Reuters looks at Brazil's economy in 2015 and sees slow growth with a lot of downside risk. The basic point of the article is that the current estimates do not take into account that any government will likely need to make economic reforms that are being avoided in 2014 due to the World Cup and election.
One additional factor missing in the analysis is Brazil's neighborhood. Venezuela's economy shows little likelihood of improving unless there is a major spike in oil prices. With billions of dollars of Brazilian companies tied up in Venezuela's economic mess (and stalled-out currency exchange system), any worsening of Venezuela's economy could hit the country hard. Additionally, Argentina faces some important structural problems that threaten Brazilian trade. The chances of those countries falling is much higher than the chances of those countries booming and giving a boost to Brazil.
With pessimism covered, I'd like to see an analysis of a more optimistic scenario. Under what conditions does Brazil grow 4-5% in 2015 without major inflation?
It's probably a combination of China getting its economy back on track, emerging markets globally regaining stability, Brazil's neighbors avoiding the worst case scenarios, the price of agricultural commodities going up, good weather, and the government engaging in some responsible infrastructure spending that serves as a stimulus while somehow putting off the worst of the spending cuts that economists think are necessary. All those factors hitting correctly for Brazil are unlikely but not impossible.
Reuters is correct that pessimism is probably more warranted for Brazil in 2015, but it's worth considering the range of scenarios so that we're not caught off guard by unexpected events to the positive side.
1) Though his coalition lost seats, President Santos keeps a divided and fragile majority coalition in Congress. This makes the country more governable for the president and gives the peace process a fighting chance. Santos's U Party also won the most votes in the Senate and House, a symbolic victory over Uribe that carries political capital and signals a more solid presidential run in a few months. President Uribe's party won a significant amount of votes and Uribe himself will become a senator, but they are still a minority opposition group.
2) Colombia's party system is divided and weak. No party received over 20% of the vote and the four top parties combined received less than 60%. Colombia's two traditional parties (Conservatives and Liberals) combined for only 25% of the vote. The two big parties, the Partido de la U and the Centro Democratico, are led by individuals (President Santos and former President Uribe) without solid ideological bases or agendas that go beyond the individual leadership.
3) For those trying to identify or map a left-right divide, Colombia is tough. President Santos started as the right-wing successor of President Uribe facing a divided group of left and center-left parties. Four years later, Santos is the leader of a center-left coalition whose main opposition is a group of right-wing politicians led by Uribe. A small fringe to the far left of Santos's coalition is shrinking and weakening.
4) A good portion of Colombia's population is against the system as a whole. Voter turnout was around 42%. There was a push by some citizens to leave ballots blank or mark the blank ballot box (a fun option in the Colombia system), which led to 6% of people marking blank ballot as their choice and another 5% leaving the ballot completely blank. An additional 10% of ballots were "spoiled" and it is unclear what percentage was a protest vote and what percentage was voter error. So, 42% turnout and over 20% of those who turned out left blank or spoiled ballots. That's a trend that should be troubling to the political leaders across the ideological spectrum.
5) A more secure Colombia. The country did not face any major attacks or even significant threats during election day. It was a peaceful day of voting, a solid change from elections past and a sign of success and hope for the government's security policies (including the ongoing peace process). Candidates who had previously denounced corruption, human right abuses, and parapolitics won seats in the Congress. That's all good news. However, peaceful voting doesn't mean completely clean. Allegations of corruption continue, particularly in rural areas, and shouldn't be ignored by the international media.
For those of you who have ever wanted to read a 2,000 word profile about me, my use of Twitter and my views on Latin America, I did a written interview with Matthew Clayfield of the Australian website Crikey. Here's the link. Even though I appear to contradict it throughout the interview, here's what I really think matters:
I’m an optimist about Latin America. I think the region has improved immensely in recent decades in terms of economic development, human rights and democracy. I think the region will improve even more in the decades to come. I worry that I and others write about Latin America’s problems and challenges too often without writing about its progress and strengths. The Americas are a great place to live and work. The hemisphere has a bright future ahead.Thanks to all my readers on this blog and Twitter. Back to the usual array of topics soon, maybe with a bit more optimism.
Daniel Ortega is still alive. For those who missed the rumors over the past two weeks, Nicaraguan President Ortega canceled several meetings and went missing for about ten days, sparking rumors that his health had deteriorated or worse. Then at the height of those rumors, significant enough that Ortega's name trended globally on Twitter and rumors of his death began circulating, he appeared at an event at the Managua airport as if nothing had happened.
