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.

A Right Turn in Latin America?

By Santiago Anria and Kenneth Roberts*

Jair Bolsonaro

Brazilian President Jair Bolsonaro in January 2019. / Marcos Brandão / Agência Senado / Flickr / Creative Commons

After a long winning streak, the left in Latin America has experienced electoral defeats in a number of former strongholds since 2015 – including Argentina, Chile, and Brazil – but the trend is not unidirectional and so far falls short of being a regional “right turn.”

  • Right wing presidents govern today in those three countries as well as Colombia, Guatemala, Paraguay, Honduras, Panama, and Peru – a scenario that is quite different from 2010, when about two-thirds of Latin Americans lived under some form of leftist government. Democratization, financial crises, and market liberalization shaped the 1980s-90s, while mounting social discontent against neoliberal market reforms helped to produce a “left turn” that spread across the region following the election of Hugo Chávez in 1998.  Leftist candidates won 30 presidential elections in 11 different Latin American countries between 1998 and 2014.

The current trend lines are hardly unidirectional across the region.  Mexico, which remained under conservative government when most of the region turned toward the left after 1998, has recently elected long-time leftist leader Andrés Manuel López Obrador to the presidency.  Incumbent leftist parties have been re-elected one or more times in Uruguay, Bolivia, Costa Rica, and El Salvador.  Notably, leftist parties in some countries where they have been historically weak, such as Colombia and Honduras, have strengthened electorally and organizationally, laying the groundwork for further growth.  Leftists’ records elsewhere are mixed.  Rivalries among Ecuadorean leftists make their future uncertain.  Venezuelan President Maduro and Nicaraguan President Ortega have resorted to increasingly repressive and authoritarian measures to maintain their grip on power.

  • With the possible exception of Brazil, the right’s surge is not the result of the sort of social backlash that brought the left to power. In general, the right’s victories appear to be a routine alternation of power rather than a regional wave with common starting points and driving forces.  Argentina and Chile are the two clearest examples of routine electoral alternation of power explained by retrospective, anti-incumbency voting in contexts of economic slow-downs, corruption scandals, and social policy discontent.  In countries like Paraguay and Honduras, on the other hand, the shifts were initiated by non-electoral means – a politically motivated presidential impeachment in the former and a military coup in the latter – and then consolidated through elections after the fact.  In Brazil, the right turn can be traced back to the social protests that broke out against Dilma Rousseff’s leftist PT government in June 2013, but former conservative allies’ opportunistic impeachment of Rousseff, along with their imprisonment of former President and PT founder Lula, seriously weakened her party – paving the way for the election of anti-establishment candidate Jair Bolsonaro.

The left in power is still strong, though probably not unbeatable today, in countries like Bolivia and Uruguay, at least in part because of their roots in and strong connections with social movements.  Unlike the PT, both Bolivia’s MAS and Uruguay’s FA have managed to preserve more of their movement character and to avoid extreme forms of top-down control and professionalization.  The ability of mass popular constituencies and grass-roots activism to hold party leaders accountable and steer public policies in desired directions—a condition largely absent in countries like Brazil, Ecuador, and Venezuela—has helped the left maintain cohesion in Bolivia and Uruguay.  This cohesion, accompanied by significant reductions of inequality, helps to explain the continued vitality of left parties in these countries.  The recent strengthening of leftist alternatives in Mexico and Colombia, moreover, should guard against facile assumptions that a region wide right turn is underway.  Conservative forces’ recent victories are better understood as a reinforcement of the post-neoliberal left-right programmatic structuring of political competition in Latin America than a unidirectional political shift to the right.  That said, Brazil wields significant political and economic influence in the region and, traditionally seen as an “early mover” in the region, may be a bellwether of the future.  The ability of President Bolsonaro and his model of governance to deliver the results that Brazilians want—and to operate within the parameters of democratic institutions—will be key factors in determining the direction and strength of the region’s rightist wave.

January 9, 2019

*Santiago Anria is Assistant Professor of Political Science and Latin American Studies at Dickinson College, and Kenneth Roberts is Professor of Government and Director of Latin American Studies at Cornell University.

