The late Carlos Fuentes, a Mexican writer, compared the exercise of mutual influence between Spain and its former colonies to “a mirror: looking from the Americas to the Mediterranean, and back”. Those transatlantic reflections continue—and reach far across Mare Nostrum—in ways that would have seemed surprising only a few years ago.
Seen from Latin America, the agonies of the euro zone arouse a sickening sense of déjà vu. The limits on withdrawals from Greek banks mimic the corralito (“little fence”) imposed by Domingo Cavallo, Argentina’s finance minister in 2001, in a doomed attempt to preserve his country’s currency board, which pegged the peso at par to the dollar for a decade.
Argentina is Exhibit A for those who argue that Greece would be better off outside the euro. Denunciations of austerity and the IMF by Alexis Tsipras, Greece’s prime minister, and his far-left Syriza party attract the sympathy of Latin America’s leftist-populist leaders. Yet the parallel is somewhat misleading: Argentina recovered strongly from 2003 onwards not just because it defaulted and devalued but because world prices for its farm exports surged. And Greece has swallowed vast lumps of concessional credit provided by Europe’s taxpayers, not usurious loans from the financial markets. Mr Tsipras’s last-minute deal suggests he realises that Greece is not Argentina.
— The Economist (@EconAmericas) August 24, 2015
In the case of Podemos, Spain’s would-be Syriza, the links with chavismo were much closer, though recently downplayed by both sides. A foundation linked to its leaders received €5.2m ($5.7m) over the 12 years to 2014 from the governments of Venezuela and Ecuador, according to ABC, a Spanish newspaper. “We’ve seen enormous parallels,” Pablo Iglesias, Podemos’s leader, told Ecuador’s president, Rafael Correa, last year. “We will seek your advice on many things.” Mr Iglesias is also a fan of Ernesto Laclau, an Argentine theorist of radical populism who died last year.
Both sides of the Atlantic
On both sides of the Atlantic, economic and political chaos brought populists to power. In Argentina it was the austerity of “internal devaluation” to restore export competitiveness under Mr Cavallo that eventually led to the presidency of Cristina Fernández. In Venezuela a stable two-party system was brought down by the collapse of the oil price in the late 1980s, and the corruption this exposed. Mr Correa’s rise followed the implosion of Ecuador’s political parties and its currency. Likewise, the exhaustion of Greece’s two-party system brought Mr Tsipras to power. Mr Iglesias, with his denunciation of la casta (the political caste of the two main parties) is counting on something similar in Spain.
Time was when the southern European left gave Latin America advice on democracy. The demise of the Franco dictatorship in Spain helped to inspire a wave of democratisation in Latin America. In Mexico in 1991, Bello recalls listening to an eloquent plea from Felipe González, then Spain’s socialist prime minister, for the Latin American left to abandon revolution and embrace democracy.
In June Mr González was back in the region to support two opposition politicians jailed in Venezuela. At a press conference on his return, he was questioned about the implications of Podemos. “In Spain the regime will not be liquidated by some kind of alternative adventure,” he declared.
That is a reasonable bet. For all their problems Europe’s political systems are still more robust than many of those in Latin America. Thanks to Spain’s economic recovery and a new centrist rival, Podemos’s appeal has probably peaked. Unlike Chávez, Mr Tsipras shows no sign of using a Rousseauesque appeal to “the popular will” in referendums as a justification for gutting democratic institutions.
Latin America shows that Europe’s leaders cannot afford to be complacent, especially with regard to political corruption. But for all its failures the European Union provides an exoskeleton of institutions, and shows a commitment to democratic norms, that Latin America lacks. Time and fiscal irresponsibility are taking their toll on Latin America’s far-left regimes. If anyone in Europe needs reminding, the likes of Venezuela—with its slump, hyperinflation and repression—prove that populism is a poor remedy for the diseases of austerity and corruption.
From the print edition: The Economist – The Americas