Home The Washington Diplomat December 2019 Inequality, Corruption, Other Grievances Fuel Unrest Throughout Latin America

Inequality, Corruption, Other Grievances Fuel Unrest Throughout Latin America

Inequality, Corruption, Other Grievances Fuel Unrest Throughout Latin America

a2.latin.america.march.santiago.storyFrom Santiago to Quito to La Paz, massive and often violent protests sparked by contentious elections, constitutional crises and worsening inequality have thrown a good portion of Latin America — including several normally stable countries — into disarray.

Suddenly, it seems, incumbent presidents are being challenged on the streets and at the ballot box. Pundits are scratching their heads trying to understand not only what’s happening throughout the region, but why it’s happening now and seemingly all at once.

The latest violence has erupted in Bolivia, where, as of press time, over 30 people have died in street protests there between security forces and coca farmers loyal to ousted President Evo Morales. The longtime populist leader, who accused his enemies of staging a “right-wing coup,” resigned and fled to Mexico after the Organization of American States revealed evidence that vote-rigging had tainted his Oct. 20 election victory.

“I am concerned that the situation in Bolivia could spin out of control if the authorities do not handle it … with full respect for human rights,” warned Michelle Bachelet, the U.N. high commissioner for human rights. Bachelet is former president of neighboring Chile, which itself has seen weeks of protests and violence that have left at least 25 dead.

At a recent event titled “Latin America’s Autumn of Discontent” — itself a misnomer since it’s currently spring, not autumn, in the Southern Hemisphere — three experts named Michael joined a fourth expert, Monica de Bolle, to make sense of it all.

“These are turbulent times in Latin America,” said Michael Camilleri, director of the Peter D. Bell Rule of Law Program at the Washington-based Inter-American Dialogue, which hosted the Nov. 6 panel. “A seemingly innocuous fare hike in the metro system of Chile led to the most severe outbreak of violence in decades, while elections in Argentina and Uruguay promise to reshape the region’s political map, protests continue in Haiti, not to mention horrific news from Mexico that highlights the country’s losing battle with organized crime.”

Michael Penfold, professor at Venezuela’s Instituto de Estudios Superiores de Administración, noted that the current unrest isn’t the first time Latin America has gone through such convulsions.

a2.latin.america.cathedral.subway.story“Two or three years ago, we had a wave of street protests in Nicaragua which were based on fiscal austerity measures. There were also protests in Venezuela, Brazil and Chile,” he said. “Perhaps what’s striking about this time is the size, momentum and scale of these protests.”

So what’s behind the turmoil? While the unrest has erupted in each country for different reasons, the common threads driving much of the protests seem to be rising inequality; a commodity boom that raised economic expectations and a bust that dashed them; an out-of-touch governing elite; rampant corruption; and the erosion of democracy.

The latter led to the downfall of Morales, Bolivia’s first indigenous president, who had been widely popular for ushering in a period of economic growth that embraced pragmatic, market-friendly policies while also improving living standards for millions of previously disenfranchised Bolivians. But when Morales, who came to office in 2006, defied the constitution and decided to seek a fourth term, people had had enough. After weeks of protests following his dubious election victory, the military and police abandoned Morales and he resigned.

However, Morales’ supporters have staged their own protests since his ouster, blocking food and fuel from reaching the capital and clashing with security forces who have opened fire on them. The new government is scrambling to hold new elections, but so far the violence has continued unabated.

“The consequences of [the recent violence in Bolivia] are huge because they highlight this regional trend of indefinite re-election. This is extremely problematic for governance,” said Penfold. “The real issue with Bolivia is the constitution. Was it right for this president to run for re-election again? And which country will be the next to explode?”

Surprisingly, that seems to be Colombia, where demonstrators have taken to the streets to protest a raft of grievances, including potential labor and pension reforms by right-wing President Iván Duque, the killings of community activists and the failure of Duque to fully implement a peace accord with FARC rebels. The protests, which have begun to take a violent turn, have shaken a country that in recent years had been held up as a model of economic transformation.

Likewise, Chile was once considered the region’s poster child for its economic prosperity and political stability. But after President Sebastián Piñera proposed a modest increase in subway fares, deadly protests broke out in Santiago, snowballing into the worst crisis to hit the country since its return to democracy in 1990. The uprising revealed how Chile’s impressive economic growth has failed to address the country’s deep-seated inequality.

Similarly, in Ecuador, pocketbook issues triggered violent protests against IMF-designed austerity measures that would have doubled fuel prices through the elimination of subsidies. In the face of riots led largely by indigenous people who would be hit hardest by the fuel hike, President Lenín Moreno was forced to move his government from Quito, the capital, to coastal Guayaquíl, and backtrack on his plan to end the four-decade-old fuel subsidy.

Moreno accused Venezuelan President Nicolás Maduro of conspiring with Ecuador’s former leftist leader, Rafael Correa, to activate a “destabilization plan” with help from Cuba. Correa, who’s living in self-imposed exile in Belgium, laughed off such suggestions, telling Reuters that, “People couldn’t take it any more. That’s the reality.”

a2.latin.america.bolle.storyBut others blame Correa for contributing to that reality through years of overspending that blew up Ecuador’s debt, forcing Moreno to impose austerity measures as part of a $4.2 billion loan agreement with the IMF.

