Monday, 10 November 2008

Obama and Latin America

At the time of writing we assume that the public opinion polls are not wildly off the mark and that the American presidential inauguration on 20 January 2009 will be somewhat more historic than usual. If so, what can Latin America expect from an Obama administration?

The first thing to determine – presuming that he is not a closet communist-islamo-terrorist coke fiend, which, if true, probably makes the rest of this analysis rather redundant – will be whether Barack Obama is indeed as isolationist and anti-free-trade as he’s been portrayed in the campaign. While it’s true that the Obama campaign claims to be against CAFTA and aims to ‘fix’ NAFTA, if one looks at his main economic advisers, the group includes influential characters from the Clinton administration, which broadened and deepened the American free trade programme in general and free trade in the Americas in particular. Assuming this team has some influence in the transition and in the selection of the new economic team, it is unlikely that Obama will renege on existing trade agreements.

The second thing that has been made clear throughout the election campaign is that the personal aspect of Obama’s political discourse is fundamental to his worldview. Obama sees the world – including Latin America – like he seems himself; as a mix of conflicting and complimentary cultures, religions, races and, yes, interests, constantly competing for supremacy. This undoubtedly has certain limitations, but after eight years of ‘Country First’, where the interests of the region were subsumed to the (usually, national security) interests of the United States, this cosmopolitan view will be well received.

For a good part of the United States’ Hispanic community, the issue of Cuba is fundamental. It is easy to overstate the importance of Cuba in Floridian politics – the 2000 election was close, after all, because Florida does have a sizeable community of Democrats (in fact, more registered Democrats than registered Republicans). But if Obama wins in Florida, it will be in spite of a nuanced discourse regarding Cuba. While no American campaign would dare suggest something as bold as lifting the embargo, Obama has committed to relaxing rules for family visits to Cuba.

And, of course, there is his famous willingness to engage in high level talks with Cuba, as well as Chavez, Ahmadinejad, and the rest of the world’s Dr Evils. What the other countries in the region will be hoping is that Obama talks to them too. What little attention American foreign policy has paid to Latin America in recent years has been centred on troublemakers like Venezuela, or friends in trouble like Colombia. If the US is to avoid rewarding bad behaviour with lots of attention, an Obamian foreign policy should include the other regions and countries that have been missing the love over the last eight years.

Lastly, and from a strictly domestic point of view, perhaps the most interesting post-election question is whither the Republican Party. Will it conclude that its electoral troubles came from having nominated a centrist, or from having imposed on that centrist a more hard-line, base-inspired agenda (and running mate)? One clue to that answer lies in where the Hispanic vote has gone. Having made important in-roads with Hispanic-Americans on values-based issues, during the 2008 election the Republican Party (especially in its Palinized form) explicitly alienated this and other immigrant groups as it tried to shore up support amongst its target audience of ‘Real Americans’. In this way, the Hispanic vote may be seen as a barometer of the broader political mood in the US.

Friday, 24 October 2008

Which election is being fought?

This Sunday’s poll may be seen as just municipal elections, as the kick-off of an electoral season, which will, within a period of fourteen months, see elections at the local, congressional and presidential levels. The way the campaign has played itself out, the latter is a more accurate description of what is going on. Why?

First, because some of the developments of the local elections have consequences for next year’s poll. There is the obvious: the extrapolation pundits and politicians will make from each party’s performance on Sunday. But everyone knows that Chilean municipal elections can be read in many ways. Who won? The coalition that gained the most mayors, the most municipalities, that won the highest percentage of the popular vote? There will be something for everyone, and everyone will claim victory. But the real prize will be Santiago. After the debacle of the failed public transport reform, if Santiago goes back to the Concertación it will be seen as an important victory.

