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PETRAS ESSAYS IN ENGLISH 

June 2, 2003

U.S.'s ratings of Latin American regimes

James Petras
Rebelión

What emerges from interviews and conversations with Wall Street investors and risk managers and trade and commerce officials in Washington, as well as from a close reading of World Bank and IMF reports, the Wall Street Journal, the Financial Times and the financial pages of the New York Times in the first 6 months of this year (2003) is that there is a hierarchy of favorites and enemies among Latin American governments. The criteria that used to judge regimes is their willingness to follow the Wall Street-Washington neo-liberal policies, their ability to implement them and their ability to secure political legitimacy. The establishment rankings have changed over the past year particularly where regime favorites have either been ineffective in imposing policies or have become politically isolated. For example a year or less ago the Bolivian President Sanchez de Losada, Peruvian President Toledo and the Uribe regime of Colombia ranked high because of their strong support for Latin American Free Trade, their programs of privatization, commitment to prompt and full debt payments and unconditional support of Bush's military interventions, in Colombia, Afghanistan and Iraq. This year they have been downgraded, not because they have changed their politics but because they are almost bereft of political support - isolated and discredited clients, of limited value in pursing Washington and Wall Street's agenda.

Wall Street's Favorites of 2003

At the top of the list of favorites are the Brazilian and Ecuadorian regimes. While most of the more astute senior diplomats and veteran State Department officials knew before the 2002 presidential election that Lula was no longer a radical threat or even a consequential reformer, most Wall Street and Washington policymakers, surprised by Lula's selection of an orthodox liberal economic team, were perfectly ecstatic when he began to forcefully push through a radical neo-liberal agenda, including privatizing social security, substantially lowering pensions for public sectors employees and reducing the cost and easing the requirements for capitalists firing workers. One Washington official commented to me that Lula's forthright repudiation of the Keynesian re- distributive politics of his party (the Workers' Party) reminded him of Gorbachev's rejection of communism and handing over Eastern Europe to Washington without any coercion or trade offs. The consensus on Wall Street is that the only significant economic difference between Lula and Bush is that the Brazilian President is a more consequential free market advocate than Bush. He demands that Washington lower its trade barrier on a list of protected products (orange juice, steel, textiles, etc.). Brazil currently ranks highest in the U.S. establishment because of four factors: 1) what one cynical broker on Wall Street (a former Leftist) called Lula's "taliban neo-liberalism" (meaning his dogmatic embrace of the whole IMF repertoire from fiscal austerity to his appeals to the multi- nationals to fight poverty); 2) Lula's immediate vigorous implementation of the harsh neo-liberal agenda even forming alliances with rightwing parties and disciplining left-wing dissident deputies from his own party who disagree; 3) the fact that Lula retains a popular majority in the polls and has been successful in co-opting or neutralizing the left trade union organization (CUT) and in ignoring the demands of the MST; 4) that Lula continues to push the IMF agenda despite a negative growth rate for the first 6 months of 2003.

The second most popular President is Lucio Gutierrez of Ecuador who has reaffirmed the dollarized economy, confirmed the U.S. military base in Manta, supports the U.S. directed military intervention in Colombia (Plan Colombia) and proposes to privatize the key petroleum and power and light industries. Before his election Gutierrez was thought of in Washington as a kind of quirky opportunist who spoke in favor of Pinochet and Castro depending on who paid his travel expenses. Soon after the first round of the elections Gutierrez went to Washington where he was considered a "docile listener" according to one Washington official who spoke off the record. Once elected Gutierrez "spoke to the Indians but worked with us" according to a leading petroleum investment advisor. Much to official Washington's pleasure he has split the once powerful Indian movement co-opting its political wing Pachacuti by giving a few notables, ministerial pests (with little effective power) and providing some of the local politicos minor posts on the administration. The Indian social movement CONAIE is further divided between leaders and followers on whether to break with Gutierrez, severely weakening efforts to unify the opposition. The same co-optation process is true with the once powerful Petroleum workers union. All this is good news to the Washington establishment, as Ecuador has seen two previous U.S. client Presidents overthrown by CONAIE and its allies in the electrical and petroleum workers unions. A bit further down in the positive rankings is President Fox of Mexico, Uribe of Colombia and Lagos of Chile. All are devoted disciples of Washington's neo-liberal ALCA agenda. Several factors have caused these client Presidents to lose top ranking. First Fox has been unable to push through the privatization of petroleum and electricity agenda, which Wall Street promotes; and Fox still insists on a quid pro quo on legalizing 4 million Mexican workers in the U.S. Secondly, Fox allowed Washington's number one asset Jorge Castaneda to be ousted from the foreign office. In addition Fox did not side with Bush on the Security Council vote on the U.S. invasion of Iraq.

Likewise Uribe slipped a notch because of his failure and incompetence in implementing Washington's war against the guerrillas and his growing political and social isolation. Uribe promised Washington he would militarize the country, and destroy the guerrillas. After over a year of combat he has totally failed. Pentagon sources claim that Uribe's military commanders are more interested in confiscating drugs for resale than engaging the guerrillas in close combat.

