Cold Math

Dispatches From the Edge

Aug. 25, 2002

Want to know what all those mind-numbing figures on Brazilian bond ratings, Argentinean currency fluctuations, and Bolivian privatization mean in the real world?

*Some 23 million Brazilians are malnourished, and 40,000 a year die of hunger. Four million people are landless, while 3 percent of Brazil’s people own two-thirds of its land. Out of a population of 175 million, Brazil has 53 million poor, 23 million homeless, and eight million unemployed.

*Argentina’s unemployment rate is 21.5 percent and half of its 36 million people live in poverty. For the first time in 200 years, malnutrition is a serious problem.

*In Bolivia, 6 out of 10 people are poor, a figure that rises to nine out of 10 in some rural areas.

One could go on, adding Columbia, Venezuela, Paraguay, Ecuador and Peru to the litany of misery that transforms the cold math of international finance into human poverty and wretchedness.

According to the White House, the International Monetary Fund (IMF), and the World Bank, the solution to the financial crisis is to stay the course, continuing the strategy of free trade, privatization and austerity. According to an increasing number of South Americans, the solution is to cast aside two decades of failed policies and challenge the rule of global capital. The problem is that the latter approach is on a collision course with the former and, given the people who run Latin American policy for the Bush Administration, that could be a very risky undertaking.

Brazilians have already discovered this. When leftist Workers Party’s candidate Luiz Inacio Lula de Silva, a critic of IMF policies, took the lead in the race for President, Morgan Stanley Dean Witter and Merrill Lynch arbitrarily downgraded Brazilian bonds, weakening its currency and increasing its debt burden. Even the normally staid Financial Times took sharp issue with the move, accusing bond market investors of “overreacting to Brazil’s two biggest problems: political uncertainty and debt,” adding that the rating “is out of line with Brazil’s relatively solid public finances and low inflation.”

Misplaced panic or deliberate sabotage? That is the question an increasing number of Latin Americans are asking these days. Lots of people on the continent recall when the U.S. deliberately undermined the Chilean economy to set up the 1972 coup. Brazilians also remember 1964, when their own President, Joao Goulart, was overthrown by a U.S.-backed military coup for even considering land reform, rent control, restricting foreign profits and nationalizing oil. The 21-year dictatorship that followed not only widened the gap between rich and poor, it is the major source of the country’s present $250 billion foreign debt.

On the surface, the recent offer by the IMF to loan Brazil $30 billion would seem a godsend. The loan, however, is not aimed at alleviating the appalling poverty and disparity of wealth, but at insuring Brazil will continue to privatize key sections of the economy, open its markets, and pay back $20 billion to Citibank and FleetBoston through “austerity measures.” However, even the current conservative and pro-IMF President, Fernando Henrique Cardoso, says “Brazil has tightened its accounts so far that it doesn’t know where to tighten any more.”

What if Brazilians (and Argentines, Paraguayans, Bolivians, etc.) say “enough” to policies that that have depressed standards of living from Mexico to Argentina? What happens if Silva wins and, instead of cutting social services to pay back banks, follows through on his plan to spend $16 billion a year for a decade aimed at alleviating poverty and illiteracy? Suppose Brazil develops an independent foreign policy on issues like the Colombian civil war, Cuba, and the Middle East?

With U.S. Latin American policy being decided by rightwing extremists likes Otto Reich and John Bolton at the State Department, Rogelio Pardo-Mauer at the Defense Department, Elliot Abrams at the National Security Council, and John Negroponte at the UN, Latin Americans are understandably nervous.

After Reich, Rogelio Pardo-Mauer, and National Security Director Condoleezza Rice openly supported the failed coup against Hugo Chavez in Venezuela, former Brazilian foreign minister Luis Felipe Lampreia warned there was “anxiety in Brazil and the rest of Latin America because the U.S. no longer seems so committed to democratic principles.”

The failed policies the White House is pushing have sparked riots and demonstrations across Latin America where the U.S. is quite rightly blamed for the disaster. By controlling 18 percent of the IMF’s voting shares, the U.S. essentially wields a veto over the organization’s actions and our fingerprints are all over the current crisis. “It was very clearly the Department of the Treasury that pushed Argentina over the edge and allowed it to collapse,” Walter Molano of BCP Securities argues.

The bottom line is that Brazil and other countries in Latin America are going to have to make a choice between Citibank and their own people. As Jean Ziegler of the UN Human Rights Commission argues, “Hunger is not a destiny, but the product of a totally unjust society. Those who die of hunger in Brazil are assassinated.”

The question is: will Latin Americans be allowed to find their own road to modernity, or are we looking at returning to the dark years when the U.S. destabilized countries it disagreed with and military dictatorships held a continent in thrall?

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