Latin American co-operation scales new heights
Gathering of leaders marks decisive shift back towards economic orthodoxy
When Hugo Chávez, the late Venezuelan leader, shot down attempts a decade ago by President George W Bush to promote free trade in Latin America, the region’s powerful leftwing leaders cheered.
But the recently ended meeting of the Pacific Alliance trade bloc attended by the leaders of Latin America’s largest economies marked a decisive shift back towards economic orthodoxy.
That was underlined by the presence of Mauricio Macri, Argentina’s centre-right leader. His country’s newfound observer status in the alliance, which comprises Chile, Colombia, Mexico and Peru, signalled the end of more than a decade of Argentine protectionism.
“There has been change in several countries around the region that favours stability, exchange, openness and integration,” Rodrigo Valdés, Chile’s finance minister, told the Financial Times during the summit in the Chilean lakeside town of Puerto Varas.
Mr Valdés pointed to a number of recent advances: moves by Brazil’s new government to fix deep-seated economic problems; Argentina’s return to international markets; continuity in Peru after Pedro Pablo Kuczynski, the former World Bank economist, won presidential elections; and the success of talks in Colombia that ended a 50-year civil war.
“This is all good news. I’m hearing that Latin America could become the region with the best performance in the world. I do hope that’s true,” Mr Valdés said, adding that Latin America had become far more resistant to economic shocks than even a decade ago.
Pointing to the impact on financial markets of the UK’s Brexit referendum, as well as pressure on exchange rates due to the end of a decade-long commodity boom, Mr Valdés said the region had “absorbed these shocks without any major setbacks”.
Indeed, much of the conversation at a summit that marked the handover of the temporary presidency of the alliance to Chile’s Michelle Bachelet related to concerns over Brexit.
Many remarked on the twin ironies that as Europe threatened to splinter, Latin American unity was strengthening, and that as populist movements receded in the region, they were surging in developed countries.
“In today’s world protectionism and isolation are not possible,” said David Bojanini, chief executive of Colombia’s Grupo Sura, one of Latin America’s biggest financial groups.
There was still much work to do to strengthen the alliance, with only “timid” growth in intra-regional trade and financial integration since the group was founded in 2011, said Mr Bojanini.
But the alliance had also learnt “very important” lessons from the EU, which has for decades moved towards ever-closer integration, including the importance of “a strong dose of pragmatism”.
“We have learnt a great deal, in particular that the level of integration must have limits,” he said, noting the importance of allowing more autonomy than exists for EU members.
I am hearing that Latin America could become the region with the best performance in the world. I do hope that’s true
In a remark that captured the mood, Mr Kuczynski won applause when he said: “Some people call me a technocrat. I happen to think it is better to know things than not to.”
The enthusiastic reception for Mr Macri combined with the presence of Mexico’s Enrique Peña Nieto — fresh from the “three amigos” summit in Canada with Barack Obama and Justin Trudeau which urged stronger North American integration — contrasted strongly with the 2005 meeting in the Argentine resort of Mar del Plata when Chávez lambasted Mr Bush, with the approval of Néstor Kirchner, Argentina’s then president.
“Latin America is a different place now,” remarked one influential business leader after hearing Mr Kuczynski’s speech. “Populism is out and technocrats are back in fashion. There are huge challenges, sure, but I am optimistic that we are much better placed to face up to them now.”
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