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Latin American Crucible: Navigating a World of Crises

ARTICLES - 25 October 2021

Latin America is caught in the cross-currents of three simultaneous crises. The first is the immediate shock of Covid-19. The second reflects years of deteriorating social conditions. The third is the result of an impasse about the region’s economy. After decades of exporting primary products and relying increasingly on migrant remissions to buoy a socially unequal model of growth, the region’s place in the world economy has never been more uncertain since the 1930s. With borders closing and world trade restructuring, Latin Americans need to chart a new economic path at a time in which its capacities to adapt are under severe strain. 

Now, elites in Buenos Aires, Mexico City, Bogotá and beyond, as well as watchers in Washington D.C., are fretting about democracy in the region while protesters take to the streets and governments declare states of emergency. If Latin American democracies are under duress, it is less because faith runs thin than because the region is suffering a social crisis unparalleled in two centuries of independence from Portugal and Spain - and to which representative systems are groaning to respond. If anything, Latin America’s electoral systems have been astonishingly effective at absorbing this seething discontent. Many are wondering whether that has become democracy’s chief function. This is a sure-fire way to degrade the legitimacy of pluralist representative systems. 

Recent events have placed the questions confronting the region into sharp relief.

"Stop whining!"

Last week, an 11-member panel from Brazil’s Congress issued a 1,200-page report accusing the country’s firebrand president, Jair Bolsonaro, of "crimes against humanity". Brazil, with 600,000 direct Covid-19 deaths, ranks second to the United States in pandemic mortality. 300,000 of them were preventable, according to public health authorities. Bolsonaro, elected on a wave of outrage against his predecessors’ spending habits while indulging his own, made no bones about his refusal to endorse lockdown policies, masking, and vaccination. "Stop whining," he ordered his citizens last March, after the country broke death records. Then, when it became clear that mass vaccination might be good for business, Bolsonaro’s Health Ministry officials solicited bribes from vaccine dealers. Federal prosecutors, whom Bolsonaro and his sons accused of sedition, are engaged in a massive investigation. One Supreme Court Justice has ordered the Attorney General to initiate judicial proceedings into the President’s personal role in the affair. 

Behind the report is a catalogue of scandal and corruption. It now rests with the Senate whether to initiate legal proceedings. It seems increasingly likely that Bolsonaro will face the same impeachment process that brought down his predecessor, Dilma Rousseff. Bolsonaro’s reaction opens another window on his willful ineptitude. "I have no way of knowing what’s happening in the ministries," he announced to his supporters. While some pundits have taken the prospect of another impeachment of a president as a sign of democratic weakness, one might equally argue that it’s a gauge of strength, giving elected representatives the means to oust incompetent and unethical officials. 

Democracy Tour

Meanwhile, President Joe Biden’s Secretary of State, Antony Blinken, is making his first trip to South America. The pivot to Asia, the messy withdrawal from Afghanistan, and unsteady relations with European leaders, especially France, pushed the Western hemisphere down Washington’s priority list. But the neuralgic debate about migration in the United States and appalling optics of armed border guards on horseback chasing down Haitians with their worldly belongings in plastic bags have forced Biden’s team to take notice of its neighbors a year away from potentially crippling elections. By the summer of 2021, US authorities had already arrested over a million migrants and deported most of them. Then, the number of migrants began to soar. Border security guards detained 200,000 in July alone, which resulted in swelling internment camps. It is forecast that, by year’s end, over 2 million migrants will have been "apprehended" at the border in 2021.

Faced with this border crisis, Secretary Blinken proposed to meet Heads of State in the region to shore up democracy, as if that were the problem. He met with Ecuadorian President Guillermo Lasso in Quito, and Colombian President Iván Duque in Bogotá. Both Latin American countries are plagued by on-going political crises. Paradoxically, while they have been through a ravaging pandemic, it is those two countries which have shouldered the weight of the region’s most alarming refugee crisis: Venezuela. 

Faced with this border crisis, Secretary Blinken proposed to meet Heads of State in the region to shore up democracy, as if that were the problem. 

According to the United Nations High Commission for Refugees, almost 5 million Venezuelans have fled, accounting for the second largest group of refugees in the world after Syria. Rather than turn them back or arrest them, the Colombian and Ecuadorean governments have policies to register and legalize the refugees (though most still wind up in the legal ether of "irregular" - which means undocumented - status and working in the informal economy). Almost 2 million live in Colombia; some 450,000 have moved to Ecuador

What’s a worried US Secretary of State to do? Without vaccines (Washington pledged 44 million doses to a population of over 660 million), investment, or trade pacts to offer - though he touted a Build Back Better World program for investment in green infrastructure without the funds - he’s on tour to promote what he calls a "democratic reckoning," as if Latin America were inexperienced in the problem and Washington were a beacon of light after four years of Donald Trump. In one speech in Quito, Blinken warned against backsliding: "Consider a country where a leader is elected in a fair election and then sets about chipping away, slowly but surely at the pillars of democracy," he warned. The sermon was strange: which New World country did he have in mind exactly? Consider the backdrop. On October 18, President Lasso declared a 60-day state of emergency, calling out the military to fight "insecurity" and gangs. Lasso, an ex-banker, assured Blinken that it was only temporary.

Next stop: Colombia. Iván Duque has been reeling after proposing tax and public service hikes in April. To be fair, the charges were meant to fund a universal basic income plan to help the poor. It backfired. Instead, millions took to the streets and forced the government to back down. The protests continued and turned violent. At one stage, the President’s helicopter came under fire. Military, police (especially the anti-riot squad ESMAD), and private gangs lashed back. Dozens were killed; hundreds went missing. Tear gas and flash bang cartridges left many civilians blind or with severe head wounds. By May, the violence was so shocking that the United Nations offered to mediate. Duque was forced to acknowledge police excesses and promised an independent investigation. Duque may have promised Blinken that "human rights are for everyone," but his police reforms are seen as shortfalls.

