Daniel Kerner: “Bolsonaro and López Obrador are competing to see who comes out worse from this crisis”

Political scientist Daniel Kerner was born in Mexico, trained in Argentina, and lives in Washington, DC. As executive director for Latin America of Eurasia group, one of the world’s leading political risk consultancies, he lives traveling across the continent to gather information and alert his clients – entrepreneurs and governments – about what is happening and can happen in each country. . But not now. He is now stranded at his home in the American capital like millions of people around the world, trying to understand this new world scenario, how each nation is facing this crisis and how the world will look after going through this historical pandemic. On these topics he spoke via Skype with Infobae.

– What does a political risk consultant say to its clients when an unexpected event occurs that burns all the papers and the previous calculations? The Chinese have the saying that “crisis is opportunity.” But can this crisis be an opportunity for someone or is it just a catastrophe for everyone?

– It is a very big change in how the world is. Today I still don’t think it’s an opportunity. And the volatility that we see in the markets, and many of the actions that we see from companies, show that the problem is that in normal crises one can see if things go wrong or if things go well, today nobody knows entirely how much it is going to last, how it is going to be, and every day everything seems to change. This paralyzes the decisions and actions that any of the people, investors, companies, can take. And a little bit of this is how the world is today, including political leaders. The world was in a very bad moment for this to happen to him. Something that we have been seeing for several years now is that the international political order was changing, it was fragmenting, there was no leadership. And basically what this implied is that there were no possibilities for international cooperation. Y if something has become clear in this crisis it is that there has been no cooperation. It started in China and there was no cooperation to stop it. Today we see different governments, central banks, the health issue, the economic issue, all making independent decisions. And that implies that This crisis is likely to worsen further because the conditions for this cooperation are not in place.

– But could it not, for the same reason, generate an awareness of how detrimental non-cooperation is and that it becomes an opportunity to seek new mechanisms for joint action between countries?

– Maybe it’s one of the changes we see. But the problem is that this was a structural problem. Basically the United States, which had been the great international leader since World War II, was increasingly less willing and able to act. Aggravated because Trump really did not want to participate in this, but that he went beyond that, because neither did China, which is the second global economy, perhaps on its way to being the first. China and the United States are, and will continue to be, the most powerful countries in the world. It may be that there is some rethinking in some way, but the structural problem of ordering of the world will continue to be. And probably what comes next, what was going to come next, is a world ordered by the conflict between China and the United States. And it is likely that after this crisis that conflict will be even worse. In China, its government will probably be strengthened, even if it remains a little weakened economically, and the United States will see how much. But I think one of the responses to this crisis is probably less inclination towards globalization, much more skepticism towards global orderings, and many more tensions between the United States and China that somehow they are going to prevent that cooperation.

– In the face of this crisis that has been going on for several weeks, the different governments were reacting in different ways and you already manage some surveys on how the reaction of your government is perceived in each country. Who are the best and worst unemployed?

– What is interesting is that although this is a health crisis and an economic crisis, surveys show that Voters are taking this as an external threat, almost like a war. And in that sense leaders who are firmer in their decisions are seeing their approval ratings rise. Macron in France. Conte in Italy. We saw him with Vizcarra in Peru. And what we see in almost every country, including the United States, is strong support for very restrictive measures as voters are scared for their own lives. Y those who are more skeptical to react more firmly, Bolsonaro in Brazil, López Obrador in Mexico, are likely to be the ones who are beginning to lose popularity. In the United States it is interesting that one sees that Trump had been losing support and in the last weeks, in the last week or ten days, he began to rise as he basically positioned himself as a war president. In the last couple of days it has begun to leave this course. We will see if that does not impact it politically. Now, in the long term, I no longer know how sustainable it is once the economic impacts begin to be felt. But at least in the short term the leaders who react most strongly, like Alberto Fernández in ArgentinaThey are the ones that tend to come out stronger.

– The United States has the particularity that it is becoming the main focus of the disease and at the same time it is going through a year with an electoral process underway. What evaluation are you beginning to make of the influence that this pandemic may have on the electoral result of November?

– I think it will most likely further weaken Trump and today it is likely to make him lose the election. Unless he really shows himself as a stronger leader. There are two questions. We were talking before about lack of cooperation on a global level. That lack of cooperation is even more widespread within the United States. With Trump saying one thing, Congress saying something else, and local leaders, governors, reacting more actively. Trump already came with certain weaknesses towards the election. Maybe a little stronger because it had a very strong economy and a leadership in the Democratic Party, its main opponents, which was not very good. If the economic crisis is of the magnitude that it seems to be in the United States, with a very strong contraction in the second quarter, probably in the third quarter, with unemployment reaching record levels, perhaps 4.5 million jobs lost, I think. that Trump is going to arrive at the election very weakened. That is why he is now so desperate to try to relaunch the economy. Now, going back to the previous point, if Trump makes a turn again, he positions himself as a leader who really looks like he is managing this crisis well and protecting the Americans, something he is not doing today yet, I think he can go up. And in fact, as I was saying, his approval rose a little when he started doing that. It is likely to go down now that it is stopping. So chances are, we’re going to a hard-fought election, where I think Trump doesn’t have an advantage. Now, a major risk that we have been seeing since last year is that Trump was very skeptical and that he tried to greatly weaken the credibility of the American institutions. And many of its voters don’t believe in American institutions, either. So I think that there is a risk for the first time in United States history that the election result will be questioned. Which, just thinking about the global impact of this crisis, can be amplified if there is a political crisis within the United States because voters on one side or the other are unhappy with the result and do not believe in its legitimacy.

– The crisis surprised Latin America also at a very bad time, with economic and political problems. How do you think the region will turn out? Are presidents going to be evaluated according to the number of deaths in each country or for something else?

