The West vs. The Rest, The Current State of Play; Latin America Pt 1.

Across Latin America in the eighteenth century, the rich white / lighter skinned elites took power from the “home” imperialist nations (i.e. Spain and Portugal) and have done whatever it takes to maintain that power since, supported by the US, Canada and Europe. The only exception was Haiti, where a people’s revolution was carried out and that nation has been punished ever since – how dare ex-slaves gain their own freedom! The same punishments have been carried out against the Cubans for six decades, the Nicaraguans for four decades and Venezuelans for two decades, for their temerity in overthrowing the exploitative lighter skinned elites and the interests of the US.

Attempts to gain power for the masses, or even simply to implement industrialization and bourgeois liberal democracy, across Latin America in the 1950s. 1960s and 1970s, were met with elite coups, many times supported and facilitated by the US government. In the 1970s the US security state and military/right-wing dictatorships in Argentina, Chile, Uruguay, Brazil, Paraguay, Bolivia and Peru carried out policies of outright extermination of left-wing and progressive leaderships, through judicial and extra-judicial means (e.g. death squads) which included the murder of at least 400 national dissidents who had fled to other countries (Operation Condor). Estimates put the death toll at least at 50,000, with at least 30,000 disappeared and 400,000 imprisoned (many of which were tortured). This was an outright state terror campaign to destroy left-wing and progressive leadership and frighten the rest of society into submission while previous progressive policies were replaced with neoliberalism and austerity.

This was followed by the “lost decade” of the 1980s of intensified neoliberalism and austerity. The US Volcker interest rate shock and resultant global recession, when combined with the rampant foreign borrowing and corruption of the military regimes, produced the Latin American debt crisis. The successes of import-substitution industrialization (ISI) were reversed with enforced neoliberal “structural adjustment” policies. These included free trade policies that opened up local manufacturing industries to much more efficient and capitalized foreign competition, resulting in significant deindustrialization. Also, the selling of state assets many times at prices substantially below their true value; a legalized theft of government assets by national and foreign elites. The debts could have been repudiated as “odious” (not approved by, nor benefitting, the people of the country) but the national oligarchs and foreign interests managed to stop that option being utilized. Only with the debt in place could the neoliberal policies be forced upon the nations of Latin America with the help of the IMF and World Bank.

Progressives at last came to power in many nations with the turn of the century (the “pink tide”) and were greatly aided by the commodity boom predominantly driven by China’s double-digit economic growth. However, these generally limited progressive governments were mostly removed/defeated by the mid 2010s (with the exceptions of Bolivia, Venezuela, Nicaragua and Mexico); with the use of lawfare and other dirty tricks (e.g. the treachery of an Ecuadorian president and Peruvian and Brazilian vice presidents, and the intentional returning of Argentina to debt-bondage by its president to fund capital flight) being prevalent, always aided and supported by the US. The agricultural, mineral extractive and financial elites, allied with foreign capital, have reasserted their power over most of the Latin American economies.

With the decline of US power globally, the increasing economic role of China in Latin America, and the utter disaster (for the West) of the anti-Russia sanctions that Latin America has rejected, space is opening up for a more independent US “backyard”. The US, and the West, will not let go of their control of the region without a fight. The internal political, economic and social realities of the individual nations will also be open to challenge; will it be only the extractive and rentier elites who benefit from these new possibilities, or will the masses be able to gain their share? This will be a complex process, as Latin American elites strive to take advantage of the opportunities provided by closer relations with China while also wanting to maintain their US security blanket in the face of challenges from the general populace striving for a better life. With China’s policy of political non-intervention, it cannot be assumed that the region will not remain elite-dominated whilst turning more toward China. Such continued elite domination based upon agriculture, raw material extraction and finance will not lead to industrialization; in fact, it may very well lead to further deindustrialization with Latin America reinforced in its role as a provider of food and minerals dominated by a landed and financial aristocracy.

For the purposes of this analysis I have divided the region into an extended southern core (part 1) which does not border the Caribbean, and those nations that are within or border the Caribbean (a separate part 2). If Latin America is considered to be the US “backyard”, the latter nations are more akin to a US “back pocket” with the reactions of the US state to any challenges being of a quantitatively and qualitatively different nature; with such things as invasions (Cuba, Panama, Grenada), the fostering and support of right-wing guerilla organizations and death squads (El Salvador, Guatemala, Nicaragua, Colombia, Haiti), and leader assassination attempts (Venezuela) more prevalent. In the extended southern cone, more indirect, subtle and deniable methods tend to be used; such as covert support for coup groups, funding of opposition parties, media and NGOs and, most recently lawfare.

The Extended Southern Cone

Brazil (214 million population; US$4 trillion GDP PPP)

Brazil is the latent superpower of Latin America that has been repeatedly held back by its own extractive elites and external powers, especially the US. It was colonized by the Portuguese under the agreement with the Pope on the division of Latin America between Portugal and Spain; with black slaves heavily utilized for sugarcane plantations. The dominance of the local predominantly Portuguese colonial elite was reinforced with independence from Portugal in 1822, with monarchic rule until 1889. A military dictatorship followed, until civilian rule was implemented in 1893; this lasted until 1930, and the period of 1889 to 1930 is seen as the First Brazilian Republic. Slavery was only abandoned in 1888, and the vast majority of the population worked in near-feudal conditions on giant estates (owned by less than 500 families) producing cash crops for export (coffee, sugar, cotton); much food had to be imported due to this export crop orientation. With low literacy rates, patron-client structures allowed the landowners to dominate the government. Industry was little-developed, and living standards were extremely low outside the rich few.

