LATIN AMERICA

Alan White, Member, on 17 October 2003.

The speaker, a retired diplomat, served in several countries before becoming Ambassador to Bolivia, in 1985, and then in Chile. He continues to travel and note developments in Latin America.

He said that news of Latin America was nearly always ‘bad news’. We heard of natural disasters, political coups and economic distress, but its complexity made characterisation difficult. There were paradoxical contradictions, such as great riches alongside enormous poverty, across a huge continent. Many indigenous people still had only tenuous contact with their governments, or with what we describe as ‘civilisation’, and up to half the total population still lived in or not far from poverty. Yet Brazil, for example, had nuclear reactors, a space programme and a successful aviation industry.

Although the countries of Latin America shared problems common to all developing regions, the speaker chose to concentrate on this occasion upon some different features. These included a distinctive history, location, the position of the Church and the special role of the military.

European history had evolved from earlier civilisations through the transmission of knowledge, technology and culture, but this process did not happen in Latin America. There was no firm evidence of contact with other cultures prior to Columbus. The effects of the Conquest – still regarded by many Latin Americans as a ‘catastrophe’ – are still felt in many areas of contemporary life. The Church, as one of the largest landowners, also greatly influenced politics and society up to Independence and is still powerful. Another important factor had been the role of the military, self-appointed guardians of state constitutions, prepared to intervene as of right when civil disorder threatened.

The speaker commented on the ‘disappointment’ often expressed, both in Latin America and the USA, over the lack of political and economic progress. Inevitably comparisons were drawn between the young USA and the independent republics to the South. The roughly similarly sized populations, availability of natural resources and inflow of immigrants in the early 20th Century did not produce the success in the south compared with that achieved further north. There was no shortage of explanations. The most popular was the Hispanic heritage, which had not encouraged hard work and enterprise. Another favourite was ‘economic exploitation’. Because of its history and location the new republics had always been at the mercy of external markets. The proximity of, and thus dominance by, the United States and its location far from world trade routes was another possible reason. In the speaker’s view, a more convincing explanation had been lack of a substantial and thriving middle class. It still remained disproportionately small compared with elsewhere. This had tended to insulate it from the mass of the population and for it to support whichever elite happened to be in power.

Using a chart, the speaker drew attention to the fact that in the last 50 years the population of Latin America had quadrupled. Almost one-third was now under 15 years-of-age. The pressure on many governments, already struggling with intractable economic and political problems was almost overwhelming. The major countries, such as Brazil and Mexico, had introduced effective family planning programmes that are drastically reducing birth rates, but other countries were not having the same success. When the Spanish and Portuguese arrived the total population of Latin America had probably been between 60 and 80 millions, roughly equal to that of Europe. War, famine and, above all, disease reduced that figure over the next fifty years to around 12 millions.

Three hundred years of colonialism ended when the Spanish and Portuguese monarchies were deposed by Napoleon. This opportunity was seized, between 1810 and 1825, by the ‘criollos’, the Latin American-born elites, to overthrow the colonialists in most of the region. The conflicts were on a heroic and bloody scale, although in Brazil a more peaceful transition to independence, through the acceptance of a Portuguese ‘Emperor of Brazil’, lasted until 1889. The liberal constitutions established offered great power to Presidents and thus also the temptation to exercise dictatorial control. Liberal and conservative governments alternated in most countries but were often overthrown by ‘strong men’. Occasionally there were interstate conflicts – in the 19th century both Bolivia and Mexico lost half of their former territories. Throughout the 19th and 20th centuries political instability was a constant problem, with the twin curses of populism and military intervention never far away. But despite the almost perpetual political turmoil the power and patronage of the elite, whose interests expanded from land owning into industry and finance, remained largely unaffected.

In many states power, rather than philosophy, came to shape the composition and shared interests of governments, occasionally making for strange bedfellows. At the end of the 19th Century, when world trade expanded, the economy boomed and foreign investment flooded in, particularly from the UK, although the benefits eluded the mass of the population. Immigration from Europe, largely confined to the East coast, increased substantially and the major cities grew rapidly. By the end of the 20th century democracy had arrived in most countries although the rapidly rising demographic pressures were threatening both political and economic aspirations throughout the region.

