Distinguished Lectures Distinguished Lectures

The political and economic trends of Latin America and the future of Indo-Latin American relations

  • Distinguished Lectures Detail

    By: Amb (Retd) R. Viswanathan
    Venue: University of Kerala, Trivandrum
    Date: March 11, 2015

Delighted to see girls as the majority in the audience of political science students of the university. South America has three women presidents to inspire them. The story of the rise of Cristina Fernandez Kirchner, Michelle Bachelet and Dilma Rouseff as Presidents of Argentina, Chile and Brazil respectively, after having suffered as victims for their political activities during the military dictatorship, should be interesting for them.

Kerala and Latin America

Kerala and Latin America have some common passions and similarities: football, communism and god.

Keralites love Latin American football and cheer for them during world cups. The Brazil- Argentina rivalry is played out among the Kerala fans too.Maradona was invited to Kerala to inaugurate a jewellery show room.

During my visit to Munnar in January 2015, I saw many prominent posters of Hugo Chavez, Fidel Castro and Che Guevara on the occasion ofthe Idukki district conference of CPI(M)there. Left is strong in the politics of Kerala and Latin America.

Keralites market their state as ' God's own country'. When the Argentine journalists asked President Dilma's reaction after her meeting with Pope Francis, she said, " Brazil is happy to see an Argentine as Pope. But remember, God is Brazilian".

Brazil, the largest catholic country in the world is running short of priests. About fifty Malayalee priests are in Brazil connecting the Brazilians to God in Portuguese. There are another hundred Keralite priests in the rest of Latin America giving sermons in Spanish. Amma from Kerala has thousands of Latin American followers.

New Latin America

Latin America has undergone a paradigm shift in the last three decades politically, economically and culturally. A New Latin America has emerged in the 21st century with a new market and mindset. The song of this New Latin America is

No me preguntas mas

Dejanos imaginar

que no existe el pasado

Que nacimos al mismos instante en

que nos conocimos

( Don’t ask me any more. Let us imagine that the past does not exist; that we were born when we came to know each other)

No more coups

The region has moved irreversibly from military dictatorship to democracy. No more military coups. The last two coup attempts in Venezuela in 2002 and in Honduras in 2009 were reversed quickly and civilian rule was restored and elections held. Ninteen out of the 20 countries of the region are flourishing as democracies with regular elections and peaceful transfer of power between different parties.

Democracies have become more stable

The democracies of the region have become more stable and stronger. Political power has moved out of the barracks and oligarchic mansions to the streets. Top-down politics has given way to bottoms-up. It is the new empowered masses who matter the most in the elections and who drive the political and economic agenda of the region. Obviously they elect those leaders and parties who have the agenda for their welfare. If the elected presidents fail to fulfill their promises, the masses vote them out in the next elections. In a few cases, the masses have brought down elected presidents through agiatations and protests even before the completion of their terms. This had happened in Brazil in 1992, in Argentina in 2002, in Bolivia in 2003 and 2005 and in Ecuador in 2000 and 2005. The student agitations in Chile in 2011-12 and the Brazilian protests in 2013-14 have given a shock and clear signal to the governments and the political parties that they needed to be responsible and accountable. This assetive middle class is growing in numbers, due to the decline in poverty, thanks to the pro-poor policies in most of the countries. This is good for the long term stability of democracies in the region.

Democracies more inclusive

The democracies have become more inclusive and representative. Previously excluded sections of the society have now come to power. The most emblematic of this is the election of Evo Morales as the President of Bolivia in 2005 and his reelection in 2009 and 2014. This is the first time in the history of Bolivia and in South America, a native Indian has become President. Although 60% of the Bolivians are native Indians, they were kept outside the political and economic positions in the last five hundred years. The election of Morales is a moment of pride and honor for the 40 million native Indians in Latin America. Another important example was the election of Lugo Fernandez, a catholic bishop without political background and a complete political outsider, as president of Paraguay in 2008. It was historic since he was able to defeat the money and muscle power of the traditional oligarchic Colorado party. Chavez and Fujimori were the other political outsiders who burst into politics from outside the established political parties and got elected as Presidents.

Democracies more mature

The democracies have become more mature. In the past, the region had suffered from ideological polarization and deadly fight between left and right in which several hundred thousand people got killed. The leftists have now become more moderate and pragmatic and less dogmatic. Even the ex-guerillas who had suffered under military dictatorship and have now become presidents did not pursue any vindictive policies towards the military or the pro-dictatorship conservatives. The centre right has become more compassionate and committed to social welfare policies. A notable example is the Progresa programme of the centre right PAN government under Vicente Fox. This is one of the pioneering pro-poor conditional cash transfer programmes in the region.

