Central America: Evolution of Economic Elites

By Alexander Segovia*

 

El Salvador landscape

El Salvador landscape / Google Images / Creative Commons

The elites of Central America – traditionally organized in national business groups with strong family ties – have lost power and allowed certain reforms to advance over the past 30 years, but the full impact of this historic shift has been blunted by the lack of broad, inclusive national debates and the growing role of regional economic powers. Until the 1980’s, the powerful interests of the traditional agricultural export economy dominated for more than a century, with enormous influence by virtue of their control over property and every facet of the production, processing, and domestic and foreign marketing of their products.

  • For these traditional elites, the state was to be used for their own benefit. Their decisive influence continued even as economies changed and exports diversified somewhat after World War II. It survived the growth of cities, the emergence of new players in industry, the growth of organized labor, and the expansion of government bureaucracies. Elites obstructed changes that threatened their interests and parried others into minor tweaks of the essentially agro-export model that they dominated. They preserved many inequities in social and economic systems, slowed diversification, and protected governments that were weak, corrupt, disorganized, and often authoritarian, repressive, and undemocratic.

Since the late 1980’s, according to my research, the agro-export model that enabled elites to have such power has changed significantly – facilitating the emergence of new economic models (albeit with different manifestations in each country) and eroding the old elites’ grip on society. The change was driven by the armed conflicts, political and social crises, emigration, and the flow of remittances. Neoliberal economic reforms, including liberalization, deregulation, privatization, and opening to foreign investment, had an impact within the context of the broader capitalist globalization gaining momentum during the period.

  • Although not always with alacrity, elites had to accept the advent of new spaces and patterns in which other actors were able to accumulate wealth and power. Tourism, telecommunications, banking, and other service sectors gave rise to new voices, as did the development in some countries of non-traditional exports. New entrepreneurs brought in new foreign actors, including many from neighboring countries and the rest of Latin America. Powerful transnational economic groups (known by the Spanish acronym GETs), with strong family ties, began to operate across borders – creating both new opportunities and new challenges. The GETs have already flexed their enormous influence over public policies. As a result, the traditional elites gradually have found themselves forced to function within a matrix of national and regional power, with new dynamics, over which their grip had been broken or at least significantly weakened.

National elites such as El Salvador’s have broken with the old stereotype of selfish economic interests united around an extreme right wing ideology – being more heterogeneous today in composition and perspectives than ever before – but deeper, lasting change is going to take time and effort. An inclusive national dialogue in each country to build agreement on the broad outlines of a political project to address how to effect national transformation and modernization would be the best way of reassuring all sides that their voices count, but unfortunately no country is holding one. Generational change – characterized in part by younger family members’ constant connectivity with peers outside strictly national circles – could also be a factor.

  • The increased activism of the GETs may explain why breaking the grip of the nation-based traditional elites has not led to deeper and broader change – essentially swapping one elite’s manipulation of government for another’s. The GETs have important, and sometimes decisive, influence over public policies not just in their home countries, but beyond. The future of reform therefore would appear to depend on the willingness of regional elites to pursue them. Several initiatives, including one undertaken by the Instituto Centroamericano de Investigaciones para el Desarrollo y Cambio Social (INCIDE), of which I am President, aim to promote a constructive dialogue between society and the GETs. Progress hasn’t been easy or quick, but we have proven that change is indeed possible.

March 21, 2019

*Alexander Segovia is a Salvadorean economist and President of the Instituto Centroamericano de Investigaciones para el Desarrollo y el Cambio Social.  He was Technical Secretary of the Presidency of El Salvador (2009-2014). This article is adapted from his recent book, Economía y Poder: Recomposición de las Élites Económicas Salvadoreñas.

South America: Can it Navigate the Changes Ahead?

By Leslie Elliott Armijo*

Latin america

Latin America / Google Images / Creative Commons

Venezuela is the latest example of how Latin America, especially South America, has missed an opportunity to demonstrate the sort of hemispheric leadership it has long striven for – and instead has ceded that role to the United States and even Russia and China.  Although the United States, and the rest of the hemisphere more generally, have been slow to realize it, economic drivers are making the world more multipolar.  In a recent article by two colleagues and myself, we analyze international financial statistics covering 180 countries from 1995 to 2013 that reveal the slow relative decline of the United States as the reigning financial hegemon.  U.S. influence, although still formidable by some margin, is eroding.

