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19 May 2021

Will Covid-19 mean another lost decade for Latin America?

From Mexico to Argentina, the pandemic has intensified inequality, social unrest and political instability. 

By Jeremy Cliffe

On 18 October 2019 a group of Chilean school pupils began a campaign of fare dodging on the metro in Santiago. In stations across the centre of the capital exuberant teenagers leaped over turnstiles while chanting: “Evadir, no pagar, otra forma de luchar!” (“Evade, don’t pay, a different way to fight!”). Their grievance was a small one, a 30 peso (about $0.04) hike in ticket prices. But it proved the spark. And Chile, long held up as a beacon of ­prosperity and stability in Latin America, turned out to be the tinderbox.

The country’s economic growth had slowed in recent years, exposing the inequalities in a free-market model that had often been brandished as an example to ­others in Latin America. Despite having had a left-led ­government for 14 out of the past 20 years, and falling rates of poverty, Chile remained one of the most unequal states in the Organisation for Economic Co-operation and Development. Healthcare, education and pensions provision for low- and mid-earners were threadbare. What followed the high school students’ protest in October 2019 came to be known as el estallido social – the ­social explosion – as citizens surged on to the streets. A state of emergency was declared. More than 1.2 million people marched in the biggest demonstration in Chile’s history.

Then Covid-19 struck. But far from curbing el estallido, it supercharged the movement. Many Chileans, particularly those working in the large informal economy, lost their jobs and fell through the country’s ragged social safety net. In El Bosque, a ­deprived neighbourhood in Santiago that is far from the gleaming skyscrapers dubbed “Sanhattan”, residents defied lockdown to stage “hunger protests”, demonstrating against food shortages. Without even the meagre support paid to the poorest, and often heavily indebted after years of easy credit, many middle-class families slipped into penury. Cacerolazos – pot-banging protests – rang out from balconies.

In October 2020, against a backdrop of renewed street protests, 78 per cent of Chilean voters supported rewriting the country’s constitution, a revised form of the one introduced by the Pinochet dictatorship in 1980. A vote held this past 15-16 May to elect a constitutional convention, the body tasked with drafting new legislature, was a triumph for the left and for political outsiders. The conservative coalition of Sebastián Piñera, the country’s billionaire president, failed to secure enough seats to hold a one-third blocking minority. The country is now putting its social contract up for discussion in a way never seen before in its post-Pinochet history. Change is afoot. But change to what?

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It is hard to generalise about the countries between the Rio Grande and Tierra del Fuego. Parts of Latin America such as Chile and Panama are as rich as the poorer regions of western Europe; others such as Venezuela and Nicaragua are nearer to sub-Saharan development levels.

Politically, Latin American leaders range from the free-market right (Chile), via ­populists of right (Brazil) and left (Mexico) to the progressive left (Costa Rica); from ­autocracies (Venezuela) via hybrid regimes (Guatemala) and flawed democracies (Argentina) to full democracies (Uruguay). Covid has struck unevenly, killing a few hundred per million in parts of central America and the Caribbean but more than 2,000 per million in Brazil.

Yet broad shifts have, historically, defied the region’s borders and made it possible to talk about a common Latin American experience. Millennia of indigenous ­history were abruptly interrupted by colonisation. Then in the early 19th century came liberation, which the Chilean poet and public figure Pablo Neruda described as the “tree of the people” in his poem “The Liberators”:

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Its heroes rise up from the earth

as leaves from the sap,

and the wind spangles the whispering

multitude’s foliage

Battles between liberals and reactionaries in the young republics gave way to the export boom of the turn of the 20th century, then dictatorships before and during the Cold War. Debt crisis, then political and economic liberalisation followed in the 1990s, then debt crisis once more. In the 2000s the Latin American narrative involved a turn to the left as part of a so-called pink tide, often accompanied by an economic boom and social progress, before a more difficult 2010s halted, or even reversed, many of those trends.

Across the ­continent, Covid has severely worsened that ­hangover, intensifying Latin America’s economic problems, social unrest and ­political instability. Nayib Bukele, El Salvador’s right-wing strongman president, last month won a ­super-majority in the country’s legislative elections, which could enable him to overhaul his country’s legal and political systems. Inflation is soaring in debt-burdened Argentina as its president Alberto Fernández rushes to refinance some $45bn in loans soon due to the International Monetary Fund.

[See also: Latin America and the Caribbean are set for a climate revolution – despite the wishes of Jair Bolsonaro]

In Colombia, violence is escalating as protests triggered by an unpopular tax reform enter their third week. The fatal collapse of a metro overpass on 3 May has highlighted Mexico’s crumbling infrastructure. Brazil, the region’s most ­populous country, is experiencing a new surge in Covid infections as Jair Bolsonaro, its right-wing authoritarian president, faces a parliamentary inquiry over his country’s pandemic response. Peru’s presidential run-off on 6 June pits two anti-system candidates, populists of right and left, against each other. Across the region, dashboards are flashing red.

