Political Situation in Latin America: January 2014
Feb-01-14 - by Rosendo Fraga

1. The CELAC Summit raises - given its heterogeneity - the question of whether it is something more than a fact of geography and language. When asked what is Latin America, French political scientist Alain Touraine said that it is the "extreme west, but west in the end", i.e. the idea of periphery with respect to a well-defined center. Over the past three decades Latin America has made progress in terms of democracy, although some advances are only limited to it as a mechanism to elect authorities and representatives, and not in terms of a system of life and political philosophy. In the first decade of the century, the region has achieved strong growth, although in general linked to the high price of materials it exports, and therefore vulnerable, as already evidenced partly in the second decade of the century. Socially, in parallel with the economic growth poverty and unemployment have gone down, and the middle class has increased. But the role of the region in today's world is closely linked to being a supplier of raw materials to the developed world and also to the emerging nations (particularly to China). The region is not a priority, but this is largely because it has a low level of conflicts. It is not important because it is not a threat, unlike what happens with certain regions of the Middle East and Africa.

2. Towards the future, the challenge is to resolve the pending tasks left by a decade of growth, relative political stability and growth of the middle class. Politically it is a matter of strengthening the institutions, limiting the person-centered style of ruling and improving the effectiveness of the State compared to the increase of organized crime and drug trafficking. In social terms, reducing the high levels of inequality and improving education and public health. Economically, diversify the productive structure and reduce excessive dependence on the price of raw materials. One of the biggest advantages that the region has in the modern world is its miscegenation. It is possibly the region with greater mix of races of the world. Both Brazil and Mexico - two of the region's largest countries which themselves account for two-thirds of it - are essentially mixed societies. In a globalized world this is an important advantage today. Based on that, it is a homogeneous region without major conflicts relevant in race or religious terms, with a common culture, a similar language and only two languages with the same linguistic origin, Spanish and the Portuguese. The information that is generally published in the Latin American media over the region is low. They are more attentive to what is happening in the developed world, China and conflict-laden regions of Africa and Middle East, than what is happening in neighboring countries. In the case of Argentina, information about the countries of the region is relatively scarce and information about the country in the media of other countries is also limited. The Latin American identity is expressed first and foremost through culture. There is a common history, a common language, a common religion and social structure, though in each of these variables there may be singularities: Chile and Haiti are very different or Uruguay and Bolivia. But Brazil and Mexico give certain homogeneity to the region and determine its averages. The effects and consequences of the Hispanic phenomenon in the United States evidences that Latin America is more a cultural than a geographical entity. 

3. At the same time, Argentina lives a crisis of economic credibility with a sharp decline in reserves, a major devaluation and a climbing inflation that nears 5% monthly. The President of the country is in Cuba to attend the Summit of the CELAC. She arrived several days earlier, lunched with Fidel Castro and met with her counterpart from Brazil. The Argentine economy minister’s (Axel Kicillof) thesis is that his country is the victim of a great move of the international financial system which seeks to destabilize it to re-establish the "neoliberal model" of the 1990s. To support these theses, the President of the Argentine subsidiary of oil company Shell was claimed to have initiated the exchange rate run last week. The idea that the Government of Cristina Kirchner conveys in Havana is that an economic downturn of Argentina may trigger a regional upheaval or even affect emerging nations at global level. 

4. The question is that from 2013 doubts about the emerging countries have been raised. The acronym BIITS (Brazil, India, Indonesia, Turkey and South Africa) has been coined in markets to refer to the successful emerging economies that have begun to generate questions. They pushed the presence at this year’s Davos Forum of the Presidents of Brazil, Mexico, Colombia, Peru and Guatemala, in an effort to prevent the enthusiasm of global investors throughout Latin America from losing steam. So far, nobody in the world has judged Latin America through Venezuela. Not even populist governments of Bolivia and Ecuador are economically tied to the Chavez regime, even if they are political allies. The question is if the same will happen with the Argentine crisis or if this is occurring at a time in which doubts and uncertainties about the region and the emerging world may increase. The 2001-2002 crisis showed that Argentina is a particular medium country and that its problems cannot get globalised. Accordingly, it is likely that this happens again and that the world has this interpretation. But the situation in Brazil is not easy and a convergence of Venezuelan failure with an Argentinean crisis and doubts about the largest country in Latin America is not a good scenario for the region. 

5. In conclusión:

a) The CELAC is the first regional attempt to create an area of political exchange that groups all countries of Latin America and the Caribbean not including the US and Canada.

b) The meeting held in Havana is the second summit of presidents of this group. No major progress is made but its main virtue is that it is actually held despite the heterogeneity of the region.

c) The economic crisis suffered in Argentina takes place when doubts are raised about emerging countries, the situation in Venezuela becomes critical and Brazil is complicated.

d) But the Argentine crisis is unlikely to trigger regional or global problems.