October 8, 2021

Review of Latin American Extractivism Dependency, Resource Nationalism, and Resistance in Broad Perspective, from our LAP in the Classroom series

 from our LAP Classroom Series!


Latin American Extractivism
Dependency, Resource Nationalism, and Resistance in Broad Perspective

Edited by Steve Ellner

A review by Angelo Rivero Santos

NACLA


On September 26, 2000, during the inauguration of the second summit of the Organization of Petroleum Exporting Countries (OPEP), President Hugo Chávez urged its members to recognize that the “worst environmental catastrophe facing the world is human poverty.” He called for unity through the promotion of a “social and egalitarian model of economic development to eradicate poverty” in member countries. Until his untimely death on March 5, 2013, petroleum, and the profits it produced during the commodities boom (2000-2014), would be at the heart of Venezuela’s extractive development model and foreign policy.


The election of Chávez as president of Venezuela in 1998 marked the beginning of the Pink Tide, a period when several progressive governments came to power in Latin America. Left-leaning leaders were elected in Brazil (2002), Argentina (2003), Bolivia (2005), Uruguay (2005), and Ecuador (2006). Citizens chose these Pink Tide governments in reaction to the disastrous social consequences of the Washington Consensus’s neoliberal policies. Although they emerged in different socio-cultural, political, geo-political and economic contexts, Pink Tide governments in Latin America shared the goal of restoring the role of the state in the development process and reclaiming their sovereignty over natural resources. Dependent on the export of commodities such as soy, petroleum, and natural gas, Pink Tide governments benefitted from the rising world demand and resulting high prices of their products. The surplus created by the commodities boom allowed these governments to aggressively increase social spending and pursue redistributive policies that aimed to reduce poverty and inequality. Politically, some of these governments also sought to promote “participatory democracy,” an attempt to empower citizens “from below” to help design and implement policies that directly impacted their lives. In South America, Pink Tide governments actively promoted a type of integration based on the logic of politics rather than one of economics and trade, which had been favored during the neoliberal period.


Pink Tide governments evolved in different contexts, so the results of their extractive development strategies were varied. Analysts across the political spectrum, however, have tended to simplify—and in some cases vilify—the Pink Tide governments, failing to account for the variety of contexts, policies, and strategies for dealing with the social ills and extractive sectors of their countries.


What were the strengths and weaknesses of Pink Tide governments in relation to the extractive development models they fostered? What are some of the tensions and contradictions found in Pink Tide governments in regards to foreign investment, social, economic, and political development and in their relation with their citizens? And, most importantly, how did Pink Tide governments differ from each other, and from moderate and conservative governments in the region, in dealing with the national and global economic and political structures that sustain the extractive sector?


Steve Ellner and his contributors explore these and other important questions in the book Latin American Extractivism: Dependency, Resource Nationalism, and Resistance in Broad Perspective. More than any previous work, this book takes an objective look at the Pink Tide and non-Pink Tide government policies toward the extractive sector and their impact on the development process in the first two decades of the 21st century. Through an in depth look at cases from Argentina, Bolivia, Colombia, Ecuador, El Salvador, Honduras, Mexico, Peru, and Venezuela, the book explores the complex logic of the extractive development model during this time and its relation to national and global capital. It examines how the Pink Tide approach differed from that of the neoliberal period, and how different governments, progressive and conservative, dealt with opposition to the extractive development model from environmental and indigenous movements.


The book also provides a constructive critique of “neo-extractivism” theory, which asserts that, although taxing the extractive sector produced profits that helped promote economic development and social welfare, the strategy ultimately proved detrimental to democracy and development. According to this view, neo-extractivist activities led by foreign capital promoted a development model that was not very different from dependent extractive models of the past. It replicated the “peripheral” nature of these countries in the global economy and did little to enhance the quality of democracy, protect the environment, or defend rights of indigenous people, women, and Afro descendants. This record, the argument goes, overshadows any positive impacts claimed by Pink Tide governments and their supporters.


Steve Ellner and his contributors take issue with this “pessimist view.” While they recognize that Pink Tide governments have a poor record in transforming the extractive development model and attempting to change their countries’ “peripheral” position in the global economy, they point also to the undeniable harm that the extractive model has had on the environment and local communities. The authors recognize how Pink Tide government policies toward the extractive sector allowed greater resources to be allocated to social spending to mitigate poverty and ask that we pay closer attention to some of the positive outcomes of legislation and policies toward foreign capital under different Pink Tide governments. The book analyzes several cases of policies and legislation which varied from country to country and produced distinct results in different contexts.


Ellner emphasizes the importance of context in analyzing the record of Pink Tide governments in the introduction. He writes that “…this context includes the full range of policies associated with extractivism, Latin America’s historical condition of underdevelopment, and the aggressiveness of the domestic and foreign opposition to progressive governments.” Failing to recognize context, Ellner argues, has had “unintended consequences.” In several countries “recent cases of instability and regime change” can be traced back to neoliberal political leaders that, with U.S. support, “have used illicit means and repression in an attempt to roll back reforms initiated by Pink Tide governments.” No doubt that when analyzed in context one understands that the experience of different Pink Tide governments cannot be painted with the same brush, let alone compared with the experience of how conservative governments dealt with the extractive sector—and opposition to it—in the first two decades of this century.


Latin American Extractivism is organized in a way that is easy to read and ideal for classroom use. In the introduction, Ellner provides a comprehensive summary and critique of neo-extractivism and successfully places it in a broader context using evidence from the cases analyzed in the following chapters. In Part I (The Global Focus) the authors examine Colombia, Bolivia, and Venezuela to show the relationship between key aspects of globalization and its impact on extractivism at the national level. The next two sections are dedicated to the experience of different Pink Tide governments (Part II) and Conservative and Right-Wing governments (Part III). In Part II, the authors present evidence from Venezuela, Bolivia, Mexico, Ecuador, and Argentina, that shows how different governments increased their control of extractive industries and how they dealt with the environment, protest movements, and the territorial rights of local and indigenous communities. The chapters in Part III on El Salvador and Honduras, Peru and Colombia show how resource nationalism and the management of environmental and opposition movements in these countries differed from the cases in Part II. The variety of practices and outcomes make it clear that it is necessary to look at the specific context to understand the extractive development model in Latin America over the past two decades.


