Towards a New Feudalism?
[A despot] does not ask [his subjects] to assist him in governing the state; it is enough that they do not aspire to govern it themselves. He stigmatizes as turbulent and unruly spirits those who would combine their exertions to promote the prosperity of the community; and, perverting the natural meaning of words, he applauds as good citizens those who have no sympathy for any but themselves.
- Alexis de Toqueville
The totalitarian dictator would soon have to choose between disregard of ordinary morals and failure. It is for this reason that the unscrupulous and uninhibited are likely to be more successful in a society tending toward totalitarianism.
- Friedrich Hayek
The loss of sovereignty
Canada's Department of Foreign Affairs and International Trade (DFAIT) defends Canada's trade policy agenda against claims that such agreements cause real power to accrue to unaccountable organizations. "The reason [a country] chooses to [sign a treaty or join an international organization] is that the expected benefits outweigh the loss of sovereignty experienced. If the expectation is not realized, a country can terminate its membership" (Bill Graham, Canada at the WTO: Towards a Millennium Agenda, A Citizen's Guide to the World Trade Organization and to the Committee's June 1999 Report, The Standing Committee on Foreign Affairs and International Trade, June 1999, p. 7). This is one of the very few times that a government publication will even use the "S" word (sovereignty), so it is worth examining in a little more detail. Once a country has joined a trade agreement, do things really get better? Based on the evidence, discussed over the last four newsletters, the answer to this question depends to a large extend on whether you're a corporate investor or a poor farmer. Further, once countries are locked into trade agreements, it becomes exceedingly difficult to opt out of them, since doing so will quickly result in a stoppage of investment flows.
The Canadian government maintains that trade can be made fair through "corporate social responsibility" ("Manley Announces Projects to Support Democracy and Human Rights in the Americas" - DFAIT press release #73, June 4, 2001), but there is no such thing as "corporate social responsibility." Being essentially teleological, corporations do not and cannot care about anything other than pursuing their purpose, which is to increase market share and return on investment. Promoting "corporate social responsibility" simply reinforces the legitimacy of corporations as legal persons and prominent members of the international community. Pasting social responsibility onto the back of a trade regime that is inherently corporatist and anti-democratic is nothing more than a veneer. In the words of DFAIT, "trade policy has become domestic policy" (Canada at the WTO, p. 7), and the ideal domestic policy is one that easily accommodates transnational corporate interests.
US imperialism
For the last century, and particularly since the end of WWII, the US has undertaken a massive, ongoing project to protect its position as an economic and military superpower. George Kennan, a senior planner at the US State Department, explained this project in a 1948 policy study that has since been declassified:
we have about 50 percent of the world's wealth, but only 6.3 percent of its population...In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity...To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives...We should cease to talk about vague and...unreal objectives such as human rights, the raising of living standards, and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better (Noam Chomsky, What Uncle Sam Really Wants, Odonian Press, Tucson AZ, 1995, pp. 9-10).
The "pattern of relationships" that the US has since devised has been driven by the need to maintain regional governments that foster America's interests. Ways of doing this have included direct military intervention, paramilitary influence by training and financing local armies that support US interests, spending money to support pro-US political parties, and influencing organizations like the World Bank, the International Monetary Fund, the Inter-American Development Bank and the WTO such that they reflect international trade and investment rules that protect US business interests.
Part of the reason that trade liberalization advocates - led by the US and its corporate sponsors - keep pushing for the WTO net to be cast wider and wider is that a huge number of countries have already signed on, desperate not to be left behind in the new globalized trade regime. The argument has it, now, that the only thing worse than being exploited by a transnational corporation is not being exploited by a transnational corporation. This, itself, is tied intimately to the high debt levels of most poor countries. Between 1976 and 1981, Latin America borrowed a total of $272.9 billion abroad. Of that, $170.5 billion was paid right back in service on pre-existing debts, $22.9 billion remained with the banks as reserves (!), and $56.6 billion left Latin America as capital flight. This means that $22.9 billion out of $272.9 billion actually entered the economy (Sue Brantford & Bernardo Kucinski, The Debt Squads, Zed Books, Ltd., New Jersey, 1988, p. xiv). This infusion of credit failed to produce wealth in the third world but still carried enormous interest obligations, leading to actual stagnation rather than the promised prosperity. Then, the high interest rates of the early 1980s - hitting as high as 21 percent in 1981 - crippled the developing countries under a crushing debt.
