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In the first few days of December the United States marked emphatically another stage in its progressive imperial decline by frenetically and unexpectedly closing a bi-lateral "free trade" deal with Peru. Just a couple of weeks beforehand, Peru had joined Ecuador and Colombia in withdrawing from negotiations on a broad Andean regional trade treaty. Then, abruptly, early in December, Peru's negotiators were ordered to Washington. Outstanding differences were resolved and the negotiations declared successfully closed. Peru sold out its sovereignty to the United States for the sake of marginal benefits like increased asparagus exports. It was not so much a US victory as an unmistakeable sign of the Bush regime's failure to sustain credible leadership in the Americas.

The significance of the trade deal with Peru for the United States is overwhelmingly political. On December 4th, the party of President Hugo Chavez won over 60% of seats in the Venezuelan National Assembly. The US supported opposition withdrew from the elections so as to avoid an obvious rout. Then, at the end of the Cuba-CARICOM summit in which 15 Caribbean countries participated together with Cuba, the final declaration at Bridgetown in Barbados called on the United States to honour its international obligations and hand over super-terrorist Luis Posada Carriles to the Venezuelan authorities to face charges for the murder of over 70 people in a terrorist attack over Barbados in 1976. The Bridgetown summit final declaration also called on the United States to end its illegal economic blockade of Cuba (1)

Shortly afterwards, in Uruguay's capital Montevideo, the Mercosur summit of Brazil, Argentina, Uruguay and Paraguay welcomed Venezuela as a full member. Venezuela's President Chavez said "Venezuela's entry has more to do with politics than economics".(2) Despite that remark from the Venezuelan president, among the projects agreed at the summit was a US$10bn gas pipeline to connect Venezuela with its Mercosur partners.

Likewise, in late November, Venezuela and Colombia agreed to build a two-way 215km pipeline between the Paraguana Refinery in north-western Venezuela and Punta Ballenas, on Colombia's La Guajira peninsula. The US$230m deal is seen as the first stage of a multi-faceted energy transportation project that will eventually serve all the Andean nations as far as Chile and also energy customers in Asia.(3) Venezuela is also negotiating a US$600m refinery improvement program with the Uruguayan ANCAP oil company, among other significant joint projects. In all of these deals, the United States is nowhere.

Peru trades in its sovereignty - the national context

US efforts to bully Latin America into a Free Trade Area of the Americas were decisively snubbed by the Mercosur countries at the recent Mar de Plata summit of the Americas. Subsequent US success in railroading vulnerable countries like Peru into bilateral trade deals are a poor consolation prize - and one that is unlikely to endure undamaged. Peru's President Toledo has less than 10% support according to opinion polls this year. His Council of Ministers president Pedro Pablo Kuczynski who travelled to Washington to oversee the forced closure of the deal actually has US citizenship. Kuczynski overruled Peru's chief trade negotiator Alfredo Ferrero who wanted a joint deal including Colombia and Ecuador.(4)

Toledo could hardly care less. He is not standing for re-election when the next presidential vote takes place in April 2006. Prior to Toledo's and Kuczynski's vicarious trade seppuku on behalf of Peru's people, the negotiations had stalled on US insistence that Peru throw open its agriculture and other vulnerable sectors to competition with US competitors. As usual in these deals, the most damaging concessions come in the investment clauses. US corporations will be able to claim as unlawful restraints on investment almost any national legislation that prevents them getting what they want. Disputes will end up being handled in supra-national tribunals in the United States.

Peru's legislature can wave national autonomy goodbye. That is what "free trade" and globalization mean. Peruvian trade negotiators seem naively to have hoped that previous Andean preferential trade deals with the US would be a base from which to negotiate better trade arrangements. As other observers have put it, far from being a baseline, those earlier deals were always regarded by the US as a ceiling.(5) For the extortionist US negotiators, the deal from the start was, "give us everything, now we've got you hooked, or lose what little you have" That threat is supplemented by the looming presence of international financial institutions like the IMF and the World Bank and the suave rustle of debilitating debt agreements that have to be paid under threat of losing access to further credit.

