There’s a revolution underway in South America, but most of the world doesn’t know it. Academy Award® winning director, Oliver Stone sets out on a road trip across five countries to explore the social and political movements, as well as the mainstream media’s misperceptions of South America, while interviewing seven of its elected presidents. In casual conversations with Presidents Hugo Chávez (Venezuela), Evo Morales (Bolivia), Lula da Silva (Brazil), Cristina Kirchner (Argentina), as well as her husband and ex-President Nestor Kirchner, Fernando Lugo (Paraguay), Rafael Correa (Ecuador) and Raúl Castro (Cuba), Stone gains unprecedented access and sheds new light upon the exciting transformations in the region.
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Hugo Rafael Chávez Frias was elected by a landslide in December of 1998, with 56 percent of the votes. In 2000, after a constitutional congress approved a new constitution, Chávez was reelected with 59.8 percent of the votes to serve a new six-year term. Most recently, he was reelected in 2006, receiving 63 percent of the vote.
Campaigning as a political outsider, Chávez pledged to reclaim Venezuela’s oil wealth in the name of the poor and put an end to four decades of corrupt party politics by holding a constitutional assembly to write a new constitution. Supported by the poor and previously excluded majority, Chávez’s election marked a departure from Venezuela’s traditionally elite-dominated politics. Unlike Venezuela’s past presidents, Chávez experienced poverty firsthand during his childhood and early formative years. He was raised by his grandmother in a very poor household, often lacking the most basic necessities. At the age of 17 he joined the Venezuelan military and subsequently attended the University of Simon Bolivar. He eventually attained the rank of Lieutenant Colonel.
In February, 1989, following a protracted political and economic crisis, President Carlos Andres Pérez agreed to implement a radical neoliberal adjustment package at the behest of the IMF. Authorities consequently raised the price of fuel, causing bus fares to double overnight. Fed up with the corruption and abuses of the ruling elite, hundreds of thousands around the country began demonstrating and eventually rioting against these harsh economic shock policies. The next day, on February 28, President Pérez declared martial law and sent the military into Venezuela’s slums to put down the revolt by any means necessary. The result was the indiscriminate killing of hundreds and perhaps thousands of civilians.
The wave of protests, rioting and subsequent government repression — known as the Caracazo–heightened the political crisis and prompted Chávez, along with several collaborators, to attempt a coup d’etat against the Pérez administration on February 4, 1992. Although the coup failed and Chávez was jailed, it succeeded in catapulting him to national fame. Pérez was subsequently impeached on corruption charges and removed from office by the Supreme Court on May 20, 1993.
Chávez’ growing popularity as a hero who stood up to a corrupt and repressive government led Pérez’s successor, President Rafael Caldera, to issue a presidential decree pardoning him for the attempted coup. After his release in 1994, Chávez harnessed his newfound popularity to organize a political movement to reform Venezuela.
Once in power, Chávez’s first move was to promote a constitutional assembly to write a new constitution. The new constitution was adopted in December, 1999 following a constitutional referendum – the first of its kind in Venezuela – in which the nation’s new charter was approved by 71.78% of voters. During the first four years of his administration, however, Chávez’s efforts to implement modest economic reforms and assert more direct state control over the nation’s prosperous oil sector were met with intense opposition from Venezuela’s moneyed elite, who repeatedly tried to oust him through a series of strikes, a coordinated media campaign and eventually a coup d’etat in February 2002. With key support from the mainstream media and the U.S. government, Venezuela’s business community conspired with elements of the military to overthrow Chávez. The coup plotters installed Pedro Carmona, the head of the Venezuelan Chamber of Commerce, as dictator, who then proceeded to dissolve the National Assembly and the Supreme Court and declared the 1999 constitution void.
The coup regime, however, only managed to hold on to power for 47 hours, as a wave of grassroots protests rose up to call for Chávez’s return and members of the military still loyal to the president managed to return him to power. After surviving the coup attempt, Chávez faced a long and economically disruptive oil strike and then a recall referendum organized by the opposition in 2004, which he easily won with 58 percent of the vote.
