Latin America's "Magic Realism" Economics

Leaders in Venezuela, Argentina and Brazil refuse to face the reality that the days of easy money are over, and the time is now for real reform.

A slum in Caracas, Venezuela — Photo: Charles Mostoller/ZUMA
A slum in Caracas, Venezuela — Photo: Charles Mostoller/ZUMA
Susan Kaufman*


MIAMI — Colombia's Gabriel García Márquez, who died last month, was one of Latin America's greatest novelists. His writing helped to popularize what became known as "magic realism," which mixes realistic narratives with magical thinking.

Recent events in Latin America make me wonder whether the magic quality is restricted to the continent's novels, or characterizes a vision of both politics and economics espoused by leaders of several crucial Latin American countries.

I am thinking specifically of Venezuela, Argentina and Brazil. While they are very different places, their governments do not seem to accept the fact that we are coming to the end of both the raw materials boom fueled by China and low interest rates in the United States. This should force them to change the policies they have followed so far. Without the easy money they had been able to access, they will now have to implement the reforms they have postponed, to avoid the political consequences of a slowdown of growth.

The Venezuelan government led by Nicolás Maduro appears to be the one furthest removed from reality. When he took office last year, the billions of U.S. dollars that flowed into Venezuela under his predecessor Hugo Chávez had disappeared. A relatively small portion had been spent to help the poor, and the rest to buy political support for Chávez policies — but also to enrich the new "Bolivarian" elite.

Nicolás Maduro "furthest removed from reality" — Photo: Avn/Xinhua/ZUMA

Despite declining oil production and the absence of new investments and loans, Maduro has maintained his predecessor's generous spending levels, generating an inflation rate of 56% that could reach 75% later this year. Maduro seems to believe that the poor will continue to back him despite a rapid deterioration of their own economic conditions.

Brazil's former president "Lula" da Silva, a friend of Venezuela's Bolivarian revolution, disagrees, which is why he has edged Maduro toward starting a "dialogue with the opposition." It is unlikely Maduro could survive for long without introducing reforms to stop the Venezuelan economy spiralling into a slump, despite thousands of Cubans helping him maintain order with increasingly repressive methods.

Argentina too appears to have fallen into its own brand of magic realism. President Cristina Fernández de Kirchner thought she could keep spending as freely as she did during the raw materials boom, despite steeper inflation, a drastic fall in foreign investment, falling dollar reserves and exacerbated capital flight.

There are signs recently that her government is adjusting itself to reality. It allowed an 18% devaluation of the peso, cut gas subsidies and agreed to pay Spain's Repsol $5 billion as compensation for nationalizing its Argentine subsidiary YPF. Some have noted that Kirchner had no options, as Argentina was running out of money. Whatever the reason, the new policies are once more attracting investment.

Finally we have Brazil, working hard to avoid the reforms needed to generate growth. The economy that grew 7.5% in 2010, grew less than 2% in 2013, and the outlook appears to be similar for the next two years. The country's vast oil reserves have not been efficiently exploited, in part because of protectionist rules imposed that require the use of drills and ships made in Brazil. The country has not significantly reduced the credit boom that stimulated consumer spending during the high-growth years, nor has it rid itself of Mercosur, the dysfunctional trading pact that has discouraged competitiveness among its members.

In contrast with Kirchner, who will not seek another term, President Dilma Rousseff hopes to be reelected this year. She is in a race against time, trying to postpone the necessary reforms until after the elections. But if she wins, it is not clear whether would truly reconsider the ways the state can better encourage growth and development of Brazil's economy.

*Kauffman is director of the Center for Hemispheric Policy at the University of Miami.

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How Thailand's Lèse-Majesté Law Is Used To Stifle All Protest

Once meant to protect the royal family, the century-old law has become a tool for the military-led government in Bangkok to stamp out all dissent. A new report outlines the abuses.

Pro-Democracy protest at The Criminal Court in Bangkok, Thailand

Laura Valentina Cortés Sierra

"We need to reform the institution of the monarchy in Thailand. It is the root of the problem." Those words, from Thai student activist Juthatip Sirikan, are a clear expression of the growing youth-led movement that is challenging the legitimacy of the government and demanding deep political changes in the Southeast Asian nation. Yet those very same words could also send Sirikan to jail.

