Trade Treaties and Challenging US Hegemony in the Americas
by Sujatha Fernandes
12 June 2006
Venezuela’s president Hugo Chávez, Brazil’s president Lula Inacio da Silva, and Nestor Kirchner, president of Argentina, met in Sao Paulo, Brazil on April 26 to discuss possibilities for integration and collaboration. On April 29, Cuba’s president Fidel Castro met with Chávez and newly elected Bolivian president Evo Morales to sign a People Trade Agreement (TPC), which is seen as a step towards the alternative trade agreement being proposed by Chávez, the Bolivarian Alternative for the Americas (ALBA).
The political scene of the Americas in the first decade of the new millennium bears some similarity to the revolutionary change and sense of possibility in the air during the 1960s. Fidel Castro and his band of guerrillas had declared victory in Havana in 1959, and the success of the Cuban revolution in thwarting Washington’s aims sparked one of the largest guerrilla movements to date across the Americas. The CIA-sponsored military coup against the democratically elected-Arbenz government in Guatemala in 1954 had proven that the United States was not willing to tolerate change by peaceful means. A whole generation of young people in Guatemala, Venezuela, and Nicaragua went into the mountains and took up arms. Revolutionary struggles were waged by the National Liberation Army (ELN) in Colombia and the Revolutionary Left Movement (MIR) in Peru. Guerrilla organizations received support from Cuba and the Soviet Union, who sought to counter the hegemony of the United States over the Americas.
In subsequent decades, many of these young and idealistic revolutionaries were imprisoned, tortured and assassinated by military governments that came to power across the Americas. Following the CIA-sponsored coup against the socialist government of Allende in Chile in 1973, the Pinochet dictatorship began to carry out a series of free market reforms with the help of economists trained at the University of Chicago. By the 1990s, a free market orthodoxy had emerged, which was known as the Washington Consensus. The left in the Americas had been decimated by the experience of military rule. The Soviet Union had collapsed in 1991, removing any hope for an alternative hegemonic pole to the United States. Unemployment and poverty rose substantially as a result of privatization, the relocation of factories to more profitable zones, and the opening up of local markets to foreign competition.
A significant expression of neoliberal reform in the Americas were the proposed free trade agreements, beginning with the North Atlantic Free Trade Agreement (NAFTA). NAFTA sought to consolidate all of North America (Canada, United States, Mexico) into one trading bloc. The NAFTA treaty required Mexico to comply with structural adjustment policies (SAPs), which would involve privatization of the state sector; an end to numerous price controls, subsidies, and protectionist measures; and significant lowering of barriers for trade. This would have several deleterious effects for ordinary Mexican people. The cheap agricultural goods flowing into Mexico would undermine the livelihood of rural agricultural workers and farmers. The proposed sale of ejidos, or ancestral, communal lands, to multinational corporations, would further weaken the position of peasants and indigenous people.
On January 1, 1994, the day that NAFTA came into effect, a revolutionary indigenous group calling itself the Zapatista National Liberation Army (EZLN), carried out a dramatic symbolic uprising. Basing themselves on Emiliano Zapata, a hero of the 1917 Mexican Revolution, the Zapatistas challenged the specific tenets of the NAFTA treaty and the broader neoliberal world order being promoted by the signatories. The Zapatistas were representative of a new wave of resistance to neoliberal structural adjustment that was to emerge from the margins. Over the next decade, the region saw the emergence of a range of social movements contesting the conditions of US-led structural adjustment reforms. From the landless laborers movement (MST) in Brazil, to indigenous mobilizations in Ecuador, the water and gas wars in Bolivia, the piqueteros (picketers) and recuperated factory movement in Argentina, and the community media movements among the urban poor in Venezuela and Uruguay, there has been a vibrant resurgence of popular activism. In several countries, these social movements made alliances, sometimes detrimental to their own causes, with electoral groupings. As a result of their joint collaborations, several leaders challenging the neoliberal orthodoxy to greater and lesser degrees came to power: Hugo Chávez in Venezuela in 1998, Lucio Gutierrez in Ecuador in 2002, Lula in Brazil in 2003, Nestor Kirchner in Argentina in 2003, and Evo Morales in Bolivia in 2005. While Gutierrez was subsequently removed by popular movements, and Lula and Kirchner followed a fairly centrist political line, Chávez and Evo have a more radical approach.
Given its strategic positioning in the region as part of the Caribbean basin and a gateway to many South American countries, and also its large natural oil reserves, Venezuela has begun to play an important role in facilitating new regional alliances among these center-left leaders to counter the hegemony of the United States in the region. Since 1994, the United States has been working to promote the Free Trade Area of the Americas (FTAA) or Area de Libre Comercio de las Americas (ALCA). FTAA/ALCA is a trade agreement modeled on NAFTA and the World Trade Organization (WTO) that seeks to remove barriers to trade across the Americas. In a series of Summits of the Americas since 1994, the United States has pushed for the signing of the free trade agreements, but negotiations have failed to achieve regional consensus. Instead, the US has begun pushing for the signing of smaller bilateral or sub-regional treaties such as the Free Trade Agreements (FTAs) signed with Peru, Chile, and Colombia, the Central American Free Trade Agreement (CAFTA) signed with several Central American countries, and the Andean Trade Preference agreement (ATP), which was signed by all Andean nations except for Venezuela. In order to counter ALCA, Venezuela’s Chávez has proposed the Bolivarian Alternative for the Americas (ALBA). ALBA seeks to define an alternative model of development for the region based on Latin American integration and the creation of sub-regional trading blocs. Like Chávez’s Bolivarian revolution in Venezuela, the Bolivarian Alternative draws on the symbol of independence leader Simón Bolívar, as a popular figure who had a vision for South American unity.
