Certainties and Qualms

Adam Przeworski once defined democracy as “the institutionalization of uncertainty.” Judged by the yardstick of uncertainty, these countries certainly qualify as democracies.

Peru—The "Outsider" Syndrome

The 2006 Presidential Election

By Alvaro Vargas Llosa

Every presidential election in peru since 1990 has been marked by forces outside the realm of the predictable. Those forces catapulted Alberto Fujimori (1990) and Alejandro Toledo (2000/2001) to power, and have made Ollanta Humala the central figure in the current presidential campaign (he won 31 percent of the vote in the first round of the elections on April 9th). The spectacular rise of Humala, a nationalist former army officer, in the polls a few weeks before the first round of the elections generated a massive reaction on the part of the establishment in favor of Social-Christian candidate Lourdes Flores, who briefly jumped back into the first place but was soon overtaken again. And in the last few days, former president Alan García, a populist, caught up with Lourdes Flores in a dead heat race for second place. Although the votes are still being counted, it looks as if Alan García will now face Humala in an unpredictable runoff in June.

Although Fujimori, Toledo, and Humala are very different, they have something in common—the popular attitudes, perceptions, and sentiments that brought them to the forefront of their respective presidential campaigns. Understanding the role played by “outsiders’ in Peruvian politics over the last decade and a half is a prerequisite for gauging what type of country will be voting in a few weeks. In all these cases the drive behind the meteoric ascent of leaders who came from outside the established parties was a revolt against what people perceived as traditional politics and “official” institutions (even if they are not such).

On the surface, voters have been reacting against the most salient symptoms of the institutional environment in which they live. In the case of Fujimori, voters were reacting against inflation, the terrorist group Shining Path, and government corruption, the three distinct features of Peru’s 1980s-style democracy. In the case of Toledo, they were reacting against “neoliberal” authoritarianism and, yes, corruption. Now, they are reacting against the “macroeconomic illusion” and, yet again, corrupt democracy (by “macroeconomic illusion” I mean the perception that healthy indicators such as a 4 or 5 percent rate of growth of the economy do not translate into progress beyond the segment of the population that traditionally benefits most directly from stable fiscal and monetary environments).

But these are all outward manifestations of something more essential—the disconnect between civil society and the state. Ultimately, voters have been reacting against a certain way of conducting state business. This same revolt has been taking place in other areas for years, with many Peruvians leaving the Catholic Church for various Protestant denominations or creating substitutes for state services at the grassroots level (in shantytowns like Villa El Salvador, the collapse of public education has forced many poor families to set up very modest private schools in their neighborhoods).

These political outsiders, Fujimori, Toledo, and Humala, were all “populists” at the time of their rise to political stardom. Populism in the Latin American sense implies heavy dependence on a caudillo who is above any sort of legal structure and whose will serves as the agent of social justice through forceful state action. Whether these leaders turned out to be (and, in the case of Humala, might eventually become), populists of the left or the right, democratic or dictatorial, is beside the point. What voters expected from them was “populism.”

A host of cumulative factors has led millions of Peruvians to revolt against elites and anything associated with them. The fundamental cause is the two-tier society segregated by almost two centuries of republican governments that failed to remove the pillars of colonial life even if they changed, sometimes dramatically, the façade. In a recent book I have called those pillars the five principles of oppression—corporatism, mercantilism, privilege, wealth transfer, and political law. These essential features of the Peruvian state mean that despite revolutions and reforms, Peru is still a country where cronyism is more important than equality before the law, and political and economic authoritarianism, rather than a market economy under the rule of law, constitute the prevailing environment.

The result is a society in which power and opportunity are concentrated by elites both at the central and at the local level. Matters are complicated by race: in many people’s imagination, the divide also pits a mostly white elite against an “indigenous” population. The divide between “white” and “indigenous” is extremely misleading in a country in which by far the predominant race is mestizo. At the local level around the country, it is actually impossible to distinguish the race of the “oppressors” from that of the “oppressed.” But this widespread perception fuels the tensions that run through the social fabric.

This social divide, a child of the institutional divide, translates into an economy in which only 2 percent of businesses produce 62 percent of the wealth while the rest—some three million small and midsized companies—produce no more than 38 percent. It also means that the centralization of economic activity is in Lima, the capital city. Arequipa, the second most important department of the country, produces a mere 6 percent of the national GDP, and most others account for no more than 1 or 2 percent. It means, in short, that one quarter of the population is extremely poor and one half is poor—the same percentage as four decades ago. Of the other half, a large chunk maintains a modest living standard but makes slow progress. Like those stone crabs whose legs are tied so that only one pair can grow disproportionately into a fleshy delicacy, Peruvian institutions enhance one segment of the population at the expense of the rest.

If we compare this static system with central and eastern Europe, where 40 million people have overcome poverty in the last six years alone, or with Chile, where one million people came out of poverty in the last decade, we have a sense of how remote macroeconomic statistics seem to ordinary Peruvians. Between 1950 and 1980, Peru’s economy grew at an average of almost 5 percent per year. In the 1990s, it grew at an annual average of 4.3 percent, and in the last three years it has grown at a rate of between 4 and 5 percent. In a different institutional context, these numbers would have entailed a significant reduction of poverty. In Peru, the corporatist, state mercantilist, privilege-ridden, wealth-transferring, and political law-dominated system stands in the way of social mobility and opens a gulf between the world of statistics and an emerging grassroots society that fails to actually emerge.

Attempts to reform the system have served to reinforce the prevailing institutions. The socialist military dictatorship of Juan Velasco attempted a “revolution” in the 1970s against the oligarchy. That “revolution” included the expropriation of haciendas and the creation of 600-plus state-controlled cooperatives in their place, as well as the nationalization of more than 200 industries. The result was a catastrophic drop in the rate of capitalization of the economy and therefore in the standard of living, and, in the specific case of agriculture, a stagnation that lasts to this day, except for a dynamic sector in the southern coast (starting in 1976, about 60 percent of those agricultural cooperatives were illegally sold to peasants associations in what constitutes a case of clandestine privatization). Another strong attempt to change the state of affairs came in the 1980s under Alan García. The result was hyperinflation and, after a short period of artificial growth, a severe drop in the amount of goods and services produced by the country.

There have also been attempts by the right to reform the status quo, most recently under the dictatorship of Alberto Fujimori. Although he successfully combated inflation and opened the economy, he practiced a systematic form of cronyism that translated into the emergence of powerful private monopolies under legal protection, a judicial corruption that reached new heights, and a political centralization that destroyed the already precarious checks and balances the previous government had left in place. Economic growth was less impressive than it could have been, and poverty was not reduced during that whole decade. (The small reduction in poverty over the last few years has to do with massive emigration, which has slowed the population growth to a rate of 1.4 percent a year as opposed to 2 percent previously.)

The return to democracy, first with the caretaker government of Valentín Paniagua and, for the last five years, the government of Alejandro Toledo brought about an improvement in areas such as freedom of expression and human rights. However, lack of reform, patronage, the subservience of the judiciary to the various political factions and the numerous barriers to entry into many markets because of legislation that preserves the privileges of special interest groups have deepened the sentiment of revulsion against the establishment. Until Fujimori was detained in Chile and it became clear he could not run in the upcoming elections, a significant portion of voters were expressing the wish to see him back in power. If this sounds contradictory with the mood of a country that is against the “traditional” political caste, it is because the goal posts keep moving in unexpected and irrational ways. Fujimori, who has been fighting efforts by the political caste to extradite him for human rights violations and corruption, is now perceived by some as an “outsider” again despite his ten-year rule in the 1990s. Now that Fujimori cannot personally run (he has been replaced by a close ally who is campaigning with Fujimori’s family) the protest sentiment has been captured by Ollanta Humala (though the Fujimori movement still managed to obtain 7 percent of the vote in April.)

Humala is a former army officer who led a quixotic coup attempt against Fujimori in the final moments of his second term. He was brought up by a father who was a Communist and who believed in racial discrimination in favor of “copper-colored” people because, according to him, of the four races of the world—white, black, yellow and copper-colored, the last one is the most unjustly treated. Humala is an admirer of Hugo Chávez, who has publicly endorsed him. He proposes “nationalism’ and expresses deep admiration for Juan Velasco, another nationalist army officer who led a coup against the democratically elected government of Fernando Belaúnde in 1968.