On that note, Correa joins a long line of leftist leaders who were able to spend heavily on popular socialist programs thanks to a boom in commodity prices that spurred strong economic growth throughout Latin America from 2003 to 2011. But with the fall in global prices of oil, copper, iron ore, crops and other commodities in 2014, that growth sputtered, straining economies in countries such as Argentina, Bolivia, Ecuador and Peru. In Chile, for example, Codelco, the world’s top copper producer, announced in August that its profits had plunged by 74% to $318 million in the first half of 2019.

Monica de Bolle, director of the Latin American Studies Program at Johns Hopkins University’s School of Advanced International Studies, said that many governments did not use commodities profits to prepare for leaner times. While Chile did better than other countries in that regard, she said its leaders failed to invest in education or health care, whose high costs have been among the protesters’ chief complaints. And while incomes have generally risen throughout Chile, so has the cost of living — Santiago is the second-most expensive city in Latin America — leaving many Chileans in debt and struggling to get by.

De Bolle also pointed out that austerity measures such as the removal of fuel subsidies or an increase in bus fares hit people in their wallets immediately, adding to the sense of frustration.

“Chile has a VAT-based tax system, and we know that VAT is a very regressive tax because it’s consumption-based,” she noted. “It is going to affect the poor more than the rich unless you create mechanisms by which you compensate people for paying that tax.”

Penfold said that when commodity prices go down, it hurts the most vulnerable people — those earning $10 to $20 a day. He added that the commodities boom helped millions of Latin Americans get a taste of the middle class, but their expectations of continued upward mobility were cut short when economic growth stalled.

a2.latin.america.morales.indigenous.storyPerhaps nowhere was this boom-and-bust cycle more evident than in Brazil, where leftist President Luiz Inácio “Lula” da Silva was able to lift millions of people out of poverty in part because of high commodity prices. But starting in 2014 and 2015, all of the social gains enacted under Lula’s administration were erased.

“Brazil’s poverty rates have risen 50% in the past four years alone, as opposed to other countries, where they’ve only stagnated,” de Bolle said. “It sort of hits people at a time when the region had seen such social transformation, and people were taking for granted that this would continue going forward. It adds to the overall sense of frustration that was already building up.”

Also contributing to the frustration is widespread corruption (Lula himself was just released from jail after serving time for corruption). Brazil’s Operation Car Wash, which started off as a criminal investigation into money laundering, has became the biggest corruption scandal in modern history, revealing systemic graft in the top echelons of power.

The sprawling bribery probe has also ensnared politicians from Panama to Peru, where in October, the president dissolved Congress for blocking his political reforms (three former Peruvian presidents face corruption charges and a fourth shot and killed himself during his arrest).

Recent protests against corruption have also rocked Guatemala, Honduras and Haiti. The administrations of Piñera in Chile and Morales in Bolivia were also dogged by corruption scandals.

As Latin America transitioned to democracy, a freer press has helped to expose corruption at the top, while elections have allowed people to vote for change at the ballot box.

De Bolle said the ongoing unrest clearly coincides with the region’s current three-year cycle of elections, starting in 2017.

“These have been very busy years, as we have every so often this coincidence of super-election cycles,” she said. “People’s frustrations have resulted in changes of government — not so much because they were voting in new governments they liked, but rather voting out governments that they disliked.”

Even though every nation in Latin America — with the exceptions of Cuba and Venezuela — are now considered democratic, “there is a sense among voters that the electoral process is not ending with outcomes that are relevant,” said Penfold. “They’re fed up with the lack of alternatives. In Argentina, only two presidents have ever lost a re-election, but this is the first time you had an incumbent president not even being able to make it to the second [round].”

That incumbent was Mauricio Macri, who was trounced by leftist candidate Alberto Fernández and his running mate, former President Cristina Fernández de Kirchner, in Oct. 27 elections. Macri, a wealthy businessman, failed to deliver on his economic promises and imposed unpopular austerity measures as part of a controversial $57 billion IMF bailout. Investors now wonder whether the new administration will pull the country out of recession or return it to the days of Cristina Fernández de Kirchner’s leftist presidency, which was criticized for its interventionist economic policies and endemic graft.

But President-elect Fernández could prove to be a wildcard who forges his own moderate path independent of his polarizing vice president. Regardless, politics in Argentina — as in many Latin American countries — doesn’t often change hands.

a2.latin.america.morales.storyAlberto Fernández previously served under former President Néstor Kirchner (Cristina’s husband) and is a product of Peronism, the populist, nationalist ideology that has dominated the country’s politics since the end of World War II.

This political revolving door has also fueled the current protests. While the region ostensibly adopted democracy following decades of dictatorships and coups, many members of the authoritarian old guard are still firmly entrenched in power.

