The Political Economy of Latin America’s Political Turmoil

While some observers, both journalistic and academic, maintain that Latin American politics is either moving to the political right or becoming less polarized, the clearest trend is rising political turmoil with a final destination that is far from clear. Political polarization continues to be an integral part of the Latin American political scene.

From the Social Inadequacies of Neoliberalism to the Unravelling of Commodity Dependent Export-Led Growth

The current turbulence arose with increasing public disillusionment with the left governments that were elected with mandates to confront the high levels of inequality and persisting poverty that had been the consequence of the market reforms of the 1980s and 1990s. These regimes came to depend heavily on taxation from rising commodity prices to fund new and expanded social programs. Largely due to these measures, poverty declined and high levels of inequality began to wane. With the fall in commodity prices, however, these regimes, which had failed to pay close attention to spending levels (Argentina is the most notable case) and to economic diversification (virtually all cases), faced economic difficulties and political crises. The newly non-poor and those who had made it into the middle classes during the period of left rule feared the loss of their new status. Left politicians had by and large played the political game the way it had always been played: corruption (in the form of various types of pay-offs) was used to keep recalcitrant political opponents on aside—or at least to keep them quiescent. The public became less tolerant of corruption as fears of social deterioration rose. Political opponents have taken up the corruption issue in an attempt to rally widespread support against the left. The left fearing loss of power has become increasingly authoritarian. In two notable cases, it has become brutally repressive.

Venezuela: Sharp Political Polarization with no end in Sight

Protests against the Maduro government, Venezuela, 2018

Venezuela is the most well-known case of the coincidence of economic and political crises. With the fall in petroleum prices, poverty shot up, unemployment rose, and wages declined while the country experienced severe shortages of basic consumer goods, medicines and other essentials, and, most recently a collapse of the health care system. There has been substantial out-migration as Venezuelans have fled to neighbouring countries.

The current regime, despite evidence of widespread corruption and brutal government repression, clings tenaciously to power. While the mainstream media has focussed on authoritarian control and the restrictions placed on the opposition (which urged voters to boycott the May 2018 election), an estimated 6.2 million Venezuelans voted for current President Nicolás Maduro. President Maduro has an approval rating of about 25 percent, which is substantial given the depth of the economic and political deterioration his country faces. A casual observer might see any continued support for the regime as hard to fathom. However, the Maduro government clings to power not just because it is not reluctant to use repression and other forms of authoritarian control but also because it retains a core of supporters. As I have pointed out in an earlier post, the opposition’s democratic credentials are equally suspect (they supported a coup that briefly removed Chavez from power) giving the current regime license, in many people’s minds, to use authoritarian mechanisms of control to retain power. The opposition is equally hardline and adverse to any form of compromise. If the opposition had control of the state, there is no reason to believe that they would be any less repressive and authoritarian.

Nicaragua: Betrayal, Repression, and Turmoil

Nicaragua is another recent case of a worsening political crisis linked to declining economic fortunes. Closely allied with Venezuela during the last decade, Nicaragua became heavily dependent upon generous financial support from Venezuela. This support facilitated the expansion of many new social programs. Under left President Daniel Ortega, the lives of the poor improved substantially, with the provision of free health care and education. However, with the decline of Venezuela’s financial support, protests from a wide swath of Nicaraguans gathered momentum; the government met these protests with repression. The most recent case occurred in April 2018, when the regime responded with violent repression against protesters opposing its proposed social security reforms. This repression triggered widespread protests, resulting in even more repression, leaving over 300 dead. Protesters have demanded Ortega’s resignation, and both sides have taken to battling each other in the streets, spurring a growing flow of migrants into neighbouring countries and northward into the U.S.