What we have seen in the last couple of months now is a fight between Humala, who expresses the cynicism against the traditional elites, and Lourdes Flores, a Social-Christian moderate who represents a desire to conduct affairs within the existing rules of the game. Postulating a woman in a country that has never had a female ruler has helped give somewhat of a dissident quality to a candidacy that in different circumstances would have been perfectly traditional and conservative. However, her links to traditional parties, something that was well exploited by her adversaries, held her back and allowed Alan García, whose party (APRA) is better organized, to catch up with her. It is by no means certain that Humala, the candidate of the angry masses, will win even of revolt if he expresses that sentiment against the elites. The reaction against him on the part of a segment of the population that cringes at the idea of a Hugo Chávez at the top and at the thought of going back to the days of Velasco or García may be enough to defeat him. People who would never have considered voting for Alan García are now expressing the need to do so in order to stop Humala. But the sentiment behind his rise—and behind whatever figure might replace him—is going to be the dominant factor in Peruvian politics for years to come. The fact that he obtained the greatest number of seats in a highly fragmented Congress (about a third of the total) is already an indication of that.

The immediate and near future of Peru depends on whether reform of the prevailing system generates the expectation of social mobility and diffuses social tensions or whether the failure to engage in reform brings into government a new Humala (or Humala himself, as was the case with Evo Morales in Bolivia, who lost in 2002 but won this time). In other words, it comes down to whether a Lourdes Flores or Alan García administration will spell a change of direction and sow the grass under the feet of authoritarian populists or whether the next president will signify a mere postponement of the rise to power of a radical nationalist caudillo of the type we have seen in Venezuela and Bolivia.

The deep-rooted cynicism of millions of Peruvians is perhaps best summarized by a phrase used by sociologist Stanislav Andreski a few decades ago in a book about Latin America: “Once a society is pervaded by parasitic exploitation, the choice is to skin or be skinned.” The challenge for the next president is not so much a macroeconomic one as a reform of the state that will bridge the gap between official institutions and everyday people and, by producing a reasonable legal framework, encourage a much more dynamic and less cynical civil society.

Alvaro Vargas Llosa is the Director of the Center on Global Prosperity at the Independent Institute, Washington D.C., and the author of Liberty for Latin America.

See also: Peru, Elections

High Emotions, Little Content

Colombia's Presidential Election

By Brian Crisp and Felipe Botero   

Colombian presidential elections are scheduled for may, but with only ten weeks to election day, the field of presidential candidates remains very crowded. Congressional elections, held two months prior to presidential elections, have frequently served to indicate which pre-candidates were most viable. Lists of congressional candidates associated with presidential hopefuls did battle with one another and helped gauge public sentiment as well as determine which presidential candidate was most likely to be able to form a legislative majority. Given that congressional races allowed multiple lists from the same party to compete against one another, they not only sorted out among parties but even among contenders in the same party.

This forecasting tool has been made more murky by an ongoing trend and by recent institutional innovations. First, there is a trend toward independent presidential candidacies. Not only are political newcomers and outsiders launching independent candidacies, but even long-time members of traditional parties have eschewed the opportunity to fight for their parties’ nominations, preferring instead to launch personal electoral vehicles. Thus some independent candidates do not expect congressional elections to motivate their bases of support. What is more, partisan candidates who might have been eliminated from the presidential race in a party primary (after congressional elections gave the momentum to an intra-party rival), have increasingly been willing to forego a primary they were likely to lose in order to run independently, just as incumbent President Álvaro Uribe did in 2002, when his chances of winning the Liberal primary were slim. In terms of institutional innovations, legislative elections are now held using open list proportional representation rules with only one list per party, rather than multiple sub-party lists. It is still unclear what impact this innovation will have on the connection between legislative and presidential races, but in the short run it promises to introduce at least some noise in the signal.

In early March the field of candidates included President Álvaro Uribe, a former Liberal using his own electoral vehicle; four candidates for the Liberal Party banner, with perpetual candidate Horacio Serpa likely to win a party primary; two candidates for the Democratic Pole/Alternative Democracy banner with Antonio Navarro the likely winner of a party primary; and three additional independents with the former mayor of Bogotá, Antanas Mockus, the only one registering even single-digit levels of support in public opinion polls. The Conservative Party, for a second election in a row, abstained from having a presidential candidate of its own. For the upcoming election, the decision was the result of a public consultation—held in November 2005—in which 64 percent of a surprising 1 million voters endorsed the idea that the party back President Uribe’s reelection candidacy.

While these developments would seem to increase the level of uncertainty in Colombian presidential politics—and may very well do so in the future—in the current race they are overshadowed by a second institutional innovation. In October 2005 Congress approved a constitutional amendment allowing for immediate reelection of presidential candidates (with a two-term limit). Both the amendment itself and the accompanying law regulating how a sitting president could fairly run for reelection (without using official resources to his or her benefit) survived numerous challenges before the Constitutional Court. This is the first presidential election to feature an incumbent candidate.

Sitting President Uribe is very popular. In three public opinion polls conducted throughout 2005 and into 2006, 56 to 57 percent of respondents steadily attested that they would cast their vote in the first round for Uribe (www.votebien.com). No other candidate or party obtained a level of support above 15 percent. In fact, polls of likely primary voters showed Liberal frontrunner Serpa and Pole frontrunner Navarro losing support within their parties to the undecided category.

Other candidates and their supporters have complained that the president is unfairly using the advantages of his office during the campaign. These charges have not resonated with the public generally nor been formalized in the judicial arena, and President Uribe looks set to win reelection in the first round with more than 50 percent of the votes cast.

Aside from the issue of the reelection itself, the campaign has been characterized by a dearth of issues. The most contentious topics revolve around policies implemented under Uribe’s first administration, especially his Democratic Security policy, intended to deal with Colombia’s longstanding civil war, and the now finalized negotiations for a Free Trade Agreement with the United States. President Uribe has been conspicuously frugal in his pronouncements and has avoided explicit statements about what his goals are for a second term, other than the vague claim that his reelection will ensure continuity for his programs to handle the armed conflict and the economy. Most of his challengers have limited their proposals to react to Uribe’s policies, adding little new to the debate. The presidential campaign has therefore been an exercise in which emotions occasionally run high but where substantive political content—from either the incumbent or the challengers—is quite modest.

In terms of the armed conflict, Uribe’s current policies will leave critical challenges for whoever assumes the presidency on August 7, 2006. First, the demobilization of the paramilitary armies has run past a previously negotiated due date, and there are numerous vigilantes that have yet to surrender their weapons and reincorporate into civilian life. Moreover, the ratio of men to weapons turned in is about 2:1, which implies that either there are (previously unarmed) people who are taking advantage of the terms of the demobilization agreement or that arms caches are being built up – for a future remobilization of the paramilitaries or for sale on the black market. Both alternatives are serious and need to be resolved by the next administration. The silence of the major candidates on this issue is notorious. For instance, Liberal contender Rafael Pardo and Polo Democrático’s Antonio Navarro only mention in their platforms that if elected president they will ensure that the paramilitary armies are entirely dismantled.

On a far more complex matter, upon demobilization the paramilitaries agreed to confess their crimes and to return all goods unlawfully acquired in exchange for lenient sentences, including reduced prison time. However, their crimes have involved massacres of civilians, kidnapping, rape, torture, extortion, plundering, cattle rustling, and drug trafficking, to name but a few. The Justice and Peace Law—which regulates the conditions for demobilization—limits the ability of this negotiation process to bring closure to victims in the form of justice and reparation because of several deficiencies in its conception. The law does not revoke the benefits of demobilized vigilantes who conceal facts in their depositions, even if it is later proved that they did so in bad faith. Perpetrators only face the risk of a slight increase in their penalties for crimes not disclosed in their declaraciones libres (free statements). The investigation periods established in the law are extremely short, especially for inquiries about heinous crimes such as massacres. The law protects the property of paramilitaries when its illegal origins cannot be determined, limiting possible reparations to the victims. This is particularly troublesome when it has been documented that paramilitaries assassinated landowners and, smoking guns in hand, forced widows to sign documents to transfer the property to their names. Most candidates avoid statements about the negotiation with right-wing paramilitaries. As an exception, Navarro suggests that he would issue a decree regulating the Justice and Peace Law to guarantee reparations for victims.

A second contentious subject related to the conflict is the question of humanitarian exchanges and the general issue of peace talks with leftist rebels, particularly the Fuerzas Armadas Revolucionarias de Colombia (FARC). The Uribe administration has, reasonably, opposed the exchange of kidnap victims for incarcerated guerrillas. However, the next administration will have to take a more proactive stance in order to bring an end to the predicament of more than 400 abducted individuals—including military, politicians, civilians and even some American citizens, some of whom have been held for over 8 years. Most of the candidates have indicated their willingness to carry out humanitarian exchanges with the FARC, including Serpa, Navarro, and Pardo.

