Similar crises, different agenda

Patricio Navia

Buenos Aires Herald, April 7, 2015


In recent weeks, many Latin American countries have experienced similar political crises triggered by corruption scandals. Dark clouds loom ahead on the economic horizon for Latin America as the export commodity boom comes to an end. Yet, though they face similar challenges, Latin American governments have shown little effort to tackle the upcoming storms together. Despite the numerous initiatives for regional integration that currently exist, each Latin American country seems to be preparing for the difficult times ahead on its own. Facing common problems has done little to induce countries to work together to mount a collective response. The upcoming Summit of the Americas to be held on April 10th and 11th in Panama City will produce few concrete answers to the problems faced precisely because Latin American governments have not learned to work together to solve common problems.


The leading national news in most of Latin America have to do with corruption scandals and with electoral setbacks for the government coalition. From the Petrobras scandal in Brazil, that has President Rousseff with the lowest approval of any president in the past two decades, to the different scandals that plague the ruling political class in Chile, scandals seem to be driving political developments in the region. Last week, for the first time in 50 years, the Peruvian Congress removed the head of the Council of Ministers as a result of a phone-tapping and political espionage scandals. In Argentina, President Cristina Kirchner is putting up a big fight to avoid being labeled a lame duck ahead of the November presidential election (where she is constitutionally banned from seeking re-election). In Mexico, President Peña Nieto is struggling to avoid a setback in the midterm legislative elections scheduled for early June. Even in Bolivia, longtime popular president Evo Morales—in power since late 2006—suffered a humiliating defeat in the municipal elections. His MAS party lost some of its strongholds, including the mayoral race in El Alto, a heavily populated city neighbouring the capital city of La Paz.


The end of the commodity boom has weakened national currencies in most Latin American countries. Though falling oil prices hurt some countries (like Venezuela, Mexico, Brazil, Colombia and Ecuador) and help others (like Chile, Central American nations and the Dominican Republic), declining terms of trade are worsening fiscal balances. Higher prices for foreign goods are putting pressure on inflation. External economic conditions configure a pessimistic outlook for the coming months for the regional economies. As access to foreign credits is becoming more expensive—and opportunities to invest in infrastructure in the region are scarce—Latin America has lost the attention of world markets.


After more than a decade of rapid economic growth, and significant progress in poverty alleviation, millions of Latin American joined the middle class. They have high expectations about the future and aspirations for their families. A slowing economy will prove a disappointment for millions of Latin Americans who grew used to seeing their living conditions improve year after year. As inflation takes away some of the consumption power of the emerging middle class, and growing unemployment deprives millions of others of their access to better living conditions, discontent will increase and approval of political leaders will continue to decline all over the region.


Since the 1990s, when democracy became the only game in town in Latin America, a number of different integration initiatives—that include trade pacts and multinational political organizations of different ideologies—were created and announced with much fanfare. The integration helped increase intraregional trade and facilitated commercial activities and political cooperation. However, the fact that there were so many of them and that they had different objectives and mechanisms to bring about integration meant that there was little progress in terms of institutionalizing the progress made in building cooperation between the different countries. In some cases, as with the community of South American nations championed by Lula or the Bolivarian initiative promoted by President Chávez, the key role played by individual leaders conspired against the necessary institution-building to consolidate the initiatives.


As a result, those initiatives failed to become sufficiently institutionalized. Though they formally exist, they function mostly as rubber stamp and symbolic organizations. They have few formal powers and little capacity to design, implement and oversee public policies. Thus, now that Latin America is struggling with corruption scandals and economic distress, the integration initiatives are not living up to the expectations. The multiple organizations that now exist have done little to facilitate a coordinated response to the political crises experienced by many governments and have proven incapable of producing a regional strategy to face the worsening economic conditions.


Not surprisingly, many Latin American leaders fail to see how those integration initiatives will help them overcome the difficult times they are experiencing in their countries. The upcoming Summit of the Americas in Panama is seen by many leaders as a distraction rather than an opportunity to overcome the problems they face at home.