One result of this that would not be surprising to anyone outside the international financial organizations is that by the early 1980s, "the nine largest US banks had lent three times the amount they held in equity to developing countries, which had become incapable of paying back the interest on the loans" (Robert A. Isaak, International Political Economy, Prentice-Hall, Inc., Englewood Cliffs NJ, 1991, p. 12). Desperate to provide poor countries with hard currency to service debts and protect the rich banks, the US, through international regulatory bodies, forced those countries to jump through some pretty tough hoops. This included asking for emergency funds through the International Monetary Fund (IMF) structural adjustment plans, which are predicated on the need to liberalize investment flows, privatize state enterprises (including basic utilities, education, and health care), and reduce wage "rigidities" - that is, minimum wage laws and laws permitting unionization (Mark R. Stone, "Large-Scale Post-Crisis Corporate Sector Restructuring," IMF Policy Discussion Paper, July 2000, p. 5). The government would still have a role: as a financier of last resort for Asset Management Corporations to buy bad loans and act as extralegal bankruptcy agents. After the restructuring is complete, then the government has only to get out of the way (Stone, p. 5). Specifically, the structural adjustment plans call for:
- cutting or constraining wages to reduce inflation and make exports more competitive
- reducing government spending on education, health, and welfare in order to control inflation and reduce demand for capital inflows for non-market activities
- liberalizing trade and investment so foreign lenders can put money into export industries to benefit balance of payments
- opening up domestic markets to foreign competition to increase efficiency through "market discipline"
- devaluing local currency to make exports more competitive
- privatizing state enterprises and deregulate the economy to stop "mis-allocation of resources" away from export industries
(Walden Bello with Shea Cunningham and Bill Rau, Dark Victory, Pluto Press, London, in assoc. with the Institute for Food and Development Policy (Food First), Oakland, 1994, p. 27)
DFAIT explains the same principles with an upbeat twist, quoting an APEC study: "Trade liberalization and integration of markets dynamically enhance competition, promote a more rational international specialization of production, and enhance the international transmission of innovation and knowledge. Expanded markets can also mean expanded returns to, and hence incentives for, innovation" (Rhoda Caldwell and Jane Barrett, Canada's Economic Interests in the FTAA, Trade and Economic Policy Commentary No. 22, Department of Foreign Affairs and International Trade, July 1988, p. 5). Of course, as always, intellectual property rights agreements are specifically designed to prevent the "transmission of innovation and knowledge," which leaves us with "international specialization of production," what used to be called comparative advantage. In comparative advantage theory, each country picks a specialty and imports the rest. Once again, if you're a large transnational corporation that sells a particular product or service, this is an opportunity both to locate the various aspects of production wherever you can best exploit local circumstances and to build market share in several economies.
Quite simply, it is impossible for a nation to industrialize in any meaningful sense when its entire economy is directed towards producing one or two products for export, as the IMF/World Bank model espouses. Foreign investors are interested in only two things: the direct purchase of domestic companies (usually state enterprises) at bargain prices, and the location of production facilities to take advantage of the low wages and weak regulation that are an explicit consequence of the structural adjustment plans. In fact, many poor countries have institutionalized this structure through export processing zones (EPZs), which are special locations more or less cut off from the rest of the domestic economy and which exist for the sole purpose of producing goods for export. By 1986, 200 transnationals had operations in the EPZs of more than 20 countries (Dennis Shoesmith, Export Processing Zones in Five Countries: The Economic and Human Consequences, Asia Partnership for Human Development, Hong Kong, 1986, p. 23). These corporations enjoy free import of raw materials and components (which means they won't be sourcing those components locally), cheap or free infrastructure including land, buildings, and utilities, access to a large pool of unemployed workers with no miminum wage laws and little or no unionization, and superior tax and customs rates (Shoesmith, p. 24). All of these measures more or less ensure that there will be no multiplier effect on the rest of the local economy.
Indeed, these liberalization programs usually result in the opposite of their intended effect; that is, they result in de-industrialization. UNICEF economist Eva Jesparson studied 24 countries that had undergone IMF structural adjustment, and found that caputal accumulation slowed in 20, the share of manufacturing in GNP declined in 18, export volumes declined in 13, and of the 11 whose exports increased, the impact on balance of payment was almost always negligible (Dark Victory p. 32-33).
