[News] The Economic Crisis and Latin America
Anti-Imperialist News
news at freedomarchives.org
Tue Oct 21 19:00:40 EDT 2008
http://www.counterpunch.org/toussaint10212008.html
October 21, 2008
Time to Delink
The Economic Crisis and Latin America
By ERIC TOUSSAINT
The economic and financial crisis, whose
epicentre is found in the United States, has to
be utilised by Latin American countries to build
an integration favourable to the peoples and at
the same initiate a partial delinking.
We need to learn the lessons of the 20th century
in order to apply them at the beginning of this
century. During the decade of the 1930s, that
followed the crisis that exploded on Wall Street
in 1929, 12 countries in Latin America suspended
for a prolonged time the repayment of their
foreign debt, prinicipally to North American and
Western European bankers. Some of them, such as
Brazil and Mexico, imposed on their creditors a
reduction of between 50% and 90% of their debt
some 10 years later. Mexico was the one that went
the furthest with their economic and social
reforms. During the government of Lazaro
Cardenas, the petroleum industry was completely
nationalised without any compensation for the
North American monopolies. Moreover, 16 million
hectares were also nationalised and in large part
handed over to the indigenous population in the
form of comunal goods (el ejido). During the
thirties and up until the middle of the sixties,
various Latin American governments carried out
very active public policies with the aim of
seeking a partially self-centred development,
known later by the name of the model of
industrialisation via substitution of
importations (ISI). On the other hand, beginning
in 1959, the Cuban revolution attempted to give a
socialist content to the Bolivarian project of
Latin American integration. This socialist
content began to appear in the Bolivian
revolution of 1952. Brutal US intervention,
backed by the dominant classes and the local
armed forces, was necessary to put an end to the
ascending cycle of social emancipation during
this period. The blockade of Cuba since 1962,
military junta in Brazil from 1964, US
intervention in Santo Domingo in 1965, the Banzer
dictatorship in Bolivia in 1971, the Pinochet
coup in Chile in 1973, installing of
dictatorships in Uruguay and Argentina. The
neoliberal model was put in practice first in
Chile with Pinochet, and with the intellectual
guidance of the Chicago Boys of Milton Friedman,
and afterwards was imposed on all the continent,
aided by the debt crisis that exploded in 1982.
With the fall of the dictatorships in the
eighties, the neoliberal model continued in
force, principally through the application of
structural adjustments programs and the
Washington Consensus. The governments of Latin
America were incapable of forming a common front,
and the majority applied the recipes dictated by
the World Bank and the IMF in a docile manner.
This ended up producing a large popular
discontent and a recomposition of popular forces
that led to a new cycle of elections of left or
centre left governments, beginning with Chavez in
1998, who committed himself to installing a
different model based on social justice.
There is a dispute between two projects of integration
At the beginning of this century, the
Bolivarian[3] project of integration of the
peoples of the region has gain new momentum. If
we want this new ascending cycle to go further it
is necessary to learn the lessons of the past.
What was particularly missing in Latin America
during the decades of the 1940s to the 1970s was
an authentic project of integration of economies
and peoples, combined with a real redistribution
of wealth in favor of the working classes. We
need to be conscious of the fact that in Latin
America today there is a dispute between two
projects of integration, that have an antagonist
class content. The capitalist classes of Brazil
and Argentina (the two principal economies of
South America) are partisans of an integration
based on their economic domination over the rest
of the region. The interests of Brazilian
companies, above all, as well as Argentine ones,
are very important in all the region: oil and
gas, large infrastructure works, mining,
metallurgy, agrobusiness, food industries, etc.
The European construction, based on a single
market dominated by big capital is the model that
they want to follow. The Brazilian and Argentine
capitalist classes want the workers of the
different countries in the region to compete
amongst themselves in order to obtain maximum
benefit and be competitive on the world market.
From the point of view of the left, it would be
a tragic error to fallback on a policy of stages:
support a model of Latin American integration
according to the European model, dominated by big
capital, with the illusionary hope of giving it a
socially emancipatory content later on. Such
support implies putting oneself at the service of
capitalist interests. We do not have to involve
ourselves in the capitalists games, trying to be
more astute and letting them dictate the rules.
The other project of integration, that falls
within Bolivarian framework, wants to given a
social justice content to integration. This
implies the recuperation of public control over
natural resources in the region and over large
means of production, credit and
commercialisation. The levelling from above of
the social conquests of the workers and small
producers, at the same time as reducing the
asymetries between the economies in the region.
