World recession, revolution and counter-revolution in Latin America

Former president of the US Federal Reserve, Alan Greenspan has described the economic situation we are living through today as a: “once in a century economic crisis”. This will mean mass poverty and escalating unemployment but also fightbacks by the working class, revolts and even revolutionary upheavals.

Aron Amm, CWI Germany

In Latin America, a whole continent with 500 million people is being rocked by revolution and counter-revolution. The momentous events between the Rio Grande and Tierra del Fuego are an anticipation of what will happen in the rest of the world.

On 28 June the residence of the Honduran president, Manuel Zelaya, was stormed by masked troops and Zelaya was violently forced to leave the country. At his first press conference in a Costa Rican airport, he was in his pyjamas.

The Honduran coup sent a warning to the oppressed masses throughout Latin America. It reflected the fear of the establishment that more and more governments could go over to the camp of Venezuela, Bolivia and Ecuador. At the same time the hundreds of thousands on the streets of the Honduran capital Tegucigalpa, ready to defy the soldiers, underlined the scale of the resistance.

There are three different Latin Americas. The first is countries like Venezuela, Bolivia and Ecuador. Starting with the proclamation of the “Bolivarian Revolution,” echoing the ideas of Simon Bolivar who struggled against colonial rule at the beginning of the 19th century, Venezuelan president Hugo Chávez has called for “Socialism of the 21st century”.

Argentina, Chile, Brazil

The second Latin America is the one of countries like Argentina, Chile and Brazil. These are led by parties who in the past had a progressive reputation but have disappointed millions by implementing savage cuts. These states are of crucial relevance because of their economic weight and their particularly powerful working classes.

The third feature of the continent is the spectre of reaction. For example in the shape of the Colombian right wing administration under Alvaro Uribe.

The last months have shown an intensification of the different processes. While some leaders like Honduras’ Zelaya orientate towards Venezuela, the forces of reaction are also visible. This is not only shown by the coup in Honduras but in the steps taken by Colombia to allow US imperialism to use its military air bases.

Moreover recent events in Venezuela and Bolivia illustrate that the struggle to defeat exploitation is a race against time. But the governments of Argentina and Mexico were seriously shaken in the recent mid-term elections and the heavy battalions of the working class are coming to the fore.

The crushing defeats of Salvador Allende in Chile in 1973 and the Sandinistas in Nicaragua in 1990 opened the door for an offensive by the capitalist classes. Chile and the neighbouring countries became laboratories for Milton Friedman and his “Chicago Boys” in testing out the policies of neoliberalism. These were based on cuts and privatisation, enforced by state repression.

Starting with the election of Chávez in Venezuela in 1998, the masses in Latin America rebelled against neoliberalism earlier than in other parts of the world.

In the years of economic upswing, millions still lived in unbearable conditions. So what lies ahead in the unfolding global recession? The United Nations is estimating that in the course of the crisis 15% more people in Latin America will fall under the poverty line.

Yet in the first six months of this year share prices on the Latin American stock markets went up by 40%. In the first stages of the downturn, central and south America were not as affected as other countries. That was mainly because in their smaller finance sectors the banks did not have the same degree of opportunity to participate in high-risk speculation.

At the same time the countries from Mexico to Chile are relying on an influx of foreign capital more than any other region on earth. Regarding this, the clouds are darkening the sky now.

The total direct investment of foreign capital going to the underdeveloped and so-called emerging countries was $580 billion in 2008, according to the World Bank. But this will drop to $380 billion in 2009.

Not only the drain of capital but also their dependency on the export market is affecting the outlook of the Latin American economies. In 2009 global trade will probably contract by 10%, rocking the nations exporting oil, copper, iron ore, coffee and soya. Last autumn, a 3% global growth rate was predicted for 2009, now a 3% contraction is expected.

Mexico, due to its dependence on the US, is facing an 8% contraction in 2009. This huge country with a 100 million-strong population is on the eve of a social explosion, after more than eight years of the conservative PAN administration.

But the opposition forces are weak. The PRD, under Lopez Obrador’s leadership, probably lost the 2006 presidential elections because of ballot rigging. But it is shattered by an internal civil war.

The mood of anger was expressed in the 57% abstention rate and the high number of blank votes in the recent mid-term elections, 6% nationwide, reaching 10% in Mexico City.


Central America is more and more characterised by clashes between the masses and the armed forces. In March this year the FMLN candidate, Mauricio Funes, won the presidential elections in El Salvador. Tens of thousands spontaneously went to the streets with red flags. This was not only to celebrate but also to challenge, if necessary, the state apparatus if it had not accepted the result.

