CONTENT

● Overview
○ War on Drugs
○ Christianity, colonialism and liberation
○ Colonial caste system
● Mexico
○ NAFTA
○ US-Mexico immigration
○ Cartel crime
● Chile
○ Allende and Pinochet
○ The legacy of crimes against humanity
● Cuba
○ Fidel Castro
○ US relations and the economy
● Colombia
○ Who are the FARC?
○ Peace Process
● Haiti
○ Brief overview of political struggle
○ Development challenges
● Puerto Rico
○ US relations
● Venezuela
○ Venezuelan Oil Crisis
○ Political Turmoil
● Brazil
○ Operation Lava Jato
○ Economy
● Argentina
○ Washington Consensus (IMF)

Overview
Latin America, perhaps because of geographical proximity and cultural ties, have been the
subject of US attention throughout all administrations. Whether it be due to heavy-handed
American attempts to contain the spread of communism in Cuba, the US’ large role in
influencing IMF economic policies for Latin America (i.e. the Washington Consensus), or
even the war on drugs, Latin America has greatly benefitted and greatly suffered from its
relationship with the US. With a prominent history of Leninism/Marxism, the region faces a
myriad of issues with achieving economic prosperity and political integrity.

War on Drugs
The legacy of the US-funded war on drugs in Latin America is profound. The US has spent
more than a trillion dollars attempting to dismantle drug cartels but has only succeeded in
pushing the problem north, further destabilizing the armed conflict in Colombia as the FARC
rushed to fill the power vacuum left by powerful cartels which controlled cocaine production
and trafficking routes.

Cocaine profits have energized the region’s major criminal networks such as Sinaloa Cartel
and the Los Zetas Cartel (a paramilitary organization). These cartels hold massive political
influence in the respective regions— in Colombia, paramilitary organizations deeply involved
in drug trafficking are affiliated with both state institutions and to specific political parties. In
Mexico, the Institutional Revolutionary Party (IRP) had a tributary relationship with their
major cartels, often accepting bribes and allowing them to access critical trading routes.
When the IRP lost the 2000 elections, it unleashed a wave of violence amongst cartels as
they attempted to seize control of important routes of transit. Cartels are also implicated in
the murders and crimes of violence against journalists– Reporters Without Borders
described Mexico as “one of the hemisphere’s most dangerous countries” for the media.

After the demise of big cartels, paramilitaries and guerilla movements in Colombia
massacred and displaced millions of small farmers in their struggle to control land and drug
trafficking routes. The 20-year war to dismantle Colombian cartels has cost approximately
15,000 lives, many of them innocent victims of narco-terrorism. Furthermore, as a result of
the concentration of drug trafficking, Latin America and the Caribbean has the world's
highest crime rates, with murder reaching 32.6 per 100,000 of population in 2008.

However, it’s important that the war on drugs is a global phenomenon, opium and heroin
production centers in Afghanistan and is trafficked through to Europe and the rest of Asia.
Drug consumption in Latin America remains relatively low, but cocaine in particular has
increased in recent years in countries along the major smuggling routes. As of 2008, the
primary pathway for drugs into the United States is through Mexico and Central America,
though crackdowns on drug trafficking by the Mexican government has forced many cartels
to operate routes through Guatemala and Honduras instead. The United States is the
primary destination, but around 25 to 30% of global cocaine production travels from Latin
America to Europe, typically via West Africa.

Christianity, colonialism and liberation

The majority (90%) of Latin Americans are Christians. There is historical predominance of
Roman Catholicism (69%), as well as increasing Protestant influence (17%).
When Christopher Columbus arrived in America, the Catholic Church moved quickly to
establish its control in the newly discovered territory. In 1493, just one year after Columbus’s
famous voyage, Pope Alexander VI published a bill dividing the new territory between Spain
and Portugal– provided the natives were converted to Catholicism. The first missionaries
arrived shortly after the fall of the Aztecs who were defeated by Hernan Cortez. Most of the
missionary work was done by Catholic orders– the Franciscans, Dominicans, Augustinians
and Jesuits. Thirty five years after the first dozen Franciscans arrived, there were 800
missionaries in Mexico alone.

The priests built new towns and villages for their converts. They constructed huge churches,
larger than many of the cathedrals in Europe. The Jesuits took this to an even higher level in
South America, where hundreds of thousands lived in Jesuit-run autonomous colonies,
complete with their own Jesuit armies.
Despite decrees baring their entry into the New World, hebreo cristianos (Hebrew
Christians), nuevo cristianos (New Christians), Moriscos (Moors), and other “heretics” began
to show up in Latin America alongside the Catholics. To deal with these non-believers, the
Spanish Inquisition also made its way across the Atlantic. On the recommendation of the
Inquisition, thousands of “heretics” throughout the continent were tortured until they died or
confessed to charges they faced. Over a thousand people were executed in Lima, Peru,
alone. As the Inquisitors labored to purge the continent of non-Catholics, the new Spanish
and Portuguese governors encouraged the spread of Catholicism among the native
populations, and not just because it gave them political support from the Vatican. The
Catholic Church, and its link with the Spanish throne, was key to their ability to control the
continent with only a small military.

During the 19th century, the various countries that make up Latin America today won
political independence. Republican movements had a strong undertone of anticlericalism
which led to the temporary alienation between church and state. Anticlericalism was an
integral feature of 19th century liberalism in Latin America. It was based on the idea that the
clergy were hindering social progress in areas such as public education and economic
development since the Catholic Church was one of the largest land owning groups in most of
Latin America's countries. As a result, the Church tended to be rather conservative
politically. With independence, a succession of liberal regimes came to power in Latin
America. Some members of these liberal regimes sought to imitate the Spain of the 1830s
(and revolutionary France of a half-century earlier) in expropriating the wealth of the Catholic
Church, and restricting or prohibiting religious orders. As a result, a number of these liberal
regimes expropriated Church property and tried to bring education, marriage and burial
under secular authority. The confiscation of Church properties and changes in the scope of
religious liberties (in general, increasing the rights of non-Catholics and non-observant
Catholics, while licensing or prohibiting the orders) generally accompanied secularist, and
later, Marxist-leaning, governmental reforms. Many of these reformations would be
accompanied by violence and the persecution of priests and religious followers.

However in the 20th century, political powers have sought to harness the continuing popular
influence of the church in support of authoritarian regimes, including military dictatorships but
also social movements. With growing urbanisation and cognisance of distributive justice,
religious ideology began to change. The Church felt a pressure to re-evaluate its practices if
it wanted to maintain its position of influence. One of the most important manifestations of its
changing religious ideology was the Catholic Action movement.

In Peru, a theologian and priest Gustavo Gutierrez was part of an oppressed class.
Equipped with his formal knowledge of Catholic structure and teachings, Guiterrez realised
how little the theories he learned were applied to the current situation of poverty and
oppression in Latin America. Moved by the Cuban Revolution in 1959, progressive clergy
members began meeting to discuss the future of the Church and its role in politics. In such a
meeting, Gutierrez presented a paper where he articulated “liberation theology”– a theology
that acted as critical evaluation and a commitment to action. This highly networked group of
religious figures began a movement to align Christianity with the needs of the poor.

A major component of liberation theology was the recognition of free will: people were
encouraged to become active agents of their destiny and liberate themselves from economic
injustice. In doing so, they liberate themselves from sin and achieve communion with God.
God, Gutierrez argued, was not only for spiritual salvation but also economic salvation (they
were one in the same).

