Monthly Archives: October 2012

Bolivia — coming back into the world?

Bolivia is one of the more interesting countries to watch in Latin America. Its president, Evo Morales, is often lumped in with the likes of Hugo Chávez as a leftist reactionary, but the reality behind the rhetoric is that Bolivia is treading a pragmatic and not ideological path.

In this vein one of the more interesting developments is Bolivia’s return to global capital markets, capped recently by a US$500 million bond issue, the first in about 100 years. Markets reportedly are pleased with the macroeconomic fundamentals of Bolivia, but a bit wary of the country’s lack of a repayment record.

Part of the challenge that Morales faces is sustaining his country’s string of high annual economic growth rates but in a manner that finally includes the indigenous majority in his country. Despite successive waves of mineral-based growth over the last two hundred years, the benefits of lead, silver, tin and gas extraction have percolated through only to a small elite, an issue mapped out in the book From Silver to CocaineEfforts to reverse this trend and keep some of the value-added wealth and employment generation in Bolivia has resulted in a significantly tougher line with resource extraction companies, including direct contratemps with giants such as Glencore and Jindal.

Morales is not shy of decrying slights to his country, which feeds his reputation as being part of the Bolivarian reactionary left. But, if a bit more attention is given to the substance of his complaints and actions what emerges is closer to a pattern of a newly confident country attempting to pave its own path to inclusive development within existing global market frameworks and behind the challenge of being a landlocked country with still poorly developed human capital resources.

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El Mercurio responds to Piñera’s “New Deal” plan for Chile’s indigenous

The lead editorial in the Friday 19 October 2012 edition of Chile’s leading daily El Mercurio took careful aim at Piñera’s plan to present a new deal for Chile’s indigenous peoples. Not surprisingly, the conservative paper is deeply skeptical and a bit alarmist.

The first concern raised is that it won’t be easy to find a way of satisfying the aspirations of the country’s indigenous that will also be compatible with the maintenance of the rights of other Chileans. Mercurio goes on to talk about the challenges of multiculturalism and how difficult this is to encode in constitutional form. (An interesting point for bilateral discussion with Chilean partner countries such as Australia, Canada and the US, let alone Peru and Ecuador.)

Cost is also raised as a significant barrier with complaints about the cost of translating documents and providing services into indigenous languages.

The fear factor is brought in at the end of the piece with a warning that nothing will be possible with this putative ‘New Deal’ unless something concrete is done about the violent minority of indigenous in La Arauncanía and the damage they have done to the local economy.

Such a reaction from a conservative newspaper like El Mercurio is hardly surprising. More to the point, it likely reflects the opinion of many movers and shakers in Chile. One of the interesting reactions to informal discussions about Piñera’s ‘New Deal’ that I have had on the margins of the Chilean Political Science Association is that a right wing president is showing a remarkably reformist streak. As a couple of senior experts on Chilean politics have noted, the ‘conservative’ Piñera has done more to undertake badly needed reforms and push major shifts towards inclusiveness in Chilean society than took place in twenty years of centre-left Concertación government. Keep in mind that it is generally very difficult to find anybody with right-wing leanings at political science academic conferences. Whether or not these off-the-cuff observations over drinks hold water is an interesting question for further research.

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Piñera’s new deal for Chile’s Indigenous peoples

Chilean president Sebastian Piñera used a Monday, October 15th OpEd in El Mercurio (reprinted here) to launch a ‘new deal’ for Chile’s indigenous peoples. This is a fairly substantial step given that there remain important constituencies on the right in Chile who don’t believe that the country has an indigenous population and that these peoples are simply trying to manipulate the system.

Piñera’s new deal is built around four pillars:

1) Amend the constitution to formally state the Chile is a multicultural nation, which would require full recognition of the cultures of the country’s native peoples;

2) Replace the strategy of ‘assimilating’ indigenous peoples in Chile with one of integration that not only tolerates but appreciates and promotes the culture, history, worldview, languages ​​and ways of life of Chile’s indigenous peoples;

3) Promote a more dynamic social and economic development indigenous communities; and

4) Ensure peace, security, public order and the full observance of the rule of law in indigenous areas.

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Chile on the rise

The big news in Chile this Monday is the report from the OECD noting that only Chile, Turkey and Germany have a lower unemployment rate today than they did in 2007 before the Global Financial Crisis. Chilean president Sebastien Piñera is understandably pleased with this and noted that this is just another sign backing his prediction that Chile will have a per capita GDP greater than Portugal by, at the very latest, 2020 (some are mooting 2014 as being possible).

