CWI 10th World Congress: Precarious growth and crisis in Latin America

Steps forward in building the forces of the CWI

A special commission on Latin America at the 10th World Congress of the CWI focused on significant and fundamentally important issues facing the working class and masses of the continent.

The end of the last century and beginning of this century saw major movements and struggles against neo-liberalism across Latin America. The coming to power of the Chavez regime in Venezuela and the explosive struggle by the working class to defeat the attempted coup in 2002, the massive uprising in Argentina in 2001, struggles of the Bolivian water and gas wars and the election of the first indigenous president Evo Morales. The overthrow of three presidents in Equador and the election of a series of governments that were opposed to neo-liberalism. These events had a powerful impact around the world.

Economic growth in Latin America between 2003 – 2008 of on average 5.5% “interrupted” the struggle against neo-liberalism in many countries. However the world economic crisis which began in 2008, temporarily cut across this exceptional period of growth and GDP fell in 2009 by 1.9% in Latin America and the Carribean. Unemployment grew by 3 million in the region. Stimulus packages and government intervention, in the form of cheap credit, helped to avoid a prolonged recession and growth is predicted for 2010. A growing dependency on China has had a profound impact. Whereas Latin American exports fell by 22.6% in 2009, it is estimated that exports will grow in 2010 by 21.4%, mainly due to increased sales to Asia and China.

There is not a uniform economic position across Latin America. Mexico and Central American countries such as El Salvador, Honduras, Nicaragua, and Costa Rica have suffered most from the world crisis as has Venezuela, which has been badly effected by the fall in oil prices.

New dependency on China

The economic relationship with China and increased commodity prices has helped the area recover from recession but this has come at a price. In 2000 Latin American trade with China was US$10 billion a year. It now stands at US$100 billion a tenfold increase and it is estimated that China will overtake EU as Latin America’s second biggest trading partner in next few years. But this relationship will ultimately prove to be detrimental for the masses of Latin America. Trade is focused on China buying up commodities and exporting back finished industrial goods. Therefore, increased trade with China is leading to a process of de-industrialisation in Latin America and reinforces its dependency on primary commodity goods.

Contrary to claims by various governments, this does not represent a major step forward for Latin America. The relationship with China is not progressive and this period will not be like the 1930’s whereby countries emerged strengthened by increased industrialisation – the opposite is now taking place.

In 1999, commodities represented 26.7% of total sales from Latin America but this has grown to 38%. For example Brazil supplies 45% of all soya imported into China. In the first four months of 2009 Brazil’s exports to the US fell by 37.8%, yet it’s exports to China grew by 62.7%. This increasing economic relationship with China has helped “protect” the majority of the region against the worst impact of the international crisis.

Mexico has experienced a 6.5% fall in GDP in 2009 and is experiencing a major social crisis with a virtual civil war between drug traffickers and a government which has lost control over some regions. In the last four years 28,000 have died in this “war”, 10,000 killed so far in 2010! Fourteen mayors and prefects have been assassinated by the drug gangs and widespread corruption involving the police has severely limited the ability of the state to deal with this major crisis.

Crisis in Venezuela

Venezuela is in recession, with GDP predicted to fall by 3% this year. Reflecting a fall in support for Chavez and his government in elections to the National Assembly, the “Chavistas” got a majority of MPs but not the majority of votes. Chavez does not have a 2/3 majority in the Assembly (necessary to pass important legislation) and the right now have an important parliamentary platform. If the right wing capitalist forces can present a united candidate, then it is possible that Hugo Chavez could be defeated in the 2012 presidential election. However, as things stand, the right-wing’s alliance is precarious and they lack a credible candidate. Therefore, it is still most likely that Chavez will be re-elected.

A fall in support and the recession have pushed Chavez to speak with a more “radical tongue”. He has introduced more nationalisations on a capitalist basis and speaks ever increasingly about socialism, but this is not actually reflected in the policies of the government. There is an increasing tendency towards bureaucratisation and corruption and there are strengthened forces within the Chavista movement who are looking for a compromise with the right wing and the ruling class. In the short term, the regime could continue to zig-zag from left wing to right wing policies and back again, in order to maintain its position and support base.

The economy is dependant on oil for 90% of its revenue and Chavez has been trying to break Venezuela’s dependency on exporting oil to the USA – 75% of its oil exports go to the USA and 15% to China. The previous record high price of oil was the basis for Chavez’s reform strategy which he entitled “Socialism in the 21st Century”. The fall in oil prices and the recession have cut across this strategy, which has been replaced by a programme of social cuts of 30% of public spending, which have impacted on health and education services. 65% of all products consumed are imported, which reflects the continued failure to industrialise the country. Up to 25% of the economy has been nationalised on a capitalist basis, but because of bureaucracy, most of these companies have not been successful – many are bankrupt and are having a negative impact on the economy. Deals are being negotiated with private capital to turn some of these enterprises into public-private partnerships, with worse conditions for the workforce!

In the last two years, there has been an increase in struggle, with 6,000 different strikes and protests taking place. This is an important development as, up until now, the working class struggle has been largely under the “shadow” of the regime, but now, a growing independence is reflected among some sectors. Chavez is coming under pressure from three fronts: international pressure from foreign forces who oppose his government, pressure from the right-wing bourgeois forces in Venezuela, but most importantly, increasingly under pressure from the working class.

