It is now apparent that neither democracy nor the neoliberal prescription of dismantling the state has been successful in mitigating widespread corruption in Latin America. In Brazil, Eduardo Cunha, the powerful politician and former leader of the lower house, who orchestrated the ouster of former Brazilian president Dilma Rousseff, has recently been arrested on corruption charges. Many more high-level Brazilian politicians and businessmen are currently under investigation, including the current president of Brazil, Michel Temer. Former President Lula has also been charged with corruption. Investigations of corruption in Argentina have reached top-level politicians and the businessmen closely allied with the Kirchner administrations. The Argentine federal prosecutor has indicted former Argentine president Cristina Kirchner, who amassed a fortune during her tenure in office, on corruption charges. These charges have included, among other transgressions, intervention in a currency trade involving Argentina’s Central Bank that may have cost the country billions of dollars. Distressing for many observers, is the fact that these governments had come to power through the electoral process and were part of the “pink tide,” left leaning regimes that promised social justice in the wake of the persistence of poverty and high levels of inequality. The mainstream media (optimistically) characterized the widespread protests in Brazil against the Rousseff administration as indicating growing public anger against the mismanagement and greed of politicians who had promised improved distributive outcomes. Hence, there is the expectation that the next stage will involve important changes in policy and institutional arrangements that will finally put an end to, or at least mitigate, corrupt practices. This thinking will be convincing only to those with short memories.
The More Things Change, They More They Don’t
What we are witnessing, revelations of widespread corruption at the highest reaches of political power, is nothing new—it is very much part of the cycle of Latin American politics. The governments whose widespread corruption is now under scrutiny came to power promising to end neoliberal policies that had lined the pockets of a small wealthy oligarchy and impoverished the masses. Before these regimes, however, neoliberal proponents argued that their rule would eliminate the corruption (characterized as “rent-seeking”) and mismanagement of populist regimes, which had borrowed and spent with reckless abandon—all policies that had contributed to economic stagnation and increasing poverty. Some of these governments, most notably that of Carlos Menem, were elected. Before that, populist regimes arose during the 1940s to 1960s promising to incorporate the masses of politically excluded, punish wealthy oligarchies, and improve living standards. It is probable that levels of corruption have worsened over time. Periods of military rule combined with neoliberal reforms have exacerbated concentrations in economic power as public companies fell into the hands of powerful conglomerates. The executives of these conglomerates now obtained more leverage than ever over politicians, of whatever political stripe.
Weak Elite Cohesion and the Role of Corruption in Political Settlements
Corruption is an integral component of Latin American politics. Unlike most western liberal democracies, corruption is a much more central component of political settlements. In most countries of the region, politician and business elite consensus (and therefore cohesion) on a great many issues is extremely weak. Political pacts between major contending political parties (for example, in Colombia and Venezuela) have been integral components of periods of political stability. These pacts involved the divvying up of state posts and generous access to state resources for politicians and their business allies. In one of the most successful cases of long term political stability (Mexico under the PRI), corruption (in the form of both cronyism and clientelism) bound both the private sector and many workers and peasants to the political status quo as key leaders were allowed generous access to state resources. What appears to be the substantial high-level corruption of recent left leaning regimes needs to be understood within this long historical context and particularly within the context of neoliberal (market) reforms.
The period of market liberalizing reforms was supposed to usher in a new era of clean government given the substantial reduction of state intervention in the economy implied by these reforms. However, as I document in my 2001 book on market liberalization in Mexico, Argentina, and Chile, new heights in corruption, particularly evident in countries’ privatization programs, occurred during the period. In order to induce business to go along with trade liberalization, political leaders sold off public companies to their business allies at bargain basement prices, often supplemented with advantageous financing arrangements. It is not surprising that these powerful economic interests would expect state generosity to continue under the new left leaning regimes. Indeed, these powerful business groups could readily discipline left elected governments since they were in a position to stymie prospects for economic growth through disinvestment. In part, at least, the maintenance of corruption allowed left regimes to keep business (or at least an important portion of it) from mounting an effective opposition, at least for a time. Presidents Lula and Rousseff, and the Kirchners developed strong ties with powerful business interests involved in the construction industry. On the one hand, the goal of social justice is better addressed through ending the corrupt practices that siphon off state resources (as these relationships surely did). However, taking measures to stop this flow of funds could pose serious political threats to a regime with social improvement aspirations.
Democracy is no Panacea
The case of Brazil is instructive on this point. Indeed, in a context of weak elite consensus on economic and social policy, and a powerful opposition, that opposition employed democratic institutions to secure Rousseff’s removal from power. While corrupt practices continued under the administration of Dilma Rousseff, her government, despite intense opposition from highly placed politicians and business leaders, allowed the corruption investigation into the state-owned company, Petrobras, to go forward. The decision to impeach Rousseff was at least partly motivated by the fears of her political opponents that they would themselves be brought up on much more serious corruption charges. Deepening economic crisis, the consequent opportunity to rally the public to their cause, and dislike of the regime’s pro-poor policies by powerful interests, all played into the opposition’s ability to secure impeachment.
The operation of democratic institutions and practices are the product of history and the resiliency of past practices. When there is a high degree of inequality in power relations (a situation that has characterized most of Latin American history) and when there is an absence of elite consensus and cohesion, the process of political struggle will deform democratic practices. Under circumstances that attempt some sort of balance between the political left and political right, there are bound to be trade-offs: political stability and fleeting acquiescence of the political right and powerful economic interests in social justice programs has to be bought in ways that interfere both with substantive democracy and with the full achievement of those social justice aspirations. Without an elite consensus on political, social, and economic goals, the glue (corruption) that holds most Latin American polities together will likely endure. Efforts to tackle corruption that fail to address these underlying realities will therefore likely produce political turmoil.