The message for Latin America from the reelection of Chavez

This article was published by the Indian think tank " Gateway House" on 11 October 2012

Link http://www.gatewayhouse.in/voices/blog/gateway-house/message-venezuelan-elections

also by The Hindu newspaper on 12 October

http://www.thehindu.com/opinion/op-ed/the-message-is-that-of-moderation/article3988562.ece

The free, fair and peaceful Venezuelan elections on Sunday, with a clear and accepted outcome has restored the confidence of the world which had some doubts about the vulnerabilities of the Latin American democracies after the constitutional overthrow  of President Lugo of Paraguay in June this year and the unconstitutional removal of Honduran President Manuel Zelaya in 2009.  The immediate and graceful acceptance of the people's verdict by Capriles, the loser and his message of congratulations to Chavez augur well for the future of the Venezuelan democracy.  These are also good for the growing maturity of the young Latin American democracies many of which were restored from military dictatorships in the eighties. 

The reelection of Chavez for the third successive term is an undoubtable proof of the empowerment of the masses of the region. It is the poor and lower middle class who set the political and economic agenda of the region by their election of Leftist leaders. Conscious of this, even the centre- right governments of the region are strongly committed to Inclusive Growth. 

Despite the high stakes involved in the outcome of the Venezuelan elections for outside powers, there was absolutely no external interference. It was purely a Venezuelan decision for Venezuela. Yet another reassertion of the Latin Americans that they are capable and determined that they would decide their destinies themselves, based on their aspirations and perspectives.

On the negative side, there is apprehension that Chavez would use this mandate to intensify his policies of  weakening and abuse of democratic institutions and damage to the private sector business and industry.  Hopefully, he will tone down his radicalism and moderate his approach. It seems logical given his awareness of the clear message from the latest election that (a) his victory margin has come down (b) the uncertainty of his health from cancer  and ( c ) the emergence of Caprilles as a credible alternative to Chavez by securing 45% vote and his reaching out to Chavez's electorate ( unlike his predecessor candidates, who would not even pay lip service to the poor) by reassuring that he would continue the good parts of Chavez's pro-poor policies.  More importantly, Caprilles's promise to take Venezuela to the mainstream path of Latin America which is moving towards pragmatic centre with a balance of pro-poor and pro-market policies is appealing even to Chavistas who are tired of the the excessive radicalism, unnecessary confrontation and poor management of the resources and economy by Chavez.

The second negative score is the reelection of Chavez for an unprecedented third term and his continuous rule for twenty years from 1999 to 2019. This is not a good news for the region which has come out from the forgettable past regimes of Caudillos ( strong men). At present, he is the longest serving Latin American President. In all the other democracies of the region, Presidential term is limited to two or one. Even the Constituition framed by Chavez himself had limited the term to two but he got it amended later to remove the term limit.  This bad example might inspire others like President Correa of Ecuador, President Evo Morales of Bolivia and the Argentine President Cristina, who have dreams of unlimited terms and power. 

Some might fear that Chavez's victory based on his model of ideological polarization might spread further in the region giving rise to more Chavista Presidents. But his model has already reached its peak and is losing appeal steadily and irreversibly in the region. This was evident from the case of  Humala, fellow leftist leader from Peru. Chavez's support was kiss of death for Humala during the Peruvian elections in 2006. Besides asking Peruvians to vote for Humala, Chavez went further and openly attacked  Alan Garcia, the opponent of Humala, calling him as thief among other things. Humala, who was till then leading in the opinion polls, lost the elections unexpectedly since the Peruvian voters were provoked and scared by the aggressive interference of Chavez. In the 2011 elections, Humala got out from the label of Peruvian Chavez, remade himself as the Peruvian Lula, espoused pragmatism and won the 2011 elections. Similiarly when Mujica, the former guerrilla leader of Uruguay was contesting the elections in 2009, the opposition scared the voters calling him as a Uruguayan Chavez. But Mujica got over this defamation by assuring that he would be a Uruguayan Lula and got elected.  The defeat of the radical leftist candidate Obrador in the June 2012 Mexican elections is also a message to the Latin American Left that radicalism is not a ticket to power.  Even Ortega, the authentic Marxist President of Nicaragua has become business-friendly, moderate and pragmatic 