There has been increased repression of political groups that are critical of Chavez. Strikes have been forbidden in the food sector with workers being told that they will be considered as traitors if they engage in strike action! However, despite the reformist methods and the growing bureaucracy and repression of the government, it is still seen by huge numbers of workers and the poor as standing in the way of the right wing regaining governmental control and the disastrous situation which would ensue.

In Bolivia, the Evo Morales government and MAS won large majorities in elections that which place in 2009 and in April 2010. The 64% support for Morales is a reflection of the desire of the Bolivian masses to defeat the right-wing capitalist forces who want to turn the clock back to the pre-Morales period. Even Salvador Allende never had this level of support in Chile. However, the MAS and Morales have not used these victories to further the development of socialism. Instead the government has continued to favour the multinationals in the oil and mining areas and has opposed and confronted striking teachers and miners.

Comrades also gave graphic illustrations of the political crisis and vacuum which exist in Argentina which has been compounded since the death of Ernesto Kirchner and the also of the role of the trade union bureaucracy in holding back the working class. Workers often still have the idea of Peron in their consciousness but have not seen any of the recent Peronist led governments as being “Peronist”. There is growing support for the idea of a new workers’party.

Comrades at the congress also discussed how to deal with the huge illusions which exist in the “left” governments of Latin America, such as that of Morales in Bolivia, which came to power as representatives of mass revolutionary movements of the working class and poor, but have failed to decisively break with capitalism and have kept the capitalist economy and state intact, and now put all of the gains of these revolutionary processes in danger. The building of mass, independently organised movements of working people, which can demand that these revolutionary movements are carried through to the end – to international socialism – and prepare to play the decisive role in the development of the Latin American revolution, is a crucial and necessary step.

Dramatic events have begun in Cuba with the decision by the Cuban Communist Party to introduce major cuts in public expenditure which will result in the sacking of one million public sector workers. The first 500,000 workers are to be dismissed by March 2011. These plans will lead to the sacking of 20% of Cuban workers! The government under Raul Castro has decided to “encourage” these workers to set up their own businesses and or to become self employed. Sections of the Cuban bureaucracy are in favour of the restoration of capitalism in Cuba, whilst others are opposed to this or undecided. Attempts to take Cuba down the road being followed by China will not be straight forward or simple. Cuba is not China and attempts at encouraging small enterprises and potentially major capitalist privatisations is complicated by the world economic crisis and the Cuban capitalists exiled in Miami waiting their opportunity to return and reclaim their so-called lost industry. A 32 page document produced by the Communist Party deals with the development of the market, legalisation of small businesses in 118 areas and allowing people to buy/sell or rent their homes.

The Cuban Communist Party has lost its base of support amongst the young generation because of the role of the bureaucracy and it is engaged in a difficult balancing act. The CWI believes that the way forward for Cuba is not in moves towards the failed capitalist market nor a continuation of the status quo under the Cuban Communist Party. Instead the Cuban working class should engage in a struggle for a genuine workers’ democracy so that Cuba’s planned economy would come under the democratic control of the working class and for once genuine socialism could flourish and offer a beacon of hope to the masses struggling throughout Latin America, the Carribean and beyond.

Brazil and Mexico are the most developed economies in the region. Brazilian multinationals are developing substantial investments in other Latin American countries and Brazil plays the role of a regional imperialist power, with Lula as a firefighter for capitalism trying to contain further movement to the left in countries like Venezuela and Bolivia. Of the 500 largest companies in Latin America, 226 are Brazilian. Petrobas accounts for 17% of Bolivia’s GDP. The general election in 2010 saw a victory for Lula-backed candidate, Dilma, who has a majority in both houses of the parliament. The comrades from Brazil explained how the current wave of “Lulaism” has developed and sustained by the current economic conjuncture and limited reforms which have been implemented. 3 million extra young people are now enrolled in universities. This will not last indefinitely and can give way to a major crisis. On the other hand there is growing social polarisation in Brazil.There are five million unemployed in Brazil and in order to stem off economic crisis Lula instigated a R$300 billion stimulus package. Brazilian society is also plagued by the curse of drugs and major social degradation. There has been an attempt by the state to militarise the slum areas. The police have occupied some of the slums and deaths of ordinary people in the “drugs war” have gone unreported in the media. Only 1% of slum dwellers are linked to the drug trade – 90% of slum dwellers are black.

Lula will be allowed to stand for President again in 2014 and in the meantime is hoping that his ally Dilma can maintain his support base. In order to build an alternative to the PT and Lula/Dilma, the CWI in Brazil are continuing to struggle to build support for PSOL and stop its shift to the right.

The CWI World Congress represented a step forward for the forces of Marxism in Latin America with the recognition of two new sections in Venezuela and Bolivia and the attendance of comrades from Argentina for the first time.

It is essential that genuine independent working class parties are built in Latin America in order to assist in the building and directing of the courageous struggles of the masses of the continent in the direction of socialist change as the only way to rid this region of the curse of capitalism.

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December 2010