by Prof. James Petras
December 09, 2015
Pundits and commentators on the Left and Right are pronouncing,
'the end of the progressive cycle in
They cite the recent presidential
Argentina, where hard-right
Mauricio Macri was elected
Brazil, where President Dilma
Rousseff has appointed a neo-liberal 'Chicago Boy'
economist, Joaquin Levy, as Finance Minister and launched an
IMF-style regressive structural adjustment policy designed
to reduce social expenditures and attract financial
Venezuela, where Washington
channeled millions of dollars to far-right parties, as well
as violent extra-parliamentary and paramilitary groups, to
destabilize the center-left Maduro government
right-wing Democratic Unity
Coalition (MUD) won the legislative elections in December
2015 with more than 2:1 margin over the Chavista Venezuelan
United Socialist Party (PSUV)
No doubt progressive social legislation
has come to a virtual halt, even before the recent political
advances of the US-backed right-wing parties with their neo-liberal
But paralysis, and even retreat and electoral defeats of the
center-left regimes, do not mean the return to the neo-liberal
1990's, a period of privatizations, pillage and plunder, which had
plunged millions into poverty, unemployment and marginality.
Whatever the current voting results, the collective memory of mass
hardship, resulting from 'free market' policies, is seared in the
memory of the vast majority of the working population.
Any attempt by the newly elected officials to 'unmake and reverse'
the social advances of the past decade will be met with,
militant resistance, if not open
institutional and political
and low commodity prices
drastically limiting export revenues
A careful analysis of the policies
proposed by the neo-liberal right, their implementation and impact
will demonstrate their likely failure and the rapid demise of any
new right-wing offensive.
This will abort the neoliberal cycle.
President Macri and Wall Street
In the upper income neighborhoods of Buenos Aires, there was singing
and dancing in the streets as the Presidential election results
rolled in and Mauricio Macri was pronounced the victor.
Wall Street, the City of London and
their financial mouthpieces, the Wall Street Journal and the
Financial Times, announced the coming of a new era and the end of
'anti-investor, populism and nationalism, wasteful social spending'
referring to increases in pensions, family allowances and wages,
approved by the previous center-left government
Mauricio Macri does not merely represent the plutocracy; he is one
of the richest plutocrats in Argentina.
He not only boasts of a 'carnal
relationship' with Washington in his acceptance speech, he pleasured
US President Obama by announcing he would work to expel
Venezuela from MERCOSUR, Latin America's foremost regional economic
Macri announced a cabinet made up of hard-core neo-liberal
economists, former supporters of the military dictatorship and even
a rabid rightwing rabbi.
He then spelled out his policy agenda,
which had been cleverly hidden during his electoral campaign when
his raucous rhetoric for 'change', spoke to everybody and nobody.
Macri promises to,
end capital controls, export
taxes and retentions on agro-business exports,
devaluate the peso,
pay over $1.2 billion dollars of
Argentine public money to the Wall Street
vulture-speculator, Paul Singer, who had bought $49 million
dollars of old Argentine debt (a profit of astronomical
proportions for buying paper),
privatize and de-nationalize the
state-owned airline, oil company and pension funds
sign-off on EU and US-centered
free trade agreements, thus undermining Latin America
integration projects like MERCOSUR;
tear up the joint-memo of
understanding with Iran regarding an investigation into a
terror bombing as requested by Israel; and
expel Venezuela from MERCOSUR.
In a word, the multi-millionaire playboy
President plans harsh austerity for the Argentine working class and
bountiful handouts for the economic elite.
The day after the elections, local and overseas speculators boosted
Argentine stocks 40% anticipating the free market bonanza.
George Soros and hedge fund mogul, Daniel Loeb,
'piled into Argentine assets'.
Investment fund managers urged Macri to
act swiftly in imposing his 'sweeping reforms' before Argentina's
famous capacity for mass popular resistance could be organized to
resist his policies.
Macri's Wall Street and Washington patrons are well aware that their
clients' boisterous big business bombast faces serious political
obstacles because his policies will provoke severe economic
President Macri does not even have a majority in Congress to approve
his radical proposals. The congress is controlled by a coalition of
rightwing and center-left Peronist parties, which will need to be
coaxed, bought or coerced.
The Argentine Congress will balk at supporting his entire neoliberal
agenda. When he resorts to 'executive decrees' to bypass Congress,
he will be contested in the courts, streets and legislature. It is
doubtful he will be able to neutralize all his critics and implement
his radical neoliberal agenda.
The head of the Central Bank, Alejandro Vanoli, who was
appointed by the previous center-left Fernandez government, is not
likely to go along with Macri's tight money policy, radical
devaluation and fiscal austerity.
Macri will likely look for a pretext to
purge the incumbent and nominate a free market crony. However, the
institutional damage will increase the general sense of a lawless
regime willing to trample the constitutional order to impose his
free market dogma.
