The Miami Herald: The US Pushes Latin America Into China’s Arms

Latin America did well in the previous era of globalisation, from 1870 to 1930. What ultimately undermined the region’s progress then was turmoil in the world economy and the failure of its governments to allow more of their peoples to share in the benefits of growth; extreme inequalities underlay the half-century of political instability that followed. This time it can be different. Ever since the days of Rivadavia and Rosas, Latin American rulers have been divided between those who looked abroad in search of modernity and those who sought inspiration within, in the interior of their own countries and their traditions. A synthesis is surely within reach: the benefits of economic openness are clear, but the politicians must ensure that they reach the hinterland. While democracy can only thrive in Latin America if it goes hand in hand with faster economic growth, development is in part a political task, involving policies, institutions and choices of the kind that democracies are best equipped to mould.

Democracy has not been imposed on Latin America by a conquering army. Its arrival in plenitude, if not in perfection, draws on two centuries of liberal constitutionalism and democratic experiment. Over the past quarter of a century, democratic governments in Latin America have solved several big problems. They have conquered inflation, though that battle was long and costly. They have ended the self-imposed economic isolation of the region. In most places they have cut the armed forces down to size and trained them in a new democratic role. And they have started to tackle the region’s historic legacy of extreme inequality, widespread poverty, chaotic urbanisation and educational neglect. They have had to do this while grappling with the rise of organised crime, partly fuelled from outside the region. These achievements have allowed other long-neglected problems, such as the poor quality of education in the region, to move to the forefront of public debate. The tasks ahead are less onerous but more complex. They can be summed up as further improving the region’s economic performance, eliminating the extreme poverty that still afflicts 80 million Latin Americans, and ensuring that all in the region have access to economic opportunities, and that they can enjoy the rule of law and the rights and responsibilities of democratic citizens.

The return of economic growth in the years after 2004 provided a valuable breathing space for the region’s democracies. Though the growth was partly due to high commodity prices, it was also in part the consequence of the attainment of financial stability. It made the record of economic reform look more effective. But it also blunted the impetus for further reform. That was understandable, but unfortunate. Over the past two centuries, Latin America’s capacity to be knocked off course by outside events and its own shortcomings and mistakes is legendary. The sickening economic collapses of the 1980s and 1990S caused great hardship. Preventing their recurrence was vital. Fortunately, there are reasons to believe that Latin America is much better placed to ride out a slowdown in the world economy when it comes. Most governments no longer have large fiscal deficits, most have reduced their external debt and developed local-currency debt markets.

Raising the rate of economic growth in a sustainable way means increasing investment from its average level of 21 percent of GDP in 2006, by a few percentage points. That is perfectly feasible. But it requires offering investors, both local and foreign, a stable and predictable environment, free of the risk of expropriation or abrupt reversals of macroeconomic policy. This in turn requires the construction of political consensuses - a new social contract. At its heart lies the need for governments to provide an effective safety-net for the poor, the unskilled and unemployed, while investing more in education, training, infrastructure and health. Governments also need to do more to promote innovation, research and development and to let their companies compete without bureaucratic hindrance and oppressive regulation. And further reform of legal systems and policing is essential, to protect citizens and contracts alike.

Most Latin American countries were better placed in 2007 than they had been at any time in the previous quarter of a century. Incomplete though they were, and despite some costly mistakes of implementation, the economic reforms have provided the region with a platform from which to seek its fortune in the world. As we have seen, while they went under the unfortunate name of the ‘Washington Consensus’, the reforms were more a local creation than a foreign imposition. In many countries, increasingly self-confident and inclusive democracies are slowly filling in the gaps in the reformers’ original list with imaginative social polices, institutional improvements and better governance. Radical social movements of sometimes questionable representativeness might grab the headlines with street demonstrations, but the power of public opinion, expressed through the media, through local government or in civic groups is often more significant in quietly achieving change. In this everyday manner, Latin Americans are creating ‘citizens’ democracies’. Racial discrimination lingers, but is much diminished. Latin America’s democratic societies are overwhelmingly mestizo and mulato in character. At the same time Latin America faces a favourable demographic moment, with fewer school-age children but not yet a large number of old people. This provides the opportunity to complete the reforms the region needs; it also makes it urgent to seize it.

With the rise of Hugo Chavez and his recruitment of a handful of countries for the ‘Bolivarian alternative’, for the first time since the end of the Cold War liberal democracy seemed to face a rival in Latin America. An accident of history - the surge in the oil price from 2001 onwards - has given spurious plausibility to an alternative course that Latin Americans seemed not so long ago to have turned their backs on. It is hard to overstate what is at stake in this ideological rivalry, this battle for Latin America’s soul. The ‘Bolivarian alternative’ is based on flawed premises. Its diagnosis of the region’s problems is based on a mistaken reading of history. It has given new life to dependency theory, when Latin Americans ought to be focusing on what they have to do for themselves in the fields of competitiveness, education and equal opportunity. Its penchant for constitution-writing is a dangerous distraction, not least because it adds another element of uncertainty for businesses to grapple with. If a new constitution were the most important tool for achieving democracy and development, Latin America would be the world’s leader on both counts.