As time progressed, the expansion of trade, commerce and industry did produce a middle class that could challenge the power of the landowners. The Brazilian Revolution of 1930, aided by the world economic crisis starting in 1929, overthrew landowner rule and lead to a bourgeois government under Vargas from 1930 to 1945 that followed state interventionist, centralizing, and protectionist policies; the Vargas Era. This was a period of industrialization and professionalization of the state with a growing bourgeois elite sharing power with the landowning elite. In 1934 Vargas shifted right becoming increasingly fascist, culminating in his totalitarian regime from 1937 to 1945. In 1945 Vargas was overthrown and democratic government returned, with the Fourth Brazilian Republic that generally followed the economic development and diversification policies of Vargas (Vargas himself was even elected as President from 1951 to 1954, he committed suicide threatened by a probable military coup). The Goulart presidency of 1961-1964 pushed for more fundamental reforms that directly threatened the landowners and bourgeois capitalist interests; a general economic democratization. He was overthrown in a military coup in 1964 (with significant US involvement).

The military government, ruling in the interests of the elite, set about crushing the opposition through arrests, imprisonment, torture and death; including abroad through Operation Condor. It did continue to follow the economic developmental policies though, and the economy boomed until the global crisis of the early 1970s intervened. The effects of the Latin American debt crisis doomed the military regime, and civilian power was returned in 1985, after 21 years of military rule. The resulting Sarney presidency failed to undo the hyperinflation inherited from the military regime and the ongoing crises lead to the presidency of the unknown Collor. Collor, a charismatic 39 year-old and from an elite background, used a media-focused campaign (aided by extreme media bias, especially by the biggest channel Globo) heavily directed at the poor and young voters (for the first time 16-18 year-old and illiterate citizens could vote), together with the increasing evangelical voter block, through vague progressive and anti-corruption promises (only 25% of the electorate had finished primary school) while promising neoliberalism for the elites. A strategy used by other “anti-corruption” and “anti-establishment” elite candidates such as Macron in France, Collor was impeached for corruption within 2 years.

Collor was succeeded by the vice president, Franco who employed Cardoso as his finance minister. Cardoso implemented the Plan Real, which combined a new currency with highly restrictive fiscal and monetary policies, together with a high quasi-fixed exchange rate; resulting in a rapid reduction in the previously seeming endemic hyper-inflation. The high exchange rate sucked in foreign imports and reduced exports helping keep inflation in check, with the balance of payments deficit surging from 1995 onwards, a resulting currency crisis was averted by an influx of foreign capital drawn by the high interest rates. At the same time high real interest rates produced increasing government budget deficits (with workers resisting the cuts that would make them bear the cost of maintaining low inflation), as well as a developing banking crisis as non-performing loans increased. This was an accident waiting to happen. Cardoso won the 1994 and 1998 elections based upon his “victory” over hyper-inflation and brought in far reaching neoliberal policies that included increasing privatizations with proceeds used to limit government deficits. The 1997 Asian Financial Crisis and 1998 Russian debt default lead to even higher interest rates, intensifying the fiscal crisis and producing a deepening recession, while also leading to net capital outflows which rapidly depleted Brazil’s foreign exchange reserves. The currency was allowed to depreciate by 40% and the fundamental flaw in the Real Plan exposed.

In 1992, Lula was elected with policies that were somewhat progressive, but did not threaten the elites. He was extremely lucky to greatly benefit from the China-driven commodities boom that pulled the economy out of economic crisis and helped fund the small handouts to the poor and other progressive programs; neoliberalism with crumbs. Instead of helping left wing groups in other countries he tended to drive a foreign policy aimed at expanding the reach of Brazilian capital in Latin America while somewhat offsetting US dominance. He also demobilized the grass roots movements that had helped get him elected (a strategy also followed by Obama after his election). The massive growth in primary commodity exports also reoriented the economy back toward agricultural and extractive sectors. He finished his two terms in 2010, just before the crashing end of the commodity boom. His hand-picked successor, Rousseff (a self-confessed pragmatic capitalist who extended the privatization of Brazil’s oil reserves) bore the brunt of the commodity crash, and the elite drive to unseat her (aided by the US) through economic destabilization, lawfare (Operation Car Wash and a spurious presidential impeachment) and Globo propaganda. This was after her winning of a second term, as they deemed even the crumbs and other limited progressive programs as too much in the now more austere times. The US was also unhappy at Rousseff not expanding privatization, especially of Petrobras the state oil company, to an even greater extent.

Her vice president, Temer, succeeded her and immediately implemented wide-ranging austerity and neoliberal policies (a pattern repeated a number of times in Latin America, Peru being the latest). In 2018, the US and the Brazilian elite went further in jailing Lula, who was set to win the election, on spurious charges. Widespread propaganda was then propagated through television (Globo again) and social media (especially WhatsApp), together with the support of the massive evangelical church and their “prosperity gospel” to guide the votes of the illiterate and uneducated, to defeat the PT (Lula’s Party) candidate. The result was the election of the reactionary and neoliberal Bolsonaro, who went to work cutting government cultural, educational and scientific programs, pensions, taxes, and environmental oversight. Bolsonaro surprised the US when he refused to implement sanctions against Russia in 2022, and then lost the election to a Lula who had been exonerated.