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To understand the present it helps to go back to the optimism of the recent past, recalling when Latin America was, as it has been at various points in its history, the “land of the future”, as the author Stefan Zweig once wrote of Brazil. In the years after the turn of the millennium things seemed to be going the region’s way. It had escaped from dictatorship, it produced many of the ­commodities that a rising ­China needed (oil, soy, meat, iron, copper, ethanol, wheat, aluminium), it was flush with foreign ­investment, and demographically it was growing richer but not yet old.

With the pink tide, the region was suddenly governed by a cluster of left-of-centre leaders: the social democrats Michelle Bachelet in Chile and Luiz Inácio Lula da Silva in Brazil; the Peronist Néstor Kirchner in Argentina; the indigenous rights activist Evo Morales in Bolivia; and the socialist strongman Hugo Chávez in Venezuela. Despite their different shades of leftism, these leaders were united by a commitment to reducing Latin America’s appalling inequalities. Collectively, they did so. According to the UN Economic Commission for Latin America and the Caribbean (ECLAC), poverty fell from 45.4 per cent in 2002 to a low of 28.6 per cent in 2013. The Latin American middle class in particular burgeoned, with mid-income groups swelling from 27 per cent of the population in 2002 to 41 per cent in 2017.

But then the golden decade gave way to a lost one. Hubris, mismanagement, clientelism and corruption that were present to varying extents across the pink tide countries – and most grotesque in Venezuela – took their toll. The rise of China and other geopolitical shifts (such as the North ­American shale energy boom) cut commodity prices. Credit dried up. Left-of-centre governments had not used the good times to build innovative, productive, broad-based economies that could sustain social progress once the fruits of the mines and fields, rainforest and pampa, no longer did so. “­Fiscal responsibility and handouts to the poor, that’s not leftism in my book,” says Roberto Unger, a Brazilian philosopher and a former minister of the Lula administration.

So several negative trends were already in place even before Covid hit. Real GDP/capita in Latin America and the Caribbean declined by 0.6 per cent per year between 2014 and 2019. Economic growth in 2019 was just 0.5 per cent across the region, compared with more than 5 per cent during the boom years of the 2000s. Unemployment rose, as did the proportion of workers in low-productivity sectors. Poverty and extreme poverty started to rise again.

In some places the failure of the pink tide prompted a turn to the political right: in Chile in 2010 (and again in 2018), in ­Argentina in 2015, in Brazil in 2018 and in Uruguay in 2020. But the backlash was also felt across political systems and societies as a whole.

The Economist Intelligence Unit’s Democracy Index shows that the quality of democracy has fallen in Latin America and the Caribbean every year since 2015. “Democracy in Latin America is facing a critical period,” wrote Daniel Zovatto, of the Brookings Institute, in a report published in February 2020. “[It] is marked by ‘irritated democracies,’ characterised by anaemic ­economic growth, citizen frustration, social tensions, discontent with politics, and weak governance.”

Such was the backdrop to the pandemic. Covid has hit Latin America harder than any other part of the world. In the next few days it will become the first region to record its one millionth death from the virus. One explanation for its particularly disastrous experience is that it combines rich-world levels of urbanisation with mid-income and poor-world levels of state and health system capacity. The result has been the world’s most severe social restrictions. According to Unicef, Latin American children have missed more school than their counterparts anywhere else, constituting almost 60 per cent of all those globally who have missed an entire year. Prolonged lockdowns have hit hard in countries with large informal ­economic sectors in which workers cannot easily claim welfare benefits.

Latin America’s economic contraction, of 7.4 per cent last year, was the biggest of any region in the world. In the region’s own history you have to go back two centuries to 1821, the time of Simón Bolívar and the Spanish American wars of independence, to find a downturn so big. Its recovery so far looks meagre. Far from becoming the world’s fifth economy, as Goldman Sachs predicted in 2003, Brazil last year fell from ninth to 12th.

Just as the pandemic is intensifying Latin America’s economic woes, so it is further inflaming social relations. Chile is not the only country where middle-class citizens are feeling the squeeze: ECLAC assesses that some 59 million Latin Americans classed as mid-income in 2019 are in a worse economic situation now than they were then, and that 25 million people have dropped out of the mid-income bracket in the past year. During lockdowns the region’s rich have fled to country or coastal second homes, while others either struggle to find work or do so from homes where internet access is limited.

[See also: “A threat to the world”: Brazil’s Covid-19 tragedy]

In poor areas, such as the shanty towns around the edges of many major Latin American cities, support has been almost non-existent. “Large poor communities like the favela da Rocinha and the favela da Maré [slums in Rio de Janeiro] cause us great concern,” Margareth Dalcolmo, a pulmonologist in Rio, told the New Statesman last spring. “The favelas receive no help, even in terms of access to sanitation and drinking water.” Her concern would prove prescient: not only have some favelas seen more ­Covid deaths than some whole countries, but areas like da Maré also now face new crises of hunger and violence (a police raid in one favela in Rio on 6 May left at least 25 dead).

