Neo-liberal policies have been a catastrophe for the Latin American masses.

Latin America is currently at the cutting edge of class struggle. A continental revolt is taking place from the Rio Grande in the north to Punto del Fuego in the south against governments and ruling elites which have relentlessly followed neo-liberal free-market policies for more than a decade. Tony Saunois, a recent visitor to Brazil and Chile, reports.

Latin America in revolt against neo-liberalism

They have been a gift for the multinationals which have plundered the continent, buying up privatised resources and assets at knock-down prices. The price has been paid by the workers and poor whose living standards have been driven further and further down. With over 215 million on the continent officially ‘living in poverty’, a staggering 41% live on less than $2 per day and a further 18% struggle to survive on less than $1 per day.

The 1980s was dubbed the ‘lost decade’ in Latin America. The 1990s was little better as the continent was ravaged by exploitation by the main imperialist powers and the corrupt ruling classes. These two decades have clearly revealed the impossibility of developing the economies and ending the endemic mass poverty while capitalism continues. In 1978, income per head in the main imperialist countries was five times greater than the most developed Latin American economies such as Argentina and Brazil. The gap between the poorest countries, such as Bolivia and Ecuador, and the main imperialist powers was twelve times greater. By 2000, this had grown to seven and 30 times respectively. Any hopes that privatisation and the ‘free market’ would lead to sustained growth and economic development have long since evaporated amongst the workers, peasants and urban poor.

These policies have provoked mass opposition to the governments which implemented them. In Ecuador, mass uprisings toppled three presidents. In Argentina, four presidents were forced out of office in a few weeks when the financial system collapsed in 2001. In Bolivia, during 2005, mass demonstrations demanded re-nationalisation of the energy industry and the country stood on the brink of civil war, resulting in the election of Evo Morales in January 2006. Struggles of workers, peasants, students and others exploited by capitalism and imperialism in Peru, Argentina, Mexico, Colombia and many other countries have erupted time and again. In Mexico, at the time of writing, 70,000 teachers in the state of Oaxaca are striking for higher wages. Following attacks by 1,700 riot police, teachers armed with sticks and stones fought running battles and eventually overpowered them. The movement has broadened into a popular rebellion demanding the resignation of the state governor, Ulises Ruiz, from the corrupt dictatorial PRI (Partido Revolucionario Institucional) which ruled Mexico for over 70 years. Workers have taken to the streets with banners proclaiming: ‘Popular resistance’, and ‘Revolution - out with Ulises’. According to some reports, teachers have taken over 20 town halls in small villages, the town squares becoming one giant protest.

Within these revolts and mass movements, opposition to the market, neo-liberalism, and support for state intervention and nationalisation have featured in the demands. In some, the issue of socialism as an alternative to capitalism has begun to be discussed amongst a layer. These revolts have opened the way for what many commentators have referred to as a ‘revival of the left’ and the coming to power of ‘left-wing’ governments. Most prominent is Hugo Chávez in Venezuela, Ernesto Kirchner in Argentina and Evo Morales in Bolivia. There is also the prospect of the populist, López Obrador, former PRD mayor of Mexico city, coming to power in Mexico, on the doorstep of US imperialism. Although he has not called for nationalisation, as a radical populist, a regime led by him would be a major irritant to George Bush who has thus far only had to deal with the compliant, Thatcherite, president Vicente Fox. His victory will possibly open the floodgates to a new wave of struggles by the Mexican workers and peasants. This will have important repercussions north of the border on the Latino population in the USA who have already been drawn into mass struggle against the Bush regime.

The election of Morales was seen by the masses of Latin America as a tremendous victory. An important factor in this was that he is from the indigenous Amaya people. This is the first time that a non-European descendant has been elected to the presidency, despite the fact that indigenous peoples are an overwhelming majority of the population. The revolts of the indigenous peoples throughout Latin America has been one of the dominant features of recent mass movements, especially in the Andean countries of Bolivia, Peru, Venezuela and Ecuador, along with the struggles of indigenous peoples in Mexico and the Mapuche in Chile.

 The coming to power of new radical populist governments in Venezuela, Argentina and Bolivia represents a point of departure from the ideological and economic tendencies which dominated the 1990s. Reflecting the massive social crises which have shaken these three countries, the governments represent a break with the neo-liberal policies of privatisation and the ‘unfettered’ free market. They have been a source of irritation and conflict for US imperialism and European imperialist countries with important investments in Latin America, such as Spain and France.

