V.

Liberal Republics and Dictatorships

The Creole elites who inherited power after independence abolished many Hispanic institutions, taxes, and customs in line with 19th-century liberalism, but political turmoil and economic decline characterized the early years of most of the new nations. By the mid-19th century, conservative dictators, or caudillos, dominated the larger part of the region.

With Spanish and Portuguese rule broken, British commercial power became the dominant and unifying external force in much of Latin America. Eventually, in the late 19th century, liberalism triumphed, and a new emphasis was placed on commercial agriculture, mining, and modernization. The United States then succeeded Britain as Latin America’s principal market and source of investment capital, and in the 20th century the United States established control over most of the region, intervening frequently in the internal affairs of individual states.

The liberalism of the 19th century came to be seen in the 20th century as little more than a means of conserving the power of a small national elite. Technological modernization and massive European immigration combined in certain countries, especially Argentina and Brazil, to create a growing middle class engaged in the new urban industries. For the vast majority of Latin Americans, however, progress was limited, and for many rural dwellers, poverty grew worse. Revolutions affected the socioeconomic structure of several states, including Mexico, Bolivia, Cuba, and Nicaragua. Cuba became a Communist state under Fidel Castro, while the Nicaraguan Revolution brought the Marxist-oriented Sandinistas to power. Peru, Bolivia, and Chile attempted to design local Latin American forms of socialism. Latin American countries continued to depend on the export of raw materials for their revenue, rather than converting to industrial economies. The region underwent urbanization without industrialization, as millions of people flooded the cities with little chance of finding a job or success. Since governments could not, or did not, provide them with adequate housing and services, most were forced to live in shantytowns that came to encircle all large Latin American cities.

One of the key problems facing Latin America in the late 20th century was the rapid rise of external debt during the 1980s. The borrowed money had been used by corrupt, or at best inefficient, governments in non-productive projects. These large debts meant that many countries had to spend up to 30 percent of their net income to pay interest on their loans. Some countries, such as Peru and Mexico, refused to pay or demanded rescheduling of payments. Others, such as Brazil, have been able to pay off their debt by exchanging natural resources for debt reduction. Another problem that has plagued several countries is rampant inflation, a result of poor economic management as well as the international recession of the 1980s. International donor agencies such as the World Bank have required countries to impose harsh fiscal austerity measures, which in turn have caused unemployment, a higher cost of living, and widespread poverty.

During the 1990s many Latin American nations moved away from the traditional Latin American approach to economies, in which the government played a major role in economic planning. In an effort to boost economic production, many nations removed price controls, cut back on social programs, and reduced the benefits and guarantees formerly enjoyed by government workers. Many countries, including Venezuela, Brazil, and Argentina, began to rapidly privatize nationalized industries, such as electric and telephone companies.

These policies enhanced efficiency, but they also increased unemployment and caused growing discontent among the poor. In addition, many Latin American economies suffered serious setbacks following the collapse of economies in Asia in 1997. The Asian crisis spread to Latin America, where economies slowed considerably and wary foreign investors withdrew their funds. A reduction in world oil prices in the late 1990s also caused problems in countries such as Venezuela and Ecuador, where oil production generated a considerable portion of the national wealth.

The development of free trade within Latin America and with other countries has also had an economic impact. Beginning in the early 1960s with the Latin American Free Trade Agreement (LAFTA), several Latin American countries have formed trading associations to improve their competitive positions in the world market. In 1969 the Andean Pact (Bolivia, Chile, Colombia, Ecuador, Peru, and Venezuela) was formed, but by 1977 Chile had withdrawn from the union and most of the countries had reverted to exporting their most successful products in disregard of trade agreements, and in open competition with each other. Several new regional groupings have since emerged: the Central American Common Market (CACM, founded in 1960, comprising Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua); the Caribbean Community and Common Market (CARICOM, founded in 1973, comprising 13 Caribbean nations); the North American Free Trade Agreement (NAFTA, founded in 1994, comprising Canada, Mexico, and the United States); the Southern Cone Common Market (known by its Spanish acronym MERCOSUR, founded in 1995, comprising Argentina, Brazil, Paraguay, and Uruguay, with Bolivia as an observer); and the Group of Three (founded in 1995, comprising Colombia, Mexico, and Venezuela). Each group attempts to provide advantages for its members by setting low tariffs on certain goods in order to stimulate the flow of goods, services, and capital investment.

Several radical political changes have also deeply affected Latin America since the 1960s. Military dictatorships have generally given way to democratically elected governments, and countries such as Panama, Nicaragua, and Mexico now allow foreign observers to monitor their free elections. Economic problems, however, have had a significant impact on the political systems in the region. Elected governments still tend to support their own interests, or those of elite groups. In many cases suffrage and voter turnout are not true indicators of democracy; many of the poorest residents are now poorer and more marginalized than they were in the 1970s. Most investment is still directed to the growing urban centers, leaving rural zones underdeveloped.

In several countries the desperation stemming from poverty, governmental neglect, corrupt politics, and unrealizable progress, has stimulated charismatic local leaders to initiate regional protest movements. Northeastern Brazil, Eastern Colombia, the Peruvian Andes, and the Mexican state of Chiapas are some of the sites of such movements. In Peru the Shining Path guerrilla movement was responsible for thousands of deaths and massive infrastructure destruction between the years of 1970 and 1992, when its leader was captured. Another Peruvian rebel group, the Tupac Amarú Revolutionary Movement, captured the Japanese embassy in Lima in 1996 and held dozens of diplomats and military personnel hostage for several months before government troops successfully stormed the building and killed all the hostage-takers. In Mexico a rebel group made up primarily of Native Americans gained international renown in January 1994 when it attacked federal troops and captured several towns in southern Mexico. Known as the Zapatistas, the rebels were able to pressure the Mexican government to agree to institute reforms that would give Native Americans more power in Mexico’s political system. In Colombia, as in Peru, drug traffickers pose serious threats to peace and stability.

Faced with such challenges to political power, many governments have turned to brutal repression to silence the voices of protest. Human-rights violations have been documented in Peru, Colombia, Guatemala, Nicaragua, and Cuba. The globalization of the world economy also poses great challenges for Latin America’s future. In the mid-1990s, Latin American nations have focused on increasing their participation in an increasingly technological world economy.