  • The Trump Administration’s activities in the larger world are also undermining Washington’s influence. Policies in the WTO and other trade actions writ large – such as withdrawing from the Trans-Pacific Partnership (TPP) and threatening and implementing trade sanctions with little apparent logic – have brushed even allies back. Positions on the Paris climate accord, at the United Nations, and in the President’s relations with North Korean leader Kim Jung Un and Russian President Vladimir Putin have left many around the world increasingly reluctant to follow the U.S. lead.

In this increasingly multipolar world, Latin America, especially South America, is going to find itself not so much freed of U.S. influence – as intellectuals in the region have often stated their wishes – as exposed to new pressures.  The change will be manifest mostly in the economic arena.  New research by McKinsey Global Institute suggests that global value chains are ever more concentrated within multinational corporation networks, which tie major markets (essentially the United States, Western Europe, China, and Japan) to geographically contiguous countries.  This is arguably good for closer neighbors, such as Central America and the Caribbean in our hemisphere, but potentially harmful to those left out – including Sub-Saharan Africa, possibly the Mideast, and South America.

South America has diversified its trade – generally a good thing – among the United States, EU, and East Asia, with the latter having become the major trading partner for a number of countries. Chile and others have been pushing hard to build the Pacific Alliance, as well as to institutionalize the alliance’s relationship with Mercosur. This strategy will be put to the test if, as early trends indicate, the world regionalizes and South America comes under great pressure to refocus on its relations with the United States. To protect and advance their interests in the future, South American countries probably will try to find the right balance between embracing and rejecting the declining yet still dominant hegemon to the north and, as in the case of Venezuela, developing their own strategic vision, forging unity among themselves, and putting some muscle behind an agenda that prepares them for the future.

March 18, 2019

* Leslie Elliott Armijo is an associate professor at the School for International Studies, Simon Fraser University, Vancouver. She is the co-author, with Daniel C. Tirone (Louisiana State University) and Hyoung-kyu Chey (National Graduate Institute for Policy Studies, Tokyo), of The Monetary and Financial Powers of States: Theory, Dataset, and Observations on the Trajectory of American Dominance.

Peru: President Vizcarra Surprisingly Paves the Way for Liberal Project

By Carlos Monge*

actualidad-salvador-solar-y-su-nuevo-gabinete-juran-al-cargo-esta-tarde-n362718-603x339-558655

Prime Minister Salvador del Solar and President Martin Vizcarra / canaln.pe / Creative Commons

One year in office, Peruvian President Martín Vizcarra has made significant strides toward strengthening neoliberal economic policies and opening the way for a liberal project in Peru – while maintaining 50 percent popular support.  Prime Minister César Villanueva took the hit for a fall in the polls last week, setting the stage for Vizcarra to name a new cabinet this week to give a push to his agenda.  The new Prime Minister – lawyer, actor, and film director Salvador del Solar – espouses a market economy with strong state regulations against corruption, tax evasion, and monopolies, while defending human, women’s, and LGTIBQ+ rights.

  • His opponents have been weakened. Former President Alberto Fujimori is back in jail, his presidential pardon revoked.  His older daughter, Keiko, is in prison, while awaiting trial on corruption charges, and his younger son, Kenji, is under investigation for links to drug trafficking.  Fujimori family long-time confidant Jaime Yoshiyama returned from the United States directly to prison for violations of campaign finance laws.

None of this seemed remotely possible only a year ago when Vizcarra, a Vice President, returned to Peru from his posting as Ambassador to Canada and, on March 23, was sworn in as President, after President Kuczynski resigned amid serious corruption charges.  Indeed, Vizcarra appeared destined to be a weak president facing a strong and ruthless parliamentary opposition.  The question then was if he would last or, rather, when he would fall.  Vizcarra initially seemed to follow his predecessor’s appeasement policies, attempting to govern without the permanent obstruction of a Congress dominated by Keiko Fujimori’s Fuerza Popular and its close ally, APRA.  He even consulted with Keiko about potential cabinet members and important policy matters.  Keiko, on the other hand, remained convinced that she should have won the 2016 elections and sought to govern the country through her control of the Congress, even hoping to generate a political crisis leading to new national elections that she was sure she would win.

