Two South American leaders in a race to the bottom
by Paul Durand
The Globe and Mail
March 18, 2016
Two South American presidents are in danger of going down. Which will be first?
This is significant and puzzling, because Brazil and Venezuela are, respectively, the most influential, and (potentially) the richest countries on the continent. How has it come to this?
In Brazil, endemic corruption, along with near-total impunity, has finally caught up with the governing elite.
Brazilians, long inured to government theft, payoffs and political fixing, have had enough. The frustrations of daily living, exacerbated by severe recession and government mismanagement, have brought massive crowds to the streets – not thousands, but millions. Overspending on the World Cup and the Rio Olympics rubbed salt into their wounds, at a time when basic services are breaking down, poverty is on the rise and the Zika virus is further undermining confidence in government institutions.
Ms. Rousseff is unpopular, having nothing like the rock-star status of her predecessor, Luiz Inacio Lula da Silva. But now even the legendary “Lula” has been tarred by scandal. Under investigation for corruption by state and federal authorities, he could be more a liability than an asset for the beleaguered President.
Ms. Rousseff may be helped by the extent of the corruption, in that those seeking to have her impeached are also tainted, as are most potential replacements (this, admittedly, is a weak reed to lean on). The masses in the streets just aren’t having it this time; they’re demanding a complete, top-down cleanup of the political system.
All this matters: Brazil has by far the largest economy and population in South America, and has long provided regional leadership. This has not always been for the good; for example, its insistence on economic autarky – domestically and in its Mercosur partners – has closed and hobbled its economy, further enabling corruption, while keeping countries such as Canada at arm’s length. The stakes are high; how Brazilians resolve their crisis will have a lasting impact on their democratic future and that of their neighbours.
Venezuela is a different, more disturbing situation, with social cohesion disintegrating and violence on the rise. Blessed by a bounty of natural wealth ranging from oil to minerals to agricultural potential, the country had it all – but excessive economic populism designed to placate the poor ended up producing a dysfunctional economy.
This process has been under way since the advent of the charismatic Hugo Chavez in the late 1990s.
His policies were in many respects well-intentioned, meant to help those who had for decades been ignored by a governing elite that was politically and economically corrupt. Mr. Chavez implemented what he called “Bolivarian socialism,” using Venezuela’s oil wealth to finance extensive social programs. Unfortunately this and other unorthodox policies stifled the economy, which became completely dependent on oil revenues and imported goods. It was not sustainable.
Compounding the damage, Mr. Chavez exported the model to his neighbours, sowing discord in the region by buying off dependent countries with subsidized oil, organizing them into an anti-American bloc. This could all be held together as long as Mr. Chavez’s charisma, combined with soaring petroleum prices, would last, but neither did. When he died in 2013, he was succeeded by his vice-president, Mr. Maduro, a plodding, inept leader.
Without the combined glue of Mr. Chavez’s personality and inflated oil revenues, the experiment quickly spiralled downward, to the wreckage we see today. Venezuela now borders on the definition of a failed state. The government has lost control of the economy, of security, of society in general. The situation is becoming intolerable, and there are increasing indications that the government will be toppled, whether by opposition forces driving Mr. Maduro from office through quasi-constitutional means, or by military coup.
So place your bets, but don’t expect any winners.
Paul Durand is a former Canadian ambassador to several Latin American countries and a fellow with the Canadian Global Affairs Institute.