American Diplomacy
Commentary and Analysis

May 2007

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In this essay, Elvio Baldinelli brings us up to date on what some see as a general leftward movement in Latin America. He does not agree with this perception, and makes his reasons clear. Readers may wish to look in the Archives and read his article on this subject a year ago to see how things are progressing.JEW

Latin America's Apparent Turn to the Left

In many sectors of opinion in the United States, it is believed that Latin America is shifting sharply to the left; but the reality is more complex, since there are big differences between those who embrace Marxism or populism and the others. The partisans of the first group want what many in the United States fear; but the events up to now are far from the hopes of that group and the fears of the other.

Colombia, and several other countries, have center-right governments, but what is important is that the hopes of the Latin American left have gone unfulfilled. They were betting that candidates who shared their views would win the presidential elections in Mexico and Peru; but Lopez Obrador lost in Mexico and Alan Garcia won in Peru. And, in addition, the leftist governments of Brazil, Chile and Uruguay—which have definite socialist backgrounds—have elected to follow a pragmatic, sensible, and realistic path.

In recent years in Argentina, the Executive Branch has acquired extraordinary powers, while the Legislative Branch ceded to the Executive many of its most important responsibilities. In addition, there are problems that go back more than half a century, such as the downgrading of entities that are basic to any State: the justice system, political parties, and Congress. But it is also true that, even though in the past Argentina has had many military coups, during the past 20 years it has had democracy. For example, in Argentina, there is freedom of the press and freedom to criticize the authorities, in contrast to what is happening in Venezuela. Neither has the Argentine government confronted the United States, so that the U.S. Department of State often speaks of the excellent ties with Argentina, including in such areas as the war against terrorism and nuclear proliferation.

During the decades of the '60s and '70s, Cuba could count on the support of the immense political and military power of the USSR, with its Marxist ideology, which inspired hope in many people in the world. In addition, there was the prestige which the Cuban government gained from having been able to defy the United States. The Cuban people take great pride in the fact that, despite being a small and poor country, they were able to confront the world's greatest power—a feeling which has allowed them to suffer, without too many complaints, their ongoing economic difficulties. But today, their leader is old and ill, bringing closer the time when Cuba will have to make political changes. It would help to move them in the right direction if the Cuban exiles in the United States would stop pressuring the government and the Congress to continue the economic embargo. Without that, the main support of the present regime would disappear, making it easier for the United States. and Cuba to reach an honorable agreement.

Bolivia, Ecuador and Venezuela have in common the fact that in each of them there is a large indigenous population which has traditionally been marginalized by the small, white elites. This is an important factor in these countries' move to the left and towards populism.

In Venezuela, the communications media are controlled, and there is an accelerating institutional deterioration. The Judicial Branch is not independent, and therefore the mechanisms for control over the Executive Branch are weakening. In addition, the schools teach Marxism, a strange fact, since one can count on the fingers of one hand the countries that still practice that utterly failed policy.

Per Capita GDP in US Dollars, 2005
Venezuela owns great riches in petroleum and dreams of becoming the vanguard in a Latin American march towards a socialist planned economy, in competition with the democratic world's market economy. The truth is that, even though it exports a resource with broad demand and an excellent price, the standard of living of its population is not one of the highest in Latin America. Its gross domestic product per capita, as measured by the World Bank according to average purchasing power, reached US$6,440 in 2005. Among the countries mentioned in this article (except Cuba, for which there are no figures) only three have a per capita GDP lower than Venezuela's: Peru, US$5,830; Ecuador, US$4,070; and Bolivia, US$2,740. Those ranking above Venezuela are: Argentina, US$13,920; Chile, US$11,470; Mexico, US$10,030; Uruguay, US$9,810; Brazil, US$8,230; and Colombia, US$7,420. In addition, Venezuela has a weak commercial enterprise structure, with few businesses in relation to the population—a circumstance which helps explain the existing level of poverty. Given these circumstances, it would be more advantageous for Venezuela to use its income from exporting this non-renewable product to stimulate industrialization instead of getting involved in an improbable adventure of ideological leadership in the continent.

The Bolivian government bought petroleum plants from Petrobras (of Brazil) for US$112 million. This was a political gesture in no way favorable for the economy of the country, since it makes no sense to invest in something that already exists and is administered by a state enterprise of a friendly neighboring country. Bolivia needs to invest in education, and to develop small and medium enterprises which would create employment and wealth—areas which would be much more beneficial.

Latin America is growing steadily and more rapidly than in the last three decades. Part of this is due to sounder economic policies which have made advances in controlling inflation, in balancing fiscal accounts, and in reducing external debt. It is also partly due to external factors: vigorous world growth, high prices for basic products, and favorable financial conditions. According to the IMF, Latin America's good rate of economic growth should continue for at least two more years.

The countries with policies distant from the irrational left and populism, such as Argentina, Brazil, Chile, Colombia, Mexico, Peru and Uruguay, represent more than 90% of Latin America's gross domestic product. As this demonstrates, only a small part of Latin America is not in this category, which makes it difficult to talk of a Latin American "turn to the left".

Dr. Baldinelli, a distinguished economist, has served in various senior positions in the Argentine Government, including Vice President of the Central Bank and Secretary of State for Foreign Commerce. Previously, he held a senior position in the administration of the Latin American Free Trade Association, predecessor of the present-day Mercosur. Dr. Baldinelli is a member of American Diplomacy's Editorial Review Panel.

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