One of the long term achievements of Chavez for Venezuela is the diversification of the trade and economic partnership. Before him, Venezuela was dependent on US for over 80 percent of oil exports. Now China and India have become the second and third largest markets with 30% and 15% of the share.  Reliance has just signed a contract on 25 September for long term purchase of 300,000 – 400,000 bpd ( which is over ten percent of the total crude imports of India). Reliance has also expressed interest in exploration and production in Venezuela. ONGC is already investing in two oil fields there. This is good for the Indian strategy of diversification of oil imports and investment in these days of uncertainties caused Arab Spring and sanctions on Iran. 

The Labor Market Story Behind Latin America’s Transformation

The unemployment rate of Latin America and Caribbean (LAC) reached a historic low of 6.5% in 2011 and "Latin America witnessed tremendous social progress during the last decade", says the October 2012 report of the World Bank entitled " The Labor Market Story Behind Latin America’s Transformation". The report has analyzed the evolution of the labour market in the last decade.

Other highlights of the report:

- the robust growth that the region experienced was remarkably pro-poor, with more than 70 million Latin Americans lifted out of moderate poverty between 2003 and 2010

- More than 35 million additional jobs were created while informality, one of the Latin American trademarks, fell in seven out of the nine countries where it could be measured consistently throughout the decade.

- Strong employment creation during the 2000s was coupled with a sharp decline in the inequality of labor earnings, a fact that stands in sharp contrast with both international trends and the stagnation that characterized the region in the previous decade. 

- Another set of momentous transformations in the labor field concern the changes in the patterns of cyclical labor market adjustments that occurred as LAC entered in the 2000s into an environment of low and stable inflation, finally breaking with its traditional history of home-grown macroeconomic instability. The dramatic decline of inflation in the region led to rising downward wage rigidities, which translated into lower fluctuations of earnings, especially during downturns. 

- During the last two decades Latin America has gone through a major transformation in the educational attainment (measured by years of schooling) of its labor force, a process that is still ongoing. The set of skills brought by Latin American workers to the labor market improved rapidly. In parallel to the steady increase in the supply of more educated workers, the inequality in educational attainment between the rich and the poor population has fallen.

- many LAC countries experienced during the 2000s a steady decline in income inequality, which stands in sharp contrast with rising inequality in virtually everywhere else.  

- Inequality of (labor and non-labor) income fell substantially, by 5 Gini points on average for 15 LAC countries

-The services sector continued to employ an increasing number of workers: its relative share in total employment increased by 2 percentage points;

- In spite of going through the worst international crisis since the Great Depression, real wages did not fall significantly during 2007-2009. While the real wages fell on average by less than one percent in Colombia, Ecuador and Mexico,  they actually increased in Argentina, Brazil, Chile, Peru and Uruguay. 

- Even in the midst of the current slowdown, labor markets in LAC have continued to perform remarkably well. The unemployment rate for the region as a whole closed at nearly 6.5 percent in 2011, the lowest since the peak of 11 percent in 2002-2003. This is not an isolated fact, it is rather a reflection of deep changes in Latin American labor markets that took place in the 2000s and which have, in turn, been part of a broader set of fundamental transformations (including the decline in household income inequality, the consolidation of sounder macro-financial frameworks and associated restoration of counter-cyclical policy capacity, the stunning reduction in poverty and the swelling of the middle classes ) that jointly constitute what the World Bank has labeled the “new face” of LAC. 