Macri's promise to end the 'tax' retention on agro-exports will
decrease government revenues, exacerbating the fiscal deficit and
necessitating deeper reductions in social expenditures.
The contrast between higher earnings for
the agro-business elite and lower living standards for labor is an
invitation to greater class hostility and strife. Even more decisive
Macri's "export strategy" will be undermined by the low world demand
and prices of Argentine commodity exports.
Macri's promise to end capital and price controls on his first day
in office will provoke a major devaluation of the peso which may
exceed 60%. This will automatically result in severe increases in
the price of consumer goods and increased profits for the export
elites, provoking mass unrest across the occupational spectrum.
Macri promises to meet with the 7% of speculator hold-outs of old
Argentine debt (from the pillage years of the 1990's) demanding full
payment with interest, especially
the 'vulture funds' led by Wall
Street's Paul Singer of Elliott Capital Management.
Pay-offs of over $1.3 billion on an
original $49 million purchase of Argentine debt to Wall Street
speculators will provoke fury among Argentine workers and
nationalists who will shoulder the added burden on top of austerity
and cuts in social welfare.
Moreover, the 93% of debt holders, who
had agreed to the 'financial haircut' and discounted the debt at 70%
will now demand full payment multiplying tenfold the demands on the
Treasury with disastrous consequences.
The devaluation and decline of purchasing power will not attract the
'tidal wave of foreign investment' to lift the economy and provide
jobs and general prosperity as Macri had promised during his
Foreign capital will not create new
enterprises; they will concentrate on buying existing privatized
public enterprises at fire-sale prices. Incoming capital will not
increase the productive forces; it will only shift the direction
of the flow of profits from public coffers to private
pockets, from the domestic economy to overseas investors.
- Then and Now
The general foreign and domestic political climate is vastly
different today from the 1990's when the previous neo-liberal
experiment was launched with such disastrous consequences.
In the late 1980's, Argentina was
suffering from acute inflation, stagnation and declining income. The
working class organizations were still recovering from the murderous
decade of military rule. Moreover, in the 1990's the US was at the
pinnacle of imperial power in Latin America. China was only
beginning its dynamic growth cycle.
The USSR had disintegrated and Russia
was a struggling vassal state. Latin America was ruled by a motley
collection of neo-liberal clones under the thumb of the IMF.
Today Macri faces an organized working class.
The trade unions and militant popular
movements are intact and have experienced a decade of substantial
gains under a center-left government. The IMF experience remains a
poisonous memory for hundreds of thousands of Argentines.
Hundreds of military officials
responsible for crimes against humanity have been arrested, tried
and prosecuted under the out-going regime.
The threat of a military coup,
ever-present in the 1980's and 90's, is non-existent. China has
become the key market for Argentine agro-exports (soya). Macri,
despite his declared passion to serve Washington, is obligated to
accommodate to the Chinese market.
Any moves out of MERCOSUR and into the arms of
Transpacific Trade Agreement will prejudice Argentina's
strategic trade links with,
Today Macri will find a hostile climate
in Latin America for his proposed embrace of the US. His promise to
'expel Venezuela from MERCOSUR' has already been rejected by its
In summary, Macri will find it impossible to replicate the
neoliberal policies of the 1990's for all the above reasons.
There is one additional factor to
The earlier version of the
'free-market experiment' led to the most severe economic
depression in Argentine history with double-digit negative
growth, unemployment exceeding 50% in working class districts
(and 25% nationally) and poverty and extreme misery in some
Argentine provinces exceeding Sub-Sahara Africa.
If Macri believes he can rush through
the "harsh medicine" - and avoid the inevitable mass protest - while
attracting a massive inflow of capital with which to rapidly grow
the economy, he is gravely mistaken.
After the initial giveaways and uptake
of the stock market, the Soros and Loeb speculators
will grab their profits and run. Weakened domestic consumption and
the depressed global commodity market do not attract long term,
The real question is not (as the financial pundits claim) whether
Macri will 'seize the opportunity' but how soon after he tries to
impose his free market model his regime will crash amid the ruins of
a depressed economy, raging inflation and general strikes.
Brazil - Right
Turn or a Left Opportunity
Commentators left and right cite the vertical decline of support for
President Dilma Rousseff from over 50% to less than 10% as a
sign of the 'decline of the left'.
Judicial investigations have led to the
arrest and prosecution of dozens of Congressional leaders of the
so-called 'Workers Party' (PT) for wholesale bribery, money
laundering and illicit transfers of millions of dollars!
Prosecutors have jailed scores of PT officials, legislators and
senior executives of the giant public petroleum company, Petrobras,
the directors of the biggest construction companies and investment
banks who were partners in crime with former PT President Lula Da
Silva. The one-time trade union leader, President Lula, turned
into a poster boy for Wall Street and more recently a notorious
influence peddler for Brazilian big businesses.
