The region’s most bombastic leader, Venezuelan President Hugo Chavez, who says his self-styled revolution should replace what he calls “savage capitalism,” is so ill with cancer that he has taken to pleading with God in public to spare his life. And in Cuba, the 53-year-old Castro government is resorting to reforms to keep a moribund economy afloat.
So Argentina’s announcement last week, complete with a defiant speech by Fernandez and the unceremonious removal of YPF executives from their Buenos Aires office, bolstered those who firmly believe that the state trumps the interests of private companies in Latin America.
“It’s the correct position,” Rafael Ramirez, Venezuela’s mining and oil minister, told reporters. “You cannot permit that a country with important internal consumption and with Argentina’s growth projections watches as transnational companies exploit and take away oil while not investing to increase production capacities.”
But even as Argentina’s senate prepared to approve the expropriation this week, Fernandez’s move underscored the gulf that exists between a group of nationalist countries led by charismatic populists and the economic centrists who govern much of the rest of the region, most notably in Brazil.
Locked out of world financial markets for defaulting on $100 billion in debt a decade ago, Argentina restricts imports, imposes currency and price controls, and has used a nationalized pension system and central bank reserves to pay off debt.
With the nationalization of YPF, the country has come to look increasingly like the state-interventionist model of the fiery general Juan Peron, who remains a guiding light for the current government 60 years after his first turn at ruling.
Indeed, Argentina has more in common with a group of four other Latin American countries, led by Chavez, that have centralized power in the executive while taking greater control of institutions such as the courts and employing state power to weaken the press.
Venezuela’s economy has become increasingly dependent on oil under Chavez, private investment has dried up and power shortages are the norm. In Ecuador, President Rafael Correa’s government focuses much of its attention on corralling the press, with the president filing libel suits against reporters he accuses of subverting his rule.
And Bolivia and Nicaragua — led respectively by Evo Morales, an Aymara Indian, and Daniel Ortega, a former guerrilla — remain two of the hemisphere’s poorest countries.
“Populism is running out of gas in Latin America,” said Arturo Porzecanski, a Uruguayan economist who teaches finance at American University in Washington. “The most ambitious charismatic personalities are fading because of age and health reasons, but their possible successors have their hands full dealing with their domestic problems and are not in position to take the mantle to develop a regional agenda, let alone pay for it.”