Latin America: The Struggle Against Neo-Liberalism
Latin America: The Struggle Against Neo-Liberalism
by Michael Murphy in Socialist View No 10, Spring 2003.
THE LAST three
years have seen a storm of political upheaval sweep through Latin America.
Country after country has experienced mass protests against the 1990's neo
liberal offensive which resulted in a sharp increase in inequality. 5% of the
region's population own more than 50% of the wealth while mass unemployment,
rampant corruption, and wholesale privatisations have wrecked public services.
These mass movements have also resulted in the election of people like Lula in
Brazil, Gutierrez in Ecuador and Chavez in Venezuela. Parties associated with
capitalism and the ruling elite have suffered an erosion of their support.
It is highly fitting that
these movements against neo liberalism are taking place in Latin America.
Throughout the 1990's, this region was held up as an example of how the twins
of "democracy and the market" would transform the lives of people and
reduce the age-old problem of poverty. In reality, the inequalities have been
accentuated in that period.
There are 17 million people unemployed in Latin America, the highest level since the 1980's. The unemployment rate is 9.2%, up from 8.1% in 2001. Only one in three workers have any access to a social security system.
Minimum wages are falling three times as fast as they grew in 2001. Economic growth reached 0.5% in 2001
but shrunk 0.8% in 2002! As the world economic slowdown deepens, the offensive by the bosses will intensify as workers are made pay for this crisis. The
inspirational struggles of the people of Latin America have valuable lessons for workers internationally.
Argentina's economic collapse
In 2002, the world watched
as over one million Argentineans took to the streets in a protest which became
known as the "cacerolazo" or mass banging of pots and pans against a
litany of austerity measures implemented by the then President, de la Rua.
After three years of public spending cuts, labour reforms, tax rises, and
recession, de la Rua was forced to resign by the mass movement. Over the course
of the next 12 days, four more Presidents would be kicked out and the country
would default on a $95 billion loan, the largest debt default in history. The
current President, the Peronist Duhalde, has managed to cling to power but
faces elections in April of this year. Some commentators are claiming that the
recession which has gripped Argentina for over four years is coming to an end
because there have been three consecutive months of economic growth. However,
economic production for 2002 was down 12%. Unemployment is running at 20% and
58% of the population or 19 million people live in poverty. From May to October
2002, the number of poor increased by 9%. 27 children die every day of hunger
in a country which the IMF held up as a miracle of economic growth, a model of
the riches that awaited the poor nations that opened up their economies to
As 2002 opened with the
Argentinean poor and working class mobilising to defend their existence. 2003
opened with the election of a new left wing President, Lula, in Brazil and the
populist President Chavez under siege from right wing opponents in Venezuela.
Brazil is the most
important economy in Latin America as it occupies a landmass comparable with
the United States and has a population of 160 million and it is also the
world's 10th largest economy.
In October 2002, Lula, the
Workers Party (PT) candidate received the largest vote in Brazilian history. He
received 52.7 million votes (61.7%) in a landslide victory over Jose Serra the
candidate for the outgoing right wing coalition government of
Cardoso who was backed by big business and the International Monetary Fund
(IMF). The PT also increased its representation in the congress and state
legislative assemblies from 59 to 91 seats and doubled its senate
representation from 7 to 14 and now has the biggest parliamentary
representation in states such as Sao Paulo.
The victory of Lula is an
enormous step forward for the Brazilian working class and represents a defeat
for the capitalist class in Brazil and internationally, who had conducted a
campaign against him. It opens up a new stage in the class struggle in Brazil.
This overwhelming victory also represents the enormous desire for change among
the Brazilian masses. Eight years of Cardoso's neo liberal offensive has
resulted in a country where 54 million people live in poverty and 30 million in
conditions similar to sub Saharan Africa. Unemployment is at 7.3%, violent
crime is rampant, public services have been wrecked due to privatisation, and
the vast majority of the land is in the hands of a tiny minority.
