The price of the social movement in the markets
The international financial system is concerned about the political instability in the region, just for a post-pandemic era in which investment is needed.
These new challenges that come to the world after the pandemic have a great risk for social movements in Latin America: debt. Photo: Flickr-Oxi.Ap
Santiago Gómez Hernández
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Leer en español: El precio del movimiento social en los mercados
Almost all politicians and economists on the right or left see that the only way to overcome the post-pandemic is with investment. Obviously, the forms, channels, and destinations of these investments vary depending on where they are on the ideological map.
However, these new challenges that come to the world after the pandemic have a great risk for social movements in Latin America: debt. Precisely, Colombia entered a National Strike after the Government of Iván Duque, clumsily, tried to calm the Risk Rating Agencies with a tax reform that intended to collect more than 6,000 million dollars. Duque assumed that tax reform would calm investors' concerns and allow him to access new credits in the future for the economic reconstruction of the country.
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However, everything turned out the other way around. The attempt to reform in the midst of a pandemic and that touched the pockets of the middle class (also impoverished in a pandemic) caused social discontent to explode and people to take to the streets. Today, without reform in sight, with a country stopped and with social and economic uncertainty through the roof, the rating agencies began to lower the rating of the country.
Standard & Poor's, una de las 3 calificadoras más influyentes del mundo, bajó la calificación a la deuda de Colombia de BBB- a BB+. Es decir: para sus expertos la deuda del país es catalogada como "basura".— La Silla Vacía (@lasillavacia) May 19, 2021
Aquí explicamos por qué las calificadoras son otro coco para @IvanDuque. pic.twitter.com/bMgpajBhGU
Another country affected economically and that should bring calm to investors if they think of resorting to international loans is Chile. The southern country held its long-awaited elections for the Constituent Assembly. Political satiety led the independents (mostly on the left) to achieve a possible significant coalition. This scared investors again and, today, Chile has a slightly more devalued currency (without reaching records). This will also make future loans more expensive as they are normally made in international currency.
???? @pulso_tw | La Bolsa de Santiago sufre su mayor caída desde marzo de 2020 y pierde todo lo que había rentado en 2021 https://t.co/2ObZ0bDnA8 pic.twitter.com/KC7uxXv8Cx— La Tercera (@latercera) May 17, 2021
Peru will still have to choose in the second round between two candidates: the right-wing Keiko Fujimori and the leftist Pedro Castillo. Although Castillo has moderated his speech, it is true that not only will he have to moderate the speech to attract voters from the center, he also has to reassure the lenders if his intention is to reactivate the Peruvian economy.
This dilemma faced by social movements must understand that before a time of investment, whether private or public, economic stability will be relevant. We have seen cases of (relative) success of macroeconomic models of the right and left in the continent, from Colombia, Bolivia, Uruguay, Chile, etc. But in times when the whole planet will start looking for credits, it is important to be able to send a message of tranquility to the international market.
The most sensible answer, and that explained by Mario Waissbluth and José Inostroza Lara in their article "Can the company and the left live together and not die trying?", Shows that beyond the left and the right, what they fear the most companies are populists. Cases like Chile show that "small and medium-sized companies, particularly innovative and modern ones, will accept and aspire to a more European / Asian capitalism", translated into a traditional German social democratic model.
El senador Gustavo Petro sostuvo una reunión con reconocidos empresarios del país encabezada por Jean Claude Dessudo, dueño de Aviatur, una de las empresa de turismo más grandes de Colombia. https://t.co/sAjtLmKlsr— Cuarto de Hora (@CuartoDeHoraCol) May 16, 2021
So, the first thing that leftist or socialist leaders must promise are fiscal reforms that, although they do not harm the national business community, they also do not affect the most vulnerable classes and even so, leave the lenders alone for the large projects that are posed. Almost an impossible triangle to fulfill, and that is where the expertise of the politician or movement and its lobby, both local and international, can guarantee the trust of all.