Brazil’s Economic Success and Corruption Woes

Brazil, a member of the BRICS group, had one of the world’s fastest growing major economies until 2010, with its economic reforms giving the country new international recognition and influence.

Background: Re-Democratization of Brazil

Leading up to the 21st century, Brazil saw a return to democratic rule after a period of dictatorship during the Vargas Era (1930–1934 and 1937–1945) and a period of military rule (1964–1985) under Brazilian military government. In January 1985 the process of negotiated transition towards democracy reached its climax with the election of Tancredo Neves of the PMDB party (the party that had always opposed the military regime) as the first civilian president since 1964. He died before being sworn in, and the elected vice president, José Sarney, was sworn in as president in his place.

In 1986 the Sarney government fulfilled Tancredo’s promise of passing in Congress a Constitutional Amendment to the Constitution inherited from the military period, summoning elections for a National Constituent Assembly to draft and adopt a new Constitution for the country. The Constituent Assembly began deliberations in February 1987 and concluded its work on October 5, 1988.

The adoption of Brazil’s current Constitution in 1988 completed the process of re-establishment of the democratic institutions. The new Constitution replaced the authoritarian legislation that still remained in place and that had been inherited from the days of the military regime.

In 1989 the first elections for president by direct popular ballot since the military coup of 1964 were held under the new Constitution, and Fernando Collor was elected. Collor was inaugurated on March 15, 1990. With the inauguration of the first president elected under the 1988 Constitution, the last step in the long process of democratization took place, and the phase of transition was finally over.

Since then, six presidential terms have elapsed, without rupture to the constitutional order: the first term corresponded to the Collor and Franco administrations (Collor was impeached on charges of corruption in 1992 and resigned the presidency. He was succeeded by Franco, his vice president.); the second and third terms corresponded to Fernando Henrique Cardoso’s administration; the fourth and fifth presidential terms corresponded to Luiz Inácio Lula da Silva’s administration; and the sixth term corresponded to Dilma Rousseff’s first administration. In 2015, Mrs. Rousseff started another term in office, due to end in 2018, but was impeached for violations of budgetary and fiscal responsibility norms in 2016.  She was succeeded by Vice President Michel Temer.

Lula Administration

In 2002, Luiz Inácio Lula da Silva of the PT (Workers’ Party) won the presidency with more than 60% of the national vote. In the first months of his mandate, inflation rose perilously, reflecting the markets’ uncertainty about the government’s monetary policy. However, the markets’ confidence in the government was promptly regained as Lula chose to maintain his predecessor’s policies, particularly the continuation of Central Bank’s task of keeping inflation down. After that, the country underwent considerable economic growth and employment expansion. On the other hand, Lula’s mainstream economic policies disappointed his most radical leftist allies, which led to a breakdown of the PT (Workers’ Party) that resulted in the creation of the PSOL (Socialism and Liberty Party).

Several corruption scandals occurred during Lula’s presidency. In 2005, Roberto Jefferson, chairman of the Brazilian Labour Party (PTB), was implicated in a bribery case. As a Parliamentary Commission of Inquiry was set up, Jefferson testified that the members of parliament were being paid monthly stipends to vote for government-backed legislation. Later, in August of the same year, after further investigation, campaign manager Duda Mendonça admitted that he had used illegal undeclared money to finance the PT electoral victory of 2002. The money in both cases was found to have originated from private sources as well as from the advertising budget of state-owned enterprises headed by political appointees, both laundered through Duda’s Mendonça advertising agency. The collection of these incidents was dubbed the Mensalão scandal. On August 24, 2007, the Brazilian Supreme Court (Supremo Tribunal Federal) accepted the indictments of 40 individuals relating to the Mensalão scandal, most of whom were former or current federal deputies, and all of whom were still allies of the Brazilian president.

The loss of support resulting from these scandals was outweighed by the president’s popularity among the voters of the lower classes, whose income per capita rose as a consequence of both higher employment, expansion of domestic credit to consumers, and government social welfare programs. The stable and solid economic situation of the country, which Brazil had not experienced in the last 20 years, with fast growth in production both for internal consumers and exportation as well as a soft but noticeable decrease in social inequality, may also partially explain the high popularity of Lula’s administration even after several scandals of corruption involving important politicians connected to Lula and to PT. Hence Lula’s re-election in 2006: After almost winning in the first round, Lula won the run-off against Geraldo Alckmin of the PSDB (Brazilian Social Democracy Party) by a 20 million vote margin.

Following Lula’s second victory, his approval ratings started to rise again (fueled by the continuity of the economic and social achievements obtained during the first term) to a record of 80%, the highest for a Brazilian president since the end of the military regime. The focus of Lula’s second term was to further stimulate the economy by investments in infrastructure and measures to keep expanding the domestic credit to producers, industry, commerce, and consumers alike.

Another mark of Lula’s second term was his efforts to expand Brazil’s political influence worldwide, specially after G20 (from which Brazil and other emerging economies participate) replaced the G8 as the main world forum of discussions. Lula is an active defender of the Reform of the United Nations Security Council, as Brazil is one of the four nations (the others being Germany, India, and Japan) officially coveting a permanent seat in the council. Lula also helped orchestrate Brazil’s membership in BRICS, the acronym for an association of five major emerging national economies: Brazil, Russia, India, China, and South Africa.

