Ambassador Andrés Rozental
Afternoon. With Chatham House punctuality, it is 1 o’clock. My name is Andrés Rozental. I’m a Senior Policy Advisor here at Chatham House and I’m moderating this session today. We have two of our three panellists, the ladies are here, so I’ll start by introducing them and then, our third panellist should be here, momentarily. So, to my immediate left, Christina Cortes, who is the CEO of Canning House. I think most of you are aware that Canning House is Latin America’s presence, to a great extent, in London. She is a Political Economist, with a lot of international commercial experience in Government, finance and energy, and she will be joined by Elena Lazarou, who is a Professor at the Fundação Getulio Vargas, Brazil, currently on leave, doing other things here in Europe. And the Author of a good number of books, Dr Lazarou specialises on transatlantic relations, global governance, security and defence issues. And next to her, Rodrigo Aguilera, a London-based Economist, Mexican, who used to work here at Chatham House and also, at the Economist Intelligence Unit and is now doing freelance work as a Consultant. He holds a Bachelor of Science and Economics from the Universidad de las Américas in Puebla, Mexico, and an MSc in Social Policy and Development from the London School of Economics. We will give each of them a five to six minute presentation slot, so that they can talk about the theme that we have for today. I remind you all of three things. One, that this is an on the record meeting, secondly, it’s being livestreamed on Chatham House’s website, and please put your mobiles on mute or turn them off, so that we don’t have any interruptions. So, Christina.
Christina Cortes
Andrés, thank you very much and good afternoon everyone. What I want to do is just briefly outline some reflections on how we got to where we are in both Brazil and Mexico, in the context of the region, and then I’m going to suggest a few areas where there are potential similarities and differences between López Obrador, AMLO as I shall call him from now on, and Bolsonaro, which will be developed by my colleagues on the panel. So, first of all, let’s just reflect on, for a second, on how we actually got here and what the recent elections were about. Fundamentally, this was a rejection of the status quo by those who don’t feel part of the elite or feel left behind, either because they haven’t benefited at all from progress or, alternatively, they did for a while, but then they lost it again because of economic downturns and recessions. And it’s also a rejection of the status quo by people, sometimes the same people, who are literally in the firing line of crime and corruption. So, although much can be made of the left/right differences between AMLO and Bolsonaro, I would argue that this wasn’t actually important to most of the voters. So this is why you had, for example, a substantial number of women and gays voting for Bolsonaro. A fascinating interview that I heard with a gay man from one of the favelas, who basically said that yes, he was worried about being beaten up for being a homosexual, but he was more worried about being killed for his cell phone. It’s also why businesses are prepared to give the benefit of the doubt to AMLO, despite some left leaning policies, if he manages to curb corruption and crime, they may yet prosper, hence, they voted for him.
Looking more broadly across the region, I think that Mexico and Brazil, in their recent elections, are consistent with something of a trend that’s going on across the region. I hesitate to say that the region is uniform, it isn’t. I mean, Latin America is basically, it’s the construct from history, it’s really no more homogeneous than Europe, Asia of Africa, but there are some trends that we can highlight. Voters basically disillusioned with the system’s failure to deliver on crime, corruption and growth, lashing out, therefore, at their elected representatives, whom they regard as distant, unaccountable, self-serving, often corrupt, who’ve either let them down or, in some cases, completely ignored them. And so, there’s been a punishment of the previous governing elite, so in Mexico the PRI, Peña Nieto got it in the neck, the PT had that punishment metered out to them in Brazil. Voters have shown themselves willing to discard the old allegiances and support candidates and new parties, who have promised them some kind of change. It’s actually interesting that both AMLO and Bolsonaro successfully claimed to be mould breakers, despite having been part of the political system for decades.
I’d also observe that the traditional two party systems have been breaking down rather more generally. So, in Colombia, Costa Rica, Paraguay, Honduras and, most recently, El Salvador, this hasn’t always resulted in the rise of new parties, as we’ve had sometimes in Europe, and sometimes it’s just breakaways from the old parties, but there’s been quite a fragmentation going on and a regrouping it in ways that are not necessarily expected. One of the results of this is, you’ve got, across the board, you’ve got fewer, even fewer, I would say, majorities in Congress. You’ve got more fragmentation of parties and this, even more, requires coalitions and makes really any Government platform rather harder to deliver, because, you know, the coalitions don’t necessarily meld in a long-term way.
Looking at all the elections that happened in 2018, I would say that there has definitely been a regional shift towards the centre right, Brazil, Colombia, Chile, Peru, Argentina, so far, but there’s also, still, a significant left leaning presence in the form of Venezuela, Bolivia, Nicaragua and, of course, Cuba. I’m not going to dwell on the specific election results. I’m sure my colleagues will go into that in detail, but what was interesting was that despite the ultimately majoritarian results for the candidates that got through, it’s interesting to note that their oppositions were flattened. I mean, the PRI in Mexico had its worst result since it was founded in 1929, and Lula’s PT is now on a par in Congress with Bolsonaro’s new PSL party, both in the Lower House and also, in the Senate.
I’m not sure how I’m doing on time, Andrés, so you’re going to stop me if I run out of time, but I just want, briefly, to look at a few ways in which we’ve got some similarities and differences. Different ends of the political spectrum between AMLO and Bolsonaro, yes, but similar electoral methodology. So, populist messages, interacting with the voters via social media over the heads of the traditional parties, will this direct democracy approach continue? Well, if AMLO’s consultations on the Mexico City Airport and also the train in the Yucatán Peninsula are anything to go by, it suggests that that’s a definite yes. The Cabinet compositions, I won’t go into detail, suffice it to say that there’s quite a lot of military in the Bolsonaro Cabinet, I think that’s been well highlighted, and only two women, though, to be fair, Temer had only one, no afro descendents, no indigenous members.
