Gusty winds in the Southern Cone

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l pampero is a meteorological phenomenon typically from the Río de la Plata region. Thanks to it, the winds from the southern Pacific, attracted by the anticyclone of southern Brazil, extend through Argentina and Uruguay. It manifests with short and intense storms and sudden drops in temperature, both in winter and summer. Jair Bolsonaro's triumph in Brazil and Argentina's economic problems have turned the Southern Cone into a storm center crossed by intense gusty winds that could become political or economic Pamperos.

The victory of a far-right Brazilian candidate has shown the number of problems the region has, although many are not exclusive to it, and should also allow for reflection on its great challenges. The elections in Brazil, like the rest of the intense 2017-2019 electoral cycle, take place in a context of strong deterioration of democracy and its institutions, loss of confidence in traditional political parties and their leaders, the emergence of serious conflicts, such as citizen insecurity and corruption, and, finally, the political prominence of evangelical churches.

Hence the question about the depth of the Bolsonaro "tsunami" and the political and economic changes that could occur in the Southern Cone in the immediate future. According to the Economic Commission for Latin America and the Caribbean (ECLAC), the Latin American continent grew by 1.3% in 2018 and will do so by 1.8% in 2019, thanks to the recovery of domestic demand and the slight increase in investment. Such modest performance responds to the poor results of Argentina and Brazil, which, along with Venezuela and Nicaragua, occupy the tail end of the regional pack.

ECONOMY AND POLITICS

The Argentine economy, threatened by a strong recession, decreased by 2.8% in 2018 and will drop by 1.8% in 2019. The Brazilian giant is also a concern as its GDP will only increase by 1.4% (2.4% in 2019). Although a greater recovery was expected, political uncertainty prevented it from materializing, and kept both the unemployment rate and the fiscal deficit high. Among the South American countries that are growing the most are Paraguay (4.6% in 2018 and 4.7% in 2019) and, to a lesser extent, Chile (3.9% and 3.5%) and Uruguay (1.9% and 1.5%).

The turning point occurred in December 2015 with the victory of Mauricio Macri over the Kirchnerist candidate Daniel Scioli. Since then, other processes were unleashed, such as the impeachment of August 31, 2016, which removed Dilma Rousseff from power.

While it can be said that things began to change in late 2009, when Sebastián Piñera won the Chilean presidency for the first time, or in June 2012, when the Paraguayan Parliament impeached Fernando Lugo, who had governed since August 2008, the turning point occurred in December 2015 with the victory of Mauricio Macri over the Kirchnerist candidate Daniel Scioli. Since then, other processes were unleashed, such as the impeachment of August 31, 2016, which removed Dilma Rousseff from power, the victory that marked the return of Sebastián Piñera to La Moneda Palace (in Chile, consecutive re-election is not possible) in December 2017, and the electoral triumph of Mario Abdo, candidate of Paraguay's Colorado Party, in April 2018.

END OF LONG GOVERNMENTS

Thus concluded a series of long governments, whether of parties, individuals, or marital. Those of parties were Chile, where the Concertación, the alliance of socialist parties and Christian Democracy, governed from 1990 to 2010 and from 2014 to 2018; Brazil, with the governments of the Workers' Party (PT) of Luiz Inácio Lula da Silva (2003-2011) and Rousseff (2011-2016), and Uruguay, with the Broad Front, present since 2005 with Tabaré Vázquez (2005–2010 and 2015–2019) and José Mujica (2010-2015). And, finally, the Kirchner marriage, whose primitive idea of indefinitely alternating in power was cut short by the death of Néstor Kirchner in 2010. However, he governed between 2003 and 2007, and then came the two terms of Cristina Fernández (from 2007 to 2015).

Bolsonaro's profile and the profound transformation of Brazilian politics allowed for the triumph of a far-right candidate in democratic elections, which had not happened in the Southern Cone since the beginning of the transition. This leads us to wonder about a possible contagion effect in neighboring countries. Bolsonaro's controversial and polarizing discourse, his defense of a values-based agenda and a hardline policy in the fight against crime, and his ideological proximity to Donald Trump and Steve Bannon have begun to cause concern in the neighborhood.

The reasons for these political shifts, especially in Argentina and Brazil, stem from a certain social weariness with a style of government associated with corruption. Along with it, deficient economic management is punished, whose consequences increased once the unrepeatable period of bonanza of the supercycle of commodities, the largest expansive cycle in recent Latin American history, ended. Brazil was in recession in 2015 and 2016 —(in both years there was a negative annual growth of -3.5%)— and Argentina from late 2013 to 2015.

THE MACRI EFFECT

Macri came to power after a narrow victory in the second round and assumed government amidst a difficult economic situation. Added to this was the Kirchnerist legacy —a heavy slab that threatened governability—, characterized by rampant inflation with figures systematically falsified since the years of Néstor Kirchner, the exchange rate cepo —restrictions on the purchase of foreign currency by individuals and companies and on the repatriation of profits by foreign investors—, a public deficit of 7% of GDP at the end of 2015, heavily subsidized sectors, and public service tariffs very lagging in relation to inflation.

