The U.S. recovery and the slowdown in China have already had effects on Latin America. Though we don’t yet know the future impact of these processes, they are certain to grow in the coming years. The new international economic winds are detrimental for commodity-exporting countries that benefited most from China’s accelerated growth over the last decade. Among them, the damage will be greatest for those that depend on the export of petroleum and minerals, and less for food producers. In Latin America, due to its close economic links to the United States, Mexico will likely be one that most benefits from the new winds. Brazil, in theory, wouldn’t fair too badly if it weren’t for the mistakes that have accumulated over recent years.
To use an image that has become cliché, when the tide is lowest you find out who is swimming naked. The weaknesses of countries like Argentina and Venezuela have long been exposed – and biggest being political. They are countries fractured into antagonistic parts. The Argentine situation is less dramatic and more nuanced. Still, within its political landscape, it is difficult to identify the forces that might emerge to turn away from the path of decadence Argentina has followed for decades. Venezuela, on the other hand, is now a case of acute crisis which these new winds will only tend to aggravate.
South American countries on the so-called Pacific Rim are in a far more favorable situation. Chile, Colombia, and even Peru, knew how to take best advantage of the bonanza over the last ten years. However, one shouldn’t underestimate the challenge this group of countries will have adapting to the new global economic context, particularly Peru.
In Chile, the likely return of Michelle Bachelet to the presidency in the November elections point toward a new political balance in the country. In the fifth government of the Concertación [coalition], the pendulum will move to the left compared to where it is today. The agenda will include fiscal reform to boost public funding of education, and political reform to give more room for parliamentary representation to smaller parties, particularly the Communist Party. The political polarization on the right, now weakened, will increase. The decline of copper exports will reduce the fiscal maneuvering room of the new government. Nothing, however, indicates severe problems in the political and economic management of Chile in the coming years.
In Colombia, for good and for ill, the situation is similar – but the risks are greater. Negotiations with the Revolutionary Armed Forces of Colombia (FARC) are now entering a decisive phase. With an agreement on land reform settled, the first major issue has been tackled. However, the government and FARC have entered rocky terrain in discussions over the ways and means of incorporating the guerrilla group into the democratic game, and is this succeeds, their disarmament. As a candidate for reelection in 2014, President Juan Manuel Santos is putting everything he has into the success of the negotiations. If they produce results, Colombia will have taken a gigantic step toward consolidating itself as the second most important South American country. The end of a 50-year guerrilla war, which at one point came to dominate a third of the country’s territory, will greatly offset any difficulties brought on by the new winds of the world. Not only for what it will represent politically, but also for the opening up of productive elements that are currently under FARC and narco-trafficker control (land and peasants). The risks and uncertainty of the voyage, however, are not negligible.
By Sergio Fausto*
Translated By Brandi Miller
*Sergio Fausto is Executive Director of the iFHC [Fernando Henrique Cardoso Institute) and a member of GACINT-USP [Foreign Affairs Institute of the University of São Paulo]. E-MAIL: SFAUSTO40@HOTMAIL.COM. .