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Latin America Delivers A Swift Kick

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On one level, April's hemispheric summit meeting was an old fashioned butt kicking for Washington's policies in the region. The White House found itself virtually alone -- Dudley Do Right Canada its sole ally -- on everything from Cuba to the war on drugs. But the differences go deeper than the exclusion of Havana and the growing body count in Washington's failed anti-narcotics strategy. They reflect profound disagreements on how to build economies, confront inequity, and reflect a new balance of power in world affairs.

The backdrop for the summit is anger in Latin America over the failure of the U.S. and Europe to stimulate their economies, all the while pursuing policies that have flooded the region with money -- a "monetary tsunami" in the words of Brazilian President Dilma Rousseff -- driving up the value of southern hemisphere currencies and strangling local industries.

After meeting last month with President Obama, Rousseff said she told him of Brazil's "concern with the expansionary monetary policies of the rich countries ... leading to the depreciation of developed countries currencies and compromising growth among emerging economies."

While Latin American economies are in better shape than those in Europe and the U.S., the recession dogging the latter areas -- plus the cooling of the Chinese economy -- has slowed growth throughout much of Latin America. Brazil's most recent figures indicate a stalled economy, which could have an impact on efforts by the Rousseff government to raise living standards and narrow what was once the world's biggest gap between rich and poor.

According to the Getulio Vargas Foundation Brazil has lifted 33 million out of extreme poverty since 2003 and, out of a population of 190 million, has created a relatively well-paid workforce of some 105.5 million. In contrast to the U.S. and Europe, where the wealth gap is accelerating, income for the poorest 50 percent of Brazilians has risen 68 percent, while for the top 10 percent, it has grown only 10 percent.

This growth has come about because most countries in Latin America reject the economic model pushed by Washington and the European Union: free trade, financial deregulation, and deep austerity.

Argentina is the poster child for the region's rejection of the so-called "Washington consensus." Throughout much of the '90s, a deeply indebted Argentina followed the strictures of the International Monetary Fund (IMF), slashing government spending and instituting a suffocating austerity. The result was a "debt trap": cutbacks increased unemployment, which dampened tax revenues, which required yet more cutbacks, and more unemployment. In the end, debts went up. From 1998 to 2002, Argentina's economy shrank 20 percent. By the time Buenos Aires finally said "enough" and defaulted on its $100 billion sovereign debt, half of its 35 million people were below the poverty line.

Argentina reversed course and primed the economy with government spending on housing, highways and education. It also subsidized 1.9 million low-income families, which cut poverty in half. Since 2002, the economy has grown at an average rate of 6 percent a year, and joblessness has fallen from 20 percent to 8 percent.

Brazil has followed a similar strategy that is now threatened by the fiscal and monetary policies of the U.S. and Europe. Those policies have caused the value of Brazil's currency, the real, to grow, which prices Brazilian manufactured goods out of the international market.

"There is concern in South America about deindustrialization," says Alicia Barcena of the UN Economic Commission for Latin America. "Therefore some countries are taking measures to support their productive sectors." While the Obama Administration calls this support "protectionism," Brazilian Finance Minister Guido Mantega says, "The measures we are using are to defend ourselves."

There are other issues Latin Americans are unhappy about that never made it into U.S. media accounts on the summit, in particular the make-up of the permanent members of the United Nations Security Council that Brazil -- along with India and South Africa -- would like to join.

As former Brazilian President Luiz Lula da Silva told the African Union summit last July, "It isn't possible that the African continent, with 53 countries, has no permanent representation in the Security Council. It isn't possible that Latin America with its 400 million inhabitants does not have permanent representation. Five countries decide what to do, and how to do it."

The five permanent members of the Security Council are the U.S., Britain, France, Russia, and China.

While the U.S. has endorsed India's bid -- in large part because it is wooing New Delhi to join its anti-China coalition -- Washington has been consciously silent on Brazil's bid.  Indeed, United Nations U.S. representative Susan Rice has been sharply critical of Brazil, India and South Africa for not supporting intervention in Syria. "We have learned a lot [about these three countries] and frankly, not all of it encouraging." The message is clear: back us and we will think about it.

The summit was particularly critical of the Obama administration around the exclusion of Cuba, causing the President to turn positively peevish. "Sometimes I feel ... we're caught in a time warp, going back to the 1950s and gunboat diplomacy and Yankees and the Cold War."

But from Latin America's point of view, by maintaining a half-century-old blockade, it is the U.S. who seems locked into the world of the Cold War. And there are, indeed, some worries about "gun boats," specifically those that make up the newly re-constituted U.S. Fourth Fleet, mothballed in 1950 and revived by the Bush Administration. The U.S. has also recently established military bases in Colombia and Central America.

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http://dispatchesfromtheedgeblog.wordpress.com

Conn M. Hallinan is a columnist for Foreign Policy In Focus, "A Think Tank Without Walls, and an independent journalist. He holds a PhD in Anthropology from the University of California, Berkeley. He oversaw the (more...)
 
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By the time they take notice the US will be a thir... by intotheabyss on Tuesday, May 1, 2012 at 4:53:23 PM