The substantial improval of paths of
communication between countries of the region,
rigourously respecting the environment (for
example, developing railway lines and other means
of collective transport before highways). Support
for small private producers in numerous
activities, agriculture, artisan, trade,
services, etc. The process of social emancipation
that the bolivarian project of the 21st century
is pursuing aims to liberate society from
capitalist domination supporting forms of
property that have a social function: small
private property, public property, cooperative
property, comunal and collective property, etc.
At the same time, Latin American integration
implies equiping oneself with a common financial,
judicial and political architecture.
Latin American is losing precious time
The current international conjuncture, favorable
for developing countries that export primary
products, needs to be utilised before the
situation changes. The countries of Latin America
have accumulated close to US$400,000 million in
reserves. This is no small figure, in the hands
of Latin American Central Banks and which needs
to be utilised at an opportune moment in order to
help regional integration and shield the
continent in the face of the effects of the
economic and financial crisis that is unfolding
in North America and Europe and that threatens
the whole planet. Unfortunately, we should not
create illusions: Latin American is on the path
to losing precious time, while the governments,
beyond the rhetoric, pursue a traditional policy:
signing of bilateral agreements on investment,
acceptance or continuation of negotiations over
certain free trade agreements, utilisation of
reserves to buy bonds from the US Treasury (that
is, lending capital to the dominant power) or
credit default swaps whose markets have collapsed
with Lehman Brothers, AIG etc, advance payments
to the IMF, World Bank and the Paris Club,
acceptance of the World Bank Tribunal (ICSID) as
a way to resolve differences with transnationals,
continuation of trade negotiations within the
framework of the agenda of Doha, maintainance of
the military occupation of Haiti. Following a
loud and promising start in 2007, the initiatives
announced in regards to Latin American
integration seem to have come to a halt in 2008.
Bank of the South
In regards to the launching of the Bank of the
South, this has already been delayed quite a bit.
Discussions have not progressed. We have to get
rid off any confusion and give a clearly
progressive content to this new institution,
whose creation was decided upon in December 2007
by seven countries in South America. The Bank of
the South has to be a democratic institution (one
country, one vote) and transparent (external
auditing). Before using public money to finance
large infrastructure project that dont respect
the environment and which are carried out by
private companies whose objectives are to obtain
maximum benefit, we have to support the efforts
of the public powers to promote policies such as
food sovereignty, agrarian reform, the
development of studies in the field of health and
the establishment of a pharmaceutical industry
that produces high quality generic medication,
reinforce collective rail-based means of
transport, utilize alternative energies to limit
the impact on depleted natural resources, protect
the environment, develop the integration of education systems
.
Debt
Contrary to what many think, the problem of the
public debt has not been resolved. It is true
that the external public debt has been reduced,
but it has been replaced by an internal public
debt that, in certain countries, has acquired
totally huge proportions (Brazil, Colombia,
Argentina, Nicaragua, and Guatemala) to the point
that it derails a considerable part of the state
budget towards parasitically financial capital.
It is very worthwhile following the example of
Ecuador, which established an integral auditing
commission to study the external and internal
public debt, with the aim of determining the
illegitimate, illicit and illegal parts of the
debt. At a time when, following a series of
adventurous operations, the large banks and other
private financial institutions of the United
States and Europe are wiping out dubious debts
with an amount that by far surpasses the external
public debt that Latin America owes them, we have
to constitute a united front of indebted
countries in order to obtain the cancellation of the debt.
Nationalisation of the banks without paying
compensation and exercising the right of reparations
Private banks need to audited and strictly
controlled, because they run the risk of being
dragged down with the international financial
crisis. We have to avoid a situation where the
state ends up nationalising the losses of the
banks, as has happened many times before (Chile
under Pinochet, Mexico in 1995, Ecuador in
1999-2000, etc). If some banks on the brink of
bankruptcy have to be nationalised, this should
be done without paying compensation and
exercising the right of reparations over the patrimony of their owners.
