1. "The Colossus of the South"
2. "The Welfare of the World Capitalist System"
3. Protecting Democracy
4. Securing the Victory
5. "A Real American Success Story"
6. Fundamentalism Triumphant
7. Some Competitors for the Prize
8. "Our Nature and Traditions"
9. Some Tools of the Trade
1. "The Colossus of the South"
"When the resources of that vast country are taken into account," the editors of the Washington Post wrote in 1929, "it becomes evident that within a few years Brazil will become one of the leading powers of the world." "The United States rejoices in the rise of this great republic in South America," which "has found the road to permanent prosperity and peace." The euphoric predictions seemed not unreasonable. "Brazil is notable for its tremendously favorable combination of large size, low population density, and rich endowment of natural resources," Peter Evans observes, and it had nothing to fear from external enemies. In the second half of the 19th century, real per capita income rose more rapidly in Brazil than in the United States. Its leading export, coffee, was under control of local capital (Brazil provided over 80 percent of world output by the turn of the century). Some weaknesses were showing: the economy relied so heavily on exporting primary products that this rich agricultural country had to import even food staples. Nevertheless, the "colossus of the South," as the New York Herald Tribune termed it in 1926, appeared to be a true counterpart to the Colossus of the North, well-placed to rise to prosperity and power. It seemed, indeed, "a mighty realm of limitless potentialities," "a nation which staggers the imagination," as other US journals described it.
The Wall Street Journal, in 1924, offered a more caustic glimpse of the future: "No territory in the world is better worth exploitation than Brazil's." Five years later, "American businessmen boasted a larger share of the export market than their British rivals" and "New York had replaced London as the major source of new capital investment" (Joseph Smith). US investment grew tenfold from 1913 to 1930; trade more than doubled, while that of Britain declined by nearly 20 percent. The picture was much the same throughout the region. Direct US investment in Latin American enterprises almost doubled to $3.5 billion in the 1920s, while portfolio investment (bonds and securities) more than quadrupled to over $1.7 billion. Venezuelan oil under the Gómez dictatorship, mines in Bolivia, Chile and elsewhere, and the riches of Cuba were among the favored targets. From 1925-1929, US capital inflow to Latin America was about $200 million a year, while the annual outflow to US investors was about $300 million.1
Serious US interest in Brazil dates from 1889, when the monarchy was overthrown and a republic established, and a Pan-American conference was held in Washington "as part of a wider strategy designed to oust European competition and thereby secure American commercial ascendancy in Latin American markets," Smith writes. The US was hesitant to recognize the republican government, in part because "the conservative instincts of American politicians were alarmed at the overthrow of a symbol of authority and stability by military violence." But as incoming Secretary of State James Blaine recognized, "Brazil holds in the South much the same relationship to the other countries that the United States does in the North," and commercial opportunities were vast. Hesitations were soon overcome.
Recognized to offer "incalculable" commercial opportunities, Brazil was chosen as the site of the third (1906) Pan-American conference, where Secretary of State Elihu Root declared that the US and Brazil, "acting together, would form a single and eternal guarantee for the integrity of America." From 1900 to 1910, US trade and investment with Latin America more than doubled, growing at the fastest rate in the world. As global power shifted toward the United States with World War I, Washington was able to implement the Monroe Doctrine beyond its Caribbean sphere. The already substantial US economic and political influence throughout the hemisphere increased, giving rise to the euphoria of the 1920s.2
US dominance of the Brazilian market peaked after World War II, when the US supplied half of Brazil's imports and bought over 40 percent of its exports. By then, the vision of Washington planners was so expansive that Latin America had come to play only a minor part, though it was not forgotten. "Latin America's role in the new world order," Stephen Rabe observes, was "to sell its raw materials" and "to absorb surplus U.S. capital." In short, it was to "fulfill its major function" and be "exploited" for the benefit of the core industrial countries, along with the rest of the South.3
Rabe's description of the New World Order of 1945 is no less apt today; the same is true of Bolívar's concerns about the "very powerful country, very rich, very warlike, and capable of anything" that stands "at the head of this great continent." The major theme of the Colombian era -- the service role assigned to the South -- persists as we advance to a "new imperial age."
The New World Order of 1945 is sometimes described with considerable candor in mainstream scholarship. A highly-regarded study of US-Brazilian relations by the senior historian of the CIA, Gerald Haines, opens frankly: "Following World War II the United States assumed, out of self-interest, responsibility for the welfare of the world capitalist system." He could have gone on to quote the 1948 CIA memorandum on "the colonial economic interests" of our Western European allies, or George Kennan's call for reopening Japan's "Empire toward the South," among other analyses reflecting real interests.4
"American leaders tried to reshape the world to fit U.S. needs and standards," Haines continues. It was to be an "open world" -- open to exploitation by the rich, but not completely open even to them. The US desired a "closed hemispheric system in an open world," Haines explains, following Latin Americanist David Green, who had described the system "formalized" after World War II as "A closed hemisphere in an open world." It was to be a world closed to others in regions already controlled by the US or held to be of critical importance (Latin America and the Middle East), and open where US dominance had not been established. Haines's phrase captures the vaunted principle of the Open Door in its doctrinally approved sense: What we have (if it is important enough), we keep; elsewhere, open access to all. The operative principle was articulated by the State Department in 1944 in a memorandum called "Petroleum Policy of the United States." The US then dominated Western Hemisphere production, which was to remain the largest in the world for another quarter century. That system must remain closed, the memorandum declared, while the rest of the world must be open. US policy "would involve the preservation of the absolute position presently obtaining, and therefore vigilant protection of existing concessions in United States hands coupled with insistence upon the Open Door principle of equal opportunity for United States companies in new areas."5
That Latin America would be ours is an expectation that goes back to the earliest days of the Republic, given an early form in the Monroe Doctrine. The intentions were articulated plainly and illustrated consistently in action. It is hard to improve upon the formulation by Woodrow Wilson's Secretary of State, Robert Lansing, which the President found "unanswerable" though "impolitic" to state openly:
In its advocacy of the Monroe Doctrine the United States considers its own interests. The integrity of other American nations is an incident, not an end. While this may seem based on selfishness alone, the author of the Doctrine had no higher or more generous motive in its declaration.
With some reason, Bismarck had described the Monroe Doctrine in 1898 as a "species of arrogance, peculiarly American and inexcusable."
Wilson's predecessor, President Taft, had foreseen that "the day is not far distant" when "the whole hemisphere will be ours in fact as, by virtue of our superiority of race, it already is ours morally." Given the awesome power that the US had achieved by the mid-1940s, Washington saw no reason to tolerate any interference in "our little region over here" (Stimson).6
In the global order of 1945, Haines continues, the goal was "to eliminate all foreign competition" from Latin America. The US undertook to displace its French, British, and Canadian rivals so as "to maintain the area as an important market for U.S. surplus industrial production and private investments, to exploit its vast reserves of raw materials, and to keep international communism out." Here the term "communist" is to be understood in its usual technical sense: those who appeal to "the poor people [who] have always wanted to plunder the rich," in John Foster Dulles's phrase. Plans were similar for the Middle East, to which the US extended the Monroe Doctrine after World War II, with enormous consequences for southern Europe, North Africa, and the region itself.
Though Haines happens to be concentrating on the richest and most important country of Latin America, the conclusions generalize. In Brazil, he writes, the US worked to prevent economic nationalism and what the Truman and Eisenhower Administrations called "excessive industrial development" -- that is, development that might compete with US corporations; competition with foreign capital was not "excessive," therefore allowed. That US demand had been imposed on the hemisphere generally by February 1945, as already discussed (chapter 2.1).
What was new in these priorities was the scale, not the character. The intent of the prewar Good Neighbor programs, David Green writes, was "to stimulate a certain diversification of Latin American production in the expectation that the Latin Americans would find ready markets in the hemisphere; [but] such diversification was to be limited to products not competitive with existing lines of production in already established Western Hemisphere markets," meaning in practice US lines of production. The proposals of the Inter-American Advisory Commission called for the US to absorb Latin American imports so as to enhance "the development of Latin America's capacity for purchasing more United States manufactures" (Green's emphasis). The earliest projects of the US-dominated inter-American agencies "were all of a consumer-goods rather than a producer goods variety." The purpose "was certainly not to cut into the United States' `share' of exports to Latin America," specifically "machinery and heavy industry exports."
The occasional exceptions highlighted the point. Washington agreed to finance a Brazilian steel project, but as government economist Simon Hanson pointed out, that meant only a "shift in the type" of American steel exports to Brazil, not a loss in total volume or value: the Brazilian plant would produce "the simpler manufactured products," which in turn would "require import of more complex materials" requiring more advanced technology; that "is where we come in," keeping US export markets safe. An analysis concluded that "the countries who will lose most of the Brazil business which will ultimately be handled by this plant are England and Germany."7
Quite generally, Haines observes, US leaders "opposed major industrialization plans of the Third World nations and rejected foreign aid programs based on public loans to promote economic growth." They preferred a "mercantilist approach," with Third World economies integrated "into their U.S.-dominated free trade system"; the concept of "mercantilist free trade" captures nicely the doctrinal framework. The US "tried to guide and control Brazilian industrial development for the benefit of private U.S.corporations and to fit Brazil into its regional economic plans." The humanitarian Point Four program, which was to be "a model for all Latin America," was designed "to develop larger and more efficient sources of supply for the American economy, as well as create expanded markets for U.S. exports and expanded opportunities for the investment of American capital."
What US planners "envisioned, but seldom stated, was a neocolonial relationship, with Brazil furnishing the raw materials for American industry and the United States supplying Brazil with manufactured goods." They pursued a "neocolonial, neomercantilist policy" -- which is, somehow, "a classic liberal approach to development," showing again how flexible an instrument economic theory can be. Industrial development was tolerable only if it was "complementary to U.S. industry." The basic concept was "that Brazilian development was all right as long as it did not interfere with American profits and dominance," and ample profit remittance was guaranteed. Agricultural development was also promoted, as long as it avoided "destabilizing" programs like land reform, relied on US farm equipment, fostered "commodities that complemented US production, such as coffee, cacao, rubber, and jute," and created "new markets for U.S. agricultural commodities" such as dairy products and wheat.
"Brazilian desires were secondary," Haines observes, though it was useful "to pat them a little bit and make them think that you are fond of them," in Dulles's words.
The Cold War framework was in place at once. By 1946, Soviet machinations in Brazil were of much concern to Ambassador Adolf Berle, a leading liberal statesman from the New Deal through Kennedy's New Frontier. The Russians are like the Nazis, he warned: "Horribly, cynically, and terribly, they exploit any center of thought or action which may make trouble for the United States"; they are so unlike us, in this regard. Intelligence could detect no Soviet trouble-making in Brazil apart from economic missions and other common practices. But as usual, that conclusion was not considered relevant, and Berle's position was endorsed. As Haines summarizes an intelligence report a few months later, "the Soviet Union might conceivably find it to its advantage in the future to fish in troubled inter-American waters," so no chances could be taken, another illustration of the "logical illogicality" that governed global policy planning. The potential Communists must be eliminated before they have a chance to interfere with our pursuit of our goals.
US leaders used Brazil as a "testing area for modern scientific methods of industrial development," Haines observes. US experts provided instructions on all sorts of topics. For example, they encouraged Brazilians to open the Amazon to development and to follow the US model of railroad operation -- the latter a touch of black humor, perhaps. But crucially, they provided Brazil with sincere advice on how to benefit US corporations.
Throughout, Haines's account is interlarded with such phrases as "the best of intentions," "sincerely believed," etc. By lucky accident, what was "sincerely believed" conformed nicely to the interests of US investors, however ruinous it might be to our wards. Again, Haines strikes traditional chords, including the faith in the benign intent that so miraculously serves self-interest.
Haines focuses on the early years, but he gives a foretaste of what was to come when he refers to the goal of "cultivating the Brazilian military," which US officials "promoted...as the protector of democracy." This farsighted program to achieve our democratic vision came to fruition as the generals took command in 1964, terminating Brazil's postwar parliamentary interlude and instituting a neo-Nazi National Security State with ample torture and repression, inspiring their counterparts throughout the hemisphere to do the same in a notable illustration of the "domino theory" which, for some reason, is rarely discussed under this rubric. Following approved neoliberal doctrine under continued US tutelage, the Generals proceeded to create an "economic miracle" that was much admired, though with some reservations about the sadistic violence by which it was instituted.
