Is this the end of the progressive cycle in Latin America?


IntroductionRecently the Pink Tide has declined and the political right has returned to power in Latin America. Starting with the election of Hugo Chavez elected as president of Venezuela in 1998, the new tide against global neoliberalism began as center left administrations took power in Brazil, Argentina, and Uruguay and Rafael Correa in Ecuador and Evo Morales in Bolivia became presidents with support from the people’s movement.

When the financial crisis hit the US in 2008, left governments in Latin America showed flexible economic recovery. However, as Venezuelan president Hugo Chavez died in 2013, the progressive movement in Latin America faced its own crisis.

During the April 2013 elections, Nicolas Maduro (who had been handpicked by Chavez as his successor) defeated Henrique Capriles from the Democratic Republican Union (URD), a party formed by alliance of the right opposition, by just 1.5%. It revealed that the hegemony of the Bolivarian Revolution had eroded.

The opposition in Venezuela has been constantly trying to regain  power by waging violent protests and economic war. During the presidential election in Brazil, then-president Dilma Rousseff also narrowly won over a right candidate. However, she has since been impeached thanks to the attacks by right forces led by  her former coalition partner.

The crisis of the ruling left in Latin America is on the rise as Argentinian presidential candidate Daniel Scioli, successor of Cristina Fernandez, lost to a right candidate, Mauricio Macri, in a runoff election in November 2015. Upon coming into power, the Macri administration has withdrawn social policies implemented under Nestor Kirchner and Cristina Fernandez administrations for 12 years. It has also oppressed the labor movement and withdrawn Argentina’s participation in regional integration of Latin America.

Rafael Correa in Ecuador also went through a failed coup attempt by the right. Therefore its previous progressive policies are retreating and transnational corporations stepping into resource development. Evo Morales in Bolivia attempted to revise the constitution to extend his term, but lost the referendum.

The series of incidents definitely show that the ruling left is declining in Latin America. Either the left government lost its executive power or its legislative one to the right. Even if a left government remains its power, it will be different from the bold executive that enacted progressive plans and will be forced to compromise and selectively adopt neoliberalist policies.

I am interested in clarifying the causes of the crisis that the left governments face in Latin America and examining critically whether the crisis will lead to the termination of progressive cycle and return of the neoliberal and imperialist right. Prior to the examination, it should be noted that the Pink Tide is not one homogenous flow. Of course, mass struggles arose as a backlash against the neoliberal restructuring imposed upon people in Latin America. It is common that the mass struggle enabled progressive forces to take power. In Venezuela, Bolivia, and Ecuador, mass struggles achieved a revision of the constitution enabling fundamental reform of the political system. So fundamental changes took place in the reconstruction of civil society, human rights, the redefinition of democracy, resource nationalism, and popular distribution of the natural resources rent. In Brazil, Argentina, and Uruguay, however, the governments adopted heterodox economic policy – neoliberalism, developmentalism, lowering poverty and expanding demand through a big government and extended welfare funds in order to breakthrough the crisis caused by neoliberalism without a fundamental transformation of existing economic policies. In Uruguay, where there is small population and where latifundism or financial forces are traditionally weak, the heterodox economic policies were successful to a certain extent enabling left coalition parties to transition power from one progressive president - Tabare Vazquez to another progressive one - Jose Mujica. In the case of Argentina and Brazil, they could change neither the way their economies were incorporated into the world market nor their existing income distribution. Consequently, the changes in world market’s condition directly led to their political crises.

An Evaluation of the “Progressive Cycle” Period Socio-economic contradictions imposed by the US on each country led to the explosion of the progressive cycle in Latin America. During the progressive cycle period started by the Bolivarian Revolution in Venezuela, the class, political, and ideological landscape changed fundamentally in Latin America. In the countries where neoliberal economic policies had been imposed,  not only had the income gap been extended but the public sector had also been reduced, inflation worsened and manufacturing competitiveness was lost. Also, the resistance movement was heightened by national capitalists who operated local companies, and people and academics who were impoverished by the exploitation of natural resources by transnational capital.

Referred to as the Caracazo, the first uprising that opened this new period took place in 1992 in Venezuela. Many lost their lives in the uprising. This was followed by a workers and citizens’ uprising in 2001 in Argentina protesting neoliberal restructuring, unemployment, and poverty. In Bolivia, there was the Cochabamba struggle and the coca farmers’ uprising. These situations were also repeated in Ecuador. In Brazil, the corrupt Fernando Collor administration collapsed and the social democratic Fernando Henrique Cardoso administration took power. Cardoso prioritized an economic policy that addressed inflation, a chronic problem in Brazil. In order to solve it, he implemented austerity measures and a reduction in public expenditure. As a result, inflation was under control but its manufacturing sector took a heavy blow.

