The End of the Latin American Left

Will Hugo Chávez's revolution die with him?

The exact condition of Hugo Chávez continues to be a Churchillian riddle wrapped in a mystery inside an enigma. The Venezuelan president, who won his third reelection last October and has been hospitalized in Cuba for many weeks with cancer, missed his own inauguration in January. In his absence, Vice President Nicolás Maduro, Chávez's hand-picked successor, has been left in charge of the government indefinitely. But Maduro is no Chávez, lacking both the charisma and the power base of Venezuela's mercurial leader. And it's not just a problem for the chattering classes in Caracas: The question haunting the Latin American hard left, which Chávez has dominated in the last decade, is who will take his place.

In explaining the rise of the political left in Latin America over the past decade, Chávez's persona looms large. Politicians like Evo Morales, Rafael Correa, and Cristina Fernandez de Kirchner owe an enormous debt of gratitude to Chávez for laying the groundwork toward a renewed form of populism, Latin America's version of socialism. Chávez's illness has only served to highlight that debt. "The issue of the health of brother Chávez is a problem and a worry not just of Venezuela, but of all the anti-imperialist, anti-capitalist people," Morales said in January, speaking from behind a podium reading, "We Are All Chávez." But Chávez's charisma and ruthless political genius fail to explain why he has been able to achieve such regional clout. Through a canny use of petrodollars, subsidies to political allies, and well-timed investments, Chávez has underwritten his Bolivarian revolution with cash -- and lots of it. But that effective constellation of money and charisma has now come out of alignment, leaving a power vacuum that will be difficult for Chávez's political heirs across the hemisphere to fill.

Several Latin American leaders would like to succeed him, but no one meets the necessary conditions: Cuba's blessing, a fat wallet, a country that carries enough demographic, political and economic weight, potent charisma, a willingness to take almost limitless risks, and sufficient autocratic control to allow him or her to devote major time to permanent revolution away from home.

What will happen is partly in Cuba's hands. Because Cuba has made Venezuela into its foreign-policy proxy, the Castro brothers need Caracas to remain the capital of the movement for it to retain any vitality. While Cuba is dependent on the roughly 100,000 barrels of heavily subsidized oil Chávez's regime supplies to Cuba daily, the island nation has a grip on Venezuela's intelligence apparatus and social programs. Chávez himself acknowledged last year that there are almost 45,000 Cuban "workers" manning many of his programs, though other sources speak of an even larger number. This strong connection allows Cuba to exercise a vicarious influence over many countries in the region. Caracas's clout in Latin America stems from Petrocaribe, a mechanism for helping Caribbean and Central American countries purchase cheap oil, and ALBA, an ideological alliance that promotes "21st century socialism." The combination of the two gives Caracas, and therefore Havana, some authority over the politics of 17 other countries.

What does this mean for the future of the left? Essentially that Cuba will do its utmost to prop up Maduro. Chávez's chosen man will never be a revered figure -- his talents as a politician are lackluster -- but with Havana's backing and control of the money funneled to the region's leaders, he will retain some of Chavez's stature. In recent months, he and what might be called the civilian nucleus of the Venezuelan government have been a constant presence in Havana, where they have relied on the information supplied to them by Cuba about Chávez's real condition. This clique is comprised mainly of Rosa Virginia, Chávez's eldest daughter; her husband Jorge Arreaza, who is also a minister; Cilia Flores, Maduro's wife and the prosecutor general of the regime; and, finally, Rafael Ramírez, the head of the oil giant PDVSA.

Maduro has made most of his key political announcements from Havana, often flanked by some of these people as a way to consolidate his legitimacy inside the Venezuelan military, where he has rivals, and of course the Latin American left writ large. It seems to have worked for now: The region's left lent him dutiful support through various regional bodies when the opposition denounced the arrangements that have turned him into an acting president indefinitely. In a statement put out by Secretary General José Miguel Insulza, the Organization of American States supported the constitutional arrangements in Venezuela in the wake of Chavez´s absence -- and incurred the ire of MUD, the united opposition.

