The world is worried about Latin America, so says former Mexican President Ernesto Zedillo.

Uneasiness over Latin America at Davos and elsewhere is rooted in the region’s perennial economic underperformance and the strong populist tone most of its politicians have been striking in recent electoral campaigns. There is talk of an old-fashioned leftist wave sweeping the region. The fear is that by next fall, when this cycle of national elections has been completed, a large number of governments will have been elected on incredibly retrograde and demagogic platforms that currently hold sway over large numbers of voters.

Perceived Risks

  • People will elect the candidates who campaign on the most irresponsible of promises.
  • Candidates thus put in office will try to do as they promised.
  • This conduct will once again bring about economic disaster, as well as a regression in the impressive democratic progress that, with a few pathological exceptions, has been made during the last 20 years.
  • Let them learn the hard way.

    The shear irony of writing about the dangers of Latin American leaders who make promises that they can’t keep, and are asinine enough to “stay the course” once they get elected and really fuck things up in George W Bush’s United States is clearly lost upon Sr. Zedillo. Worry not though, Zedillo assures us that the market will teach those who sway from the one true path of Neo-Liberalism the error of their ways in short order.

    However, populist politicians–if elected at all and if they’ve learned anything from history–are unlikely to throw the baby out with the bathwater. They know by now that the financial markets’ tolerance of inconsistent policies has worn thin. Market reactions to foolish policies, which used to take months or even years to unravel, now erupt in a matter of days, if not hours, making evident in fairly short order their ominous consequences on GDP growth, employment and inflation. Moreover, democratic governments instinctively try to avoid such disasters in order to retain their hold on power with the voters.

    As this table clearly demonstrates, countries like Argentina, Venezuela, and Uruguay that have rejected the economic policies of the Washington Consensus have clearly suffered economically in comparison Mexico and Colombia who have both been strong adherents to the neoliberal orthodoxy emanating from the World Bank and IMF.  The again, maybe not……

    And the winner is …… Simon Bolivar?

    The Latin Left is ascendent.  

    In the beginning, there was Chavez in Venezuela, then came Kirchner in Argentina, Vasquez in Uruguay, and Morales in Bolivia. In Washington, the victory of Morales provoked what can only described as muted panic.  The Domino theory returns. There is a growing fear both in the United States and in the capitals of Europe that what Che Guevara could not do with bullets is being accomplised with ballots by politicians of the Latin Left.

    It was Lenin who said that reports of his demise had been much exagerated, and it appears evident that the assumption socialism is dead has been similarly overstated.

    Socialism lives in Buenos Aires, in Bolivia, and in Brazil the winning team in Rio’s Carnival parade danced to brotherhood of Latin Americans.  

    The annual parade competition at Brazil’s famous Rio de Janeiro carnival has been won by a samba group largely funded by the Venezuelan government.

    The Vila Isabel group, which was declared the winner after a dance-off, had Latin American unity as its theme.

    Vila Isabel’s president, Wilson Moises Alves, thanked Venezuela’s national oil company, PDVSA, for its funding.

    PDVSA will not say how much money was involved, but reports estimate its donation at more than $500,000……

    The Vila Isabel procession featured floats showcasing the brotherhood of Latin Americans, including a huge effigy of Simon Bolivar and a 1960s anthem dedicated to the left, called I’m Crazy About You, America.

    Thee recent admission of Venezuela to the Mercosur trading bloc promises to bring a far stronger political element to Mercosur, and feed Bolivarian sentiments in the region.  For residents of the United States, the consequences of Latin America’s rejection of the Washington Consensus are going to hit a lot closer to home in coming months.  On July 2, Mexicans will elect their next president, and if recent opinion polls are correct, Andres Manuel Lopez Obrador (AMLO) is going to come to power with a political platform opposed to the Washington Consensus, albeit much less dramatic than Chavez.  With notions of dominoes falling prevailing in Washington, this does not bode well for Mexican-American relations. With Bush’s dramatic decline in recent polls, a latter day Southern Strategy that demonizes AMLO and seals the border might prove tempting.  This would only serve to drive Mexico into Mercosur and the full glory of a truly Bolvarian revolution, but recognition that actions have consequences has not been a strong point for the Bush Adminstration.

    Democracy is on the march….. when convenient

    The massive failure that was the Bush administration’s 2002 coup attempt against Hugo Chavez, the democratically elected leader of Venezuela, is well know, but allegations that the Bush administration is funding a seperatist movement in Venezuela’s Zulia state have not received the attention that they deserve.  While there’s no hard proof of collusion, it makes sense.  Zulia is home to much of Venezuela’s oil industry, and depriving Chavez of oil revenues as a method to blunt his inflence in the region is precisely the type of hare-brained scheme that the Bush administration has attempted in the country.  

    Seccession as a strategy to mantain access to energy supplies in the region also played out in Bolivia where the secession of Santa Cruz, where large natural gas deposits have been discovered, was put forward as a possibility if Morales won, and the rank neo-liberalism of Rumbo Propio and its #2 Alberto Mansueti stink of Washington’s Cato Insitute and Spain’s FAES.  

    The pillars of the Rumbo Propio (trans. Our Path) project, as explained by Mansueti, are autonomy and a market economy for Zulia. “We want one country, two systems, as with Hong Kong in respect to China”, clarified the spokesman. “If Venezuela moves towards the socialist model, for Zulia we want a market economy model. We are Liberals in economic, conservatives in politics, and hristians in principals.  Have I explained myself?”

