Latin America’s rising right
Indeed, we can think of the shift as a Latin American variant of the West’s blossoming romance with anti-establishment movements. And that means that the region’s governments must be seen to deliver to their citizens. Otherwise, the shift will prove to be only a stop on an uncertain path — politically more complicated and economically harder to navigate — toward an even less stable destination.
The evidence of the ongoing political change comes in many forms. After years of fiscally irresponsible populist rule by the Kirchner family, Argentina has opted for Mauricio Macri, a former businessman running on a right-wing platform. In Brazil, and pending final consideration by the Senate, President Dilma Rousseff has been sidelined by a “temporary impeachment,” with her replacement signaling a shift away from the policies of the leftist Workers’ Party.
Even incumbent governments in the region are altering their course. In Chile, President Michelle Bachelet was reelected, but her government is signaling a move to the right on economic policy. Cuba, under President Raúl Castro, is enlarging the legal scope for private businesses.
And in Venezuela, a country tragically flirting with “failed state” status, President Nicolás Maduro’s government confronts mounting economic and financial challenges stemming from fiscally unanchored policies begun under his predecessor, Hugo Chávez. Facing widespread shortages of goods and malfunctioning markets, including for foreign exchange, his government has already lost control of the National Assembly, and the opposition is now seeking to shorten his term by constitutional means.
Several key factors are driving the region’s political dynamics. The sharp drop in international prices for commodities, such as oil and copper, together with a slowing Chinese economy, has reduced the region’s export earnings and accentuated domestic economic challenges. This has been aggravated by a more volatile environment for financial flows to emerging countries, more tentative foreign direct investment, and concern about the potential fallout for international trade from rising anti-globalization rhetoric in the unusual presidential race in the United States.
The resulting deterioration in economic performance, including deep recessions in Brazil and Venezuela, has accentuated popular dissatisfaction with public services and amplified long-standing worries about inequality and misappropriation of public funds. Popular dissatisfaction is evident even in traditionally well-managed countries, such as Chile, where lower-income groups have done relatively well in recent years and where the scale of official fraud — documented and alleged — pales in comparison to neighboring countries.
For now, rightist parties and policy agendas are the main beneficiaries of the region’s economic and social disillusion. The hope for many in the region is that political change can catalyze faster growth, by revamping existing policies and pursuing more effective anti-corruption campaigns. But, again, unless today’s political winners deliver notably higher and significantly more inclusive growth, their electorates are likely to move on.
Viewed from a global perspective, the shift in Latin America is part of a broader rise in discontent with the “establishment.” And it is not limited to governments. It also extends to private-sector elites, particularly banks and multinational companies.
(Mohamed A. El-Erian, chief economic adviser at Allianz, is chairman of US President’s Global Development Council.)
— Project Syndicate
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