Podcast: Special Report - Venezuela Up Close with Luis Moreno

TRANSCRIPT: Special Report - Venezuela Up Close with Luis Moreno

Luis Alberto Moreno:

Life in Venezuela is beyond all limits of desperation.

Ian Bremmer:

Hi, I'm Ian Bremmer, and welcome to the GZERO World Podcast, an audio version of what you can find on public television where I analyze global topics, sit down with big guests, and make use of small puppets. This week I sit down with Luis Alberto Moreno, president of the Inter-American Development Bank, an institution he has transformed since taking office in 2005. Today I'll ask him how direct investment can help rescue struggling economies like Venezuela's from their downward spirals. Let's get to it.

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Ian Bremmer:

I am here with Luis Moreno, President of the Inter-American Development Bank, basically forever now, right? I mean, a very long time.

Luis Alberto Moreno:

Well, first of all, thank you for having me, Ian.

Ian Bremmer:

Of course. And as you know, there's nothing going on in Latin America to talk about right now. I guess I have to start with the obvious, which is Venezuela. And this has gone from economic disaster to international political crisis very quickly.

Luis Alberto Moreno:

Yes.

Ian Bremmer:

Tell me first how you assess the situation on the ground right now.

Luis Alberto Moreno:

Look, it's very difficult to get a clear assessment on the ground, but I would say that we have three major types of problems all at the same time in Venezuela. You have a huge humanitarian crisis, where already you have issues of famine, lack of access to medicines. So, that whole part we have never seen in a country of this size in Latin America. Then, you have a major financial challenge, which is when you add up the sum of bondholders to Venezuela, plus big indebtedness to countries like China and Russia. And then on the other hand, a big macroeconomic disruption. I mean, you haven't seen in the world inflation of this level.

Ian Bremmer:

10 million percent.

Luis Alberto Moreno:

Probably in [post-WWI] Germany, but that's probably the only thing that we know in history that has been. So, think about this, at the same time, this humanitarian crisis where you have over three and a half million people that in the last four years, according to UN numbers, left Venezuela. Compare that to about 1.8 million in that same period of time that came from the Middle East, largely from Syria, into Europe. So, we've never seen anything of this scale. The stories of people not having electricity in many of the key cities in Venezuela, or having rationed electricity, which then has huge consequences as well, and access to clean water, and certainly the lack of medicines. For instance, the pickup in malaria, the pickup in things like polio, neglected tropical diseases. So, it's a very, very complex situation that we have on the ground.

Ian Bremmer:

Now let's imagine for a moment, take the easy outcome, which is that Maduro actually leaves. Given what you know in terms of both how badly for how long Venezuela has been governed, all of the messiness of the debt and the holders from China, from Russia, what's a realistic scenario of how this country starts to dig out? What do we do?

Luis Alberto Moreno:

Well, I think it's going to require major work, certainly from the IMF, which their sweet spot is dealing with issues of debt. It will equally require a huge push by institutions like ours and the World Bank and others to do the pure development work. But this is going to be a very long haul. And then on the other hand, Venezuela needs to get all of this debt that it's going to need to just get back on its feet, it's equally going to require a way to get the production of oil, which is fundamentally... it's what Venezuela has always lived and died from is basically oil. And the production of oil in Venezuela, I mean, nobody has a hard number, but people argue it's anywhere from 1.5 million to 1.2 million.

Ian Bremmer:

This is an interesting crisis in the sense that most of the Latin American countries are on board and aligned with the United States in removing the Venezuelan President, which is not what we could have imagined a few years ago. The ideologies, of course, are very different. Are you surprised by that? Do you think that that can hold together?

Luis Alberto Moreno:

Well, look, I think a lot of the leadership on where we are today really came from the so-called Lima Group of countries, which fundamentally are the larger countries in Latin America, perhaps with exception of one or two. And it's really Latin America saying, "We've got to put a line on the sand. We've got to really respond to this crisis in a different way."

Ian Bremmer:

You used to be the Colombian ambassador to the United States right here in Washington, DC. They're experiencing really the brunt of the refugee crisis from Venezuela right now. Haven't seen significant violence, haven't even seen that much criminality as a consequence, as opposed to a lot of the backlash that we saw when the Syrians came to the Middle East and came to Europe. Talk about that a little bit.

Luis Alberto Moreno:

Well, I think it's amazing, and I think we should give a lot of credit to Colombian people who basically didn't forget that when we went through very rough times in our country, they were millions of Colombians that went to Venezuela and Venezuela embraced them, and they were able to make a living there. Many of which, of course, have returned. And you're right in that we haven't seen... And actually nowhere, at least in Latin America, this level of polarization that you've seen in Europe and in other parts of the world against immigrants. On the contrary, I think most of our countries have embraced them. But you always have that risk that it can become a big political cleavage under one candidate or a group of candidates going to get behind this notion of just closing in the borders. But so far, Colombia, as you correctly say, has received over a million Venezuelans coming into our country, which today are trying to make a living there.

Ian Bremmer:

More broadly, Latin America has not been immune to the same forces of populism that we've seen in the United States and in Europe, though it doesn't make the headlines the way it does here. What are the similarities and what are the differences as you see them?

