Global economic disruption makes it seem events are overtaking analysis faster than people can keep up. In May it was reported that China is now Brazil's main trading partner, displacing the US after more than 75 years. Ever since the debacle at the Mar del Plata summit in 2005 of President Bush's continent-wide free trade plan, the US has been unable to defend its formerly dominant trade position in Latin America.
For years before the current Western Bloc economic contraction, countries across Latin America have been broadening their trade relations. Between 2000 and 2006 trade between Asia and Latin America doubled from US$ 62 billion to over US$ 130 billion. China has been the most important new partner, but countries like India, South Korea, Taiwan, Singapore, Vietnam and Iran have become significant partners too. With the US and the European Union in recession, Latin American economies have more reason than ever to diversify their trade.
At the Arab-South America summit in Doha late in March this year, Celso Amorim, the Brazilian foreign minister said, "One of the factors that made the economic crisis less serious in Brazil is that we have very diversified trade. With the Arab world it went from eight billion to 20 billion dollars in three or four years." (1)
That trend is part of a global development in South-South commercial activity, which Unctad reported in 2008 grew in volume between 1995 and 2006 from US$ 577 billion to more than $2 trillion, accounting for 17% of global trade. (2)
So when observers talk about the start of a new phase in US-Latin America relations, one needs to be clear it is not something initiated by the US government. President Obama, Hilary Clinton and their colleagues are reacting to events over which they have little control. US government efforts to get their way in Venezuela, in Bolivia, in Ecuador and even in Central America have been consistently frustrated. But if one looks for significant policy change in response to that failure, there is none worth mentioning.
Support continues for right wing allies in the region, Mexico, Colombia and Peru, as do covert activities to subvert and weaken governments in Cuba, Venezuela, Bolivia, Ecuador, Nicaragua and perhaps to a lesser extent, Argentina, Paraguay and Uruguay. Acute observers may toil over the details of official US government announcements or in mainstream corporate media and wring out analytical dribbles of passing interest. But the underlying components of Western Bloc foreign policy hardly change at all from one decade to the next.
On the night of last year's presidential elections, veteran State Department diplomat Robert Callahan, the US ambassador to Nicaragua was asked by Nicaraguan media what change Obama might bring to US policy in Latin America. Callahan replied that he thought there would be no change. He said US policy in Latin America has been the same for many decades and is unlikely to change under President Obama. Callahan, loyal sidekick of John Negroponte – the archetypal supremely competent, suave US imperialist mass-murder-CEO nonpareil – is worth taking seriously.
Likewise after the Trinidad and Tobago Summit of the Americas, Larry Summers, Obama's senior financial adviser was quoted in a Bloomberg report on April 19th on the issue of Cuba : "An end to the embargo is 'way down the road' Larry Summers, Obama's senior economic adviser said recently on NBC's 'Meet the Press' program." Modalities may change, underlying strategies and tactics remain the same.
Global Military-Finance Connection
This is worth considering in the wider global context. Since the Second World War, Western Bloc imperialism has operated under US leadership. The deal between the US and its Nato country and Pacific allies has always been that they will work together to defend their interests as a bloc. Economic dominance of former colonies – the majority world – in Africa, Asia and Latin America took priority. Latterly, more than ever the deal has been that the US acts as military point man while its allies collude in manipulating international finance and trade so as to maintain the neocolonial status quo.
Apparent rivalry between the US dollar and the Euro is mostly financial theatre. The peoples of European nations are never going to permit the levels of military spending necessary to defend their countries' global corporate dominance. US government military spending both meets its side of the geostrategic bargain with its European and Pacific allies and performs vital global financial and economic functions.
It boosts public spending. It gives vast subsidies to corporate investment in technological and scientific research. Via the hundreds of foreign US military bases, multi-billion dollar foreign military aid and foreign wars, it flushes dollars into foreign markets worldwide. The financial effects of that unregulated global dollar liquidity complement those of more than US$1.5 trillion flowing through foreign tax-paradises each year, mainly in territories controlled by the United States and Britain.
By the late 1980s, rich countries' traditional manufacturing-based economies no longer provided levels of growth necessary to satisfy the insane logic of corporate consumer capitalism. Wriggling out of that systemic failure, Western Bloc elites rejigged their economies as financial casino-markets pushing financial insurance techniques, accounting standards and ratings procedures to their very limits and beyond. That process drove the de facto devaluation of the dollar and other leading currencies as rich country governments struggled to defend the dollar as the international reserve currency despite massive US budget and trade deficits and burgeoning debt.
Wall Street's Strategic Role
Gargantuan US government military spending may well make sense in that context. The hundreds of US military bases worldwide, the billions of dollars in foreign military "aid", the relentless aggressive wars – they all make sense as components of a global dollar-recycling engine. Likewise, the perversely inefficient monopolistic concentration of US corporate finance makes sense as a tool of the US plutocracy's geopolitical strategy. From that point of view, other similarly puzzling aspects of the financial collapse seem less perplexing.
