Political Upheaval in Latin America: Back to the Future?

Since the decline of commodity prices in 2013, Latin America has witnessed mounting political turmoil: widespread protests against transportation fare increases in Chile, against the removal of fuel subsidies in Ecuador, and over the legitimacy of the Bolivian presidential election. Brazil’s period of political upheaval began earlier with protests against corruption, leading to the impeachment and removal of President Dilma Rousseff. Following these events, Brazilians elected populist right president, Jair Bolsonaro, whose racist remarks about the country’s Indigenous people combined with his accelerated burning of the Amazon, have aroused international and domestic disapprobation. In a worrisome development, Latin American presidents have been appearing in public flanked by their Generals, suggesting that political leaders are at a loss as to how to address the growing political chaos. Most observers accept that the military played a key role in Evo Morales’ exist from power. Latin American history is rife with export commodity dependence, popular unrest (if not insurgency), political repression, authoritarian rule, and military meddling (if not direct intervention). The transition to democracy and market liberalization of the 1980s was supposed to end all of this. They have not.

The Root of the Problem: Misguided Economic Policies

Latin America’s current political turmoil is, to a significant extent, the unhappy culmination of the last thirty-five years of misguided economic policies—mostly arising in the awake of the international debt crisis of the early 1980s, and the market liberalizing reforms that countries pursued at the vigorous urging of the international financial institutions. The pre-existing social, economic, and political conditions were, admittedly, not optimal. The region’s history of colonial conquest, wealth concentration, political turmoil, and authoritarianism, along with racialized socio-economic inequality, and periodic U.S. intervention overturning governments committed to dealing with some of these problems, certainly provided a difficult historical legacy. However, economic globalization with its market liberalizing agenda exacerbated these very problems, contributing to increased political polarization.

On the assumption that countries should build on their comparative advantage, International Monetary Fund and World Bank policy urged elimination of industrial protection, a policy direction that resulted in processes of de-industrialization and a consequent rise in unemployment and underemployment. Revisions to labor codes, making it easier to hire and fire, had a similar negative impact on employment. Privatization of public companies and efforts to promote export expansion produced a concentration of wealth as only the biggest domestic companies (often in alliance with foreign capital) were in a position to purchase public companies and take advantage of export incentives. Exploitation of commodities particularly of mineral and hydrocarbons and the establishment of cheap labor export processing zones, seen as essential ingredients in achieving economic growth and prosperity, failed to provide sufficient decent employment. The demise of inefficient domestic enterprises was supposed to be compensated by economic growth and new employment generating activities. This did not happen. While economic growth returned in the 1990s, it was punctuated by economic crises; only a slow decline in poverty, and inequality that was now higher than ever.

The Political Consequences: Even more Political Polarization

All of this would have profound political consequences. Throughout the 1980s and into the 1990s Latin American civil society mobilized against the market liberalizing reforms. Meanwhile, the power of business increased from the 1980s as governments became increasingly dependent on their investment to drive economic growth and as the numbers of entrepreneurs obtaining formal positions of power within the state, particularly cabinet-level appointments, increased. Popular disillusionment with the failure of socio-economic conditions to improve sufficiently during the 1990s finally culminated in the election of a series of left government: by 2009, over 2/3 of countries had such regimes. These electoral wins caused great consternation among business and many members of middle classes, who often remained intractable opponents, the case of Venezuela being the most notable case. In countries with large Indigenous and mixed blood populations, the arrival to power of leaders representing the poor darker skinned masses engendered strong feelings of insecurity, and even fear. Ongoing tensions between governments and business interests during the 2000s deterred private investment. However, because these electoral wins coincided with the rise of commodity prices and substantial increases in state revenues, these regimes (with the notable exception of Venezuela) could spread around the bounty in ways that would keep powerful opposition interests at bay.

Things have fallen apart with the decline in commodity prices, however. While the various left regimes had been able to reduce poverty substantially during the boom years, none were able to diversify their economic base, or significantly increase taxes on non-resources sectors. As trade balances, deteriorated and fiscal deficits shot up, unemployment increased and governments cut back social programs. In a number of cases, these economic downturns prompted the election of right leaning governments (Brazil, Chile, and Argentina). Whatever their ideological predisposition, governments scrambled to maintain revenues by increasing commodity exports; in the cases of Bolivia and Brazil by burning the Amazon to increase beef and soy production.

Resource Extraction and the Growth of Authoritarianism

Without the achievement of economic diversification, Latin America’s left regimes could do little to increase formal employment opportunities substantially. At the same time, the project of growth-led extractive activities caused increasing opposition from previous supporters, particularly in the cases of Bolivia and Ecuador where the disruption of local communities and contamination of land occasioned by resource extraction activities negatively impact Indigenous groups located in resource rich regions. Fears of the erosion of mass support combined with intransigent middle class and upper class opposition have probably been at the root of the authoritarian tendencies of the populist left, most notably in Venezuela but also in Bolivia. However, right-leaning regimes have by no means been immune to the use of repression. While protests have been more or less permanent features of Chilean politics since the early 2000s, the current right government of Sebastían Piñera has dealt with protests demanding a new constitution and an end to inequality by deploying soldiers and tanks--the first time the government has responded in this way since the return to civilian rule. There have been with violent clashes between protesters and security forces.

Latin America’s difficult history is now more difficult than ever. Polarization between previous supporters of the political left and their opponents has increased and is now laced with racial disparagement. Fear and suspicion are endemic. At the same time, countries have become heavily dependent on commodity booms as drivers of economic growth—in large part a consequence of an ideological faith in the efficacy of the market and the merits of comparative advantage. Today, as in the nineteenth and early twentieth centuries, declines in commodity prices trigger political unrest among those most adversely affected, fears among middle and upper class, and dismay among political leaders who are tempted to find authoritarian solutions to contain increasingly explosive political situations.

A shortened version of this post also appeared in three major Latin American newspapers:

El Universo, Ecuador

Folha, Sao Paulo, Brazil

Pagina Siete, La Paz, Bolivia