A much-disciplined (by the elites) Lula, ruling with a heavily right-wing national assembly, has little room to offset the reinstated elite dominance based in the agricultural, extractive and finance sectors. Since the peak of developmental state in the 1970s, Brazil’s economy has been put on the path of a return to rentier and financier dominance. From 1990 to 2020, the share of manufacturing value added in Brazil’s GDP declined from an already low 15% to 9.9%, and between 2005 and 2019 Brazil turned a trade surplus of US$8 billion in manufactured goods into a deficit of US$90 billion. The share of primary goods in exports rose from 28% in 1990 to 50% in 2014, while that of medium and low technology industries fell from 25% to 18% and 14% to 5% respectively.

China’s share of Brazilian exports increased from 2% in 2000 to 32.4% (US$67.8 billion) in 2020, compared to the Chinese share of imports in 2020 being 21.9% (US$34.8 billion); a bilateral trade surplus of US$33 billion. The Brazilian exports are primary commodities (75% being soybeans, iron ore and oil) while Chinese imports are of high value added and medium to high technology goods, reinforcing the deindustrialization of the Brazilian economy. China’s foreign direct investment in Brazil has also been predominantly in the mineral extraction, and electricity generation and water supply, sectors; with minimal investments in manufacturing.

The financial sector is also focused on rentier earnings, with extremely high margins (6 times higher than in the US and China!) and highest in the world interest rates on government short term bills, while providing much less credit than in other nations such as the US.

These above trends risk ongoing declines in the incomes of the vast majority of Brazilians, with only the extractive and financial elites benefitting from expanded primary exports and rentier profits. This is at a GDP per capita PPP of only US$16,000 (only just now exceeding the level of 2014) in a country with one of the highest levels of income and wealth inequality (which has hardly changed in 200 years) in the world. The average monthly wage is equal to US$600 at market exchange rates. The elites also value the backing of the US (and the US-trained and equipped military) in times of challenge to their dominance, limiting any significant move away from the US. They may be taking advantage of the Chinese export opportunities, but they understand who has their back (the US) especially when China has a policy of no political intervention in other nations. Lula will need to tread very carefully with respect to any real decoupling from the US.

Argentina (46 million; US$1.27 trillion)

The fundamental problem for the development of the Argentinian economy has always been the dominance of a very small agricultural oligarchy focused on the export of food products such as meat and cereals. This oligarchy has had little interest in the development of domestic industry, or the good education of the majority. In the post-WW2 period, the populist Peronist government (1946 to 1955), elected twice in 1946 and 1951, challenged oligarchic power and espoused social justice and economic independence. It carried out extensive progressive policies; such as increasing social expenditures, investing heavily in public infrastructure, bringing in women’s suffrage, supporting unions against employers and a minimum wage, implementing limited free health care, and legitimizing working-class culture, while at the same time running an authoritarian socially conservative government. Peron also nationalized the central bank, the previously British and French owned railways, utilities, universities, and took state control over agricultural exports. Real wages and the workers share of national income rose significantly. He also restored diplomatic relations with the Soviet Union.

Import-substitution-industrialization (ISI) was also implemented to drive the creation of industry and an industrial bourgeoisie. This was successful, but the resulting large imports of capital goods required for industrialization created an increasing trade deficit, exacerbated by US political hostility and pressure from the US agricultural lobby, bad harvests, and a deterioration in the terms of trade. Stagflation becoming embedded as the exchange rate fell in such an import-dependent nation. Peron also encouraged foreign direct investment to promote local manufacturing and oil production. Peron’s plans to legalize divorce and prostitution, as well as his relationship with an underage girl, made the Catholic church a major enemy. After a failed attempted coup, a Catholic group of military officers overthrew Peron in 1955; the Liberating Revolution. Peron had overreached with his socially liberal policies that threatened the Catholic church in a socially conservative country, exacerbating the problem with the underage relationship, facilitating the coalition of the church and the oligarchs against him. An error repeated recently by the progressive Chilean government with its proposed new constitution full of woke liberal items that were a gift to their opponents; a great opportunity for change thrown away by liberal cultural overreach.

The Peronist party was banned, and even after elections were reinstated in 1958 the military constrained the allowable government policies; with unacceptable governments overthrown by the military. The progressive Frondizi (1958 to 1962) was forced to implement austerity in 1959 by the military but at the same time followed developmental policies based upon by foreign direct investment; especially in the areas of oil and steel production and infrastructure. His military imposed successor Guido (1962 to 1963) then followed a conservative economic policy of austerity that created a 2-year recession. He was succeeded by Illia (1963 to 1966) who reversed the conservative policies before also being deposed by a military coup in 1966. He was replaced by the dictator Ongania (1966 to 1970) who implemented a wage freeze and large currency devaluation while creating a partial oil monopoly. In 1975 he was toppled by the military and replaced with Levingston who was himself replaced by the military in 1971 with Lanusse who lasted until new democratic elections in 1973. The nation had benefitted from the developmental policies of Frondizi and Illia, together with the automation of agriculture and the rapid growth of the global economy; the Argentine economy doubled in size between 1955 and 1973.

The 1973 elections produced a win for the Peronist Campora, who quickly resigned to trigger an election that Peron himself won after an 18-year exile. Between the time Peron took office and his death in 1974, there was increasing violence toward left-wing and moderate elements even within the Peronist party as Peron had moved increasingly to the right. Developmental policies were also restricted by the economic impact of the 1973 oil shock. After his death, his wife Isabel took over. She deepened the level of state violence against the opposition with a deepening civil war that included political assassinations, and also implemented an economic shock therapy. The military carried out yet another coup, and the period of state terrorism known as the Dirty War (1974 to 1983) began, including death squads and the widespread jailing, torture and murder of progressives as well as anyone who was against the neoliberal policies (favouring the landowners, financiers and foreign capital) that were implemented. This era was only ended by economic collapse and military defeat during the Falklands War of 1982.

