The turn of the century saw
the coming to power of the three best presidents that the region has had in
half a century: Fernando Henrique Cardoso (Brazil), Ricardo Lagos (Chile) and
Alvaro Uribe (Colombia).
While they nominally adhered
to different political persuasions (center left, left, center right), all three
proved pragmatic, enjoyed popular support[1],
and made a dramatic difference by tackling their countries ‘greatest challenges:
hyperinflation and bad governance (Brazil), the gap between rich and poor
(Chile), security and narco-guerillas (Colombia).
Sadly, today, Brazil and
Colombia seem to have fallen back into their past travails, Chile is trying to
turn the page on attempts at forced reforms while Venezuela has sunk into chaos
and poverty amid the general indifference.
Argentina is finding it hard to emerge from years of populism, Peru is
overcoming the resignation of its president, and Ecuador is feeling the fallouts
from the Colombian Peace Process.
A measure of Latin America’s
frustrating lack of progress is its decreasing economic weight in the world: from
9% of world GDP in 2004 to 3% in 2014[2]. Meanwhile, Asia ex-Japan went from 19% to
43%. While much of this divergence is
due to China and some to lower commodity prices, Latin America’s rate of
development still lags behind most of Asia as can be seen in the table below:
1990-2016: GDP increase on ppp basis, in
constant 2011 US$[3]
|
||||
Argentina
|
129%
|
|||
Brazil
|
88%
|
|||
Colombia
|
147%
|
|||
Mexico
|
100%
|
|||
China
|
1046%
|
|||
Indonesia
|
235%
|
|||
Malaysia
|
319%
|
|||
Philippines
|
201%
|
|||
So what will it be? Decades of professional and personal
involvement with the region lead me to be skeptical, although I can’t dismiss
the possibility of a sudden change for the better here and there. With presidential elections due later this
year in Brazil, Colombia, Mexico and Venezuela and recent ones in Chile and
Peru, there won’t be long to wait.
Brazil
In Brazil, the so-called Lava Jato criminal investigation has
revealed the enormous scope of institutional corruption: started with Petrobras, it has uncovered organized
graft in federal and state agencies and government-controlled companies. Tellingly, fully privatized steel and telecom
companies were unscathed. These
investigations also revealed that the corruption had not only tainted
politicians in power but those in opposition as well, thus weakening democracy.
To wit, last month the armed
forces spoke up for the first time in decades when General Eduardo Villas Boas
warned against impunity[4].
The most popular politician, Ignacio Lula da Silva, is in jail and unlikely to
run for another presidential term yet he leads election polls. The approval ratings of current president
Temer are in the 6% range and he barely escaped indictment. Prominent opposition leader (PSDB) Aecio
Neves is in the crossfire of Lava Jato
investigators. Sadly, the PSDB was also
F. H. Cardoso’s party.
So where does that leave
Brazil, 6 months prior to its presidential elections? With a wide open field of pre-candidates[5] which
includes two main-stream heavy weights and a handful of “outsiders”.
Geraldo Alckmin, a four-time
governor of the state of Sao Paulo and current leader of the PSDB, ran for the
presidency in 2006 when he did surprisingly well, forcing President Lula into a
second round run-off. Odebrecht, the
corrupting force behind the Lava Jato
scandal, denounced him for illicit campaign financing. The investigation is ongoing. He has high level experience in politics and
government and is a moderate.
Henrique Meireilles, a banker
by training, has held high government positions (Central Bank Governor,
Minister of Finance) under Presidents Lula and Temer. He announced that he
would run under the MDB[6]
banner, a large traditional party to which President Temer also belongs. Meireilles is well respected in both private
and public sector spheres. He is viewed
as an honest technocrat. He has briefly
served in Congress.
Behind these two main stream
candidates, the field widens and spans the whole political spectrum.
Rodrigo Maia is the Speaker
of the Lower House. He is affiliated to
the DEM, a traditional right of center[7]
party. Born in a political family, young
(47) yet in his fifth congressional term, Maia strives to present himself as
the “new wave”. He will have to contend
with his association with President Temer and an ongoing Lava Jato investigation.
Jair Bolsonaro is the most
obvious product of the Lava Jato
backlash and the discredit of traditional politicians. Sometime referred as the Trump of the
Tropics, Bolsonaro is a right wing politician who is campaigning on law and
order, nationalism, against crime and corruption. He has served half of his adult life in the
Army and the other in Congress.
While his rants have earned criticism
from the media, he does have a popular following, and unlike Trump, his
denunciations of criminality and corruption hit close to home for many
Brazilians. As the leading rightwing
populist, his presidential future largely depends on how the supporters of Lula
(the leading leftwing populist) will vote.
