What is the best political point of view

Seven political consequences of the crisis in Latin America

Brief introduction to the crisis

The global crisis is having deep, serious and even devastating aftermath in many countries. Latin America is a victim of this crisis. The region's vulnerability is shown by how difficult it is to agree on a policy that has the character of a state, i.e. that is capable of reflecting the will of all different actors at the national level. These coordination difficulties are also evident at the regional level, where it has not been possible to develop common visions to face the crisis. In addition, many proposed solutions are presented that aim more at protectionism than at joint actions between the countries. The best example of this is the G-20 and the position taken by the region at the last Doha Round meeting.

It is worth noting that various countries have taken measures to mitigate the consequences of the crisis and to protect their respective economies. Therefore, compared to the 1980s and 1990s, the region is better placed to deal with this crisis. In general, however, the programs of the countries are strongly characterized by economic and financial measures, without any equivalent measures being visible in the political field. These types of measures require specific agreements - perhaps one of the greatest weaknesses of the countries in the region - especially when the executive and parliament need to reach political agreement, set up round tables involving various actors, and hold discussions with political parties. to find common positions that are designed for the long term beyond the economic cycle1.

This solution to a global problem that shows itself locally with all its consequences offers not only the opportunity to contain the effects of the crisis through social and economic policy measures, but also the chance to strengthen democracy and to govern better.

Experts discuss when the crisis broke out and what its immediate causes are. What is clear is that the crisis began to take shape around August 2007. The countries in the region began to be aware of them at the time, but without making any decisions. In those months it was thought that the region could “decouple”, primarily due to the growing economic importance of the Chinese and other Asian economies for the Latin American countries. Within a short time, however, it became clear that there would be no such decoupling and that the consequences of the crisis would by far not only be limited to the most important industrialized countries, but would also be felt in the periphery: not only economically (consequences for trade, investment and Remittances) but also politically and with regard to the ability of governments to act2.

In Latin America and the Caribbean, the impact began to be felt in 2009 when the entire region experienced negative growth rates, with sharp falls in the two major economies (Brazil and Mexico). The crisis does not strike in a linear fashion: it is of uneven pace and scope and affects different sectors in different ways. The speed with which the crisis is making itself felt in different countries also varies. Its consequences were felt first in the countries with more open markets - mainly through a decline in exports, which in turn led to unemployment and lower trade turnover. Remittances from abroad, investments and development aid also decreased.

The crisis has a global and systemic connection that includes financial aspects, but also the food crisis of 2008, which has not yet been overcome in structural terms. The same is true of the energy crisis - the effects of which have been mitigated by the temporary fall in energy prices - and the crisis of violence plaguing Latin America. Finally, one must also take into account the consequences that climate change has and will have.

Uncertainty is the best term to describe the current situation in mid-2009: Uncertainty regarding the further development of the crisis in the various countries in the region and regarding the question of how quickly and to what extent the different social groups in each country will be affected; There is also uncertainty about where the region is most vulnerable and what priorities to respond to in an environment of severe political and economic constraints. However, the uncertainty also shapes the development of the crisis on a global level and affects the ability of the G-20 to implement these responses. The uncertainty is shown in the doubts about whether the economic experts really know which measures need to be taken in the short or medium term. One can even discern a certain perplexity among political leaders around the world when it comes to this crisis, which marks a turning point.

But there are also some certainties. One of them is that the globalization process will continue, perhaps with new ways and means. The revolution in trade and communication, the major changes in transport and the adaptation processes in global production will certainly produce structures that function differently than we are familiar with today.

Another certainty is that the paradigms associated with a deregulated market economy collapsed as quickly and noisily as the Berlin Wall. Creating a new paradigm that better balances the market, government and society will take a long time because there is no quick answer. The ex-President of Chile, Ricardo Lagos, puts it this way:

We have learned that if only citizens and the state and nothing else exist, the Berlin Wall will fall. And if only consumption and the market rule, Wall Street will fall. So there is a triad here: society, state, market, in which society gives instructions to the state for those things that it believes must be available to all.3

If there are no clear concepts for overcoming the crisis, there will hardly be a common plan for the future that will create the institutions of the 21st century. However, it is essential to develop mechanisms for regulating the global financial system and those institutions that are partners in crisis management at regional and national level, especially if one is looking for a democratic solution to the serious problems of marginalization, poverty and hunger. from which the majority of people suffer. «Poverty and exclusion make instability worse. It is time to bring the social dimension of globalization to the fore. The workers facing stormy economic times want more justice and security. Your voices must be heard »4.