Covid’s Shadow

Brazil, Colombia, Ecuador: these are countries with competitive political parties, a free press, and vibrant civil societies. All three have seen competitive elections swing back and forth between progressive and conservative leaders. Democracy may be troubled. But it’s not the source of the problem. 

Covid-19 has ravaged the region. In recent weeks, the numbers of infections have finally been dipping. To date, however, over 1.5 million Latin Americans have died and 44 million have been infected. This accounts for 30% of the world’s deaths (with only 8.4% of the world’s population). 

The underlying cause of the calamity, according to a recent report of the United Nations Economic Commission for Latin America and the Caribbean (CEPAL) and the Pan-American Health Organization, is the toxic mix of very high inequality and low capacity public institutions. The pandemic afflicted a region whose hospitals, schools and courts, have been drained by decades of neglect, underfunding, and relentless attacks from the likes of Jair Bolsonaro. 

Covid struck hard at ailing economies that relied on vast informal sectors to sustain the livelihoods of the bottom 40% of the population - sectors that do not adapt well to social distancing measures or public health campaigns. Just as Brazil's Congress spotlighted the president’s handling of the pandemic, the market was delivering its own verdict. The country’s GDP fell by over 4% in 2020 and inflation is creeping upwards. Extended school closures alone had a staggering effect on Brazil’s poor who do not have equal access to remote learning, and reversed over a generation’s worth of incremental improvement in the Human Capital Index.

Covid struck hard at ailing economies that relied on vast informal sectors to sustain the livelihoods of the bottom 40% of the population.

Yet, when the government approved "Auxilio Emergencial" support for the indigent, it set off a currency crisis and an upheaval within the Economy Ministry. Rumors are flying about the resignation of the Minister, Paulo Guedes, and the alarm is ringing over the crater developing in Brazil’s public accounts. 

The informal sectors have swollen because the region has been in an economic rut for years. The short lived commodity boom of the 1990s turns out to have been a blip in decades’ long stagnation. Compare the growth of East Asia and Latin America since 1980: before the eruption of the debt crisis in 1982, East Asian GDP per capita was only 12% of Latin America’s. The gap has closed; it’s now at 71%. Even the commodity boom was a bust. Latin American economies rode the soya, oil, and minerals ride through the 1990s, but did not join the real surge in trade around global value chains and remained, for the most part, traditional primary staple exporters instead of joining manufacturing and service provision. When the commodity boom finally fizzled after 2007, so did the region’s growth prospects. Ever since, Latin America’s economies have been languishing. The last six years have marked the lowest regional growth since the 1930s. 

Even before the pandemic, the UN Economic Commission for Latin America and Caribbean Executive Secretary, Alicia Bárcena, warned that the region could not withstand any more "adjustment" policies.Then came Covid. Output fell by 7% in 2020, more than any other world region and the IMF predicts that growth next year will lag behind the rest of the world. The disease and its lockdowns made inequality and poverty even worse. More than 22 million people slipped into extreme poverty in one year - one of the largest yearly reversals of fortune in modern human history. It wiped out the meager gains of the last four decades that were supposed to be the region’s democratic renaissance.

Democracy and/or Capitalism?

With a crisis of this scale, it is remarkable that Latin American democracies survive at all. Far less stress-testing raised basic questions about democracy in the United States, for example. Moreover, when the rule of law is weak, public institutions hobbled, and judiciaries favor the haves over the have-nots, faith in democracy is bound to lag.

What is at stake is whether Latin America can find a new [...] model of growth after decades of squandered opportunities and persistent debt overhang. 

What is at stake is whether Latin America can find a new, and ecologically sustainable and socially equitable, model of growth after decades of squandered opportunities and persistent debt overhang. It missed the reconstruction of global value chains almost completely, failed to invest in basic public infrastructure when capital flows were abundant, and let its human talent fall behind Asia’s. Indeed, the main relief came from China, which poured funds into ports, roads, dams, and railways that connected Latin American hinterlands to China’s manufacturing needs.

China emerged as South America’s largest trade partner. Brazil, for instance, sent 2.8% of its exports to China in 2000; now it’s 27%, more than double Brazil’s exchange with the United States.

But signs point to an end to the convergence. China’s grown more averse to dependency on long-distance and vulnerable trade routes. It has been burned by Latin America’s open, even raucous, democracies. Peru and Brazil have been negotiating a 3,750 km Bi-Oceanic Railway Integration Corridor to connect the Pacific to the Atlantic, funded by Chinese investors, for years, but challenged by environmental activists, it’s never moved from concept to construction. High-profile protests by trade unions over the vast Rositas dams in Bolivia (to fuel natural gas production for shipment - by pipelines built with Chinese capital for Chinese markets) and journalistic exposés of corruption in railway concessions in Mexico and hydroelectric dams in Argentina have soured Beijing’s enthusiasm for extending its Belt and Road Initiative to Latin America. These are indices of democracy in action, not weakness.

Defending democracy is hard to assail. But good government is hard to build or uphold when social conditions spiral year after year. And the economy? As the large economic blocs around China, North America, and Europe turn inward, Latin America may not be able to rely, as it has so often in the past, on foreign markets to buoy its economies. This may force a turn to regional integration. But Latin American governments are going to have to make up for lost time in promoting investment in their people when their capabilities are so strained.



Copyright: LUIS ROBAYO / AFP


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