Part Twelve of my series on the history of corporations. This section covers the opposition to the WTO and IMF structures in the undeveloped world, particularly in South America under Morales, Chavez and da Silva. Links to the other sections are included. This is a book manuscript I am working on, that I am publishing one piece at a time as it is written.
The other installments, for those who didn't see them or don't remember them, are here:
Part One: The Anti-Corporate Revolution of 1776
Part Two: The Robber Barons
Part Three: The Progressive era
Part Four: The Roaring Twenties
Part Five: New Deal and World War 2
Part Six: The Organization Men
Part Seven: The Man
Part Eight: the Reagan Revolution
Part Nine: The Multi-National Wars
Part Ten: NAFTA and WTO
Part Eleven: The Failed American Century
The Bush administration, with its military and economic disasters, finished its years as one of the most unpopular Presidencies in American history, and the neocon agenda had turned the US into a virtual international pariah. Several nations announced that they would arrest Bush Administration officials as war criminals if they ever entered their jurisdictions. In one of the international community’s most visible rebukes, the Swedish Nobel Prize Committee nominated Bush’s successor, Barack Obama, for a prize even before he had assumed office—and in an unmistakably pointed message, awarded the Nobel Peace Prize to Obama largely because he was not George W Bush.
Ironically, however, the multi-polar global economic structure that the neocons had unsuccessfully fought against, was now itself the target of another massive international opposition—an opposition which first exploded into American public view in Seattle, Washington.
The Battle in Seattle
On November 30, 1999, the WTO opened its third annual Ministerial Conference in Seattle, Washington.
For years, the annual meetings of the WTO, IMF and World Bank had attracted protestors and demonstrators, but news organizations, particularly in the US, paid them little attention. That changed drastically in 1999. A wide variety of groups had been planning protest rallies in Seattle for several months, each with its own agenda. Some of the most visible were the AFL-CIO, which objected to the WTO’s lack of regard for labor rights and minimum worker protections; a number of environmental organizations, who planned to protest WTO’s gutting of ecological and wildlife protection in the name of “free trade”; the Jubilee 2000 movement, a Catholic-based activist group which sought international debt forgiveness for poor nations; a number of different right-wing “America first” groups who objected to the erosion of US sovereignty under the WTO; and the Direct Action Network, a small loose group of radicals, mostly anarchists, who planned street actions to disrupt the conference.
When the WTO conference opened in November, it was met by a mass of protestors (estimates ran between 50,000 to over 100,000). The spirit of the demonstration was summed up by one sign that read “Teamsters and Turtles—United at Last”. While the larger organizations carried out peaceful marches, rallies and teach-ins, the small anarchist “Black Bloc” generated most of the press attention by blocking intersections and breaking windows, and provoked the police into overreacting. In what became known as the “Battle of Seattle”, the police moved in with pepper spray, tear gas and clubs, arrested some 600 people (over 150 of these, who had nothing to do with the Black Bloc violence, later filed successful lawsuits over their arrest), imposed a curfew, and cordoned off a large “no-protest zone”. City officials declared a state of emergency. It was an image not seen in the US since the 1960’s.
Mass protests had taken place at previous WTO conferences, including Geneva and Singapore. But it wasn’t until Americans were being clubbed and tear-gassed on their own city streets that anyone in the US paid attention. Suddenly the press was filled with articles about the anti-globalization movement, and while WTO spokesmen (and Clinton White House officials) attempted to portray the protestors as mere Luddites who opposed the modern world, anti-WTO organizers of all stripes were able to seriously present their arguments to the press. Almost overnight, average Americans were, for the first time, able to hear about the inherently anti-democratic structure of the WTO and IMF, about their unelected veto power over democratically-passed national laws, about the wholesale gutting of environmental and labor protections as “unfair restraints of free trade”, and about the crushing poverty that was the most common result of global WTO and IMF policies.