Between 1998 and 2003 the Venezuelan economy faced a series of negative shocks, including the aforementioned political instability, that led to a severe recession. However, in 2003 after the end of the oil strike and once the government was able to gain control over the state oil company, PDVSA, Venezuela experienced a dramatic economic expansion. Between 2003 and 2008 Venezuela’s real (adjusted for inflation) gross domestic product (GDP) nearly doubled, growing 13.5 percent annually. At the same time, the government’s total public debt was cut in half, falling from 30.7 to 14.3 percent of GDP. The government’s foreign public debt decreased even more, from 25.6 to 9.8 percent of GDP.
PDVSA’s oil revenues allowed the government to increase social spending dramatically. Between 1998 and 2006, real social spending per person more than tripled. The government set up a number of popular social programs — or “misiones” as they are known in Venezuela — to promote literacy, provide discounted food and free medical attention to the poor, and low-income housing, among other things. These social programs have contributed to a dramatic lowering of Venezuela’s poverty rate by more than half, from 54 percent of households in 2003 to 26 percent in 2008, while extreme poverty fell by an impressive 72 percent. The increased social spending has also helped produce a substantial decrease in inequality, which measured by the Gini index, has dropped from 48.1 in 2003 to 41 in 2008. Throughout this time the government also achieved a large decrease in infant mortality rates and managed to significantly increase school enrollment.
Venezuela’s foreign policy over the last decade has sought to promote a Latin American alternative to U.S.-led economic neoliberalism. To this end, it has initiated and supported a wide array of political and economic integration frameworks. The Petrocaribe initiative, which was launched in 2005, provides oil to several countries of the Caribbean and Central America on preferential terms. The Bolivarian Alliance for the Americas (ALBA, for its Spanish initials) is an organization intended to promote social, political and economic integration based on the principle of social justice and solidarity. ALBA recently took the first steps towards creating a virtual common currency, named the SUCRE. Venezuela has also promoted the creation of the Bank of the South, a Latin American and democratic alternative to the U.S.-controlled World Bank and Inter-American Development Bank.
In broader terms, Venezuela has also promoted anti-imperialism, peace and solidarity throughout the world. It opposed the U.S. invasions of Afghanistan and Iraq and has vocally defended countries’ right to self-determination. In 2007 President Chávez acted as a mediator in Colombia’s conflict, seeking the release of hostages held by the Revolutionary Armed Forces of Colombia (FARC) and promoting peace talks. Venezuela has also provided millions of dollars of subsidized heating oil to the residents of the Bronx, Washington, D.C., Native American reservations, and other low-income communities in the US.
Mark Weisbrot’s op-ed’s and columns on Venezuela, Center for Economic and Policy Research.
Hugo!: The Hugo Chavez Story from Mud Hut to Perpetual Revolution
By Bart Jones. Steerforth: 2008.
Venezuela: Hugo Chávez and the Decline of an Exceptional Democracy
Miguel Tinker Salas and Steve Ellner, Editors. Rowman & Littlefield Publishers, Inc.: 2006.
Venezuela Speaks!: Voices from the Grassroots
Carlos Martinez, Michael Fox, and JoJo Farrell, Editors. PM Press: 2010.
As demonstrated in numerous examples in “South of the Border,” major U.S. media outlets have distorted their audiences’ perceptions of Venezuela and the government of Hugo Chávez. Most media reports on Venezuela frame their stories in ways that are likely to make American audiences distrustful and apprehensive of Venezuela. These frames are reinforced by commonly repeated media myths and inaccuracies that further tend to portray the Venezuelan government as an enemy of the United States, and as an increasingly totalitarian government that is stifling dissent, cracking down on the press, and eroding democratic freedoms. These frames and myths – “spin,” in public relations-speak – overlook an abundance of evidence to the contrary.
Truth: The government of Venezuela has held, and Chávez and his party have won, repeated elections throughout his time in office. These elections have been considered free and fair by the Organization of American States (OAS), the European Union (EU) and the Carter Center — three major electoral observation bodies. Some criticize the Chávez government because his political party has near total control over the National Assembly; however this is a direct result of the opposition’s actions. Just days before the 2005 legislative elections most of the opposition decided to stage a boycott of the vote. This came only a few days after their representatives had told the OAS and other electoral observers that conditions had been met for their participation. The move handed almost complete control in the National Assembly to Chávez’s allies while failing to delegitimize the legislature internationally. Prior to these elections, the opposition held significant power in the National Assembly, which allowed them to block many of the Chávez administration’s policies.