It was amidst this situation that Luiz Inácio Lula da Silva took power after abandoning combative policies against neoliberalism and compromising with reality.

Lula administration did not promote strong income distribution but strengthened government control over public companies such as Petrobras and implemented conditional aid to low income sector such as Bolsa Familia.

The situation is not that different in Argentina. President Kirchner tried to recover Argentina’s industrial competitiveness by abolishing the one-to-one exchange policy between the peso and dollar – implemented by recommendation of the U.S. and inducing devaluation of pesos. Then, they succeeded to get a 70 percent of reduction in their debt repayment by negotiating an adjustment of the debt with international creditors. Yet, both Brazil and Argentina could not implement any restructuring that cut into the profits of the strong agricultural bourgeois.

The Chavez administration in Venezuela strengthened its control over its national oil company and used a big amount of its revenue into social programs. Then, a sharp political struggle took place against the oligarchy. After the failed 2002 coup, factories were abandoned by those that participated in the coup. In response, the Chavez administration allowed workers to occupy the abandoned factories.  Thus, the Chavez administration implemented policies that build the social economy and induced a sharp class struggle against the oligarchy who tried to keep their privilege.

In the case of Ecuador’s Correa administration and Bolivia’s Morales administration, they used the rhetoric of 21st century socialism, but there is evidence that they adopted East Asia’s developmental system. The key to developmentalism is fostering the manufacturing industry to improve trade conditions against the neoliberal trade system.

However, in Ecuador and Bolivia, they did not implement the East Asian regional division system that can accelerate technological development, domestic markets and regional industrialization.

On the other hand, Latin American countries have oil, natural gas and minerals (Brazil and Argentina) with vast agricultural surpluses. Therefore, they can accumulate foreign exchange by exporting raw materials.

Entering the 21st century, theses countries have been strengthening their ties with China in order to escape subordination by U.S hegemony. As China has developed rapidly, they need enormous oil, minerals and agricultural produce. Latin American countries have met this natural resource need and earned large amounts of foreign currency. At the surface level, this relationship seemed to fit with the multi-polarization of the international order pursued by the Chavez administration.

However, as regards trade relations with China, Latin American progressive governments could not act strategically as one regional block. Regional institutions such as ALBA, UNASUR, MERCOSUR, and CELAC had difficulty achieving the Latin America integration emphasized by Chavez in his Bolivarianism. Despite the somewhat successful integration among the left governments, economic integration had rarely been achieved. South American bank and currency integration, which were included in the Chavez’s grand plan, stalled due to Brazil’s rejection.

Eventually, the progressive governments in Latin America expanded trade with China in order to get out of the political-economic relationship with the U.S but could not implement the concrete moves for independent industrialization needed for social progress. An energy loop for Latin America was not achieved and integrating institution for developing scientific technology was not established.

As China’s economic growth declined, which had kept increasing despite the world economic recession, the raw materials export boom that had lifted up the Latin American economy received a heavy blow. To overcome this economic recession, each country focused on expanding their goods market through competition rather than on industrial diversification and regional economic integration. As a result, they compromised with transnational corporations and financial capital fleeing the nationalist economic policies of Brazil, Argentina, and Ecuador. For example, Scioli, a presidential candidate of Argentina’s progressive ruling party publicly promised a debt renegotiation for the payment on the principal and interest at far more disadvantageous conditions than previously negotiated. The debt was owned by vulture capital and had caused economic tragedy in Argentina. Also the progressive Worker’s Party in Brazil attempted a kind of austerity measure to deal with their low levels of foreign currency. This was a retreat from the various achievements against neoliberalism. After reelecttion, Rousseff betrayed her traditional support base of workers and the poor by appointing a radical right wing economic scholar as finance minister.

The Correa administration adopted a traditional developmental line such as strengthening progressive taxes, promoting domestic demand, and protecting domestic capital claiming 21st century socialism. As the economic recession continued and oil prices dropped, the government concentrated on promoting export and free trade agreements with the EU.

