Which way, Latin America?

Andrés Martinez says most Latin American countries have abandoned Hugo Chavez’s brand of leftism. Angelo Rivero Santos says Venezuelans have rejected the kind of neo-liberal economics that benefit only the elite.

July 14, 2008

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Today's question: Are Latin American nations moving toward neo-liberal free markets or a 21st century form of Bolivarian socialism? All week, Andrés Martinez and Angelo Rivero Santos discuss U.S. policy toward Venezuela, Colombia and other Latin American nations.


Dear Angelo,

I think Americans have a rather warped view of developments in Latin America; I wonder how things look from your vantage point at the Venezuelan Embassy. People in this country with a passing knowledge of the region talk as if the whole region has gone left, following your fearless comandante, Venezuelan President Hugo Chavez. From all the hand-wringing out there, you'd assume the champagne must flow pretty freely at your embassy, with all that celebrating over the decline of American influence, both political and economic.

FOR THE RECORD: The headline for an earlier version of this story read, "Which way, Central America?" Also, the question previously read, "Are Central American nations moving toward neo-liberal free markets or a 21st century form of Bolivarian socialism?"

But I wonder. Isn't that sketch a caricature, one partly driven by Americans' own view of how George W. Bush must play overseas, and partly driven by an overly narrow zero-sum view of Latin American politics (that stipulates that nations are either with us or against us)?

I think trends in Latin America are far less adverse to U.S. interests than conventional wisdom suggests. Indeed, this period will be looked at in retrospect when the Latin American left, which became ascendant as a reaction to the excesses and corruption of the neoliberal faith in the last decade, matured into a more democratic, economically responsible alternative. And no, I am not talking about your government, Angelo; but rather the governments of Luis Inacio Lula da Silva in Brazil and Michelle Bachelet in Chile. In the long term, these social democratic Latin American leaders -- committed democrats who once stood up to military dictators -- will leave a far more lasting legacy than Chavez -- a military man whose dictatorial aspirations haven't abated -- and his hollow, demagogic project.

Throughout the continent, you have models of governance vying for influence: conservative pro-American ones like in Colombia, Mexico and much of Central America; social democratic administrations that respect the rule of law such as in Brazil and Chile; and what I might call the folkloric leftist authoritarianism of the Castro brothers, Chavez and Nicaraguan President Daniel Ortega. I don't think this last model is all that interesting -- however entertaining Chavez's antics can be -- or sustainable as a model to emulate.

Again, what is happening in a place like Brazil is far more interesting. You have a lifelong labor activist leading the country, emphasizing his social policies without antagonizing foreign investors or ruining the nation's public finances. At the same time, Brazil's government has been incredibly savvy at modernizing Petrobras, the nation's state-owned oil giant, in such a way likely to catapult Brazil into the world's leading oil producers at a time when Mexico and Venezuela are running their state-owned oil companies into the ground.

Brazil's growing confidence and credibility on the global stage has presented problems for U.S. policy, to be sure, especially in stalling the Free Trade Area of the Americas and at the World Trade Organization (where Brazil has led a revolt by the developing world against northern farm subsidies). Still, the rise of a credible left that is not anti-democratic will prove beneficial to the region and to the United States.

On the economic front, Brazil and Chile are blending a social democratic project with market-based capitalism, and that trend is taking root across the region. Chile remains the gold standard in proving what an economic opening to the outside world can do for a nation's living standards, and the recently implemented Central American Free Trade Agreement is also paying dividends for that region, in terms of accelerated growth. It is interesting that for all his Chavista bluster, even Daniel Ortega in Nicaragua seems to understand that it is in his country's best interest to stay in CAFTA. I hope our Congress will soon extend the benefits of free trade to Colombia, a steadfast ally. In Mexico, meanwhile, voters two years ago rejected a leftist populist candidate who wanted to take the country back to a time of heavy-handed, destructive statism

Lots of ground to cover, and I look forward to covering it with you, Angelo.

Andrés Martinez is a senior fellow at the New America Foundation.
Dear Andrés,

Let me stick to providing some reflections based on the question: Are Central American nations moving toward neo-liberal free markets, or a 21st century form of Bolivarian socialism?

After decades of regional conflict, Central American countries are overcoming domestic fragmentation and have elected governments through open elections. These societies are also facing the same questions all societies face when trying to redefine their political economy and socio-political structures: How much state? How much market? What are the responsibilities of the state and the private sector with regard to the economy? What goods should be provided by the state and which by private citizens?

In Venezuela, as in most countries in South America, there has been a lively debate over the past two decades regarding these questions. This debate has taken particular importance after the colossal failure of neo-liberalism and the failed "Washington consensus," which, albeit successful in controlling inflation, wreaked devastating social, political and economic effects on the majority of our people. The so-called "consensus" was one among elites that brought benefits to a few and unacceptable levels of social, economic and political exclusion to the rest.

Our experience tells us that the idea of self-regulating markets and economic liberalization leading to political liberalization is a fallacy. Under the assumption that the benefits of economic growth would eventually "trickle down," the neo-liberal project, just as the liberal paradigm of the 19th century, promised social and political benefits that did not materialize. Why? Because neo-liberalism conveniently ignores that power relations are present in the market as well as in the state and civil society. As it played out in Venezuela and other countries in South America, neo-liberalism minimized the role of the state, privatized gains and socialized losses with the blessing of elite-based democratic systems that, over time, protected the interests of a few and failed to represent the interests of the majority.

In Venezuela, we are convinced that the only way to promote growth and development is through participatory democracy and by empowering our people to, as the Nobel economics laureate Amartya Sen has stated, lead the kinds of lives they want to lead. The majority of Venezuelans have decided through 12 electoral processes over the past 10 years to do this in peace and democracy -- under a mixed economic system that promotes socially responsible private investment and a state that promotes massive government programs that attempt to correct the historical wrongs of social, economic and political exclusion. We also promote political integration and commercial exchange based not only on the narrow concept of "comparative advantage," but also on the concepts of solidarity and complementarity.

Central Americans, as sovereign people, will decide for themselves and through elections which system of political economy, nationally and regionally, best suits the enormous challenges they face in the 21st century. Our experience may or may not serve them as they accumulate wisdom. In Venezuela and most of South America, these debates are not seen as "anti-American," but rather as the normal maturing process of a region that seems to be finally accepting the call of Simon Rodriguez who, in the 19th century, called upon the newly liberated people of South America to think and act "creatively and with originality."

Complex matters indeed, Andrés. I also look forward to this week's debate.

Angelo Rivero Santos is the deputy chief of mission of the Embassy of the Bolivarian Republic of Venezuela.