Latin America in 2016: A New Phase of Conflict and Uncertainty

What challenges will Latin America and the Caribbean need to overcome in 2016?

By Tortilla con Sal

The volatility and dizzying pace of world events is quickly turning 2016 into an especially decisive year for Latin America and the Caribbean. Ever since the crisis of 2008, the global corporate elites have patiently defended their huge accumulated economic and financial advantage. At opportune moments, through their influence over government foreign policy via political proxies or through unleashing outright violence, they have pressed that advantage ruthlessly.

President Obama’s renewal of the sinister Presidential decree casting Venezuela as a threat to the national security of the United States is the most recent example. President Mauricio Macri’s abdication of national sovereignty to a New York judge and Wall Street vulture funds over Argentina’s debt is another. The judicial and media attack on Brazil’s Ignacio Lula da Silva is another.

These examples get extensive media coverage because they are so high profile. By contrast, the endless, low intensity corporate elite war on the impoverished majority at the grass roots throughout Latin America and the Caribbean rarely receives such coverage. Only a huge effort by international solidarity organizations has kept the recent assassination of Berta Caceres in the news over the last couple of weeks.

By contrast, international coverage since the 2009 military coup of the continuous sequence of murders and abuses aimed at destroying militant community and popular movements in Honduras has been minimal. The same tends to be true to varying degrees of media coverage throughout the region from Mexico to Colombia to Paraguay to Chile.

Now acute economic problems, cynically exploited by local elites and their foreign owners and allies, most clearly in Venezuela and Brazil, are exacerbating the volatility of political conflict in the region. This is also happening in a different way in the United States which remains hopelessly tied to extremely counterproductive financial and trade policies while exploiting its decades old blockade of Cuba and attacking much more vulnerable countries like Venezuela, Bolivia and Ecuador. In the U.S. itself, the share of gross domestic income for the great majority of people is at record lows while corporate profits are at record highs. The U.S. Central Bank, the Federal Reserve, accompanied by its allied Central Banks in Europe and the Pacific region, is trapped in an intractable policy dilemma resulting from over two decades of deep financial and fiscal policy mismanagement.

Reaction against the consequent extended economic repression experienced by the country’s majority population is expressed in the electoral campaign success of Bernie Sanders and Donald Trump running against the preferred candidates of their respective corporate-controlled party machines. From a global perspective, Sanders and Trump are still mainstream, but they are rebels from the perspective of the U.S. corporate power brokers. It is also worth noting that Bernie Sanders, Donald Trump and even, paradoxically, Hillary Clinton have all felt bound to reject the misnamed trade and investment agreements, like the Trans Pacific Partnership, currently being pushed so hard by the U.S. corporate elites and their current sales representative, President Barack Obama. So, clearly, in the 2016 U.S. election campaign, there is an unprecedented mismatch between grassroots opinion and the policies advocated by corporate owned political elites.

That is true also in Europe where majority opinion in the UK, for example, supports leaving the European Union. While in France and Germany, right-wing political parties have greatly increased their support and, elsewhere, in Spain and Greece, new political parties have made successful breakthroughs into national politics without seriously challenging the corporate-controlled framework of the European Union.

Other factors have clearly been very important, for example the wave of refugees from NATO-provoked wars. But continuing economic crisis, seen in falling living standards, high youth unemployment and public sector cutbacks in the name of austerity, are the fundamental cause of political trends that have radically undermined the credibility and authority of the institutions and political classes of the European Union countries.

However, changing events in the world over the last year or so do little to alter fundamental processes that have been categorically clear since the first years of this century. The countries of North America and Europe and their allies are being forced to manage the pace of their declining influence and control rather than being able to reverse it. The impoverished majority in Asia, Africa and Latin America expect sustained, higher living standards and national politics in each region reflect that accordingly.

Russia and China, can, and will develop with or without the say so of the West and its allies, certainly across Eurasia and around the rest of the world too. Even if the Western powers were able to put a brake on their decline for a while relative to their main global rivals, environmental limits to growth will almost certainly impose unpredictable political changes on societies all over the world much sooner than people think, perhaps even beginning in the next five years.

All these major underlying trends raise huge policy questions for countries in Latin America and the Caribbean. Here, as elsewhere in the world, center-right social democrat governments and outright neoliberal right-wing governments have hedged their bets in terms of international relations. The clearest examples are Chile, Peru and Costa Rica which have all signed free trade agreements in recent years with Chin. At the same time as Chile and Peru have signed up to the U.S. government backed Trans Pacific Partnership which excludes China.