Ecuador: Lenín Moreno’s Balancing Act

By John Polga-Hecimovich*

Lenín Moreno

Ecuadorian President Lenín Moreno (far right) meets with members of the National Assembly in October 2018. / Diego Cevallos / Asamblea Nacional / Flickr / Creative Commons

As Ecuadorian President Lenín Moreno begins the post-honeymoon phase of his presidency, he appears firmly committed to positioning himself as a judicious voice and centrist in a region where ideological moderation and restrained oratory are the exception rather than the norm.  This might be unexpected given his political background and four years as vice president under leftist firebrand Rafael Correa (2007-17), but it makes sense given the country’s challenging economic situation and political constraints.  As previously noted, Moreno had two choices when taking office: remain loyal to his socialist roots, govern through his Alianza PAIS legislative bloc, and double down on Correa’s (fiscally unsustainable) “Citizens’ Revolution;” or move towards the political center, splinter his legislative majority, and abandon Correa and many of his policies.  He has decisively opted for the latter, attempting to navigate a middle ground between the left and the right.

  • No issue depicts the thin line Moreno walks more than Ecuador’s foreign policy, and no foreign policy issue reflects that tug-of-war better than his handling of Wikileaks founder Julian Assange. Assangeto whom Correa granted asylum in 2012 at the Ecuadorian Embassy in Londonis now a costly and increasingly undesirable houseguest.  He is a liability in Moreno’s quest for technical assistance, international loans, and greater security and commercial cooperation with the United States, which is still seeking justice for Wikileaks’s publication of U.S. classified material.  Although Moreno has called Assange “more than a nuisance” and “an inherited problem,” the president has been reluctant to push him out over concern for his human rights.  In July, Moreno suggested Ecuador was seeking guarantees that Assange would not face the death penalty.  Maintaining its delicate dance, however, in October, the government broke from its longstanding dialogue with British authorities over Assange’s situation and announced that it will no longer pay for his food and medical care.
  • Ecuador is also seeking closer relations with its right-of-center neighbors, beginning to distance itself from the region’s leftist governments, and attempting to rebuild ties with the United States. Since June, Moreno has attended the inauguration of Colombian President Iván Duque, met with Peruvian President Martín Vizcarra, welcomed U.S. Vice President Mike Pence to Quito, and launched a security agreement with Washington.  Moreno has also changed his tone with regards to Venezuela.  Speaking to the United Nations General Assembly on September 25, he spoke of the burden caused by arrival of more than 6,000 Venezuelan migrants a day and called for a national dialogue in that country, provoking an acrimonious back-and-forth between the two capitals that culminated in the Ecuadorian government tweeting that “corrupt, murderous, and lying socialism of the 21st century is still alive in Venezuela and producing the most massive migration in the country’s history.”

Moreno’s strategy to confront the country’s fiscal deficit, which was 5.5 percent of GDP in 2017, is an even greater departure from his predecessor’s approach.  Whereas Correa pursued financing primarily through oil-for-loan deals from China after Ecuador’s selective default in 2008, Moreno has turned to other global lenders such as the World Bank and Japan.  He has also pursued new commercial relationships and market-friendly policies, including a free trade agreement with the European Free Trade Association, beginning accession talks with the pro-market Pacific Alliance, and continuing to encourage foreign investment in Ecuador’s hydrocarbon industry.  However, Moreno has not fully committed to Washington consensus-style reforms: the government announced measures in August to reduce its $60 billion debt, but it also authorized over $1.2 billion in loans to the housing sector, agriculture, and small and medium-sized business to reactivate the domestic economy.

Although not an ideological rightist like Chilean President Sebastián Piñera or Colombian President Iván Duque, Lenín Moreno has reoriented many of Rafael Correa’s domestic and foreign policies out of necessity as he confronts Ecuador’s difficult economic situation.  Given that the country’s fiscal deficit and outstanding debt are strategic challenges, it seems likely that he will continue to judiciously tread this middle path.  Although fiscal austerity measures have lowered Moreno’s approval rating and provoked protests from the Correista left, it would be a mistake to bet against him.  Moreno has not only upended expectations but also proven far more resourceful and politically sophisticated than his critics—and probably even his admirers—expected.  He may also send Julian Assange at some point an eviction notice.

November 6, 2018

*John Polga-Hecimovich is an Assistant Professor of Political Science at the U.S. Naval Academy.  The views expressed here are solely those of the author and do not represent the views of or endorsement by the Naval Academy, the Department of the Navy, the Department of Defense, or the U.S. government.