The crisis has had a number of negative effects on the development of the labor markets. It has reversed significant advances in the previous period. In Latin America, unemployment fell from 11% to 7.4% between 2004 and 2008. In the first half of 2009 alone it rose by more than one percentage point, i.e. at least three million people became unemployed5. The Director General of the International Labor Organization (ILO), Juan Somavia, has proposed a "global employment pact" which includes a commitment by the three parties to anchor employment and social protection as central elements of state policies6.

The in Club de Madrid The gathering of former heads of government spoke very clearly about the possible effects of the global recession. "The crisis could jeopardize the political achievements of the last decades, create an ideal environment for social unrest with the potential for violence and intensify the living conditions and the injustice under which millions of people in the region live."7.

Sketches of possible crisis scenarios

The future development of the crisis can be summarized in various scenarios and represented by letters. The ideal scenario is a "V": a quick recovery and a reactivation of the economy in less than a year. The worst scenario would be a "W" (an apparent end of the crisis with a new, perhaps even stronger, fall) or a "W" together with an "L" (the recession lasts longer). The scenario in between would be a shorter or longer recovery in the form of a "U": a strong fall and a slower recovery, ie the crisis lasts shorter or longer (depending on whether it is a closed "U" or an open "U") ).

Some authors tend to predict a "V" scenario (a relatively quick recovery) or an "L" scenario for some countries (countries have bottomed out, but the recession is still ongoing)8. The Brazilian perspective, as well as that of the rest of the BRIC countries (India, Russia and China), sees Brazil in a "U" scenario: They fell, but in a short time they have recovered and are now starting with projected positive values ​​of 3% to grow from 2010 onwards9. In the study of the Economic Commission for Latin America and the Caribbean (Comisión Económica para America Latina y el Caribe, CEPAL) on the 2008-2009 economy, it is noted that “while there are signs that the worst is over, the recovery will be slow and gradual. It will take time for the financial markets to return to normal. Phases of instability cannot be ruled out «10.

However, beyond the economic recovery, the social side of the crisis should be analyzed. Alicia Bárcena, Executive Secretary of CEPAL, warns that a lot of time will be needed for the recovery of the social indicators.

The losses associated with crises cannot be made up for in the new cycle. The next upswing does not, by itself, guarantee that we will regain what we will lose in this crisis. It took the region 24 years to return to the level of poverty it had before the 1980 crisis. I would like to address one more problem that normally goes unnoticed but that seems very important to us: we know from the historical experience of Latin America that it took twelve years for the growth indicators to return to the level they were before the beginning of the crisis in the 1980s Years. But it took 24 years for the social indicators to return to the same level, especially for poverty. I would like to draw attention to something as simple as it is dramatic: if we stand with our arms crossed and watch the crisis grow over our heads, it will be another 25 years before we can observe the same social indicators that we have today .11The political consequences of these lessons are clear: this is exactly how long instability in political systems can persist. Even in a rapid recovery scenario (in the shape of a "V"), social recovery will extend beyond the terms of office of the new leaders elected this year or next. The newly elected officials will have to exercise their four- or five-year mandate in the context of a social crisis, as the economic recovery will not allow the indexes to improve over the main growth period in the region (2003-2007) and even up to 2008 . As a result, the regional, social and political context will create tension in the political systems of Latin America. The Secretary General of the Organization of American States (OAS), José Miguel Insulza, warns: “The political risks of this situation are obvious. Given that the millions of citizens of Latin America and the Caribbean have left poverty behind in the past seven years, job cuts pose a direct threat to them, and they will not, of falling back into the poverty trap be ready to accept this "12.