The IMF has given Brazil a
loan of $30 billion negotiated with Cardoso just before the election. Lula has
since committed himself to honour this and all other debts. Brazil's public
debt jumped from 30% to 60% of GDP in 2002. The reliance on foreign capital
means the threat of debt default hangs over the country. It was precisely this
situation which sparked the Argentinean crisis in early 2002. 80% of the total
debt is held by domestic creditors. If the government defaults on the debt,
banks and businesses will collapse. A moratorium (debt default) by Brazil was
only avoided by the IMF loan. However the situation is unsustainable. The IMF
deal ties the government to a minimum of 3.75% budget surplus with 6% being the
real figure sought. This will mean hard choices for Lula if he is to achieve
this level of budget surplus against a background of the world economic crisis.
It will mean there will be limited finances available for social spending.
It is against this very
difficult economic background that Lula has come to power but there are
enormous expectations among the Brazilian masses. Everywhere he goes he is met
with massive crowds wanting to see him. At the moment, he is undertaking a
"Misery Tour" whereby he is bringing his 30 cabinet ministers on a
tour of the poorest regions of Brazil to give them a dose of reality. This type
of tour will only further heighten expectations. In one of the shantytowns in
northeast Brazil. Irma Dulce, people carrying placards welcomed the new
President bearing slogans like "The only hope we have left in the world is
in God and in Lula". 77% of Brazilians expect the new government to be
"excellent or good". This gives a glimpse of the sheer weight of
expectations on Lula to deliver a new era for the poor of Brazil.
He has taken some positive
steps, including the announcement that a $450 million deal to purchase 12 new
jet planes for the Brazilian air force would be postponed and the money put
towards the government’s "zero hunger" campaign instead. The new
government has also announced cuts of almost $177 million in defence spending.
The "zero hunger" programme aims to feed the 46 million Brazilians
who survive on a dollar a day. In two pilot projects, 700 families will receive
$14 per day in a social welfare type payment. $500 million has been earmarked
for the "zero hunger" programme. The target is to extend the
programme to 1.5 million families by the end of 2003.
However, Lula has already
begun to dampen down expectation by telling people to be patient. At the World
Social Forum in Porto Allegre this month, he told the crowds gathered that
"running a government is like running a marathon. "You can't rush
otherwise you'll end up panting at the first street corner". These words
may buy him some time but this honeymoon has a limited lifespan. Lula is
playing a dangerous game. On the one hand, attempting to deal with the massive expectation
that he will sort out Brazil's problems, while on the other trying to prove to
international capitalism that he is no threat to their system. He will only be
able to straddle these two horses for a limited period. Initially the anger of
Brazilian workers and peasants may turn against international finance capital.
However Lula's inability to deal with the deep problems facing Brazil if he
refuses to break with capitalism will mean the anger of the masses will
eventually turn against him.
PT moves to the right
Founded in 1980 against the
back drop of the struggle to overthrow the military dictatorship the PT won a
mass base very quickly developing deep roots amongst the Brazilian working
class; its anti capitalist positions made the party a pole of attraction for
the combative left in Brazil and throughout Latin American.
In the 1989, presidential
election Lula lost out narrowly to Collor a corrupt capitalist politician. This
defeat coupled with the collapse of Stalinism throughout Europe and the former
Soviet Union and the defeat of the Sandinistas in Nicaragua marked the
beginning of a turn to the right, which characterised the PT leadership
throughout the 1990's. In 1992, the Collor government was toppled by a mass
movement but instead of demanding new elections, the PT leadership supported
the then Vice President Itmar Franco. This gave the bourgeois time to
reorganise and launched the "Real Plan" with Cardoso as their
candidate for President. Cardoso went on to win in 1994 and 1998 by bringing
about a certain economic stability and the reduction in hyperinflation which
was running at 5,000% in 1994.
"success" of reducing inflation from that high to 10% was achieved
through massive spending cuts and a sharp rise in inequality which laid the
basis for the victory of Lula and the PT. The authority of the PT over the
masses in Brazil is still very high and the expectations enormous but Lula will
not deliver. There is a need for the building of a genuine socialist
alternative to the left reformist programme of the PT leadership in order for
the Brazilian working class to end the rule of capital which is responsible for
the poverty and deprivation which plagues their country.
