Hugo Chavez on the Move with A.L.B.A.

With the advent of an amplified progression towards a globalized economic system and recent economic instability that has come along with it, the geo-politics and focus on the debate between socialism and capitalism has once again been put at the forefront of discussion.

Since the fall of the Soviet Union two decades ago, the globe had been generally divided, in economic and geo-political terms, between the last remaining super power, the United States, and the rest of the world trying to catch up.

As a result, Latin America, in the decades since World War 2, has dealt with the United States consistently attempt to pursue the establishment, implementation, and extension of the experiment known as “neo-liberalism”.

For those who are not familiar with the term of neo-liberalism, it is a term used to describe an economic system that attempts to diminish the role of the government, and at the same time aims to increase the influence of the business sector in developing countries.

In many developing Latin American countries, the term neo-liberalism can also bluntly refer to outside influences trying to take over natural resources and other sectors of their economy, along with the institutions that work towards that goal. (ex: World Bank, International Monetary Fund)

With the recent emergence of an increasingly intertwined global market and the rise of new economic powers in the eastern and southern hemispheres, it has become apparent that the world is moving towards a multi-polar economic and political reality. In other words, the balance of power and influence is slowly being spread out to the capitals of countries such as Brazil,China, and Venezuela.

Many people and politicians of certain Latin American countries have responded to this emerging economic landscape by rejecting neo-liberal policies, and are attempting to adopt what they say is a more fair and just economic and political reality.

Thus, Latin American countries are successfully building an economic and political coalition of their own, which includes what many would describe as leftist or socialist policies.

Based on the increased cooperation, and hard lined coalition of countries such as Venezuela, Nicaragua, Cuba, Bolivia, Ecuador, Honduras, Argentina, Brazil, Chile, and others, it seems only natural more countries in Latin America will continue to follow the precedent that has been set by the forerunners of this new economic and political model. The economic and political alliance or “movement”, are defined by the countries that have signed on to the “Bolivarian Alliance for the Peoples of Our America”.

Also known as ALBA, meaning “Dawn” in Spanish, this agreement is seen widely as an economic alternative for member Latin American countries, as well as a response and defense from the “neo-liberalization” of markets and “free trade agreements” such as the United States supported Free Trade Area Agreement. (FTAA)

ALBA nations also enter agreements that focus on cooperation, and utilize tools such as bartering and economic subsidization of services and products, as well as a focus on the social welfare for the people of member countries. All elements of which are associated with “left-wing” governments.

This new populist style of government that has come into fashion in the early 21st century is democratic, socialist, and is dramatically shifting the political face of the region. The origins of this style of governance can be traced back to the election of Hugo Chavez to the presidency of Venezuela in 1998, in which Chavez made huge strides towards leftist policies. This included nationalizing the electric, telephone, cement, steel and other industries.

The origins of ALBA draws from it’s original concept in an agreement reached in 2004.  In the agreement, known as the “Cuba-Venezuela Agreement”,  the countries of Venezuela and Cuba, led by the socialist presidents Hugo Chavez and Fidel Castro, entered into a cooperation agreement in what would later become known as ALBA.

The original agreement included delivering 96,000 barrels of Venezuelan oil to Cuba a day, at subsidized prices. Cuba in return agreed to send over 20,000 medical personnel and thousands of educators to the poorest states in Venezuela. This original agreement named, The Cuba-Venezuela Agreement, set the precedent for the values and principles of the countries that have joined, or are willing obtain ALBA membership.

Since the original conception in 2004, ALBA has seen a substantial increase in participating governments. The ongoing increase in membership confirms more Latin American Countries are joining the new “socialist” model.

Two ways to illustrate the increase in membership and participation are through the elections of candidates who support the socialist model, and the eventual implementation of ALBA by the candidates who share views of anti-neoliberalism.

Accordingly, most new members of the alliance are allies of Hugo Chavez, and some have actually held campaign rallies prior to, and after their election with Mr. Chavez.

One such case is the current president of Bolivia, who is the country’s first fully indigenous president. Morales comes from the background of being the leader of a farmers Union, and the leader of the party known as MAS, which is an acronym for the “Movement for Socialism”. President Morales was elected in 2005.

Morales, was swept into office on a platform of new approaches to the distribution of land and ownership regulations, the nationalization of resources, especially hydrocarbons, and a revamped constitution. Morales is also an advocate for land owners rights, most notably for those known as “cocaleros”, who are peasants who grow the coca leaf for nutritional and agricultural benefits.

Morales, like Chavez, have a profound mistrust of neo-liberal institutions such as the World Bank and the International Monetary Fund. This past September, Morales attended a summit in Venezuela, where he advocated for an increased presence of Banco del Sur, a regionally financed institution backed by Venezuela, Brazil, and Argentina that assists South American countries like Bolivia to invest in social programs. Morales continues to argue against the I.M.F. and the U.S., saying that, “The institutions are a threat to the sovereignty of any nation that deals with them.”

Along with despising capitalism, the nationalization of resources is a foundational aspect for members of ALBA. The attitude of these new socialist leaders in Latin America couples the issues together. At the United Nations General Assembly this past September, Mr. Morales stated, “The origin of this climate change and financial crisis is the exaggerated accumulation of capital in too few hands. It is the permanent removal of natural resources and the commercialization of Mother Earth. The origins come from the system and an economic model of capitalism.”

In April 2006, 4 months after Morales was elected, Bolivia joined ALBA, and days later announced that he would move to begin the process towards the nationalization of all hydrocarbon assets.

