Latin America and Nicaragua - taking stock

Steadily improving financial and economic conditions through 2010 were an important boost for people in Nicaragua and for the country's Sandinista government. Despite the worldwide recession in 2009, Nicaragua's government protected the living standards of the most impoverished. It is now well placed to continue making important advances in poverty reduction and economic development through 2011.

The turnaround is partly due to the modest and patchy global recovery from the rich country financial crash of 2008. But perhaps more important were the astute and prudent domestic policies of the Sandinista government, acknowledged even by centrist economists who do not support the FSLN politically. Since 2007, Nicaragua's government has consolidated long standing trade and development cooperation relationships with countries like Mexico, Taiwan and Japan.

Despite political arm twisting from North America and Europe, the FSLN government maintains relatively successful development cooperation relationships with those two regions. In 2010, Nicaragua played an important role in negotiating the much-criticized Agreement of Association between the European Union and Central America. USAID programs continue unaffected by the occasional spats between the Nicaraguan and US authorities.

Alongside those traditional relationships, the Sandinista government has also cultivated much closer diplomatic, trade and investment relationships with other global partners like Russia, Brazil and Iran. Membership of the Bolivarian Alliance of the Americas (ALBA) has generated very important trade and development cooperation links with Venezuela - now Nicaragua's second largest export destination. Cuba's development cooperation has made possible health programmes - like Misión Milagro or Todos con Voz and the Yo Sí Puedo literacy programme - that have benefited hundreds of thousands of Nicaraguans.

Within the Central American region, President Daniel Ortega's government has withstood the many difficulties caused by the continuing political and human rights crisis in Honduras and the aggressive diplomatic offensive by Costa Rica over its spurious territorial claims in relation to the Rio San Juan. Domestically, most of the political opposition have abandoned their counterproductive policy of boycotting institutions like the Supreme Court of Justice and the National Assembly. In public opinion polls, President Daniel Ortega is well ahead of his political rivals.

While in Nicaragua everyone is focused on the forthcoming presidential elections in November 2011, the broader regional and global picture is less well focused. Uncertainties abound. Global economic recovery is by no means guaranteed through 2011. Global security is under constant threat from the militarism of the US government and its NATO allies and those countries' support for Israel. Linked to the economic and security factors, global ecological stability is likely to deteriorate because major industrial nations refuse to negotiate prudent measures to reduce serious threats to the environment.

Military aggression overseas - structural adjustment at home

Unprecedented emergency financial measures taken by the US and European Central Banks and governments have rescued their financial systems from bankruptcy. But they did so mostly by imposing the cost of the bailouts on ordinary citizens. The banking sector rescues also dealt a fatal blow to the credibility of "free market" ideology. The crisis of 2008 compressed the relative economic decline of the European Union and the United States - self-evident from the unproductive finance orientation of their economies - reaching an epiphany in a matter of months.

That epiphany was the recognition that the G-8 summit system had to expand to a G-20 system to accommodate other economic powers. As a result, giant countries like Brazil, China, India and Russia, as well as lesser regional powers like Argentina, Indonesia, South Africa, Turkey are becoming more important. It is noteworthy that Iran and Venezuela were excluded from the G-20 despite being as important in their respective regions as countries like Saudi Arabia and South Korea or Mexico.

To compensate for their relative decline in power and influence and perhaps stave it off for a while, governments in North America and Europe, and the oligarchies for which they front, are doing three main things. Firstly, they are leveraging their massive military power via aggressive wars and widespread low level global military operations - increasingly, via the North Atlantic Treaty Organization. Secondly, while protecting military spending and cosseting their financial cronies, they apply aggressive structural adjustment policies to their own populations. Thirdly, as they undermine fundamental rights in their own countries, they wage constant, vicious psychological warfare via their loyal corporate media against people and governments who do not do what they want.

These three phenomena occur in an economic context of stagflation that is likely to last until the financial and political elites in North America and Europe can create yet another short-lived credit bubble, probably by 2016. People's incomes are stagnant but they experience steadily rising prices and living costs. Oil and food prices are likely to be volatile but to trend relentlessly upwards. Unemployment will remain intractably high. All these difficulties will probably be compounded by increasingly unpredictable climate conditions.

The outcomes in North America and Europe of these political and economic realities are unlikely to be stable. Every country in those regions has already applied ever more oppressive security measures and systems, ostensibly against terrorism. Those measures and systems are available to be used mercilessly against domestic political resistance to economic or environmental policies at home or to military aggression overseas. The US government has already long abandoned any serious claim it ever had to be a defender of basic human rights. Its NATO partners are on the same track.

Latin America

As North America and Europe adapt brutally to their relative decline, Latin America continues adapting to its relative progress over the last decade. Every important country in the region has reached out to Asian trading and investment partners, especially to China. In 2010, China overtook the US as Brazil's most important trading partner. Since 2009 Argentina has engaged in currency swaps with China, eliminating the dollar from much of the two countries' bilateral trade transactions. India and Russia too have greatly increased their trade with and investment in Latin America.