As followers of liberation theology grew in numbers, the Vatican felt threatened by the
movement’s connection to radical leftist movements. They attempted to issue critical
instructions to the congregation that undermined the Bible being used as an example of
Marxist class struggle. (However, readers should note that liberation theology has marked
differences from Marxism – e.g. liberation theology believes there is no incompatibility
between religion and empiricism, and it maintains the Christian doctrine). Despite the
Vatican’s attempts, the movement created many Christian Base Communities and
Theological Reflection workshops, where people were encouraged to strengthen community
support. CEBs taught peasants basic skills like literacy, alongside religious teachings in an
effort to empower them and have peasants redefine their relationship with the Church.

Colonial caste system

During most of the colonial era, Spanish and Portuguese-controlled America had a
pyramidal structure which was codified in an official caste system (“casta” which means
lineage in Spanish). The small number of white Europeans were at the top, while mixed race
people followed and at the bottom were Amerindians and Africans. Basic mixed-race
categories appeared in official colonial documentation (eg. mestizo referred to people who
were the children of a Spaniard and an indigenous person, and mulato referred to people
who were the children of a Spaniard and a black African). Though basic terms existed, this
racial taxonomy was obsessive and had huge numbers of classification for people born with
specific combinations of races. There was also a distinction between people of European
descent born in America (i.e. creoles) versus in Europe (i.e. peninsulares). Peninsulares
held a disproportionate amount of the wealth and lived in exclusively Spanish-occupied town
centers in colonial America. To tighten control, legal and political favours were given to those
who were seen to be more loyal to the King. This meant control of colonial operations and
official positions were typically given to those who were of European birth.

Creoles often identified with their privileged European heritage in opposition to mixed-race
people or indigenous/African people (despite many of creole people growing up in a cultural
context more proximate to local communities). But as peninsulares were given more favour,
some creole people began longing for sovereignty (or, at least, a version of sovereignty
where they would be the most socio-economically dominant class).

Spain was often quite skilled at dividing and conquering local people, and pitting them
against each other. For example, Native Americans were given crown protection (as long as
they paid a tribute to the King) and were allowed to function as almost a different republic,
which was subservient to the King but independent of the Spanish and the creoles. So, their
resentment towards Spaniards was relatively limited compared to their resentment against
creoles. After all, it was creole people who were constantly encroaching on their land. But
below indigenous people were slaves, typically brought from Africa to work on plantations
and in mines. In Latin America, slaves were much more likely to earn their freedom
compared to their counterparts in the US.

Note that race wasn’t the only determinant of caste – general socio-economic status was as
well. There was considerable fluidity in society, with the same individuals identified by
different categories over time. People could climb their way up the social hierarchy through
marriage or through having a highly-demanded skill (e.g. artisanal skills). Individuals also
self-identified with a particular term, often to specific contextual advantages.

The legacy of such caste systems arguably lives on in beauty standards and the availability
of socio-economic opportunity. Attitudes towards preferring lighter-skinned people of
European appearance still persist.

Mexico
Mexico is the second-largest economy in Latin America and a major oil exporter with high
degrees of wealth inequality. The current president of Mexico is Enrique Pena Nieto, the
former mayor of Mexico City and leader of the Institutional Revolutionary Party, who won in a
clear victory in 2012. Mr Pena Nieto has managed to push groundbreaking reforms including
the liberalisation of the telecoms industry, closing corporate tax loopholes, and opening the
longstanding state energy monopoly to privatisation. But rampant gang violence, corruption,
and the weak state authority continue to feed into public disenchantment with politics.

NAFTA
The North American Free Trade Agreement (NAFTA) is a treaty between Canada, the US,
and Mexico (the world’s largest free trade agreement), being the first time two developed
nations signed a trade agreement with an emerging economy. The gross domestic product
between the three countries is more than $20 trillion USD.

There are three important portions of NAFTA. First, NAFTA grants the most-favoured-nation
status to all co-signers. This means that countries must give all parties that are part of
NAFTA, both domestic and foreign, equal treatment including foreign direct investment (i.e.
no preferential treatment to domestic parties or non-NAFTA parties). Second, NAFTA
eliminates all tariffs on exports and imports between the three members though there are
special provisions to regulate trade in farm products, telecommunications, and clothing.
Exporters must get Certificates of Origin from these three signatories to waive tariffs.

Thirdly, a problematic clause in NAFTA establishes dispute settlement procedures which

allows investors to sue governments if they introduce policies that may reduce profit
margins. It also has other mechanisms for settling disputes between countries and
corporations such as judicial review and an informal mediation process by the NAFTA
Secretariat. Canada has been on the receiving end of many legal suits by mostly American
investors, 68% of which challenge its environmental protection and resource management
programmes that allegedly interfere with the rights of foreign investors. This aspect has been
a huge issue for the US in the negotiation process; they surprisingly want the dispute settle
procedures to be abolished. Other clauses include a freer movement between borders and
intellectual property rights.

Economists largely agree that NAFTA has provided benefits to the North American
economies. Regional trade increased sharply over the treaty’s first two decades, from
roughly $290 billion in 1993 to more than $1.1 trillion in 2016. Cross-border investment has
also surged, with U.S. foreign direct investment (FDI) stock in Mexico increasing in that
period from $15 billion to more than $100 billion. In the US, supporters of NAFTA estimate
that some fourteen million jobs rely on trade with Canada and Mexico, while the nearly two
hundred thousand export-related jobs created annually by the pact pay 15% to 20% more
on average than the jobs that were lost.
In Mexico, NAFTA gave a major boost to Mexican farm exports to the United States, which
have tripled since NAFTA’s implementation. The value of bilateral trade with the US is
equivalent to nearly half of Mexico’s GDP. America buys three-quarters of Mexico’s exports.
Hundreds of thousands of auto manufacturing jobs have also been created in the country,
and most studies have found that the pact had a positive impact on Mexican productivity and
consumer prices, making American goods more affordable.

However critics have pointed to the corporations that have taken advantage of wage
differentials in Mexico (Mexico has a per capita income just 30% that of the US’), leading to
a huge move of manufacturing jobs from the US to Mexico. A maquiladora is a factory in
Mexico that operates under preferential tariff programmes established and administered by
the US and Mexico. Materials, assembly components, and production equipment used in
maquiladoras are allowed to enter Mexico duty-free, and all goods produced can easily be
exported into the US at lower tariff rates. Some economists argue that this relocation caused
the loss of up to 600,000 U.S. jobs over two decades. In particular, the U.S. auto sector has
lost some 350,000 jobs since 1994—a third of the industry—while Mexican auto sector
employment spiked from 120,000 to 550,000 workers.

In Mexico, these factories have conditions that are often exploitative. Despite jobs being
created, poverty remains at the same levels as in 1994, and the expected “wage
convergence” between U.S. and Mexican wages didn’t happen, with Mexico’s per capita
income rising at an annual average of just 1.2 percent in that period—far slower than Latin
American countries such as Brazil, Chile, and Peru. Mexican unemployment also rose,
which some economists have blamed on NAFTA for exposing Mexican farmers, especially
corn producers, to competition from heavily subsidized U.S. agriculture. Some studies
estimate that NAFTA put almost two million small-scale Mexican farmers out of work, in turn
driving illegal migration to the United States.