Luis Alberto Moreno:

Well, Ian, you're a good student of this. I mean, think back to the days of, I mean, I would say that as far as I can remember, there's always been populism in Latin America, and people would argue from Perón to, say, Chávez. And I always reflect on this because I think the fundamental reason has been that during all this period, Latin America was always the most unequal region of the world, where huge levels of inequality. And clearly, I think it's hard to understand working democracies when you have those levels of inequality. So, it's very easy to have as an outcome politicians who want to be populist and basically provide for what seems to [be] a quick remedy.

Ian Bremmer:

Corruption's still significant almost across the board in these countries. Still a lot of political reactions. Yes, the middle class expanding, no question. But if I think about the recent elections we've had in Brazil, a tremendous reaction against corruption, outside candidate as a consequence. The elections we've just had in Mexico, serious reaction against the establishment; outsider comes in as a consequence. El Salvador, I mean, even El Salvador, you just have someone come in outsider, no support in terms of local parties and the rest, but now is President of El Salvador. I mean, different ideologies. What does that make you think about where Latin America, where these countries are heading?

Luis Alberto Moreno:

Look, I think we are in an age of disruption, not only technological disruption, but political disruption. And clearly what is different is that corruption is something that no longer comes from a whole host of institutions from outside the country saying, "Look, you've got to put attention to corruption." It's in the streets and people are fed up.

Ian Bremmer:

So go through Brazil and Mexico, because in both cases, new presidents so far untested, unproven, big question. A lot of hope among their core supporters. Start with Bolsonaro in Brazil. What's the one thing you see him doing right now that you think could make a real positive difference to address this issue for the Brazilian people?

Luis Alberto Moreno:

Well, let's begin by remembering that Brazil went through its biggest recession, really, in its history. The Brazilian people had to face some very tough and dire economic circumstances. And certainly what they want to see is a government, and I think a lot of the explanation of President Bolsonaro being elected... I mean, he got elected with a very, very austere budget, a lot of uses of social media, which is something very interesting. Latin America is probably one of the most connected regions of the world. We're largely an urban region. 80% of people live in cities. But very, very connected through social media, in fact, the-

Ian Bremmer:

And the first, really, Facebook election in Brazil.

Luis Alberto Moreno:

Exactly. And actually in Brazil, the average Brazilian probably spends more time, or I know for a fact they spend more time on social media than even in the US. So, it was a very interesting kind of change in how people get elected because there was not only the president, but a number of people from his team who got to Congress and whatnot.

Luis Alberto Moreno:

But I think that President Bolsonaro is going to pass the first litmus test between now and July, which is a major pension reform-

Ian Bremmer:

Pension reform.

Luis Alberto Moreno:

... which is central to their economy. And once that happens, I see that that's going to awaken a lot of the animal spirits from throughout the world. And Brazil is a country, like most of Latin America, but Brazil, especially given its scale, that needs to import a lot of capital. So, I see a lot of foreign investment that will be coming into Brazil in the years ahead.

Ian Bremmer:

Now, move to the other side of the political spectrum in Mexico, where again, we had center-right government. Now we have center-left to left government under López Obrador. If you look at all the things he's talking about, where do you think we could see a success if he's able to get it done?

Luis Alberto Moreno:

Well, look, first of all, he, it's very interesting that even though President López Obrador is a center-left government, as you describe it, he did a very austere budget, which was, perhaps, the first test so far that he did at the end of the year. He's clearly focused on the issues of corruption, the issues of changing Mexico. And Mexico has fascinating possibilities. Definitely, you have the north of Mexico, starting from Mexico City onwards, that has developed in very different ways than, say, the south. He comes from the south of Mexico. The issues of illegal immigration today are not exclusive to the United States.

Ian Bremmer:

How much harder, in reality, is that challenge for him given the politics in the United States on immigration right now?

Luis Alberto Moreno:

I think it's a huge challenge for Mexico because on the one hand, people don't know this as much in the United States, there's almost a negative immigration into the United States coming from Mexico, which wasn't the case, say, 10 years ago. So, today, this is a problem for the United States, but it's equally perhaps a graver problem for Mexico.

Luis Alberto Moreno:

And that's why I think if the average Honduran can earn in 33 days in the United States what he earns in his country a whole year, there's always going to be a push for that person, that family, to try to come to the United States. And unless the situation in his country changes, which is going to require, in my view, a big investment shock, certainly a better security situation, and of course, a better institutional situation, is the only way that is going to be corrected. And you can call that nation building, whatever you want, but unless that happens, there's going to be probably 2 million people in the next five years entering the labor market. If they don't find a place there, they're going to want to immigrate.

Ian Bremmer:

Luis Moreno, good to see you, my friend. Thank you very much.

Luis Alberto Moreno:

Thank you, Ian. Always, always great to see you. Thank you so much.

Ian Bremmer:

A pleasure.

Ian Bremmer:

That's our show this week. We'll be right back here next week, same place, same time. Unless you're watching on social media, in which case, it's wherever you happen to be. Don't miss it. In the meantime, check us out at gzeromedia.com.

Announcer:

The GZERO World is brought to you by our founding sponsor, First Republic. First Republic, a private bank and wealth management company, places clients' needs first by providing responsive, relevant and customized solutions. Visit firstrepublic.com to learn more.