presidents, ruling parties, and party rules: a theory on the politics of economic reform inlatin...

7/28/2019 Presidents, Ruling Parties, and Party Rules: A Theory on the Politics of Economic Reform inLatin America

1/24

Presidents, Ruling Parties, and Party Rules: A Theory on the Politics of Economic Reform in

Latin AmericaAuthor(s): Javier CorralesSource: Comparative Politics, Vol. 32, No. 2 (Jan., 2000), pp. 127-149Published by: Ph.D. Program in Political Science of the City University of New YorkStable URL: http://www.jstor.org/stable/422394

Accessed: 03/06/2009 16:13

Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at

http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless

you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you

may use content in the JSTOR archive only for your personal, non-commercial use.

Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at

http://www.jstor.org/action/showPublisher?publisherCode=phd.

Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed

page of such transmission.

JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with the

scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that

promotes the discovery and use of these resources. For more information about JSTOR, please contact [email protected].

Ph.D. Program in Political Science of the City University of New Yorkis collaborating with JSTOR to digitize,

preserve and extend access to Comparative Politics.

http://www.jstor.org
http://www.jstor.org/stable/422394?origin=JSTOR-pdfhttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/action/showPublisher?publisherCode=phdhttp://www.jstor.org/action/showPublisher?publisherCode=phdhttp://www.jstor.org/page/info/about/policies/terms.jsphttp://www.jstor.org/stable/422394?origin=JSTOR-pdf


2/24

Presidents, Ruling Parties, and PartyRulesA TheoryonthePoliticsof EconomicReformnLatinAmerica

Javier Corrales

Betweenthe 1980s and early 1990s numerous statistpolitical partiesthroughout heworldexperiencedthe shock of their lifetimes.1In countriesas diverse as Australia,Bolivia, Costa Rica, Ecuador,France, Greece, Haiti, India, Jamaica,Mexico, NewZealand,Paraguay,Romania,Spain,andZambia,statistpartieswon elections, oftenrunningon a traditionalplatformof state intervention n the economy,only to dis-cover that their very own governmentswere readyto jettison this platformin favorof market-oriented conomic reforms.These turnaroundsnot only contradicted heparties'historicalplatforms,but also penalized importantconstituentsof the partiesin the short term.Invariably,hesepartiesreactedto these reformswith utterdismay.This dislocation in executive-rulingpartyrelationsis a recurrentand understud-ied political issue in every process of market-oriented conomic reform.In contrastto prevailingtheories on the subject,which view reformimplementationas contin-gent on strugglesbetween the executive andantireform nterestgroupsand opposi-tion parties,this articlearguesthatthe key conflict to resolve is between the execu-tive and the ruling party.If left unchecked,executive-rulingparty dislocation willhamper he capacityof governments o implementreforms.This article elaborates the reasons why market-oriented conomic reforms pro-duce dislocation in executive-rulingpartyrelations. However,it also suggests thatthis dislocation is resolvable,dependingon the strategies adopted by the executive.Three possible responses to these dislocations are discussed. The first is a party-neglecting approach:the executive simply neglects the concerns of the party andattempts to implement the reforms by bypassing the ruling party. The secondapproach is party-yielding: the executive cedes to the demands of the party, inessence abandoning he reformprogram.The thirdapproach s party-accommodat-ing: the executive negotiates some compromise with the party, granting politicalconcessions in return or theparty'sconsent to implementreforms.All of these responses affect the politics of reformimplementation.Specifically,they affect two variables:political stability during the reform process and depth ofreformimplementation.A party-neglectingapproachengendersthe highest degreeof instability and, hence, implementationdifficulties. The party-yielding approachmight placate tensions in executive-ruling party relations, but at the expense ofreform implementation.Whetherreformabdicationwill improve stabilityin overall

127


3/24

ComparativePolitics January2000state-societyrelationsis, however, ess predictable.On the one hand,the rulingpartyis less likely to be a source of conflict, but,on the other,the abandonment f reformsmight lead to such a deteriorationof economic variables thatstate-societyrelationscould turn unstable.Partyaccommodation, n contrast,generatesboth greaterpoliti-cal stabilityanddeeperreformimplementation.By obtainingthe consent of the rul-ing party,the executive wins a crucialpolitical ally, which betterequips the execu-tive to wage battles against reform enemies across society. Nevertheless, reformimplementationwill neverbe as deep as the executivehad hoped. Preciselybecausethe executive is forced to compromisewith the rulingparty, mportant lliberalgapswill emerge. In short, reform implementationwill be far-reachingand politicallysmoother,but not entirelyneoliberal.These points will be illustratedby discussingVenezuela(1989-1993) andArgentina 1989-1996) in detail andMexico, Paraguay,and Ecuador n moregeneralterms.

Economic Reforms and Political PartiesPolitical economists who study processes of economic reform devote little attentionto political parties.They prefer instead to see reforms as a political battle betweenthe state and a battery of reform-opposed social groups. Rent-seeking interestgroups(eitherbusiness or labor)are often consideredto be the most seriouspoliticalenemies of the reforms,since they are perceivedas the biggest economic losers oftheseprocesses,at least in the shortterm.2Successful economic reformis thus contingenton state officials' ability to neu-tralize society-based opposition. In some cases, social forces oppose the reformsbecause they bear heavy economic costs; the suggested remedy is to compensatelosers. In other cases, social forces oppose the reforms because they mistrust theexecutive's commitmentto reform; the prescribedsolution is for the executive tomaximize credibility by adoptingthe right policy prescription,3he right technicalexperts,4 or the most radical policy shock ("overshooting").5For other scholars,reformimplementations contingenton the executive'sability to concentratepower6or simply to persevereuntil the opposition subsides by attrition.7Still others arguethat the key is for the state to establish some kind of "link" (for example, con-certacion) with affected groups such as business or popular sectors or both.8 Othersequatereformdifficulties to a prisoner'sdilemmaor a deadlock game between thestate and social sectors,9which can be resolved to the state's advantage f there is amajoreconomic catastrophe hat renderssocial actors more prone to accept the costsof cooperation.'0In most of these works,political parties are eitheran absent or a secondary vari-able. To the extent thatpartiesenter into the discussion, it is usually in reference toopposition partiesor the manner n which the incumbents nteractwith them. It has128


4/24

Javier Corralesbeen argued, or instance,thatin fragmented,highly polarized,or deinstitutionalizedparty systems, executives will encountergreater difficulty in governing.l'1Othersemphasizethatpoliticalpartieswith a traditionof clientelismand statismareunlike-ly ever to playa constructiverole in processesof politicalor economic renewal.12However,political partiesin general-and ruling partiesin particular-play cru-cial roles in the politics of economic reform. Governments hat fail to gain the sup-portof their own partiesfor structural djustment ind it even harder o gain the sup-portof otherpolitical forces in society.This failureimperilsreformimplementation.Strongand unified (as opposedto loose, fragmented,anddivided)ruling partiesarea preconditionof economic governance.However,ruling partiescan also act as themost formidablestumblingblock in the reformprocess.To show how, it is importantto understandhe interactionbetween executives andruling parties duringeconomicreforms.

