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  Number 429 | Abril 2017
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Latin America

The extractivism of “leftist” governments: Alternative development model or trap?

“Commodities consensus” was the ideological underpinning of all of South America’s recent progressive governments. All massively extracted and exported their country’s natural resources, taking advantage of the raw materials “boom” triggered above all by China’s demand with its emergence into the world economy. All argued that extractivism was the way to fight poverty. What has this voracity left on the balance sheet as the era of leftist governments draws to an end?

Frédéric Thomas

The wave of governmental changes starting in 1999 with Hugo Chávez’s coming to power in Venezuela, followed by electoral victories for Lula in Brazil (2003), the Kirchners in Argentina (2003), Tabaré Vásquez in Uruguay (2004), Evo Morales in Bolivia (2006) and Rafael Correa in Ecuador (2007) has ended with the weakening or departure of all those governments. Is that weakness due only to the fall in prices of raw materials in the international market?

Despite the specificities of different national contexts, the governments resulting from the “swing to the left” in South America can be described as post-neoliberal even though, in the words of sociologist Bernard Duterme, director of the Tricontinental Center, it is a swing of “variable, partial, atypical, multiple, conjunctural, limited and reversible geometry, but for all that an “effective and unprecedented one.”

They coincided with China’s boom

All these governments attempted to turn the page on the neoliberal hegemony that had reigned in the continent since the 1980s. Their prioritizing of the struggle against poverty and for access to public services, especially health and education, resulted in the return of the State’s role and the countries’ diplomatic projection on the regional and even world stage reaffirming national sovereignty, often combined with a focus on South-South cooperation.

This “swing to the left” occurred and developed at a very particular moment, catalyzed by the raw materials boom and China’s emergence in the world market. Years later, the deceleration of the world economy added to the fall in raw materials prices seem to have brought this cycle of progressive governments to an end. The finalizing of this economic cycle, coinciding with the political crisis that has shaken Brazil and Venezuela, and continued gestating in Ecuador and Bolivia, and the Right’s return to government in Argentina, adds pertinence to the question of whether we are witnessing the end of a historical phase.

The answer is the subject of intense debates in Latin America and even beyond the continent, combining analyses of the legacy these experiences are leaving and the perspectives emerging for the future. We will concentrate here on the four most emblematic cases of the post-neoliberal shift: Venezuela, Brazil, Bolivia and Ecuador.

They followed the traditional logic: Exploit and export raw materials

Uruguayan ecologist Eduardo Gudynas, who has researched extractive industry strategies and their impact on development and the environment, defines extractivism as an accumulation model based on the overexploitation of natural resources destined mainly for export with little or no transformation. It includes the extraction of minerals, oil and gas, and the mono-cropping of soy, African palm and the like…

The Latin American continent’s historical development and its insertion into the world economy have always followed the traditional logic of the raw materials export model. But since the beginning of the new millennium and particularly over the last ten years, all governments of the region, independent of their political stripe, participated in the boom of raw materials exploitation and export. The countries that moved to the left consolidated extractivism in a “progressive” form characterized by the State’s central role in exercising greater control over processes such as for example the nationalization of oil and gas in Venezuela, Bolivia and Ecuador. Appropriating a larger amount of the dividends, they re-channeled them into anti-poverty social and political programs. In so doing, Latin America, particularly South America, increased its dependence on commodities, in this case raw materials.

In the early 1980s, raw materials made up 27% of the continent’s exports, but by 2009 they accounted for 40%, peaking at 42% four years later. By 2013, 73% of its exports also went to China, by then its second largest trade partner. Those same trends were even more accentuated in South America, with raw materials making up 75% of all its exports in 2012-2013.

China is the main source of Brazil’s imports. It is also the main destination for both its and Bolivia’s exports, and the second most important for Ecuador’s and Venezuela’s. Yet manufactured products account for 69% of the continent’s total imports from the rest of the world and 90% of those from China. The Economic Commission for Latin America and the Caribbean (ECLAC) speaks of the Latin America and Caribbean export sector’s “return” to primary goods [raw materials, particularly from agriculture, fishing, mining and forestry, without any manufacturing process], with China the catalyzer rather than the cause.