After the announcement, Morales successfully implemented the preliminary steps towards the partial nationalization of natural gas fields. To do this, Morales sent troops to occupy 56 natural gas fields, which made shareholders in the previously “private fields” nervous and skeptical. The government quickly implemented a 32% increase in taxes and profits from the production of gas and forced companies to cooperate, or leave the fields within 180 days. The takeover was a success for the government, in terms of revenue, as $1.3 billion dollars was generated as a result.

In Bolivia, the most important revenue producing commodity for the country is its reserves of over 710 billion cubic metres (bcm) of natural gas. Bolivia is producing about 11.3 bcm for export annually, and is the second largest producer in Latin America. Thus the issue of nationalization was a major one for Morales’s campaign, who campaigned tirelessly on the issue of nationalizing the resource. (In a developing country like Bolivia, any increase in monetary resources will greatly impact the government’s ability to provide services)

Another member of the ALBA inspired coalition is Nicaragua, led by ex Marxist and Sandinista Daniel Ortega. Although Nicaragua brings little to the table for other ALBA members, Nicaragua will benefit greatly.

After elected as president in November of 2006, Ortega signed on to ALBA two months after becoming president, becoming a member in January 2007. Ortega, along with Chavez, successfully made Nicaragua’s participation in ALBA a central campaign issue, which helped propel Ortega into the presidency.

Ortega, who has long been a thorn to the United State’s interest, dating back to the Contra-Sandinista war of the 80s, signed an agreement with Chavez in May of 2006, months prior to the election held the following November.

The deal allowed Ortega to campaign on a promise to ease the energy crisis Nicaragua was experiencing at the time. Throughout the previous year and into 2006, shortages of energy caused blackouts, and as result strikes and instability ensued, which eventually matured into a major political issue for the November 2006 presidential elections.

The agreement that Ortega agreed to as a candidate would allow Nicaragua to pay Venezuela only 60 percent of the value of the oil, and the other 40 percent will be financed for 25 years at 1 percent interest, with a two year grace period. The agreement was popular amongst the masses, and Ortega was ushered into the presidency for the second time in Nicaragua’s history.

Once president, Ortega formally joined ALBA, and Venezuela forgave US$31 million dollars in debt. In return Venezuela and ALBA were able to extend their sphere of influence into Central America.

Another signatory of the ALBA alliance is the economist by training, and president of Ecuador, Rafael Correa. President Correa was elected in 2006 and brought Ecuador into ALBA in June of 2009. Correa was just recently re-elected to the presidency in April of 2010, serving what can be seen as a mandate for ALBA countries.

Correa describes himself as a “humanist and Christian of the left”. One memorable quote that cements his position is, “Socialism will continue. The Ecuadorian people voted for that. We are going to emphasize this fight for social justice, for regional justice. We are going to continue the fight to eliminate all forms of workplace exploitation within our socialist conviction: the supremacy of human work over capital. Hasta la victoria siempre!”

Correa, like Chavez and Morales, opposes the role of the International Monetary Fund and the World Bank. In 2007, Correa pulled out from the institutions, insisting they were designed to help bankers at the expense of the poor. In contrast, he expounds support for the developing Banco del Sur, a regional alternative.

In regards to debt owed to the I.M.F. and World Bank, totaling nearly $510 million dollars, Correa has threatened to default on the loans and not intend to pay them back, saying that the debt is illegitimate because the loans were made by corrupt previous regimes.

Another characteristic of the socialist trend is featured in the increased political influence and participation by the historically lower classes, especially the indigenous peoples of Latin America.

Historically, indigenous peoples of Latin America have endured unequal political and socio-economic status, when compared to those of European descent. One example can be made when examining the composition of the Guatemalan legislator in the year 2000, in which only about 11 percent of elected legislators were of indigenous descent. Despite the success and increase of this minute percentage in previous years, the number does not compare well with the fact that nearly half of Guatemalans are of indigenous descent.

Countries that are part of the new socialistic standard that is enveloping Latin America have seen a substantial increase in the participation and political influence of the indigenous peoples. In fact, in the year 2006 Bolivia saw its’ first fully indigenous president elected in Evo Morales.

Morales is the leader of the political party known as the Movement for Socialism (MAS). About 85% of elected officials affiliated with MAS are indigenous. MAS controls the presidency and has a substantial presence in the legislature, with 35 out of 157 votes. Morales was up for reelection in December of this year, and easily defeated his U.S. backed opponent in his bid for reelection.

Another common theme of the ALBA members are the revamping of outdated Latin American government’s constitutions, in which most of the constitutions were constructed at the height of the influence from outside forces. The previous constitutions were drawn up with multinational corporation interests and chiefly the United States working in collusion with the established economic elite of the country.

Most constitutional changes pertain to empowering the president’s powers, extending term limits, and making government more accessible by granting more power to local governments and councils.

Since World War 2, the Latin American continent has had various forms of governments; many forms have been disastrous and dysfunctional regimes that range from militaristic right winged and installed puppet regimes, driven and financed by foreign interests- to Marxist inspired revolutionaries overtaking the capital of the country by the barrel of a gun.

With the emergence of ALBA, a viable alternative to neo-liberalism has been identified by Latin American countries. Currently, ALBA has even undertaken the ambitious process to begin implementing a new currency, which would counter the influence and power of the American dollar. If the trends continue towards cooperation and alliances within member countries,  Latin America will continue the progression towards socialism for the 21st century.