The petroleum giant Venezuela, in particular, illustrates the importance of examining the experience of the Pink Tide in context. This was implicitly acknowledged by Chávez on January 16, 2003 at the United Nations. He said at the time that “…the only sin we have committed in Venezuela is to dare, for the first time in a hundred years, to face the gross privileges of a senseless and insensitive oligarchy that has carried a people that lives on top of gold and oil…to a degree of poverty that surpasses 80 percent of our population. That has been our sin.” This statement came after an attempted coup d’etat in April 2002 and a devastating petroleum strike in late 2002 and early 2003 by the state oil and gas (PDVSA) workers and technocrats that cost the nation billions of dollars. Both actions were supported by foreign interests that opposed the administration’s extractive development model that reverted efforts to privatize PDVSA and, in turn, reverted the neoliberal process in that South American country.


As the past few years have shown, “resource nationalism” and the the Chávez administration’s distributive policies cannot be understood in isolation from the structure of the world economy, the national and foreign interests in the extractive sector, the Venezuelan economy’s dependency on petroleum, and the geopolitical powerplay around this natural resource. Ellner and his contributors argue that this also applies to other Pink Tide governments and should be considered when analyzing their extractive development models and redistributive policies.


Ellner’s book is another successful publication of the Latin American Perspective in the Classroom series. It is a must-read for anyone interested in the complexities of the relationship between the extractive sector and development in Latin America in the age of globalization.


Angelo Rivero Santos is Teaching Associate Professor and Director of Academic Affairs at the Center for Latin American Studies at Georgetown University.


Review originally published here: https://nacla.org/latin-american-extractivism-dependency-resource-nationalism-and-resistance-broad




This book explores different aspects of Latin America’s extractivist economies and argues that on issues such as legislation and policies toward foreign capital and small-scale mining, economic ties with China, environmental destruction and indigenous rights, Latin American governments had different records. In doing so, the book takes issue with a school of writers referred to as “neo-extractivism,” who tend to minimize the importance of differences between Pink Tide progressive governments, conservative ones and those on the right on grounds that all of them have submitted themselves to the dictates of global capital. Several chapters look at cultural patterns involving gender, ethnicity and class that lay behind protests in opposition to extractivist projects as well as the contrast in responses from state actors to those movements. The book also compares the impact of strategies toward economic development as they relate to extractivism and analyzes the role of the state in promoting economic growth and its theoretical implications. In emphasizing resource nationalism, the book attempts to refute a basic precept of neo-extractivism writers that a “consensus” existed among Latin American governments on extractivism. The book argues that there may have been a consensus regarding the beneficial nature of extractivist industries, but not on how to maximize the revenue derived from extractivism, and how to put it to good use.




Steve Ellner is a retired professor at the Universidad de Oriente, Puerto La Cruz, Venezuela, and is currently associate managing editor of Latin American Perspectives. His books include Rethinking Venezuelan Politics and his edited Latin America’s Pink TideLatin America’s Radical Left, and (coedited) Venezuela: Hugo Chavez and the Decline of an “Exceptional Democracy.

September 24, 2021

Latest LAP issue! The Nicaraguan Crisis and the Challenge to the International Left


edited by William I. Robison

https://journals.sagepub.com/toc/lapa/48/6

Debate is heating up among scholars over the ongoing crisis in Nicaragua. For some, the Ortega-Murillo government is a continuation of the 1980s Sandinista revolution while for others it is a corrupt and nepotistic regime that has promoted capitalist expansion while carrying out harsh repression against its opponents. This symposium brings together 10 scholars who debate the crisis at a time when it is generating deep fissures among the left and progressives in and out of the academy.

This issue also includes two commentaries on the July 11, 2021 protests in Cuba as well as nine additional articles on a variety of topics including indigenous movements, agriculture, precarious work, religion, and film as well as a number of book reviews.


Virtual Forum - The Nicaraguan Crisis: A Left Perspectives

hosted by NACLA and WGNC

with introductory remarks from William I. Robinson, LAP Editor and editor of LAP's latest issue The Nicaraguan Crisis and the Challenge to the International Left.

The crisis in Nicaragua has divided the Left in the United States and throughout the Americas. Significant sectors of this international Left claim that President Daniel Ortega and Vice President Rosario Murillo represents a leftist project for Nicaragua that should be defended, and that the United States is trying to overthrow the government. This event aims to address those claims from an explicitly leftist perspective. As well, as a reminder, the latest issue of LAP features a symposium/debate on the Nicaraguan crisis.


WHEN: October 7, 2021, 8:00pm-9:30pm EDT


Please click on this link to register. Registration is free:

https://nacla.salsalabs.org/thenicaraguancrisis/index.html




September 22, 2021

Political Report #1462 - Can an Article on Jair Bolsonaro be “Politically Neutral”?

by Steve Ellner 


LAP’s Political Report 1459 titled “The Washington Consensus Arrives in Brazil,” takes an uncritical look at Jair Bolsonaro and his policies. At first glance, the article appears to be neutral and the authors, Marc Castillo and Sírio Sapper, impartial analysts. Neither of these initial impressions are the case and indeed elsewhere both authors have defended the policies of the Bolsonaro government. A careful reading of Political Report 1459 reveals that the article, albeit for the most part subtly, justifies Bolsonaro’s policies and his presidency. At the same time, there is absolutely nothing in it that is at all critical of the Brazilian president. Below I provide quotes from the article which demonstrate the point I am making.

Latin American Perspectives correctly does not adhere to a specific political line or ideology, but we are nevertheless on the left. I also believe it is acceptable that we publish articles that fall outside of the left side of the political spectrum or ones that are politically neutral (if such a thing exists). At the same time, we have not over the years published articles that even remotely support the positions of the political right. 

“Political neutrality” may or may not exist for certain types of subject matter, but it certainly doesn’t exist for heavily charged issues like those related to the Bolsonaro government. To take a much more extreme example to help illustrate my point (but without the intention of casting aspersions on Castillo and Sapper in this regard), an article on Hitler that didn’t say anything good or bad about him could be interpreted as a justification of his actions. The same with an article on a mafia kingpin.

