The columnist and editor of the continent, Michael Stott, makes an analysis of the mismanagement in economic matters of all the presidents of the region. This is the difficult scenario.
Inacio Lula da Silva / Andres Manuel Lopez Obrador / Gabriel Boric / Gustavo Petro / Alberto Fernandez - Photo: Revista Semana
Latin America has it all. Abundant and cheap renewable energy. Land and possibilities to be one of the world's food reserves. It is a relatively peaceful place compared to other regions of the world. Close to the United States and in a privileged position to send merchandise to China. So says the columnist for the prestigious Financial Times, Michael Stott, who comes to a sad conclusion: even so, the continent wastes all those privileges.
"Presidents seem to have other priorities," says Stott.
The journalist has all the authority to talk about the subject. As editor for Latin America of the Financial Times, he knows the ins and outs of power and business in Latin America like no one else. Michael works in London, but plays as a local in Latin America, as he lived there between 1990-1998, in Brazil, Colombia and Mexico.
Graduated from the prestigious University of Cambridge, he is fluent in Spanish, Portuguese, French, German and Russian.
Brazil's President Luis Inácio Lula da Silva smiles as he walks past far-right parliamentarians protesting his presence, after delivering a speech during a welcome session at the Portuguese parliament - Photo: AP
In his analysis, Stott talks country by country. For example, of the giant Brazil, he says that while it could be a Silicon Valley of the world, and compete with India in manufacturing chips, Luiz Inácio Lula da Silva's priority is to bet on the past by building refineries, betting on the construction of ships and making alliances in a monetary policy with the worst of the course in this matter: Argentina.
This week it was just in the news how the Central Bank of Brazil (BCB) said No to the president and maintained this Wednesday its reference interest rate at 13.75%, where it has been since August 2022, despite pressure from the government to reduce the cost of money and boost the economy.
The entity's Monetary Policy Committee (Copom) left the Selic rate unchanged for the sixth consecutive time. He based his decision on inflation that was still high in relation to the target, as indicated in a statement at the end of their third meeting of the year.
The Brazilian president has publicly said that he will help Argentina, despite all the internal criticism for that twist. "I am going to make everything and any sacrifice so that we can help Argentina in this difficult moment," he said at a press conference at the Palacio de la Alvorada, the official residence, where he received his Argentine counterpart in a meeting that lasted almost four hours a few days ago. After the meeting, Lula said he was "willing" to talk with businessmen and the Brazilian Congress to find "a solution" for the lack of dollars in the Central Bank of Argentina.
Argentina's President Alberto Fernández walks past an honor guard during an official ceremony as he meets with Chile's President Gabriel Boric in Santiago, Chile - Photo: REUTERS
The Gabriel Boric case also surprises Stott. The Chilean president came as a huge promise and he has done badly. The last blow was received last Sunday when he went like a pendulum, in two years from embracing and rejecting a proposal for a left-wing Constitution to embarking on a new one with the ultra-conservatives at the helm and the Government just as a spectator, after the surprising electoral results.
Chileans elected a 51-member constituent council largely dominated by the opposition right, which will draw up a new Political Charter to replace that of the Augusto Pinochet dictatorship (1973-1990), which must be submitted to a plebiscite in December.
Stott says that while this was happening, the Government was betting on exploiting lithium. Boric has a controversial proposal: he wants the State to control the entire production process of this key mineral for the manufacture of electric vehicle batteries. "Many of you may have legitimate doubts (...), we are calling for a process of dialogue and participation to collect visions and knowledge about the new lithium governance," he said when presenting the project.
Photo published by the press office of the Chilean presidency showing the Chilean president, Gabriel Boric, presenting a message to the country to announce the public-private partnership for the exploitation of lithium in Chile - Photo: AFP
Chile is the second-world producer of this mineral, essential for the manufacture of energy storage batteries, electric cars and buses. Its demand has grown strongly in recent years as the world seeks to move away from fossil fuels to curb global warming.
Stott did interviews with experts in that market who maintain that Boric's strategy is "poor" and has filled the country with "uncertainty."
Mexico, for its part, does not raise either. According to Stott, it should be the best place to do business, due to its proximity to the United States and its Free Trade Agreement. But President López Obrador eliminated the country's promotion agency, attacked renewable energy companies, ordered the closure of the Mexico City airport to cargo planes, among other controversial decisions.
- Photo: REUTERS
Argentina did hit rock bottom and is "almost bankrupt." In March, the country reached the highest monthly inflation in 12 months, a period in which the increase in consumer prices totaled 104.3%. The country, in the midst of an election year, is going through a difficult moment in its economy, with a drought that has severely affected the agricultural and livestock sector, the country's largest source of foreign currency, which since the beginning of the year has lost more than 5,500 million dollars of its international reserves, currently at around 37,000 million.
The International Monetary Fund forecast for Argentina in 2023 a very timid growth of 0.2% of the Gross Domestic Product. The Financial Times reports that the government, instead of managing the situation, has created fear and uncertainty with decisions that have impacted its flagship products in sectors such as agriculture.
Just to give an example of what has happened there, corn and soybeans, which were a considerable source of income, have been hit hard. Production is estimated to fall to 37 million tons in 2023. "For Argentina, production is reduced because continued heat in March has reduced yield prospects for late-planted corn," says the Wasde report from the United States Department of Agriculture.
President of the Republic Gustavo Petro summoned the people to march on Workers' Day and to accompany him to the speech from the balcony of the Casa de Nariño Petro greeting Bogota May 1, 2023 Photo Guillermo Torres Reina / Semana - Photo: Guillermo Torres / Semana
Colombia is the last country he mentions but it is not doing well either. Of President Petro, says that he has opposed mining and oil, the pillar of the country's economy. “The ex-guerrilla has forced almost the entirety of his cabinet to resign” including his respected finance minister”, as a response to a “government emergency”, the article states.
Due to this context, many millionaires on the continent have preferred to withdraw their money rather than invest it in their land. The article closes the analysis with a phrase from Boric when he presented the lithium plan: "We cannot lose this opportunity." And Tott's conclusion is clear: he and all his colleagues on the continent have already done it.
This article was originally published in Spanish in Revista Semana.
