-Analysis-
PARIS — And then, Brazil. The list of countries that are switching to so-called “strongman” regimes keeps growing. Vladimir Putin’s Russia, Recep Tayyip Erdogan’s Turkey, Narendra Modi’s India, Rodrigo Duterte’s Philippines, Jair Bolsonaro in Brazil. The “people” leave it up to a candidate who has promised the end of corruption and economic recovery. In Europe, Poland and Hungary have made this choice while in Italy, Matteo Salvini’s League has conquered a big piece of power. The momentum is worldwide.
Parallel to these victories, the faith in the higher virtues of representative democracy is lost. In France, according to a survey by the Jean Jaurès Foundation published in July, nearly one in two young people (under 35) believes that democracy “is not the optimum system.” And two-thirds of French polled think that politicians are corrupt.
To make politics more effective in more difficult times, strong governments are needed.
The “peoples’ who give their votes to nationalists, populists and other “strongmen” have reasons to do so. The level of corruption is appalling in many of these countries and their economies are stagnating. The euphoria born of soaring commodity prices is long finished, and the rise in U.S. interest rates has brutally drained investment flows these past two years.
There’s now a widespread feeling that democracy was a regime for sunny times, but that to make politics more effective in more difficult times, strong governments are needed. And the examples of Putin, Xi, and Trump are used to demonstrate just that.
An overlooked twist to consider, however, is the behavior of financial markets. The markets appear enthusiastic about the tax cuts in the U.S. and are said to welcome the would-be “stability” and corruption crackdown that autocrats supposedly bring. The corruption argument is pure deception. A generation ago, Brazilian military leaders distinguished themselves by enriching themselves while in power after 1964.
Viktor Orban’s Hungary lost 10 points on the Transparency International index, from 55 in 2012 to 45 in 2017. The NGO is vilified by the person concerned, but the price of public contracts there is 25% higher than average. Corruption has reached new heights in China, to the point that Mr. Xi has had to declare its eradication as his priority and clean up governing bodies.
[rebelmouse-image 27069304 original_size=”800×532″ expand=1]
Hungary’s Viktor Orban in Brussels on Oct. 17 — Photo: EPP
The economic argument is a tall tale. China is a model that cannot be replicated. An examination of the results of strong regimes reveals many more failures than successes. Growth rates around 6% are “normal” for countries that are “catching up,” so we need to take a closer look. Let’s keep Venezuela aside, with a regime that is more mad than strong. But in the Philippines, growth exceeds 6.5%, largely due to the money sent back to the home country by emigrants. President Duterte distributes social assistance, but public investment is insufficient. The short-term prevails over the long term.
Putin is now paying for his obsession with control.
In India, per capita income is rising very slowly, bureaucracy continues to paralyze the country, and the difficult business climate discourages foreign investment. Prime Minister Modi has failed to reform and clean up the financial system, as illustrated by the fiasco of the demonetization of large banknotes in November 2016. India is a difficult country to govern, no one doubts it. But the populist Modi has proven no better than his predecessors.
Turkey still enjoys 3.5% growth, but the country’s weaknesses — inflation, high debt, external deficit — are getting worse and the government is locking itself into authoritarianism. As a result, the markets finally reacted negatively this summer. As for Vladimir Putin, the “godfather” of the current batch of strongmen, he’s now paying for his obsession with control and his total inability, after 18 years in power, to diversify his economy away from hydrocarbons and allow an autonomous private sector to flourish. Sanctions are affecting growth (1.7%), but Putin himself is the perfect embodiment of a country that wastes its opportunities and remains an economic dwarf.
The numbers and the facts speak for themselves. Against corruption and for the economy? Strong regimes wind up as champions of the exact opposite.
