Geopolitics

Latin American Elections, A Mirror Of Global Unrest In 2018

Governments in several Latin American states are facing angry voters who may remove them from power, but perhaps of greater concern is the spreading wrath against all politicians, everywhere.

A protest against the government on May 13 in Masaya, Nicaragua
Rodolfo H. Gil

BUENOS AIRES — Another big crisis has erupted in Latin America. Nicaragua. This erstwhile member of the declining forces of so-called 21st Century Socialism is in fact the other facet of the Venezuelan experience.

The Sandinista government controls the armed forces and police, and it has had a relatively successful run given Nicaragua's size and impoverished state. The regime had forged a firm alliance with the private sector and revamped its Marxism with a mix of zealous Christianity.

And yet, despite a formidable array of legitimating tools, President Daniel Ortega opted for the fierce repression of public protests over corruption in the state pensions fund, causing more than 60 deaths. Initially headed by students, the unrest has swiftly spread to other social sectors.

The "new" middle classes and a youth generation that knows neither the pre-revolutionary Somaza regime nor the first, Ortega-led Sandinista government that replaced it in 1979 and governed until 1990, want democratic qualities authoritarian rulers cannot give them. People are tired of so many years of Sandinista dominance and frightened by prospects of Ortega's wife succeeding him in dynastic style. The logic of legitimacy, dialogue and the quest for common solutions is giving way to the mute logic of violence.

nicaragua_protest_government_gun

A man holding a gun in a protest against the government on May 13 in Masaya, Nicaragua — Photo: Carlos Herrera

What can explain such an error in political practice? The pride of believing that you alone hold the truth. Since its foundation, the Ortega regime has entertained the messianic notion that circumstantial majorities, even lasting ones, give one the right to skip the rule of law, trample on basic liberties, and negate dialogue with social and political forces.

Sandinism is right now at its weakest since Ortega returned to power in 2007. The regime is suffering from infighting even as it faces a civilian revolt that expresses itself in multiple and disorderly ways but lacks leadership and an organic structure. Shouts of "Ortega Out" can be a catharsis but not a solution.

For now, the Church's presence as mediator in a stalled national roundtable discussion, and assurances from the armed forces that they will not participate in acts of suppression are encouraging signs that gentle good sense may return to the home of such continental emblems as César Sandino and the poet Rubén Darío.

The crisis is unfolding against a background, furthermore, of some very important elections this year in Latin America. Leaving aside the parody in Venezuela, three of the region's four main economies are going to the polls and none of the polls are expected to be good news for ruling parties. The vote is becoming more negative by the day, and feels more like a rejection of the governments in power than support for an alternative program or leadership.

The Macri administration is making political missteps tries to put a wayward economy back on track.

Worse yet, the backlash is targeting the entire political class — opposition groups included — and is now just one step away from challenging the democratic system itself. Indeed, the political novelties of the developed world, where fascist-type or even clownish options are emerging, may be late in reaching Latin America. Inevitably, though, they will show up.

All of this should serve as a warning to the administration of Argentine President Mauricio Macri. Even a government with his margins of legitimacy, earned from victories in two impeccable elections, cannot close itself in and claim its truth as the only one around. Argentina faces a particularly difficult situation, both inherited and self-generated, and this government lacks the critical political mass to face them alone.

The Macri administration is making political missteps tries to put a wayward economy back on track. It needs to engage in dialogue, a real one, not one of those simulated versions convened from time to time once you've forced your interlocutor to adhere to official policies.

This dialogue, which should have been convened when the executive was strongest, must be organic and engage the country's various leading players. Unfortunately, the Macri administration let the postman ring the doorbell twice without answering — which takes us to a second conclusion.

Those who rule must understand that the opposition is just that: opposition. It does not share many of your visions and approaches, and you cannot ask it to share the costs of your decisions — decisions from which it was excluded. One can expect the opposition not to aggravate already difficult circumstances, and to be mindful of the presidential investiture and the wellbeing of state institutions.

The world is a little tired of the Argentines, and a new degradation of democracy would be unfortunate. And in this instance, as it has in the past, silence by itself could cause the degradation. A good starting point, for example, would be to withdraw the parliamentary bill on stand-by loans, which would effectively place the national economy in the hands of IMF bureaucrats.

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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