Many of these same forces had unsuccessfully fought against the ratification of NAFTA in the early 90’s, and in the years just before Seattle they had engaged in another more successful fight. In 1997, sources within the Organization for Economic Cooperation and Development leaked a draft of a treaty called the Multilateral Agreement on Investment (MAI), which was intended to impose a global set of rules onto the burgeoning financial and investment markets, protecting the financial interests of large global investment banks while limiting the ability of national governments to control the markets. A number of nonprofit organizations, labor unions, human rights groups, and others around the world—many of them veterans of the anti-NAFTA and anti-WTO fights—formed a coalition that became known as “Fifty Years is Enough”, to combat the proposed agreement. They referred to their strategy as the “Dracula Policy”, asserting that the best way to beat the proposed treaty was simply to drag its provisions out into the light of day where everyone could see them. Mass protests against MAI broke out in Australia, New Zealand, France and Canada. In Montreal, over 100 demonstrators were arrested when a meeting of the Conference on Globalized Economies was peacefully blockaded. In October 1998, France gave in to public pressure and, citing concerns over national sovereignty, announced that it would not support the treaty, and MAI was scrapped. The international protest coalition considered it a clear victory.
In response, however, trade representatives from the US and UK introduced proposals to expand the already-existing WTO framework to include areas such as financial investments and international banking which the MAI was supposed to cover. The proposal to expand the WTO’s jurisdiction, however, ran into opposition from several small member nations; these issues were not solved during the WTO’s second Ministerial Conference in Geneva, and were therefore scheduled for reconsideration at the third conference, in Seattle, where they were to be introduced as part of “The Millenium Round”, a far-reaching expansion of WTO into new spheres of biotechnology, services, and finance, as well as strengthened agreements on agriculture and intellectual property rights.
While the anti-WTO rebellions were going on in the streets outside the meeting hall, therefore, an even more important rebellion was simultaneously taking place inside—and it shared few goals with the street protestors.
The Dohan Rebellion
By 1999, the Washington Consensus, the basis for the entire WTO framework, was under increasing fire not only from international protest groups, but also from a growing number of small member nations. Even before the Seattle Conference began, there were indications that the large wealthy nations would no longer be able to unilaterally impose their will upon the smaller nations; this time, the smaller nations were prepared to fight. Many of their grievances centered around their lack of input into trade negotiations, and the wealthy nations’ penchant for “green room” conferences which produced agreements and decisions favorable to themselves and then pressured the smaller nations to accept them.
The most stubborn fight, however, centered around the blatant hypocrisy of the wealthy nations. For smaller nations with largely agricultural economies, equal access to the American and European markets is a vitally important requirement. But even while they forced smaller nations to open their markets, the wealthy nations continued to subsidize their own agribusinesses. In the US, farm subsidies totaled over $1 billion a year; in Europe, the average cow received government support of around $2/day—and trade representatives from poor nations were quick to remind the Seattle Conference that almost half of the world’s human population lived on less than that. These trade delegates, who themselves represented the wealthy educated elite of their own countries, did not share the progressive agenda being preached by the social justice activists who were protesting outside—they were not interested in stronger labor rights or minimum wages or environmental protection. They were interested in gaining access to the large European and American markets for their own companies. Nevertheless, the trade delegates proved to be far more effective than the protestors—they announced that they would not support any new extension of WTO’s jurisdiction until the wealthy nations agreed to end their subsidies and open their markets. Indeed, they announced, if anyone deserved subsidies and protections, it was their own small subsistence farmers who were being destroyed by the global corporate agribusinesses. The Millenium Round collapsed into stalemate.
The failure of the 1999 Seattle Conference to accept the Millenium Round led to another attempt at the fourth Ministerial conference, which took place at the remote resort (to avoid protesters) of Doha, Qatar, in November 2001. These efforts were introduced as the Doha Development Agenda, usually referred to informally as the Dohan Round. The Dohan Round was scheduled for discussion at the WTO Conference planned for 2003 in Cancun. Once again, however, the talks bogged down over the issue of agricultural subsidies. During the Cancun Conference, delegates announced the formation of a voting bloc within WTO of 22 nations, led by Brazil, China, India and South Africa, to act together on matters affecting the poorer developing nations. Known as G20+ (“G20 plus”), the voting bloc represented fully half of the world’s population.