In addition, although the municipal campaign has Chile’s major cities plastered with signs, most of the attention has already shifted to the presidential race. Former president Ricardo Lagos announced to great fanfare (and a full page interview in the Sunday paper) that he was not a candidate, only to appear the following week campaigning for regional candidates, criticising the current administration, and saying that if he was asked really, really nicely, he would be available. Organization of American States Secretary General José Miguel Insulza has been spending more time in Santiago than in Washington lately, having his picture taken with local candidates and trying to avoid a war of words with Lagos. Christian Democratic presidential contenders are lining up; watch for former president Frei to reappear if the polls do not give Lagos or Insulza a good chance of beating Sebastian Piñera. And while Sebastian Piñera continues to be by far the front-runner, never underestimate the ability of the right to shoot itself in the presidential foot. In the last few days the UDI has taken some tentative steps to putting forward its own candidate, Senator Evelyn Matthei. Besides being the daughter of a former member of the Military Junta, Matthei has a history of bitter rivalry with Piñera. Matthei’s candidacy is likely simply political posturing aimed at strengthening the UDI’s position within the Alianza (with the approaching congressional elections much inter-party negotiating will be required for selecting candidates), but it is not helpful. One reason Piñera is so far ahead in the polls (about fifteen points) is that he has been a sole candidate running against a field of three or four, who have spent the last months criticising each other instead of Piñera.

Indeed, the bickering amongst the Concertación’s presidential contenders has been pointed to by many as being yet another signal of the fragmentation and exhaustion of the coalition that has governed for eighteen years. But a race between four or five seriously qualified candidates is hardly a sign of exhaustion. The same has occurred in the Concertación in every election since the return to democracy.

What is worrying, however, is that the race is between the same four or five seriously qualified candidates, including two former presidents. The lack of new blood – and new ideas – is a sign that the Concertación is in urgent need of renewal. Unless Piñera gets distracted by a serious challenge from his right flank – which may yet happen – the odds are that the Concertación will have plenty of time in opposition to contemplate that renewal.

Saturday, 27 September 2008

Reining him in

The 15 September meeting held in Santiago to address the ongoing Bolivian crisis revealed as much about the state of relations between Latin American countries as it did about the state of Bolivian politics.

First, was the role that Chile, and President Michelle Bachelet, as acting president of the Union of South American Nations (UNASUR), played. One would have thought that Santiago would be the last place that a Bolivian president would be willing to deal with an internal problem. But it is a sign of how much relations have improved under Evo Morales that such a meeting was even possible. It was also a sign of how concerned Santiago is. Only a few weeks ago a Chilean official scoffed when it was suggested that the country should prepare a contingency for a Bolivian civil war. Asked how Chile would deal with such an eventuality, and the prospect of thousands of refugees streaming over the border, the answer was, ‘It’s impossible’. It is unlikely that the Chileans still believe the idea is so far fetched. Chile has some interest, beyond President Bachelet’s current role as head of UNASUR, to encourage some sort of reduction in tensions.

Less inclined to reduce tensions was the president of Venezuela. As the meeting’s most mercurial, vociferous, and petro-dollar-propelled president, Hugo Chavez was hoping to use UNASUR was as a platform to bash the US for its supposed role in Bolivia. This was one of the main sticking points in the marathon, six-hour negotiation, but the most of the other delegates, and especially Chilean Foreign Minister Foxley, would have none of it. Well into the evening, President Bachelet announced the nine-point Moneda Declaration which offered “full and decided support to the constitutional government of President Evo Morales”, encouraged dialogue between the parties concerned, and created a commission to facilitate it, presided over by the acting president of UNASUR, President Bachelet. Only five years ago a Bolivian president was removed from office in part for suggesting that gas be exported through Chile.

Chavez was not done, though. Having returned to Caracas, he proceeded to expel the Chilean head of Human Rights Watch from the country. The Chilean reaction was angry but muted, trying to avoid taking further steps towards Chile-Venezuela war of attrition. In recent weeks, then, Chile and Bolivia, who have ongoing territorial issues, are cooperating to solve regional crises, while Chile and Venezuela, who have historically close ties, have an increasingly tense relationship. But what are the two countries actually arguing about?

In a word, leadership. Chile knows that with Brazil and Argentina in the neighbourhood it will never really be the region’s economic leader. But Chile does enjoy a kind of moral leadership and, especially under Socialist presidents Lagos and Bachelet, it has been able to present its model as one which is on the road towards a modern and successful social democracy, combining social justice with capitalism. It is the one example in the region that most undermines chavismo.