Ortega’s leadership now resembles the corrupt and brutal dictatorship of Anastasio Somoza, the regime that the Sandinistas, led by Ortega himself, overthrew in 1979. Ortega and the FSLN (National Sandinista Liberation Front) had improved land distribution and brought about improvements in health and education between 1979 and 1984; these achievements were largely overturned by the neoliberal regime (supported by the U.S.) that came to power in 1990. Unable to re-gain power any other way, Ortega built a political machine that came to control a wide swath of civil and political organizations. He has also constructed a close (and corrupt) alliance with powerful members of the business community. Extremist Ortega supporters are now engaged in a violent struggle to maintain his regime in power, having recently defeated an uprising in a town that had been a stronghold of the 1979 Nicaraguan Revolution. The regime appears firmly entrenched. There is little likelihood of an opposition alliance toppling it any time soon since the opposition is deeply divided between some members the business community who have joined the opposition, on the one hand, and former guerrilla leaders, FSLN supporters, poor farmers, and students, on the other hand. Like Venezuela’s Maduro, and Chavez before him, Ortega and the FSLN were co-opted into the old political game. Once in power, they did not attempt to alter the economic structure. Closely collaborating with the International Monetary Fund and the World Bank, and cultivating business support, the Ortega’s regime became a stanch supporter of the political and economic status quo.

Brazil: Political Polarization and a Troubling Political Future

In Brazil, the political right removed a left government (under Labour Party President Dilma Rousseff) from power through what critics have called a “congressional coup” in the wake of rising political protests against government corruption. The essential context of this development was, once again, the decline in commodity prices that put employment and social programs in jeopardy and laid bare the country’s fiscal problems. The current government, led by President Michel Temer, is however, no less corrupt (perhaps more) and profoundly unpopular, with an approval rating of just 5 percent. This government embarked on a series of policies that gave rise to ongoing popular protests through 2017 and 2018. These have included strikes and demonstrations against his proposed labor reforms (geared to the reduction of labour power), pension reform (which would reduce benefits) along with demonstrations in support of former President Luiz Inácio Lula da Silva, who the government has jailed on corruption charges making it impossible for him to run for office. The government has responded with repression, thereby instigating even more protests. Most recently, the government’s hike in fuel prices resulted in a strike by the transportation sector, which brought the country to a standstill and resulted in shortages of essentials such as cooking oil. Protesters called for Temer’s resignation. An estimated 15 to 20 percent of the population now support military intervention. Lula, even though imprisoned and not allowed to run in the upcoming presidential election, still leads in popular support. He is followed by right-wing presidential candidate Jair Bolsonaro, who has been openly supportive of the country’s 1964-1985 military government. Whether Lula’s current support base will eventually be transferred to a candidate he and his party endorses is an open question.

The Politicization of Corruption

Much of the protests and ensuing political turmoil has involved the issue of political corruption. While some observers have seen this development as positive insofar as it indicates growing public intolerance of corrupt practices, the politicization of corruption charges suggests more sinister processes at work. Close attention to the pursuit of corruption charges reveals the predisposition to bend the rules to prosecute (and eliminate) political opponents. One of the consequences is that the growing political unrest in the region is likely to be addressed in ways that are seen as unfair and exclusionary by significant portions of the public. However, problematic left regimes may have become, the politicization of corruption by the political right, which is able to divert the fears and economic insecurities of the public toward the corruption issue, is not a strategy likely to produce compromise or political peace. The left has probably not been any more corrupt than regimes before it or after it. Corruption, as I have argued in earlier posts, is not a moral failing; it is symptomatic of the inability to arrive at a political settlement by any other mean—corruption buys political quiescence when regimes are not able to orchestrate a cross-class coalitional distributive agreement.

The current political turmoil has deep historical roots. The unequal economic and social structures of Latin American countries are rooted in the nineteenth century, or even earlier. However, the economic crises of the early 1980s and the neoliberal reforms that followed gave rise to unprecedented levels of poverty and inequality. The left regimes that came to power in the 2000s attempted to grapple with these problems largely through increased social spending. One might argue that these governments ought to have brought about more transformative changes, both politically and economically. However, there were powerful structural constraints on policy choices, most notably the discipline conferred by both domestic and international capital on regimes that become too interventionist, particularly ones purposing basic changes in productive structures. These regimes therefore became increasingly dependent on commodity exports to address pressing social issues, a strategy that has now run out of steam and left in its wake a perilous political future.