Coping with Crisis, Latin America Seeks New Paths

As the U.S. economy tumbles into greater depths of disaster and ignominy—dragging the rest of the world with it—countries in Latin America have decided it’s time to strike out on their own.

At a Nov. 26 meeting in Caracas, barely mentioned in the U.S. press, the nations that make up Alba (the Bolivarian Alternative for the Americas) agreed to form a regional monetary zone. The idea is to immediately create a new accounting unit to be called the “sucre” (standing for Unitary System of Regional Compensation and also the name of a historical figure) and move toward adopting it as the legal tender. The financial ministers of the six Alba countries (Bolivia, Honduras, Nicaragua, the Dominican Republic, Venezuela, Cuba, with Ecuador) subsequently met to begin the technical studies required to carry out the measure.

Venezuela’s finance minister, Ali Rodríguez, stated to the press, “When there’s a crisis that has among its factors the weakness of the dollar—profoundly affected by extremely high levels of speculation—that means that other regions must seek their own solutions, and that’s what is happening.”

While proposals from Venezuela to reduce U.S. influence in the region are nothing new, the other countries at the meeting showed equal enthusiasm for paths that would enable them to escape the shadow of the now not-so-mighty dollar.

Honduran economic minister Pedro Paez affirmed “At a time when the international financial crisis creates a horizon of compression of traditional markets, we are creating new markets to guarantee the adequate flow of resources and defend employment in our countries.”

Rafael Correa, president of Ecuador which is an “observer” to Alba, excoriated the dollar system. “Imperialism of the XXI century is no longer boots, no longer planes, no longer aircraft carriers, ships, or cannons. It’s called ‘dollars’, that’s how they seek to dominate us, and we’ve had enough of these pressures.” Ecuador switched to the dollar in 2000 (last time I was there you bought your sancochos with Sacajawea dollars, which solves the mystery of whatever happened to the second failed attempt to circulate a woman’s image on U.S. currency).

Other proposals to come out of the meeting include decreasing reliance on the International Monetary Fund and other U.S.-dominated international finance institutions (IFIs). The Group of 20 wealthy nations and President Bush have urged using these to bail out developing economies hard-hit by the same policies they promote.

“We’re not going to wait here with our arms crossed for the World Bank or the International Monetary Fund to come and solve the problems that this great threat unleashed on the world,” Chavez said at the Alba summit in Caracas. Although Chavez stopped short of calling for withdrawal from the IMF, both the IMF and the Inter-American Development Bank came under fire for placing political conditions on loans that limit countries’ political options in dealing with the impact of the crisis.

Chavez also criticized the Andean Development Corporation, a regional bank made up of governments and private banks, for operating along the same lines. Chavez proposed strengthening the role of the Bank of the South, and pledged $500 million of Venezuelan funds to establish a regional “common monetary fund” for the region and asked other countries to commit portions of their reserves to back up economies in crisis.

Correa slammed “certain international bureaucracies” in reference to the IFIs and their legal apparatus. He was quoted in the Ecuadorean newspaper El Telegrafo saying, “As usual, they are accomplices to the lenders and exploiters of our country, but they will find a new Latin America, one full of dignity, that will know how to respond in case they try to blackmail us.” Ecuador recently completed an audit of its foreign debt that shows that a large part of the debt was contracted illegally and under unfair terms. At the Alba meeting he got the support of the other six nations to face down the global financial system regarding payment of the illegitimate debt.

It’s true that experience shows that real results in building Latin American regional integration fall far short of the pronouncements. But the recent flurry of diplomatic activity—to be followed up by more meetings and a summit on Dec. 17 in Brazil—has an unprecedented urgency now: the result of not acting could be chaos.

The World Bank’s “optimistic” estimate is for about 2% average growth in the region, while other estimates predict a slight contraction. This compares to an average 5% growth a year over the past five years. In countries where so many people live on the edge, a few points uptick in inflation or a couple of percentage points drop in GDP affects survival. This isn’t a game of statistics.