In Mexico, of the Cabinet, you’ve got seven women and you also had an indigenous ceremony, which AMLO went through as part of his inauguration. So, there’s a very different flavour there, but there are other ways in which they are remarkably similar, reliance on the military is one. In Bolsonaro’s case, it’s obvious, he’s got them in his Cabinet. In AMLO’s case, it’s perhaps less obvious, but he is going to be heavily dependent on them, until he gets his new National Guard up and running. The influence of the Evangelicals has also been commented on a great deal with Bolsonaro. His slogan for the campaign, “Brazil before everything, and God above all,” is very obvious that there’s the influence there. But, nevertheless, AMLO also is in coalition with his own party, MORENA, a Marxist left wing party and also, the Evangelicals, so they’ve definitely got any influence going on in there.
How am I doing on time, Andrés? A tiny bit more?
Ambassador Andrés Rozental
Two minutes.
Christina Cortes
Okay, brilliant, okay. On the domestic economy, they’re coming from very different directions. So, AMLO’s got left leaning policies, but he has promised that he’s going from AgriStability, he’s also going to respect the independence of the Central Bank, so it will be interesting to see quite where that works out. Bolsonaro, who’s got two Chicago free traders in his team, but he’s also got anti-globalists, as well, so, again, will they meld, or will they fight? What I suggest is, that since both need to satisfy the voters by developing, or delivering, rather, growth and infrastructure, the convergent needs of both parties may actually drive convergent behaviour. I’m going to stop there, because I think we can talk about the regional impact further down the line.
Ambassador Andrés Rozental
Thank you, Cristina. Thank you very much.
Christina Cortes
You’re welcome.
Ambassador Andrés Rozental
Elena.
Dr Elena Lazarou
Thank you very much, Andrés, it’s really a pleasure to be here. It’s always very hard to speak about what a Government is doing after a month, barely a month and a half, after the inauguration of the President, so a lot of what I’m going to say is speculative. What I wanted to do, in my five minutes, is point out a couple of issues that we may be seeing, and probably will be seeing, in the domestic and the foreign policy sphere. But before doing that I think it’s essential to set out the setting of what we’re seeing right now in Brazil because, in many ways, it’s a bit like a Brazilian telenovela, if you don’t know the characters and the background, it’s very hard to turn on the TV and understand what’s going on. So, what I thought I’d do is start with a bit of that.
What we have right now is a very popular President, in spite of anything the media might be saying right now in Europe and elsewhere, the fact is that the support for Bolsonaro is, right now, at 70%. This means that people who did not vote for him currently, are optimistic about the way his Presidency’s going to go. And what is staggering is that the last data we had on Temer was his popularity was 7%. So, we went from a President that’s 7% popular to someone who’s 70% popularity, which means that there is space to do things. I’m not saying what these things – whether these things are good or bad, but this is what we have.
We also have a relatively strong President, and strong in the sense that while his party is very small in Congress, in both houses, and that, as I’ll explain in a minute, will be a huge struggle, and nevertheless, his supporters, and by this I don’t just mean his party, but the other parties that are aligned with him, have won the governorships of four of the most important states in Brazil: São Paulo, Rio de Janeiro, [inaudible – 11:03] and Minas Gerais. He has just been very successful, in terms of support, from both houses of Congress, because we’ve had – just seen the elections for the speakers of both houses and both are from Democrats, which have given their support to the President, so his party. So, in general, I would say we have a very strong President.
But how did Bolsonaro become a strong President? Because a year ago, this was totally unpredictable and, in fact, all odds were beaten when he won. I’d say many of the reasons you mentioned, and mainly three issues: crime is extremely high, we have 64,000 homicides in Brazil per year, and based on last year’s data. The economy, terrible – Brazil’s just come out of recession, but it’s still not growing, and we – no-one has forgotten how bad it got during 2014, until a year ago, and corruption, I think these are the three issues that, basically, brought down the establishment. And not to forget that the Lava Jato unravelling, who was involved in this corruption scandal, including prominent members, former Presidents from all main establishment parties, basically brought that establishment down. So, why did Bolsonaro win? I’d say these are basically the reasons. Many polls have shown that the Lava Jato revelations basically, eradicated public support and public confidence in all of the institutions, legislative, executive and, partially, the judiciary, because some viewed it as politicised. So what remained, essentially, was what Bolsonaro brought to the fore, someone that’s not very much linked to any of those, even as in his legislative career, he was not a prominent member of the Congress. He represents the military, which was basically, untouched by the scandal, and he brought on board the Evangelicals, who were also not affected by the scandal. So basically, Bolsonaro represented everything that had not yet been touched.
This is the setting, a very popular President, with all the facts I mentioned, but also, relatively weak in Congress and with a very bizarre mix of a team in his Cabinet, and I say bizarre because we have people representing different ideological approaches to issues. We have a very powerful Economy Minister now, who’s responsible for trade, in the form of Guedes, who you mentioned, and the Chicago trained Economist, very much pro-Liberal economic reforms, and wants to bring down the fiscal deficit, pro-trade, reduce tariff barriers, and has given – been given a lot of power since the new economics ministry has – is a merger of three former ministries, which, at times, was a problem, when it came to issues such a trade, because several ministries had to agree. A powerful Minister of Justice, in the form of Sergio Moro, who was the main Chief Justice responsible for the Lava Jato scandal, so representing some morality, when it comes to justice, but, interestingly enough, now, becoming slightly more politicised. And anti-globalist Foreign Minister, Ernesto Araújo, representing a very conservative, sort of, pro-Christian Western approach to – a pro-Western approach to foreign policy, and a military Vice President, with a very strong opinion, who is very pragmatic about foreign policy.
Ambassador Andrés Rozental
And with whom he has fought.
Dr Elena Lazarou
Yes.
Ambassador Andrés Rozental
Publicly.
Dr Elena Lazarou
At times, yes, recently he did. So, it’s a very strange mix, and one would say that, perhaps, the reason he has all these people onboard is because the base that voted for Bolsonaro, himself, itself, is a very diverse base, representing very diverse interests, and this takes me to the domestic issues, because I think the biggest challenge for Bolsonaro is exactly the fact, the diversity of his base. In Congress, it will be practically impossible to use the traditional method of Presidential coalition building of, sort of, payouts and favours in order to get several parties onboard, which is how Brazilian politics usually happens in Congress, and many are suggesting that instead, he will go for the caucus method, so interest-based approach to several issues. The three – the most important, three most important caucuses that are in support of Bolsonaro, those who people refer to it as bullets, Bible and beef, so agriculture, law and order and the Evangelicals are set out to be probably his most prominent supporters. But, again, to get all these caucuses to support every kind of proposal will be a difficult test. How much time? Finished? Sorry, I underestimated. So, as I will say later in the Q&A, the main challenge for this Congress will be pension reform, we’ll talk about this later, and there are several interesting foreign policy issues that I look forward to discussing in the Q&A.