Seven political consequences of the crisis

From a purely political point of view, it is possible to divide the consequences of the crisis into seven areas: effects on the democratic political system, higher demands on the state, political polarization, difficulties in consolidating the rule of law, effects on the elections, effects on integration and the consequences for multilateralism as well as the position of the region in it.

1. Consequences for democracy. Latin America has had a long democratic phase, even if the institutions are still weak. The coup and the crisis in Honduras will mark a milestone in this historical trend. It is therefore also important to restore the rule of law and constitutional order as soon as possible.

Apart from this episode, however, so much is certain that in the last two decades a clear shift towards democratic procedures has been observed, mainly in the implementation of increasingly transparent free elections. However, some election results have been questioned in recent years. This fact and the tendency towards re-election by changing the rules of the game have weakened the confidence of the population and polarized many societies in the region.

It is necessary to ensure that "democracy responds to the demands of those who have historically been neglected [so] that there is a real guarantee that citizens enjoy real equality of opportunity"13. In other words, it means strengthening and deepening civil rights, which seems particularly important in times of economic crisis and deterioration in social indicators. The role of politics is particularly important in the face of this challenge. In order to promote participation, civil rights and deepening democracy, it is essential to achieve a stable consensus in each individual society so that the democratic state can take a leading role in all important issues.

Maintaining and strengthening democracy often means going against old political practices in the region, such as clientelism, demagogy and messianism. It is therefore a crucial task to promote interpersonal trust and trust in democratic institutions, to increase civic participation in the constitutional democratic context of each country, and to improve the transparency of information and access to it. The result will be better informed citizens who support the democratic political system while demanding that their governments meet a minimum of cohesion and social inclusion.

2. Higher demands on the state. The paradigm shift does not only affect the theoretical framework from which reality is analyzed and hypotheses are formed that are the basis for decisions. The paradigm shift following the failure of the Washington Consensus, which is evident in the collapse caused by the global crisis, forces us to rethink the role of the state. In particular, the ability of the state to act in the context of globalization, both with regard to transnational and global phenomena (including pandemics, climate change, organized crime) and with regard to purely local problems related to democratic coexistence and social cohesion to have. It is the democratic governments and their institutions to whom the demands of the citizens are addressed, both basic demands for security - protection from crime - as well as other important needs (health, nutrition, housing).

A common problem with most Latin American states is that they have been smashed, ground up and downsized by neoliberalism over the past twenty years. The focus was on the market and what remained were dismantled public institutions without funds and with little capacity to act. In the context of the current crisis, the democratic leadership must at the same time rebuild state capacities, in particular its ability to regulate and take immediate macroeconomic and social measures. So it is a scenario with growing demands on weak states.

If the state does not cope with this task, a critical situation can arise in which the governments cannot meet the basic social demands, so that they appear as "failed states"; i.e. states that guarantee neither the validity of their constitution, nor the rule of law or the fundamental rights of their people. Although these are extreme situations, the global economic crisis can bring many countries to a standstill. For this reason, strengthening the democratic state in the region is a fundamental task.

3. More internal tension and political polarization. Latin America has a largely consolidated new political map14, with different points of view and perspectives. These differ in some aspects, such as the role of the state and the market, international connections, the role of foreign investments and the function of institutions in a democratic context. The economic crisis and its impact on the real economies of Latin American countries can lead to tensions within the political systems and narrow the space for debate and proposals.

The insecurity and fear encourage social unrest. A few examples already exist: The case of the indigenous people of the Amazon in Peru has perhaps attracted the most media attention. About 50 people died. The demand that was made in Argentina under the slogan "Take off" was also made here. Mainly by the countries of the Bolivarian Alternative for the Americas (ALBA), the coup in Honduras is interpreted as a reaction of the opponents of the change that this bloc supports.

Political tensions are mounting as the crisis has a direct impact on tax revenues. States collect less taxes because the level of economic activity in all countries decreases and payments are delayed. Governments have fewer resources and, at the same time, more demands are made on them. Both governments and the private sector are denied credit. The crisis is forcing higher investments in the social field, but there is neither the money nor the real possibility to increase the deficits, which leads to political tensions, arguments in parliament and growing social protests. In this context, militarization is the worst way to go. Above all against the background of the events in Peru, one must prevent the criminalization of social protest. It is therefore necessary to find ways of permanent dialogue that seek amicable solutions between the main actors in every society and in every political regime in the region.