The macroeconomic statistics, gloomy as they are, don’t even show the worst of it. In the most unequal region of the world, some will suffer more than others—and some will make money off disaster hand-over-fist. Although a few major companies are taking mega-losses, it’s the poor who feel the pain. In Mexico, the average real wage fell again, as inflation ate up the tiny nominal rise. Currency devaluation has pummeled consumers reliant on U.S. imports, and over a quarter of a million jobs were lost in the third quarter. Central American countries are suffering a drop in remittances from family members working in the United States, strangling the many small businesses and family economies that depend on that money. Inter-American Development Bank analyst Santiago Levy says employment will come to a standstill in the region in 2009, announcing plans to divert $6 billion of Bank funds to address the crisis.

The international financial institutions are salivating at the prospect of lending massive amounts of money to rescue Latin American countries and restore indebtedness in the region. Many countries, sick of the neoliberal conditions placed on loans, have turned their backs on the IFIs in recent years and their portfolios were seriously dwindling. Crisis means new clients—unless the Alba plan and others like it take off.

No-one knows how far this declaration of independence from U.S. financial hegemony will ultimately reach. Or even what “independence” looks like, beyond cutting ties to the dollar system. The Alba group promotes a trade model called the Trade Agreement of the Peoples as an alternative to U.S. Free Trade Agreements. While the Central American members have the Central American Free Trade Agreement (CAFTA) with the United States, the other members have refused to sign FTAs.

The prospect of a unified Latin America that could finally stand up, not only to the U.S., but to the global financial system is not on the near horizon.

Once again, though, a refreshing wind from the south has blown the dust off the conventional “wisdom” of the system. For people in the United States who want to see the crisis open up real avenues for change, building alliances to help our southern neighbors build alternatives makes a lot of sense.

Related Americas Program Articles:

G7 Plus G20 Equals the Rocky Road to Recovery?

http://americas.irc-online.org/am/5732

The WTO and Other Trade Tales

http://americas.irc-online.org/am/5714

Pictures from the Americas Social Forum in Guatemala

Join us at the Americas Social Forum in Guatemala

Three events in Guatemala City this week at the FSA:

If you can be in Guatemala for the Americas Social Forum (www.fsaguatemala.org) please come see our events, and pass along the information to friends/colleagues that might be in Guatemala for the Forum.

Plan Mexico/Merida Initiative

Oct. 9, 2-5pm, Auditorio EFEPM

Hungry for Justice: The Food Crisis

Oct. 10, 9-11am, S10-201

Remapping Latin America's Future

Oct. 10, 11-1, S10-201

Recent related materials from the Americas Program:

Resources on Plan Mexico

Re-mapping Latin America's Future

Hungry for Justice: How the World Food System Fails the Poor

Hundreds Gather to Confront Militarization of the Americas

It rains--A LOT--in La Esperanza, Honduras. Over the past weeks the rains have wiped out crops, rural roads and the little that campesinos here have to live on.

But even as the streets become giant puddles and mud holes, and the rivers plan their assault on the fields, the name of the town still translates as "hope".

That at times absurd persistence also characterizes the struggle of the over 700 people from organizations across the hemisphere, gathered in the Second Hemispheric Meeting against Militarization. Absurd, because in just the first few hours of presentations, we already had a vision of a hemisphere under attack. Persistent because despite the threats and hardships, people showed up from all over to find ways to stop militarization and instead of being discouraged by the magnitude of the challenges found real ways to move forward by sharing ideas and cultures, problems and solutions.

To understand the conference, it's important to have a working definition of militarization. To conceive of it as merely the presence of armed forces is insufficient. In Colombia and Chiapas, for example, paramilitary forces constitute a major threat. In many parts of the hemisphere police forces are being used as the shock forces to put down social protest--enforcing plans to wrest control of natural resources from rural communities and create a climate of fear in the cities. Under today's model, the U.S. government, whose overt military interventions are still fresh in the memory of many participants here, can now occupy a nation without being present by training subordinated national armies to their ends and controlling the defense and intelligence infrastructure.

In a major advance, participants mainly from grassroots indigenous, peasant and workers' organizations also analyzed how militarization stems from a mentality, the same mentality of the patriarchy that perpetuates violence against women. Not only by armed forces that see women's bodies as the spoils of war, but also in the household and the streets. Militarization could not flourish if it weren't for this mentality, along with colonial forms of education that feed racism and discrimination.