Ambassador Andrés Rozental
Thank you, Elena. I’m sorry that it’s short, but I think we want to give as much time to our audience to participate. So, Rodrigo.
Rodrigo Aguilera
Thank you and it’s an honour to be here at Chatham House, where I used to work ten years ago, exactly, and it’s great to be on this side of the auditorium, for once, though. First of all, I want to start with what the historical significance of AMLO’s victory, in this previous election, is. Mexico had not voted for a left or a liberal President since 1910, so that was more than a century of not a single election going to the left. It also hadn’t had a leftist Government at all from 1982. So, basically, someone my age, 39-years-old, has basically had centre right Governments for 36 years, over that time, which is quite a lot, and it’s telling of how the Mexican political establishment really is a tough nut to crack. The main – so why did a leftist finally win in Mexico? The reasons, I would say, are exactly the same ones that Elena mentioned: corruption, security and the economy. I think AMLO tapped into the sentiment that even though Mexico has had free and relatively fair elections since 2000, this hasn’t translated into more effective political mechanisms and also that corruption and insecurity, pretty much feed themselves. And also, that even though Mexico’s liberal, open economy has made it more competitive, at least by most of the rankings that you might see, it actually hasn’t translated to a necessary level of GDP growth to solve the country’s socioeconomic ills and much less, you know, feed – and trickle down and feed into the people who need that money most.
So his rhetoric, pretty much, addresses this, and his campaign logo was, “Por el bien de todos, primero los pobres,” for everyone’s benefit, first the poor, and his mantra, as President, has been, “No mentir, no robar y no traicionar al pueblo,” which is no lying, no stealing and no betrayal of the people. And also helping his cause was that the Peña Nieto administration, so a really severe deterioration, institutional deterioration, that was almost, you know, a corruption scandal happening every other month. And if you look at the latest corruption rankings, from Transparency International, Mexico is now the most corrupt among Latin America’s seven largest economies, aside from Venezuela, which is not a great statistic. So, definitely AMLO is a Populist, no doubt about it, as is Bolsonaro.
They both use a very anti-establishment discourse, they both appeal to voters, rather than elites. They both have nationalistic, nostalgic overtones and they both, kind of, particularly yearn for this golden age in the 60s or 70s, which was actually a golden year for growth for both Mexico and Brazil during that time. Clearly, AMLO doesn’t refer to any dictatorship or authoritarian aspects, the way that Bolsonaro does, but he does also idealise that period. As with Bolsonaro, as well, AMLO is not really an anti-establishment candidate, you know, he has the discourse, but he’s very much an establishment Politician. His entire political career has been among one of the major Mexican political parties, first the PRI and then the [inaudible – 19:18]. I think it’s better to see him, not so much as an outsider but, sort of, the rebellious brother, within the Mexican political family.
So, why is this period idolised so much? As any good Economist I’m going to give you some numbers. GDP growth during a period known as [inaudible – 19:36], this was a period of relative macro stability, roughly between the mid 1950s to 1970. GDP growth, in this period, was 6.9%. In the 21st Century, it’s been 2.1. Now, if you look at it, in terms of GDP per the growth in the working age population, which I think is the best indicator to see how much of this growth is actually coming into people’s pockets, during that period it was 4.1. During the 21st Century it’s been 0.1. So, basically, for the majority of Mexicans, they haven’t really seen this growth materialise, and even though Mexico has not had a recession in ten years, which is actually a modern record and certainly not a crisis, like Brazil’s, Brazil’s crisis knocked off 8% of GDP from, peak to trough. People felt that the economy has stagnated. They feel the country has, sort of, not progressed the way that the Politicians have promised, either the promise of NAFTA, back in the 90s, or the promise of the structural reforms, under Peña Nieto. And just to give you an example, the Government’s own budget forecast, which come out a few months before the actual budget is approved, in 1914, which was at the peak moment of the structural reform agenda, estimated that Mexico should have grown last year by 5.3% and, in reality, it just grew slightly more than 2%. After NAFTA, Mexico’s been the fourth lowest in Latin America, in terms of growth, just 1.2%, on average, and FDI, as a share of GDP, is just 2.6% during this period, which actually, is just slightly above half of Honduras, Jamaica and Nicaragua, countries that none of you probably assume to be the most competitive and dynamic in the region. So, from the economic side, you can see where the sentiment comes from.
Now, after what AMLO promises, I think if one has to describe him, is he’s a left-wing Economic Nationalist, he’s a Social Conservative, actually, and I would say if you can sum him up in one word, he’s a Statist. So he sees a role for the state, backing economic activity in the way that that hasn’t happened in a long time. You know, you can see policies, like having the Army build the new airport in Santa Lucia, which is unprecedented, you know, in what country does the Army actually build civilian infrastructure? He’s also vowed to keep the Army on the street and create a National Guard and he’s – although he hasn’t rolled back all of the structural reforms that were passed under Peña Nieto, he’s definitely halted them, so – but overall, and I think this was already mentioned, is his economic policies are not really that transformative. I would say that if you look at, for example, the Labour Party’s agenda, here in the UK, it’s much more radical, in terms of just how left it is than López Obrador, or even some aspects, some elements of the Democratic Party in the US.
Now, on the positive side, AMLO has, like, also now has a really strong mandate, in terms of popular opinion, but he also has a mandate, in terms of actual control of Congress. He has a majority on both houses of the Congress and he also controls more than half of the state legislators in Mexico, and this is really important because you need to pass constitutional reforms, only with the approval of more than half of the state legislators. So he can, pretty much, at least in his first three years in power, can do whatever he wants, practically rule by decree, even though that’s – in Mexico, you don’t have rule by decree, as you do in other countries. He won’t need to make alliances and the opposition is completely delegitimized and disorganised, so it’s going to take a while before they offer any substantial opposition.