Critical in all of this is the money at Maduro's disposal. The sales of PDVSA, the state-owned oil cash cow, amounted to $124.7 billion in 2011, of which one-fifth went to the state in the form of taxes and royalties, and another fourth was channeled directly into a panoply of social programs. This kind of management makes for very bad economics, a reason why the company needs to resort to debt to fund its basic capital expenditures, and for decreasing productivity, but it remains crucial for the regime and the Latin American left. Funding social programs at home and subsidizing oil shipments abroad, as well as giving cash to various foreign entities, is in good part what makes Caracas the epicenter of the left. Consequently, the support Maduro enjoys from Cuba and the money at his disposal offsets his lack of Chávez-like charisma.

Although Venezuela's current economic debacle has had a debilitating effect on the system described above, as has Chávez's ill health, China has helped mitigate the impact. The China Development Bank and the Industrial and Commercial Bank of China have lent Caracas $38 billion to fund some social programs, a bit of infrastructure spending, and purchases of Chinese products and services. Another $40 billion has been promised to fund part of the capital expenditures needed to maintain the flow of oil committed to Beijing. The oxygen provided by Beijing gives Caracas some ability to grease the regional machinery despite the domestic crisis.

Cuba's support for Maduro and his oil money notwithstanding, there will still be a vacuum of sorts at the top of the Latin American left after the vice president takes over from Chávez on a permanent basis -- assuming he is able to consolidate his own power internally and fend off his military rivals. Other Latin American leaders will clearly see an opening at least to enlarge their role if not lead the left outright.

Argentina's Kirchner is already trying. As she has further radicalized in response to an acute economic crisis at home and the rise of an opposition both within the ranks of her party and among the large middle class, in looking for a major Latin American role she has departed from traditional Peronismo. In the last year, she has made her country's claim to the Falkland Islands, now under British control, a focal point of her foreign policy, obtaining explicit support at Mercosur (the South American common market) and UNASUR (the Union of South American Nations). Until recently, she limited her rapport with Caracas to business and occasional gestures rather than ideology -- Buenos Aires sold sovereign bonds to Caracas a few years ago and was later able to import fuel cheaply and sign trade deals. Now she makes trips to Havana too and has raised her voice in denouncing the usual imperialist suspects -- certain liberal democracies, foreign investors, international courts, and the IMF. By adopting this tone, she hopes to rally the base at a difficult time. She is currently barred from seeking reelection in 2015 but is aiming to change the constitution to allow her to seek another term, a move laden with certain Chávismo overtones.

There are, however, limits to her potential role as a leader of the Latin American left. The most important one is economic. The statist, populist Argentine model is now bankrupt. Economic growth was minimal in 2012, a year that also saw record inflation and the expansion of capital controls to prevent a stampede of dollars. This would not be an insurmountable political obstacle were it not for the fact that a majority of Argentineans are now opposed to her -- her approval rating is down to 30 percent -- and that her own party is fractured. It is one thing to fight the "fascist right" as the head of a united Peronista front. But it is quite another for Kirchner to be denounced more stridently by her leftist base than by the center-right. Apart from the fact that she lacks the funds to finance regional revolution -- despite running the largest populist economy in Latin America -- Kirchner can ill afford to devote her attention to foreign matters. Last but not least, Argentina is too large and too proud a country for it to accept near-subordination to Cuba, a key condition for leading the Latin American rebels.

What about Bolivia's Morales? Given the symbolism of his indigenous roots, he seems a strong prospective candidate. But he is geographically too far from Havana -- Chávez´s constant pilgrimages to Cuba would be hard for Morales to replicate. He too has mounting problems at home, where his social and political base is now severely split. Unlike Chávez, who has been able to group his different supporters under a socialist umbrella organization, Morales's party, MAS, has become isolated from the myriad social movements that once backed him and now claim he is not delivering on promises of social justice. His main fights have not been with the right but with these organizations, which have paralyzed the country at various times.

Like other populists, Morales has some cash at his disposal through the sale of natural resources. But private investment is tiny in Bolivia, and Morales has doubled the proportion of the economy directly under government control. Because he needs to pour resources into populist economic programs to keep his enemies at bay, Morales cannot afford to fund foreign adventures. In fact, his need for cash is forcing him to charge Kirchner, a close ally, about four times more for Bolivia's natural gas than the going rate in Argentina's own gas-producing region, the Neuquen Basin. Lastly, Bolivia's economy is tiny, amounting to just 8 percent of Venezuela's.

