2018 was an eventful year for Latin America. Six countries held presidential elections, Peruvian president Pedro Pablo Kuczinski resigned ahead of a congressional impeachment, Argentina hosted the G20 with around 20,000 government representatives, and Venezuela’s deteriorating humanitarian and refugee crisis escalated immensely. Full time MBA student and CFA candidate, Yelian Garcia, provides an edited version of the geo-politics and financial issues plaguing Latin America in 2019.
All of the main states in Latin America have been struck by political discord, crises, and processes which go beyond the bounds of normativity, creating geopolitical turbulence for the continent. A vast majority of media attention over the past few months have been centered on Venezuela, and for good reason; Venezuela is a country in which the ruling party that once won elections fairly has now stripped parliament of power on response to opposition victories, have eliminated all independent media, and are actively denying outside aid. This has caused an uproar in violence within the country but also forced many to flee to neighbouring countries. Yet, as Yelian Garcia explains, while the challenges facing other countries in the region are not as severe or extreme as Venezuela, the mounting problems and public anger have become common features throughout Latin America.
Mercosur, an economic and political bloc comprising of Argentina, Brazil, Paraguay, Uruguay, and Venezuela, has also been at the forefront of the news as it seeks to modernize its practices. Using the framework as an opportunity to drive development, to establish genuinely free trade among and its members, and become a formidable market is the goal; but to stay relevant, Mercosur has to start evolving with the times. As it stands, these Latin American countries are no closer to a deal, and German Chancellor Angela Merkel explained that the new Brazilian government of President Jair Bolsonaro would likely make it harder to reach a deal in the long-running talks with Mercosur. Mercosur is going through difficulties, which are not unrelated to the other integration processes in Latin America. Another model in the international integration of the region is the Pacific Alliance Free Trade Agreement.
The Pacific Alliance Free Trade Agreement is a regional initiative created in 2011 by Chile, Colombia, Mexico and Peru. Yelian Garcia explains that the alliance’s goals are to promote the free movement of goods, services, capital, and people to promote greater competitiveness and economic growth in member countries. Many would agree that the Pacific Alliance is committed to transparency and anti-corruption, making it a better model than its protectionist counterpart, Mercosur. With a GDP worth over $1.8 trillion USD in 2015–16, and with some of the fastest growing economies in the region, it is no wonder that other countries like Canada, Australia, New Zealand and Singapore are becoming associated states of the alliance.
Political turmoil in the region, as well as rising poverty rates — which have grown from 8,2% in 2014 (48 million) to 10% in 2016 (61 million) — have seen a ‘turn to the right’ in Latin America. In a wider historical context, we observe a change related to the alignment of the parties and movements; the left and right in Latin America have recently shown a tendency to move to the centre, all the while using populist tactics and new communication methods. While the hope is that these disparate countries will come together on major issues like trade, the future of the Pacific Alliance, Mercosur, and Venezuela remain to be seen.