However, I still think that change will not be easy. First of all, Mexico’s political problems are not due to a bad Government, or even two bad Governments in a row, but just it goes to actually how the Mexican political establishment is, and it’s a system that permits reforms only at the margins and it very much favours the incumbent. So any incumbent Government really would rather just stick with the system rather than change it. On the economic side, as well, it has not much to do with just bad macro policies, but actually microeconomic dysfunctions that are very complicated and aren’t resolved just by tweaking this or tweaking that, but really requiring an overhaul of the labour market, of the welfare system, of the tax regime, and these are areas that AMLO really hasn’t touched upon yet, and in some cases, it doesn’t seem like he will.
I’ll wrap up really quickly. He’s trying to do a lot very quickly, as well, and it’s not quite sure whether the Mexican bureaucracy has a competence, or technocracy has a competence to do this, and he’s – but, on the other hand, he has shown a willingness to tackle problems that other Governments didn’t address and one of these cases, the fuel theft crisis that hit Mexico in January, which I’ll happily talk about in a follow-up question, but that’s a good example of something that he’s done that, pretty much, three administrations just didn’t bother doing anything against. So, I would say that AMLO, he seeks to transcend, he really – you know, but his administration was the fourth transformation, or so, but his personalistic style of leadership can be problematic because it doesn’t leave a lot of room to make the changes on the institutional front that Mexico really needs, so that’s a bit concerning, and even though his mandate will allow him to will his policies into being, he can’t will their outcome. So, thank you.
Ambassador Andrés Rozental
Good, thank you very much. I think one of the fascinating things that I pick out from this discussion, but also from observing what goes on in my country in Mexico and what goes on in Brazil, is that in the case of Mexico, AMLO has been running for President for 17 years. So, he knows exactly what he wants, he knows exactly where he wants to go. He’s been very transparent about it, I think very much like President Trump, during his campaign, and he has a fairly direct way of looking at his objectives and dealing with them. He has a daily press conference, which lasts for anywhere between one hour to almost two hours every day at 7:00 in the morning, gets his Cabinet people to come to this meeting, they’re all bleary eyed, they’ve had to get up at 4:00 or 5:00 in the morning to get there and they all have to stand while he talks. And some of the members of Cabinet are elderly, so it’s really quite an interesting way of – but the communication is very effective, extremely effective, and the fact is that when AMLO was elected he had, pretty much, the same popularity that Bolsonaro has, 70%. Today, his popularity is 87%, in spite of the fact that he’s had to face three or four very complicated crisis: the issue of the gasoline shortage, the closing of the airport, the downgrading of Pemex by one of the rating agencies, and a whole series of things, and his popularity only grows because he is a master communicator with his base and his base is fairly broad, as Rodrigo says.
In the case of Bolsonaro, you have a guy who is very young. López Obrador is not young. Bolsonaro is relatively young, relatively unknown, in the sense that he was not running for President for 17 years, so everything is yet to be discovered about him. And his first month, and some of his time in office, he’s had to spend in the hospital because he, as a result of the assassination attempt, he had a series of follow-up surgeries and things, and he’s still in the hospital today. Maybe he’ll be out this week, but apparently, he’s still in that way. So, two strong Presidents, very, very strong, with very weak opposition, although, in the case of Brazil, it’s a very fractured opposition, while as in the case of Mexico, it’s a diminished opposition, I’d say, without the possibility of really presenting a major obstacle to the President’s desires and objectives. And, finally, both of them very much on the anti-corruption, anti-violence and anti-impunity strategy, in terms of how they have approached their electorate. The big question, and this is something I pose to the panellists and as well as to the audiences, when will reality catch up with populist promises? Because both of them have promised enormous amounts of things, which financially, but also, politically and socially, may be very difficult to accomplish.
So, with that, I’m going to throw it open to questions or comments. Please be very brief, pose a question, don’t give a speech, and then we will have the opportunity for the panellists to comment. So, I’m ready. Let’s go first to the back of the room. You must identify yourself. Please stand up, identify yourself and your affiliation.
Sam
Sure. Hi everyone, my name’s Sam. I’m a Journalist with CNBC in London. I was looking to understand a bit from the panel the regional impact of the crisis in Venezuela and both, how you’d anticipate both Bolsonaro and AMLO to deal with that deepening crisis? Thank you.
Ambassador Andrés Rozental
Good, we’ll take a few questions at a time and then we’ll ask the panellists to talk. One of you two I saw a hand raised.
Elise Escavelez
Hi, I’m Elise Escavelez and at King’s College, London. In Mexico, many people compare AMLO to Madero, I would like to know the relationship about it.
Ambassador Andrés Rozental
Okay.
Member
[Inaudible – 30:31] from the Overseas Development Institute. I’m wondering, I think it was really interesting to hear about the kinds of support that both AMLO and Bolsonaro have. But my impression, coming from Mexico myself, is that the, let’s say, the powerful elite in Mexico are much less reluctant to embrace AMLO’s project of reform, whereas Bolsonaro does have a lot more support from the economic and political powerful establishment, could you comment on that? Thank you.
Ambassador Andrés Rozental
Okay, thank you. Rodrigo, do you want to talk about AMLO-Madero?
Rodrigo Aguilera
Sure.
Ambassador Andrés Rozental
And then perhaps mention the Venezuela issue in passing and then I’ll ask Elena to talk about the Venezuela foreign policy, Brazil foreign policy, and if Christina wants to say something as well.
Rodrigo Aguilera
Yeah, I think, well, the comparison between AMLO and Madero, aside from the fact that they both are from the left, I think it ends there. I think, in terms of their style, it’s completely different, in terms of their economic policies, as well. Mexico’s brand of leftism is not – does not seem to intend to nationalise large parts of the economy, for example. And also, Mexico is not a monoexporter, so also, its reliance on one source of foreign exchange doesn’t limit itself and so, the likelihood that Mexico would have a crisis the way that Venezuela is having is, I would say, near zero, in that sense.