Chavez an embattled president
Events in Venezuela demonstrate
the difficulties which face the PT. Capitalism is based on the ownership of the
wealth and means of production by a tiny minority whose profits are accumulated
at the expense of the working class and the poor. The demands for ordinary
people for a decent life cannot be satisfied without breaking that
Under the guise of a strike
by oil workers, the ruling class and big business interests in Venezuela have
attempted to overthrow the democratically elected government of Hugo Chavez.
This is the second attempt in the space of a year to oust Chavez. The first, a
coup in April last year assisted by the US government, was defeated by a
spontaneous mass movement of the poor from the shanty towns, many of whom are
organised in committees called "Bolivarian Circles". Some 30,000 of
these circles, incorporating up to half a million Venezuelans, exist and have
the support of sections of the army rank and file. Hugo Chavez, the populist
President of Venezuela, came to power on a wave of popular support following a
landslide election victory in December 1998 and won a further six years in
office in 2000. The current 'strike', which has been ongoing since late
November last year, is organised under the umbrella of the "Co-ordinadora
Democratica" which is made up of older capitalist politicians, the
employers' organisations, Fedecamaras, the Catholic Church hierarchy and the
corrupt CTV trade union leadership.
The key demand of the
'strike' is for a referendum on Chavez's right to be President. The Venezuelan
constitution allows for a recall vote half way through a President's term,
which in Chavez's case would be August of this year. The CWI's prophetic
warnings after the April coup attempt, that the counter revolutionary forces in
Venezuela aided by the national ruling class and US imperialism would regroup
and come back, has been borne out graphically by the current 'strike'.
Unfortunately, instead of
seizing the initiative after the coup to organise a mass movement against the
conspirators, Chavez tried to placate the ruling class. Chavez is repeating
mistakes that have been made by many in his position, particularly Salvador
Allende in Chile in 1973.
After an attempted coup to
overthrow Allende, he invited the military including General Augusto Pinochet to
join the government, who then proceeded to plan a successful coup 3 months
later. This paved the way for a vicious and bloody campaign against the Chilean
people over the next two decades.
Chavez, unfortunately, has
not learnt these lessons. Following the April coup he reinstated the sacked
director of the state oil company PVVSA and even removed some of his own
supporters! The 'oil strike', which is more like a "voluntary
lockout" as employers have continued to pay the wages of those on strike
has been joined by sections of the middle class, some skilled workers and by
some other workers such as dockers.
The 'strike' has crippled
the already weakened economy. Venezuela is the world's fifth largest exporter
of oil. Oil output dropped from just over three million barrels per day at the
start of December to just 400,000 barrels per day at the height of the
'strike'. This had increased to one million barrels per day by mid January due
to an intervention by the military and Chavez supporters. Oil provides 70% of
export revenue and half of government earnings.
Economic crisis deepens
It is predicted that the
Venezuelan economy could contract by up to 40% in the first quarter of 2003 and
by 9% for the year as a whole. The Bolivar has tumbled 32% against the US
Dollar since 1 January. Inflation has soared to 30%, unemployment is 20% and
70% of Venezuelans live below the poverty line.
There has been a massive
flight of capital from Venezuela with $8 billion taken out of the country in
2002 alone. This represents about 8% of the Venezuelan economy.
It is this economic
nightmare that is assisting the "strike" leaders. They have been able
to exploit the economic crisis to mobilise section of the middle classes
against Chavez. There have also been marches in defence of Chavez. Because of
this and also some support by the newly elected PT President in Brazil, Lula,
Chavez has managed to hold on. There have been indications of cracks beginning
to appear in the strike. Many retail outlets reopened over Christmas, not
wishing to miss out on the Christmas spending bonanza. The leaders of the
strike announced on 2 February that they would ease the strike to prevent
business bankruptcy. However the "strike" at the state oil company is
Having come to power with
such popular support Chavez's popularity now stands at 30% in the polls which,
even allowing for some inaccuracy, is a significant drop. Among the most
oppressed layers in the shantytowns and the poor he retains mass support, it is
among the middle classes that his support as been eroded.