  • Vizcarra soon grasped Keiko’s intentions and sided with citizens’ widespread indignation caused by the leak of audio recordings that confirmed enormous levels of corruption in the judiciary and its connections to political parties such as Keiko’s Fuerza Popular and APRA. Despite desperate efforts by these parties and their allies in both the judiciary and the General Attorney’s office to block ongoing investigations, both Keiko and Alán García, the APRA leader and former national president, were in serious trouble.  Vizcarra embraced the anti-corruption platform and confronted head-on the same leaders and parties he had initially tried to appease.
  • Bypassing the Fuerza Popular and APRA’s domination in Congress, Vizcarra succeeded in organizing a referendum last December that approved a package of reforms he proposed to reduce corruption. (He even convinced citizens to vote NO on one of his four reform proposals – the return to a two-chamber parliament – after Fuerza Popular and APRA introduced a provision that would open the way for parliamentary re-election in 2021, which another reform prohibited.)  With an average of 80 percent of voters supporting his position on all four measures, Vizcarra scored a huge victory– clearing the way for him to move forthrightly on his political and economic agenda.

Early posturing for the 2021 elections shows that Vizcarra may have opened a previously nonexistent space for liberal politics in the country.  In fact, his new Prime Minister has presidential aspirations and Julio Guzmán and his Partido Morado have recently registered, and they are –as Vizcarra is – – a “liberal” or “sort of liberal” politician.  The traditional right, including Fuerza Popular, APRA, the CONFIEP business guild, and others, have strongly criticized the values and economic views of the new Prime Minister, but the days that the only face of the right was a mix of state capture by large economic groups and conservative values and policies – a mix Alán García and Keiko Fujimori represent so well– seem to be over.  The emergence of a liberal project also represents a challenge for the left, traditional champion of liberal values.  If those liberal values now find liberal champions, the left will have to remain true to them while – at the same time – displaying its total opposition to the continuity of neoliberal economic policies and pushing for a set of distinctly leftist policies in the social, environmental and cultural realms.

March 15, 2019

* Carlos Monge is Latin America Director at the Natural Resource Governance Institute in Lima.

The Arrival of #MeToo in Latin America

By Brenda Werth

#NiUnaMenos

#NiUnaMenos Protest in Neuquen / Flickr/ Creative Commons

The #MeToo movement – described frequently as a moment of reckoning in the societies it touches– is arriving in Latin America, but the region’s own #NiUnaMenos movement provides a superior model for driving awareness of violence against women.  Latin America has a deep history of activism against gender violence, including decades of organizing against feminicide at the U.S.-Mexico border and most recently the mass mobilizations of #NiUnaMenos in Argentina, Peru, Brazil, and Chile.  Two major cases have breathed life into the framework of #MeToo in the past three months: Argentine actress Thelma Fardín’s open denunciation in December of actor Juan Darthés for raping her on the set of the children’s show “The Ugly Duckling” when she was 16 years old; and most recently, the mounting accusations of sexual assault and misconduct against former Costa Rican President and Nobel Laureate Oscar Árias Sánchez.  In denouncing celebrities and politicians in positions of power, #MeToo in Latin America replicates the pattern of “toppling the powerful, not the ordinary.”

While the significance of bringing down the powerful and those who historically have seemed most immune from prosecution and public scrutiny should not be underestimated, the concern that #MeToo so far has had little effect in changing attitudes of the ordinary or holding the ordinary accountable is a valid one and presents a much bigger and strategically important problem.  New York Times writer Amanda Taub writes that “the movement has had little effect on the broader problem of sexual abuse, harassment and violence by men who are neither famous nor particularly powerful.” While addressing the broader problem of sexual abuse, holding perpetrators accountable, and implementing long term systemic change are central tenets to the original mission of #MeToo as envisioned by founder Tarana Burke, there is a sense that the movement’s adaptation and subsequent viralization have narrowed the movement to focus primarily on cases of sexual abuse with potential for media spectacularity.