Democracy was again reinstated in 1983, and Raul Alfonsin became the elected president. After nearly 300 of the coup leaders were prosecuted and many senior leaders jailed, the military threatened another coup that forced the government to pass a law that ended such prosecution. With the onset of the Latin American debt crisis, the IMF-enforced neoliberal, free trade and austerity policies created widespread unemployment and unrest. The debts that had been taken on during the deeply corrupt military government could have been rejected as “odious” debts as they were taken on without the consent of the people, but the financial establishment (much of it educated in elite Western universities and working in the interest of the elite and foreign capital) at home and abroad successfully pushed for the debts to be honoured; making the general population pay for the corrupt debts that benefitted the military and the elite, through enforced austerity. A significant portion of the “foreign” debt may actually be held for the benefit of local elites who squirreled money abroad during previous episodes of capital flight, which may account for their resistance to debt defaults. The Plan Austral of 1985 froze prices and wages, enacted deep spending cuts, limited the money supply and exchanged the old currency for the new Austral at a 1 to 1000 conversion rate. Inflation did drop at first, but the economy was crushed, resulting in increasing government and foreign debt. Money printing was reinstated, and problematic levels of inflation returned, which then became hyperinflation.

After a “lost decade” of economic contraction, the populist and Peronist Menem was elected in 1989, but he immediately embraced radical neoliberal policies, austerity, and corrupt and bribe-laden extensive privatizations at prices below true value and without debts; mirroring somewhat the plunder of state assets in Russia during this period, with even a “shares for loans” conversion scheme for foreign creditors. Many union leaders and other Peronist politicians joined him in his treachery, mirroring the corporate and neoliberal turn of the Democratic Party in the US and the Labour Party in the UK. Social spending was cut, time deposits were forcibly converted to government bonds, trade was deregulated, regressive value added taxes increased, the number of state employees reduced, a fixed exchange rate set with the US dollar with full convertibility (leading to an extensive dollarization of the economy), and wages frozen. The fixed exchange rate stopped capital flight and helped reduce inflation but was the same ticking time bomb as the Brazilian attempt to fix its exchange rate, imports increased, and domestic manufacturing was crushed (deindustrialization); with the economic crisis intensifying toward the end of his second term (exacerbated by the Asian and Russian financial crises). Foreign policy was aligned with the United States. The use of foreign debt to control Argentina for two centuries, together with the absolutely venal corrupt nature of Menem’s government is covered by this excellent documentary:

De la Rua succeeded Menem in 1999, but the economic crisis deepened into a full-blown banking panic with social unrest, and after calling a state of emergency in December 2001 he resigned when faced with extensive rioting. A number of short-term interim presidents were then appointed amid economic and social collapse and chaos, until the appointment of the Peronist Duhalde at the beginning of 2002. The fixed exchange rate was repealed, resulting in a two-thirds devaluation that spurred exports (aided by the China-driven commodity boom) and lessened competition from imports (leading to import substitution), with the extensive dollar denominated domestic deposits “pesofied” at a rate of one dollar to four pesos. Menem had been pushing toward a fully US dollarized economy, which would have de facto moved control of the economy to the US government. Duhalde hand-picked Kirchner, despite reservations, to run against Menem in the 2003 election and threw his support fully behind him, in a successful attempt to stop Menem regaining office. Kirchner, and then his wife served in office until 2015.

A swap of defaulted debt was carried out that involved a two-thirds write down of the debt, and the IMF was paid off, and new trials for the military that served during the Dirty War took place as the laws stopping such prosecutions were repealed. The judiciary was reformed, with some judges removed and the process of appointment changed. Some industries were renationalized, social spending was increased, and a more non-aligned foreign policy was followed. With the presidency of his wife Cristina, private pension funds were nationalised, the fossil fuel company YPF was renationalized, social payments were increased, and prices for public utility services fixed, as the economy continued to benefit from the commodities boom. The fundamental failure of Cristina’s first term was the failure to raise agricultural export taxes in an attempt at supporting production for domestic consumption and redistribution from the highly concentrated agricultural elite; an elite that had benefitted greatly from the commodities boom. That elite carried out economic warfare through an agrarian strike, together with roadblocks and mass protests, and the legislation was rejected by a vote of 37-36 with the vice president notoriously voting against his own president (progressive Latin American leaders have to be very careful who they select as their vice presidents and successors, as such traitorous behavior has repeatedly happened!). This maintained the power of the agricultural elites that had actively blocked the diversification of the economy since independence and meant that increased social spending would lead to increasing deficits.

In what can only be deemed as US rentier elite financial lawfare, an ageing American judge not only ruled in favour of vulture funds that had invested in defaulted Argentinian bonds but also ruled that Argentina had to pay all of the creditors that had not agreed to the debt restructuring; ridiculously ruling that Argentina had not fallen into a sovereign default. Argentina refused to pay, but this facilitated legal actions against Argentinian state assets in foreign nations. With the impacts of the 2008 GFC and escalating oil prices increasing the energy trade deficit, the exchange rate declined, and domestic inflation increased while power outages became frequent. The end of the commodity boom also reduced exports, and without any reductions in government expenditures or tax rises, the government deficit expanded to 8% of GDP; this was the other fundamental economic failure of the government that lead to increasing levels of foreign debt (reversing the escape from foreign debt dependency after the previous debt crisis). Toward the end of the presidency capital controls were implemented to stop capital flight, controls which have been successfully used by the Asian nations as part of their successful industrialization.

