Progressing?

There is nothing like a good crisis to get the adrenaline flowing and to focus the mind. So whereas previous meetings may have been little more than talking shops, last weekend’s Progressive Governance Summit seemed like a dress rehearsal for the G-20. Of course, the self-filtering nature of the event all but guaranteed that there would be broad agreement on both the analytical and prescriptive sides.

There was some. President Bachelet set the tone when summarizing the summit’s – and the progressive movement’s – priorities: using the present crisis to underscore the need to strengthen social policies, to build a new international financial architecture, to strengthen elements of the existing architecture such as the IMF and regional development banks, and to link recovery spending with environmentally-friendly and forward looking policies and programmes, so as to encourage a so-called “green recovery”.

In their statements, most leaders agreed that these were worthy objectives, and agreed that the G-20 would be the place to try to move forward on them, and on Thursday it appeared that some of those agreements indeed did manage to survive the trip to London. Yet there are some areas of discord which could end up being very annoying pebbles in the progressive shoe.

The first is the clear difference in progressive outlook. Whereas Vice President Biden emphasized the importance of markets, most of the others concentrated on regulation and other restrictions. The Americans are also lukewarm on talk of reorganizing the world’s financial system because for it to have any meaning at all, such moves would require an adjustment not only of the institutions themselves, but of the power structures behind them. Lula’s recent comments show that he is already pushing for greater BRIC presence in the international system, although the rhetoric he is using is unlikely to help the cause.

This is the toughest sticking point, because surely the United States will not give up its position without a fight. With its economic standing being threatened by China and others, and its military overextension, much of the political weight the USA still hold is wielded through IFIs and other international organizations. If the Lula thesis takes hold, the past mistakes of American (and to some extent, British) financial management disqualify it from holding on to its dominance of the international financial system.

It would be a shame if concrete measures to deal with the current crisis were not agreed because of political posturing or power politics. Yet at the Progessive Governance Summit these were the two axes of the discussion, which in turn lay bare the problem with ‘progressivism’ as a whole. While many viewed the summit as a clubby get-together of like-minded leaders, in reality there was quite a bit of disparity in political, ideological and economic styles. Mrs. Kirchner’s peronist populism has little in common with Lula’s peripheral ambition, which in turn bears little resemblance to Biden’s non-committal friendliness. Overseeing it all was Bachelet, who did a good job of chairing the meeting while wallowing in the reflected glory of Prime Minister Brown’s compliments and Jens Stoltenberg’s flattering tribute to Andres Velasco. “True courage”, he said “is not spending in rough times, but saving in the good times”.

Would all the leaders present agree with that? It’s not certain, because Chile’s past fiscal conservatism is the product of the market model these ‘We-were-right-they-were-wrong’ leaders were intent on criticizing, and perhaps replacing. That fundamental confusion lies at the heart of the progressive movement. Is it saving capitalism from itself, or socialism from itself, or both, or neither?

Chile’s Top Model

Of the many new things which Michelle Bachelet’s election seemed to augur, a new economic model was not most prominent. Yes, she did promise to deepen the country’s social protection system, but that is not much more than a continuation of the leap President Lagos took in expanding public health care. Yet looking back over the Bachelet years, one is struck by how much ink is dedicated to debates over appropriate levels of saving, how and where to spend, and Finance Minister Velasco’s efforts to fight back his boss’ rather more statist inclinations. Having withstood great political pressure from left and right, from above and from below, to spend the copper bonanza, Velasco stood his ground and, at least in this space, earned repeated plaudits. In recent weeks both the FT and the Economist have come around, dedicating articles to Chile’s wise fiscal and economic management in times of crisis, which is interesting not because Chile’s unique form of “neoliberal-social-democracy” is once again the focus of some attention, but because of its implications in Chile and abroad.

The plaudits may be less a function of what Chile has done right, than what the others have done wrong. The positive aspects of Chile’s model highlighted by the foreign press – fiscal responsibility, free trade, education vouchers and the mix of private pensions system with a state-guaranteed minimum pension – are policies touted by the developed world but not actually implemented by much of it. As for the rest of Latin America, one compares Chile to the Colombianization of Mexico, some kind of economic and/or political crisis inching closer in Argentina, and the increasing authoritarianism of Chavez. Compared to the profligacy of much of the North or the mismanagement of much of the South, Chile’s model looks pretty good.

But a closer look shows it’s not that simple. Chile spends just over 4% of GDP on public education, slightly more than Greece and Russia, slightly less than Germany and Spain. Yet the public education system has been in trouble for some time. Whereas the public expenditure of developed countries on health ranges from 5 and 8 percent of GDP, Chile spends about 3%, slightly more than Mozambique and Ethiopia. In terms of the relationship between public spending and the quality of service provided, then, Chile seems to be punching below its weight in education and above its weight in healthcare.

The debate over the Chilean model, then, is not, and should not be, about the money; it’s about universality. The story the aforementioned figures do not tell is that they do not apply to the Chilean upper middle class and higher, whose private education and health care are first rate. The debate over the state in Chile is not about making the state bigger, but about giving it a role in leveling the playing field. Some of the more significant, yet gradual, steps taken by the Bachelet government – such as in pensions – have been in this direction. In late March Bachelet will play host to half a dozen social-democratic leaders and other dignitaries from around the world, including Gordon Brown, in a summit that is bound to underscore the contributions that an active state can make – indeed, could have made – to avoiding or reducing the effects of today’s economic situation. With polls showing that well over 50% of voters also place a good deal of trust in the state, Bachelet’s own poll numbers on the rise, and an international environment that seems to have moved closer to its kind of “neoliberal-social-democracy”, the Concertación seems well placed to ride this crisis all the way to a record fifth victory in December.

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.

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.

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.

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.

Palin

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.