Friday, March 18, 2016

Latin America's turn to the right and American policy

Tom Jobim said that Brazil was not for beginners, and he was right. The Brazilian economy is in free fall. As I noted before the causes are strictly internal, and not related to any fiscal problem. Inflation was low, even if closer to the top margin of the inflation target. Devaluation of the currency has led to higher inflation, on the low two digit level, just slightly above 10%. At the same time, fiscal contraction has led to a collapse of about 3.5% of GDP last year. There is little need for discussing that again. Nothing much has changed.

What I said about corruption in that not so old post from last December still stands. In short:
(1.) there is no evidence that corruption increased;*
(2.) corruption is not limited to the government or the parties in its coalition;
(3.) the central issues related to corruption are the structural ones, the ones that make it a necessary feature to manage the country (and those have been there for a long time).
Things have, however, got out of control in the last month, and the judiciary (which is as corrupt as other institutions in Brazilian society, no more, no less) has been clearly used for political purposes. The investigation of accusations related to members of the government coalition and not of those in the opposition, and the illegal questioning and then the bizarre request by prosecutors to jail ex-president Luiz Inácio Lula da Silva (with citations of Nietzsche, and Marx and Hegel, rather than Engels) have politicized the corruption investigations.

In addition, this has gone hand in hand with the establishment of impeachment procedures against the current president, Dilma Rousseff. The basis for the process is the delay in the payments to public banks (the so-called 'pedaladas'), which in the view of some imply the government is borrowing from public banks, which is against the Law of Fiscal Responsibility. Note that this was a common practice, even in previous governments, was never questioned, and can hardly be considered a crime that requires the impeachment of the president. So far nothing has connected the president to the corruption investigations, in contrast to her opponent in the last election, Aécio Neves, whose name has appeared in the same investigation for which Lula has been questioned and almost jailed. Many think that this is a thinly veiled coup d'état. It is hard to disagree.

I should add that these events in Brazil, a pivotal country in the region, takes place at the same time that in Argentina a right of center party, with members with ties to the last dictatorship, that has promised to stop investigations into human rights abuses, won narrowly an election. That, in Venezuela, political maneuverings to shorten the mandate of Maduro are in place, while in Bolivia, Evo has lost the chance for re-election.

In the middle of the retreat of the left in Latin America, Obama will basically go down to Argentina and Cuba to cheer about the rightwing turn in the region (note that the Post is wrong, this is not a swing to the center; these are radical right-wingers; on the policies pursued by the Argentine government go here; note that the main beneficiary of the agreement with the Vultures is Paul Singer, a backer of Marco Rubio). And the president that once said he wanted to revise NAFTA, will push for free trade with Argentina. If one adds the defense of Kissinger in one of the debates by Hillary Clinton (note that Bernie not only defended Cuba, but also cited the coup against Allende as an American mistake, part of the infamous Monroe Doctrine that he criticized), and her own ambiguous history with free trade, one cannot but be concerned about the American influence in Latin American affairs, even if Democrats remain in power. The continent, like Brazil, is not for beginners.

* Note that most measures of corruption are related to subjective surveys, not objective measures. Also, the fact that more people, including some wealthy contractors and many politicians have been jailed, may indicate a healthy reduction of impunity rather than more corruption.

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