Putting on the Pressure:
Latin America
excerpts from the book
Rogue States
The Rule of Force in World Affairs
by Noam chomsky
South End Press, 2000, paper
Putting on the Pressure: Latin America
Exercising Pressure
p93
Guatemala's experiment with democracy, its first and only experiment,
which went on for 10 years, was overthrown by the Eisenhower administration
in 1954, opening a period of brutal repression and tortures supported
strongly by the Kennedy administration, which essentially constructed
the national security doctrine, not just for Guatemala-but for
the whole hemisphere. That led to a plague of repression over
the hemisphere, with direct US involvement strongly supported
by Johnson as atrocities mounted in the late '60s, and so it continued.
The atrocities peaked in the early 1980s under the Reagan administration,
which publicly and openly-and, in fact, rather passionately-supported
the killers now identified by the UN commission. This was known
at the time perfectly well. Congress compelled the administration
to state repeatedly that the human rights condition was improving
not only in Guatemala but in El Salvador and Honduras so that
the US could continue to support the regimes. Congress knew they
were hearing lies; that is now recognized. The UN commission gives
a grim report on Guatemala; there is an equally grim one to be
given on El Salvador.
There's more. In presenting the report, the chair of the commission
emphasized that the US government and private companies "exercised
pressure to maintain the country's archaic and unjust socioeconomic
structure."' The chair of the commission emphasized that
because it's at the core of the issue wherever there are atrocities
and terror. These reflect the socioeconomic structure, which is
one of brutal repression for a large majority of the population.
When people try to gain and protect some rights, an iron fist
comes down, with the hemispheric superpower backing it. That's
the story of "our little region over here."
p95
... Why did the United States overthrow the one democratic capitalist
government in Guatemala, and why has it maintained support for
state terror ever since?
Guatemala was becoming what's called a "virus" which
might infect others. It was threatening what's called "stability."
"Stability" was defined by the US embassy as follows:
Guatemala has become an increasing threat to the stability of
Honduras and El Salvador. Its agrarian reform is a powerful propaganda
weapon; its broad social program of aiding the workers and peasants
in a victorious struggle against the upper classes and large foreign
enterprises has a strong appeal to the populations of Central
American neighbors where similar conditions prevail.
And that's unacceptable. That's undermining stability. The
US coup restored "stability," restored the traditional
social order, by violence. It's been maintained by extreme violence.
The coup was undertaken and the terrorist regimes have been maintained
for exactly the reasons just stated very clearly: to contain the
threat of democracy and to roll back the social programs that
were undermining stability because of their strong appeal to the
population, not only in Guatemala, but in other countries of the
region.
p97
The Tombstone of Debt
Let's move on to other examples of maintaining socioeconomic supremacy
in "our little region over here." Recently in Tegucigalpa,
the capital of Honduras, there was a meeting of 17 Latin American
countries on the debt. The archbishop of Tegucigalpa, president
of the Latin American Conference of Bishops, speaking of the debt,
said that it "is not one more problem for us to face-it is
the problem. The foreign debt is like a tombstone." Latin
America Press, which comes from Peruvian liberation theology circles,
reported what I'm now quoting, but it ought to be on the front
pages here. It's a problem that we're creating and we're maintaining.
But the conference was not even reported.
Then come the data. These are World Bank figures. The data
roughly are the following: in the 1970s the Latin American debt
was about $60 billion. By 1980 it had reached $200 billion. That's
the result of very explicit World Bank and International Monetary
Fund (IMF) policies that were urging banks to make huge loans
and urging countries to accept those loans. Their economic theories
ensured everyone that that was going to work great.
Those recommendations continued virtually right up to the
day on which Mexico defaulted and the Latin American system collapsed.
Up till then there was strong advice from the World Bank and the
IMF to continue pouring in the loans. By 1990 the debt had gone
from $200 billion to about $433 billion; by the end of 1999 it
was expected to be about $700 billion. Meanwhile, from 1982 to
1996, about $740 billion has been sent back to the Northern banks
and the international financial institutions in debt payment.
In 1999, debt service alone amounted to about $120 billion. Just
take a look at these numbers. It's clear that the debt will never
be paid. It's impossible to pay. It's getting bigger and bigger,
it's more and more of a capital drain from the poor to the rich,
and that will continue and escalate without any change.
I'll give a final example, from the Wall Street Journal, a
very enlightening front-page article. It's about Mexico since
the North American Free Trade Agreement (NAFTA). NAFTA came along,
and then the 1994 debacle occurred, when the Mexican economy went
into a tailspin. The article starts out conventionally, reporting
that since NAFTA, Mexico has been an economic miracle. It "enjoys
a stellar reputation." It's a model that should be followed
by other countries. The reason is that Mexico is following all
the rules, doing just what the IMF tells it- meaning just what
the US tells it, because the US decides what the IMF tells it.
It's following all the rules, the macroeconomic statistics look
great, foreign investors and wealthy Mexicans are prospering,
everything is just perfect.