Lula is also notorious for seeing himself as a friendly, peacemaker conciliator Head of State, managing to befriend leaders of rival countries from the likes of Presidents George W. Bush and Barack Obama from the United States to Venezuelan leader Hugo Chávez, Cuban former president Fidel Castro, the President of Bolivia Evo Morales, and lastly, Iranian President Mahmoud Ahmadinejad, fueling protests inside and outside the country due to Ahmadinejad’s polemical anti-Semitic statements. Lula took part in a deal with the governments of Turkey and Iran regarding Iran’s nuclear program despite the United States’ desire to strengthen the sanctions against the country, fearing the possibility of Iran developing nuclear weapons.

Rousseff Administration

On October 31, 2010, Dilma Rousseff, also from the Worker’s Party, was the first woman elected President of Brazil, with her term beginning on January 1, 2011. In her winning speech, Rousseff, who was also a key member in Lula’s administration, made clear that her mission during her term would be to keep enforcing her predecessor’s policies to mitigate poverty and ensure Brazil’s current economic growth.

On June 2011, Rouseff announced a program called “Brasil Sem Miséria” (Brazil Without Poverty). With the ambitious task of drastically reducing absolute poverty in Brazil until the end of her term, which currently afflicts 16 million people in the country or a little less than a tenth of the population. The program involves broadening the reach of the Bolsa Família social welfare program while creating new job opportunities and establishing professional certification programs. In 2012, another program called “Brasil Carinhoso” (Tenderful Brazil) was launched with the objective to provide extra care to all children in the country who live below the poverty threshold.

Although there was criticism from the local and international press regarding the lower-than-expected economic results achieved during her first term ahead of the government and the measures taken to solve it, Rouseff’s approval rates reached levels higher than any other president since the end of the military regime, until a wave of protests struck the country in mid 2013 reflecting dissatisfaction from the people with the current transport, healthcare, and education policies, among other issues that affected the popularity not only of the president, but several other governors and mayors from key areas in the country as well.

In 2014, Rousseff won a second term by a narrow margin, but was unable to to prevent her popularity from falling. In June 2015, her approval dropped to less than 10% after another wave of protests, this time organized by opposition who wanted her ousted from power, amid revelations that numerous politicians, including those from her party, were being investigated for accepting bribes from the state-owned energy company Petrobras from 2003 to 2010, during which time she was on the company’s board of directors. In 2015, a process of impeachment was opened against Rousseff that culminated with her temporarily removal from power in May 12, 2016 with Vice President Michel Temer assuming power temporarily until the final trial was concluded in August 31, 2016, when Rousseff was officially impeached and Temer was sworn in as president for the remainder of the term. During the impeachment process, Brazil hosted the 2016 Summer Olympics.

Venezuela and Chavismo

Under the presidency of Hugo Chávez from 1999 to 2013, Venezuela saw sweeping and radical shifts in social policy, marked by a move away from the government officially embracing a free market economy and neoliberal reform principles and a move towards the government embracing socialist income redistribution and social welfare programs.

Bolivarian Revolution in Venezuela

The Bolivarian Revolution is a leftist social movement and political process in Venezuela that was led by late Venezuelan president Hugo Chávez, the founder of the Fifth Republic Movement and later the United Socialist Party of Venezuela. The “Bolivarian Revolution” is named after Simón Bolívar, an early 19th-century Venezuelan and Latin American revolutionary leader, prominent in the Spanish American wars of independence in achieving the independence of most of northern South America from Spanish rule. According to Chávez and other supporters, the “Bolivarian Revolution” seeks to build a mass movement to implement Bolivarianism, popular democracy, economic independence, equitable distribution of revenues, and an end to political corruption in Venezuela. They interpret Bolívar’s ideas from a socialist perspective.

Hugo Chávez

Hugo Chávez, a former paratroop lieutenant-colonel who led an unsuccessful coup d’état in 1992, was elected President in December 1998 on a platform that called for the creation of a “Fifth Republic,” a new constitution, a new name (“the Bolivarian Republic of Venezuela”), and a new set of relations between socioeconomic classes. In 1999, voters approved a referendum on a new constitution and in 2000, re-elected Chávez, also placing many members of his Fifth Republic Movement party in the National Assembly. Supporters of Chávez called the process symbolized by him the Bolivarian Revolution and were organized into different government-funded groups, including the Bolivarian Circles. Chávez’s first few months in office were dedicated primarily to constitutional reform, while his secondary focus was on immediately allocating more government funds to new social programs.

However, as a recession triggered by historically low oil prices and soaring international interest rates rocked Venezuela, the shrunken federal treasury provided very little of the resources Chávez required for his promised massive populist programs. The economy, which was still staggering, shrunk by 10% and the unemployment rate increased to 20%, the highest level in since the 1980s.

Chávez sharply diverged from previous administrations’ economic policies, terminating their practice of extensively privatizing Venezuela’s state-owned holdings, such as the national social security system, holdings in the aluminum industry, and the oil sector. Chávez worked to reduce Venezuelan oil extraction in the hopes of garnering elevated oil prices and, at least theoretically, elevated total oil revenues, thereby boosting Venezuela’s severely deflated foreign exchange reserves. He extensively lobbied other OPEC (Organization of the Petroleum Exporting Countries) countries to cut their production rates as well. As a result of these actions, Chávez became known as a “price hawk” in his dealings with the oil industry and OPEC. Chávez also attempted a comprehensive renegotiation of 60- year-old royalty payment agreements with oil giants Philips Petroleum and ExxonMobil. These agreements had allowed the corporations to pay in taxes as little as 1% of the tens of billions of dollars in revenues they were earning from their extraction of Venezuelan oil. Afterwards, Chávez stated his intention to complete the nationalization of Venezuela’s oil resources.