With the formation of the G20+ alliance, the balance of power within WTO shifted dramatically, since no trade policy could take effect without its approval. In 2005, WTO officials began re-branding the Dohan Round as the “Development Round”, declaring that its purpose was to aid the poorer countries and to make the trade agreements more fair. The poorer countries didn’t buy it, however, and in 2006, Caribbean trade delegate Sir Shidrath Ramphal declared, “This should not be a game about enhancing corporate profits. This should not be a time when big countries, strong countries, the world’s wealthiest countries, are setting about a process designed to enrich themselves.” Talks once again deadlocked, and were soon formally suspended.
At the same time that the G20+ bloc was challenging the dominance of the wealthy nations and tilting the balance of power within the World Trade Organization, a political and economic shift was also occurring in the USA’s back yard.
The South American Challenge
Fewer nations fell more deeply under the sway of the IMF and the Washington Consensus than those of South America. And fewer nations demonstrate more clearly the utter failure of the entire neoliberal free market ideology to deliver the jobs and prosperity for all that it promised.
In the late 1960’s and early 1970’s, several South American countries borrowed heavily in order to finance economic programs which included industrialization and improvements in infrastructure. By 1983, the total debt load exceeded $300 billion, over half of the entire continent’s Gross Domestic Product. Many of these governments were military dictatorships, and the economic programs were intended to help defuse popular opposition within their own country.
When the global economy fell in the 1980’s, however, these countries found themselves caught in a vise—as the income they received from exports dropped, the interest payments on their debt became harder and harder to meet. Finally in August 1982, Mexico announced that it could not make its debt payment for at least 90 days past its due date, and asked for a renegotiation of its loan terms.
As a result, commercial banks, fearing that Mexico and other countries would default on their payments, immediately called in all of their short-term loans to South American countries, making them due in full, immediately. The national governments, of course, could not pay. Continent-wide economic collapse loomed.
The IMF then stepped in, with US support. In exchange for massive loans to pay off existing debts, the IMF imposed a series of Structural Adjustment Programs, popularly known as “austerity programs”, which placed virtually the entire economy under IMF oversight. The austerity programs were based on a rigid free market ideology—debtor nations were required to cut corporate taxes, privatize and sell off government-owned industries and utilities, and balance their governmental budgets by cutting services and social welfare programs. A few economists referred to this as “shock therapy”.
One of the first nations to accept the IMF’s shock treatment was Bolivia. One of the poorest countries in South America, Bolivia’s economy had for centuries been dependent upon mining exports, particularly tin. By the mid-1980’s, natural gas had begun to replace tin as the most important industry. The Bolivian Government owned 65% of the mining industry and 80% of oil and natural gas. The economic downturn, combined with the financial debt crisis, had produced rampant “hyperinflation” that made Bolivia’s currency worthless.
In 1985, the IMF imposed a ”New Economic Policy” on Bolivia as a condition for new loans. Over the next ten years, the state-run industries and utilities were all sold to foreign corporations. The loss of revenue from these state industries forced Bolivia to cut its social services even as unemployment grew and wages fell. In 2000, the country’s water system was privatized and sold to Bechtel Corporation, which promptly raised the prices. In the city of Cochabamba, protests broke out and red banners appeared reading “The water is ours, dammit!”, leading to martial law—finally Bechtel packed up and left, and a cooperative of local residents was formed to run the city’s water system.
The “Water War” was only a small part of the backlash. Faced with loss of income from state-owned industries and by tax cuts to private companies, the Bolivian government had no choice but borrow to finance its social programs, and by 2003 the country’s debt stood at 8.7% of national income. The IMF ordered this cut to 5.5%. Bolivian officials, under President Gonzalo Sanchez de Losada (known popularly as “El Gringo” because he grew up in the US and spoke Spanish with an American accent), answered that such a large decrease was impossible without huge cuts in social services that would produce riots and political instability, and pleaded to be allowed the limit to be set at 6.5% instead. The IMF refused, declaring that if the 5.5% target was not met, Bolivia would receive no further IMF funding. In desperation, Bolivia cut services and at the same time raised income taxes on virtually everyone in the country.