They also discussed how the justice system plays a dual role. Throughout Latin America, "sons of the Patriot Act" have been born and adopted into national legislation at the express urging of the U.S. government and international finance institutions. These anti-terrorist laws--of no real value in fighting global terrorism--have already been applied to social protest in El Salvador, Nicaragua and Mexico. While new laws criminalize dissidence, on the other side of the dysfunctional justice system lies the impunity granted security forces that have committed all sorts of crimes against their own people, including rape, assassination, assault and torture.

The men and women of the Anti-Militarization Meeting know they are swimming counter-current, in the context of policies such as Plan Mexico and the Merida Initiative, and megaprojects that bring "development" backed up by machine guns. No matter. To get beyond what might seem like a romanticized view of resistance, what I should do is recount the day to day work of the individuals and organizations here. That's probably not possible, so just imagine what happens when you merge the knowledge and commitment of nearly a thousand people from across the continent in defense of their land, their lives and their communities against military domination. Even after the grim recitation of woes, it's enough to inspire action and, yes, joy (pictures of dancing and discussing, along with more details on the meeting, to come soon.)

Chronicles from the Drug War #1: Who are the good guys?

It's confusing trying to keep track of the good guys and the bad guys in Mexico's all-out war against organized crime these days. Consider two news stories from the past few days alone:

1. Lorena González Hernández was arrested on Monday in relation to the kidnapping and murder of Fernando Martí, the 14 year old son of the founder of a chain of sports stores. So who is Lorena González? According to press reports and government statements, she's a federal police officer, working in--you guessed it--the kidnappings department. Not only that, she worked for years in the Federal Intelligence Agency (AFI) as an Interpol agent.

Who better than an insider to design a bust-proof operation?

Unfortunately, we're not talking about a Scorcese film here. The case has shaken the entire country due to its brutality(the boy's decomposing body was found in the trunk of a car weeks after the ransom was paid). Gonzalez's family members deny the charges and contradictions have emerged in government statements. But "Comandante Lore" is implicated as the person who stopped the Martí family car at a false police checkpoint, capturing Fernando, the driver (also murdered) and the bodyguard on July 4.

2. A shoot-out between federal police and army, and local police in Torreón Monday left several dead. But aren´t the police supposed to be fighting the bad guys and not each other? National newspapers report that allegedly a number of police officers on the Torreón payroll moonlighted as protection for the Gulf Cartel. The shoot-out began when federal forces set up a roadblock and captured presumed drug traffickers along with several police officers. Other municipal agents then attempted to free their partners and the shoot-out ensued. Over 30 local officers are under arrest.

These news stories are nothing new here in Mexico. What's important about them is the conclusions we draw. They leave little doubt that Mexican police forces on all levels--local, state and federal--are a rat's nest of corruption. Nobody denies that. And yet a truly thorough and committed effort to change the structure of the organizations has not even been designed. Instead these forces will received huge amounts of money from the Mexican and U.S. governments, as well as training that will no doubt be useful when they cross over.

When the lines between the good guys and the bad guys are as blurred as they are in the Mexican drug war, it's important to proceed with caution and an integral, long-term plan. This does not exist--not in the Merida Initiative or in the Mexican government's many rhetorical declarations of force. The Mexican budget includes an increase in the security budget of over 30%, mostly to confront traffickers while leaving many of the root causes of the violence untouched. Pouring weaponry and resources on the problem may only blur the lines further and accelerate the violence.

The Speech

One thing is clear: after the 2008 convention, the Democratic Party is not the same. It’s not just that Barack Obama accepted the nomination of his party as the first African-American candidate of a major party and a former community organizer, and offered a new course for a country that had reached broad consensus that the current path under Republican administrations is a dead-end. It was the speech itself and the energy it generated that changed the U.S. political scene.

When Barack Obama took the stage before some 80,000 enthusiastic supporters, he delivered the speech of his campaign and the speech of a generation. Whether you agree with all his positions or not, the August 28 speech was impressive--for its political acumen, the masterly delivery and the response of the crowd.