Real attacks on democracy have come from sectors of the Venezuelan opposition. In April 2002, a broad group of opposition forces directly supported and participated in a short-lived coup d’etat against the elected government. In late 2002 and early 2003, opposition groups paralyzed the oil industry and provoked a deep recession, in a second attempt to force President Chávez from power. In 2005, the country’s main opposition parties tried to provoke a destabilizing political crisis by boycotting the legislative elections. All of these undemocratic actions only succeeded in further discrediting an opposition movement that many Venezuelans identify with the failed policies of the unpopular governments of the past.
The Chávez government continues to enjoy an overwhelming majority support of voters in most national elections. In the 2006 presidential election, in which a record number of voters participated, Chávez won with 63 percent of the vote, and in the 2008 regional elections his party won in 17 of 22 states. The next legislative elections are in September, and the opposition is expected to significantly increase its presence in the National Assembly. However the opposition remains divided and trails far behind the government in terms of popular support.
Democratic participation has increased greatly under Chávez as well. For example, while turnout was around 54 percent in the 1998 elections in which Chávez was first elected, in the 2006 presidential election, voter participation jumped to 75 percent. For perspective, in the 2008 U.S. presidential election, voter participation was around 60 percent, and this was one of the highest totals in some 40 years. The Chávez administration has made it a priority to promote electoral participation within poor communities that traditionally had a low voter turnout; this has included large voter registration drives and the creation of voting centers in poor areas.
Despite media reports to the contrary Venezuelans are satisfied with their democracy. The Chilean Latinbarómetro, one of the most exhaustive and well respected polling companies in the region, consistently shows that Venezuela ranks near the top of countries in the hemisphere in terms of the level of satisfaction with democracy.
The Truth: Venezuela continues to have strong opposition broadcast and print media, as any casual visitor to Venezuela can plainly see. The supposed deterioration of freedom of the press under the Chávez government is a favorite theme of U.S. media coverage of Venezuela, and it is regarding this topic that the gap between reality and media claims is usually at its widest. Anyone who travels to Venezuela will easily find numerous front-page criticisms and broadcast denunciations of the Chávez government that go well beyond the sort of attacks on Obama that appear in the U.S. press. Yet that Chávez is attempting to “eliminate independent media” by “muzzling the press” are favorite themes for U.S. editorial pages, with news articles chiming in that “Chavez’s administration is moving to tighten its grip over Venezuela’s media industry.” U.S. media coverage has often also distorted the facts regarding the Venezuelan government’s conflicts with opposition media outlets, some of which have openly supported undemocratic and extra-constitutional means to undermine or even overthrow the government.
Claims that Chávez is an enemy of press freedom reached a peak in 2007 when the Venezuelan government chose not to renew the broadcast license of opposition TV station RCTV. U.S. media and commentators claimed that RCTV was being “censored” and “shut down”, but in reality, RCTV continued to broadcast via cable and Internet with large audience numbers, and maintaining its anti-Chávez line. While opponents of the government criticized the decision to allow RCTV’s license to expire, it is important to note that a TV station that had done even some of the things that RCTV had done would never obtain a broadcast license in the United States or any European democracy. Most importantly – as was admitted in news articles on the controversy, RCTV openly supported the 2002 coup against Chávez by encouraging people to participate in opposition protests, by reporting the false information that Chávez had resigned, and then, when Chávez returned to power, by airing Disney cartoons rather than report this news. RCTV head Marcel Granier met with coup president Pedro Carmona during the coup, as Carmona enlisted the media’s help in attempting to ensure the coup’s success. RCTV also actively promoted the oil strike (2002-2003) that attempted to topple the government, and other, legal political and electoral campaigns.
Even some observers who harshly criticized the government’s decision on RCTV admitted that the issue was much more complicated, and that RCTV was not automatically entitled to its license. “Broadcasting companies in any country in the world, especially in democratic countries, are not entitled to renewal of their licenses,” José Miguel Vivanco of Human Rights Watch explained. “The lack of renewal of the contract, per se, is not a free speech issue. Just per se.”