The military-run National Security States were a direct outcome of US policy and doctrine. From World War II, US planners sought to integrate the Latin American military within the US command structure. During the war, they had laid the basis for a permanent coordinated supply system, with standardized US weapons for the continent. These measures, it was assumed, would "prove very profitable" to the booming US military industries (General "Hap" Arnold, referring, in this case, to the postwar aviation industry); and control over military supplies would provide economic and political leverage as well, enabling the US to deter nationalist tendencies and to counter "subversion." A corollary would be a takeover of training missions, displacing European rivals. Truman's Inter-American Military Cooperation Act of 1946 sought to secure a US monopoly of supply and training in a "militarily closed hemisphere under United States domination" (Green). The need to replace European rivals was stressed in internal documents in later years, and soon accomplished.
The problem of combating "subversion" had come to the fore in 1943, when Bolivian mine owners called on government troops to suppress striking tin miners, killing hundreds of them in the "Catavi massacre." There was no US reaction until the nationalist, anti-oligarchic, pro-labor National Revolutionary Movement (MNR) deposed the dictatorship a year later. The US denounced the new regime as "pro-fascist" (on flimsy pretexts) and as opposed to "Anglo-Yankee imperialism" (accurately, in this case), demanded that all MNR members be excluded from positions of power, and quickly secured its overthrow in favor of a military government. A State Department memo identified one decisive theme: the mine owners, it observed, are afraid of the MNR's "announced intention to interest itself in the betterment of the workers, fearing this can only be done at the expense of the mining interests." The broader fear was radical nationalism (chapter 2.1).
The Kennedy Administration moved the process forward, shifting the mission of the Latin American military from "hemispheric defense" to "internal security," meaning war against the population. Academic experts explained soberly that the military are a "modernizing" force, when guided by their US tutors.
The basic reasoning was explained in a secret 1965 study by Robert McNamara's Defense Department, which found that "U.S. policies toward the Latin American military have, on the whole, been effective in attaining the goals set for them": "improving internal security capabilities" and "establishing predominant U.S. military influence." The military now understands their tasks and are equipped to pursue them, thanks to the substantial increase in training and supply carried out by the Kennedy Administration in 1961-1962. These tasks include the overthrow of civilian governments "whenever, in the judgment of the military, the conduct of these leaders is injurious to the welfare of the nation"; this is a necessity in "the Latin American cultural environment," the Kennedy liberals explained, sure to be carried out properly now that the judgment of the military is based upon "the understanding of, and orientation toward, U.S. objectives." Proceeding along these lines, we can assure the proper outcome to the "revolutionary struggle for power among major groups which constitute the present class structure" in Latin America, and can guarantee "private U.S. investment" and trade, the "economic root" that is the strongest of the roots of "U.S. political interest in Latin America."8
The vulgar Marxist rhetoric affected by the Kennedy-Johnson planners is common in internal documents, as in the business press.
Returning to Brazil, plans for a military coup were initiated shortly after João Goulart became President in August 1961. The military were wary of his populist rhetoric and appeal, and angered by his efforts to raise minimum wages of civilian laborers. Concerns of the US business community were enhanced when the Chamber of Deputies passed a bill placing conditions on foreign investment and limiting remittance of profits on the grounds that they were "bleeding the Brazilian economy." Though Goulart, a faithful member of the Brazilian elite, was anti-Communist, US labor leaders and Embassy officials were alarmed at his involvement with labor and peasant organizations and appointment of Brazilian Communists to staff positions; "an openly Communist course," the CIA warned. The appropriate Cold War context had been spelled out by JFK, shortly before assuming office (see p. 73).
By early 1962, Brazilian military commanders had notified Kennedy's Ambassador, Lincoln Gordon, that they were organizing a coup. At JFK's personal initiative, the US began to lend clandestine and overt support to right-wing political candidates. The President's feeling, in agreement with Gordon and the US business community, was that "the military probably represented the key to the future," Ruth Leacock concludes. Robert Kennedy was dispatched to Brazil in December 1962 to influence Goulart to "confront the communist problem," as the US Embassy put it. RFK informed Goulart that the President was seriously concerned about the infiltration of "Communists and anti-American nationalist leftists" into the government, the military, the unions, and student groups, and about the "ill treatment [of] American and other foreign private investors." If Goulart wanted US aid, Kennedy said, he must see to it that "personnel in key Brazilian positions" were pro-American, and impose economic measures that the US recommended.
Relations remained tense, particularly over the austerity plan that the Kennedy Administration demanded as a condition for aid, and its admonitions about left-wing influence. In March 1963, the CIA again reported plans for a military coup; US corporate executives were, by then, privately urging a total US aid cutoff to expedite the coup plans. In August, US Defense Attaché Vernon Walters warned the Pentagon that Goulart was promoting "ultranationalist officers" in preference to "pro-democratic pro-US officers" (the two terms presumably being synonymous). Relations harshened further under the Johnson Administration. Senator Albert Gore informed the Senate Foreign Relations Committee, then considering US aid, that he had heard that "all of the members of the Brazilian Congress who advocated the kind of reforms which we have made a prerequisite for Alliance for Progress aid are now in prison." Ambassador Gordon cabled Washington that the US should increase military aid for Brazil because the military was essential in the "strategy for restraining left wing excesses of Goulart government." Meanwhile the CIA was "financing the mass urban demonstrations against the Goulart government, proving the old themes of God, country, family, and liberty to be as effective as ever," Philip Agee noted in his Diary.
Recall that aid to the military is standard operating procedure for overthrowing a civilian government. The device was also used effectively in Indonesia and Chile, and tried in Iran in the early 1980s, the first stage in what later became (suitably recrafted) the Iran-contra affair.9
On March 31, the generals took over, with US support and plans for further action if necessary "to assure success of takeover." The Generals had carried out a "democratic rebellion," Gordon cabled Washington. The revolution was "a great victory for the free world," which prevented a "total loss to the West of all South American Republics" and should "create a greatly improved climate for private investments." "The principal purpose for the Brazilian revolution," he testified before Congress two years later, "was to preserve and not destroy Brazil's democracy." This democratic revolution was "the single most decisive victory of freedom in the mid-twentieth century," Gordon held, "one of the major turning points in world history" in this period. Adolf Berle agreed that Goulart was a Castro clone who had to be removed. Secretary of State Dean Rusk justified US recognition for the coup regime on the grounds that "the succession there occurred as foreseen by the Constitution," a statement that was not "entirely accurate," Thomas Skidmore judiciously observes.
US labor leaders demanded their proper share of the credit for the violent overthrow of the parliamentary regime, while the new government proceeded to crush the labor movement and to subordinate poor and working people to the overriding needs of business interests, primarily foreign, reducing real wages by 25 percent within 3 years and redistributing income "toward upper-income groups who were destined to be the great consumers of the Brazilian miracle" (Sylvia Ann Hewlett, who sees the brutal repression and attack on living standards as "an essential prerequisite for a new cycle of capitalist growth within the Brazilian domestic economy"). Washington and the investment community were naturally delighted. As the relics of constitutional rule faded away and the investment climate improved, the World Bank offered its first loans in 15 years and US aid rapidly increased along with torture, murder, starvation, disease, infant mortality -- and profits.10
The United States was the "regime's most reliable ally," Thomas Skidmore observes in the most comprehensive scholarly study of what came next. US aid "saved the day" for the ruling Generals; the process also "turned the U.S. into a kind of unilateral IMF, overseeing every aspect of Brazilian economic policy." "In almost every Brazilian office involved in administering unpopular tax, wage, or price decisions, there was the ubiquitous American adviser," the new US Ambassador discovered in 1966. Once again, the US was well-positioned to use Brazil as a "testing area for modern scientific methods of industrial development" (Haines), and therefore has every right to take credit for what ensued. Under US guidance, Brazil pursued orthodox neoliberal policies, "doing everything right" by monetarist criteria, and "strengthening the market economy" (Skidmore). The "economic miracle" proceeded in parallel with the entrenchment of the fascist National Security State, not accidentally; a regime that could not wield the knout could hardly have carried out measures with such a deleterious impact on the population.
The neoliberal reforms did not exactly succeed in "building Brazilian capitalism," Skidmore continues (though they did help build foreign corporations). They provoked a severe industrial recession, driving many businesses to ruin. To counter these effects and to prevent still further foreign takeover of the economy, the government turned to the public sector, strengthening the despised state corporations.
In 1967, economic policy was taken over by technocrats led by the highly respected conservative economist Antonio Delfim Neto, an enthusiastic supporter of "the Revolution of March 31," which he saw as a "huge demonstration by society" and "the product of a collective consensus" (among those who qualify as "society"). Declaring its devotion to the principles of economic liberalism, the government instituted indefinite wage controls. "Worker protests, up to now infrequent and small, were handily suppressed," Skidmore notes, as fascist rule hardened further over the whole society, with harsh censorship, elimination of judicial independence, removal of many faculty, and revised curricula to promote patriotism. The new compulsory course in "Moral and Civic Education" aimed to "defend the democratic principle by preserving the religious spirit, the dignity of the human being, and the love of liberty, with responsibility under God's inspiration" -- as administered by the Generals with the technocrats at their side. The authors of the 1992 Republican Campaign platform would have been much impressed, along with 1980s-style "conservatives" rather generally.
The President announced in 1970 that repression would be "harsh and implacable," with no rights for "pseudo-Brazilians." Torture became "a grisly ritual, a calculated onslaught against body and soul," Skidmore writes, with such specialties as torture of children and gang rape of wives before the family. The "orgy of torture" provided "a stark warning" to anyone with the wrong thoughts. It was a "powerful instrument," that "made it even easier for Delfim and his technocrats to avoid public debate over fundamental economic and social priorities" while they "preached the virtues of the free market." The resumption of high economic growth, by these means, made Brazil "again attractive to foreign private investors," who took over substantial parts of the economy. By the late 1970s, "The industries dominated by local capital in Brazil [were] the same industries where small businesses flourish in the United States"; multinationals and their local associates dominated the more profitable growth areas, though with the changes in the global economy, about 60 percent of foreign capital was then non-US (Peter Evans).
Macroeconomic statistics continued to be satisfying, Skidmore continues, with rapid growth of GNP and foreign investment. A "dramatic" improvement in terms of trade in the early '70s also provided a shot in the arm to the Generals and technocrats. They held firm to the doctrine that "the real answer to poverty and unequal income distribution was rapid economic growth, thereby increasing the total economic pie," eliciting nods of approval in the West. A closer look shows other characteristic features of neoliberal doctrine. Growth rates in 1965-1982 under the National Security State averaged no higher than under the parliamentary governments from 1947-1964, economist David Felix observes, despite the advantages of authoritarian control the fascist neoliberals enjoyed; and the domestic savings rate hardly rose during the "miracle years" under the "right-wing consumerism" instituted by the Generals and technocrats. The domestic market was dominated by luxury goods for the rich. None of this will be unfamiliar to others subjected to the same doctrines, including North Americans during the "Reagan revolution."
Brazil became "the most rapidly growing of major overseas markets of American manufacturers," Evans observes, with high rates of return for investment, second only to Germany during the late '60s and early '70s. Meanwhile, the country became even more of a foreign-owned subsidiary. As for the population, a World Bank study in 1975 -- at the peak of the miracle years -- reported that 68 percent had less than the minimum caloric requirement for normal physical activity and that 58 percent of children suffered from malnutrition. Ministry of Health expenditures were lower than in 1965, with the expected concomitant effects.11
After a visit to Brazil in 1972, Harvard political scientist Samuel Huntington urged some relaxation of the fascist terror, but with moderation: "relaxation of controls" might "have an explosive effect in which the process gets out of control," he warned. He suggested the model of Turkey or Mexican one-party rule, playing down the importance of liberal rights in comparison with the more significant values of "institutionalization" and stability.
