Monday, February 27, 2017

Macri In Good Political Position In Argentina

Argentina’s Mauricio Macri weathers storm as Peronists in disarray Floundering opposition struggles to challenge reform

HOURS AGO by: Benedict Mander in Buenos Aires In recent weeks, Mauricio Macri, Argentina’s president, has faced a storm of criticism. After failing to condemn an official who offended many when he played down the gravity of Argentina’s military dictatorship, he is now accused of favouritism towards his father’s company in negotiations over the repayment of a $300m debt to the state after a botched privatisation of the post office in the 1990s.  But however politically tone deaf Mr Macri may seem to his critics, the former businessman remains in a strong position ahead of midterm elections later this year, with the Peronist opposition in a state of disarray since its defeat in the 2015 presidential elections after 12 years in power. “It worries me that Macri seems to be making so many unforced errors, but this scandal over the post office will blow over. Macri is still so much better than the previous lot, who are a bunch of crooks,” says Jimena Morales, a well-heeled architect who voted for Mr Macri. Indeed, the latest survey by local pollster Poliarquia shows Mr Macri’s approval ratings rebounding to 58 per cent in January, the highest level in 6 months. Whether or not Peronism can recover will be critical ahead of midterm legislative elections in October that could enable the market-friendly leader to consolidate his liberalising economic reforms.  “Peronism is in a state of dissolution. It is over,” says Julio Bárbaro, who was a congressman in the 1970s under the final government of Juan Domingo Perón, the movement’s legendary founder. “It is just a memory now,” he adds. Related article Interview: Argentine president Mauricio Macri looks to end confrontational politics The president of Argentina says his austere approach can revive the economy and turn the page on mistakes of the past The problem for Peronists is that no new leader has emerged to eclipse the charismatic Cristina Fernández de Kirchner, who models herself on the Argentine heroine Evita, Peron’s second wife. She commands considerable loyalty though more moderate Peronists prefer to distance themselves from the divisive leader, who is fighting off multiple accusations of corruption.  “Peronism is in deep crisis. It has been unable to break the equation of Cristina [Fernández] versus Macri that dominated in the 2015 elections, leaving Macri well positioned in the electoral scenario of 2017,” says Carlos Germano, a political analyst.  Mr Germano argues that Argentines are showing a remarkable level of tolerance towards the reforms implemented by Mr Macri last year. Despite a devaluation and slashing unsustainable subsidies by hiking utility tariffs, fuelling inflation in 2016 to about 40 per cent, most Argentines remain optimistic about their economic prospects this year, he says.  Although Peronists have a majority in congress, Mr Macri’s coalition controls their traditional heartland, the province of Buenos Aires. Including the capital, which is also under the government’s control, this accounts for almost 40 per cent of voters and is led by María Eugenia Vidal, the most popular Argentine after the Pope.  There is intense speculation over whether or not Ms Fernández will choose to run for a seat in congress in the province of Buenos Aires, where she maintains strong support in poorer areas. If she does and her candidacy splits the Peronist vote, Mr Macri’s party stands to win more seats in the strategically crucial province.  For Daniel Scioli, the Peronist candidate chosen by Ms Fernández who lost to Mr Macri in the 2015 elections, it is too early to write off Peronism.  “Never underestimate Peronism. It is a party for exercising power, with experience and good leaders. It may be going through this situation, but at some point it will come out with initiatives and proposals that will rouse the people,” assures Mr Scioli, who recently commended Donald Trump’s defence of national industry and workers on Twitter with the hashtag “Argentina First”.  Indeed, some analysts quote Peron, who said that Peronists are like cats: when it seems like they are fighting, they are in fact reproducing.  Mr Scioli, a former governor of Buenos Aires province, cast doubt on Mr Macri’s ability to reactivate the economy, expressing concern about debt levels and shrinking salaries. “The government’s reforms have led to a deterioration in many economic and social indicators. They say this is necessary so that later we can be better off — I hope that time comes,” he says.  Officials say that — after five years of stagnation — there is some evidence that the economy has turned a corner. The economic activity indicator of the state statistics agency, Indec, climbed 1.4 per cent in November after rising 0.5 per cent in October.  For Mr Bárbaro, the demise of Peronism is irrelevant to the political fortunes of Mr Macri, who he argues is simply profiting from the resentment sowed by the divisive Ms Fernández. “In Argentina, those in power often end up defeating themselves. They don’t need an opposition.”  