Executive-Ruling Party Relations in Argentina and Venezuela in the Early 1990sWhenpolitical partiesassume office, they do not cease to exist as separateentities.Not all party leadersjoin the state, and not all party structuresmesh with the stateapparatus.At a minimum,ruling partiespreservetheir hierarchy,which includes acentral committeeresponsiblefor administeringpartyaffairs, settingparty policies,influencing voting patterns n the legislature,and conductingrelations with outsideorgans.Not all membersof these committeesarenecessarilystate officials (they canbe party notables, local officeholders, legislators, financiers, or labor bosses). Inaddition, ruling parties preservea set of internalorganizations secretariats, egisla-tive blocs, laborgroups,civic associations)that also preservesome autonomy.'3Thepolitical opinions,preferences,and actions of ruling partyleaders andorganizationsneed not coincide with those of the executive.InVenezuelaandArgentina he ruling partiesreacted n opposite directionsto thereformprocess launched in 1989 by the presidentsCarlosAndres Perez and CarlosS. Menem. Both presidents came from quintessential statist parties: AccionDemocratica (AD) andthe PartidoJusticialista(PJ), or PeronistParty,respectively.Halfway into the reform process, executive-ruling party relations became con-tentiousinVenezuelaand cooperative n Argentina.Interviewswith top party leadersin each country n 1994 support his assessment.14Whenasked if they felt represent-ed in the government, only two AD respondents agreed, whereas all but one PJrespondentagreed.AD's sense of alienationcould not be attributed o disagreementsabout economic ideas:the majorityof AD respondents ndicatedagreementwith theadministration's conomic objectives.This dichotomyin executive-rulingparty relations can not be easily explained byexisting arguments.Forexample,Geddesargues hatrulingpartiesarelikely to support

129


5/24

ComparativePolitics January2000efficiency-enhancingeformswhentheyachieveparitywithotherparties,whichmakespartiesestimate that the political costs of the reformswill be sharedby all politicalforcesmoreor less equally.'sHowever,AD intensified ts rebellionagainstthe execu-tive in 1991,whenits distance romtheoppositionwasdeclining seeTable1).Table 1 ElectoralResults of the MainParties,ArgentinaandVenezuela,1983-1995

Venezuela1983 1988 1989 1992a 1992b 1993TotalAD 57.7 52.7 39.7 32.3 31.1 23.6Copei 35.1 40.0 32.8 32.3 38.4 22.7Convergencia 30.9CausaR 21.9Distance etweenulingpartyand irstoppositionarty 22.6 12.7 6.9 0 -7.3 7.3

Notes:1989and1992aareelectionsormayors; 992b epresentlectiornsfgovemor.

Argentina1983 1983' 1985' 1987' 1989 1989' 1991' 1993* 1994"? 1995 19950

PJ 39.9 38.4 34.9 41.5 47.5 44.8 40.7 42.3 38.8 49.9 43.0UCR 51.8 47.8 43.6 37.2 32.5 28.8 29.0 30.0 20.5 17.0 21.8Frepaso 01.5 02.5 12.7 28.2 21.2Distance etweenulingpartyandfirstoppositionparty 11.9 9.4 8.7 -4.3 15.0 16.0 11.7 12.3 18.5 21.7 21.2Notes:*ChamberfDeputiesElections* ElectionsotheConstitutionalssemblyFiguresor 1989-1995deRiz(1998)Source:OCEI;Fraga 1989);Anuario stadisticoe aRepsiblica rgentina.

Many Venezuelanistsactually make the opposite argument.They attributeAD'sdiscontentpreciselyto its decline in the share of the vote under Perez. However, hePJ in Argentinaalso experienceda decline by 1991 (albeit a less significantone), yetit began to cooperate with the executive that same year. Thus, electoral distancebetween the ruling party and the opposition does not fully determineexecutive-rul-ing party relations.Another set of argumentsstresses the imperiousnessof the executive. O'Donnellcoined the term "delegative democracy" o describe how, in moments of economiccrisis,politicalactorsdelegate power to the executive at the expense of institutions.16Along these lines, Acuna argues that Menem pursueda "Hobbesianstrategy,"whichincluded colonizing the party's hierarchy and coopting dissenters.'7 Likewise,Venezuelanists end to see Perez's administration n similar terms: a forceful execu-tive thatattempted o impose its will.'8 The applicationof the same label to process-es that produceddifferentoutcomes suggests that it is not useful in accounting forsuchdifferences.Venezuelanistsoften explain Perez's conflict with AD as a result of two special

circumstances.First, they stress that Perez became a presidentialcandidate n defi-130


6/24

Javier Corralesance of AD's leadership,which supportedOctavioLepage.But Menem also won hisparty's nomination against the wishes of the PJ's leadership, which supportedAntonio Cafiero. Second,they stress the role of the Caracazo, he massive riots thatenveloped Venezuela's largest cities on February 27-28, 1989, shortly afterannouncementof the reforms.19However, while the Caracazo served to confirmAD's suspicionthat the reforms wereunpopular,t neithertriggered hese suspicions(AD hadalready expressed apprehensionwhen it chided Perez for not disclosing theletterof intentto the IMF) nor ended completelyAD's willingness to cooperate(inlate March 1989 AD still endorsed he reforms).A final set of inadequateexplanations s based on economic factors. One versionstressesthe role of economic catastrophes:Argentinaexperiencedsuch a devastatingeconomic crisis after 1983, climaxing in the 1989 hyperinflation, hatactors finallyadopted cooperative strategiesin the 1990s. This argument,however,is empiricallyproblematic.The most conflictive period in executive-rulingparty relations, bothbefore and duringMenem'sadministration,occurred in the midst of high inflation(1986-1991).20 Another version stresses economic achievements: once economicconditions turnedfavorable,the ruling partyturnedcooperative.This hypothesis isalso problematic. In Venezuela AD's rebellion intensified in 1991, the healthiestmacroeconomicyearof the administration.And in Argentina he PJbeganto cooper-ate also in 1991, when most economic actors andgurus (includingthe IMF)expect-ed Argentina'snew round of stability to collapse, as hadhappenedwith every previ-ous stabilizationattempt.The PJ thusbegan to cooperatewith the executivein a con-text of high economic uncertainty-a true act of faith.

How (Statist) Ruling Political Parties React to Market-Oriented ReformsAn explanation of the different evolution of executive-ruling party relations inArgentinaandVenezuelamust begin with a map of the initialpreferences of rulingparties regardingmarket-orientedreforms. Geddes demonstrated hat incumbentshave reservationsabout efficiency-orientedreformsbecause they bear the politicalcosts of these reforms more intenselythannonincumbents.21 his situationcreates adilemma for presidents, who realize that reforms threaten their base of support,whereas the absenceof reformsthreatens heirfutureelectorability.AlthoughGeddes'argument s a sophisticatedaccount of presidents'dilemmas,itsays little about the preferencesof rulingparties, other than stating that they preferpatronageor cost-avoidance. In reality,ruling parties tend to have a more complexattitude owardreforms, at least initially.Likethe executives,rulingparties face theirown dilemma: they recognize that reforms can hurt them politically, but they alsounderstand hat not cooperatingwith the executive can be costly. Ruling partiesarethus repelledby andattracted o reformssimultaneously.

131


7/24

ComparativePolitics January2000Points of Conflict Ruling parties are repelledby reforms for a number reasons.First,the calls for spendingcutbacks contradict he naturalexpectationof victoriouspartiesthatthey shouldexploit the advantagesof officeholding. Second,differencesin the timing and location of elections makeruling partyofficials more risk-averseabout reforms than executives. Executives normally face electoral competitionsatdifferenttimes and in differentarenasthanrulingpartyleaders,usually four or fiveyears after their election, if at all. In contrast,the ruling party faces more frequentmid term congressional, municipal, and local elections. Because market reformstend to produceeconomichardship n the nearterm,they appearriskierto politiciansfacing elections in the nearterm.22 n addition,presidentsand partyofficials com-pete in different electoral arenas. Presidentsget elected by nationwide constituen-cies; partyleaderscompete in narrowerdistricts. Since marketreformstend to pro-duce concentrated osers (for example, a specific privatizationcan generateunem-ployment in a particular ocality or hurt a specific interestgroup), politicians whodepend heavily on votes from narrowconstituencies(mayors, governors, egislators,laborbosses) will be unenthusiasticabout reforms.If the ruling partyhappens o be a statistparty, he clash between the partyand thereformscan be even stronger.Statistpartiessee themselvesas market-correctorsatherthan market-creatorsndthuscould see the reformsas depriving hemof theirraisond 'etre,or at leastof leavingthem with anincongruentdeologicalposture.Statistpartiesalso fearthatthe reformswill deprive hem of opportunitieso carryon as brokersofrents betweenthe state and rent-seeking ndustrialists nd laborgroups.Even worse,they fear thatthe reforms will reduce their involvement in policy decision making.Since manystatistparties considerthemselves as custodiansof the very same institu-tions that market-orientedecnicosseek to dismantle, hey will havea strongdesire tobe consultedover these decisions.Tecnicos,on the otherhand,will havea strongdesireto avoidsuchconsultation ut of fearthatconsultationwill producedeadlock.In short,the executive and the ruling party hold opposite primarypreferences ontwo variables:depth of reformimplementationandparty inclusion in policymaking(see Figure 1). PointA in Figure 1 representsthe executive's primary preferences.The executiveprefersto pursuedeep reform andexclude the ruling party as much aspossible from decision making(the executive correctlyperceives apprehensionaboutreform within the ruling party).Points B1 throughB4 represent he possible initialpreferencesof the ruling party.Compared o the executive,the rulingparty certainlyprefers less reform implementationand more inclusion in policymaking.However,dependingon how many of the previously discussed points these parties share, rul-ing partiesmight allow more flexibility.For instance, some parties,such as AD, havea history of grantinggreat autonomyto the executive (point Bl on Figure 1). Otherparties mightbe less flexible in this regard.Thus,the range of preferencesof the rul-ing party can vary,although t is significantly moreaverse to reform implementationand exclusion frompolicymaking han the executive.132


