Clockwise from top left: Chilean president Michelle Bachelet, Bolivian president Evo Morales, Brazilian president Luiz Inácio "Lula" da Silva, Mexican presidential candidate Andres Manuel Ló Obrador

Political Upheaval

Latin America challenges the Washington Consensus

BY Nadia Martinez

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The presidential palaces of Latin America are famous for their imposing Spanish colonial grandeur. Not long ago these marble edifices on grand plazas were inhabited mostly by military strongmen. That these leaders were elites of European descent went virtually without question.

Today, Chile’s presidential palace, La Moneda, is the home of a single mother and torture survivor. In Buenos Aires’ famous Casa Rosada lives a man who is perhaps the biggest thorn in the side of the International Monetary Fund. In Bolivia it is an indigenous coca farmer, in Brazil a metalworker and in Uruguay a former leader of left social movements who call these palaces home.

In election after election, Latin Americans are choosing leaders who promise a shift from traditional elite-driven politics to more participatory and active democracies that focus on fulfilling the needs of the poor. With nearly a dozen national elections coming up this year, including especially significant ones in Mexico and Brazil, this is an important time to assess how far the new leaders of Latin American politics, diverse as they may be, are likely to go in achieving real change. And at a time of virtually one-party rule in the United States, the prospects for real democracy in Latin America offer an intriguing model for the rest of the world.

Under the U.S. radar

To the extent that U.S. officials have paid any attention to the new Latin American leadership, it has been largely fixated on Venezuelan President Hugo Chávez. In February, Defense Secretary Donald Rumsfeld played the Hitler card, describing Chávez as “a person who was elected legally–just as Adolf Hitler was elected legally–and then consolidated power and now is, of course, working closely with Fidel Castro and Mr. Morales and others.” Other U.S. officials have used Chávez’ fiery attacks on President Bush to raise the specter of a Cuban socialist model being imposed by Chávez and his new allies throughout Latin America.

In general, however, Latin America is low on the Bush administration’s radar screen. Although the U.S. government was deeply involved in Latin America during the ’80s, providing military and other assistance to governments fighting internal civil wars, successive administrations have been less concerned with the region since the fighting there stopped. The war in Iraq has pushed Latin America even lower on the priority list.

According to Adam Isacson, a senior policy associate at the D.C.-based Center for International Policy, U.S. military assistance to Latin America has not dried up. Rather it has been refocused “to fight the war on drugs and efforts to maintain close contact with the militaries of countries that are lifting trade barriers, privatizing and pursuing laissez-faire economic policies.”

By pulling back from direct political involvement in the region, the U.S. government created an opening for Latin American social movements of small farmers, trade unionists, human rights activists and urban poor to organize and elect new leadership. Their efforts have been bolstered by the failure of the policies that the U.S. government has pushed in the region–fighting drugs and expanding free market reforms. On drugs, the U.S. government’s attempt to crack down on Latin American suppliers was key to the rise of Bolivia’s newly elected president, Evo Morales. A native Aymara and leader of the country’s coca farmers union, Morales is a staunch opponent of U.S. coca crop eradication programs. Although the coca plant is used to produce cocaine, for Bolivians coca in its natural form is as much a part of their culture as coffee is to ours. His courage to stand up to the United States in defending the rights of coca farmers made him a national celebrity even before he went into politics.

In February, shortly after taking office, Morales urged the United States to change its drug war policy in Bolivia. He said, “The [U.S.] zero-coca policies haven’t worked. … We don’t want a false drug war.” Then, during Chile’s presidential inauguration in March, Morales gave Secretary of State Condoleezza Rice a traditional Bolivian musical instrument called the charango, decorated with coca leaves–a symbolic reminder that coca farming is legal in Bolivia.

The U.S. coca eradication efforts in Bolivia and elsewhere have had little to no effect on cocaine use at home or on coca cultivation. Sanho Tree, a fellow at the Institute for Policy Studies, explains that after the United States put the squeeze on Bolivia and Peru in the early ’90s, coca cultivation exploded in Colombia. Now, after five years of hammering at Colombia, production is moving back to Peru, Bolivia and other countries. “The drug war hasn’t been able to solve this balloon effect,” he says. “In fact, constricting global supply simply creates greater financial incentives for more campesinos to plant coca, and in a region where there is so much poverty, we will never make coca disappear by making it more valuable. Morales’ victory should be occasion for Washington to re-evaluate its failed drug war rather than to propagate alarmist rhetoric.”