This development has also begun to open a debate on the left in Latin America on what programme and type of government is needed to break from capitalism and imperialism.

Lula’s role in Brazil

However, this process has not been uniform. Another layer of ‘new left’ leaders have come to power in countries such as Brazil, Uruguay and Chile. The election of the likes of Lula (Brazil), Tabaré Vázquez (Uruguay) and more recently Michel Bachelet (Chile) reflected the same anti-neoliberal consciousness that has swept the continent. Colonel Lucio Gutiérrez, in Ecuador, was swept to power as a Chávez-type figure on an anti-neo-liberal agenda but immediately capitulated to the IMF and imperialism, announcing neo-liberal measures. Consequently, he was overthrown by a mass movement of workers, peasants and indigenous peoples in 2005 – the third president to be overthrown by a mass uprising in Ecuador since 1996.

The exceptions at this stage are Colombia and Peru. In Colombia, with mass violence and conflicts arising from the drug cartels, right-wing paramilitaries and against the background of the guerrilla campaigns of the FARC and ELN, the US-backed Alvaro Uribe was re-elected. In Peru, the alternative of the nationalistic maverick, Ollanta Humala, was not sufficiently attractive to prevent Alan Garcia, from the oldest populist party in Latin America, APRA, (which has now turned to the right) making a comeback. Garcia had been forced from power in the 1980s after heading a government which presided over price increases of 1,000,000%.

Yet, in general, the old established politicians and their parties have been swept from office. The ‘new left’, (as in ‘New Labour’) headed by the Partido Trabalhadores (PT) in Brazil, Partido Socialista in Chile and Frente Amplio in Uruguay, has come to power amidst high expectations for fundamental change.

However, the hopes of the workers and youth in these countries have been rapidly dashed. These governments have capitulated to the demands of imperialism and their own ruling classes and continued with the same neo-liberal polices of their predecessors.

This process began in Brazil with the election of Lula who, even prior to his election, had convinced the IMF and other imperialist and capitalist institutions that his policy would remain the same as the former president Fernando Henrique Cordoso. No headway has been made in tackling the massive inequalities which exist in Brazilian society. While the richest 10% of the population consume 47% of national income, the poorest 10% are left in squalor consuming a mere 0.5%.

The majority of the ruling class has been content to rest on the Lula government as a means of carrying through further attacks on the working class. Continued privatisation, the failure to take effective steps to attack inequality, and a series of massive corruption scandals would have provoked major struggles by the working class and youth if the traditional capitalist parties and politicians were in office. Lula, together with the treacherous role of the leadership of the main trade union confederation, CUT, has partly been able to hold the working class in check during the last four years. The majority of the CUT leadership is now merely an arm of the government – its unofficial ministry of labour.

The continuation of a very fragile and ephemeral growth in the economy, because of the world economic situation, fear of the return of the traditional capitalist parties, splits amongst the capitalist politicians and the lack of a powerful alternative have temporarily allowed Lula to maintain a basis of support amongst older workers. His likely victory for a second term in October will not be a mere repetition of his first mandate. Economic slowdown, even prior to a worldwide recession, is likely to open the way for powerful struggles by workers, landless people, youth and the urban poor after the election. The car producer, Volkswagen, recently announced its intention to reduce its workforce from 21,500 to 15,500 in the next few years. This is a warning of the scale of the attacks that are being prepared by the ruling class and which are certain to produce powerful social movements and struggles by the working class. These will give big opportunities to build support for a socialist alternative to Lula’s pro-capitalist policies.

Already, there is growing support for a radical socialist alternative. Significant layers of socialists and activists in the workers’ movement have begun the task of building it. The formation of P-SOL represents an important step forward in this objective. With 7-8% support indicated in opinion polls, P-SOL will have a big opportunity during the presidential election to build a stronger basis of support. If P-SOL can agree a strategy around a radical socialist programme and build a real party of struggle it will have big opportunities to grow during and after the election. There is however a debate taking place in P-SOL about the programme it should adopt and how the party should be built. Sections of the leadership are attempting to moderate its programme and push the party to the right and prevent a fighting, democratic party struggling for socialism from being built. P-SOL has major possibilities to build a powerful force. However, these opportunities can be lost if the party fails to defend a socialist alternative and build a base through struggle and intervention in the class struggle.