US-Mexico immigration
Pew Research Center estimates that about 11.3 million people are currently living in the U.S.
without authorization. More than half come from Mexico, and about 15% come from other
parts Latin America. About 8 million of them have jobs, making up 5% of the U.S. workforce,
figures that have remained more or less steady for the past decade. Geographically, these
unauthorized workers are spread throughout the U.S. but are unsurprisingly most
concentrated in border states like California and Texas. This massive influx of Mexicans has
lent cultural diversity, provided inexpensive labor alternatives, and has boosted American
business. However, it has also arguably overpopulated American cities, put a serious drain
on social services, and created a growing tension between white American citizens and
Mexican migrants.

Undocumented migrants tend to be represented more pronouncedly in certain industries….

The Department of Agriculture estimates that about half of the nation's farmworkers are
unauthorized, while 15% of those in construction lack papers– more than the share of legal
immigrants in either industry. In the service sector, which would include jobs such as fast
food and domestic help, the figure is about 9%.

American agriculture is heavily reliant on illegal immigration. In the past, most foreign worker
programs originated from the executive branch of government as treaties such as the
Bracero program that was meant to address agricultural labor needs, until its termination in
the 1960s. The border was open for migrant workers to cross to harvest crops as they
ripened; generally, workers returned to Mexico when the growing season ended. However,
as border enforcement increased over the years, so did the dangers and expense of
crossing the border. As a result, many workers remain in the United States. Now, most
agricultural labor in the western United States is unauthorized residents– estimated at
400,000 in California and 800,000 nationally. Many dairy, vegetable, fruit, and meat farmers
say that they turn to undocumented workers because they are unable to find and keep
reliable US citizens to do the jobs, in part due to farm work being low paid, physically
demanding, socially denigrated work. More importantly, farm work is one the most
dangerous occupations in the US.

Despite “low-skill” work being of such high demand in the US, legal immigration opportunities
do not reflect these realities. The quota for “unskilled” work E3 employment visas in the US
are restricted to only 5,000 a year. This, including the infamous backlogs of American
immigration systems that take years to resolve, force many Mexican economic migrants to
resort to illegal methods of crossing the border. According to the US Customs and Border
Protection, 7,216 people have died crossing the US-Mexico border between 1998 and 2017.
Common causes are exposure to the elements (death of hypothermia, heat stroke, and
dehydration), drowning, and car accidents. Those who traffick humans across the border
(i.e. coyotes) are often exploitative, charging extortionate rates and smuggling people in
unsafe conditions. Unfortunate cases include individuals suffocating in the back of lorries, or
drowning in poorly made dinghies.

During the Trump administration, policies towards immigration were harshened. Trump
announced that President Obama's "Deferred Action for Childhood Arrivals" (DACA)
Executive Order from 2012, which enabled an estimated 800,000 young adults ("Dreamers")
brought illegally into the US as children to work legally without fear of deportation, would be
phased out. The US government has also launched a campaign of "zero tolerance" of
unauthorized crossing of the border with Mexico, coordinated between the Departments of
Homeland Security and the Justice Department.
Under this policy, federal authorities separate children from their parents, relatives, or other
adults who accompanied them in crossing the border. Parents are sent to federal jails
awaiting their hearing while children are held in shelters under the aegis of the Department
of Health and Human Services (HHS). The number of immigrant children in custody surged
following the implementation of the policy. HHS "that it had 10,773 migrant children in its
custody, up from 8,886 on April 29, 2018.” The crackdown on immigration (both legal and
illegal) during the Trump administration can be seen as a result of the US’ increasingly anti-
immigration stance. Many US citizens believe that migrants bring increased crime (even
though statistics show that first-generation immigrants are less susceptible to criminal
activity than naturalised citizens) and take jobs.

Cartel crime
Though drug cartels lack a particular political ideology, what is best for business is an
entrenched complicity between criminal groups and authorities, politicians and law
enforcement agents at the local, state, and federal level. The ability to corrupt, penetrate and
erode the political institutions is one of the major sources of power for these organizations
nowadays as it allows them to expand their business and reduce the costs of their
operations.

Since 2011, numerous political scandals have exposed the collusion of Mexican politicians
and drug cartels to the public. To name a single example, earlier this year, former governor
of the state of Coahuila and president of the Partido Revolucionario Institucional (PRI),
Humberto Moreira, was detained in Spain and accused of money laundering and collusion
with a Mexican drug cartel. Cartels have become more aggressively political; mayors or local
authorities who do not align with the demands of drug cartels are simply murdered. This was
the case with Gisela Mota in January who was murdered mere hours after her appointment
as the first female mayor of Temixco. Drug cartels also regularly offer bribes to buy their
protection and political favours

Drug cartels in Mexico also aim to decrease state legitimacy. Members of these cartels use
social network platforms to expose corrupt politicians, demand the resignation of the
president, and go so far as to say that El Chapo Guzman would be a better leader of the
country than any of the political elite. This political activism aims to win the hearts and minds
of millions of people through social discontent as the stigmas around the drug trade industry
are blurred. By proving local government forces to be inadequate at providing security and
stability, cartels have redefined themselves as anti-establishment anti-heroes, making it
harder for government forces to fight cartels on a local level.

Frighteningly, politicians are also incredibly vulnerable to cartel crime. Between 2010 and
2017, 42 mayors were murdered in Mexico, 12 of them in the state of Oaxaca. A further ten
mayors or ex-mayors have been killed in 2018. Some perish because they fight corruption
and organised crime. In one particular example, Gisele Mota, the former mayor of Temixco,
was killed during her second day in office. Her victory against the PRI as well as her
inauguration speech where she promised to be tough on political corruption was most likely
seen as a threat. Others die because they side with a gang, becoming targets of its rivals. In
Oaxaca, a rural state where drug gangs are strong, many mayors have been killed in
disputes over land between villages. This has not only resulted in the forced cooperation of
local mayors with cartels, but also has meant that they ability to enact public policies (even in
areas unrelated to crime and justice) are curtailed. In Oaxaca, mayors were forced to drop
projects that included providing safe drinking water due to it being perceived to be
threatening to cartels.

Normal civilians feel the devastating impact of cartels. Murder rates are consistently high in
areas that are part of turf wars. Criminal organisations smuggle guns and arms, easily
bought in the United States, back into Mexico. Weak law enforcement lets gangsters kill with
virtual impunity. Criminal activities other than drug trafficking also have effects such as
gender-based violence and murder in villages where young women and girls are forced to be
part of prostitution rings. In Ciudad Juarez in north Mexico, more than 400 women have
been murdered. After surveying 155 killings out of 340 documented between 1993 and
2003, a government committee found that roughly half were prompted by motives like
robbery and gang wars, while a little more than a third involved sexual assault. Local police
and judicial systems have been largely inactive in response to the severity and scale of
cartel crime.

Chile
Chile exhibits many of the traits that typically characterise Latin American countries. It was
colonised by Spain, and the culture that evolved was largely Spanish. However, appreciation
for the influence of indigenous culture has been growing. It is one of the more urbanised and
developed countries in Latin America, but the country still grapples with the traumas it
suffered under Pinochet.

Allende and Pinochet

In the early 1960s, Chile was in upheaval. It was run by a tiny, elte group of people with little
to no upward mobility. The 1964 presidential election of Christian Democrat Eduardo Frei
Montalva initiated a period of major reform, articularly in education, housing, and agrarian
reform, including rural unionization of agricultural workers.

