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Latin America: Events in October

By Thiago de Aragao.

Beyond any doubt, the election of Cristina Kirchner in Argentina stood out as the most important political event last October.

The re-election of the Kirchners means a downward turn for Argentinean democracy and an upswing of populist-family politics in the country. Much to the surprise of those who were anticipating an exciting dispute for the country's reins, the campaign revealed a candidate who scarcely had to show any skills because the opposition failed to create a single opportunity with which to corner her.

Campaigning ran very smoothly for Cristina Kirchner. While her opponents bickered about each other, a confident Cristina strode ahead working as though she was already the country's top official. Cristina's international trips, during which she met with leaders such as Angela Merkel (Germany), Nicolas Sarkozy (France), Lula and Bill Clinton, helped consolidate her image as the country's future president.

However, Kirchner's victory doesn't necessarily mean in victory for Argentina. Her administration is likely to turn out a highly faithful continuation of her husband's government. Some occasional changes may be seen throughout her office, but any such change will have more to do with Cristina's personal characteristics than necessarily with her management style.

Inflation could well be one of the major issues that Cristina will have to face first. While Nestor put a great deal of energy in assuring both the population and foreign investors that the inflation index fluctuated somewhere between 7% and 9%, independent non-government experts pointed that inflation was in fact between 17% and 20%. This major difference will not be easily masqueraded in the beginning of 2008 as it was during 2007. Cristina's popularity may be in for a plunge if the Argentineans perceive prices as running upwards and this situation reaches an unbearable stage. In Buenos Aires, the one and only province where Cristina didn't win the poll, the pressure exerted by the opposition and people surveillance will likely be greater.

The energy crisis is day by day becoming a reality in Argentina and can also prove a major problem. The energy supply has reached its production limit and rationing schemes have been put in force more often than not. Gas imports from Bolivia are expected to increase, as is the overall instability in the neighbouring country. If Bolivia confirms predictions and turns into a powder keg, the energy crisis will consolidate in Argentina, the country's industry will be suffer greatly and Cristina will incur great difficulty maintaining the stability of the economy, even artificially, as her husband had been doing so far.

As far as it affects Brazil, one shouldn't expect significant changes. After all, the family is the same and Nestor will have a key role in Cristina's administration. However, Cristina's ability to talk is much greater than that of Nestor. We may expect tangible improvements in the Brazil-Argentina dialogue in this respect.

VENEZUELA

Discussions about constitutional reform dominated the landscape in Hugo Chávez's country. Despite much apprehension around the proposed reforms, we now know it will not introduce anything new beyond what has been disclosed. The voting carried out in Venezuela's National Assembly means practically nothing in terms of legitimacy as 100% of the representatives are Chávez partisans.

Nevertheless, an increase in strength and mobilization was noticed in student protests against the government last October. Even though the rallies were sporadic in fashion, they represent a solid threat to Chávez's stability and institutions. The following deserve attention among other measures of lesser importance:

  • Unlimited re-election.

In the centralized, one-party-only regime that Chávez is building, not only will he dominate the totality of the representatives at the National Assembly but his ability to perpetuate himself in power will be restricted only by his own appetite. And even if Chávez eventually leaves office, he will still hold enough power to appoint his successor, will invariably come from the ranks of the United Socialist Party of Venezuela (USPV).

  • Increase of the presidential term from six to seven years.

This measure is engineered to mitigate the impact of the unlimited re-election proposal. An increased presidential term means greater spacing between elections, which can reduce potential tension caused by the opposition. This typically happens during electoral campaigns. Chávez intends to spend as little time as possible in campaign for re-election since this situation would attract a barrage of criticism, both internal and external.

  • Elimination of central bank autonomy.

Following the rationale of concentrating powers in the Executive branch, there would be little sense in having a legitimating Legislative branch if the Central Bank was allowed to go on formulating its own policies. By bundling autonomy up in his own hands, Chávez will be sufficiently empowered to intervene in the economy at his own convenience. We know that in Latin America political scandals tend to do little harm to a leader's popularity if the economy is solid, or at least appears to be solid (as with Argentina).

  • Lowering the work hours from eight to six hours a day.