The rebuilding of a fighting alternative is also beginning in the trade unions with preparatory steps towards the formation of a new trade union centre. Hundreds of local unions have already disaffiliated from the CUT or have stopped paying affiliation fees.

Chilean student protest

Yet while Lula has been able to fend off powerful social movements in the last few years, ‘socialist’ president, Bachelet, has not been so lucky in Chile. Less than three months after being sworn in, she faced a mass mobilisation of school students demanding changes to the entire education system, the largest youth movement to rock Chile since the military coup in 1973. The movement compelled the government to grant some concessions, increase the education budget by $200 million and end the national college entrance exam fee.

One feature of this protest was the vicious repression used by the hated riot police. This is a general feature of the situation. The return of ‘democracy’ following the military police dictatorships of the 1970s and 1980s has not meant an end to the use of brutal repression against workers, peasants and the poor in struggle. In Chile, Brazil, Mexico, Bolivia and other countries, the masses have still had to confront water cannon, tear gas and, in some cases, bullets when they have taken to the streets to fight for their rights. In Chile this is known as ‘demodura’ (hard democracy) as opposed to ‘dictadura’ (dictatorship).

The first ‘100-day plan’ of the Bachelet government was taken over by the school student protests. It plunged the government into crisis and has opened a new chapter in the struggle of the Chilean people following the end of the Pinochet dictatorship in 1990. The example set by the youth is set to be followed by further struggles of the workers who were inspired by this movement. Significantly, the students instinctively grasped the need to broaden their support amongst the working class and other sections of the population. Over 80% indicated that they supported the students and a mere 17% backed the government!

This movement also has wider implications. Chile has been portrayed as the economic success story of Latin America. With record economic growth, impressive investment in infrastructure, especially transport, this was the neo-liberal model to emulate elsewhere, according to capitalist analysts. Sections of the Chilean ruling class even spoke of the country as a ‘developed economy’. Yet, the growth was always one-sided. It has gone side by side with a massive increase in the exploitation of the working class. Bank workers are currently involved in a campaign to prevent Sunday opening. Better houses, access to cars and other consumer goods have been paid for largely through the accumulation of massive debt. The vast majority of the increased national income, largely due to high copper prices and exports of agricultural products, fruits and wine, has gone to the rich elite. The richest 20% of the population take 62.2% of national income. The poorest 20% are supposed to survive on 3.3% of national income!

Significantly, this tremendous movement of young people erupted as the economy has begun to slow. In challenging the ‘market orientation’ of the education system, the youth have put into question the entire neo-liberal model. Not only questioning the privatisation of education and health but the very type of society they want. The full impact of this movement has yet to be fully felt in Chile and the continent. However, it is clear that the ‘socialist’ government will not enjoy the relative ‘calm’ of the preceding coalition governments since the ‘democratic transition’. Bachelet and her capitalist coalition will undoubtedly attempt to continue with neo-liberal ‘reforms’.

However, they are certain to run into much greater resistance amongst the working class. During the month of the student protests, Bachelet’s approval ratings fell from 67% in May to 56% in June, only three months after becoming president. The government’s defence of neo-liberal polices and the rapid development of opposition to Bachelet confirm how wrong the Communist Party of Chile and some others who claim to defend Marxist ideas were to support her in the second round of the election. The Communist Party has paid for this mistake with the onset of a massive internal crisis. The CWI and its sister organisation in Chile, Socialismo Revolucionário, argued for a blank vote and a campaign to build a new workers’ party to fight for socialist policies. The crisis in the Communist Party is in marked contrast to the popularity of the radical candidate for the presidency, Tomás Hirsch, a member of the Humanist Party (part of the left alliance, PODEMOS), who called for a blank vote in the second round because of Bachelet’s neo-liberal policies.

State intervention

The revolt against neo-liberalism has given rise to a new wave of radical, left-populist governments in Venezuela, Argentina and Bolivia, reflecting the massive pressure of the masses and the deep social and economic crises in these countries. The emergence of these regimes, which have supported a policy of greater state intervention in the economy, represents an important change in the world situation following the 1990s.

The measures have included some limited partial nationalisation. In Venezuela, they have included the setting up of joint ventures between state companies and private multinationals. In Argentina, Kirchner has retaken control of the management of airports, purchased 40% of the privatised state airline, Aerolineas Argentinas, and through a state company has taken over the privatised water supplier in the capital, Buenos Aires.

