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Implications of the Latin American elections of 2005-2006

Date
Time (GMT +01) 11:30 13:30

Speakers:

George Philip, Professor of Government and Latin American Comparative Politics, LSE

Victor Bulmer-Thomas, Director, Chatham House

Duncan Green, Head of Research, Oxfam

Chair:

David Booth, ODI

1. The first meeting in this series took place at ODI on 25th April 2006. The speakers were George Philip (LSE), Victor Bulmer-Thomas (Chatham House) and Duncan Green (Oxfam). David Booth (ODI) moderated.

George Philip (LSE)

2. George Philip considered the current Latin American political context and then set out possible scenarios for the future:

3. Latin America has awakened a recent interest in the last few months because of changes in the region, but most importantly for more radical changes in some of its smaller countries (e.g. Bolivia, Peru). The full effects of those changes, however, will not be fully seen or understood for some time.

4. The policy context in the region has changed:

- Neo-liberal policies have been discredited in the region
- Most countries are fully integrated into the international financial markets
- An unexpected boom in commodity prices is giving policymakers in the region more resources to play with
- The US has become rather unpopular in Latin America and they and their economic model and support is no longer seen as the only possibility as it was during the crises of the 1980s and 90s due to changing nature of international economic power
5. Looking ahead it is possible to expect:

- More of a series of National Stories than Regional ones.
- A more politically secure region where leaders will be less afraid of speaking out against the interests of stronger economies
- Countries will have a chance to use the new resources associated with higher commodity prices to flirt with policy alternatives
- The social issue will be higher on the agenda

6. Still pending are reforms to the public sector and the professionalism of the civil service which are al most a pre-requisite to better manage commodity-price cycles and democratic transitions.
 Victor Bulmer-Thomas (Chatham House)

7. Victor Bulmer-Thomas opened with an optimistic note: the celebration of democracy; and addressed the current changes in the economic policies in the region:

8. There is a clear link between economic performance or the economic model and politics and the elections (and vice versa). Hence it is perfectly natural to expect a swing to the left; and this is true for the medium to long term. However, if we focus in the short term, in these elections, the swing is not that clear;

- It has happened in Uruguay, Bolivia, possibly Mexico, Peru and Argentina
- But there is no change in Colombia or Chile
- And in fact there has been a swing to the right in the Dominican Republic
9. The international context has never been better for Latin America and the new governments have the opportunity to take advantage of a unique policy context:

- Global growth
- High commodity prices
- Terms of trade have improved
- International interest rates are low and risk premiums paid by Latin American countries are also low
- The US is no longer in a position to undermine experiments in economic policies (The IMF is barely a player in the region and the World Bank is shifting to project lending with less conditionality)

10. However, these new governments face some limits in terms of what they can possibly do or experiment with:

- Fear of hyper-inflation: sound macroeconomic policies are necessary
- Membership of the WTO: imposes constraints on economic policies
- Globalisation: demands policies to increase competitiveness

11. Within this context, Latin American policymakers have the freedom to undertake a series of transformative policies in the following areas:

- Microeconomics: regulation and competition policies, micro-credit, labour markets
- Social policy: health, education, hunger, pensions, minimum wages
- Preferential Trade Agreements: little can be done if they are already in, but there is surely some degree of flexibility if these have not been signed or ratified. In reality, though, opposition to them is mostly down to political rhetoric as most policymakers would need them to address the limits posed by globalisation.
- FDI and foreign capital: access some of the additional profits associated to the rise in commodity prices are controlled by the private sector (often foreign)

12. Rather that talking about economic models it is more appropriate to talk about economic paradigms. These do not change in the short term. Latin America is still living the new economic models paradigm (neo-liberal) so what the region might very well see are changes in policies but not in the paradigm it self. A change in paradigm would probably involve external actors.

Duncan Green (Oxfam)

13. Duncan Green addressed the changing face of the political context and in particular the relation between civil society and the state, providing a more in-detail analysis of the current political actors in the region:

14. The political context is different: Although Latin America is celebrating democracy in the ballots; opinion polls show a broad disenchantment with democracy and traditional politics and politicians. The left in Latin America has been allowed to rethink its position after the end of the Cold War and decentralisation processes have given social movements more and new spaces for engagement in politics.

15. The left that is taking power in the region, however, faces some constraints:

- Most governments are loose coalitions
- Their economies depend on foreign capital due to low savings and investment
- FTA constrain economic policies
- There is an absence of an alternative model

16. The left is also not a homogenous group. In Latin America there are several strands (classification by Panizza):

- Liberal Republican: Chile and Uruguay are examples. This group is made up of the old hard left that went into exile during the right wing governments of the 1970s and 1980s and returned with an acceptance of some aspects of the Washington Consensus. They are closer to the European social democratic left
- Traditional Populist: Venezuela and Peru (Humala) are examples. Often from a military background, it is li

Description

This event explored the current Latin American political context and potential scenarios for the future.