The rule of the Kirchners ended in 2015, with the election of the right-wing businessman Macri who narrowly beat the Kirchnerite candidate. Macri removed currency controls (facilitating increasing capital flight) and the Argentine peso was devalued by 30%. Also removed were export quotas and tariffs on wheat, while tariffs on soybeans were reduced, while US$6.5 billion was spent to pay off the vulture funds. These all served to increase government deficits by reducing revenues (or increasing expenditure in the case of the vulture fund payouts) rather than reducing them. Import tariffs on capital goods were also cut and tariffs on technology products removed, combined policies of deregulation. Austerity would not be borne by the rich, but rather by the rest of society – especially the poor and middle class. Public utility prices were massively raised after they had been fixed for years under the previous government, an over ten times jump in the price of electricity, over a five-times jump in the price of gas and an over eight times jump in the price of water. These prices did need to be unfixed, but their rapid rise as against a slower normalization, had a huge negative impact outside the economic elites. Together with an anti-labour stance that started to roll-back previous gains, the result was a very significant transfer in income upwards and large increases in poverty. Rises in US interest rates, combined with a massive drought, worsened the trade deficit further and the resultant currency devaluation (combined with capital flight) increased inflation. The response was a massive, US$50 billion IMF loan in 2018 of which US$44 billion was disbursed in 2018 and 2019, and accelerated austerity.

The continued lack of capital controls, together with IMF restrictions on further devaluation, facilitated a mass capital flight by the elites (barely 10% of foreign exchange buyers bought US$47 billion) funded by the IMF loan that would be paid for by society in general. The elites were allowed to offshore large amounts of money in a short period before an inevitable major devaluation, after which they could exchange their foreign currency for much more pesos than they spent to buy that foreign currency – pure rentier corruption. The IMF stance reminds me of the “economic hitman” book, with societies intentionally drowned in non-productive debt to facilitate neocolonial control. All the economic independence gains of the Kirchner era were being thrown away in a matter of years, locking the nation in to debt dependency. It is ridiculous to think that the IMF would not have understood the impact of the quasi-fixed exchange rate combined with a lack of currency controls and just happen to dole out US$44 billion at exactly the time when capital flight was being facilitated by state foreign exchange interventions to support the currency. The IMF is explicitly prohibited from providing loans that will facilitate capital flight. The IMF loan was also granted against the advice of the IMFs own staff that viewed Argentina’s debt as unsustainable without a restructuring, and breached IMF bylaws on allowable facility amounts. In many ways it mirrors the IMF loan given to Yeltsin in 1996 to allow him to stay in power, the IMF was acting as a political supporter of the preferred neoliberal president to forestall a return of the Peronists. This provides a good coverage of the crooked and politically biased nature of the IMF loan.

A take on the perpetual Argentinian debt crisis and the general role of the IMF in implementing neoliberal policies benefitting the rich and foreign investors.

Macri was replaced with the Kirchnerite Fernandez in 2019 with Kirchner herself as vice president. The capital controls that were belatedly put back in place by Macri near the end of his tenure have been continued. Tax hikes were placed on foreign currency purchases, agricultural exports (in the face of agricultural elite resistance), wealth and car sales, tax incentives were provided for production, and modest social spending increases made. Argentina defaulted on its foreign debt in 2020, and a restructuring of US$65 billion in foreign bonds was agreed in 2022. After the cozy relationship of Macri with the US, relations have become strained with Argentina leaving the anti-Venezuela Lima Group and Fernandez visiting China. With the impacts of the COVID crisis and ongoing inflation and high unemployment, a neoliberal government could easily come to power in the elections of October this year. Kirchner was stopped from running again by an obviously biased judiciary ruling against her in a criminal case that threatens to jail her, only months after a failed assassination attempt against her. The party that Macri represented, the Peronist party and a new far-right party are neck and neck in recent political polls.

Argentina’s exports are dominated by crops, fossil fuels, minerals and meat while its imports are dominated by manufactured products. The share of manufacturing value added in GDP was 15% in 2021, compared to 40% in the mid 1970s. All of the gains of the post-WW2 years have been thrown away.

Chile (19.5 million; US$0.6 trillion)

In 1932, the Chilean middle class at last rested control of the country from the ruling oligarchy with the election of Radical Party that dominated for 20 years with policies of increased state intervention. The Radical Party was replaced with conservative governments in 1952, lasting until 1964 when Frei instituted wide ranging social and economic reforms. Then, in 1970 the left-wing Salvador Allende was elected and the response to his socialist programs (which included the completion of the nationalization of the copper industry without compensation) was capital flight, an investment strike, a withdrawal of bank deposits and outright domestic and political destabilization actively backed by the US. After one head of the military was murdered, and another forced out of office, a new head who would back a coup (Pinochet) was put in place and within weeks Allende was overthrown in a violent military coup by Pinochet (1973 to 1990) that was actively supported by the US; the first 9/11. This was followed by an era of brutal repression and radical neoliberalism, with at least 40,000 killed, tortured or imprisoned. During this time, the Chilean economy significantly underperformed its Latin American neighbours, with GDP per capita growth being only half that of the region overall and Chile falling from being one of the richer nations in the region to be below the average for the region. With a significant increase in inequality, the number of people living in poverty doubled to 40%.