The effect was, as the government had feared, social upheaval. Opposition party leader Evo Morales, an indigenous Aymara Indian union leader who had lost the election to Sanchez de Losada by only two percent, called for protests—a call that was echoed the next day by the Bolivian labor federation (COB). Within hours, the Special Security Force (GES), part of the national police, also announced their opposition to the austerity plan. “It can’t be withdrawn”, the government pleaded in response. “We have a commitment with the International Monetary Fund.”
Within 72 hours of the announcement, over 100 GES officers were protesting in front of the Presidential Palace, and were fired on by Army troops. They fired back. Eighteen people were killed, and additional people were killed in other riots around the country. Too late, Sanchez de Losada announced a repeal of the austerity measures, declaring “Our budget will not be a budget of the IMF.”
Shortly afterwards, more riots broke out over the utilization of Bolivia’s natural gas and oil resources, a conflict that became known as the “Gas Wars”. Protestors demanded an end to IMF-imposed privatization of the hydrocarbon industry and called for nationalization. Over 60 demonstrators were killed as they blockaded roads, shut down factories, and called a general strike. After declaring martial law, President Sanchez de Lozada resigned and was replaced by Carlos Mesa. In 2005, the Gas Wars popped up again, after a referendum resulted in demands for an increase in government gas and oil royalties. Evo Morales, now leader of the Movement Towards Socialism (MAS), called instead for full nationalization. In the ensuing protests, Mesa resigned and was temporarily replaced by Supreme Court Justice Eduardo Rodriguez. In December 2005 the new Presidential elections were won by Evo Morales and the MAS. “This,” Morales declared, “is a government of the social movements . . . We’re not just anti-neoliberal; we’re anti-imperialist in our blood.”
In March 1976, political power in Argentina was seized by a military coup under a junta led by two Army officers and a Navy admiral. The dictatorship was met by a storm of popular opposition, and after its attempt to rally patriotic support during the Falklands War in 1982 failed, the regime turned to pure repression—the so-called “Dirty War” resulted in the “disappearing” of over 30,000 political opponents and critics. The junta’s economic policies were formulated by American-trained students who embraced the Chicago-school ideology of free-market fundamentalism, and they imposed wage freezes, meanwhile borrowing heavily from banks in New York and Paris.
In the mid-1980’s, the junta was forced to relinquish power to the democratically-elected government of Raul Alfonsin, which faced massive civil unrest caused by the wage freezes and high inflation rates. When the US withdrew a promised loan guarantee, the Argentine financial market collapsed and Alfonsin resigned. Carlos Menem took over as President, and turned to the IMF.
The IMF program of privatization and belt-tightening at first seemed to work. Through the 90’s, Argentina’s economy grew at 4.5% a year. A government “currency board” imposed tight monetary policies that ended hyperinflation.
By 1998, however, problems appeared. The currency board had tied Argentina’s money supply to the amount of dollars it held, and as the value of the US dollar rose, so did the peso, which made Argentine exports more expensive and decreasing its market. More and more of Argentina’s budget was made up of IMF loans—by 2000, Argentina was receiving some $40 billion in IMF-arranged funding.
As a condition of these loan guarantees, however, the IMF demanded that the government reduce its budget deficit, and this could only be accomplished by cutting services. At a time when unemployment was over 20%, President Fernando de la Rula announced cuts of $1.6 billion in social services, followed shortly after by further cuts of $9.2 billion (about 18% of the total state budget).
The effect was immediate; a series of riots and strikes forced de la Rula to resign in December 2001. He was replaced by Adolfo Rodriguez Saa. Within weeks, Argentina defaulted on $132 billion in loans and devalued the Argentine peso by 70%, leading to almost a doubling of prices and pushing the poverty level from 35% of the population to over 50%. Demonstrators all over the country chanted “Out with them all!” The piqueteros, a movement of the unemployed, set up roadblocks. When large numbers of factory owners fled the country (taking all their financial assets with them), workers organized themselves into cooperatives and took over the abandoned plants, under banners that read “Occupy, Resist, Produce!”; other cooperatives set up their own kitchens, bakeries and schools. In the rural areas, the Landless Workers Movement (MST) took over unoccupied or abandoned farmland and distributed it to the landless tenant farmers.