A few years later, the bubble burst. Brazil was swept up in the global economic crisis of the '80s, particularly ruinous in Africa and Latin America. Terms of trade now rapidly declined, eliminating this crutch for those who held the purse strings and the whip. Inflation and debt raced out of control, income levels dropped substantially, many firms faced bankruptcy, and idle capacity reached 50 percent, "giving a new meaning to `stagflation'," Skidmore observes. Delfim's neoliberal growth strategy was in "total collapse," he adds. After 4 years of severe economic decline, the economy began to recover, in large part thanks to the import-substituting industrialization decried by neoliberal economic doctrine. The Generals bowed out, leaving a civilian government to administer the economic and social wreckage.
Writing in 1989, Gerald Haines describes the results of more than four decades of US dominance and tutelage as "a real American success story." "America's Brazilian policies were enormously successful," bringing about "impressive economic growth based solidly on capitalism." As for political success, as early as September 1945, when the "testing area" had barely been opened for experiment, Ambassador Berle wrote that "every Brazilian now has available to himself all of the resources available to any American during a political campaign: he can make a speech, hire a hall, circulate a petition, run a newspaper, post handbills, organize a parade, solicit support, get radio time, form committees, organize a political party, and otherwise make any peaceable bid for the suffrage and support of his countrymen" -- just like "any American." We're all equal, one happy family in harmony, which is why government is so responsive to the needs of the people. And so "democratic" -- in the doctrinally approved sense of the term, referring to unquestioned business rule.
This triumph of capitalist democracy stands in dramatic contrast to the failures of Communism, though admittedly the comparison is unfair -- to the Communists, who had nothing remotely like the favorable conditions of this "testing area" for capitalism, with its huge resources, no foreign enemies, free access to international capital and aid, and benevolent US guidance for half a century. And the success is real. From the early years, US investments and profits boomed as "Washington intensified Brazil's financial dependence on the United States, influenced its government's decisions affecting the allocation of resources, and nudged Brazil into the U.S.-dominated trading system," Haines writes.
Within Brazil, the "modern scientific methods of development based solidly on capitalism" also brought great benefits, though to understand them, a bit more precision is necessary. There are two very different Brazils, Peter Evans wrote as the miracle peaked in the 1970s: "the fundamental conflict in Brazil is between the 1, or perhaps 5, percent of the population that comprises the elite and the 80 percent that has been left out of the `Brazilian model' of development." The first Brazil, modern and westernized, has benefited greatly from the success story of capitalism. The second is sunk in the deepest misery. For three-quarters of the population of this "mighty realm of limitless potentialities," the conditions of Eastern Europe are dreams beyond reach, another triumph of the Free World.
The "real American success story" was spelled out in a 1986 study commissioned by the new civilian government. It presented "a by-now familiar picture of Brazil," Skidmore observes: "although boasting the eighth largest economy in the Western world, Brazil fell into the same category as the less developed African or Asian countries when it came to social welfare indices"; this was the result of "two decades of a free hand for the technocrats" and the approved neoliberal doctrines, which "increased the cake" while leaving "one of the most unequal income distributions in the world" and "appalling deficiencies" in health and welfare generally. A UN Report on Human Development (measuring education, health, etc.) ranked Brazil in 80th place, near Albania, Paraguay, and Thailand. Shortly after, in October 1990, the UN Food and Agriculture Organization (FAO) announced that more than 40 percent of the population (almost 53 million people) are hungry. The Brazilian Health Ministry estimates that hundreds of thousands of children die of hunger every year. Brazil's educational system ranks above only Guinea-Bissau and Bangladesh, according to 1990 UNESCO data.12
The "success story" is summarized in a May 1992 Americas Watch report: "Rich in natural resources and with a large industrial base, the country has the largest debt in the developing world and an economy that is entering its second decade of acute crisis. Tragically, Brazil is not able to provide an adequate standard of living for its 148 million people, two-thirds of whom were malnourished in 1985, their misery caused and compounded by lack of access to the land" in a country with "one of the highest degrees of concentration of land ownership in the world," and one of the most lopsided distributions of income as well.
Starvation and disease are rampant, along with slave labor by contract workers who are brutally treated or simply murdered if they seek to escape before working off their debts. In one of the nine cases of rural slavery unearthed by the Catholic Church Land Ministry Commission in the first few months of 1992, 4000 slave workers were found extracting charcoal in an agribusiness project established and subsidized by the military government as a "reforestation project" (of which nothing operates but the charcoal pits). In haciendas, slave laborers work 16 hours a day without pay and are frequently beaten and tortured, sometimes murdered, with almost complete impunity. Almost half the farmland is owned by 1 percent of farmers; government emphasis on export crops, following the precepts of the foreign masters, favors farmers with capital to invest, marginalizing the huge majority even further. In the north and northeast, rich landowners call in gunmen or the military police to burn houses and crops, shoot livestock, murder unionists, priests, nuns or lawyers trying to defend peasant rights, and drive the villagers into shantytowns or to the Amazon, where they are then blamed for deforestation as they clear land in a desperate attempt to survive. Brazilian medical researchers describe the population of the region as a new subspecies: "Pygmies," with 40 percent the brain capacity of humans -- the result of severe malnutrition in a region with much fertile land, owned by large plantations that produce cash crops for export.13
Brazil is a world center of such triumphs as child slavery, with some 7 million children working as slaves and prostitutes, exploited, overworked, deprived of health and education, "or just deprived of their childhood," an International Labor Organization study estimates. The luckier children can look forward to work for drug traffickers in exchange for glue to sniff to "make the hunger go away." The figure worldwide is estimated at hundreds of millions, "one of the grimmer ironies of the age," George Moffett comments. Had the grim result been found in Eastern Europe it would have been a proof of the bestiality of the Communist enemy; since it is the normal situation in Western domains, it is only irony, the result of "endemic third-world poverty...exacerbated as financially strapped governments have cut expenditures for education," all with no cause.
Brazil also wins the prize for torture and murder of street children by the security forces -- "a process of extermination of young people" according to the head of the Justice Department in Rio de Janeiro (Hélio Saboya), targeting the 7-8 million street children who "beg, steal, or sniff glue" and "for a few glorious moments forget who or where they are" (London Guardian correspondent Jan Rocha). In Rio, a congressional commission identified 15 death squads, most of them made up of police officers and financed by merchants. Bodies of children murdered by death squads are found outside metropolitan areas with their hands tied, showing signs of torture, riddled with bullet holes. Street girls are forced to work as prostitutes. The Legal Medical Institute recorded 427 children murdered in Rio alone in the first ten months of 1991, most by death squads. A Brazilian parliamentary study released in December 1991 reported that 7000 children had been killed in the past four years.14
Truly a tribute to our magnificence and the "modern scientific methods of development based solidly on capitalism" in a territory as much "worth exploitation" as any in the world.
We should not underestimate the scale of the achievement. It took real talent to create a nightmare in a country as favored and richly-endowed as Brazil. In the light of such triumphs, it is understandable that the ruling class of the new imperial age should be dedicated with such passion to helping others share the wonders, and that the ideological managers should celebrate the accomplishment with such enthusiasm and self-praise.
One might object that despite its unusual advantages, Brazil is still not the optimal testing area to demonstrate the virtues of the neoliberal doctrines that "American-style capitalism" urges upon countries it deems "worth exploitation." Perhaps it would be better to try Venezuela, even more favorable terrain with its extraordinary resources, including the richest petroleum reserves outside the Middle East. We might, then, have a look at that success story.
In a major scholarly study of US-Venezuelan relations, Stephen Rabe writes that after World War II, the US "actively supported the vicious and venal regime of Juan Vicente Gómez," who opened the country wide to foreign exploitation. The State Department shelved the "Open Door" policy in the usual way, recognizing the possibility of "U.S. economic hegemony in Venezuela," hence pressuring its government to bar British concessions (while continuing to demand -- and secure -- US oil rights in the Middle East, where the British and French were in the lead). By 1928, Venezuela had become the world's leading oil exporter, with US companies in charge. During World War II, the US agreed to a Venezuelan demand for 50-50 profit-sharing. The effect, as predicted, was a vast expansion of oil production and "substantial profits for the [US] oil industry," which took control over the country's economy and "major economic decisions" in all areas. During the 1949-1958 dictatorship of the murderous thug Pérez Jiménez, "U.S. relations with Venezuela were harmonious and economically beneficial to U.S. businessmen"; torture, terror, and general repression passed without notice on the usual Cold War pretexts. In 1954, the dictator was awarded the Legion of Merit by President Eisenhower. The citation noted that "his wholesome policy in economic and financial matters has facilitated the expansion of foreign investment, his Administration thus contributing to the greater well-being of the country and the rapid development of its immense natural resources" -- and, incidentally, huge profits for the US corporations that ran the country, including by then steel companies and others. About half of Standard Oil of New Jersey's profits came from its Venezuelan subsidiary, to cite just one example.
From World War II, in Venezuela the US followed the standard policy of taking total control of the military "to expand U.S. political and military influence in the Western Hemisphere and perhaps help keep the U.S. arms industry vigorous" (Rabe). As later explained by Kennedy's Ambassador Allan Stewart, "U.S.-oriented and anti-Communist armed forces are vital instruments to maintain our security interests." He illustrated the point with the case of Cuba, where the "armed forces disintegrated" while elsewhere they "remained intact and able to defend themselves and others from Communists," as demonstrated by the wave of National Security States that swept over the hemisphere. The Kennedy Administration increased its assistance to the Venezuelan security forces for "internal security and counterinsurgency operations against the political left," Rabe comments, also assigning personnel to advise in combat operations, as in Vietnam. Stewart urged the government to "dramatize" its arrests of radicals, which would make a good impression in Washington as well as among Venezuelans (those who matter, that is).
In 1970, Venezuela lost its position as world's leading oil exporter to Saudi Arabia and Iran. As in the Middle East, Venezuela nationalized its oil (and iron ore) in a manner quite satisfactory to Washington and US investors, who "found a newly rich Venezuela hospitable," Rabe writes, "one of the most unique markets in the world," in the words of a Commerce Department official.15
The return to office of social democrat Carlos Andrés Pérez in 1988 aroused some concerns, but they dissipated as he launched an IMF-approved structural readjustment program, resolutely maintained despite thousands of protests, many violent, including one in February 1989 in which 300 people were killed by security forces in the capital city of Caracas.
Though rarely reported in the US, protests continued along with strike waves severe enough to lead to fear that the country was headed towards "anarchy." Among other cases, three students were killed by police who attacked peaceful demonstrations in late November 1991; and two weeks later, police used tear gas to break up a peaceful march of 15,000 people in Caracas protesting Pérez's economic policies. In January 1992, the main trade union confederation predicted serious difficulties and conflicts as a result of the neoliberal programs, which had caused "massive impoverishment" including a 60 percent drop in workers' buying power in 3 years, while enriching financial groups and transnational corporations.16
By then, another "economic miracle" was in place: "a treasury brimming with foreign reserves, inflation at its lowest rate in five years, and an economy growing at the fastest rate in the Americas, 9.2 percent in 1991," Times correspondent James Brooke reported, noting also some familiar flaws, among them a fall in the real minimum wage in Caracas to 44 percent of the 1987 level, a decline in nutritional levels, and a "scandalous concentration of wealth," according to a right-wing Congressman he quotes. Other flaws were to come to light (in the US) a few weeks later after a coup attempt, among them, the government's admission that only 57 percent of Venezuelans could afford more than one meal a day in this country of enormous wealth. Other flaws in the miracle had been revealed in the report of an August 1991 Presidential Commission for the Rights of Children, not previously noticed, which found that "critical poverty, defined as the inability to meet at least one half of basic nutritional requirements," had tripled from 11 percent of the population in 1984 to 33 percent in 1991; and that real per capita income fell 55 percent from 1988 to 1991, falling at double the rate of 1980-1988.17
On February 4, 1992, an attempted military coup was crushed. "There was little jubilation," AP reported. "The coup attempt caps a crescendo of anger and frustration over the economic reforms that have written such a macroeconomic success story but have failed to benefit the lives of most Venezuelans and have embittered many" (Financial Times ). It "was met by silent cheers from a large part of the population," Brooke reported, particularly in poor and working-class areas. Like the Brazilian technocrats, Pérez had done everything right, "cutting subsidies, privatizing state companies and opening a closed economy to competition." But something had unaccountably gone wrong. True, the growth rate was impressive, "but most economic analysts agree that the high price of oil in 1991 fueled Venezuela's growth more than Pérez's austerity moves," Stan Yarbro reported, and none can fail to see that "the new wealth has failed to trickle down to Venezuela's middle and lower classes, whose standard of living has fallen dramatically." Infant deaths "have soared in the past two years as a result of worsening malnutrition and other health problems in the shantytowns," a priest who had worked in poor neighborhoods for 16 years said. There is ample "new wealth," much of it "poured into financial speculation schemes rather than new investments in industry. In 1991 money made in real estate and financial services almost equaled the profits from manufactures."18
In short, a typical economic miracle, achieved under unusually favorable conditions for the evaluation of the neoliberal doctrines preached with such fervor by the priesthood of what Jeremy Seabrook calls the new "International Monetary Fundamentalism."19
It is a bit unfair to award Brazil the prize for enslavement, murder, and abuse of children; after all, it is the "colossus of the South," so opportunities abound and numbers are larger. In fact, the story is much the same throughout the continent. Take Guatemala, another country richly endowed with resources that offered fine prospects for a success story for capitalism after the US regained control in 1954 -- and another case that should inspire us with pride in our accomplishments, so impressive in comparison with the wreckage left by the despicable enemy.