Southern Cone: Rapid Transition to Non-Conventional Renewable Energy

By Thomas Andrew O’Keefe*

Edificio Alexander

Edificio Alexander, a building in Punta del Este, Uruguay, that produces wind energy on its roof. / Jimmy Baikovicius / Flickr / Creative Commons

South America’s Southern Cone is undertaking a transition to non-conventional, renewable energy resources – that is, production not dependent on fossil fuels or large-scale hydropower – that creates the opportunity for a historic regional consensus on energy policy.  Uruguay and Chile are at the forefront.  Both lack significant fossil fuel reserves and have experienced crises when droughts detrimentally impacted hydro-supplied electricity.  For them, the rapid shift to other forms of domestically sourced renewables is as much a means to guarantee energy security as to combat climate change.  Approximately a third of Uruguay’s electricity is currently generated from wind power (up from only one percent as recently as 2013).  Similarly, about a third of Chile’s electric power – depending on the time of day – is sourced from the sun and the wind.

  • Brazil has also made significant strides in incorporating wind, and to a lesser degree, solar power into its energy matrix. The primary motivation is the need to offset carbon emissions from the burning of rain forests and the country’s greater use of natural gas.  Brazil has long enjoyed the cleanest energy of any large economy in the world because of its heavy reliance on hydropower, which still covers some two-thirds of the country’s electric needs.  Brazil was also a pioneer in the development of more environmentally friendly sugar-based ethanol (as opposed to corn favored in U.S. ethanol production); most passenger vehicles today have flex-fuel engines.  Paraguay gets almost all its electricity from hydropower (and exports the bulk of what it produces).
  • Argentina, while increasing exploitation of its large shale gas and oil reserves, in 2017 expanded renewable energy projects nearly 800 percent over the previous year, according to reports. President Mauricio Macri has created a more inviting investment climate for the private sector, rapidly increasing natural gas output, especially from the Vaca Muerta shale reserves in Patagonia.  He is also encouraging the expansion of renewable energy beyond large hydro by, among other things, allowing long-term power purchase agreements in U.S. dollars as a hedge against currency devaluations.  Furthermore, large industrial consumers face penalties if they do not meet increasing thresholds set for renewable energy use.  Current laws require that at least 20 percent of the nation’s electricity come from non-conventional renewables by the end of 2025, and they include tax exemptions, import duty waivers, and a special trust fund called FODER, created in 2016, to provide subsidized loans and other assistance.

The rapid expansion of the renewable energy sector in the Southern Cone will enable countries to export excess production to their neighbors, facilitated by a robust regulatory framework to facilitate the cross-border trade in energy resources.  In addition, by creating a fully integrated regional market in renewable energy products, a crucial backup is established for resources such as wind and solar power that are inevitably prone to interruptions during the day.  It would also mitigate the impact of droughts on hydro-generated electricity, which are likely to worsen with global climate change.  Accordingly, there are strong incentives to revive efforts begun by MERCOSUR in the late 1990s to integrate energy markets that collapsed with the Argentine energy crisis at the start of the 21st century.  The fact that all the Southern Cone governments are now ideologically aligned in favor of market-oriented economic and investment policies facilitates achieving a regional consensus on energy for the first time.  Governments in the region now need to move beyond the discussion phase to turn all this into a concrete reality.

October 19, 2018

*Thomas Andrew O’Keefe is the President of Mercosur Consulting Group, Ltd. and currently teaches at Stanford University in Palo Alto and Santiago, Chile.

Bolivia: Locked in Its Past

By Carlos Malamud*

The International Court of Justice

The International Court of Justice in The Hague. / International Court of Justice / Wikimedia

The International Court of Justice (ICJ)’s rejection of Bolivia’s case against Chile over access to the Pacific Ocean shocked Bolivian public opinion – and was a significant blow to President Evo Morales.  The ICJ judgment, issued on October 1, countered the beliefs of practically every Bolivian, educated since childhood that the Chilean port of Antofagasta was theirs.  In the Bolivians’ calculus, the complaint they brought to The Hague was already a compromise: they didn’t demand new borders or sovereignty, but rather argued that Chile had an obligation to negotiate a settlement.