In the years since the RCTV decision, instead of correcting its hyperbolic claims of Venezuelan censorship, U.S. media outlets have continued the theme. The new focus is on broadcaster Globovisión, routinely described as “Venezuela’s only remaining opposition TV television station on the open airwaves.” This characterization is simply false, as numerous local TV stations in Venezuela have an opposition political line (and national broadcasters such as Televen continue to run programs with a strong opposition slant). The great majority of Venezuelan media continues to be privately owned, and the opposition dominates the newspaper industry as well. As Human Rights Watch – a frequent critic of freedom of the press in Venezuela – noted in a 2008 report, “the balance of forces in the print media has not changed significantly”, with the majority of Venezuelan newspapers continuing to be privately-owned and two of the three top newspapers maintaining an opposition political line (the third is neutral).
U.S. press reports also frequently describe a shift among some opposition media, such as TV station Venevisión, towards being less critical of the government. While U.S. media often suggests that this could be out of fear of “censorship,” Venezuela-analyst Greg Wilpert offers another theory: “I think some of the TV stations have slightly moderated [their opposition to the government] not because of intimidation, but because they were losing audience share. Over half of the population is supportive of Chávez. They’ve reduced the number of anti-Chávez programs that they used to have. But those that continue to exist are just as anti-Chávez as they were before.”
The Truth: Poverty has fallen dramatically in Venezuela since Hugo Chávez was elected president. While poverty did rise overall from 1999 – 2003, this was largely due to the economic impact of the coup d’etat in 2002 and the severely damaging oil lockout in late 2002/early 2003. The resulting recession was extreme: a 24 percent loss of GDP from the third quarter of 2002 until the first quarter of 2003. Media outlets in the past used poverty data from 2003 or 2004 to “prove” that poverty increased under Chávez – even when more recent poverty data was available. This distorted the reality of what happened. From the first half of 2003 to the second half of 2009 the percentage of households below the poverty line declined from 54 percent to just 24.2 percent, a 55 percent decrease. Extreme poverty has also declined precipitously, from 30.2 percent in 2003 to 7.4 percent in 2009, a decline of over 75 percent.
It is important to note that these poverty measures only include income measures and do not take into account the non-income benefits generated by numerous social programs that have benefited the poor. Access to health care, education and discounted food all contribute to improving the conditions of Venezuela’s poor. In addition, Venezuela has made important strides in reducing inequality. From 2002-2008, Venezuela led Latin America in decreased inequality, and currently has the most equitable distribution of income in the region.
The Truth: While the inflation rate in Venezuela is relatively high, it has not reached dangerous levels, as is often reported. Inflation was 31 percent in 2008, however much of this was in the first half of the year due to temporary price shocks. In 2009, inflation slowed to around 26 percent. To put this in perspective, when Chávez took office inflation was 29.5 percent, and reached 100 percent in 1996. Over the last seven years inflation has averaged roughly 21 percent per year, but this is barely over the threshold of 20 percent inflation that research has shown to negatively effect growth.
The minimum wage has also largely tracked inflation. In addition, while some goods have increased more in price than the general index, some important goods have not. For instance, since December 2007, the cost of housing, household services, clothing, communications, and education have all increased less than the general rate of inflation. While food and health have both increased more, these are areas where the government of Venezuela has increased access and affordability for the poor.
The Truth: While the rise in the price of oil clearly contributed to Venezuela’s strong growth, it was not the only reason and there are signs that the economy can withstand fluctuations. After the oil lock-out and subsequent recession the economy took off, growing 95 percent over the following five and half years. At the same time world oil prices continued to sharply rise. This led many media commentators to claim that Venezuela’s growth is dependent on an unsustainable oil boom. However, during those five years of rapid growth it was in fact non-oil GDP that was the prime contributor to GDP growth. In fact, from 2005-2007 the oil sector was actually a drag on growth, decreasing around two percent a year, while on the other hand non-oil GDP was growing at around ten percent during the same period.
Looking at the current recession in Venezuela also provides evidence that the economy is not based on an oil boom. While Venezuela saw negative growth in 2009, this did not have to be so bad. The country has accumulated massive international reserves, and when oil prices dropped and the economy began to slow, the government could have used these reserves to fund stimulus measures to make up for the loss in demand. With relatively low levels of public debt, Venezuela also could have borrowed money internationally to finance counter-cyclical spending. Further evidence of this is that despite that the economy shrank 3.3 percent, poverty rates continued to decline and unemployment was less affected than in many other countries hit by the global recession.