Venezuela, Brazil, Bolivia and Ecuador are particularly caught up in this process. According to 2013 data for Venezuela and 2015 data for the other three countries, gas and minerals represent nearly two-thirds of all Bolivian exports, while oil accounts for 36% of Ecuador’s and a bit over 85% of Venezuela’s. The concentration of raw materials exports in Brazil was lower, with soy, minerals and oil representing 25% of its total exports.

Between 2011 and 2015, the international prices of metals and energy (oil, gas and coal) fell by half, while that last year the prices of iron (7.5% of Brazil’s exports) and of copper and zinc (10.6% of Bolivia’s exports) all dropped by 30%. Considering that the resources from the exploitation and export of these raw materials are such important components of these countries’ budgets, it’s easy to imagine the effects they suffered. This is particularly true for Ecuador and Venezuela, where the yield from hydrocarbons represented around 40% of the income of both States in 2014.

They repeated the extractivist matrix

This extractivist matrix, a historical characteristic of the Latin American countries, poses important problems. Above all it makes them dependent on some natural resources whose international prices experience serious fluctuations over which they have little or no control.

More problematic is that the social programs launched by those governments were largely financed by the exploitation and export of these natural resources. Moreover, the extractivist matrix they adopted became an obstacle to industrialization and productive diversification, tending to trap them in a rentier economy, i.e. one that derives all or a substantial portion of its national revenues from conceding indigenous resources to external clients, and locking the entire continent into a subordinate role in an international division of labor reproduced from the colonial model. This made them mere suppliers of cheap natural resources for the North and China, in exchange for receiving manufactured products from them.

These post-neoliberal countries proclaimed themselves motivated by a profound desire for change, and did not limit themselves to radical rhetoric. They translated it into legislative and even constitutional reforms, including such outstanding incentives and original concepts as the now famous “Buen Vivir” [most commonly translated as “good living,” although no translation does it cultural justice], the Rights of Nature or the idea of a “social and solidary” economy. Why then did they stress such a traditional trade model, not only failing to transform the extractivist matrix, but actually reinforcing it? The answers to this question can be grouped into two blocs: those who justify it as “a stage” and those who refer to “a transition.”

They did it to fight poverty

Independent of their differences and their more or less radical or reformist rhetoric, the governments of Ecuador, Bolivia, Brazil and Venezuela present extractivism as “a stage.” They underscore a prioritizing of objectives and a particular way of attaining them, and denounce as hidden power games any questioning of their development model. They start from the premise that their priority as governments is above all to pull millions of people out of their deep poverty, and that this necessarily implies growth and development, either confusing or linking those two concepts and goals.

They believe extractivism is the main motor to fulfill that defined priority, as declared on July 30, 2013, by the heads of State of Cuba, Venezuela, Bolivia, Ecuador, Nicaragua and the Caribbean islands of Antigua & Barbuda, Dominica, Saint Lucia and Saint Vicente & the Grenadines, the countries involved in the Peoples’ Trade Agreement of the Bolivarian Alliance for the Peoples of Our America (ALBA-TCP). The basic lines of this vision are synthesized in that declaration’s text on those countries’ “right and need” to benefit from their non-renewable natural resources, which constitute “an important source for financing economic development, social justice and, most importantly, the wellbeing of our peoples, in which it is clear that the main social imperative of our time—and our region—is to fight poverty and misery.”

Given that the high levels of poverty represent a social emergency, isn’t it indeed a priority to fight to eradicate it after years of neoliberalism? And isn’t it also true that anything not directly related to that fight is a luxury? Can these governments allow themselves that luxury today? They were elected based on programs that promised to end or drastically reduce poverty. Wasn’t that the first clause of the contract that committed them to their citizens and required verification and evaluation in the short time of electoral terms, rather than the strategic time of a change of model?

And didn’t they fulfill that promise? According to ECLAC, the percentage of the population in poverty dropped between 2000 and 2011 from 34.9% to 5.7% in Argentina, 37.5% to 20.9% in Brazil, 49% to 32.4% in Ecuador, 48.6% to 29.5% in Venezuela and 62.4% to 22.4% in Bolivia. In total 54 million people emerged from poverty in South America between 2002 and 2011.

