Americas Quarterly - Spring 2009

last economic slowdown, of 1998–2002, corroded support for the center-right which had dominated Latin American politics in the 1990s. Unless governments are able to devise effective policy responses, tougher times are once again likely to make incumbents less popular. This time it is the left that may pay the price of incumbency.

But not everywhere. Take Chile. A few months ago, the center-left Concertación coalition that has governed since 1990 looked as if it was heading for defeat at the hands of the conservative opposition.

But polls suggest Chileans value their government’s counter-cyclical policies. And by anointing former president Eduardo Frei, one of its most conservative leaders, as its presidential candidate, the Concertación is making an appeal to the middle ground. Uruguay’s election later this year similarly looks too close to call. In

Mexico, recession has ended President Felipe Calderón’s hopes of winning a majority in a midterm congressional

election in July. But it is the PRI, straddling the middle ground, rather than the divided left, that will make big gains.

Looking further ahead, Brazil’s election of 2010 is likely to see a contest bet ween Dilma Rousseff, Lula’s chief of staff and chosen candidate, and Jose Serra,

the governor of São Paulo from the Party of Brazilian Social Democracy. With important nuances of difference, both stand for the combination of orthodox economic policy and more active social policy that has characterized Brazilian government since the mid-1990s. In Colombia, the economic downturn and other difficulties appear to have ended any lingering desires that Uribe nurtured of changing the constitution and imitating Chávez in seeking a third term. But he may still be strong enough to play the role of the great broker in 2010.

So from here to the horizon, it is hard to see anything other than a strengthening of the pragmatic, reformist current that has been the dominant trend in Latin America for the past few years. This combines the stress on markets, trade and private investment of the Washington Consensus with a more activist state, especially in poverty reduction and in promoting innovation and research and development.

Nevertheless, the global economic turmoil will challenge some of the liberal assumptions of the past 25 years.

One of the biggest new threats to Latin America is the tendency of foreign banks to curb lending by their subsidiaries in the region. So it can no longer be said that the nationality of banks is unimportant. Stricter bank regulation also seems likely: many Latin Americans learned this lesson the hard way during the regional financial collapses of the 1980s and 1990s.