These internal divisions in the US and Latin America are played out in an international context which radicalizes the class and national confrontations.

International Context

Two world-historic processes affect US policy toward Latin America: 1) the prolonged Middle East wars and 2) the dynamic growth of the four Asian powers led by China. The Middle Eastern/South Asian wars have severely overextended US military forces, undermined domestic support for new wars and severely strained the budget. These outcomes have weakened the US military capacity for intervention in Latin America in support of a military coup, or, even less, a direct military invasion. As a result the US increasingly relies on domestic (Latin American) clients to defend its interests (Calderon, Santa Cruz land/business barons, Garcia, Uribe).

Asia’s (particularly China and India) dynamic growth and demand for raw materials (iron, copper and oil), food and agricultural products (like soya) has resulted in greater competition with the US/EU for access to Latin American exporters and suppliers, and increased prices and revenues for Latin American treasuries (major trade and budget surpluses). Asia increases the diversity of markets and investors for Latin American exporters. These changes mean less dependence on external financing (especially the IMF) and US markets which in turn means Washington has less political and diplomatic leverage over Latin American regimes, even neo-liberal governments like Lula, Bachelet, Kirchner and Vazquez.

Faced with a loss of military capacity and a decline in economic leverage, Washington is moving toward a ‘compromise’ between the White House’s hard line militarists and the State Department’s market-driven ‘negotiators’. The essence of the compromise is to pursue a ‘two-track policy’: combining support for the subversive opposition in countries where it is strong (Bolivia) with negotiation in countries where it is weak (Venezuela). With regard to the neo-liberal regimes, which have some degree of autonomy (Brazil, Chile and Argentina), Washington will emphasize bilateral relations and try to maximize economic opportunities while discouraging any concession to the mass movements especially demands to reverse privatizations. The two-track policy will be combined in the cases of Cuba and Venezuela: with promises of dialogue and agreements conditional on major concessions in diplomacy, property and investments combined with continued financial support for agents of destabilization.

Latin America: Political Changes and US Response

The mild response of the US to the regime changes resulting from the Latin American elections of 2006 can easily be explained by the fact that they did not produce any consequential socio-economic structural changes, at least for the foreseeable future.

The clearest demonstration of the marginal effects of ‘center-left’ electoral victories is the case of the electoral victory of Lula who made it clear to even his own most ardent intellectual supporters (Frei Betto, Emir Sader, Joao Pedro Stedile) that he considered ‘leftism an infantile disorder’ (La Jornada 12/14/2006), a remark much appreciated in business circles throughout the hemisphere. No doubt Wall Street was pleased that the Brazilian ‘Workers Party’ voted to double Congressional salaries from$6500 USD to $12000 USD per month (and doubling each Congress member’s individual monthly budget to $75,000 USD) while increasing the minimum wage by $7 USD a month from $159 to $166USD (about 1.7% after inflation) (Financial Times December 16-17, 2006). One out of five Brazilian Congress members (many from Lula’s coalition) are currently under investigation for corruption. Wall Street speculators who also were recently investigated for fraud and yet received huge year-end bonuses would feel a real identity of condition with Brazilian lawmakers who doubled their salaries, while awaiting criminal charges.

Contrary to White House expectations, but much to its liking, Evo Morales’ regime pursued orthodox, austere fiscal policies aimed at budget surpluses, eschewed any redistributive policies (virtually no land, mining or energy expropriations). While Morales demobilized the social movements and focused on endless legal procedures, the oligarchy regrouped, expanded its power base in Santa Cruz and threatens to bring down the government. While Washington’s oligarchic Bolivian clients advanced toward power (La Jornada December 16, 2006) Evo Morales continued his self-destructive policies of symbolic radical populist rhetoric and greater concessions to the elites. Washington has maintained a foot in both camps, providing over $60 million dollars in foreign aid to Morales and untold millions to the opposition in Santa Cruz organizing massive ‘separatist’ demonstrations (HoyBolivia.com December 16, 2006).

Washington’s ‘soft-line’ negotiators (Shannon) strengthened their position vis-a-vis the White House’s ‘hard line’ policy toward Venezuela by pointing to Hugo Chavez’ electoral victory (63% of the vote) as a reason for a rapprochement (La Jornada, December 14, 2006). Shannon has advanced the argument in Washington that a significant sector of the Chavez government was open to a negotiated pact with involves freezing the status quo, softening criticism of US imperial policies, consolidating oil and gas agreements and blocking any steps toward socializing the economy.

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