Agrarian reforms were deeply divisive. They consisted of the government buying land from
wealthy landowners for a low price, putting it into a cooperative and redistributing it back to
poor people. By 1967, however, Frei encountered increasing opposition from leftists, who
charged that his reforms were inadequate, and from conservatives, who found them
excessive. This polarisation provides an opening for Senator Salvador Allende Gossens who
contests the 1970 election.

Allende was Marxist with a platform to reclaim Chile’s American-owned copper mines. He
argued that money from these mines were lining American pockets, not going to the benefit
of normal Chilean people. His platform and ideology alarmed US President Richard Nixon,
who told the CIA to ensure Allende did not become President. The CIA funnelled money to
his opponents and paid for massive propaganda blitzes, some of which compared Allende to
Fidel Castro in Cuba.

Allende won anyway to the dismay of middle- and upper-class people and made good on
many of his biggest promises. He nationalised over 500 corporations including banks, textile
plants and copper mines. He also gave free milk to young children, created government jobs
and implemented pay rises for blue-collar workers. However, with the drop in foreign
investment and economic output, Allende was forced to print money to finance his high
government expenditure. This caused runaway inflation that hit 700%. Nixon used this
opportunity to further weaken Allende by cutting off loans, foreign aid grants and credit to
Chile via the US and the World Bank.

To stop the inflation, Allende implemented a price fix. But because producers were no longer
able to make profits on their goods, they just stopped supplying, leading to massive food
shortages and protests from both ends of the political spectrum. Violence between the right
and left in these protests was normalised as the two became more radicalised. A military
coup soon ensued led by General Augusto Pinochet with the aid of the CIA. Heavily
influenced by a group of Western-educated Chilean economists called the “Chicago Boys”,
Pinochet implemented many market reforms to control the inflation, shortages and deficit.

The military busts and bans unions; they unfix the price of food and crack down on the black
market. Famous economist Milton Friedman was even invited to promote market
liberalisation. His message was that Chile needed “shock therapy” to return to normal –
austerity, no more printing money, higher taxes, no more tariffs etc. This was deeply
economically painful for the middle and working classes as unemployment spiked as
government jobs and welfare were cut. But competition between newly privatised companies
eventually brought prices back down in the coming years. The economy begins to recover
and the Chicago Boys are actually brought in to consult other countries on economic policy.
However, for readers that are interested, many of these liberal policies would bite back and
result in a severe economic crisis.

“Shock therapy” economic practices were aided by Pinochet’s dictatorial hold on Chile. Any
protests and political opposition were brutally suppressed with mass abductions, torture and
state terrorism conducted by the secret police. This will be explored in the next section about
the legacy of human rights violations in Chile. It wasn’t until 1989 Chileans could elect a new
president: Christian Democrat Patricio Aylwin, the candidate of a coalition of 17 political
parties.

The legacy of crimes against humanity

Under Pinochet’s government, thousands of people were the victims of the Chilean Armed
Forces and secret state police between 1973 to 1990. A Truth and Reconciliation
Commission created by Aylwin’s government found that around 30,000 people were tortured
and executed. In addition, 2over 200,000 people suffered exile and an unknown number
went through clandestine centers and illegal detention. Leftists were arrested or abducted,
and subjected to unspeakable acts of physical, psychological and sexual torture.

The tactic of “disappearing” the enemies of the Pinochet regime was systematically carried
out during the first four years of military rule. Many people would lose friends and family and
never know what happened to them. The Truth and Reconciliation Commission were given
large amounts of resources and access to official documents to provide as complete a
picture as possible of the most human rights violations, and compile a list of victims’ names,
fates and whereabouts. It also recommended ways to make reparations to families. Two
reports were made: the Rettig Report and the Valech Report (which you can read more
about by searching).
Pinochet and his politics still have an impact on Chilean politics now. Many extreme-right
politicians who supported Pinochet continue to justify the military takeover by citing the
chaos of the Allende years. Left-leaning blocs leap upon this fact as well. An example of how
past wounds reopen nowadays includes the 2013 election. Michelle Bachelet was a front-
runner in her presidential campaign, and was directly affected by Pinochet’s rule. Her father
was imprisoned and died of a heart attack after months of torutre. Bachlet herself was
arrested and tortured. Her closest rival for presidency was Evelyn Matthei, whose father
sided with Pinochet. In response to demands from leftist opponents for her to apologise,
Matthei defended her record on human rights and said: “I was 20 years old when the coup
happened. I don’t have to ask forgiveness.”

Reconciliation seems to be difficult in Chile when those responsible for atrocities have not
been brought to justice, and disagreements over the “goodness” of Pinochet’s government
occur across political lines. This trauma makes cross-party reform challenging, especially
when it is difficult for any one party to gain a significant majority in Chile’s congress.

Cuba
Cuba took center stage for the Cold War conflict, ending in a break in US-Cuban ties which
proved disastrous for the Cuban economy despite large socialist reforms by Castro that
improved coverage of healthcare and education to the country’s poorest. However, with the
Obama administration, US-Cuba relations are finally thawing.

Fidel Castro
Fidel Castro was the leader of the first communist country in the Western hemisphere. After
exhausting legal means to dislodge Cuba’s dictatorship, run by Fulgencio Batista, in 1952,
Castro organized a rebel force to start a guerilla military campaign against Batista. Castro,
and his close partner Che Guevara, succeeded in disposing of Batista who fled the country
in 1959. Castro slowly ascended up the political ladder in Cuba’s new provisional
government, becoming its head of state. This sent a shockwave of communist uprisings
throughout Latin America.

Castro came to power with the support of most Cuba city dwellers on promises of restoring
the constitution, creating an honest administration and reinstating full civil and political
liberties. However, once established as the head of state, he began to pursue more radical
policies: private commerce and industry were nationalized, sweeping land reforms were
instituted, and American businesses and agricultural estates were expropriated.

In the midst of the Cold War, several fights for power took place in Cuba. Being the first
communist state, the Soviet Union secretly stationed ballistic missiles in Cuba that would be
able to deliver nuclear warheads to American cities in order to counter the missiles the US
had stationed in Turkey. The ensuing confrontation nearly precipitated full nuclear warfare,
but eventually both states agreed to withdraw their nuclear weapons from Cuba and Turkey,
and the US promised not to overthrow Castro’s regime. However, the US did instate a full
economic embargo of Cuban goods and services which dealt a massive blow to the nation’s
economy.

In his presidency, Castro has imprisoned, tortured and murdered thousands of political
prisoners. Members of the opposition, journalists, and homosexuals were sent to forced
labour camps where they would perish from the conditions. However, he extended free and
equal access to healthcare and education, and despite its small size, Cuba is recognized as
a global medical-training capital resulting in an incredibly high doctor-to-patient ratio.
Communism also naturally promotes gender equality and in the 21s century, the country has
made leaps forward to achieving gender parity (e.g. 50% of seats in parliament are held by
women). However, economic growth has been modest, and the country has been unable to
rid itself of its reliance on cane sugar production.

US Relations and the economy

In 2015, the Obama administration finally removed Cuba from a list of rogue regimes that it
designates as state-sponsors of terrorism and as a result, Cuba is finally free from the harsh
series of financial and social sanctions that have seriously disrupted its diplomatic activities
with the US. The US’ interests in thawing its relations are obvious. America’s long-standing
attempt at isolating Cuba have been ineffective, it failed to dislodge the Castros, hurt the
Cuban people, and incubated anti-American sentiments in Latin America.