The following statements from the article may at first glance appear to be politically neutral, but in fact serve to enhance Bolsonaro’s highly questioned political legitimacy.

Here the authors point to the alleged success of the Bolsonaro in the fight against crime: 

"Brazil's population is exhausted from the high crime rate. Wanting to arrest the out- of-control crime rate Michel Temer´s administration was noticeably successful in containing crimes in general and specifically property crimes.”

“Bolsonaro’s election victory was partially related to public safety concerns.… Through his presidency Jair Bolsonaro has pushed forth many new initiatives to deal with the grave issue of security in Brazil.”

“All these measures were aimed to shore up public safety in the face of calamitous crime and insecurity that have been and continue to be prevalent in Brazil. Comparing year to year crime statistics published by the National Security Information System (Sinesp) from the Ministry of Justice and Public Security for the years 2019 and 2018 crime fell across the board with homicides experiencing a 20.3% decline, homicides involving robbery fell by 23.8% and robberies of financial institutions fell by 41.5% (March 17, 2021)…. Bolsonaro’s approval rating is largely attributed to Public Safety measures (Venagilia, 2019).”

The article also uncritically discusses the privatization that took place under Temer and has been reinforced by Bolsonaro: “Brazil´s complex political system has inhibited Paulo Guedes and his economic team from making the progress that some expected; nevertheless there has been pension reform, the recent autonomy of the Brazilian Central Bank and the Law of Economic Liberty.”

“The mere presence and continuation of Paulo Guedes in Bolsonaro´s cabinet portends vast credibility and political capital to ease investor worries."

The article then turns to Bolsonaro’s verbal aggression: “To popular media Bolsonaro´s presidency seems to be in a perpetual state of balance regarding his governance, however, there is no better even keel to the tumultuous president´s rhetoric than his agenda for free-market reform that serves to counter any notion of dictatorial perceptions.” The wording leaves the impression that his rhetoric is somewhat innocuous. No mention of Bolsonaro’s notoriously racist, misogynist, homophobic, and anti-immigrant statements.

The article ends on a positive note about Bolsonaro’s legacy: “A robust transformational process has taken hold in Brazil in terms of economic and financial progress with a distinct capitalist bent. Irrespective of who wins the presidency in 2022 the neoliberal economic groundwork has been laid and it is extremely doubtful that there will be any regression as the largest South American country attempts to become a more open and less protectionist.”

Bolsonaro can count on the commercial media to discuss his allegedly positive accomplishments. Indeed, the Wall Street Journal endorsed his presidential candidacy. Latin American Perspectives – as has always been our policy in other contexts – should refrain from publishing articles that fail to underline Bolsonaro’s criminal actions and behavior and those of his ilk. 

September 16, 2021

Political Report #1461 Castillo's Path


Castillo's Path

By: Tony Wood
30 August 2021


Nearly two months after Pedro Castillo’s narrow victory in Peru’s second-round runoff, the new president has only just managed to get his first cabinet appointed. The 73 to 50 vote through which the Peruvian Congress approved the ministers on 27 August came at the end of several weeks of obstruction and outcry from the opposition. This included a prolonged refusal by Keiko Fujimori, the defeated candidate, to acknowledge the result, as well as yet more of the hysterical redbaiting that had marked the presidential campaign. The turbulent weeks since the 6 June election provide a depressingly clear indication of what Castillo can expect in the months (and indeed years) ahead; yet at the same time, they also amply demonstrate the profound dysfunction that brought him to power in the first place.


The Peruvian political establishment has in many ways still not recovered from the initial shock of the first round of voting on 11 April. Though the field was crowded, few expected Castillo, the former leader of the teachers’ union and a native of the northern province of Cajamarca, to emerge as the front-runner with 18% of the vote. Still more surprising was that he did so as the candidate of Perú Libre, an avowedly Marxist-Leninist party, in a country still sharply polarized by the legacies of the Shining Path insurgency and state repression of the 1980s and 1990s.


The campaign for the second-round runoff duly brought a crescendo of anti-communist outrage. In Peru the specific form this takes is terruqueo ­– ‘calling someone a terrorist’; that is, tainting anyone on the left by (imaginary) association with the Shining Path – though the media also conjured the reliable spectres of Cuba and Venezuela. Such was the need for elite unity in the face of the supposed Communist threat that Nobel laureate Mario Vargas Llosa, who in both the 2011 and 2016 elections had branded Keiko Fujimori a threat to democracy, now hailed her as the representative of ‘freedom and progress’.


The scare tactics almost worked: in the run up to 6 June, Castillo’s poll lead narrowed day by day. But when the votes were finally counted, he had edged home by a mere 44,250 votes – a nationwide margin of 0.2%. The miniscule gap between the candidates’ totals concealed a yawning geographical divide, however. Across much of the country’s interior, especially the poorer highland departments, Castillo won by crushing margins. Five Andean departments – Apurímac, Ayacucho, Cusco, Huancavelica, Puno – reported scores of over 80% for Castillo; in Puno, which borders Bolivia, his total was a staggering 89%. Altogether, Castillo carried 16 of Peru’s 25 departments, in areas that account not only for the lion’s share of the national territory, but also for some of its deepest deprivation. At the same time, it is from these areas that Peru’s mineral wealth is extracted, while the benefits of the boom of the late 2000s and early 2010s were mostly felt elsewhere. Hence the resonance of Castillo’s campaign slogan: ‘No more poor people in a rich country.’


Yet Fujimori carried the more populous coast – most notably the capital, Lima, which contains 30% of the national population, and which she won by 31 percentage points. (Her margin of victory in Lima department, which surrounds the capital region and stretches as far as the Andes, was only 7%.) While there are many complexities to consider – there is much poverty on the coast, too – the disparities of Peru’s geography largely account for the fact that Castillo’s victory provided both a resounding, historic rebuke to coastal dominance and at the same time the slimmest possible mandate.


Fujimori immediately contested the result, alleging ‘systematic fraud’ and demanding that as many as 200,000 votes be annulled. Some of her allegations involved scarcely concealed racism: the votes Fujimori contested were from the predominantly indigenous highlands, and in one case her campaign complained that too many of the election officials had the same surname, and therefore must be related. (In indigenous areas, surnames often recur regardless of kinship.) Though Fujimori’s legal challenges lacked any basis, it took weeks for the courts to exhaust them, delaying Castillo from formally taking office until 28 July. The day of the inauguration was also the two-hundredth anniversary of Peru’s independence from Spain, but the historic occasion was clouded by the ongoing uncertainties of the presidential transition.