This convention was billed as an “open convention.” This meant that instead of accepting the nomination in the Pepsi Center where entry was restricted to some 20,000 delegates, press and donors, it was taken outside to Mile-High Stadium where capacity was quadrupled to permit entry of campaign workers from throughout the state of Colorado, representatives of unions and organizations, and supporters who just wanted to be a part of it all.
Like any good organizer, Obama did not stand up to say ‘I will lead this nation into a new era.’ He stood up to say we will change this country.

“Across America something is stirring. What the naysayers don’t understand is that this election has never been about me--it’s about you.”

The Obama team underlined the collective nature of the challenge by presenting short speeches by average citizens carefully selected to make a plea to critical sectors of the population, coordinating on the spot over 30,000 text messages in support of the candidate from the stadium and viewers, and announcing the launch of a massive voter registration drive.
Before the speech, analysts speculated on the content. Would it seek to assuage the doubts of independent voters about his abilities or consolidate the support of democratic stalwarts? Would it be lofty rhetoric or detailed policy positions? Would it be the firebrand or the family man?

Surprisingly, it was all of the above.

Much of the personal part of making the candidate someone millions could identify with was left to the short video before his appearance. The carefully crafted message was that although he wasn’t typical (race being, as usual, an implicit sub-text) his was a uniquely American story—that with hard work, commitment, family support and a vision anyone can make it.
Obama touched briefly on the personal then launched into a hard-hitting attack on John McCain and the Bush administration for abandoning the poor and middle class. The ground had been prepared by the many “ordinary people” speeches, many of them extraordinarily effective (Barney Smith, a displaced factory worker, got the line of the night with “We need a president who puts Barney Smith before Smith Barney”)

There was no reaching across the aisle here—in fact, if anything Obama widened the aisle by emphasizing that McCain had voted with Bush 90% of the time, plans a continuation of failed economic policies and in foreign policy “has squandered the legacy that generations of Americans, democrats and republicans, have built…” Instead, many of the speeches of the night were from former Republicans crossing over.

The attacks on McCain were tough. Saying “John McCain doesn’t get it”, Obama ripped into the Republican candidate, citing his gaffes regarding the number of houses he owns and similar statements to show a man out of touch with middle class America.
In foreign policy, he called for withdrawal from Iraq, direct diplomacy in Iran, new partnerships, and restoring the U.S. government’s moral standing. Some of the ideas are vague but they’re big ideas, in the context of the smallness of mind that characterizes current foreign policy.

I’ve been criticized by progressives since writing about my guarded optimism on Obama’s Latin America policy (pretty much absent during the convention except for a commitment to pay more attention to the region in Spanish from Bill Richardson). Most comments note the areas where Obama diverges from the positions many of us hold, especially on security policy, and accuse me of a lack of realism.

But after this speech, I’m more convinced than ever that we have something to work with here. It’s even a little beyond the lesser of two evils. Obama’s discourse and organizing style—very successfully reflected in the convention—has brought up issues in the mainstream that many of us thought lost during the long years of imprisonment in the Washington Consensus and War on Terrorism: trickle-down as a “discredited philosophy”, the relationship between globalization and workers’ rights, the disaster of the Iraq invasion, corporate excesses.

The new consensus being forged on these issues is largely the result of years of work by citizen organizations and the evident failure of the Bush administration. But they are messages taken on eloquently by the candidate and echoed, finally, in the mainstream media as a result.

The Democratic Party changed perceptibly Thursday night. The party leadership was outflanked from above and below. From above, by a candidate who has certainly not broken with party positions but who has pushed further than most on issues of trade and displacement, corporate power and influence, and social programs for the poor. From below, by a base that has been mobilized to take the initiative in this campaign—through fresh faces in the ranks, grassroots funding, community organizers on the ground where traditionally party officials ran the show, and a level of involvement both physical and emotional that was evident in Denver last week.

We can’t know what policies will actually come out of it. But the second major impact of Barack Obama’s candidacy is the re-enfranchisement of important segments of the U.S. population, especially groups that had been excluded or ignored. This “something is stirring in America” may sound a little corny but even hardened political announcers found the energy in Mile-High Stadium after the speech contagious, and the thousands of campaign workers will go home with more than souvenirs.