  • The #NiUnaMenos movement in Latin America, on the other hand, offers concrete examples of how to address the broader problem of sexual abuse and gender violence at the grassroots level through open popular assemblies, rallies, demonstrations, collective performances, and social media. University of California Professor Alyson Brysk notes the importance of the grassroots organizing against gender violence that preceded #MeToo.  #NiUnaMenos was first introduced in 2015 by Argentine journalists, activists and artists who, outraged by the murder of 14-year old Chiara Páez by her boyfriend, announced a call of action via social media to build solidarity against gender violence and feminicide.  Cecilia Palmeiro, one of the movement’s founding members, says #NiUnaMenos embraces a “feminism from below” that is intersectional, transversal, and horizontal and engages with marginalized communities, with a revolutionary lineage of activism passed down from the Mothers, Grandmothers and other human rights groups.  In joining forces with the International Women’s Strikes, #NiUnaMenos makes the crucial link between gender violence and the forms of economic inequality and exploitation that affect women worldwide.

While #MeToo “jumps to countries across Asia, Europe, and Latin America,” the lessons of movements from Latin America such as #NiUnaMenos are indeed more valuable – and worth being studied by the United States and Europe. A hemispheric exchange of ideas, methods, and practices between movements such as #MeToo and #NiUnaMenos would help establish new networks of solidarity while drawing attention to the diverse challenges and questions that inform both movements and the contexts in which they emerged. Furthermore, mutual acknowledgment of the sophistication and potential international impact of these and other movements would help to dispel the notion that Latin America is “catching up” by finally grappling with #MeToo and would contest the familiar trope of knowledge dissemination from North to South.

March 8, 2019

* Brenda Werth is Associate Professor and Department Chair, World Languages and Cultures, at American University.

Brazil: Will Officers’ Role in Government Taint the Military Institution?

By Christoph Harig*

President and Vice President of Brazil

Vice-President General Hamilton Mourão and President Jair Bolsonaro / Pedro França / Agência Senado / Flickr / Creative Commons

More military officers have joined Brazilian President Jair Bolsonaro’s government than during most periods of the country’s last military regime (1964-1985), which raises the question how much the military – as an institution – will avoid compromising its supposed non-partisan nature.  The President, Vice-President, as well as eight government ministers, are retired or reserve military officers.  Bolsonaro furthermore nominated an active-duty army general as the government spokesperson.  In total, more than 100 reserve and active-duty military personnel serve in various ministries and subordinate government agencies.  Some officers have joined out of true allegiance, others, out of a sense of duty or because they want to prevent worse things from happening.  The government is drawing heavily on individual (mostly reserve) military officers, but the military as an institution is not running the government.  This is not a return to the military’s previous political interventionism: instead, a democratically elected government is (re)militarizing politics.

  • The military’s official discourse is keen on maintaining its image as a non-partisan state institution. However, officers are aware that this will be a challenge.  The presence of dozens of reserve officers in government agencies irrevocably connects the armed forces to the administration.  Although many officers do have reservations about Bolsonaro, others have proudly displayed their satisfaction with the victory of the former paratrooper.  Many citizens and international observers will thus perceive the government’s actions as being at least implicitly backed by the military.
  • For the armed forces, this involvement comes with opportunities as well as risks. On the one hand, there is a considerable increase in the military’s veto power.  They can expect privileged treatment and an effective representation of their interests.  The military might for instance be able to draw some red lines when it comes to being included in the government’s planned pension reform.  On the other hand, the prominent role in Bolsonaro’s administration attracts unwanted public scrutiny.  Discontent with an eventual preferential treatment of the armed forces in the pensions reform might grow louder than if the military had stayed below the radar.

So far, military officers’ involvement in government appears to have boosted the military’s standing.  The generals are widely being seen as a moderating force.  They have blocked some controversial foreign policy proposals of Bolsonaro and the radical wing of the government, such as the move of the Brazilian embassy in Israel to Jerusalem or the establishment of a U.S. military base on Brazilian soil.  Some observers even suggest that the generals have established a tutelary role in foreign policy after the Minister of Foreign Affairs ended military cooperation with Venezuela without consulting the armed forces.

