The Platform

Palácio do Planalto

As I said in my last article, 2010 was a challenging period for the world, and Latin America was no exception.

In 2017, the region’s economic growth stagnated as well as its poverty rates reduction. In 2019, poverty increased. According to Latin America Social Panorama 2019, the number of poor people went from 181 million in 2018 to 191 million. Moreover, income inequality contracted for the first time since 2002, and as ECLAC declares in the same Social Panorama, “the concentration over the property of material and financial assets is far more important than the concentration of real incomes in Latin America.” If one thought that income inequality was a big problem, wealth inequality is level more significant.

Inequality issues along with small state capacities and insufficient distribution of political power led to massive turmoil in 2019, reflected in a worrying GDP regional real growth of 0.2%, according to the International Monetary Fund.

During the last year, Nicolás Maduro’s dictatorship in Venezuela continued. Evo Morales’ regime in Bolivia ended with him escaping outside the country after Bolivians discovered that his re-election had been another electoral fraud. Populism proliferated with Andrés López Obrador (AMLO) in Mexico, Jair Bolsonaro in Brazil, and Alberto Fernández in Argentina. The dismantlement of Peru’s National Congress by its president keeps the country under uncertainty. Finally, the massive protests in Ecuador, Chile, and Colombia completed Latin America’s upheaval.

Unfortunately, there are no signs of recovery for 2020. According to IMF forecasts, the region will grow by 1.8%, far less than the global growth rate of 3.4%.

On January 4th, 2020, The Economist published an article about some forecasts for the starting year. As it points out, the chances for Nicolás Maduro to hold his dictatorship in Venezuela are an alarming 78%. Cuba and Nicaragua, the two prevailing dictatorial regimes in Latin America, do not seem to end either. About Bolivia, despite the interim government having shown signs of calling for new elections, Alberto Fernández received Evo Morales and his sons in Argentina as refugees, and some local media say that the Bolivian leader is planning to take power back.

AMLO in Mexico has shown to be empathic and modest, two attributes that the predominantly Christian region values highly, but his technical incompetence, implausible promises, and protectionist policy have slowed down the country’s economy.

Bolsonaro in Brazil has precisely the opposite problem. His arrogance and lack of good manners have undermined the country’s reputation, facing its president Emmanuel Macron for the Amazon’s fires, and with Greta Thunberg, when she denounced indigenous murderers in the Amazonia. Even though Bolsonaro holds 30% of approval according to Datafolha, a luxury, considering the support of his peers in the region, and has passed a critical pension reform to improve the Brazilian fiscal situation, his erratic behavior is weakening Brazil’s international position.

Respect Mr. Fernández, in Argentina, his vice-president and former mandatary of the country, Cristina Fernández, set up the alarms since the latter took public debt to unsustainable levels and, supposedly would have been participated in illicit acts, accumulating a great fortune for herself. The biggest bailout in the history of the IMF was a response to Fernández’s public spending policy, which led to the election of right-wing Mauricio Macri, whose correct but aggressive measures to regain international credibility and fiscal responsibility made Fernández’s side eligible again.

About Peru, on January 26th, Peruvians will vote in extraordinary ballots for an entirely new National Congress. The one that Martín Vizcarra, the Peruvian president, dismantled in 2019 was unpopular and co-opted by the Fujimoristas, the supporters of the ‘90s Peruvian dictator, Alberto Fujimori, and his sons. A series of corruption events that involved Congressmen made the situation worse. If Peruvians choose well this time, the government should boost the urgent reforms to diversify the based-on-commodities Peruvian economy; to reduce both poverty and inequality, and to reshape the institutional frames, promoting transparency and integrity.

Regarding Chile, once the bastion of stability in Latin America, the principal political leaders agreed to start a new constitutional process to replace the Constitution that Augusto Pinochet promulgated in 1980. Following the intentions of those leaders, elaborating a new system of rules with the participation of both the political and civil society representatives could revert the legitimacy crisis in Chile. That is a necessary but not sufficient condition. Excessive wealth inequality, as well as the absence of a welfare state, should be considered in the new Chilean fundamental law, but the real and material changes require structural reforms and a few decades to see results. The protesters in Chile have demonstrated not to be that patient.

So, will be 2020 a happy new year for Latin America? Probably not.

Anyway, the crises have made Latin American societies make deep reflections. If those get well managed in a political sense, the institutional flaws that exploded in 2019 might give way to the best world practices. In that sense, international relations with the European Union could boost those institutional reforms and show some lessons about the welfare states; its benefits and defects, of course.

The European Union has underestimated those relations, and sooner than later China and the United States, the two main commercial Latin America partners will strengthen even more the bond with the region, gaining a strategic and rich on resources partner. If that happens, the European Union will stop being the global power that has pretended historically.

Despite Europe has not given special attention to this yet, sooner than later China or the United States will entrench its bonds with the region as a strategic position. If that happens, the European Union will not be seated at the table with the grown anymore.

Carlos Cruz Infante is an independent consultant and researcher with over 10 years of work experience. He is a sociologist and also has a Master of Business Administration (MBA). He currently advises the Vice Ministry of Housing and Urbanism of Chile's content strategy and has been a consultant for the Inter-American Bank of Development.