In April 2002, Chávez was briefly ousted from power in the 2002 Venezuelan coup d’état attempt following popular demonstrations by his opponents, but he was returned to power after two days as a result of demonstrations by poor Chávez supporters in Caracas, as well as actions by the military.

Chávez also remained in power after an all-out national strike that lasted from December 2002 to February 2003, including a strike/lockout in the state oil company PDVSA. The strike produced severe economic dislocation, with the country’s GDP falling 27% during the first four months of 2003, and costing the oil industry $13.3 billion. In the subsequent decade, the government was forced into several currency devaluations. These devaluations have done little to improve the situation of the Venezuelan people who rely on imported products or locally produced products that depend on imported inputs, while dollar-denominated oil sales account for the vast majority of Venezuela’s exports. The profits of the oil industry have been lost to “social engineering” and corruption, instead of investments needed to maintain oil production.

Chávez survived several further political tests, including an August 2004 recall referendum. He was elected for another term in December 2006 and re-elected for a third term in October 2012. However, he was never sworn in for his third term due to medical complications. Chávez died on March 5, 2013 after a nearly two-year fight with cancer. The presidential election that took place on April 14, 2013, was the first since Chávez took office in 1999 in which his name did not appear on the ballot.

Chavez’s ideas, programs, and style form the basis of ” Chavismo,” a political ideology closely associated with Bolivarianism and socialism of the 21st century, which continued but declined after his death. Internationally, Chávez aligned himself with the Marxist–Leninist governments of Fidel and then Raúl Castro in Cuba, and the socialist governments of Evo Morales (Bolivia), Rafael Correa (Ecuador), and Daniel Ortega (Nicaragua). His presidency was seen as a part of the socialist “pink tide” sweeping Latin America. Chávez described his policies as anti-imperialist, being a prominent adversary of the United States’s foreign policy as well as a vocal critic of U.S.-supported neoliberalism and laissez-faire capitalism. He described himself as a Marxist. He supported Latin American and Caribbean cooperation and was instrumental in setting up the pan-regional Union of South American Nations, the Community of Latin American and Caribbean States, the Bolivarian Alliance for the Americas, the Bank of the South, and the regional television network TeleSUR.

Nicolás Maduro

Nicolás Maduro has been the President of Venezuela since April 14, 2013, after winning the second presidential election after Chávez’s death with 50.61% of the votes against the opposition’s candidate Henrique Capriles Radonski, who had 49.12% of the votes. The Democratic Unity Roundtable contested his election as fraudulent, and as a violation of the constitution. However, the Supreme Court of Venezuela ruled that under Venezuela’s Constitution, Nicolás Maduro is the legitimate president and was invested as such by the Venezuelan National Assembly.

Beginning in February 2014, hundreds of thousands of Venezuelans have protested over high levels of criminal violence, corruption, hyperinflation, and chronic scarcity of basic goods due to policies of the federal government. Demonstrations and riots have left over 40 fatalities in the unrest between both Chavistas and opposition protesters, and has led to the arrest of opposition leaders such as Leopoldo López and Antonio Ledezma. Human rights groups have strongly condemned the arrest of Leopoldo López.

In the 2015 Venezuelan parliamentary election, the opposition gained a majority.

The following year, in a July 2016 decree, President Maduro used his executive power to declare a state of economic emergency. The decree could force citizens to work in agricultural fields and farms for 60-day (or longer) periods to supply food to the country. Colombian border crossings have been temporarily opened to allow Venezuelans to purchase food and basic household and health items in Colombia in mid-2016. In September 2016, a study published in the Spanish-language Diario Las Américas indicated that 15% of Venezuelans are eating “food waste discarded by commercial establishments.”

Democracy in Chile and Argentina

Chile and Argentina both transitioned from military dictatorships to democratic regimes in the 1980s, leading to relative political stability in both countries in the 21st century.

Chile’s Transition to Democracy

The Chilean transition to democracy began when a constitution establishing a transition itinerary was approved in a vote. From March 11, 1981 to March 1990, several organic constitutional laws were approved leading to the final restoration of democracy. After the 1988 plebiscite, the 1980 Constitution, still in force today, was amended to ease provisions for future amendments to the constitution, create more seats in the senate, diminish the role of the National Security Council, and equalize the number of civilian and military members (four members each).

Christian Democrat Patricio Aylwin served from 1990 to 1994 and was succeeded by another Christian Democrat, Eduardo Frei Ruiz-Tagle (son of Frei-Montalva), leading the same coalition for a 6-year term. Ricardo Lagos Escobar of the Socialist Party and the Party for Democracy led the Concertación (a coalition of center-left political parties in Chile, founded in 1988) to a narrower victory in the 2000 presidential elections. His term ended on March 11, 2006 when Michelle Bachelet of the Socialist Party took office. Center-right investor and businessman Sebastián Piñera, of the National Renewal, assumed the presidency on March 11, 2010 after Bachelet’s term expired.

Part of the transition from the military dictatorship to democracy entailed investigating the human right’s abuses under the previous regimes. In February 1991 Aylwin created the National Commission for Truth and Reconciliation, which released in February 1991 the Rettig Report on human rights violations committed during the military rule. This report counted 2,279 cases of “disappearances” that could be proved and registered. Of course, the very nature of “disappearances” made such investigations very difficult. The same issue arose several years later with the Valech Report released in 2004, which counted almost 30,000 victims of torture, among testimonies from 35,000 persons.

Chile in the 21st Century

The Concertación has continued to dominate Chilean politics for last two decades. Frei Ruiz-Tagle was succeeded in 2000 by Socialist Ricardo Lagos, who won the presidency in an unprecedented runoff election against Joaquín Lavín of the rightist Alliance for Chile.