In the 1989 election, Aylwin (1990 to 1994) was elected and spending on social programs was increased, trade union rights were improved, and tax reform implemented. The share of the population living in poverty fell from 40% to 33%. Frei (1994 to 2000) and Lagos (2000 to 2006) followed, with the latter initiating numerous free trade agreements. Next was the socialist Bachelet (2006 to 2010 and 2014 to 2018), who in her first term brought in a basic state pension, increased other social spending, reformed the education system and increased spending in infrastructure. In the second half of her term the economy was negatively affected by the GFC, with unemployment rising to 11%.

In 2010 the billionaire Pinera (2010 to 2014 and 2018 to 2022) was elected president, and his government included a number of officials that had served under Pinochet, representing a move to the right after two decades of progressive governments. The 2011 student protests against the legalization of for-profit education helped greatly reduce his public approval, and he was unable to implement his agenda. Bachelet was returned to presidency in 2014. Free education was guaranteed and state funding for universities was doubled, corporate taxes were increased, proportional representation was reintroduced together with overseas voting rights and the CPTPP free trade deal (which includes Chile, Peru, Mexico, Canada, Japan, Brunei, Vietnam, Malaysia, New Zealand, Australia and Singapore) was signed. Her public approval was significantly reduced by corruption scandals. Pinera was then returned to office, and again included Pinochet-era officials in his government. Massive protests broke out across Chile due to the poor economy, privatization, corruption and university graduate unemployment, triggered specifically by increased subway tariffs (the Estallido Social), and once again Pinera’s approval rating plummeted. There were also two efforts to impeach him, one for his mishandling of the social unrest and the other for corruption.

In 2022, the “left-wing” 36-year-old Boric was elected. The new progressive constitution meant to replace the one put in place by Pinochet, loaded with liberal progressive cultural commitments in what is still a very culturally conservative country, was rejected by the voters. For instance, the lengthy list of rights looks like it was generated by a progressive student committee rather than a group tasked with coming up with a new constitution. It includes such things as the right for “the progressive autonomy of children and adolescents”, “the full development of the personality”, “neurodiversity”, “recognition of domestic work”, “sexual and reproductive rights” (a huge issue in such a conservative country), “consumption and respect for it”, “to create social media”, “to leisure”, “to cultural and artistic participation”, “to read”, “to the regeneration of nature”, “universal access to mountains, beaches, lakes, lagoons, and wetlands”. The proposed constitution would also establish nature as a holder of rights, animals as subjects and sentient beings, and indigenous (13% of the population) autonomous regions and creates sweeping changes to the government and judicial systems. Providing ample ammunition for capitalist press and right-wing politicians. This was very much an own goal of overreach by the “post-modern” leader Boric and so-called cultural “leftists” and shows the highly self-defeating nature of such liberal cultural beliefs that have been internalized by many new “left wing” intellectuals and politicians; especially those from comfortable middle-class backgrounds such as Boric. They are very reminiscent of Blair’s “New Labour” or even the current US Democrats in many ways; capitalism with crumbs, vague unenforceable “rights” and bourgeois progressive woke challenges to basic societal beliefs held by many members of the working class. The less than revolutionary nature of the “pragmatic” New Left in Latin America, including Boric, is very well analyzed here.

The right-wing has a majority of the elected delegates to the new constituent assembly, tasked with producing a second draft of the new constitution; the window of opportunity for a truly progressive constitution has been thrown away. Boric announced the nationalization of the lithium industry (with full compensation and future public-private partnerships planned) at the end of 2022, to add to the already nationalized copper industry. With respect to foreign policy, Boric is following a generally non-aligned approach and has been critical of China, Russia, Venezuela and Nicaragua using very much bourgeois progressive talking points. The rejection of the new constitution, the perception of incompetence in dealing with forest fires, and high crimes levels and inflation have heavily driven down his approval rating after only a year in power.

About 60 % of Chile’s exports are of refined and unrefined copper and minimally manufactured copper products (e.g. copper wire), with exports of other minerals and precious metals representing another 10%, with the balance being predominantly fruits, fish, wine and wood with minimal amounts of non-copper manufactures. The leading source of imports is the US (36%), with oil, vehicles, and other manufactures dominating. Chile exports food and raw materials to pay for oil and manufactured products, with a central dependency on the price of copper. Even after three decades of mostly progressive government, the economy is still basically the neoliberal one implemented by Pinochet and the country still remains a highly unequal one. As in other Latin American nations, its elites also value the support of the US against any popular pressures to fundamentally undo the neo-liberalization of Pinochet. A New Left government can provide them with perfect “progressive” cover without threatening their ongoing political-economic dominance.

Peru (33.7 million; US$0.56 trillion)

From 1930 to 1939, Peru had a military government aligned with the landowning aristocracy, followed by somewhat progressive democratically elected government up to 1948. This was ended by a military coup with military rule until 1956, followed by moderately progressive governments until 1968 when another military coup took place. This coup lead to a revolutionary government that carried out extensive land reform and nationalization, together with an independent stance from the US, until overthrown by a more right-wing coup in 1975.