Guatemala now boasts a higher level of child malnutrition than Haiti, according to UNICEF. The Health Ministry reports that 40 percent of students suffer from chronic malnutrition, while 2.5 million children in this country of 9 million suffer abuse that leads them to abandon school and become involved in crime. A quarter of a million have been orphaned by political violence. The condition of children is not very surprising when 87 percent of the population live below the poverty line (up from 79 percent in 1980), 72 percent cannot afford a minimum diet (52 percent in 1980), 6 million have no access to health service, 3.6 million lack drinking water, and concentration of land ownership continues to rise (2 percent now control 70 percent of the land). Purchasing power in 1989 was 22 percent of its 1972 level, dropping still further as the neoliberal measures of the 1980s were intensified.
We need not linger on the record of mass slaughter, genocide in the highlands, disappearance, torture, mutilation, and other standard accompaniments of Free World victories; admittedly, a display of imperial benevolence that has been somewhat excessive in the case of Guatemala. The contours, at least, should be recalled. The terror began as soon as the US-run military coup succeeded in overthrowing the reformist capitalist democracy. Some 8000 peasants were murdered in two months in a terror campaign that targeted particularly United Fruit Company union organizers and Indian village leaders. The US Embassy participated with considerable fervor, providing lists of "Communists" to be eliminated or imprisoned and tortured while Washington dedicated itself to making Guatemala "a showcase for democracy." At a comparable stage, the Khmer Rouge were condemned for genocide. Terror mounted again in the 1960s, with active US participation. The process resumed in the late 1970s, soon reaching new levels of barbarism. Over 440 villages were totally destroyed and well over 100,000 civilians were killed or "disappeared," up to 150,000 according to the Church and others, all with the enthusiastic support of the Reagan Administration. Huge areas of the highlands were destroyed in a frenzy of irreversible environmental devastation. The goal was to prevent a recurrence of popular organization or any further thought of freedom or social reform. The toll since the US regained control is estimated at about 200,000 unarmed civilians killed or "disappeared," and in the highlands, episodes that qualify as genocide, if the word has meaning. In an amazing triumph of the human spirit, popular forces and leaders continue their struggle against US-inspired neo-Nazism.20
The terror continues, still arousing little notice in the US or the West generally. The report of the Archbishop's Office of Human Rights for the first half of 1992 reported at least 399 assassinations, many of them "extrajudicial actions" of the state security forces and their allies. "Every day dozens of attacks upon constitutional rights are reported." The terror has its place in the neoliberal economic program. "Twenty union leaders fled into exile in 1991 because of death threats against themselves and their families," according to the State Department's annual human rights review. When workers began to form a legally recognized union in the US-owned Phillips-Van Heusen company in 1991, the result was death threats, raised production quotas and the shooting of an organizer to deter any threat to the working conditions that enable foreign-owned clothing assembly plants to make their contribution to the "economic miracle": under $2 wages for 16 hours of work, stifling warehouses with few fans and locked exits, and physical and sexual abuse, according to a complaint by US unions to the US Trade Representative Office.21
As for the "showcase of democracy," an election was scheduled for 1963, but it was prevented by a military coup backed by the Kennedy Administration to block the participation of Juan José Arévalo, the founder of Guatemalan democracy, who had been elected in 1945 after the overthrow of the US-backed Ubico dictatorship. A 1966 election extended military control over the country, setting off another wave of terror. The 1985 election was proclaimed by the US Embassy to be the "final step in the reestablishment of democracy in Guatemala." The November 1990 elections ended in a draw between two right-wing neoliberal candidates, who managed to stir up 30 percent of the electorate (counting valid votes). In the runoff election won by Jorge Serrano, abstention was even higher.
These achievements aside, the prevailing social conditions are the result of another successful experiment: the development model introduced by US advisers after the 1954 coup terminated the ten-year episode of capitalist democracy. As terror improved the investment climate, export-oriented economic programs led to rapid growth in production of agricultural commodities and beef for export, destruction of forests and traditional agriculture, sharp increase in hunger and general misery, the world championship for DDT in mothers' milk (185 times World Health Organization limits), and gratifying balance sheets for US agribusiness and local affiliates. The new maquiladoras are having a similar impact. Current economic plans, under the guidance of US advisers, are intensifying this range of effects.
No less predictably, in his January 1992 report to Congress, President Serrano declared the results of the properly neoliberal economic program (including the 100 percent increase for the military in the 1992 budget) to be an "economic miracle," while Western commentators applauded and looked forward to still further triumphs of capitalist democracy.
We may recall, in passing, that the main victims are indigenous people, who constitute over half the population. Their travail began long ago. "At no time before the [Spanish] conquest," Susanne Jonas writes, "did the Indians suffer the systematic material deprivation that has characterized Guatemala since 1524," and "although Bartolomé de Las Casas's figure of 4-5 million Indian deaths in Guatemala between 1524 and 1540 may be exaggerated, its thrust is accurate. An estimated two-thirds to six-sevenths of the Indian population in Central America and Mexico died between 1519 and 1650."22
Child slavery has long been documented in the traditional service areas. India alone is reported to have some 14 million child laborers, aged six and up, many working under conditions of virtual slavery for up to 16 hours a day. As always, this is a reflection of general social conditions. A detailed study in a leading Indian journal of "one of South India's most fertile and productive regions" found "a story of narrowing options, desolation and despair -- and, increasingly, of death" from starvation and suicide, with at least 73 starvation deaths among weavers in two months of 1991. The deteriorating conditions result from the "frenzied export drive" and accompanying "strategy of taxing the poor and pampering the rich," policies to be accelerated under the IMF-designed structural adjustment policies for which India is now widely praised.23
The situation in Thailand has long been notorious, condemned by international and Thai human rights groups while Thailand is hailed in the West as another "success story for capitalism." The Bangkok press alone offers harrowing testimony. Cambodia specialist Michael Vickery provides a recent sample, including the case of teenagers "freed...from a factory where they were allegedly detained for slave labour and tortured," tied up and beaten when they became too tired to work after 18-hour shifts; eighteen girls aged 12-14 rescued from a textile mill where they worked over 15 hours a day "for almost no pay"; teenagers fleeing from poverty in the Northeast dragooned into factories or forced into brothels for European and Japanese tourists. A leading Thai political scientist comments:
In Thailand, we occasionally hear stories about young children sold into bondage by their parents. These young indentured servants work under harsh conditions...and for many, the bondage will be renewed when the parents make out another loan from the employer. [Young girls] would be forced to work in a factory normally not registered with the Minister of Industry... as young as nine -- would be literally imprisoned by the boss for up to 12 hours a day...those who complained or attempted to escape would be harshly punished.
This is apart from the normal misery and brutal exploitation of the millions of poor.
"Year after year, such incidents are revealed in the Thai press," Vickery observes, "and although the authorities express shock each time, no substantial reform ever results. This is because such atrocities, and we must call them by their true name, are systemic in the Thai type of capitalism" -- more generally, in the "economic miracles" that are the "success stories of capitalism." It is all more "irony," given the locus of the plague. Another "irony" is illustrated by Vickery's acid comment on the treatment of Cambodia and Vietnam, tortured and strangled by US-run economic warfare, in comparison to Thailand, a major aid recipient: "While Vietnamese farmers are getting greater control over land and its produce, Thai farmers are losing theirs and their children are forced into types of exploitation which have not been discovered in Vietnam since 1975, even by the most hostile observers."24
Surveying the Latin American region in a Peruvian Church journal, Uruguayan journalist Samuel Blixen reports that in Guatemala City, the majority of the 5000 street children work as prostitutes. In September 1990, three bodies of children were found with their ears cut off and eyes gouged out, a warning about what would happen to witnesses of abuse of children by the security forces, formal or informal. In Peru, children are sold to the highest bidder to pan for gold; according to a young campesina who escaped, they work 18 hours a day in water up to their knees and are paid with a daily ration sufficient to keep them alive. In Guayaquil, Ecuador, some 100,000 children from 4 to 14 work 10- to 12-hour shifts for low wages, many of them victims of sexual abuse. "In Panama the Minors Protective Tribunal buildings were bombed during the 1989 US invasion, rendering work nearly impossible. Following the invasion the number of criminal gangs robbing stores in search of food increased," with about 45 percent of robberies attributed to children using stolen military weapons. UNICEF reports that 69 million children in Latin America survive by menial labor, robbing, running drugs, and prostitution. A study released by the health ministers of the Central American countries in November 1991 estimated that 120,000 children under five die annually in Central America from malnutrition (one million are born annually), and that two-thirds of the survivors suffer from malnutrition.
"Until recently," Blixen writes, "the image of the abandoned Latin American child was of a ragged child sleeping in a doorway. Today the image is of a body, lacerated and dumped in a city slum -- those who survive that far."25
A leading Mexican journal reports a study by Victor Carlos García Moreno of the Institute for Law Research at the Autonomous National University of Mexico (UNAM), presented at a conference on "International Traffic in Children" in Mexico City. He found that about 20,000 children are sent illegally to the United States each year "for supplying illegal traffic in vital organs, for sexual exploitation, or for experimental tests." Mexico's leading daily, Excelsior, reports that "Another element of abuses against minors [in Guatemala] is the existence of various illegal `crib houses' responsible for the `fattening' of newborns who are sent out of the country for their organs to be sold in the United States and Europe." A Professor of Theology at the University of São Paulo (Brazil), Father Barruel, informed the UN that "75 percent of the corpses [of murdered children] reveal internal mutilation and the majority have their eyes removed." The President of the Episcopal Council of Latin America, Archbishop Lopez Rodriguez of Santo Domingo, stated in July 1991 that the Church "is investigating all the charges concerning sale of children for illegal adoption or organ transplant."
There have been numerous allegations about kidnapping of children for organ transplant in Latin America; whether true or not, the fact that they are taken seriously, from the press to academic researchers and government agencies, is indicative of the conditions of existence for children.26
And other superfluous creatures as well. The British Medical Journal reported an Argentine judicial investigation that led to arrest of the director of a state-run mental hospital, doctors, businessmen and others, after "evidence of the trafficking of human organs" was unearthed, among other crimes. AFP reported that "Argentines were aghast at the near-hallucinatory revelations of the horrors involving disappearances, trafficking in corneas, blood, babies, contraband and corruption" for more than a decade at the hospital, and the discovery in Uruguay of a "gang of organ smugglers headed by Argentinians." "There is traffic in children and organs," the Argentine Minister of Health reported.