Saturday, February 25, 2017

Friday, February 24, 2017

The Odebrecht Bribery Machine

Odebrecht scandal puts Latin America’s leaders on watch Fallout from the probe into Brazilian construction group could stir renewed populism Read next EM Squared Odebrecht’s scandal spreads across Latin America Premium Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Email5 Save FEBRUARY 20, 2017 by: Andres Schipani in Quito, Joe Leahy in São Paulo, Jude Webber in Mexico City and Benedict Mander in Buenos Aires When Peru’s President Pedro Pablo Kuczynski held a call with US President Donald Trump last week, one of his tasks was to ask whether his former boss could be extradited. Alejandro Toledo, president from 2001 to 2006, is wanted on suspicion that he received $20m in illicit funds from Brazilian group Odebrecht. Mr Toledo, believed to be in California, has rejected the claims. Two other former Peruvian presidents are also facing scrutiny for links with Odebrecht, and Mr Kuczynski himself is facing a preliminary investigation for agreeing a law that removed hurdles to granting road contracts when he was Mr Toledo’s prime minister. But Peru is just one country rattled by the international shockwaves from the admission by Odebrecht, Latin America’s biggest construction company, that it paid $788m in bribes in 12 countries in the region. For its part, Interpol has issued wanted notices for two sons of Ricardo Martinelli, former president of Panama. The case has already led the Brazilian group agreeing in a plea bargain with US, Brazilian and Swiss authorities to make the biggest corruption-related payout in history of at least $3.5bn. But the political repercussions of the case are spreading, shaking governments and politicians across Latin America. The rise of leftist populist governments across the region at the turn of the century was propelled by poverty and inequality. Now, in crisis-hit Venezuela authorities raided the Caracas offices of Odebrecht, after the company admitted paying $98m in bribes supposedly to socialist officials — the highest amount outside of Brazil. Juan Carlos Varela, Panama’s leader, denied receiving campaign donations from Odebrecht, as alleged by Ramón Fonseca of the law firm at the centre of the so-called Panama Papers scandal and a former adviser. But Ramón Arias of Transparency International in Panama said Mr Varela was “losing support and legitimacy by the day”. As the economic downturn continues to bite across the region, “people are increasingly associating the fact that there’s a slowdown with corruption. They feel that if there’s no money now, it means it’s because someone in the government stole it,” says Paulina Recalde of pollster Perfiles de Opinión in Ecuador. While governments face allegations of receiving illegal election donations or kickbacks from Odebrecht, the silver lining of the disruptive investigation is a newfound adherence to the rule of law in growing pockets of Latin America. However, analysts warn, this could open the gates for a renewed boost of populism. The Big Read A Brazilian bribery machine Record fine for illegal payments by Odebrecht raises hopes of end to the country’s culture of impunity “Corruption was something present but abstract. Now people really feel politicians were stealing from their pockets. This will surely have electoral consequences,” explains Luis Benavente, a political analyst with the Lima-based consultancy Vox Populi. “It could easily feed the rise of anti-establishment candidates.” Already in Mexico, where state-oil company Pemex is being investigated by the state comptroller’s office for its links with Odebrecht, populist Andrés Manuel López Obrador is promising to stamp out corruption and sweep out the “mafia of power” in yet another attempt to win the presidency next year. In Brazil the sweeping investigation that led to Odebrecht’s fall from grace is entering its fourth year. The probe known as Car Wash initially focused on state-owned oil company Petrobras, one of Odebrecht’s main customers, before spreading to the group. It helped lead to the fall of former president Dilma Rousseff in 2016. Her replacement, former vice-president Michel Temer, is also battling allegations of receiving illegal funds. With testimony from 77 Odebrecht executives expected to soon be released by the supreme court, Mr Temer runs the risk of having his tenure terminated if he is found to be involved. EM Squared Odebrecht’s web of corruption spreads across Latin America Disgraced construction group paid bribes to a huge number of politicians beyond Brazil The scandal, coupled with Brazil’s worst recession in more than a century, has thrown wide open the nation’s elections next year. That may also be the case in Colombia, where President Juan Manuel Santos and a political opponent have been tarnished by accusations. María Luisa Puig at Eurasia Group says this “paves the way for candidates rallying on anti-corruption platforms” in Colombia’s 2018 presidential poll. Argentina’s President Mauricio Macri faces crucial midterm elections this year at a time when the director of the intelligence agency is accused of receiving an Odebrecht bribe in 2013. There is no sign of the pressure letting up. Last week, prosecutors from nine Latin American countries held closed-door talks in Brasília and agreed to set up investigation teams to provide “the most extensive, speedy and efficient international judicial co-operation”. Politicians in the region have been placed on notice.  