Far from winding down with Castillo’s assumption of power, the Peruvian opposition’s campaign to cripple his presidency simply entered a new phase. By August this had come to centre on the designation of the cabinet – usually a formality for a newly elected administration, but this time the focal point of another round of terruqueo and obstruction. The first casualty was Héctor Béjar, a leftist guerrilla in the 1960s who then worked for the progressive military dictatorship of Juan Velasco Alvarado in the 1970s, and has since remained one of Peru’s most prominent radical public intellectuals. His appointment as foreign secretary augured well for the country’s hemispheric policy, not least his vow to remove Peru from the Lima Group, the anti-Maduro coalition formed in 2017. But in mid-August videos surfaced of him making critical comments about the Peruvian Navy and accusing the CIA of funding the Shining Path, and within days he had been forced to resign. (His replacement, Oscar Maúrtua, a career diplomat who also served as foreign secretary from 2005–2006, was a calculatedly unprovocative choice.)


This was an abrupt retreat, and the opposition smelled blood. The day after Béjar’s exit, Lady Camones of the centre-right Alliance for Progress Party told the media that ‘the resignation of the foreign secretary is definitely not enough’. The next target was, if not the entire cabinet, then at least Castillo’s choice of premier, Guido Bellido. Born in 1979 in a rural district of Cusco in Peru’s southern highlands, Bellido is a native Quechua speaker, which in itself brings forth a visceral reaction from elites in Lima. For instance, when Bellido began his address to Congress on 26 August in Quechua, which is one of Peru’s official languages, he was interrupted by deputies complaining they did not understand. Both Castillo and Bellido very much cast themselves as representatives of ‘Perú Profundo’, the country’s long marginalized interior. In that sense, the tussle over Bellido’s appointment is a microcosm of the historic tension between coast and highlands.


But there is a more specific political backdrop to the opposition’s targeting of Bellido, in which Bellido himself is not even the central player. A loyal cadre of the Perú Libre party, Bellido is widely seen as a proxy for the party’s leader, Vladimir Cerrón – a 50-year-old Cuban-trained neurosurgeon and former governor of Junín in the central highlands. It was Cerrón who founded Perú Libre in 2008, initially as a vehicle for achieving power at the regional level. He was elected as Junín’s governor in 2011 and then again in 2018; but in August 2019, seven months into his term, he was removed from office after receiving a criminal conviction for corruption. Further cases against him are pending, including one launched in July 2021 for money-laundering, and another in August 2021 against him and Bellido for ‘terrorism’ over supposed links to Shining Path remnants.


Both Cerrón and Bellido have denied any such connections, but the right has seized on Cerrón’s unabashed embrace of Marxism to paint him as a terrorist sympathizer. Cerrón’s harsh criticism of state repression during the armed conflict of the 1980s and 1990s also puts him outside the ideological pale. (Personal factors play a role here, too: his father, Jaime Cerrón Palomino, was a respected leftist academic in Huancayo who was kidnapped and killed in 1990 by state-run paramilitaries; in the wake of testimony given to Peru’s Truth and Reconciliation Commission in 2002, four generals were charged with the murder, but they have yet to be tried.)


Keeping Cerrón away from effective power is the opposition’s real goal. No doubt personal animus plays a role, as does the whiff of crookedness surrounding Cerrón – though on that front, most of Peru’s Congress doesn’t have a straight leg to stand on. But the core of the contention over the incoming cabinet was the opportunity it provided for driving a wedge between Castillo and Perú Libre. The former’s ascent was already enough of a blow for Lima’s political establishment. Still more alarming for them was the success of Perú Libre in the legislative elections, held in April at the same time as the first round of the presidential vote. From having no seats in Congress at all, Perú Libre went to being the largest single party with 37 representatives. Fujimori’s Fuerza Popular garnered only 24 seats – an improvement on the 15 it gained in the 2020 snap election, but a considerable drop from the 73-seat tally with which it dominated Congress in 2016–20. The remainder of the 130 seats are distributed between a dozen other parties, most of them arranged across a spectrum from centre-right to right.


The new Congress is therefore highly fragmented, which will make governing the country extremely difficult. Perú Libre’s main ally will be Juntos por el Perú, a Syriza-style left coalition led by former presidential candidate Verónika Mendoza. Though it has only 5 seats, it has played a prominent role in the transition, supplying personnel that are undoubtedly more politically experienced than most Perú Libre cadres, but also much more presentable to coastal elites and middle classes. A key example of this is Pedro Francke, Castillo’s pick as finance minister, who had been on Mendoza’s team and was brought in to soothe the markets after Castillo won. (It briefly worked, though the currency nosedived again when Castillo nominated Bellido as premier.) But this raised hackles in Perú Libre: Cerrón has long made clear his dislike of what he terms the ‘caviar left’, and one of the many challenges Castillo faces is how to hold together the very different components of the left on which his government is built.


There are far larger difficulties ahead, however. Well short of a majority, the incoming government will have to cobble together votes for every piece of legislation it puts forward, in a series of confidence-and-supply-type arrangements. Castillo did in the end manage to get his cabinet through Congress – minus Béjar – but the struggle he had in doing so provides a bitter foretaste of things to come. At the same time, both his success and that of Perú Libre are unmistakable symptoms of the profound crisis of the Peruvian political system, which has now experienced several years of rolling dysfunction. A series of corruption scandals, many of them involving the tentacular Brazilian conglomerate Odebrecht, led to the ouster of two presidents in succession, as well as graft charges against leading members of the Peruvian congress, including Keiko Fujimori. (She was released from a second spell in jail in May 2020, but more charges were filed in March 2021, in the midst of the presidential campaign.)


Elsewhere in Latin America – Brazil first and foremost – anti-corruption politics have been successfully weaponized by the right, against a coherent rival for power on the left. In Peru, in the absence of such a left, anti-corruption largely became a means of score-settling within the political class, all too obviously cynical and devoid of actual concern for the fate of the country. It was in part the disillusionment sown by years of this that prompted calls for a new constitution, including protests that led to the removal of a third (albeit interim) president in November 2020.