For example, why were the big five Wall Street investment banks allowed to waive normal limits on what they were allowed to borrow, from 12 times their capital to up to 40 times? Those five investment houses – Goldman Sachs, Bear Stearns, Morgan Stanley, Lehman Brothers and Merrill Lynch – worked in practice as quasi-non-governmental outfits, colluding intimately with the main Western Bloc Central Banks – the Federal Reserve, the Swiss Central Bank, the Bank of England, the Bank of Japan and the European Central Bank.
It is a safe bet this international cartel did their level best to rig international currency and commodity markets so as to prop up the US dollar, making it easier for the US to run its huge deficits. The surviving broker dealers – Morgan Stanley and Goldman Sachs -have now become bank holding companies. Bear Stearns was swallowed by J.P.Morgan, Bank of America bought Merrill Lynch. Wells Fargo bought up the somewhat smaller Wachovia. Lehman's was let go bust.
The quasi-non-governmental status of the main Wall Street banks also explains why none have been put into receivership. They are all probably insolvent. But breaking them up would dismantle a strategically vital apparatus for coordinating Western Bloc intervention in currency and commodity markets. It is not that these companies are "too big to fail" as such. The US plutocrat elite, and their European and Pacific allies, keep these outfits afloat because they are important moneyness engines for global geopolitical financial intervention and dollar recycling. Many other perplexing aspects of the current economic crisis seem to make sense in similar terms.
Implications for Policy
All this then explains why President Obama is extremely unlikely to initiate significant changes in US foreign policy. Some policies may change, but only in response to facts created beyond the reach of the Western Bloc dominated status quo. President Obama and Hilary Clinton, on Latin America, will continue to befriend narco-terror gangster President Alvaro Uribe in Colombia and anti-democratic crooks like Felipe Calderón in Mexico and Alan Garcia in Peru.
Similarly, they will continue to undermine Hugo Chavez, Evo Morales, Rafael Correa, Raul Castro, Daniel Ortega and any other regional leader – El Salvador's Mauricio Funes perhaps or perhaps leaders of small Caribbean island nations – who may act decisively to build alternative economic and trade arrangements. One example of such alternative economic and trade arrangements is the Bolivarian Alternative for the Americas, ALBA. ALBA – a trading bloc based on solidarity and complementary trade that includes barter – is probably currently the most important alternative economic model to consumer capitalism.
One indication that it may well be is that the Western Bloc corporate media never write about it. While only a few countries are full members of ALBA (3), almost every country in Central America and the Caribbean are members are members of ALBA's subsidiary regional energy and food security program, Petrocaribe. ALBA's importance can be seen from the sequel to the US government's use of the Andean Trade Preference and Drug Eradication Agreement to punish Bolivia for expelling former Ambassador to La Paz Philip Goldberg.
The US authorities withdrew Bolivia's access to the ATPDEA just days after Goldberg's expulsion in September 2008. Under the ATPDEA, thousands of export items from Bolivia and other Andean countries entered the US with zero import tariffs. Without the advantages of the ATPDEA, those products from Bolivia are now subject to import duties of between 17% and 33%. Bolivia's exports to the US under the APTDEA in 2007, mostly clothing, textiles, leather goods (34%) and hydrocarbon derivatives (66%), totaled about US$ 150 million. (4)
Without the benefits of the ATPDEA those exports may now drop dramatically, even without the additional effects of the US recession. However, in October 2008, the Venezuelan government negotiated a trade arrangement with Bolivia guaranteeing to buy over US$46m of the goods Bolivia previously exported to the US. That deal is already underway with US$9m worth of the goods covered by the agreement already delivered to Venezuela.
Over the year, that means Venezuela will take up almost all but around US$ 4 million of the clothing, textiles and leather goods previously exported to the US. Bolivia's exports to the Mercosur trade area increased by 60% in 2008, mostly sales of gas. With the Morales administration negotiating new markets also in Russia, Japan, Iran China and India, the US may well find that its efforts to bully Bolivia end up backfiring. Bolivia may well establish dynamic new markets while the US will be left with even less influence in the Andean region than before.
It seems absolutely clear that the Obama administration brings hardly any change to long-standing plutocrat elite "bipartisan" policy in general. Certainly in Latin America, policy change is most likely to be forced upon the US government by events beyond its control.
While Obama and Clinton will take heart from the new right-wing regime in Panama, they may well find the new government in El Salvador under Mauricio Funes more than cancels out that respite. All the signs are that any occasional good news for the US government in Latin America in months to come is likely to highlight even more the deep failure of its longer term efforts to maintain influence and prestige in the region.
3.Bolivia, Cuba, Dominica, Honduras, Nicaragua, St Vincent and the Grenadines, Venezuela. Ecuador and Uruguay have observer status.
Toni Solo writes for www.tortillaconsal.com