Where We’re at Now in Latin America

Mexico City.

The Vice-President of Bolivia has opened an interesting reflection on what is happening, on everyday politics. The much-announced economic deceleration of 2014-2015 has arrived with the foreseen signs of social chaos in all of Latin America.  The bad news is, as we all knew, that the prices of raw materials went through a cycle that was highly rigged by the financial sector, moving to record high levels, that later fell like a rock. The fines charged the nine banks that had criminal interventions in the financial markets added 300,000 million dollars over the past two years, for their criminal interventions between 2008 and 2012. All the theory of export led growth has landed in the rubbish bin together with the political apparatus that said that with the FTAs we would herald the exit from the stagnation of the 1980s and 1990s. The discourse according to which foreign exchange would be shielded by high levels of international reserves also went into the rubbish bin. Those of us on this side of the river knew they were wrong, but most people believed it and the media took charge of making all this into revealed truth. So now what can we do?

Prof Hoekman, in a recently published book by the CEPR, states that “The period between the mid-1980s and the mid-2000s was a major outlier on the upside. It spanned two major geo-political developments and one economic one: (i) the fall of the Berlin Wall and the re-integration of central and eastern European nations with western Europe; (ii) the re-integration of China into the global economy, following the adoption of an export-oriented growth strategy that culminated with the accession of China to the WTO; and (iii) a great expansion in the use of so-called global value chains (GVCs) by large manufacturers and retailers, involving the outsourcing of parts of the production process to firms located in different countries. “.

After 2008, he says: “Presently, trade is not a driver of growth for either industrialized or emerging economies.”  (Bernard Hoekman, “Trade and growth – end of an era?” in The Global Trade Slowdown: A New Normal? Centre for Economic Policy Research (CEPR), A VoxEU.org eBook, 2015, p.5) This is a problem for everyone, the believers and the non-believers in Pan American or regional integration and for those who argued that growing exports would be the solution to the economic shutdowns of the 1980s.The bad results currently generated are not temporary because the phenomena are not temporary. The collapse of commodity prices has revealed financial manipulations in these markets that gave rise to immense price distortions between 2008 and 2012.The gold market in particular is much affected by the manipulations of prices. Interest rates are still negative in the United States but the rising expectation that they will rise has pushed prices back to their natural level, as the classics would say. Those who argued that positive terms of trade were permanent must eat their tongues with the bitter sauce of misfortune. The terms of exchange are back to negative, as always, and US interest rates have not risen yet.

The more Hayekian countries of the region, such as Peru, Colombia, Mexico and Chile, whose common characteristic is a Pan American vision of integration and export led growth demonstrate their discomfort in this area.  Students protest, there are protests against corruption in the Bachelet government, there are campesinos fighting for their right to clean water and against the development of mines in some valleys of Peru, Colombia and Mexico. In the opposite political pole, more post-neoliberal, there are protests in Ecuador against state violence, the high cost of living and the indefinite reelection of the president, one of the 16 constitutional amendments recently proposed. In Uruguay, the Association of Secondary Teachers (ADES) decided to strike on Monday, August 17, in the country of the Frente Amplio, where Pepe Mujica governed until recently. There are also public sector protests against budget austerity adjustments for 2016. In Bolivia there are very violent protests, with dynamite, associated with the economy. Venezuela has been suffering protests for over two years due to the impact of inflation and the shortages due to this.

