LATIN AMERICA: Is Populism Out? Conservatism In?

Marching to the Right?

South America map courtesy of Nations Online Project

Is populism on the wane in Latin America’s larger economies?

On Thursday (December 9), Argentina’s new business-friendly conservative President Maurico Macri took office after 12 years of left wing government.

Voters recently dealt an electoral blow to the populist legacy of the late Hugo Chavez and his United Socialist Party of Venezuela — electing an opposition majority to the National Assembly.

Meanwhile lawmakers in Brazil are trying to impeach another populist, President Dilma Rousseff, who is is grappling with a severe economic downturn and a massive corruption scandal in her Workers Party government.

But bad news for leftists is good news to foreign investors, according to Bloomberg News (via the Tico Times).

Venezuelan bonds climbed after the opposition won a majority in Congress for the first time in 16 years, Bloomberg reported, adding that the Global X MSCI Argentina exchange-traded fund has seen asses under management climb since polls showed Macri was likely o win the presidency. Investors have also piled into the biggest Brazil stock, ET< since impeachment proceedings against Rousseff were initiated, the business news site said.

The Venezuelan elections could also have significant consequences for Russian oil development contracts and a slowdown of arms sales to Venezuela, according to RBC Daily (via Russia Beyond the Headlines).

Today Venezuela is Russia’s second largest American trading partner after Brazil. Trade relations between the two countries is largely focused on oil and defense. Russia’s state oil enterprise Rosneft is collaborating on five joint oil production projects in Venezuela, including developing oil deposits in the Orinoco River Valley, according to RBC.

Russia has supplied much of Venezuela’s military weaponry including Su-30 fighter jets, T-72 tanks and Grad multiple rocket launchers, according to RBC.

While Chavez’s hand-picked successor, Nicola Maduro, remains president, his party’s capability to influence decisions has been significantly reduced, RBC said. The assembly voting is the worst-ever defeat for the leftist movement founded by Chavez in 1999, according to the BBC.

Argentina’s economy isstuck in a prolonged slowdown and facing a recession next year, according to International Monetary Fund forecasts. But Macri’s room to maneuver will be limited by Congress, where the coalition loyal to his predecessor Cristina Kirchner and her husband Nestor — also a former president — will be the largest party in the lower house and have an absolute majority in the Senate, according to AFP.

Meanwhile, Brazil’s Supreme Court has suspended impeachment proceedings against Rousseff until it rules on a secret vote that apparently stacked a congressional committee with opponents trying to oust her, according to The Independent website.