The sense of crisis was hugely accelerated, of course, by the impact of Covid-19. Peru has been among the countries most drastically affected, suffering catastrophic spikes in deaths and infections from early in the pandemic. Though its total figure of 198,000 deaths to date is dwarfed by the casualties elsewhere in Latin America, proportionally it has been hit much harder: at 609 per 100,000, its incidence of death is more than double that of Brazil, and three times higher than Mexico’s. In a country where 70% of workers are in the informal sector, the pandemic reversed whatever gains had been made over the past decade: between 2019 and 2020, per capita incomes dropped by 20%, and the poverty rate rose from 20% to 30% of the population.


It was these overlapping crises – public health disaster plus deepening political disarray plus the ongoing inequalities wrought by a neoliberal extractive economy – that made possible the dual shock of Perú Libre’s advance and Castillo’s victory. If nothing else, they made it abundantly clear that there can be no return to business as usual. But less clear is how much of a transformation Castillo’s government will be able to bring about, given the political constraints and polarized ideological climate in which it will have to operate. Perú Libre’s platform – originally drafted by Cerrón in February 2020, when the party had no seats in Congress – isn’t necessarily much of a guide to what Castillo’s programme will be. Its proposals range from doubling the health and education budgets to nationalizations of mining concerns, and from a ‘second agrarian reform’ (after the one enacted in the late 1960s by the Velasco regime) to a transition away from neoliberalism to a ‘popular economy with markets’.


The effects of the pandemic mean at least some increases in social spending are likely to get through, but it remains to be seen if Castillo can, for instance, revise mining contracts to give the Peruvian state a higher share of resource rents. Perhaps the proposal that is likeliest to be implemented is the call for a referendum on a new constitution. This was already in the air in Peru in late 2020, inspired by the example of neighbouring Chile, and it seems the only way to secure both a mandate and a framework for overhauling Peru’s neoliberal model.


In this context, it is significant that, besides Lenin and Fidel Castro, the main models mentioned in Perú Libre’s programme are Rafael Correa and Evo Morales. Both these Pink Tide leaders, however, were in much stronger positions than Castillo at the outset of their terms, and even if the referendum were to succeed, the balance of forces in Peru is unlikely to produce as progressive a charter as either Ecuador or Bolivia. But in the absence of such a thoroughgoing democratic renewal, a neoliberal restoration on the old terms doesn’t seem likely either. Far more probable is a prolonged and turbulent interregnum.


Read on: Susan Watkins, ‘Politics and Pandemics’, NLR 125.


Read Original Article Here: Here



September 13, 2021

Political Report #1460 - The Census, Skin Color and Social Analysis

by Esteban Morales Domínguez



Although it still causes many prejudices, misunderstandings and challenges, there is no choice but to pay attention to skin color. Above all, in its consideration within the media and national statistics.

Cuban society is a multiracial society, or rather, multicolored, mestizo. And that reality has to be registered statistically. Not by handling the Census as a simply numerical matter, but as a cultural demographic one.


It is about the fact that color is a legacy of slavery. It is not possible to avoid it, since it has marked Cuban society since its origins.

When the Spaniards arrived in Cuba, in 1492, they did it with white credentials and that is how they stayed. Those who came of their own free will did so in search of a fortune, which they often found.

But Spain is not White. Colonized by the Arabs for 800 years, it is impossible to consider it as such. Even when the Spanish do not assume that identity.


So, the colonizers of our Archipelago were not white. Their power did not consist in being white, but in having arrived with the cross and the sword.


They arrived in a territory of indigenous people, of low culture and they only used them to find gold. They exploited them mercilessly and their population mass did not last long, although we still have representatives of that original population in Cuba.


Chinese also came, brought by means of a system of contracts that turned them into slaves. The so-called “culíes” [coolies], who since then added their beauty to the population of the Island, becoming a part of our nationality. These three large groups were the ones that formed the Cuban population. Later, other Antilleans joined, although not in the magnitude of the first ones, also merging with our population.  

September 10, 2021

Blog Exclusive, Political Report #1959 - The Washington Consensus Arrives In Brasília

by Marc Castillo and Sírio Sapper


Abstract

John Williamson´s renown paper "The Washington Consensus" while causing controversy is nothing more than basic capitalist tenants.  Brazil has been undergoing a "Washington Consensus" transformation for decades now.  During the last several years this evolution has progressed at a more ambitious pace.  This paper examines the actions and mechanisms that the Bolsonaro administration has undertaken to make free market principles more concrete in Brazil.


Keywords:  Free Market Principles, Brazil Economy, Bolsonaro Administration, Brazil, Brazilian Politics



THE WASHINGTON CONSENSUS AND BRAZIL: CONTEXTUALIZATION

The ‘Washington Consensus’ has arrived in Brazil and it is there to stay.  In 1989, US Treasury Secretary Nicholas F. Brady came out with a solution to the immediate debt crisis faced by countries such as Brazil, Argentina, Panama, and Peru among others at the time.  Shaped as a debt refinancing agreement, the initiative proposed extended terms between creditors and debtors under specific requirements to be fulfilled.  Though it is not thought of, several of the economic initiatives used by various Brazilian governments throughout the last several decades have heralded from the famous work of John Williamson called "A Short History Of The Washington Consensus, " these reforms haven given way to privatization and in a way more civil liberties, a Westernization or Americanization process is occurring in Brazil.  

To understand how Brazil got to this consensus it is imperative to comprehend the initial backdrop of the so-called "Washington Consensus."  One of the underlying precepts of the Washington Consensus is a process called "securitization,”  this process allowed debt to be exchanged for national government bonds, which were backed by U.S. bonds.  One of the main mechanisms of monetary stability adopted in Latin American economies during the late 1980s was the fixed exchange rate.  