It is good timing. Cuba, which has enjoyed extracting subsidies from left-wing allies in the
past, is now facing dire economic strain. Venezuela, which replaced the Soviet Union as its
patron, is no longer able to provide the same benefits– Cuba has had to buy more fuel at full
price on the international market. As Venezuela’s shipments of subsidised oil to Cuba
dropped, the country needed a new source of hard currency with American tourists as a
promising start. However, the thaw has raised the expectations of Cuban people that will be
hard to satisfy unless Cuban authorities loosen their system of command and control.
American businesses such as Airbnb, Netflix, and IDT International have used the new rules
to launch businesses in Cuba that bypass state monopolies. President Obama has cleverly
sought to craft the new rules so that they support the 400,000 people working in small
restaurants, guesthouses and other service companies set up by private individuals in Cuba.

Despite a boom in tourism, its revenues from services, including medical ones, have been
declining since 2013. Bound by strict socialist regulations, Cuba produces little else that
other countries or its own people want to buy. Farming, for example, is constrained by the
absence of markets for land, machinery and other inputs, by government-set prices, which
are often below the market price, and by bad transport. Cuba imports 80% of its food. That is
why Raúl Castro embraced market reforms, albeit far more timid ones than those in China or
Vietnam. More than 500,000 Cubans now work in a weak private sector of small and micro
businesses or co-operatives. But these reforms bring inequality and a loss of state control,
which it is loathe to give up especially with increasing US demands for freer media and
democratic elections. Cuba’s reforms are confused between a country that wants both the
political control of a socialist state, but with the prosperity of a modern capitalist economy.
Due to this, its reforms fail to address key weaknesses in attracting foreign investors and
decreasing reliance in foreign aid. It also seems nowhere near tackling the multiple
exchange rates (ranging from one peso to the dollar for official imports to 25 for most wages
and prices) that ludicrously distort the economy.

Colombia
Colombia has significant natural resources and its culture reflects the indigenous Indian,
Spanish and African origins of its people. However, it has also been ravaged by a decades-
long violent conflict involving outlawed armed groups, drug cartels and gross violations of
human rights, although, since 2002, the country has been making significant progress
towards improving security.

The fourth largest country in South America and one of the continent's most populous
nations, Colombia has substantial oil reserves and is a major producer of gold, silver,
emeralds, platinum and coal. It also has a highly stratified society where the traditionally rich
families of Spanish descent have benefited from this mineral wealth to a far greater degree
than the majority mixed-race population, providing a ready constituency for left-wing
insurgents.

Who are the FARC?

The FARC was founded in the 1960s in the wake of a decade of political violence in
Colombia known as la Violencia: an ugly political war between the country’s Liberals and
Conservatives—triggered by the assassination of Liberal Party Leader Jorge Eliecer Gaitan.
Conservatives drove Liberals from their villages; Liberals in turn regrouped as guerrillas,
making rural Colombia their stronghold. Soon killing became an end in itself, sadistic and
without cause. Excluded from a power-sharing agreement that ended the fighting, the
communists took up arms against the government, starting a long and bloody civil war. Their
conflict with state security forces lasting more than 50 years has shaped contemporary
Colombian psyche.

The FARC are a small guerilla group formed as an armed wing of the Communist party
during 1964 when political ideologies deemed subversive were cracked down upon. The
FARC was composed of militant communists and peasant self-defense group, and claimed
to represent the rural poor against the country’s wealthy. Their founders were mainly small
farmers and land workers who banded together to fight against the staggering inequality in
Colombia at the time. Large swathes of land were controlled by a rich elite, sold to them
during the 19th century by the state which hoped to use the money to pay off its debt. Their
communist ideals were a large threat to the wealthy landowners.
Though it has urbanised to an extent, the FARC still remains a largely rural guerilla group.
The rebels are organised in small tactical groups that make up larger fighting blocs
controlled by the Secretariat, a group of less than 12 commanders who create the
overarching strategy of the FARC. The FARC’s top leader is Rodrigo Londono Echeverri,
better known by his alias Timochenko.

The FARC is the largest of Colombia’s rebel groups with 10,000 armed soldiers and
thousands of supporters, largely drawn from the country’s rural areas. has used acts of
terrorism and has been engaged in armed conflict with state forces, causing the deaths of
more than 220,000 people. They’re funded mostly by their control of coca production and
trafficking, but also by ransom money they extort from kidnappings which number up to
25,000 people in the last 40 years.

Peace Process
In 2016, there was a prospect of peace as the state and the leader of the FARC negotiated a
peace deal which would allow the FARC’s political participation and the rebels’ reintegration
into civilian life. It would eradicate illegal groups and disarm all the rebels in exchange for
amnesty and aid in rehabilitating combatants. FARC militia would surrender their arms (up to
5000 independent firearms) to the UN, release child soldiers and other coerced combattants
that would be returned home, undergo questioning of their ambitions and past actions, and
be subject to reintegration into civilian life. Combattants would be granted full amnesty.
The peace deal was expected to pass but the state had to first open it up to popular
referendum (though people thought it was merely a formality and that the deal would be
passed with an overwhelming majority). Sadly, this wasn’t the case as the deal failed to get a
popular vote and was not passed. Colombia’s war-ravaged population felt that due justice
hadn’t been given to the rebels and the pain they had inflicted upon society.

Afterward, the FARC and the Colombian government signed a revised peace deal and
passed it through Congress and did not seek a second referendum. The ratification of the
peace deal brought the formal end of the conflict in November 2016. However, the peace
deal was rejected and denounced by the opposition because it failed to include some of their
key proposals. Nonetheless, the process by which the FARC guerrillas were to relinquish
their weapons was largely peacefully under way at the beginning of 2017.

However, the popular referendum dealt a great blow to public optimism about peace and
stability, exacerbating uncertainties within the FARC guerillas. The peace process was at
first quite slow, but on August 15, 2017, the FARC turned over the last of its accessible
weapons to UN representatives (some 900 weapons remained in caches in remote areas),
bringing the total of decommissioned weapons to more than 8,100 guns and about 1.3
million cartridges. With this action the Colombian government declared an official end to its
conflict with the FARC. The FARC began its transition into a political party that was
guaranteed 10 unelected seats in the Colombian legislature (five in the House of
Representatives and five in the Senate).
*Interesting fact: The construction of the peace deal included a large number of female and
LGBTI+ delegates who made up more than ⅓ of the delegates present.

Haiti
Haiti became the world's first black-led republic and the first independent Caribbean state
when it threw off French colonial control and slavery in the early 19th century. But
independence came at a crippling cost. It had to pay reparations (nearly 100 million francs)
to France, which demanded compensation for former slave owners. The 19th century
"independence debt" was not paid off until 1947. There have been recent calls for France to
repay the money.

Chronic instability, dictatorships and natural disasters in recent decades have left it as the
poorest nation in the Americas. An earthquake in 2010 killed more than 200,000 people and
caused extensive damage to infrastructure and the economy. A UN peacekeeping force was
put in place in 2004 to help stabilise the country, and only withdrew in 2017.

