Two Latin Americas? MERCOSUR vs Pacific Alliance

Brazil is becoming Argentina, Argentina is becoming Venezuela, and Venezuela is becoming Zimbabwe - unnamed Brazilian official

Think of the Wall Street Journal's op-ed pages as a confused bastion of conservative thinking and you won't go far astray. It whitewashes George W. Bush's free-spending ways and features his Fox News-inspired brand of flag-waving USA#1 boosterism, for instance. Such wooly thinking is evident in a recent piece about "The Two Latin Americas" that purportedly contrasts anti-enterprise, anti-trade and anti-American countries (Argentina, Brazil, Venezuela) with pro-enterprise, pro-trade, and pro-American countries (Mexico, Peru, Chile and Colombia). The former group is composed of MERCOSUR customs union members doing poorly, while the latter group is composed of the more recently formed group the Pacific Alliance doing better.

You do not need to convince me that Argentina and Venezuela are run by left-wing ideologues/nutters with few sane ideas about how to run their countries. Argentina is so pathetic that it blatantly falsifies inflation data, while Venezuela is suffering from uncontrolled crime, rampant inflation, goods shortages...you name it. Both like blaming everyone else for their myriad failings, but in the end, many rightly suspect the problem lies with them and not with anyone else if they keep blaming everyone except themselves for their problems. Brazil, though, I am not sure falls into the same category of economic mismanagement. True, it tries to strike a (my apologies) third way between populism and neoliberalism, but I think its current underperformance has more to do with a lack of diversification at a time of falling commodity prices than outright mismanagement.

Look past the WSJ op-ed pages' Manichaean, crusader-grade morality play [freedom good, markets good, America good!] and there is actually more to the story. In particular, the characterization of Chile is disingenuous. It probably would not fit into the mould of other Pacific Alliance countries as being led by staunchly conservative figures. Chile's leader Michelle Bachelet is an unapologetic socialist, and won their recent presidential elections on a platform of unabashedly redistributive policies that would make a WSJ op-ed page writer retch:

Bachelet ran on a platform of social policies to address a deep divide between rich and poor, and plans to raise the corporate tax rate. Chile, the world's top copper-exporting nation, is ranked the most unequal country in the 34-member Organisation for Economic Co-operation and Development (OECD).

So when did WSJ commentary start lauding a country run by some Latin American woman who talks like a commie campaigning on [heaven forbid] raising taxes? The morality play of pro-market, pro-American countries doing better plays to the choir--except that the one identified as one of the best-performing is actually rather leftist. Nor can they claim that Bachelet hasn't had the Obama-like opportunity to wreck Chile, since she was already its leader from 2006 to 2010 (this is her second term in office). Last I checked, Bachelet was also seeking to establish better ties with MERCOSUR nations and avoid precisely the kind of MERCOSUR - Pacific Alliance polarization the WSJ writer fetishizes about:

Chile under its next president, center-left Michelle Bachelet, is likely to cool toward Latin America's more conservative governments in favor of warmer relations with Brazil and other left-leaning countries in the region...But there is no indication it will withdraw from the Pacific Alliance, a nascent trade bloc that [her predecessor Sebastian] Pinera championed and that also includes Pacific-facing, investor-friendly nations Mexico, Colombia, and Peru.

However, there is concern in the Bachelet camp that Chile has forged those links at the expense of its relationship with other, left-leaning governments, particularly regional heavyweight Brazil and important neighbor Argentina.

That is something Bachelet wants to address. "We value the efforts of the Pacific Alliance integration, but we will focus on ensuring that our participation in it is not exclusive or antagonistic to other existing integration projects in the region," says Bachelet's campaign manifesto. "Chile has lost presence in the region, its relations with its neighbors are problematic, a commercial vision has been imposed on our Latin American links."

Hence, it's not really about creating "two Latin Americas":

Bachelet is keen to avoid any moves that would prove divisive for South America, said Michael Shifter, head of the Inter-American Dialogue think tank.

"I think we can expect that Bachelet will try to get a deeper relationship with Brazil under Dilma (Rousseff) and certainly avoid the sense that Chile is in one camp, Brazil is in another camp," Shifter said. His comments were echoed at a meeting of ex-presidents in Santiago last month, when former Brazilian head Luiz Inacio Lula da Silva and ex-Chile leader Ricardo Lagos called for closer regional integration.

It is important to avoid the sense that South America was being divided into two - with the more socialist Atlantic-facing countries like Argentina, Brazil and Venezuela in one camp and market-friendly Pacific-facing nations like Chile, Peru and Colombia in the other, said Lagos.

Nuff said. Read WSJ op-eds with a healthy dose of caution.