This systematic gangsterism is deliberately designed to be anti-democratic and repressive, striking deals with oligarchical elites that intentionally target the most vulnerable, the impoverished majority. As in Mexico's case, Peru's agriculture and food sovereignty will be decisively weakened by the trade deal with the US. Medicines were also a key target for US negotiators, as in the Central American Free Trade Agreement (CAFTA). Mining, agri-business, energy and pharmaceutical multinational corporations will be the main beneficiaries. As these deals progress, the US negotiators will point to precedents like CAFTA and the deal with Peru to try and force countries like Bolivia, Colombia and Ecuador to cave in and accept the same hopelessly disadvantageous terms under threat of losing earlier preferential treatment.

The regional perspective

The deal with Peru is a hollow victory for the Bush regime for two main reasons. Firstly, it is a clear measure of US decline. Did the US government care much in 1990 whether or not it had a trade deal with any country south of the Rio Grande? Now it spares no effort to secure them. Secondly, the deals are likely to prove of temporary benefit as political developments steadily turn national public sentiment decisively against US influence. In Ecuador, three presidents have been forced from office by popular unrest in recent years for favouring US and other foreign interests.

In Bolivia, two presidents have been forced to leave office for the same reason. By contrast, defence of national interests has been a defining policy in sustaining the popularity of Venezuela's President Hugo Chavez. Even Colombia's pro-US President Alvaro Uribe is having to proceed carefully in his country's trade negotiations with the US government. In contrast to Toledo, Uribe is seeking re-election next year.

For the majority of people in the affected countries, including Peru once the treaty is ratified, the effects of these trade deals are markedly negative. They invariably provoke sharper extremes of poverty and inequality, widespread disruption of rural communities, increased environmental degradation, greater employment insecurity and dramatically increased capital flight. President Toledo has predicted, absurdly, 6 million more jobs as a result of the trade deal. But the miserable results are in from Mexico after over a decade of the North American Free Trade Agreement (NAFTA) and it's plain that Toledo's prediction is idiotic. No wonder Toledo's party was wiped out in Peru's municipal elections last year.

Toledo sneaked his trade team off to Washington and closed the deal behind the backs of Peru's nearly 30 million people. Even when ratified the Peruvian trade deal with the US may well face attempts at revision from Peru's new government after next year's April elections. Colombia's is the next likely government to sign away its people's sovereignty. After that, predatory US trade representatives may well run out of ready prey. Political crises threaten in both Ecuador and Bolivia to an extent that would cast doubt on the legitimacy of any trade deals signed by those countries in the near future. If progressive indigenous leader Evo Morales wins the Bolivian presidential elections scheduled for December 18th, the US will most likely have to cross Bolivia off its list of intended "free trade" victims.

The US is now engaged in a desperate holding operation to sustain its dwindling authority and prestige in Latin America. Its drive for a Free Trade Area of the Americas has failed. When the World Trade Organization summit in Hong Kong folds without agreement this month as is most likely, the US will have to review its options. There is little more mileage in trying to strike futile trade deals with oligarchical governments in countries whose peoples may well repudiate them subsequently.

On the other hand, the rich countries' global effort to bully and cajole weaker countries into a "free trade" strait jacket via the WTO also looks incapable of achieving legitimate acceptance. As international trade negotiations tread water, the US will certainly be working hard to undermine alternative models of sovereign integration such as Mercosur and Venezuela's more ambitious Alternativa Bolivariana para las Americas (ALBA). Efforts at fracturing national states by promoting separatism in resource rich areas like Bolivia's Santa Cruz and in Venezuela's Zulia may well increase.