It is worth remembering that China is now a member of the Inter-American Development Bank. For its part, Brazil is a founding member of the Asian Infrastructure Investment Bank and of the New Development Bank agreed upon at the 6th BRICS country summit in the Brazilian city of Fortaleza in 2014 and which became operational at the end of last year.

Assuming the Trans Pacific Partnership ultimately does come into effect, once ratified by national legislatures, it may paradoxically promote even greater Chinese inward investment in Latin American countries who are members of the TPP so as to get around TPP restrictions against Chinese goods and services. Mexico’s case is a good example of Latin America’s ambivalence about China.

In 2014, to China’s dismay, the Mexican authorities canceled a US$3 billion plus project for a high-speed rail link alleging unfair competition. For Mexico, the TPP is one way of seeking some advantage for Mexican businesses trading with Asia over their Chinese rivals. But at the same time, trade between China and Mexico has grown from US$3 billion in 2003 to around US$37 billion now. China is Mexico’s second biggest commercial partner, behind the U.S. In Latin America, Mexico is China’s second biggest commercial partner, behind Brazil.

The United States government and the corporate elites that dominate U.S. trade policy are trying to exploit Latin America’s ambivalence towards China to protect the U.S. economy against Chinese commercial and financial competitors. A dramatic recent example of that ambivalence was the sinking of a Chinese fishing boat, allegedly fishing illegally in Argentina’s territorial waters, by the Argentine navy.

It is hard to imagine that outrage being permitted under the previous Argentinian government of President Cristina Fernandez. Perhaps it should come as no surprise that the current, very aggressive offensive by the Latin American right-wing, openly instigated and directly supported by the U.S. authorities, against progressive governments in Latin America and the Caribbean goes hand in hand with efforts to stymie Chinese trade and investment in the region.

Between 2004 and 2013, U.S. corporate elites lost their commercial dominance and the U.S. government its political dominance in the region. But U.S. corporate elites and their allies maintained their financial control and have used that, as well as deploying measures by their proxy U.S. government, to destabilize major Latin American economies like Brazil and Argentina with an implacable cynicism that parallels the European Union’s attack on Greece in 2015.

Likewise, the U.S. and EU authorities have destroyed whatever authority and credibility remained of the International Monetary Fund by allowing it to lend money against its own rules, to a country in default on its sovereign debt, Ukraine, which has now effectively defaulted on a US$3 billion loan from Russia. In this regard, reporting on the progress of the Trans Pacific Partnership has been misleading because it generally leaves out the intimate relationship between the TPP and its accompanying Trade in Services Agreement which will give Western corporate financial interests, in particular, unprecedented juridical supranational status over sovereign governments.

All of this means that, especially since the death of Comandante Hugo Chavez three years ago in March 2013, Latin America has become a more crucial theater of global conflict. Berta Cáceres’ assassination and the recent spate of murders of activists in Colombia are a reminder of the bitter conflict playing out at a national level between progressive political movements and reactionary elites throughout the region, above all perhaps in Venezuela.

Also at a regional level, Latin America and the Caribbean cannot avoid being deeply affected by the war between Western and allied corporate elites struggling to maintain the global power and control of their financial system against the increasing presence of China. Naturally, progressive governments and political movements advocate a multipolar world because they face opposing reactionary national elites still dependent on the United States.

But three fundamental trends are likely to change the terms of that regional stand off very fast. Firstly, although in Latin America the U.S. maintains the permanent threat of overwhelming military force, events in Syria and elsewhere clearly suggest the West has lost the global military superiority that previously backed up its global economic dominance.

Secondly, even systematic coordination between Western and allied central banks, by insisting on a return to the status quo prior to 2008, has failed to stabilize the Western financial system in a way that promotes sustainable productive investment in their countries’ economies and peoples, that is why Western corporate elites are so desperate to impose supranational juridically unassailable commercial and financial structures via agreements like the TPP.

Thirdly, climate change is creating a new global economic reality that is likely to render the global capitalist economic system of investment and production definitively obsolete, unsustainable and impractical beyond all plausible, or even electorally saleable, political argument. In any case, the current drive by the U.S. authorities towards agreements like the TPP and its ugly partner corporate agreements, the Transatlantic Trade and Investment Partnership and the Trade in Services Agreement, signal that the most ambitious version of Western corporate globalization is exhausted.

In the new complex uncertain global context, progressive governments in Latin America and the Caribbean face unprecedented policy challenges around both regional integration and national sovereignty. Those challenges make imperative a convincing defense of socialist achievements in Latin America prioritizing the needs of the human person, especially among the ALBA countries led by Venezuela and Cuba, as humanity’s best alternative to the catastrophe of Western dominated corporate capitalism.