Correa, who as president of Ecuador heads an oil-producing country, is another possibility. He certainly has the ambition and is the intellectual alpha male of the pack. His inevitable reelection this month will give him renewed vigor. But his country produces five times less oil than Venezuela and, with an economy less than a fifth the size, is in no position to command leadership regionally. After tripling government spending since he came to power in 2007, Correa's coffers face a fiscal deficit of 7.7 percent of GDP. And because it defaulted on part of the national debt in 2008, Ecuador is barred from capital markets. If not for the $7 billion-plus lifeline China has thrown Correa in advance payments for oil and credits, the country's financial situation would be dire. Given that 80 percent of Ecuador's oil exports have been pledged as guarantee against these loans, Correa would never be able to subsidize other countries.

That leaves Brazil, the single most powerful Latin American country and a symbol of ideological moderation that may well hold the key to the destiny of the Latin American left -- if only it wanted to. Until now, Brazil has deliberately given Chávez the space to play a disproportionate role in the neighborhood. Since former president Luiz Inácio Lula da Silva had Marxist roots and a radical base to please, he made up for his responsible domestic policies by tolerating, and sometimes encouraging, Chávez's leadership of the regional left. In foreign policy, Lula preferred to spend his time cementing ties with the other BRIC countries and collecting allies in Africa, partly with a view to building up support for a permanent seat at the U.N. Security Council. The rest was spent cozying up to the United States's adversaries, including Iran, and proposing solutions to the Israeli-Palestinian question (an initiative for which he teamed up with Turkey).

Dilma Rousseff, the current Brazilian president and Lula's political heir, has moderated her country's foreign policy but is conscious of the fact that her overbearing predecessor and the party base want close relations with the left. This is a major reason for having kept Marco Aurélio Garcia, a man umbilically connected with the regional populists, as a foreign policy advisor.

But Dilma is not personally interested in leading Latin America's left. Her country's main economic tool in Latin America, the Brazilian development bank BNDES, funds mostly domestic companies investing in the region, not other governments, and its disbursements in Latin America totaled a mere $1 billion last year. An initiative for integrating South America's infrastructure led by Brazil, known as IIRSA, lacks a political or ideological imprint. Dilma also confronts an economic challenge that Lula was spared. Growth has stalled (it barely cracked 1 percent last year), and some serious soul-searching is underway about why the emerging star of the last decade is now facing the prospect of a mediocre future if new reforms are not undertaken.

All of this points to the Cuba-Venezuela connection continuing to play a pivotal role through Maduro. That said, Maduro will have considerably less ability to project influence than when Chávez was at the helm. Presumably, the vacuum partially left by Chávez will see various forces vying for an increased role, including Kirchner as the radicalized Peronista running the largest populist economy, while Morales and Correa, as well as Nicaragua's Daniel Ortega, call attention to themselves without the necessary power to back their chutzpah. Brazil will arbitrate among these leftists and wait to see what emerges before throwing its lot with anyone.

With no viable leader to take up Chávez's mantle, the future portends disarray for the Latin American left. Fearful that this may spell the end of the movement, there is but one miracle the left can cling to -- that Chávez finds a way to rise from his Havana deathbed.



The Other Resource Curse

Moving away from fossil fuels could be devastating for some of the world's poorest countries.

For as long as people have talked about moving beyond fossil fuels, another tantalizing prospect has hovered over the horizon: the decline of resource-rich authoritarian countries and the rogue nonstate actors that depend on them. A world of reduced demand for coal, oil, and gas is a world in which Iran, Russia, and various al Qaeda supporters are significantly weakened. That would certainly qualify as good news.

But visiting Mozambique last week, I was reminded that not all of the losers from lower fossil-fuel demand will be the traditional bad guys. Mozambique's economy has tripled in size in the decade since the end of the country's 15-year-long civil war, but GDP per capita remains barely over $1,000 a head -- and highly concentrated among relatively wealthy elites. Leaders in Maputo, the capital, relied on international aid for 40 percent of the national budget last year.