8/24

Javier Corrales

Figure 1 ReformImplementation ndExecutive-RulingPartyRelationsHigh A

DepthofReformImplementation, 82 83

B1 Bl0 0,,--""--""""'--,

LowLow HighParty- , Party- Party-Neglecting Accomodating Yielding

DegreeofAccommodationfRuling artyA InitialreferenceftheExecutiveB,, B, Initialraeference(s)ftheRulingarty

Points of Compatibility Theprevious analysissuggests thatthereis no possibilityof cooperationbetween executivesandruling parties.However,rulingpartiesare notentirelyaverse to neoliberalreforms.First,thereareaffinitiesbetween neoliberalismand populism, as many scholars have highlightedrecently.Both ideologies provideutopianvisions of the future, dentifyclear enemies (privilegedinterestgroups),andseek to mobilize actors thatwere"hurt"by thepreexistingmodel of economic devel-opment.23Second, the reformsoffer these partiesthe opportunity o repeattheirroleas "foundational" arties,that is, to bringmodernityto the nation,not unlike whatthese partiesthoughtthey were doing in the mid twentiethcenturywhen they intro-duced statist economic models. Third,many of these partieshave nonprogrammatictraditions.LatinAmericanpolitical parties, for instance, operate in extraordinarilypresidentialsystems, in which partiesgrant executivessignificantautonomy n poli-cymaking.At most, partiesexpect the executiveto implementpolicies based on "thephilosophical and doctrinal principles of the party," o quote directly from AD'sstatutes.24But these principles are often quite vague (for example, to preservethesovereigntyof the people) and flexible (for example,to promotesocial justice), andsometimes not at all incompatible with the antirentobjectives of market-orientedreforms.Fourth,ties with labor,which are common among statistparties, create a"captivemarket,"whichmightencourage he partiesto take more risks.

133


9/24

ComparativePolitics January2000Finally, here is congruenceat the second level of preferencesbetweenthe execu-tive and the rulingparty.While executives and ruling parties disagree on their first

order of preferences,their second order of preferencesis mutually compatible.Forinstance,althoughexecutivespreferfull reformimplementationandlittle accommo-dation of the ruling party, they nonetheless prefer some implementationand somepartyinclusionover the thirdalternative,no reformat all. Likewise, althoughrulingpartieswould prefer little reform with total inclusion in the government,they stillwould prefer some reform with some exclusion over the alternative,the completefailure of theirgovernment.Thus,the rankingof preferencesof a reformistcabinet isfull implementationwithout modification, implementationwith modification, andno implementation.For the rulingparty, he rankingof preferences s full incorpora-tion, some reform with some exclusion, and the failureof the government.Thus, atthe startof the game the first preferencesof the executive and the ruling partyareincompatible,but the second level preferencesarecompatible.25In short, some features of statist parties encourage assimilation of neoliberalreformsor at least morerisk-taking.Moreover, he second-levelpreferencesof exec-utives andrulingpartiesarecompatible.Thus,executive-rulingpartyrapprochementis difficult, but not impossible. Argentina and Venezuela illustrate how this rap-prochementmightormightnot materialize.

Party-Neglecting Strategies:Argentina and Venezuela, 1989-1991For the most part,Latin Americanexecutives have respondedto the initial disloca-tion in executive-ruling party relations by circumventingthe ruling party (party-neglecting policy), attempting o negotiate some policy autonomy n return or somepolitical concession to the party(party-accommodatingtrategy),or acceding to theparty's desire to interrupt the reforms (party-yielding policy). In Argentina andVenezuela the executives began the reform process by adopting the first response.Thisresponseexacerbatesexecutive-rulingpartyrelationsthe most.

Perezbeganto neglect the rulingparty even before taking office, when he and hisadvisers essentially ignored the comision de enlace (transitioncommission) estab-lished to coordinate he transferof power after the 1988 elections. Only ten cabinetposts were filled withAD leaders,a very low number n a countrywhere parties tra-ditionally staffed most governments. Instead of relying on Adecos, Perez mostlyappointed political friends (for example, Pedro Tinoco, central bank) and highlytrained, nonpartisan, market-oriented social scientists (for example, MiguelRodriguez, Cordiplan;Moises Naim, industry;Carlos Blanco, COPRE). Even theministryof healthand social assistance,historicallya bastion of the ruling party,wasgiven to a non-Adeco.The first major confrontationoccurredwhenAD learned thatit was not consultedon the draftingof the letterof intent thatPerez secretly signed134


10/24

Javier Corraleswith the IMF,which committedVenezuela o the reforms.Perezand his ministerfre-quentlydisparagedalmost everythingrelatedto the "oldregime."Perezattempted oestablish alliances with newerparties(Nueva Generacion)and to appeal directlytonew social movements.The executive'spolicy of partyexclusion was high by Venezuelanhistorical stan-dards,but not as excessive as manyAdecos argued.Variouscabinetpositions that arecrucial for economic policy were given to AD leaders. In addition,Perez still gaveAD some control over state resources. For example, Perez grantedcontrol of theCorporacionVenezolana de Guayanato AD financier Leopoldo Sucre Figarella,thereby insulatingthis massive state-owned industrialcomplex and source of staterents from the reformprocess.

Nevertheless,AD never felt that it carriedweight in the government.As a formerAD presidentialcandidatestated,"theCEN of AD feels impotentvis-a-vis Perez."26In response, AD decided to devote itself to raising the transaction cost of thereforms.The few statements n supportof the reforms ssuedby AD typicallyinclud-ed salvos such as "thePartywould like to be more involved in decision making"and"socialissues arebeing neglected."AD refused to grantPerezspecial powersto han-dle the crisis,attackedalmosteverycabinetposition,andpersistentlyscrutinizedandeven shelved governmentbills in congress.27 n essence, AD grantedpartymembersfreedomto criticize the governmentand to restrictthe autonomyof the executive informulatingpolicies.InArgentinaMenem also began his administration y adoptinga party-neglectingapproach.Rather than turn to the party,Menem sought to build alliances with theprivatesector(Bunge and Borncorporation),neoliberalparties (the Ucede),militarysectors (appeasementof the military),and internationalactors(Argentina'snew pro-U.S. foreign policy). Consequently,executive-rulingpartyrelationsexploded. LikeAD, the PJplungedinto a debateabout the extent to whichthe reforms (and Menem)were truly party-friendlyand electorally wise. By January 1990 (in the midst ofArgentina's econdhyperinflation), pproximately wenty leadingPeronist egislators(the group of eight) quit the partyin protest,and those who stayed intensified their

criticisms.By late 1990 executive-rulingpartyrelations were in major disarray, uc-cumbingto "internal annibalism,"o quoteMenem.28This disharmony n executive-rulingparty relations explains why reform imple-mentationwas mixed and instabilitywas relatively high duringthis first partof thereform in Venezuela andArgentina.There were very few serious structural eforms.Those thatwere implemented(trade iberalizationand a few privatizations) ame atthe expense of growing political instability and declining public support. InArgentina n 1990 Menem even threatened o use the militaryto quell opposition toprivatizations.The problemwas that the rulingparties,resentingthe executive'sparty-neglectingpolicy,werebecomingthe preeminentopposition partyin each country.In this situa-

135


11/24

ComparativePolitics January2000tion there was no possibility that other political forces would supportthe reforms.Often led by rulingpartymembers,congress became unfriendly o the reforms. Forthe first time ever, for instance,AD sided with opposition parties againstthe execu-tive. Itjoined COPEI senatorRafael Caldera o approvea new antireform aborlaw,the so-called CalderaLaw,and Causa-Rto delay variousprivatizations. nArgentinathe PJbegan to question everythingthat it had agreedto when it approved he Lawof the Reformof the State at the start of Menem'sadministration.Both AD and thePJ encouragedother social actors to show resistance.Business groupsbegan to seethe executive as devoid of political allies and thus as a noncredibleactor,and state-business cooperationdeclined.In mid 1991 Venezuela's eadingbusiness federation,Fedecdmaras,criticized the government;between 1990 and early 1991 Argentinebusiness groups engaged in massive capital flight and speculation, triggeringtwohyperinflations. n short,party-neglecting trategiesdestabilizedoverallstate-societyrelations.