As a result of the relative powerlessness of poor countries against liberalization, the US is in an excellent position to strong-arm its corporate agenda onto the table of what often amounts to a captive audience. As developing countries are tied into the multilateral trading regime, the US leverages their dependence on trade to push its agenda onto the table. Recall that the US actually threatened to walk away from the Uruguay Round talks unless it managed to secure a GATS. DFAIT tiptoes around US pressure by arguing that "up to recently, services were not even seen as being tradable. Through the gradual evolution of how services are envisioned, it became internationally accepted to include them into the regime for international trade" (Chantal Blouin, Trade in Telecommunications Services: The Result of the WTO Agreement on Basic Telecommunications, Department of Foreign Affairs and International Trade, Reference Document No. 10, April 1999, p. 3). Not surprisingly, the "evolution" of service provision is built around "commercial presence" - that is, transnational corporations operating in multiple jurisdictions.
The TRIPs Agreement is another excellent example of the US moving its corporate policy agenda into the WTO. While the World Intellectual Property Organization (WIPO) already supported the basic terms of the TRIPs Agreement, the US wanted the rules to be built into a system that was both binding and enforceable. However, since the enforcement mechanisms of the WTO are based on an aggrieved country's ability to fight back with countermeasures, the countries with the most capacity to act unilaterally tend also to be the most resistant to retaliation.
This plays into the other side of continued support for multilateral trade bodies like the WTO. There is a perception among poor countries that these forums are the only way to curb unilateral actions by the US, which has historically used protectionism and trade sanctions as part of an overall foreign policy. An obvious recent example of this is the notorious Helms-Burton Act, through which the US has launched trade sanctions not only against Cuba but also against countries that trade with Cuba. (Cuba is the tiny, powerless nation that the US nevertheless persists in calling a "threat to national security.") By tying the US down to an international set of rules, small countries hope to be able to prevent exactly this sort of international bullying. However, as we've seen, the US is generally able to ignore the retaliatory actions of countries with small economies.
The defense spending loophole
Most damningly, the US has engineered a fail-safe system to eliminate state industrial policies in other countries while maintaining its own industrial policy. This is accomplished through exempting defense spending from the WTO agreements. As Rodrigue Tremblay explains, "If explicit micro-based industrial policies are bound to be less relied upon in the future, this will not preclude the reliance on implicit industrial strategies, which can be disguised under military and government procurements," (Rodrigue Tremblay, "Macro-Based International Competitiveness with Free Trade," A.R. Riggs & Tom Velk, Eds., Beyond NAFTA The Fraser Institute, Vancouver, 1993, p. 144). The American economy has relied on defense spending in a variety of forms to support its domestic industry for decades. Talking about US military spending, economist Richard B. DuBoff notes that the US "has been getting by with more than a little help from its friends - in the public sector. And here, military spending continues to be the only virtually unchallenged public program to prevent aggregate demand from collapsing as it did in 1929" (Richard B. DuBoff, Accumulation and Power, M. E. Sharpe, Inc., New York, 1989, p. 116). DuBoff notes that while the military share of GNP has averaged 7.5 percent since 1947, this underestimates true military spending. He notes a surprising example in the US Department of Energy, which "has become heavily militarized, with two-thirds of its 1987 budget of $12.5 billion formally allocated to nuclear weapons production, and part of the other third to civilian research actually furthering the Strategic Defense Initiative ('star wars') program. One estimate for 1980 is that while official military spending accounted for 5.2 percent of GNP, 9.5 percent of GNP was really tied up with military-generated or derived programs" (DuBoff, pp. 116-117). All of this government money for military industry has been a tremendous boon to the corporations that receive military contracts, whose return on equity was double that of the rest of the manufacturing sector in the 1980s.
