LATAM-DEVELOPMENT: Political Reform, Today’s Big New Challenge

By Mario Osava Reprint | | Print |

Mario Osava

BRASILIA, Mar 25 1998 (IPS) - Politics has a key role to play in fostering development in Latin America, because both the obstacles and solutions for accomplishing the now universally accepted economic and social objectives are concentrated in that decision- making sphere.

Political reforms are thus the big new challenge for development, concluded the Circle of Montevideo, a reflection group created two years ago to seek new routes towards development in the region, which drew three presidents and 14 international financial and intellectual personalities to the Brazilian capital Monday and Tuesday.

The world is “at the gateway of consensus” on economic and social reforms, underlined Brazilian President Fernando Henrique Cardoso, highlighting the new emphasis put by the International Monetary Fund (IMF) on social investment in favour of equality and the poor.

In a document sent to the meeting in Brasilia, IMF managing- director Michel Camdessus stressed that “promoting equity is a basic responsibility of the state,” and defended a fiscal policy that reduces unequal income distribution and puts priority on education and health.

Camdessus recommended cutbacks in “unproductive public spending,” in the area of defence, for example, as well as spending that effectively favoured the poor and granted priority to primary, rather than higher, education, and preventive medicine above hospital services.

He called for “adequately focused measures of social protection,” like directed subsidies, temporary price controls and compensation for dismissed employees, to cushion the effects of the economic adjustment programmes promoted by the IMF itself.

Nevertheless, sound macroeconomic policies are a necessary condition in the search for equality, he stressed.

“Low inflation, productive investment and economic growth” are crucial to fighting poverty, he said, citing as an example the major improvement in income distribution achieved by Brazil after it stabilised its currency.

The need for economic stability is widely accepted, said Uruguayan President Julio Sanguinetti, who added that what was new was the growing consensus on social investments, as well as state action in that area, now defended by previously rigid financial institutions like the IMF.

The “false opposition” between the state and the market, economic growth and fair distribution of income has been left behind, he said.

“There is a new awareness of social questions,” agreed sociologist Luciano Martins, a special adviser to Cardoso.

Agrarian reform, which in the Cold War era was seen as a political problem, identified with the revolution, is now making a comeback due to social reasons, he said.

“Social issues are no longer a monopoly of the left,” just as international bureaucracy is no longer “so technocratic and insensitive,” said Martins, reflecting a consensus seen at the Brasilia meeting.

The need to universalise and improve basic education in order to promote equity and ensure competitiveness in the globalised economy is now almost universally recognised throughout the world, participants pointed out.

The average level of schooling completed in Latin America is four years, half the level of east Asia, Fernando Zumbado, the regional director of the UN Development Programme (UNDP), told IPS.

At a time when knowledge is increasingly decisive in international competitiveness, the region’s educational, scientific and technological backwardness seems to be growing as an obstacle to development, he said.

To overcome its problems, Latin America has to “break the vicious circle of poverty” and inequality, and universalise education and other services that represent “investment in people,” as well as providing special attention to vulnerable groups like children and female heads of households, said Zumbado.

But the economic and social reforms recognised as indispensable face many obstacles, warned several members of the Circle of Montevideo.

Political obstacles abound, said Zumbado, because business associations have corporate interests, institutions are weak and do not respond to today’s new needs, and political parties are often trapped in the past.

Opposition to reforms, said the UNDP representative, comes from “the old left and right, which by clinging to a world which can no longer exist show themselves to be incapable of learning the new. But they are powerful and could frustrate Latin America’s hopes” for the future.

It is necessary “to create a new ideology, new values for securing the reforms,” said Cardoso, who added that “the old forms of political organisation are incompatible with the new society.”

In Latin America, “is it neither the economy nor the social movement which have the central role to play, but the political system,” French sociologist Alain Touraine said at the first meeting of the reflection group, back in 1996 in Montevideo.

Democracy in Latin America and the Caribbean “is a recent and still vulnerable phenomenon,” the president of the Inter-American Development Bank Enrique Iglesias said this week.

Democratic governability requires a strengthening of institutions, added Iglesias, who cited a regional survey which indicated that only 27 percent of the population was satisfied with the political system, a similar level of approval given the parties, parliaments, governments and the legal system.

All change runs into heavy resistance from established interest groups, like unions, public employees opposed to reforms of the state and economic sectors, Zumbado underlined.

The competing forces frequently do not favour social justice, he added. In Uruguay, for example, pensioners absorb 15 percent of the Gross Domestic Product, compared to the five percent that goes into education.

And while there is wide recognition of the necessary reforms, “the difficulty lies in getting society to desire them,” said Cardoso. “We have made great strides in economic and social rationality in Latin America, but we must now do so in politics, that kingdom of the unexpected.”

“The large transformations necessary will take more than one generation,” Zumbado warned.

But Sanguinetti was optimistic, saying a region like Latin America, which had scored victories over its foreign debt problem and runaway inflation, could successfully face up to today’s new challenges.

Defining the new role of the state is key to building a democracy that is also economic and social, he stressed.

The Circle of Montevideo was created on Sanguinetti’s suggestion. Prior to the meeting in Brasilia, the group gathered in Montevideo and Barcelona, and will meet again in October in Madrid.