Until recently, Cuba and Venezuela were the main proponents of this alternative project within the Americas, with Cuba providing doctors and educational scholarships to Venezuela, and Venezuela guaranteeing oil to Cuba at preferential prices. But after surviving a massive strike by oil industry executives and a right-wing coup in 2002, and a recall referendum organized by the opposition in 2004, Chávez has emerged in a stronger position, and has begun to extend ALCA to other nations in the region. In June 2005, Chávez convened Caribbean heads of state for the signing of ALBA-Petrocaribe, an initiative that will supply Caribbean countries with oil at below-market prices. Petrosur is a similar regional agreement signed among South American countries. Another initiative associated with ALBA is Telesur, a regional television network that seeks to counter the influence of CNN in Spanish and Univisión over broadcasting. Cuba, Venezuela, Brazil, Bolivia, Uruguay, and Argentina have signed a range of trade agreements in the last few years solidifying these initiatives as a part of ALCA, and also in connection with other regional treaties such as the Buenos Aires Consensus.
Since the emergence of the Zapatistas on the scene, social movements have made their voices clear regarding the devastating consequences of free trade agreements, and they have fueled the efforts towards alternative development agreements and models. For example, Evo Morales’ decision on May 1 to nationalize the Bolivian natural gas industry is a historic decision in the context of what came to be known as the “Gas Wars.” The Bolivian economy is highly reliant on its natural reserves of gas and oil. There are currently 52.3 trillion cubic feet of gas reserves in Bolivia which are worth $120 billion US dollars. These are the second largest reserves in Latin America, after Venezuela. The main consumers of these reserves are not Bolivians, but foreign corporations and citizens of foreign nations. Beginning in September 2003, a Coalition in Defense and Recuperation of Gas and Hydrocarbon Resources demanded the recovery of natural gas reserves from transnationals and the nationalization of natural gas. Protesters occupied the capital city of La Paz, demanding that the government reject a contract with Pacific LNG, which would permit export of natural gas to the US at prices well below market value and with only 18 percent paid in royalties to the Bolivian state. As a result of the protests and the repressive response of the army which left hundreds wounded and over 30 dead, President Sánchez de Lozada resigned in October 2003. The protests continued into May and June 2004, when social movements carried out a series of marches, demonstrations, and road blockades. As a result of the popular protests, the royalties on production were increased from 18% to 50%. But the social movements wanted more than this, they wanted state ownership, or nationalization of natural gas, and industrialization of gas. Industrialization would mean building the infrastructure for gas to be refined in Bolivia.
During his election campaign, Evo Morales made a promise to nationalize gas reserves, and on May 1, he signed a decree recovering ownership of hydrocarbons by the Bolivian state. Amidst street celebrations and ceremonies, military units and government engineers occupied the 56 energy installations in the country. Evo stated that the nationalization would not take the form of expropriations, but rather the negotiations of new contracts that will give ownership over the resources to the state. The state, rather than foreign companies, will make decisions over which markets to sell to and at what prices. Brazil, Spain, the US, the UK, and France all have gas companies in Bolivia. Under Evo’s decreed nationalization, these companies will continue operations in Bolivia, but they will be paid a fee for their services: for most companies this will be 40 percent of production, while the largest companies will be paid 18 percent. The nationalization is bound to guarantee popular support for Evo, but may bring problems with foreign companies. Brazil’s Petrobras, the largest investor in Bolivian energy, has said they will be scrapping plans to build a natural gas pipeline from Bolivia to Brazil, and they are considering pursuing litigation. The nationalization decree is a bold move that comes as a result of pressure from Bolivian social movements, and takes place in the context of moves towards energy integration in ALBA.
However, social movements also find themselves in conflict with some aspects of the new regional initiatives, such as the Southern Gas Pipeline discussed in the meeting between Chávez, Kirchner and Lula on April 26. The pipeline, which would pump oil from Venezuela to Argentina, is seen as an essential component in promoting regional integration and alternative development models. But the gas pipeline would lead to further exploitation of Venezuela’s natural oil reserves, and would run through the Amazon, creating contamination, deforestation and putting at risk the livelihood of the indigenous groups and local communities who live in these regions. The proposal has already come under criticism by local groups, some Bolivian officials, and international environmental organizations, and is likely to generate significant opposition.
The failures of the Washington Consensus and popular discontent with Free Trade Agreements have generated new revolutionary models of solidarity, cooperation and unification in the Americas. After decades of austerity, growing inequalities, and US domination of the region, national governments are beginning to reject Washington’s recipe for corporate-led growth in favor of social development models. Whether the region can truly begin to carve out an alternative path will depend on the outcomes of upcoming elections in Peru, Colombia, and Mexico; the extension of ALBA beyond a small group of countries; and the ability of social movements to shift the focus away from further exploitation and mega-projects as the basis for regional integration.