But. To the credit of the Wall Street Journal, it points out
that there's a "but." Mexico has "a stellar reputation,"
and it's an economic miracle, but the population is being devastated.
There's been a 40 percent drop in purchasing power since 1994.
The poverty rate is going up and is in fact rising fast. The economic
miracle wiped out, they say, a generation of progress; most Mexicans
are poorer than their parents. Other sources reveal that agriculture
is being wiped out by US-subsidized agricultural imports, manufacturing
jobs have actually declined, manufacturing wages have declined
about 20 percent, general wages even more. In fact, NAFTA is a
remarkable success: it's the first trade agreement in history
that's succeeded in harming the populations of all three countries
involved. That's quite an achievement.
The point of NAFTA was to lock in the so-called reforms by
treaty, so that even if there is a democracy opening-that hated
danger-they won't be able to do much about it, because they're
locked into these arrangements.
***
Jubilee 2000
p101
The Latin American debt that reached crisis levels from 1982 would
| have been sharply reduced-in some cases, overcome-by return
of flight capital, though all figures are dubious for these secret
and often illegal operations. According to Karin Lissakers, currently
US executive director of the IMF, "bankers contend that there
would be no [debt] crisis if flight capital-the money the citizens
of the borrowing countries sent abroad for investment and safekeeping-were
available for debt payments," although "these same bankers
are active promoters of flight capital." The World Bank estimated
that Venezuela's flight capital exceeded its foreign debt by some
40 percent by 1987. In 1980-82, capital flight reached 70 percent
of borrowing for eight leading debtors, Business Week estimated.
That is a regular pre-collapse phenomenon, as again in Mexico
in 1994. The 1998 IMF "rescue package" for Indonesia
approximated the estimated wealth of the Suharto family. One Indonesian
economist estimates that 95 percent of the foreign debt of some
$80 billion is owed by 50 individuals, not the 200 million who
suffer the costs in the "Stalinist state set on top of Dodge
City," as Asia scholar Richard Robison describes Indonesia.
The debt of the 41 highly indebted poor countries is on the
order of the bailout of the US Savings & Loan institutions
in the past few years, one of many cases of socialization of risk
and cost that was accelerated by Reaganite "conservatives"
along with increase of debt and government spending (relative
to GDP). Foreign-held wealth of Latin Americans is perhaps 25
percent higher than the S&L bailout, close to $250 billion
by 1990.
The picture generalizes, and breaks little new ground. A study
of the global economy points out that "defaults on foreign
bonds by US railroads in the 1890s were on the same scale as current
developing country debt problems." Britain, France, and Italy
defaulted on US debts in the 1930s. After World War II, there
was reported to be heavy flow of capital from Europe to the United
States. Cooperative controls could have kept the funds at home
for post-war reconstruction, but, some analysts allege, policymakers
preferred to have wealthy Europeans send their capital to New
York banks, with the costs of reconstruction transferred to US
taxpayers. The Marshall Plan approximately covered the "mass
movements of nervous flight capital" that leading economists
had predicted.
There are other relevant precedents. When the US took over
Cuba 100 years ago it canceled Cuba's debt to Spain on the grounds
that the burden was "imposed upon the people of Cuba without
their consent and by force of arms." Such debts were later
called "odious debt" by legal scholarship, "not
an obligation for the nation," but the "debt of the
power that has incurred it," while the creditors who "have
committed a hostile act with regard to the people" can expect
no payment from the victims. Rejecting a British challenge to
Costa Rican debt cancellation, the arbitrator-US Supreme Court
Chief Justice William Howard Taft-concluded that the bank lent
the money for no "legitimate use," so its claim for
payment "must fail." The logic extends readily to much
of today's debt: "odious debt" with no legal or moral
standing, imposed upon people without their consent, often serving
to repress them and enrich their masters. The principle of odious
debt, "if applied today would wipe out a substantial portion
of the Third World's indebtedness," Lissakers comments.
In some cases, there are solutions to the debt crisis that
are even simpler and more conservative than the unthinkable capitalist
idea or the US government's principle of odious debt. Central
America is suffering severely from the debt crisis. The highest
per capita debt in the region is Nicaragua's, currently $6.4 billion
and clearly unpayable. The human costs of the IMF programs designed
to ensure that lenders are compensated many times over are incalculable.
About $1.5 billion is from the Somoza years, hence clearly "odious
debt," of no standing. Another $3 billion is from the post-1990
period when the US regained control over Nicaragua; also odious
debt. The remainder is the direct responsibility of the United
States, which was conducting brutal economic warfare and a murderous
terrorist war against Nicaragua, for which it was condemned by
the World Court, which ordered the US to pay reparations, variously
estimated in the range of $ 17 billion. Accordingly, the highly
conservative principle of adhering to international law, as determined
by the highest international judicial body, would suffice to eliminate
Nicaragua's debt, with a good deal left over. Were elementary
moral principles even to be imaginable in elite Western culture,
similar conclusions would at once be drawn far more broadly throughout
Europe and the US, even without World Court judgments. But that
day remains very distant
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