Party-Accommodating Strategies in Argentina, 1991-1996By early 1991 executive-rulingparty relations were on a collision course in bothVenezuela and Argentina.This collision occurred in Venezuela. In AD's internalelections of September-October 991 all the top party positions (presidency,secre-tarygeneral,organization ecretary,all three vice presidents)and a majorityof sec-retariatswent to orthodoxantireform/governmenteaders.Henceforth he balance inexecutive-rulingparty relations shifted toward the party,now underthe control ofrecalcitrantreform enemies. In Argentinathe collision was avoided. By late 1991Menem emergedas the unquestionableeader of the PJ.Two variables account for this difference. The first is a policy-type variable:theswitch towardpartyaccommodation n Argentinabut not in Venezuela.The secondis an institutionalvariable:AD's relatively higher degree of dependence on staterents and internalcartelization.Policy Switch: The Rise of Party Accommodation in Argentina In a majorabout-face in mid 1991 Menembegan to addresssome of the political grievances ofthe PJ. Essentially,he adopteda party-accommodating trategy.As with every greattransformation,his one beganat the level of ideology.A new campaign o aggiornarthe PJ was launched with a massive party congress in March 1991: the Justicialistmobilization for political and doctrinal updating.This congress was an exercise inPeronist adulationand party caretaking.Stating that he came to the congress "feel-ing more Peronist than ever before,"Menem addressedhead-on every controversialissue in executive-rulingparty relations. He announceda new policy towardthe PJ."Ourgoal is to assign to Peronism the paternity of an unprecedentedprocess of136


12/24

Javier Corraleschange in our history....Thepoint is not to destroythe political parties,but to insertthem in a model of social democracy..."From a position of neglect, the partywasnow proclaimedthe "main author"of the reforms.Mentioningthe word Peron(inreference either to Juan Domingo or Evita) thirty-one times, Menem arguedthateverything hat he was doing was exactlywhat Peronwould have done undertoday'scircumstances.Since 1991 Menem has never shied away from emphasizingthat hisprogramwas simplyan updatedversion of Peronism.Menem also renegotiated he rules of executive-rulingpartyrelations. Much hasbeen written about Menem's use of decrees.29Less attention s paid to the fact thatafter 1991 the PJrarelycomplained.Moreover, he most important tructural eforms(the ConvertibilityLaw,most privatizations,he reform of the pension system) wereapproved by congress. In 1991 the executive negotiated a tacit pact with the PJ.Ministers and reforms would go to congress more frequently; egislatorswould beallowed to introduce modifications in the proposedbills and even halt progressonlabor marketreforms;but the executive reserved the rightto veto all or partof con-gressional output.After 1991 the authorities rom the ministryof the economy gavethe most frequentdepositions n congressin recentArgentinehistory,consistentwiththe new tacitpact.These new rules of executive-rulingpartyrelationspleasedthe PJ.Allowing PJlegislatorsto presentmodificationsto laws gave the PJ both a say in thereformprocessand an opportunityo save face vis-a-vis their clients. The "youmodi-fy, I might veto" formulaprovedmore functionalto the clientelistic interests of thepartythanthe "you watch, I decree" scheme thatprevailed duringfirst years of thereforms.The latter ormulahighlighted he irrelevanceof legislators,while the formerallowedthepartyto present tself as an influentialplayer.The importanceof addressing he ideological questionandrenegotiatingrules cannot be overstated.As Panebiancoargues, ideology acts as the primarysource of col-lective incentives(the benefits orpromiseof benefits that all organizationsmust dis-tributeequally among participants) ndas a veil to conceal selective incentives (ben-efits distributed o only a few membersof the organization).30 y Peronizingneolib-eralism,Menemgave party eadersthe ideologicaltool to coverup the asymmetry nthe distributionof costs andbenefits that the reformsimposed among the rank andfile. And the newly negotiatedrules addressedcrucialpolitical concerns of the PJ:brokerageandinclusionin policymaking.Institutional Variables In fairness, the Venezuelan executive faced much moreconstrainingcircumstancesn its dealingswith the ruling party.Centrifugal orces inexecutive-rulingpartyrelations were stronger n Venezuela, due to two institutionalfactors:AD's greaterdependenceon staterentsandgreater nternalcartelization.By 1989 AD had governed Venezuela during most of its democratic history,whereas the PJ had governed Argentina on only two occasions, 1946-1952 and1973-1976. Even in the opposition,AD still retained importantstate subsidies and

137


13/24

ComparativePolitics January2000prerogatives. Thus, AD was excessively accustomed to the spoils of office.Moreover,from 1983 to 1989 AD enjoyeda "powerfeast": it solidly controlled theexecutive, both houses of congress, and every echelon of the state bureaucracy.PresidentLusinchiappointedall the provincialsecretariesgeneral of AD as gover-norsof theirrespectiveprovinces.Incontrast, he 1980s was an ingloriousperiodforthe PJ. For the first time, Peronism lost democratic elections not once, but twice(1983 and 1985), plunging the party into a severe political crisis. As predicted byAnthonyDowns, the need to recapturevotes caused internalinfighting, ideologicalrevision, and leadership turnover.31These changes did not turn the party moreneoliberal,but they served to dismantle old structuresand old leaderships.In addi-tion, the numerous debates about the true meaning of Peronist ideology madePeronist ideology more elastic. Experimenters gained more space, and loyaltiesbecame less entrenched.AD's comfortable control of power and votes in the 1980s exempted it fromundergoing a real renovation.AD had always been governed by one of the mostentrenchedcartels in LatinAmerica, the CEN.32Because CEN members were notelectedby direct vote but ratherby partydelegates, it was insulated from the prefer-ences of partymembers. Because CEN members had direct control over who in thepartywouldoccupypositionsof power,there was a built-inmechanismforpartydel-egates to vote on behalf of incumbents.Thus, the CEN had more power than theelectorate in deciding who would hold public office, including governorships.Lackinginternaland externalcontestation,CEN members did not need to worrytoomuch about competingfor votes. In fact, the party could lose presidentialelections,but the compositionof the CEN would change little. And in contrast to the PRI inMexico, CEN members were not rotatedwith a change of administrations.Becausethe CEN facedno need to find a winning formula, t underwentno internalchange.33In short, low internaland external contestation entrenched leadership structures,fixed ideologies, and fostered strict admission standards.Thus, institutional differences-dependence on state resources and internalcartelization-help explain why AD's reaction to the executive and the reforms wasmuch more hostile than the PJ's. However, they were contributing, not sufficient,explanationsof executive-rulingpartyrelations.If institutional eatureswere the soleanswer, executive-rulingpartyrelationsin Argentinawould not have been as turbu-lent as they were between 1989 and 1991 (and underprevious Peronist administra-tions), and AD's relations with Perez's successors (Ramon Velasquez and RafaelCaldera)would not have been as cooperativeas they turnedout to be. The execu-tive's policy towardthe partywas in the end more decisive in shaping ruling partyresponses.Consequences for State-Society Relations When Cafiero and Menem publiclyexchangedflatteriesin August 1991 for the first time since Menem became presi-138