Also, the other thing, and I think this also answers the follow-up question, is even though elites in Mexico have been quite sceptical of AMLO for a long time, I think, in some areas, they have warmed up, at least slightly, to him, at least compared to, for example, when he ran in 2006, when almost the entire business sector thought he was the Devil. But if you look at the policies that AMLO – for example, the very fact that in his first year, least, he has not proposed a tax reform and has vowed not to raise taxes, at least for the first half of his term. I mean, compare that, for example, with what a lot of Democrats are asking for in the US, to have a 70% marginal – upper marginal income tax. I mean, these things aren’t being proposed in Mexico. The fundamental structure of the Mexican economy does not appear to change and if you look at the budget estimates from this year, it’s practically – it could have been any year during the Peña Nieto administration. And, anyway, I’ll talk about Venezuela, I guess, in a follow-up question, so…
Ambassador Andrés Rozental
Fine, Elena?
Dr Elena Lazarou
Well, on the Venezuela question I think it opens a number of issues. What we’ve seen so far is that Bolsonaro has supported, as part of the Lima Group, the Lima Group declaration, so Brazil recognises Guaido now as the President of Venezuela. But I think it’s much more complicated than just that. The background to this is a yearlong policy by the – of the [inaudible – 33:31], too, which, in a way, assisted Venezuela’s regime to keep up. I mean, financially also there were a lot of transactions between Brazil and Venezuela during the years of the [inaudible – 33:42] ranging from, you know, sales of beef to energy, there was a lot going on, which, in many ways, helped sustain that regime.
One of the reasons that Bolsonaro’s positioning himself clearly against the [inaudible – 33:54] is because having been elected as everything that is contrary to the [inaudible – 33:58], that is – apart from his basic convictions, this is also an expected foreign policy approach, that they would do exactly the opposite than what the [inaudible – 34:07] is doing. However, on the other hand, Brazilian foreign policy has traditionally been very strongly anti-intervention and so, that brings him at a bit of a contrast with the United States which, however, he wants to align himself with.
So there’s a lot of different vortexes here of what’s happening, and I don’t think we have a clear picture on Venezuela and Brazil at the moment, but we generally don’t have a clear picture on Venezuela, so – but clearly, the issue of Venezuela also touches on something that Andrés mentioned, which is when are things going to get real? And I think they’re getting real very, very quickly because what we have in Venezuela right now, in fact, is less of a regional thing, but rather the United States and China being on very different sides of the story. And Brazil is really caught up in that because on the one hand, we have a Government that wants to follow the US on foreign policy and align itself with the US, but we have a very strong economic relationship with China right now, so I think we’re going to see a lot happening there.
There was a question on the Bolsonaro base, and elitist versus non-elitist, and I’ll just pick it up really quickly. Indeed, if we look at how people voted in Brazil, the North East, which is the less prosperous part of Brazil, did not vote for Bolsonaro, largely. So, indeed, there is there a, sort of, economic stratification divide. However, and again to undress this question, when do things get too real? The proposed pension reform, in many ways, would benefit these people, but would clash with the interests of several elites. So, again, if he goes ahead with this, with the pension reform, we may see some, kind of, movement, in terms of who supports what.
Ambassador Andrés Rozental
Thank you. Christine.
Christina Cortes
I’ll comment, briefly, on Venezuela, not least because Canning House had an event in the Houses of Parliament yesterday, which, if anybody’s interested in, they can pick up on livestream, where we’re talking about exactly this. But coming back to Mexico and to Brazil and their respective positions, I mean, it’s particularly interesting that they have landed on very different sides, on this whole question, and Bolsonaro was very quick getting in behind, or rather being behind the movement of the Lima Group, to be calling for Maduro to go. Mexico’s been dragging its heels and finds itself in a very odd company with, you know, Bolivia, Russia, China, Cuba and Turkey and isn’t aligned with the region at all, so it’ll be interesting to see whether that actually comes together. I mean, at one stage, the Mexicans were aligned with Uruguayans in not calling, with the rest of the world, for elections to happen. Uruguay has now joined the EU and the US and the Lima Group and Mexico’s still standing, looking rather isolated and, as I say, in rather strange company at the moment. We’ll see how that one goes.
Ambassador Andrés Rozental
I couldn’t agree more, and you’re absolutely right. Please. Oh, good, the mic is over there, but okay, please, go ahead.
Hilde Rapp
I’m Hilde Rapp, Centre for International Peacebuilding. I also am interested in the reality question. I’m aware that, particularly in Mexico, but equally in Brazil, there are huge inequalities, regional inequalities, in terms of performance, economic, political, otherwise and also, they both share the problem with drugs and how to deal with that. And from what I saw, there was really such insufficient infrastructure to deal with convictions, with investigation, with prison availability for actually locking anybody up, with training for some guards. And I wonder whether there is any, kind of, practical initiative afoot to deal with those underlying issues that would make it more possible to meet the political aspirations they both have? Thank you.
Ambassador Andrés Rozental
Thank you, and the gentleman just behind you, yes.
Steve Cooney
Yeah. Oh hi, I’m Steve Cooney from – well, I’m a Chatham House Member, but I was formally at the Library of Congress, and one of my jobs, I worked quite a bit on the steel industry and visited Brazil a number of times. And so my question is about the mud, the subject hasn’t been raised yet, you know, what’s going to happen with respect of Vale? I mean, it’s a huge company, largest iron ore exporter in the world, Brazil is the second largest steel industry in the Americas, and so the question I have is, you know, and they stopped producing iron ore in Minas. So, you know, what do you forecast happening, with respect to the Bolsonaro response to the whole crisis in that industry?
Ambassador Andrés Rozental
Okay, thank you. Boy, a very peaceful audience today.
Munith Calawoon
Hi, Munith Calawoon from UCL. I wanted to ask about the stance on the sciences by Bolsonaro, especially climate change. So, you know, the Evangelical base are very sceptical of climate change theory, the same with the cousins in the US, and this is very important, especially in Brazil with the Amazon rainforest, what future do you forecast with this situation? Thank you.
Ambassador Andrés Rozental
Thank you. Well, let’s go in inverse order this time.
Christina Cortes
Yes, absolutely fine
Ambassador Andrés Rozental
Christina, start off, and I’m sure you have a lot to say.
