Venezuela, the OAS and the planned obsolescence of democracy promotion

As the democratic situation in Venezuela has deteriorated over the past decade and a half, the Organization of American States (OAS), as the premier multilateral organization in the region, has been harshly criticized by many for not doing more to combat chavismo’s assault on the country’s institutions. No doubt, the OAS has failed to play much of a role since the stillborn mesa de diálogo following the 2002 coup that briefly removed Hugo Chávez from power. Critics question why the OAS hasn’t invoked the Inter-American Democratic Charter in response to the clear democratic breakdown that has occurred. The answer is less fecklessness or a tacit approval of chavismo by many in the OAS, rather it is a consequence of the two fundamental flaws that were built into the OAS and the Inter-American system; that the OAS is a multilateral organization that won’t infringe on its member states’ sovereignty, and that the Inter-American democratic system is accessible only by the executive branch.

Fundamentally, multilateral organizations function by member states agreeing to mutually cede a degree of sovereignty in order to facilitate action on a given topic. For various historical reasons, Latin American states are uniquely jealous of their sovereignty, and as such, the institutions that make up the OAS lack any sort of mechanisms to oblige member states to abide by the agreements reached. As long as every member state participates, this isn’t a problem, but it makes the OAS very ineffective in dealing with any situation where there isn’t unanimous agreement by its members. Member states can refuse to live up to its obligations as defined by the treaties that compromise the OAS, without experiencing any major consequences.

This combines with the executive-centric nature of all of the institutions in the Inter-American system save for the Inter-American Human Rights Commission. Partially as a legacy of the traditional executive-led nature of diplomacy, and partially by design, the OAS permanent council and the Inter-American Democratic Charter are all the exclusive domain of the executive. That means, for example, that the Venezuelan congress has no authority petition for a meeting of the Permanent Council over undemocratic actions by Nicolás Maduro and his goverment. Originally, this didn’t matter much, since the democratic breakdowns of the 50s, 60s and 70s almost always started with the overthrow of the executive–usually by the military–before the other democratic institutions were dismantled by the de facto government. In essence, protecting the executive was effectively the same as protecting democracy.

Looking at the successes the OAS has had in dealing with democratic breakdowns, one can clearly see the way these institutions are effective at dealing with threats to democratically-elected executives. When presidents were overthrown, or there were legitimate threats to sitting presidents, the system was reasonably effective. However, when the presdient has been responsible for the breakdown in the democratic system, the OAS has been very slow to respond, if at all. For instance, Alberto Fujimori was able to launch an autogolpe in which he dissolved the congress and judiciary, yet remained a member in good standing of the OAS. It wasn’t until Fujimori was credibly accused of rigging an election that the OAS’ member states forcefully moved to address the situation.

A similar thing is occurring now in Venezuela. The executive branch, first with Chávez and now Maduro, has totally dismembered the democratic institutions, yet the OAS has done virutually nothing. Some member states have made noises expressing concern, but not enough to invoke the Inter-American Democratic Charter and since only the executive can petition, no one representing Venezuela has been able to force the issue. Because of the premium placed on respecting state sovereignty, the General Secretariat has no authority to punish Venezuela and, for a variety of reasons, no majority of member states exists willing to push the issue.

Alberto Lleras Camargo, the first secretary general is supposed to have remarked that the OAS would be whatever its member states wanted it to be. While each milestone that accompanied the development of the Inter-American democratic system since 1989 featured lofty talk of protecting and nurturing democratic ideals, there was never any impetus to do more than protect sitting presidents while protecting state sovereignty. Chavismo’s descent into outright authoritarianism, in that sense, is not a failure of those entrusted with protect Latin America’s democracy. Instead it is the embodiment of the type of democratic breakdown that the Inter-American was explicitly designed not to prevent. Lleras Camargo had a point, unfortunately.

What goes up…

Over the weekend, I read a really interesting paper by David S Jacks about commodity prices over the long run. The Economist’s Free Exchange blog has a nice distillation of its findings but essentially the paper finds that over time, most commodities have risen in price—though “grown” commodities have been less robust—but in between they have been marked by 20-70 year “super cycles” and shorter booms and busts. Most importantly, as far as Latin America is concerned, it appears many commodities are at or near their super cycle peaks.

A commodity super cycle is a multi-year period of above and below-trend prices for a given commodity. A trough-to-trough cycle typically will last about 20 years, though they may last much longer. These cycles trend closely with periods of rapid industrialization and urbanization where demand for commodities grows faster than the supply, pushing up prices until supply can catch up. In the paper, Jacks identifies nearly half of the 30 commodities he tracked as reaching their price nadir in the mid-to-late 1990s. This would suggest that many of them would be close to their peak within the super cycle, with some perhaps having already passed it.

For Latin America, the beginning of a downward super cycle trend could be defining for the region’s recent economic development. Many Latin American countries remain hugely dependent on commodities and a number of them have benefitted hugely over the last decade from ever-rising prices (i.e. Venezuela from oil; Peru from mineral and agricultural goods; Bolivia from natural gas; and many others). Unlike a commodity bust, where prices fall dramatically for a short time and then recover, the downward trend would mean consistently lower prices over time, even if there were years where prices rose (i.e. the oil price spike in 1991 from the Gulf War). Depending on how adaptable each economy is, and if there is a rapid initial decline, this could manifest itself as a slight drag on growth while other sectors perhaps benefit from lower input prices, or it could be the impetus for a decade of stagnation and potentially crisis.

Roughly, I would guess that Chile and especially Mexico would be the best prepared to deal with a prolonged decline in commodity prices due to their comparatively well-developed industrial sectors and openness to trade. On the flip side, Venezuela seems the most obvious country to have trouble adjusting, not just because of its massive dependence on a single commodity, but also because of its huge stock of debt. Similarly, Argentina’s economy seems too fragile to adapt quickly to a decline in commodity prices while the underpinnings of economies like Peru and Brazil would be severely tested.