From 1980 onwards there was a return to civilian government, but the mismanagement of the previous military government together with the more general Latin American crisis of the 1980s, and ongoing economic mismanagement, lead to an inflationary slump in the second half of that decade; with over 40% of the population living in poverty. At the same time, both the illegal drug industry and rural insurgent movements (e.g. Shining Path) gained ground with the latter benefitting significantly from alliances with the former. From 1985-1990, under President Garcia, the state attempted a military solution to the insurgents. In 1990 Fujimori came to power and implemented a neoliberal strategy of widespread privatization, austerity, and capital friendly policies while instigating a full-blown brutal civil war against the insurgent movements and widespread domestic repression. After 15 years of violence, and widespread corruption, Fujimori fled to Japan to escape prosecution.

Fujimori was followed by 16 years of business and foreign capital friendly governments, with the economy growing quickly due to the commodities boom. From 2016 to 2020 there was a political crisis as the unicameral Congress forced the progressive president, Kuczynski, to resign in 2018 and then impeached the next president (Vizcarra, Kuczynski’s first vice president) in 2020, who was then succeeded by two interim presidents. In 2021, the Peruvian elites were shocked when the indigenous left-wing Castillo narrowly won over Fujimori’s daughter Keiko. The Congress, and the elite in general, immediately set about making it impossible for Castillo to rule; including two failed impeachment votes and another impeachment attempt that Castillo attempted to stop by a self-coup (dissolving the congress and ruling by decree until new elections for both president and congress). Castillo’s vice president who succeeded him has turned out to be a tool of the oligarchy.

Although Castillo was hampered by the lack of a strong movement behind him, his impeachment and jailing have served to rouse the indigenous population, and parts of the working class into rising up against the ruling oligarchy; an extremely corrupt and drug-trade linked oligarchy that has been in place since independence. Under pressure from the protests, and with state violence unable to stop the protests, the government has scheduled new elections for 2024. Little may change short of a Bolivia-style mass movement supporting a progressive government, given the power of the oligarchy and the ownership of much of the country by foreign interests; especially US interests. Peru may have greatly increased its trade with China (a quarter of both imports and exports), but that trade is with oligarchy, US, and other Western-owned agricultural and extractive businesses.

Ecuador (17.8 million; US$0.25 trillion)

The democratically elected Ibarra was overthrown in Ecuador by a military coup in 1972, with the military ruling from 1972 to 1979. Ibarra, a progressive populist, had been elected in 1933 with 80% of the vote but was overthrown by the military in 1935. He was fraudulently beaten in 1940 but became president again after the 1944 Glorious Revolution only to be subject to another military coup in 1947. He won again in 1952 and served his full term and elected again in 1960 only to be overthrown by the military again in 1961. In 1968 he won for a fifth time and was overthrown by the military for a fourth time in 1972. After the ensuing period of military rule, the highly progressive Aguilera was elected in 1980 but perished in a plane crash in 1981, with many attributing the crash to the military and security services. Small progressive changes were made in the next two decades, but the country remained under oligarchic control with more neoliberal policies and the dollarization of the economy in 2000.

Major changes had to wait until the election of the left-wing Correa, who served from 2007-2017. He raised health and social spending and paid off the debt to the IMF in 2007, as well as forcing other creditors to take more than 60% reductions in their principal and cancelled the US military base in Ecuador. The state share of oil revenues was increased, the constitution was rewritten, the national police reformed after Correa survived a kidnapping by them, the judiciary restructured, Chinese loans taken out to develop infrastructure, and the activities of USAID in the country ended.

In 2018 Correa could not run for a further term, and his previous vice president Morena (who had been vice president from 2007b to 2013) became president in a close second round vote. Moreno very quickly reneged on his election promises and implemented neoliberal policies, reversing key pieces of legislation aimed at the wealthy and banks, implementing austerity and deregulation, cutting taxes, removing fuel subsidies, and aiming to remove all aspects of Correa’s influence. He also took on a loan of US$4.2 billion loan from the IMF and aligned with the US, including the expulsion of Julian Assange from the Ecuadorian embassy in London. He ended his term with a 9% approval rating and was expelled from the party he was elected to represent. Succeeding him in 2021 was Lasso, a multi-millionaire conservative banker, whose election was facilitated by the neoliberal and anti-Correa indigenous leader Perez pushing indigenous voters to give null votes or even votes for Lasso instead of votes for the progressive candidate. Lasso brought forward elections in May 2023 to avoid impeachment for corruption and embezzlement; these elections will take place in August 2023 and Lasso has said that he will not be a candidate. In the interim though, Lasso can rule by decree and has stated that he will use such powers to implement radical neoliberal policies with the backing of the military. The elites have shown the scale of their ingenuity and cunning in reversing the progressive changes made by Correa and reinstating their power over the state. Ecuadorians have a chance to reverse the treachery of Moreno, if the August elections are allowed to take place, and attempt to loosen the hold of the oligarchy and the US.

Bolivia (12.1 million; US$0.13 trillion)

After the crushing of a progressive government in 1964, Bolivia was ruled by a military government representing the mestizo agricultural and business elite (concentrated in the Santa Cruz region that contributes 80% of national agricultural production and 35% of GDP and contains the biggest city of that name). A short-lived left-wing coup government came into power in 1970 but was overturned within a year and elite military rule was returned until 1982. From 1982 to 1985, relatively progressive governments ruled; handicapped by the previous government’s economic mismanagement and the 1980s Latin America debt crisis. In 1985, the new President Estenssoro turned to neoliberalism, the very opposite of the progressive policies he had been elected on, with his successor unable to undo the fundamental restructuring of the economy implemented to benefit the elite and foreign capital. Lozada (1993-1997 and 2002-2003), a major force for the neoliberal policies in the Estenssoro administration, continued with a socially progressive but economically neoliberal stance; which included the privatization of the five largest state enterprises – including water provision. In 1997, Banzer who had served as the president under the military dictatorship was elected and launched a “drug war” under US guidelines.

