Can Latin America resist a return to its populist past?
The interventionist role of the military has mostly disappeared in Latin America. But the temptation of populist politics is greater than ever in some countries, while others are resisting the short-term demands of voters in favor of the long-term sustainability of society. Here's a look at six countries.
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CHILE. Chile, Colombia, and Mexico have so far done a better job of resisting the populist temptation.Skip to next paragraph
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Chile today has become the Singapore of the Western Hemisphere. Since 95 percent of Chile’s trade is bound up in free-trade agreements, you can get anything from anywhere in its glittering capital, Santiago. Its sophisticated political class has had the foresight to try to diversify the country’s dependence on its main commodity, copper, almost all of which today is exported to China.
When Ricardo Lagos was president from 2000 to 2006, he instituted a program to set aside revenues from futures contracts for copper and put them into a fund for research and development of new technologies. As he told me, “One day the copper will run out. We need to use today’s resources to finance the future and diversify the economy. Otherwise, our prosperity will have been built on a weak basis. When the future arrives, we would then be back to square one.”
COLOMBIA. Colombia’s current president, Jose Manuel Santos, is a “third way” leader in the mold of former US president, Bill Clinton, and former British prime minister, Tony Blair. As Mr. Santos puts it, good governance means “as much market as possible, as much government as necessary.”
While courageously seeking to disengage Colombia from its long civil war with the FARC guerrillas, Santos is at the same time engaging the future, when prosperity will be built more on knowledge than commodities. To that end, he is sponsoring a program to bring computer tablets to the poorest students and expanding broadband, following South Korea’s example, to 1,200 cities across the country. To avoid the kind of bloated budgets that have gotten Argentina into so much trouble, he has passed legislation that requires provincial governments to maintain fiscal balances.
MEXICO. Under its new president, Enrique Peña Nieto, Mexico is leading the pack away from the populist past, building on the accomplishments of Mr. Peña Nieto's predecessor, Felipe Calderon, as well as the North American Free Trade Agreement (NAFTA) in the 1990s. The economy grew at 4 percent last year and is expected to grow faster in 2013.
There is a budget surplus. Mexico has a large middle class and a diversified economy that is attracting direct foreign investment – such as from Bombardier and General Electric – which is taking advantage of the deep engineering and professional labor pool as well as Mexico’s proximity to the US market. Rising wage rates in China are leading to “re-manufacturing” by companies that once left Mexico for cheaper labor. NAFTA and other free trade agreements have greatly aided diversification and reduced the price of consumer goods by 50 percent since 2000.
I attended Peña Nieto’s inauguration last December at the Palacio Nacional in Mexico City. He stood boldly in front of Carlos Slim, the telecoms mogul, and Emilio Azcarraga Jean, the media mogul, sitting a few feet away, promising to disband the television and telecoms monopolies that dominate Mexico. To robust applause, he pledged reform of the teacher’s union, which, incredibly, has long had the power to hire teachers and even pass on hereditary jobs.
He also promised to “open up” PEMEX, the laggard state oil monopoly that has been the core of Mexico’s nationalist ideology since the 1930s, to foreign investment. Without technology and competition, the company has become a power unto itself and failed to modernize.
The inaugural audience was stunned by the scope and specificity of the new president’s program – and the fact that he was openly taking on the very historical pillars of his Institutional Revolutionary Party (PRI), which had ruled Mexico for 71 years until 2000.
The day after his inauguration, Peña Nieto broke the partisan rancor of the election campaign in a way that Washington could only dream of: He announced a consensus “pacto” of the other major parties in the Congress that agreed to support his list of reforms.
Less than five months later, he has delivered. The head of the teachers union, Elba Esther Gordillo – known for her luxe wardrobe and accessories – was arrested for embezzlement. The legislation that empowers the government to break up the telecom and TV monopolies has now been passed in the Congress. The historic legislation to open up PEMEX is well under way.
POPE FRANCIS. As the new pope from Buenos Aires, Pope Francis, reminds us with his “preference for the poor,” that vast poverty weighs heavily on Latin America’s future. That gap must narrow, not widen, as middle-class prosperity grows. But to finally escape its past, democratic governance must avoid the populist trap that, in the name of the poor, has so often led it back to square one instead of to a sustainable and upwardly mobile path that will endure. That is Latin America’s challenge today.
Nathan Gardels is editor of the Global Viewpoint Network and co-author with Nicolas Berggruen of “Intelligent Governance for the 21st Century: A Middle Way Between West and East.”