After nearly 200 years of independence, the Latin American states long pre-date the other ex-colonies. They feel proud to have been the largest single group at the formation of the United Nations. But although all except Cuba are currently democracies, the ability of some of these governments and institutions to cope with the many and pressing changes now confronting them must be in some doubt.

Turning to economic aspects, the speaker noted that although all the Latin American states had large foreign debts from the early 19th century onwards (two-thirds of foreign investment was from Britain up to 1914), by 1939 many were doing relatively well from the export of their primary products. This economic growth, stimulating development of the raw-material sectors, was accompanied by an acceptance of the theory of economic liberalism and the need for Latin America to integrate itself fully into the world system. With the increasing links with Europe and the US came social and political, as well as economic, change.

After 1945 there was a move to achieve greater economic independence through industrialisation and import-substitution in an effort to break dependency on single products and certain markets. The role of the state in actively promoting industrial growth grew steadily. The resulting high tariffs, reduced reliance on foreign capital, and Government-subsidised industrial-isation did bring considerable growth for a time, but the debt crisis of 1981 ended that phase. The new industries, often over-manned, indifferently directed and slow to adapt, found it difficult to compete with foreign rivals. The funds to continue with these policies were simply not available. Rapidly increasing population and social pressures resulted in a return to free market ideas. A general move towards privatisation and foreign investment then brought new industries, but little benefit to the majority of the population. Privatisation, in particular, was unpopular. Jobs were lost rather than gained and it was widely believed that political favourites had benefited most. Moreover, these policies did not deliver the anticipated growth.

Following the ‘Washington Consensus’- a strategy agreed with the U.S. – in 1990 these policies were given a new boost. But foreign investors, including the international financial institutions, demanded exacting terms. Governments were encouraged to introduce severe anti-inflation measures that bore particularly hardly on the less advantaged sectors of society. Protestors, who opposed ‘globalisation’ and the free market, became more numerous and vociferous but, because disunited, were largely ineffectual.

Currently, economic prospects for Mexico and Brazil appeared hopeful. The new President of Brazil would be a key figure, not just for Brazil but also as a standard-bearer for the region. If successful in satisfying both the demands of the international financial community and the social needs of the majority of his people Brazil could become a model for development. If, on the other hand, Brazil defaulted on its international obligations, there could be global consequences. The current proposals to build upon the existing North American Free Trade Area (NAFTA) in order to create a Free Trade Agreement of the Americas (FTAA) was highly ambitious and could face considerable opposition on several fronts, not least within the US. The treaty is due to take shape in 2005.

UN figures suggest that, of the roughly 600 million who make up Latin America’s population, some 200 million live on less than US$2 a day (the U.N. poverty level figure) and 100 million on less than 1 dollar a day. The so-called ‘popular sector’ is enormous, making up perhaps as much as 65-70% of the population of Mexico and Brazil. Some 50% of the workforce is said to be in the ‘informal market’, that is, without regular employment. In the last few years the situation of the poor has been deteriorating rather than improving and society is now less equal than it was 15 years ago. Income per head is now lower than it was five years ago. As an example of the pressure on jobs, the speaker referred to the recent serious riot in Rio when over 10,000 people applied for 120 refuse collection jobs

Another huge problem was land tenure, and the success of the new Brazilian President in tackling the theme was being followed with close interest throughout the region. Social development generally is hampered by widespread lack of confidence in legal and judicial systems and of the police. Crime remained a major and fundamental problem, particularly for the poorest. Because of the weakness of the legal and judicial systems, police corruption was endemic and law and order often not available even within the cities, let alone the hinterlands. As Guillermo O’Donnell had observed, widespread political rights for the poor were no substitute for human and social rights.