Christina Cortes
I’ll try to keep it limited, but actually, if I can pick up on the climate change point first and I think, and also the point in mining, I think Brumadinho is going to have an impact, absolutely, definitely. I was in São Paulo last week and, you know, was asking people what they thought the impact on Vale would be and, you know, frankly, it’s not seeing as something that’s going to crater the company, was what I was hearing, you know, it’s within the scope of the company to deal with. But, nevertheless, obviously, from a reputation point of view and financially, they’re going to take quite a hit and they’re going to have to, you know, alter the operations that they’re working on. And as far as Brazil’s contribution, or lack of it, on the climate change side, I mean, it’s interesting that if you look at Brazil’s role internationally, that is one of the areas where they’ve been notable for taking an international role. I mean, the other has been, to a degree, peacekeeping. But, nevertheless, you know, what Bolsonaro’s certainly been saying through his campaign is very much, you know, pro-Agro business loosening environmental controls, particularly restrictions on mining and ranching and farming, as I say, Brumadinho may well roll that back to some degree, it’ll be interesting to see where it goes. But he’s also on the record, I think, as opposing foreign NGO agendas on the Amazon, for example, you know, he wants more hydro, he wants more nuclear power in the area and also, notably, withdrew Brazil from the offer to host the 2019 UN Climate Change Conference.
So, lots of things on the Brazil side, where I think there’s a major question mark over what will happen on the climate change side. But actually, to be fair, you know, bouncing up a little bit, you know, looking at what is happening in Mexico, I think we’re getting very mixed messages from AMLO as well. So, you know, on the one hand, he’s saying he wants to protect the environment and he wants to consult with indigenous communities, he respects the Paris Agreement and he wants to promote renewable energy. But on the other side of it he’s also saying he’s going to freeze energy prices, for several years, he’s going to boost crude output ideally by 40% and gas by 50% by 2024 and he’s also going to build a new refinery in tabasco to produce 400,000 barrels of refined crude per day. So, you know, it’ll be interesting to see which comes out ahead on that one, so they’re both under the microscope, I would say, on this one, at the moment.
Ambassador Andrés Rozental
And he’s also, in the case of AMLO, has also said that Mexico should go back to using coal for energy production and that Mexico should not do any fracking, so have also that same contradiction, in terms of a very ambitious commitment in Paris, and very, very ambitious, probably the most ambitious in Latin America, in terms of reducing and working with climate change and the contradictions.
Christina Cortes
I’m not going to even attempt to talk about drug problems, ‘cause that’s way outside my territory.
Dr Elena Lazarou
I think you had me covered on environment and on mining. I think if I can add anything, it’s with – that I – my feeling is that the Bolsonaro Government is, kind of, ambivalent about what message it needs to send to the international community on climate. I think both in Davos , but also in some negotiations on the – on concluding the EU Mercosur FTA, it’s been clear that, particularly the EU and several other big international actors, are very persistent on standards on environmental issues. And I think that may be where the Bolsonaro Government makes a, sort of, somersault, because if they’re serious about trade and free trade, the majority of free trade agreements these days are large scale, particularly the EU agreements that are also including environmental clauses. So, I think that may be an issue where trade and environments, trade may, in a way, facilitate a more consistent, sort of, environmental and climate approach to the previous one, which was, as you said, Brazil was really a leader in this area, and it will be good if it remains so.
On the mining, again, I think you covered it. The hope is that this will, perhaps, serve as a reason, an argument, to see a bit more regulation on mining and, for example, in Brumadinho, it was revealed that the cafeteria in the place was over a pit, things like that should not be happening, particularly if Brazil is to attract big international investors and I think, perhaps, we’ll see, if we’re lucky, some better regulation. Drugs is also not my area but, I mean, the Bolsonaro Government, so far, is clear, what they insist on is gun ownership, sort of, giving people guns for self-defence, bringing out the military. I’m not – scientifically, this has not been shown, so far, to be the best way to deal with crime and drugs, but this is a platform that Bolsonaro was voted on, so I think, for at least the first months after his inauguration, this is what we’ll be seeing.
Ambassador Andrés Rozental
Rodrigo?
Rodrigo Aguilera
Yeah, so I think this goes back to the issue of, sort of, the reality check of when things might go downhill for AMLO, and one of the points that was mentioned was his incredible approval rating right now, the 87%, despite a month of fuel shortages. And I was there, during all of January and, you know, even in Mexico City, you would see queues of like four or six blocks outside of gasoline – of gas stations, which was unprecedented. And if you looked at the criticism from his opponents, you would think that Mexico, in January, was basically Mad Max, Fury Road, and yet, people gave him the benefit of the doubt and people said, “Well, you know, this is a hardship that we’ll happily endure, on a temporary basis, insofar as it addresses a real issue involving security.” However, even though I do think that AMLO’s, kind of, honeymoon period will definitely be longer than the average of a Latin American leader, I definitely don’t think it’s going to go down significantly in his first year. But there’s the issue of growth, you know, if the economy doesn’t start growing the way that he has promised, and he promised 4% growth by the end of his term, but if it doesn’t start moving in that direction, then people are going to start becoming a bit more cynical.
The other is a security element. I mean, people are really worried about this. There’s been an uptake in crime and violence, in the last two, three years of the Peña Nieto administration and it doesn’t seem to be abating right now. And I think a lot of segment – even people who have supported López Obrador have really not looked too kindly on his security strategy, which basically involves more militarisation of society, rather than less, despite what a lot of civil society has actually demanded. And, furthermore, there’s not even the money to make any other alternative options and, for example, people have been calling for training local Police Forces, etc., but if there’s no money because the budget doesn’t really allow much leeway in this respect, and Mexico only collects 13% of GDP in taxes, which is an absurdly low number, then there’s not so much that you can do, in terms having – you know, attacking the problem on all these fronts.
