THE BOLIVARIAN ALLIANCE FOR THE AMERICAS: AN ALTERNATIVE DEVELOPMENT STRATEGY

• DOI: https://doi.org/10.2307/41945941
• Pages: 128-144
• Published date: 01 July 2011
• Date: 01 July 2011
• Author: Helen Yaffe

THE BOLIVARIAN ALLIANCE FOR THE

AMERICAS: AN ALTERNATIVE DEVELOPMENT

STRATEGY

Helen Yaffe

University of

Leicester

Abstract

This

article

outlines the

regional

and international

context in which ALBA

has

emerged

and

is

expanding

before

explaining

the

concept

of

unequal

terms of trade which is

central

to

ALBA's

conception.

It examines the ideas

and influences embedded in ALBA

which

distinguish

it from

previous regional

trade blocs and

generate

its

potential

to transform the

domestic

production,

distribution and

development

priorities

of

participating

states,

challenging

the

coercive

power

of international financial

institutions

(I Fis)

and multinational

corporations.

The

article also

considers the threats and

challenges

the Alliance

faces.

Keywords:

ALBA,

development,

neoliberalism,

Washington

Consensus

Economic

Background

Since the

1980s,

neoliberalism

in

Latin America and the Caribbean has

resulted in

increased

poverty

and low

economic

growth.

Out of the

challenges

to and

eventual

collapse

of the

'Washington

Consensus',

heterogeneous

development strategies

have

re-emerged.

The

'emerging

economies',

including

the BRIC

countries

(Brazil,

Russia,

India and

China),

provide

examples

of

stronger

state

involvement in

driving

economic

growth.

The financial crisis and

unprecedented

government

bailouts

for

the banks

in

the US and

Europe

have further undermined faith in

the

curative

power

of unconstrained

market forces.

The coercive

capacity

of the

(US-dominated)

IMF

and the World Bank

Group

is

being

undermined.

The

proportion

of the IMF's loan

portfolio

to Latin

America

fell from 80

per

cent

in

2005 to

1

per

cent

in

2007 (McElhinny

2007).

The

US

dominance

in

loans,

investments

and trade with Latin America has been

challenged

by Europe

and

by

China since the 1990s.1

Argentina

and Bolivia have

relieved

themselves of US debt

with

help

from Venezuela and China. The

adoption

of

local

currency payment systems

in

international trade is

undermining

the

leverage

of

International

Journal

of Cuban Studies 3.2 & 3.3 Summer/Autumn

2011

AN ALTERNATIVE DEVELOPMENT STRATEGY 129

the US dollar. Numerous

regional

trade blocs have been

established,

particularly

in

Latin America.

In

February

2010 a new

organisation,

the

Community

of Latin

American and Caribbean States was established with all 32

independent

countries

from the

Americas,

except

the United States and Canada. The

largest economy

in

Latin

America, Brazil,

now

eighth

largest

economy

in the

world,

has

commercial

and

development partnerships

with

ALBA

and its member nations.

The financial crisis and

global

recession since 2008 exposed

Latin America

and the

Caribbean

to

greater

fluctuations than usual

in

commodity prices

and

investment

capital

and markets.

Countering

these effects and

undermining

the

traditional role of IFIs

in

the

region,

the Venezuelan

government

uses its oil

revenues

to

provide

credit

and

investment funds to its

neighbours

directly

or

through

multilateral institutions.

The

concern

over

'peak

oil' and the

threat

of

fossil fuels to the

global

climate has reinforced international anxieties about

energy politics.

The

availability

of

energy

resources

within the ALBA

countries

shapes

internal

politics,

the role of the

state

in the

economy

and

state-society

relationships

and is

being

translated into a source of

political strength,

which is

used to

promote

the

ALBA

agenda.

Unequal

Terms of Trade

Opposition

to

perceived

unequal

terms of trade is central to ALBA's

conception,

originally proposed

as an

alternative

to the US-driven Free Trade

Area of the

Americas.

(Neo)liberal

free trade treaties

promote

the

theory

of

'comparative

advantage'

in

international

trade,

under which advanced

capitalist

countries,

the first to

industrialise,

should

export high

value added

products

and services

to

'developing'

countries,

which

provide

the low value added raw materials

and

agricultural products

needed for the industrialised world. This

perpetuates

underdevelopment.

There is a long history

of

opposition

to this liberal doctrine

in

Latin America.

When the

region's export-orientated

economies were devastated

by

the Great

Depression

of the

1930s,

governments responded

with 'economic nationalism'

as

they sought

to

reduce

dependence

on

foreign

investments

and

trade and to

foster

domestic markets

and balanced

growth.

Set

up

by

the United Nations in

1948,

the Economic Commission for Latin America

(ECLA) recommended an

interventionist

government approach

to

stimulating manufacturing

and

industry.

Keynesian-style

macroeconomic instruments should be

adopted by

the

state to

foster

entrepreneurship

and accumulation.

ECLA's

development

strategy

had

three

elements:

agrarian

reform,

regional

integration

and

import

substitution industrialisation

(ISI),

to

replace imports

with

domestically produced

alternatives. Little

progress

was made

in

terms of

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