The 'Mexico Pact' signed in 2012 by all the four major political parties of the country agreeing to a consensus on urgent and crucial reforms is a remarkable example of political maturity. Under the Mexico Pact, a dozen reforms have already been carried out through legislation in the last two years. Even the US media praised this and mentioned that this could be a lesson for the partisan politics in Washington DC.

More to the Left..

Left has reemerged and consolidated its power in majority of the countries of the region. In South America, all the countries except Paraguay and Colombia have Leftist governments. Even Paraguay had a Leftist President in the last term. In Colombia, Left has been given a bad name by the FARC guerrillas who have deviated from their original political ideology to crime, kidnapping, narcotrafficking and terrorism. In Central America, Nicaragua and El Salvador have leftist governments. Even Mexico came almost close to having a leftist president in Lopez Obrador who lost very narrowly ( by 0.5 %) in the elections in 2006. Leftists including communists have been elected to many city and provincial governments in many countries of the region. The Left which suffered a setback after the overthrow of the leftist government in Guatemala in 1954 got reinspired after the success of the Cuban revolution.

Che Guevara became a true global icon of the left. Born in Argentina, he worked for revolution in Guatemala, Cuba, Angola and Bolivia. He was a true revolutionary and did not seek to enjoy power after the success of the Cuban revolution. He offered himself as a martyr to revolution and died fighting in Bolivia. This is the reason why Che has remained as an enduring romantic symbol for revolutionaries and leftists around the world.

The radical form of Leftism pursued by Chavez has died with him. In any case, the worsening political, economic and social crisis in Venezuela has discredited the Caudillo politics and extremism. Ollanta Humala lost the 2006 election since he was labelled as the ' Chavez of Peru'. However, in the 2011 elections he had rebranded himself as the ' Peruvian Lula' and won. Similiarly the ex-guerilla leader Jose Mujica won the 2009 Presidential elections assuring the voters that he would be the 'Uruguayan Lula'. This confirms that theLula model of moderation and pragmatism has come to stay as the role model for the region's leftist governments. This New Left gives ample space for the private sector to flourish so that they also generate wealth for the country, jobs for the people and taxes for the government.

Imported political model replaced with indigenous one

The Latin Americans have evolved their own indigenous politico-economic model called as ' Brasilia Consensus' ( also known as Lulaism) which is a balanced mix of pro-poor and business-friendly policies. Earlier they had unsuccessfully tried and failed with imported models of capitalism including the neo-liberalistic ' Washington Consensus' as well as the Soviet model. The Latin Americans are now proud to have their own model of development which is sustainable in the long term.

Economic transformation

The region has come out of the three curses of the past: hyperinflation, excessive external debt and volatile currencies and exchange rates. Average inflation of the region is in single digit for the last dozen years. External debt is just about 21% of GDP which is much better than those of many developed countries. No more reckless external borrowing. The currencies and exchange rates have become more stable and predictable.

The macroeconomic fundamentals of the region have become stronger and more solid.Monetary and fiscal policies are more disciplined and prudent. No more adventurism or experiments. The economies have become more resilient and resistant to external shocks. While banks and financial institutions collapsed in US and Europe during the so-called world financial crisis in 2008, nothing of that sort happened in Latin America. The region withstood the shock with just minor damages. Exceptions are Venezuela and Argentina which have double digit inflations, besides other economic difficulties. But both the countries have the potential and the resources to bounce back, as they had done in the past.

The region is set on a stable and long term growth trajectory. The Latin American market is large with 550 million people, over 6 trillion dollars of GDP and 2 trillion dollars of trade. The per capita income of12000 dollars puts the region in the middle income group.

Regional integration

Latin American countries have realized the advantages of regional integration and have become members of one or other sub regional groups such as Mercosur, Pacific Alliance, Andean Community, SICA and Unasur. All the countries of the region, along with the Caribbean are part of the recently formed pan-Latin American group called as CELAC. The economic groupings have facilitated movement of trade, investment, capital and people.

Unasur has emerged as a forum to mediate in internal and external conflicts of member states within South America. Unasur has stood up for democratically elected governments when they were challenged by unconstitutional forces in some countries in recent years. Mercosur saved the democracy in Paraguay when there was a coup attempt by General Oviedo in 1998.

When the US proposed abolition of the sub-regional groups during the FTAA negotiations, the countries of the region rejected the US proposal and managed to kill the idea of FTAA itself. This is an important turning point in the history of Latin America-US relations.

