Latin America fights neolibralism
Archive Recent Editions 2003 Editions Jun 28, 2003
Author: José A. Cruz
People's Weekly World Newspaper, 06/28/03 00:00

When the Peruvian trade union movement organized demonstrations this month in support of the public school teachers' strike and against the government-imposed State of Emergency, the demonstrations turned into protests against President Alejandro Toledo's neoliberal economic policies as a whole and not just the trade union issues.


Meanwhile in Ecuador, 210,000 teachers had also been on strike for a month, staging mass hunger strikes. As in Peru, the teachers were joined by other workers presenting their demands. The strike also protested the government of Lucio Gutierrez signing a new $205 million loan agreement with the International Monetary Fund and implementing neoliberal economic policies. Gutierrez gave in to the public education workers after they met in a conference with the trade unions of oil workers, public employees, other unions, and organizations of the indigenous peoples to map out joint actions against the government's policies.


In Mexico demonstrations against NAFTA and neoliberalism have been taking place since the mid-1990s.

Last January, over 100,000 Mexican farmers protested the implementation of provisions, under NAFTA, that would allow a flood of U.S. agricultural products into Mexico. Mexican farmer organizations say without protective tariffs they won't be able to compete with subsidized U.S. agricultural imports. The farm groups report that every year 600 farmers leave agriculture because they just can't afford to continue.

After threats of an agricultural strike, supported by labor unions, the government of President Vicente Fox signed an agreement last April with a coalition of agricultural organizations that would increase the budget to help the agricultural sector, even though government spokespeople kept insisting that there were no problems with NAFTA in farming.

A number of farmer groups refused to sign because the government would not agree to the main demand that the agricultural sections of NAFTA be renegotiated. Those organizations have committed themselves to keep on fighting.


Spectacular failure of Argentine model

In Argentina the government of Carlos Menem instituted neoliberal policies in the 1990s. As always, these « free-market economic reforms » included the privatization of state companies, throwing thousands of people out of work and prompting a general strike in August 1997. In Tucuman, the smallest of the provinces, 60 percent of the workers took part in the strike. The people of Tucuman were later subjected to another indignity of neoliberalism - their water was privatized and sold to a French firm which raised fees and cut services.

At the end of 2001 Menem's neoliberal policies, continued by his successors, brought the country to an economic collapse. The street demonstrations brought down the government which resulted in Argentina having five different presidents in a month's time. Argentina was, together with Chile, previously touted as the best example of neoliberal policies in motion.


Struggles against privatization mount

Other countries have experienced massive strikes against their government's neoliberal policies.

Paraguay has seen many farmer and other protests. Last year the government imposed a State of Emergency, suspending civil liberties, to deal with the massive anti-« free market » demonstration. The demonstrations won some demands and forced the government to scale back on some of its privatization schemes.


In 2000, the Bolivian government was forced by popular demonstrations to cancel the privatization contract for the Cochabamba water system that it had given to the U.S. transnational Bechtel. Now Bechtel is suing Bolivia through the World Bank's International Center for the Settlement of Investments Dispute in secret proceedings.


In 1997, people in Puerto Rico launched the fight against the plan to privatize the Puerto Rican Telephone Company (PRTC). This fight included a general strike that effectively closed down this U.S. colony for two days. A similar struggle had succeeded in keeping the company public in 1990. Even though Governor Pedro Rossello was ultimately successful in selling off the phone company as well as privatizing health care, this action, along with others, presented him as being against the national interests of the Puerto Rican people and his candidate lost the election to the current governor two years ago.

In El Salvador health care workers just concluded a nine-month long strike against the health care privatization scheme of President Francisco Flores. Flores has been forced to accept a plan for national health care reform that includes representatives of all sectors of Salvadoran society, including the workers and their trade unions.

Mounting strikes, ferment, turmoil

Every country in Latin America, with the exception of socialist Cuba, has implemented neoliberal policies. These « free market » policies have been lauded by governments and business alike as the solution to the problems of poverty, unemployment and underdevelopment. Instead, these policies have brought about more poverty for working people and greater control for the transnational corporations, especially U.S. banks and corporations. It has also widened the income gap between the poor and the richest sectors of each country, and pushed each country into deeper debt to U.S. banks.

The resulting protests and strikes - many of them increasingly political in character - have led many of the Latin American government leaders to proclaim that they will fight for a free trade agreement « with a human face. » This is causing fear in U.S. ruling class circles and the Bush administration that the Free Trade Agreement of the Americas (FTAA) may not be negotiated by 2005 as planned.

Political fallout

The discontent has also created a climate where politicians who support the neoliberal model have lost office. Some votes have gone to others who support similar policies, while others to candidates who have campaigned against that model.

The election of candidates who campaigned on a left program against neoliberalism and won the governments of a number of nations has complicated the attempt to impose a neoliberal « solutions » to the problems of underdevelopment in the Americas.

In Brazil, the election of Luiz Inacio Lula da Silva was not a vote for a socialist alternative but a vote against the previous government for following the dictates of the IMF and the World Bank and their austerity programs. Lula had support from sectors of the Brazilian national bourgeoisie that considered the neoliberal model as being detrimental to their own interests. Lately Lula has been accused of conceding too much to the IMF, even though before his election he said that he was inheriting many onerous obligations to the IMF from his predecessor.

In Ecuador, with support from the broad left, Lucio Gutierrez was elected president. He campaigned on a pro-Ecuador, anti-neoliberalism platform. However, like all the heads of states in the Americas, the pressures come not only from below, but also from the U.S. and the international financial institutions. Recently Gutierrez declared that he wants to be « the best ally of the Bush administration » in the Americas.