Moreover, numerous litigation cases have emerged
in the last few years between the states of the
region and multinationals, from the North and the
South. Rather that taking them to the
International Centre for Settlement of Investment
Disputes (ICSID), which is part of the World
Bank, dominated by a handful of industrialised
countries, the countries of the region should
follow the example of Bolivia, which has pulled
out of the organisation. They should create a
regional organism for the resolution of
litigation cases initiated by other countries or
private companies. How can we continue to sign
loan contracts or trade contracts that state
that, in the case of litigation, the only
jurisdictions that are valid are those of the US,
United Kingdom or other countries of the North?
We are dealing here with an inadmissible
renouncement of the exercising of sovereignty.
It is worthwhile establishing a strict control
over capital movements and exchange rates, with
the goal of avoiding capital flight and
speculative attacks against currencies in the
region. For the states that want to make the
Bolivarian project of Latin American integration
for greater social justice a reality, it is
necessary to advance towards a common currency.
Integration has a political dimension
Naturally, integration has to have a political
dimension: a Latin American parliament elected by
universal suffrage in each one of the member
countries, equipped with a real legislative
power. Within the framework of political
construction, we have to avoid repeating the bad
example of Europe, where the European Commission
(that is, the European government) has
exaggerated powers in regards to the parliament.
We have to move towards a democratic constituent
process with the goal of adopting a common
political constitution. We also have to avoid
reproducing the anti-democratic procedure
followed by the European Commission that attempts
to impose a constitutional treaty elaborated
without the active participation of citizens and
without submitting it to a referendum in each
member country. On the contrary, we have to
follow the example of the constituent assemblies
of Venezuela (1999), Bolivia (2007) and Ecuador
(2007-8). The important democratic advances
achieved in the course of these three processes
will have to be integrated into the Bolivarian constituent process.
Likewise, it is necessary to strengthen the
powers of the Latin American Court of Justice,
particularly in matters regarding the
guaranteeing for the respect of inalienable human rights.
Until now, various processes of integration
coexist: the Community of Andean Nations,
Mercosur, Unasur, Caricom, Alba
.It is important
to avoid dispersion and adopt a integration
process with a social-political definition based
on social justice. This Bolivarian process should
bring together all the countries in Latin America
(South America, Central America and the
Caribbean) that adhere themselves to this
orientation. It is preferable to commence this
common construction with a reduced and coherent
nucleus, rather than with a heterogeneous set of
states whose governments follow contradictory, if
not antagonistic, social policies.
Partial delinking from the world capitalist market
Bolivarian integration should be accompanied with
a partial delinking from the world capitalist
market. We are dealing with trying to
progressively erase the borders that separate the
states that participate in the project, reducing
the asymmetries between the member countries
especially thanks to a mechanism of transfer of
wealth from the richer states to the poorer.
This will allow for the considerable expansion of
the internal market and will favour the
development of local producers under different
forms of property. It will allow for the putting
into action of a process of development (not only
industrialisation) with substitution of
importations. Of course, this implies the
development, for example, of a policy of food
sovereignty. At the same time, the Bolivarian
project made up of various member countries will
partially delink itself from the world capitalist
market. This means in particular the repealing of
bilateral treaties in areas of investment and
trade. The member countries of the Bolivarian
group should also pull out of institutions such
as the World Bank, the IMF and the WTO, at the
same time as promoting the creation of new
democratic global institutions that respect inalienable human rights.
As was mentioned before, the member state of the
new Bolivarian group would equip itself with new
regional institutions, such as the Bank of the
South, which would develop collaborative
relations with other similar institutions made up
by states from other regions in the world.
The member states of the new Bolivarian group
will act with the maximum number of third states
in favour of a radical democratic reform of the
United Nations, with the objective of ensuring
compliance with the United Nations Charter and
the numerous international instruments that
defend human rights, such as the international
pact on economic, social and cultural rights
(1996), the charter on the rights and
responsibilities of states (1974), the
declaration on the right to development (1986),
the resolution on the rights of indigenous people
(2007). Equally, it would lend support to the
activities of the International Criminal Court
and the International Court of Justice in The
Hague. It would act in favour of reaching
understandings between states and the peoples
with the goal of acting in order to limit climate
change as much as possible, given that this
represents a terrible danger for humanity.
Eric Toussaint, president of the Committee for
the Cancellation of Third World Debt Belgium
<http://www.cadtm.org/>www.cadtm.org , author of
<http://www.amazon.com/exec/obidos/ASIN/0745327133/counterpunchmaga>The
World Bank: A Critical Primer, Pluto, London, 2008.
Translated by Fred Fuentes
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