The defensive responses to extractivism

Following this logical sequence, the exactitude of the extractivism growth development equation verifies both the success in the war on poverty and the legitimacy of the extractive policies. That’s why extractivism can be justified as “a stage” with defensive and programmatic analyses. Those who do so emphasize the contradictory duality between temporality and opportunities. The progressive governments should have modified their productive matrices… but couldn’t.

In an interview in late 2006 by the journal of the French Institute for International and Strategic Affairs (IRIS), Christophe Ventura, a specialist on Latin America and its civil society and social movements, offered a good synthesis of this type of analysis. Asked whether the Brazilian emergency should or could have translated into a change of economic model, his response was: “‘Should have,’ yes, and the current events are there to remind us of it in a painful way. Brazil’s problem is the same as that of all the other Latin American countries… But ‘could have’ is something else. Like the other progressive governments, the Brazilian government tried to respond to the social emergency. That was its imperative mandate; it was why it was elected and it respected that mandate.”

It would be utopian to think the legacy of five centuries can be changed in only ten years. In addition, these governments were facing both international and national opposition, including within their own ranks, as well as structural hobbles that prevented them from responding to everything they had promised. Brazil’s Workers’ Party (PT), for example, represented at best a third of the force within the coalition with which it governed, and US imperialism didn’t magically disappear during the PT government. It became necessary to forge commitments, even alliances, with the local bourgeoisies and transnational actors…

The defensive justification reminds us that while the process that brought those governments to power was innovative and participatory, it wasn’t a revolution. As a consequence, the strategic options were subject to a network of already–established economic and political institutions that conditioned and even blocked more profound changes. It was necessary to deal with forces already present on the stage and achieve enough maneuvering room to reach a consensus, albeit a partial one, until agreements could be found. The defensive justification of extractivism as “a stage” is a reminder of what realpolitik is and also a lesson in strategy.

“We’re using extractivism temporarily”

The defensive justification of the extractivist model has been accompanied by more programmatic reasons, which involve calling it a transitory stage. From this perspective, it is seen as useful to pass through an extractivist stage in order to reach a post-extractivist one. Bolivian Vice President Álvaro García Linera has offered the best explanation of this logic.

During an international meeting in Quito in late September 2015, he said: “Do we have to extract ourselves from extractivism? Yes, we do. But not by freezing production conditions or returning to the Stone Age. One gets out of extractivism by temporarily using it to put an end to poverty. How can they ask us to get rid of something in five years that has lasted for five hundred? We need a transition period, a bridge that creates the technical, material and educational conditions for a new generation capable of surmounting extractivism. We’re going to continue, because we have to satisfy people’s material needs. But at the same time we’ll begin creating the conditions for a reencounter with Nature, rescuing the indigenous tradition… Extractiv-ism yes, temporarily and necessarily. Only until we can create the new society of knowledge and education.”

From this perspective, extractivism would end after a more or less long road, while we would see the dialectic paradox of the intensification of extractivism making way for a post-extractivist society. The disagreement is thus reduced to a question of time and means, of strategy and greater or lesser patience until a common and shared objective is reached.

They disparage questioning

Along with the justifications offered for extractivism as a stage, we also find a pure and simple disparaging of all questioning of it. In the best of cases, the criticisms are considered incongruent or proof of infantile leftist, ecologist or indigenist thinking. Ecuador’s President Rafael Correa has repeatedly been guilty of this. In the worst of cases, criticisms are viewed as proof of “colonial environmentalism,” as García Linera called it in the same international meeting in Quito. In all cases, they are seen as coming from one of two camps: opponents of development and an opposition with a hidden agenda.

This is where we find the famous anecdote of the “frog enemy of development” which Brazil’s Lula so liked to repeat during his presidency: it begins with the discovery of an endangered species of frog during the building of a tunnel, which brings the work to a halt… The moral of the story was that anything that hinders or delays development is of minimal importance. Moreover, he identified development strictly with the megaprojects during his administration: dams, highways and other infrastructures that were part of his government’s strategic and emblematic plan known as the Growth Acceleration Program (PAC).