In January 2006 Chileans elected their first female president, Michelle Bachelet, of the Socialist Party. She was sworn in on March 11, 2006, extending the Concertación coalition governance for another four years.

Chile signed an association agreement with the European Union in 2002; signed an extensive free trade agreement with the United States in 2003, and signed an extensive free trade agreement with South Korea in 2004, expecting a boom in the import and export of local produce and expecting to become a regional trade-hub. Continuing the coalition’s free-trade strategy, in August 2006 President Bachelet promulgated a free trade agreement with the People’s Republic of China (signed under the previous administration of Ricardo Lagos), the first Chinese free-trade agreement with a Latin American nation; similar deals with Japan and India were promulgated in August 2007. In October 2006, Bachelet promulgated a multilateral trade deal with New Zealand, Singapore and Brunei, the Trans-Pacific Strategic Economic Partnership (P4), also signed under Lagos’ presidency. Regionally, she has signed bilateral free-trade agreements with Panama, Peru, and Colombia.

After 20 years, Chile went in a new direction marked by the win of center-right Sebastián Piñera in the Chilean presidential election of 2009–2010. On February 27, 2010, Chile was struck by an 8.8 MW earthquake, the fifth largest ever recorded at the time. More than 500 people died (most from the ensuing tsunami) and over a million people lost their homes. The earthquake was also followed by multiple aftershocks. Initial damage estimates were in the range of US$15–30 billion, around 10 to 15 percent of Chile’s real gross domestic product.

Chile achieved global recognition for the successful rescue of 33 trapped miners in 2010. On August 5, 2010 the access tunnel collapsed at the San José copper and gold mine in the Atacama Desert near Copiapó in northern Chile, trapping 33 men 2,300 feet below ground. A rescue effort organized by the Chilean government located the miners 17 days later. All 33 men were brought to the surface two months later on October 13, 2010 over a period of almost 24 hours, an effort that was carried on live television around the world.

Good macroeconomic indicators failed to halt the social dissatisfaction claiming for a better and fairer education, which was traced to massive protests demanding more democratic and equitable institutions and a permanent disapproval of Piñera’s administration.

Due to term limits, Sebastián Piñera did not stand for re-election in 2013, and his term expired in March 2014 resulting in Michelle Bachelet returning to office. In 2015 a series of corruption scandals became public, threatening the credibility of the political and business class.

Contemporary Era in Argentina

Argentina also experienced a transition from a military dictatorship to a democracy in the 1980s. Raúl Alfonsín won the 1983 elections campaigning for the prosecution of those responsible for human rights violations during the military dictatorship. The Trial of the Juntas and other martial courts sentenced all the coup’s leaders but, under military pressure, Alfonsín also enacted the Full Stop and Due Obedience laws, which halted prosecutions further down the chain of command. The worsening economic crisis and hyperinflation reduced his popular support and the Peronist Carlos Menem won the 1989 election. Soon after, riots forced Alfonsín to an early resignation.

Menem embraced neo-liberal policies: a fixed exchange rate, business deregulation, privatizations,and dismantling of protectionist barriers normalized the economy for a while. He pardoned the officers who had been sentenced during Alfonsín’s government. The 1994 Constitutional Amendment allowed Menem to be elected for a second term. The economy began to decline in 1995, with increasing unemployment and recession; led by Fernando de la Rúa, the UCR (Radical Civic Union, a centrist social-liberal political party) returned to the presidency in the 1999 elections.

De la Rúa kept Menem’s economic plan despite the worsening crisis, which led to growing social discontent. A massive capital flight was responded to with a freezing of bank accounts, generating further turmoil. The December 2001 riots forced him to resign. Congress appointed Eduardo Duhalde as acting president, who repealed the fixed exchange rate established by Menem. By the late 2002 the economic crisis began to recess, but the assassination of two protestors by the police caused political commotion, prompting Duhalde to move elections forward. Néstor Kirchner was elected as the new president.

Boosting the neo-Keynesian economic policies laid by Duhalde, Kirchner ended the economic crisis attaining significant fiscal and trade surpluses, and steep GDP growth. Under his administration Argentina restructured its defaulted debt with an unprecedented discount of about 70% on most bonds, paid off debts with the International Monetary Fund, purged the military of officers with doubtful human rights records, nullified and voided the Full Stop and Due Obedience laws, ruled them as unconstitutional, and resumed legal prosecution of the Juntas’ crimes. He did not run for reelection, promoting instead the candidacy of his wife, senator Cristina Fernández de Kirchner, who was elected in 2007 and reelected in 2011.

On November 22, 2015, after a tie in the first round of presidential elections on October 25, Mauricio Macri won the first ballotage in Argentina’s history, beating Front for Victory candidate Daniel Scioli and becoming president-elect. Macri is the first democratically elected non-radical or peronist president since 1916, although he had the support of the first mentioned. He took office on December 10, 2015. In April 2016, the Macri Government introduced austerity measures intended to tackle inflation and public deficits.

Mexico’s Transition to True Democracy

The Partido Revolucionario Institucional (PRI), the political party that controlled national and state politics in Mexico since 1929, was finally voted out of power in 2000 with the election of Vicente Fox Quesada, the candidate of the National Action Party (PAN).

