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Book No. – 52 (History)
Book Name – Modern World History (Norman Lowe)
What’s Inside the Chapter? (After Subscription)
1. THE ERA OF US DOMINATION
2. SOUTH AMERICA: BRAZIL AND VENEZUELA
2.1. Brazil
2.2. Venezuela
3. MEXICO, GUATEMALA AND NICARAGUA
3.1. Mexico
3.2. Guatemala
3.3. Nicaragua
4. THE CHALLENGE TO US DOMINATION
4.1. Venezuela
4.2. Brazil
4.3. Mexico
4.4. Argentina
4.5. Chile
4.6. Bolivia
4.7. Ecuador
4.8. Nicaragua
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LANGUAGE
Latin America
Chapter – 28
Table of Contents
- Latin America consists of South America, Central America (including Mexico), and Caribbean islands like Cuba, Jamaica, and Hispaniola (split into Haiti and the Dominican Republic).
- Most of these countries gained independence from Spain, while Brazil gained independence from Portugal in the early 19th century.
- Most countries speak Spanish, except Brazil, where Portuguese is the main language.
- Common issues faced by these countries: underdevelopment in industry and agriculture, poverty, illiteracy, and unstable political systems.
- Revolutions, coups, and assassinations were common, and progress was slow and uneven.
- The USA provided economic aid to some Latin American states but with the expectation of political influence to prevent socialist or communist governments.
- US interventions occurred in countries like Guatemala (1954), Cuba (1962), Brazil (1964), Dominican Republic(1965), Chile (1970-1973), Nicaragua (from 1979), Panama (1989), and Haiti (1994).
- Fidel Castro‘s removal from Cuba failed in 1962, and by 2012, his brother Raul Castro was still in power.
- Cold War ended towards the end of the 20th century, removing the Soviet Union as the communist enemy, reducing justification for US interventions.
- After the Cold War, Latin American states gained more freedom to control their own affairs.
- Venezuela led the shift in 1998 when Hugo Chávez was elected, advocating for social services and trading with Cuba, against US interests.
- US-backed right-wing forces tried to overthrow Chávez in 2002, but he survived.
- Chávez became an inspiration for other Latin American nations, with Brazil (2002), Argentina (2003), Chile (2005), Bolivia (2005), and Ecuador (2006) electing leaders focused on reducing US influence.
- Chávez was re-elected in 2000, 2006, and 2012.
- These shifts led to serious consequences for the US, losing economic, diplomatic, and military advantages in South America.
- Some Latin American countries began to form trade relations with China, which negatively affected the US economy.
- Some Latin American nations, like Brazil, began to experience greater prosperity. By 2011, Brazil was viewed as an emerging economy, alongside India, rivaling the US and China.
THE ERA OF US DOMINATION
- Latin America faced economic underdevelopment both in industry and agriculture.
- Factory industries existed, but were still below the level of Europe, USA, and Japan. Issues included a shortage of capital, equipment, and technical knowledge.
- Home markets were unpredictable due to widespread poverty, and exports were hindered by competition from advanced nations.
- Many countries were heavily dependent on a few commodities for exports. A price fall in those commodities (e.g., Chile on copper, Cuba on sugar and tobacco, Bolivia on tin) would be disastrous.
- Agriculture remained backward because of cheap labor, with wealthy estate owners not modernizing. Peru was dominated by huge estates ruled by feudal-like landowners.
- Population growth due to advances in medicine and hygiene, and the Catholic Church‘s stance against birth control, caused challenges.
- Peasant families had insufficient land and moved to cities where jobs were scarce, leading to shanty towns (favelas in Brazil) lacking basic services like water, sewage, and electricity.
- Rich-poor gap widened, with little progress in eliminating poverty and illiteracy.
- Political systems were inadequate, dominated by wealthy landowners and military dictators (e.g., caudillos).
- After World War II, democracy was introduced in some states, but when reforms were attempted, landownersopposed them, using the army to block or overthrow governments.