Finally, where was the United States? While the summit and the declaration were generally well received, critics, including the Chilean opposition, were not wrong in questioning the role – or lack thereof – of the Organization of the American States (OAS). Its secretary general, José Miguel Insulza, did attend, but clearly this was an UNASUR show. Apparently Bolivia and others did not wish to turn to the OAS as it counts the United States as a member. If that is the logic that Latin American countries will use from now on, the future of the OAS seems, at least, problematic. So does the United States’ future role in hemispheric relations.

Wednesday, 10 September 2008

The gaff that keeps on giving

Ever since John Marshall established the principle of judicial review in Marbury v. Madison, bodies entrusted with these powers have locked horns with executives. It should come as no surprise, then, that Michelle Bachelet has had some difficult encounters with Chile’s Constitutional Tribunal, including a tussle over the government’s plans to make birth control pills available at public clinics. But the latest encounter is particularly damaging.

Since it implementation in February, 2006, the revamped public transportation system in Santiago has been the Bachelet government’s Achilles Heel, costing the government tens of millions of dollars a month, while public opinion claims not to notice a substantial improvement in service (indeed, the number of those with a negative opinion of the system has increased). Faced with bankrupting Transantiago, the government sought funding in Congress but was unable to garner enough votes. It then obtained a U$400 million loan from the Inter-American Development Bank. But this week the Constitutional Tribunal declared the loan unconstitutional. As if that weren’t bad enough, the government is threatening to use its weapon of last resort – the 2% of the budget the constitution permits for spending on ‘catastrophic events’. Of course, declaring Transantiago a catastrophe is a public relations nightmare, but options are becoming scarce. Without Congress’ cooperation, funding runs out in two weeks. Opposition critics are demanding the abandonment of the plan altogether and a total redesign.

Transantiago has already become a symbol of technical incompetence, opening the door for opposition claims that government is incapable of offering solutions to problems of public policy. Chile remains a country where many public services, from roads to water to pensions are largely in private hands, and although Michelle Bachelet has had some success in areas such as health care and pensions, Transantiago gives a strong boost to the neoliberal argument. For President Bachelet’s progressive agenda, this is the legacy of Transantiago.

That is the public policy problem. But there is a political problem as well. This week former president Ricardo Lagos, who insists he does not want to run for president but who is making more and more public appearances, lashed out at Bachelet, saying that “One responsibility is the plan’s design, which all the international authorities applaud… but the way in which it was implemented, or implemented ahead of time, is not my responsibility.” In other words, he handed over an internationally-approved plan and Bachelet messed it up. Vote for Lagos, he’ll fix it.

What lies behind this extraordinarily ungraceful outburst? Probably the publication of a poll earlier in August in which 32 percent of those polled blamed the previous administration for Transantiago, whereas only 25 percent blamed Bachelet. What Lagos did not say is that although the government’s current subsidization of Santiago’s public transportation system was not written into the original plan, it is the rule rather than the exception. Although the government claims that one of the principal funding problems that Transantiago is that too many riders are not paying their fares, research shows that most public transportation systems around the world are not, in fact, financed entirely by what riders pay. In the US, fares cover anywhere from 13% of total operating costs (Detroit) to 67% (New York’s subway), with most in the 30 to 50 percent range. Whatever the implementation problems Ricardo Lagos wishes to concentrate on, it appears that in addition to routes and technology, not admitting that subsidization was going to be necessary was a design flaw as well.

Thursday, 4 September 2008


OK. So he's not senile. He knew exactly what he was doing -- or rather, the faceless powers behind the party knew exactly what they were doing. She's there for the base, and she's perfect for them: angry and condescending, just like them.

Tuesday, 2 September 2008

Is he senile?

What this shows is not that Sarah Palin is not suited to be Vice President, but that John McCain is not suited to be dog catcher.


Watching CNN these last few days is like watching fish flopping on a beach, gasping for air (or water?). They were all geared up for the Republican National Convention, but then it was quasi-cancelled becuase of Hurricaine Gustav. So they all donned their rain gear and headed down to New Orleans to film the next disaster to hit the city, but the storm took a left turn at the last minute and there wasn't much death and destruction to film. So no RNC, no Gustav, no story.

