Latin America 2002: The Electoral Outlook

This is the year to watch electoral politics in Latin America. In the
shadow of a political crisis and major course-change in Argentina, five
other Latin countries will be holding presidential elections over the
next seven months.

They include Latin America’s largest country and economy, Brazil, where
the leading candidate has long been a critic of neoliberalism and free

The region’s political experts are pondering the issue of whether developments
in Argentina and Brazil signal the beginning of the end for neoliberalism
in Latin America.

"Neo-liberalism is suffering a setback … and the pendulum is once
again turning toward populism," argues José Antonio Gil Yepes,
president of the Caracas, Venezuela-based consulting firm Datanalisis
and author of a new book on the subject, La sexta república
venezolana: Un balance entre liberalismo y el estatismo
. "Neo-liberalism
failed to provide the population with an improvement in daily life,"
he notes.

Gustavo Arteta, director of the Ecuadorian think tank Corporación
de Estudios para el Desarrollo (Cordes), agrees. However, in Arteta’s
home country, scheduled to hold presidential elections in October, it
is hard to predict if the disenchantment will be reflected in the balloting,
he notes.

None of the candidates, including millionaire Alvaro Noboa and former
presidents León Febres Cordero and Rodrigo Borja, have opposed
privatization, he adds. But with a largely undecided electorate, according
to polls, and a contemporary history of popular and military upheaval
over dollarization of the economy dictated by macroeconomics, the candidates’
rhetoric has been tempered to hint at the promise of reining in market

Brazil Teeters on the Edge of Maintaining Status Quo

In Brazil, neoliberalism’s potential nemesis Luiz Inácio "Lula"
da Silva from the Workers Party has consistently been leading all polls
ahead of the October elections.

For a short time, it looked like another candidate, Roseana Sarney, governor
of Maranhao state in northeast Brazil and a member of the center-right
PFL party, would pass him. Then police raided a company owned by Sarney
and her husband in connection with a fraud investigation. Sarney and the
PFL claimed the raid was politically motivated, but her popularity has
declined, all the same.

Now, José Serra, a former health minister and close ally of outgoing
President Fernando Henrique Cardoso, appears to be benefiting from Sarney’s
reduced popularity. According to at least one poll, he would actually
beat Lula if the two went into a second round.

A second round will be held between the two top vote-getters if no candidate
musters a majority of the votes in the first round. In the past two election
periods, Lula also led polls for a long while and then won the first round
of balloting, only to be beat in the second.

Robin Rosenberg, deputy director of the University of Miami-based North-South
Center for hemispheric public policy studies, believes Brazil’s business
and political establishment will rally around an anti-Lula candidate who
will triumph.

Yet, if that were to be Serra, the question would remain over how close
he’d come to being a Cardoso clone. While not as staunch in his criticism
of neoliberalism as Lula, Serra is considered less of a free-market advocate
than Cardoso.

In any case, Brazil is expected to continue being the toughest negotiator
in talks for a Free Trade Area of the Americas (FTAA), arguing positions
that don’t necessarily square with Washington’s vision.

A Mixed Bag Elsewhere in the Region

Meanwhile, Colombia is scheduled to hold elections on May 23. A poll
released Feb. 14, showed that former Antioquia Gov. Álvaro Uribe
Vélez would win 53% of the votes, which means he would take the
elections in the first round of balloting.

Uribe, the main critic of President Andrés Pastrana’s onetime
policy of negotiations with the FARC guerrillas, would likely continue
current macro-economic policies, analysts believe.

If no candidate garners a majority of the votes in the election’s first
round, a second round will be held in June. But top challenger Horacio
Serpa, a former Interior minister, can count on only 25% support, according
to the February poll.

Uribe, is running as an independent after losing the nomination of the
Liberal Party to Serpa.

Bolivia is also slated to hold elections later this summer. Polls show
that former President Gonzalo Sánchez de Lozada will win in the
June polling. Sánchez de Lozada plans to re-start market reforms
that stalled under the current government, which followed his own administration.

Sánchez de Lozada speaks Spanish with an American accent after
growing up in the United States. He won worldwide fame when he introduced
a privatization model known as capitalization.

The model awards state enterprises to the bidders who pledge the highest
investment in the company, rather than those who offer to pay the most
to the government. It also requires that half the shares in the privatized
firms be converted into pension funds for the population. Some analysts
say the approach offers an effective way to reduce government corruption
in the privatization process, a central campaign promise of Sánchez
de Lozada, along with more market reforms.

Farther north, Costa Rica will be holding a second round of elections
on April 7, after no candidate claimed the majority of the votes in Feb.
3 elections.

This is the first run-off in more than 50 years. The reason: Independent
candidate and former Planning Minister Ottón Solis, who ran on
a semi-populist platform, managed to get enough votes to block victories
by the leading candidates—from the Social Democrat PLN he once belonged
to and the rival Christian Democrat PUSC.

But the PLN and PUSC candidates—the only two allowed to go into
the second round—are just as likely to stop the liberalization policies
of outgoing president Miguel Angel Rodríguez, from the PUSC party.
Rodríguez faced massive judicial and political resistance when
he tried to privatize the state telecom and electricity company ICE. Now,
both the PLN and PUSC candidates have stated they oppose privatization.

The latest polls show PUSC candidate Abel Pacheco, a 67-year-old psychiatrist
and TV presenter, leading PLN candidate Rolando Araya, a 54-year-old chemical
engineer and former Transport minister.

As a result of electoral politicking, it appears that Latin America may
experience some shifts to reduced market reform in Ecuador and Costa Rica,
some measure of increased market reform in Bolivia, and maintenance of
status quo in Colombia, while the outcome in Brazil remains up in the
air. It’s a mixed bag for the region.



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