In terms of economic policy, the presidential campaign has also been characterized by a lack of new and concrete proposals and instead by denunciations of Uribe’s programs. The current state of the economy is neither critical nor ideal. After almost two years, Uribe was able to close negotiations with the United States for a Free Trade Agreement that will progressively eliminate tariffs between the two countries in the near future. This agreement should generate incentives for Colombian businesses to export their products to the world’s largest economy, while exposing Colombian businesses to competition from their American counterparts. Though the benefits are clear in certain sectors, there will be negative effects in others, mainly in agriculture. Colombian grain producers simply cannot compete with (often subsidized) American agribusinesses. As a result, the government has already announced a program to help those sectors that would be more heavily hit. The plan includes some $500,000 million pesos (some $220 million U.S.) in annual subsidies for targeted industries. It is not clear where the funds will come from, even though Uribe’s government has announced that it would not raise existing taxes or create new ones. The next president will have to deal with the negative impact of the Free Trade Agreement on a significant sector of Colombia’s economy and with the more difficult task of raising funds in a fiscally responsible way to dole out help, particularly given the reduced revenues due to the elimination of tariffs.

In sum, the outcome of the election has seemed a foregone conclusion for quite some time. Barring some very dramatic events, Álvaro Uribe appears destined to win a second term—handily. An open question is whether the lack of substance to the campaign is a function of Uribe’s popularity or if Uribe’s popularity is (at least in part) a function of the lack of substance to the campaign (and party programs more generally).

Brian Crisp is an Associate Professor in the Department of Political Science at Washington University in St Louis.

Felipe Botero is an Assistant Professor at the University of Los Andes in Bogotá, Colombia.

See also: Colombia, Elections

Mexico's Presidential Election

Taking the Chávez Out of López Obrador

By Allyson Lucinda Benton 

IS MEXICO VENEZUELAN OR BRAZILIAN IN ITS POLICY TRAJECTORY?

Over the past few years there has been a surprising shift to the left in Latin American politics, raising concern among domestic businessmen, international investors, and the U.S. government about the sanctity of their investments. Rather than support the Washington Consensus, a growing number of politicians have improved their political prospects by blaming fiscal austerity and free-market economics for their countries’ lackluster economic records and widespread poverty. Indeed, as a counterpoint to neoliberal economic approaches, many newly elected leaders have won elections by advocating an increased role of the state in the economy.

Mexico is no exception to this trend. The front runner for the July 2, 2006 presidential elections is the left-leaning Andrés Manuel López Obrador of the Partido de la Revolución Democrática (PRD) who, like his Latin American counterparts, is campaigning on a left-of-center platform that questions, even if it does not fully reject, structural reforms like labor reform, social security reform, tax reform, and energy sector privatization that would help the Mexican economy retain its competitiveness and thus its market share in the U.S. economy. Domestic and international investors are concerned that López Obrador’s rejection of such measures, combined with his views on the importance of aiding Mexico’s poor, implies a potential weakening of the country’s macroeconomic position, investor confidence, and stable economic growth.

However, not all left-leaning presidents end up pushing through the policies they campaigned on. For every president like Néstor Kirchner (Argentina) or Hugo Chávez (Venezuela), two presidents who have dramatically increased state presence in their economies in recent years, there is a Luiz Inacio “Lula” da Silva, a Ricardo Lagos or Michelle Bachelet, or a Tabaré Vazquez. In these countries—Brazil, Chile, and Uruguay—left-leaning presidents have honored the neoliberal economic policies of their predecessors and even pushed for more, often to the chagrin of co-partisans. Regardless of the rhetorical shift to the left at election time, the region’s left-leaning governments tend to follow one of two trajectories: the statist or the neoliberal path.

Which path will Mexico’s López Obrador take if elected? Will he push his government to follow a more statist economic policy agenda or will he support the continuation of Mexico’s free-market economic policy approach? I argue that Mexico is most likely to find itself along the second path because two things limit its president’s ability to choose a left-leaning policy agenda: the nature of the government’s fiscal resources and congressional politics.

Presidents who can easily build coalitions in Congress and whose financial policies depend on revenues generated from single economic sectors like commodity production, rather than directly on governmental economic policy for revenues, have a much better chance of rolling back free-market economic policies. Governments whose fiscal finances depend on maintaining free-market economic policies, a broad domestic tax base, and access to cheap credit in international capital markets are much more limited in their capacities to pursue left-leaning policy objectives, even with a pliant Congress. Statist policy measures often lead to negative reactions by investors, triggering capital flight, rises in the cost of financing debt, and economic downturns. Indeed, it is those leaders lacking either fiscal resources or a compliant Congress who often find themselves either pushing for neoliberal economic policy reforms or accepting the status quo.

Though there are several parties competing for the presidency, Mexico’s presidential race is between three main contenders: the left-leaning López Obrador, the centrist Roberto Madrazo of the Partido Revolucionario Institucional (PRI), and the right-of-center Felipe Calderón of the Partido Acción Nacional (PAN). Recent public opinion polls conducted in February 2006 put López Obrador somewhere between five to ten percentage points ahead of Calderón, with Madrazo about three points behind the PANista candidate. A poll published by Reforma, a leading national newspaper, showed López Obrador with 38 percent total national votes compared to Calderón’s 31 percent and Madrazo’s 29 percent. Consulta Mitofsky shows a larger lead: López Obrador with 39 percent, Calderón at 29 percent, and Madrazo at 27 percent total national support. Though there are still several months left in the race, López Obrador’s continued popularity among the nation’s vast number of independent voters (estimated to be around 40 percent of total eligible voters) points to his edge at election time.

Unlike the PRI and PAN candidates, López Obrador is campaigning on a left-leaning policy platform that highlights Mexico’s wide income disparities. He advocates an increased role of the state in the economy to beef up job creation and increase economic opportunities, even if he does not support a rise in governmental expenditures along the way. López Obrador would also like to reorient governmental spending toward social programs and infrastructure development. A major crackdown on tax evasion by businesses and elites and a significant reduction in redundant governmental spending and thus waste would give him extra resources to pay for such spending priorities.

Some of these proposals are not very radical: most economists and politicians believe that Mexico needs infrastructure development, education spending, and poverty programs to help political stability and medium-term economic development. However, it is the prospect of state involvement in areas formerly left to markets alongside the outright rejection of many types of structural reforms that has raised concerns among domestic and international investors. López Obrador rejects fiscal reforms meant to broaden Mexico’s extremely narrow tax base as they would then increase the tax burden on the humbler classes. He rejects the notion of energy reform that would allow private investment in this highly regulated, tightly closed, and thus extremely expensive sector, claiming that energy (read: oil production) is of strategic importance for Mexico and its economy. Labor reform to ease the ability of companies to fire and hire workers is criticized for reducing worker benefits, while a full scale social security reform to allow individual accounts and an end to the defunct pay-as-you-go system is also unlikely. Most governments that have made economic decisions disregarding markets have also found themselves under pressure to support target industries for political rather than economic reasons, leading to inefficient governmental expenditures, macroeconomic instability, and low economic growth down the line.

At the other end of the left-right continuum stands Felipe Calderón. In the tradition of current President Vicente Fox (PAN), Calderón highlights the need to undertake structural reforms to attract foreign investment and ensure economic growth. Indeed, he believes that foreign direct investment and macroeconomic stability, through their effects on job creation, are the key ingredients to alleviating poverty and Mexico’s wide income disparities. Calderón also highlights the need for a continuation of governmental transparency and support for the rule of law as a means of reducing corruption, enhancing public security, and thus attracting foreign investors. Reforms to the legal system would make both of these things possible. Calderón’s policy platform is music to investors’ ears, even if it has not been as attractive to Mexican voters as López Obrador’s.

Madrazo has had a harder time appealing to supporters. Though he places himself at the political center, his party spans a wide array of ideological positions ranging from radical left to conservative. As a result, Madrazo has had perhaps the least clearly defined policy platform, one that changes depending on which constituency he is addressing. Otherwise, he risks alienating supporters. Madrazo appears keenly aware of the importance of foreign direct investment in the economy, and thus has argued in favor of structural reforms to attract investors. It is thanks to his close ties with a range of business groups that he pushed the PRI to again change its party statutes to allow its members to support fiscal and energy reforms in the future. Investors are confident that Madrazo would push for the types of reforms they prefer, even if they understand that he cannot espouse them during his campaign.

MEXICO DOESN’T HAVE WHAT IT TAKES (TO TRULY MOVE LEFT)

Mexico’s upcoming presidential elections reflect a competition between more statist economic approaches and neoliberal free-market economics. Given that López Obrador looks increasingly likely to win, this means that Mexico’s next president will have gained office through exactly the same means as many other presidents in the region. But will he be able to push policy truly left, that is, support a dramatic rise of state presence in the economy, shift governmental expenditures to new areas, and prevent additional liberalizing reforms? López Obrador’s capacity to shift governmental policy to the left depends on two things: the government’s fiscal coffers and his ability to build support in Congress. Yet neither seems to favor López Obrador.