The other thing that I think could really harm him is a corruption scandal, and if there’s a corrupt – I don’t think it would involve him, you know, I do take his word that he is an honest Politician and lives quite frugally, himself. But it’s not the same to say that about a lot of members of MORENA, especially because a lot of members of MORENA aren’t really committed to his ideology or his thriftiness, the way that he is. So, I would say, almost with 100% certainty, that there will be a corruption scandal at some point, over the next couple of years and that, yes, it will involve someone in his inner circle and MORENA. And the way that he deals with that scandal, I think, will be really, a watershed moment, in terms of is he going to apply the same standard that he would, you know, or what he’s been claiming that he would, if it were from anyone else? Because a problem in Mexico has been the discretionary use of the rule of law, not that there isn’t rule of law, it’s just that it applies, you know, to who the President or the ruling party wants to, and AMLO really needs to break away from that mould, if he wants to appear different.
Member
I think I have to pick up on that corruption point. I mean, if you take that to Bolsonaro, I mean, he’s somebody who has got a, as far as we know, at least, a clean background, to date. I mean, there are loads of other things he’s been accused of, you know, sexism, homophobia and so on but, you know, he’s not been accused of corruption, so far. But I think one of the credibility tests, similar to Mexico and AMLO, is, you know, how is he going to deal with the corruption allegations that are surfacing against his Tourism Minister, against one of his sons? You know, that will be an acid test as to whether his anticorruption message is actually, I think, believed.
Ambassador Andrés Rozental
Yeah, and I think the same holds true for López Obrador, because already, two of his Cabinet members have been found out, in terms of not having declared properties that they own in the United States in their – every Member of Government in Mexico has to declare, publicly declare, what they –what their assets are and already, two of his Ministers, the Minister of the Interior and the Minister of Communications, have both been found out, by the media, by the way, to have things that they did not declare. So, I think it holds true for both. And the other, of course, the other issue is that I think at the top, Bolsonaro, López Obrador, are probably honest, they’re probably clean, because in the case of López Obrador, if he hadn’t been clean, somebody would have found it out over the 17 years, and they certainly tried very hard, never found anything. But, again, as Rodrigo says, people around him and the Cabinet, that Elena mentioned the case of Bolsonaro, as bizarre, is equally bizarre in Mexico.
It’s a Cabinet made up of academics, of people that don’t have Government experience, people who don’t have any, as we say in Spanish, [inaudible – 50:06], that is they don’t have anything that somebody could find of their backgrounds, where they might have been corrupt or might have done something wrong. But, at the same time, they are not a unified group that would be able to fulfil the strategy that López Obrador might want them to do. And I believe, in my own perception, that this Cabinet in Mexico is a transition Cabinet and probably will be falling off, as this year goes by, and new people will be coming in that he wants to name. Question there, in the very, very back.
John Curtis
Hello. John Curtis, House of Commons Library. I was wondering if you’d talk a little bit more about AMLO’s approach to migration, especially from his own southern border, I know there’s been some attempts to secure that, how will he change from what happened before? Will he be uncomfortable with being seen to support a, sort of, Trump strategy of stopping migration?
Ambassador Andrés Rozental
Very good.
Orlando Edwards
Hello. I’m Orlando Edwards, British Council. I think, in the lead up to the election, Bolsonaro talked about – one of his commitments was about abolishing the Ministry of Culture and cutting state funding for the arts and, similarly, he talked about cleansing universities of left-wing Teachers and installing right-wing Vice Chancellors. I just wondered if the panel could share some insights on that and, perhaps, if there was anything, I’m not sure what AMLO, if, in a similar vein, he made any pledges. And then, secondly, just in – there’s been a lot of talk in this country about, sort of, global Britain going out there and forging new partnerships, do you think – what do you think are the prospects of AMLO and Bolsonaro looking to the UK for forging their new partnerships?
Ambassador Andrés Rozental
Good question. Jeremy.
Jeremy Greenstock
Jeremy Greenstock, Gatehouse Advisory. On the back of that could you say a little bit more about the foreign policy field? There used to be a Brazil/South Africa/India connection, the relationship with the United States, the attitudes in the – at the UN. Brazil is well known for its outward reach and its wish to co-operate with other countries on global issues, is that going to fade under Bolsonaro? And perhaps a comment on the AMLO front on foreign policy as well, would be good.
Ambassador Andrés Rozental
Thank you, yes, I think that’s very important and I’d add another question to the panellists, relating to the rapprochement between Mercosur and the Pacific Alliance, which began under the Temer Government and the former Government of Mexico in Peña Nieto. Is that likely to continue or is Mercosur dead forever? Or what’s going to happen? Because I think that’s very important. So, Elena, why don’t you lead off, as the Brazilian in the room?
Dr Elena Lazarou
Well, honorary. Well, Macri and Bolsonaro decided there will be no obituary for Mercosur yet. In fact, they met in January and they decided, actually on the back of what Temer and Macri had also discussed, that Mercosur is not dead, but that it needs to change. I think what Bolsonaro is envisaging is perhaps a little more flexibility, in terms of the leeway to sign FTAs. I think it’s been a real longstanding realisation that Mercosur is not very flexible and efficient in doing that. So I think they’re in the process of seeing how this can – how they can restore a Mercosur that is more flexible and more dynamic and actually make it work for what it was supposed to be from the beginning, a, sort of, Customs union, which enhances trade within the area, but also, is more of a vehicle portrayed within the area, rather than to stop or to inhibit and make it more difficult to sign FTAs outside the area.
Wider foreign policy is a very broad issue. I mean, Brazil has traditionally been a multilateral, a supporter of the multilateral system of international law. It’s been a supporter of non-interference in international affairs. It has had longstanding objectives in foreign affairs, including a seat in the UN Security Council with the G4. It’s been, in recent years, very much part of this idea of having several multilateral, minilateral formations, for the purposes of reforming global governance, such as the BRICS, IPSA, etc., so that’s what you’re referring to. We’re seeing a bit of a departure from that right now. We’re seeing a Foreign Minister who is very intent on a more moralistic approach to foreign affairs, if you would like, making Brazil part of a, sort of, at least in this course, Western, sort of, Christian group of states, and we see that very much in the rapprochement with the US, and I say rapprochement because it’s been a tricky relationship and the fact that, you know, Pompeo has been to Brazil, Bolton has been to Brazil, Araújo was in Washington last week, we’ll probably have a visit by Bolsonaro, so all of this is actually a lot of activism in US/Brazil relations. And there’s been suggestions of things that may not happen, but were clearly suggested, in order to improve the relationships, such as a US military base in Brazil, which is probably not going to happen, but still the fact that it was mentioned. And we see, of course, a lot of alignment with Trump, on a number of issues, discussing moving the Embassy in Israel to Jerusalem, discussing leaving the Paris Climate Agreement. So I think US is definitely on the list but, of course, this begs the question how will relations with China fair because, of course, Araújo’s approach does not – China’s not in this group of states but, on the other hand, we have the trade relationship, we have investment, so that’s going to be a big battle. And I want to stop here because there’s more I can say, but foreign policy’s huge.