  • The ICJ’s decision – by a vote of 12 to three – that Chile had no obligation to negotiate underscored, once again, that the Morales government had stirred up unrealistic expectations. While Morales, who was in The Hague for the announcement, declared that “Bolivia will never give up,” his Chilean counterpart, Sebastián Piñera, lamented that the ICJ case “made us waste five years which could have been spent building a healthy relationship between the two countries.”  Nationalism permeated both sides’ positions, but the Chilean government showed greater restraint, even if demonstrators in Antofagasta did show certain triumphalism after the verdict was announced.
  • In terms of politics, Morales was more ambitious preceding the Court’s decision than Piñera. The Bolivian president’s lawsuit wasn’t just about territory; he had the clear political objective of keeping himself in power indefinitely.  Had he won the case in The Hague, his ability to remain in office would have been practically guaranteed – as a national hero and savior for having regained Bolivia’s access to the Pacific Ocean.

The Bolivian government’s rhetoric has hurt its image.  In the week before the verdict was announced, Morales’s vice president, Álvaro García Linera, in his well-established role as mobilizer and opportunist, spoke of “Chilean aggression” and predicted a “major defeat” for Chilean diplomacy at the ICJ.  In his customary paternalistic style, he called for full compliance with the Court’s decision (although he himself did not do so later).  After the decision, Morales acknowledged that the Court said Chile was not obligated to negotiate, but – instead of clearing the way for better relations in the future – renewed his call for negotiations.  The Chilean government is not about to talk about anything unless Bolivia demonstrates that it is serious.  One important move would be for Bolivia to rescind, unilaterally and immediately, the suspension of diplomatic relations with Chile in 1978.

Bolivia’s defeat has already had serious political consequences.  It is a serious blow to the re-election aspirations of Evo Morales in 2019, which he was pursuing despite its unconstitutionality as reinforced by the defeat of a constitutional amendment allowing a third consecutive term in a referendum on February 21, 2016.  It also prompted ex-President Carlos Mesa – a rival with good chances of success – to announce his candidacy in elections next year.  Morales has already lashed out at Mesa, linking him to the “Chilean oligarchy” and speaking of his “betrayal of the fatherland.”

  •  Beyond the ICJ judgment, Bolivia will eventually have to free itself of the isolation – mental as well as geographic – that prevents it from finding better ways of promoting its interests. Bolivia has means – in Peru and Chile toward the Pacific, and in Santa Cruz toward the Atlantic – with which to find solutions and reinforce its potential for growth.  But that entails lowering the flag of nationalism, something that is still unclear they’re prepared to do.

October 10, 2018

*Carlos Malamud is Senior Analyst for Latin America at the Elcano Royal Institute, and Professor of Latin American History at the Universidad Nacional de Educación a Distancia (UNED), Madrid.  A version of this article was originally published in El Heraldo de México.

Prospects for Reproductive Rights Dim with End of “Left-Turn”

By Merike Blofield and Christina Ewig*

A large group of women and men gather in front of statue in a plaza.

A demonstration against abortion in Córdoba, Argentina, shortly after President Mauricio Macri’s election. / Marco Camejo / Flickr / Creative Commons

The end of Latin America’s “pink tide” suggests the region will make little progress in protecting reproductive rights in coming years and may even face some policy reversals.  With five Latin American governments slated to elect new leaders in 2018, and with recent elections of right-leaning governments in Chile and Argentina, Latin America may well be concluding the left-turn that has characterized the region’s politics since the early 2000s.

  • The past two decades of pink tide governments coincided with a flurry of legislative activity on abortion policy – in sharp contrast to previous decades of policy stasis, when high rates of clandestine abortions coexisted with restrictive laws. Since the turn of the millennium, abortion laws have been revised by Latin American legislatures and courts on 11 separate occasions in eight different countries.  Even in countries where legal reforms did not go through, legislatures debated bills at a prevalence not seen before.
  • Several left governments have carried through liberalization in response to public opinion and social mobilization. Last August, for example, the Chilean Supreme Court upheld its Congress’ liberalization of abortion law – to allow for abortion under three circumstances (threat to life; fatal fetal defect; rape) – overturning the absolute prohibition that had been in effect since the last days of the Pinochet military regime in 1989.  Some left governments went even further:  Uruguay legalized abortion in 2012, and Mexico City did so even earlier, in 2007.