Launching of the book " Malgudi to Macondo- the journey of an innocent Indian through seductive Latin America

The book "Malgudi to Macondo - journey of an innocent Indian through seductive Latin America" by R. Viswanathan is being launched by The Indo-Latin American Chamber, Southern India Chamber of Commerce and Industry ( SICCI ) and Engineering Export Promotion Council, Chennai

Time 1000 to 1330 hrs followed by lunch

Venue GRT Grand Days, T. Nagar Chennai

Speakers at the event include

M.Ganapathi, Secretary Ministry of External Affairs
Siddharth Varadarajan, Editor The Hindu newspaper
Ambassadors of Brazil, Peru and Paraguay


contact Dr Ravichandran

Paraguay: Back to Latin America's bad old days?

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25 JUNE 2012

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Gateway House

Paraguay: Back to Latin America's bad old days?

While the ouster of Paraguay’s president is a setback to the young democracy of the country, it shouldn’t be viewed as a repeat of Latin America’s history of coup d’états. The painful process of democratic maturity will continue, albeit slowly.

BY

 Ambassador R. Viswanathan

FORMER INDIAN AMBASSADOR TO ARGENTINA, URUGUAY AND PARAGUAY

The hasty impeachment of Paraguay’s President Fernando Lugo by the Congress on June 22 has brought back memories of the bad old days of Latin American history marked by coup d’états. This is the third overthrow of a democratically-elected president in the New Latin America, which had started its confident march on the path of democracy, seeking a new destiny in the twenty-first century. The previous cases were the ouster of Venezuelan President Hugo Chavez in 2002 and Honduran President Manuel Zelaya in 2009. The difference in the case of Paraguay was the absence of two critical ingredients of a classic Latin American coup: military and the Big Brother from the north, the U.S. This one was a constitutional coup staged by an overwhelming majority of the elected representatives of both houses of the Congress. The lower house voted 76-1 and the senate 36-4.

The impeachment, however, is not surprising. It was being plotted from the very first day of Lugo’s assumption of office in 2008, after his historic victory over the mighty right-wing Colorado party which had ruled the country continuously in the previous sixty-one years. What was surprising was that the Colorado oligarchs had allowed Lugo, a leftist Bishop of the Poor, a political outsider and new comer, to win in the 2008 elections. Their overconfidence and underestimation of Lugo, coupled with the division within the party leadership, did them in.

The Colorado party is not just a political party. It is the strongest institution in Paraguay with a total stranglehold over the political and economic power system. Even the civil servants and diplomats are members of the party. The Colorados were therefore determined to recover power by any means and wanted to nip in the bud the unprecedented expectations raised among the poor people of Paraguay by the leftist Lugo, who promised to reform the system. Using their majority in the Congress to block his proposals, they didn’t let Lugo implement any of his progressive policies; they paralysed his administration by internal sabotaging with their loyal bureaucrats. Lugo simply did not have the political skills or a solid political party to deal with the ruthless Colorado machinery. In addition, his own Vice President Federico Franco – sworn in as President only a day after the coup – has been conspiring with the party to topple Lugo. Franco is the leader of the liberal party, the second largest after Colorados. He seems to have made a deal with the Colorados, who have let him become president for one year, up until the next elections set for April 2013, when they expect him to cede power.

The real military coup attempt was in 1996, when the Army Chief General Lino Oviedo threatened to overthrow the civilian government. The foreign ministers of the other three Mercosur countries – Argentina, Brazil and Uruguay – flew to Asuncion immediately and told him that if he took over, they would expel Paraguay from Mercosur, which accounts for three-fourths of Paraguay's trade. The General backed down. This time, UNASUR, the union of the twelve South American countries, sent a group of foreign ministers to Asuncion but the Paraguayan Senate paid no heed and passed the impeachment resolution quickly. All the countries of the region have condemned the ouster of Lugo. Argentina and Brazil have recalled their ambassadors. Besides non-recognition of the new President, there is threat of isolation and expulsion from the regional groups. Paraguay has already been suspended from the bi-annual Mercosur summit to be held in Argentina this week. 

