LATAM Political Waves Are A Myth

Dear all,

We welcome you to the fourteenth week of our Greater Caribbean Monitor (GCaM) pilot. We would like to remind you that as a token of our appreciation, we will be extending you an early-bird offer at the pilot’s conclusion.

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In this issue, you will find:

•Analysis of Latin America’s purported ideological waves

•An overview of recent developments in Venezuela’s dispute with Guyana over Essequibo

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Best,

The GCaM Team

•Latin America Lacks Ideology
592 words | 3 minutes reading time

Latin American politics is usually understood in terms of left- or right-wing waves. There is some truth to this: Hugo Chávez’s pink tide was evidently an ideological phenomenon. Nonetheless, the regional right has tended to disavow its conservative credentials, preferring to present itself as big-tent. 

• It would be more appropriate, then, to speak of electoral “turnism”: the different forces are elected, disappoint, and are then replaced by their ideological foil. The cycle repeats itself infinitely, hence the waves identified by pundits.
  

• Most countries in the region do not have an ideologized and decidedly left- or right-wing electorate. Some parties, it must be said, manage to stay in power, generally due to tradition or clientelism, rather than their ideology.
  

• There are, as economist Daniel Lacalle says, countries that are relatively well or poorly managed. This explains some parties’ success, since it cannot be said that Latin American voters shift their ideology every four years.

News. At last Sunday’s Argentine presidential runoff, libertarian Javier Milei (LLA, right), defeated Peronist Sergio Massa (UP, left). Milei, who won with 55.69% compared to Massa's 44.31%, will take office on December 10. He faces a set of circumstances that may be generously described as difficult.

• State coffers are unusually depressed, even by Argentine standards. Massa’s campaign relied on the plan platita (“petty cash plan”), temporarily increasing welfare and suspending tax payments. Milei will have to resolve this unpaid bill.
  

• Since Argentina lacks foreign reserves, Massa’s campaign made ample use of the money printer; the cost of his plan is estimated at $2.2 billion, equivalent to 1.3% of GDP. Interannual inflation stands at 142.7%.
  

• Milei, an eccentric candidate, proposes dollarization and the abolition of the Central Bank. He has tactfully declared war on the immense network of loss-making state-owned enterprises.

Why Does It Matter? Argentina has a series of particularities. Peronism, however discordant it may be, is the longest-running and most successful electoral movement in Latin America. Milei has dealt a hard blow to one of the regional left’s leading models. This should not, however, be misread as Peronism’s swan song.

• Milei clinched the presidency 11.38%, a much stronger lead than the 2.68% obtained by center-right candidate Mauricio Macri in 2015. The defeat of Peronism in its traditional fiefdoms suggests a political paradigm shift.
  

• Argentina has historically maintained a relatively firm ideological line. Its governments have sought to establish a European-style welfare state. This has been supplemented by strict protectionist policies and capital controls.
  

• That said, the president-elect is slated to lose support once he introduces his reforms. Frustration at Peronist mismanagement is evident, but the coming cuts will cause a stir in the streets, possibly limiting Milei’s capacity to reform.

Outlook. The Latin American right, or at least the non-left, has a crucial advantage: its promises are easier to keep. It tends to rise to power in times of crisis, usually offering liberal reforms and anti-crime measures. In this it may fail, as it often does, but its projects are realistic in light of Latin American state capacity.

• The left promises money: a Latin American welfare state. This would perhaps be possible if it held on to power for several terms. Leftist plans require more time, leaving them at risk of being punished by notoriously impatient voters.
  

• The “perfect” candidate, therefore, is a kind of vaguely right-wing centrist. Besides addressing security concerns, this candidate must also demonstrate certain administrative skills. Competence, or at least the illusion of it, is essential.
  

• There is no ideologized electorate, but it can emerge: 20th-century Latin America serves as proof of the region’s capacity to nurture mass movements. U.S.-style cultural wars are already taking place in several countries.

•Oil Aggravates Venezuela-Guyana Dispute
857 words | 4 minutes reading time

On Sunday, Venezuela carried out a mock referendum regarding Essequibo, the area in dispute with Guyana. Caracas is promoting a consultative vote, which is to be held on December 3.

• In the consultation, citizens of the Bolivarian Republic will be asked if they support granting Venezuelan citizenship to the territory’s 128,000 inhabitants. Guyana would view this as a provocation. 
  

• Voters will also decide whether to turn “Guayana Esequiba” into a Venezuelan state. This state would claim an area measuring 61,600 sq mi (159,500 km²), roughly the same size as Tunisia or the U.S. state of Georgia.
  

• Essequibo makes up roughly two-thirds of Guyana’s territory. Georgetown considers Venezuelan claims an existential threat; it is even entertaining the idea of hosting foreign military bases in Essequibo. 

