The challenges for Latin America’s new left

A former guerrilla takes power in Colombia on Sunday as the country’s first leftwing president. Gustavo Petro is part of a trend: five of Latin America’s six largest economies will now be run by the left. If current opinion polls are reflected at the ballot box, Brazil will complete the regional pivot in October.

Formidable challenges await Petro and his peers. They must tackle some of the world’s slowest economic growth rates, high levels of corruption, entrenched inequality, inadequate health and education services and poor infrastructure. Colombia faces additional problems of its own. These include a faltering peace process with thousands of former insurgents, rampant deforestation in the Amazon, and a history of bad relations with the authoritarian regime of Nicolás Maduro in Venezuela.

The experience of Petro’s ideological soulmates in Chile, Peru and Argentina offers useful lessons. The first is to avoid interpreting their recent electoral success as a triumph of socialism or an invitation to repeat the failed state-centric economic policies of the early 2000s. Instead of voting for fresh ideas, Latin Americans have been voting against incumbent governments.

Most of the region’s sitting presidents were conservatives, so a change of guard inevitably means a shift left. Reasons for discontent abound: living standards are falling, the state is failing to deliver and the best opportunities are too often reserved for a privileged few. The pandemic exacerbated social tensions.

As a result, presidential honeymoons are short and expectations almost impossibly high. The perils for new leaders are obvious: the presidents of Chile and Peru have seen their approval ratings collapse in a matter of months because they disappointed impatient voters. In Argentina, the incumbents facing a drubbing at the polls next year are on the left. Voters care about results, not ideology.

A second lesson is that broad coalitions are essential to make the deep structural changes Latin America needs in areas such as tax reform. Chile’s president Gabriel Boric quickly lost support after pursuing a divisive and economically risky new constitution. So far Petro has shown welcome pragmatism, negotiating multi-party support in Congress and appointing a widely respected economist, José Antonio Ocampo, as finance minister.

Strong, sustainable growth is also essential for the just, inclusive society that Petro and his peers are promising. Delivering that growth requires a well-educated workforce, stable rules for doing business, efficient courts and infrastructure fit for the 21st century.

Latin America is well placed to exploit some outstanding business opportunities. It ought to boom from the “nearshoring” of production from China to countries closer to the US. Its abundant natural resources can help feed the world and accelerate the drive towards clean power.

Yet none of this will happen without supportive policies. Too often in the past, governments in Latin America have focused on boosting spending rather than wealth creation, and electorally motivated fixes such as welfare handouts and fatter state payrolls rather than delivering high quality public services efficiently.

Petro has the chance to show he can do better. Colombia’s economy is forecast by JPMorgan to grow at 7.2 percent this year, by far the best of the region’s larger nations. The test of the new president’s success — and that of his regional peers — will not be the size of their social programs nor the number of politically symbolic appointments. It will be to deliver and sustain south-east Asian levels of economic growth.

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