Even notwithstanding that US defense policy ought to be prohibited under the principles of the WTO as thinly guised protectionism, the amount of criminal fraud - even by US defense policy standards - has been tremendous. "In 1985 the Pentagon's inspector general announced that 45 of the nation's 100 largest military contractors were under criminal investigation" (DuBoff, p. 118). It makes you wonder what the other 55 corporations were doing wrong. And please don't think that military spending in the US declined either after the fall of the USSR or after the Reagan administration. Mark Zepezauer and Arthur Naiman point out that "According to a US Senate hearing, $13 billion the Pentagon handed out to weapons contractors between 1985 and 1995 was simply 'lost.' Another $15 billion remains unaccounted for because of 'financial management troubles'" (Mark Zepezauer & Arthur Naiman, Take the Rich off Welfare, Odonian Press, Tucson AZ, 1996, p. 15). Furthermore, "According to the Bulletin of the Atomic Scientists, every single one of the top ten weapons contractors was convicted of or admitted to defrauding the government between 1980 and 1992...In another study, the Project on Government Oversight (PGO) searched public records from October 1989 to February 1994 and found - in just that 4 1/3 year period - 85 instances of fraud, waste and abuse in weapons contracting" (Zepezauer & Naiman, pp. 18-19). All of this represents a tremendous transfer of wealth from the public into the hands of large corporations that appear to be unaccountable to any entity, even the rule of law.
The US and Latin America
The US has long seen Latin America as a colonial hinterland to exploit, and has spent a century meddling in Central American affairs in order to maintain conditions that are conducive to US interests. Further, countries that have attempted to improve the basic standard of living of their citizens through state intervention have come under vicious attack. The US State department had this to say about Guatemala in 1954, the year that began Guatemala's devastating 40 year civil war: "Guatemala has become an increasing threat to the stability of Honduras and El Salvador. Its agrarian reform is a powerful propaganda weapon; its broad social program of aiding the workers and peasants in a victorious struggle against the upper classes and large foreign enterprises and has a strong appeal to the populations of Central American neighbors where similar conditions prevail" (Chomsky, What Uncle Sam Really Wants, p. 25). This is as compelling as any evidence that the US is more concerned about the threat of a good example than it is about basic human rights. Harold Laski argued that "there is a point...up to which the men of property [sic] are willing to buy off the opponents of capitalism by measures of social reform. But when that point is reached, there is always the gravest danger that men of property, if they have to make their choice between their possessions and democratic institutions, will prefer their possessions and will destroy democratic institutions (Harold J. Laski, Liberty in the Modern State, Augustus M. Kelley, Clifton, NJ, 1972 p. 15). That point is reached quickly in Latin America, and the US rushes to destroy those democratic institutions wherever they threaten corporate power.
In order to maintain political control of Latin America, the US government stepped up its financial and military support of "friendly" governments in the early 1980s, leading to extreme levels of violence and repression of basic civil rights. As Walden Bello explains, "Aid policy became the key weapon in the Reagan administration's disciplining of the South. For most Reaganites, there appeared to be a consensus that aid was mainly a political instrument, one that should be deployed primarily to bolster the position of the US" (Bello, p. 25). Noam Chomsky argues this further, pointing out "a study by Lars Shoultz, the leading academic specialist on human rights [in Latin America, which] shows that US aid has tended to flow disproportionately to Latin American governments which torture their citizens" (Chomsky, p. 29).
Nicaragua: the threat of a good example
Nicaragua deserves some attention, because it most clearly highlights the heavy hand of US foreign policy in Latin America. Not surprisingly in this context, when the corrupt Somoza government in Nicaragua was overthrown by the Sandinista revolutionary group, US aid to the country, which had been relatively high, was cut off immediately in what soon-to-be United Nations Ambassador Jeane Kirkpatrick described as "the replacement of moderate autocrats friendly to American interests with less friendly autocrats of extremist persuasion" (Digital National Security Archive. This is in spite of the fact that the Sandinistas immediately set about improving the basic living conditions of Nicaraguan citizens.
Throughout much of this century, Nicaragua was controlled by the Somoza dictatorship, which was installed by the US and catered shamelessly to the interests of the rich at the expense of most of Nicaraguans. Land ownership was extremely concentrated; successive waves of land seizures, evictions, repossessions for unpaid debts, state-auctioned communal lands and church lands, etc., left over 50 percent of the land in the hands of only two percent of the landowners, while the poorest 70 percent of landowners owned only two percent of the land. Of course, most of the land held by the minority was used for export. 22 times more land went to export or "cash" crops than to domestic food crops. When peasants were forced off their land as it was auctioned off to wealthy coffee and cotton producers, a huge pool of unemployed workers was freed up such that wages plummeted.
