Reform redux in Latin America?

Latin America is approaching a fin de siècle… again. Populist regimes in Argentina, Brazil and Venezuela are vulnerable, and opponents espousing market-based policy reforms for moribund commodity-based economies are nipping at the heels of power. We´ve seen this movie before. Will it end differently this time?

Maybe. The film opens in Argentina, where right-of-centre presidential hopeful Mauricio Macri holds a comfortable lead over government-backed rival Daniel Scioli ahead of a 22 November run-off election. If Macri wins, a dozen years of Kirchnerismo marked by widespread subsidies, price controls and capital restrictions would come to an end, albeit gradually.

A Macri victory would sweep away economic distortions, and Buenos Aires would be re-embraced by investors and creditors. Foreign oil companies would flock to Argentina´s shale formations. Biodiesel and other once-vibrant industrial sectors would get back on their feet. Beyond Argentina, a Macri victory would embolden like-minded forces in Brazil and Venezuela, toppling a house of cards worthy of a Netflix sequel. Or so the plot line goes.

But not so fast. Brazilian president Dilma Rousseff is hanging on in spite of pervasive rot, or perhaps because of it. Her congressional opponents who would topple her appear equally discredited. And Brazil remains a non-Opec star even though oil prices have plummeted. A strike by oil workers that is knocking out as much as a fifth of production shows that the restructuring of Petrobras will be especially painful to execute. For overdoses of power, rehab is like that. But it doesn´t have to mean regime change.

Venezuela´s Nicolas Maduro is muddling through as well. Echoing his counterparts in Argentina, he warns of the dire consequences of an opposition victory in 6 December legislative elections. He has shunned credible international observers, just in case voters dismiss his warnings. Even the collapse of oil prices that many had predicted would topple Chavismo has only escalated the government´s campaign during an “economic war” that only it will be allowed to win.  

It is tempting to think we are watching a political version of Twilight. For now, these look more like coming attractions that may or may not be shown at a theatre near you.

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