Lessons From Latin America

Unlike in Europe, the left in Latin America is still winning elections – albeit with difficulty. After 12 years in power, President Hugo Chávez has just seen his party win Venezuela's election with a much reduced majority. In Brazil the Workers' party is on the way to its third presidency in a row – though Dilma Rousseff must run off against the centre-right José Serra. And Ecuador's Rafael Correa has survived an attempted coup. They all face similar challenges – heavy pressure from regional oligarchs, and civil unrest from their grassroots social base. To understand this, look at how the left came to power in the first place.

In the 80s Latin America emerged from the dark days of military dictatorship with the hope that democracy would bring social justice. It was not to be. Forced to accept the free-trade doctrines of the Washington consensus, the weak and ill-prepared governments of the day auctioned off public resources at bargain-basement prices, mainly to Spanish capital and were drawn into global capitalism. The elite benefited, while the majority gained nothing. Jobs barely increased, public sector wages were "readjusted", and poverty rose dramatically. Workers suffered a double disadvantage: their labour cost more than that of their Chinese counterparts, and they were less well educated than eastern Europeans.

As the redistributive and welfare roles of government were progressively abandoned, the image of the old nation state began to erode. Poorer sectors of society dissociated their idea of national identity from the state. There was a deep crisis of political representation: traditional parties alienated voters, and the politicians who replaced the military quickly exhausted their credibility.

This was the context in which the left came to power. In the last two decades mass mobilisations – particularly of indigenous peoples – brought down four presidents in Argentina, three in Ecuador, and one each in Venezuela, Brazil, Colombia and Peru. Social movements challenged US hegemony and stopped the privatisation of state enterprises and natural resources, building a new sense of identity forged by ethnic and regional demands and uniting the excluded and marginalised. Before the centre-left's electoral victories, a cultural victory had already been won.

In Venezuela, Bolivia and Ecuador new constitutions were the expression of these new pacts: a legal framework recognising collective social and environmental rights and creating the conditions for radical democracy, emerging from the decolonization of states.

These progressive governments have driven a reconstruction of the architecture of power and geopolitics. Throughout the continent there has been a profound redefinition of the relationship with the US and global financial organisations, expressed in the rejection of the policies of the White House and the emergence of new institutional arrangements favouring regional integration on the continent's own terms.

It was no accident that the ambitious US-backed initiative for a free-market framework – the Free Trade Area of the Americas – was torpedoed, or that Ecuador did not renew the contract for a US military base at Manta. Foreign relations are flourishing in other directions, however: solidarity with Cuba and active diplomatic ties with Iran, and growing Chinese investment.

The central element of this redefinition has been the demand for national control of natural resources – which has produced major conflicts with multinationals. Today the states have greater control over resources, but social and indigenous organisations have criticised governments for continuing to base their strategies on an "extractivist" model – in which they remain primarily producers and exporters of raw materials.

These grassroots challenges over the exploitation of natural resources are gaining in strength, despite the international boom in the price of raw materials. Additional challenges have emerged – the Confederation of Indigenous Nationalities of Ecuador accused Correa of being authoritarian, and environmental groups argue that he has given undue concessions to large mining companies. In Brazil the MST – the landless workers' movement – has criticised President Lula for failing to make advances in land reform. In Venezuela there is discontent with the ruling bureaucracy and the "Bolibourgeoisie" – those who have become wealthy under Chávez's socialism, which reveres Simón Bolívar, the 19th-century aristocrat who won Venezuela's freedom from Spain. In Bolivia, the more radical indigenous groups have criticised new gas exploration projects.

The extraction of natural resources has brought considerable new income to the continent, which these governments have used to finance social programmes and to combat poverty. During Lula's two terms his family plan has reached 50 million of Brazil's poorest people. In Venezuela 60% of tax income was dedicated to social programmes between 1999 and 2009; the poverty index fell from 49% to 24%, and the level of extreme poverty from 30% to 7%. Economic elites in each country have attacked this social spending, but corporate profits have actually increased – in Brazil under Lula, three banks earned $95bn in eight years.

The social transformation under way in Latin America has not yet produced definitive results. Disputes over the role of the state and the direction of regional integration and development policy have not been resolved. The waters of change are turbulent – and are likely to remain so for several years to come.