With Nicolás Maduro’s narrow victory in Venezuela’s presidential election still being contested by the Venezuelan opposition, even though he has already been sworn in as president, there is a growing feeling that, with a majority of only 50.7 per cent of the popular vote, the self-styled ‘son’ and heir of Hugo Chávez may well be in for a rough ride. Uncertainty, if not instability, would appear to be on the menu for some time yet in Venezuela, even as opponents of the chavista regime are predicting a crisis of governance, with an inexperienced leader at the helm of a clearly divided country and economic woes on the rise. Governments in Latin America and the Caribbean will no doubt be watching closely as events unfold.
It will be recalled that in the years immediately following President Chávez’s assumption of office in January 1999, there was talk of a “pink tide” sweeping Latin America, with leftist governments holding sway, at one time or another, in Argentina, Bolivia, Brazil, Chile, Cuba, Ecuador, El Salvador, Honduras, Nicaragua, Paraguay and Uruguay. Indeed, as the neo-liberal policies of the Washington Consensus fell into disrepute, the shift towards more progressive social policies and, in some cases, outright populism became more pronounced.
Mr Chávez was, of course, able to capitalise on the windfall of high oil prices and growing anti-American sentiment to establish the Bolivarian Alliance for the Peoples of Our America (ALBA), encompassing the Latin nations, Bolivia, Cuba, Ecuador, Nicaragua and his own Venezuela, as well as the Caricom countries of Antigua and Barbuda, Dominica and St Vincent and the Grenadines. With his demise and with serious doubts about the economic sustainability of his ‘Bolivarian revolution,’ the whole project may now be facing difficult times ahead.
Over the past few years, the Latin American Left, as a whole, would appear to have lost some ground, with a centre-right government taking power in Chile in 2010, and the leftist presidents of Honduras and Paraguay being the victims of constitutional coups in 2009 and 2012 respectively. But while the Left may not be in full retreat, only the more radical Latin, ALBA countries would now appear set on continuing with populist economic policies.
The experiences of Argentina and Venezuela should, however, give pause for thought. In the former, populist spending and dependence on the export of commodities have placed the country in a precarious economic situation. But the picture is much worse in Venezuela, where Mr Chávez’s personal brand of populism is responsible for the highest inflation rate in the world, crumbling infrastructure and shortages of basic goods, all of which is making life increasingly difficult for everyone, but particularly the poor, who were intended to be the beneficiaries of chavismo.
On the other hand, Chile has shown, under both centre-left and centre-right governments, that it is possible to resist the populist temptation, by pursuing a mix of free trade policies and using profits from the export of its main commodity, copper, to finance economic diversification, research and development and, notably, social programmes. In Colombia, President José Manuel Santos, an adherent of ‘the third way,’ is working to transform the economy into a knowledge-based one rather than one dependent on raw materials. And Peru, according to The Economist, “is enjoying a virtuous circle of economic growth,” with foreign investment and the commodities boom allowing for record levels of public investment. Significantly, during President Chávez’s 14 years in power, these economies grew more than Venezuela’s, and Chile and Peru were also more successful in reducing poverty, with Colombia not far behind, without having recourse to short-term, populist policies.
Leftist populism tends to be premised on nationalisation of key industries and protectionism, with state-sponsored social programmes that are little more than handouts, all of which tends to lead to managerial incompetence, low productivity, unsustainable levels of debt, runaway inflation, corruption and, eventually, widespread discontent. In the not too distant past in Latin America, this was, more often than not, a recipe for social unrest and military intervention. But, with the general consolidation of democracy in the continent, this historical pattern need not be repeated, especially as the trend appears to be turning towards efficiency, fiscal responsibility and long-term investments in infrastructure and public services, particularly health and education, with sensible social safety nets – such as one in Brazil with aid to poor families dependent on them sending their children to school – as the best way to guarantee economic growth and make democracy sustainable.