Of course, the election of Hugo Chavez to the presidency of Venezuela is one of the most dramatic manifestations of popular rejection of the corrupt, ruling oligarchies that have so often saddled Latin American countries. Widespread support for Chavez among the workers and poor of Venezuela also flows from his determination to resist U.S. economic and political domination. Chavez himself has stated that the reason the U.S. government wants to destabilize his government is because Venezuela has taken a stand against the FTAA and neoliberalism.

Colombia under U.S. military pressure

At the recently concluded summit of the Rio Group in Cuzo, Peru, last month, Ecuador President Lucio Gutierrez came out in support of Colombian President Alvaro Uribe and attacked the Revolutionary Armed Forces of Colombia (FARC). He said, « The UN should pressure the FARC to accept peace or help fight them. » In the past Gutierrez has publicly resisted pressures by the government of Alvaro Uribe to condemn the FARC.

Colombia remains a primary target of the U.S. State Department, the Pentagon, and U.S. corporations. The country is rich in natural resources (including oil), exploitable labor, and is strategically located. The U.S. government has appropriated over $2 billion for Plan Colombia, an anti-insurgency program thinly disguised as a « war on drugs. »

The FARC has resisted the efforts by the Uribe government and the U.S. government to destroy it. It has rejected any ultimatum to negotiate on terms dictated by the Uribe government. The FARC and the people's movement in Colombia are demanding a negotiated peace proposal that would let the FARC enter the peaceful political life of the country without any retaliation and with guarantees of democratic reforms. In the 1980s the FARC tried to enter the political process peacefully, setting up the Patriotic Union party. Thousands of Patriotic Union members and leaders were assassinated, including its candidates for president.

plan colombia

FTAA as new Monroe Doctrine

Many in Latin American see the FTAA as a new Monroe Doctrine, with the goal of U.S. control of the Western Hemisphere. In fact, the term used by many in the anti-neoliberal and anti-globalization movement is « annexation. » They view « free trade, » combined with politico-military programs like Plan Colombia, as a way to make the U.S. dominant in the region.


Like Plan Colombia, the Andean Regional Initiative is a program that is supposed to be for the purpose of eradicating the cultivation of opium and cocaine as part of the war on drugs. But, according to a U.S. State Department fact sheet on the Andean Initiative, « Important U.S. national interests are at stake in the region. » It cites the slow pace of economic development and « inconsistent liberalization » as obstacles to U.S. plans. Besides Colombia, the Andean Initiative includes Bolivia, Brazil, Ecuador, Panama, Peru and Venezuela.

andean regional initiative

Regional economic integration

There is another issue that may complicate the establishment of the Free Trade Area of the Americas and that is the current fight for economic integration as a way to present a strong Latin America against the economic might of the United States and the European Union. The Common Market of the Southern Cone (MERCOSUR), the Central American Common Market, and the Andean Community of Nations as well as the Rio Group were set up to work, in part, toward the economic integration of Latin American countries.

The Brazilian president, Lula, has suggested that the FTAA be delayed so that organizations like MERCOSUR can be strengthened. The newly elected Argentine president, Nestor Kirchner, is proposing to strengthen MERCOSUR by adding countries like Venezuela.

At the Rio Group summit, which includes every Latin American and Caribbean country with the exception of Cuba, Venezuelan President Hugo Chavez presented a plan to discuss an alternative to the FTAA. He criticized the summit for not having a discussion of the FTAA on its agenda and proposed a Bolivarian Alternative for the Americas. He said that his government was working to change FTAA, but if that was not possible, it would work for a different plan. Chavez said the FTAA cannot work as presently constituted because « without the integration of the countries of South America and the Caribbean, we would have no possibility of surviving the FTAA. » The Rio Group, acting independently of the U.S., also decided to invite Cuba to participate at its next summit.

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What is Neoliberalism?

Neoliberalism is the laissez-faire capitalism of today. It is the application of libertarian ideas to the economic field. The term is used more in Latin America than in the rest of the world, although many of its ideas were born in the USA. It is a political-economic philosophy that fights for no restrictions on capital and less government control on doing business.

Neoliberalism is characterized by free trade, free flow of capital across borders with no tariffs, unfettered foreign investments, deregulation, privatization of state-owned enterprises, and broadening the tax base.

Many of the current ideas for the neoliberal economic model came from the Economics Department of the University of Chicago economist Milton Friedman.

Many of Friedman's ideas were put into place in the U.S. Without going into the basis for them, some of the economic proposals associated with Milton Friedman are the privatization of Social Security, a flat income tax rate, eliminating tax deductions (including those that benefit working-class and poor people), and promoting school vouchers.

Friedman's ideas were first put into place in Chile, under the dictatorship of Gen. Augusto Pinochet, who had led the overthrow of the democratically-elected government of socialist President Salvador Allende. From 1973 to 1989 Friedman's ideas were implemented by his people. Labor union rights, minimum wage, the state pension system, and taxes on corporate profits and the rich were abolished. Government social services were closed down. State-owned enterprises were privatized, resulting in thousands of workers being thrown out of work. During the 16 years of what Friedman called « the Chile miracle, » the income gap became larger, unemployment rose from 4 percent to 22 percent, the 20 percent poverty rate doubled, and real wages dropped 40 percent.

Despite the murderous repression that the Pinochet regime was known for, thousands of Chileans took to the streets in mass demonstrations. With the economy collapsing, the fascist government was forced to rehire public sector workers and reinstitute many of the laws and programs in place before the coup.

- José A. Cruz

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