The Truth: No specific proof of Venezuelan support for terrorist groups has ever been presented. Groups and individuals opposed to the Venezuelan government, both in Venezuela and internationally, have continually made allegations that the Venezuelan government supports groups on the State Department list of terrorist organizations, most commonly the FARC. Despite this, no specific, verifiable proof has ever been presented; indeed many of the allegations are based on a single, discredited source (see below). Venezuela and Colombia share a border of more than 2000 km, much of which is dense, sparsely populated jungle; it is likely that the FARC operates on both sides of the border area.
A new round of allegations of Venezuelan support for the FARC occurred after a March 2008 raid on a FARC camp in the eastern jungle of Ecuador near the Colombian border. Although the bombing raid killed 26 people and destroyed much of the camp, the Colombian military (itself responsible for horrific human rights abuses and ties to right wing paramilitaries) claims to have recovered laptops, hard drives and memory cards that were not damaged in the raid. The Colombian government has since made numerous allegations of Venezuelan (and Ecuadorean) support for the FARC based on these files. Colombian officials have leaked excerpts of the documents, exaggerating the significance of the contents for possible political purposes. Colombia also made a number of other allegations that stemmed from the laptops regarding an alleged FARC “dirty bomb” and the FARC’s ties to Ecuador, both of which were quickly proven false. Some experts expressed skepticism regarding the laptop documents in part due to how quickly Colombia appeared to find incriminating information. An Interpol analysis stated that it would take more than one thousand years to read through it all, at a rate of a hundred pages per day, yet Colombia began releasing some of what would be the most damning evidence within just days of the raid. Yet the Colombian authorities continued to claim to find evidence from the computer files linking not only the Venezuelan and Ecuadorian governments to the FARC, but also investigative journalists, activists, and others. Recently released Colombian government documents show that some of these individuals were the targets of “smear campaigns” by the Colombian presidency and the intelligence agency.
The allegation that received the most press coverage was that Chávez had offered some $300 million in support to the FARC. This turned out, however, to be based on a far-reaching interpretation of sections of the files, and it is also possible that various alleged communications between the FARC and Venezuelan government actually related to Venezuela’s role in the months just prior to the raid in negotiating the release of high-profile hostages from the FARC. After a phone call from President George W. Bush, Colombian President Alvaro Uribe abruptly ended Chávez’s official mediation role. The released hostage Pablo Moncoyo, after being freed following over a decade in captivity, thanked Chávez but not Uribe for his release.
Although the U.S. and Colombia have both cited the laptops as evidence of Venezuelan support for the FARC, most other countries and international bodies have not, and in April 2008 OAS Secretary General Jose Miguel Insulza testified before the House Subcommittee on Western Hemispheric Affairs that there was no evidence of Venezuelan support for the FARC.
An Interpol analysis of the laptops concluded that because of the handling of the evidence by the Colombian government for days before it was turned over, that it would not hold up in judicial proceedings. The computers and other devices were in control of the Colombia military for two days until they were handed over to computer experts, and then it was another week before they were given to Interpol. Interpol did not analyze the contents of the documents, in fact they had non-Spanish speakers evaluate the contents, despite that most – if not all – of the emails and other text was in Spanish.
Recently, further allegations have been made about Venezuelan support for both the FARC and the ETA (the Basque separatist group that is also labeled a terrorist organization). This made a splash in the media in March 2010 when a Spanish judge brought charges against Venezuela claiming Venezuelan support for the ETA. The evidence cited was again from the recovered FARC laptops, and during a recent hearing before the Senate Armed Service Committee, Douglas Fraser, the U.S. Commander of the U.S. Southern Command, testified that he was not aware of any evidence of Venezuelan support for the ETA. Although he later recanted these statements after meeting with the U.S. State Department, this seems more political than factual. It is unlikely that the head of the U.S. military in Latin America would not be aware of this evidence, had if it existed.
The Truth: Venezuela’s “Bolivarian Revolution” empowers communities to make decisions and exert more control over their lives in a “bottom-up” distribution of power. Most media coverage of Venezuela focuses on the role of president Chávez, framing coverage of developments in Venezuela whereby decision-making appears to be unilaterally made by Chávez. This ignores, however, the efforts that have been made in Venezuela to increase political participation and empower grassroots organizations, not to mention the role of the legislature, the judiciary, government agencies, and political parties – both Chávez’s and independent parties.