The chances of restoration of Lugo to the presidency do not seem to be bright. First, Lugo himself has given up, saying that he would abide by the decision of the Congress, and promptly vacated his office. Secondly, Lugo has lost his personal moral ground after the recent scandals caused by his admission of affairs with women when he was a bishop and his acceptance of fathering of children with at least two women. Thirdly, he does not have adequate political machinery to bring the masses to the streets and threaten the Congress or the new President. Lastly, the Brazilians, who have the maximum clout in Paraguayan affairs, will not go out of their way to help Lugo. He had annoyed Brazil by forcing them to pay more for the electricity they import from Paraguay and claimed it as one of his major achievements. Brazil will also keep in mind the thousands of Brazilian farmers (who dominate the soya cultivation) settled in Paraguay and whose interests were under threat from the land reform proposals of Lugo. Brazil has taken the position that they would go by Mercosur and Unasur decisions. But Unasur, which is meeting at the summit level on 27 June in Lima, will not go beyond a point to confront the elected Paraguayan Congress which has done the impeachment with an overwhelming majority. 

It seems that the new President Franco might ride out the isolation and manage to finish his term, in the same way as the vice president of Honduras did after the coup. The Colorado party is likely to come back to power next year and continue its business as usual, including the continuation of the dubious distinction of keeping Paraguay as the only country which does not have a system of personal income tax. The poor masses of Paraguay will have to wait for the next Messiah. 

While the ouster of Lugo is a setback to the young democracy of Paraguay and a disappointment to its masses, it should not be seen as repetition of history for Latin America as such. The region has irreversibly changed its paradigm and is set on the foundation of democracy. What happened in Paraguay is a damage to the super structure and a bump in the road. It is part of the painful process of the democratic maturity in some countries of the region. 

The ouster has significance for India as well: President Lugo visited New Delhi last month and met the Indian Prime Minister and the President. During my meeting with him before the visit, Lugo expressed his admiration for Indian democracy and wanted to learn from India’s example.  It is a pity that he did not get time to put into practice whatever he had learnt.

R. Viswanathan was Indian ambassador to Paraguay, Uruguay and Argentina from October 2007 to May 2012 and is now retired. His email: rv@rviswanthan.com

This article is part of Gateway House’s Ambassadors’ views section, a collection of articles featuring eminent Indian diplomats.

Ali Rodrigues is the new Secretary General of UNASUR

Ali Rodrigues Araque, the Venezuelan Electricity Minister took over as the new secretary general of UNASUR (union of south american nations) on 11 May in Bogota. The new secretary general pledged to work for energy integration and the preservation of the region’s natural resources. 


Ali Rodrigues replaces Maria Emma Mejia, a former Colombian Foreign Minister (1996-1998) who was SG in the last one year. The term of the secretary general is one year.Mejia and Rodríguez were elected in 2011 to occupy successively, a year each, the post of Secretary General of Unasur following the death (October 2010) of the first holder of the post, former Argentine president Nestor Kirchner.


Ali Rodrigues, a former guerrilla leader, has held a number of cabinet posts in the government of Chavez. I had met him in Caracas when he was Minister of petroleum. He is a mature and pragmatic statesman of Venezuela which has too many extremist leaders on the left and right.


The ceremony was witnessed by the Colombian and Paraguayan Presidents. Preceding the ceremony, the twelve Foreign ministers of Unasur held an extraordinary council meeting.


Unasur was formed in 2008 as a bloc of all the 12 countries of South America -Argentina, Bolivia, Brazil, Colombia, Chile, Ecuador, Guyana, Paraguay, Peru, Surinam, Uruguay and Venezuela. The Presidency of Unasur rotates every year and a summit meeting takes place once a year. The Unasur secretariat is located in Quito, Ecuador.  The current President is Paraguay who took over from Guayana in October 2011.


Unasur has ambitious agenda for integration but unfortunately has not made serious efforts to implement its agenda. President Santos admitted, in his speech at the ceremony, that when Unasur was first created he was sceptical to the point of asking whether the new organization was going to create more problems than benefits. He confessed that he was wrong in his perception and expressed his optimism for the future of the group. I share his optimism.


More information on Unasur in 
http://www.unasursg.org