In his story, those defending the frog included naïve ecologists and bureaucrats exercising meticulous environmental control, with the indigenous peoples alongside them. Saulo Ferreira Feitosa, adjunct secretary of the Missionary Indigenous Council, very correctly denounced President Lula’s display of incomprehension of indigenous culture in his text “Lula, los indios y las ranas.”

“They’re against development”

Pooh-poohing criticisms of extractivism in the name of development hasn’t been limited to Brazil. It reflects the modernizing and productivist vision of the Latin American Left as a whole, as Argentine sociologist Maristella Svampa demonstrates. Such disqualifying has tended to be more violent in Ecuador, where President Correa declared on December 1, 2008: “Don’t listen to the romantic environmentalists. Everyone opposed to the country’s development is a terrorist.”

The terrorism he denounced encompassed various sectors: those opposed to the national and strategic interest represented by development, those politically manipulated by the rightwing opposition and/or imperialism, and those with a hidden opposition agenda in which the environment is merely a pretext.

The pro-extractivism viewpoints don’t fail to include the importance of preserving the environment, but insist that the environmental agenda must be subordinated to the fight against poverty and the conviction that development is the priority for winning that struggle.

On World Environment Day in 2009 Lula argued that “we want to preserve the Amazon, but we also have to take care of the 25 million human beings who live there, who want a car, a refrigerator, a television… all the things everyone wants.” A year later, returning from the Copenhagen climate change meeting, Lula insisted that the wealthy countries weren’t interested in applying the Kyoto Protocol. “What they want,” he said, “is to prevent the developing countries from reaching the same goals as them.”

Lula reiterated that he would accept no obstacle to Brazil’s development. And he repudiated the North’s criticisms of the South’s consumerism, recalling that the North was developed “on the back” of the world’s environment, not to mention the environment of the South’s countries. He confirmed Brazil’s neo-developmentalist option, now shared by other neighboring “progressive” governments, thus eliminating any possibility of a debate and simplifying the issue down to this: the South is where those who want development and to have a car, refrigerator and television are, and the North is where one finds ecologist hypocrisy.

If criticizing development amounts to halting the struggle against poverty and boycotting national interests, it is legitimate to reject such criticism as either absurd; a Trojan horse of the internal enemy—the conservative or neoliberal right-wingers, who if they return to government would destroy the environment on an even greater scale—or at the service of the external enemy: imperialism. Doesn’t such an oversimplified vision justify the repression and criminalizing of those who oppose development…?

For a post-extractivist transition

Those who consider extractivism “a transition” share the intention of taking seriously new concepts such as good living and rights of nature that grew out of recent struggles and were supported by the Bolivian and Ecuadoran social movements, even to the point of being included in both countries’ Constitutions.

Beyond the specific aspects of their viewpoints, people who share it (Eduardo Gudynas, Maristella Svampa and Ecuadoran economist and politician Alberto Acosta) also share a dual critique of extractivism and development, propose reintegrating the economic dimension into social and environmental relations, and favor revaluing and reenergizing local knowledge, mainly that of indigenous peoples. They thus open up an alternative proposal for a post-development and/or post-extractivist transition.

The document “Propuestas para transitar al post-extractivismo” (Proposals for moving to post-extractivism) at a regional level, published in Lima in 2015, provides a good synthesis of the measures proposed to achieve that transition. While there isn’t enough space to discuss this text here, they propose adopting both urgent and medium-term transitory measures, differentiating depredating extraction from sensible extraction and prohibiting the former. They also favor beginning the transition now, firmly trusting in the capacity of the social movements, conferring a more important role on the State and reorienting the productive matrix of the countries involved. To help distance us from the extractivist governments’ caricature of these proposals, it suffices to recall that these defenders of transition are neither utopists disconnected from concrete realities nor antiquated “anti-mining” and “anti-petroleum” romantics.