The picture was not totally gloomy. Some social conditions were improving. UN figures suggested that the illiteracy’ rate had fallen from 20% in 1980 to 10% in 2000 with the expected life span the highest in the developing world. Latin America was the only developing region where girls were credited with higher literacy rates than boys and it also had the lowest military spending.

It was particularly difficult to forecast future developments. Over the next 10 – 15 years continuing fragility and huge economic problems were a given. Crime, corruption and drugs would remain major issues. Whilst the larger and more sophisticated countries were likely to make significant progress, with democracy strengthening, it seemed possible that democracy might be threatened in others, particularly the Andean countries and those threatened with high demographic pressures. There would be growing regional gaps. Illegal immigration would remain a highly sensitive issue. This affected countries like Argentina and Venezuela as well as the border with the US. The economic prospects overall must remain gloomy although much would depend on what happened in the US economy.

The speaker concluded by remarking that the ‘problems seemed almost overwhelming’. Yet there were good prospects for agriculture, particularly for Argentina and Brazil who could be world-class players if only world markets were opened to their products. It had been demonstrated that major problems, such as hyperinflation and the very high birth rate, could be tackled successfully. The obstacles to development were well identified, with weak institutions and governments perhaps the most challenging. A broad, if still fragile consensus existed in favour of democracy and the market economy. The speaker believed that Latin America needed more globalisation, rather than less. This seemed the only way to bring the investment and technology that was required and to demand from governments the stronger institutions and legal regimes that were essential. Only prosperous economies could generate the growth needed to improve the lot of the majority of the population. Help from outside was needed to remove existing restrictions and open markets for the region’s products. Aid was not a solution.

Despite their problems, most Latin Americans remained remarkably optimistic about the future, perhaps reflecting the young and vigorous population. They did not wish to copy either the United States or Europe but to find their own solutions.

Questioned on education, the speaker affirmed that it is mostly rudimentary, with the bigger countries taking an elitist approach. The Church is still involved and both UNESCO and other agencies help, but policies vary widely.

The economic situation as outlined raised many questions and thus answers. As always, considerations of risks versus reward would determine the nature and amount of external investments. For example, investors in a pipeline project in Bolivia would not welcome its current upheavals. Whilst agriculture and oil exploitation offered huge possibilities it was individual governments that made the rules. Regional pacts, such as Mercosur and the Andean Pact had been helpful in stimulating trade, although there had been problems of implementation. If FTAA were successful, such pacts would be subsumed.

The role of the US and the value of NAFTA were questioned. Over 80% of Mexico’s exports now go to the US, but along its borders the cheap labour it offered to US investors was preferred to the unemployment alternative. Overall, the health of the US economy determined the value of NAFTA to its partners. While the US certainly ‘drives a hard bargain’ this was an agreement freely entered into by Mexico. A question was raised about the future of the ‘Group of 21’, which emerged at Cancun. The speaker concluded that this had complicated the situation. One problem was that although the Group was demanding free trade it did not want to open its own markets. The speaker thought that the forthcoming US Presidential elections would freeze WTO developments.

The size and role of the middle classes were also queried and the speaker emphasised the wide gap between those with primary education and the relatively small number with higher education, who remained somewhat apart from the rest of the population and tended to side with elites in power when there were problems. They initially had opposed privatisation, since many lost their jobs in government-run industries, but later welcomed the wide range of consumer goods which became available as a result, and were now largely in favour.

Finally, the complexity of the political situation was illustrated when the speaker, in answer to a question about Bolivia, explained the conflict between the Government and the coca growers, fighting eradication, plus a wider indigenous group seeking a fairer deal for the poor majority. These groups used ‘globalisation’ and ‘privatisation’ (of which there is little anyway) to demonise the Government rather than address the real problems.

Bolivia is the poorest country in Latin America and the speaker concluded his remarks by quoting a contemporary Bolivian commentator describing its problems – ‘land, poverty, marginalisation, collapse of institutions, corruption, an inoperative government, a parliament without legitimacy, authoritarianism and much more….’

Geoffrey Catchpole