Thailand's Criminal Code 'Lèse-Majesté' Article 112 imposes jail terms for defaming, insulting, or threatening the monarchy, with sentences of three to 15 years. This law has been present in Thai politics since 1908, though applied sparingly, only when direct verbal or written attacks against members of the royal family.

But after the May 2014 military coup d'état, Thailand experienced the first wave of lèse-majesté arrests, prosecutions, and detentions of at least 127 individuals arrested in a much wider interpretation of the law.

The recent report 'Second Wave: The Return of Lèse-Majesté in Thailand', documents how the Thai government has "used and abused Article 112 of the Criminal Code to target pro-democracy activists and protesters in relation to their online political expression and participation in peaceful pro-democracy demonstrations."

Criticism of any 'royal project'

The investigation shows 124 individuals, including at least eight minors, have been charged with lèse-majesté between November 2020 and August 2021. Nineteen of them served jail time. The new wave of charges is cited as a response to the rising pro-democracy protests across Thailand over the past year.

Juthatip Sirikan explains that the law is now being applied in such a broad way that people are not allowed to question government budgets and expenditure if they have any relationship with the royal family, which stifles criticism of the most basic government decision-making since there are an estimated 5,000 ongoing "royal" projects. "Article 112 of lèse-majesté could be the key (factor) in Thailand's political problems" the young activist argues.

In 2020 the Move Forward opposition party questioned royal spending paid by government departments, including nearly 3 billion baht (89,874,174 USD) from the Defense Ministry and Thai police for royal security, and 7 billion baht budgeted for royal development projects, as well as 38 planes and helicopters for the monarchy. Previously, on June 16, 2018, it was revealed that Thailand's Crown Property Bureau transferred its entire portfolio to the new King Maha Vajiralongkorn.

photo of graffiti of 112 crossed out on sidewalk

Protestors In Bangkok Call For Political Prisoner Release

Peerapon Boonyakiat/SOPA Images via ZUMA Wire

Freedom of speech at stake

"Article 112 shuts down all freedom of speech in this country", says Sirikan. "Even the political parties fear to touch the subject, so it blocks most things. This country cannot move anywhere if we still have this law."

The student activist herself was charged with lèse-majesté in September 2020, after simply citing a list of public documents that refer to royal family expenditure. Sirikan comes from a family that has faced the consequences of decades of political repression. Her grandfather, Tiang Sirikhan was a journalist and politician who openly protested against Thailand's involvement in World War II. He was accused of being a Communist and abducted in 1952. According to Sirikhan's family, he was killed by the state.

The new report was conducted by The International Federation for Human Rights (FIDH), Thai Lawyer for Human Rights (TLHR), and Internet Law Reform Dialogue (iLaw). It accuses Thai authorities of an increasingly broad interpretation of Article 112, to the point of "absurdity," including charges against people for criticizing the government's COVID-19 vaccine management, wearing crop tops, insulting the previous monarch, or quoting a United Nations statement about Article 112.

Juthatip Sirikan speaks in front of democracy monument.

Shift to social media

While in the past the Article was only used against people who spoke about the royals, it's now being used as an alibi for more general political repression — which has also spurred more open campaigning to abolish it. Sirikan recounts recent cases of police charging people for spreading paint near the picture of the king during a protest, or even just for having a picture of the king as phone wallpaper.

The more than a century-old law is now largely playing out online, where much of today's protest takes place in Thailand. Sirikan says people are willing to go further on social media to expose information such as how the king intervenes in politics and the monarchy's accumulation of wealth, information the mainstream media rarely reports on them.

Not surprisingly, however, social media is heavily monitored and the military is involved in Intelligence operations and cyber attacks against human rights defenders and critics of any kind. In October 2020, Twitter took down 926 accounts, linked to the army and the government, which promoted themselves and attacked political opposition, and this June, Google removed two Maps with pictures, names, and addresses, of more than 400 people who were accused of insulting the Thai monarchy. "They are trying to control the internet as well," Sirikan says. "They are trying to censor every content that they find a threat".

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