State involvement in the economy implies increased fiscal expenditures, regardless of a politician’s intention to limit governmental spending. Policy measures deemed too radical by markets risk raising interest rates and thus debt payment obligations, something that can hurt fiscal coffers severely. This tendency worsens with economic performance, fiscal performance, monetary conditions, or any other economic or political risk perceived by markets. Arguments that López Obrador can increase governmental coffers by streamlining government are suspect in that most of the streamlining would have to come at the expense of worker salaries, which accounts for the lion’s share of governmental expenditures. Most jobs are protected under civil service or labor law. López Obrador will save money, but not enough to make up any fiscal gaps left by increased interest rates on sovereign debt.

It is possible that López Obrador could buffer fiscal coffers with oil revenues. It is true that windfall gains from oil revenues are widely expected to continue into the very near future. However, though oil prices are likely to remain high in the near to medium term, there are questions over Mexico’s ability to maintain its oil production targets over the next few years. Any dip in production would necessarily adversely affect López Obrador’s policy plans.

The government and state oil monopoly Pemex both agree that the engine of Mexican oil production, the Cantarell complex, is set to decline in the coming two to three years. Cantarell accounts for 60 percent of total oil production in Mexico and, though it produces about 1.9 million barrels per day (mbpd), it is set to decline to about 1.4 mbpd by 2008. However, other energy experts argue that this decline will be much steeper, with Cantarell producing only half its projected amount by 2008. If Pemex is unable quickly to replace lost barrels with increased production from other fields, governmental coffers could suffer dramatically. Pemex contributes between 35 and 40 percent of total governmental revenues. In a worst case scenario where Cantarell production dropped to about half of what it is producing now, something that is possible since López Obrador is reluctant to open the sector to private investment that would likely ratchet up production, and where only half of that lost production was replaced by increases from other fields, the government could lose as much as 5 percent of its overall budgetary resources. In the absence of fiscal reform to broaden the tax base, this would be a hard hit.

Even in the best case scenario where oil revenues remained high, tax collections improved, and governmental expenditures were streamlined, López Obrador would still have to face Congress. Mexico’s Congress is made up of two chambers, the Chamber of Deputies and the Senate. Most shifts in policies must be approved by both chambers in Congress, while changes to governmental spending targets must be approved by the lower chamber. Though López Obrador is favored to win the presidential elections, it is very unlikely that his PRD will gain a majority in Congress. In fact, most public opinion polls show that the parties are evenly matched in terms of congressional support, and this means that the Congress could be divided about evenly between the coalitions led by the PRD (with the Partido del Trabajo and Convergencia) and the PRI (with the Partido Verde Ecologista de México), and the PAN (running by itself).

The PAN would never support measures implying increased state control. So, to pass reforms, López Obrador would need to build a coalition with his party’s closest political counterpoint, the PRI, but a quick look at the chamber of deputies makes this seem remote. Let us assume for argument’s sake that each of the three parties wins about 150 seats each in the 500-seat lower chamber, with the remaining seats going to small parties. This means that to pass legislation, the PRD would have to build ties to small parties, as well as gain a significant share of PRI deputies, perhaps as many as two-thirds of them in the absence of small party support. This is unlikely. Though the PRI counts on politicians who might support López Obrador, to get two-thirds of these party members on board any measure is no easy task. Current policies in most areas reflect internal PRI preferences and any dramatic moves to the left (or right in the case of a Calderón presidency) are necessarily difficult to sell to politicians who prefer current stances. It also bears mentioning that the PRI has historically been quite disciplined in congressional votes, since party leaders still control campaign financing resources and access to opportunities to run for local and national office. As a result, splitting the party on important policy votes appears unlikely, especially to the extent that the PRI believes that it would be worse off under such policy regimes.

TAKING THE CHÁVEZ OUT OF LÓPEZ OBRADOR

Though López Obrador is quite popular and looks increasingly likely to win the national election this July, he will be faced with problems similar to those faced in countries like Brazil, Chile, and Uruguay, which do not count on major fiscal windfalls from commodities exports and which count on retaining access to international capital markets to finance sovereign debt and budget deficits. Mexico is no Venezuela, whose oil reserves are much larger and which counts on private investment in the sector to bring those reserves to market (and taxes and royalties to governmental coffers). Mexico is no Argentina, either, where the government also counts on windfall profits from export taxes on non-oil commodities exports and thus has the capacity to finance governmental economic and monetary policies with much more ease than Mexico. Rather, Mexico is more like Brazil in this regard, and for this reason, thanks to its integration into the international economy and international capital markets, and thanks to the willingness of voters to split their tickets between presidents and congressmen, will retain a more moderate policy course, with no major shifts to the left. This means that there is very little downside risk in Mexico, though, in a country that needs additional structural reform, the upside benefit is missing as well.

Allyson Lucinda Benton is a professor and research associate at CIDE in Mexico City. She has worked as a political risk analyst in New York and is currently a consultant for international investors through Medley Global Advisors. She has published academic articles on voting behavior, party factionalism, and economic trends in Latin America.

From Revolution to Rouba Mas Faz?

Lula's Reelection Campaign in Brazil

By Scott Desposato

President Lula came to office promising mudança, or change. He delivered, but in a very unexpected way.

Many observers were hopeful that the inauguration of Luiz Inacio da Silva as President of Brazil would usher in a new, modern, and socially just era of Brazilian politics. His personal history of labor militancy and his party’s reputation for disciplined, progressive, and clean governance suggested a dramatic departure from Brazilian politics as usual.

Lula’s rise from poverty to become president of the fifth largest country in the world is a well-known and inspiring story. Born into poverty in the northeastern state of Pernambuco, Lula came to São Paulo with his family at the age of seven. With just a fourth grade education, he entered the workforce at 12 years old, and eventually became a metal worker. During the military regime, he rose to become president of his metal workers’ union. In 1980, he was a founding member of a new Workers’ Party (PT). Although imprisoned by the military, he continued his activism, playing a leading role in the direct elections movement. He was elected to his first public office, federal deputy, in 1986.

The party he helped found—the PT—is unique among major Brazilian parties. Brazil is widely known as “the anti-party system,” beset by party-switching, corruption, and personality politics. The PT offered a new and ultimately very successful model for Brazil. The party is programmatic, has a large mass following and dedicated network of activists, is highly disciplined, and avoids public dissension. And the PT has projected a strong and clear message against the Washington Consensus or neoliberal model of development, opposing debt repayment, agreements with the IMF, privatization, and globalization.

Lula spent the last decade running for president and losing. He has been the PT’s presidential candidate four times (1989, 1994, 1998, 2002). He ran a close second in 1989 to Fernando Collor, but was easily defeated twice by Fernando Henrique Cardoso (1994 and 1998). However, in 2002, the PT chose a new strategy. A major component was a complete transformation of Lula's appearance and discourse. Gone were the sweaty t-shirts and anti-capitalism rants, replaced with designer suits and courting trips to Wall Street, and promises to comply with IMF agreements. He continued to criticize the neoliberal model, but vaguely promised a third way, which would start from scratch. His campaign improved as the outgoing Cardoso administration's popularity slipped during an economic slowdown, and Cardoso’s successor, José Serra, did not have the charisma to overcome this electoral-economic deficit. Lula won easily in a second round with 61 percent of the vote.

Post-election uncertainty surrounded the questions “which Lula had won?” the anti-IMF labor leader, or the pro-business pragmatic? In a prosperous year, he might have dodged the question and enjoyed a prolonged honeymoon period, but 2003 was difficult for Brazil. Inflation was threatening, Brazil’s debt was up to $250 billion U.S., or more than 50 percent of GDP, and fears of capital flight threatened to downgrade Brazil’s bond ratings and push up the cost of borrowing.

Lula responded, as promised, with mudança. But the change was in his politics and those of his party—not in policy. In a dramatic departure from his twenty years of activism, he chose the neoliberal response to crisis. He appointed fiscal conservatives to key posts—the Finance Ministry and the Central Bank—and made fiscal discipline and inflation-fighting top priorities. Brazil voluntarily exceeded the IMF’s budget surplus targets—4.25 percent versus the IMF’s 3.75 percent. And in an even more obvious about-face, Lula chose to push pension and tax reform. Both sorely needed attention. Brazil’s inequitable pension plan provided unsustainably generous funding to public servants after short careers, and relatively small payouts to private sector workers. Brazil’s tax system is a complex mess of state and federal income, property, and value-added taxes. Lula proposed to raise the retirement age and qualifications, cap public pensions, reduce inheritability, and implement other cost-saving measures. On taxes, his proposal was less bold but still a step forward: simplifying and unifying the states’ 27 value-added taxes into a single VAT.

