LATIN AMERICA
U.S. bailouts expose economic, political collapse
By Andy McInerney
The Bush administration has desperately intervened to try to
bolster the capitalist economic system in Latin America. On
Aug. 4, the U.S. government authorized an emergency $1.5
billion loan to Uruguay's crippled banking system. Days later,
on Aug. 7, the International Monetary Fund approved a massive
$30 billion loan package for Brazil--the world's 10th largest
economy.
The IMF loan is the biggest bailout in the fund's history.
The United States is the biggest donor to the IMF, a
conglomerate of international banks and lenders, and would
certainly have had to approve a bailout of this magnitude.
The two loans have a dual purpose. On the one hand, there is
the economic goal: preventing the economic crisis that is
sweeping Latin America from further damaging U.S. bankers and
corporate heads.
On the other hand, the political goal is to give the ruling
classes in Latin America a respite from massive, growing
protests aimed at the IMF--and, increasingly, against the
U.S.-backed ruling classes themselves.
The loan to Uruguay came after runs on the South American
country's banks led to a four-day bank shutdown. Protests
bubbled over into sackings of stores and clashes with
police.
U.S. Ambassador Martin Silverstein announced the bailout
"immediately after Uruguay's parliament passed legislation that
would freeze bank deposits and cut government spending to meet
conditions set for the loan," the Deutsche Presse Agentur
reported Aug. 5.
The massive bailout for Brazil's banks was announced as the
value of the Brazilian currency, the real, plummeted. In the
past year, the real has lost 20-40 percent of its value. During
the last week of July, it fell to 3.25 reals to the dollar--the
same exchange rate as the hobbled Argentinean peso.
Financiers worried that both Uruguay and Brazil would
default on the foreign debt if emergency aid were not
approved.
The biggest winners from the Brazil bailout were not in
Brasilia, Sao Paolo or Rio de Janeiro. They were sitting in
their Wall Street boardrooms. According to cbsmarketwatch.com
analyst Paul Erdman, the big U.S. banks Citigroup and
FleetBoston have investments and loans in Brazil to the tune of
some $20 billion.
"Brazil has also been a big magnet for American industrial
investment," reported the Aug. 9 New York Times. "General
Motors and other car companies have sunk billions into factory
expansions, and a Brazilian meltdown would turn those into
white elephants."
The other aspect of the recent round of bailouts is
political. The social misery caused by over a decade of IMF-
and U.S.-imposed austerity measures and privatizations
throughout the continent is beginning to find expression in
mass movements and political challenges.
Argentina's political establishment collapsed amid mass
protests in December. That country's ruling class is still
trapped in a vise between the demands of U.S. bankers and
growing mass protests.
Revolutionary insurgencies are challenging Colombia's ruling
class and its grip on power.
President Hugo Chávez is steering Venezuela out of
the orbit of U.S. exploitation as millions of poor and working
people challenge that oil-producing country's economic
elite.
Huge, militant mobilizations have swept Peru and
Paraguay.
In Bolivia, only political machinations in that country's
Congress prevented Evo Morales of the Movement to Socialism
party from winning the presidency. Morales' popularity grew in
direct proportion to the number of times the U.S. ambassador
denounced his candidacy.
And in Brazil, the economic lynchpin of Latin America, polls
show that two leftist presidential candidates have all but
overshadowed the traditional political elite. The prospect that
the reins of power could slip out of trusted pro-imperialist
hands in such a crucial country is already causing U.S.
financiers nightmares--two months before the elections are set
to be held.
The strings attached to the recent $30 billion IMF loan show
that this prospect was high on U.S. bankers' minds. Eighty
percent of the loans would be paid in 2003--after the
presidential elections--and only then on the condition that the
new government not increase social spending.
Despite the bailouts, the convergence of economic crisis
with growing political consciousness on the part of the working
class ensures that capitalist rule in Latin America remains
vulnerable.
Reprinted from the Aug. 22, 2002, issue of
Workers World newspaper
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