[News] Chomsky: Latin American Unity

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Wed Oct 1 17:11:43 EDT 2008

Chomsky: Latin American Unity

Written by Noam Chomsky

Wednesday, 01 October 2008

VII Social Summit for the Latin American and Caribbean Unity

(Caracas 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 

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.

Freedom Archives
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