Neoliberalism According to Benjamin Keen, Reaction Paper

These Latin American countries are now, more than ever, part of the world economy, which has made other nations more interested in bolstering democracy in the region -- they now have investments to protect. The United States, for example, exert significant pressure on these Latin American democracies. The U.S. has stepped in to prevent military coups, and if it can't prevent the overthrow of democracy, it immediately punishes the new regime with economic sanctions. Before neoliberalism, few international countries had any sort of leverage over Latin American rulers and their insular economies. One salient example happened in Peru in 1992 when President Fujimori tried to dismiss the congress of Peru and install himself as a dictator. Fujimori had instituted neoliberal reforms and felt the need to concentrate power, but the United States warned him that going through with his autocratic plan meant severe consequences. The International Monetary Fund (IMF) and other nations would divest from Peru. He wasn't happy about it, but Fujimori caved to U.S. And international pressure and restored the basic outlines of democracy in Peru.

A similar threat also worked in Guatemala, when President Jimmy Carter threatened to cut of all aid unless the country's leaders cleaned up their human rights record. This time, however, the threat failed. Neoliberalism had not taken a firm hold in Guatemala and the government had no reason to bow to the pressure. Had the country been more integrated into the world economy at the time of President Carter's demands, they likely would have responded positively. In the late 1980s this actually became the case. Guatemala enacted reforms that opened its economy to international investment and trade. So when President Clinton made the same demands in 1993, the leaders eventually backed down. President Clinton's economic sanctions carried a real threat.As more Latin American countries have turned to neoliberal policies, the pressure to behave doesn't just come from outside of the region; it comes from within as well. The countries of Latin America are more intertwined than ever. While each country has to deal with the internal effects of neoliberalism -- which can include positive results, like fewer internal challenges to the democracy -- they know which kind of pressures to exert on their neighbors.

Several countries are still dealing with the negative consequences of neoliberalism on democracy, which often include decreased electoral participation and a general feeling that foreign businesses are now in control of the country. Opening up their economies to the world has made them, in general, more susceptible to the ups and downs of the world economy, which they were insulated from before. The countries also provide subsidies and tax breaks for investors, which can lead to a reduction in the fund available for social programs.

The overall result of neoliberalism in Latin America is, as Weylan pointed out from the very beginning, a mixed bag. Market reform has contributed to the survival of democracy, but that democracy is not necessarily of high quality. The exact same forces, however, have changed the balance of power in these countries and have weakened domestic agencies. The jury is still out.

References

Keen, Benjamin. A History of Latin America (2003). Wadsworth Publishing: Lexington, KY

Weyland, Kurt. Neoliberalism and Democracy in Latin America: A Mixed Record. Latin American Politics and Society, Vol. 46, No. 1 (Spring 2004), pp. 135-157. Distributed by Blackwell publishing on behalf of the Center for Latin American Studies at the University of Miami. Retrieved from the….....