Neoliberalism Raises Its Ugly Head in South America: As Washington Targets Venezuela, Brazil and Arg
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Following his re-election in 2012, Obama announced what was called a ‘pivot’ to Asia to contain and check China’s growing economic and political influence. In 2013-14, it was the U.S.-directed Ukraine coup – i.e. a pretext for sanctions on Russia designed to sever that country’s growing economic relations with Europe. But there is yet another U.S. policy shift underway that is perhaps not as evident as the refocus on China or the U.S. new ‘cold war’ offensive against Russia. It is the U.S. pivot toward Latin America, begun in 2014, targeting in particular the key countries and economies of South America – Venezuela, Brazil, and Argentina – for economic and political destabilization as a fundamental requisite for re-introduction of Neoliberal policies in that
Economic destabilization in its most recent phase has been underway in Venezuela since 2013. The collapse of world oil and commodity prices, a consequence in part of the United States vs. Saudi fight that erupted in 2014 over who controls the global price of oil, has caused the Venezuela currency, the Bolivar, to collapse. The United States raising its long term interest rates the past year has intensified that currency collapse. But U.S. government and banking forces have further fanned the flames of currency collapse by encouraging speculators, operating out of Colombia and the ‘DollarToday’ website, to ‘short’ the Bolivar and depress it still further. U.S. based media, in particular the arch-conservative CATO institute in Washington, has joined in the effort by consistently reporting exaggerated claims of currency decline, as high as 700 percent, to panic Venezuelans to further dump Bolivars for dollars, thus causing even more currency collapse. Meanwhile, multinational corporations in Venezuela continue to hoard more than US$11 billion in dollars, causing the dollar to rise and the Bolivar to fall even more. The consequence of all these forces contributing to collapse of the currency is a growing black market for dollars and shortages of key consumer and producer goods
But all that’s just the beginning. Currency collapse in turn means escalating cost of imports and domestic inflation, and thus falling real incomes for small businesses and workers. The black market and dollar shortage due means inability to import critical goods like medicines and food. Rising cost of imports means lack of critical materials needed to continue production, which results in falling production, plant and business closures, and rising unemployment.
Currency collapse, inflation, and recession together result in capital flight from the country, which in turn exacerbates all the above again. A vicious cycle of general economic collapse thus ensues, for which the popular government is blamed but which it has fundamentally not caused.
http://www.counterpunch.org/2016/01/08/neoliberalism-raises-its-ugly-head-in-south-america/
