Democracy, Latino-style

Visible disorder, hidden progress

Economist

EARLY in the morning on June 28th 2009 a group of soldiers barged into the official residence of Honduras’s president and bundled its occupant, Manuel Zelaya, onto a plane out of the country. Mr Zelaya’s opponents claimed he had violated the constitution, though their real fear was that he was plotting to hang on to power beyond his term with the help of his ally, Mr Chávez. He was replaced by the head of Congress, who organised an election in November last year won by Porfirio Lobo, a traditional politician not unlike Mr Zelaya.

To many in Latin America Mr Zelaya’s ousting recalled the nightmare of past military coups. The region’s presidents, led by Brazil, took a stern line: Honduras was suspended from the Organisation of American States and the new president has still not been recognised by many governments. But what happened in Honduras was an isolated incident. Nearly all Latin American elections now are free and fair. After a period of instability during the economic slowdown of 1998-2003, governments generally run their full term.

That said, democracy in Latin America faces two significant threats. The first is autocracy, a danger which harks back to the caudillos (strongmen) who emerged from the independence wars. Elected but autocratic presidents have neutered judiciaries and other democratic institutions. Mr Chávez has turned Venezuela’s courts into a tool of the executive and used them to jail, harass or disqualify a growing number of his opponents. Nicaragua’s president, Daniel Ortega, has abused his power to rig both municipal elections and the supreme court. Less blatantly, Ecuador’s Mr Correa has tried to muzzle the media, and the Kirchners in Argentina have used the presidency to bully opponents in business and the press. Yet the leaders of the region’s main powers have stayed silent about these abuses.

The second danger to democracy is incompetence. Even in countries where the separation of powers is respected, the institutions often do a poor job of protecting the rule of law, providing effective government and advancing the rights and freedoms of citizens.

Take Peru, where the economy has grown at Asian rates for several years but politics are anarchic. Neither the current president, Mr García, nor his predecessor, Alejandro Toledo, has had a majority in Congress. Apart from Mr García’s APRA, which is notoriously corrupt, the remaining political parties are personal vehicles with little organisation. For local elections in October, no fewer than 60,000 candidates have registered in 14,000 slates for just 2,000 municipalities. Most of the outgoing regional presidents are local figures without national allegiances. There is no civil service. Bright young people increasingly go into business rather than politics. There are constant demonstrations, some violent. In a recent poll 22% of respondents outside Lima approved of blocking roads as a form of protest. Although the economy has grown, Mr García is unpopular (as was Mr Toledo).

Stability is relative

Having listed these problems, Martín Tanaka, a political scientist in Lima, points out that “Peru is quite a stable country” where economic policy commands a broad consensus. But because so much depends on who is at the top, that continuity will be at risk in the presidential election next year. In 2006 Mr García won with a lead of only 5% over Ollanta Humala, a populist former army officer who was friendly with Mr Chávez and would have ruptured that economic consensus. Mr Humala will be a candidate next year, though his chance of winning this time is smaller.

Peru is at the extreme end of the spectrum, but to some degree the same flaws are in evidence in many other countries. In much of the region (though not in Chile and Uruguay) political parties are weaker than they used to be. Presidents struggle to get laws through a many-sided legislature. Mexico has moved from one-party rule by the PRI, which ended in 2000, to three-way gridlock. In Lula’s first term in Brazil leaders of his Workers Party resorted to buying votes in Congress. The resulting scandal caused Lula to lose interest in difficult tax and labour-law reforms in his second term and to forge an alliance with the PMDB, an agglomeration of regional barons with a voracious appetite for patronage and pork.

Even so, over the past two decades Latin America’s politics have become more inclusive. A wave of electoral victories by the left in the early 2000s brought to power leaders who had grown up poor, such as Lula and Bolivia’s Mr Morales. And democratic politicians have achieved more than meets the eye. There are islands of excellence in the public service, especially the institutions that make economic policy, and there has been much innovation in social policy. Decentralisation has brought waste and corruption in some places, but in others it has produced better urban management. That is important: 15 big cities generate more than half of Latin America’s GDP, says McKinsey’s Mr Elstrodt.

Some of the change has been driven by public opinion. When governments fought inflation with free-market reforms they both forged and reflected a societal consensus in favour of economic stability. A similar consensus is beginning to emerge on education.

A second trend is competitive emulation. Like CCTs, fiscal-responsibility laws and stabilisation funds have ricocheted around the region. Colombia’s new president, Juan Manuel Santos, is the latest to say he will implement them. The same process applies at local level. The Complexo de Alemão, a crime-ridden labyrinth of favelas in Rio de Janeiro, is now trying to replicate innovative urban management pioneered in Medellín in Colombia, with cable cars connecting hillside slums to the urban railway network and new libraries and community centres. Citizens’ monitoring groups in a dozen Latin American cities have formed a regional network.

Lower middle classes to the fore

The big political question in Latin America is whether the swelling lower middle class will become a force favouring better governance, stronger democratic institutions and the rule of law. The evidence is mixed. “They are a group that demands more subsidies from the government than they contribute: representation without taxation, that’s the middle class in Latin America,” says Mauricio Cárdenas, a former Colombian minister who is now at the Brookings Institution in Washington, DC.

But Bolívar Lamounier, a political scientist in Brazil, says the lower middle class there is politically divided, and over time will tend to support market policies rather than statist and protectionist ones. This social cohort is clearly intolerant of crime and of inflation. In Mexico the lower middle class may have tipped the 2006 election narrowly in favour of Mr Calderón because they felt that his opponent, Andrés Manuel López Obrador, was jeopardising economic stability.

But public opinion can favour populist giveaways, too. And bad examples can be copied, as the Kirchners have done, in imitation of Mr Chávez, by grabbing foreign-exchange reserves from the central bank. Argentina and Venezuela provide cautionary tales: they were the richest countries in the region but fell back, unable to break the downward spiral of commodity dependence and populist politics.