Nor is it true that the indigenous movements all oppose the progressive governments’ prioritizing of development via extractivism. Like all social and leftist movements they’re divided on this issue. Moreover, while indigenous people are usually in the front line of mobilizations—226 social-environmental conflicts took place on indigenous lands in opposition to mining and hydrocarbon projects between 2010 and 2013—they aren’t alone. In the struggle against neo-developmentalism, indigenous peoples are alongside peasant movements, women, Afro-descendants and more generally speaking the whole set of actors who have introduced what Svampa calls an “eco-territorial shift” into the social struggle.

Is poverty reduction via extractivism sustainable?

Even taking times, means and strategies into account, the reality is that two visions, two logics, are at a standoff. Those who speak of extractivism as a means of “transition” have a more critical analysis of the post-neoliberal governments’ experience and question the logic of an obliged extractivist “stage.” Although they recognize many achievements by these governments, they question their probable durability and impact and emphasize the model’s non-visible costs and the lost opportunity to transform it. They use conjunctural, structural and strategic arguments to counter those who see extractivism as an inevitably longer “stage.”

Even the fight against poverty, which is the most evident and emblematic achievement of the post-neoliberal governments, must be questioned. Although most marked in the countries that made the “swing to the Left,” poverty reduction has been a general trend throughout the continent, including in countries with governments that did not make that shift. According to ECLAC data, between 2002 and 2011 the population living in poverty dropped from 49.7% to 34.2% in Colombia, from 20.2% to 11% in Chile and from 61% to 49.6% in Paraguay.

More data. While 54 million people broke out of poverty in the continent between 2002 and 2011, only another 4 million at most did so between 2011 and 2014. In Venezuela, the percentages of poverty and indigence have increased since 2012. And in Brazil, the drop in the poverty rate coincided with an increase in the indigence rate. This decline in the achievements is directly related to the change in the world economic dynamics and more particularly to the international fall in raw materials prices. This demonstrates the fragile foundations of the struggle against poverty, its insufficiently structural nature and its dependence on world market fluctuations.

They didn’t touch the tax system

These data both question the political decisions made by the progressive governments and highlight the ones they didn’t make. The fiscal systems in Latin America have traditionally been inequitable, yet the South American governments that moved to the left barely touched the system in their country. Instead of assuring a more equitable redistribution of the country’s wealth through fair tax collection, they sought to finance the struggle against poverty with resources obtained from the exploitation and export of the countries’ raw materials, most of them unrenewable.

By choosing to accentuate extractivism at the cost of dodging a reform of the fiscal system, they avoided a direct confrontation with the traditional oligarchs, who have never paid their fair share of taxes. With that political decision the progressive governments served “both God and the devil” through explicit or implicit pacts with the oligarchy to ensure stability. The most particular case is Venezuela, where a “boliburguesía” (Bolivarian bourgeoisie) created from the government competes with the traditional oligarchy.

More extractivism brings less democracy

The progressive governments’ political decisions resulted in a reconfiguration of the alliance with the social movements that had voted them into power. And when the achievements began to shrink and the prices of raw materials began to fall, the model’s fragility became evident. That was demonstrated by what happened in Brazil when the oligarchy, seeing its interests threatened, suddenly broke the pacts it had made with the PT.

The results of the extractivist model must also be evaluated from perspectives that don’t appear on the balance sheets: environmental damage, external dependence, social conflicts… When the environment isn’t taken into account as it must be, the economic and social cost of its destruction is systematically undervalued. How does one assess the negative impact of extractivism on human health, or adequately appraise the way countries that gamble on extractivism become penned in through an international division of labor that makes their economic diversification hard?

Socio-environmental conflicts related to the use, control or destiny of the land and its natural resources have multiplied and intensified all over the continent today. In addition to the immeasurable cost of the indigenous peoples’ loss of territories, extractivism has exacerbated increased food insecurity and the de-ruralizing of the countries.

At the core of all this is a vicious circle that in the final analysis condemns the extractivist model: indebtedness. The fall of raw materials prices, aggravated by the subsequent deterioration in the balance of payments (as exports bring in less hard currency while the import of manufactured goods maintains or even increases its cost), served only to increase extractivism: more was exploited and exported to compensate for the falling prices. And thus, although extractivism’s financial profitability shrank, the volume of exported natural resources grew, sparking more and increasingly diverse conflicts. It is a truly vicious circle, which Svampa synthesized in this equation: “More extractivism brings less democracy.”