Democratic participation has increased greatly under Chávez. As noted above, voter participation increased from 54 percent to 73 percent from the 1998 presidential election to the 2006 election. This was the result of policies such as voter registration drives that allowed millions of previously disenfranchised voters to have a voice in politics.
Participation extends beyond elections, with community councils being a main source for grassroots empowerment. The new Constitution in 1999 formed the legal basis for a participatory democracy through the codification of Local Public Planning Councils. In 2006 the law was modified to give more power and control directly to Community Councils; there are an estimated 20,000 of these in Venezuela. The councils can plan and implement community projects, and can request funding from the state. They have drastically changed the previous system, where the decision-making process in such projects was concentrated in the hands of local and national authorities.
Self-organization has been a dominant theme throughout the Chávez administration, and was the primary force that overturned the April 2002 coup d’etat. After the military ousted Chávez in April 2002, and the coup leaders dissolved the nation’s institutions, it was the grassroots that took to the streets demanding that democracy be respected. The successful mobilization led to the rapid overturning of the coup and the return of the democratically-elected Chávez to power.
The roots of these grassroots efforts come from an event in 1989 in Venezuela which became known as the Caracazo. Former president Carlos Andrés Pérez, at the urging of the International Monetary Fund, implemented austere economic policies in the face of high inflation and high unemployment. When bus fares were raised in the capital city of Caracas, popular protests ensued. The government responded with a harsh military crackdown, resulting in the death of at least 450 Venezuelans.
Jules Boykoff, “Devil or Democrat? Hugo Chávez and the US Prestige Press.” New Political Science, Volume 31, Issue 1 March 2009 , pages 3 – 26. (A shortened version of this article was posted on Venezuela Analysis.)
Dan Beeton, “Wrong Numbers: Distorting Venezuela’s record on poverty,” Extra!, November/December 2006
Lee Salter, “A Decade of Propaganda? The BBC’s Reporting of Venezuela.” Venezuelanalysis.com, December 14th 2009
Mark Weisbrot’s op-ed’s and columns on Venezuela, Center for Economic and Policy Research.
 The Washington Post, “Meddle With Mr. Chavez.” (Editorial) March 1, 2003. [http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A18965-2003Feb28¬Found=true] Accessed April 27, 2010.
 The Los Angeles Times, “Hugo Chavez flexes his muzzle.” (Editorial) January 26, 2010. [http://articles.latimes.com/2010/jan/26/opinion/la-ed-rctv26-2010jan26] Accessed April 27, 2010.
 Darcy Crowe, “Venezuela’s Chavez Moves to Tighten Control Over Private Media.” The Wall Street Journal. July 9, 2009 [http://online.wsj.com/article/SB124717745352519889.html] Accessed April 27, 2010.
 Miguel Perez, “Muzzling the news media broadcasts a loss of Venezuela democracy.” Chicago Sun-Times. January 9, 2007. Reposted at http://www.creators.com/opinion/miguel-perez/say-adios-to-venezuelan-democracy.html . Accessed April 27, 2010.
 Andres Oppenheimer, “OAS silence on Venezuela censorship scary.” The Miami Herald. June 7, 2007.
Reposted at http://www.hacer.org/current/Vene145.php. Accessed April 27, 2010.
 Simon Romero, “Nonrenewal of TV License Stokes Debate in Venezuela.” New York Times, January 1, 2007. [http://www.nytimes.com/2007/01/01/world/americas/01venez.html?_r=1] Accessed April 26, 2010.
 Carlos Chirinos, “Venezuela investiga el “Carmonazo”.” BBC Mundo, October 5, 2004. [http://news.bbc.co.uk/hi/spanish/latin_america/newsid_3718000/3718810.stm] Accessed April 27, 2010.
 David Adams and Phil Gunson, “Media accused in failed coup.” St. Petersburg Times, April 18, 2002. [http://www.stpetersburgtimes.com/2002/04/18/Worldandnation/Media_accused_in_fail.shtml] Accessed April 27, 2010.
 On the Media (NPR), “Pulling the Plug.” May 18, 2007. [http://www.onthemedia.org/transcripts/2007/05/18/05] Accessed April 27, 2010.