Change in mindset

There is also a fundamental change in the mindset and culture of Latin Americans. In the past, when there was hyper inflation and political and economic uncertainties, short-termism was the trick to survive. The song of these old times was

Dejame disfrutar ahora

Mañana puede ser tarde

Dame ahora tu amor

Entregame ahora tu querer

( let me enjoy now. Tomorrow could be too late. Give me your love now. Deliver me your love..now )

But now that there is political stability and economic certainty, the Latin Americans are planning for the long term. The New Latin America is filled with more confidence and optimism.

Foreign policy- more independent and assertive

The old Latin America was a playing field for external global players. It was evendubbed as the ' backyard of US'.But the New Latin America is more autonomous, independent and assertive in the global stage. Some of the countries voiced their concern loudly in support of Palestine recently drawing the attention of the world.

The region has successfully diversified its economic and trade partnership and reduced its dependence on their traditional partners. Asia has emerged as a major trade partner, investor and source of credit for some countries of the region.

Latin America as role model

It is amazing to see that the region which was considered as politically unstable and economically volatile in the past, has now become a role model for other developing countries including India in some respects. These are;

Brasilia Consensus- balanced pro-poor and pro-business policies

Conditional Cash Transfer programmes- most countries of the region have reduced poverty successfully using the CCT. The most well known is the Brazilian ' Bolsa Familia'

Mexico Pact- consensus among the major political parties on urgent and crucial reforms and development goals of the country.

Jose Mujica- the President of Uruguay in the period 2010 till 1 March 2015. Mujica, known as as ' world's poorest President' lived a simple, austere, non-ostentatious life even as President of the country. He lived in his modest farm house refusing to move into the Presidential mansion and drove his own old Volkswagon Beetle car.

No to army and yes to peace - Costa Rica

This small country has set an example to the rest of the world by abolishing its armed forces in 1948, preferring to spend money on education and healthcare rather than on the armed forces. They have remained as peaceful country despite the civil wars all around them in their neighborhood for many years. They did not follow just a passive approach to peace. They actively offered their good offices and successfully brought about a peace settlement in the region in 1987. They have also established a University of Peace for studies, research and develop leaders to pursue global peace. It has students from over 50 countries.Costa Rica was one of the first in the world which combined its ministries of energy and the environment back in the 1970s and generates an impressive 99 per cent of its energy from renewable sources. The Costa Rican Government has declared that it intends to become carbon neutral by 2021.

Participatory Budgetting – Porto Alegre municipality in the south of Brazil is the pioneer and some other Brazilian cities have also been following this practice. It is on the agenda of the Aam Admi Party of India.

The future of Indo-Latin American relations

This New Latin America offers opportunities for Indian business and the government. The trade which was 42 billion dollars in 2013 could reach 100 billion by 2020. The growing middle class offers scope for increase in India's exports. Latin America has emerged as a source of crude oil accounting for over 10% of India's imports. Given the large reserves in the region and the keenness of the governments targeting India as a long term market, India can count on Latin America as a contributor to its energy security. With its large surplus arable land, abundant water reserves and modern and efficient large-scale forming South America is emerging as an Agricultural Powerhouse of the world. This is in contrast to India which faces growing population, reduction in farmland and water scarcity. South America can complement India with supply of edible oil, pulses and other agriproducts in the long term. Latin America which is rich in mineral resources can supply copper, gold, coal and other minerals to fuel India's high economic growth in the coming years.

There are over 100 Indian companies which have invested around 12 billion dollarsin a wide range of fields such as IT, energy, pharmaceuticals, chemicals, vehicles, auto parts, two wheelers, sugar, mining, cosmetics, metals, plastics, electrical products and resort hotels.The most visible Indian investment in the region is the presence of two dozen Indian IT companies which operate with 25,000 Latin American staff in 14 out of the 20 Latin American countries includingsmall countries such as Uruguay, Costa Rica and Guatemala. TCS is the leader with 12,000 staff in eight countries of the region. The Latin Americans value the contribution of the Indian IT companies to human resource development of the region through training and skill development.

Twenty Latin American companies have invested about one billion dollars in India in steel, multiplexes, bus assembly, auto parts, electric motors, IT and even cola drinks.

The Latin American governments have become more assertive and independent in foreign policy and they strongly believe in a multipolar world. Their worldview and interests coincide with India's global agenda in many areas. India has worked with many Latin American countries in G-20 and other multilateral and global forums for common goals. India has established strategic partnership with Brazil and the two have many common aspirations including permanent membership of UNSC.

Young Indians have started learning salsa and enjoy Latin American music, dance and culture. The Latin Americans are interested in yoga, meditation, ayurveda and follow Indian gurus and spiritualism.The Latin Americans look at India as an emerging global power, large and growing market, an IT powerhouse and an important investor.

Conscious of the complementarities and synergies, the New Latin America and the New India are expanding trade, investment, joint venture, interaction, engagement and cooperation towards a long term win-win partnership.