Prosecutors have arrested 117 officials from Petrobras, the giant
state oil corporation, and Brazil's biggest company.
They have arrested two of Brazil's most
Marcelo Odebrecht, president of
Constructora Norberto Odebrecht
Octavio Marquez de Azevedo of
the Andrade Gutierrez Corporation
Both contributed to the Workers Party
electoral campaign of ex-President Lula Da Silva and current
President Dilma Rousseff.
Big business contributors, currently under investigation or jailed,
had received forty-times the value of their political donations in
terms of lucrative PT government contracts (a 4000% return on
Criminal cases and arrests for 'bribes for contracts' schemes have
affected the financial sector, including the billionaire financier
Andre Esteves, founder-President of BTG Pactual , a close
friend and associate of Lula Da Silva.
The entire elite of Brazil's capitalist and financial class has been
indicted, jailed or is under investigation.
The Treasurer of the PT, Senate and
Congressional leaders and Presidential advisers of the 'Workers'
Party have been arrested and jailed for bribes, money laundering and
fraud, in connection with the Petrobras and other corporate
The judicial investigation demonstrates that the PT had become a
party of the corporate elite. PT leaders and officials work closely
with business elites in channeling billions to corporate treasuries.
In contrast, the PT's so-called "poverty program" donated $60 a
month to poor families, just above subsistence level.
This poverty program was part of
a vast patronage machine designed to secure votes to elect corrupt
officials embedded with big capital and financiers!
While the prosecutors are not explicitly anti-capitalist, the
investigations have exposed the corrupt basis of capitalist rule. In
the course of one year Brazilian prosecutors have conducted deeper
and more thorough research on the power elite and determined how it
rules, exploits and pillages the wealth of the country than any
analysis by the vast majority of 'leftist' academics and journalists
over the fifteen years of PT mis-governance.
The prosecutors have acted against the entire class of capitalist
executives and their political partners in the PT with greater force
and integrity than the major 'left' trade union (the CUT) and social
movement, Landless Rural Workers (MST) leaders.
The CUT and MST leaders secured minor
regime concessions, in exchange for ignoring the large-scale,
long-term criminal links between bankers, agro- businesspeople,
industrialists and the PT.
While leaders of the MST, the CUT and the National Union of Students
gave 'critical' support to Presidents Lula and Dilma and their
entourage of corrupt Congress-people, the prosecutors exposed years
of endemic fraud, swindles and bribes which had enabled the PT
leaders to buy luxury BMWs, Rolex watches and million-dollar villas
and luxury condos in exclusive neighborhoods.
Deltan Dallagnol, one of the prosecutors leading the
investigation, has demonstrated that the PT works for the rich and
powerful, foreign and domestic capitalists and deceives the poor.
His investigations demonstrate that the
PT is not a 'center-left' party - it is a party of kleptocrats
working for capitalists.
One thing is sure:
the PT is not a party embracing
diverse popular classes
it is not an arena for popular
it is a party that serves
diverse capitalist sectors, including finance, construction,
petroleum and agro business
Because of corruption, the cost of
government projects doubled and tripled. As a result vital social
services were starved of funds and deteriorated and public transport
construction was delayed for years.
In summary, the decline and discredit of the PT is not a defeat for
the Left because the PT regime never was on the left.
On the contrary, the discredit of the PT
is a positive victory for anti-capitalist forces struggling against
the ruling class and political elite.
The victory of hard right neo-liberal Mauricio Macri in Argentina
and the disintegration of the PT do not augur a new rightwing cycle
in Latin America.
Macri's economic team will quickly
confront mass opposition and, outside the upper class neighborhoods,
they lack any political mass support. Their policies will polarize
the country and undermine the stability, which investors require.
Brutal devaluations and the end of
capital controls are formulas, not for economic development, but for
inciting general strikes. Conflict, stagnation and hyperinflation
will put an end to the enthusiasm of local and foreign investors.
Moreover, Macri cannot embrace Washington's entire agenda because
Argentina's natural trading partner is China.
Macri's regime is the beginning and the end of a reversion to the
neo-liberal disaster, similar to what took place at the end of the
The fall of the PT, more a product of conscientious prosecutors than
the action of trade unions and social movements, opens political
space for new working class struggles, free from the constraints of
corrupt leaders and bureaucrats.
Even if the Right returns to power in Brazil... it is tainted with
the same stench of corruption; its capitalist partners are in jail
or facing prosecution. In other words, the fall of the PT is only
part of the decline and decay of all the capitalist parties.
Over time, soon after the collapse of the 'New Right', a new
authentic left may emerge, free of corruption and links to big
Hopefully, an authentic working class
party will form, which can pursue socio-economic policies to end
exploitation of labor, the pillage of the public treasury and the
destruction of the Amazon rainforest.
This should be a left, which sustains
the environment, respects nature and upholds the rights of
Afro-Brazilians, indigenous people and women.