ALBA dawns in the US

Despite US government hostility, ALBA - the acronym means dawn in Spanish - made it a new day in the Bronx and parts of Boston lately when the CITGO subsidiary of Venezuela's PDVSA State oil company began distributing cut price fuel oil for people on low incomes. Commentators from Forbes to Bloomberg to the Washington Post have tried to tag CITGO's solidarity initiative as merely a political ploy by Venezuela's Hugo Chavez. "The populist South American president would relish being able to show that Venezuela, far less wealthy than the United States, had come to the rescue of low-income people here, analysts said." (6) A useful specimen there of how the US information media mix unattributed sources with fact to create mind-numbing quasi-news propaganda.

In fact CITGO is responding to a request circulated this year by a group of nine US senators to the major oil companies to help provide relief for vulnerable people with their heating bills through the winter. A total of around 70,000 families in Boston and New York's Bronx - more than a quarter of a million people - are expected to benefit from price reductions of around 40% in the current market price. Coporate US media commentators seem completely unable to acknowledge that far from being a propaganda coup, the CITGO heating oil initiative is just one more example of a people-first economic model that shows up deals like that between Peru and the United States as the exercises in corporate gangsterism they really are. In the third quarter of 2005 five oil corporations – Exxon, BP-Amoco, Chevron, Shell and Total - earned US$33.4bn. They still refused to match little CITGO's gesture.

Venezuela's cheap heating oil program in the US embodies a practical alternative to imperialist capitalism the corporate media simply refuse to acknowledge. On Jamaica's "Breakfast Club" radio show last month, Fiona Mackie, a Latin America specialist for the Economist Intelligence Unit gave a succinct summary of the way Venezuela's policies are systematically misrepresented by international media. Mackie alleged that neighbouring countries would be unable to copy Venezuela's policies because they lacked both sufficient natural resources and the political will.

The ridiculous assertion about the region's natural resources was surely a slip, perhaps understandable in an unrehearsed radio interview. And it is certainly true the local oligarchies who run those countries are terrified of the participatory democracy practised by Chavez. But a lack of political will for change is manifestly not true of those countries' peoples, especially in Colombia, Bolivia and Ecuador.

Economic integration putting people first

Corporate media commentators like Mackie also like to contrast Venezuela with Brazil. They argue that Chavez is taking irresponsible advantage of windfall oil profits to buy political support with his government's social programs. While in contrast Brazil is displaying maturity by following "sensible" financial and economic management. These advocates of global corporate capitalism argue, of all things, that Chavez's health, education and income support programs are not sustainable. The same commentators generally ignore Brazil's uncontrolled soya production, which is wrecking the medium and long term sustainability of Brazil's agricultural economy.

It makes no sense to deny the intimate relationship between solid social investment and long term economic well-being. A recent report from the Economic Commission for Latin America and the Caribbean estimated the number of people living in poverty at over 213 million, over 40% of the continent's peoples. (7) Presumably this is a “sensible” outcome of twenty five years of aggressive “free market” proselytism overseen by the International Monetary Fund and the World Bank. On the other hand one might perhaps remark sardonically that poverty is certainly sustainable.

After Cuba, Venezuela is the country in the region doing most to counteract the mendacious nonsense of capitalist apologetics delivering the basic health and education services that are the fundamental pre-requisites enabling impoverished families to attain a decent life. If there is anything in which Brazil is being sensible it is in its still half-hearted attempts to imitate Venezuela's efforts to reduce inequality. Despite disappointing overall economic growth, Brazil this year reported three million fewer people living in extreme poverty compared to 2004, thanks largely to its "beca familia" income support program. (8) Similar programs in Venezuela seem to be achieving significant reductions in poverty and inequality there too.

With its Andean trade strategy in disarray and the determination of the Mercosur countries to work out their own style of trade integration, US government influence and credibility in the region is diminishing year by year. At the political level, these economic realities have a startling multiplier effect. The failure of traditional oligarchical politics and corporate capitalist economics in Latin America is obvious. More and more people want their countries' resources to benefit their people instead of foreign corporations. The recent vote in Venezuela was the first in a series of elections through the continent focusing around that and related issues. Next week it will be Bolivia's turn. Most of Latin America will have presidential elections through 2006. It will be a decisive, win-some-lose-some year in which the decline of US influence in Latin America is likely to become irreversible.