Chile does, though, face some roadblocks familiar to Australia. Despite mining being the mainstay of the economy and the fastest growth sector, not enough students are enrolling in the technical courses necessary to qualify for work in these projects. This could create an upward pressure on specialist wage rates and increase costs.

There was also some quibbling in today’s El Mercurio that Chile’s inflation adjusted, exchange rate adjusted growth rate has only been about 3.3% over the last several years. Not bad, note the critics, but not quite the stratospheric levels that the cheerleaders are pointing to or that the IMF postulates.

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Jose Dirceu guilty in Brazil corruption trial

Lula’s former chief of staff and all-round superlative backroom operator Jose Dirceu has been found guilty of corruption for his involvement in the mensalão scandal. This matters because even though Dirceu fell from grace and saw his own presidential ambitions dashed when the scheme for buying legislative support for the Lula agenda was uncovered, Dirceu remained one of the most important movers and shakers not only in Brazil, but also in Latin America. Depending on the prison sentence length — if one is imposed and appeals don’t negate the whole trial process — it could more or less permanently push Dirceu from the scene. An interesting historical question will be the extent to which this causes people to reexamine Lula’s relationship to corruption during his presidency. At the moment he has a Reaganesque teflon shield that prevents the asking of awkward questions despite some questionable associations for the ex-president. While it is unlikely that anyone will suggest Lula lined his own pockets, people may start to ask how much he knew about what was going on, and if he didn’t, why not.

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Challenges for Chávez’s new government

The Spanish Daily El País has a devastating appraisal of current realities in Venezuela, starting with the revelation that Venezuela is now the most dangerous country in Latin America. With the basis for fear well-established through a discussion of out-of-hour murder of police officers and management of organized crime by leaders locked in jail, the article turns its attention to more insidious problems, namely emigration. It points to the successes of the Cuban medical missions and contrasts it with the number of Venezuelan-trained doctors leaving for Europe and Panama. The article is not the sort of thing Chávez wants to see on the day he has won reelection, but it does provide him with a pretty good road map of the challenges he needs to address if the positive changes he has wrought are to persist and not crumble to dust.

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Chávez Wins

With nearly all of the votes counted, incumbent Hugo Chávez appears to have an unassailable lead in Venezuela’s presidential election and has been recognized as the victor by opposition candidate Henrique Capriles. Significantly, this was a comfortable, but not a thumping win for Chávez. Preliminary reports give him about 54.5% of the vote compared to Capriles 46.8%. Eighty percent of the electorate turned out to vote. In 2006 Chávez won with a 25% margin.

As Capriles noted in his accession speech, nearly half the country voted for an alternate model to advancing Venezuela and that it behooved Chávez to take this into account as he took office for another term. Whether he will take up his opponents advice is another question. Arguably he should. Many of Capriles promises during the campaign revolved around continuing social policies launched by Chávez, suggesting that after over a decade of political rancour the elements of some middle ground might be emerging in key policy sectors. More to the point, an ongoing battle with cancer has made Chávez very aware of his own mortality, not to mention the challenges of ensuring that his socialist transformation continues if he should pass away. Does Chávez have it in him to again reinvent himself in a way that will create a new political reality in Venezuela that creates a more sustainable, inclusive debate? Elections for state governors in December may force this on him, and congressional elections in 2015 may push towards a greater balance of power by election an opposition-run congress.

Some balance in Venezuelan politics is needed. There are real concerns about corruption and crime, both of which Chávez has promised to address. But, if, as many critics suggest, his highly centralized style of governance is a key factor behind surging corruption and criminality rates, can Venezuelans really expect much change, particularly since it would perforce require devolving more power to ministries, agencies, states, and municipalities that are not wholly in his camp? There is also the question of paying for existing and new social policies. To date the cash cow has been state-oil company PDVSA. The problem here is that there is serious doubt about the company’s ability to maintain production and, as the Amuay refinery fire highlights, the ability to maintain production safely and complete the necessary maintenance.

For the moment the critical point for democracy watchers is that the vote in Venezuela was run properly and despite numerous concerns about pro-Chávez shenanigans with public broadcasters and personalistic pork-barrelling, a real and serious electoral contest took place.

–Sean Burges

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