In May 2003, Nestor Kirchner (who had been arrested twice during the Dirty Wars by the junta) took over as President, removed the remaining junta-era officers in the military and police, and repealed the legal obstructions to their prosecution. He also publicly referred to the IMF as “the Devil” and promptly reversed the longstanding IMF-approved policies. At the UN, Kirchner called for a “structural redesign” of the IMF, declaring that it had gone from being “a lender for development to a creditor demanding privileges”. When the IMF attempted to gain better terms for foreign creditors, Kirchner refused, and when the IMF threatened to not renew its short-term loans, Kirchner temporarily defaulted on its payments. The IMF blinked and agreed to renew its loans and to renegotiate another $100 billion in debt, sometimes settling for as low as 30% of the amount due, but Kirchner soon announced that, with the help of $1.6 billion in bond purchases by Venezuela, Argentina would pay off its entire outstanding IMF debt, over $9 billion, in one lump payment—thereby asserting the country’s “political sovereignty and economic independence” and completely removing IMF oversight of the Argentine economy. “There’s a rebellion on the farm,” declared Foreign Minister Rafael Bielsa. “The IMF is no longer a corral, and the little animals are beginning to escape.” President Kirchner soon echoed, “There is life after the IMF, and it’s a very good life.”
Just two days earlier, Brazil had announced the same action.
In the 1980’s Brazil, like most of South America, was ruled by a military junta. During the term of military president Joao Figueiredo, unemployment and inflation were high, while GDP declined and debt soared. IMF austerity programs only increased the popular resentment, and the junta responded to strikes and protests with repression. In 1985, the dictatorship fell, and a new Constitution was written during the term of President Jose Sarney. In 1989, Brazil’s first democratic election in almost 30 years placed Fernando Collor de Mella in office.
During this time, three economic programs were begun. In 1986, the Cruzado Plan attempted to curb inflation (which had been running at almost 250% per year) by freezing wages and prices. Although inflation was temporarily stopped, it wasn’t long before it began again, and the Bresser and Summer Plans also failed to control it.
After Collor de Mella was impeached for corruption in 1992, the Real Plan was introduced by President Itamar Franco, inflation was finally curbed in 1995, and Fernando Enrique Cardoso, the economic minister who had formed the Real Plan, was elected President. In 1998 Brazil received a record-setting $41 billion loan from the IMF, after agreeing to austerity measures and a devaluing of the currency. Meanwhile, more than one-third of Brazilians lived on less than two dollars a day.
In 2002, the election was won by Lula da Silva of the Workers Party. Da Silva was a metalworkers union organizer who had been arrested under the military junta, and who had campaigned under the motto “The Priority of the Social”. Once elected, da Silva announced that his priority was to insure that “all Brazilians eat three times a day”.
Within a few years, da Silva signed an agreement with Argentina and Venezuela to jointly negotiate all the terms of any international loans, and, in conjunction with Argentina and with the aid of Venezuela, paid off its entire outstanding IMF debt.
Throughout the 1970’s, Venezuela—an oil-rich member of OPEC—was far more economically well-off than most other Latin American countries. About two percent of the country’s GDP was donated to international aid organizations and development banks.
In the early 1980’s, however, under President Carlo Andres Perez, the Venezuelan oil economy was shaken by the global recession, and although Perez had criticized the IMF as “a bomb that killed people but left buildings standing”, the agency was now approached for a number of loans. In a series of IMF-backed reforms, the Venezuelan financial and banking sectors were deregulated, and a series of price controls, including those on public transport and on gasoline, were lifted. When protests broke out, Perez imposed martial law—the military killed at least 300 demonstrators.
