Latin America’s Moment

Scholars of Latin America spent much of the first decade of this century discussing the causes and consequences of the region's turn to the left, under Venezuela's Chávez, Argentina's Kirchners, Brazil's Workers' Party, and other variants of leftist parties. It was therefore perhaps not surprising that as the left began to lose power in the second decade of this century, journalists and academics began to talk of the region's tilt to the right. But looking across South America's political landscape, it becomes apparent that the region hasn't really turned toward right-leaning politics as much as it has chosen deadlock. In country after country, the president is governing with either minority support in Congress, or will be perilously close to doing so after upcoming elections. In Peru, Pedro Pablo Kuczynski (PPK) narrowly won the presidency over Keiko Fujimori, but her Fuerza Popular party gained 56% of Congress. This majority, combined with the divided Left, has empowered the Fuerza Popular to block PPK at every turn, including by removing PPK's ministers or forcing them to resign. Argentina's President Maurício Macri was able to move forward on a variety of reforms in his first year, but now faces a rockier outlook. Four months away from midterm elections that will be crucial to the fate of his market reforms, the ever-surprising former president, Cristina Kirchner last week announced that she was founding her own Unidad Ciudadana party, and declared herself a candidate for an open Buenos Aires Senate seat that she will contest against a close Macri ally. As one local pundit summarized the situation, Macri needs to defeat Kirchner to finally become president and convince investors fearful of a return to populism; Kirchner needs to destroy the Macri presidency if she is to have a political future. The midterm elections are widely thought to be a bellwether for the 2019 presidential election, but although some Macri gains are anticipated, it is not clear such gains would lead to a change in the balance of power in Congress that would enable Macri to move as quickly and surely on reform as he might wish. Brazil's stand-in president, Michel Temer, has lost all capacity to govern the fragmented Congress, whose members are running scared of losing their heads either from the sword of justice or the scimitar of popular disgust.  After some initial success on fiscal reform, social security reform is back on the back burner, labor reform has been narrowly blocked in committee, and tax reform, political reform, and other significant changes are a distant mirage. In Chile, Michelle Bachelet's approval ratings have been improving of late, and she hopes to move forward on same-sex marriage and infrastructure investment plans in her remaining months in office. She may yet do so, but her successor will likely have a harder time of it. Polling in the presidential election continues to tip between Chile Vamos' Sebastián Piñera and the Nueva Mayoria's presumptive nominee, Alejandro Guillier, who have each polled in the 20 to 25 percent range in recent months. The 155-seat lower house, and 23 of 50 Senate seats, are also pending in the November elections. Concomitant elections for the executive branch and much of the legislature may ensure the presidential winner has some legislative coattails. But the extreme fragmentation of this year's primaries, the breakup of the old anti-authoritarian coalition, declining voter turnout, and simmering protests raise questions about the political system's ability to manufacture a convincing legislative majority. This may matter less in Chile than in some parts of Latin America, given the broad Chilean consensus around economic policies, but it does suggest that governance under the next president will not be an easy matter. In Colombia, former presidents Álvaro Uribe and Andrés Pastrana are doing everything they can to make certain that the election campaign is polarized around the peace deal, thus continuing the back-and-forth between those critical of the deal and supporters of President Juan Manuel Santos' effort. The initial candidate of Uribe's Centro Democrático party, Oscar Ivan Zuluaga, has had to withdraw due to allegations in the Odebrecht case, but that does not seem to have weakened the "no" side's resolve. The more that fissures around the peace deal dominate the 2018 election cycle, the less likely that other issues will become a matter of debate. In a political landscape in which former vice president Germán Vargas Lleras leads, but no other candidate is yet a clear second-place contender, emphasizing the shortcomings of the peace deal makes strategic sense. But the longer-term upshot may be a deepening of the polarization that emerged around the October plebiscite on the peace deal. The path toward deadlock is by no means certain. But in a context of sluggish regional growth, a massive regional corruption scandal, declining trust in democratic institutions, and the fracturing of traditional political parties, the possibility of gridlock does raise red flags. Influential social scientists have long warned of the perils of presidentialism, with its tendency toward zero-sum politics and regime breakdown. Over the past twenty years, Latin America has largely managed to avoid these perils through coalition-making and consensus-building. But the region's susceptibility to stalemate suggests these may yet become tense times for the region's democracies.

Ford announced this week that instead of building its new Focus – the best-selling car in the world – in a new $1.6 billion dollar Mexico-based plant, it will ship cars for North American customers from China. Ford has promised that its decision won’t reduce its workforce. Yet even if that is true, American workers will lose. Today the compact Focus uses steel from Wisconsin, axles from Oregon, seatbelts from Indiana, grills from Michigan, tire pressure sensors from Tennessee, front-side shafts from North Carolina and Ohio, and the list goes on. With the shift, these raw materials, parts and components will be sourced and put together in Asia, eliminating dozens of U.S. based suppliers, and likely costing many of their employees their jobs. While assembly was scheduled to move from Michigan to Mexico, that would have ensured ongoing American employment – as over 40 percent of the value of vehicles “made in Mexico” comes from U.S. factory floors and U.S. offices. For products imported from China – as the new Ford Focus will be starting in 2019 – this number is a negligible 4 percent. Ford made the decision first and foremost for market reasons. China’s 28 million vehicle market is the largest in the world. And while U.S. demand for smaller cars has faltered, in China it is growing at a robust 4 percent annually. Already nearly half of the million Ford Focus models sold each year go to Chinese buyers. Importing vehicles isn’t an option as the United States doesn’t have a free trade agreement with China, so cars coming from abroad face a stifling 25 percent tariff. View full text of article, originally published in Americas Quarterly.

I am pleased to share the latest report in the Corruption Brief series from the Civil Society, Markets, and Democracy program at the Council on Foreign Relations. In this report, I focus on the case of the International Commission Against Impunity in Guatemala (better known by its Spanish acronym CICIG). In partnership with its Guatemalan counterparts, CICIG has successfully prosecuted senior government officials and achieved important reforms of the legal system. CICIG can be a model for other countries facing the challenge of deep-seated corruption and impunity, but donors must pay attention to ensuring that future CICIG-like bodies are politically independent, adequately funded, and assigned top priority within donors’ broader foreign policy and aid objectives. You can read the report here.