4. Difficulties in consolidating the rule of law. Even before the outbreak of the crisis, the countries of Latin America were facing serious difficulties in enforcing the law. The rule of law is undermined by corruption and often also by organized crime. The institutional weaknesses make it difficult for citizens to exercise their rights properly: the law is not applied equally to everyone. This impotence of the law, which in some cases leads to a loss of the monopoly on the use of force, has a serious impact on governability and leads to a decline in support for democratic systems and governments. Abstentions have increased in elections in most countries and voter turnout is low. All of this means less support for democracy, which in turn leads to an increase in undemocratic attitudes, proposals and activities in different countries.

Organized crime hinders the exercise of citizens' fundamental rights15. Citizens often feel at home as "prisoners" and are afraid to take to the streets. You have lost many public spaces that are now in the hands of criminals. Freedom of movement has been lost or has been restricted to certain parts of the city or certain times in many Latin American cities. The state is no longer present in many of these places. But the face of the state cannot be just violence and repression. With its various instruments and institutions, the state must guarantee its presence on the entire national territory, especially in education, health and housing, in state building projects and in culture. This weakness of the state can become more apparent in times of crisis, social tension and shortage of funds.

5. Impact on the elections. In 2009 and 2010, elections will be held in ten countries in the region (Brazil, Bolivia, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Honduras, Panama and Uruguay). This means that practically half of the regional tours are renewed.

The term of office of presidents in Latin America is four years in seven countries, five years in nine countries, and six in two countries. If the economic crisis is followed by a relatively quick recovery ("V" scenario), this economic recovery could be felt at the beginning of the second half of 2011, and even more noticeably in 2012 and 2013. If there is an "L" Scenario, the heads of government will exercise their office in a climate of recession or stagnation. No matter which of these scenarios occurs, what is certain is that the ten elected presidents will have to live with an adverse social reality that will not change quickly unless an effective social policy tries to change and mitigate the effects of the crisis.

This harbors great uncertainties with regard to the will of the electorate: the climate of fear could lead to highly polarized elections in which hostility and confrontation ultimately weaken democracy and create space for politically authoritarian options to rise. “A crisis of this magnitude demands a degree of national unity that goes beyond the elections. Only with political and social agreements with one another will the region’s democracies remain governable and make the necessary measures politically enforceable «16.

As already mentioned, the new presidents will take office in 2010 (with the exception of the Brazilian president, who will take up his duties on January 1, 2011). The time to get to know each other and to build a relationship of trust with one another is very short. The period of time to agree on a certain policy line within their effective term of office is at best two years, which could weaken the integration processes.

The elections also need to be analyzed in terms of how global capital markets and foreign investment perceive them. According to the Organization for Economic Cooperation and Development (OECD), one of the key features of Latin American government bond markets is that "they have always been extremely sensitive to political events and, for example, reacted negatively to the uncertainties that inevitably accompany democratic elections."17. The economic actors also react very sensitively to economic policy statements and future political lines as they are expressed in party programs and speeches in every political system.

A fifth aspect that emerges clearly in connection with elections relates to the political as well as economic, social and cultural models of development. Even before the onset of the crisis, the citizens were presented with models that were often contradicting themselves and not very rich in content. Recently, tendencies have also become apparent that are moving from polarization to a climate of increasing civil hostility. This is a very alarming situation: in addition to a lack of social cohesion, there are growing political tensions that can even break democracy.

6. Effects on the integration processes. In general, opinions in the region are unanimous that integration is one of the most important tools for dealing with the crisis. Nonetheless, the practice and actions of different governments show serious weaknesses in coordinating their policies and developing a common agenda. The lack of a common strategic perspective hinders the establishment of the institutions required for integration and the development of the necessary convergence areas for the coordination of policies.