“The elites have captured the policymaking process, yet support for democracy in the region remains high, so the real perception is that the policymaking process and outcomes are not working,” Penfold said.

A recent region-wide survey showed that 74% of Chileans believe that process has been compromised in some way; in Bolivia, it’s 60%; in Ecuador and Colombia, it’s 81%; and in Peru, it’s 84%.

In Chile alone, the last four presidencies were held by two people elected to nonconsecutive terms: Bachelet (2006 to 2010 and 2014 to 2018) and Piñera (2010 to 2014 and 2018 to the present).

Michael Shifter, president of the Inter-American Dialogue, says Chile’s apparent success story masked deep structural problems.

“There was tremendous inequality, and Chile had a political class on both the right and left that was very disconnected to its citizens,” he said. “At the same time, Chile’s economic performance and the reduction of poverty has been undeniable. It worked, but now it’s at a point where it has to be completely changed.”

Shifter attributes Chile’s current crisis to “profound” problems that stem from the 1973 military overthrow of democratically elected President Salvador Allende by Gen. Augusto Pinochet, whose rule ended in 1990 but whose influence endures to this day. Even though the Pinochet dictatorship may have set the stage for economic prosperity — Chile has consistently enjoyed the fastest GDP growth in Latin America’s history — not everyone has benefitted. In fact, the country of 18 million people has one of the highest levels of income inequality within the Organization for Economic Cooperation and Development.

a2.latin.america.pinera.bachelet.storyExperts attribute that in part to the Pinochet-era constitution that enshrined a neoliberal, market-driven economic model but did not establish the state’s responsibility to provide education, health care or pensions.

Piñera, a billionaire businessman who was initially caught off guard by the protests and sent the military to suppress them, has since offered the protesters a series of concessions. Notably, that includes a plan to hold a referendum next April on a new constitution, asking the public whether it should be drafted by the existing Congress or a new group made up of legislators and specially elected citizens. Piñera has also vowed to investigate abuses committed by security forces and suggested increasing the minimum wage and pension payments.

While the moves received tentative praise, it remains to be seen if they will be enough to quell the discontent, particularly among the country’s youth.

“Chile has a generational problem. Both the government and the opposition were very much shaped by the Pinochet era, and for most of the people on the streets, that’s not a part of their experience,” Shifter said. “Inequality doesn’t only mean social and economic inequality. It also means inequality in access to justice and the rule of law. I’m not terribly optimistic. We’re seeing this crisis of representation not only in Latin America, but in other parts of the world too.”

Penfold agrees that the protests in Chile should be viewed not only through an economic lens, but a political one as well, citing his own nation of Venezuela as an example of what happens when democracy crumbles.

“It’s very tempting to compare Chile to the yellow jackets in France, but I’d be careful,” he warned, referring to the protest movement against France’s high costs of living. “I’m Venezuelan, and there was a time when Venezuela was a poster child, the region’s most stable democracy. We were among the high middle-income countries and a global energy player. Now we produce less oil than Colombia. What a backslide that’s been.”

On that note, Penfold said he worries that another major crisis is being overlooked amid the wave of protests.

a2.latin.america.shifter.story“I think the migration crisis from Venezuela is going to be huge. There are already 4.5 million migrants; a large portion of them are refugees, and most of them are going to Colombia, which will go through some major social changes,” Penfold said. “The real heroes right now are the local mayors in cities like Barranquilla and Cúcuta, but it’s beyond their capacity to handle.”

Penfold predicted that by late 2020, the Venezuelan refugee crisis will eclipse that of Syria — and that pressures on Colombia will be immense (also see “Colombia’s Commitment: Envoy Says Government Is Sticking by FARC Peace Deal — and Venezuelan Refugees” in the November 2019 issue).

“They don’t have the resources to deal with it,” Penfold said. “But more importantly, there’s no Germany, no European infrastructure to absorb them, and no job market. Of course, this is going to be a source of social discontent in many ways.”

De Bolle worries about social discontent in another Latin American heavyweight: Brazil, where conservative President Jair Bolsonaro was elected on an anti-establishment platform last year. A former military officer, Bolsonaro has made waves with his praise for the authoritarian regimes that once ruled the region, as well as his hard-right views on the environment, gay rights, women and secularism. But whether Bolsonaro can tackle the bread-and-butter issues that propelled him to office — righting the economy and rooting out corruption — remains to be seen.

“We are now 10 months into the Bolsonaro administration. The fact is, apart from this political dysfunction, we’re talking about an economy that is growing very slowly,” de Bolle said. Although unemployment has dropped slightly — to 11.8% from 13% a year ago — that reduction was made possible only by an expansion of the underground economy.

“Brazil has seen a 50% rise in extreme poverty, meaning 13.5 million people who live on less than $50 a month,” she said, adding that “it wouldn’t take much for Latin America’s largest nation to crumble into chaos” like it did in 2015, when Brazil went through a massive recession.

“The country is in a sort of Stockholm syndrome,” she lamented. “People feel they have to support the very government that’s hurting them.”

About the Author

Larry Luxner is the Tel Aviv-based news editor of The Washington Diplomat.