A novel idea was implemented in Colombia, where security guards of a medical school murdered poor people and sold the bodies to the school for student research; reports indicate that before they were killed, organs that could be sold on the black market were removed. These practices, however, scarcely make a dent in one of the worst human rights records in the continent, compiled by security forces that have long benefited from US training and supply and have now become one of the hemisphere's top recipients of US military funding. As elsewhere, the main targets for mutilation, torture, and murder are priests, union activists, political leaders and others who try to defend the poor, form cooperatives, or otherwise qualify as "subversives" by interfering with the neoliberal economic model implemented under instructions from the US and the World Bank.27
These development programs have other features, among them, an epidemic of pesticide poisoning that has reached the few corners of our little region over here that, for a time, escaped the deadly impact of the neoliberal doctrines. In Costa Rica, "legal pesticides -- many of them imported from the United States -- are making people sick, injuring them, even killing them," Christopher Scanlan reports in the Miami Herald from Pitahaya, where a 15-year old farm worker had just died of poisoning by a highly toxic American Cyanamid product. The village cemetery of Pitahaya, he continues, "is a stark symbol of a global death toll from pesticides estimated at 220,000 a year by the World Health Organization," along with 25 million incidents a year of illness, including chronic neurological damage; the Guaymí Indians who die from pesticide poisoning cleaning drainage ditches at US-owned plantations in Costa Rica and Panama are unlikely to make it to a village cemetery. More than 99 percent of deaths from acute pesticide poisoning occur in Third World countries, which use 20 percent of agricultural chemicals.
With "markets closed at home" by regulations to protect the population and the environment, "chemical companies shifted sales of these banned chemicals to the Third World where government regulations are weak." The corporations have also devised new "nonpersistent" pesticides that "are generally much more acutely toxic" to farm workers and their families, including some "first developed as nerve gas by the Germans before World War II." Physicians in Costa Rica are calling for removal of killer chemicals from the Third World market, but "the Bush administration sides with the industry," Scanlan reports. Its position is that the solution does not lie in interference with the market -- to translate to English: profits for the rich. Rather, in "educating people about the risk," William Jordan of the Environmental Protection Agency explains. Progress has its problems, he concedes, but "you cannot simply ignore progress." An American Cyanamid executive says "I sleep at night very comfortably." So do leaders and ideologists generally, except when their rest is disturbed by the faults of official enemies and their retrograde doctrines.28
The United States has never been very happy with Costa Rica, despite its almost total subordination to the wishes of US corporations and Washington. Costa Rican social democracy and successes in state-guided development, unique in Central America, were a constant irritant. Concerns were relieved in the 1980s, as the huge debt and other problems gave the US government leverage to move Costa Rica closer to the "Central American mode" lauded by the press, but the Ticos still don't know their place. One problem arose in November 1991, when Costa Rica renewed its request to the US to extradite US rancher John Hull, who was charged with murder in the La Penca bombing in which six people were killed, as well as drug running and other crimes. This renewed call for extradition was particularly irritating because of the timing -- just as the US was orchestrating a vociferous PR campaign against Libya for its insistence on keeping to international law and arranging for trial of two Libyans accused of air terrorism either in its own courts or by a neutral country or agency, instead of handing them over to the US. The unfortunate coincidence did not disrupt the Washington-media campaign against Libya, thanks to the scrupulous suppression of the Costa Rican request.
Yet another Costa Rican crime was its expropriation of property of US citizens, for which it was duly punished by the freezing of promised economic assistance. The most serious case was the confiscation of the property of a US businessman by President Oscar Arias, who incorporated it into a national park. Costa Rica offered compensation, but not enough, Washington determined. The land was expropriated when it was found that it had been used by the CIA for an illegal air strip for resupplying US terrorist forces in Nicaragua. Arias's expropriation without adequate compensation is a crime that naturally calls for retribution by Washington -- and silence by the media, particularly as they are railing against Libyan terrorism.29
The effrontery of the powerful often leaves one virtually speechless.
Another Miami Herald reporter surveys the "barren future" that "looms for Central America" as forests there and in Mexico vanish at a rate "faster than any other region on Earth except West Africa," perhaps to "disappear within our lifetime." The accelerating destruction is caused by poor farmers, lumbermen, and people seeking firewood, but "experts throughout the region blame rapid deforestation on unfair land distribution" throughout the region, including even Costa Rica, which "boasts one of the highest rates of deforestation in the world." Another major factor is the US-initiated counterinsurgency doctrine, with its emphasis on blasting people out of their homes and lands with massive firepower if they cannot be controlled. The Central American Committee on Water Resources warned that the ecological disaster is also severely diminishing water supply. "The main lagoons and rivers which supply water to the people are about to be destroyed by continuous deforestation in the region," one high official said after a July 1992 regional meeting, also "setting back the generation of electricity and possible economic growth in the region."
"The concentration of the best land into vast coffee, cotton and sugar estates owned by a small elite meant hundreds of thousands of peasants were forced to eke a living off steep, marginal land," Tom Gibb reports from El Salvador, where firewood may disappear in a decade and 90 percent of rivers are contaminated. The destruction might still be averted, but that would "require a change in the political atmosphere that has dominated El Salvador for decades: peasant farmers are afraid to organize and work in groups for fear of being labeled `subversive'."30
To rephrase in more realistic terms, farmers are aware that efforts to organize will call forth another US-sponsored wave of torture and massacre to bar any interference with our high ideals of economic liberalism for the Third World.
A study of the Costa Rican economy by the Washington World Resources Institute and the Tropical Science Center in Costa Rica concludes that each year, 5 percent of the Gross Domestic Product "has vanished without a trace" and that depreciation of natural resources has robbed the country of almost 30 percent of its potential net growth over the past 20 years. A quarter of the estimated growth rate from 1970 through 1989 disappears when these factors are considered.31
These effects will only increase as neoliberal models are more firmly implanted. In Costa Rica, they were firmly in place by 1985, earlier in much of the region -- and in fact, they are only a variant of traditional US programs. After five years of IMF Fundamentalism in Costa Rica, the predicted growth had not occurred though the trade deficit grew substantially, fed primarily by imports from the US; the minimum wage had lost 25 percent of its buying power, with 37 percent of salaried workers paid below the legal minimum. Average family incomes declined by 10 percent through the 1980s, except for the top 5 percent, and buying power of workers continues its decline. The Ministry of Labor reported that under President Calderón's neoliberal rule, poverty had increased 18 percent in 1991 alone, leaving 35 percent of Costa Rican families unable to satisfy their most basic needs, a home census of the Ministry of Economy revealed. 1991 marks a sharp increase in the poverty rate, "a consequence of the kind of economic adjustment applied in recent years," a researcher added. "Representatives of the World Bank and USAID have showered the Calderón administration with praise for its economic program," CAR reports.32
Costa Rica is the Central American exception, a special case. When we turn to the "Central American mode," the situation is vastly worse. In Honduras, IMF measures "have provoked mass unemployment [to two-thirds of the population] and skyrocketing inflation," with sharply rising prices for fuel, food, and medicine (CAR ). President Callejas concedes that these policies have had "a negative effect on the vast majority of the population"; but, CAR observes, he "is willing to pay this price, however, to satisfy international lenders and continue promoting a free market economy." Callejas and his associates, needless to add, are not those who "pay the price." In El Salvador, 90 percent of the population live in poverty and only 40 percent have steady employment. The 1990 structural adjustment program put 25,000 more out of work and substantially reduced exports, and despite increase in minimum salaries, "the price of the basic family basket far outstrips workers' income." Almost 80 percent of private bank loans go to large businesses; of agricultural loans, 60 percent went to coffee growers, 3 percent to small-scale basic grain producers. Reserves have risen, the Central Bank reports, but not because of the austerity measures; rather, as a result of the $700 million sent by Salvadorans abroad, many of them refugees fleeing the state terror of the past decade, which, in this way, did produce an "economic success story." Mass terror has declined, but terror continues at a low level. On July 31, 1992, a top leftist union leader, Ivan Ramírez, was murdered by unidentified gunmen in the style of the death squads. We turn to Nicaragua directly.33
The effects of IMF Fundamentalism, now administered with renewed fervor, "have been catastrophic" in Central America, the Jesuit journal Envío reports. Inflation has increased. Fiscal deficits have not declined as anticipated, but GDP growth has stagnated since 1985 and declined since 1988. Real wages have substantially fallen almost everywhere in Latin America, and the distribution of income is becoming even more skewed than before. "The word `development' has disappeared from Latin America's economic vocabulary" -- though "profit" is on everyone's lips, for the foreigner and the domestic islands of privilege. The same can only be expected elsewhere. Discussing what lies ahead for India under IMF-designed restructuring, two economics professors at the Bombay Institute of Development Research review the consequences of such programs worldwide, drawing the "unambiguous" conclusion from "economic theory and the recent economic history of developing countries": the effects are "tremendous hardship for the poor and working people" and "great hardship on the economies of developing nations"; no less unambiguous are the benefits for the privileged sectors and their foreign associates, who call the tune.34
There are many other "success stories" in the Caribbean and Central America, the Philippines, Africa, in fact wherever Western power and capitalist ideology have reached. The few partial exceptions, mostly in the Japanese orbit, have escaped by radically violating the prescribed rules of the game, under special circumstances that are not likely to recur.35 These basic truths and their meaning, which would be taught in elementary schools in free societies, must be kept far removed from consciousness as we advance towards Year 501 of the Old World Order.
And so they are. Merely to take the case closest to hand, the US-run charnel house in Central America in the 1980s, we find that cultivated opinion takes pride in what we have wrought. Typical is a report by Washington Post Central America correspondent Lee Hockstader on a meeting in Guatemala of the new breed of conservative Presidents, freely elected at last without a trace of foreign influence. This "new wave of democracy" has "shifted politicians' priorities" from the days when they "traditionally represented the established order." The proof is that they have now dedicated themselves to serving the poor with an imaginative new approach: "Central Americans to use Trickle-down Strategy in War on Poverty," the headline reads. "Committed to free-market economics," the Presidents have abandoned vapid rhetoric about land reform and social welfare programs, adopting at last a serious idea: "a trickle-down approach to aid the poor." "The idea is to help the poor without threatening the basic power structure," a regional economist observes. This brilliant and innovative conception overturns the "preferential option for the poor" of the Latin American Bishops. Now that we have driven this naive idea from the heads of our little brown brothers by Pol Pot-style terror, we can return to our traditional vocation of serving the poor, somehow not drowning in our own hypocrisy -- the one truly memorable achievement.
Barbara Crossette reports in the New York Times that Central America illustrates "what Bush Administration officials regard as one of their most successful foreign policy initiatives: to bring peace, disarmament and economic development to this tormented region"; she wastes no words on how and why it was tormented, and by whom. "The strategy was immeasurably assisted by the collapse of the Soviet Union," she continues, repeating the convenient fairy tale that the US assault was undertaken in defense against the Evil Empire. El Salvador is "the most violent theater of East-West conflict in the hemisphere," Tim Golden proclaims on the front page; perhaps some Soviet counterpart wrote in 1956 that Hungary is "the most violent theater of East-West conflict in Eastern Europe" -- however shameful, a claim that would have been far more plausible, in the irrelevant real world.
For the larger picture, we naturally turn to New York Times chief diplomatic correspondent Thomas Friedman, who takes as his text Congressman Les Aspin's proclamation that "The emerging world is likely to lack the clarity of the cold war... The old world was good guys and bad guys. The new world is gray guys." Developing this theme, Friedman observes that "Normally, Washington gets rather exercised about the toppling of freely elected presidents." But now life is harder. Some of those elected may not be clean upstanding folk as in the past, and we may have to make sharper discriminations. It won't be as easy as when Washington got "exercised about the toppling of" Goulart, Arbenz, Allende, Bosch ....
Even before, we did not always support only good guys, Friedman recognizes, recalling such unpleasant folk as the Shah and Marcos. But that deviation from high principle is easily handled: "During the cold war the United States did not really have the luxury or burden of choosing its friends," but "simply had to identify who was with it in the grand struggle with the `Evil Empire' led by Moscow." Our real values were demonstrated by the "fact" that "Washington did press for democracy, free markets and other ideals" -- a declaration of some audacity, but safe enough in the reigning intellectual culture.
The "Soviet threat" forced on us "a degree of cynicism in foreign affairs, which was contrary to our nature and traditions," a senior Administration policymaker adds with the Times imprimatur. Neither tarries on some questions that come to mind. To mention a few: How are "our nature and traditions" illustrated by our practice before the Soviet Union threatened our existence in 1917? Or by the regular pattern of concocting "Soviet threats" on the most ludicrous pretexts to justify atrocities undertaken to preserve "stability" in our special sense of the term? Nor do they trouble to explain exactly what the Soviet threat had to do with our support for genocidal monsters from Indonesia to Guatemala, or how it explains the close correlation between torture and US aid.
