Post Cold War Latin America In the Eagle's Shadow

September 25, 2007

In this Report, the third in a series of three that examine U.S.-Latin American relations after the Cold War, we focus on how Latin America has fared economically and politically in the epoch that began with the fall of the Berlin Wall in 1989.

The Cold War was a faceoff between the United States and the Soviet Union, and during the Cold War years, Washington saw all other conflicts—in Latin America and elsewhere in the world—largely as offshoots of this primordial two-way struggle. Starting with the 1959 Cuban revolution led by Fidel Castro all the way through the Central American conflicts of the 1980s, U.S. officials seemed incapable of viewing Latin American social movements as anything but Soviet surrogates. Cuba was viewed as little more than a Soviet proxy, and the United States backed a string of military dictatorships and funded counterinsurgency efforts everywhere in the region in the name of fighting Soviet, and Cuban, Communism.

For some Latin Americans, surprisingly little has changed since the demise of the Soviet Union: According to Rafael Hernández, the Cold War has not really ended for Cuba. The United States continues to view the island nation as an ideological enemy, despite Cuban attempts to warm up relations. Alejandro Bendaña reports that in Nicaragua, too, U.S. officials continue to view events through a lens shaped in the Cold War era. In the 1980s, the United States funded Contra forces trying to topple the Sandinista government that had taken power in a 1979 revolution. In 2001, the United States made it clear that a new, elected Sandinista government would be equally unacceptable—even though the Sandinistas had declared their allegiance to democracy and free market economics. And in Colombia, Nazih Richani tells us, the United States is fueling an almost four-decade old war against leftist insurgents.

For many, the collapse of the Soviet Union was irrefutable proof of the innate superiority of the U.S. political and economic systems. In fact, when it comes to economics, U.S. officials have, since the end of the Cold War, even more smugly than before pressed Latin America to reshape itself in an idealized free market mold. In 1973, when a military coup put an end to Chile’s socialist experiment, neoliberalism—completely unregulated capitalism—was considered almost a fringe ideology, and Chile’s junta had to back up its radical free market reforms with a reign of terror. Today, neoliberalism is orthodoxy: While international financial institutions (IFIs) like the International Monetary Fund had their roots in the notion that some sort of government intervention was necessary to temper market swings and inequalities, the IFIs today, at the behest of the United States, demand that Latin American governments, like those in other developing regions of the world, deregulate and privatize their economies and remove all restrictions on trade.

Many Latin Americans have themselves become boosters of the neoliberal prescription as a cure for the region’s economic ills, as Claudio Katz explains in his article on the Free Trade Area of the Americas. But Katz argues that the main effect of trade pacts like FTAA—a hemisphere-wide expansion of the North American Free Trade Agreement—will be to reinforce existing U.S. domination. And neoliberal triumphalism may be premature: Carlos Salas details how NAFTA has already widened existing gaps between rich and poor Mexicans, and between different parts of the country. In some places—like Nicaragua, according to Bendaña, and Peru, as Oscar Ugarteche reports—deregulation and privatization have so far done more to fuel corruption than to spark economic advancement. Proponents argue that the benefits of neoliberal programs will be more apparent over the long run, but John Lear and Joseph Collins’ scrutiny of one of Latin America’s oldest neoliberal experiments, Chile’s privatized social security system, shows that the free market is far from a panacea—a warning that U.S. social security reformers may wish to heed.


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