A passage from David Harvey’s A Brief History of Neoliberalism gives a fair summary of the connection between the neoliberalism and US foreign policy. Harvey has just described how the Reagan administration deregulated just about everything (corporate taxes were lowered from 70% to 28%!) and “so began the momentous shift towards greater inequality and the restoration of economic power to the upper class” (p.26). See my recent post on income inequality in America to see just how big it was. On page 27, he goes on to say this:
There was, however, one other concomitant shift that also impelled the movement towards neoliberalization during the 1970s. The OPEC oil price hike that come with the oil embargo of 1973 placed vast amounts of financial power at the disposal of the oil-producing states such as Saudi Arabia, Kuwait, and Abu Dhabi. We now know from British intelligence reports that the US was actively preparing to invade these countries in 1973 in order to restore the flow of oil and bring down oil prices. We also know that the Saudis agreed at that time, presumably under military pressure if not open threat from the US, to recycle all of their petrodollars through the New York investment banks. The latter suddenly found themselves in command of massive funds for which they needed to find profitable outlets. The options within the US, given the depressed economic conditions and low rates of return in the mid-1970s, were not good. More profitable opportunities had to be sought out abroad. Governments seemed the safest bet because, as Walter Wriston, head of Citibank, famously put it, governments can’t move or disappear. And many governments in the developing world, hitherto starved of funds, were anxious enough to borrow. For this to occur required, however, open entry and reasonably secure conditions for lending. The New York investment banks looked to the US imperial tradition both to prise open new investment opportunities and to protect their foreign operations.
The US imperial tradition had been long in the making, and to great degree defined itself against the imperial traditions of Britain, France, Holland, and other European powers. While the US had toyed with colonial conquest at the end of the nineteenth century, it evolved a more open system of imperialism without colonies during the twentieth century. The paradigm case was worked out in Nicaragua in the 1920s and 1930s, when US marines were deployed to protect US interests but found themselves embroiled in a lengthy and difficult guerrilla insurgency led by Sandino. The answer was to find a local strongman – in this case Somoza – and to provide economic and military assistance to him and his family and immediate allies so that they could repress or buy off opposition and accumulate considerable wealth and power for themselves. In return they would always keep their country open to the operations of US capital and support, and if necessary promote US interests, both in the country and in the region (in the Nicaraguan case, Central America) as a whole.
In Nicaragua, the Reagan administration went on to fund terrorists (the Contras, not the only terrorists he supported) in order to undermine the successes of the Sandinista government and maintain US control over the country. This happened throughout Latin America, and indeed the rest of the world.
It is interesting to note that Cuba, the one Latin American country that successfully resisted American domination post-1959 (despite the massive terrorist campaign started by Kennedy known as Operation Mongoose AND the illegal US embargo), also has the highest UN Human Development Index in Central America.
So the one country in Central America that was not under control of the US – Cuba – flourished the most, even with Castro ruling it. That says a lot about the real goals and effects of US foreign policy and the neoliberal reforms that are so closely linked to it.
Filed under: Politics/International Affairs