With the Cochabamba Water War of 1999-2000, against the privatization of water supplies and their ownership by a foreign multinational, the exploited majority indigenous population gained a sense of ethnic and class solidarity that could carry it into power for the first time.

In 2006, the MAS (Movement for Socialism) won the elections and Bolivia became the dangerous bad example for the US, as the new government reflected the interests of the indigenous and followed a developmental strategy that benefitted the masses at the expense of foreign multinationals and ethnic European elites. The benefits of Bolivia’s natural resources were redirected from national and international capital toward raising the indigenous majority from grinding poverty and a lack of basic educational and social services. The mestizo elite fought against this democratic and representative government, and even managed a coup in 2019 (with the new government rapidly recognized in the West) that stopped the indigenous president Morales from continuing in office after winning the election, but this coup was overturned by popular forces and new elections were carried out in 2020 that returned the MAS to power.  The coup president, Anez (a fundamental Christian and racist celebrated as a win for “feminism” by the US), has been sentenced to 10 years in jail which is a very lenient sentence given her actions; the West consider this right-wing coup leader to be a “political prisoner”. The rich Santa Cruz region has also attempted to secede from the rest of the nation.

Bolivia has the second largest natural gas reserves (the exploitation of which is limited by a lack of infrastructure and the eastern location away from the coast, especially in Tarija in the south east) in South America, and gas exports make up 30% of exports (rising rapidly from 2000 onwards), followed by precious metals at 27%, zinc, lead and tin at 17%, and soybeans at 11%. Agriculture, forestry and fishing employ 44% of Bolivian, many in subsistence farming. The nation also has large lithium fields, but the required destruction of the country’s salt flats has blocked their exploitation.

Paraguay (6.7 million; US$0.12 trillion)

Democracy was overthrown in 1954 and replaced with the dictatorship of Stroessner, which combined extensive human rights abuses with modernization and development. His Colorado Party dominated the nation until 2008, following the overthrow of Stroessner in 1989. A 1980 Associated Press report that sums up the nature of the Stroessner regime quite well but with a rosy hue covering the ugliness of it, especially skipping over its utter brutality, paralleling the Western arrogant elite view of the world so well. “Strong” allied leaders are always good and having to “put down” or “re-educate” some annoying “communists” is simply “unfortunate” but “required”.

In 2008, the progressive Lugo was elected ending 54 years of Colorado rule. He was impeached by the Colorado dominated upper and lower houses and removed (shades of current Peru?), and the Colorado Party has ruled Paraguay since. The economy is dominated by the production of soybeans (with other crops being maize and sugarcane in addition to livestock production), with 85% of agricultural land owned by 2.6% of owners (with the level of concentration increasing as more small farmers leave their land), and inequality has widened in recent years – with exporters and landowners paying little tax. Paraguay is heavily aligned with the US, with numerous US multinationals having a presence in the country.

Uruguay (3.4 million; US$0.1 trillion)

From the 1920s to the 1950s there was a focus on import-substitution-industrialization (ISI) which was quite successful at building up the industrial base. This began to collapse in the 1950s and was completely reversed by the 1973 civilian-military regime implemented in response to left-wing challenges to the state, that lasted until 1985. It used extensive domestic repression and implemented neoliberal policies. Uruguay had the greatest numbers of political prisoners per capita in the world, unions were smashed, and it is estimated that one in every five Uruguayans went into exile, and one in every five hundred was jailed (with most being tortured). After 1980, GDP fell by one fifth and unemployment reached 17%.

The country is split between the agricultural rural areas (National Party) and the bourgeois commercial entrepot port city of Montevideo (Colorado Party). The Colorado and National parties have dominated Uruguayan politics since independence in the eighteenth century.

The Colorado Party candidate Sanguinetti was elected president with the return to democracy in 1985 and was succeeded by National Party Lacalle who Sanguinetti then succeeded for his second term. Generally free-market policies were implemented, including under Colorado Party Batlle (2000 to 2005, a descendant of two previous Uruguayan presidents). These transformed the economy to one of large-scale monoculture agriculture (reducing small-scale agriculture), tourism and services with significant falls in the share of manufacturing value added in GDP. Exports are now dominated by meat, woodpulp, milk and electricity, with China as the largest trading partner. Half of industrial production is for food processing and the refining of agricultural products.

In 2005 Uruguay’s first socialist president, the Broad Front Vazquez, came to office and implemented policies to raise the minimum wage and reduce poverty. Not allowed to stand for an immediate second term by the constitution, he was succeeded by the Broad Front Mujica who legalized marijuana, increased social spending and supported the expansion of trade unions. Vazquez then served for a second term in office and continued the left-wing policies. Uruguay has one of the lowest levels of income inequality in Latin America due to the efforts of these progressive governments, and the country’s role as a regional hub for finance and tourism, supporting a relatively large well-educated middle class.

In 2020 the National party Lacalle Pou was elected (son of previous president Lacalle), and with the COVID emergency behind him he is striving to implement many neoliberal policies while reorienting foreign policy back to the US. The next elections are in late 2024, and current opinion polls put the left-wing Broad Front coalition well ahead of the National Party, with the Colorado Party in single digits (the Colorado Party seems to have been displaced in national politics by the Broad front). Uruguay may survive a one term return to power of the right-wing with little negative impact, unlike Brazil, Argentina, and Ecuador.