If you believe that a new foreign policy must be built from the bottom up, like all change, that can only be a good sign.

Mending Party Rifts

Last night I was one of the last people to find a seat in the Pepsi Center before the fire marshals closed the doors at full capacity. From the nose-bleed section, we had a bird’s-eye view of the sea of signs and bodies that filled the stadium.

Although most of the people, like me, were there to see if the party would achieve the closure it needed after the bitter primaries, the drama temporarily took a backseat for a surprisingly invigorating speech by Montana Governor Brian Schweitzer. With an Everyman charm, Schweitzer took on the issues and slammed the Republican leadership to the choreography of dancing red “McCain—the same” signs.

Hillary Clinton’s appearance began with a video tribute to her life, focusing on biographical trivia, her long battle for healthcare and the “18 million cracks in the glass ceiling” (in reference to the number of primary votes she won)—a phrase echoed by Michelle Obama in her speech the night before.

There was very little ambiguity in Clinton’s speech. She recounted moments from her campaign and stated, “I ran to stand up for all those who have been invisible to this government… and they are the reason I support Barack Obama.” She scoffed at the Bush-McCain duo soon to meet in the “Twin Cities” (“it makes perfect sense”).

On the anniversary of women’s suffrage, she recounted the struggles of Harriet Tubman and Seneca Falls, dear to the hearts of her feminist followers. And just as we began to wonder if the exhortations to “keep on” didn’t have a sub-text ("we’re not big on quitting,” she said in an under-statement), she quickly turned it around to a plea to support Barack Obama.

Having successfully navigated the Hillary moment with a clear message of unity, the next telling moment came at today’s roll-call vote. Earlier in the day, Hillary Clinton “released her delegates” without telling them what to do with their votes. Many of the delegates from states where Clinton won the primary cast their votes for Obama. As the vote made its way down the alphabet, and Obama racked up votes, hundreds of Clinton delegates cast their votes for Obama, with several states like Arkansas, New Jersey and New Hampshire casting a unanimous group vote for Obama.

So then New Mexico yields in florid terms to Illinois, Illinois yields to New York and Hillary Clinton files onto the floor to suspend the roll call vote and nominate Barack Obama as the Democratic candidate.

The whole process seemed a little contrived to me, but I’m not much on rituals of power.

Anyway, it worked—Clinton was poised and dignified, the delegates accepted the measure to much acclaim, and everybody danced to “Love Train” in the aisles. Of course, all the states with the misfortune of beginning with letters after “n” missed their moment in the limelight and had to pocket their speeches about the beauty and benevolence of their states. But, hey, unity requires sacrifice.

The final important step on the road to post-primary unity was Bill Clinton’s speech tonight. The media reported some jostling between the Clinton and Obama camps on that one, with Clinton reportedly asked to pave the path for Obama’s debut as the unity candidate, and Clinton insisting on a forum to extol some of the accomplishments of his presidency.

President Clinton had one thing he HAD to say: Barack Obama is ready to be president. He said it, textually. He then went on to talk about what the United States should be, restoring work with international institutions and using diplomacy first and military force as a last resort, on this, the foreign policy night. “People abroad are always more impressed by the power of our example than by the example of our power.”

The former president made a strong case for Obama, endorsing his qualifications directly in a way his wife avoided. The rest of the evening consolidated the critique of the Bush administration and McCain’s candidacy, adding praise of the Obama candidacy. John Kerry compared the Obama/Biden platform to McCain’s positions with the rhetorical statement “Who can we trust to keep America safe?” Biden followed up, Obama took the stage in an unannounced appearance to cement the fact that it was his party, and some of the citizen participants made really remarkable contributions.

So the Democratic Party now has closure. But closure is an opening. The scripted opening is the path cleared for Barack Obama’s general elections campaign—the bottom line for the Party convention. That was a foregone conclusion but required careful packaging to begin to draw in sectors of the population that weren’t among the hardcore democrats on the floor of the Pepsi Center.

But the real opening is to give content and commitment to all the words heard here. Nobody expects the politicking to end here—in fact in many ways it’s just getting started. But what a united party now has to tell voters what it’s united behind, and how that differs substantially from the Republicans, to meet next week in their own convention.