Of the country's 2.5 million citizens, fully 400,000 were seasonal labourers who worked for three two four months of the year for less than subsistence wages on the big farms. Their work exposed them to toxic pesticides; women who worked the big farms often had 500 times the level of DDT in their breast milk that the World Health Organization had deemed safe. Since most campesinos, or small rural landowners, couldn't produce papers to verify their ownership of the land, they were evicted or their lands were seized by the Somoza dictatorship to be auctioned off to investors. Unions were, of course, forbidden, and church groups that supported human rights were branded as subversives. The state terrorized its citizens, and Somoza's National Guard killed subversives and dissidents more or less with impunity. (Joseph Collins with Frances Moore Lappe, Nick Allen and Paul Rice, Nicaragua: What Difference Could A Revolution Make, Institute for Food and Development Policy (Food First), San Fransisco CA, 1985, pp. 14-16)
Named after August Cesar Sandino, who fought the US Marine-backed coup of the first Somoza dictatorship and was assassinated in 1933, the Sandinista Front for National Liberation grew in force through the participation of citizen groups, labour, and church groups, until the revolution of 1979, during which Somoza and his associates (the 'Somocistas') fled to Florida. The lands owned by the Somocistas were nationalized, but these amounted to only 20 percent of Nicaragua's farmland. The rest of the properties were left in the hands of their owners. Even though this was a politically unpopular move with the grassroots majority that had propelled the Sandinistas to victory, the fledgling government had several real concerns: 1) they were afraid of capital and infrastructure flight, 2) they could barely manage the land they had nationalized, 3) they feared that too severe actions would antagonize the already hostile US, which had immediately cut all aid to Nicaragua after the coup, and 4) they didn't want to disrupt exporting farms that already worked eficiently and helped the country's balance of payments.
The Sandinistas encouraged campesinos to pool their resources in voluntary farming co-operatives by offering low interest loans, while the confiscated lands were run as state farms, offering full-time employment at newly-raised minimum wages. While inflation eliminated the wage gains, the "social gains" of improved health and education services, access to food, and reduced working hours raised real living standards. The Sandinistas had considered carving up the state farms and giving them to peasants, but the huge problems of how to distribute the land, combinded with the fact that the farms were already set up for large-scale production, made this impractical in the short term. Another benefit of the state farms was that they dramatically lowered unemployment, giving workers more leverage to demand living wages in the private sector. Unions were encouraged to facilitate this trend. The National Bank sold US dollars to farmers at the rate of 10 Cordobas to one dollar, rather than the 25 to 1 they would have to pay in private banks, making it cheaper to buy imports. The Sandinistas also worked to improve social and health conditions. A massive literacy program reduced illiteracy from 50 percent to 13 percent, polio was eliminated, and infant mortality was reduced by two thirds (www.changeforchildren.com).
In spite of the changes that the Sandinistas undertook, conditions were still made favourable to the rich, who could enjoy generous loans at low interest rates, export price floors established to guarantee income annually, low taxes on income and profits, and business representation on the Council of State. The only condition of private ownership was that owners would use the land to benefit society as well as themselves. Profits for the rich landowners were lower but still quite astonishing by national standards. The government resisted demands by peasants that additional lands be confiscated in its attempts to appease the fears of the rich. Nevertheless the Nicaraguan rich staunchly resisted reform, and capital flight ate into the export dollars the Sandinistas needed to service their debts and raise living standards. Many rich landowners accepted low-interest government loans and then sold equipment to Honduras and funnelled the money to bank accounts in Miami. Many also practiced transfer pricing (paying inflated prices for exports so that their money could be stored offshore) for when they themselves left. Many of these farmers left their lands unattended, resulting in blighted, wasted harvests and plummeting exports. In one particular region, the coffee harvest for 1980-1981 was 3/4 lower than it had been the previous year. This widespread capital strike was strangling the economy; the Sandinistas couldn't get the hard currency they needed to finance reform or service debts, and the attention drawn by the rich farmers' fears was heating up international pressure.