An intriguing candidate is
Joaquim Barbosa, former Chief Justice of the Supreme Federal Court (STF). Dr. Barbosa is the most prominent black
figure in government and politics. From
very humble origins, he earned university degrees in Brazil and in France. He served in the diplomatic corps before making
a distinguished career in the judiciary.
He earned wide respect for
leading a kicking and screaming STF through the early Lava Jato investigation and the indictments of the same politicians
and party (PT) which had appointed him to the STF high office. He has not announced his final decision, but
given his curriculum vitae, his proven integrity and the fact that half of the
Brazilian population recognizes itself as black, he could play a major role.
Marina Silva is an attractive
political figure: an orphan, coming from poverty, she earned a university
degree and became active in politics and the environment early. She became a
senator, then Environment Minister under Lula.
Switching from the PT to the Green Party (PV), she garnered 19% of the
votes in the 2010 presidential elections and 21% in 2014. So far, she appears to be the main
beneficiary of Lula’s drop in the polls.
Given that she lost to Dilma
Rousseff (PT, 41%), who was later
impeached, and to Aecio Neves (PSDB, 34%), who recently resigned under a cloud from
the leadership of the PSDB, she could score better this time.
Ciro Gomes is perhaps the
last figure in that second group. A
native of the Northeast like Lula, Gomes was one of Young Turks of politics
when he was elected to Congress at 26 and governor of the state of Ceara at 33.
He was twice a candidate to the presidency, in 1998 and 2002. Gomes is affiliated to the PDT, a leftwing
party allied to Lula’s PT. With a
combination of intellect, nationalism and progressive outlook, Gomes wants to
lead the left in the absence of Lula. He
will have a hard time to rally the PT which traditionally has looked inward for
its leaders.
The table below presents 6
scenarios from an April Datafolha poll.
The first 5 assume that neither
Lula nor Temer run. #1further assumes
that the PT fields Fernando Haddad[8] to
replace Lula in the first round, #2 that the PT opts out of the first round.
Second round scenario #3 pits
Haddad vs. Bolsonaro, #4 pits Haddad vs. Alckmin, and #5 assumes the Left is out
of the 2nd round.
Scenario #6 assumes that Lula
runs in the first round.
(1) 1st
rd with Haddad
|
(2) 1st
rd PT stays out
|
(3) 2nd
round Haddad. vs. Bolsonaro
|
(4) 2nd
round Haddad. vs. Alckmin
|
(5) 2nd
round w/o the Left
|
(6) 1st
round with Lula
|
|
Lula
|
out
|
out
|
out
|
out
|
out
|
31%
|
J. Bolsonaro
|
17%
|
17%
|
37%
|
out
|
32%
|
15%
|
M. Silva
|
15%
|
16%
|
out
|
out
|
out
|
10%
|
C. Gomes
|
9%
|
9%
|
out
|
out
|
out
|
5%
|
J. Barbosa
|
9%
|
9%
|
out
|
out
|
out
|
8%
|
G. Alckmin
|
7%
|
8%
|
out
|
37%
|
33%
|
6%
|
F. Haddad
|
2%
|
out
|
26%
|
21%
|
out
|
out
|
R. Maia
|
1%
|
1%
|
out
|
out
|
out
|
1%
|
H. Meireilles
|
1%
|
1%
|
out
|
out
|
out
|
1%
|
Others
|
13%
|
13%
|
out
|
out
|
out
|
7%
|
Blank
|
23%
|
23%
|
33%
|
38%
|
32%
|
13%
|
Don’t know
|
3%
|
3%
|
4%
|
3%
|
2%
|
3%
|
What do these polls
show?
1.
Despite his
conviction and jailing, Lula is the only leader with broad appeal; at present,
he would win the elections hands down. Without him, blank or null votes would
rise by half to over a third of total.
The PT has no real substitute for him.
2.
With him out, “outsiders”
beat the main-stream candidates, Marina Silva doing particularly well and Barbosa
looking very credible. Bolsonaro does
well in the first round but loses to Silva in the second. So far, Alckmin lags, as do Ciro Gomes and
Meireilles.
It is still very early. Fundamentally though, I see two reasons to be
wary.
One is that the “outsiders”
do not enjoy the backing of large parties, and in the Brazilian world of
notoriously free-wheeling politicians, securing a working majority in Congress in
order to govern would be very difficult[9]. The Macron Model is unlikely to work
here.
Another is that society faces
long standing cultural challenges: despite the disastrous Lava Jato experience and their rejection of institutional corruption,
Brazilians in their majority remain against the measures needed to deal with
it, such as the full privatization of national champion Petrobras[10].
In my view, Joaquim Barbosa
is the candidate that comes closest to the FH Cardoso mold. He would however face great challenges in
Congress, as did Cardoso, but he could be a transformational president.