Background: Decline of the PRI

A phenomenon of the 1980s in Mexico was the growth of organized political opposition to de facto one-party rule by the Institutional Revolutionary Party (Spanish: Partido Revolucionario Institucional or PRI), which held power uninterruptedly in the country for 71 years from 1929 to 2000. The National Action Party (PAN), founded in 1939 and until the 1980s a marginal political party and not a serious contender for power, began to gain voters, particularly in Mexico’s north. They made gains in local elections initially, but in 1986 the PAN candidate for the governorship of Chihuahua had a good chance of winning.

The 1988 Mexican general election was pivotal in Mexican history. The PRI’s candidate was Carlos Salinas de Gortari, an economist who was educated at Harvard and who had never held an elected office. Cuauhtemoc Cárdenas, the son of former President Lázaro Cárdenas, broke with the PRI and ran as a candidate of the Democratic Current, later forming into the Party of Democratic Revolution (PRD). The PAN candidate Manuel Clouthier ran a clean campaign in long-standing pattern of the party.

The election was marked by irregularities on a massive scale. The Ministry of the Interior administered the electoral process, which meant in practice that the PRI controlled it. During the vote count, the government computers were said to have crashed, something the government called “a breakdown of the system.” One observer said, “For the ordinary citizen, it was not the computer network but the Mexican political system that had crashed.” When the computers were said to be running again after a considerable delay, the election results they recorded were an extremely narrow victory for Salinas (50.7%), Cárdenas (31.1%), and Clouthier (16.8%). Cárdenas was widely seen to have won the election, but Salinas was declared the winner. There might have been violence in the wake of such fraudulent results, but Cárdenas did not call for it, “sparing the country a possible civil war.” Years later, former Mexican President Miguel de la Madrid (1982–88) was quoted in the New York Times stating that the results were indeed fraudulent.

Salinas embarked on a program of neoliberal reforms that fixed the exchange rate, controlled inflation, and culminated with the signing of the North American Free Trade Agreement (NAFTA), which came into effect on January 1, 1994. The same day, the Zapatista Army of National Liberation (EZLN) started a two-week-long armed rebellion against the federal government, and has continued as a non-violent opposition movement against neoliberalism and globalization.

In 1994, Salinas was succeeded by Ernesto Zedillo, followed by the Mexican peso crisis and a $50 billion bailout by the International Monetary Fund (IMF). Major macroeconomic reforms were initiated by President Zedillo, and the economy rapidly recovered and growth peaked at almost 7% by the end of 1999.

President Vicente Fox Quesada (2000–2006)

Emphasizing the need to upgrade infrastructure, modernize the tax system and labor laws, integrate with the U.S. economy, and allow private investment in the energy sector, Vicente Fox Quesada, the candidate of the National Action Party (PAN), was elected the 69th president of Mexico on July 2, 2000, ending PRI’s 71-year-long control of the office. Though Fox’s victory was due in part to popular discontent with decades of unchallenged PRI hegemony, Fox’s opponent, president Zedillo, conceded defeat on the night of the election—a first in Mexican history. A further sign of the quickening of Mexican democracy was the fact that PAN failed to win a majority in both chambers of Congress—a situation that prevented Fox from implementing his reform pledges. Nonetheless, the transfer of power in 2000 was quick and peaceful.

Fox was a very strong candidate, but an ineffective president who was weakened by PAN’s minority status in Congress. Historian Philip Russell summarizes the strengths and weaknesses of Fox as president:

Marketed on television, Fox made a far better candidate than he did president. He failed to take charge and provide cabinet leadership, failed to set priorities, and turned a blind eye to alliance building….By 2006, as political scientist Soledad Loaeza noted, ‘the eager candidate became a reluctant president who avoided tough choices and appeared hesitant and unable to hide the weariness caused by the responsibilities and constraints of the office….’ He had little success in fighting crime. Even though he maintained the macroeconomic stability inherited from his predecessor, economic growth barely exceeded the rate of population increase. Similarly, the lack of fiscal reform left tax collection at a rate similar to that of Haiti….Finally, during Fox’s administration, only 1.4 million formal-sector jobs were created, leading to massive immigration to the United States and an explosive increase in informal employment.

President Felipe Calderón Hinojosa (2006–2012)

President Felipe Calderón Hinojosa (PAN) took office after one of the most hotly contested elections in recent Mexican history; Calderón won by such a small margin (.56% or 233,831 votes) that the runner-up, Andrés Manuel López Obrador of the leftist Party of the Democratic Revolution (PRD), contested the results.

Despite imposing a cap on salaries of high-ranking public servants, Calderón ordered a raise on the salaries of the Federal Police and the Mexican armed forces on his first day as president.

Calderón’s government also ordered massive raids on drug cartels upon assuming office in December 2006 in response to an increasingly deadly spate of violence in his home state of Michoacán. The decision to intensify drug enforcement operations led to an ongoing conflict between the federal government and the Mexican drug cartels.

President Enrique Peña Nieto (2006-Present)

On July 1, 2012, Enrique Peña Nieto was elected president of Mexico with 38% of the vote. He is a former governor of the state of Mexico and a member of the PRI. His election returned the PRI to power after 12 years of PAN rule. He was officially sworn into office on December 1, 2012.

The Pacto por México was a cross party alliance that called for the accomplishment of 95 goals. It was signed on December 2, 2012 by the leaders of the three main political parties in Chapultepec Castle. The Pact has been lauded by international pundits as an example for solving political gridlock and for effectively passing institutional reforms. Among other legislation, it called for education reform, banking reform, fiscal reform, and telecommunications reform, all of which were eventually passed. Most importantly, the Pact wanted a revaluation of PEMEX. This ultimately resulted in the dissolution of the agreement when in December 2013 the center-left PRD refused to collaborate with the legislation penned by the center-right PAN and PRI that ended PEMEX’s monopoly and allowed for foreign investment in Mexico’s oil industry.