 Patrick McElwee, “Is Free Speech Really at Stake? Venezuela and RCTV.” VenezuelaAnalysis.com. May 23rd 2007. [http://venezuelanalysis.com/analysis/2398] Accessed April 26, 2010.
 Christopher Toothaker, “Last Anti-Chavez TV Station Faces Probe, Shutdown.” Associated Press. May 16, 2009. [http://abcnews.go.com/International/wireStory?id=7604504] Accessed April 27, 2010.
 Human Rights Watch, “A Decade Under Chávez: Political Intolerance and Lost Opportunities for Advancing Human Rights in Venezuela.” September 18, 2008 . (footnote 184, p.74; footnote 181, p.73) [http://www.hrw.org/sites/default/files/reports/venezuela0908web.pdf] Accessed April 27, 2010.
 Simon Romero, “Chávez Looks at His Critics in the Media and Sees the Enemy.” The New York Times. June 1, 2007. [http://www.nytimes.com/2007/06/01/world/americas/01venez.html] Accessed April 27, 2010.
Prior to the rise of the recent wave of progressive governments, Latin American countries for years followed “neoliberal” or “Washington Consensus” policies. Designed by orthodox economists in the U.S. and promoted by international financial institutions including the International Monetary Fund (IMF) and the World Bank, neoliberal doctrine eschews government intervention in the economy in many areas (such as health care and education). While often referred to as “free market” policies, neoliberal measures actually promote selective “free market” practices (such as elimination of tariffs and quotas) while often enforcing other market protections (such as patents and copyrights). Economists and policy-makers often push neoliberal policies as the definitive route to development and economic prosperity, but in the decades of the “Washington Consensus” in Latin America (and in most developing countries), the 1980’s and ‘90’s, there was a sharp drop off in economic growth and various key health indicators.
The principle father of this ideology was the University of Chicago economist, Milton Friedman. Friedman and his disciples emerged as a backlash to the statist, pro-government economic policies that prevailed in much of the world during the post-war period. These thinkers from the “Chicago school” argued that the government, by getting in the way of market forces, was an obstacle to economic prosperity.
As the ideology of neoliberalism migrated from the academic to the policy sphere, the IMF and World Bank took the lead as its principal champions. Countries that found themselves in economic trouble and in need of external funding were required–and often coerced–into adopting sweeping packages of neoliberal reforms, known as Structural Adjustment Programs (SAPs). The IMF, in particular, became the gatekeeper of international finance. The IMF acted as the de facto head of a creditors’ cartel, as its seal of approval was routinely required for countries to access international credit or loans from the World Bank and other institutions. The U.S. Treasury Department in turn maintained – and continues to maintain – an effective veto over IMF decisions through its voting power on the governing Executive Board.
SAPs were often signed behind the backs of domestic legislatures and with little transparency or public accountability. An early example of a neoliberal reform package, for instance, was in Chile during the 1970s under the brutal dictatorship of General Augusto Pinochet. General Pinochet sought advice from Milton Friedman and several Chilean economists who had studied under Friedman–known in Chile as the Chicago boys. They in turn handed Pinochet a radical blueprint on how to restructure Chile’s economy.
The main argument behind the SAPs was that the short-term pain of economic adjustment policies would unleash the productive energy of the free-market, setting the country on the course to long-term economic growth and development. Unfortunately, these economic shock policies led to more than just a little short-term pain, causing severe negative social consequences and failing to deliver robust economic growth. In fact, Latin America’s two decades of neoliberal reform coincided with a growth failure of historic proportions when compared to the previous two decades. Between 1960-1980 real per capita income grew 82% while between 1980-2000 it only grew 9%.
The standard neoliberal recipe called for (1) “free trade”, (2) privatization, (3) cutting government spending, (4) deregulation and (5) opening up financial markets. “Free trade” made a major stride forward in 1994 with the establishment of the North American Free Trade Agreement (NAFTA), the most ambitious and far-reaching trade agreement to date stretching from Canada to Mexico. In the following years numerous more “free trade agreements” (FTAs) were signed, including one between the U.S. and Chile. In 2005, Central America and the Dominican Republic followed in Mexico’s footsteps, signing the U.S.-Dominican Republic and Central American Free Trade Agreement (DR-CAFTA).
