Historically, Latin American politics have been highly influenced by the cycles that link the region to the global economy. In the last decades of the 20th Century, most countries in the region were led by governments upholding favorable attitudes towards businesses, foreign direct investment and the integration markets through free trade. The region was recovering from one of its worst economic crises and these policies were seen as the only alternative to bring back economic growth. However, the region was shocked once again by the effects of the financial crisis of the late 1990s and early 2000s, which in turn triggered the opening of a new political cycle.
Between 2003 and 2007, Left-of-centre governments were elected in many countries. Uruguay, Brazil and Chile adopted a social-democratic outlook in terms of policymaking; whereas countries such as Venezuela, Ecuador, Argentina, Bolivia and Nicaragua adopted an openly left-oriented stand by which the state re-entered the scene as a protagonist in the appropriation and redistribution of wealth. Unlike previous cycles, however, we witnessed variations within the region, as countries such as Mexico, Colombia, Costa Rica and Peru, sustained a more liberal stand in regards to the balance between the state and the market. In any case, it is worth noting that this political cycle was highly influenced by the boom in commodity prices triggered by the raise of China, in particular, and the so-called BRICs in general.
Propelled by this cycle of growth, more than Seventy Million people, 18 percent of the entire population, were lifted from poverty and were entered the middle classes in the region. Approximately six in ten Latin Americans experienced an improved economic situation that allowed them to move into a higher income group. Inequality, the Achilles’ hill of the region, was reduced and reached its lowest level since the pre-industrialization era. Disregarding of their ideological flavor, governments took serious the challenge of tackling poverty and inequality through redistributive social policies. Of course, these policies were easier to implement in the context “commodities boom”.
It seems, however, that as the prices of oil and minerals decrease in the international markets, we are on the eve of a new economic and political cycle in Latin America. According to the IMF, the region is set to contract by 0.5 percent in 2016 — marking two consecutive years of negative growth for the first time since the crisis of 1982–83. The economies of Brazil and Argentina are contracting, so is the Venezuelan one, a country that faces a decrease of 8 percent of its economic output and is expected to experience rates of hyperinflation unseen in the region for decades.
It is probably not surprising to see, thus, signs of political realignments in some countries. Left-of-centre governments have been challenged in Argentina, Venezuela and Brazil. After more than a decade of consecutive leftist governments under Nestor and Cristina Kirchner, a centre-right candidate, Mauricio Macri, won the 2015 general elections in Argentina. In Venezuela, Nicolas Maduro, the successor of Hugo Chavez lost complete control of congress in the parliamentary elections of 2015. Currently, the Venezuelan parliament dominated by a centre-right opposition has declared in open rebellion after the electoral authority blocked their attempts to promote a recall referendum. In Brazil, after experiencing historical lows in her popularity and a wave of massive protests, Dilma Rousseff has been impeached by congress and is out of office. Peru recently elected a centre-right government led by a former World Bank economist, Pedro-Pablo Kuczynski, consolidating its orientation towards market-oriented policies. Early this year in Bolivia, one of the few countries that managed to navigate the current economic slowdown, Evo Morales lost a referendum, through which he attempted to reform the constitution to allow for his re-election.
It is too early to say if the above-mentioned events mean that the region is about to experience abrupt political changes. If the rise of left-of-centre governments left space and coexisted with governments from different ideological orientations, I think that a new political cycle will give way to yet more political diversity in the years to come. Complexity and polarization will not come merely from the dynamics of party politics but by deeper issues that will enter the electoral realm such as we saw in the latest referendum in which a majority of the electorate rejected the peace agreement between the Colombian government and the FARC. As the region’s markets integrate even more to a global economy with multiple centers and their societies become more complex, governments will become more flexible when it comes to their policies and the way in which they interact with their citizens.
The practice of public affairs in Latin America, thus, will have to adapt in order to navigate this increasingly complex reality. Unlike what happened in the past, it will be highly unrealistic to talk about a single regional strategy to influence policy-making. Different markets will require different engagement strategies and regional campaigns will have to be able to localize tactics across and even within countries.
Gustavo Bonifaz-Moreno, senior account executive, Global Public Affairs.