Yet left governments have not been unequivocally liberal; some have actively upheld or enacted conservative laws, even absolute prohibitions.  In 2006, the Sandinista Party in Nicaragua reversed course from allowing therapeutic abortion to supporting absolute prohibition, while Ecuadoran President Rafael Correa in 2013 rejected a provision allowing abortion in the case of rape.  The FMLN in El Salvador has doggedly, even brutally, enforced a total prohibition, to the detriment of many (primarily poor) women’s lives.  In a recent study (published in Social Politics), we show this split in policy roughly follows the “institutionalized” vs. “populist” typology of lefts.

  • Institutionalized parties – like those in Chile and Uruguay – have channels in place for civil society organizations, including feminist ones, to have bottom-up influence. Given their respect for the rules of the game, however, the institutionalized lefts are also likely to face well-organized conservative opposition, which slow down reform, shape final legislation, or even veto it altogether.  In Uruguay and Chile, feminists had a voice, but conservatives were also are able to block, slow down, and water down liberalization.  This is why the Uruguayan reform took so long and why in both cases the final legislation is less liberal than the original proposals.
  • By contrast, populist governments, like those of Nicaragua under Daniel Ortega and Ecuador under Rafael Correa, often see advocates for liberalization as political threats – particularly feminists who also represent more general claims for individual autonomy and pluralism. Moreover, an issue like abortion, where the practical costs of a restrictive stance are born almost exclusively by low-income women, is likely to be used by populist leaders as a pawn in a power struggle with well-organized, influential religious forces.

Although we systematically analyzed only abortion politics, we found that sex education, contraceptive access, and other reproductive health policies more broadly have followed similar dynamics in Ecuador, Nicaragua, Chile, and Uruguay.  For example, the Uruguayan left government expanded sex education after assuming power in 2006, while in Ecuador, leaders appointed in health bureaucracies sought to reduce access to publically provided reproductive health services.  Nicaragua, on the other hand, has the highest rate of teenage pregnancies outside sub-Saharan Africa.

As Latin America’s left shift appears to be coming to a close, reproductive health policies promise to remain contentions – and abortion continues to be a public health crisis across most of Latin America even with the limited liberalizations of the past decade.  The Alan Guttmacher Institute recently estimated that 6.5 million abortions are annually performed in the region.  The vast majority are still done in clandestinity, resulting in high maternal mortality and tens of thousands of annual hospitalizations, which affect low-income women the most.  While it is unlikely that recent changes will be reversed in the more institutionalized settings, the rightward shift that is occurring among especially these countries does not bode well for further liberalization and resolution to the abortion crisis.

 January 18, 2018

 * Merike Blofield is Associate Professor of Political Science at the University of Miami.  Christina Ewig is Professor of Public Affairs and Director of the Center on Women, Gender and Public Policy at the Humphrey School of Public Affairs, University of Minnesota.

Chile: Election Likely to Show Big Political Shifts

By Kenneth Roberts and Eduardo Silva*

A presidential candidate stands in front of a crowd and a large Chilean flag

Ex-president Sebastián Piñera addresses his supporters at a campaign rally last month. / Twitter: @sebastianpinera

Chilean politics in the run-up to national presidential and legislative elections on November 19 have revealed that – within major lines of continuity – significant changes in the political alignments that have structured the country’s democracy since the end of the Pinochet dictatorship in 1990 are taking place.

  • Continuity is most pronounced on the conservative side of the political spectrum, where the two main conservative parties, Renovación Nacional (RN) and Unión Demócrata Independiente (UDI), have joined forces with smaller parties to sponsor the presidential candidacy of billionaire business mogul and former President Sebastián Piñera. In public opinion surveys of voter intentions, Piñera has maintained a healthy lead over a collection of centrist and leftist candidates.  He appears likely to come out on top in the first round of voting – and significant abstention (if fewer than 5.5 million registered voters vote) could push him over the top.  If he is forced into a run-off, the final outcome will rest heavily on the ability of his opponents in the divided center-left bloc to coalesce forces.
  • The center-left space is where most change is concentrated. The core parties in the Nueva Mayoría coalition that backed incumbent Socialist President Michelle Bachelet have won five of Chile’s six presidential elections since the transition to democracy in 1990.  For the first time, however, the main centrist party, the Partido Demócrata Cristiano (PDC), has opted out of the alliance to run its own candidate, Senator Carolina Goic.  With Goic languishing in the polls, however, the primary challengers to Piñera are located further to the left, including the Nueva Mayoría’s favorite, Senator Alejandro Guillier.  Although early speculation pegged him as an outsider, he is now firmly identified with the moderate reformist left and represents continuity with the current government.

