How the US Lost Latin America

The end of the Cold War can be seen as both the best and worst thing to ever befall the United States. On one hand, the USSR’s precipitous collapse represented total victory for the US. In one dramatic moment, the US’s primary military rival was defeated, while the putative threat of communism appeared to suffer an irrevocable setback, if not absolute historical refutation, with the demise of its oldest and largest nation-state sponsor; US anti-Soviet policies were perceived as vindicated, while the global conditions for US dominance pursued since the Wilson Administration, as described by Neil Smith–namely, an open world market–had finally arrived. US hubris was as sizable as it was predictable. On the other hand, the disappearance of the US’s primary rival introduced enormous and potentially insurmountable difficulties.

Massive military spending subsidizing the US economy found itself without political justification for the first time since FDR’s Lend Lease Act rescued capitalism from itself; an enormously effective propaganda device used to suppress domestic labor and maintain social control had been lost; the disappearance of an ostensibly alternative political-economic ideology that had previously inspired the US into undergoing domestic civil rights reforms threatens to create a newfound and possibly terminal complacency; and the nominal raison d’etre for an aggressive foreign policy “protecting” allies from the alleged Soviet threat, while toppling and upholding rebels and servants in interventions around the Third World, has been eliminated. The ramifications of the end of the Cold War can be seen domestically and internationally, and politically, economically, militarily and ideologically. This paper will examine the effects of those ramifications on the US relationship with Latin America.

When we say that the US “lost” Latin America we are of course adopting the language of US planners who seek to “have” it, that is, who seek to keep it from foreign competitors as stipulated in the Monroe Doctrine, while maintaining internal rulers amenable to US corporate investment and extraction. The US has lost on both counts, as imperial rivals, specifically China, Noam Chomsky notes, are cultivating financial, arms and energy agreements with Latin American states, while growing numbers of those states are increasingly and flagrantly ignoring US orders. The US’s traditional response of forcible removal has apparently been presently neutralized, at least in Venezuela, where the 2002 attempted overthrow of Hugo Chavez was a humiliating failure, resulting in the solidification of the targeted regime. Likewise, the US’s traditional day-to-day method of dominance over Latin America, that of IMF/WTO economic policies expediting the massive and regular transfer of Latin American wealth to the US, is also being eschewed by emboldened nationalist leaders.

With the collapse of the socialist bloc, large areas hitherto quarantined from the West became exposed to capitalist penetration, dialectically creating the conditions for the US’s ensuing overreach. The economic aspects of this overreach, however, to a fair degree transcend the Cold War. It was in 1973 that capitalism’s postwar Golden Age finally came tumbling to an end. The crisis in overproduction/ under-consumption would prove intractable, triggering the US’s shift from productive to finance capitalism and the advent of a debt-based economy. Though the US effectively employed economic means to thwart rivals from the 1973 oil crisis through the Asian financial crisis of the late 1990s, as David Harvey writes, the deindustrialization associated with its greater shift to a consumption-driven economy weakened the nation internally while its growing massive debt significantly weakened its leverage vis-à-vis foreign rivals. The international equilibrium that had been so totaled by WWII, which had left much of the world in ruins and the US vastly enriched, was irrepressibly reconfiguring. The Cold War’s end, depriving the US of its role as the chief defender of the West against the USSR, introduced a greater political component to the intensifying economic rivalry between the US and its allies, specifically its Western European allies who were, in fits and starts, moving toward economic, political and nascent military unification driven by both longstanding US economic dominance and the hastening decline of the rate of profit.

Growing differences between the US and its Cold War allies–not to mention its adversaries–descended into total and acrimonious conflict over the US/UK 2003 war on Iraq. Immanuel Wallerstein asserts that the US war against Iraq constituted a war on France and Germany, noting that it was the first time in the history of the UN that the US was unable to win Security Council passage of a resolution it badly wanted. France and Germany, among others, were indeed defying US attempts to isolate and strangle Iraq, elevating its own energy, financial and political interests above the US’s attempt at disciplining the recalcitrant oil producer. Hussein’s threats to convert oil sales from dollars to euros, which would have benefited the EU at potentially great US expense, could further be seen as likely to have raised the hackles of US leaders. Indeed, the latter were particularly embittered as they recognized that the military destruction of Iraq’s ossified nationalized economy would create massive investment opportunities benefiting the global economy as a whole. Their erstwhile allies, for their part, opposed the war as a means of, beyond protecting their own positions, opposing the narrower US interests that attacking Iraq did in fact also advance. Beyond the general domestic benefits of warfare–expanding executive power, weakening civil liberties, furthering nationalism and weakening labor, etc.–the US attacked Iraq with the aim of controlling access to the Middle Eastern oil “spigot” while encircling China with military bases, securing US dominance for future decades as outlined in the Project for a New American Century, as Harvey notes.

The war has, of course, not gone as planned. As a result, the US has suffered incalculable political damage–partially due to the incontrovertible exposure of its prewar claims as fabrications. It is badly overextended militarily, strengthening the hands of regional adversaries, namely Iran, and its treasury is hemorrhaging. In short, as Paul Kennedy presciently saw, it appears that the US’s difficulties in Iraq are hastening what was being fended off: US decline.

