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Via Workers World News Service Reprinted from the Aug. 22, 2002 issue of Workers World newspaper ------------------------- LATIN AMERICA:
U.S. BAILOUTS EXPOSE ECONOMIC,
POLITICAL COLLAPSE
By Andy McInerney
The Bush administration has desperately intervened
to try to
bolster the capitalist economic system in Latin America. On Aug. 4, the U.S. government authorized an emergency $1.5 billion loan to Uruguay's crippled banking system. Days later, on Aug. 7, the International Monetary Fund approved a massive $30 billion loan package for Brazil--the world's 10th largest economy. The IMF loan is the biggest bailout in the fund's
history.
The United States is the biggest donor to the IMF, a conglomerate of international banks and lenders, and would certainly have had to approve a bailout of this magnitude. The two loans have a dual purpose. On the one hand,
there is
the economic goal: preventing the economic crisis that is sweeping Latin America from further damaging U.S. bankers and corporate heads. On the other hand, the political goal is to give
the ruling
classes in Latin America a respite from massive, growing protests aimed at the IMF--and, increasingly, against the U.S.-backed ruling classes themselves. The loan to Uruguay came after runs on the South
American
country's banks led to a four-day bank shutdown. Protests bubbled over into sackings of stores and clashes with police. U.S. Ambassador Martin Silverstein announced the
bailout
"immediately after Uruguay's parliament passed legislation that would freeze bank deposits and cut government spending to meet conditions set for the loan," the Deutsche Presse Agentur reported Aug. 5. The massive bailout for Brazil's banks was
announced as the
value of the Brazilian currency, the real, plummeted. In the past year, the real has lost 20-40 percent of its value. During the last week of July, it fell to 3.25 reals to the dollar--the same exchange rate as the hobbled Argentinean peso. Financiers worried that both Uruguay and Brazil
would
default on the foreign debt if emergency aid were not approved. The biggest winners from the Brazil bailout were
not in
Brasilia, Sao Paolo or Rio de Janeiro. They were sitting in their Wall Street boardrooms. According to cbsmarketwatch.com analyst Paul Erdman, the big U.S. banks Citigroup and FleetBoston have investments and loans in Brazil to the tune of some $20 billion. "Brazil has also been a big magnet for American
industrial
investment," reported the Aug. 9 New York Times. "General Motors and other car companies have sunk billions into factory expansions, and a Brazilian meltdown would turn those into white elephants." The other aspect of the recent round of bailouts is
political. The social misery caused by over a decade of IMF- and U.S.-imposed austerity measures and privatizations throughout the continent is beginning to find expression in mass movements and political challenges. Argentina's political establishment collapsed amid
mass
protests in December. That country's ruling class is still trapped in a vise between the demands of U.S. bankers and growing mass protests. Revolutionary insurgencies are challenging
Colombia's ruling
class and its grip on power. President Hugo Ch�vez is steering Venezuela out of
the orbit
of U.S. exploitation as millions of poor and working people challenge that oil-producing country's economic elite. Huge, militant mobilizations have swept Peru and
Paraguay.
In Bolivia, only political machinations in that
country's
Congress prevented Evo Morales of the Movement to Socialism party from winning the presidency. Morales' popularity grew in direct proportion to the number of times the U.S. ambassador denounced his candidacy. And in Brazil, the economic lynchpin of Latin
America, polls
show that two leftist presidential candidates have all but overshadowed the traditional political elite. The prospect that the reins of power could slip out of trusted pro- imperialist hands in such a crucial country is already causing U.S. financiers nightmares--two months before the elections are set to be held. The strings attached to the recent $30 billion IMF
loan show
that this prospect was high on U.S. bankers' minds. Eighty percent of the loans would be paid in 2003--after the presidential elections--and only then on the condition that the new government not increase social spending. Despite the bailouts, the convergence of economic
crisis
with growing political consciousness on the part of the working class ensures that capitalist rule in Latin America remains vulnerable. - END -
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