Both the pension and tax reform were similar to initiatives pushed by the previous Cardoso administration, and fiercely opposed by Lula and the Workers’ Party. This was not the only time Lula was to essentially follow Cardoso’s lead. Most of Lula’s fiscal and social programs were closely modeled on policies previously introduced by the Cardoso administration, including his hunger and poverty program, land reform, environment, and foreign policy.

The dramatic about-face in policy did not go unnoticed, generating discord within the Workers’ Party. The PT’s internal divisions are real and quite heated, but public disagreement is rare, especially when the party decides to present a united front. In Congress, PT legislators that disagree on policy will occasionally abstain on roll-call votes—subtly signaling opposition. But Lula faced rare public criticism from his own co-partisans. Ironically, the breaking point was Lula’s own pension reform package. Several PT deputies and a senator voted against Lula’s reform proposal, and were subsequently expelled from the party.

Lula also faced opposition from social sectors normally closely allied with his party. Public employees have traditionally been strong supporters of the PT, but in response to pension reform, they demonstrated outside Congress, eventually vandalizing the building. The landless movement stepped up occupations of property in response to slow land reform, and labor protests accompanied rising unemployment.

However, in spite of having a divided minority and some social opposition, Lula has been fairly effective at advancing his policy agenda through Congress. A disciplined majority of the PT and allied parties closed ranks in support of his agenda. In addition, Lula found votes for his proposals among the members of the PMDB, a centrist “catch-all” party. In exchange for pork—public works projects in their constituencies—the PMDB provided the votes for a three-fifths majority—enough to change the constitution. Finally, Lula successfully leveraged other actors’ influence when possible. For example, he symbolically delivered his proposed pension and tax reforms by walking to the Congress building with all 27 governors in tow. Governors in Brazil wield significant influence with their legislative delegations, and their presence was an important signal to legislators.

Fiscal discipline eventually solved the economic crisis, but with serious short-term costs. Growth stalled, wages fell 6 percent, unemployment rose to 11.5 percent, and Brazil’s economy shrank 0.2 percent. The central bank kept interest rates high to head off inflation, putting pressure on businesses, agriculture, and consumers. The government also faced a corruption scandal. An aide to Lula’s chief of staff, José Dirceu, was found to have solicited campaign contributions from an illegal lottery boss. The scandal was never directly linked to Lula, and the alleged acts took place before his administration was installed, but it did tarnish the PT’s “clean government” image.

A stalled economy plus disappointment with the PT’s about-face on policy contributed to a decline in popular support for the administration. From a record high 86 percent approval rate upon taking office, Lula’s approval rating fell to 60 percent by May of 2004 (see Figure 1). His net support (positive-negative evaluations) fell from almost 80 percent to about 15 percent during the same period.

But by late 2004, an economic recovery was well under way. GDP grew by 5.2 percent that year, and an estimated 2.6 percent in 2005. Unemployment slipped below 10 percent, and inflation was held to a manageable 7.6 percent. The recovery plus a fading away of the campaign finance scandal combined to a rebound in popular support for Lula, with an enviable 60 percent approval and over 30 percent net approval by late 2004. In a December 2004 simulated election survey, Lula was projected to easily win re-election against any of the likely challengers.

Thus, by early 2005, the PT’s re-election seemed reassured. The president was popular, the economy was growing, and the PT had “stolen” the center-right’s policies. It was hard to imagine a compelling message that the opposition could use against the administration. Pre-candidate evaluations put Lula 20 percent ahead of the leading opposition candidate, José Serra. However, the PT’s mudança was not yet complete. The party had transitioned from opposition to government, and from left to center-right, but had one more major change in store. In 2005, a corruption scandal was tied directly to the president’s closest advisors. The scandal rocked Brazil, tarnished the president and his party, and has opened at least the possibility of an opposition victory.

The scandal broke when two businessmen seeking government contracts were asked for kickbacks by the procurement director of the mail service, Maurício Marinho. They secretly taped the encounter, during which Marinho directly implicated PTB president and Lula ally, Roberto Jefferson. Initially Senator Jefferson tried deflecting prosecutorial attention with vague hints of a grand corruption scheme and implicit threats to “tell all.” However, once cornered, he started naming names, and the scheme he described was impressive in its scope and audacity.

Barry Ames wrote in 1995 that “pork buys deputies”—that legislators’ support can be bought by building bridges, roads, medical clinics for legislators’ constituencies. Apparently, cash works well too. Senator Jefferson reported that many deputies in the governing coalition were on the president’s payroll, receiving side payments of $30,000 R per month in exchange for their support. The funds were skimmed from state-owned companies and through kickbacks from government contractors, then funneled to legislators. In exchange, the “bought” legislators were to provide loyal support for the president’s legislative initiatives. Dubbed the mensalão or, literally, big monthly, alleged recipients included PT deputies as well as members of allied parties. Apparently, opposition legislators were also offered payments if they switched party into the president’s coalition. More damning, Jefferson named Lula’s chief of staff, José Dirceu, as the puppet master.

A bumbling administration seemed determined to look as guilty as possible. The president quickly gave full support to Jefferson. When it became clear that the allegations were probably true and Congress prepared to create an investigating committee, the administration resisted. Lula tried to buy enough congressional votes to prevent the investigation by releasing millions in federal funds to deputies’ constituencies. PT legislators that supported the investigation were suspended from the party for 60 days. To the parties’ credit, the investigation proposal received multi-party support, including members of the governing coalition (PT, PMDB, PP, PL, PCdoB, PTB, and PSB). The administration’s efforts to squash the inquiry failed, and many of the allegations were substantiated in a subsequent investigation by the Federal Police. Eventually, Lula apologized publicly to the Brazilian people in December of 2005, claiming ignorance about the mensalãoscheme, and promising to punish all involved.

The scandal disillusioned and depressed Brazil. In a 2004 Latinobarómetro survey, only 37 percent of Brazilians agreed that “Democracy is preferable to any other kind of government.” Support for Lula and his government slipped as well. His positive approval rating dropped below 50 percent and net support fell from 30 percent before the scandal broke to 2.5 percent by November of 2005 (see Figure 2). More importantly, for the first time since taking office, Lula was projected to lose a reelection bid in 2006. Before the mensalão scandal, Lula had a projected 20-point victory over the leading opposition candidate, and much higher margins against other possible challengers. By November 2005, Lula’s projected victory had turned to a projected defeat, with José Serra predicted to defeat Lula by 3.9 percent of the vote.

The decline in Lula’s popularity breathed new life into the opposition’s hopes to defeat Lula in 2006. Apparently, Lula had only two possible campaign strategies: he could either claim incompetence, being unaware of the massive support-buying going on all around him, or he could admit corruption. Neither is a compelling campaign message.

However, Lula is proving incredibly resilient. The most recent polls (February 2006) show his surprising recovery (see Figures 1 and 2), and even project a 15 point victory over his leading opponent. His recovery has several sources. First, Brazil’s macro economy still looks solid. Unemployment fell to just 8.5 percent with substantial job creation. The government’s inflation-fighting discipline may have been a bit too strict, but lower interest rates should boost growth in 2006. Second, Lula has implemented successful poverty-fighting programs, including a basic welfare program and a substantial increase in the minimum wage.

How do these accomplishments “make up” for the corruption scandal? A popular saying in Brazil is—he steals, but he gets things done. Historically, this has only been used to describe clientelistic old-style Brazilian politicians, but now it may be the PT’s reelection theme. From the perspective of the poor, the PT administration may have been corrupt, but it has also delivered. Lula’s programs—though largely continuations of the previous administration—have yielded results, improving the quality of life for many Brazilians. Further, his personal charisma and impoverished origins resonate with the poor. For many voters, Lula’s behavior doesn’t actually look that bad. Many see the entire political class as corrupt, and recent scandals in Congress have served to reinforce that image, including a money laundering scheme involving a politician’s aide caught at the airport with $100,000 U.S. in his underwear. Compared to these, the administration’s buying support for substantive policy proposals doesn’t look quite so bad.

One side effect of the administration’s policies and scandal is increasing political polarization between rich and poor. Figure 3 tracks approval-disapproval scores by income, for 2003-06. Net approval for each of the three groups tracks together very well for Lula’s first two years, showing the honeymoon period of 2003, the decline in support with the economic slowdown and Waldomiro Diniz campaign finance scandal, and rise in net support during the economic recovery. However, the three groups diverge in response to the mensalão scandal. Net approval among poor Brazilians slips, but remains positive—poor Brazilians have consistently supported Lula. Middle-class voters slip into disapproval, with net approval just below zero. And net approval plummets for more affluent Brazilians, down to almost minus 30 in December of 2005. But as more than 60 percent of Brazilians fall into the poorest category, rouba mais faz should reelect Lula in October of 2006.