14/24

Javier Corralesdent,34they marked a historic realignment in executive-ruling party relations.35Essentially,the "dissenting"wing of the PJ grantedMenem a negotiated permit toproceedwith the reforms.The use of decreesdid not end,and not all grievancesdis-appeared,but none of the PJ's debates-until 1996-questioned the spirit of thereform. No previousadministration ince 1951 hadenjoyedsuch a high level of rul-ing party support or economicausteritymeasures.The animosity in executive-ruling party relations in Venezuelaand harmonyinArgentina were unprecedentedin each country. In the past, factionalism in ADmeant only that the party would overridethe executive's choice of a successor; itneverdenied the executiveautonomyoverpolicymaking,as happenedunderPerez.36Likewise,the harmony n executive-rulingpartyrelations n Argentinabetween 1991and 1996 was new in a countrywhere almost every previousadministration, ivilianormilitary,hadexperiencedcrippling nternaldissent.The emergenceof executive-rulingpartycooperation n Argentinahad enormousconsequencesfor state-societyrelations.First,it granted he state an effective shieldagainstattacksfromsociety-basedreformopponents.For the first time in Argentina,the PJ became unavailable as an institutionalavenue throughwhich social forcescould sabotagethe state'sagenda(a role thatthe PJ hadgladly playedsince 1955). Infact, after 1991 the PJ became a delegitimizer of social unrest, including laborprotests.This party stand discouragedwould-be saboteurs from launchingattacks.Second,executive-rulingpartyrealignmentallowed the state to close the credibilitygap. For the first time in decades, an Argentine presidentcould offer guaranteesofpolicy continuity because it had solid political grounding. Reform skepticism-amajor reasonthat stabilizationattemptsoften fail-abated. The result was a reformstampedewith relativesocial acquiescence.

The Costs of Party AccommodationIn countrieswith strong statistparties, a party-accommodatingtrategyis thereforenecessary for deep reformimplementation.However,party-accommodatingransi-tions to the marketcome with two costs: "illiberal"pockets in the reforms and thestrengtheningof illiberaltendencies in the rulingparty.The illiberalpockets stem from the compromisesthat the executivereachesin itsnegotiations with the ruling party. For instance, Menem had to agree to the PJ'sdemand not to touchtwo areasthat were dear to the party:labor marketreforms andsocial welfare (obrassociales). The executive also offered thepartyantiliberalizationguarantees.Spending on social services, which had always been underthe controlofthe party, increased64.9 percentbetween early 1991 and mid 1994. Many Peronistunions were grantedopportunities o form their own companies in order to partici-pate in privatizations.Most of the debts of obras sociales, controlledby PJ unions,

139


15/24

ComparativePolitics January2000were condoned.The federalgovernmentgrantedthe provinceof BuenosAires, con-trolled by PJ strongmanand former vice-president EduardoDuhalde, significantfundsfor discretionary pending.The second cost stems fromconformingto the rulingparty'shungerfor protago-nism. In orderto obtainruling partycooperation,the executive inflated the party'ssense of self-importance. The PJ wanted its place in the sun as a condition forreform endorsement,and Menem complied. Once again, a Peronistexecutive nur-turedthe party'sself-perceptionas the founderof the nation,the custodianof institu-tions, and the political force whose say shouldmatterthe most. The PJ will emergefrom the reformprocesswith an inflatedsense of indispensability.Mexico from 1988 to 1994 is a similar case. Much has been writtenabout howMexico's market-oriented residents mplementedreformsby courting extrapartisanallies-technocrats andnew social groupsthat were eitherreform "winners"or sim-ply previouslymarginalizedsectors-to the detrimentof traditionalistpopulist ele-ments in the PRI.37This article would propose a differentinterpretation.Mexico'smarket reformswere possible, as in Argentina,because the executive succeeded inaccommodating,ratherthan displacing, the traditionalistsectors of the PRI. WhenPresidentCarlos Salinas de Gortariassumedoffice in 1988, he encountereda rulingpartyin disarray.His predecessor,Miguel de la Madrid(1982-1988), had done littleto accommodatethe "dinosaurs"n the PRI.38By 1988 the PRI suffereda massivedefection, and those who stayed remained rebellious (in the last months of hisadministration,de la Madridfaced the most uncooperativecongress in decades,andlabor leaderswere openly calling for a changeof economicmodels).39Salinas de Gortaridecided to be far more accommodating.He gave traditionalistPRI membersspace within his administrationpositions in the cabinet, local/guber-natorial offices, and party congresses). He sacrificed certain economic objectives(for example, abandoning the original goal of reducing annual inflation to singledigits and allowing it to hover around 19 percent) in order to satisfy the party'sdemand for economic growth.40Ratherthan insist on de la Madrid'sstrategy ofdenyingvictories to the opposition,Salinas devotedsignificant resourcesto enhanc-ing the party'scapacityto compete electorally.41 or instance, Salinas injectedmas-sive resources into the PRI's electoral campaigns.42The 1993-94 electoral codereformsestablishedvery high ceilings for privatecontributions,allowing the PRI tooutspend its rivals.43 Another electoral booster was PRONASOL (ProgramaNacional de Solidaridad),a huge state programwith a US$3 billion budget nominal-ly intended to fight povertythroughpublic works but in fact a populistmachinetoenhance the PRI's electoral chances. PRONASOL'sbudget was targeted at areaswhere the PRI had experiencedelectoral defeats (Michoacan,Juchitan,Oaxaca).44Although monies went from the president'soffice directly to local offices, therebysupercedingsome traditional "corporatist"party chiefs, PRONASOLnonethelesshelpedthe partybecauseit provided"investments"n the geographicareas where the140


16/24

Javier CorralesPRIwas electorallyneedy.45The resultwas a negotiatedsettlementwith a rebelliousparty.In return for political concessions, the PRI allowed the executive to proceedwith economic reforms.In short, party accommodation in Argentina and Mexico enhanced the state'scapacity to govern economic change, albeit at a cost: illiberal gaps in the reformsand, more important, the fueling of illiberal tendencies inside the ruling party.Paradoxically,neoliberalism has been introduced n conjunctionwith-in fact, as aconsequenceof-illiberal gaps.

The Costs of Party-Neglecting StrategiesHowever serious the costs of a party-accommodatingransition to the market,thecosts of a party-neglectingapproachcan be worse. Given the powerresources of rul-ing parties,especially statistparties,allowing them to become too angry,by neglect-ing them, can destabilize overall state-societyrelations. Acrimonious executive-rul-ing party relations erode the credibility of the executive, which undermines thechances of societal cooperationwith the reforms. A political impasse emerges inwhich the executive tries to push the reforms,while opponentsacross society, oftenled or galvanized by the ruling party,resist in full knowledge that the executive ispolitically isolated. This impasse is an unstableequilibrium.At least two scenariosbecome plausible.Scenario 1: The Ruling Party Rebels Party-neglecting trategiescan prompttheruling partyto strikeagainst the executive, as happened n Venezuelain the October1991 internalelections of AD. The rise of the orthodox sectors and the subsequentexecutive-ruling party divorce createda political vacuum at the state level. Theseconditions invited a coup attempt,which materialized n February1992. After thiscoup, AD continued to chastise the government,demandingthe interruptionof allreforms.An embattledand isolated executive had no optionbut to yield to the party.In the meantime,state-societyrelationsdeteriorated urther.Thus,party-neglecting trategiesoftenresult, paradoxically,n party-yieldingout-comes, which oughtnot be confusedwith party accommodation.Party accommoda-tion entails the grantingto the party of certain concessions in returnfor substantialleewayover economic policy. Party yielding, on the other hand,entails the surrenderof autonomy o the party, he abandonment f the reformprogramaltogether,and thecreation of a political vacuum at the top that provokes instability in state-societyrelations.Paraguay 1993-1998) is a comparablecase. PresidentJuan CarlosWasmosy alsocame from a statistparty,the PartidoColorado,and unveiled reforms that includedstructural conomic changes as well as the demilitarizationof state andpartystruc-

