11/10/2022

THE INTERNATIONAL POLITICAL SITUATION AND LATIN AMERICA

The international situation is complex and uncertain, mainly due to the repercussions of the invasion of Ukraine, including the risk of a nuclear conflict. Russia's latest move was to hold referendums to annex the Ukrainian regions of Kherson, Zaporizhzhia, Donetsk and Lugansk, once again threatening to use nuclear arms. This is compounded by the sabotage of the Nord Stream I and Nord Stream II gas pipelines - not operational at the moment-, which will probably lead to a scenario of an energy war with the European Union (EU). Putin seeks to reduce the supply of hydrocarbons to a Europe that relies heavily on Russian production. The arrival of general Winter may make matters worse.                                   

Although the hike in gas prices began to lose steam after the first spike in recent weeks, they are again on the rise due to fears of trade disruptions or further physical sabotage or cyber-attacks on the European energy network. Since Europe’s gas and oil pipelines, and even electric grids, form a closely interconnected network, a blow to one sector can lead to a total collapse. This is of concern to governments, intelligence services, and citizens.

Another important issue is the victory of Giorgia Meloni in Italy, which for obvious reasons worries Brussels. However, it is worth introducing a few notes of moderation. The first is that the landscape looks bleak outside the euro and the EU. A country as economically fragile as Italy, which is on the brink of recession, is not likely to cause a major uproar against the Union. In the aftermath of the pandemic, the EU provided a substantial aid fund, which revealed the leverage of Brussels to member States. Added to this is the war in Ukraine, to which the EU responded diligently and effectively, unlike other crises when its reaction was spasmodic or sluggish. What President Mattarella, acting Prime Minister Draghi and Meloni herself have in mind is a prompt transition. The government is expected to be in place by October 25th. One of its first tasks will be to submit an orthodox draft budget to the EU. In this regard, Antonio Tajani, former president of the European Parliament, whose reputation for credibility and confidence with the markets is guaranteed, seems likely to be the new Minister of Foreign Affairs.

The war in Ukraine broke the populist axis in Europe, especially in Poland and Hungary. While Orbán remains loyal to Putin and Russia, Poland adopted a distinctly anti-Russian stance. Unlike Salvini and Berlusconi, her other coalition partners, Meloni appears to be more proactive against Russia.

Outside Europe, the return of Trump to the White House is not to be ruled out. Control of both houses is at stake in the upcoming mid-term elections. While three months ago the prospects were catastrophic for the Democrats, an upswing in Biden's popularity has changed some expectations. The outcome will be important for Trump, who must decide whether to seek re-election, which will have implications for international politics. 

Latin America is a divided and heterogeneous region stumbling to adapt to the international context. Its fragmentary nature, coupled with age-old tendencies, prevents it from articulating a single voice. As a result, it has become internationally irrelevant and the tried and tested regional integration processes have failed, which is not only a problem for the region, but also for its potential interlocutors.

Integration is seen as a political or ideological issue rather than a process to reconcile national interests which, albeit contradictory, can be resolved. The idea is that only if we speak the same language, belong to the same club, are all on the left or the right, can integration move forward. And this has led to the current situation.

The war in Ukraine poses both great challenges and opportunities for Latin America. One of the challenges is political positioning. While Nicaragua, Venezuela and Cuba are staunch allies of Russia, there are others with a more distant attitude. But unlike other regions, no Latin American country has endorsed sanctions against Russia, notwithstanding the rhetoric, the condemnation of the invasion by international organizations or the abstention from voting.

In terms of opportunities, there is the commodity upswing. This happened before, i.e., during the commodity super-cycle, when prices rose steadily as a result of Chinese demand. However, at this juncture, the question is whether Latin American countries will be able to take advantage of the opportunities. Another element to bear in mind is the reconfiguration of global production and supply chains, the reorientation of investments, the outflow of capital from China and its relocation elsewhere. Political and ideological issues can also become a major barrier in this area. Mexico is a case in point. Due to its proximity to the US, it is an ideal destination for relocating investments. However, President López Obrador's policies in areas such as energy, his rejection of renewable energies, his support for hydrocarbons and even certain flirtations with Moscow are causing many European and US companies to be suspicious.

The presence of China and Russia is another major issue. While Russia plays a secondary role, China has become a decisive partner over the last 15-20 years, not only in terms of trade, but also of direct investment. However, the war is reshaping the relationship between them. At the last summit of the Shanghai Cooperation Organization, where Xi Jinping and Putin met, China took a certain distance from Russia. At the same time, Russia's reliance on China is increasing. If Russia becomes a satellite of Beijing, its exports will, for geographical reasons, concentrate on China, in many cases displacing the Latin American potential.

Finally, Latin America is said to be witnessing a shift to the left, a new pink tide, with Boric in Chile, Petro in Colombia and Xiomara Castro in Honduras. In reality, rather than a shift to the left, we are facing a vote to punish the ruling parties. Only in Nicaragua did the ruling party win out of the last 14 presidential elections in Latin America. And its victory was not precisely due to democratic practices. The idea of a shift to the left is also based on the calendar. Between 2021 and 2024, all Latin American countries, except for Cuba and Bolivia (which will vote in 2025), will hold or have already held presidential elections. Many of them had right-wing governments, and the natural replacement led to the emergence of "progressive" administrations. Next year there are elections in Argentina, and if things turn out as they seem to, the Peronist party is likely to be defeated.

In Brazil, the outcome of the presidential run-off could be quite tight and either of the two candidates may win, among other things because the rejection rate is very high. If Lula wins, the risk is whether Bolsonaro will accept the result or if the scene of January 6th in Washington will be repeated. All the conditions are in place for his refusal to acknowledge the results.

Whether Lula or Bolsonaro wins, provided they both respect the result, Brazil will continue to be Brazil. The fundamentals of its economy and the solidity of its institutions will enable it to keep its course. In fact, despite Bolsonaro's attempts to radically change some essential issues, his results have been meagre, and his promises of major reforms and privatizations have not materialized. Yet, Brazil is already a different country.

Carlos Malamud is Emeritus Professor of American History at the Universidad Nacional de Educación a Distancia (Spain) and Senior Researcher at the Real Instituto Elcano. He is a Corresponding Member of the Academy of History of Argentina. His latest book is: "El sueño de Bolívar y la manipulación bolivariana. Integración regional y falsificación de la historia en América Latina" (Alianza Editorial, 2021).