Generally speaking, Chávez's package carries a stigma on account of the increased amount of powers he will concentrate in himself. The reduction in the number of work hours is a true populist measure engineered to soften the negative aspects of other measures in the package. Since the voting and the referendum concerning the measures will be carried out in one single instance, by reducing the number of work hours Chávez ensures that classes C and D (his main electorate) will vote yes and "forget" about the other more important topics.

Not surprisingly, the project has been approved via three voting sessions at the Constitutional Assembly. Now it has only to receive the population's approval via referendum. Communication vehicles in Venezuela have refrained to criticize "Chávez's Big Package" after the RCTV episode, a stance that reduces opportunity for the opposition to show some strength or organisational power.

CHILE

Argentina's President Elect Cristina Kirchner wouldn't wish to follow the same path of her Chilean counterpart, Michelle Bachelet. Bachelet's popularity has been gradually decreasing as the government appears to have lost track in some alliances. Joaquín Lavín, Bachelet's adversary in the last presidential election, is to join the government in a portfolio yet to be announced. With this manoeuvre, Bachelet intended to tranquilise and "silence" the opposition, which has gained political momentum since the collapse of the public transportation system in Santiago early this year.

The whole plan actually backfired, after all. The bringing of Lavín into the government was enough to destroy the powerful and solid figure Bachelet had built as Minister of Defence during Ricardo Lago's administration. This move has been perceived by society as an indication that Bachelet is in betrayal of Concertación's social democratic progress goals and of her going into the trap of political collusion.

Unlike other Latin American countries, the solid Chilean economy hasn't been enough to cushion the impact of the many political crises upon the government. While many find that Andrés Velasco's work as Minister of Finance has been positive, his success isn't attached to Bachelet.

The likeliness of an energetic collapse in the short- or mid-term may well bring yet more political turmoil for Bachelet. This scenario would certainly have an adverse effect on the economy as Chile's industrial complex is highly dependant upon Bolivian natural gas imported via Argentina. The continued threats by Bolivia demanding that Argentina's government stops reselling gas to Chile may prove successful anytime now. In this case, Chile would have to carve out a quick alternative to avoid that the ensuing drop in its industrial production will considerably harm the longstanding economic stability enjoyed by the country.

COLOMBIA

Never before in the recent history of Latin America has a president enjoyed such a strong respectability both internally and externally as Álvaro Uribe. Uribe is showing his other Latin American counterparts that confronting the guerrilla, modernising industry and keeping the economy in a healthy state can bring inconceivable advantages.

Surprisingly enough, Uribe hasn't been able to impart his charisma to any candidate appointed by him. His party emerged largely victorious in the last electoral dispute for Colombian municipalities, but failed to win the municipality of Bogotá. In addition to being the capital and most important city in the country, Bogotá is the poster child for Uribe's administrative triumph.

The defeat in the capital can be explained by a number of reasons. Although Uribe has been keen to punish involvement with paramilitary groups, the ties of many of his officials with such groups generated a rather negative impact. Uribe has managed to shield himself as his gestures refute accusations by adversaries that he too would have his ties with paramilitary forces. In addition, Uribe's personal history (his father was assassinated by FARC guerrillas) defuses and prevents accusations of paramilitary connections from gaining much ground against him.

Despite the fiasco in the capital, the implications haven't been significant. Uribe will continue strong and firm in his administration but contrary to the acclamations for a third term, the president has made it very clear that any such movement would be a mortal wound to the country's democracy.

MERCOSUL

Approval of Venezuela's entry in Mercosul by the Committee on Foreign Affairs of the Brazilian House of Representatives marked an important event in October. Arguments voiced by many pro-government representatives and businessmen with interests in Venezuela proved decisive for the approval.

Now the bill has to be approved in the Senate, a task that will not be easily accomplished. The government's top priority now is the CPMF and the opposition in the Senate is well prepared to prevent Venezuela from entering the MERCOSUL.

The fact that the government doesn't hold the majority of senatorial support and that José Sarney, one of president Lula's key allies, has already taken a stance against Venezuela's entry in the bloc will likely make things much worse.

thiago@arkoadvice.com.br

+55-51-7813-3277