Georgetown Americas Institute

Latin America has changed significantly over the past 25 years. While poverty levels and economic instability have declined across most countries, the region remains adrift. Chronic economic stagnation, caused by a stubborn lack of productivity growth, has left citizens dissatisfied with the status quo. In the past few years, voters have turned out in high numbers to punish incumbent political leaders by supporting non-traditional candidates, raising international concerns over the health of regional democracy and the rule of law. To discuss these complex and interrelated regional dynamics, GAI hosted Michael Reid, author, journalist, and speaker, specializing in Latin American, Iberian, and international affairs, for a conversation with GAI founding director Alejandro Werner. 

Stuck in a Vicious Cycle

For Reid, Latin America faces a clear conundrum. Although the policies of the 1990s, guided by the principles of the Washington Consensus on macroeconomic responsibility, stabilized regional economies and enabled the boom period from 2003 to 2014, old challenges have been hard to overcome. 

“The challenge is that Latin America is stuck in a vicious cycle. It has changed over the past decades, reducing poverty, but inequality remains entrenched, and the past decade has witnessed negligible growth, while dictatorships like those in Cuba, Nicaragua, and Venezuela have entrenched themselves.” -Michael Reid

The list of challenges identified by Reid include the pervasiveness of the informal economy, the weakness of regional states in the face of entrenched vested interests and elites, and the spread of drug trafficking southwards from its traditional centers in Mexico and Colombia. Reid also voiced his concern with the effects that prolonged economic stagnation and the rise of organized crime are having on citizen’s trust in democracy. This is particularly troubling among the young who, having benefited from better education in the 2000s and 2010s than previous generations, are now faced with systems and governments that have failed to produce enough opportunities for them. 

“In the 1990s there was a reformist political center that pushed reforms and embraced technocratic methods and policies that stabilized most countries. Unfortunately, these have now lost significant social credibility.” -Michael Reid

Populism, which for Reid is a cross-ideological dynamic, has risen both from the left and the right as a means of channeling voter frustration and democratic apathy to gain power. Although Latin America’s democracies have demonstrated a notable resilience in the face of home-grown challengers and structural stagnation, these new forces threaten to undermine the progress achieved in the 1990s and 2000s. In Argentina, for instance, President Milei’s favorite term, “the caste,” which he uses to denote the political establishment, was actually first used by far right and EU-skeptic politicians in Italy.

Different Stories across the Region

Reid clarified that he recognizes differences across countries. In the case of Chile for example, Reid is optimistic that the instability that emerged through the constitutional reform process is now abating, and President Boric, who proved to be more of a reformist moderate, will be likely succeeded by a representative of the center-right rather than the far right. In contrast, Colombia’s president, Gustavo Petro, proved to be a more traditional kind of Latin American nationalist populist, a heavily divisive figure in his country. In Argentina the story is the opposite, where President Milei, empowered by voter frustration, has taken the lessons of Macri’s failed “gradualist” reforms and is pushing an aggressive series of reforms more akin to “shock therapy.” 

“Rule of law is much harder to build than electoral democracy is, it takes time. We have already seen how many of the judicial reforms of the 1990s are being undermined across the board, and the politicization of some anti-corruption campaigns like in Brazil has actually undermined this agenda.” -Michael Reid

In Central America, very different experiences have taken root. In Nicaragua  democracy has been completely upended by the Ortega family into a system more akin to nineteenth century patrimonialism. Bukele’s El Salvador shares some traits but is different, namely because he has chosen to build the foundations of his rule through more modern ideas. Guatemala meanwhile demonstrated that support for democracy is not a bipartisan issue for its fractured political leadership. At the regional level, Reid concluded by arguing that the institutions of liberal democracy are being challenged by disparate actors across the ideological spectrum. 

The event was moderated by GAI Founding Director Alejanndro Werner. A full recording of the event is available on the GAI YouTube channel.