He has moved against
corruption, introduced reforms including the distribution of unoccupied land to
the peasants, built thousands of new schools and introduced free places at
universities. He has taken steps to root out corruption, which is a huge issue
not just in Venezuela but throughout Latin America. However, he has not been
prepared to break with capitalism and adopt a socialist programme based on a
nationalised and democratically planned and controlled economy.
Masses must be mobilised
April's coup gave a
warning, this 'strike' is the second shot across his bow. Polarisation is now
so pronounced that there is a real danger of a civil war developing. Many of
Chavez's supporters amongst the poor are determined to fight the attempts to
remove him. This determination must be given concrete expression if the right
wing is to be defeated. If it is not organised and does not find a clear
revolutionary socialist expression, this mood of defiance could eventually evaporate
when faced with a decisive blow from the right wing. It should be remembered
that only one week before Pinochet's coup, 500,000 marched demanding arms. When
the decisive moment arrived, however, the workers' movement was left paralysed
because of the failure of its leaders to carry through the necessary
preparation and action to defeat the coup.
The class polarisation in
Venezuela may yet force Chavez to take further radical steps in the short term.
The army has been used to break open a Coca-Cola bottling plant closed by the
management. Soldiers distributed bottles of water and drinks to the poor.
Chavez has ordered military units to take similar action against companies
guilty of 'hoarding goods': "Those who attempt to deprive the people of food
and then complain that Chavez is arbitrary are traitors to the nation", he
declared. This has frightened capitalist commentators: "US corporations
with interests in Venezuela are facing increasing risk of government
intervention, or even expropriation, as President Hugo Chavez moves to confront
a general strike and consolidate his position, business leaders warned
yesterday" (Financial Times, 20 January 2002).
A socialist Venezuela
There is an urgent
necessity for independent action and organisation by the working class. The
Bolivarian Circles, set up by Chavez, must be expanded and strengthened to
include elected representatives from all the workplaces, shantytown dwellers
and rank-and-file soldiers. Armed defence detachments must be created in each
local area. The Bolivarian Circles must also be linked up on a local, city-wide
and national basis, and a national congress convened with the aim of forming a
democratic government of working people with a socialist programme that will
break with capitalism.
An emergency programme for
the economy needs to be established. The basis of the programme would be the
nationalisation of the major companies, banking and finance, controlled and
managed democratically by the working class.
The call should go out for
skilled workers and the middle class to join the struggle to rebuild the
economy; planning it to meet the needs of the mass of the population and not
just the rich elite which exploits the middle class as well as the workers and
The establishment of a democratic,
socialist Venezuela, if linked to an appeal to the masses of the whole of Latin
America for solidarity action and to overthrow capitalism and landlordism,
would win massive support. It would gain the backing of "latinos" in
the USA and, through them, the North American working class. Ultimately, it is
the only way to defeat US imperialism and capitalist reaction in Venezuela.
If Chavez succeeds in
riding out this crisis, the current social and political issues will remain.
There will be other attempts to overthrow him, including the possibility of a
military coup. This would provoke massive turmoil throughout Latin America. The
situation is not the same as the 1970s however. There is a profound hatred of
military dictatorship following the experience of living under the "iron
heel" of the likes of Pinochet. In Argentina, where in many respects
conditions are ripe for military intervention, even the armed forces have
opposed taking this road at this stage.
This does not mean that it
is excluded, but that it will be more complicated than in the past. Despite the
fact that Chavez's radical regime has not brought about significant economic
gains for the poor, he retains enormous support. Chavez is seen as the only one
"who speaks for us and cares about us". The poor in the shantytowns
are aware of what a return to the old
dynasty would mean for them and remain resolutely opposed to it. The stormy
events in Venezuela are at the heart of the social and economic crisis which is
now unfolding throughout Latin America. They illustrate, above all, the need to
build new independent mass parties of the working class with revolutionary
socialist policies in Venezuela, Argentina, Brazil and throughout Latin America
as the only way out of the impasse which exists under capitalism.