141


17/24

ComparativePolitics January2000tures.46 These proposals provoked a double-front opposition from the PartidoColorado: the traditionalistcivilians, led by Luis MariaArgania, ejectedeconomicreforms, and the military sectors of the party,led by General Lino Cesar Oviedo,opposedthe effortsto subordinate he military.Fora while, Wasmosyalso pursuedaparty-neglecting trategy hiringHernanBuchi, the architectof Pinochet'sneoliberalreforms in the 1980s, as his main economic advisor).This strategy, oo, led to thedeterioration of executive-ruling party relations. As in Venezuela, the orthodoxgained the upperhand,and Wasmosy began to switch to a party-yieldingapproach(for example, he yielded to Oviedo's desire to construct a lavish field for militaryparades,the so-called Linodromo).Rather than placate the orthodoxsectors, partyyielding only invigorated hem. By April 1996 Oviedo staged an unsuccessfulcoupd'etat. He won the party's September1997 primaries,followed by Argania nd in adistant thirdplace the government'scandidate.Not surprisingly,economic reformshave stalled in Paraguay ince 1995.Scenario 2: Opposition Parties Attempt to Exploit the Political Vacuum Theanalyticalequivalentof a dislocationin executive-rulingpartyrelations is to have nostrong ruling party at all. In Brazil (1989-1992), Ecuador(1996-1998), and Peru(1990-1992), for instance,populist leaders won the presidencywith weak politicalparties (AbdalaiBucaram/FabianAlarcon in Ecuador)or last-minute flash electoralmovements(FernandoCollorde Melo in Brazil and AlbertoFujimori n Peru).Theseexecutives tried to govern, in effect, without a ruling party.Not surprisingly,thereformprograms alteredmostlybecauseoppositionpartiesand interestgroups, per-ceiving the political weaknessof the executive,tried to take advantageof the politi-cal vacuumat the state level by rebelling against the reforms.In Brazil and Ecuadorthe oppositionprevailed.In PeruFujimori riedto escape fromthis situationby carryingouthis own coup in1992. With this coup Fujimoriattempted o preempt he possibility of the Brazilian-Ecuadorian cenario.An alternative scape routeis to pursuea party-accommodatingstrategyvis-a-vis the main opposition party.This approachwas takenby VenezuelanpresidentRafael Calderabetween 1996 and 1998. Caldera was elected with a veryweakruling party,a last-minutealliance formedin 1993 between anad hoc coalitionof minuteparties(Convergencia)and a historicallysmall socialist party(Movimientoal Socialismo, MAS). This Convergencia-MASalliance came in thirdin every con-gressional, gubernatorial, ndmayoralelection. In 1996 Caldera auncheda programof economic reform(AgendaVenezuela),which furtheratomized the ruling coalition.Sectors of Convergenciabeganto defect, andMAS began to break apart.This atom-ization climaxed in July 1998 when the government's conomic czar (and founderofMAS), TeodoroPetkoff, resigned from MAS in protest of MAS's antigovernmentdecision to endorseHugo Chavez, the most antireformcandidateand author of theFebruary1992 coup attempt, orthe 1998 presidential lections.142


18/24

Javier CorralesCaldera's esponseto the fragilityof his rulingpartywas to buildbridgeswith themain opposition force, AD. He gave AD a few ministries,supportedAD's nomina-

tions and several laws, and preservedAD's presence in the bureaucracy. n return,AD supportedsome of Caldera's nitiatives, such as a watered-downprivatizationlaw. Compared to a party-neglecting strategy, party accommodation toward theopposition offered the advantageof compensatingthe administration or its fragileruling coalition with a borrowedsupporter.However,comparedto partyaccommo-dation vis-a-vis the rulingparty,partyaccommodationvis-a-vis the oppositionpre-cludeshigh levels of reform mplementation.Oppositionpartieshave little interest nseeing the success of the incumbent.Hencethe opposition partysells its supportat amuch higherprice and with greaterconditions than the rulingparty.Thus,AD sup-ported only the most modest reforms and did not shy away from siding withCaldera's nemywhenconvenient.Consequently,reformimplementationunderCaldera did not go very far.He pri-vatized a few firms and liberalizedthe oil andbankingsectors,but he failed to con-trol inflation and to enact much needed structural eforms,for example, a stabiliza-tion fund to managewindfalls in oil revenues.The Venezuelaneconomy thereforeremained ragileandsusceptibleto externalshocks.

Epilogue:Venezuela's 1998 Elections and the Politics of Economic ReformIn the 1998 presidential elections, in the midst of yet another economic crisis,Venezuelans elected the protagonist of the February 1992 coup attempt, HugoChavez Frias.The circumstancesof his victory areby now a familiarstory in LatinAmerica: a populist, military-linked political novice puts together a last-minutecoalition of small, left-leaning parties(the Polo Patriotico),runsa populist,antipo-liticalpartycampaign,and wins the presidency,but not the congress.If Chavez decides to implementstructural djustment,political instability s like-ly.The Polo Patrioticowill fragmentandweakenfurther,rendering he countrysus-ceptibleto any of the scenarios discussedpreviously.Oppositionpartiesin congress,for instance,perceivingthe institutional solationof the executiveoffice, might rebelagainst the executive (scenario 2). In theory, Chavez could respond by adoptingCaldera'sapproach-accommodating the largest opposition party, AD-but thisstrategyis unlikely, given Chavez's disdain for traditionalpolitical parties. Chavezcould also abandon he reformprocessaltogether scenario 1), but this strategy, oo,is unlikely,given the seriousnessof Venezuela'seconomic troubles.Anotherpossi-bility is some variationof Fujimori'sapproach-abolishing or supercedingcongress.Although Chavez has implicitly threatenedsuch action (and many critics contendthat his call for a constitutionalassembly is a subtle way of accomplishing it), hemight be deterred from taking such a bold step because opposition parties in

143


19/24

ComparativePolitics January2000Venezuela,howeverweakened,arenot as easy to dismiss as they were in Peru whenFujimoristagedhis coup.

A final optionwould be to attempt o strengthenhis ruling party. Specifically, hecould use state resources to strengthen he partywithin Polo Patriotico that is mostloyal to him, theMovimientoQuintaReputblicaMVR).Anecdotalevidencesuggeststhat Chavezhas begunto move in this direction.Inpreparing he countryfor a possi-ble election for a constitutionalassembly,for instance,Chavezorganized"neighbor-hood committees."In essence, this approachwould be a type of partyaccommoda-tion. If successful, it would no doubtliberateChavezfromthe vicissitudes of havingto rely on a weak coalition of ad hoc partiesand enhance his capacityto overwhelmhis opponents.But even under the best of circumstances,party-buildingwill takesome time. In the meantime,the politics of economic reformin Venezuela will con-tinue to be tumultuous.

ConclusionMarket-oriented eforms produce a dislocation in executive-rulingparty relations.Executives are initiallytemptedto bypass the ruling party (pointY1 in Figure2). Atfirst, party neglect allows the executivesto registersome progressin reformimple-mentation,but nowherenear the level of implementationdesired by the executive(the distancebetween the dotted line andpoint Y1). Because party-neglectingstrate-gies exacerbate conflicts in executive-rulingparty relations, which in turn disruptstate-societyrelations,they are inherentlyunstable.The tension thatthey produceisimpossible to sustain over time. Eventually, his tension must be resolved in one ofseveral directions.One approach s to move towardsome kind of settlementwith the ruling party(party accommodation,point Y2, Argentina 1991-1996, Mexico 1988-1994). Thisapproachexpandsthe executive'scapacityto deepen the reforms,in partbecause itdiscouragessocial actors from sabotagingor mistrusting he reforms.However,thegovernmentwill still fail to achieve the levels of reformimplementationoriginallyintended the gap between points A1andY2). Partyaccommodation,by nature,entailsgranting he partycertainconcessions thattranslatento gaps in the reformprocess.The alternative scenario is a rebellion of the ruling party (point Y4, Venezuela1991-1993, Paraguay1995-1998). Increasingly rustratedwith the executive, antire-form sectors in the party gain the upper hand,which in turngalvanizes social actorsinto opposingthe reforms.The executivebecomes entirely isolated,unable to imple-mentreforms,andlikely to abdicate(partyyielding). If the ruling partyis not strongto begin with, the rebellion will be led by opposition political parties (Brazil1989-1992, Ecuador1996-1998), which the executive can preemptby staging somekind of coup againstthe political system (Peru 1992) or by adopting a party-accom-144