The opposition PSDB currently has just a few options for the campaign. Criticizing PT policy or flip-flops will be difficult, because the PT largely adopted the PSDB’s own policy program. The opposition can attack Lula on the corruption charge. While Lula looks very resilient right now, the right campaign message might turn public opinion against him, or at least make the race more competitive. There are a few wild cards that could change things quickly. One is the economy. The latest figures show a rise in unemployment and slower GDP growth. A significant slowdown in the economy would hurt Lula’s chances, but we can expect the administration to do everything in its power to avoid any economic disruption. The tight fiscal discipline of the last three years will give Lula room to spend more this year on public works and programs that are welcomed by the poor. And we can expect to see interest rates lowered to encourage growth and facilitate consumer spending. Another possibility that could derail Lula is additional corruption scandals. Should Lula be tied directly to themensalão or another scandal, that might hurt him. But there don’t appear to be many of these wild cards near the top of the deck.

Regardless of the electoral outcome in October, what will be the impact of the dramatic mudança in Brazilian politics? For Brazil, the first Lula administration has certainly had mixed results for the consolidation of democracy. On a positive note, the PT has shown that there is a broad consensus among elites that fiscal discipline and markets work, suggesting a maturation of political discourse and the expectation that Brazil may create the conditions for stable, long-term growth. The PT’s fiscal discipline has worked, and has improved the lives of many Brazilians.

On the other hand, the PT’s abandonment of its historical discourse won’t help consolidate Brazilian democracy. In Brazil, party positions and identification are not clear, and its identity is unstable – except for the PT. That party had promoted a clear policy message in the past: opposition to the neoliberal economic model. They promptly abandoned that message upon taking office, replacing it with a vague centrist ideology wrapped in progressive adjectives. This may indicate a maturation of Brazilian politics to a narrow, centrist, capitalist ideology. Or it may indicate that Brazil still is the “anti-party system.”

Scott Desposato is an Assistant Professor in the Department of Political Science at the University of California, San Diego, and a Harvard Academy Scholar. His research focuses on democratic institutions in Latin America and the United States.

See also: Democracy, Elections

Will the United States Ever Leave Nicaragua Alone?

The Presidential Election of 2006

By Roxanne Dunbar-Ortiz 

Even before the landslide election of evo morales as president of Bolivia at the end of 2005, and with left-leaning parties in power in Venezuela, Chile, Argentina, Brazil, and Uruguay, there have been hopes and fears, depending on the observer, of a possible left-wing sweep of Latin America. Given that Nicaragua is the second poorest country in the Americas and has only three million people and negligible resources, few outside the region consider Nicaragua’s 2006 presidential election significant in the process.

However, with Daniel Ortega of the Sandinista National Liberation Front (FSLN) running for president once again, the Bush administration has expressed concern about a possible return of the Sandinistas to the presidency, which they lost in the 1990 elections. This is not a new concern and not limited to the Bush administration. In October 1996, a few weeks before Nicaraguan elections, the Clinton administration’s State Department spokesman, Nicholas Burns, warned against electing Ortega saying, according to one report, that “Washington remembered Ortega’s past actions against the United States.” In 2001, the Bush administration used the September 11 attacks to oppose the return of the Sandinista “terrorists,” and is doing the same regarding Nicaragua’s upcoming November 2006 elections.

It is scarcely possible, indeed somewhat distorting, to discuss Nicaragua’s internal politics outside the context of its political history, in which the United States has loomed large since Nicaragua’s independence. From “gunboat diplomacy” to military interventions and occupations to establishing a U.S.-friendly dictatorship to organizing a war of terror against the Sandinista government to the 1990 elections that ousted the FSLN to promoting neoliberal economic policies to replace social programs, U.S. administrations have prevented Nicaragua from expressing basic national sovereignty.

The FSLN took power in Nicaragua in 1979, when its two-decade insurgency led to mass uprisings against the dictator Anastasio Somoza, who was the third in a succession of three Somoza family members to rule Nicaragua as dictators for nearly a half century, initially installed and supported throughout by U.S. administrations. Following the Sandinista triumph, the Reagan administration began in 1981 to form and finance former Somoza national guardsmen and members of the disposed oligarchy to overthrow the Sandinistas. Despite having to go on a military footing to resist the counter-revolution (Contra war), the Sandinistas held elections in 1984, which the Reagan administration condemned and which the U.S.-funded political parties boycotted. Daniel Ortega won the presidency on behalf of the FSLN, and the elections also created a multiparty National Assembly that completed a constitution which went into effect in 1987 and remains in operation today. The U.S.-sponsored war against the Sandinistas, causing tens of thousands of civilian casualties and destruction of the already underdeveloped economic infrastructure, raged on into the George H. W. Bush administration. Under pressure from the United States, the Nicaraguan national elections that were scheduled for November 1990 were moved up to February 1990, in exchange for the promise of demobilization of the Contras, a deal brokered in part by former President Jimmy Carter. The FSLN was not prepared for elections, but the Nicaraguan population was exhausted by war and economic austerity. The United States, through the National Endowment for Democracy (NED), granted nearly $13 million specifically to opposition parties in the election, along with the tens of millions pumped into anti-FSLN organizing by NED and the CIA. Furthermore, in the December 1989 U.S. invasion of Panama and removal of its president, the U.S. military forces entered the residence of the Nicaraguan ambassador in Panama, a clear provocation and warning to the Nicaraguan people of what would transpire if the FSLN was reelected. Not surprisingly, the FSLN won only 40.8 percent of the vote and 39 seats in the 92-seat National Assembly, while the National Opposition Union (UNO), the U.S.-supported collection of parties headed by Violeta Chamorro, garnered 54.7 percent of the votes and 51 seats in the Assembly.

Despite the FSLN’s loss in the 1990 elections, it retained enough Assembly seats and strong civil society support to force all three presidents (Chamorro, Alemán, and Bolaños) up to 2006 to broker deals that increased the FSLN’s political power. In 1995, then President Arnoldo Alemán (PLC-Liberal Party) amended the constitution, granting the FSLN and other parties in Congress more decision-making power over nominees for the Supreme Court and the Electoral Council. The Sandinistas also have come to control the majority of municipalities throughout the country.

The Bush administration came to office in 2001 with a sizable bloc of former Reagan managers of the Contra war and has made clear its intention to prevent the FSLN from regaining power through the electoral system. During Bush’s first term of office, Otto Reich, followed by Roger Noriega, served as Assistant Secretary of State for Hemispheric Affairs. Reich had directed the Reagan administration’s Office of Public Diplomacy, a propaganda mechanism for planting negative stories about the Sandinistas and positive ones about the contras. During the Reagan administration, Roger Noriega administered aid to Central America from the Agency for International Development (USAID), providing supplies to the Contras. Eliot Abrams was in charge of human rights in Reagan’s State Department, and then in 1985 was appointed Assistant Secretary of State for Inter-American Affairs. In that capacity, he persistently and viciously attacked the Sandinistas for human rights violations and characterized the Contras as “freedom fighters,” as President Reagan also called them. In the Bush administration, Abrams has moved on to a similar role on Middle East affairs in the National Security Council. But in 2005, Bush also appointed Abrams director of his new global democracy campaign, which he will surely use to batter an FSLN-led government if it succeeds in winning the presidential election.

Best known among the former Reagan appointees is John Negroponte, Bush’s Director of National Intelligence, also previously the administration’s Permanent Representative to the United Nations and the first Ambassador to Iraq. From 1981 to 1985, Negroponte, as the Reagan administration’s Ambassador to Honduras, constructed, oversaw, and micromanaged the Contra war against the Sandinistas. Some observers have linked the use of torture in Iraq, Guantánamo, and secret prisons around the world to the Reagan administration’s promotion of torture in Central America through the migration of such officials.

The Bush administration has evoked the “War on Terrorism” in pressuring Nicaragua to destroy more than a thousand missiles (SAM-7) remaining from the Sandinista era. Ginger Thompson, writing in the April 5, 2005, issue of the New York Times, reported that Washington buzzed with strong, although vaguely substantiated warnings about Al Qaeda recruiting operatives in Latin America; about a new axis of evil forming across the Western Hemisphere, from Venezuela through Nicaragua to Cuba; about a destabilization, or a backslide away from democratic principles south of the border; about Daniel Ortega serving as a tool to Fidel Castro of Cuba and Hugo Chávez of Venezuela.