In order for Brazil to adhere to the fixed exchange rate program, which it finally did in 1993, a series of reforms and compromises had to be undertaken.  In the spring of 1989, British economist John Williamson testified before a Congressional committee in favor of the Brady Plan, a plan where Latin American countries received credit from the United States to not default on debt (Williams  2004: 1).  He argued that it would be good policy to help the debtor countries overcome their debt burden, since Latin American countries were slightly shifting their economic practices (Williams, 2004: 1).  Those adjustments did not represent staunch radical Austrian laissez-faire changes, given that they were even advocated by mainstream economists such as Mário Simonsen and Béla Belassa (Williams, 2004: 1).

John Williamson writing in his acclaimed work, "A Short History Of The Washington Consensus," included social reforms as a means of enhanced social cohesion, opining on the merits of social stability which would in time be fundamental to the free market development process in Brazil.

Williamson´s infamous 1989 Washington Consensus paper highlights 10 points: (1) Fiscal discipline; (2) Reordering Public Expenditure Priorities; (3) Tax Reform; (4) Liberalizing Interest Rates; (5) A Competitive Exchange Rate; (6) Trade Liberalization; (7) Liberalization of Inward Foreign Direct Investment; (8) Privatization; (9) Deregulation; (10) Property Rights.
The term "Washington Consensus" became undoubtedly cliché and controversial. It belies the simple practicality of what it really is. Detractors and others who wish to criticize, enliven or even embellish the term fail to grasp that in reality it is just mainstream policy in developed nations.  They constitute well-established practices shared by wealthy and successful nations. 

The “Washington Consensus guidelines are only general principles, whose implementation can also vary from country to country.  The manner of which such directives are going to be carried out is still dependent on national factors and cultural norms: it is not an absolute standardized top-down solution applied indiscriminately.  Brazil in one way or another has been undergoing these reforms since the mid 1980s and now in the early 2020s the process of moving toward a free market directed society is more evolved and established.

Williamson´s points opposed the abolition of the market economy, which was tried in the communist countries for 70 years and proved a disastrous dead end, but to give the poor access to assets that will enable them to make and sell things that others will pay to buy. That means nation states need to develop and further four key paradigms to ensure success in a market-oriented economy: Education;  Titling programs;  Land reform;  Microcredit (Williams, 2004: 13).  These attributes of an open market economy are what Brazil has been developing and furthering during the Bolsonaro administration.  


ONGOING FREE MARKET REFORMS 

Federal Tax Reduction 

Tax reform is one of the most crucial aspects of free market liberalization.  The current Brazilian Tax Code dates from 1966, when the isolationist and ISI military dictatorship was in power. Little has happened regarding point three, which is tax reform,  of Williamson´s paper . There are different proposals, but no ultimate deadline for Congress to act on it.  Currently there are a few changes regarding federal taxation.  One such alteration on industrialised products (IPI) are no longer applied to roughly 300 different capital goods, among them are diesel engines, forklifts, crane machines, printer and biometric systems’ subparts.

There are four major transformations which already took place during the Bolsonaro administration: pension reform, central bank autonomy, economic freedom law and the new regulatory framework on basic sanitation. Each one is a case study in itself.  All these innovations are hallmarks of Williamson´s pragmatic approach.  The four measures cover nearly all of the 10 points in the Washington Consensus points paper. 


Normative Instruction 85/2020I

A very relevant initiative, but somewhat unnoticed, is the Normative Instruction 85/2020 from the National Department of Business Registration and Integration (DREI).  André Santa Cruz Ramos, a renowned professor and author, known as an avid Ayn Rand supporter, is in charge of the office.  This instruction promotes and cultivates deregulation.  To mention a few of these new changes: (1) associations or cooperatives can freely be converted into a business without any type of new registration; (2) there is no requirement for signature authentication or authenticated copy; (3) considerable extension of automatic business registration (Art. 43); (4) any business constitutive act registration is independent from any form of government authorization; (5) any business is permitted to extend the term for the payment of capital stock; (6) acts, documents and declarations that contain mere cadastral records (for example, changes in marital status, changes in addresses) do not require contractual alterations, being presented as a simple administrative measure.  These articles emphasize the swift pace at which deregulation has become a priority in Brazil as the country is moving toward being more business friendly. 


PRONAMPE

As stipulated, the Washington Consensus lays down social reforms as a means of neoliberal economic improvement.  One of them is microcredit access.  This subject matter is targeted by Law 13.999/20, which extended the term limits of the National Support Program for Micro and Small Enterprises (PRONAMPE).  Microcredit access lines have been extended by the Bolsonaro administration which provide small businesses the opportunity to continue to operate. 


The New Franchise Law 

The federal law nº 13.966/20 renews the franchise opportunities in Brazil.  Following in the steps of federal law nº 13.874/19 (Lei da Liberdade Econômica), the pacta sunt servanda principle shall be applied as the general rule among private contractors.  Unlike what has been done so far, any business contract now is taken primarily as a symmetric (Art. 421-A, Law of Economic Freedom). Thus, there can be no government intervention within the commerce sphere, until proven otherwise (Art. 421, § 4º, Law of Economic Freedom).

The prior franchise law was silent concerning the nature of the franchisor-franchisee relationships.  So the Brazilian Judiciary went back and forth on the idea of franchisor-franchisee bonds being protected by consumer rights.  That would represent a propitious environment for continuous government intervention, since consumer law presupposes an asymmetrical and uneven settlement.  With the renewed franchise law, the parties can freely express private autonomy regarding which contract clauses should be applied or not (Art. 1, Franchise Law/2020).

State companies and non-profit organizations are also able to sign franchise contracts (Art. 1, § 2º, Franchise Law/2020).  In order to be implemented, the franchisor must provide a Circular de Oferta de Franquia, similar to the American Franchise Disclosure Document (FDD) or Uniform Franchise Offering Circular (Art. 2).  This document must be handed over at least ten days before the contract signature (Art. 2, § 1º).  If the deadline is not duly fulfilled, the franchisee has the right to argue for a void or voidable contract (Art. 2, § 2º).  Under such circumstances, the franchisee holds the right to receive all its expenditures back (Art. 2, § 2º).

The parties may also elect an arbitral tribunal to resolve disputes related to the franchise agreement (Art. 7, Franchise Law/2020).  As seen, the arbitration clause is expressly guaranteed by the law.  This new law does not require the presence of any witness during the contract signature, unlike its predecessor.  This new law simplifies the franchise business on the whole, the franchisor-franchisee relationship and its practices.   