In Honduras after the coup the masses were ready to confront the army. At the peak of the protests 400,000 participated in demonstrations, many youth wearing Che Guevara t-shirts. Even layers of the army were affected but Zelaya seems not to have the same popular base as Chávez had in 2002 when the right-wing coup in Venezuela was defeated.

Washington has found it difficult to come out publicly in support of the coup in Honduras. But there are strong connections between US imperialism and the Honduras military. The White House called what happened not a coup but a “constitutional succession” and cut its military and development assistance by less than 10%.

Zelaya belongs to one of the richest families of Honduras. But in a populist move he provoked the ruling class by increasing the minimum wage by 60%. More importantly, a year ago, the hatred of the upper class was provoked by Zelaya’s decision to join the ALBA trade alliance, in that way going over to the side of Venezuela, Bolivia, Nicaragua and Cuba.

In Venezuela, the Chávez presidency is polarising and radicalising the continent. Ten years of Chávez has meant ten years of confrontation with landlordism, capitalism and imperialism. And ten years of measures to improve the living standards of the masses.

But despite the welfare programmes, 30% of the Venezuelan population are still living in poverty. The health and education schemes are built on oil. Oil exports are 90% of total exports and oil income is financing 50% of the state budget.

We are just witnessing the beginning of the end of the oil bonanza, but even now the Chávez administration has increased VAT by 3% and decreased expenditure by 30%!

In 2002, 2003 and 2004, faced with a coup, a bosses’ lockout and an attempted recall referendum, Hugo Chávez proved ready to fight. The workers and youth were the driving forces. But Chávez himself is still trying to avoid a full-blown confrontation with the landlords and capitalists.

The processes in Venezuela have not gone as far as in Nicaragua after 1979, when a political revolution took place, which overruled the old state machine. The measures taken by Chávez also have not reached the level of Chile between 1970 and 1973, when the Allende administration nationalised 40% of the economy.

Chávez has raised socialist ideas but he leads in a top-down manner with elements of a bureaucratic Stalinist approach, without the nationalised economy of Stalinism.

In April 2007, in his TV show Alo Presidente Chávez paid tribute to Leon Trotsky’s theory of the permanent revolution. But what is the core of that idea? The Russian revolutionary Trotsky perceived that the tasks of the bourgeois-democratic, capitalist revolution would be carried through in the underdeveloped countries by the working class – supported by the peasantry.

A workers’ and peasants’ government coming to power must complete the bourgeois-democratic revolution but then directly pass over to the socialist tasks. Additionally it would ignite a movement internationally.

In his book Permanent Revolution Trotsky emphasised that the rule of the workers and peasants in 1917: “appeared on the scene not after the completion of the agrarian democratic revolution but as the necessary prerequisite for its accomplishment”. Regrettably Chávez has so far taken up these ideas in a reformist, not in a revolutionary manner.


In the last years Chávez has nationalised the steel company Venepal, the telecommunications and electricity enterprises CANTV and EDC and started state intervention in parts of the media and the cement industry. But huge compensation has been paid to private owners and collaboration with private business has continued.

As a consequence of the economic growth before the recession, the private sector accounted for a bigger share of the economy than before Chávez came into office.

In May this year Chávez, accompanied by soldiers and workers in red clothes, stormed to Lake Maracaibo to confiscate some equipment owned by oil and gas supply firms and expropriate dozens of suppliers. Despite that many suppliers are still in private hands.

Furthermore, big foreign companies are involved in oil production. Actually the state run PDVSA is facing increasing problems in paying its debts to US companies like Halliburton and Schlumberger. Apart from the oil industry, five big oligarchic families, together with the major banks, control the decisive sectors of the Venezuelan economy.

At the same time frustration is growing, more in the cities than in the rural areas, caused by poverty and the threats of reaction. In the first half of this year four trade union secretaries have been killed.

Discontent is also caused by the tendency towards bureaucratisation in the Chávez camp and the top-down approach of the new party PSUV. The 44% abstention rate in the 2007 referendum must be seen in the light of this. Despite the Chávez regime being victorious in most areas, the loss of support in the local elections in November 2008 marked another warning sign.

In the first six months of 2009 workers’ struggles were on the rise in Venezuela. These new developments represent the beginning of a change in the situation and are leading to bigger tensions between working class activists on the one side and representatives of the Chávez administration on the other.

