A New Latin American Consensus?

They first met as a group in 2007. Many of them were neoliberal leaders who had instituted the fiscal belt tightening and pro-market reforms known as the Washington Consensus. They witnessed unprecedented increases in wealth, but they also saw the gap between rich and poor grow more pronounced -- and with it, social discontent.

They are Latin America's retired presidents, and two years ago some 20 of them came together to devise a new way forward for the region. Their objectives were simple: to foster long-term economic development and, in turn, strengthen democracy.

Coordinated by former Peruvian President Alejandro Toledo, the group includes former presidents Vicente Fox of Mexico, Carlos Mesa of Bolivia, Ricardo Maduro of Honduras, Nicolas Ardito Barletta of Panama and Vinicio Cerezo of Guatemala. Later this month, they will present their 16-point plan, dubbed the Social Agenda for Democracy, to the sitting heads of state during the 2009 Ibero-American Summit in Portugal.

They are working in part to overcome the two extremes that have defined Latin American politics and economies for the last 20 years. They still tout the benefits of the Washington Consensus that left Latin American economies better positioned to compete in a globalized world. But they recognize that financial rewards can easily lead to a sort of "market fundamentalism" that assumes economic growth can alleviate any social problem.

At the same time, they also argue in the Social Agenda that the "authoritarian populism" that has emerged as a response doesn't serve the region well. Though initially this kind of populism was an effort to right real imbalances, they write, it has drifted from addressing inequality toward a "confrontational, demagogic path, where the leader, rather than the reform project, takes center stage."

Their agenda offers nothing radical. It recommends improving the quality of education, health care and public services, as well as reforming fiscal policy and political and legal institutions. To measure progress, the group also proposes creating a Latin American index that would include performance indicators such as a coefficient to promote more equitable energy distribution.

The former presidents' suggestions are, in fact, in line with current thinking about development. Compared to 15 or 20 years ago, Latin American governments of all political stripes are more focused on tackling poverty directly, says Francisco Rodriguez, head of research for the United Nations Development Program's Human Development Report. Recently, he says, the debate has been moving toward "a re-evaluation of the balance" between long-term, universal social policies and the recently popular targeted policies that provide cash transfers to poor mothers in exchange for taking their children to school and to regular medical check-ups.

Clearly, one advantage that these former leaders have is that they no longer answer to the public. They can afford to think long-term -- their plan is for the next 20 years -- a perspective that is sorely needed but not often sought in the region.

In Bolivia, for instance, President Evo Morales has managed to make people feel that he cares more about them than other leaders in the country do, in part because of initiatives such as $28 annual bonuses to poor Bolivian mothers and soccer fields in low-income neighborhoods. He is widely expected to win re-election next month.

The problem, according to former Bolivian President Mesa, is that Morales hasn't implemented a better funded "structured social policy." Despite unprecedented budget surpluses, a doubling of the gross domestic product and a fourfold increase in exports, Bolivia has seen a 2 percent rise in poverty rates over the last four years, Mesa said in an interview. Mesa projects that if Morales tripled Bolivia's investment in social policy, it could reduce poverty by 8 to 10 percent in the next five years.

It is likely that Morales and other current leaders will dismiss their predecessors' proposal out of ideological or personal differences. But that would be unfortunate, particularly in the case of Bolivia, where Morales is in an ideal position to implement some of the suggested reforms. With fiscal reform, for instance, Morales could help transfer a large portion of his supporters from the informal sector of the economy to the formal one, thereby significantly increasing the country's tax base.

As former Guatemalan President Cerezo observed when the group presented its proposal on Nov. 3 in Washington, D.C., now is the time to overcome ideological differences and commit to policies that transcend the term of any one leader.

Of course, that is much easier said by retired leaders than done by current ones. But as a vision for the future, this possible new consensus offers a much more balanced and plausible way forward for democracy and development.