In April 2005 the Bush administration suspended more than $2 million in military aid to Nicaragua, and Donald Rumsfeld paid a visit. Most observers see the action as a way to pressure Nicaraguan politicians and voters to prevent Daniel Ortega, head of the FSLN, from becoming president. The same Times article reported that a diplomat accompanying Rumsfeld said that the administration was concerned about the Sandinistas coming to power and controlling the missiles. A State Department official told the Times: “There’s no doubt about it, Daniel Ortega is still the pivotal actor in Nicaraguan politics… So if you are hearing that the United States is worried about missiles, and about who might come to power in 2006, there is basis for that.” Dana Harman, reporting in the September 15, 2005 issue of the Christian Science Monitor, wrote that “Roger Noriega, the Bush administration’s outgoing top envoy to Latin America (who has called Ortega a “hoodlum”), told the Managua newspaper La Prensa last month that if the Sandinistas returned to power, Nicaragua would ‘sink like a stone and reach depths such as those of Cuba.’”

The outcome of the November 2006 elections depends in part on the FSLN’s internal politics, which revolves around the role of Daniel Ortega. In 1994, many FSLN leaders and rank and file, led by former Vice-President Sergio Ramírez (1985-90), unable to dislodge Daniel Ortega from the FSLN leadership, left the FSLN to form the Sandinista Renovation Movement (MRS). In 1998, Ortega's stepdaughter, Zoilamérica Narváez, accused him of years of sexual abuse during her childhood, discrediting him among many in the FSLN, and affecting the whole party. Ortega refused to deal with the issue, shielding himself with his immunity from prosecution. Then, Ortega alienated many more in his party in 1999, when he made an agreement (pacto) with President Arnoldo Alemán (1997-2001). It is assumed that a part of the secret agreement included guarantees that Ortega would not be stripped of his immunity. The two parties, the Liberal Constitutional Party and the Sandinista National Liberation Front, created electoral laws that virtually precluded the rise of a third party, and they divided key posts between the two parties.

The Secretary-General of the Nicaraguan Foreign Ministry during the Sandinista era, Alejandro Bendaña, wrote in the July/August 2005 issue of NACLA Report on the Americas that Ortega remains untrustworthy to Washington, despite his continuous good behavior interspersed with occasional anti-U.S. rhetoric. Bendaña, like many other former Sandinistas, supports Herty Lewites, the popular former mayor of Nicaragua, in his efforts to open up the FSLN to nominations other than Ortega.

In August 2005, the Sandinista Renovation Movement (MRS), now headed by former Sandinista commander and Minister Dora María Téllez, pulled out of an alliance made in 2001 with the FSLN offering Lewites the leadership and presidential candidacy of MRS. What happens within the FSLN and with Lewites's challenge may either split the FSLN again, weakening it, or topple Ortega's leadership, which could move the FSLN farther left.

In any case, the Bush administration will oppose the FSLN or any semblance of it. Eduardo Montealegre of the Conservative Party appears to be favored by the administration over the Arnoldo Alemán-controlled Liberal Party. The current president, Enrique Bolaños, as the candidate for the Liberal Party, won the 2001 election over Daniel Ortega, but subsequently broke with the Liberal Party to form his own party, Alliance for the Republic (APRE), and went on to prosecute former President Alemán. Bolaños then campaigned for the prosecution of Alemán on various corruption charges, leading to his indictment and 20-year prison sentence. However, Bolaños and his party are weak, the president under threats of impeachment. Arnoldo Alemán is still leader of the Liberal Party and has declared his candidacy, but his legal problems persist, and he is largely discredited.

Unreasonable as it may appear, the Bush administration follows in a long line of U.S. administrations in being seemingly obsessed with controlling Nicaragua. Critic Toni Solo has commented about the current administration: “If the peoples of small countries like Nicaragua fail to submit to U.S. rule, international investors will quickly begin to ask what that fact implies for confidence in the dollar, already weak, as a strategic reserve currency.”

Perhaps that has always been the reason for persistent U.S. interventions in Nicaraguan affairs. Perhaps it’s true that “the United States will never leave Nicaragua alone,” a comment attributed to the filibuster William Walker, a U.S. citizen who invaded Nicaragua with a private army in 1853 and later proclaimed himself president. However, as the majority of Latin American states reclaim their independence from a century and a half of United States control, it may no longer be politically feasible for the United States to intervene in Nicaragua’s political processes.

Roxanne Dunbar-Ortiz is a historian and professor emeritus in the Department of Ethnic Studies at California State University East Bay. Her most recent book, Blood on the Border: A Memoir of the Contra War, was published in 2005.

See also: Nicaragua, Elections

The 2006 Presidential Election in Venezuela

Electoral Competition and Regime Change

By Angel E. Alvarez and Yorelis J. Acosta

INTRODUCTION

Between 1999 and 2005, Venezuelans have been called to cast their ballots ten times. These frequent elections have been the government showcase for democracy. Yet elections have become progressively less competitive, as President Hugo Chávez and his followers have concentrated an unusual amount of power and effectively sidelined the National Assembly. The opposition has also warned of fraud and other forms of electoral bias that favor the government. Nonetheless, with the sole exception of the 2005 legislative elections, most of the opposition parties have run for executive and legislative offices.

In Venezuela, as in other fragile democracies, elections have not been a straightforward electoral game. Indeed, Venezuelan political competition has been a two-level game in which both the government and the opposition have faced crucial political dilemmas. Chávez and his allies have dealt with the tension implicit in allowing electoral contestation that legitimizes the political system on the one hand, and exercising unchallenged authority to stay in power endlessly on the other. For their part, opposition parties have inefficiently attempted to coordinate undemocratic strategies to resist Chávez’s revolution, while simultaneously running separately in executive and legislative elections. The incipient 2006 presidential campaign reveals this tension between electoral competition and regime change.

In fragile democracies, competitive elections are not the only game in town. Political stability is at stake, and elections may either liberalize or reinforce authoritarian tendencies. Regime uncertainty strongly shapes politicians’ behavior, leading them to play an electoral game for offices and a political struggle for regime change. In this type of game is very difficult for the opposition to cooperate at both levels.

During the so-called Fifth Republic, Venezuelan democracy has become appreciably unstable and fragile. In the course of seven years, Venezuelans have endured a long-lasting process of extreme polarization, a controversial constitutional reform, the dissolution of Congress, two general strikes, a failed coup d’état led by conservative businessmen and generals, many massive demonstrations, violent upheavals, the dismissal of about 18,000 workers from the state-owned oil company (PDVSA), and dozens of politically related deaths. President Chávez has consolidated power, yet still alleges that the opposition, along with the U.S. government, plots either a new coup or his assassination, whereas the opposition insists that Chávez’s final aim is to impose an authoritarian socialist regime. Thus, political instability and polarization are far from over.

The exact nature of the chavista regime is yet to be defined. The 1999 constitution makes clear that the Venezuelan regime is not a representative democracy, but a radical participatory regime. The main features of the Bolivarian revolution include frequent and massive electoral mobilization; permanent political mobilization against alleged anti-revolutionary forces, both domestic and foreign; restrictions of free speech; redistribution of rural and urban land property; and constraints on economic freedom.

Chávez has implemented a broad gamut of social programs, and has proclaimed that his ultimate goal is to re-invent socialism. He attempts to build a network of public-private partnership industries and farmer cooperatives not determined by profits but oriented to solidarity. The so-called “nuclei of endogenous development” are the seeds of this allegedly new economic model. As part of this process, the Chávez government is implementing a radical agrarian reform, has promoted the distribution of urban land (including illegal takeovers of private buildings), and has declared that in Venezuela private property is no longer “sacred.” Paradoxically, however, the private sector has grown following the critical years of 2001-2003. Thus far, Chávez’s “21st century socialism” seems to be a sort of radical populism. He has certainly concentrated power, regulated the economy and restricted civic rights. Nevertheless, Venezuela remains far from exhibiting a Cuban-style authoritarian socialism.

The Bolivarian revolution has based its legitimacy on successive electoral victories. On average, Chávez and his followers have run for and won more than one election per year. Each of the elections where Venezuelans have cast their ballots since 1999 has been eventually presented as a revolutionary victory by Chávez and his backers.

Nonetheless, opposition leaders and social organizations (labor unions, business federations, domestic and international NGOs and human rights groups) have claimed that Chávez’s revolution is a threat to democracy. The opposition distrusts political institutions—particularly, the National Electoral Council (CNE), the Supreme Court, and the General Prosecutor’s Office (Fiscalía), and has complained of persecution and discrimination, demanded political liberalization, rule of law, and electoral transparency. Despite their many grievances, opposition candidates have run for all offices between 1999 and 2004, and apparently will run for president in December 2006.