Haiti has suffers from tense relationships with its bordering neighbour, the Dominican
Republic. The enmity between the two countries has long historical roots and racist
underpinnings: some Dominicans, with their Spanish culture and largely European ancestry,
look disdainfully upon black Haitian labourers; however, the Dominican economy depends
heavily on cheap Haitian labour. In 1937 troops and police from the Dominican Republic
massacred thousands of Haitian labourers living near the border. The Dominican
government agreed to compensate the slain workers’ relatives the following year, but only
part of the promised amount was actually paid.
Brief overview of political struggle
When Haiti gained independence in the 19th century, it was faced with multiple challenges. It
was forced to pay reparations to its former coloniser, France, even when the nation lacked
basic social services and communications in the countryside and its economy was struggling
to develop past its dependence on shipping and commerce taking place in Port-au-Prince.
There was a huge gulf between the small urban elite, who were mostly light-skinned and
French-speaking, and the vast majority of black, Creole-speaking peasants.

After occupation by US Marines during the early 1900s, which had entrenched the power of
a wealthy mulatto elite in government, Haiti continued to experience political turmoil until the
election of Francois Duvalier in 1956. Duvalier promised to end domination by the mulatto
elite and to extend political and economic power to the black masses. Violence continued,
however, and there was an unsuccessful attempt to overthrow Duvalier in July 1958. In
response, Duvalier organized a paramilitary group: the Tontons Macoutes (“Bogeymen”).
This group terrorised the population and by 1964, Duvalier had an iron grip on Haiti, and
extended his term for life and transformed Haiti into a police state.

During Duvalier’s time in power, Haiti experienced increasing international isolation, renewed
friction with the Dominican Republic, and a marked exodus of Haitian professionals. The
regime was characterised by corruption and human rights abuses, but a personality cult
developed around Duvalier himself, and some sectors of society strongly supported him,
including a small upwardly mobile black middle class. His legacy was continued when his
son, Jean-Claude Duvalier, succeeded him at the age of 19 in 1971.

Haiti’s next few years would be characterised by deep political instability and violence with
fraudulent democratic elections, military coups, and unstable regimes. The US and other
Western nations imposed trade embargos on Haiti, and tens of thousands of Haitians
attempted to flee their country. In 1994, the de facto government was compelled to step
down and allow some 20,000 US troops to occupy the country. Western powers pressured
for free-market reforms, and Haiti benefited economically from a large influx of international
aid and loans, but many of its farmers (the largest component of its workforce) struggled to
compete with cheaper imported foodstuffs.

Fraudulent elections and a seizure of power amidst political in-fighting led Aristide, the
former president of Haiti who was previously exiled, to regain power. However, he faced
serious economic and political problems on his return to power in 2001. International aid
sanctions, imposed after the 2000 elections, helped fuel a downward economic spiral that
further impoverished an already desperate population. Instances of disease (including
HIV/AIDS) rose sharply, as did levels of lawlessness and violence. Aristide’s second term
was marked by accusations of corruption, and mass protests broke in 2004. Aristide had fled
the country in the face of a rebel insurgency and assistance from abroad slowed. Haiti’s
main source of income came from remittances from Haitians overseas.

Conflicts between Aristide’s supporters and rivals escalated, leading to hundreds of deaths
and an onslaught of gross human rights abuses. With authority of the UN Security Council,
US-led troops were sent to Port-au-Prince to stabilise the situation and to oversee the
installation of an interim government (i.e. the United Nations Stabilisation Mission in Haiti,
MINUSTAH). Under MINUSTAH, US- and UN- trained police forces cracked down on
Haitians slums (where many of Aristide’s supporters resided). Democratic elections were
constantly delayed by crime and gang activity. Food and fuel prices sky-rocketed, leading to
protests against elected politicians. Violent riots against high costs of living broke out in April
2008, and much of the anger was directed toward the government and MINUSTAH. Several
people were killed and dozens injured.

From 2008 to 2010, a series of earthquakes and hurricanes devastated Haiti, destroyed key
infrastructure, leaving many dead and homeless without access to basic sanitation and
healthcare. The disasters destroyed crops and the country was heavily reliant on
international aid to stop starvation and the spread of diseases. To this day, the interim
government struggles with rebuilding Haiti and eliminating political violence and corruption.

Development challenges
Haiti is the poorest country in the Western Hemisphere. More than half the population lives
under the poverty line, and many rely on subsistence farming to feed their families. Haiti is
also heavily dependent on external revenue: foreign aid accounts for more than 20% of the
government’s annual budget, while remittances from the Haitian diaspora account for more
than a quarter of the country’s GDP. For the last decade, Haiti has run an average annual
trade deficit of $190 million. Tourism, once a vibrant sector, has declined. In 2017, Haiti
derived just 10 percent of its GDP from tourism, compared to an average of 15% among
Caribbean states.

In recent years, natural disasters, disease, political instability, mismanagement of

humanitarian relief, and a depreciation of the gourde, Haiti’s currency, have strained the
economy. Since its independence from France, Haiti’s development has been menaced by
the interference of foreign powers to domestic political malfeasance to natural disasters and
epidemics.

Freedom from France in 1804 did not mean an end to foreign powers intervening in Haiti.
France only recognized an independent Haiti in 1825, after its former colony agreed to pay
reparations that would be worth $22 billion today. Over the next 120 years, as much as 80%
of Haiti’s revenues went to paying off this debt. Haiti was forced to gear its economy to
paying back the French and forewent industrialisation, education, and development of its
government and democratic institutions. Furthermore, during the nearly two-decade
occupation in the early 1900s, the US controlled Haiti’s security and finances. It also
imposed racial segregation, forced labor, and press censorship, and deposed presidents and
legislatures that opposed the US presence. Some 15,000 Haitians were killed in rebellions
against the US administration.

The US withdrawal was followed by a series of unstable governments, which were

characterised by corruption that drained the nation. Haiti continues to rank among the top
fifteen most corrupt countries in the world, with current intermin president Moise under
investigation for money laundering.

Haiti also has the misfortune to be located on a geological fault line in a region prone to
severe storms, Haiti suffers more natural disasters than most Caribbean nations. In 2008, a
series of hurricanes ravaged the country, killing nearly 800 Haitians and displacing hundreds
of thousands. Flooding destroyed crops, and the country had to rely on international relief
efforts. Rebuilding was hampered by a lack of government action and continued violence
both from Haitians and from MINUSTAH. Disaster struck again in 2010, when a devastating
earthquake southwest of Port-au-Prince resulted in massive damage and considerable loss
of life. In addition to a death toll of 316,000, more than one million were left homeless. The
quake caused the collapse of homes as well as public buildings, such as hospitals, schools,
and almost all the important national government buildings. The day-to-day operation of the
government was effectively halted for a time. It was estimated that some three million people
were affected by the quake—nearly one-third of the country’s total population. In late
October 2012 Hurricane Sandy wreaked further destruction on Haiti’s ongoing efforts to
recover from the 2010 earthquake and subsequent setbacks.

Epidemics and aid mismanagement have further complicated matters. Dengue and malaria
run rampant, and cholera, introduced by UN peacekeepers from Nepal after the 2010
earthquake, has killed ten thousand and infected nearly one million more. At the same time,
nongovernmental organizations have poorly administered billions of dollars in aid. Some
critics, including Concannon, say aid delivery has suffered from a top-down approach.