The same official warns that we should not revert to our traditional stand "of granting idealism a near exclusive hold on our foreign policy." The world is still too harsh a place for us to "revert to form," slipping back unthinkingly to our role of world benefactor while ignoring "the national interest," bemused by "Wilsonian" idealism. The latter concept has an interesting status; it does not refer to what Wilson did -- for example, his murderous interventions in Haiti and the Dominican Republic -- or even what he said, when push came to shove. The same holds, more generally, of the concept "our values." Thus, Friedman quotes Harvard political philosopher Michael Sandel, who expresses his concern that we will persist in past practices instead of rising to the current challenge. "For years we have just pressed a shorthand version of our values -- free elections and free markets -- without realizing that the fullest expression of our values required more" than the limited mission of righteousness that has guided us heretofore. As in the case of Wilsonianism, the concept "our values" is entirely independent of what we do or even profess, except before the cameras.
With the global enemy out of the way, "the emerging yardstick is one of democratic values," Friedman concludes, doubtless thinking of George Bush's attitude towards Suharto, the Gulf emirates and Saddam Hussein (before his unfortunate error of August 2, 1990), and other attractive figures whose appeal has outlasted the Cold War -- and had little to do with it in the first place.
"No satire of Funston could reach perfection, because Funston occupies that summit himself," Mark Twain wrote, referring to one of the heroes of the Philippine slaughter: he is "satire incarnated."36
The device of eliminating history by a wave at the Cold War, no matter how foolish the pretense, is one that is to be highly recommended to the aspiring servant of power, given what history actually tells us. This is only the most recent application of the technique of "change of course," regularly invoked when some ugliness finally breaks through the elegant and smoothly functioning mechanisms of suppression: Yes, there was an unfortunate lapse, but now we can march on behind the banner of our high ideals.
The doctrine of "change of course" is only one of the devices that must be mastered by those who hope to attain respectability and prestige; several others have been mentioned, and we turn to other handy procedures below. The preceding discussion has touched upon a more subtle array of notions that are essential for the aspiring intellectual: "economic miracle," "American success story," "free market triumph," etc. These are elusive, and require a bit of care.
The term "economic miracle" refers to a complex of nice macroeconomic statistics, great profits for foreign investors, and a life of luxury for local elites; and, in the small print, increasing misery for the general population, quite typically. It is no wonder that these miracles are so admired by commentators in the press and elsewhere. As long as the façade remains in place, such societies are "American success stories" and "triumphs of capitalism and the free market." But when it collapses, the very same examples turn into a demonstration of the dread pitfalls of statism, socialism, Marxism-Leninism, and other sins.
The Brazilian case illustrates the doctrinal pattern. Gerald Haines was not alone in celebrating the triumph of capitalism and American know-how in Brazil, though his timing -- 1989 -- was a bit off. The brilliant achievements of the Generals and their right-thinking technocratic advisers made Brazil "the Latin American darling of the international business community," Business Latin America reported in 1972. Arthur Burns, Chairman of the Federal Reserve, was full of praise for Delfim's "miraculous" work. As the "Chicago boys" were invited in by another collection of fascist killers after the overthrow of Allende in Chile a year later, Chicago school economist Arnold Harberger held up Brazil "as the exemplar of a glowing future under economic liberalism," David Felix recalls. A few years later, in a 1980 interview, he was to applaud Pinochet's successes under the same model: "Santiago has never looked better. Consumer goods from all over the world are readily available at cheap prices"; there are even jobs for people with the right qualifications, like police torturers. True, real wages had collapsed, but the real value of imports was up 38 percent by 1980, thanks to the increase of 276 percent in luxury goods while capital imports fell sharply. Foreign debt skyrocketed (to be paid off later by the poor), and unions and peasant movements had been crushed in a wave of terror. But the rich were doing just fine; everything was on course in Chile, as in Brazil, thanks to proper application of economic theory.
By the early '80s, the Brazilian economy was spinning towards disaster, and the tune changed. Brazil was dropped from the list of "neo-liberal successes," Felix observed in 1986, though some had not heard the message. In a 1989 discussion of the Brazilian military regime, Harvard Government professor Frances Hagopian, like Haines, still admired "the impressive extent to which the military succeeded in its economic objectives," while expressing doubts as to whether this "extraordinary economic success" really required the repression and torture.37
While the "economic miracle" was churning merrily along, Brazil's achievements were heralded as a demonstration of the marvels of free-market capitalism, the happy result of American guidance and kind assistance. After the collapse, Brazil demonstrates the failure to follow US advice and the sound principles of economic liberalism. Brazil's plight is attributed to its state socialist deviation from economic orthodoxy. We thus derive yet another proof of the superiority of capitalism and the free market. To account for Brazil's sorry state, we may now invoke the very measures that brought about the "free market triumph" while it was still possible to be dazzled by the "economic miracle": the indefinite wage controls instituted by the much-praised neoliberal economist Delfim, the state corporations established to overcome the severe recession caused by monetarist strategies and to prevent a complete takeover of the economy by foreign corporations, and the import-substitution strategy that kept the economy afloat in the mid-1980s.
It all goes to show, once again, how supple an instrument ideology can be, in well-trained hands.
A great sigh of relief accompanied the victory in 1989 of the attractive representative of the Brazilian elite, Fernando Collor de Mello, in an election in which the two candidates could actually be distinguished without a microscope, the other being the labor leader Luís Inácio da Silva ("Lula"). With "the playing field levelled" by Collor's huge financial resources and clear warnings by those who own the country that they would sink it down the tube if the elections came out the wrong way, Collor was able to eke out a victory. There was great enthusiasm in the doctrinal institutions as he set forth on the approved neoliberal path, with expectations for yet another "success story for American-style capitalism." Briefly, however. The economy fell from 3.3 percent growth in 1989 to -4.6 percent in 1990. Per capita income fell by 6 percent from 1990 to 1992 as production continued to decline, health spending was cut by 33 percent, education spending sank further, and the tax burden on wage earners rose 60 percent. By mid-1992, James Brooke reports, "Mr. Collor's failed economic policies" were "feeding national discontent." And to top it off, Collor was facing impeachment after exposure of a corruption scandal that also set new records.38
As in the case of Brazil, "success stories of capitalism and democracy" achieve this status irrespective of the means employed. The import substitution strategy that saved Brazil from utter ruin was also an essential component of the "economic miracles" of the Pacific Rim. These miracles came into being under harsh authoritarian regimes that intervened massively in economic planning and kept tight control (by terror if necessary, as at Kwangju), not only of labor, as is the norm, but of capital as well (see
chapter 4.2). The achievements of the NICs, constituting an "economic miracle," thereby illustrate the virtues of democracy and the free market. Thus the New York Times cites South Korea, Taiwan, Singapore, and Hong Kong to teach the lesson that "as an economic mechanism, democracy demonstrably works." And democratic socialist Dennis Wrong writes admiringly of the "striking capitalist successes" of the same grand democracies "under capitalist economies free from control by rickety authoritarian governments" -- correct, in that the authoritarian state capitalist governments were efficient, powerful, and interventionist, not "rickety" (in contrast, he explains, Cuba, Nicaragua, and other officially designated enemies demonstrate the failure of Marxist-Leninist dogma, no other factor in their travail being detectable to the properly blinkered eye). Washington Quarterly editor Brad Roberts writes that "Nondemocratic governments have on the whole shown themselves incapable of providing the framework necessary for economic adaptation...," thinking perhaps of the NICs, or in earlier years, Hitler Germany -- though in this case, we have to ask just what he means by "democratic," given his faith in "the US commitment to democracy abroad" and to the "protection of human rights," particularly in the 1980s.39
It is recognized that "economic miracles" have some attendant flaws. Discussing "Menem's Miracle" in Argentina, British correspondent John Simpson notes that "The miracle is not perfect." There are "unpleasant signs of corruption," "large sections of the middle class have sunk without trace" while "the new entrepeneurs and the old rich" happily shop in the "expensive shops," and there is substantial poverty. Unconstrained by the conventional reserve, James Petras and Pablo Pozzi fill in a few of the details. Since the onset of "Menem's Miracle" in 1989, "Neo-liberal private pillage has set up a system where individual wealth depends on public decay and economic regression," with some 40 percent of the economically active population unemployed or underemployed, proliferating shantytowns, factories closed and not replaced by new enterprises, exploitation of the state as "an instrument for personal enrichment and private pillage," reduction of expenditures for health, education and welfare to all time lows, negative growth rates, decreasing yearly rate of investment, and declining real wages. By now, over 60 percent of the 12 million inhabitants of Buenos Aires are not connected to the sewer system, one reason for the return of diseases that had been eradicated decades ago. The "speculative economy, reinforced by a neo-liberal economic policy, which impoverishes most of the population while destroying Argentina's internal market and productive capacity, and scarce resources has generated a Hobbesian world, a savage struggle to survive while the elite continue to reap windfall profits." The "privileged minority whose wealth, level of consumption and standard of living have flourished" are enthusiastic about the neoliberal policies. "Menem's miracle" also includes "privatization," the new shibboleth, but with a twist: thus the government sold the state telephone monopoly to Spanish and Italian state corporations, and the national airline to the Spanish government airline Iberia, so that "management is merely transferred from Argentine to Spanish and Italian bureaucrats," David Felix observes.40
In short, an "economic miracle," in the technical sense.
The proper deployment of these ideas is also illustrated in the case of Mexico, where another gratifying "economic miracle" is in process, though "`Economic Miracle' Has Yet to Reach Mexico's Poorest," a front-page headline reads, followed by the familiar story. Elsewhere we learn that wages are at their lowest level in history, having dropped 60 percent under the neoliberal policies of the 1980s (National Autonomous University (UNAM) Institute of Economic Research and other economists); that half of all newborns in Mexico City have lead levels in their blood high enough to impair neurological and motor-physical development; and that nutritional levels have sharply declined. GDP has risen since 1987, UNAM economists observe, "but this larger production of wealth advanced in one direction, contrary to the gradual impoverishing of millions of Mexicans," concentrating "in the hands of businessmen." The 1990 census reports that 60 percent of households were unable to cover basic needs. Despite the growth of maquila production (foreign-owned, export-oriented), "the industrial sector employs fewer people now than it did a decade ago," economist David Barkin writes, and labor's participation in personal income declined from 36 percent in the mid-'70s to 23 percent in 1992 while rewards for the rich and to foreign investors are "fabulous," developments that have "aroused the admiration of the international press."
Attempting to entice foreign investors, the Mexican Secretary of Commerce stressed the sharp decline of the price of labor in Mexico, from $1.38 per hour in 1982 to $0.45 in 1990, an appealing prospect for GM, Ford, Zenith, and other foreign corporations, along with the useful absence of effective environmental restrictions. The wage level is ensured by brutal government repression of labor, with the participation of corrupt union leaders linked closely to the one-party state. The 1980s have been a particularly dim era in that respect. Typical is the experience of Ford workers at one major plant. In 1987, Dan LaBotz observes in a study of labor rights in Mexico, "the company fired the entire work force, eliminated the union contract, and then rehired the workers at a far inferior salary. When the workers attempted to win the right to democratic union elections, and to fight for their legally mandated benefits, they were subjected to beatings, kidnappings, and murder blatantly conducted through collusion between the Ford Motor Company" and officials of the union run by the always-ruling party. These are little-discussed but critical features of the North American Free Trade Agreement (NAFTA), crafted so as to guarantee optimal conditions for profit, whatever the human cost may be.
