Political Upheaval

While he is committed to pushing for a political program that will benefit the poor and indigenous populations that make up the majority of Bolivians, Morales has shown consistent respect for the democratic process. Morales is the first indigenous president in Bolivia’s 180-year independent history. With 54 percent of the popular vote, he’s also the first president ever to win an election with a clear majority in the first voting round, starting his term with a strong mandate and high expectations.

Backlash Against World Bank and IMF

Morales also got a huge boost from U.S. support for the policies of the World Bank and International Monetary Fund (IMF). Following on the heels of the Reagan-era’s “trickle-down” economics, which posited that benefits for the rich will “trickle down” to the rest, Washington has used its power of the purse and its leading position within international lending institutions to guide Latin American governments toward economic policies that restrict public spending, increase the role for the private sector, and dismantle the system of import taxes and other tariffs in order to facilitate international trade.

Lending agreements from the IMF and the World Bank during the ’80s and ’90s came riddled with conditions for countries to manage fiscal deficits by lowering government spending on social programs, including health and education. “Cutting public expenditures by any large degree cannot be done without affecting the poor who rely on public services, or provoking huge rebellions,” says Jim Shultz, director of the Democracy Center in Cochabamba, Bolivia.

Yet in 2003, the IMF demanded Bolivia cut more than $250 million, or 8 percent, of the national budget. In Deadly Consequences: How the IMF Provoked Bolivia into Bloody Crisis, Shultz details how the Bolivian government tried to warn the IMF that this would incite popular unrest. Bolivians deposed two presidents in as many years through protests against these types of policies and then elected Morales.

Argentine President Néstor Kirchner also owes much of his success and popularity to his resistance to the IMF. Since assuming office in 2003, Kirchner has been a tough negotiator with the IMF. He has resisted demands to slash spending, lift controls on public utility prices and implement banking and tax reforms, and instead he has pushed for investment in the public sector and protection of Argentina’s poor.

Argentina, once the poster child of the IMF, has made a remarkable comeback since its economy collapsed in 2001 after a decade of closely following IMF and World Bank prescriptions. While in 2000 growth was a negative 0.8 percent, growth from 2003 to 2005 under Kirchner’s watch exceeded 8 percent, with low inflation and falling unemployment and poverty. Consequently, Kirchner now commands a stunning 80 percent approval rating in opinion polls.

Brazil, too, has reaped considerable benefits from its government’s determination to balance external pressures to adopt a cautious macroeconomic strategy with internal demands for higher standards of living for all Brazilians. Economic growth in 2004 was the highest since 1986, with gross domestic product (GDP) increasing 5.2 percent.

The U.S. government’s aggressive push to expand free trade in Latin America also helped catapult other new leaders into the presidential palaces. Luiz Inácio “Lula” da Silva in Brazil made his opposition to a proposed hemispheric trade deal, the Free Trade Area of the Americas (FTAA) a centerpiece of his 2002 election campaign, calling it an “annexation agreement” rather than an integration agreement. He then helped lead resistance to the FTAA among other wary developing countries, resulting in a deadlock for the past several years. Likewise, in Costa Rica, opposition candidate Ottón Solís nearly pulled off a stunning upset in that country’s February election, thanks to his popular position against the Central American Free Trade Agreement (CAFTA). CAFTA passed the U.S. House of Representatives last summer by only two votes.

Lula and Solís were riding a wave of widespread outrage against the failure of trade and investment liberalization policies (often called the “Washington Consensus”) imposed on the region since the ’80s. No region of the world had gone further to adopt these reforms, and yet, while promoters argued this would lead to prosperity, Latin America has experienced rising poverty and inequality. The World Bank estimates that the number of Latin Americans living on less then $2 per day increased from 99 million in 1981 to 128 million in 2001. According to the United Nations, the gap between rich and poor has continued to grow and Latin America has the most unequal wealth distribution of any region in the world.

The democratic opening that occurred after the infamous era of military dictatorships allowed social movements to express their discontent. The traditional conservative elites who were aligned with the United Sates were voted out, and replaced by socially minded, left-leaning leaders.

Share This Post