Leading by muddling through?

Buenos Aires Herald. 20 de junio de 2016.

South American organizations face challenging crisis.

In recent decades Brazil has relied on regional political groupings such as Mercosur and Unasur to help it project an international image of stable, low key leadership in a South American sphere. Along with its huge territory and population, Brazil’s centrist political and economic tendencies have helped it to play its preferred role in the regional system.

Politically, Brazil has represented relative political moderation even as it alternated between centre-right and, since 2003, centre-left political coalitions. Economically, it has maintained a state-capitalist orientation with a pragmatic bent. The current crisis raises questions about how these basic tendencies may change, and the effects of any changes on the future of regionalism organizations.

Supporters of President Dilma Rousseff equate her recent impeachment and removal with the military seizure of power in 1964. However, although there is much to criticize about the ongoing political machinations, Brazil’s political system and society today are not the same as those of the Cold War. Openly illegal ousters are not tolerated. The ongoing anti-corruption investigations promise to snare politicians of all political stripes, including key members of the government of interim president Michel Temer. Even Rousseff, who clearly believes herself to be the target of a right-wing conspiracy, seems to believe she will return lawfully. The lingering consequences of the recent episode may be increased polarization and social bitterness but, politically, Brazil’s democracy has every hope of muddling through.

Regardless of the legal grounds for impeachment, along with frustration with the PT’s involvement in corruption scandals, the most important causes of the political crisis were Dilma’s enormous unpopularity and the state of the economy. State capitalist policies have clear costs, which have been accentuated under the Workers’ Party administrations, even as some other pressing problems, such as acute poverty and social exclusion, were very much improved. The party’s supporters say that the international economic context is responsible for the economic problems that caught up with the PT during the Rousseff administration. However, it is incorrect to cast most of the blame on international conditions. The commodity price downturn did hit some parts of the country hard, but the Brazilian economy is not that dependent on international trade. Brazil weathered the global financial nicely, but continued expansionary policy (via the BNDES, its national development bank) for far too long. In short, the PT governments fell into a common political-economic trap: they didn’t prepare for bad times while the going was good.

Brazil needs to improve its finance and its investment climate and participate more in global trade, both of which are usually higher priorities for the political centre-right. It would be much better if these reforms were implemented in a process of political rotation via elections rather than irregular if institutionally-correct crisis management. However, improvements since the beginning of this year would indicate that Brazil will also muddle through economically.

How will the political and economic changes affect South American political and economic groupings such as Mercosur and Unasur? The recent invitation to Mauricio Macri’s government granting observer-status for Argentina in the Pacific Alliance is one indication that the array of regional organizations is shifting. The deeper political crisis in Venezuela is placing additional strain on regional institutions. Meanwhile, the rise of new, cross-regional possibilities such as the Trans Pacific Partnership, offers enticements to countries that South America’s underperforming organizations could not match even if they remained important for Brazil. However, Mercosur at least has been in existence long enough and can point to a few accomplishments that will make it difficult for leaders to abandon completely. Unasur, which is newer and less institutionally developed, is a different matter. Its fate will likely depend on evolving views in Brazil and other countries about its usefulness in particular areas, such as security and defence. In any case, some version of the fragmented alphabet soup of South American multilateral organizations is likely to muddle through the current crisis.