Given the significant support that Kirchnerism had, Macri opted for a gradualist policy, and maintained a good part of the social programs instead of revealing all the difficulties and implementing a harsh adjustment. Simultaneously, he relied on the return of foreign investment, which would allow for the relaunch of economic growth. His proposals had some initial successes, which translated into victories for pro-government candidates in the mid-term elections of October 2017. There was even speculation about his re-election in 2019.

However, in April 2018, a new crisis erupted, initially manifesting as an exchange rate crisis, which turned everything upside down. Then the ghosts of the 2001 corralito re-emerged in the form of a sharp devaluation and interest rate hike, along with runaway inflation. The agreement with the International Monetary Fund (IMF), valued at

56.3 billion dollars, avoided a new trip to hell, although many Argentinians, influenced by Kirchnerism, saw themselves reflected in a narrative centered on imperialist exploitation, misery, and unemployment.

After Macri's victory, many analysts believed that if he finished his term, it would be historic, as it would be the first time since 1946 that something similar happened with a democratically elected non-Peronist president. The names of Alfonsín and De la Rúa resonated, and the more distant ones of Frondizi and Illia. Today the bar has been raised and the future of Macrism is at stake in its re-election chances next October. While there is still an eternity to go and everything can change, the possibility of Macri being president again depends on various variables, such as the performance of the economy, the Peronist renewal, and the candidates they present.

If the Government stabilizes the economy and the exchange rate of the peso against the dollar, and even if it promotes a timid economic recovery in early 2019, its options would increase. These would also be high if Macri competes with Cristina Fernández, since today her rejection is greater than that of the president. Therefore, a renewed and reorganized Peronism around a credible and powerful candidate would be worse than the return of the previous president.

The reasons for these political shifts, especially in Argentina and Brazil, stem from a certain social weariness with a style of government associated with corruption. Along with it, deficient economic management is punished

The new Brazilian government debuted on January 1. So far there are more unknowns than certainties about its main lines of action, especially about how much it will be able to fulfill of all that was promised. There are many commitments with very varied sectors, sometimes contradictory, and the interests of the different groups that supported it, especially the most powerful ones, do not usually coincide. An important point will be privatizations.

The economic super-minister Paulo Guedes, a graduate of the University of Chicago, is in favor of opening the economy and reducing the size of the state. However, the military who backed Bolsonaro are developmentalists and prefer to maintain strategic control of public companies. Another conflicting issue is the relocation of the Brazilian embassy to Jerusalem, a key promise in the campaign, as ranchers and meat exporters fear that a gesture of that nature would compromise the sale of meat products to Arab countries.

MERCOSUR IN THE FUTURE

Mercosur is another issue with strong regional repercussions, especially if we consider the close connections between the Brazilian and Argentine economies. When Guedes said that Mercosur was not a priority for Brazil, since the Bolivarian bias that the regional bloc acquired turned his country into "a prisoner of ideological alliances," something bad for the economy, it caused great alarm. But, beyond the brutality of opinions later nuanced, Mercosur needs a profound transformation if it wants to continue advancing. Apart from the agreements signed within Latin America, it only has free trade agreements (FTAs) with Israel, Egypt, and the Palestinian Authority, a good sign of its paralysis.

Uruguay had already requested to make the bloc's negotiations more flexible, including that each country could do so individually. The arrival of Bolsonaro and Guedes' openness would make it possible to take steps in that direction. Cristina Fernández and Dilma Rousseff were quite hostile to the Pacific Alliance, a situation that had begun to change with Macri and it is possible that Bolsonaro will deepen it given the close ties he wants to have with the Chilean Sebastián Piñera.

From a regional perspective, another cause for concern is the attempt by one of Bolsonaro's sons to bring together the most right-wing options in Latin America, in line with what Bannon is trying to do in the European Union (EU): gather all nationalist and xenophobic populism. The choice of diplomat Ernesto Araújo as Foreign Minister also alarms given his criticisms of globalism, the theoretical mechanism used by Marxism to transform globalization and mortally wound Western civilization.

EVOLUTIONS IN THE SOUTHERN CONE

With the two major powers of the Southern Cone immersed in their own problems, the smaller countries (Chile, Uruguay, and Paraguay) await future developments expectantly. As open economies, especially the Chilean one, their growth depends on international markets. China is a relevant economic actor and destination for many regional exports, such as Chilean copper or Uruguayan meats, not to mention the intense exchanges of Brazil and Argentina. Paraguay is the regional exception as it does not recognize the People's Republic of China as an interlocutor.

The United States and the EU remain major trading partners for all these countries, hence the importance of quickly closing the Association Agreement between Mercosur and the EU. Despite great progress in negotiations in recent months, there are still serious obstacles preventing a happy ending. The hurdles come from both sides, as protectionism is not exclusive to any. However, the EU could make some additional concessions to achieve an agreement that would provide it with enormous advantages and opportunities. It is time for Europe to say how much Latin America matters to it.