In the Americas austerity programmes are nothing new. Neither is the loss of sovereignty concerning economic and social policies. Think of Mexico’s debt crisis in 1982 which set off a range of structural adjustment plans focusing on spending cuts and privatization in the region, or think of Argentina in 2001, and the similarities to European crises and “crisis management” will jump to your eye. Or think of Chile, where the Pinochet dictatorship was representative of a liberalization laboratory deeply dependent on austerity measures and its repressive framing. Its imagery of necessities has carried on until today.
Now, there is talk of “intelligent austerity” supposedly needed to confront the structural reduction of growth in the region, based on the “end of the super cycle of raw commodities” (CEPAL). “Intelligent austerity” is supposed to avoid excessive cuts that would affect growth and thus taxes. The UN Economic Commission on Latin America (CEPAL) has warned that the cuts in (public) investment could lead to exactly that. So, austerity is once again on the table in Latin America.
One interesting example for renewed budgetary restraints on the national and the municipal level, considering the fall of commodity prices, is Colombia where one must ask what implications austerity politics has for the current peace process between the government and guerrillas. Three points can be made:
Firstly, the peace process hasn’t affected austerity measures even though original causes of the conflict have likely been exacerbated by cuts to public spending (extreme inequality, rural isolation, violent appropriation of land, missing life perspectives). Because of the fall of commodity prices of raw materials so central to Colombian the export structure, the cabinet has agreed to reduce the investment side of the national budget by 10 %. To combat the fiscal deficit is its central concern, especially since a fiscal balance-regulation was introduced in 2011; the Banco de la República’s high interest rates focus on inflation control. In 2016, the Santos government also tried to cut running costs by introducing an “Austerity Plan” for its own public administration personnel.
Secondly, austerity measures have not seriously undermined the exorbitant security budget. The armed conflict, interestingly enough, has never been presented as the costly undertaking it is, even though the expansion of the military budget between 2002 and 2015 in absolute terms is diametrically opposed to austerity – if you took the latter literally. The internal defence budget alone has revolved around 9 billion Euros since 2012 which are fed into the military fighting of guerrillas annually. Additionally one might consider costs of infrastructure damage. This makes it far more costly to maintain the war than to end it, even though the allegedly high payments to demobilized guerrillas were one point used by those opposing the peace deal subjected to referendum in October 2016. With this and other arguments focusing on the threats that FARC fighters represent to parts of society, the campaign for a ‘no’ vote succeeded . However the campaign leader, Álvaro Uribe, never mentioned that during his government term demobilized paramilitaries formerly involved in illegal economy were awarded ample support for setting up legal businesses.
Third, the politics of austerity deeply embedded in Colombian politics affect the chances for what we might call “sustainable” peace entwined with social justice. A transformative idea of peace which by definition encompasses social justice is hardly possible with an economic austerity policies, with so many people earning only minimum wage or being in long-term displacement with no realistic perspective to return to their villages. It is remarkable enough that the FARC guerrilla agreed to the peace process on the terms that the economic model as such would not be put under scrutiny. The agreements on agrarian reform might be far reaching but in a context favouring large-scale export focussed agrarian industries, where smaller producers under pressure and public investment is cut, reality will rather cement the extreme rural inequality co-produced by decades of forced displacement and violence directed at grassroots campesino movements.
The fourth point is relevant beyond the context of the Colombian conflict. It’s the punitive take on poverty that represents austerity policies’ flip side in Latin America. It will likely persist even if the peace deal is realized with some modifications due to the referendum: prison populations have grown excessively in the Americas (see the World Prison Brief), i.e. from 126/100.000 inhabitants in 2003 to 231 in 2014 in Colombia or from 156/100.000 inhabitants in 2003 to 214/100.000 inhabitants in 2014 in Mexico. Mexico is another fundamental example where the narratives of security and austerity feed into each other in simbiosis, yet affect only parts of the highly stratified society, while some, close enough to transnational capital flows and political, boast their cars and mansions on social media. It seems quite ironic that often, the latter have been union leaders on the one hand and sons and daughters of those entrepreneurs at least bordering on illegal economy with their negocios.
As UNDP reports for the region confirm, most inmates however, complemented meagre income with what is now called narcomenudeo (small scale selling of drugs) or committed crimes such as theft or robbery. They, as the clients consuming the by-products of the drug economy, seem to sit on the lowest steps of the social classification ladder. What role do these segments of population play for society in countries such as Colombia or Mexico? They fill in the large segment of low-skilled, informal and badly paid jobs whose access to social policies is worse than ever after historical structural adjustment has conflated already selective social security programs. The gruesome numbers of police killings and disappearances underline that these social sectors are denied the most basic rights based on class and racial classifications. Austerity and punitive measures are closely linked and reinforce each other. Arguments against a raise in minimum wage are usually based on austerity and the competitive advantages narrative. But as increases in minimum wage would mostly go into consumption this might even have positive effects on domestic demand. It would break the assumed linkage between reduced spending and more growth. As things stand, they provide a growing social base for illegal economy.
Security discourses in turn legitimize policies which leave out social questions or subsume them under a theme of threat. How this relation of austerity and the production of insecurity for parts of society plays out can be observed in contemporary Latin American.
Alke Jenss is a researcher and lecturer at Bielefeld University, Germany and has worked on insecurity and the state in Latin America.