  • Particularly Vice-President General Mourão – once known for threatening military intervention in politics and even considered a liability during the election campaign due to several ill-considered statements – excels in his newly found role as “adult in the room.” As President Bolsonaro is stuck in polarizing campaign mode (for instance, he keeps on attacking Brazil’s press and recently lauded late Paraguayan dictator Alfredo Stroessner as great statesman), it is fairly easy for Mourão to present himself as pragmatic and reliable statesman.  In this role, he led Brazil’s delegation to the Lima Group meeting in Bogotá, where he clarified that Brazil would not support a military intervention in Venezuela.

In the long run, the impact of officers’ enhanced policymaking role on the military’s prestige will depend on whether they stay clear of blunders, failures, and scandals.  While the military officers in government might succeed in playing a moderating role for the time being, this development entails considerable risks.  Within and outside of the barracks, there already is a widespread perception of the military as savior that is supposed to rescue Brazil in times of extreme crisis.  This historically grown paternalistic role of high levels of political interventionism – in which allegedly competent armed forces save the nation from incompetent civilian politicians – will only become further entrenched.

March 6, 2019

*Christoph Harig is a Postdoctoral Research Fellow in Political Science at the Helmut Schmidt University/University of the Federal Armed Forces in Hamburg, Germany.

Colombia: Ready to Expand Environmental Policies

By Luis Gilberto Murillo*

Lush view of mountain range in Colombia

Jardín, Colombia by Pedro Szekely / Flickr / Creative Commons

Colombia has provided important leadership in implementing integrated, pro-environment taxes in the country, but there is urgent need for it to do more.  In 2017, Colombia became one of three countries with the greatest advances in implementing fiscal mechanisms to control emissions, one of the principal tasks on its agenda for full membership in the OECD.  But experts believe that the deepening of the global socio-ecological crisis caused by climate change demands broader, accelerated fiscal mechanisms to protect the environment and sustainable development.

  • In 2015, Colombia, as part of its Paris Agreement commitments, set the goal of reducing greenhouse gases by 20 percent by 2030. A recent report by the Comptroller General of the Republic concluded that the Colombian national economy will need to undergo a significant restructuring to meet that goal and make the country resilient in the face of extreme climate events such as floods and droughts.  The Comptroller report opened the door to discussion of fiscal tools for action and environmental protection, with special priority given to controlling deforestation, water conservation, and improving air quality. Environment taxes on carbon, plastic bags, and motorcycles with motors above 200cc have been a starting point, but the Comptroller assesses that they haven’t been effective enough.
  • The government today has much greater resources – more than 700 billion Pesos (about US$227 million) per year – than before. Moreover, the launch of Colombia’s unique voluntary carbon market, bringing important projects and a flow of resources to rural and ethnic minorities (Afro-Colombians and Indigenous communities), has already demonstrated the positive impact of green taxes.  The program to tax plastic bags has reduced their use by 30 percent in just the first year of implementation, 2017.

Debate over how and where to invest the resources created by environmental taxes will certainly be important.  Most observers believe that the central criterion should be how well projects change the attitudes and behavior of those involved.  Projects will be key, but the contribution of each individual to save the planet will be even more important.

  • The recent finance law, introduced by the current government and approved by Congress, missed a valuable opportunity to adjust existing green taxes and create new ones, especially regarding progress in promoting electric vehicles, innovative renewable energy production, and control over the use of plastics other than bags. Upcoming legislation provides ample chances to expand environmental taxes to achieve these goals.  A better balance between various taxes – on capital and labor on one hand, and pollution and environmental degradation on the other – could lay the foundation for progress.

The gains made thus far underscore the importance of having a strategic vision and discipline.  Improvisation will fail; steady work, technical rigor, and political wisdom are required for progress.  An important first step will be the designation of a technical mission to head the National Planning Department, which is charged with leading and coordinating the country’s development agenda in the medium and long term.  Such a technical mission, along with the Comptroller team, can guide public debate and keep it squarely on the national public agenda.

March 1, 2019

* Luis Gilberto Murillo is a CLALS research fellow and former Minister of Environment and Sustainable Development of Colombia, with almost 30 years of experience in the areas of environment, sustainable development, and peace building.