Did they break with neoliberalism?

The bottom line of these governments’ extractivist model isn’t positive. Its partial and skewed dependence on the international market and the local oligarchy, its failure to take into account the “hidden costs” and all the negative effects of the model that make its cost-benefit more problematic, and its distorted conception of development, which it presents as the only one possible, have endangered agrarian reforms, food sovereignty, the redistribution of wealth and the design of another, more viable project for society.

As a result, some analysts of what happened argue that the return of the State’s role in these progressive governments has only amounted to an adjustment of that role to attract foreign investment. And that in turn means they have not broken with neoliberalism at all; if anything they have merely reoriented it.

Bolivia’s Vice President García Linera tried to conceptually reduce the sense of extractivism to a “technical relationship with nature,” forgetting in the process, as Venezuelan socialist Edgardo Lander reminds us, that extractivism doesn’t just produce wealth. It also produces social relations, a particular type of State characterized by authoritarian and rentier positions, a collective self-identity and a model of society. As a consequence, extractivism can’t simply be set aside like a tool, because it shapes policies, influences the relationship between the State and society and also influences the societal project.

It’s paradoxical that these governments didn’t at least initiate a transition toward another project of society while they had the favorable economic climate resulting from the important increase in raw materials prices, enjoyed the positive political climate produced by the broad popular support that brought them to power, and found themselves in such a novel political climate internationally with the strengthening of the region’s image. If it wasn’t possible to break with the traditional extractivist model despite all those positive circumstances, when and how, with what circumstances and more favorable and lasting conditions would change be possible? Must we conclude that transition is impossible, forever relegated to a hypothetical “later”?

Did they really want to?

Maristella Svampa defined “commodities consensus” as the common ideological foundation of Latin American governments, whether or not they had made the “swing to the left.” That consensus consists of betting on development by expanding extractivism. The differences among the different governments, be they post-neoliberal or still neoliberal, fade into insignificance if we look at their common extractive voracity.

It is only a posteriori that differences can be seen: How has the fiscal policy evolved? Who or which sectors have benefited from the profits generated by natural resource exploitation? Without underestimating the resistance and limitations facing the progressive governments, the responses to these questions make it possible to say whether the transition has been successful or a failure. The dilemma is posed more in terms of power than desire.

Couldn’t they or didn’t they want to? It would appear that the “commodities consensus” trapped all the governments, with none of them ever able to free themselves completely. To what point did they believe they could make this transition… or did they really even want to?

The struggle has to be waged against both poverty and dependence. The post-neoliberal governments promised some policies that were abandoned along the way. What can be said about the incoherent or contradictory aspect of their actions when compared with their initial declaration and the Constitutions they themselves redrafted together with civil society? In practice, the negation of the Rights of Nature and of Good Living, reducing them to mere rhetoric for national and international forums, causes confusion, risking these alternatives and the trust the social movements put in them.

We mustn’t kid ourselves

This very synthetic analysis merits more nuances both by country and by the phases each government has moved through. Each country has faced an emblematic conflict (Belo Monte in Brazil, Tipnis in Bolivia, Yasuní in Ecuador) that reveals the contradictions between pretentions and practices. Meanwhile, neo-extractivism is still a structural feature in all those countries. When looking at the balance sheet and engaging in the debate about future perspectives, two questions have to be asked: what actors and what changes?

Today the actors that voted the progressive governments into office appear divided and weakened, frequently trapped in a net of subordination or self-censorship. The alliance, whether implicit or explicit, of the progressive governments with the big agro-industrial businesses, the oligarchy and transnational stakeholders reconfigured the power relations within the business bloc, thus concealing antagonisms under the developmentalist discourse, or even under the “pacha¬mama” discourse, the one promising alternative development or an alternative to development.

The social movements that brought these governments to power are now facing an important dilemma. They mustn’t fool themselves about the contradictions they saw in these years of progressive governments. What is at stake at the center of the problems generated in recent years is their autonomy and strengthening, their capacity to become genuine counterweights to power.

Frédéric Thomas is a political scientist with the Tricontinental Center (CETRI). Edited by envío.

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