US intervention and a return of the right As I have mentioned, the Pink Tide in Latin America arose and expanded as a backlash against the social contradictions caused by neoliberal restructuring. The tide derailed the establishment of the Free Trade Area of the Americas proposed by President George W. Bush and enhanced each country’s developmental strategies. In the process, US influence over the region decreased, neoliberal restructuring stopped or weakened, and resource nationalism strengthened. Latin America was once called the backyard of the U.S. but now the US refrained from public military intervention like they had in Cuba, Nicaragua, Panama, and Granada. Partly, this was to the US focusing its energy and attention in intervening in the Middle East and Pacific region. Also it became more difficult to intervene in Latin America due to the changed political landscape. Nonetheless, the US has been continuing its destabilizing operations through various non-government organizations and intelligence agencies in countries where anti-imperialist and nationalist left forces took power.

Post-neoliberalism tends to be very fluid. Argentina and Brazil have the softest post-neoliberalism. In Brazil, the Lula administration accepted part of the neoliberalist economic measures through pension reform and maintained its power through coalition with large agricultural corporations and capitalist groups. In Argentina, although vast agricultural profit were secured under the Kirchner administration with the continuing global market boom, the profits were not strategically rechanneled to grow the manufacturing sector but accumulated in the hands of agricultural capitalists and then were transferred abroad.

During the Argentinazo, workers occupied factories and workplaces and established a number of worker-run companies. However, the Kirchner administration’s unfavorable attitude towards them resulted in only a few of them being acknowledged as legal cooperatives.

In Bolivia, the government promoted transnational corporations’ investment under the mantle of developing the extraction industry. In the process, many incidents of unjust violation of indigenous community’s rights were not properly addressed.

Among the post neoliberalist systems, only Venezuela has a close connection between governmental power and people’s movement and attempts to implement strategic plans toward socialism.

As a result, fierce class struggle occurred between the old oligarchy and Chavistas. While oil prices remained high, the government was able to pour dollars to defend the exchange rate but as foreign currency reserves were depleted the government attempted to control the exchange rate. Consequently, the exchange rate in the black market soared and inflation got out of control.

After Chavez’s death, the right used this situation to wage street violence, economic war and media war with attacks on human right by US backed NGOs. Also the right achieved a landslide victory in the 2015 general election and is currently organizing a recall election of President Maduro in order to accelerate their system change.

As the economic situation worsened in Ecuador, Correa exhibited a tendency to return to neoliberalism such as by signing an FTA with the EU. Also, he announced that he would not run for president again as his approval ratings had dropped.

The recent left governments’ crisis and the right forces’ return to power were possible because the former’s post-neoliberal developmental strategies were very contradictory. Also, class compromise had been possible domestically by the high price of raw materials for the first 10 years in the 21st century. Post-neoliberal countries could use part of the surplus from the export of raw materials to meet the needs of working class through social funds for higher wages without hurting the national capitalists.

With an end of the agricultural sector and extractive industry boom, the condition that enabled the class compromise disappeared. Therefore neoliberal governments tried to solve the financial difficulties by re-adopting neoliberal measures rather than pursuing radical restructuring toward socialism. This caused people’s discontentment and led to electoral defeats. In addition, left forces are left with little choice against the right’s destabilizing strategies.

Prospect In Argentina where the right took power, Macri has nullified the Kirchners’ reforms and regressed to the 1990s. During the first few months after Macri took office, over a hundred thousand workers in the public sector were laid off and wages were cut in numerous companies. In addition, plans to privatize public service and national companies are in progress. In response to these moves, people’s resistance are organized, workers are having general strikes, human right organizations such Mothers of the Plaza de Mayo and civil societies are protesting.

The problem the right now faces is that after taking power from the left by attacking the latter, the right has little prospects to improve the difficult economic situation or seek new developmental strategies.

The situation is not very different in Brazil. Now, after Rousseff was removed from office through impeachment, in fact a coup, will the next president, Temer, be able to manage the economy? Although he is an interim president, he has already implemented a lot of neoliberal policies. They include privatizing Petrobras, strengthening austerity measures, and reconciling with international financial speculation forces.

How will people who turned their back on Rousseff respond to these retreating policies?

The center left project was done by class compromise and by liquidating the worst legacies of past neoliberalist policies but without radical changes to the system. Latin America has arrived to its current situation as the left carried out its historical duty but the right cannot offer an alternative. Therefore it is fluid political situation.

Furthermore, the return of the right power will come with the US influence over Latin America.

However, right forces are divided in both Brazil and Argentina and do not have enough hegemony to dominate the situation.

Considering these facts, the Bolivarian revolutionary movement in Venezuela will influence critical and long term impact on progressive politics in Latin America. Only in Venezuela, people are organized and prepared to defend the achievements of the revolution. If people in Venezuela succeed in defending the achievements, regional integration in Latin America will get a new boost again.

Huh Seok Ryol (Professor, Sociology Department, Chungbuk National University)