Drug Cartels

Drug cartels have been a major force in contemporary Latin America, sometimes rivaling the power of some nations’ governments and military, and causing hundreds of thousands of deaths through violence between competing cartels and between cartels and governments.

Drug Cartels

A drug cartel is any criminal organization with the intention of supplying drug trafficking operations. They range from loosely managed agreements among various drug traffickers to formalized commercial enterprises. The term was applied when the largest trafficking organizations reached an agreement to coordinate the production and distribution of cocaine. Since that agreement was broken up, drug cartels are no longer actually cartels, but the term stuck and it is now popularly used to refer to any criminal narcotics related organization.

The basic structure of a drug cartel is as follows:

• Falcons (Spanish: Halcones): Considered the “eyes and ears” of the streets, the “falcons” are the lowest rank in any drug cartel. They are responsible for supervising and reporting the activities of the police, the military, and rival groups.
• Hitmen (Spanish: Sicarios): The armed group within the drug cartel, responsible for carrying out assassinations, kidnappings, thefts, extortions, operating protection rackets, and defending their plaza (turf) from rival groups and the military.
• Lieutenants (Spanish: Lugartenientes): The second highest position in the drug cartel organization, responsible for supervising the hitmen and falcons within their own territory. They are allowed to carry out low-profile executions without permission from their bosses.
• Drug lords (Spanish: Capos): The highest position in any drug cartel, responsible for supervising the entire drug industry, appointing territorial leaders, making alliances, and planning high-profile executions.

It is worth noting that there are other operating groups within the drug cartels. For example, the drug producers and suppliers, although not considered in the basic structure, are critical operators of any drug cartel, along with the financiers and money launderers. In addition, the arms suppliers operate in a completely different circle, and are technically not considered part of the cartel’s logistics.

Mexican Drug Cartels

Origins

The birth of most Mexican drug cartels is traced to former Mexican Judicial Federal Police agent Miguel Ángel Félix Gallardo (“The Godfather”), who founded the Guadalajara Cartel in 1980 and controlled most of the illegal drug trade in Mexico and the trafficking corridors across the Mexico–U.S. border along with Juan Garcia Abrego throughout the 1980s. He started off by smuggling marijuana and opium into the United States and was the first Mexican drug chief to link up with Colombia’s cocaine cartels in the 1980s. Through his connections, Félix Gallardo became the point man for the Medellín Cartel, which was run by Pablo Escobar. This was easily accomplished because Félix Gallardo had already established an infrastructure that stood ready to serve the Colombia-based traffickers.

There were no cartels at that time in Mexico. Félix Gallardo oversaw all operations; there was just him, his cronies, and the politicians who sold him protection. However, the Guadalajara Cartel suffered a major blow in 1985 when the group’s co-founder Rafael Caro Quintero was captured and later convicted for the murder of DEA agent Enrique Camarena. Félix Gallardo afterwards kept a low profile and in 1987 he moved with his family to Guadalajara.

“The Godfather” then decided to divide up the trade he controlled, as it would be more efficient and less likely to be brought down in one law enforcement swoop. In a way, he was privatizing the Mexican drug business while sending it back underground, to be run by bosses who were less well known or not yet known by the DEA. Gallardo convened the nation’s top drug traffickers at a house in the resort of Acapulco where he designated the plazas or territories.

The Tijuana route would go to the Arellano Felix brothers. The Ciudad Juárez route would go to the Carrillo Fuentes family. Miguel Caro Quintero would run the Sonora corridor. The control of the Matamoros, Tamaulipas corridor—then becoming the Gulf Cartel—would be left undisturbed to its founder Juan García Ábrego. Meanwhile, Joaquín Guzmán Loera and Ismael Zambada García would take over Pacific coast operations, becoming the Sinaloa Cartel. Guzmán and Zambada brought veteran Héctor Luis Palma Salazar back into the fold. Félix Gallardo still planned to oversee national operations, as he maintained important connections, but he would no longer control all details of the business.

Félix Gallardo was arrested on 8 April 1989.

Gulf Cartel

The Gulf Cartel (Cartel del Golfo or CDG), based in Matamoros, Tamaulipas, has been one of Mexico’s two dominant cartels in recent years. In the late 1990s, it hired a private mercenary army (an enforcer group now called Los Zetas), which in 2006 stepped up as a partner but, in February 2010, their partnership was dissolved and both groups engaged in widespread violence across several border cities of Tamaulipas state, turning several border towns into “ghost towns.”

The CDG was strong at the beginning of 2011, holding off several Zetas incursions into its territory. However, as the year progressed, internal divisions led to intra-cartel battles in Matamoros and Reynosa, Tamaulipas state. The infighting resulted in several arrests and deaths in Mexico and in the United States. The CDG has since broken apart, and it appears that one faction, known as Los Metros, has overpowered its rival Los Rojos faction and is now asserting its control over CDG operations.

Mexican Drug War

The Mexican Drug War is the Mexican theater of the United States’ War on Drugs, involving an ongoing war between the Mexican Government and various drug trafficking syndicates. Since 2006, when the Mexican military began to intervene, the government’s principal goal has been to reduce the drug-related violence. Additionally, the Mexican government has claimed that their primary focus is on dismantling the powerful drug cartels, rather than on preventing drug trafficking, which is left to U.S. functionaries.