In Brazil there are protests against the massive corruption of the Dilma government, but as the protesters also note, there is no alternative candidate, since the government that would replace Dilma faces a similar accusation and Dilma herself does not. Behind this is the middle class that has always opposed the PT. Corruption in Brazil is endemic, what is new is that it is being investigated and those responsible taken to trial.  In reality, the protests are against the problem of the devaluation of currency that has gone from 1.60 to 3.20 reales to the dollar and the impact of inflation and productive stagnation and the consequences on jobs and wages. Inflation is not new. In the 1960’s it was very high and there were no protests. But now it is different, as inflation has all but disappeared from people´s minds for over two decades. Brazil is the economy most affected by the current global changes. In 2014 it grew 0.1%, that is to say it didn’t really grow and in 2015 it grew by -1.5% with inflation at 8.5%. In Paraguay school teachers are on strike demanding a minimum wage of 350 dollars, and family benefits of 20 dollars per child, among other things. In Mexico the protests are all about the dead and disappeared so far. The latest scandal, at the beginning of August, is the murder of a journalist who had moved to the Federal District after being threatened by the governor of Veracruz, and he was killed together with four women, including the household servant, in the apartment where they lived. One of the four women was a social activist who was also threatened in Veracruz. The austerity budget for 2016 has not been published to date but it is foreseen to be very sharp.

Apparently there are two kinds of protests on the go.  One related to economics and others related to the politics of indefinite re-election. As was the case of Fujimori in 1998, permanent re-election is a thorny issue for public opinion, which can hit the streets en masse in opposition to this.

The theme in Bolivia is different: it is pressure derived from improvement.  The GNP grew to 6.9% in 2013, 5.4% in 2014 and hopefully 4.5% in 2015, the highest growth rates in Latin America. In this context the people of Potosí are agitating for 26 works promised by the central government, among others an international airport, a hydroelectric plant, hospitals and factories to produce cement, lime and glass in the context of admirable prosperity in a country hit for centuries by the abandonment of its leaders. The reaction to the social tensions by the Bolivian government is also different. While in Ecuador it was resolved with violence, in Bolivia it is met with attacks on the old NGOs that for decades have analyzed the country.

In a way that is unclear, environmentalism belongs to the left in the world, but in Bolivia they are pointed out as coming from the right. Green is the new red, they say in France, but in Bolivia green is the new white. This seems to be the quid of the problem. A violent verbal attack from the Vice-President García Linera against CEDIB, the well-established and prestigious documentation centre, internationally acclaimed with 30 years of life; CEDLA, that just celebrated its 40th anniversary and is the most internationally recognized independent Bolivian, research centre; the Fundación Milenio, with 25 years of work, sponsored by the Konrad Adenauer Foundation, associated with the German Liberal Party; and the Fundación Tierra that has the support of the Asociación Latinoamericana de Organismos de Promoción ALOP, historically tied to the Dutch aid, made them appear as targets of the popular government.

Bolivia has the highest rate of economic growth in Latin America, the best income distribution policy and one of the highest investment rates in the region. It is comfortably accommodated for the coming re-election of Evo, which makes the governmental fright unnecessary and inexplicable.  Background to this was the expulsion in 2013 of IBIS, a Danish NGO with 30 years of work, with no more explanation than that it worked to destabilize the government, analogous to the present tone. The question is, can anyone more or less intelligent think that any political regime can exist without some kind of internal opposition?  Doesn’t governing have to do with dialoguing with the adversaries? Or does the Bolivian government have a Stalinist vision of politics? If this were the case, it would be needlessly almost alone in the world.

In general, there are protests against economic problems everywhere in Latin America, right and left, due to frustration after the promises for over two decades that we will enter the first world “like Chile” and that “we have to work as Chile has”, and with more or less authoritarianism we all did resemble Chile. FTAs were empowered and anything except neoliberalism or Pan American integration was discredited. People in all countries have waited for that “first world” promise to be fulfilled. Chile is where it was most fulfilled but it appears that the “first worlders” of the south do not enjoy their status, given the size of the protests and political demands.

Chile has a GNP measured in PPP (Purchasing Power Parity) three times that of Bolivia, double that of Peru and Colombia and one and a half times that of Brazil, but the discomfort is growing due to the lack of perspectives for the young in face of decades of promises.

In general leftist governments such as Venezuela, Bolivia and Ecuador are reacting badly to political demands and they should be those who most respect social demands because in the end these governments were elected by the people. In effect, if it be a question of indefinite re-election in Ecuador there should be a referendum to see what the people want, whether or not there should be a constitutional reform that allows this. Otherwise Correa would look more like Fujimori than say, Dilma. This is not the political sense of his government, no doubt about this, in spite of numerous accusations from the right and some from the left.