Colombia
It is hard for an American to
imagine living decades in a country where the inhabitants of small towns,
villages and the countryside are at the mercy of armed groups that kidnap,
extort or kill anyone perceived to have some money or oblivious enough to run
for local or national office. Over the
years, these armed groups penetrated the cocaine business, offering protection
and then outright partnership with national and international drug dealing organizations.
Yet this was the Colombian reality
until Alvaro Uribe was elected president in 2002. As he made security his top priority, the
local economy took off: before, few wanted to invest in industry when the payback
period took years and when one’s personal safety was at risk every day; who
wanted to develop new crops when every trip to a farm or plantation carried
with it the threats of kidnapping or shake-downs?
Uribe’s decision to fight the
FARCs decisively, going as far as raiding one of their camps across the border
with Ecuador and exposing Venezuela’s support for these groups paid huge
dividends: besides the economic benefits, it rallied the population behind its
president[11] and forced the FARCs to
seek a negotiated peace.
Unfortunately, Uribe’s
successor, perhaps too anxious to reach the goal line quickly, seems to have played
a strong hand poorly. There was a
blueprint for resolution of such a conflict from the Federal Government of
Malaya’s war with the communist insurgency of Chin Peng in the 1950s:
1)
amnesty for the
insurgents for their actions in combat, and assistance in social reintegration[12];
exit to China for those who didn’t want to accept the proposed deal,
2)
no general cease
fire but accommodation locally to permit surrenders,
3)
no political
recognition of the communist party or of a future political role for the
insurgency movement.
In the end, what the
insurgency leaders most wanted was an organized political future. The talks failed and the insurgency was
further weakened. In 1960, surrendering
guerrillas were offered amnesty and social reinsertion, while a number of the
top echelon, including Chin Peng, fled to Thailand and China.
Despite the example of the
successful Malayan experience, the Colombian government elected to:
1)
raise the insurgency
profile by involving foreign governments which were anything but impartial
facilitators, namely Cuba and Venezuela,
2)
throttle back
military pressure to the point of accepting several temporary cease-fires,
3)
not only allow
the FARCs to have a national political role but guarantee a minimum
representation in Congress and a role in municipalities they had occupied,
4)
allow them to
keep a “war chest” of some US$300 million that dwarfed that of any other
political party,
5)
decriminalize the
cultivation of coca, which, when combined with the interdiction of aerial
fumigation[13], resulted in a massive
increase in coca acreage,
6)
create new
institutions for both the administration of justice for past crimes committed
during the conflict and new avenues and procedures for implementing such tasks
as agrarian reforms, reinsertion, victim reparations, etc. with the result that
the FARCs would often be co-executors with the Colombian government.
The flawed strategy of the government
and the undue complexity of the Peace Agreement are such that nobody really knows what
to expect. What is clear,
however, is that the FARCs, an insurgency movement which never had any
significant popular following, will enjoy a unique political and economic
position.
Coca acreage now approaches
500,000 acres and a former top FARC negotiator was recently arrested for drug
trafficking. Other top leaders are
reportedly under investigation[14]. New information has also surfaced that
Mexican cartels are still linked to FARC members and have become more active in
Colombia. All things considered, many in
Colombia wonder whether the FARCs have truly broken with their drug trafficking
past.
Against this disturbing
background, the political scene is tense and the country is divided. The
May presidential elections are likely to have a binary outcome: good or bad.
The two leading candidates
include Ivan Duque, 41, from the Centro Democratico and Gustavo Petro, 58, from
the Movimiento Progresistas. The first
is the political heir to Alvaro Uribe and a senator, with more experience in
economics and finance than in politics.
The second sits well to the left, is a politician by calling and was a
very controversial mayor of Bogota[15]. He was also active in the M-19 guerilla
movement[16].
Besides his leftist ideology
and sympathy for the Bolivarian revolution in Venezuela, Petro has displayed
quite an authoritarian streak as mayor and the belief that the means justify worthy
(in his view) ends. While he is right
that Colombia should develop its agribusiness sector, it is unclear that he
knows how to do it; certainly, going “green” and eliminating oil and gas
exports would cripple the economy and not help achieve his goals.
In the latest polls, Duque
leads with 36% (down 6 points from the previous survey), Petro comes second
with 22% (down 4 points). Former
Antioquia governor Fajardo is third with 17% (up 4 points).
Like Brazil, Colombia is
again facing one of its long-drawn challenges.
Unlike Brazil, its leftwing candidate is more uncompromising, more
exclusionary. In that, he also reflects
differences in national cultures.
But like Brazil, Colombia
still needs to find a way to raise millions out of poverty as quickly as
possible, without mortgaging its economic future and without exacerbating
social and political polarization.
Many in Latin America thought
that Venezuela, by electing a charismatic leader like Hugo Chavez, and by being
able to draw on its huge oil riches, would succeed in that endeavor. It didn’t.