Perez, meanwhile, was widely viewed as corrupt, and in 1992 a group of Venezuelan Army officers led by Hugo Chavez attempted to overthrow Perez and arrest him. The coup failed and its leaders were jailed, but less than a year later Perez was arrested by Congress and the Supreme Court, and after an interim president served for a short time, Rafael Caldera was elected as the new President. Caldera pardoned all of the imprisoned coup leaders, including Chavez.
In 1994, Venezuela faced a banking and financial crisis, produced largely by the Perez deregulations. The Venezuelan government took control of ten banks making up 18% of all deposits, and subsidized a number of others in a $12 billion bailout. IMF loans helped the government deal with the crisis. Caldera also continued the Perez policy of privatizing the state-owned oil, mining and utilities.
In 1998, Hugo Chavez was elected President on a populist platform of social reform, economic redistribution and land reform, a new constitution, and nationalization of the oil economy, under the banner “Socialism for the 21st century”. Upon taking office in 1999, one of Chavez’s first actions was to pay off all of Venezuela’s outstanding debts to the IMF and World Bank.
In 2002, a coup led by the head of the Venezuelan Chamber of Commerce removed Chavez, and dissolved Congress and the Supreme Court. The coup, which Chavez denounced as ”made in America”, received immediate support from the Bush administration and from the IMF; within days, however, popular uprisings had crippled the coup and restored Chavez to office. Later, another attempt to remove Chavez by shutting down the national oil industry for two months (thereby shutting off the government’s income) also failed.
The IMF closed its Venezuelan office in 2006, and a year later Chavez announced the withdrawal of Venezuela from the IMF and World Bank, as well as the nationalization of all foreign holdings in the Orinoco Belt oil region. “We don’t accept,” Chavez declared, “the kind of development the World Bank and the International Monetary Fund want to push on us.”
A week earlier, President Rafael Correa of Ecuador had announced that he was expelling the representatives of the World Bank from his country. Back in 2005, the World Bank had withdrawn a $100 million loan after the Ecuadoran government had refused to use its unexpectedly high oil income to pay its foreign debts rather than spending it on social programs. “We will not stand,” Correa declared, “for extortion by this international bureaucracy.” Evo Morales had announced in 2006 that he was allowing Bolivia’s loan agreement with IMF to expire, and shortly before Venezuela withdrew from IMF, both Bolivia and Nicaragua declared that they no longer accepted the authority of a World Bank arbitration panel that was set up to settle trade disputes.
In summer 2007, Chavez announced plans for a Bank of the South, an alternative to the IMF that would be funded by the South American nations and used for local development. In 2009, the Banco del Sur was formally opened with capital of $20 billion from Venezuela, Argentina, Brazil, Paraguay, Uruguay, Bolivia and Ecuador.
It was a virtual death knell for the IMF, which saw the percentage of its capital invested in South America fall from 80% in 2005 to just 1%, as total worldwide loans dropped from $105 billion to only $10 billion—most of that to Turkey and Pakistan. Economist Mark Weisbrot wrote, “The IMF’s loss of influence is probably the most important change in the international financial system in more than half a century.”
IMF was even forced to downsize, reducing offices and firing staff members to deal with a $400 million/year budgetary deficit.
It has not escaped the notice of the undeveloped world that, by 2008, the nations which were doing well economically were those who had successfully fought off the IMF. Argentina had growth rates averaging 8.6%, while social spending had lifted some 9 million out of poverty. In Bolivia, Evo Morales nationalized the oil and gas industry and used the profits to finance social improvements; he also passed a land reform bill breaking up large estates and giving land to the small farmers. In Venezuela, GDP grew an average of 13% a year, while oil revenues that once enriched the elite were now used for social programs.
The rise of a number of democratically-elected governments (by 2007, left-leaning Presidents had been elected in Venezuela, Brazil, Argentina, Nicaragua, Chile, Uruguay and Ecuador, and lost in Mexico by just 0.5% of the vote) that could successfully band together and defy the United States, has also not gone unnoticed in the rest of the world. Several nations, including Russia, Indonesia and the Philippines, have taken up the South American strategy of removing IMF oversight by paying off their loans early. Alternative economic alliances that operate outside of the IMF-WTO, and independently of the United States and Europe, have also popped up worldwide. Venezuela and China have contracted bilateral agreements in which China provides financing and credits to the Venezuelan government in exchange for access to Venezuelan oil. Similar deals were also made by Beijing with Brazil.
