December, 12 2018 (Financial Times)
On Saturday, Andrés Manuel López Obrador, a leftist nationalist, will become president of Mexico. Relations between Mexico and the US are rarely easy, so how Mr López Obrador squares off against President Donald Trump, a nationalist himself, is anybody’s guess.
One month later, Jair Bolsonaro, a conservative nationalist, will assume the presidency of Brazil and aims to reforge Latin America’s biggest economy. Like Mr Trump, he has made combating China’s economic advances a priority. What that means for Brazilian trade with its biggest commercial partner is also a matter of guesswork.
The Mexican and Brazilian leaders come from opposite ends of the political spectrum, yet are part of the epochal changes that have swept Latin America this year. Under a remarkable alignment of political calendars, two out of three Latin Americans acquired or elected new presidents in 2018. Next year promises to be just as tumultuous.
Venezuela, under the regime of President Nicolás Maduro, continues to suffer deep economic and social crisis. Neighbouring Colombia, under centre-right President Iván Duque, must deal with its consequences, with 5,000 people fleeing Venezuela every day.
Mauricio Macri, elected in 2015 with a pledge to make Argentina “normal”, will meanwhile struggle with the political fallout of recession, austerity and the International Monetary Fund’s biggest ever bailout programme. To many, Argentina’s new normal seems much like its crises of the past. Can Mr Macri still win a second term in October, as many G20 members hope?
Rarely has the outlook for Latin America seemed more uncertain. The irony is that this comes at the end of what many heralded as “the decade of Latin America”. What went wrong?
To get a sense of how times change, it is worth revisiting 2010. Back then, shortly after the G20’s inaugural leaders’ summit, an optimistic book was published with the title: What if Latin America Ruled the World?
It was not so implausible at the time. The developed world was gripped by financial crisis, the intellectual underpinnings of western market liberalism were crumbling. The Middle East was convulsed by sectarian violence. Africa’s “moment” was yet to come. And China, while economically pounding ahead, was, as it remains, a one-party state.
By contrast, Latin America, from the Rio Grande to Patagonia, was almost entirely democratic, enjoyed macroeconomic stability and was flourishing thanks to the China-driven commodity boom. It had a new middle class growing by millions every year, had renounced nuclear weapons and enjoyed relative racial harmony.
Women were also doing well in a continent long associated with machismo. A crop of female presidents — in Brazil, Argentina, Chile and Costa Rica — was either in power, or about to be. Even poverty and inequality were falling. Multinational companies piled in.But then the boom turned to bust. Members of the region’s “new middle class” clung precariously to their new status. Corruption scandals erupted as the boom’s excesses unwound. With anger supercharged by social media, voters channelled their frustration against the established order in often poisonous elections. The results were decisive.
In South America, prompted by socialist Venezuela’s tragic example, the rejection of the status quo led to a swing towards the political right and economic liberalism. Argentina, Chile, Colombia, Ecuador, Paraguay and Peru all have centrist presidents. In Mexico, the pendulum swung to the left. At the July 1 presidential election, voters rejected the country’s two traditional parties — the centrist PRI and centre-right PAN — and awarded Mr López Obrador a landslide victory.
What might unite these apparently very different political changes? One common driver has been the anger of citizens fed up with cronyism and corruption. Mr Bolsonaro and Mr López Obrador made the fight against graft central to their campaigns. Others, such as Mr Macri and Mr Duque, did too.
It remains an open question whether these leaders will back up their anti-corruption pledges with substantive action. If they do, that would herald the beginning of an extraordinary microeconomic revolution.
Nor is it entirely unrealistic. The controversial appointment of Sérgio Moro, the highly regarded judge who led Brazil’s Lava Jato — or car wash — corruption probe, as a super justice minister in Mr Bolsonaro’s new administration is perhaps a promising sign.
Alternatively, these anti-corruption drives could fail. That would probably lead to more popular frustration and political instability. In Mexico, a lack of clarity by Mr López Obrador on the institutional framework for his anti-corruption drive is a cause for concern.
Corruption and poor governance have long bedevilled Latin America. Even just beginning to tackle these problems will be a difficult and tumultuous process. But success would be a worthy if unexpected conclusion to the “decade of Latin America” — in some measure supporting its claim to be true.