– Latin America was even worse positioned than the rest of the world for this. At the end of last year we had the protests in Chile, the economy in Argentina in very bad shape, protests in Bolivia, protests in Colombia, polarized Brazil, stagnant Mexico. A global economic crisis, and then I think that a domestic health and economic crisis will aggravate these problems even more. Many of the region’s political problems had to do with huge voter discontent over corruption, poor provision of public services, and low economic growth. And I think those trends are going to worsen as the economic situation deteriorates. Plus Very few governments have the real capacity to launch a monetary fiscal policy that really impacts this crisis. In the United States, Congress passed a huge aid package, the United States can do it. Germany can do it. No country in Latin America can do it. Now, there are governments, in Argentina, in Peru, perhaps in Chile, that are handling it a little better. And I think that can give temporary relief to leaders who were already very complicated. But as this is a long crisis, I think the economic situation is going to be what ultimately ends up affecting these leaders. The two worst that are managing it, and that I think are much more at risk, are Brazil and Mexico. Two leaders who are basically denying the magnitude of the crisis. López Obrador and Bolsonaro are competing to see who gets worse, I think Bolsonaro has a bit of an advantage. But in both the economy is going to suffer, the reforms that had to be done are not going to be done. And I think that social discontent is going to grow strongly due to the combination of health systems that are not prepared to handle this and very vulnerable economies that are not going to be able to handle this either. And unless the crisis is short and the recovery is very fast, something that does not seem today, I think Latin America is going to get out of this even worse and with many more needs for economic reforms that are going to be difficult.

– One of the questions that various analysts have been repeating is that this health crisis will revalue the role of the State and the need for strong states. But this can mean two very different things: it can be the revaluation of powerful public health systems as part of a Welfare State, but also the strengthening of authoritarian and state leaderships that control the population more. Are we moving towards more democratic or less democratic societies?

– I think we are going to perhaps more polarized societies than we came from, but with a more present State. First, if it is true that China seems to be emerging from this crisis, the Chinese model is going to come out in some way revalued. Because they seem to be the ones who best managed the crisis. If the crisis is more pronounced in the United States, the lack of state coordination will further limit the credibility of that system. In any of the scenarios, the way out of this crisis will come from the State. Both in Germany, as in the United States, as in China, as in Brazil, as in Argentina, it is the State through health, it is the State through countercyclical policies, and it is the State helping voters, consumers and businesses that will save. The general economic problem that exists is that it is a crisis of supply, that is, companies cannot produce, and demand, because people cannot go out and buy. The only way to solve is with the State spending more and probably having a greater participation in the economy. Even in the United States, where there really is no tradition of this, there is a debate over whether the state needs to have equity interests in airlines and other companies. So I think we are moving towards a more polarized society. Probably with voters much more skeptical of what is foreign, of globalization, which is undemocratic, and with a state that is going to be more present. After, All of these countries are going to have to deal with the effects of having expanded the role of the state. Today I think that all politicians are basically thinking about how to solve the short term.

– But in the case of China, a strong and omnipresent state also implies absolute control of the lives of citizens that severely restricts individual liberties. Are we facing the possibility that this phenomenon will spread in other parts of the world?

– Yes, and China is interesting, because China, because the Communist Party in China, the Chinese government, know well that its legitimacy and its ability to have a modern society, with enough market share, with high levels of consumption and at the same authoritarian time, depends just on that the levels of economic growth and the quality of life grow year after year. If China emerges from this crisis, with economic growth lower than 4 or 5%, China’s ability to maintain itself as a stable government will be more difficult. Cast it can lead to China becoming even more authoritarian just to try to maintain order. And if we add to this potentially a crisis of legitimacy in the United States, I think that precisely these traditional orders under which the world was ordered will probably all come out of this crisis more unbalanced.

– Trump stated in the last hours that he wants to speed up the times of this quarantine and that the United States is working again for Easter. Is it possible that he has advanced an issue that, perhaps in less brutal terms, other governments are also beginning to think about if quarantines are extended for a long time and the economic situation leads to lack of money in their pockets, unemployment and other problems of mental and physical health, maybe deaths too?

– Yes I think so. That discussion is coming for different questions. It comes because of the economic question because, as I was saying, we are finally in a crisis of supply and demand. With this, neither companies can produce nor consumers can go shopping around the world. Secondly, due to the question of social stability: all of us are in some way thinking about what we are going to do to remain locked up in our homes without leaving, with our families, for a long time. Which is something that seems to me that not much is being talked about yet, but it is the subject of social discontent and political stability. And also that I think that, with the passage of time, except for situations like China, which are strongly authoritarian, It will be increasingly difficult, as people become more desperate, to maintain this order. I think Trump is desperate for the economic situation, he is desperate for his reelection chances, for the market, he knows that somehow doing this he blames many of the restrictions and the quarantines of the governors, who are the that they are finally imposing them. As we saw in England, the government tried to do that and faced with the health threat decided to back down. But I think that debate is going to be more and more. If the Chinese case shows as successful, it can show that there is light at the end of the road, that after two or three months, these restrictions work, and that can help them to stay in place. If that is not the case, if there are more cases in China, or if in other countries it is not contained, I think we return to the fact that the answer will have to be from the State. A little what Congress did in the United States: greater unemployment benefits, aid to companies … But each time for the countries it is going to be more difficult and we are going to go to stronger economic crises. But it is difficult for a democratic government to decide to lift these restrictions and risk having a much bigger health problem, which ultimately will also cost politicians, right? So, It seems to me that we will probably see that these restrictions are maintained although it will be more difficult to sustain them and the economic situation, if this lasts more than two or three months, will worsen in almost all countries.