Ambassador Andrés Rozental
Alright, thank you. Rodrigo, you want to address the migration issue with the central American caravans and the relationship with the US on the issue?
Rodrigo Aguilera
So, I don’t – yeah, overall, I think he’s trying to juggle the fact that he doesn’t want to antagonise Trump too much, but at the same time, he seems to be quite unfazed by anything that Trump says about Mexicans or migration, migrants in general. So, I think that that’s – you know, he’s not going to be personally insulted by Trump in any dimension. And his Government has actually given support to the big caravan that was there in the last month, and I think that would be a good thing, in order – you know, his Government seems to be a bit more sympathetic to the human rights abuses that these people suffer, because Mexico has, traditionally, had a very, very, I would say, shameful double standard of the way that – how we treat central American migrants in Mexico and the way that we expect the US to treat Mexican migrants in the US. But, on the other hand, you can’t just have a migrant caravan every month, so something needs to be – you know, something needs to give in there.
Someone mentioned, also, the thing about the universities, which even though it’s not an issue in Mexico, I would say, directly, it does, in a sense, touch upon AMLO’s inherent combativeness with the media, for example, and with things that he doesn’t view as, kind of, having his pure background of struggle and, you know, opposing the system. And so, for example, he’s had a beef with one of Mexico’s big private universities, the ITAM, which he sees as, kind of, being an old boys’ network. But whether, you know, sort of intellectual cleansing, the way that Bolsonaro has suggested, which hopefully, he won’t do, but I don’t think that’s a threat in Mexico.
And I just want to say a couple of things on the foreign policy side, ‘cause I haven’t really touched upon that. Mexico’s foreign relationships are dominated by the US. I mean, the relationship with Latin America is non-existent on a political level, you know, any practical sense, so I don’t think Mexico has any influence, for example, on the Venezuelan crisis. But, at the same time, the economic reality, as well, is that, you know, this is a country that has 80% of its exports to the US. So any regional economic activity or any regional integration that Mexico has supported, over the last couple of years, and the Pacific Alliance, for example, has to deal with that reality that Mexico only trades, you know, maybe 3% or 4% of its entire export stock, with the countries in the Pacific Alliance, so, ultimately, its influence is going to be quite modest, in this regard. So I don’t really see him as very much a Pan-Americanist, in any sense. It’s actually telling that probably his most high profile Minister, which is Marcelo Ebrard, has largely been on the sidelines, at least his first two months, which is quite strange, and been talking to people who suspect that he just, kind of, wants to ride out any early term controversies and then maybe find a more visible position later on. But then, on the other side, even this hands off approach could, at least – you know, in the Venezuela case, I think it’s hurting him more than helping but, on the other hand, he’s probably going to not resort on some of the needless provocations that you had, for example, during the Vicente Fox years, where he made a lot of enemies, for no reason whatsoever. But I don’t really think that Mexico has much to contribute, in terms of regional integration.
Ambassador Andrés Rozental
Thank you. Thank you Rodrigo. Christina?
Christina Cortes
Given time I will just burn this quickly.
Ambassador Andrés Rozental
Go ahead, you have time, but would you address the question about the relationship with the UK? Because I think that’s very important.
Christina Cortes
Absolutely, I’ll gladly include that.
Ambassador Andrés Rozental
As we’re in the UK, we have to talk about it.
Christina Cortes
Absolutely, yeah. Let me start with just a reflection on where, you know, things like the almost unpronounceable CPTPP, you know, the Pacific Alliance reworked, and Mercosur is sitting. The fact that Mexico has got the, now the US Mexico/Canada FTA, in process, albeit not ratified yet, the fact that they are already part of CPTPP I think actually puts them in a rather better position than Brazil, in terms of, you know, they’re in the swim of some free trade agreements that are actually seem to be going somewhere. Frankly, my own view on Mercosur is, we’re still on slow track, you know, still haven’t got it signed off with the EU, that’s fairly typical of what’s going on there. So, although it may refocus, I’m still not sure it’s actually going to really accelerate. That actually reflects on, you know, what the UK can do, in terms of, you know, trading alliances, what it might rollover from the EU and so on and so forth, so I think that plays, very much, into that space. So, I think Mexico is in a more dynamic area than Brazil is, in that regard. That said, bilaterally, and the sense that I have, from my position, is that both are very much open for business, if Britain wants to be genuinely global, so I think that is to play for.
If I step back to look at how Mexico is working and how Brazil is working, Mexico, on the trade side, I think, can make good progress because of those alliances, as I say, but politically, I go back to Venezuela, it’s somewhat out of step with the rest of the region. Also, the fact that, for migration purposes, you know, they’re very much – their foreign policy looks North. The only reason why they’re looking South really, I think, at all, is because of the Central American caravans at the moment. So, you know, Mexico, for me, places itself very much in the North American Continent, if you will. Brazil, on the other hand, I still see Brazil, despite the focus on domestic policy, playing a considerable role in peacekeeping, still, less on the environmental side. But, to be perfectly honest, unless Brazil can simplify its political systems such that it doesn’t have the fragmentation with the parties and it can actually build some stable coalitions, I do think it’s going to really remain the gentle giant within the area, tripping over its shoelaces, from time-to-time, because they’ve been tied together by a political system that doesn’t really free it to do what it ought to be doing.
Ambassador Andrés Rozental
Well, with that thank you very much. Please join me in thanking the panellists [applause]. I think the subject matter is worthy, perhaps, of a continuation at some point in the near future, because there are many things we did not cover because of time constraints. But thank you very much for your patience and for your attendance.