Foreign debt is increasing, along with the trade deficit, electoral fraud, government repression to bar labor organizing or critical public commentary (murder of several journalists a year makes the message clearer still), and torture that is "endemic" according to Amnesty International. As NAFTA is currently designed "most Mexicans will become irrelevant," Barkin predicts in a review of the crisis that has resulted from "more than 35 years of successful capitalist development" oriented to the needs of domestic wealth and foreign capital. But foreign investors are happy, as is the business-professional sector that benefits. Mexico is therefore put forth by Secretary of State James Baker as "a model" for reform in Eastern Europe and the Third World, an authentic "economic miracle."41
Lead headlines herald the good news: "A Breath of Fresh Economic Air Brings Change to Latin America," though we also learn that "Latin Debt Load Keeps Climbing Despite Accords" (Nathaniel Nash, NYT ). Another reads: "South Americans Find Economic Reform Has Initial Social Costs, People Say the New Wealth Is Slow to Trickle Down" (Thomas Kamm, WSJ ). Just hang in there; all will be well. As usual, we do not learn that the famed "trickle down" policies have, in the past, produced a tiny trickle indeed, though read closely, the current reports indicate why the same can be expected this time around. The indicators look fine from Washington and Europe, Kamm reports, but they conceal rapid concentration of wealth, increased poverty including "critical poverty," declining real wages, and the other usual concomitants of "miracles." Former Brazilian President José Sarney writes that "in all countries" of Latin America, the foreign banks and other usual beneficiaries reap their rewards, "and what's left is unemployment, slave wages, and terrible social indicators." "The rich continue to get richer, the gap between them and the middle and lower classes widen," and none of the policies that are so promising "have been able to wipe out poverty" (Nash), a curious and unexpected failure to achieve their goal, we are to understand.42
The most phenomenal success story of all is Chile, with its "prospering free-market economy generated by Gen. August Pinochet" (Nash). That is an established truth, repeated everywhere. True, Pinochet was tough, but the "economic miracle" carried out by his Chicago Boys from 1974 to 1989 is there for all to see. To see, if they do not look too closely.
Pinochet's "miracle" turned into the "Chilean catastrophe" in under a decade, David Felix writes; virtually the entire banking system was taken over by the government in an attempt to salvage the economy, leading some to describe the transition from Allende to Pinochet as "a transition from utopian to scientific socialism, since the means of production are ending up in the hands of the state" (Felix), or "the Chicago Road to socialism." The militantly anti-socialist London Economist Intelligence Unit wrote that "the believer in free markets, President Pinochet, had a more comprehensive grip on the `controlling heights of the economy' than President Allende had dared dream of." The government-controlled portion of the economy in 1983 was comparable to the Allende years after the state took over failing enterprises, which it sold off at bargain rates to the private sector when they were resuscitated, along with efficient and profitable public enterprises that were generating 25 percent of the government's revenues, Joseph Collins and John Lear note. Multinational corporations did very nicely in the process, gaining control over large parts of the Chilean economy. Citing Chilean economists, James Petras and Steve Vieux report that "an estimated $600 million in subsidies were provided to purchasers in the 1986-1987 wave of privatizations," including "efficiently run, surplus-producing operations"; the operation is expected to reduce government surplus by $100 to $165 million during 1990-1995.
Until 1980, Chile's GDP per capita did not approach the 1972 (Allende) level, and investment was still below the late 1960s while unemployment was far higher. Per capita health care was more than halved from 1973 to 1985, setting off explosive growth in poverty-related diseases such as typhoid and viral hepatitis. Since 1973, consumption dropped 30 percent for the poorest 20 percent in Santiago and increased 15 percent for the top 20 percent. Private hospitals proudly display their high-tech equipment for the rich, while public ones offer mothers an appointment months away and medicines they cannot afford. College education, free for everyone under Allende, is now for the more privileged; and they will not be exposed to the "subversives" who have been purged, but offered "sociology, political science, and economics courses...more like religious instruction in the revealed truth of free markets and the red peril" (Tina Rosenberg), as in Brazil under the generals, or other places that come to mind. Macroeconomic statistics in the Pinochet years are generally below those for the preceding two decades; the average GNP growth from 1974-1979 was just over half that of 1961-1971, while per capita GNP fell 6.4 percent and per capita consumption 23 percent from 1972-1987. The capital city of Santiago is now "among the most polluted cities in the world," Nathaniel Nash observes, thanks to the free market Friedmanite model with its slogan "Produce, produce, produce," come what may -- what we denounce as the "Stalinist model" when there are points to be scored thereby. What "came" was "the daunting cost of cleaning up, ...and the daunting cost of not cleaning up" in a country with "some of the world's dirtiest factories," no regulations, severe pollution of water supplies, and general environmental ruin with much-feared consequences for the health of the population.
And thanks to the miracle, along with a little US help in "making the economy scream" under the Allende government, the proportion of the population that fell below the poverty line (minimum income required for basic food and housing) increased from 20 percent to 44.4 percent from 1970 to 1987.
"Not much of a miracle," Edward Herman comments.43
In the bad old days, according to the doctrinal truths of 1992, our Latin American wards didn't listen to our sage counsel. Now, however, with the worldwide victory of economic liberalism and free trade, they understand, at last, the wisdom of our words. The chorus of self-adulation is untroubled by the usual problems, such as the fact that we never followed that model ourselves, nor did any other country that has developed except when it conferred advantage; and that contrary to the doctrine, Latin America quite commonly did follow our advice, as the review of Brazil illustrates. It is hardly the only case. The Kennedy-Johnson Alliance for Progress is another. One of its most highly touted success stories was Somoza's Nicaragua. The catastrophic "miracle" provided a popular base for the Sandinista revolution in 1979. The most respected Nicaraguan economist during the US war against Nicaragua was Francisco Mayorga, who became economic Czar under the US-backed UNO government (soon to be dispatched to oblivion when the recovery policies he initiated to much US acclaim proved an utter failure). During his day in the sun, the media and others who hailed Mayorga were careful to ignore his major scholarly work. This interesting 1986 study examined the failure of the "monetarist paradigm" that had been advocated and enthusiastically backed by the US, which left the economy "on the verge of collapse" by 1978, perhaps unresurrectable, Mayorga argued, no matter what economic policies had been pursued, even without the immense costs of US terror and economic warfare.44
Blithely ignoring all relevant facts (and crucially, the unmentionable US contribution), Latin America specialists in the press now inform us that "To the commercial pioneers of the post-Sandinista era, Nicaragua is ripe for a comeback after a decade of revolutionary mismanagement and two years of fiscal rehabilitation under President Violeta Chamorro" (Pamela Constable). True, businessmen still see problems, Constable notes: "the continuing threat of violence from labor unions" and armed factions in the countryside, and "the unresolved status of property" confiscated by the Sandinistas. But the "commercial pioneers" are optimistic. Particularly cheerful are private bankers and their clients. The Sandinistas nationalized banks "and began channeling state loans to farmers, rural cooperatives and small industry high-risk sectors," Tim Johnson writes in the Miami Herald. But, thankfully, such misbehavior is now over, and "the public is beginning to demand a lot more services from their banks," a private banker comments.
"The public" does not include the campesinos whose march against hunger was reported in the Mexican press a few days later, or the huge number of unemployed, or the children sniffing glue, or the semi-human figures celebrating the victory of capitalism and democracy while scavenging in the Managua garbage dump.
Shortly after, the government's National Development Bank (BND) announced a new credit policy under pressure from international lending institutions, CAR reported: "Under the Sandinista government, the BND provided subsidies and low-interest credit to cooperatives and small farmers with very few prerequisites, but those days are over." Now there will be "only guaranteed loans to clients with substantial collateral, leaving most peasant farmers out in the cold." Another feature of the new credit policy is that it "is expected to make it impossible for workers to pay off debts or make monthly bank payments on the companies they intend to buy." That will overcome a serious defect in the privatization process that the US demands as a condition for calling off its economic warfare: under the evil influence of the Sandinistas, the process allowed the wrong class of people -- workers in the enterprise -- to gain a share in ownership. That is quite improper, and inconsistent with the concept of "economic miracle."
To be sure, traditional US idealism will see to it that free market policies are not carried to excessive lengths: "the BND is considering financing large producers...at up to 70 percent of production costs," CAR notes.
The guiding US hand can also be seen in the measures to overcome "the unresolved status of property" that troubles the "commercial pioneers" and their cheerleaders in the US press. Envío reports that "The retrenching of the state banks towards medium- and large-scale production became evident in 1991, when the BND closed 16 branch offices in small towns throughout the country's central regions. Traditional financing mechanisms such as usury credit, futures sales, and sharecropping -- whose costs to the peasantry are well-known -- are coming into use again." Campesinos will be forced to leave their land, and it will return to its rightful owners.
To help the natural evolution along, the Army and National Police have been "utilizing all forms of violence and humiliation" to evacuate rural farmers from their lands, CAR reports; these lands had been distributed by constitutional decrees introduced by the Sandinistas, under which "farmlands and other properties abandoned or liquidated...were parceled out to landless campesinos in the form of small family subsistence plots or cooperative farms." In June 1992, 21 farms were violently "cleaned out" by the security forces, to be returned to their former owners; in 11 cases, to members of the Somoza family, according to the Nicaraguan Center for Human Rights (CENIDH). On June 30, CAR continues, 300 police and army troops "violently evicted 40 campesino families" with attack dogs, beating men, women, and children and threatening to kill campesinos who did not leave, burning homes and crops, and arresting activists of the Rural Workers Association. The security forces have imposed "a state of terror and blackmail" to prevent campesinos from organizing, CENIDH charged.
The police are now almost half ex-contras, it is estimated. The US failure to regain total control of the security forces has caused much outrage in Washington and the press. One major reason for the US war against Nicaragua was to restore that traditional control, so that the security forces can once again impose the "regional standards" of El Salvador, Guatemala, and Honduras, as in the Somoza days.45
Since the US-backed UNO government won the February 1990 election, rural poverty has "drastically increased" because of the acceleration of neoliberal policies, which has "wreaked havoc on Nicaragua's small and medium-sized farmers," CAR reports. In much of the countryside, people are "becoming more desperate each day, with more than 70 percent of the children in these areas suffering malnutrition and between 65 percent to 89 percent of the population unemployed." In the Atlantic Coast region, "not only are farmers suffering, but fishermen are losing 80 percent of their livelihood to foreign companies which the UNO government has authorized to fish in the Atlantic Coast waters." Serious diseases that were eradicated under the Sandinistas are now common in the region, where 90 percent of residents are unable to satisfy basic needs. A representative of the National Union of Farmers and Cattle Ranchers (UNAG) says that the stringent credit requirements for peasant farmers "are killing us": "Large nontraditional farms get all the funding they need, but a subsistence farmer growing beans or corn to feed his family is allowed to go bankrupt and starve." Thirty-two-thousand families are surviving on "roots and empty tortillas with salt," UNAG reports. Opening of the economy, reeling under the impact of the US embargo and the terrorist war, has "forced Nicaragua's homegrown industries to compete with giant multinational companies," John Otis observes. As the country is flooded with foreign products, small industries have declined from 3800 when Chamorro took office to 2500 two years later; Nicaragua even imports its own national beer from Wisconsin, under a Nicaraguan label. Importers, middlemen, luxury goods shops, and the local wealthy are doing fine, along with the foreigners for whom the policies are designed. The rest can wait for "trickle down," including the 50 percent or more unemployed.46
Per capita income has fallen to the level of 1945; real wages amount to 13 percent of their 1980 value, still falling. Infant mortality and low birth weight are increasing, reversing earlier progress. The reduction of the health care budget by 40 percent in March 1991 has seriously affected the already insufficient supply of medicines. Hospitals for the general public barely function, though the rich can have what they need as the country returns to the "Central American mode." "The right to health care no longer exists in post-war Nicaragua," apart from those rich enough to pay, the Evangelical Church (CEPAD) reports. A survey of prostitutes found that 80 percent had taken up the trade in the last year, many of them teenagers.
In May 1992, the US Congress suspended over $100 million of already approved aid, objecting to alleged government assistance to Sandinista organizations and failure to return property to former owners. "Extraofficially, it was learned that the government will give priority to United States citizens, to prominent Nicaraguan business people and to leaders of the former contras," the Mexican press reported, notably the North American Rosario Mining Co., which claims the gold mining installations in the northeast. The central issue is "whether the more than 100,000 peasant families who received land or title to land which they were already working under the Sandinista Administration will be able to keep their lands," as had been promised in the UNO program, Lisa Haugaard of the Central American Historical Institute observes.
