THE EBBING OF THE RED TIDE

Macri

Mauricio Macri celebrates his upset victory. Image source: REUTERS/Ivan Alvarado

As I’ve mentioned before, the fundamental cleavage in Latin America — which is mostly unified in terms of language, religion and culture and lacks major national rivalries — is class. Deep socioeconomic inequalities left over from the colonial era have bred resentment, popular movements and even violent revolutions. Even with the Cold War over it’s looked like old notions of an oppressed mass of poor laborers getting screwed over by a haughty, greedy, corrupt elite have endured. But recent developments in South America hint that a change might be coming to this archaic dynamic.

BACKGROUND
A full background of neo-Marxism in Latin America reads like a historical overview of the whole region. The Spanish and Portuguese colonized the area in the 1500s and set themselves up as the elite presiding over a continent and a half full of poor, illiterate natives who toiled away on estates, plantations, and mines. Over time, a native-born elite developed that resented Spanish and Portuguese domination and declared independence from them in the 1810s and ‘20s. But they just replaced them as the overlords, and Latin America’s natives, blacks, and mestizos (the offspring of whites and natives) remained marginalized, poor and discriminated against.

Obviously they didn’t take this quietly forever, and Latino history is peppered with outbreaks of violence and peaceful movements to reclaim the region for the majority of its people. Military leaders called caudillos would gain support and eventually the presidency by appealing to popular demands for land, food and rights. Brazil’s emperor Dom Pedro II freed his country’s slaves. Mexico witnessed a confusing revolution that ended up tearing apart the country’s old social regime and redistributing power and land.

The political climate of the Cold War fueled this clash of class even more. The Soviet Union (and China, to a lesser extent) proved that you could redistribute wealth to the lower classes and still be rich and powerful. When rebels took over Cuba in 1959 and set up a Communist state, that inspired the left even more. Here was a role model, a fellow Latino country that had stood up against its oppressors and threw centuries of quasi-feudalism into the trash. The Cuban regime was proud and confident and did what it could to promote its ideology and export it to other angry Latino countries like Bolivia, Colombia and Nicaragua.

In the background, imperialist machinations swirled. Although America made it clear upon Latino independence that it wouldn’t tolerate any further colonialism in its hemisphere, Britain, the economic superpower of the 1800s, stepped in and offered the new countries its manufactured goods in exchange for their raw materials (copper, gold, silver, coffee, rubber, sugar). In the 1900s America grew more assertive and displaced Britain. While this tied Latin America into the global trading network, it mostly just lined the pockets of the rich while tethering the poor to drudge work. Eduardo Galeano, in his classic screed Open Veins of Latin America, uses the metaphor of Western imperialists tapping Latin America’s vital resources and sucking its blood dry to convey the despair and resentment Latinos feel to the gringo.

While the collapse of the Soviet Union definitely set back Communist ambitions at first — Cuba lost its main patron, long-standing myths about Communist greatness were discredited — the Latino left had a resurgence in the ‘00s led by Venezuela’s controversial president Hugo Chávez. He lavished his supporters, the lower classes, with subsidies, welfare, and spending on big government programs to give them a boost in society and ease their economic burdens. He also bellowed invective about “the Empire,” denouncing its war-mongering and hypocrisy and exhorting other Latinos to spurn it and beware it. He had imitators in Brazil (Lula da Silva, beloved by the masses for his “Bolsa Família” poverty eradication program) and Argentina (Néstor Kirchner and his wife Cristina Fernández, who subsidized child care, energy, grain and transport). And he bound them and other neo-Marxist Latino countries (Nicaragua, Ecuador, Bolivia) together in the Bolivarian Alliance for the Peoples of Our America (ALBA).

But not all Latino countries — including major ones with historic insurgency problems like Mexico and Colombia — hopped on board the socialism express, and in recent years Chávez’s dreams have seemed more and more naïve.

CURRENT SITUATION
Let’s start with Argentina. Since 2011 its economy has barely grown, and unemployment is at 7%. Inflation, long an Argentine problem, has continued to harass it, and it’s estimated to be somewhere between 20 and 30%. The Kirchners’ generous public spending has drained government finances, and the country’s fiscal deficit is now over 5% of GDP. These figures are estimates, since the government is widely suspected of manipulating them to shore up its support.

To rescue the economy and treasury, Fernández relied on strict import and capital controls, cutting Argentina off from international finance. Foreign investors have fled in droves, and the government negotiated with them to write off most of its debt… except a handful, the so-called “vulture funds,” have stood firm and demanded their money back. An American court settled the case in their favor, which brought default into view as that would mean paying back every bondholder for a total of around $100 billion.

With the economy stagnant, the country an international outcast and Fernández interfering in the legal process and dubiously enrichening herself, voters in the election of November 2015 were fed up and threw the government out. In its place, they elected Mauricio Macri, the mayor of Buenos Aires, the city that dominates Argentina. He has moved swiftly since then to repair the damage Fernández caused by lifting trade barriers, abolishing currency controls, and negotiating with the vulture funds. He fired officials at the central bank who got in his way, along with the head of the Federal Authority for Audiovisual Communication Services — suggesting either that he’s a strong leader with a passion for economic and media freedom or an aggressive boss who can’t deal with his political opponents. In general, foreigners approve of him, and he is doing his best to get on their good side — by visiting the World Economic Forum in Davos, Switzerland, last weekend, for instance (it’s like the annual conference of capitalism).