The opposition boycotted the 2005 National Assembly election. This last-minute decision resulted from the combination of electoral calculations and regime strategies. Opposition leaders claimed that the government was prepared to commit fraud. According to their arguments, the electoral authorities were able to trace votes electronically, and the government was employing an electronic database to intimidate and to blackmail potential opponents – the so-called Maisanta List. This database combines public information from the electoral register and the list of people who requested the referendum to revoke President Chavez’s mandate. The Maisanta List includes personal information on political preferences, previous voting behavior, identity numbers, addresses, and assigned polling stations. This list could probably have been used to distort voting decisions. Nonetheless, pre-election surveys predicted voters’ unwillingness to support opposition parties. According to Alfredo Keller and Assoc., the majority party (the Fifth Republic Movement, MVR) was preferred by 55 percent of most likely voters, whereas the sum of the all opposition parties (AD, COPEI, PV, MPJ, ABP, UNT, and LCR) was just 14 percent. The same firm estimated a turnout at 30 percent or less.

Nonetheless, the electoral boycott made explicit some dramatic implications of the current political game. As a result of the 2005 legislative election, the MVR and some of its allies (PPT, PODEMOS, and PCV) gained 100 percent of congressional seats, wiping out opposition presence in Congress, which was about 45 percent of the seats in the former legislature. Therefore, opposition leaders now have no access to crucial political information, no influence in the policy-making process, and no parliamentary immunity for at least five years. They now constitute a less effective opposition, and can be much more easily prosecuted and imprisoned for their political declarations and actions. However, the opposition boycott revealed many flaws in the electoral system, also detected by international observers. In a nutshell, in December 2005 the government won all the seats, but lost some legitimacy, while the opposition lost all its power, but cast some shadows on the transparency of the Venezuelan electoral system.

Chávez’s government has used and will continue using competitive elections to legitimate his increasing concentration of power. Opposition parties have attempted to coordinate to avoid the consolidation of the chavista regime, using both democratic methods and violent strategies (general strikes, military rebellion, and riots). Yet they have been divided and will remain separated by ideological gaps and pragmatic conflicts for offices and leadership, and will probably keep failing to build successful electoral coalitions, since each party has sought to maximize its own vote share. President Chávez has been extremely successful in the electoral game, strengthening his government while the opposition gradually vanishes. Paradoxically, Chávez still needs the opposition to maintain domestic and international legitimacy. Hence the government dilemma has been and still is how to concentrate power to change the economic system and the political regime, without preventing the opposition from participating in elections.

THE 2006 PRESIDENTIAL ELECTION: CHALLENGES AND DILEMMAS

President Chávez has never concealed his electoral ambitions. Indeed, in his Aló Presidente! (his weekly live TV show) on February 19, 2006, the president voiced his willingness to remain in power indefinitely. The constitution allows him to run for president only for a second term, but his followers in the National Assembly have claimed that they are ready for a new constitutional reform.

Currently, Chávez has no serious challengers. In the ruling coalition, he is an uncontested leader. Vice-President José Vicente Rangel and many other party leaders say that Chávez is the only necessary leader of the Bolivarian “process.” Moreover, Chávez is currently the most popular candidate in Venezuela. According to Keller, Chávez is supported by 55 percent of the voters, whereas the most popular of his opponents (Julio Borges, of the MPJ) is backed by 10 percent of the citizens. Thus Chávez will probably win with no effort. However, Chávez not only needs to win the elections, he requires massive support. His proclaimed goal is to gain 10 million votes out of a total 14 million potential voters. Thus his most important enemy is not the opposition, but abstention. The 2005 parliamentary elections demonstrated that his immense and expensive political apparatus (the so-called UBE, Units of Electoral Battle) does not necessarily guarantee a massive turnout.

However, previous elections have taught him to take advantage of inflammatory and polarizing rhetoric. Since 1998, Venezuelan turnout has responded to higher competitiveness and polarization. Thus Chávez will desperately need a challenger if he wants to use the 2006 elections as a showcase for the legitimacy and strength of the Bolivarian revolution. Yet opposition leaders and traditional parties are no longer a credible threat to Chávez’s revolution.

The opposition leadership is weak and volatile. At least seven challengers are running for president. Some of them might give up very soon, but probably some others will emerge. Opposition candidates are ideologically diverse. One of them, Teodoro Petkoff, is from the center-left. He is an economist and newspaper editor who was a guerrilla leader in the 1960s, a former leader of a socialist party, and the former Minister of Planning during the macroeconomic adjustment of 1996-97. Another candidate, William Ojeda, is from a more radical and former chavista left-wing party (Un Solo Pueblo). The most right-wing candidate, Roberto Smith, is a technocratic mathematician who was a member of the economic team that implemented a “shock-therapy” program during the second administration of Carlos Andrés Pérez (1989-93). Petkoff and Ojeda have strongly criticized corruption, inefficiency, and populism in Chávez’s administration, but both of them have remarked on the relevance of Chávez’s social reforms. They also have supported the current ultra-nationalist foreign policy. On the other hand, Smith has emphasized the virtues of orthodox economic policies. Two additional candidates, Julio Borges, a lawyer and leader of the Movimiento Primero Justicia (MPJ) who is also the only candidate supported by a national opposition party, and Manuel Rosales, a governor and the main leader of a personalistic regional party (Nuevo Tiempo), have said almost nothing about economics and social programs. However, Rosales explicitly supported the 2002 coup d’état, Borges and Ojeda participated in demonstrations and popular upheavals in 2002 and 2003, whereas Petkoff and his newspaper (Tal Cual) condemned the coup, claimed for moderation, and proposed democratic ways out of the crisis.

Most of these candidates have declared that the opposition should have only one candidate, but they have still not found a way to choose one. Some have proposed a primary election; others prefer a national public opinion poll. Nonetheless, parties lack mechanisms for the coordination and enforcement of collective decisions. Thus the more likely scenario is that despite their efforts, opposition leaders will run separately for the presidency. Added to the December 2005 experience, this could mean that they could eventually boycott the presidential election in a second attempt to expose the alleged undemocratic nature of the chavista regime. The National Assembly is about to elect new electoral authorities, but there is no reason to think that a single-party legislature will elect a more independent and trustworthy electoral council than the previous multi-party Congress. Additionally, if the public opinion trends persist, opposition candidates would be inexorably defeated. Thus once again they may have incentives to boycott the election.

In this scenario, Chávez will probably emphasize his already strong position on foreign policy issues and will make use of an even more radical “anti-imperialist” rhetoric. Lacking a strong domestic menace, Chávez will probably need to fight against a powerful enemy. If he does not find a real threat, he seems to be able to fabricate one.

Venezuelan National Elections: Dates and Outcomes, 1998-2005

TYPE OF ELECTION DATE OUTCOME TURNOUT
Presidential Election December 6, 1998 H. Chávez, 62%
H. Salas R., 31%
66.5%
Constitution Amendment Referendum April 25, 1999 Yes 87.8%
No, 7.3%
37.6%
National Constitutional Referendum July 25, 1999 MVR 103 members
Opposition, 7 members
46.2%
Approval Referendum of the 1999 Constitution December 15, 1999 Yes, 71.8%
No, 28.2%
44.4%
Labor Unions Referendum December 3, 2000 Yes, 62%
No, 23.5%
23.5%
Presidential Election July 30, 2000 H. Chávez, 59.8%
F. Arias C., 37.5%
56.3%
National Assembly July 30, 2000 MVR, 44.4%
AD, 16.1%
Others, 39.5%
 
Municipal Elections December 3, 2000 MVR, 35.5% (834 concejales)
AD, 21.4% (503 concejales)
Others, 41.3%
25.1%
Presidential Recall Election August 15, 2004 Yes, 40.7% (a)
No, 59.2%
69.9%
National Assembly December 4, 2005 MVR and allies, 100% 24.9%

Note: CTV, Confedaración de Trabajadores de Venezuela (Confederation of Venezuelan Workers); MVR, Movimiento V República (chavista coalition).
Source: Consejo Nacional Electoral (National Electoral Council)
The recall referendum was certified as free and fair by international observers from the OAS and the Carter Center, but major opposition parties have refused to accept the results.

Angel E. Alvarez is a professor of political science at the Universidad Central de Venezuela and an independent political advisor. He is the author of several books and articles on Venezuelan parties and elections.

Yorelis J. Acosta is a professor of social theory at the Universidad Central de Venezuela. She also writes for Venezuelan newspapers as a political analyst and columnist.

See also: Venezuela, Elections