While Latin America's economic relations are generally diverse, diplomatically, the region is split three ways. Right wing governments like those in Mexico, Perú, Colombia, Chile, Honduras, Costa Rica and Panama are unconditional allies of the United States government. Centrist Central American governments in El Salvador and Guatemala, heavily dependent on US trade and aid, struggle to define autonomous foreign policy. Centre-left governments like those currently in office in the Mercosur countries (Uruguay, Argentina, Paraguay and Brazil) maintain cordial relations with the US but insist on their own priorities.

Examples of that insistence have been Argentina's determined and successful efforts to defend its interests following the disastrous economic debacle of 1999-2002 and Brazil's autonomous recent efforts to broker negotiations over Iran's right to nuclear power. Earlier, these Mercosur countries were also decisive in resisting the Bush regime's abortive attempt to impose a Free Trade Area of the Americas. However, Brazil also leads the discredited UN military occupation of Haiti and has acted as a drag on the creation of economic integration initiatives like the Banco del Sur. Brazil has preferred to emphasise the corporate friendly South American Regional Infrastructure Integration Initiative (IIRSA).

More radical steps towards sovereign autonomy characterize the ALBA bloc of countries led by Venezuela and Cuba and including Bolivia, Ecuador, Nicaragua and three Caribbean island nations. The ALBA countries have moved ahead developing their own institutions, an intra-bloc trade compensation system called the SUCRE, the ALBA Bank and a structure of ALBA Councils that recalls the early days of the European Economic Community. ALBA's implicit logic is one of opposition to US and European dominance in Latin America.

That logic converges well with the medium and long term strategies of the Mercosur countries and is not entirely incompatible with the trend of US allies in the region to diversify their trade and diplomatic relations. But ALBA's regional redistributive logic does run counter to the commitments and understandings between centre-left governments in Brazil, Argentina and Uruguay and those countries' corporate sectors. Brazil's corporate elite in particular resists any concession of Brazil's regional dominance in the name of greater regional equality. In that respect, Brazil in South America plays a similar role to that of France and Germany in the European Union.

This means that regional political structures leading towards greater integration will be subject to constant negotiation and compromise. The Union of South American Nations (UNASUR) was founded in 2008 and played a key role in supporting President Evo Morales in Bolivia when the US-supported right wing opposition made an all out attack on Morales' government that same year. UNASUR will be joined on July 5th this year by the Community of Latin American and Caribbean States (CELAC) - a body rivalling the Organization of American States but excluding Canada and the United States. The Banco del Sur continues to struggle to be born as does the Council for South American Defence. Negotiations in relation to these bodies turn on so many factors as to make predictions as to outcomes impossible.

However, one key factor will be the extent to which the US government pushes its destabilization efforts against the ALBA governments of Bolivia, Cuba, Ecuador, Nicaragua and Venezuela. Even right-wing Latin American governments generally reject the coup in Honduras and the coup attempt in 2010 in Ecuador. They know that they too are vulnerable and, in any case, economic considerations take priority. Colombia has made a quick rapprochement with Venezuela following the departure of vicious, narco-terrorist former president, Alvaro Uribe. US destabilization efforts are likely to shift towards greater support for Venezuela's domestic opposition and likewise in other countries in the region regarded as uncooperative.

Back to Nicaragua

In 2011, ALBA member Nicaragua is likely to prove a litmus test of US government policy. The US government's regional allies will continue seeking ways to undermine the unquestionable achievements of successful governments in the ALBA countries. President Obama's administration is adept at not having its right hand know what the left hand is doing. The coup in Honduras and the attempted coup in Ecuador were carried out and supported by committed supporters of US dominance in the region inside and outside the US government while leading US government figures looked the other way.

Whenever Under-Secretary of State for Western Hemisphere Affairs Arturo Valenzuela speaks softly, it will be important to see what US government democracy promotion/destabilization programs are doing and what material the corporate media psy-warfare machine is producing. Regionally, the US Southern Command is now entrenched in Honduras, El Salvador and Costa Rica with resources ridiculously far in excess of legitimate anti-narcotics needs. After the events in Honduras and Ecuador, the Nicaraguan government is carefully framing policy to counter attempts by the US government and its regional allies to create adverse conditions to obstruct the highly probable Sandinista electoral victory in November 2011.

Nicaragua has the most successful anti-narcotics record of any country in Central America, despite receiving pitifully small levels of assistance for that work from the United States government. Nicaragua has been the country most committed to regional integration processes in particular the Central American Integration System (SICA). By contrast US allies like Costa Rica and Panama have persistently undermined SICA's viability. Nor has Nicaragua been unreasonable in its policy towards the regime of Pepe Lobo in Honduras which the FSLN government, like most of Latin America, refuses to recognize because Pepe Lobo's election was held under the conditions of a military coup.

If, as seems most likely, the Sandinista government is returned to office in 2012 following a successful presidential election for Daniel Ortega in November 2011, the United States government's regional policy will have suffered a decisive setback. Attention will then turn to the even more important presidential elections in Venezuela in 2012. Should Hugo Chavez win in 2012 the United States government's remaining options to maintain its traditional overweening regional influence will be military ones. But if the Obama administration does choose to use its unquestionable military muscle in Latin America, it is likely to be a short term fix creating unforeseeable reactions among economically powerful countries like Brazil, Russia, and China which the US government can less and less afford to alienate.

ENDS

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