iran, to reclaim imperial
power. A coalition led by the major pro-Israel organizations, the
civilian Pentagon militarists, the majority of the mass media and a
minority of the general public support a military attack. In
opposition stand a large proportion of retired military officials,
leaders of the oil industry, the majority of Christin and Muslim
organizations and a majority of the US public.

The multiple Middle East and South Asian wars and rising internal
discontent with the costs of war have substantially weakened the
capacity of the US to engage in a full-scale intervention in Latin
America. Instead it is forced to rely on its Latin American client
regimes and European “allies” to isolate and weaken the nationalist
Chavez and Morales governments and to contain the rising popular and
electoral opposition in Mexico, Nicaragua, Ecuador, Colombia, Peru and
Brazil. The problem for Washington is that the current Latin American
client-presidents are weak or on the way out of office. By the end of
2006, almost all of Washington’s most servile client Presidents will
be out of office. In some cases they will be replaced by political
clones but in others the newly elected leaders may be less given to
provoking conflict with their nationalist neighbors.

Contrary to the euphoria of the US and Western European left, the new
nationalist governments and Cuba face serious internal challenges from
their very own supporters. While successfully countering imperialist
pressures and increasing their tax revenues from foreign capital, they
have neglected to implement social reforms of the utmost urgency to
their supporters. Both Venezuela and Cuba, despite government
promises, lag far behind in meeting the huge housing and transport
deficit, and the efforts to diversify their economies lag far behind
goals particularly in agro-industries (sugar to ethanol and local food
production in Cuba; meat, poultry, fish and grains in Venezuela),
manufacturing (especially arms, durables, IT and electronics) and
processing of minerals. Moreover in Venezuela there are large sectors,
perhaps 50%, of the labor force with improved access to free social
services but which are employed in the low-paid “informal sector”.

In Bolivia, Morales has announced a land reform program, which will be
based on expropriating underutilized land, excluding the large
profitable productive agro-business estates in Santa Cruz’s fertile
plains. Instead he emphasizes distributing less fertile state lands
far from markets and roads. The key to the success of agrarian reform
will depend on the procedure of implementation and adjudication and
the availability of credit and technical assistance. Moreover
Morales’s salary and incomes policy is only marginally better than his
liberal predecessors: wage and salary increases for teachers and other
public sector workers are less than 5% over the rate of inflation. His
promise to double the minimum wage from $50 to $100 dollars a month
has been repudiated in favor of a $6 dollar raise. In other words, if
the international polarization is not backed by internal
redistributive policies affecting wealth and assets of the very rich,
both in Venezuela and Bolivia, strategically important popular sectors
necessary for support in any serious international confrontations
could be alienated. Grandiose international gestures, humanitarian
solidarity and anti-imperialist policies are no substitute for
deepening internal structural changes and meeting essential domestic
demands for housing, jobs and higher salaries.

Class and Regional Polarization and Crisis in Bolivia

If, as we have argued, the emerging polarization in Latin America is
between imperial-centered neo-liberal regimes and reformist
nationalist populists, it follows that the successful resolution of
this conflict depends in part on the premises of the reformist
strategists ­ their belief that socio-economic reforms are compatible
with national capitalist development. In the case of President
Morales, I would argue that his electoral-programmatic political
strategy dictated his political and socio-economic analysis. The
premises of Morales reform policies were dictated by several dubious
premises: 1) the belief that “productive” capital can be separated
from “unproductive” capital, and hence that a land reform confined to
and affecting only “unexploited land” or “land without a
socio-economic function” would not generate elite opposition and would
be compatible with a multi-class electoral coalition. This has proven
incorrect: the large “productive” landowners vehemently oppose the
land reform and are supported by business and banking elites,
especially in Santa Cruz, because they have diverse investment
holdings which cross sectoral boundaries (including banks, industry,
productive land for exports and unproductive lands held for

The second false premise of President Morales’ reform strategy is
based on a mistaken diagnosis of the “dichotomy” between foreign and
national capital. President Morales believes that by “nationalizing”
or more precisely converting foreign-owned petrol and gas companies
into joint state-private enterprises, he could finance national
capitalist development thus securing their support. This “analysis”
totally underestimated the economic and political links between large
and medium-sized enterprises and foreign-owned enterprises. Many
Bolivian firms are suppliers, subcontractors and importers dependent
on foreign markets, credit and financing from foreign MNCs and
regimes. It is not surprising that both the political opposition in
Congress and the major Bolivian business groups have opposed Morales
national reforms ­ despite the fact that they are the promised

The third false premise of President Morales reformist-nationalist
strategy is the idea that the so-called “center-left” regimes in
Brazil, Argentina and Spain would be willing to negotiate and accept
modifications in the exploitation contracts of their multi-nationals
and accept modest increases in the prices of gas purchases. Morales
overestimated the effectiveness of his “personal diplomacy” and
ideological affinity with Lula in Brazil, Kirchner in Argentina and
Zapatero in Spain and completely underestimated their powerful and
durable ties to their MNCs. As a result, Lula’s regime has rejected
all of Morales’ proposals, including his offer to negotiate a
two-dollar increase in gas prices, let alone his proposal of a joint
venture with Petrobras. Likewise Kirchner’s regime in Argentina has
postponed several meetings to discuss a similar price increase in gas,
and his representative has set no new date to even discuss the
proposal. Zapatero, backed by the IMF, has insisted that any Spanish
holdings (REPSOL oil and gas, BBV) be fully and promptly compensated,
an impossible task given Bolivia’s budgetary constraints.

It is the greatest irony that while “center-left” Presidents ­
Kirchner, Lula and Zapatero) reject Morales’ proposals to increase
Bolivia’s tax revenues on their MNCs, the reactionary US Congress
approved legislation to increase the government’s share of oil profits
by $20 billion dollars (Financial Times , May 20/21, 2006). Moreover
while the US pays $6 dollars per thousand cubic feet of gas, Lula and
Kirchner object to Morales’ proposal to increase the price to $5
dollars per thousand cubic feet. With “friends of the Bolivian people”
like these, who needs imperialists to exploit the poorest country in
Latin America?

In summary, all of Morales political assumptions were based on
“imagined facts” which do not correspond to the economic and political
realities in which they are projected. The absence of a serious
empirical analysis of structural realities has resulted in imposing an
electoral strategy based on a multi-class political alliance onto a
class/imperial polarized world. Morales’ reformist ideology “created”
a illusory vision of the political world in which he would unite
“productive capitalists”, friendly center-left regimes, workers and
peasants against “unproductive landowners” and corrupt MNCs, in
pursuit of a mixed economy, a balanced budget and incremental social

The current impasse facing Morales,imposed by his unwilling
“partners”, poses a serious dilemma for his regime and his
international allies (Venezuela and Cuba): If the reformist program is
not viable, should he further dilute his “nationalist” agenda and
retain the semblance of a “progressive regime” or should he radicalize
his program, drawing on the support of his international allies in a
deeper continental confrontation?

Source: Counter Punch