A new left-leaning group, the Frente Amplio, has nominated Beatriz Sánchez, an independent journalist.  She arguably represents a larger challenge to the status quo, as her candidacy gives political expression to social actors who are sharply critical of Chile’s political establishment and the neoliberal economic model.  Even though the Broad Front’s electoral strength is untested, it brings together a number of small parties alienated from Nueva Mayoría and inspired by Chile’s massive student protest movement and other activist networks that have mobilized around labor, environmental, and pension reform issues in recent years.  Sánchez favors more redistributive taxation and greater state intervention in strategic enterprises and utilities, as well as in water property rights and forestry where social conflict has been high.  She is also for replacing the private pensions system with a mixed public-private one and getting private banking out of the student loan business.

This election will likely show that the broad center-left coalition that dominated Chilean politics since the 1990 transition has effectively splintered, with the Christian Democrats seeking to carve out an independent space in the political center and a movement-based alternative emerging on the mainstream parties’ left flank.  Uniting such disparate forces to compete against Piñera in a run-off election, should one be required, will clearly be a formidable task.  Nueva Mayoría candidate Alejandro Guillier, considered the strongest run-off candidate to take on Piñera, is already in conversation with Christian Democrats and Sánchez’s Frente Amplio.  In a run-off, he is thought likely to get around 60 percent of the Christian Democratic vote, with more conservative Christian Democrats voting for Piñera.  His appeal to Frente Amplio voters could suffer because of their unhappiness with Nueva Mayoría.

  •  The specter of high abstention looms large for second-round voting, too. President Bachelet’s low approval ratings for most of her second term in office, although recently reversed, signaled low enthusiasm despite her successful pushing through a series of major reforms, including a reform of the electoral law to enhance proportional representation, a tax reform to increase revenues for social programs, the initiation of free university education for low-income students, and a much-debated law to legalize abortions in limited circumstances.  Last, but not least, mainstream parties across the board have been weakened by a series of corruption and campaign finance scandals, leaving many citizens alienated from parties.

November 2, 2017

*Eduardo Silva is Professor of Political Science at Tulane University, and Kenneth Roberts is Professor of Government at Cornell University.

And the Winner is… Trump in Latin America

By Nicolás Comini*

Donald_Trump_and_Mauricio_Macri_in_the_Oval_Office,_April_27,_2017

U.S. President Trump and Argentine President Macri meet in the Oval Office. / Official White House Photo by Shealah Craighead / Wikimedia / Creative Commons

Criticism of U.S. President Donald Trump’s policies toward Latin America ranges from mild to furious in the region and among many U.S. Latin America watchers, but that anger is not likely to drive greater regional unity and demands for a more balanced relationship.  Trump’s rhetoric – emphasizing sovereignty, nationalism, and protectionism – have long been popular concepts in many countries of the region.  During Latin America’s recent “turn to the left,” for example, political leaders embraced a developmentalist emphasis on using tariffs and non-tariff trade barriers to give domestic industries an advantage in national economic expansion strategies.  But the U.S. President’s statements have generally infuriated not only the left as reflecting bias on an array of issues, such as immigration, but also the right.

  • Trump’s policies contradict the prescriptions that Washington has been advocating – and most conservative politicians have embraced – for Latin America for many years. Those prescriptions have emphasized free trade but touched on other issues as well, such as the shift (symbolic and material) of resources from traditional national defense to the “war on drugs.”  Trump’s “America First” approach undercuts his natural allies in Argentina, Brazil, Mexico, and elsewhere.  It has also given their leftist opponents a sense of legitimization of their anti-Americanism speeches, something that is surging also because of Washington’s new policies toward Cuba.
  • The U.S. summary abandonment of the Trans-Pacific Partnership (TPP), conservatives’ last great hope for deeper trade integration with the United States, left them angry. According to the ECLAC, 73 percent of all FDI in Latin America in 2016 came from the United States (20 percent) and the European Union (53 percent).  Individuals with strong anti-Communist credentials in Colombia, Chile, and Peru are all flirting with joining China’s Regional Comprehensive Economic Partnership (RCEP).