- Countries like Guatemala (1950), Bolivia (1964), Brazil (1964), Argentina (1966), and Chile (1973) experienced military coups.
- Foreign investment in industry and agriculture took profits out of countries, with US companies controlling key resources in Bolivia and Venezuela (oil), Guatemala (fruit plantations), Chile (copper), and Cuba (sugar plantations).
- International organizations like the Organization of American States (OAS) (1948) aimed to foster cooperationand settle disputes.
- The Central American Common Market (1960) had some success in reducing tariffs.
- United Nations provided technical experts and conferences on increasing exports for underdeveloped nations.
- The USA provided economic aid, with President Kennedy’s Alliance for Progress aiming to inject billions into Latin America for economic and social reforms.
- However, US motives were mixed, aiming to promote moderate reforming governments to prevent communistregimes.
- Aid was sometimes conditional, requiring the purchase of US products, which didn’t help local industry development and led to large interest payments.
- If governments in Latin America were unacceptable to the US, aid would be cut until the government changed.
- The US also provided weapons to rebels to overthrow reforming governments (e.g., Guatemala, 1954) and used military intervention (e.g., Dominican Republic, 1965).
- By the early 1980s, debt and finance crises reached catastrophic levels.
- Neo-liberalism policies, enforced under US dominance, led to privatization, deregulation, and austerity measures, benefiting a wealthy elite and foreign investors.
- Latin American countries borrowed massively from foreign banks, especially US banks, during the period 1973-1982.
- With rising US interest rates (1979-81), many Latin American countries couldn’t repay loans or even pay interest, and had to borrow further just to cover interest.
- In 1991, Haiti’s President Jean-Bertrand Aristide was overthrown in a military coup backed by the CIA after just eight months in office.
- Aristide, influenced by liberation theology, was seen as left-wing, which caused conflict with authorities, and many left-wing priests were arrested or killed, like Bishop Oscar Romero in El Salvador (1980).
- By 1985, Latin America owed about $368 billion. The US continued to drain capital, leaving the region impoverished.
- By 1987, export earnings declined, and Brazil had over $100 million in debt, with Mexico considering debt repudiation.
- The IMF and World Bank intervened with large loans to prevent economic collapse. Mexico secured a 30-year loanand Brazil received credits to reschedule debts.
- Five countries (Brazil, Venezuela, Mexico, Guatemala, and Nicaragua) represent diverse experiences under US domination.
SOUTH AMERICA: BRAZIL AND VENEZUELA
Brazil
- Brazil gained independence from Portugal in 1825 and was a monarchy until 1889, when it became a republic.
- From independence until 1930, Brazil was ruled by military dictatorships, facing economic, social, and political problems leading to several revolutions and attempted coups.
- Genuine economic progress began after 1930 with President Getulio Vargas, who replaced the ultra-conservative government of wealthy landowners.
- Vargas focused on economic planning, particularly encouraging industry, creating jobs in electrical and steel manufacture.
- Vargas became popular and remained in power through World War II; however, by 1945, the army grew weary of his popularity and dictatorial actions and forced him to step down.
- After Vargas was re-elected in 1950, the army was divided on his return, but younger officers allowed him to serve until 1954, when he was accused of corruption and incompetence, leading him to commit suicide.
- Juscelino Kubitschek won the 1955 election and increased the army’s pay to secure support. His major achievement was the construction of Brasilia, though his presidency was largely seen as a disappointment.
- In 1961, Janio Quadros was elected president but resigned after seven months, and Vice-President Julio Goulart took over, aiming to move Brazil towards democracy, propose reforms, and limit profits by multinational companies.
- Goulart’s policies, including opening diplomatic relations with the USSR and proposing nationalization of oil refineries, alarmed the USA and military, leading to his overthrow in a 1964 military coup, with the USA providing naval support.
- From 1964 until the 1980s, Brazil was ruled by military dictatorships, initially through harsh repression, including the banning of political parties, press censorship, and widespread torture of political opponents.
- After 1974, under General Ernesto Geisel, repression relaxed, and the military pursued an economic miracle through extensive foreign borrowing, achieving rapid growth from 1968–74 with exports quadrupling.
