May 20, 2007

Castro, ChÁvez and now the entire Latin America is showing that it is time for the world to get together and embrace happy capitalism

After celebrating the execution of Saddam and (almost) writing the obituary of Fidel Castro, the US was sitting pretty and eying an opportunity to engage with Iran. But, the hale and hearty revival of Castro and his iconoclastic interview, blasting Bush for freeing a terrorist and his biofuel plans, terming the latter as a genocide, had put sudden halt to the celebrations. Moreover, much to their chagrin, what they have witnessed over the last couple of weeks are some historic decisions that were taken up by a few countries, which could well mark the end of their hegemony and the beginning of the new world order.

To begin with, lets start with the most historic and yet carefully ignored news of this week. On 1 May 2007, the Venezuelan President Hugo Chávez, severed ties with the World Bank and the International Monetary Fund, after clearing debts in advance and pledged to start a new Banco del Sur. He stated that this new bank would disburse finances for state projects across Latin America. This was followed by another decision by Chávez, and that was to nationalise major joint ventures in the Venezuelan oil industry, which included the joint ventures with Conoco Phillips, Chevron and Exxon Mobil of the US, British Petroleum of UK, Total of France and Statoil of Norway. Concurrently, each of these companies had agreed to hand over the operational control of their joint ventures to Petroleos dé Venezuela, the nodal state owned oil company.

In a related development, i.e. on 4 May, the Brazilian government too invoked compulsory licensing for Merck’s HIV drug known as Efavirenz. This decision by the Brazilian President, Luiz Inácio Lula da Silva, would facilitate the purchase of the generic version of Merck’s HIV drug from many of the emerging economies like India, wherein Cipla would be a major supplier of the same.

Though the three incidents might seem disparate, but they seem to have a common mandate. It seems that Latin America is all set to fight against the established hegemony of the single minded, profit seeking mentality of the First World, led by the US. Why should it not? For decades, the American-led western oil companies have many of the Third World economies like them, in their quest for never ending appetite for new oil fields. In most of these economies with vast reserves of oil,

these companies have made windfall profits, while the local population was made to languish. One can take the examples from Africa or even the Middle East, where most of the oil MNCs have made a fortune, but be it Iraq, Nigeria, or Saudi Arabia, the commonman has been bereft of any benefits. On the contrary, more often than not, they have had to pay with their lives and peace. While these nations were mired in civil wars, the loot by the oil giant continued unabated.

In a similar manner, the western pharma companies have often brutally refrained from reducing the price of much needed drugs. Most of the time, they have even inhumanly refused to supply essential drugs to the dying masses for fear of them not being appropriately used (so that the virus does not develop immunity to the drug). While millions have been dying prematurely for want of anti-retroviral drugs (for AIDS), companies like Merck and Pfizer have been coldly calculating the returns on the capital invested.

The same was true for the multilateral institutions, like the World Bank and the IMF. Over the last five decades, these institutions have been disbursing loans to countries in despair, against stringent conditions (like Structural Adjustment Programmes) and forced them to open up their economies and strategic sectors to western companies. It is no secret that for long, the nexus between the multilateral organisations like IMF, World Bank and especially the American MNCs have worked like a well-oiled machinery.

When Chávez and Lula, through their right moves in challenging the existing set up, the U.S. has reason to worry. The US realises that just in case Chávez succeeds in creating an alternative to the IMF and the World Bank, it might trigger an exodus of other countries, who can neither accommodate nor do much about their displeasure with the IMF. Plus, the chances are also high that Chávez might start trading in the Euro. If that happens, given the fact that Orinoco Basin has potentially one of the world’s largest reserves of crude oil, the U.S. has many reasons to worry.

The biggest worry for America is the growing popularity of the Latin American leaders for they know that their stance had been directed towards the welfare of the people. Interestingly, the Latin American approach is such, which essentially does not shun capitalism per se, but endeavours to make it more humane. Fidel Castro for long, and Chávez and now entire Latin America is showing the world the right way and indicating that the American version of capitalism is not the ideal one. It is time for the world to get together and embrace this new wave of happy capitalism.

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