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The end of a cycle

Left wing, “progressive” governments that took advantage of a sustained commodities boom are now in retreat amid corruption scandals and economic crisis

Leftist governments in Latin America have suffered a series of poll setbacks in recent months signaling a political shift in the region. The ruling party was defeated in Argentina, while Brazil and Bolivia are not without their share of problems

El Universal


25 de marzo de 2016 23:59 PM

Actualizado el 26 de marzo de 2016 10:45 AM


The end of a cycle

Hundreds of thousands of demonstrators took to the streets of Brazil on March 13 to demand the ouster of embattled President Dilma Rousseff, carrying banners expressing anger at bribery scandals and economic woes. A banner read "We don’t want a new Venezuela in Brazil."

Last February, Bolivia’s President Evo Morales, one of the late President Chavez’s staunchest allies, lost a bid to run for a fourth straight term in office.

Shortly after assuming the presidency of the country, after 12 years of Kirchner rule, Argentina's new president, conservative liberal Mauricio Macri, ordered the removal of the portraits of the late former president Néstor Kirchner and his Venezuelan colleague, Hugo Chávez, from the Gallery of Latin American Patriots in the Casa Rosada presidential palace, where they hung alongside portraits of Juan Domingo Perón and Ernesto Che Guevara, among others.

In Venezuela a similar scene took place in early January, a month after the opposition coalition took control of the National Assembly after winning 112 of the 167 up for election on December 6. Newly sworn-in Congress Speaker Henry Ramos Allup ordered the removal of the pictures and giant posters of late President Hugo Chávez from the legislative palace. He also got rid of the 3D portraits of Simón Bolívar, which Chávezism has done so much to impose as a symbol of the Bolivarian Revolution.

These apparently isolated events follow a thread of momentous changes running through Latin America. Some analysts tend to agree that  they mark the end of a cycle of left-wing hegemony led by late Venezuelan leader Hugo Chávez, “the Eternal Commander,” as he was posthumously named by his followers, perhaps in the hope of lengthening the cycle of self-proclaimed “progressive” governments over time. The fact is that, because of the massive corruption scandals, the economic crisis, and particularly the unending drop in the price of oil, former supporters are now looking for an alternative to left-wing governments.

Four super cycles

Oil expert José Toro Hardy argues that Hugo Chávez is the first political figure on the continent to have emerged as a result of the new cycle of a sustained commodities boom, particularly oil.

He explains that historically, there has been evidence of four commodities super-cycles -an approximately 10-35 year global trend of rising commodity prices.

During the latest commodities boom, which economists believe began at the start of the 21st century, the price of oil, “the commodity par excellence," rose to unimagined levels. And along with oil, the prices of iron, steel, nickel, copper, tin, wheat, and most agricultural products rose stimulating growth in the Latin American economies. China experienced decades of unprecedented growth, driving up commodities prices amid rising demand.

The state's ownership of the rights to mineral resources is rooted in our colonial history. As commodity prices rose, Latin American governments found themselves the recipients of unimagined windfall profits.

Hence, some governments became stronger. Hugo Chávez led the first populist government, followed by Lula Da Silva in Brazil and later by Rafael Correa, Evo Morales, Pepe Mujica, Daniel Ortega and Ernesto Kirchner, among others.

As Toro Hardy notes, all these governments introduced new populist policies. New groupings were formed, such as the Bolivarian Alliance for the Peoples of Our America (ALBA), the Union of South American Nations (Unasur) and the Community of Latin American and Caribbean States (CELAC), and the Forum of Sao Paulo was fostered, with a view to strengthening their political vision, with different degrees of authoritarian states, depending on the strength of their institutions. As institutions were coopted by the state, left-wing governments became more authoritarian, including changing their constitutions to allow for indefinite re-election of the president and imposing draconian media control laws. It was all about imposing "21st Century Socialism," each government according to its version, but their goal was one and the same, namely to maintain the ruling party's power in all those countries where they  have taken over the government.

Changes throughout the region

One of the particular features of these left-wing governments, according to Toro Hardy, is pushing for political change trough constituent assemblies with a view to rewriting the constitution in order to stay longer in power. This is usually done following the Venezuelan way, whereby through a constitutional amendment the presidential term was first extended from six to seven years, then a constitutional reform was secured (in 2009) that allowed for indefinite re-election.