Puerto Rico
Puerto Rico is the easternmost and smallest of the Greater Antilles, bordered by the Atlantic
Ocean to the north and the Caribbean Basin to the south. Puerto Rican culture is a blend of
Amerindian Taino, Spanish and African influences with Spanish being the island's first
language. Tourism is an important money-earner and the island attracts millions of visitors
each year. But crippling public debt, poverty and high unemployment have seen many of the
islanders leave for the US mainland.

In 2015, the Puerto Rico government declared bankruptcy, kicking off the biggest bankruptcy
case in America’s history. Public-sector debts total almost $74bn (around 100% of GNP).
The drawn-out fiscal crisis has both imperilled Puerto Rico’s economy and upended the
island’s politics. The government’s fiscal plan sought to balance the budget over three years
through austerity cuts worth about 10% of GNP by 2020, resulting in mass protests.

The misfortune continues with a hurricane in 2018, Hurricane Irma, destroying the country’s
infrastructure and key energy delivery systems have been. The government forecasts output
will shrink by another 11% in the year to June 2018. To escape austerity and the effects of
the hurricane, tens of thousands of Puerto Ricans have escaped to the mainland, leaving
fewer people to pay off the debt. The population is more than 8% smaller than in 2010.

US Relations
Neither a state nor independent, the island has been a US territory since 1898. Everyone
born on the island is an American citizen and holds a US passport. However, residents
cannot vote in US presidential elections, unless they are registered to vote in one of the 50
states.

The latest referendum on statehood, independence, or an associated republic was held on

November 6, 2012. The people of Puerto Rico made history by requesting, for the first time
ever, the conclusion of the island's current territorial status. Almost 78% of registered voters
participated in a plebiscite held to resolve Puerto Rico's status, and a slim but clear majority
(54%) disagreed with Puerto Rico maintaining its present territorial status. Furthermore,
among the possible alternatives, sixty-one percent (61%) of voters chose the statehood
option, while one third of the ballots were submitted blank.

Venezuela
Venezuela is also among the most highly urbanised countries in Latin America. The country
has some of the world's largest proven oil deposits as well as huge quantities of coal, iron
ore, bauxite and gold. Yet many Venezuelans live in poverty, often in shanty towns, some of
which sprawl over the hillsides around the capital, Caracas.

Former president Hugo Chavez, who died in 2013, styled himself a champion of the poor
during his 14 years in office, pouring billions of dollars of Venezuela's oil wealth into social
programmes. The government of his successor, Nicolas Maduro, has had to struggle with
plummeting oil prices amid an economic crisis characterised by shortages of basic goods
and soaring inflation.

Venezuelan Oil Crisis

It is difficult to convey the seriousness of Venezuela’s economic crisis. Its economy shrank
by 10% in 2016 and will be 23% smaller than the 2013 economy by the end of 2017. Due to
the scarcity of food, three quarters of Venezuelans have lost weight with an average of 8.7kg
per person. President Nicolas Maduro has handled the crisis poorly, marching slowly to a
system of dictatorship and increased political turbulence.

Venezuela’s economy is built on oil, its leaders boast the largest proven reserve of crude oil.
90% of Venezuela’s exports is made up of oil and it helps to fund the government budget
while providing the foreign exchange that the country needs to import consumer goods.
Nearly everything of consequence in the economy is imported from abroad. As oil prices
were soaring in the early 2000s, Venezuela found itself awash in money. But this trend of
good fortune halted in 2014 when the boom ended. Maduro, former bus driver and the hand-
picked successor of Chavez, could have allowed the currency to tumble but that would have
caused the price of imports to skyrocket, going against the manifesto of Venezuela’s
egalitarian government and politically unpopular for its new president. Instead, Maduro kept
the wildly overvalued foreign exchange rate and restricted the flow of hard currency to those
looking to import. This move backfired and the flow of imports dried up and prices rose.
Despite attempts at price controls, imports either stopped or moved underground. All moves
that might have alleviated the crisis such as broadening the tax base and cutting public
spending in light of slashes to government revenue would have been politically unpopular,
so Maduro continued his political suicide.

It might be tempting to blame Venezuela’s oil industry for the crisis but that would be to
ignore the smarter policies of other, more long-sighted oil-dependent economies. When
times are good, soaring oil prices places an upwards pressure on the exchange rate, putting
other non-oil industries at a competitive disadvantage. This deepens dependence on oil and
makes falling oil prices more painful. Governments know this and often try to mitigate the
risk, putting significant effort to diversify their economies. Most of them also keep large
reserves of foreign hard currency when times are good in order to pay off import bills later on
(e.g. Saudi Arabia and Norway).
Chavez was lucky to take office during the tail-end of the oil boom, and whatever money
Venezuela earned, he spent on increased public spending on social programmes and
subsidies for food and energy. Venezuelans, for a time, felt the effects in higher living
standards and incomes. However, his successor is having no such luck.

Political Turmoil
Maduro’s popularity since the oil crisis has tumbled significantly. Because he is no longer to
retain power democratically, he has bypassed Chavez’s constitution to appoint a new
constituent assembly by presidential decree. He has justified his heavy-handedness to fight
the “fascism” within his opposition. Each of the 340 municipalities will elect one assembly
member, regardless of size (only state capitals will get two), meaning the opposition-
supporting cities are under-represented. A further 181 members will be chosen from
communal and occupational groups controlled by the regime.

Maduro’s lurch to dictatorship was in part a response to opposition majority in a legislative

election in 2015. Since then, Maduro has ruled by decree and a puppet supreme court. In
almost daily opposition protests, at least 163 were killed by the National Guard or pro-regime
armed gangs. The turmoil has opened cracks in Maduro’s political base. The attorney
general and ex-Chavez loyalist Luisa Ortego is one of Maduro’s harshest critics. Opposition
demanded the removal from office of the current Supreme Court justices, general elections
in 2017, the creation of a humanitarian channel to allow medication to be imported to counter
the severe shortages in Venezuela, and the release of all the political prisoners. However as
the regime continued, it arrested the most prominent leaders of the opposition or banned
them from politics. Others are in exile, leaving the opposition leaderless, divided and
demoralised. Little is left of the hope and fury that animated protests against the regime.

In 2017, the country held regional elections. The two main participants were the Democratic
Unity Roundtable (MUD) opposition coalition and the Great Patriotic Pole (GPP) alliance of
the ruling Bolivarian government. The election resulted in a victory for the ruling GPP, which
won the majority of governorships (18 out of the 23). Allegations regarding election rigging
are well-founded as Smartmatic, a company based in the UK that provides Venezuela’s
voting machines, had stated that results were tampered with. In 2018, Maduro was re-
elected by a second 6-year term as hundreds of thousands of Venezuelan citizens flee
across the borders.

Brazil
Most headlines concerning Brazil focus on its political crisis but the country is also in the
midst of a troubling economic recession. Once expected to be one of the most powerful
economies in the world alongside Russia, India, and China, Brazil has fallen short of many
political and economic speculations. Wracked by corruption investigations that have halted
important economic reforms, Brazil is a supersized country entangled in deep pessimism.

Operation Lava Jato

One of the most comprehensive corruption investigations in Brazilian history, Operation Lava
Jato started in 2009 as a probe into a money-laundering scheme involving a local politician
from Paraná, a state in the south of Brazil. By 2014, the investigation had uncovered a
massive corruption scandal within Brazil’s state oil company, Petrobras, involving politicians
from numerous parties and the country’s biggest construction companies. Politicians
including Brazil’s president from 2003-2010, Lula, have been suspecting in extracting billions
of dollars in bribes from construction firms, which in turn benefitted from inflated public
contracts.

