Globalization and Latin American politics are currently hot subjects. And hearing the former president of a Latin American country discuss both is not a frequent opportunity.
Friday morning, Ecuador's former leader, Jamil Mahuad, gave a lecture in Houston Hall on the impact that economic globalization has on Latin America.
Mahuad focused on the role of the International Monetary Fund in the context of the political instability that frequently troubles the region.
Mahuad started by describing the economic situation in Latin America, explaining that the lack of capital prevents the economy from taking off.
"We have no savings," he said. "We can't save. We are just trying to survive."
In order to find capital for investment, the former president explained, Latin American countries need loans. Due to the poor performance of their economies, however, few institutions are willing to lend them money.
The former president likened Ecuador to a corporate firm seeking loans.
"Someone has to say your enterprise is a good enterprise that you can trust," he said.
The IMF, Mahuad said, is like an auditor that guarantees a firm will be able to pay back its loans. In order to do so, the IMF sets adjustment programs to make sure that a country's economy improves.
"It's crucial for a country to get an IMF program," Mahuad explained, but added that "It's difficult to get one."
According to Mahuad, such programs of fiscal discipline, which often include tax increases and welfare cuts, are often the basis of government's unpopularity.
"Which congress in the world likes to raise taxes?" he asked. However, he said leaders have no choice but to follow IMF's programs.
"You go to the IMF when there's nobody else willing to give you a cent," Mahuad said. "You cannot negotiate the rules of the game. The rules of the game are already there."
Mahuad explained that Latin American rulers are divided between the requests from their own people and the pressure from the IMF and other international institutions.
"What your people are asking from you is the opposite of what the international community is asking from you," he said.
Such pressure is hard to handle, Mahuad explained, and many leaders face the dilemma of either sacrificing some aspect of democratic choice in order to carry economical adjustments or maintaining democracy and sacrificing the economy.
"I believe in law," he said. "I believe in the rules of the game. So in the end I decided to sacrifice the results."
But Mahuad was quick to admit that his presidency lasted only a year and a half.
College junior Lincoln Ellis said he was in Ecuador when Mahuad fell from power.
"I wanted to hear his side of the story," he said.
Fels Center of Government first-year graduate student Gina Yu said she was surprised by Mahuad's realistic point of view and the different perspective he brought about democracy.
"I don't believe the American model works everywhere outside of America," she said.