In 2008, the Union of South American Nations (UNASUR) was formed in Brazil. Modeled on the European Union, UNASUR is a consolidation of two regional free trade alliances, the Andean Community of Nations (Bolivia, Peru, Ecuador and Colombia) and Mercosur, the Southern Common Market (Brazil, Argentina, Paraguay and Uruguay), along with the other nations that have joined as members (Venezuela, Chile, Guyana and Suriname). UNASUR is intended to provide a common economic and political framework for South America.
In 2002, the African Union was formed as a successor to the Organization of African Unity. Also based on the model of the European Union, the African Union contains every nation in Africa except Morocco. Its proposed aim is the coordination of economic and political policies, leading eventually to the unification of the African continent under one authority.
In Asia, the Shanghai Cooperation Organization (SCO), formed in 2001 by China, Russia, Kazakhstan, Kyrgyzstan, Tajikstan, and Uzbekistan, (India, Iran, Mongolia and Pakistan have also participated as “observers”) contains 25% of the world’s entire population, and serves as a framework for mutual economic cooperation and an eventual free-trade organization.
Another important multi-lateral group is the India-Brazil-South Africa Forum (IBSA), which unites economic powers from three continents around common economic agendas in “South-South Cooperation”. In the future, the IBSA is intended to form the nucleus of a global alliance of nations from the global “South”, as a counterweight to the economic and military powers of the global “North”. Among the goals advocated by the IBSA are reforming the United Nations to give the developing nations a more powerful voice; inserting strong protections into international trade organizations for workers and the environment; obtaining more resources for health care and education in the developing world; and working for equitable distribution of global resources.
Free Trade Area of the Americas
From the corporate viewpoint, of course, the NAFTA-Mexico era was a huge success—they were able to rake in enormous profits from an unregulated low-wage paradise. It was not surprising, therefore, that the supra-nationals almost immediately made plans to expand the NAFTA framework to the rest of South America—and just as immediately ran into opposition.
Negotiations for the Free Trade Area of the Americas, an agreement that would cover all the nations of the Western Hemisphere (except Cuba), began in 1994, shortly after NAFTA was implemented. By the time of the 2001 summit in Quebec, Canada, the plan was already facing opposition. Lula da Silva, President of Brazil, and Cristina Fernandez de Kirchner, President of Argentina (and wife of former President Nestor Kirchner), announced that they wanted strong protections for local member nations, and also demanded a complete end to US agricultural subsidies. Evo Morales of Bolivia flatly rejected FTAA as “an agreement to legalize the colonization of the Americas”, and Venezuela’s Hugo Chavez denounced it as a “tool of imperialism” and an “annexation”. Chavez suggested that the South American nations form their own “Bolivarian Alternative for the Americas (ALBA)”, a series of economic agreements (including Cuba) that would in time lead to a continent-wide free trade agreement without the US.
At the FTAA conference in Miami in 2003, the talks collapsed, and a new proposal by the US for a scaled-down “FTAA-Lite” version was also shelved. Another effort was made in 2004, in Monterrey, Mexico, but once again opposition killed the proposal. Chavez called for a “new moral architecture” that protected “the weakest”, while da Silva called free trade “a perverse model that wrongly separated the economic from the social, put stability against growth, and separated responsibility and justice”. Cristina Kirchner condemned FTAA, saying it would “do nothing but deepen injustice and the breakdown of our economies”.
At the final round of talks in 2005 in Argentina, Chavez and da Silva again spoke against the agreement inside, while soon-to-be Bolivian President Evo Morales led a group of 40,000 demonstrators outside. The talks fell apart for the last time.
In the wake of the FTAA failure, the United States went ahead with its proposed Central America Free Trade Agreement (CAFTA) instead, which also drew opposition in both the US and in Central America (particularly Costa Rica), but which was narrowly passed in a Costa Rican referendum, and by only two votes in the US Congress.