20/24

Javier CorralesFigure 2 Reform Implementation and Executive-Ruling Party Relations inArgentinaandVenezuela,1989-1996

High A, A2- .-- -----. ---. . .Arg/Mex

Depth of y/--Reform _' \Implementation

< B B3* j

Ven/Par \Low 91-93 93?98LowLow HighParty- . Party- * Party-Negbecting Accornodaling Yielding

Degree of Accommodation of Ruling PartyA Initial referenceof the ExecutiveB,,... B, Initial reference(s)of the RulingPartyZ1 UnstableSituation

- Hypothesized elationship etween rulingpartyaccommodatlon nddepthof reformimplemnentation

modatingpolicy vis-a-vis an oppositionparty (pointY3,Venezuela1996-1998). Thelattermight contain some political tensions in state-societyrelationsand allow thegovernment o implementsome reforms(more thanwould be the case at point Y1),butnever to the same extentas wouldbe the case understrongexecutive-rulingpartyrelations(pointY2)This argumenthas implicationsfor state governance.Essentially, he relationshipbetween state autonomyvis-a-vis the ruling party and state capacity to implementreforms is not linear,but rathercurve-shaped.Too much autonomyfrom the rulingparty(party-neglectingpolicies) and too little autonomyfromthe ruling party(partyyielding) aredetrimental o the implementationof reforms.The former is inherentlyunstable; he latter is a recipe for reformparalysis.Thus, reformoutcomes in LatinAmericahave been intrinsically inkedto the way in which executiveshaverespond-ed to the dislocation in executive-rulingpartyrelations,sometimes more than to theway in which the executive has interactedwith interestgroupsor oppositionparties.Where executives and ruling parties have succeeded in renegotiatingthe terms oftheirrelationship,rather hansupercedingeach other,the resulthas been an enlargedprocessof reform.

145


21/24

ComparativePolitics January2000This study also showed thatthe initially dissimilarpreferencesof executives andruling parties,as laid out by Geddes, can be overcome,not so muchby the interplay

between the ruling partyand the opposition,but as a result of policies enactedby theexecutives,conditionedby the institutional eaturesof these parties. Arguments hatstress executiveimperiousness n bringingabout neoliberalreformsmiss this crucialaspectof the politics of reformimplementation.This study, finally, departssomewhatfrom those studiesthatarguethat neoliber-alism has come at the expense of traditionalpolitical institutions. On the contrary,where neoliberal reforms have been implemented the furthest (Argentina andMexico), therehas also been a reinforcementof very traditional nstitutions:statist,ruling political parties. Resolving the dislocation in executive-rulingpartyrequiredaccommodating, ather hanobliterating, ome of the illiberal demandsof rulingpar-ties. Thus, reformist executives in Argentinaand Mexico in the 1990s do not leavebehind weakeror streamlinedpolitical parties.To do away with the old economicmodel, these executives found it necessary to oxygenate ratherthan decimate thepartyas a whole, andespecially the traditional ectors.Party-accommodatingtrate-gies permitted Menem and Salinas to resolve one of the most serious dilemmasfaced by leaders who embracepolicies that contradictthe historical platforms oftheir own parties, but they also succeeded in fueling a populist monster. At somepointor another his monsterwill hauntthe countries'reformprocess.

NOTESI am grateful o the FordFoundation,he NationalResearchCouncil,and the David RockefellerCenterfor LatinAmericanStudiesat HarvardUniversity or funding hisproject. am also indebted o the Institutode EstudiosSuperioresde AdministracionIESA) in Caracasand the InstitutoTorcuatodi Tella in BuenosAiresforhostingme as a visitingresearcher.orgeI. Dominguez,RobertD. Putnam,DeborahYashar, rancesHagopian,JanetKelly,MichaelCoppedge,MiriamKornblith, uanCarlosTorres,AnibalRomero,JeanneK.Giraldo,M. VictoriaMurillo,and MarkWilliamsprovided aluableguidanceand comments.1. Statistpartiesare political partiesthat advocate state intervention n the economy for populist pur-poses, that is, to mobilize supportamong urban groups, domestically oriented industrialists,and orga-nized workers.See Robert R. Kaufmanand BarbaraStallings,"The Political Economyof Latin AmericanPopulism," n Rudiger Dornbusch and Sebastian Edwards, eds., The Macroeconomics of Populism inLatinAmerica(Chicago:Universityof Chicago Press, 1991).2. Anne 0. Krueger,Economic Policy Reform in Developing Countries: The Kuznets MemorialLectures at the Economic Growth Center, Yale University (Cambridge,Mass.: Blackwell, 1992); JoanNelson, "The Political Economy of Stabilization: Commitment, Capacity, and Public Response," inRobert H. Bates, ed., Towarda Political Economy of Development: A Rational Choice Perspective(Berkeley: Universityof CaliforniaPress, 1988).3. JohnWilliamson,"In Search of a Manual for Technopols,"n John Williamson,ed., The PoliticalEconomy of Policy Reform (Washington, D.C.: Institute for International Economics, 1994); JohnWilliamson,ed., LatinAmericanAdjustment:How Much Has Happened?(Washington,D.C.: Institute or

InternationalEconomics, 1990).

146


22/24

Javier Corrales4. Jorge 1. Dominguez, ed., Technopols:Ideas and Leaders FreeingPolitics and Markets n LatinAmericain the 1990s (UniversityPark:PennStatePress, 1997);VeronicaMontesinos,"El valor simboli-co de los economistas en la democratizacionde la politica chilena,"Nueva Sociedad, 152 (November-December1997), 108-26.5. AndersAslund,"The Case for Radical Reform,"Journalof Democracy,5 (October 1994), 63-74;Dani Rodrik,"Promises,Promises: CrediblePolicy Reform via Signalling,"The EconomicJournal, 99(1989), 756-72.6. GuillermoO'Donnell,"DelegativeDemocracy," ournalofDemocracy, 5 (January1994), 55-69.7. Alberto Alesina and Allan Drazen, "Why Are Stabilizations Delayed?,"American EconomicReview,81 (1991), 1170-88.8. Silvia Maxfield and Ben Ross Schneider,eds., Business and the State in Developing Countries(Ithaca: Cornell University Press, 1997); Peter Evans, EmbeddedAutonomy: States and IndustrialTransformationPrinceton:PrincetonUniversityPress, 1995); Joel S. Migdal,Atul Kohli, and VivienneShue, eds., State Power and Social Forces: Domination and Transformation in the Third World

