By Robson Coelho Cardoch Valdez

It is no secret to anyone that a good economic performance makes a great difference when it comes to a legitimate government or a regime within a country. This was true during the military coup that came to power in Brazil in 1964 and ruled the country until 1985. The negative outcome of the world oil crisis of 1973 and 1979, however, had a significant and negative impact on the economic plan that the regime was carrying out. In the beginning of the eighties, the Brazilian external debt skyrocketed, inflation rates got out of control, and the whole economy started to collapse. At the same time, social discontentment flourished throughout the country while its citizens were demanding political democratic freedom and economic and social welfare. 

When we look at that period we have to take into account the changes that had taken place in the international scenario. It was crystal clear that the Communist threat was fading away and its complete fall would occur in only a matter of time. Therefore, the whole purpose of having dictatorships aligned to Washington to fight Communism made no sense. Reagan and Thatcher were then enforcing the neoliberal agenda that had been put into operation in Latin America as an experiment in Chile, by the Chicago boys, in the United States and England, respectively. 

The nationalist and protectionist economy agenda, common to most dictatorships, had no use in the New Economic World Order that was about to take over the world.

When we look at Latin America today, we may conclude that the challenges that most governments are facing are due to their poor economic performance and their affects on the day-to-day lives of the people in the region. These governments enjoyed a very good and long period of favorable international economic conditions that boosted the international price of their main exports: raw materials such as oil, iron, copper, soybean, etc. In the last ten years Brazil, Venezuela, Argentina, Bolivia, and Ecuador took this opportunity to put into action economic and social policies in favor of the poor majority of each of these countries (for many, populist policies). In one way or another, these governments (Lula/Dilma in Brazil, the Kirchners in Argentina, Evo Morales in Bolivia, Chavez/Maduro in Venezuela and Rafael Correa in Ecuador) enjoyed very high rates of popularity that legitimated each one of these governments.

Now things are quite different. The commodities boom has come to an end, domestic demand has dropped, and there is no money left for the same social and economic policies that boosted the popularity of the leaders of Brazil and Venezuela. In the case of these two countries, the diagnosis of the problem is the same, but their abilities to solve their problems are quite different from one another.

When it comes to Brazil, we have a country that has a diversified economy composed of a strong industrial sector, a very competitive agricultural segment, a huge domestic market, and a modern financial system that knows the limits imposed by the international market. The Brazilian government knows what is at risk at this very single moment: as long as the Brazilian economy deteriorates, the chances to remain in power in 2018 diminish.

Venezuela has a much more difficult task. Unemployment and inflation rates are high. Shortage is wide spread, protests have been repressed, and opposition leaders are being arrested. The country imports almost everything. Since oil prices have dropped dramatically, Maduro’s government has lost its capacity to import and to put forward the same economic and social agenda implemented by his predecessor, Hugo Chavez. Maduro has already lost the control of the situation. There is no hope in the near future that his government will be able to put the country back on the track of development and economic growth. South American leaders have already expressed their worries with what is going on in Venezuela by pressing Maduro to ensure that legislative elections scheduled for the end of this year occur, and that he does not try to rule the country through a leftist coup.

Despite the difficulties that Brazil is currently facing, the government  will have to convince public opinion of its commitment to the recovery of the economy, as well as the strengthening of democratic values throughout the country in order to recover its popularity and to have any chance in the 2018 presidential election. The strengthening of democratic values seems to be a demand of the Brazilian opposition, due to the fact that that both Venezuela and Brazil are ruled by leftist governments. There is wide spread fear within the opposition in this regard within both countries because of the traditional ideological alignment between Caracas and Brasilia. For many, what is going on in Venezuela may happen to Brazil in the future.

Finally, in the case of Venezuela, as the economy collapses and the government represses the opposition, Maduro has gotten into a more complicated situation. The president has lost his political support, both domestically and abroad. Maybe, an utopic and less disastrous solution rests on Maduro himself and, in a lesser degree, on the leaders of the region. Maduro and South American leaders, especially the Brazilian government, should recognize that Maduro has no political support or the economic tools to reorganize the Venezuelan economy. Despite the Bolivarian rhetoric, the financial market disapproval towards the economic situation of the country plays a good role in that game. When Lula came to power in 2003, he knew that he could not take the market for granted. In face of that reality, he implemented numerous economic policies that accommodated the demands of the national private sector, of the middle class and of those living in poverty. Now, for the good of Venezuelans, it is time for Maduro to realize the same lesson and start paving the way for the necessary peaceful and democratic changes in the political and economic structures of his country.

Robson Coelho Cardoch Valdez is an International Relations analyst and researcher at Foundation of Economics and Statistics of Rio Grande do Sul – FEE. He is also a PHD student of the Post-Graduate Program of International Strategic Studies at the Federal University of Rio Grande do Sul, Brazil.