A Peronist On The Potomac

A Peronist on the Potomac

Donald Trump through Latin American eyes

A PRESIDENT is swept into office after whipping up a wave of grievance and resentment. He claims to represent “the people” against internal exploiters and external threats. He purports to “refound” the nation, and damns those who preceded him. He governs though confrontation and polarisation. His language is aggressive—opponents are branded as enemies or traitors. He uses the media to cement his connection with the masses, while bridling at critical journalism and at rebuffs to executive power. His policies focus on bringing short-term benefits to his political base—hang the long-term cost to the country’s economic stability.
Donald Trump? Yes, but these traits come straight from the manual of Latin American populist nationalism, a tradition that stretches from Argentina’s Juan Perón to Venezuela’s Hugo Chávez and beyond. Yes, Mr Trump is a billionaire capitalist whereas Chávez was an anti-capitalist army officer. But populism is not synonymous with the left: conservatives such as Peru’s Alberto Fujimori used its techniques, too. “Post-truth” politics and “alternative facts” have long been deployed in Latin America, from Mr Fujimori’s use of tabloid newspapers to smear opponents, to Chávez’s imaginary coups and Cristina Fernández de Kirchner’s fake inflation statistics in Argentina.
So when they contemplate Mr Trump’s first few weeks in the White House, many Latin American liberal democrats think they’ve seen this movie before. And they know it usually ends badly. Some of the continent’s own populists, by contrast, recognise Mr Trump as a kindred spirit. Nicolás Maduro, Chávez’s dictatorial successor, criticised a “hate campaign” against Mr Trump—though that was before the United States this week blacklisted Venezuela’s vice-president as a drug kingpin (an allegation Mr Maduro called “baseless”). Guillermo Moreno, the former official entrusted by Ms Fernández with producing Argentina’s statistics, has identified “a Peronist” in Mr Trump, “who is trying to do what we did”.
It is not just Mr Trump’s assault on Mexico’s economy and national dignity, with his threats to tear up the North American Free Trade Agreement and to build a border wall, that Latin Americans have to deal with. The bigger question for the region is what Mr Trump represents in the battle of political ideas. The risk is that he may re-legitimise populist nationalism just when it was waning south of the border. That is especially so in Mexico, where Andrés Manuel López Obrador, who heads opinion polls for the 2018 presidential election, now talks of “the fatherland first”. Even Chile may not be immune: Alejandro Guillier, a former television presenter who boasts of a special bond with “the people”, has a chance in an election in November.
Mr Trump is helping to make life more difficult for those in Latin America who have argued, in the face of the region’s instinctive nationalism and anti-Americanism, that its best interests are served by co-operation with the United States and a liberal world order. “We could all hang our hats on free trade, free markets and macroeconomic stability in part because the United States believed in it, both the Democrats and Republicans,” says Luis Alberto Moreno, the president of the Inter-American Development Bank. “Now there are protectionist forces in the world, and that resonates in the region.”
One response is for Latin America to seek other partners. Though interest in deeper ties with Europe (both the European Union and Brexit Britain) is reviving, China is the main hope. It is already a big trade partner and is investing in infrastructure in the region. But Latin America exports raw materials to China and imports its cheap manufactures. That does less for its economic development than does its more diversified trade with the United States, according to research by the World Bank.
The best response to Mr Trump would be for Latin American liberals to have the courage of their convictions. They should keep their economies open and carry out several tasks they have neglected. These include building more infrastructure and fostering more regional integration, which the populists undermined by turning it into a political slogan rather than a business reality.
Latin American experience teaches that populists are easily underestimated and can stay in power for a long time. But not forever. Populist regimes are often corrupt and spendthrift, and usually fail to make people better off. Whatever the example from the White House, Latin American history shows that populist nationalism is a recipe for national decline. That is the message liberals need to hammer home.