(Cambridge:CambridgeUniversityPress, 1994).9. Leslie ElliottArmijo,"Inflationand Insouciance:The Peculiar BrazilianGame,"LatinAmericanResearchReview,31 (1997), 7-46.10. AaronTornell,"Are Economic Crises Necessary for Trade Liberalizationand Fiscal Reform?TheMexicanExperience,"n RudigerDornbuschand SebastianEdwards,eds., Reform,Recoveryand Growth(Chicago:Universityof Chicago Press, 1995); KurtWeyland,"RiskTaking n Latin American EconomicRestructuring:Lessons fromProspectTheory," nternationalStudiesQuarterly,40 (1996), 185-208; JohnT. S. Keeler, "Openingthe Window for Reform: Mandates,Crises and ExtraordinaryPolicy-making,"ComparativePolitical Studies, 25 (1993), 433-86; Allan Drazen and Vittorio Grilli, "The Benefit ofCrises forEconomicReforms,"AmericanEconomicReview, 83 (1993), 598-607.11. Stephan Haggardand Robert R. Kaufman, The Political Economy of Democratic Transitions(Princeton: Princeton University Press, 1995); Scott Mainwaringand Timothy Scully, eds., BuildingDemocraticInstitutions:PartySystems n LatinAmerica (Stanford:StanfordUniversityPress, 1996).12. See SusanStokes,"ArePartiesWhat'sWrongwithDemocracy n LatinAmerica?," aperpresented tthe Twentieth nternational ongressof the LatinAmericanStudiesAssociation,Guadalajara,Mexico, 1997.13. Fora cartographyof internalstructuresof AD and the PJ, see Michael Coppedge, StrongPartiesand LameDucks:PresidentialPartyarchyand Factionalismin Venezuela Stanford:Stanford UniversityPress, 1994);James W.McGuire,PeronismwithoutPeron: Unions,Parties, and Democracy inArgentina(Stanford:StanfordUniversity Press, 1997); and Steven Levitsky,"Institutionalization nd Peronism,"PartyPolitics,4 (1998), 77-92.14. I interviewedtwelve party leaders in Venezuelaand ten in Argentina.All were membersof theparty'scentral committee (ComiteEjecutivoNacional, CEN, in AD and the Mesa Ejecutiva in the PJ).None was a cabinet memberat the time of the interview.15. Barbara Geddes, Politician 's Dilemma: Building State Capacity in Latin America (Berkeley:Universityof CaliforniaPress, 1994).16. O'Donnell.17. CarlosH. Acuna,"Politics and Economicsin the Argentinaof the Nineties (or Why the FutureNoLonger Is What It Used to Be)," in William C. Smith et al., eds., Democracy,Markets,and StructuralReform in Latin America:Argentina,Bolivia, Brazil, Chile, and Mexico (New Brunswick:North-SouthCenter/Transaction,994).18. JenniferMcCoy and William C. Smith,"FromDeconsolidationto Reequilibration?ProspectsforDemocraticRenewal in Venezuela," n JenniferMcCoy,Andres Serbin,William C. Smith, and AndresStambouli,eds., VenezuelanDemocracyunderStress (New Brunswick:Transaction,1995).19. See MiriamKornblith,"Deuday democraciaen Venezuela:Los sucesos del 27 y 28 de febrero,"Cuadernosdel CENDES,10(1989), 17-34.

147


23/24

ComparativePolitics January200020. JavierCorrales,"Do Economic CrisesContribute o Economic Reforms?ArgentinaandVenezuelain the 1990s,"Political Science Quarterly,112 (Winter1997-98), 617-43. Others see crises as contribut-ing (not sufficient)factorsin Argentina'surnaround. uanCarlosTorre,"CriticalJuncturesand EconomicChange: Launching Market Reforms in Argentina," in Joseph S. Tulchin with Allison M. Garland,Argentina: he Challenges of Modernization Wilmington:SR Book, 1998);Vicente Palermoand MarcosNavarro,Politicay poder en el gobiernode Menem(BuenosAires:GrupoEditorialNorma, 1996).21. Geddes.22. See Martha de Melo, Cevdet Denizer, and Alan Gelb, "Patterns of Transition from Plan to

Market," The WorldBank Economic Review, 10 (September 1996), 397-424; Adam Przeworski,Democracyand the Market:Political and EconomicReforms n EasternEuropeand LatinAmerica(NewYork:CambridgeUniversityPress, 1991).23. EdwardGibson,"ThePopulistRoad to MarketReform,Policy and ElectoralCoalition in MexicoandArgentina,"WorldPolitics, 49 (April 1997), 339-70; KurtWeyland,"NeopopulismandNeoliberalismin LatinAmerica,"Studies in Comparative nternationalDevelopment,31 (Fall 1996), 3-31; KennethM.Roberts, "Neoliberalism and the Transformationof Populism in Latin America: The PeruvianCase,"WorldPolitics,48 (October 1995), 82-116.24. Accion Demociratica,Accion Democrctica: Doctrinay programa(Caracas:SecretariaNacionaldeOrganizaciondel PartidoAccion Democraticaand InstituteLatinoamericano e InvestigacionesSociales,ILDIS, 1993).25. JavierCorrales,"El Presidentey su gente,"Nueva Sociedad, 152 (November-December1997),93-107.26. OctavioLepage,Politica, democracia,partidos (Caracas:EditorialCentauro,1991),p. 61.27. El Nacional, Jan.5, 1991, p. D2.28. Pdgina/12, Dec. 12, 1990.29. Delia FerreiraRubio and MatteoGoretti,"Gobiernopor decreto en Argentina(1989-1993)," ElDerecho (UniversidadCatolicaArgentina),32 (1994), 1-8.30. Angelo Panebianco,Political Parties:Organizationand Power(Cambridge:CambridgeUniversityPress, 1988).31. Anthony Downs,AnEconomicTheoryof Democracy(NewYork:Harperand Row, 1957).32. MiriamKornblithand Daniel H. Levine, "Venezuela:The Life and Times of the Party System," nMainwaringand Scully, eds.; Daniel H. Levine,"Venezuela ince 1958: The Consolidationof DemocraticPolitics," n JuanJ. Linz and Alfred Stepan,eds., TheBreakdownof Democratic Regimes:LatinAmerica(Baltimore:The Johns Hopkins UniversityPress, 1978); John D. Martz, "PartyElites and Leadership nColombia andVenezuela," ournalof LatinAmericanStudies,24 (1992), 87-121.33. Corrales,"ElPresidentey su gente."34. Clarin,Aug. 27, 1991, p. 21.35. Antonio Cafiero was the presidentof the PJ and governorof the provinceof Buenos Aires (thelargestbastion of Peronistvoters)at the startof the reforms.36. See Coppedge.37. See Merilee Grindle, Challenging the State (Cambridge:Cambridge University Press, 1997);Stephanie Golob, "'MakingPossible What Is Necessary': PedroAspe, the Salinas Teamand the NextMexican'Miracle,"' n Dominguez, ed.; EdwardL. Gibson,"ThePopulistRoad to MarketReform:PolicyandElectoralCoalitions n Mexico andArgentina,"World olitics,49 (April 1997), 339-70.38. See M. Delal Baer,"Mexico'sSecond Revolution:Pathways o Liberalization,"n RiordanRoett,ed., Political and EconomicLiberalization n Mexico: At a Critical Juncture?(Boulder: Lynne Rienner,1993), pp. 53-54.39. Miguel Angel Centeno, Democracywithin Reason: TechnocraticRevolution n Mexico(UniversityPark:PennState Press, 1994), p. 15; LarissaAdler Lomnitz,ClaudioLomnitz-Adler,and Ilay Adler,"El

fondo de la forma:Actos publicos de la campana presidencialdel PartidoRevolucionario Institucional"

148


24/24

Javier Corrales(Notre Dame:WorkingPaperNo. 135, Helen Kellogg Institute or International tudies,March1990), p.20.40. See Baer,p. 57; andJorgeBuendia,"EconomicReform,PublicOpinionand PresidentialApprovalin Mexico, 1988-1993," ComparativePoliticalStudies,29 (October1996), 559.41. Luis DonaldoColosio, "Whythe PRI Won the 1991 Elections," n Roett,ed.42. Ibid.,pp. 93-104.43. Wayne Cornelius, Mexican Politics in Transition: The Breakdown of a One-Party DominantRegime(San Diego: Centerfor U.S.-MexicanStudies,Universityof California,SanDiego, 1996), p. 58.44. Denise Dresser, "Bringing the Poor Back In: National Solidarity as a Strategy of RegimeLegitimation,"n WayneA. Cornelius,Ann L. Craig,and JonathanFox, eds., Transforming tate-SocietyRelations in Mexico: The National Solidarity Strategy (San Diego: Center for U.S.-Mexican Studies,Universityof California,SanDiego 1991).45. Centeno,p. 65; Cornelius,p. 59. Some PRI traditionalists esent PRONASOLbecause it appearsto be a "parallelpolitical party."See Baer,pp. 57-60; Dresser,p. 157.

46. One legacy of Alfredo Stroessner'sdictatorship 1954-1989) was an alliance between Coloradoleaders, state bureaucratswho were required o be affiliated with the party),and militaryofficers (alsorequiredto be affiliated with the party). See Domingo Rivarola, "Recomposicion Interna del PartidoColorado," n Domingo Rivarola,Marcelo Cavarozzi,and ManuelAntonio Garreton,eds., Militaresypoliticos en una transicionatipica (Buenos Aires: CLACSO, 1991).

149

presidents, ruling parties, and party rules: a theory on the politics of economic reform inlatin...

Documents