Under an FTA countries agree to lower tariffs and other “barriers to trade”. This is supposed to reduce the price of imports and make consumers better off, but it also exposes local producers to unfair competition from the north. Thousands of Mexican farmers, for example, found that they could not compete with the price of U.S. corn suddenly imported under NAFTA, and were forced to seek other ways to make a living – in garment factories, for example, or across the border in the U.S. The U.S. had planned to extend these trade agreements throughout the entire hemisphere with a “Free Trade Area of the Americas.” This idea was finally defeated, after earlier failed summits, in Argentina in 2005 – a low point for the Bush administration’s Latin America policy.
Another important aspect of the SAPs was financial liberalization, to allow the free flow of capital between countries. While in principle this was supposed to lead to higher growth and economic stability, many countries that opened their economies to international financial markets became vulnerable and some suffered severe financial crises.
These SAPs frequently encountered mass popular resistance, sometimes taking the form of an “IMF riot.” Some of the most well-known “IMF riots” occurred in the late ‘90’s in Southeast Asia, as financial crises spread, leaving millions suddenly impoverished. In Indonesia, for example, rioting began in 1998 after adherence to IMF-mandated policies forced sharp increases in the price of fuel. These price hikes hit poor and working people particularly hard, who were already suffering falling real incomes and spiraling unemployment – also due in large part to IMF policies. http://www.cepr.net/index2.php?option=com_content&task=view&id=980&pop=1&page=730&Itemid=45
In Argentina, the IMF’s support for an overvalued exchange rate led to a severe recession and then finally economic collapse, at the end of 2001. Ensuing riots, which left some 27 people dead, forced president Fernando de la Rua to resign in December 2001. In the following ten days Argentina had a succession of four different presidents as mass protests and riots forced out one president after another. Venezuela’s 1989 IMF riot was known as the “Caracazo,” and, as in Indonesia’s case, was sparked by a fuel hike. In the ensuing riots, then-president Carlos Andrés Pérez called out the troops, and hundreds at the least, but probably thousands (the number is not known) were killed as the military fired on civilians. The “Caracazo” was a crucial turning point in Venezuelan history, polarizing society and galvanizing support for an end to the old political system, and laying the groundwork for popular support for Chávez and his political movement when it emerged three years later.
In the wake of the IMF’s disastrous policies, the 1990’s saw the worldwide emergence of the “global justice movement”, comprised of peasant groups, labor unions, activist networks, non-governmental organizations (such as, for example, Jubilee USA. the Bretton Woods Project, and Focus on the Global South, environmentalists, and other social movements around the world. At the same time, many developing nations began to distance themselves from the Fund, seeking alternative methods to insure themselves against economic problems without what they saw as Washington’s interference. In Latin America, the emergence of Venezuela as an alternative source of regional funding allowed some countries, notably Argentina, to pay off their debts to the IMF early.
Faced with the prospect of becoming completely irrelevant in the world financial system, the IMF has undertaken an internal process of reform. With the appointment of new Managing Director, former French finance minister Dominique Strauss-Kahn in 2007, the IMF modified much of its lending framework and publicly changed some policy stances. Many commentators have interpreted this change of face as the beginning of a new IMF or an “IMF 2.0,” as Peter Gumbel commented in Time magazine.
But despite the IMF’s fresh public relations campaign and new policy positions, it appears that old habits die hard. For example, during the recent global downturn the IMF announced with much fanfare that it was reversing its long held opposition to counter-cyclical policies to combat a recession (increasing spending during a slump to raise aggregate demand and stimulate the economy). However, the reality of IMF programs in developing countries is quite different. A recent study of IMF policies during the current world recession shows that 31 of 41 countries with IMF programs implemented pro-cyclical policies (that is, policies expected to hurt growth and increase unemployment). This points to a glaring double standard: according to the IMF pro-growth stimulus policies are acceptable for rich countries but not for developing countries.
Center for Economic and Policy Research’s Globalization and Trade pages
Flat Broke in the Free Market: How Globalization Fleeced Working People
By Jon Jeter. W.W. Norton: 2009
Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism
By Ha-Joon Chang. Bloomsbury Publishing PLC: 2007
Globalization and Its Discontents
By Joseph E Stiglitz. W. W. Norton & Company: 2003
The Shock Doctrine: The Rise of Disaster Capitalism
By Naomi Klein. Metropolitan Books: 2007.