Venezuela, meanwhile, has been going through some very hard times lately. Chávez died in 2013, leaving the field to Nicolás Maduro, who’s not nearly as charismatic as he is. The economy has crashed, and is estimated to have shrunk 7% last year. Unemployment is at 8%, and strict currency controls have created hyperinflation, a black market, and dire shortages of food and, most famously, toilet paper. Crime and violence are really bad, even by Latino standards. Maduro has continued the Chávez tradition of blaming everything on foreigners out to get Venezuela and on a privileged elite determined to wipe out the progress of Venezuela’s boom years.

Though not quite to the extent of his comrade Fidel Castro in Cuba, Maduro runs an authoritarian government, and protests against his policies have been dismissed and responded to with violence and arrests. But in an election last month, an opposition alliance (the Democratic Unity Roundtable, or MUD) triumphed, taking 56% of the seats. The stage is set for a messy showdown between the 2 branches of government — the assembly added 13 judges to the Supreme Court before adjourning, and Maduro tried to overturn some of the election results. The MUD returns the animosity by pledging to seek Maduro’s recall. 2016 looks like it’s going to be another vicious fracas in Caracas.

Venezuela parliament

The chavistas (leftists) show their disdain for the new ruling party by walking out. Image source: RTVE

As for Brazil, South America’s biggest country and the one with the most potential influence and weight, its fate is more uncertain. It already had its election in 2014, so its president, Dilma Rousseff, is probably secure… except that she’s under investigation for her role in a giant corruption scandal involving Petrobras, the state oil firm. She claims no responsibility for it, but it happened while she was on Petrobras’s board, so her opponents aren’t convinced. They are seeking her impeachment this year. Dilma, like Maduro, has proved way less charismatic and exciting than her predecessor, Lula, and her approval rating has slumped to 9%. A year of political paralysis seems imminent.

Even worse than that is Brazil’s economy. Last year its sovereign debt was downgraded to junk by 2 of the 3 big credit agencies, cutting off Brazil from most international bond-buying. The economy is crashing and shrunk by 3% last year. The fiscal deficit is 10% of GDP. Public debt is 70% of GDP. Inflation, which is something Brazil has also struggled with historically, is back, and hit 10.5% last year. It’s usually a bad sign when your presidential approval rating is lower than the inflation rate. With little else to do, Dilma is resorting to the kind of austerity measures people hate everywhere: tax hikes, job cuts, welfare benefit cuts, public spending cuts. Even some of Brazil’s beloved and iconic Carnival celebrations are getting axed.

Dilma

Brazil’s international press coverage has definitely taken a battering from the glory days of the ’00s.

The common thread in all of these cases is economic collapse. Even though Latin America has grown economically since the Cold War era, it’s still very dependent on “commodities” — oil, soybeans, wood, coffee, livestock, copper and other minerals. In the ‘00s, there was a thriving global market for commodities, driven most of all by China. Now the Chinese economy is slowing, which means less demand for natural resources, which means less money for Latinos. Combined with expectations of a hike in America’s interest rate, it also means Latino currencies are also slipping. One bright spot in the scene is Mexico, which is sustained by its close manufacturing and commercial ties with… the U.S. In general, though, the region is very commodity-dependent, and without that money coming in, generous social programs aren’t sustainable. (Oil makes up 95% of Venezuelan government revenue.)

The real question is: How permanent and fundamental is this shift? A change in presidents in Argentina and an opposition parliamentary victory in Venezuela doesn’t necessarily spell doom for neo-Marxism. There are still millions of disgruntled poor people bereft of opportunities and dependent on farming and hard labor to get by. Distrust of America and other scheming, greedy foreigners runs deep. It’s possible that the recent shift in mood is just a classic case of voters reacting to bad economies and governments getting corrupt after a decade in power. If the new guys aren’t charismatic or inspiring or make blunders, this could all be a flash in the pan.

But there are signs pointing to a permanent shift away from socialism. Latin America’s middle class has doubled since 2002. Countries like Mexico and Chile are more receptive to foreign economic powers and less paranoid about imperialism. Cuba is repairing its horrible relationship with the U.S. and allowing more foreign and private investment. Colombia is in a peace process with its long-raging insurgency, the FARC, presenting a more moderate, forgiving face than the old image of a conservative lapdog of the Yankees fighting a drug war for them. Ecuador’s leftist president, Rafael Correa, is unpopular and might get unseated this year. America under Barack Obama seems less belligerent and condescending than it did under George Bush, at least to the more moderate left. Despite its cozy relationship with Venezuela, Dilma’s Brazil is more moderate than other leftist countries and tries to accommodate foreign economic advice. And Galeano, before he died last April, admitted that his book hasn’t aged well.

East Asia’s economic boom, which relied heavily on foreign investment to bring millions of peasants out of poverty, is a possible model for the region. But unless deeply entrenched suspicion of rich foreigners and selfish businessmen is dealt with, it’s hard to imagine the ongoing class struggles of Latin America fading away.

Advertisements

One thought on “THE EBBING OF THE RED TIDE

  1. One fascinating element in the changes in Latin America is the rapid emergence of Protestant church movements. They seem to reflect economic and social shifts while presenting an alternative to the standard church and state relationships throughout the continent.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s