Regional organizations show no sign of providing leadership in how to respond to U.S. policy.  UNASUR is fading rapidly, in part, because it was labeled by the new conservative governments as too Bolivarian and anti-American.  Something similar is happening with the CELAC.  MERCOSUR is struggling, in part, because of the political tumult in Brazil.  Indeed, most governments are trying to remain friends with Washington, prioritizing bilateral agendas in detriment of regional (multilateral) institutions and mechanisms.

The surge in resentment toward Washington – within and among Latin American countries – is unlikely to lead to increased regional unity.  Internally, the left and right may agree that Trump is harming their interests, but their reasons are different and prescriptions for dealing with it are far apart.  On a regional basis as well, the current context accelerates the atomization of the region – and threatens to expand the bargaining power of the great powers of the United States, China, Germany, or Israel.  Although China is making inroads, in the end the United States has, and will retain, the greatest influence in Latin America – and the lack of efficient regional decision-making will prolong that situation.  Latin American fragmentation will create an image of acquiescence – and President Trump will think he is not doing so badly in the region.

October 18, 2017

* Nicolás Comini is Director of the Bachelor and Master Programs in International Relations at the Universidad del Salvador (Buenos Aires) and Professor at the New York University-Buenos Aires.  He was Research Fellow at CLALS.

Chile’s Transition to Clean Energy Matrix

By Thomas Andrew O’Keefe*

Giant wind turbines in Northern Chile

Parque Eólico Canela in Coquimbo, Chile, one of many wind-producing farms in Northern Chile. / Wikimedia / Creative Commons

Since Michelle Bachelet’s return to the presidency in March 2014, Chile has aggressively pursued an ambitious program to transition the country’s energy matrix toward non-conventional renewable resources.  The emphasis on non-conventional includes mini-hydro facilities with a generating capacity under 20 Megawatts, geothermal, solar, wind, biomass, and potentially ocean currents.  Chile aims to generate 60 percent of its electricity from domestic renewable energy resources (including all forms of hydro) by 2035, and 70 percent by 2050.  To encourage that transition, Chile is one of only two Latin American countries (the other being Mexico) to establish a carbon tax, under which energy-intensive industries and utilities that exceed mandated emissions levels are charged US$5.00 per ton of CO2 emissions.  Chile’s drive to adopt a cleaner energy matrix is motivated as much by a desire to reduce greenhouse gas emissions as it is to enhance energy security.

  • During the mid-1990s, Chile faced consecutive years of severe drought that had hugely detrimental impacts on the country’s dams, responsible at the time for around 50 percent of the country’s electricity. An abundance of natural gas in neighboring Argentina led to the construction of pipelines across the Andes and new thermal generators in Chile, but Argentina began cutting natural gas exports in 2004 (and eventually stopped them altogether) because disastrous policies there had caused domestic shortages.  Bolivia, in turn, rebuffed Santiago’s entreaties to purchase its gas unless Chile granted it territorial compensation for the loss of Bolivian access to the Pacific after the 19th century War of the Pacific.  Chile had to build two expensive receiving terminals to import Liquefied Natural Gas (LNG) from East Asia as well as Trinidad and Tobago.  The Chileans were also forced to use more coal and diesel, exacerbating the already precarious air quality in many Chilean cities, particularly during the winter.

In recent years, more than half of all investment in non-conventional, renewable energy in Latin America and the Caribbean has been directed to Chile, primarily to build solar and wind parks to supply the mining industry in the north of the country.  The shift to renewable energy has largely been financed by the private sector, with no subsidies other than reimbursement for small-scale photovoltaic and other nonconventional contributors to the grid at the full retail price (and no transmission charge).  Chile’s antipathy to subsidies reflects the country’s market-based economic orientation and a conscious decision to prioritize state-of-the-art renewable technology sourced from elsewhere rather than encourage the development of its own industry.  The recent investment boom in renewables was driven by the business-friendly climate, the fact that Chile is not a significant hydrocarbons producer, and the inflationary impact of the last three years of drought on the price of hydroelectricity.

