The Amazon Fires: Globalization’s Chickens have come Home to Roost

Over the last week, the extensive media coverage of the fires raging in the Amazon has caught the attention of the leaders of the world’s most powerful countries. The G-7 meeting of western nations offered $20 million (U.S.) in aid and urged the Brazilian government of right populist president Jair Bolsonaro to take measures to contain the growing inferno in the Brazilian Amazon. What is happening in the Amazon is a disaster of horrific proportions; the fires are destroying vegetation and wildlife and threatening the lives and livelihoods of the Indigenous peoples who live there.

The Root of the Problem: Latin America’s Commodity Dependence

The media, for the most part, has placed the blame on Brazil’s president, who has made no secret of his blatant disregard for the environment and for Brazil’s environmental regulations. He has proclaimed his support for the agricultural development of the Amazon, backing big agribusiness in its designs to expand production there. The use of man-made fires has been a common mode of clearing land and this has increased markedly since Bolsonaro took power. However, a less reported fact is that fires are also raging in the Bolivian Amazon—a country ruled by left populist president Evo Morales, who has (in the past at least) declared support for both environmental protection and Indigenous peoples.

Presidents Bolsonaro (left) and Morales (right)

Hence, while the ideological predisposition of Latin American political leaders plays some role in this latest global environmental crisis (Bolsonaro flouts environmental protection openly), it is far from the whole story. The reality is that recent and current governments in Latin America, regardless of their particular ideological bent, have been intent on finding ways to expand commodity production—the difference is that left governments have made a more concerted effort to reap higher levels of government revenue from these exports, which are then used to expand social programs and national infrastructural development. Indeed, left populist leaders have proclaimed accelerated resource extraction as a necessary component of national development and improved social welfare. However, as the academic literature on the topic has shown, Latin American left governments have garnered tough opposition for the harm their commodity extraction policies have wrought on local environments and Indigenous communities.

It is this preoccupation with commodity extraction and export expansion that is at the very root of the crisis faced by the Amazon—and it is not just agricultural development that threatens the Amazon but mineral, oil extraction, and logging are also a growing cause of environmental degradation and community destruction. Economic globalization has operationalized a set of neoliberal policy prescriptions premised upon the notion of comparative advantage: that if every country focuses on the economic activity (ies) that it does best, the economies of all countries will growth efficiently. A corollary assumption is, of course, that the benefits of economic growth will trickle down to the less-well-off within each country, thereby “lifting all boats.” In the current era of economic globalization, what Latin America is deemed to do best is commodity production and exports. While criticisms of this still dominant paradigm have been vociferously pronounced from many quarters given its many failings (inequality, environmental degradation, among others), its major premises are still very much in place.

Latin America’s role as a Commodity Exporter

Latin America’s insertion into the new global economic order occurred with the implementation of neoliberalism in the wake of the debt crisis of early 1980s. Countries were pressured to dismantle industrial support systems (tariff protection, tax regimes, industrial development banks), and various other types of state intervention geared to the expansion of productive activities. Not only did countries eliminate any controls on foreign investment, but in accordance with the advice of international financial institutions and conventional economic wisdom, governments took measures to attract foreign investment, particularly in resource development. In the ensuing decades, Latin American countries, became increasingly dependent on commodity exports (minerals, oil and agricultural products such as soy beans) as the driver of economic growth and foreign exchange earnings. Over 90 percent of the exports of Bolivia, Ecuador, and Venezuela are natural resources, while over 60 percent of the value of exports from Brazil, Chile, Argentina, Colombia, Paraguay, Peru, and Uruguay are some combination of fuel, minerals, and agricultural products.

As long as commodity exports and prices were rising on the international market, as they did between the early 2000s and about 2013, Latin American countries did well. The left leaning populist regimes of the region increased the revenue obtained from resource extraction and used the funds for social programs that contributed substantially to poverty reduction. The economic growth of commodity booms facilitated job creation and rises in wages and salaries. However, the commodity boom had various negative consequences, not the least of which was the sharp rise in corruption, a process facilitated by the sudden availability of enormous commodity-generated resources. These revenues, in some cases, became an essential ingredient facilitating business confidence and political stability.

The sad end of the Commodity Boom and its Implications

All of this has come to a sad end, however. The drop in commodity demand and prices has rendered the economic situation of Latin American countries desperate. It has produced political turmoil and a shift to the political right in a number of cases and provided an ideal opening for the return of regimes attuned to the dictates of the free market, comparative advantage, and sympathetic to international capitalist interests. This difficult set of circumstances has encouraged even greater interest in even more commodity extraction as a strategy to spur economic growth, bolster export earnings, and make payments on the debt.

Brazil’s president Jair Bolsonaro, whose administration enthusiastically supports a return to free market neoliberal policies has called for an increase of logging and agribusiness in the Amazon. His administration has stated that environmental laws infringe upon export earnings, particularly in the agricultural sector. Bolsonaro is closely allied with international capitalist mining and agribusiness interests, which have been lobbying the Brazilian government for further opening of the Amazon.

Bolsonario, however, is not alone in his enthusiasm for promoting investment in the Amazon. Up to 800,000 hectares of the Bolivian Chiquitano forest were burned to the ground between August 18 and August 23, which is more forest than is usually destroyed across the country in two years. This spike in fires was immediately preceded by two events. One was a law supporting slash and burn farming practices. The other was an announcement by President Morales of measures to promote beef production for export. While providing farming opportunities for poor peasants (one of Morales key bases of political support) was no doubt a motivation for encouraging the fires, increasing export earnings from increased agribusiness production was likely a much more important objective. Garnering poor peasant support and increasing export earnings are both powerful incentives to clear land for agriculture in the Amazon.

Economic globalization, which has contributed mightily to Latin America’s heavy dependence on commodity exports, has bred political turmoil and regimes (whether leaning left or right), which are now committed to deepening the resource extraction model. The de-industrialization promoted by market liberalization programs initiated in the 1980s was premised on the argument that Latin America’s import substitution industries were non-competitive and inefficient--and they were. But, better industrial policy, not its elimination, was the answer. The fires in the Amazon clearly illustrate how economic globalization, with its blind faith in the free market model, is leading to disaster. Importantly, the decisions made by Bolsonaro and Morales are symptoms, not root causes, of the problem.