Los Amigos de la Plata del Amigo que se Fue; oh, que tristeza, perder un amigo tan bueno (y tan rico...)

What’s left of the Latin left
By John Paul Rathbone
Financial Times, March 8, 2013 7:57 pm

As Chávez’s death focuses attention on the economic failings of radicals, pragmatists are proving more successful

Three weeks before Venezuelan President Hugo Chávez died on Tuesday, Yoani Sánchez, Cuba’s best-known pro-democracy blogger, landed in Brazil on a scheduled flight. Ms Sánchez had waited five years for permission to travel abroad and Brazil was an obvious first place to visit.

Latin America’s biggest economy shares a common heritage with Cuba, with their histories of slavery and sugar. Brazil is also governed by the leftwing Workers party, elected three times in a vibrant democracy – so unlike the Castro dictatorship at home.

Yet soon after the gangly 37-year- old writer arrived, she had an unwelcome reminder of the world she had left momentarily behind. At a São Paulo bookshop, about 200 young socialist activists burst into the room proclaiming her a CIA spy. One protester chanted: “Mercenary”. It was the same kind of invective that Chávez, Cuba’s closest ally, had levelled against Caracas’s middle class, which he condemned as los escuálidos or the “squalid ones”.

Ms Sánchez brushed it off. Yet many Brazilians were mortified. Ms Sánchez tweeted: “You know the phrase I’ve most heard in São Paulo? Yoani, please excuse these extremists. They don’t represent us.”

In some ways, though, they do. Ms Sánchez’s experience exposes a feature of Latin American politics that has been highlighted again this week by Chávez’s death. Both events show there are two strands of leftism in Latin America, the Brazilian kind and the Cuban/Venezuelan kind.

Both have very different origins – and prospects. Jorge Castañeda, a Mexican intellectual, identified their characteristics in a 2006 essay in Foreign Affairs. The first strand, a pragmatic left, today includes the governments in Brazil, Peru and Uruguay. They are “modern, open-minded, reformist and internationalist”.

The second strand, which includes Cuba, Venezuela, Ecuador, Bolivia and perhaps Argentina, “is born of the great tradition of Latin American populism, is nationalistic, strident and closed-minded”. While democratically elected, their autocratic style and length of tenure can also make their successions traumatic.

Chávez wanted to reign until 2030. Evo Morales, president of Bolivia since 2006, is running for a third term. Rafael Correa, into his second term, is Ecuador’s longest-serving president in more than 30 years.

Cristina Fernández, Argentine president, is in her second term, after one by her husband, and eyeing a third. The Castro brothers have ruled since 1959.

Chávez’s death raises questions about the future of this populist strand. That it is partly because his petrodollar diplomacy financed most of them, and partly because his tweak-the-nose attitude to enemies poisoned the region’s tone frequently during the past 14 years.

“Chávez was very amiguero, very approachable. He wasn’t white, which is important. And he set a new tone in the rhetorical scale. He said what the suits never dared to say,” says James Dunkerley at Queen Mary, University of London. “Whether that tone was useful or not is ambiguous.”

It was the “pink tide” which rose in Latin America after the Asian and Russian crises of 1997 that drew the world’s attention back to the continent. The region’s democratic transition in the 1980s first favoured centrist governments and the liberal economic policies of the “Washington consensus”.

But when Russia and the Asian economies crumpled, Latin America suffered a recession so deep it was called the lost half-decade. The region, since 1990 one of the world’s fastest-growing, began to look like a disaster. Poverty rose. The political pendulum swung to the left.

Chávez’s election in 1998, supported by the middle class, marked the first change. Ricardo Lagos followed in 2000 – as the first socialist president in Chile’s ruling coalition. Then came Brazil’s Luiz Inácio Lula da Silva in 2002. Bolivia, Paraguay and El Salvador followed. By 2009, 17 of Latin America’s 20 republics had left or centre-left governments, according to Victor Bulmer-Thomas, an economic historian.

Economically, the timing was brilliant. From 2003, the region began to ride a boom in commodity prices, which strengthened government finances and allowed large increases in social spending. But there were two distinct streams within the pink tide.