Rule of Law

As indicated previously, rule of law represents one of the main pillars of the “Washington Consensus.”  Rule of law is a basic institution that is also a pillar of Williamson´s work.  As rule of law is a basic pillar of functioning democracies it is unreasonable that the Washington Consensus point of private property guarantee should be characterized as "evil machinery."  According to John Williamson (Williams, 1990: 1):

"In the United States property rights are so well entrenched that their fundamental importance for the satisfactory operation of the capitalist system is easily overlooked. I suspect, however, that when Washington brings itself to think about the subject, there is general acceptance that property rights do indeed matter. There is also a general perception that property rights are highly insecure in Latin America."


As Williamson continued to elucidate regarding point 10 of his trademark piece: “This was primarily about providing the informal sector with the ability to gain property rights at acceptable cost (inspired by the Peruvian economist Hernando de Soto’s analysis)” (Williams 2004: 4).  Brazil suffered from a drastic property crimes increase between the end of the 80’s until mid 2010’s.

Property rights are inextricably linked to public safety.  For several years, public safety was not viewed as a first tier subject matter.  Public safety was viewed as a consequence of inequality. Violence was perceived by the authorities as a result of economic inequality.  In order for Brazil to become a safer place, the income gap between the rich and the poor had to be reduced.  Naturally, this view was definitely not shared by the overwhelming majority of the population, rather by a fringe minority in power.  The reason is quite simple: traditionally Brazil is a High Gini coefficient economy. Reducing inequality in Brazil is an extremely complicated task (Brzezisnki 2012: 49-50). Therefore, waiting for this problem to be solved would take much time.  Brazil's population is exhausted from the high crime rate.  Wanting to arrest the out of control crime rate Michel Temer´s administration was noticeably successful in containing crimes in general and specifically property crimes.  

The Temer administration undertook several measures that included: (1) reactivated the Institutional Security Cabinet (GSI) and hand it out to Four-Star General Etchegoyen; (2) instituted the Single Public Security System (Sistema Único de Segurança Pública), the National Plan for Public Security and Social Defense (Plano Nacional para Segurança Pública e Defesa Social) and the National Council for Public Security and Social Defense (Conselho Nacional de Segurança Pública e Defesa Social); (3) authorized direct military intervention through the Law and Order Guarantee Operation (GLO) in Rio de Janeiro state and Roraima state; (4) increased security forces funding, by enabling private investment and by redirecting sports lottery resources; (5) the Federal Military Justice now holds military personnel responsible for intentionally violent crimes committed by military personnel against civilians within the GLO framework.  Michel Temer adhered to rule of law fundamentals that militarized public safety and laid the groundwork for Bolsonaro´s administration.  

Bolsonaro’s election victory was partially related to public safety concerns.  The mercurial Brazilian president has campaigned and continues to campaign on public safety as an ongoing concern.  Through his presidency Jari Bolsonaro has pushed forth many new initiatives to deal with the grave issue of security in Brazil.  Property crimes are still drastically in decline (Kadanus, 2020).  His actions included: (1) passing Anti-Crime Package legislation promoted by Ex-Minister of Justice Sérgio Moro; (2) transferring various criminal organization leaders to federal facilities; (3) apprehending drugs in record numbers; (4)  expreding the National Force towards many states; (5) creating the Secretary of Integrated Operations (Seop); (6) implementing the Portuguese-inspired program Em Frente Brasil, which select key-cities to receive special law enforcement treatment as role models; (7) authorizing military interventions through GLO operations in the Amazon region; (8) piling up intelligence and military agents throughout several government bodies; (9) extending the scope of action of the Institutional Security Cabinet (GSI), the Brazilian Intelligence Agency (ABIN) and the head of the Federal Police, compounding them; (10) facilitating private gun ownership.  

All these measures were aimed to shore up public safety in the face of calamitous crime and insecurity that have been and continue to be prevalent in Brazil.  Comparing year to year crime statistics published by the National Security Information System (Sinesp) from the Ministry of Justice and Public Security for the years 2019 and 2018 crime fell across the board with homicides experiencing a 20.3% decline, homicides involving robbery fell by 23.8% and robberies of financial institutions fell by 41.5% (March 17, 2021).  However, there is still improvement needed as homicide rates have climbed during the pandemic year of 2020 with an uptick of 7% in comparison to the first six months of 2019 (Kadanus, 2020).  Another attribute of public safety that coalesces with civil liberties and even manifests an air of "Americanization" is gun access policy, which the Bolsonaro administration is bolstering. Bolsonaro’s approval rating is largely attributed to Public Safety measures (Venagilia, 2019). 

Regarding to Moro’s Anti-Crime Package, it is fair to briefly point out some of the legal modifications introduced: (1) extending maximum jail time from 30 to 40 years; (2) making parole opportunities stricter; (3) instituting the plea bargain; (4) judicial supervision during criminal investigations. However, this extolled new criminal legislation is partially and temporarily suspended by a Supreme Court decision.  It is not clear exactly how this will come to fruition.  

PRIVATIZATION

In 1988 a group of international economists formed a “National Forum,” in Brazil whose aim was to point out “ideas for the modernization of Brazil.”  The forum was coordinated by João Paulo dos Reis Velloso, a former minister of the military regime and a close friend of Mário Simonsen.  Although it was not the central theme of the forum, privatization appeared strongly in Velloso's speech.  When discussing the “state conglomerates (Eletrobras, Petrobras, Telebras etc.)”, the former minister defended strict control of government spending, however, regarding other state-owned companies, Velloso defended the immediate sale of shares on stock exchanges.  For all his talk concerning privatization, Velloso pointed out areas that should not be sold that included electricity, oil, communication and transportation (Valente, 2013). Years later several of these industries would eventually go through privatization or go bankrupt. Between 1990 and 2015 privatizations resulted in over $100 billion in sales both at the federal and state level (Romero, 2021).

A Contemporary Privatizations 

Petrobrás follows the privatization example of state ownership where the state is a majority investor.  Through this style of state ownership the state accepts to follow certain rules to attract private investors as minority shareholders (Romero, 2021).  If Petrobrás were to be privatized, it would follow Embraer’s golden share clause model. That means the government holds a subsidiary veto power.  Even though these companies are private there is still a level of government influence and a minor opportunity for government intervention.  This level of government involvement in these companies also suffices as a possible vehicle for government exertion of foreign policy.  

