“A Revolution in Economic Thinking” – USAID and Privatization in Latin America and Eastern Europe (1981–1993)

Abstract: With Ronald Reagan’s ascent to power in January 1981, the conservatives were eager to promote neoliberalism to revitalize America at home and weaken the Communists and the New International Economic Order abroad. Surprisingly, the main vehicle of this ideological offensive was an agency long hated by the American conservatives, the United States Agency for International Development (USAID). Throughout the 1980s, the agency promoted neoliberal dogmas in developing countries, especially in Latin America which was considered as a testing ground for the neoliberal ideology. To achieve this goal, USAID promoted an important tenet of neoliberalism as a tool for economic development: privatization. At the same time, the agency established various collaborations with different types of actors in a “neoliberal nebula” in which it found an important place. At the end of the 1980s, the fall of the Berlin Wall and the collapse of the Eastern Bloc provided the reaganized agency its most important test: the promotion of free-market economy in the socialist countries. This article examines how USAID became part of the ideological offensive led by the Reagan administration through its transformation into a neoliberal actor seeking to promote privatization in developing countries. In the process, Latin America became a testing ground for these new policies, but also a blueprint for those that USAID would soon implement in the Eastern Bloc after the fall of the Berlin Wall.