Classic moment of the day, when a reporter asked a mother why, having not evacuated for Katrina, they decided to evacuate now. Brilliant reporting.

Of course, the other non-story is that the Republicans got away with murder, not having to a) showcase the dismal speaker that is McCain and opening him up to comparisons with the silver tongued lawyer from Chicago, and b) not having to showcase McCain together with Bush. They can turn the convention into a Hurricaine relief telethon and go home. Lucky.

Friday, 29 August 2008


I watched the Obama convention speech here in the US. It was quite a performance, and showed that words matter. Yes, the guy can talk. But the point is that it's how you talk, what you say, how you organize your thoughts and communicate them, that says an awful lot about what's goin on upstairs.

So he's not just an articulate lawyer. The guy is very, very smart.

Tuesday, 19 August 2008

The costs of good behaviour

The numbers are not particularly encouraging. Inflation is nearing double digits, growth forecasts are revised downwards, the Central Bank complains of upward pressure on interest rates, unemployment is creeping up, and the political mood is ugly. The economist Felipe Larrain, a Piñera advisor, denies that Chile is in crisis. He calls the situation “delicate”. Given this delicacy, there is no more talk of external vs domestic causes. In the context of next month’s presentation of the 2009 budget to Congress, politics has come into it, and politics, as we know, are local.

Now that politics has come into it, one would think that Finance Minister Velasco – not affiliated with any political party, and naturally disinclined to playing politics – would have an easy time of it. However, while the economic scenario is complicated, the stars have conspired to hand him the most favourable political hand that he has had since coming to office. He has remained totally loyal to the president, and the president has returned the favour. The president probably recognises that, far from being the intransigent technocrat that many make him out to be, Velasco has shown quite a bit of flexibility, giving in in a few key areas, such as the injection of additional funds into the Fuel Stabilisation Fund and a funding feud with the Supreme Court, while keeping public spending within reasonable margins. In fact, despite all the rhetoric of social spending, public spending as a percentage of GDP started to fall in 2008, after peaking the year before, and is projected to fall further in 2009. In this regard President Bachelet should be given credit for allowing Velasco to resist the political pressures (while also allowing him to take quite a bit of the political flak). President Bachelet does not get credit for much these days, but it should be recognized that she has kept her cool with respect to the finance minister.

There remain important pressures on spending, not the least of which is the still un-resolved problem of the badly misdesigned reform of Santiago’s public transportation system, which requires roughly 40 million dollars a month just to cover its operating deficit and to keep it functioning at its current – and still far from optimal – level. And there are unspoken pressures which remain unaddressed, such as a long term plan to solve the country’s energy needs – probably Chile’s greatest long-term public policy challenge. Yet today, few, except for political outliers like Senator Zaldívar, call for the finance minister to be sacked. With the municipal elections later this year, and the 2009 presidential race already very much on people’s minds, the Concertación is mindful of the 1999 campaign – the last time a presidential election was fought in the midst of an economic downturn. That time, Joaquin Lavin came very close to taking the presidency, and for all their differences, Concertación leaders are united in wanting to avoid an Alianza victory next year. So in current budget negotiations, Velasco will at least be able to count on a bit of breathing room from his own coalition – something he has not really enjoyed before.

All of which combine in the oddest possible way: a Latin American government, not exactly smashing the opposition in public opinion polls, rich in fiscal resources, but unable and even unwilling to spend in an election year. Will Chilean voters respond to all this good behaviour?

Thursday, 7 February 2008

Super Tuesday

The results of Tuesdays primaries in the US show that the Republicans are already coalescing around a single candidate, while the Democrats cannot seem to be able to make up their minds. Not good.

Clinton is having a rough ride, which is pretty unfair to her. She has done all the homework, while Obama has blown in on a lot of hot air. But it works. He has his finger on the mood of the country, particularly young people. The theme of change seems to be gaining some footing, although it is as meaningless as when Joaquín Lavín used it in 1999. Change for the sake of change accomplishes nothing. Change is important when a) one actually wishes to change the current state of affairs, which clearly Americans desperately want; and b) there is a better alternative on offer.

What's Obama offering?

In the meantime, this is an entertaining way to keep track of what's going on.