The ‘nationalisation’ of the oil and gas industries by Morales in Bolivia is, however, the most significant to date and provoked widespread opposition by the ruling class – especially in Brazil and Spain which own the largest part of these industries. Amongst the working class throughout Latin America this ‘nationalisation’ had a massive impact and was extremely popular. Brazil, the largest regional power in Latin America, has massive investments in Bolivia and is dependent on Bolivia for 51% of its gas consumption. In Sao Paulo, this rises to more than 75%. Petrobras, the Brazilian company, controls 46% of Bolivia’s gas resources and 95% of its refining capacity. It has a turnover in Bolivia which equals 19% of that country’s GDP!

This state intervention has provoked widespread opposition from imperialism and those sections of the national capitalist class. It has also won support from workers in the countries concerned as a break from the policies of the 1990s.

Yet the measures have represented partial nationalisation, in some cases, and little more than joint ventures in others. Even in Bolivia, all that Morales has done is to establish joint ventures where the state will control 50% plus one of the shares in companies that were nationalised prior to privatisation in 1996. This falls far short of the wholesale nationalisation of Standard Oil in 1937 or Gulf Oil in 1969.

It also falls short of the demands of the Bolivian masses who supported the idea of nationalisation of oil and gas. These partial measures are wholly insufficient to break with capitalism. On the contrary, they are part of an alternative supported by Morales, Chávez and Kirchner to attempt to build an ‘Andean capitalism’, an alternative to the neo-liberal model – capitalism with a more human face.

In Argentina, Kirchner is attempting to revert to the traditional ‘Peronism’ – pre-Carlos Menem – of state intervention backed by a powerful trade union bureaucracy. The newly "state-ised" water company has a management board which includes representatives from the Peronist trade unions. In the airport industry, the sub-secretary of Transporte Aerocomercial is Ricardo Ciielli, a powerful union leader.

However, this reversal to state intervention is not the same as the policies introduced by the Peronist regimes following the second world war. Then, the export of meat to a hungry Europe allowed the ruling class a cushion from which it financed significant reforms that benefited the working class and won the populist, nationalist Peronist movement mass support which endured for decades. Although currently enjoying widespread support, Kirchner does not have the same room for manoeuvre or capacity to grant such lasting reforms.

While the media churn out reports of annual economic growth of over 9% for the last four years, millions have gained nothing – 58% of Argentinean children still live in poverty. The rebuilt former dock area of Buenos Aires, Puerto Madera, is awash with expensive cafés and desirable apartments. Yet even here, the opening up of a soup kitchen reveals the unevenness of the ‘boom’ and the gap between rich and poor which has widened as the economy has expanded. It is a fragile boom, led by construction and a growth in agricultural exports which, like Chile’s, will be dramatically brought to an end when the world economy moves into stagnation and/or recession.

Kirchner’s policies of more state intervention have been combined with attacks and repression against sections of workers and the unemployed involved in struggle.

Regional conflict

The emergence of these radical populist regimes has reinforced conflicts between these populist governments and imperialism and also between the neo-liberal governments in other Latin American countries. Venezuela, Bolivia and Argentina, with the support of Cuba, currently form a core group of countries which have come into collision with the interests of imperialism and other regional powers, such as Brazil, Colombia and Chile.

These conflicts have reflected the particular national interests of each ruling class. While the core countries led by Venezuela are looking towards greater regional integration and establishing stronger trade relations with other powers than the USA (such as Europe, China and Russia), Chile, Brazil, Colombia, and especially Mexico, favour greater co-operation and integration with the US economy. Even these developments are contradictory. While US imperialism faced a defeat at the Summit of the Americas in 2005 over its proposal to proceed with the FTAA (Free Trade Agreement of the Americas), many Latin American countries have tried to establish their own bilateral agreements with the USA.

At the same time, a series of disputes has emerged between countries over trade and border disputes which have boosted nationalist trends. Argentina was in conflict with Uruguay, Bolivia with Brazil and Chile, Peru with Chile. These pressures have reinforced nationalist features amongst the radical populist movements which have emerged in some countries. This partly reflects the powerful anti-imperialist feeling which exist throughout Latin America, but also attempts by the ruling classes to whip up nationalist sentiment within the continent. It is a potential danger for the masses which the working class, urban and rural poor and others need to overcome by developing a powerful socialist and internationalist alternative to capitalism and imperialism.

