The Fading Light of Chavismo in Latin America

By Fabio Rafael Fiallo

By bringing Venezuela's economy to an unprecedented state of disarray despite record high global oil prices, progressively dismantling the country's checks and balances and by providing diplomatic support to the world's most criminal regimes, the Chavista-Bolivarian model has been losing the international prestige it enjoyed when it emerged in the Latin American political scene at the turn of the century.

A clear sign of the erosion of the attractiveness of the Bolivarian model came from Peru in 2011, at the time of the election win that brought former army officer Ollanta Humala to the presidency in July of that year.

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Humala had till then portrayed himself as a sort of Peruvian Chávez. Nonetheless, he noticeably changed rhetoric during the campaign and subsequently, as president, has put in place an economic policy that, contrary to Chávez's extravaganzas, is akin to the market-friendly social model instituted in Brazil by the Lula-Roussef tandem and in Chile by former socialist President Michelle Bachelet.

Humala could have behaved like Chávez: brandish democratic values for electioneering purposes so as to gain the moderates' votes and, once in power, unveil dictatorial designs and carry out an economic policy centered on the harassment and eventual elimination of the entrepreneurial class. Humala instead had the lucidity and enough good sense to look around and survey the regional landscape. He compared the predicament of the Venezuelan economy (paralysis of agriculture and manufacturing, shortages of essential goods, increased dependence on food imports, skyrocketing inflation and decline in oil production) with the economic robustness of Brazil and Chile, and for that matter with Peru's strong economic performance during the mandate of his predecessor Alán García.

Infatuation with the Chavista model is on the wane even in Nicaragua, a country ruled by someone, Daniel Ortega, who hasn't hesitated to crack down on the opposition and change the constitution with the purpose of perpetuating his stay in power. Nonetheless, without oil manna -- and drawing lessons from the Venezuelan debacle -- even Ortega has somewhat readjusted his economic policy so as to attract foreign capital and come to terms with the local entrepreneurial class.

Ortega's change of tack was highlighted by The Economist in an article published in 2011 with the suggestive title "Ortega Goes Capitalist."

Latin American leaders have also been able to draw lessons from the vicissitudes that Argentina is enduring for having made economic policy choices (indeed, mistakes) similar to those that have played havoc in the Venezuelan economy, namely: price controls, foreign exchange restrictions, demonization and harassment of the entrepreneurial class.

Argentina thus shares with Venezuela the unenviable position of exhibiting the highest rates of inflation and of capital flight in the region. Nothing to be emulated, to say the least.

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Fabio Rafael Fiallo is a Dominican-born economist and author and a retired official of the United Nations Conference on Trade and Development (UNCTAD).

(AP Photo)

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