Lagos is still highly rated in Washington but with the neo-Pinochet right gaining strength and the pro-Lago coalition immersed in corruption scandals, Washington has slightly downgraded Lagos, particularly after he waffled on the Iraq resolution at the Security Council.

The second ranking clients have the virtue, in Wall Street's eyes, of being strategic neo-liberal allies, even if their occasional mild expression of dissent irritates Rumsfeld's Pentagon.

The third level in the positive rankings include many of the previous first rankers, Batlle of Uruguay, Sanchez de Losada of Bolivia and Toledo of Peru. Batlle is running a bankrupt corrupt-ridden regime which stays in power largely thanks to the inertia of the political system and the ultra- legalism and prudence of the center-left parliamentary opposition. Sanchez de Losada and Toledo have less than 10% support and are constantly facing massive opposition in the streets. They are totally inept and lack the power to implement Wall Street's privatization agenda, Washington's repressive policies toward coca growing farmers as much as they would like to.

Washington/Wall Street continue to support these regimes up to now, but look forward to discarding them if the popular pressure builds up. They then have the choice of looking for a "responsible" centrist (like Alan Gareen of APRA in Peru) to put out the fire or military-civilian junta in Bolivia (as Ambassador Greenlee implies) to seize power to "save democracy" according to the Rumsfeld formula.

Between the positive and negative rankings is the new Argentine President Nestor Kirchner. Washington demonstrated its negative reaction to the defeat of its two preferred ultra-rightwing candidates (Menem/Murphy) by sending a low level Cuban émigré, Cabinet minister to Kirchner's inauguration. Wall Street is keen to see how Kirchner handles negotiations with the IMF, how soon he restores debt payments, and how long he can maintain order and secure an agreement with local financial elite and the multi-nationals. Both Washington and Wall street did not like Kirchner's declaration of political independence from the corporate elite and the priority he gave to regional integration as opposed to ALCA. But both Wall Street observers and Washington professionals are used to populist and nationalist post-election rhetoric and are awaiting to see what concrete politics Kirchner will pursue. "As governor in the oil rich province of Santa Cruz, Kirchner backed the privatization of the lucrative petroleum industry, and that counts for something", a financial journalist commented to me. Washington and Wall Street place Kirchner in the unranked box with an asterisk signaling, "Awaiting implementation of political economic agenda."

On the negative rankings stands Venezuela and Cuba in that order. Venezuela is negative in Washington's rankings but plus and minus on Wall Street. The discrepancy has to do with President Chavez heterodox politics. He pays his debts on time to Wall Street Banks; he is a loyal supplier of oil to the U.S. even during an imperialist war; he has not nationalized any U.S. property or imposed graduated taxes. His neo- liberal economic team and policies are seen as pluses on Wall Street. He has however, fired the most malleable and corrupt pro-Wall Street executives from the state petroleum company, diverting profits to investments in internal development instead of to the U.S. stock market, costing Wall Street firms lucrative commissions. He has instituted capital controls, limiting the outflow of capital and profits, licit and illicit, to U.S. banks and real estate investors. While there is some ambiguity among Wall Street regarding Venezuela's economic performance in Washington Venezuela's ranking is totally negative. President Chavez defeated CIA directed Venezuelan "assets" and Washington's political- economic clients who twice tried to overthrow the elected President. Chavez has taken a critical position on the U.S. war on terrorism, Plan Colombia and ALCA in the name of peace, anti- militarization and Latin American integration. Venezuela under Chavez, has friendly trade and diplomatic relations with Cuba. In the Rumsfeld- Wolfowitz world view Venezuela needs a "regime change."

Cuba is clearly on the lowest pedestal in Washington's rankings. The Bush administration has labeled Cuba a military target, as part of the "axis of evil" to be invaded, if Cuba didn't have the best-trained armed forces in the Third World, a superb security system and the popular backing of millions of Cubans. Cuba is enemy number one because it is a clear alternative to the region's neo-liberal colonies. Cuba is a major force in the United Nations and in all international forums, expressing its solidarity with the anti-globalization and anti-imperialist movements and opposing U.S. imperial designs in Asia, the Middle East and especially Latin America. While Washington gives Cuba the lowest ranking possible, Wall street, or at least sectors of the big ago-business sector, does not always agree. The U.S. Chamber of Commerce, major agricultural exporters and giant grain shipping firms have given Cuba a positive economic ranking in terms of its availability as a market, as have important tourist, airlines and service industries.

Conclusion

The U.S. rankings reflect the changes in the complex political and social forces working within Latin America as well as the success and failure of Washington and Wall Street's policies. While popular movements have undermined the rankings of several U.S. client regimes as effective instruments of U.S. policy, in other important cases the right-wing evolution of certain popular political leaders has resulted in Washington's adding their countries to the highest rankings. In large part U.S. rankings of Latin American regimes is a result of the internal political and class struggles, the failures of neo-liberal economic policies, and the struggle between imperial intervention and anti-imperialist movements and nations. Secondly, it is clear that while in many cases Washington and Wall Street coincide in their rankings there are cases of some divergences. Finally in the case of Lula's Brazil we have a peculiar situation in which the Bush-Rumsfeld administration and the center left politicians in Latin Americas converge with high rankings. Washington's positive assessment is based on Lula's actual policies, the center-left on their mistaken expectations or illusions.

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