- By 1980, Brazil faced a crisis with massive foreign debts, declining export markets, and rising inequality, leading to the suspension of interest payments and growing unrest.
- The military decided to return to civilian rule in 1985 with Tancredo Neves elected president, but he died before taking office, leaving Jose Sarney to deal with the country’s economic problems.
- Sarney struggled with hyperinflation, which led to his defeat in 1989, with Ferdinando Collor becoming president and implementing drastic policies like currency devaluation and freezing bank accounts.
- These measures resulted in business failures and massive unemployment, and Collor was later impeached for corruption in 1992.
- The 1994 election saw a coalition of right-wing groups win with Francesco Cardoso, who implemented the Plano Real to curb inflation, reducing it from 1000% to single digits by 1997.
- Cardoso’s re-election in 1998 saw some economic challenges with declining exports, high government spending, and inflation rising again, leading to another intervention by the IMF.
- In 2002, Luis Ignacio da Silva (“Lula”), a left-wing candidate, was elected president, and by 2011, Brazil was seen as one of the world’s leading economies.
Venezuela
- Venezuela was one of the wealthiest Latin American states due to its oil resources, but until 1945, profits mainly benefited foreign oil companies and a small group of wealthy people under military dictatorship.
- The majority of the population remained poor and illiterate.
- In 1945, Romulo Betancourt, leader of the Acción Democrática party, came to power after the overthrow of the military government.
- Betancourt introduced a new constitution, land reform, heavy taxes on foreign oil companies, and plans to exclude the army from politics.
- These reforms were opposed by foreign companies and wealthy landowners, leading to Betancourt being overthrown in a military coup in 1948.
- For the next ten years, Venezuela was under military dictatorship, with banned political parties, trade unions, and strict press censorship.
- U.S. investments flowed back into Venezuela after Betancourt’s removal, leading to some progress in building steel plants to exploit local iron-ore deposits, making iron and steel Venezuela’s most valuable exports.
- Despite this, wealth remained concentrated among the elite, while the majority of Venezuelans lived in poverty.
- In 1957, Archbishop Blanco condemned the wealth and corruption among leaders while the majority remained impoverished.
- In 1958, a general strike led to the removal of dictator Marcos Pérez Jiménez, and democracy was restored, with Betancourt returning to power.
- Betancourt raised Venezuela’s share of oil revenues to 60%, but did not nationalize foreign companies, disappointing the communist party.
- Betancourt cautiously avoided alienating the USA but gradually lost popularity, completing his presidency in 1964.
- After Betancourt, democracy survived, with Acción Democrática alternating power with the Christian Social Party.
- Venezuela became the main oil supplier for Central America and the USA, benefiting from the oil boom of the early 1970s.
- In 1976, President Carlos Andrés Pérez nationalized part of the oil industry and created PdVSA, the state oil company.
- Venezuela remained politically stable until the early 1980s, with the Communist Party legalized and diplomatic relations with the USSR opened.
- The fall in world oil prices and difficulties with other exports like iron and steel negatively affected Venezuela’s revenue.
- In 1985, President Lusinchi criticized the USA for reducing imports of Venezuelan steel, which severely hurt the Venezuelan economy.
- By the early 1990s, Venezuela faced growing debt and rising unemployment and inflation.
- There were no significant improvements in social conditions, with poverty widespread and education and healthcare gains not maintained.
- Riots erupted in response to growing discontent, and in 1992, Colonel Hugo Chávez led a failed coup after the government sent troops to suppress protests in poor neighborhoods.
- Although the coup failed, it raised Chávez’s profile and revealed splits in the military.
- By 1994, half of Venezuela’s banking system collapsed, and the government attempted to expand gold and diamond mining to reduce reliance on oil.
- After a second failed coup in 1994, Chávez ran for president in the 1998 election, campaigning on a platform of increased social spending and trade agreements with Cuba.
- Chávez won a convincing victory, as voters rejected the two main parties.