    Los pilares del proyecto de Rumbo Propio, según se desprende de lo conversado con Mansueti, son la autonomía y economía de mercado para Zulia. “Queremos un país y dos sistemas, como el de Hong Kong respecto a China”, concreta el portavoz. “Si Venezuela va hacia el modelo socialista, para Zulia queremos el modelo de una economía de mercado.

    Somos liberales en lo económico, conservadores en lo político y cristianos en los principios ¿Me explico?”.

    Latin American borders have largely been a fixed affair since the early 1940’s when Peru swallowed a much of the Amazonian territory of Ecuador, however the increasing division of Latin America into countries that support neo-liberal policies (Columbia, the Central American republics, and Ecuador), and the bloc opposed to the policies of the Washington Consensus and neoliberalism (Venezuela, Argentina, Uruguay, Bolivia, and to a lesser extent Brazil). While the world has been focused on the mess in Iraq with a lesser focus on the rise of China as a superpower, the impulse to integration and the rejection of the Washington Consensus in Latin America has largely been ignored save the “Oh shit” moments like when Morales was elected president of Bolivia. The birth of a divided continent is likely.

    The new free-trade map of the Americas may soon show an east-west partition of the hemisphere. There may be a Pacific bloc of nations — made up of Chile, Peru, Ecuador, Colombia, Central America and Mexico — with free-trade deals and growing economic ties with Washington, and an Atlantic bloc of agricultural or oil-producing countries — Brazil, Argentina and Venezuela — that will pursue a more independent path.

    Another way to state this is FTAA (Free Trade Area of the Americas) vs. Mercosur.  


    Neo-liberalism vs. Bolivarianism.  

    The numbers are amazing. The Mercosur core (Brazil, Argentina, Paraguay, and Uruguay) plus Venezuela and Bolivia has a GDP of 785.4 billion USD, 9th globally, with a population of 268 million, 4th globally. There’s been some speculation that if Andres Manuel Lopez Obrador and his leftist PDR (Democratic Revolution Party) win, there will be a move away from NAFTA and the FTAA, and towards Mercosur, which has been developing as a viable alternative to Washington with the willingness of Chavez to bail out other countries from loan debt that puts their sovereignty as risk when the IMF and World Bank attach conditions to further loans.  If Mexico is pushed in the Mercosur bloc, the group would have a GDP of 1,462 billion USD,  8th globally, and a combined total population of 374 million, 3rd globally and 81% that of the EU. It would be by all measures a player on the world stage, and an economy with plenty of room for growth and the natural resources to fuel that growth.  

    All of this make charges that Obrador is taking money from Chavez all the more explosive, and the fear of  “red tide” lapping at America’s souther border is beginning to penetrate into the conservative consciousness in the US.  Prior to the Dubai ports deal, immigration appeared to offer the Republican party a strategy to combat their decline in the polls.  That is to say the least a much harder sell at this time, however should Obrador when in July, I expect that the “communist” threat from Latin America will become a topic of discussion for discussion in American politics. The pressure to clamp down on illegal immigration would also undoubtedly put the libertarian wing, who want cheap Mexican labor, and nationalist conservative wing, who want to seal the border, of the Republican party at each others throats.  The “red tide” rising message provides a way or Republicans to change the message, like when the hunt for Osama Bin Laden somehow led to the invasion of Iraq.

    Hugo Chavez and the revolution of which he is in the vanguard are by no means perfect.  Like many Latin leaders, Chavez is at times burdened with machismo and a belligerency that is not productive, and there are serious questions about la lista, the list of people who signed the petition to recall Chavez, and who have not been allowed to access social programs and jobs as a result of political beliefs.  And the creation of a civilian reserve, 2 million strong, in order to create a guerilla fighting force in case the US invades, raises serious questions about the militarization of Venezuelan society. However, US support for the 2002 coup attempt, the situation in Zulia, and the blowup in Britain over the “Argentine threat” to the Falklands, all suggest a certain level of anxiety is justified. Finally, for its failing Chavez Venezuela is a demorcraticly elected government that suffers from the same problems as the rest of the continent:

    Like all of Latin America, Venezuela has governance problems: a weak state, limited rule of law, corruption and incompetent government. But no reputable human rights organization has alleged that Venezuela under Chavez has deteriorated with regard to civil liberties, human rights or democracy, as compared with prior governments. Nor does the country compare unfavorably on these criteria with its neighbors in the region. In Peru, the government has shut down opposition TV stations; in Colombia, union organizers are murdered with impunity.

    From a Latin American point of view, Venezuelans should have the right to choose their own president — even one who sometimes insults the American president — without interference from the United States. And Chavez’s anger at Washington, from Latin Americans’ point of view, appears justified. U.S. government documents released under our Freedom of Information Act indicate that Washington not only supported but was involved in the military coup that temporarily overthrew Venezuela’s elected government in April 2002. Here in Washington, there is a “Monty Python” attitude toward the coup: “Let’s not argue about who killed who.” But in Latin America, a military coup against a democratically elected government is still considered a serious crime. To top it off, Washington continued to finance efforts to recall Chavez and, having failed miserably,still regularly presents him as a threat to democracy in the region.

    There is no red tide rising in Latin America, there is however a recognition that the economic and public policy presecriptions of the Washington Consensus have been a miserable failure. Unless Washington (and European capitals) get serious about offering real development solutions instead of the same old soverignty killing policies from the IMF and World Bank, relations between the West and Latin America will grow more strained, and present the opportunity for new mistakes to rival the mess created in the Middle East when the US and UK decided that democracy was on the march.

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