It is more this material weakening of the US global position than the blow to its political credibility that pertains to Latin America. Latin America, as opposed to Western Europe, has long had good reason to view the US with hostility and suspicion. The US has repeatedly undermined democratic nationalist heads of state, overthrowing Arbenz in 1954 Guatemala and supporting the military coup against Goulart ten years later in Brazil. In 1973 Chile, the CIA orchestrated the overthrow of the socialist democrat Allende, replacing him with Augusto Pinochet who went on to establish a murderous police state. After the US-supported dictator Somoza was overthrown in 1979 Nicaragua, the US created death squads who employed non-state terrorism as a means to destroying the popular Sandinista Government. The US established similar death squads in Guatemala and El Salvador, murdering hundreds of thousands of people. Today the US supports a government in Colombia engaged in some of the worst human rights abuses in the hemisphere.

If US-supported repression, however, is a means to an end, the end largely involves economic domination. The US has more often than not been able to achieve this more directly, if not less violently in its effects, through the imposition of IMF/WTO economic mandates, often culminating in brutal so-called austerity programs. For creditor nations, these programs’ success was their failure, as the dramatically depreciated standards of living resulting from foreign-imposed neo-liberalism in Argentina, for example, discredited that program there once and for all. The political fallout of the Argentine crisis–where the poor overtook highways and rebelled in food protests, while the wealthier fought cops upon being deprived of their capital–has contributed to the US’s failure to impose the Free Trade Area of the Americas in Latin America, an attempt to expand NAFTA as a means of matching the EU’s increasing economic cohesion and the ascent of China.

The backlash against IMF/WTO neo-liberalism and its US sponsor is increasingly articulated through indigenous people’s movements, which have obtained state power in Bolivia. Indigenous movement’s grievances, platforms and rhetoric, buttressed by the strength of innumerable anti-capitalist movements with their annual meetings at the World Social Forum in Porto Alegre, arguably represent the greatest and most cogent refutation of global US-led capitalism in the post-Cold War era. That the US is unable to condemn these movements as Soviet proxies, but must either attack them through the baldly oppressive and ideologically prostrate “War on Terror,” itself a rhetorical substitute for the equally impotent “War on Drugs,” badly weakens its hand. No matter how hollow and hypocritical the US’s Cold War rhetoric had been it at least had the retrogressive Soviet police state to reference. With the collapse of the Soviet Union, US imperialism is growingly naked–revealing its indubitable oppressiveness among masses whose revolutionary sentiment “another world is possible” is a direct challenge to the US nationalism that is an internal precondition for its rule. At the same time, even removed gloves can do little when their fists are being swallowed in the Middle East.

While the growing brazenness of US extra-legal violence reveals and exacerbates its weakening position, the US is simultaneously suffering as a result of the internal contradictions of its official, and unavoidable, economic policies. NAFTA was designed to both alleviate capitalism’s invariable overproduction crises by opening up the Mexican market to US-subsidized agribusiness, while also creating investment outlets freed from environmental, labor and other regulations impeding foreign trade and profit. While reactionaries such as Ross Perot were correct in predicting that NAFTA would accelerate US de-industrialization and lead to massive job losses, its defenders were equally correct to condemn nationalist capitalists like Perot as naïve isolationists ignoring that capitalism’s quintessence is perpetual expansion. NAFTA’s adoption less reflected a political decision than a bilateral response to increased economic competition within post-1973 capitalism, that is, falling rates of profit combined with decreasing areas of investment.

One irony of present-day capitalism is that the deleterious effects of its insatiable rapaciousness are, via one manner or another, increasingly boomeranging on the imperial powers. NAFTA assuredly devastated Mexico, condemning myriad peasant farmers to poverty. Unable to compete in a market flooded with US-subsidized cheap grains, rural farmers overwhelmed the cities. In the north, the brutal anti-union maquiladoras resulted in heavily polluted, crime-ridden towns left for dead by the ravages of capital departed for yet cheaper markets across the Pacific. This declining standard of living led increased numbers of Mexican workers, combined with refugees of the earlier Central American killing fields, to migrate to the US.

In Working the Boundaries, Nicholas De Genova describes the manner in which the inflow of Latino/a migrant workers benefits the US economy, as it is able to assault labor as a whole through making vulnerable an underpaid racialized subclass by, rather than deporting it, legally designating it perpetually “deportable.” Though benefiting the economy, the stable political basis required for capitalism is being undermined by job loss amid the persistent decline in the standard of living. US fascist movements like the so-called Minutemen have astutely diverted growing hostility associated with worsening labor and living conditions through obfuscating economic realities while decrying the effects of a degraded “culture.” Composed of and aided by neo-Nazi organizations, they, like liberals, accept borders, states and capitalism as natural givens, while seeking to “defend” white supremacy against the Latino/a “aliens.” Notably, the Minutemen and other fascist organizations are increasingly disdainful of George W. Bush, himself the helpless captive of corporate and state exigencies. The negative effects of furthering capitalism within an ideological context that precludes mass dissemination of the radical critique of capitalism has resulted in tendencies so potentially powerful they threaten to subordinate material state economic interests to ideological ones.

That this fascist threat is occurring after the end of the Cold War indicates that if the US’s pro-freedom language of the Cold War-years was rhetoric and bluff, sometimes called, the loss of an apparent ideological foe within the context of advancing capitalist crises relegates present-day declarations of “freedom” an anachronistic folly. Apart from the present and future domestic victims of an increasingly racist and aggressive US, the collapse of an “American” ideology premised on perpetually expanding borders and “freedom” harms the long-term health of a state needing though doggedly avoiding reform, as Eric Hobsbawm foresaw in his Age of Extremes. The US appears to have played its last hand, and brute force is a prescription for, if not total collapse a la the USSR, precipitous and inevitable decline.

JOSHUA SPERBER lives in New York. He can be reached at:




Joshua Sperber teaches political science and history. He is the author of Consumer Management in the Internet Age. He can be reached at