The pandemic has a strong impact on the side there with the collapse of GDP per capita income in Latin America has fallen a decade and extreme poverty is at levels of the nineties no less
Europe was never the best place to feel optimistic about Latin America and Spain may not be either the Executive warns in an internal document of the risk of an unmanageable debt crisis Spanish diplomacy paints a gloomy socioeconomic picture
Given the scarce fiscal and monetary margin in the region Spain is committed to opening multilateral financing lines to avoid greater evils
The IMF the World Bank and ECLAC forecast GDP falls of around 8 this year that bump has resurrected the Latin American curse of the lost decade
By the end of 2020 there will be 214 million poor people in the region more than a third of the population and 83 million people are expected to fall into extreme poverty a statistical artifice that puts the threshold at an income below 19 dollars a day thats a bitter return to the very forgettable 1990s
The migration crisis is unprecedented Inequality reaches dizzying heights Corruption and outbreaks of violence remain the order of the day
And the hyperbole outlined by the socioeconomic data is joined by sociopolitical trends with a malaise that is reflected in levels of dissatisfaction with democracy that have gone from 51 to 71 the worst numbers in a quarter of a century
This lasagna of figures and complexities leaves the region exposed to its old ghosts Spain in that document of just a dozen juicy pages alludes to the risk of a new sovereign debt crisis and a prolonged cycle of austerity policies
The adjustments which have already started in some country may aggravate the social fractures if a multilateral response is not arbitrated which Spain offers to lead
In addition to health challenges countries in the region may have difficulties in obtaining financing There is neither a Federal Reserve nor a European Central.
Bank for them beyond the market their capacity will depend on the answers that international financial institutions can give explained the Secretary of State for Foreign Affairs and Latin America Cristina last Thursday
With the permission of Eduardo Galeano writing about Latin American economic policy requires the style of a love novel or a pirate novel
In Central and South America economic piracy is in dire health debt crises happen every 10 years roughly speaking and there always seems to be a lost decade around the corner The metrics of the current hurricane compare beautifully with those of the Great Depression which left an ugly scar in those latitudes or with the formidable debt crisis of the 1980s
But back in 2008 with Lehman Brothers putting the world in a quagmire the global economy was living a love affair with Latin America the region had a very good five years which only played in 2009 but quickly recovered with the invaluable help of the supercycle of raw materials and China
That honeymoon gave way to the inescapable pirate novel the region limped into the pandemic with a peg leg in the form of a fiveyear crisis
The covid also threatens to sever the good leg The health economic and social crises occur in a fragmented and polarized political scenario with low levels of trust in institutions and high levels of public disaffection fragile economies and high levels of inequality poverty and exclusion that can cause social unrest and political crises deep according to the diagnosis of the aforementioned document to which EL PAÍS has had access
The medical picture combines social unrest there have been riots in Chile Colombia Ecuador Nicaragua Venezuela and political volatility in which sharp turns Mexico Argentina and various leaders with authoritarian tendencies are mixed Spain yes applauds the recent episodes in Chile and Bolivia not everything was going to be bad news
The economic flank is a real headache Before the pandemic Argentina and Ecuador were already implementing IMFsponsored adjustment programs In the current situation an important part of the region can be doomed to face unmanageable debt crises according to Foreign Affairs
This would once again highlight the lack of a multilateral mechanism to restructure debts which recognizes both the rights of creditors and the needs of indebted countries and avoids opportunistic funds
Spain with great interests in the area denounces an insufficient multilateral response the debt moratorium agreed at the G20 only covers the 76 poorest countries in the world which leaves out the vast majority of Latin America
The Government will put forward proposals both in the IMF and in the G20 itself to find solutions It seeks to prevent the health crisis from leading to a major debt crisis
Among the recipes that Spain contemplates are an extraordinary issuance of special drawing rights the capital of the IMF a solution complicated by the US blockade or the possibility that the Fund uses in America the margin that it has for Europe if the Old Continent doesnt need it
Also proposed are broad moratoriums and the relaxation of liquidity lines from the IMF and multilateral development banks Spain is not sparing proposals that can raise blisters such as a greater fiscal effort by the elites of each country
That analysis dates from last June The Executive has recently qualified the pessimistic tone of the report the number two of Foreign Affairs Cristina Gallach predicted last week difficulties in several countries to face financing problems although she avoided mentioning the accursed phrase debt crisis
José Antonio Ocampo from Columbia admits that the impact of the pandemic has been very strong but does not share the gloomiest analyzes The restructurings in Argentina and Ecuador worked and there are IMF credit lines in several countries
And most importantly unlike other times the closing of the markets lasted just a couple of months There may be specific problems if the health crisis continues but Latin America is not doing any worse than southern Europe he closes with an irony that works at the same time as an uncomfortable truth
The Foreign Affairs document raises from its inception initiatives and concerted actions in the G20 and other forums with the aim of facilitating access to financing and debt relief in the face of the crisis but it goes much further
Spain intends to strengthen its diplomatic strategy in the region it has two visits planned shortly to Chile and Bolivia and above all it wants to strengthen the role of the EU in Latin America in the face of fierce geopolitical competition from Chinaand the United States
Latin America may be one of the scenarios in which some of the key fractures of the postcovid world will be resolved nationalism or global cooperation open or closed democratic or authoritarian societies and on the role of Spain and the EU in a world of growing geopolitical competition points out the report of the Spanish Executive
To regain influence Spain proposes to improve the treatment of Latin America in the Multiannual Financial Framework the EU budget
Foreign Affairs intends to play a more active role in regional crises particularly in Venezuela and plans to increase resources so that the Spanish cooperation strategy regains credibility and capacity
Spain notes the crisis of regional cooperation initiatives Unasur has dismantled Celac has been paralyzed since 2017 and projects such as the Organization of American States OAS Prosur or the Lima Group have no credibility or autonomy due to their alignment with the United States
The Pacific Alliance has lost its original appeal and in Mercosur there are tensions over the confrontation between Brazil and Argentina although Spain urges the provisional entry into force of the EUMercosur agreement.
