The year of the election

Since the Navigator and I both reside in South America, I thought this article contributed by "The Commodity Investor" was quite appropriate.

The year of the election in South America ended rather undramatically as Hugo Chavez won his bid for re-election in South America. A year ago, his policies and his anti-US stance were drawing in fans across the continent and indeed across the world.

Much had been made of the nationalistic tendencies of South American countries, and Chavez had single handedly seemed to reinvigorate that movement throughout many of his neighboring countries.

Chavez's movement however was overestimated as Peru rejected the socialist party in favor of Alan Garcia, a previous president who was widely criticized for destroying the economy and increasing the amount of violent crime. Colombia, whose president has become of the greatest allies of the United States over recent years, re-elected Uribe to another term on the back of free market policies and a strong anti-FARC agenda. Brazil and Chile, who voted towards the left leaning parties, are still moving in a pro-capitalist stance with the election of Bachelet and de Silva. Perhaps the greatest coup for the Chavez movement though was in Nicaragua, where Ortega gained control of the government once again, despite his record of civil war and repossession of private property.

Ortega, at least during his election campaign, promised voters that he was a reformed man. While still a supporter of a nationalistic agenda, he portrayed a sympathetic ear to the capitalist cause. How this will play out is uncertain, but many international investors, especially in the real estate market, have been spooked. International Living, perhaps the most widely read online newsletter involved with international real estate has been touting Nicaragua for years based on its low cost of living, its idealic beaches, and its free markets. Ortega may turn all of this on its head, if he reverts back to the President he was in his previous public life.

Even with the Bolivia, Nicaragua, and Venezuela all having chosen communists to lead their country, South America dodged a bullet this year, with the majority of countries electing leaders who see the need for free markets. A year ago, many political analysts were predicting disaster for the continent with as many as 3 or 4 more countries falling into the Chavez movement. With South America having never really escaped nationalism over the past few hundred years, the recent progress of several countries over the last decade had added a great amount of optimism that these people would finally achieve the progress they deserve. 2006 was a pivotal year in this growth, as the South American people gave a vote of confidence for free market reforms, a policy that may usher in an era of prosperity not seen in over a century.

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