The former Chancellor of the Republic, Ernesto Talvireappeared in the media and talked about current issues with the Spanish podcast Conversaciones El Cano in a chapter called Latin America: political and economic challenges.
The first thing he talked about was the recent riot in Brazil. Talvi recalled that this type of demonstrations also occurred in a similar way in other countries in the region such as Chile, Peru and Colombia and Ecuador and that they all have a common denominator: it is “the economic stagnation of the region, after the end of the super cycle of raw materials in 2014“.
“Let’s not forget that per capita income today is lower than it was in 2014. In other words, this has led to increases in the levels of poverty and, above all, that millions of people who accessed a middle-class life for the first time and dreamed of an even better future for their children, now find themselves in a situation of vulnerability and at risk of losing the economic and social promotion that they had achieved“said the economist.
For the economist, all this generates a feeling of insecurity and discomfort, which causes it to be generated “a breeding ground for right-wing or left-wing populism in the region”.
This frustration, according to Talvi, leads to governments being replaced by others of different ideologies. Something that happened to the left with Andrés Manuel López Obrador in Mexico in 2018 and that continues with Lula’s victory in 2022 in Brazil.
“Now it is also interesting to note that in Uruguay and Ecuador, where in 2018-19 there were leftist governments, they were replaced by right-wing governments. In other words, what seems to be a movement against those who exercise power and are not capable of responding to these frustrations. They were replaced by that anger, that frustration that there is towards the elites that do not give answers”, he assured.
With respect to the leftist governments of Latin America, Talvi differentiated them into three. According to him, Brazil and Chile are governed by a “modern, democratic, cosmopolitan, pro-market and social democratic” left. Later, the one that governs in Mexico, Peru and Bolivia is “nationalist, authoritarian, statist and populist”. And there is the left in Cuba, Venezuela and Nicaragua that “are dictatorships.” “So, With that qualification, I would say yes, that we have a turn to the left and that in many countries it is a turn towards a modern, democratic, cosmopolitan and social democratic left”analyzed.
Talvi said that “It should not be forgotten that we are witnessing the rise of legitimacy of the radical and conservative right-wing forces throughout the region in parallel.” He pointed out that “they are being configured and positioned as replacement alternatives”. In his view, it is something “unthinkable until recently.”
Talvi analyzed economic prospects
In addition to the political prospects, Talvi made an economic analysis of the region and said that the situation “is not very auspicious.” “Let’s think that between 2014 and 2019, before the pandemic, in the five years after the end of the super cycle of the commoditiesthe region grew at an annual average of 1%”indicated.
“Last year the region grew somewhat more than forecasts due to the rise in the price of primary products, which is now beginning to reverse slightly, with which all projections indicate that, at least for the next 2023 and 24, growth will be in the order of 1%, back,” he continued.
According to the former Uruguayan foreign minister, three scenarios will be seen. “We are going to see debt restructuring —we saw it in the case of Argentina, in the case of Ecuador—; we are going to have requests for assistance from the International Monetary Fund to avoid having to fall into those restructurings, something that is happening in El Salvador and Costa Rica, and we are going to have countries that are going to need to adjust public accounts to stop the unsustainable growth of indebtedness and thus avoid falling into situations like the ones we mentioned of possible restructuring.” Talvi predicts this last scenario for the government of Gabriel Boric in Chile.
In turn, he said he was frustrated by the delay in signing the Free Trade Agreement between Mercosur and the European Union. “I think it should be achieved or should be achieved, and put all the political will to do it.”
“Let’s not forget that the economic space that we would be able to create would be a formidably large space, with 700 million consumers. It would be the largest agreement that probably exists on the planet,” he said.