But an end is in sight: Massive coal deposits and offshore natural gas are poised to end Mozambique's aid dependence and rapidly increase economic output. The most bullish projections are far from assured -- Mozambique suffers from a lack of skilled labor, regulatory capacity, and essential infrastructure. But perhaps the biggest unknown is demand for what the country hopes to sell. If the world were to sharply reduce its dependence on fossil fuels, appetite for Mozambique's exports would decline or vanish, likely leaving the country in considerably worse shape.

Mozambique is hardly the only country that would face this predicament. Africa in particular is packed with countries for which resource extraction appears to be the only viable first rung on the road to economic growth. Others in Central and Southeast Asia, Latin America, and the South Pacific confront similar prospects. Some plan to sell oil, gas, or coal. Others foresee extracting minerals like iron ore and bauxite, the processing of which requires massive amounts of fossil fuels. In a carbon-constrained world, however, consumers would need to cut back on their use of these minerals.

Resource wealth is, of course, far from a guarantee of prosperity. Indeed, it can often bring the opposite: corruption, violence, and economic distortions that crowd out manufacturing and other industries, often deepening inequality in the process. But save for a few lucky countries like Costa Rica that have become favorite tourist destinations, there are few alternatives to resource extraction for many of the poorest developing countries. Development economist Paul Collier argues this point well in his powerful 2010 book, The Plundered Planet. The best alternative to suffering the resource curse, he explains, isn't necessarily forgoing resource development. It's harnessing revenues from resource extraction more effectively for broad and sustainable social and economic good.

But while a great deal of effort has been expended looking at how low-carbon development could work in resource-consuming developing countries, very little time has been spent considering what it would look like for resource-rich developing countries. Entire careers are spent devising ideas for how China could power its economy using nuclear energy and renewable fuels, or how India could boost its resource efficiency. Not so when it comes to the travails of resource-rich countries. Many rightly mock demands for compensation from of the likes of Saudi Arabia, which would be hurt by reduced oil exports, but few stop to think about others that would suffer.

There are exceptions to this pattern. Ecuador is attempting to solicit payments in exchange for not developing oil in its Yasuni National Park, though it has only raised $300 million out of the total of $3.6 billion it is seeking. Considerably more thought has gone into a closely related area of low-carbon development for the resource-rich: charting alternative paths for highly forested countries that don't involve cutting down all their trees. In 2008, the consultancy McKinsey & Co. worked with Guyana to devise an economic plan that would leave its forests intact, provided wealthy donors (or carbon credit buyers) paid compensation. The plan got off the ground a year later, when Norway stepped up with cash, though it is far from fully funded.

Moreover, some countries -- those rich in rare earth elements, lithium, and other ingredients for advanced energy technologies -- might actually benefit from resource extraction in a carbon-constrained world. Natural gas producers could benefit in the near term if countries decide to reduce carbon emissions by shifting to gas from coal. And if technologies are developed to capture and store carbon dioxide emissions -- eliminating the need to avoid them entirely -- countries rich in coal (and perhaps natural gas) could benefit.

But these are possibilities, not guarantees, and in any case they would still leave many countries behind. No one has seriously argued that the schemes being peddled by Guyana and Ecuador can be scaled up to the massive level that would be necessary to avoid serious harm to poor but resource-rich countries, should demand for fossil fuels plummet. And few alternatives have been proposed. Efforts by Britain's Department for International Development to set out a low-carbon development path for Mozambique are telling: it investigated ways to lower emissions from agriculture, but ignored potential revenue pitfalls from depressed natural gas and coal prices.

Don't get me wrong: This is not an argument against taking action to combat climate change. While I was in Mozambique, large swaths of the country were paralyzed by intense flooding, a problem that will only get worse as climate change intensifies. Mozambique's agricultural potential -- the country ranks sixth in the world in fertile but uncultivated land -- would also be put at risk from rising temperatures and more volatile weather. But it is cold comfort for poor countries that serious climate action will spare them future horrors when their daily existence remains mired in severe poverty.

Of course, demand for the developing world's resources is unlikely to evaporate overnight; the planet has proved spectacularly incapable of combating greenhouse gas emissions. As we step up efforts to change that, a vision for poor but resource-rich countries should be part of the plan.