Another issue is the independence of the security forces. In accord with longstanding policy, Washington insists that they be under US control -- that Sandinista officials be dismissed, to use the code words preferred by government-media propaganda. Other industrial countries, not having the traditional interest in running "our little region over here," dismiss these demands as absurd, considering the Sandinista FSLN to be a "solidly structured [party] with a significant political weight," the only large popular-based party in the country (Detlev Nolte, head of Germany's Institute of Ibero-American Studies). They object to the US policy of "again polarizing the situation," another German Latin American specialist adds. When the congressional hold on aid was dropped, the Bush Administration held it back anyway, in line with its deep commitment to bar even a minimal show of independence.47
As we gaze on what we have accomplished and envision the glorious future that awaits, we can take pride in "having served as an inspiration for the triumph of democracy in our time," as the New Republic exulted after the elections had been won by "the right side" in Nicaragua, a "level playing field" having been established by Washington's stern warning that any other outcome would be followed by continued economic strangulation and terror. We can, in short, join the editors in their praise for Washington's terror and violence, giving "Reagan & Co. good marks" for the gratifying mounds of mutilated corpses and hordes of starving children in Central America, recognizing, as they advised, that we must send military aid to "Latin-style fascists... regardless of how many are murdered" because "there are higher American priorities than Salvadoran human rights."48
Recall that in accord with official convention, the economic catastrophe of the past years in Latin America is the result of statism, populism, Marxism, and other evils, now to be cured by the newly discovered virtues of monetarism and the free market. This picture is "a complete fabrication," James Petras and Steve Vieux point out. The highly-touted new discoveries are just those that have led to catastrophe in the past -- with no little aid from US-sponsored terror and economic warfare. Furthermore, neoliberal dogma has ruled for years in these US-run "testing areas." Social expenditures dropped sharply from 1980, leading to public health disaster and educational collapse, except for the rich; growth stagnated or declined. There was one area of progress: privatization, providing great advantages to wealthy sectors at home and abroad, and diminishing public revenues still further when "efficiently run, surplus-producing operations" were sold off, as in Chile. "The brutal austerity programs of the 1980s were obviously the work of doctrinaire neoliberals," they point out, and the "dismal results" are directly traceable to their ideological fervor. The huge debt accumulated through the partnership of domestic military-economic elites and foreign banks awash with petrodollars is to be paid by the poor. "Wage earners sacrificed the most in making available the surplus needed to make payments on the external debt," the UN World Economic Survey 1990 observed.
"More than any geographic area in the world," correspondent Marc Cooper writes, "Latin America over the past decade took seriously the promise of the Reagan revolution" -- not quite by choice. The decade was marked by privatization, deregulation, "free trade," destruction of unions and popular organizations, opening of resources (including national parks and reserves) to foreign investors, and all the rest of the package. The effects have been disastrous, predictably.49
The celebration in the doctrinal institutions is also entirely predictable. Blame for past catastrophes has to be shifted to the shoulders of others. Any role that the US masters have played is, by definition, marginal at most, to be attributed to Cold War imperatives. And as the old doctrines produce new "economic miracles," there is every reason for the ideologues of privilege to applaud, as they always have, and as they will continue to do as long as power offers them that task.
1 Evans, Dependent Development, 51ff. WP, May 6, 1929; New York Herald Tribune, Dec. 23, 1926; CSM, Dec. 22, 1928; NY Post, Dec. 21, 1928; WSJ, Sept. 10, 1924; cited by Smith, Unequal Giants, 186f., 135f., 82. Krenn, US Policy, 122. Green, Containment, 8f.
2 Smith, Unequal Giants, 3ff., 35f., 134.
3 Evans, Dependent Development, 70; Rabe, Road to OPEC, 110.
4 Haines, Americanization; Leffler, Preponderance, 258, 339. Ch. 2.2.
5 Cited by Kolko, Politics, 302f. Green, Containment, ch. 11. The situation is more complex; see ch. 2.2.
6 See TTT, ch. 2.3. Bismarck quoted by Nancy Mitchell, ms., SAIS, Johns Hopkins, 1991, forthcoming in Prologue. Stimson, p. 42, above.
7Green, Containment, 74f., 315n.; ch. 2.1, above.
8 NSC 5432, August 1954; Memorandum for the Special Assistant to the President for National Security Affairs (McGeorge Bundy), "Study of U.S. Policy Toward Latin American Military Forces," Secretary of Defense, 11 June 1965. See PI, lecture I, for further details. Green, Containment, 180f., 259f., 103, 147f., 174f., 188. On Latin American military, see also Leffler, Preponderance, 59f. On the aftermath in Bolivia, see, DD, 395f.; and ch. 3.4, above.
9 See ch. 5, n. 5. Agee, Inside, 361-2.
10 Parker, Brazil; Leacock, Requiem; Skidmore, Politics; Hewlett, Cruel Dilemmas. See also Black, US Penetration.
11 Felix, "Financial Blowups" (ch. 4, n. 5); Evans, op. cit.; Herman, Real Terror Network, 97.
12 Skidmore; Evans, 4. Mario de Carvalho Garnero, chairman of Brasilinvest Informations and Telecommunications, O Estado de São Paulo, Aug. 8 (LANU, Sept. 1990); Latin America Commentary, October, 1990. CIIR, Brazil. On the broader context, see DD, ch. 7.
13 Americas Watch, Struggle for Land; Brazilian journalist José Pedro Martins, Latinamerica press, June 4, 1992; George Monbiot, Index on Censorship (London), May 1992; Isabel Vincent, G&M, Dec. 17, 1991. Generally, see Hecht and Cockburn, Fate.
14 Dimerstein, Brazil; Blixen, "`War' waged on Latin American street kids," Latinamerica press, November 7, 1991; Gabriel Canihuante, Ibid., May 14, 1992; Moffett, CSM, July 21, 1992; Maité Pinero, Le Monde diplomatique, August 1992.
15Rabe, Road. Krenn, US Policy, on earlier period.
16 Excelsior (Mexico City), Nov. 11, Nov. 21, Dec. 4, 1991; Jan. 30, 1992 (LANU ).
17 Brooke, NYT, Jan. 21; AP, NYT, Feb. 5; Douglas Farah, BG, Feb. 10; Stan Yarbro, CSM, Feb. 12, 1992.
18 AP, NYT, Feb. 5; Joseph Mann, FT, Feb. 5; Brooke, NYT, Feb. 9; Yarbro, CSM, Feb. 11, 12, 1992.
19 Seabrook, Race & Class (London), 34.1, 1992.
20 TTT, MC; Jonas, Battle.
21 Excelsior, July 21, 1992; Shelley Emling, WP, Aug. 1, 1992.
22 Jonas, Battle. David Santos, Excelsior, June 20, 1992 (CAN); CAR, Jan. 17, 1992; Florence Gardner, "Guatemala's Deadly Harvest," Multinational Monitor, Jan./Feb. 1991; Report from Guatemala, Spring 1992. On US government perspectives on Guatemalan democracy, see DD, chs.3.6, 8.3, 12.5.
23 Edward Gargan, NYT, July 9, 1992. Frontline (India), Dec. 6, 1991.
24 Vickery, "Cambodia After the `Peace'," ms. (Penang, Malaysia, Dec. 1991). See his Cambodia for comparative discussion of Cambodia and Thailand. For a small sample of the plague of child slavery, see TNCW, 202, 283.
25 Blixen, op. cit.; Excelsior (Mexico), Nov. 5, 1991 (CAN ).
26 Unomásuno, Oct. 13, 1990; David Santos, Excelsior, June 20, 1992; Pinero, op. cit. "Honduras: A Growing Market in Children?," CAR, June 5, 1992. See also UN Economic and Social Council, Commission on Human Rights, E/CN.4/Sub.2/1992/34, 23 June 1992. DD, ch. 7.
27 "Argentina uncovers patients killed for organs," BMJ, summer 1992; AFP, March 8, 1992, cited in LANU, April-May 1992; Pinero, op. cit. For additional reports from Latin America, see DD, 220-1. Colombia, also Reuters, BG, March 3, 5, 1992; Ruth Conniff, Progressive, May 1992, On the US role, see DD, ch. 4.5.
28 Scanlan, MH, May 28, 1991; CT, 243.
29 US-Costa Rica, ch. 3, n. 20. My "Letter from Lexington," Lies of our Times, Jan. 1992.
30 Tim Johnson, MH, June 14, 1992; Inter Press Service (IPS), July 31, 1992; Gibb, SFC, June 17, 1992 (CAN ).
31 Science, Dec. 20, 1991; Economist, Jan. 4, 1992.
32 CAR, June 14; Aug. 16, 1991; Aug. 21, 1992. IPS, San José, Feb. 23; Excelsior, July 31, 1992 (CAN ).
33 CAR, Oct. 18, 1991; Reuters, SFC, Aug. 1, 1992 (CAN ).
34 Envío (Managua), April 1991. Madhura Swaminathan and V.K. Ramachandran, Frontline (India), Dec. 6, 1991. See Herman, Real Terror Network, ch. 3, on the pre-1980 version.
35 Ch. 4.2. See DD, ch. 1, n. 19; ch. 7.7. Also Bello and Rosenfeld, Dragons.
36 Hockstader, WP, June 20, 1990; Crossette, NYT, Jan. 18; Tim Golden, NYT, Jan 17; Friedman, NYT, Jan. 12, 1992. Aid-torture, p. 120. Zwick, Twain, 111.
37 Skidmore, Evans, Felix, op. cit. Hagopian, review of Skidmore, Politics, Fletcher Forum, Summer 1989. Chile, Herman, Real Terror Network, 189f. (citing Harberger interview, Norman Gall, Forbes, March 31, 1980).
38 James Petras and Steve Vieux, "Myths and Realities: Latin America's Free Markets," Monthly Review, May 1992; update, ms, SUNY Binghamton. CIIR, Brazil. Brooke, NYT, Aug. 28, 1992.
39 James Markham, NYT Week in Review, Sept. 25, 1988; Wrong, Dissent, Spring 1989. Roberts, "Democracy and World Order," Fletcher Forum, Summer 1991.
40 Simpson, Spectator, March 21, 1992; Petras and Pozzi, Against the Current, March/April 1992; Felix, "Reflections on Privatizing and Rolling Back the Latin American State," ms., Washington University, July 1991.
41 David Clark Scott, CSM, July 30, 1992; Salvador Corro, Proceso (Mexico), Nov. 18, 1991 (LANU, Jan. 1992); UN Report on the Environment, AP, May 7, 1992; La Botz, Mask, 165, 158; Andrew Reding and Christopher Whalen, Fragile Stability, Mexico Project, World Policy Institute, 1991. Barkin, Report on the Americas (NACLA), May 1991; "Salinastroika," ms., Aug. 1992. Baker, WP, Sept. 10, 1991, cited by Reding and Whalen.
42 Nash, NYT, Nov. 13, 1991; Aug. 1, 1992. Kamm, WSJ, April 16, 1992.
43 Felix, "Financial Blowups"; "Reflections on Privatizing"; "Latin American Monetarism in Crisis," in 'Monetarism' and the Third World, Institute of Development Studies, Sussex, 1981. Data compiled by Chilean economist Patricio Meller; UN ECLA Poverty Study (Santiago, 1990) (Felix, p.c.). Petras and Vieux, "Myths and Realities." Economist Intelligence Unit cited by Doug Henwood, Left Business Observer, no. 50, July 7, 1992. Collins and Lear, "Pinochet's Giveaway," Multinational Monitor, May 1991. Rosenberg, Dissent, Summer 1989. Herman, letter, Washington Report on the Hemisphere, June 3, 1992. Nash, NYT, July 6, 1992.
44 Mayorga, Nicaraguan Economic Experience. See DD for further discussion.
45 Constable, BG, March 4 (see p. 150); Golden, MH, March 5; wire services, Excelsior, March 12, 1992 (CAN). CAR, July 31, 1992.
46 CAR, Oct. 18, 1991; May 8, 1992; Otis, SFC, Aug. 1, 1992.
47 Links (National Central America Health Rights Network), Summer 1992; CEPAD Report, Jan.-Feb. 1992; Excelsior, June 11, 1992 (CAN); Haugaard, CAHI, Georgetown University; IPS, Aug. 9, 1992 (CAN ).
48 For more on the matter, see TTT, ch. 3.9; DD, ch. 10.
49 Petras and Vieux, "Myths and Realities." Cooper, New Statesman & Society (London), Aug. 7, 1992. On US-IMF programs in the Caribbean, see Deere, In the Shadows; McAfee, Storm Signals. For an ongoing record on Central America, see PEHR, TNCW, TT, COT, NI, DD, and sources cited.