From ALCA to ALBA – An End To Dependency in Latin America?

On November 6th, 2011, over 5,000 people gathered in Mar del Plata to commemorate the sixth anniversary of the “IV Summit of the Americas” where Latin American presidents rejected the US-led initiative to establish a free trade zone for the entire region with the exception of Cuba. US President, George Bush, had come to the Argentine resort in 2005 looking to reach agreement on the Free Trade Area of the Americas, or ALCA as it is known in Spanish, but was rebuffed by his Latin American counterparts, led by the late Nestor Kirchner, then President of the host country.

If George Bush had been successful, Latin America would have been locked into a continent-wide agreement to attain the highest possible degree of trade liberalisation to facilitate access by US capital through clauses on trade in goods, services, investments, public procurement and competition rules that would have left sovereign states powerless to resist their economies being harnessed to the interests of transnational companies. Even without the ALCA, Latin American states face the challenge of diversifying their economies away from an over reliance on the export of primary products and towards more sustainable models of development. As long ago as the 1940s, the economist, Raúl Prebisch, said that the prevailing system of international relations was incompatible with the development of what he called the “peripheral” countries, given that the “metropolis”, i.e. the industrialised powers, controlled the international division of labour and value chains as well as the creation and development of new technology. His dependency theory, which we would refer to today as globalisation, maintained that in such circumstances, the peripheral states had great difficulty in constructing national development projects. This was recognised by some Latin American politicians, notably by Juan Perón who, during his first two administrations pursued a policy of import substitution industrialisation in Argentina, a policy that was swept away by the military dictatorship of 1976-83 and the subsequent presidency of neo-liberal disciple, Carlos Menem.

Though the US failed in their bid to create the ALCA, they signed a bilateral free trade agreement with Chile in 2003 and with the Dominican Republic and Central America in 2004. 10 years previously the North American Free Trade Agreement (NAFTA) was finalised between the US, Canada and Mexico. Since its inception, over 2 million Mexican farmers have abandoned their lands, unable to compete with subsidised US imports. The exodus and destruction of so many rural communities has contributed to the political and social breakdown of Mexican society and provided fertile ground for the escalation of the drug trade. Once a country self -sufficient in food, Mexico now imports 40% of its needs. This includes genetically modified maize that is contaminating the many native varieties as well as threatening to wipe out domestic production of its most famous staple product which is embedded in the country’s indigenous culture.

The lessons of Mexico have not been lost upon a generation of Latin American politicians who, in the words of current Argentinian President, Cristina Fernandez de Kirchner, have had enough of “anarcho-capitalism”. Political shifts have led to the emergence of proposals regarded as alternatives to the hegemony of neo-liberalism and for the development of individual countries and the wider region. Two major initiatives have emerged in the form of the South American Union of Nations (UNASUR) and the Bolivarian Alternative for the Americas (ALBA), both of which focus on regional integration but with distinct objectives.

UNASUR was born out the first summit of the Americas in 2000 and was initially an economic initiative intended to insert South America into the globalised market by the Brazilian President, Fernando Cardoso. Since then, it has been modified to incorporate the construction of a regional market but it has also taken on a more political role. At the third summit of the Americas in Cuzco a declaration was made which announced that UNASUR had created a “South American Union of Nations” and that there would be a Latin American parliament. The body is constituted of twelve South American republics, including the Mercosur countries, Venezuela, the Andean Community of Nations (CAN) and also Chile, Guyana and Surinam. Despite the differences in political orientation between the member states, UNASUR demonstrated its unity by the swift reaction to the attempted coup against Ecuador’s President Correa in September, 2010.

The Venezuelan-led ALBA project is in direct opposition to the ALCA and is significantly different to UNASUR in a number of ways. Its objectives are fundamentally political as well as economic. The inspiration for the organisation came largely from the Hemispheric Social Alliance, an alliance of diverse social movements that had been leading resistance to the neo-liberal free trade agenda. A paper entitled “Alternatives for the Americas” criticised the open market model and was influential in the formation of an agreement between Venezuela and Cuba in 2004 that prioritised the exchange of goods and services within a framework of solidarity and cooperation as opposed to the logic of the market. Bolivia (2006) and Nicaragua (2007) became part of the ALBA and other members are Antigua, Dominica, St Vincent and Ecuador. The focus of the ALBA is on the prioritising of political, social and cultural agreements that strengthen Latin American and Caribbean integration and features innovative cross border institutions such as the TV channel, Telesur, the oil company, Petrosur and, significantly, the Bank of the South.

Both UNASUR and ALBA undoubtedly contribute to a process of regional integration but the agro-exporting model of natural resources and agricultural products to what we may call the’ new’ metropolis to include China still holds sway. Buoyed by burgeoning commodity prices and unprecedented demand from the Asian giant, Latin American agricultural exports are booming but because of the concentration of ownership by local elites and multinational companies the benefits to the population at large are limited. Similarly, large scale mining projects in a number of republics have brought little financial benefit where royalty payments to host governments are rarely more than 3%  and, in common with mono-crop plantation agriculture, are responsible for environmental degradation which has engendered widespread protest and criticism across the region.

Latin America has serious problems resulting from years of neo-liberal policies with debilitated states competing for the exportation of similar primary products instead of indulging in productive complementation. The economic model was created for transnational companies and it is apparent that their goal of profit maximisation for the benefit of their shareholders is at odds with the aims of those who see regional integration and the growth of regional markets as the way forward. For the moment, an end to dependency and the Bolivarian dream of a united America (minus the US) is little more than an aspiration. Regional rivalries, vested interests and the lack of political will are formidable obstacles to overcome on the road to sustainability but as the contradictions and failings of deregulated market economies become more pronounced, the Latin American experience will have a wider relevance for us all.

Article by Bert Schouwenburg, GMB International Officer