Chile has several other things going for it in achieving its goals, including a good regulatory framework and resources that are in growing demand.  Chilean regulators allow generators to sell electricity in only one of three time blocks during the day — giving solar and wind power a competitive edge in public purchase agreement auctions.  This more than halved the bidding price offered by generators and made solar power competitive with natural gas and even electricity sourced from hydro.  In the near future, as the country’s energy matrix shifts to greater reliance on solar and wind power, Chile intends to utilize hydroelectricity to supply peaks in demand for electric power (usually in the evening hours) to make up for intermittencies in sunshine and wind.  (At the moment, fossil fuels provide that function.)  New developments in storage technology will also help.  Chile is one of the world’s largest producers of lithium, needed to make storage batteries.  The interconnection of Chile’s northern and central grids in 2018 should also facilitate greater use of different renewables and redirect the electric power generated from them to where it is most needed.  Chile, already a leader in Latin American alternative energy production, is poised to enhance that position.

September 11, 2017

* Thomas Andrew O’Keefe is President of Mercosur Consulting Group, Ltd.  He taught a seminar on “Energy and Climate Cooperation in the Americas: The Role of Chile” at Stanford’s Santiago campus during the summer 2017 quarter.

Who Really Benefited from the Commodities Supercycle – and Who Loses with Its End?

By Carlos Monge*

2017-05-13 AULABLOG_Carlos_Monge_graphic

Latin American governments and business associations have tended to overstate the benefits of extractive industries during the commodities supercycle that ended in 2014-15.  Resource-rich Latin American countries did experience high rates of economic growth and diminished poverty and inequality during the boom years.  On the surface, this would appear to strengthen arguments that – despite their negative environmental impact – extractive industries are the key to progress, especially in resource-rich areas.  Nevertheless, a closer look at data from household surveys in Bolivia, Chile, Colombia, Ecuador, and Peru shows that things are a bit more complicated.

  • The inequality gap between individuals, as measured on the GINI Index, has narrowed, but the gaps between groups of the population have not evolved evenly. For example, the National Resource Governance Institute (of which I’m regional director) recently completed a study of the performance of social indicators during the supercycle that concluded that the poverty gap between urban and rural populations has increased in all countries.  (The report is available in English and Spanish.)  In Peru and Chile, the gap increased more in territories where extractive territories are located, while in Colombia, Bolivia, and Ecuador less so.  The gap between indigenous and non-indigenous populations increased only in extractive territories in Ecuador, decreasing in both extractive and non-extractive settings in the rest of the countries considered.  Regarding gender, in all five countries the gap between men and women increased slightly in non-extractive territories and decreased a bit more in extractive ones.

This report establishes correlations between the increase in extractive activities, the availability of extractive rents, and patterns of inequality reflected in social indicators, but it does not establish a causal relation between such variables.  For example, the data show that urban populations in Peru’s extractive regions have benefited more than rural ones – which some very preliminary research shows is probably because urban centers provide extractive projects with the goods and services they need, while less sophisticated rural areas do not.  At the same time, rural populations have to compete with the extractive projects for those same urban goods and services, and with local governments for the labor force that the public sector contracts to develop infrastructure projects that are paid for through increased revenues delivered by the extractive sector.  This is what we have called the “Cholo Disease.”  A variation of the “Dutch Disease,” it reflects a loss of competitiveness resulting not from large exports of raw materials causing the currency to appreciate, but rather from increases in the cost of labor and of urban goods and services consumed by campesinos.  However, a more definitive explanation regarding exactly how this happens in Peru and in other countries certainly needs further research.

While our data clearly show the impact of mining and hydrocarbons extraction and the resulting expenditure of extractive rents on the poverty gaps between urban and rural populations, men and women, and indigenous and non-indigenous populations, further investigation into the causes and consequences is needed.  The end of the supercycle has already meant a fall in growth rates and extractive revenues, leading to a worrisome rebound in poverty rates.  We are still unable to answer, however, the question of how broadly it will impact the substantial segments of Latin America’s population that emerged from poverty but remains in a vulnerable position – and how it will aggravate poverty gaps among individuals and between groups in extractive and non-extractive territories.

May 16, 2017

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