View comments
Reuse this content

FTLatAm For Friday 23 February, 2017

Don't hold your breath
By Andres Schipani 
February 24, 2017
When it was almost certain Sunday's presidential election in Ecuador was going to a second round, populist Rafael Correa tweeted the war cry of Latin America's left: "Until victory, always!" Such a victory, will have to wait - it if happens at all - after it was confirmed that the vote will go to a run-off on April 2.
His proxy candidate, Lenín Boltaire Moreno, fell just short of crossing the threshold needed to win outright. He will have to face conservative former banker Guillermo Lasso, who may rally the votes from the divided opposition behind him. The once-unbeatable and mercurial Correa was understandably disappointed. 
"If I thought they were going to win, I would have run for president myself," he told reporters in Quito - even as he is barred from another consecutive term. He may have not yet realised that people have been demanding accountability while turning their backs on populist governments accused of being spendthrift.
A victory for Lasso in the runoff could also add to sweeping regional changes, following the removal of populist governments in Argentina and Brazil; Bolivians rejecting a proposal to allow Evo Morales to run again (although he will try again) while Venezuela's Nicolás Maduro faces growing rage from citizens.
But before holding your breaths, be aware that even if the regional romance with the left may be flagging, it is not yet entirely dead. Nor have its opponents found all the solutions. Corruption scandals are making citizens feel establishments from the left and the right alike are a seething pit of compromised politicians
This may unleash a new wave of populist presidents. The Lava Jato investigation is throwing the 2018 presidential election in Brazil wide open. Even if the worst recession in over a century is showing signs of bottoming out, President Michel Temer runs the risk of having his tenure terminated if found guilty of corruption.
In Mexico, the populist Andrés Manuel López Obrador is promising to stamp out corruption and sweep away the "mafia of power", as he is being fed nationalistic arguments by US President Donald Trump. (Let's see what happens after Rex Tillerson, US secretary of state, struck a conciliatory tone during his visit to Mexico.)
Lasso could face a populist backlash should he prevail in April’s runoff. To do so, he will first need to rally a coalition of backers. Then, he must battle a legislature in the hands of Correa, who remains the most powerful politician in Ecuador and who has already threatened foes of a potential early comeback.
"The best way to keep me away is for them to behave well," warned the firebrand US-trained economist. "If they misbehave, I'll stand again." Perro que ladra no muerde (roughly translated, his bark is worse than his bite) goes the adage in Spanish. Yet with Correa, known for his bullying style, one cannot be so sure.
Quote of the week
"I am tired of tired of politicians. That’s why I decided to govern” - Ecuador's banker-turned-presidential candidate Guillermo Lasso in an interview with the FT
Chart of the week
The week in review
Jancis Robinson: Chilean wines
‘A revolution is under way. The best Chilean winemakers are not content to emphasise quantity at the expense of quality’
Leading critic of Philippine leader Rodrigo Duterte arrested
Senator Leila de Lima claims drug money charges have been trumped up to silence her
Rex Tillerson promotes US ties during Mexico trip
Secretary of state to meet Enrique Peña Nieto as tensions between nations simmer
FT View: Latin America’s flagging romance with the left
Ecuador’s inconclusive vote shows the right still has some way to go
Fast FT: Mexico, US officials pledge to talk over 'notorious differences'
Brazil’s central bank cuts benchmark rate to 12.25%
Second successive 75 basis point reduction made as recession seems to be bottoming
Ecuador’s Lasso looks to overturn Correa’s revolution
Free-market presidential candidate vows to cut taxes and create 1m extra jobs
Run-off needed to elect next Ecuador president
Correa says favoured candidate Moreno short of enough votes to beat Lasso
Ecuador faces polarising presidential election run-off between Moreno and Lasso
Opposition groups expected to close ranks behind challenger Guillermo Lasso
Tension mounts in Ecuador as election is too close to call
Delay in counting votes from remote areas and expats angers opposition supporters
Moreno edges ahead in Ecuador’s nail-biting presidential election
Correa’s leftwing protégé close to margin needed to avoid run-off
Odebrecht scandal puts Latin America’s leaders on watch
Fallout from the probe into Brazilian construction group could stir renewed populism
Bomb blast hits central Bogotá
Fears that Farc peace deal may not have ended residual conflict from 50-year civil war
Ecuador election puts Correa’s legacy to the test
Sunday’s poll comes as economic downturn stirs political dissent