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Why Latin America Cannot Support Further Austerity

Further Austerity James Petras RESISTANCE is growing among previously complaint Latin American regimes to the austerity programmes of the IMF, as the massive debt payments continually undermine economic development and recovery. In recent months the newly elected President of Peru has threatened to pull his country out of the IMF and has limited debt payments to ten per cent of export earnings. Brazil's newly elected President, Jose Sarney, has stated that "Brazil will not pay its foreign debt with recession, not with unemployment nor with hunger". Similar statements have come forth from a variety of other Latin leaders. While previous opposition was based largely among labour unions and leftist groups, today's critics include leaders and politicians who have followed IMF directives, complied with its stabilisation recipes and been celebrated as 'models' in dealing with the debt crises. It was precisely this outward compliance with the IMF and the creditor nations which has been heralded in the international business press as a success. The dark-side of the picture, the dimensions which are now pressing upon the current political spokespersons, however, is the profound economic and social costs of this creditor success story. To paraphrase a Brazilian general: the debt payments are going well, only the economy and the people are suffering. Compliance with the debt payments and IMF austerity programmes has had a disastrous effect on the economy and living standards, while the volume of debt mounts and the payments continue their upward spiral. Latin America's conservative and accommodating behaviour has not been matched by any reciprocal payoffs: the trade-off for austerity is more austerity ... and continuing stagnation. What makes the problems more acute today is the existence of political space in a growing number of countries, the establishment of democratic norms, which allow an increasing number of citizens to express their discontent.

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