Last February, President Evo Morales lost a bid to run for a fourth straight term in office in the 2019 election and potentially remain in power until 2025. Morales first assumed the presidency in 2006, after winning the elections with 54% of the vote. Under Bolivia's constitution, presidents were only allowed to serve two consecutive terms for a four-year term each. In December 2009 he obtained 64.22% of the voting, which allowed him to begin a second term in office.  Bolivia's Constitutional Court ruled that President Evo Morales could run for a third term in elections scheduled for December 2014. The court argued that Morales's first term should not count because it predated the current constitution, which was amended in 2009.       Morales claimed he needed a new mandate to complete its economic and social model; however, his personal popularity has been eroded by corruption allegations that have hurt his regional allies, and by a scandal involving a former lover who holds an important position in the Chinese engineering company CAMC, which has secured more than USD 500m in contracts with the Bolivian government. So, Morales will have to hand over the presidential sash to a new President on January 22, 2020.

Rafael Correa has served as President of the Republic of Ecuador since January 15, 2007. He oversaw the introduction of a new constitution, and was re-elected to serve his second, four-year term in 2009. Correa was again re-elected in the 2013 general election. Based on the election results, Correa will remain president until 2017. Ecuador's ruling party-majority National Assembly has approved a constitutional amendment allowing the president and other officials to be re-elected for an indefinite number of terms. But the constitutional change lifting restrictions on the number of re-elections only comes into force in 2021.

Luiz Inácio Lula da Silva served as President of Brazil from January 1, 2003 to January 1, 2011. The Brazilian Constitution permits presidents to serve only two consecutive, four-year terms. Dilma Russeff, a member of Lula’s party, took over from him as President of the Republic in March 2003. Her government is currently plagued by an overwhelming corruption scandal and a dismal economy, which is set to shrink 3.5 percent.

The plunge

Toro Hardy notes that as from 2008 a particularly abrupt slowdown was recorded in the growth rates of the region’s economies. In 2008 the Venezuelan oil basket, which stood  at USD 116 a barrel, dropped, then recovered, and as from 2012-13 a steady plunge in prices began, aggravated by China’s economic slowdown. Likewise, the prices of Latin American raw materials started to fall. The financial crisis of 2008 affected just about every market, all around the world. The broader American economy weathered the global financial shock wave better than Europe, and the  Latin American economies held quite well because China was demanding raw materials. But by 2013 China started slowing down and the super cycle began to unravel.

In 2015 and 2016 governments that were extremely dependent on high prices of raw materials no longer could keep up.

In Venezuela, according to Toro Hardy, this became evident in the results of the December 6 election. The government no longer has the resources to keep up with social plans and keep the population satisfied. Against a background of general shortages, people start to feel cheated. As a result, the opposition now controls two-thirds of the National Assembly.

Economic decline

According to Bloomberg, the slump in raw materials prices that has hurt Venezuela, Brazil, Chile, Peru and Argentina “is leaving Central America unscathed.”

Bloomberg forecasts that countries like El Salvador, Guatemala, Costa Rica, Panama, and even Nicaragua (an ALBA member) “are bucking a trend of sluggish growth in the rest of Latin America as cheaper crude prices cut their fuel bills and faster growth in the United States boosts remittances and tourist spending.”

It is noteworthy that during Daniel Ortega’s first term in office (1985-1990), he applied nationalization and control policies very similar to those applied by Chavez, which led to an acute crisis in Nicaragua. When he returned to power in November 2006, and after being re-elected in 2011, he maintained the economic free market policies of his predecessors (despite being an ideological ally of Hugo Chávez). Today, Nicaragua has one of the highest growth rates on the continent (4 %).

A crisis of the left?

Citizens are demanding "a better democracy," Latinobarómetro director Marta Lagos told El Paí, on the current political shift in the region. Latinobarómetro  is an annual public opinion survey that involves some 20,000 interviews in 18 Latin American countries, representing more than 600 million inhabitants. “It’s not about right or left, people are against the elites," Lagos said. "Until 2010 people believed that the elites were able to substantially change the living conditions of a country. That belief is now being challenged. Protests start; fear spread by dictatorships is overcome. Latin American societies had always been very controlled, but the allowances, the paternalistic political model, strongmen, populism, are not enough,” she said.

According to Toro Hardy, what people resent most are unfulfilled promises. The elites themselves are keenly aware about the non-viability of populist models.

But at the same time, he says, they are coming down because "populism can only be powered in two ways, by a populist speech that few people are able to handle, reaching to the hearts of people as Hugo Chávez did; but, no matter how charismatic a leader may be, two things are necessary - reaching to the hearts of people and having the resources to feeding their stomachs," Toro Hardy said.

twitter: folivares10

Translated by Sancho Araujo

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