US Bullying
Once Ronald Reagan was elected into office, the US reacted in earnest to the new government. Since popular support in the US for open conflict was low after the Vietnam war, the Reagan administration turned to subtler means of realizing their goal of toppling the Sandinistas. In a shadow of the anti-Cuba Helms-Burton Act to come, trade embargoes against Nicaragua were followed by pressure on US satellites to follow suit. Soon, Nicaragua found itself without trading partners and had to turn to the USSR and Cuba for foreign trade. As the Digital National Security Archives note,
First bilateral aid and then all economic trade was terminated. In addition, U.S. officials orchestrated an "invisible blockade" of multilateral bank credits to Nicaragua. Some loans from the World Bank or the Inter-American Development Bank (IDB) were simply vetoed; where a U.S. veto was not possible, Administration officials quietly moved "to persuade the Managements of the [multilateral development banks] not to bring these loans forward," according to internal Treasury Department memoranda included in this collection. "We did help effect [Treasury Department] interventions in the IDB and World Bank to not go ahead and lend to Nicaragua," stated one former NSC official. After September 1983, Nicaragua received no further loans from the World Bank or the IDB (Digital National Security Archive)
The US State Department runs off the usual laundry list of Sandinista horrors. "The FSLN established an authoritarian dictatorship soon after taking power. U.S.-Nicaraguan relations deteriorated rapidly as the regime nationalized many private industries, confiscated private property, supported Central American guerrilla movements, and maintained links to international terrorists. The United States suspended aid to Nicaragua in 1981. The Reagan Administration provided assistance to the Nicaraguan Resistance and in 1985 imposed an embargo on U.S.-Nicaraguan trade" (www.state.gov). The "assistance to the Nicaraguan Resistance" is an interesting turn of phrase. There was no Nicaraguan Resistance before the CIA gathered an army of old National Guardsmen and dissidents, armed them, trained them, financed them, and helped orchestrate their terrorism. As for the "support" of Central American guerilla movements, there has never been any reliable evidence of Sandinista support for other guerilla movements; indeed, it would have been a tremendous accomplishment had the Sandinistas managed to sneak materials past the huge US military and paramilitary presence around Nicaragua in the 1980s! Furthermore, even if the Sandinistas had supported other groups in the area, it is hard to see how this would be less defensible from the unprecedented meddling of the US itself.
Thus branded dictators, the Sandinistas were presented in America as a dire threat to US national security. In 1981, as declassified government documents now reveal, Ronald Reagan secretly authorized the CIA to undertake paramilitary operations in Nicaragua to undermine the Sandinista government (www.gwu.edu. These paramilitary operations surrounded sponsoring and financing a "Contra" or counterrevolutionary army of ex-soldiers from Somoza's National Guard, the sole purpose of which was to destabilize Nicaragua's economy, undermine the social progress of the Sandinista movement and weaken public support for the Sandinistas. US Ambassador Anthony Quainton explains some of the results of the Contra war. "While direct military costs have risen, the country has also paid an increasing price in damage done to crops, productive equipment and infrastructure. By devoting the time and effort of several thousand active young men to the military struggle, Nicaragua has foregone the productive benefit of their work, while land has remained idle simply because the ongoing military struggle has made it impossible to work in some areas. The economic costs are real" (Digital National Security Archive. The Contras deliberately targeted the tangible results of the Sandinista great society programs: hospitals, schools, bridges, and co-operative farms.
Will the real election please stand up?
The Sandinistas were open about admitting their mistakes and the press were free to publish critical articles about the government's progress. Citizens were quite free to voice their opinions; indeed, the Sandinistas turned to the people for guidance in their new and frustrating roles as administrators. Throughout the 1980s, the main opposition paper, La Prensa, was financed by the CIA, and it wasn't until Nicaragua was deep in the throes of a US-sponsored civil war that the government placed some constraints on La Prensa's editorial freedom. The Latin American Studies Association (LASA) observed the November 1984 Nicaraguan elections, and noted that the Sandinista program "implies redistribution of access to wealth and public services. The state will use its power to guarantee fulfillment of the basic needs of the majority population," and that the Sandinistas involved "very large numbers of people in the decisions that affect their lives" (Noam Chomsky & Edward Herman, Manufacturing Consent, Random House of Canada, Ltd., Toronto, 1988, p. 92). LASA further noted that opposition parties were allowed to organize, communicate publicly, and hold rallies and meetings without interruption and harassment from the Sandinistas (Manufacturing Consent pp. 93-100). Most bluntly, LASA stated that "No major political tendency in Nicaragua was denied access to the electoral process in 1984" (Manufacturing Consent, p. 127). Clearly, the Sandinistas were not the oppressive Communist dictators that US propaganda painted them out to be, but the risk of self-sufficiency and a successful mixed economy - the birthright of every industrialized country, after all - proved too be too radical for the US to allow in a disobedient client state.