Comparisons between Ortega and former Venezuelan President Hugo Chavez are overblown. Ortega spent decades making and screwing up history before Chavez was elected president of Venezuela, so the idea that Nicaragua's once and current leader was following a "Chavez model" as some analysts claimed simply didn't match the timeline.
On the issue of managing their own health and presidential succession, however, the comparisons between the Nicaraguan president and former Venezuelan president may be valid. Ortega, like Chavez, isn't being transparent and honest about his health issues. Ortega, like Chavez, appears to be mismanaging the big question of who leads the country in a post-Ortega Nicaragua. Both men were too focused on their own personal control and desire to lead for life to allow for any credible successor to grow underneath them.
Nicaraguan Vice President Omar Halleslevens is the constitutional successor, but anyone who follows the local politics knows the real power behind the president is First Lady Rosario Murillo. In the case of Nicaragua, Ortega has done everything to strengthen the personal, party and institutional power of his wife, which could create some serious problems for the vice president should he need to assume a higher office. I think if you were to ask the average Nicaraguan who would become president if Ortega died, they would guess Murillo. In terms of power struggles, Halleslevens vs Murillo has the potential to be bigger than Maduro vs Cabello.
Today marks one year after Chavez's death and it Ortega is traveling down to Venezuela to pay his respects. Nicaragua's president should take a long look at the mess created by the fact Chavez was too vain to properly plan a transition. He should see the damage done by a president who hid the severity of his own health issues until it was too late. While I'm sure Ortega will have nothing but words of praise for Maduro publicly, he should privately take note of the disaster that can occur with a poorly planned succession.
Ortega has greater institutional control, better public approval, a weaker opposition and a stronger economy than Chavez had in the year before his death. He has nothing to fear from returning to Nicaragua, being honest about his ten day absence, and, if needed, talking openly about what a post-Ortega Nicaragua and post-Ortega FSLN should look like. But he probably won't. Too much pride and too many years building up his image as the only legitimate Sandinista leader mean that he probably doesn't know how to speak about a future without him.
Nicaragua and Venezuela are two very different countries and Ortega and Chavez are two very different leaders. They shouldn't follow the same path. If a post-Ortega Nicaragua looks at all as bad as a post-Chavez Venezuela, there will be nobody to blame but Nicaragua's president and his lifelong allegiance to his own cult of personality.
The US Department of Defense released the 2014 Quadrennial Defense Review. The document matters as it helps define the broad direction of the US military. Here are the very few mentions of Latin America and the Caribbean in the document:
In the Western Hemisphere, predominant security challenges no longer stem principally from state-on-state conflict, right-wing paramilitaries, or left-wing insurgents. Today’s threats stem from the spread of narcotics and other forms of transnational organized crime, the effects of which can be exacerbated by natural disasters and uneven economic opportunity. These challenges are shared and do not respect sovereign boundaries. It is in the mutual interest of all the nations of the Western Hemisphere to unite to develop regional capacity to disrupt, dismantle, and defeat these threats from non-state actors.On building regional security
U.S. engagement in the Western Hemisphere is aimed at promoting and maintaining regional stability. The Department will focus its limited resources on countries that want to partner with the United States and demonstrate a commitment to investing the time and resources reqrequired to develop and sustain an effective, civilian-led enterprise. We will emphasize building defense institutional capacity, increasing interoperability with the United States and other like-minded partners, and supporting a system of multilateral defense cooperation such as the Conference of Defense Ministers of the Americas and the Inter-American Defense Board to respond to shared challenges....On budgets:
...Working with our interagency colleagues and international partners, we will assist as appropriate in countering diversified illicit drug trafficking and transnational criminal organization networks in Latin America that are expanding in size, scope, and influence. The Department will continue to maximize the impact of U.S. presence in Latin America by continuing to foster positive security relationships with our partners to maintain peace and security of the Western Hemisphere.
If sequestration continues, there would be fewer U.S. military forces in other regions, such as the Western Hemisphere and Africa, than there are today. These regions are already seeing the impact of increasingly constrained resources.
A Management & Fit poll published by Clarin shows President Cristina Fernandez de Kirchner has 25% approval and 68% disapproval. That is a significant drop from last October, when her approval was 44% and disapproval 47%.
Only 13% of poll respondents said they thought their personal economic situation would improve in the coming months while 56% said it would worsen.