On February 23, 2021 a provisional measure was brought to the Brazilian congress by the Minister of Mines and Energy Bento Albuquerque along with the Minister of Economy Paulo Guedes to start the process of privatizing Eletrobrás, the behemoth company of Brazilian Electricity.   This move has been anticipated by many as an inevitable part of the privatization process.  The government stake in Eletrobrás will drop from 61% to 45% and the government is expected to generate $11 billion through the share price rise.  Eletrobrás will likely follow Embraer´s privatization process and will adopt the golden share model.  

In a brazen effort to stave off any impression that he is not serious about economic liberalization, Bolsonaro submitted a proposal to congress to privatize the Brazilian postal service.  Whether the privatization is accomplished by direct sale, sale of majority control or sale of part of the company is yet to be determined (Miazzo, 2021).  The proposal for privatization of the Brazilian postal service mandates that the Empresas de Telégrafos e Correios continue to send mail throughout the country; private companies would not be obliged to deliver to the entire country.  Since there is no economic demand to establish mail service in remote places the government will continue to fulfill its public mandate.    


THE POLITICAL DIATRIBES OF THE BOLSONARO ADMINISTRATION

Despite the political frantics of Jair Bolsonaro there has been an underlying motion in his administration to privatize business and develop the private sector of the country which is perennially named "the country of the future." These reforms have taken place in Brazil at a time when perhaps few are noting the significance of it.  The political mayhem and polarization that has gripped Brazil distracts from some prominent yet slow developments in Brazilian economic liberalization.  

Bolsonaro´s rhetoric is mainly of his own doing firstly to rouse up populist sentiment and gain popularity as this is a staple of power perseverance in Brazil, secondly this sends mixed political signals that leaves opponents and pundits off-balance that can further agendas.  To popular media Bolsonaro´s presidency seems to be in a perpetual state of balance regarding his governance, however, there is no better even keel to the tumultuous president´s rhetoric than his agenda for free-market reform that serves to counter any notion of dictatorial perceptions.   

Brazil's government is attempting to greatly reduce the footprint of the state in the economy whether it be through asset sales, privatizations or  concessions across a range of sectors, all of which it hopes will attract foreign investment into the country (Ayers, 2019).  The fact that the Bolsonaro administration exceeded its 2019 target of $20 billion in divestiture is an accolade in itself.  The government of Brazil set a goal of privatizing state assets worth at least $20 billion and in the first nine months of 2019 it privatized $23.5 billion which the government tallied as revenue $19.25 billion (Ayers, 2019).  

The recent firing of the CEO of Petrobras is an example of the "interesting" character of Bolsonaro, while Bolsonaro does not share the same values as Venezuela's Chavez or Maduro there has been marked concern in the media.  The Brazilian president likely understands the maxim coined by LBJ "there is no such thing as bad press."  Where this recent demission has caused controversy this is merely a blip in the screen of his economic liberalization program that Paulo Guedes leads.  The firing of the CEO of Petrobras was quickly countered by the official start in the process of privatizing Eletrobras as well as the proposal to privatize the national mail service.  These rapid initiatives contrast with Bolsonaro´s recent decision involving Petrobras which demonstrates that after all the hype the Brazilian president is still keen on privatizing state-owned enterprises.  

Brazil´s complex political system has inhibited Paulo Guedes and his economic team from making the progress that some expected;  nevertheless there has been pension reform, the recent autonomy of the Brazilian Central Bank and the Law of Economic Liberty.  

The coronavirus pandemic has been costly to the free-market minded economy minister confiscating hope for fiscal rectitude that he hoped to push through (Pulice, 2020). Reforms on privatization have been slower than desired in 2020.  The mere presence and continuation of Paulo Guedes in Bolsonaro´s cabinet portends vast credibility and political capital to ease investor worries.  The Economist forecasts that even though GDP fell 4.4% in 2020, and is expected to recover in 2021 by growing 3.2% (Economist Intelligence Unit Report, 2021).


CONCLUSION


Irrespective of who wins the presidency in 2022 the neoliberal economic groundwork has been laid and it is extremely doubtful that there will be any regression as the largest South American country attempts to become a more open and less protectionist.  The ideas furthered by John Williamson´s work "The Washington Consensus" seems profoundly entrenched in Brazil and there are many reasons to think so. 


Plan Execution 

The historical implementation of Williamson´s points has a consistent past in Brazil.  At the end of the military regime, the liberalization process slowly took its first steps.  However, the acceleration only began with the Itamar Franco administration, through the Plano Real implementation, an important anchor for monetary stability.  In terms of privatizations, Embraer became a role model of how to proceed.  With the lessons of Embraer in mind FHC privatized Telebrás and Vale do Rio Doce and pushed through a Fiscal Responsibility Law.  The empowerment of Federal Agencies could be understood as another example of FHC´s commitment to the Washington Consensus paper, but it's praxis demonstrated to be more of a push-back than an effective accomplishment. 


FINAL CONSIDERATIONS 

A robust transformational process has taken hold in Brazil in terms of economic and financial progress with a distinct capitalist bent.  Irrespective of who wins the presidency in 2022 the neoliberal economic groundwork has been laid and it is extremely doubtful that there will be any regression as the largest South American country attempts to become a more open and less protectionist. The ideas furthered by John Williamson´s work "The Washington Consensus" seems profoundly entrenched in Brazil and there are many reasons to think so. 




BIBLIOGRAPHY


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About the Authors:

Marc Castillo is a Master in Latin American International Affairs from The George Washington University in Washington D.C.  Marc has written several articles related to Brazil and the Mercosul region.  He has lived, worked, traveled, and studied in Latin America.  Marc is a federal civil servant and a consultant. 

 

Sírio Sapper is a graduate of the Federal University of Rio Grande Do Sul in Porto Alegre, Brazil.  He is a lawyer who focuses on military law as well as general law.  He has written several articles related to Brazil and the Mercosul region. Sirio is an alumni from  Justus-Liebig-Universität Giessen in Germany.  He practices law in Porto Alegre, Brazil.