The partial nationalisation of Petrobras caused shockwaves in the Brazilian ruling class who attempted to unleash a nationalist fervour against Bolivia. The press warned of an imminent threat to gas supplies. Lula protested at the ‘way’ Morales ‘nationalised’ oil and gas companies belonging to Petrobras. Morales pointed out that he “had to make a political gesture, to avoid destabilisation – Bolivia has had four presidents in four years”. If Morales had not enacted some measure against Petrobras and Repsol then he would have faced the prospect of a more rapid collision with the workers and peasants who swept him to power demanding nationalisation.

Although Morales has been compelled to carry through a partial nationalisation of oil and gas, at the same time, he has used the army to occupy the airports when workers from the national airline, Lloyd Aero Boliviano, demanded its nationalisation in the face of bankruptcy.

Tackling mass poverty

Chávez and Morales have been able to carry through some welcome limited reforms, especially in health, education and cheap food distribution. In Venezuela, this has been done through the establishment of ‘missiones’, which have brought some relief to the most downtrodden sections of society. In Bolivia, the minimum wage has been increased by 13% from 440 bolivianos (US$55) to 500 bolivianos (US$63), far less than the 1,500 bolivianos (US$192) promised in the election campaign.

Yet nearly 30% receive less than the minimum wage in the urban areas. The deployment of Cuban doctors to Bolivia has allowed 7,000 cataract operations to be carried out in two months on the poorest layers of the population, who could never afford the $5-700 charged by the private clinics in La Paz.

While these reforms have been welcomed, they have not resolved the mass poverty which exists in these countries. Capitalism still condemns 67.3% of the Bolivian population to conditions of stark poverty. The same problem exists in Venezuela where the continuation of poverty is compounded by the growth of bureaucracy and corruption throughout the expanded state sector because of the absence of real democratic workers’ control and management.

While Chávez has benefited from the rising price of oil on the world market up until now, this cushion can be removed in the coming months and years which will provoke a major social and political crisis. If the working class does not take the necessary steps to build its own independent organisations and establish a workers’ and peasants’ government, then the threat of counter-revolution and the overthrow of Chávez can re-emerge.

In Bolivia, because of a far deeper social and economic crisis, rampant poverty and a powerful tradition of independent revolutionary struggle and organisation by the working class and poor peasants, Morales has even less room to manoeuvre.

Although Chávez has the sympathy of the mass of the working class, his failure to overthrow capitalism, the widespread corruption and bureaucracy and the absence of workers’ control and management have meant that many workers in Latin America are sceptical towards his regime.

An opinion poll in the Brazilian daily, O Estado, while pointing to Chávez’s popularity in Bolivia, reported that only 14% of Brazilians had a positive image of him. A mere 10% thought that his ‘Bolivarian policy’ was a model to follow. Yet the same poll found that 60% supported nationalisation of natural resources and 74% and 78% supported state control of the multinationals and banking, and prices!

The revolt of the masses against neo-liberalism and the crisis which is now developing throughout the continent pose the need for the working class and poor peasants to begin to build their own independent political and social organisations with a programme that will overthrow capitalism and confront imperialism. The establishment of workers’ and peasants’ governments with revolutionary socialist programmes is urgently needed. Such a programme must be based on the nationalisation of the major companies, banks, and multinationals in each country, and a programme of real agricultural reform where necessary. Only then will it be possible to defeat capitalism and begin to plan the economy to meet the needs of the mass of the population.

Such a programme cannot be limited to one country. The current energy crisis on the continent illustrates the need for regional integration and planning of the economy. Chávez has called for the establishment of a Latin American oil and gas enterprise – Petrosur. Yet how will this be possible on a capitalist basis? It would require the working class and poor peasants to take over the running of society for such a plan to be carried through and to allow the vast resources of the continent to be planned for the needs of the masses rather than ruling classes and imperialism. The establishment of a voluntary, democratic socialist federation of Latin America is the real alternative to capitalism and imperialism and the only way to begin to tackle the poverty and exploitation which blights the continent. A step towards this would be the establishment of a democratic socialist federation of Venezuela, Cuba and Bolivia on the basis of the formation of democratic workers’ and peasants governments in these countries. This is the way to begin to unify the continent and begin planning the resources and the economies as an alternative to the capitalist trade blocks and agreements which are currently being formed.

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