The Crux. Essequibo has traditionally been known for its gold and diamonds, but it is oil reserves that are attracting Venezuela. Caracas has maintained its claim for two centuries, but it has ramped up efforts an ExxonMobil-led consortium discovered the oil fields that have revolutionized Guyana’s economy.

• In September, Guyana concluded a round of negotiations with energy giants to put its coastal reserves to good use. Caracas demands the delimitation of these sectors, describing Guyanese tenders as violations of international law.
  

• The Venezuelan government evidently wishes to lay claim to the newfound reserves. Guyanese oil appears to be different from Venezuelan crude, which is “heavy,” of less value, and more expensive to refine.
  

• Guyana, for its part, enjoys the globe’s fastest GDP growth. Growth is expected to hit 27.2% this year, which is rather low in light of the fast five year’s figures. Projections for 2024 suggest growth will rise to 34.2%.

The Historian’s Corner. The dispute dates back to the 18th century. It has reached the International Court of Justice (ICJ), the UN’s highest court, where Guyana expects to secure a full victory.

• Guyana wishes for the Paris Arbitral Award of 1899 to be declared firm. This ruling awarded a large part of the region to the United Kingdom, whose claim has passed to Guyana. Caracas deems the award “fraudulent, null, and void.”
  

• Venezuela trusts that the 1966 Geneva Agreement will resolve the controversy. Its arguments have nonetheless been rejected on various occasions, with international courts siding with Georgetown.
  

• In 2018, UN Secretary General Antonio Guterres petitioned the ICJ to settle the matter. Venezuela refuses to participate in the trial before the Court, effectively boycotting the procedure. 

Voices. Milos Alcalay, former Venezuelan ambassador to the UN, criticizes the wording of the referendum questions. In his view, the questions are “long and contradictory”; the plebiscite has become “incomprehensible and unnecessarily aggressive.”

• According to Carl Greenidge, former Guyanese foreign minister, only the ICJ can “protect” the rights of his country and avoid “chaos” in the region. He warns of “irreparable” threats.
  

• Jorge Rodríguez, president of the Venezuelan National Assembly, describes the president of Guyana, Irfaan Ali, as a “slave of ExxonMobil.”
  

• For Venezuelan Vice President Delcy Rodríguez, the referendum must go ahead regardless of the consequences. Indeed, she considers the claim inalienable, as provided by the Venezuelan Constitution. 

Yes, But. Essequibo is one of the few issues on which Nicolás Maduro and his opponents publicly agree. Both factions claim “historical, sovereign, and inalienable rights” over this area. This is hardly remarkable: past Venezuelan governments have also been consistent.

• However, María Corina Machado, a former opposition deputy, has urged the regime to suspend the non-binding referendum. She is of the view that it could harm Venezuela’s ICJ defense.
  

• “Sovereignty is exercised, not consulted,” she says. “[The referendum] is much more serious than a mere distraction; it is a mistake.”
  

• Machado proposes to convene the best experts and present an unobjectionable counter-memorial (a legal argument against Guyanese claims) that demonstrates Venezuela’s rights over the territory.

Now What? Prime Minister Mark Phillips stresses that the Venezuelan claim represents a risk to investments in Guyana. Furthermore, it poses a continuous and direct threat to Guyana sovereignty and territorial integrity. That is, of course, Venezuela’s point; it wishes to deny Guyana the territory.

• In recent weeks, the Venezuelan government has ordered a troop buildup in the border region. It claims peaceful motives, stating the soldiers are there to defend against illegal mining. 
  

• Some reports seem to indicate that the Venezuelan military is building a landing strip near the border, hence Guyana’s interest in hosting foreign bases in Essequibo.
  

• For Andrei Serbin Pont, a geopolitical analyst, the possibility of armed conflict is “a serious concern.” A “Malvinization” (Falklandization) of the internal crises of Chavismo is “a latent risk.” 

Regional Echoes. The United States promotes negotiations and agreements with the Maduro government, while also defending Guyana’s right to exploit resources in the claimed area. The issues do not represent a conflict of interest for U.S. diplomacy.

• Washington believes the Arbitral Award of 1899, which established the current border limits, must be respected. This would only change if both parties reached a new agreement or if the ICJ ruled otherwise.
  

• The Biden administration has been embarrassed by Maduro’s actions following the Barbados agreement to loosen sanctions. It is likely that an increase in Venezuela-Guyana tensions would put Washington in a punitive mood.
  

• U.S. support for oil exploration in Essequibo waters is unquestionable. After all, two U.S. energy giants, Exxon and Chevron, are largely behind Guyana’s recent change in fortunes.