Both Sergio Massa and Daniel Scioli are polling positively and remain the frontrunners for the 2015 presidential election.
Colombian President Santos says he will push for a political reform that will prohibit presidential reelection but extend the term to six years. It's a move that goes against the recent trends in Latin America. The supporters of the reform say that presidential incumbency is too large of an advantage in an election campaign.
What will be controversial is that the same political reform will extend the terms of some mayors and governors who are already in office. This could give Santos the political capital he needs to pass the reform, but is also questionable as it grants term extensions without elections to some officials.
Several days ago, the caravan of Aída Avella, presidential candidate for the Union Patriotica, came under fire while traveling in Arauca. The attack was widely criticized and President Santos ordered an increase in her security team.
The attack against Avella came after numerous threats by right-wing groups against her and her party, making many believe it was politically motivated. The government said it had military intelligence showing the ELN was actually responsible. The government was correct. The ELN, the country's other large guerrilla group, took the credit/blame for the attack in a statement and apologized for its role.
While Avella doesn't have a shot of winning the presidency, there is symbolic importance in her participation in this election. The killings of UP candidates in the late 1980s by paramilitaries was a significant human rights atrocity and at the time helped convince the FARC leadership that they would not be accepted in democratic politics. The UP's participation today is an opportunity to show that politicians across the political spectrum can now participate in Colombian politics, which is important for getting the FARC to a peace agreement.
Telefonica is investing $15 million in a land-based internet line running from Mexico to Panama. They hope to increase internet speeds and access in Central America.
This is a contrast to the Brazil-Europe internet line I wrote about earlier this week. It's a private sector initiative and it is being done without the anti-NSA fanfare that Brazil's Rousseff has latched on to. While the Telefonica investment is significantly cheaper and technologically easier, it's also more urgently needed than the Brazil project due to Central America's general lack of connectivity.
Once again, anything improving the internet in Latin America and increasing the amount of data flowing across borders is something I support. I'll also note, as I did in a recent chapter for Southern Pulse's Beyond 2014, that Central America needs more investment in its north-south integration. Projects that connect the oceans, like the Panama Canal expansion and the proposed Nicaragua Canal, get an unfair amount of the media attention. Projects that can connect Mexico and Guatemala to Panama via highway, electricity grid and internet fiber are quite important to Central America's long term economic development and don't get enough attention or support.
The current protests in Venezuela began on university campuses. The majority of the protest movement, like the majority of Venezuela's population, is under the age of 30. Across the political spectrum, among analysts who lean both pro- and anti- government, this youthful aspect of the protest movement is a fact that simply hasn't sunk in.
Imagine Venezuelans who are 20 years old, around the age someone would be attending university and involving themselves in the initial round of protests this year. They were born in 1994, five years after the Caracazo and two years after Lieutenant-Colonel Hugo Chavez attempted to overthrow the government. They were four years old when Chavez was elected president, meaning they have essentially no personal experience of the politics of Venezuela prior to Chavismo. They were eight when the 2002 coup attempt occurred. Ten years old during the 2004 oil strikes.
Over the past few weeks I've read many analysts insisting on the importance of historical context. Some version of "Remember the coup in 2002," is in at least half the commentary I've read. Many pro-Maduro writers want to blame today's protesters for an event that occurred when they were eight years old.
For much of Venezuela, including the vast majority of protesters, the historical context actually is history. They may (or may not) remember seeing it on television. They largely learned about it from their parents and teachers. To argue that the current protesters are repeating actions from the opposition's past misses the point that they weren't even teenagers when many of those events took place.
The political battles in Venezuela are being fought on two levels. On one level, government and opposition leaders who have been battling for decades are once again fighting for control. For them, 2002 matters and feels quite recent. At a second level, university students, like youth all over the world, think that those political leaders are old and out of touch.
To be fair, the same holds true for the youth who are pro-government. That 20 year old PSUV activist was five when the new constitution was written, ten when Chavez won the recall referendum and thirteen when RCTV was forced off air, To pin to that person all the views, history and errors of Chavismo would be just as incorrect as to claim today's university protesters were eight year old coup-leaders.
Historical context is important, but our analysis shouldn't be trapped by history. Venezuela's youth, both pro- and anti-government, are not necessarily being well represented by their political leaders or by the debate occurring at the national and international level. Those youth deserve the respect to write their own narratives for why they are protesting (or for why they are supporting the government), not be forced to respond to the debates and battles of the past.