But it's not just about building institutions. A task that cannot be postponed is the promotion of regional trade and better access to the intra-Latin American market. As a result of the global economic crisis, which is manifesting itself in the decline in trade, all eyes are directed back to the domestic market. The local market of our countries should be the Latin American market. Few but significant adjustments are necessary for this, which in turn requires political will for fixed deadlines and concrete actions. The Executive Secretary of CEPAL, Alicia Bárcena, puts it this way:

Intra-regional trade has also suffered badly. This is worrying because trade between countries in the region was expected to somehow offset the downturn in other countries of destination or origin, besides its job creation potential. But intra-regional trade is not reacting and it is imperative to develop special credit lines in its defense.18

In addition to promoting regional trade, there are numerous ideas about clearing methods for settlement in local currencies. Some of them have made progress bilaterally, such as in Brazil and Argentina. The role of the Latin American Integration Community (Aladi) must be strengthened here especially as an instrument for more growth and the expansion of the Latin American market. In this context, the task of the regional development banks is fundamental in promoting integration. The main points of the agenda are the same in all sub-regions and equally important for all countries: infrastructure, trade, energy, food and technology form a substantial basic agenda that can be supported by the regional development banks. These banks would need international funding to get stronger and increase their coverage (this is one of the G-20 agreements that needs to be put into effect). Nevertheless, this agenda has not yet been put into practice, although in many cases there are projects that can be practically implemented immediately.

The countries in the region are very actively exchanging analyzes, assessments and forecasts about the effects of the crisis. At least twenty summits have already taken place. There are already some agreements, such as the need to reform the international financial architecture and the establishment of a regulatory framework for the capital markets, as well as strengthening the links between the various integration bodies. Regardless of this, in most cases these findings have not yet been translated into effective action. Even more: the political tensions and the radicalization of politics in many countries in the region have increased the tendency towards fragmentation. In this environment, reaching regional agreements is more difficult and slower and requires greater political and diplomatic efforts. Political agreement is more difficult today than it was before the crisis. Nevertheless, the task of finding a common sense and a common strategic line is essential19. Therefore, we must insist on this goal. 7. Effects on multilateralism. With Barack Obama's inauguration, the unilateralism of the previous American administration was dropped. A new climate and a new way of approaching international problems have emerged. Today all states recognize that they cannot solve any of the great global problems on their own. The financial crisis has clearly shown that the answer must be multilateral.

This new circumstance offers a great opportunity for the Latin American countries. For the first time in many decades, Latin America is back at the negotiating table, where the most important decisions about global architecture and the organization of the world economy and world politics are made. However, the coordination for a common vision of the Latin American countries has so far been insufficient. On top of that, there are no joint reform proposals in the region. Without this shared vision, however, the influence of Latin American G-20 member countries and the region in general will diminish.

The crisis as a political opportunity

Taking politics back into your own hands is an essential political leadership task. The quality of the policy is crucial. In the past, when the market pretended to be able to solve any and every situation, the consumer was defenseless to global trends. The rationality of the common good was lost. The financial crisis made this clear around the world with devastating consequences. In this sense, bringing politics back means regaining rationality in order to protect the common good20.

Most global problems are part of national and local problems, while many of the local problems caused by the crisis are linked to regional and global dimensions. This leads to the conclusion that the alternatives must address different levels at the same time. For this reason, more integration, cooperation and the development of common visions are required. “The challenge for world leaders is to bind citizens and societies to a program of change based on new values ​​and a new culture. (...) The economy must be regulated worldwide, just as world politics needs a global democratic government «21.

The world financial crisis, in conjunction with other crises, will lead to decisive restrictions for the development of mankind. These restrictions will increase the threats to human security in a context of increasing tensions within democratic political systems, which in some cases will even jeopardize democratic governability. That is why it is so important to bring politics back and strengthen it. The debates over macroeconomics, institutional reforms and the design of a new global financial architecture, to name just a few, are not just technical debates: they are necessary political debates that are directly linked and intertwined with the development visions of each country and sub-region .

The crisis is the result of a world without norms. "So this is a unique opportunity not only to rethink the way heads of state and government acted and got things done, but also to promote reforms that lead to a more democratic model."22 This confirms the importance of a global perspective based on cooperation and solidarity in a democratic environment. This requires innovation and political confidence building as some of the important factors in overcoming the crisis. Politics can offer us the best alternatives.