by Toni Solo
ZNet, June 7, 2005
Amid the confusing signals streaming out
of events in Latin America recently, arguments around the Central
American Free Trade Agreement juxtapose two opposing motifs. One
follows from the mute recognition by the United States that it
is in decline against its competitors in Asia and against the
European Union. Hence US efforts to pre-empt World Trade Organization
negotiations so as to consolidate corporate control of and access
to Latin America's resources via CAFTA and similar deals before
Latin American countries can consolidate resistance,
The other contrary motif is growing widespread
resistance to CAFTA and similar agreements accompanying increasing
awareness that the bogus "free trade" they represent
is unsustainable. Rejected along with CAFTA is the gangster system
of international corporate welfare economics rigged by the powers
that control the World Bank, the International Monetary Fund and
by local financial enforcers like the Inter-American Development
Bank. Throughout Latin America, the majority of people know very
well that handing over sovereignty within a failed international
economic and financial system operated for the benefit of rapacious
corporations is a bad idea.
Mutiny afoot in the US backyard
As oil prices trend upwards and the US
dollar trends downwards, one country after another seems to be
slipping their neo-colonial traces. A majority of people in Venezuela,
Bolivia and Ecuador now reject corporate welfare economic policies
because they obviously do not meet most people's needs. These
realities mean Janus-faced political leaders like Brazil's President
Da Silva are able to play a kind of teasing peekaboo with the
Bush regime over Washington's continent-wide Free Trade Area of
the Americas initiative and associated attempts to demonize Venezuela's
Energy policy may be the principal factor
influencing perceptions of available options. Throughout the continent,
import-dependent countries have found that the corporate welfare
"free market" model fails to meet national energy needs.
For example, Chile may well strike energy deals with Venezuela
because its neighbours Argentina and Bolivia, carved up by energy
multinationals, cannot guarantee long term supply. (1)
For their part, the international financial
gangsters remain detached from reality. They continue to talk
about "growth" and "privatization" being the
solution to poverty without acknowledging that experience shows
their policies have little to offer. After twenty years of such
abysmal failure few on the receiving end take them seriously.
Nor do the gangsters acknowledge that the experience of countries
like India and China renders their advice redundant for countries
like Venezuela that are not hopelessly locked into their glorified
The resistible rise of Pascal Lamy.
When one looks at the behaviour of the
people concerned it's clear only a concerted hard line against
the international financial and trade goons will protect the majorities
in poorer countries from declining living standards. Pascal "Arturo
Ui" Lamy poses as the poor countries' friend but when it
came to crunch time at the world trade summit in Mexico in 2003,
as George Monbiot writes, "He tried to force through new
rules on investment, competition and procurement, which would
have allowed corporations to dictate terms to the poor world's
governments.....By destroying the talks, Lamy prevented a fairer
trading regime from being introduced. He left the rich countries
free to strike individual treaties with their weaker trading partners."(2)
That is exactly what happened in Latin America, with a cowboy
US administration trying to corral wayward countries so as to
lassoo and mark them with the indelible, neo-colonial "free
For Lamy, former head of France's flagship
bank Credit Lyonnais and who oversaw its privatization, talking
softly while nursing a metaphorical machine-gun-in-the-violin
case is a necessary career skill. His successor Peter "Warlock"
Mandelson, twice slung out of Tony Blair's government for delving
in dark downright deceit, lacks Lamy's finesse. Early in May,
Lamy announced that China would brake its exports by raising tariffs
on its exports of textiles. Despite the apparent win, Mandelson,
addressing the European Parliament, could not resist threatening
China with WTO legal moves. As European Trade Commissioner, Mandelson
plays the role of United States cuckoo in Brussels even more directly
than the rest of Tony Blair's pro-Washington UK ensemble.(3)
By the end of May, China's response to
this gangsterism ("...wouldn't want anything to happen to
those nice textile quotas, would you....?") was to cancel
its domestic tariffs on textile exports. That may be just the
toughness required to see off Lamy-Mandelson style intimidation
and extortion. Inexplicably, developing countries ceded the post
of WTO Director General to Lamy by failing to back the Uruguayan,
Carlos Perez de Castillo. (4) So Europeans now head both the International
Monetary Fund and the World Trade Organization, while the United
States' Paul Wolfowitz heads up the World Bank. The Cosa Nostra
never had it so good.
In Central America the footsoldiers slog
Back in Central America, rich-country-mafia
footsoldiers like Enrique Bolaños in Nicaragua, Tony Sacasa
in El Salvador and Martin Torrijos in Panama are finding the going
heavy. Torrijos is trying to tough out Social Security reform,
raising retirement ages for men and women and increasing qualification
requirements. His reforms have been met by violent riots. In Nicaragua,
Bolaños waited till the Mother's Day holiday to declare
an economic state of emergency so as to bypass the country's legislature
and force through an 11% price rise in electricity prices.
In neighboring El Salvador business leaders
scatch their heads at scraggy growth statistics. The economy grew
under 1.8% in 2004.(5) Within that figure, somewhat better growth
in the agricultural sector at a little over 3% seemed to result
from government credit intitiatives to assist producers of cotton
and basic grains. Whoops! An all too visible hand there saved
the day while the "free market" fumbled.
El Salvador is also finding it hard to
retain maquila businesses that characteristically relocate to
wherever wages are lower, to Nicaragua for example, or to Haiti,
currently being worked over good with help from UN rich country
enforcers. So even using the growth measure in the same self-serving,
almost meaningless way (because it ignores wealth distribution)
that the World Bank and the IMF do, El Salvador, after over twenty
years of their policies, is a basket case - a poor advertisement
for more-of-the-same-but-worse CAFTA.