The Bolivian case appears to be an isolated phenomenon since there is no doubt about the re-election of Evo, even though there could be qualms about an indefinite re-election — not envisioned yet — which is the thorny issue that brought down Fujimori. The Peruvian ruler had Washington’s support from the day of the coup, and a plan for economic reforms sponsored by the World Bank was coordinated from the ministries by World Bank officials, from the day after the coup. Fujimori was overthrown in spite of these supports and the absolute control of the intelligence services over the movements of the opposition. The loneliness of leftist governments in the crisis should not have them behave as right-wingers, hitting and repressing. The important thing to note is that raw materials prices have returned to their historical level and there is no sign of strong economic growth in either Europe, the United States, or Japan; and that China will continue to grow fast, but less so over the long term. In addition, there appears to be a new and active international financial problem of great dimensions in the making.

The Vice-President of Bolivia García Linera, in a letter to friends, says: “In this context– with freedom of thought and expression — I have pointed out that four NGOs have lied and camouflaged their reactionary political activism under the cover of “non-governmental activity”. If CEDIB, CEDLA, etc., have decided to turn to the right, it is an option like any other and neither interrupts nor interferes with the Bolivian social and political process. Milenio was always liberal right and Tierra should be centre left. In any case, the opposition feeds the government, as all criticism feeds progressive governments. If these institutions do not speak the truth the problem is different, as the object of scientific research is the search for truth. It is precisely because of this that plagiarism is strongly sanctioned. The solution to the problem of lying in the name of science is to show the truth. It is neither to close the institution nor to attack it. It is to show, with evidence, where falsity lies. The question, given the political weight of Evo in Bolivia, is whether all this is worthwhile to ensure his re-election.

In the context of protests in all of Latin America it makes sense that countries with rightist governments come to blows with protesters, but it makes no sense that those on the left do the same thing. Or the world is upside down. The left is not about re-electing itself permanently. We who have struggled for social justice in the whole continent for decades and were against the third re-election of Fujimori could see the degree to which the control of the State was in the hands of the intelligence service that operated only to guarantee the permanence of the regime. Is this what the left does in power?  The example is awful and its end was brutal, first to dash out of the country, then take exile, and finally life imprisonment for a mistaken political calculation. This should not be the pattern to be followed by presidents and governments on the left in search of perpetuity in power. No. They should be examples of humility and honesty. It was Louis XIV who said “I am the State”.  Then Stalin persecuted Trotsky with the same argument. He also murdered Kondratiev because he said that there were economic cycles.

Finally, on the environmentalist agenda, García Linera refers to “the ideological framework in environmentalist discourse emitted and financed by imperialist centres”.  Eduardo Gudynas is accused of the same thing in Peru, but from the contrary pole. The mining companies accuse the anti-miners of being “Chavistas”. I have no idea where the Vice-president would put Joan Martínez Alier and his followers of Ecología Política. Nor Pope Francisco, who recently had a successful visit to the southern country, and who with his Encyclical Letter Laudato si, on the care of the common house has left many conservatives sleepless. Jeb Bush said he would not take recommendations on economic policy from the Pope. The environmental agenda is anathema for the international right and for Bolivia. What does the government of Evo and the international right have in common? Why does the Vice-president face off against the international left with imprecise data? Not all international NGOs are agents of imperialism and not all environmental positions are aligned to USAID.

We are now at a crossroads where progressive governments should provide an example of what they are about, not stalking upon their adversaries, nor beating up their citizens. We are in a moment where we should be thinking about what to do in the future in an international context that is no longer that of 2003 and with a dominant economic theory that it has just been said is outdated. There are more serious themes than staying in power and always being right. Being right most of the time is now enough.

Oscar Ugarteche is a researcher with the Institute of Economic Investigations UNAM, Member of the SN/Conacyt, Coordinator of the Obela project www.obela.org. Email:  ugarteche@iiec.unam.mx

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