Although Mexican drug cartels, or drug trafficking organizations, have existed for several decades, their influence has increased since the demise of the Colombian Cali and Medellín cartels in the 1990s. Mexican drug cartels now dominate the wholesale illicit drug market and in 2007 controlled 90% of the cocaine entering the United States. Arrests of key cartel leaders, particularly in the Tijuana and Gulf cartels, has led to increasing drug violence as cartels fight for control of the trafficking routes into the United States.

Although violence between drug cartels had been occurring long before the war began, the government held a generally passive stance regarding cartel violence in the 1990s and early 2000s. That changed on December 11, 2006, when newly elected President Felipe Calderón sent 6,500 federal troops to the state of Michoacán to end drug violence there (Operation Michoacán). This action is regarded as the first major operation against organized crime, and is generally viewed as the starting point of the war between the government and the drug cartels. As time progressed, Calderón continued to escalate his anti-drug campaign, in which there are now about 45,000 troops involved in addition to state and federal police forces. In 2010 Calderón said that the cartels seek “to replace the government” and “are trying to impose a monopoly by force of arms, and are even trying to impose their own laws.”

As of 2011, Mexico’s military captured 11,544 people who were believed to have been involved with the cartels and organized crime. In the year prior, 28,000 individuals were arrested on drug-related charges. The decrease in eradication and drug seizures, as shown in statistics calculated by federal authorities, poorly reflects Calderón’s security agenda. Since the war began, over forty thousand people have been killed as a result of cartel violence. During Calderón’s presidential term, the murder rate of Mexico increased dramatically.

Medellín Cartel

The Medellín Cartel was a Colombian drug cartel originating in the city of Medellín. The drug cartel operated from the mid-1970s until the early-1990s in Bolivia, Colombia, Honduras, Peru, and the United States, as well as in Canada and Europe. It was founded and run by Ochoa Vázquez brothers Jorge Luis, Juan David, and Fabio, together with Pablo Escobar, Carlos Lehder, and José Gonzalo Rodríguez Gacha. By 1993, the resistance group, Los Pepes (or PEPES), controlled by the Cali Cartel, and the Colombian government, in collaboration with the Cali Cartel, right-wing paramilitary groups, and the U.S. government, had dismantled the Medellín Cartel by imprisoning or assassinating its members.

At the height of Pablo Escobar’s reign of the Medellín Cartel, and for 20 years, Pablo Escobar was the most powerful and richest drug lord in the world. And for 25 years, Escobar was also the most violent, ruthless, deadliest, dangerous, and feared drug lord in the World. From 1981-1993, Pablo Escobar was the 7th richest person in the World, Escobar had an astronomical and amazing net worth of $30-$42 Billion (which is equivalent to $107 Billion as of 2017). Escobar became Colombia’s top drug kingpin in 1976, but he became the world’s top drug kingpin in 1981, around that time Pablo Escobar became the most powerful and dangerous man in Colombia, and during Pablo Escobar’s regime, the Medellín Cartel became bigger and more powerful than the Colombian Government.

Escobar had more power, man power, weapons, influences, resources, and reach than the Colombian  government and the Colombian military. For almost 2 decades, Escobar was responsible for ordering hundreds of atrocities, such as 1,300 bombings all over Colombia. Escobar’s most notorious bombings were the Avianca Flight 203 bombing, which killed 110 people; the DAS Building bombing, which killed 75 people and severely injured over 1,800 people; a truck bomb that killed a total of 489 people and severely injured 3,000 people; a bus bomb that killed a total of 260 people and wounded around 1,000 people;  a series of 7 car bombs in the same day, which killed a total of 194 people and injured nearly 800 people; and a car bomb that killed 137 adults, 112 children, and severely injured 600 more people. Over a 20 year period, Escobar ordered the murders of at least 110,000 people.

The United States in the 21st Century

The beginning of the 21st century saw the September 11 attacks by Al-Qaeda, subsequent U.S. invasions of Afghanistan and Iraq, and in 2008,  the worst U.S. economic crisis since the Great Depression.

George W. Bush

In 2000, Republican George W. Bush was elected president in one of the closest and most controversial elections in U.S. history. Early in his term, his administration approved education reform and a large across-the-board tax cut aimed at stimulating the economy. Following the September 11 attacks in 2001, the United States embarked on the Global War on Terrorism, starting with the 2001 war in Afghanistan. In 2003, the United States invaded Iraq, which deposed the controversial regime of Saddam Hussein, but also resulted in a prolonged conflict that would continue over the course of the decade. The Homeland Security Department was formed and the controversial Patriot Act was passed to bolster domestic efforts against terrorism. In 2006, criticism over the handling of the disastrous Hurricane Katrina (which struck the Gulf Coast region in 2005), political scandals, and the growing unpopularity of the Iraq War helped the Democrats gain control of Congress. Saddam Hussein was later tried, charged for war crimes and crimes against humanity, and executed by hanging. In 2007, President Bush ordered a troop surge in Iraq, which ultimately led to reduced casualties.

9/11 and the Iraq War

On September 11, 2001 (“9/11”), the United States was struck by a terrorist attack when 19 al-Qaeda hijackers commandeered four airliners to be used in suicide attacks. They intentionally crashed two into both twin towers of the World Trade Center and the third into the Pentagon, killing 2,937 victims—206 aboard the three airliners, 2,606 who were in the World Trade Center and on the ground, and 125 who were in the Pentagon. The fourth plane was re-taken by the passengers and crew of the aircraft. While they were not able to land the plane safely, they were able to re-take control of the aircraft and crash it into an empty field in Pennsylvania, killing all 44 people including the four terrorists on board, thereby saving whatever target the terrorists were aiming for. All in all, a total of 2,977 people perished in the attacks. In response, President George W. Bush on September 20 announced a “War on Terror.” On October 7, 2001, the United States and NATO then invaded Afghanistan to oust the Taliban regime, which had provided safe haven to al-Qaeda and its leader Osama bin Laden.