Energy - let's pin the tail on the burro......
Something all these countries share is
an apparent paralysis in facing up to the growing energy crisis.
No one seems to have worked out what much higher energy prices
should imply in terms of sensible public economic policy. Nicaragua's
case is indicative of the political, economic and social disruption
in store following strict obedience to repeated visits over the
years from IMF heavies
When electricity was privatized in the
late 1990s, Nicaragua followed much the same model as was used
in the UK during the 1980s. Generation was separated from distribution
and a regulatory body was set up to monitor the rules of the game.
A 30 year distribution deal was put out for contract and the killing
was made by Spanish multinational Union Fenosa in 2000. Generation,
(some hydro-electric, some geo-thermal but around 80% diesel fuelled)
was left to five mostly foreign owned companies.
Now Union Fenosa owes hundreds of thousands
of dollars to the generating companies and alleges it can't pay
up unless it is permitted to raise prices by nearly twelve per
cent. So Union Fenosa, with the total monopoly on electricity
distribution and despite raising prices dramatically since the
year 2000, is saying straight out that it can't cut it in the
Nicaraguan energy market. Who was it forced Nicaragua to privatize
its electricity industry? Step forward, Spats and Scarface from
the International Monetary Fund.
If Nicaragua and its neighbours are on
the rack now with oil prices at current levels, how will their
economies cope in a year or two years' time as prices trend persistently
upwards? Combined with a steady fall in the purchasing power of
the dollar, high energy prices mean even bigger deficit problems
for both public sector spending and balance of trade. Further
trade liberalization will not address those problems adequately.
CAFTA is virtually irrelevant in such a context.
A US$0.03 cents rise in bus fares following
a fuel price increase in March led to widespread riots in Nicaragua's
capital Managua. An 11% rise in electricity prices will eat even
deeper into the budgets of families already struggling to cope
with plummeting living standards. Apart from the rise in the monthly
cost of domestic electricity, businesses will inevitably pass
on the price rise in the cost of their goods and service. Social
unrest is guaranteed as the poor majority are squeezed ever harder.
Learning from the gangsters
In politics and economics the United States
government has little to teach the rest of the world except gross
hypocrisy and how not to do things. The Central American countries
do not need yet more domination by tiny plutocrat elites via CAFTA.
They will not accumulate wealth for their peoples by opening up
their economies to even more maquila-style exploitation, export-oriented
agricultural policies that destroy their soils and forests to
fatten off-shore bank accounts or by privatizing water and the
other meagre remains of their public sectors. Nor will investment
rules absurdly favourable to foreign corporations, restrictions
on public procurement policy and the other disadvantageous CAFTA
provisions produce benefits except for the already rich.
Among the prime lessons from the economic
gangster zones of Europe and the United States protecting agriculture
and enforcing preferences and advantages for domestic businesses
stand tall. US and European experience suggest not to privatize
or de-regulate public resources, especially electricity and water.
Instead of CAFTA the Central American countries should have tried
to make trade liberalization of selected sectors a quid pro quo
in exchange for debt cancellation and other concessions. The region
should have acted as a bloc for its peoples rather than each small
country letting itself get bullied individually by the giant United
States enforcement mob. They should have recognised and exploited
the fact that the US needs them so as to present a "free
trade" fait accompli to the rest of Latin America as a precedent
for the FTAA.
Alternatives - looking South
If arguments around CAFTA and its infrastructure
twin Plan Puebla-Panama have demonstrated anything, it is the
pathetic failure of the respective countries' traditional elites
to represent the best interests of their peoples. Central America
will pay dear in decades of prolonged mass poverty and migration
for the folly of allowing greedy US dominated elites to skew trade
perspectives North instead of South and for denying inward integration
focused on people's needs rather than corporate profit.
Venezuela, Cuba and the rest of the Caribbean,
the Andean coutnries and Mercosur offer opportunities and models
that represent beneficial possible alternatives for the countries
of the isthmus to endless neo-colonial dependency on foreign great
powers. The political forces exist in Central America to make
that shift in the region's economic agenda. But it remains an
open question if they are capable of effecting such change.
Billy Wilder as economic guru
Vibrant grass roots opposition to CAFTA
and the imperialist system it represents tends to coalesce around
local problems as they arise, without so far being able to achieve
decisive political change. Existing apparently progressive political
parties often seem both ambivalent about their own policies and
intentions and self-absorbed in their internal feuds. The leadership
of powerful blocs like the Sandinista FSLN in Nicaragua and the
FMLN in El Salvador are busy entrenching their own economic interests.
They need to work out a viable shift South in their perspectives
if they are not to become clients of the IMF and the World Bank
as crass as the national elites they have partially displaced.
With CAFTA, the traditional regional elites
resemble increasingly the self-absorbed bride-hungry millionaire
at the end of Billy Wilder's gangster comedy "Some Like it
Hot" faced with Tony Curtis crying "I'm a man!"
through the make-up as he tears off his wig. By rights, if CAFTA
had a similar comic denouement, the double-talking US imposter
regime would cry "It's true, we're two-bit plutocrat hoodlums!"
The complacent Central American elite know that and have already
replied, "well, nobody's perfect..." as did Wilder's
millionaire. But there's nothing comic about CAFTA. If achieved
it will steer Central America into a social, environmental and
economic dead end for a generation.
toni solo is an activist based in Central
America - contact via www.tonisolo.net
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