Declining oil prices

A further decline in oil prices could have a devastating effect – not only for Venezuela but also for the Cuban economy. After the collapse of the Soviet Union, the Cuban economy has partially recovered on the basis of the supply of cheap oil from Venezuela.

Barack Obama’s change of policy from sanctions towards encouraging US companies to increase economic activity in Cuba – in combination with the pro-capitalist direction of a layer of the Cuban bureaucracy – could enhance the danger of capitalist restoration.

In Venezuela there is a burning need for the nationalised monopolies to be managed democratically by elected workers’ committees. Similar committees must be established in the communities and in the army rank and file, linked on a regional and national level, to form the basis for a workers’ and peasants’ government and to replace the old state machine.

One of the biggest factors missing in Venezuela is an organised, independent movement of the working class and the poor. The same applies to Bolivia. Fundamental change will not come via individual leaders but only by mass action from below. This is a precondition for the building of a workers’ democracy.

Like Chávez, Evo Morales in Bolivia, since his election in December 2005, is attempting to mediate between the different classes in society. Morales made the same mistake as Allende in promising not to touch the officer caste. Silvano Paillo, an assembly member of Morales’ MAS, made a telling comment: “We have a president – but we do not have the power”.

In the last period the counter-revolution has been felt more strongly in Bolivia than in Venezuela. In autumn last year a confrontation was sparked off by the armed takeover of state institutions in four provinces and the massacre of 20 peasants.

A few weeks later the Senate questioned the referendum on the new constitution which led to a protest march of half a million people.

Morales stands out as a radical left wing populist and one of the indigenous people who compose 60% of the Bolivian population.

The indigenous peoples are generally not demanding the private ownership of small areas of land, they are in favour of collective ownership. And in a number of countries they have a high degree of organisation.

In Peru this summer the conflict between the indigenous Amazonians and the reactionary administration under Alan Garcia reached boiling point. More than 100 Amazonians were massacred while organising street blockades over two months. The government wants to take away indigenous peoples’ land rights and privatise communal territory for the sake of multinational petroleum corporations.

The last nine months saw three changes of cabinet leaders. There were demonstrations of hundreds of thousands on 11 June, and three days of national protest in July.

Working class

Next to Chile – where the working class has begun to fight back, supported by a new generation in a series of mass protests – the particularly powerful working classes of Argentina and Brazil are key for the future of Latin America.

In the Argentinian mid-term elections on 28 June, the ruling Peronists lost their majority in both chambers of the parliament. The workers and the poor peasants took revenge for the Kirchners’ empty promises as presidents.

Farmers became especially outraged when the government announced a dramatic increase in export taxes last year.

For a period the Argentinian economy seemed to perform like a Phoenix from the ashes. After simply refusing to pay back foreign debts, a recovery took place, with an export boom. But Argentina is now again in recession. It may have to import wheat next year for the first time since records began.

Not only have farmers protested in recent times but a new wave of factory occupations has begun. Significantly the government was compelled to nationalise Mahle, a German car parts supplier in Rosario.

Brazil, the economic powerhouse of Latin America, was praised for years by global capitalist commentators. But even in the growth years the 180 million-strong country was leaking jobs to China and elsewhere.

Hit by the global recession, hundreds of thousands of workers have been sacked. The government and the bosses are desperately trying to avoid wage increases. This will dash hopes of a reverse of the downturn based on the domestic market.

Lula, the president of Brazil and leader of the PT, is still popular. But he cannot stand again in the elections next year. Either before the elections in 2010 or shortly afterwards a dramatic upswing in the class struggle is likely.

Five years ago the P-SOL (Party of Socialism and Liberty) was founded in Brazil. In the presidential elections of 2006, the P-SOL candidate Heloisa Helena came third, winning 6%. Unfortunately the leadership is watering down the radical profile of the party and swinging to the right.

But the CWI Brazilian section Revolutionary Socialism, is part of a Marxist opposition in P-SOL. In May this year the organisations Socialist Liberty Collective and Revolutionary Socialism came together in a congress of unification, launching the LSR (Liberty, Socialism and Revolution).

This new formation is affiliated to the Committee for a Workers International (CWI).

Many of its members are rooted in the trade unions or social movements and play an outstanding role in the struggle for a fighting, democratic and socialist P-SOL. Together with the comrades of the CWI in Chile, Venezuela and Bolivia these forces of Marxism in the tumultuous new period can become a pole of attraction for other left wing and socialist activists across the whole continent.