Rather, the bloating of the public sector, the indiscriminate subsidies,
corruption, incompetence and disdain for the rule of law brought the country to
its knees and on the verge of social disintegration.
Which brings us to Ricardo
Lagos and Chile.
Chile
For years, Chile was the economic
star of the region thanks to sound economic policies, stable institutions and
the respect for the rule of law. Yet the
parentage of these policies (military regime of 1973-89) and the very different
paths followed by its neighbors made it difficult for governments to toe the
line. Over the last decade, Chile
experienced a growing polarization which culminated in the second Bachelet
government (2014-18) trying to ram through important tax and educational
reforms, and generally stepping back from the past liberal model. Again, the ends may have been laudable, but
the means weren’t and the country paid the price in terms of lower economic
growth and growing social dissent.
It is worth noting that
Michelle Bachelet (from the left) and Sebastian Piñera (from the right) will have alternated in
government for 16 years, reinforcing perhaps calls for real political change. More to the point, neither president
succeeded in enlisting broad popular support and in combining economic growth with
income redistribution in a socially harmonious way.
One president did it, the
Socialist Ricardo Lagos (2000-2006). By
boosting economic growth, he was able to finance new healthcare and other
social programs and benefits. A bigger
pie made it more palatable to cut bigger slices to those in the greater need of
them. It is sad that his candidacy in
2017 was invalidated by the more progressive elements of the Chilean Left.
Conclusion
Latin America is in dire need
of inspiring and effective governments. Over
the past half century, only three presidents, in my view, met that test; while the
bar is high, not clearing it is very costly.
In important ways, a majority of Latin American countries are worse off
today than they were at the turn of the millennium.
As we consider the
forthcoming presidential races in Brazil, Colombia, Mexico and Venezuela, we
see no clear leader (Brazil), a new but unproven one (Colombia), a divisive[17] populist
(Mexico) or a disastrous tyrant (Venezuela).
The steady hands have the
experience but are either under a reputational cloud or unable to connect with
those at the bottom of the social ladder.
The fresher, socially responsive ones, have little political backing to
govern if elected. In the mix are populists
from left and right whose potential downside is evident and whose possible
upside is as yet unclear.
Yet history doesn’t move in a
straight line; for better or for worse, inflexion points seem to pop up out of
nowhere and lead us to unexpected avenues, or at least avenues which we thought
were further removed.
In Brazil, Alckmin could be
exonerated, Meireilles and Barbosa could join forces; in Colombia, Duque could
reveal himself as a born communicator and effective statesman; Obrador, if
elected, could be so focused on Mexico’s biggest challenges (security,
corruption) that he could have less time or resources to lead an economic or
social upheaval. These are many IFs.
For the time being however, the
aspirations of the people in Latin American are not matched by the profiles of
their presidential candidates which leads to greater social tensions and
potentially to more political instability.
Latin America is not alone in
facing such dilemma. Europe and the US
have recently gone through their own elections, often selecting outsiders. One can argue that the results there have
been uneven, but most would agree that American and European institutions are
probably more resilient, thereby providing better protection should political
experiments go wrong.
[1] FH Cardoso less so, at least during his
presidency.
[3] Source: World Bank.
[4] The thinly disguised warning was given days
before the Supreme Court’s decision as to whether or not former President Lula
should go to jail.
[5] Candidacies will be officially registered in
August.
[7] DEM has a rich history. Previously known as the PFL, it traces its
origins to the Democratic Social Party and before that to ARENA which ruled
during the military years. Famous ARENA
and PFL politicians include ex-president Jose Sarney and Antonio Carlos
Magalhaes.
[8] Former minister and mayor of Sao Paulo.
[9] The only large party with voting discipline
has been the PT. In his days, FH Cardoso
had a very hard time working in Congress.
[10] Even if the State retained a golden share.
[11] Throughout, Uribe enjoyed broad popular
support which allowed him to better manage problematic relations with such
neighbors as Ecuador and Venezuela.
[12] Provided of course that they surrendered
their arms and accepted to abide by the laws of the land.
[13] Which the FARCs had strenuously opposed.
[14] Luciano Marin Arango aka Ivan Marquez would
be in the sights of the DEA according to the Wall Street Journal.
[15] His management was harshly criticized for
lacking transparency and being ineffective.
He was sanctioned and recalled from office by popular vote.
[16] The history of the M-19 is interesting, and
while they did commit violence, including the bloody siege of the Palace of
Justice, they were not involved in drug dealing and were motivated by a
political and social agenda.
[17] Andres
Manuel Obrador, the leftwing ex-mayor of Mexico City, lead a Reforma newspaper poll with 39%, the
second place going to left-right coalition leader Ricardo Anaya with 25% while
Jose Antonio Meade from the PRI comes third with 15%. “No preference” got 18% of the responses.
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