The judge in charge of Operation Lava Jato, Sergio Moro, released over 50 incriminating
tapes involving Lula and his allies. This prompted a judicial war that sought to remove
Moro’s nomination as a Supreme Court judge, questioning whether Moro had the right to
release tapes that implicated the president to the public.

Succeeding Lula is President Dilma Rosseuf who was impeached in 2016 for illegally
manipulating government accounts. Her critics argue that Rosseuf moved funds from the
government budget to plug holes in popular social programmes to boost her chances of re-
election in 2014. During this scandal, her popularity ratings dropped from 76% to 10% with
protesters marching the streets, calling for her impeachment. To serve out the rest of her
term, Michel Temer is currently Brazil’s acting president.

Many Brazilians saw Temer has a clean break from Brazil’s grubby past. However, both his
party, the Brazilian Democratic Movement, and Ms Rosseuf’s are under investigation by
Lava Jato. It remains unclear whether Temer has committed any crimes though tapes have
been released which suggest that Temer has endorsed the payment of hush money to a
convicted politician and has been the recipient of bribes. The allegations have wounded his
presidency during attempts to make economic reforms Brazil desperately needs. Mr Temer
is encouraging recovery by reforming the pension system, which will otherwise crush the
economy with debt. He is trying to liberalise labour laws modelled on those of Benito
Mussolini. Lava Jato’s latest blast will delay the reforms, if not wreck them.

Economy
From 1900 to 1980, Brazil had one of the fastest growing economies in the world. Income
per capita rose faster than in the US; Brazil transformed from a rural agricultural economy
that exported sugar and coffee to an industrialised powerhouse.

Following WW2, Brazil’s federal government planned for economic development, target
industrialization and high rates of economic growth. However, with the abrupt resignation of
President Quadros in 1961, the left-leaning Vice President João Goulart took office. His
support of labor rights, land reform and other populist policies led to his removal by a military
coup in 1964, with the support of the Brazilian elite and U.S. government. The generals
would run the country until 1985. The principal victims of this coup were Brazilian democracy
and a more inclusive model of development though the economy continued to grow rapidly
as poverty plummeted.

However, in the 1980s, a debt crisis swept over Latin America. Brazil, which had long
depended on foreign debt to prolong inward-looking industralization, was hit by hyperinflation
and stagnation. Brazil experienced negative growth and would only permanently surpass the
income per capita of 1980 in 1994.

Large economic reforms such as modest reforms of social security programs, cash transfer
programmes that required children to go to school and important fiscal responsibility laws
combined with a favourable international environment meant that Brazil was once again
booming in the early 2000s. With rising living standards and falling poverty, Brazil once
again entered a phase of considerable optimism. As Brazil paid off its debt with the IMF, the
country began to discover large reserves of oil. International rating agencies elevated the
classification of Brazilian foreign debt from speculative to investment grade, clearing the way
for U.S. pension funds to invest in Brazil. However the 2008 global financial crisis gripped
Brazil which was dependent on the health of the global economy.

A few integral problems can be gleaned from Brazil’s history:

● First, investments in physical and human capital were a central component of the
development success stories in China and the East Asian Tigers. Brazil, in contrast,
has repeatedly fallen short on these fronts. Most recently, Brazil squandered the
opportunity presented by the commodity boom to invest heavily in infrastructure.
● Second, Brazil’s history of runaway inflation was, in part, a reflection of the inability of
successive governments to make difficult policy choices. Similarly, while the
commodity boom lasted, the government seemed able to satisfy all demands – from
raising the minimum wage and subsidizing national business “champions” to
expanding cash transfers to the poor – all while it built stadiums for international
sporting events and cut debt as a share of GDP.
● Finally, Brazil needs deep institutional reforms in order to lay the groundwork for a
successful 21st century. One of the most challenging reforms relates to the country’s
dysfunctional political system. With over two dozen parties in Congress, it is
extremely difficult to govern. This fragmentation creates an environment ripe for the
kinds of corruption scandals witnessed in 2005 – with the bribery scheme in
Congress – and again with Petrobras today. It is this political and institutional
environment that contributes to mismanagement and corruption at all levels.

Argentina
Argentina boasts the third-largest Latin American economy and the highest Human
Development Index in the region. Compared to some of its neighbours, Argentina has a
relatively stable and functional government with promising economic aspirations. However,
during the Latin American debt crisis in the 1980s, it suffered under one of the most
disastrous attempts at neoliberal economic reform overseen by the US.

The Washington Consensus

The Washington Consensus is a set of 10 economic policies considered to be the ‘standard’
reform package promoted for crisis-wracked developing countries by institutions such as the
IMF, US treasury, and World Bank. The prescriptions encompasses policies in such areas
as macroeconomic stabilization, economic opening with respect to both trade and
investment, and the expansion of market forces within the domestic economy. The IMF’s
heavy involvement in the rehabilitation of Latin American economies in the 1980s meant that
many countries were subject to neoliberal economic reforms. Results varied from Chile
being a poster boy of success while Argentina suffered greatly from blanket prescriptions.

Proponents of the Washington Consensus argue that a laissez faire approach to the
economic management, with little to no state intervention, will unleash market forces to
determine outcomes in the most efficient and productive way possible. Argentina’s embrace
of free market reforms came under President Menem in 1991 after chronic difficulties
characterised by poor growth and astronomic economic inflation peaking at 3000%. It
yielded early success, curbing inflation to single digits by 1994 while growth remained
positive and strong from 1991-1998.

However, one of the more controversial policies implemented diverged greatly from the
Washington Consensus. The Argentinian peso was pegged to the US dollar on a one-to-one
basis, undermining the idea of a competitive exchange rate. However, the country’s urgent
desire to control inflation prevented it from adopting a floating exchange rate. Tying the peso
to the overvalued dollar harmed exports while boosting imports, leading to a large balance of
payments deficit, which was continually financed with external credit. The Asian financial
crisis of 1997 exposed the weaknesses in the Argentinian economy as investor confidence
in emerging economies took a hit. Neighbouring Brazil devalued its currency during this
crucial period which had profound detrimental impacts on Argentina which could not
compete on the same terms. Exports and foreign direct investment dried up, triggering a
large-scale economic, social and political crisis.

One of the greatest criticisms of the Washington Consensus is its potential to exacerbate
poverty and income inequality. It advises a broadening of the tax base while reducing
marginal rates, causing many countries to rely less on income tax for government revenue
and depend on regressive taxes like VAT. Since poorer sections of society spend larger
proportions of their income on consumer goods, they are left worse off than their more
affluent counterparts. The Washington Consensus also advises reducing the role of public
expenditure, arguing that where the government retracts, the private sector will fill the void
leading to a leaner and more efficient operation. In Argentina, the privatization of several
utility firms led to the broad improvement of public services but coverage proportionately
declined as the poorest in the society were eventually priced out of the market. Unable to
provide adequate social safety nets due to the restrictions, Argentina faced widening income
inequality during the 1990s. Overall, these policies lowered inflation and induced an export
boom but failed to boost domestic investment and remove the balance-of-payments
constraining the region's long-term path to economic expansion.