(october 2008)
Latin America's future looks more like the past.
Brazil and most of Latin America enjoyed a spectacular economic boom in
the first decade of the 21st century. Brazil was even included by experts
in the BRIC club (Brazil-Russia-India-China) of emerging powers.
It became
the world's third biggest food exporter (after the USA and France)
and colossal oil reserves were discovered off its coasts.
In 2010 its GDP grew by more than 7%, rivaling China's growth rate.
In 2012 the economy barely grew (0.9%, slower than the USA) and in 2013
popular protests have been raging in all major cities.
It turns out that Brazil has invested little of its wealth in infrastructure
and reformed almost none of its antiquated system
while it still spends an incredible amount in welfare services to its citizens.oNational debt is already almost 70% and growing rapidly.
Taxes on business are high, the bureaucracy is nightmarish,
corruption is still rampant (the proliferation of parties is largely a
symptom of corruption) and transportation is inadequate to the needs of
an emerging power (and pathetic by East Asian standards).
The solution? Brazil's leftist president Dilma Rousseff decided to make a big
deal of the fact that the USA was spying on Brazil, perhaps trying to distract
people from the problems that the country is facing now that she's running it.
Then there is Argentina, a perennial candidate to becoming a rich country.
The government of Cristina Fernandez has boasted that the economy is growing
at more than 5% (never mind that analysts estimate this is twice the real
number) but the same government still has international debts that does not
seem able to repay. For the first time in its history the IMF has threatened
a country with expulsion, and that country is Argentina.
People don't seem to believe the statistics either: at a recent election
Fernandez's party got about 26% of the vote, down from 54% of the vote in 2011,
and the president's approval rating is 30%.
Inflation is about 25% in a country where it is basically illegal to buy
dollars (since 2011).
In 2011 Argentina became a net importer of energy
for the first time since 1984. Fernandez blame it on
YPF, an oil company owned by Spain's Repsol, and proceeded to nationalize it.
Since then energy production has further plunged and Fernandez announced
a joint venture between YPF and Chevron, an even bigger Western company
than Repsol was, mainly to develop
Argentina's colossal reserves of shale oil and shale gas; but it clearly
contradicted the president's nationalist anti-capitalist agenda.
The black market for dollars is a meter of how confident the country is in her
leader: one dollar costs about 11 pesos, twice the official rate.
The solution? The president went to the United Nations to revive Argentina's
old claim over the Falklands (a British colony that does not want to become
Argentinian as a recent referendum confirmed).
Ecuador's president Rafael Correa presided over an economic boom that was
largely driven by oil and populist public spending. Oil reserves are rapidly
being eroded and there is little else that Ecuador will be able to offer when
that runs out. In a sign of desperation, the president announced that Ecuador
will start drilling in its Yasuni National Park, the equivalent of, say, the
USA drilling in Alaska's national parks.
And of course there is Venezuela, the country that has been most vocal about
freeing itself from the evil influence of the USA. Chavez is dead but his
successor Nicolas Maduro has continued in his program to invest Venezuela's
sumptuous oil revenues in public spending that pleases the majority of voters.
Nonetheless inflation is about 45% and crime is rampant.
There are periodic scarcities of goods such as
toilet paper, all of them routinely blamed on North American sabotage.
Latin America has a long history of going through cycles of booms and busts,
eventually retreating back into the rank of developing nations.
TM, ®, Copyright © 2013 Piero Scaruffi All rights reserved.
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