Violence and Protest in Latin America: Why the People are Pushing Back After a ‘Lost Decade’

Anti-government protesters march during a demonstration in Caracas March 12, 2014.REUTERS/Carlos Garcia Rawlins

In recent years, Latin America has erupted into a state of civil unrest, with conflict and protests reaching a boiling point in Venezuela, Chile, Bolivia, Nicaragua, Ecuador, and other countries across Central and South America. While on the surface, these conflicts appear to have each arisen in isolation, if we consider the history of Latin America, we can identify shared experiences of poverty and inequality worsened by World Bank loans in the 1980s and 1990s. 

The 1980s became known as the ‘lost decade’ in Latin America [1]; poverty and inequality grew as wages plummeted for workers [2], while previously public services were privatized, and became increasingly unaffordable [3, 4, 5]. Plummeting global oil prices crippled economies built heavily on oil exports [6], and the World Bank and the International Monetary Fund (IMF) stepped in to provide loans, and prevent countries from defaulting on their debt [7]. However, these loans came at a price. As a condition of the loans, countries like Ecuador, Bolivia, Nicaragua, and Venezuela were mandated to participate in free trade, decrease worker wages, and privatize public services, like health care [1]. The idea was to streamline government spending and cut back on ‘unnecessary’ costs, while boosting economies by making them more competitive in global markets [8]. Unfortunately, opening up markets drove down wages and deteriorated working conditions [9], while privatization of previously public services made access to health care exceedingly expensive [10]. It is no surprise that tensions rose as life became increasingly unaffordable for the poor in Latin America, while the rich accumulated wealth.  

Unrest in Chile has reawakened in the past months, with more than one million people taking to the streets of Santiago in response to announcements of the privatization of education, health care, and pensions [11]. Years before the World Bank and the IMF forced these reforms on other countries in Latin America, a group of Chilean economists tested a neoliberal economic model in Chile starting in the mid 1970s [9]. Neoliberalism is a way of re-ordering society around market-based assumptions that competition is the most effective mechanism to distribute resources. This results in policies that lower taxes on businesses, reduces restrictions on the global flow of capital, and transfers state assets to the hands of the private sector [12]. In Chile, this translated into sweeping privatizations as the government sold stocks in more than 160 corporations, 16 banks, and over 3,600 agro-industrial plants, mines, and real estate [13]. By the late 1970s, the sale of these state assets funnelled quick money into the Chilean economy, which grew at a moderate rate. However, the sale of these profitable government assets meant the government no longer benefited from the profit generated by these assets, which were sold at cheap rates to transnational corporations [9]. In short, Chile’s moderate economic growth was built on a bubble, which burst in 1982, plummeting the Chilean economy [9]. From 1970 to 1990, the poverty rate doubled from 17 percent to 35 percent [9], a direct result of the economic model of privatization and deregulation. Despite now being largely recognized as a failure, the economic model tested in Chile has been implemented time and time again across Latin America, and the people are fed up. 

Following the misguided accolades that Chile received for the initial moderate economic growth, in 1985, Bolivia accepted a loan from the World Bank and the IMF, which was conditional on the implementation of a bundle of policies strikingly similar to the policies piloted in Chile. Based on neoliberal assumptions about markets being the most efficient and fair way of distributing resources, the policies reduced state intervention and investment in health and social programs, and favoured privatization and deregulation [14]. Within a short period of time, history began to repeat itself. Bolivia enjoyed moderate economic growth, just like Chile, but this initial growth was quickly followed by massive cuts to public spending and social services, which pushed people further into poverty and increased inequality across Bolivia [15]. Tensions boiled over in Bolivia in early 2000 after the government privatized water supplies, and the price of water tripled in a matter of weeks. Protestors took to the streets, but police soon began using tear gas to disband protest groups, injuring 175 demonstrators, and causing two to go permanently blind [16]. The people were fed up with privatization being forced upon them, and they responded in the polls in 2006, electing Bolivia’s first indigenous president who quickly re-invested in public health care and education, and nationalized the natural gas sector [16]. Once again, neoliberal policies of privatization and state deregulation led Bolivians to push back, but not before significant damage had already been done. The harmful policies forced upon Bolivians by the World Bank and IMF loans exacerbated poverty in the country, and halted any previous economic growth and development the country had enjoyed. 

Chile and Bolivia are just two examples of the lasting devastating effects of neoliberal policies of privatization, and cuts to funding for health and social services, a model which the World Bank and IMF have rolled out through structural adjustment programs across Latin America. Similar neoliberal policies can be seen in Ecuador, where structural adjustment programs and cuts to government subsidies resulted in fuel prices that skyrocketed, leading to civil unrest [17], or Nicaragua, where workers’ wages were slashed in order to be more competitive in the global market [18]. These structural adjustment programs imposed by the World Bank and the IMF are not isolated to Latin America; similar trends have swept across Europe. As violence and protests continue to break out in Latin America, we must consider the legacies of damaging policies imposed by the World Bank and the IMF, and our complacency in these policies that led to Latin America’s ‘lost decade’. 

References

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[9] Rosenfeld, S. (1994). The myth of the Chilean miracle. Multinational monitor, 15(7), 30-32. 

[10] Ewig, C., & Palmucci, G. (2012). Inequality and the politics of social policy implementation: Gender, age and Chile’s 2004 health reforms. World Development, 40(12), 2490–2504.

[11] Finkelstein, R. (October 28, 2019). Debt and neoliberalism: The global roots of Chile’s crisis. Ricochet. Retrieved from https://ricochet.media/en/2804/debt-and-neoliberalism-the-global-roots-of-chiles-crisis

[12] Harvey, D. (2007). A brief history of neoliberalism. Oxford University Press, USA.

[13] Collins, J., & Lear, J. (1991). Pinochet’s giveaway: Chile’s privatization experience. Multinational Monitor, 12(5). 

[14] Bastidas, R.M.C. (2017). Similar critiques on neoliberalism and different post-neoliberal responses in Bolivia and Ecuador. Poverty & Public Policy, 9(1), 103-117. 

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[16] Shultz, J. (2005). The politics of water in Bolivia. Retrieved from https://www.thenation.com/article/politics-water-bolivia/

[17] Cabrera, J.M.L., & Krauss, C. (2019). Deal struck in Ecuador to cancel austerity package and end protests. The New York Times. Retrieved from https://www.nytimes.com/2019/10/13/world/americas/ecuador-protests-lenin-moreno.html

[18] Pisani, M. (2003). The negative impact of structural adjustment on sextoral earnings in Nicaragua. Review of Radical Political Economies, 35(2), 107-125.