Saturday, April 18, 2009

Open Veins of Latin America: The Summit of the Americas

“Open Veins of Latin America” was written by Eduardo Galeano (then a professor at the University of Montevideo) in Uruguay in 1971. This was the book that President Chavez gave Obama during the Summit of the Americas. For promoting left-wing views, the book was banned in Chile, Argentina and Uruguay. The book describes the role played by the United States in fostering the dictatorship regimes in South America: Chile, Brazil and Argentina. Now we know how the United States provided economic and political support to the worst dictatorship period that South American countries experienced between 1970 and 1985. The United States, in different degrees provided political ammunition to justify why ‘left wing’ leaders had to be eliminated and why South American countries should continue to follow the capitalism doctrine. The president of Brazil – Lula – and the president of Chile – Michelle Bachelet – are among those that fought against the so called ‘imperialism’ of the United States.

Obama and Latin America

Obama and his team have a few important positive attitude towards Latin America. However, it is true that the Washington politicians and policy makers have given up on Latin countries and some of the countries in the Latam region display indifference about Washington. Opinion polls show that Latin Americans have an increasingly negative opinion of the United States, coupled with growing doubts about the success of Washington-affiliated political and economic reforms during the 1990s.
The gap between the U.S. and Latin America is partly a reaction by Latin America to the United States’ post 9/11 foreign policy agenda. Latin America was not central to the global war on terrorism. Moreover, China captured the economic imagination of the U.S.
Until this massive bailout (the current global financial crisis that was mainly triggered by the US and its irresponsible policies) I used to argue that: “However, one must recognize that Latin America itself bears some responsibility for Washington’s lack of interest in the region. Latin America’s slow growth reflects its failure to fully implement the so-called Washington Consensus – not the failure of Washington Consensus policies. In brief, the United States lost interest in Latin America both because US foreign policy changed (the pressing need to fight terrorism) and because Latin America failed to implement the economic reforms needed to compete with China.” Now, my take on the story is quite different. I think that had Latin countries received the same amount of FDI and trade arrangements that China received since 2000, South American countries would probably be better than China. In other words, what is lacking in Latin America is a ‘ big push’ like the one China – for some strategic/political – reason received from the US. China didn’t become that big giant just because they implemented a set of economic reforms. They became an important player because China also helps the US in supporting the current global imbalance equilibrium, where the China finances the US trade and budget deficit through the purchase of US treasury bonds and the US is the leading market for Chinese exports. Latin countries were never allowed to enter the ‘global imbalances game’, the so-called Bretton Woods II regime.

Indeed, most Latin countries failed to implement the main aspects of the ‘Washington Consensus’ and as a result, failed to credibly consolidate macroeconomic stability and support sustained growth. On the political front, Latin countries displayed progress and have stable democratic regime. It is puzzling that economists and political analysts keep praising China and its economic performance without mentioning the dictatorship type of regime. Hugo Chavez, the Venezuelan president, tends to be more of an apprentice especially when compared to the not-so-soft Chinese leaders. In any case, we all know that Latin America countries still need to take additional steps to reduce poverty and inequality, in order to achieve high and sustainable growth rates.

The fact that US lost interest in Latin America does not suggest a severed relationship but something more related to the deep economic problems almost all the countries in South America experienced during the 1990s. On the other hand, US republicans have never cared about the region. All in all, I think that as long as we have a democrat as the new US president, Latin countries will get closer to Washington than ever before. Nowadays, Brazil, Mexico, Chile, Peru have stable economies and tend to move forward with their structural reforms. I have no doubts that a new democrat president will regain interest in the region mainly because they are aware of the economic potential of these countries that could be bring positive spillovers across the Americas.

We know that dictatorship-types of regimes display higher growth than democratic types. If Latin countries did not implement ALL the so-called structural reforms, they did conquer democracy. For those that argue that China is more democratic than Brazil, for example, because you can afford to send your kids to school, I suggest they spend sometime in rural China to see what is going on out there. In any case, we all know that Latin America countries still need to take additional steps to reduce poverty and inequality, in order to achieve high and sustainable growth rates.

1 comment:

  1. China is one country, latin america are many, china has one leader, LA has many,
    China know what it wants to be, not all LA countries know what they want to be.
    chinese work very hard, latinos so so and finally
    We blame US for everything under the sun, even if it happened 3o,40 or 50 years ago.

    ReplyDelete