While he is committed to pushing for a political program that will benefit the poor and indigenous populations that make up the majority of Bolivians, Morales has shown consistent respect for the democratic process. Morales is the first indigenous president in Bolivia’s 180-year independent history. With 54 percent of the popular vote, he’s also the first president ever to win an election with a clear majority in the first voting round, starting his term with a strong mandate and high expectations.

Backlash against World Bank and IMF

Morales also got a huge boost from U.S. support for the policies of the World Bank and International Monetary Fund (IMF). Following on the heels of the Reagan-era’s “trickle-down” economics, which posited that benefits for the rich will “trickle down” to the rest, Washington has used its power of the purse and its leading position within international lending institutions to guide Latin American governments toward economic policies that restrict public spending, increase the role for the private sector, and dismantle the system of import taxes and other tariffs in order to facilitate international trade.

Lending agreements from the IMF and the World Bank during the ’80s and ’90s came riddled with conditions for countries to manage fiscal deficits by lowering government spending on social programs, including health and education. “Cutting public expenditures by any large degree cannot be done without affecting the poor who rely on public services, or provoking huge rebellions,” says Jim Shultz, director of the Democracy Center in Cochabamba, Bolivia.

Yet in 2003, the IMF demanded Bolivia cut more than $250 million, or 8 percent, of the national budget. In Deadly Consequences: How the IMF Provoked Bolivia into Bloody Crisis, Shultz details how the Bolivian government tried to warn the IMF that this would incite popular unrest. Bolivians deposed two presidents in as many years through protests against these types of policies and then elected Morales.

Argentine President Néstor Kirchner also owes much of his success and popularity to his resistance to the IMF. Since assuming office in 2003, Kirchner has been a tough negotiator with the IMF. He has resisted demands to slash spending, lift controls on public utility prices and implement banking and tax reforms, and instead he has pushed for investment in the public sector and protection of Argentina’s poor.

Argentina, once the poster child of the IMF, has made a remarkable comeback since its economy collapsed in 2001 after a decade of closely following IMF and World Bank prescriptions. While in 2000 growth was a negative 0.8 percent, growth from 2003 to 2005 under Kirchner’s watch exceeded 8 percent, with low inflation and falling unemployment and poverty. Consequently, Kirchner now commands a stunning 80 percent approval rating in opinion polls.

Brazil, too, has reaped considerable benefits from its government’s determination to balance external pressures to adopt a cautious macroeconomic strategy with internal demands for higher standards of living for all Brazilians. Economic growth in 2004 was the highest since 1986, with gross domestic product (GDP) increasing 5.2 percent.

The U.S. government’s aggressive push to expand free trade in Latin America also helped catapult other new leaders into the presidential palaces. Luiz Inácio “Lula” da Silva in Brazil made his opposition to a proposed hemispheric trade deal, the Free Trade Area of the Americas (FTAA) a centerpiece of his 2002 election campaign, calling it an “annexation agreement” rather than an integration agreement. He then helped lead resistance to the FTAA among other wary developing countries, resulting in a deadlock for the past several years. Likewise, in Costa Rica, opposition candidate Ottón Solís nearly pulled off a stunning upset in that country’s February election, thanks to his popular position against the Central American Free Trade Agreement (CAFTA). CAFTA passed the U.S. House of Representatives last summer by only two votes.

Lula and Solís were riding a wave of widespread outrage against the failure of trade and investment liberalization policies (often called the “Washington Consensus”) imposed on the region since the ’80s. No region of the world had gone further to adopt these reforms, and yet, while promoters argued this would lead to prosperity, Latin America has experienced rising poverty and inequality. The World Bank estimates that the number of Latin Americans living on less then $2 per day increased from 99 million in 1981 to 128 million in 2001. According to the United Nations, the gap between rich and poor has continued to grow and Latin America has the most unequal wealth distribution of any region in the world.

The democratic opening that occurred after the infamous era of military dictatorships allowed social movements to express their discontent. The traditional conservative elites who were aligned with the United Sates were voted out, and replaced by socially minded, left-leaning leaders.

Right versus Left?

It is somewhat simplistic to characterize the changes taking place in Latin America as purely right versus left, but it is undeniable that there is a general shift toward the left. However, in Latin America the political spectrum is relatively wide and what are considered left governments vary greatly from country to country. Their common thread is that they all support state involvement in pursuing economic and social policies focused on improving the lives of the poor.


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Nadia Martinez was born and raised in Panama. She is co-director of the Sustainable Energy and Economy Network, a project of the Institute for Policy Studies in Washington.

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