Because of its dependence on oil wealth, chavismo was not easily exportable to other countries in any lasting manner. And politics in places like Bolivia and Ecuador had its own logic, or lack of it, and was not a simple copy of Venezuela. Even so, the rise of the ‘Bolivarian alternative’ was a cautionary tale for liberal democrats in Latin America. It was another reminder that extreme inequality provides fertile ground for populism. The populists have won power where inequality and economic setbacks have been combined with political systems or governments that have appeared to benefit narrow elites. One lesson was that if capitalism is to thrive it needs to be underpinned by an effective state and social policies, which have to be paid for with an adequate level of tax revenues. Another lesson for the privileged was that in a democracy the rule of law applies to everyone - even to them. If the government bails out delinquent or even unfortunate bankers when ordinary people are losing their jobs because of austerity, as happened in Ecuador, Mexico and Venezuela, it is hardly surprising if popular resentment with the political system grows. In his inaugural address as Guatemala’s president in 1944, Juan Jose Arevalo promised ‘to give civic and legal value to all people who live in the republic’. (37) As long as that remains an unfinished task in the region, populist would-be saviours will thrive.

There were lessons, too, for the Latin American left. Even as Venezuela’s democracy was being hollowed out, there was no appetite in the region for criticising Chavez, at the Organisation of American States or in other purely Latin American forums. That risked establishing a dangerous tolerance for autocracy of any stripe, provided it was elected. In refusing to criticise Chavez, the left is forgetting its own strictures to the effect that democracy is more than just elections. It needs to recognise that the rule of law offers a far stronger guarantee of citizenship to the poor than the paternalist largesse of caudillos. In its enchantment with ‘Bolivarianism’, and renewed respect for Cuba, much of the left has forgotten the abiding lessons of the end of the Cold War, that central-planning failed and that communism was tyranny not liberation. If it is to offer a sustainable economic alternative for Latin Americans, the left will have to reconcile itself to capitalism.

After more or less synchronised democratization and economic reform in the 1980s and 1990s, Latin America looks to be moving once again into a period of greater heterogeneity. Of the larger countries, Mexico, Brazil, Chile and perhaps Colombia and Peru seem set on a path of democratic development that looks likely to become increasingly successful in the coming years. Venezuela, Bolivia and Ecuador are setting their store by resource nationalism, their leaders appealing to the tenets of dependency theory and seeking to remake institutions in their own image. In the long term, this formula is unlikely to provide a path to development. As always, Argentina could go either way, but it is more likely to end up in the first camp. But these distinctions are not necessarily set in stone. Politics in each country in the region is driven as much by national histories, conflicts and imperatives as by continental fashion. Where political systems and the economy were reasonably strong, the underlying democratisation of Latin American societies gave rise to a demand for reform. Where such conditions were absent, the same process could lead to populism, though not necessarily of a uniform kind.

That this underlying democratisation is not better understood owes much to Latin America’s status as the ‘forgotten continent’ to which, it is assumed, anachronistic stereotypes and generalisations can safely be applied. Neglect may indeed be mainly benign but it is also risky. Most of Latin America has bet on economic openness and democracy. This book has argued that the reasons for that are mainly internal to the region. Even so, external influences matter. If the United States and the European Union continue to turn their backs on the region, some Latin Americans may reconsider, especially if China starts to offer a serious alternative.

Largely overlooked by the outside world, Latin America has made much progress in the past few decades. A sense of perspective is important: two generations ago a majority of Latin Americans lived in semi-feudal conditions in the countryside; little more than a generation ago, many were being murdered because of their political beliefs. Not all of the improvement has been captured in the cold economic numbers. Indeed, one of the problems Latin America’s democracies face is the persistent denial of progress by many academics, journalists and politicians, both within the region and among those who observe it from the United States and Europe. (38) This habit, which serves to undermine the legitimacy of democratic institutions, is not new. In Brazil, for example, scorn for representative democracy was widespread among such figures in the nineteenth century. It ‘still permeates today both intellectual and popular language, and can without doubt be considered one of the most important outlines of our political culture’, according to a leading Brazilian political scientist (39) The same goes for Colombia, as a senior government official recently noted. To emphasise positive characteristics in Colombia is particularly daring in a place where part of the intellectual elite, for years if not decades, has dedicated itself to pointing out its failures, physical and human misery [and] to ridicule its achievements. (40)

This is not an argument for complacency in the face of Latin America’s relative failures of development and the flaws of its democracies. Rather, it is to argue that it is time to liberate Latin America from some of the more defeatist and whimsical readings of its own history, time to look more to the future with at least cautious optimism. The relatively disappointing record of many of Latin America’s democratic governments should be judged realistically against the scale of the problems that they have had to face. The problems may be more obviously visible, but progress has started to get the upper hand. Consolidating it requires incremental reform, not regressive revolution. It also reqires patience, hard though that is to muster in the face of poverty. As Juan Bautista Alberdi, the Argentine liberal and constitutionalist, noted in 1837: Las naciones, como los hombres, no tienen alas; hacen sus viajes a pie, paso par paso. “Nations, like men, do not have wings; they make their journeys on step by step.”

(37) Scheslinger, Stephen, and Kinzer, Stephen (1982) Bitter Fruit: The Untold Story of the American Clup in Guatemala, Sinclair Browne, London, p. 11.

(38) Gall, Norman (2004) ‘Latin America’s Struggling Institutions: Is Democracy Threatened?’ Braudel Papers No. 34, Fernand Braudel Institute of World Economics, São Paulo.

(39) Lamounier, Bolivar (2005), Da Independencia a Lula: dois séculos de politica brasileira, Augurium Editora, São Paulo, p. 80.

(40) Montenegro, Santiago, ‘Mas alla de la violencia: fortalezas de Colombia’, Departamento Nacional de Planificación, 2003.