The pragmatic strand was composed of technocratic social democrats who prioritised social needs while maintaining economic stability. Its ideological origins lay in the Communist International, and followed a similar path to leftists elsewhere. After the fall of the Berlin Wall in 1989, it acknowledged its failures and reconstructed itself.

President Dilma Rousseff of Brazil, for example, grew up in guerrilla movements and studied Marxist texts. But she has also privatised airports to speed preparation of the infrastructure desperately needed for the 2014 World Cup and 2016 Olympic Games.

The second strand was rooted in Latin populism, placed Cuba’s Fidel Castro and Che Guevara in a pantheon of demigods, and were often poor or spendthrift, or both. “Venezuela just took the money and blew it,” says Eric Farnsworth, vice-president of the Council of the Americas and Americas Society.

Such spending was central to Chávez’s clientelist model. Closely advised by Havana and bolstered by high oil prices, he set his sights on a pan-American “Bolivarian revolution”.

He bought Argentine debt, gave aid to Bolivia and Nicaragua, and $6bn a year of cheap oil to Cuba in return for doctors, teachers and intelligence officials. At home, he funded social projects by draining PDVSA, the state oil company and nationalising private companies, sometimes on his television show, Aló Presidente, exclaiming: “Nationalise it!”

He was not alone. Ecuador defaulted on international bonds and gave refuge to Julian Assange, the WikiLeaks founder. Argentina nationalised YPF, the Spanish-controlled oil company. Evo Morales nationalised swaths of Bolivia’s energy sector including the local operations of Petrobras, the Brazilian oil company . The productivity of these nationalised businesses has since deteriorated.

. . .

This created a furore that echoed around the region. The noise it generated, though, was misleading because the economies of these maverick countries amount to just 17 per cent of Latin America’s US$6tn gross domestic product. It also obscured advances made by centrist democrats.

“People outside the region overestimate Chávez’s influence,” says Malcolm Deas, an Oxford-based historian of the Andes. “Mexico is not chavista, nor is Central America – Nicaragua apart. Nor are Chile, Peru or Colombia ever going to follow his example.”

Indeed Peru is a telling example of this. In 2006, Ollanta Humala, a former army officer, ran for president espousing Chávez’s approach – and lost. In 2011, he ran again while embracing the pragmatic Brazilian model – and won. The pendulum has swung again.

Today, about half of the region’s 20 republics are centrist or centre-right. Not that this has diminished the importance of social progress everywhere. Caracas rightly boasts that it has halved poverty levels in Venezuela. Yet this performance has been repeated elsewhere, in Chile and Peru for example, without ransacking the economy as Chávez did.

The Chavista model is a busted flush but no leader in the region will publicly admit it. Nonetheless, tributes have flowed in all week. Dignitaries and world leaders, from Iran’s President Mahmoud Ahmadi-Nejad to the Prince of Asturias, have flown to Caracas to pay their respects. In Havana, the Castro government declared three days of mourning.

Much of the radical left’s grief is real, but so too is the self-interest. Because Chávez’s demise confronts it with a bind. The populist left is dominated by outsize personalities. With its most extravagant character gone, others are jostling for supremacy. That is as true inside Venezuela, where chavismo is riddled with factions, as outside.

“The space and rhetoric won’t change,” says Franklin Ramírez, a sociologist at the Latin American Faculty of Social Sciences in Quito. But the “map has been changing”. The main contenders for influence are two economic blocs: Brazil and its partners in the southern Mercosur trade pact, and its regional counterweight, the free-trading Pacific economies of Mexico, Colombia, Peru and Chile.

The second and bigger problem is that the radical economic model is unsustainable. Even with the largest oil reserves in the world, Venezuela has turned to China for $40bn of loans to keep itself going.

Economic decay may not matter to true populists. After all, “as well as handouts, their beneficiaries gained hope, a feeling of being listened to”, says Mr Farnsworth. “You can’t put a dollar figure on that. It is a revolution of the mind.”

It is an open question how long that revolution of the mind will continue if Caracas or other radical governments in the region cannot deliver their promises. That will better showcase the success of the region’s pragmatic centrists. But it will also leave the populist left struggling to stand for anything other than empty pledges and stale rhetoric.

Additional reporting by Andres Schipani in Bogotá