The federal government established new domestic efforts to prevent future attacks. The controversial USA PATRIOT Act increased the government’s power to monitor communications and removed legal restrictions on information sharing between federal law enforcement and intelligence services. A cabinet-level agency called the Department of Homeland Security was created to lead and coordinate federal counter-terrorism activities. Some of these anti-terrorism efforts, particularly the U.S. government’s handling of detainees at the prison at Guantanamo Bay, led to allegations against the U.S. government of human rights violations.

In 2003, from March 19 to May 1, the United States launched an invasion of Iraq, which led to the collapse of the Iraq government and the eventual capture of Iraqi dictator Saddam Hussein, with whom the United States had long-standing tense relations. The reasons for the invasion cited by the Bush administration included the spreading of democracy, the elimination of weapons of mass destruction, and the liberation of the Iraqi people. Despite some initial successes early in the invasion, the continued Iraq War fueled international protests and gradually saw domestic support decline as many people began to question whether or not the invasion was worth the cost.

In 2008, the unpopularity of President Bush and the Iraq War, along with the 2008 financial crisis, led to the election of Barack Obama, the first African-American President of the United States. After his election, Obama reluctantly continued the war effort in Iraq until August 31, 2010, when he declared that combat operations had ended. However, 50,000 American soldiers and military personnel were kept in Iraq to assist Iraqi forces, help protect withdrawing forces, and work on counter-terrorism until December 15, 2011, when the war was declared formally over and the last troops left the country.

Great Recession

In September 2008, the United States, and most of Europe, entered the longest post-World War II recession, often called the “Great Recession.” Multiple overlapping crises were involved, especially the housing market crisis, a subprime mortgage crisis, soaring oil prices, an automotive industry crisis, rising unemployment, and the worst financial crisis since the Great Depression. The financial crisis threatened the stability of the entire economy in September 2008 when Lehman Brothers failed and other giant banks were in grave danger. Starting in October, the federal government lent $245 billion to financial institutions through the Troubled Asset Relief Program, which was passed by bipartisan majorities and signed by Bush.

Following his election victory by a wide electoral margin in November 2008, Bush’s successor, Barack Obama, signed into law the American Recovery and Reinvestment Act of 2009, which was a $787 billion economic stimulus aimed at helping the economy recover from the deepening recession. Obama, like Bush, took steps to rescue the auto industry and prevent future economic meltdowns. These included a bailout of General Motors and Chrysler, putting ownership temporarily in the hands of the government, and the “cash for clunkers” program, which temporarily boosted new car sales.

The recession officially ended in June 2009, and the economy slowly began to expand once again. The unemployment rate peaked at 10.1% in October 2009 after surging from 4.7% in November 2007, and returned to 5.0% as of October 2015. However, overall economic growth has remained weaker in the 2010s compared to expansions in previous decades.

Recent Events

From 2009 to 2010, the 111th Congress passed major legislation such as the Patient Protection and Affordable Care Act; the Dodd–Frank Wall Street Reform and Consumer Protection Act; and the Don’t Ask, Don’t Tell Repeal Act, which were signed into law by President Obama. Following the 2010 midterm elections, which resulted in a Republican-controlled House of Representatives and a Democratic-controlled Senate, Congress presided over a period of elevated gridlock and heated debates over whether or not to raise the debt ceiling, extend tax cuts for citizens making over $250,000 annually, and many other key issues. In the fall of 2012, Mitt Romney challenged Barack Obama for the presidency. Congressional gridlock continued as Congressional Republicans’ call for the repeal of the Patient Protection and Affordable Care Act—popularly known as “Obamacare”—along with other various demands, resulted in the first government shutdown since the Clinton administration and almost led to the first default on U.S. debt since the 19th century. As a result of growing public frustration with both parties in Congress since the beginning of the decade, Congressional approval ratings fell to record lows, with only 11% of Americans approving as of October 2013.

Other major events that have occurred during the 2010s include the rise of new political movements, such as the conservative Tea Party movement and the liberal Occupy movement. There was also unusually severe weather during the early part of the decade. In 2012, over half the country experienced record drought and Hurricane Sandy caused massive damage to coastal areas of New York and New Jersey.

The ongoing debate over the issue of rights for the LGBT community, most notably that of same-sex marriage, began to shift in favor of same-sex couples, and has been reflected in dozens of polls released in the early part of the decade. In 2012, President Obama became the first president to openly support same-sex marriage, and the 2013 Supreme Court decision in the case of United States v. Windsor provided for federal recognition of same-sex unions. In June 2015, the United States Supreme Court legalized gay marriage nationally in the case of Obergefell v. Hodges.

Political debate has continued over issues such as tax reform, immigration reform, income inequality and U.S. foreign policy in the Middle East, particularly with regards to global terrorism, the rise of the Islamic State of Iraq and the Levant, and an accompanying climate of Islamophobia.

After unprecedented media coverage and a hostile presidential campaign, businessman Donald Trump defeated former Secretary of State Hillary Clinton in the 2016 election, leading to Republicans gaining control of all branches of government. His first weeks in office have largely been characterized by a series of executive orders restricting abortion rights and the effects of the Affordable Care Act, the construction of the pipelines in North Dakota and a wall along the Mexican-American border, and the refusal to admit citizens of several Muslim majority countries.