Such pressures are putting democracies under strain. Andrés Manuel López Obrador, the president of Mexico, last month tried to extend the term of a judge considered sympathetic towards him in what critics called an unconstitutional power grab. The second round of Peru’s presidential election pits the self-described Marxist-Leninist Pedro Castillo against Keiko Fujimori, the daughter of the country’s authoritarian 1990s president.

***

In Brazil, Bolsonaro is attempting to politicise the military and has hinted he might seek to defy a defeat in next year’s presidential election. Meanwhile, the region’s economic struggles are creating footholds for illiberal foreign powers such as China – whose vast investments there have continued and whose ­Sinovac vaccine is a major ­component of Latin American portfolios of orders. The current turmoil in Colombia, sparked by a modest package of measures to help stabilise the public finances introduced by its ­president, Iván Duque Márquez, may prove a foretaste of unrest across the region when the bills for Covid support programmes are due.

The major trend of recent elections in ­Latin America has been less an ideological one than one of instability and anti-incumbency. But seeing as many sitting presidents are conservatives elected as part of the reaction against the pink tide, there may overall be a new tilt to the left. Obrador’s election in 2018 in Mexico and that of Fernández in ­Argentina in 2019 looked like isolated ­cases. But they may soon be joined by others. The leftist Castillo is ahead in the polls in Peru. Colombia’s protests have been accompanied by soaring ­support for Gustavo Petro, the left-wing former mayor of Bogotá who has played a leading role in the demonstrations, ahead of a general election in 2022.

In Brazil, a new poll on 12 May showed a resurgent Lula – whose corruption convictions were quashed by a supreme court judge in March – taking a 55 per cent lead against Bolsonaro in next year’s presidential election run-off. Meanwhile, Chile’s referendum to redraft its constitution indicates that the left there too is on the rise. Daniel Jadue, a communist, has strong polling numbers ahead of a presidential election in November.

It would be a mistake to make ­assumptions about how those contests will play out. But nonetheless it is valid to ask: if the 2020s do herald a second pink tide in the ­region, will it be one that learns from the mistakes of the first? Can it construct an economic model that goes beyond clientelism and commodities? Can it build a sustainable foundation for productive, innovative, investment-led economies? Can it embed progressive goals through institutional and structural reform?

There are reasons to be sceptical. Latin America will probably emerge from Covid slowly. At the time of writing, only 15 per cent of South Americans have had their first vaccine dose (and numbers in Mexico and Central America are similar), compared with 47 per cent in the US. Herd immunity will come only around the turn of the next year, at the earliest. And when it does, Latin America will face the same problems as before – democracy deteriorating, inequality rising, economies stagnating – but made more difficult by the pandemic’s legacy of increased debt, polarisation and distrust.

It is not hard to imagine the next few years being yet another period of stagnation for this region defined more than most by false dawns. Neruda captured the long ­frustration. “Latin America is very fond of the word ‘hope’,” he wrote. “This hope is really something like a promise of heaven, an IOU whose payment is always being put off. It is put off until the next legislative campaign, until next year, until the next century.”

***

Yet hope is not nothing. There are reasons why Latin America is imbued with so much of it. It remains the most democratic region in the world after North America and Europe. It is urban, open and broadly socially liberal: relatively comfortable with its ethnically diverse make-up (even if deep inequalities persist), the most advanced on LGBT rights of any part of the Global South. It is moving forward on ­other measures of progress, such as ­Argentina’s historic legalisation of abortion in December 2020. Latin America’s only ongoing major war, which was fought between the ­Colombian government and the Farc ­rebels, reached a ceasefire agreed five years ago.

Reflecting on Brazil, his country and ­Latin America’s most populous nation, ­Unger defies the ambient gloom:

“I’ve gone through the whole country, every state, the interior of every state. I’ve spoken with people of every class of society. My experience is one of complete openness. The country is ready, is capable of taking a surprising turn… It’s enormously exciting. It’s the real thing. That’s what politics is for.”

Across the Andes, Chile’s constitutional convention can be seen in the same way: it is not just a symbol of what is broken but also of the will to make things better, the mark of a region where people have the fire in their veins to stand up when things are wrong and open a structural discussion. Neruda was right: hope is not a sufficient condition for change. But it is a necessary one.

[See also: How Lula da Silva has shaken Jair Bolsonaro’s grip on Brazil]

This piece appears in the forthcoming issue of the New Statesman magazine, subscribe here.

This article appears in the 19 May 2021 issue of the New Statesman, In defence of meritocracy