Nevertheless, The US refused to acknowledge the reports of the independent election observers, and instead painted the Nicaraguan election as invalid, apparently because the Sandanistas won a clear majority in an open and fair election. A senior US official defended the American policy of using different measures to judge the "fairness" of the election in Nicaragua as those that were used to judge the elections also held in El Salvador, where US-sponsored state terrorism had left tens of thousands of Salvadoran citizens murdered. "The United States is not obliged to apply the same standard of judgment to a country [Nicaragua] whose government is avowedly hostile to the US as for a country like El Salvador, where it is not...[The Sandinistas] could bring about a situation in Central America which could pose a thread to US security. That allows us to change our yardstick" (Manufacturing Consent, p. 91).
Finally, in 1990, after a decade of terror, propaganda, and isolation, the Sandinistas lost power in an election that was heavily influenced by the US. The US still insists that there were no valid elections in Nicaragua before the election that was successfully manipulated into the preferred American outcome. The CIA explains the election thus: "Free elections in 1990 and again in 1996 saw the Sandinistas defeated. The country has slowly rebuilt its economy during the 1990s" (www.cia.gov. Note that the CIA report doesn't even mention the 1984 election, which was widely regarded by every international agency that was present to be free and open. Of course, the "free" 1990 elections in Nicaragua would not be possible without $13 million in CIA political spending inside Nicaragua between 1984 and 1987, another $10 million between 1987 and 1988 for a political opposition fund account, and yet another $5 million shot in the arm in 1989 for the main pro-US opposition party (www.brianwillson.com).
As an interesting aside, it was Violetta Chamorro, the editor of the CIA-funded anti-Sandinista paper La Prensa, who won the 1990 election that defeated the Sandinistas. It seems that a decade of the US telling Nicaraguans through a variety of means that a progressive government would simply not be tolerated finally sank in with Nicaraguan voters, and they elected the pro-US party that promised to liberalize trade flows, privatize state institutions and de-regulate the economy, in what is turning into a dreary litany of neoliberalism. The Arnoldo Alemán administration elected in 1996 moved quickly to request an IMF structural adjustment package, and low wage, duty free maquiladoras are multiplying.
Meanwhile, the US has always been quite friendly to other Central American governments that were more amenable to US interests. That is, the US was happy to ignore or, more often, support massive state terrorism in countries that allowed US interests to flourish. As Ludwig Von Mises from the US Foundation for Economic Education explains, "Many of the richest deposits of various mineral substances are located in areas whose inhabitants are too ignorant, too inert, or too dull to take advantage of the riches nature has bestowed upon them" (Ludwig Von Mises, "A National Policy for Peace," Joan Kennedy Taylor, Ed., Free Trade: The Necessary Foundation for Peace The Foundation for Economic Education, Inc., New York, 1986. Thus is the US justified in exploiting those who are "too ignorant, too inert, or too dull" to help themselves. And against the possibility that those people are prepared to help themselves, the US is ready with a hammer to smash over their heads. If you think I'm writing rhetorically, here's a quote from one of capitalism's Latin American proponents: "The superior capitalist class in our country is naturally the strongest and its destiny, without question, is to govern and regulate the inferior classes. And what is more, it has a duty to exploit, dispose of, conquer and even exterminate elements of these inferior classes when the benefits of capitalism require such" (Allan Engler, The Apostles of Greed Fernwood Publishing, Halifax, 1995, pp. 86-87). This Death Squad leader from El Salvador was trained by and outfitted through US foreign aid.
Regards,
Ryan McGreal
June 11, 2001
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Comments
From: Judy Sturtevant
Date: Fri, 1 Jun 2001
Subject: Re: Newsletter #5
You do a great job! I enjoy reading your work. You are performing an important service.
Judy Sturtevant
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