Mauricio Cárdenas at Casa America in Madrid in September 2019. Inma Flores
From his home in Bogotá, Mauricio Cárdenas (Bogotá, 1962) responds to EL PAÍS’ call to speak about the moment of opportunity and dissatisfaction that Latin America is going through. The economist and researcher at the Center for Global Energy Policy at Columbia University in New York wrote a widely shared column in chats and groups of global political economy observers earlier this year. His thesis is simple: Latin America has much to offer the world in a time of great political autonomy. Complications begin with pressure on governance.
Nationalist discourses that ban mining or private energy investment “give leaders short-term governance but don’t solve people’s problems,” says Cárdenas, who was Colombia’s finance minister from 2012 to 2018, with Juan Manuel Santos. Providing income, employment and education is more difficult, but ultimately the only long-term strategy.
Questions. They claim that Latin America is currently alone in a scattered world. Does this mean that the region is becoming irrelevant or that it is a better option for foreign capital looking for relative stability?
Answer. The world is focused on other issues and not looking at Latin America, so the region is sort of alone. It’s freer, it has more autonomy than it was 30 or 40 years ago when we were struggling in Central America. Or even more so if Chile has problems with Allende. Previously, a change in political orientation or ideology had triggered reactions, particularly in the United States. The thought was “this can’t happen, this is our terrace, our back garden”, and they ended up overthrowing governments. Thankfully, that isn’t happening anymore, and Latin America is making its transitions, its changes, while the US is taking care of Russia, of China. That’s a first point. A second point answers your question: Does this mean that Latin America is irrelevant? No, because coincidentally the world has moved in a direction where it needs more every day than Latin America has to offer. It has biodiversity, so it could offer the solution to climate change. It has the food, it has the strategic minerals needed to migrate to clean energy and move away from fossil fuels. It has oil, which plays a role in the energy transition and from which Brazil and Guyana in particular can benefit. Those are two facts, two realities. The world is busy with other things, but this is happening at a time when Latin America is most relevant.
Q Faced with strong social discontent in recent years, do governments have the room to maneuver to meet the economic demands of their citizens while seizing this special moment?
R That’s a good point and makes me think that this is more of a triad combining these three realities, not two: first, what it has to offer becomes more relevant every day; second, that it becomes more autonomous every day; and third, governments’ tolerance for error is getting smaller every day because societies are very impatient. Getting it wrong can be very costly and those in power have more pressure, which is why they sometimes make bad decisions. Latin American leaders may be more independent from the powers that be, they may be more relevant players in the world today, but their disaffected populations may not let them do what is right because they are exerting enormous pressure. They choose them with high expectations and when it doesn’t work out, they knock them out. The example of Peru is perfect.
Q What are the best public policies under these conditions?
R This triad we envision is scratching the field. It’s a dish where you have more autonomy and resources to contribute to the world. An impatient populace that wants quick fixes will adapt to your limitations. A leading company in Latin America wonders what the best possible game is? I would say that to capitalize on and capitalize on this greater importance of Latin America requires a long-term vision. These are not things that will happen overnight. It must protect its biodiversity. You have to become a great food producer, that requires the production of fertilizers. At the same time, it can produce those minerals needed for the world like lithium. The leader must lead his country with a long-term vision, but he has a short-term expression on the road to watch out for. Latin American leaders must be very adept at solving problems for the people that are being exacerbated by the pandemic today, while maintaining that long-term vision. What is happening is that often to resolve them, to counter short-term pressures, they wave flags that make people feel progress is being made, such as energy nationalism, banning extractive industries, or blocking investment in strategic sectors like mining. This gives them governance in the short term, but it doesn’t solve people’s problems. The relevance of Latin America will not increase in the long term either. To govern effectively, people’s problems must be solved more directly, not with nationalist discourses, nor with anti-market discourses, or that our countries’ history has been a failure. It is necessary to solve people’s problems by giving them income, employment and education, but they don’t do it because it’s difficult. If that were so, Latin America would miss its chance.
Q Given the speed of the world, I fear that the results of today’s policies will be seen in as little as three years.
R Today we are not sitting on the patient chair. That is, we are not in the crisis of the Mexican peso in 1995, nor in that of Brazil in 1999. Today, Latin America can put itself in the position of the solution provider, the helper, the helper has the formulas. But if we don’t act, we could end up in the patient chair again in three years.
Q You have described the new wave of left-wing presidents in the region as a “de facto coalition”. Should we expect them to coordinate for greater economic integration?
R No doubt there could be more coordination now because there is a group that has more affinities that think alike. If you look at how they treat each other, for example when they support each other on social networks, it becomes clear that this didn’t exist until recently, there is a new wave of managers who want to work more in a team and still do create a greater coordination capacity for the region and play a more relevant role on the international stage. Everyone believes that Lula can provide the leadership needed, but we’ll have to see if the political situation in Brazil allows for that because he’s going to have to govern a very complex country, much more difficult than the one he had to govern 20 years ago. I think they will end up being absorbed by each country’s internal problems and perhaps deny them the chance to provide that coordinated leadership.
Q My final question relates to China, as the Asian country, while facing a trade war with the US, has expanded its commercial operations in Mexico and other Latin American countries to become part of US friendshoring. What are the effects?
R This is a very complex and very important chapter, since Latin America will be a focal point of tensions between China and the United States, which Latin America has so far resolved with pragmatism, since at no time has it prevented the arrival of Chinese companies. So Latin America is saying, “You see, I need to develop and welcome Chinese capital.” The room for maneuver for Latin America is limited because the weight of foreign trade is enormous. And yes, the US has its concerns, but at the moment of truth it does not have effective mechanisms in place to replace China in Latin America. The United States is a market economy, nobody can force companies to come to Latin America. The US state does not have a finance arm that would allow it to do what Chinese banks do and is at a disadvantage in this respect.
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