It seems to be reversal-of-fortune time in Latin America. Argentina has settled its battle with bondholders and is already preparing to re-enter the bond markets after 14 years as a pariah. Its president, Mauricio Macri, who has pushed aggressive reforms in his three months in office, is being hailed for making the country a “rare bright spot” (paywall) in emerging markets.
Brazil, on the other hand, is bracing for a weekend of unrest after ex-president Luíz Inácio Lula da Silva was briefly detained—the latest step in a corruption probe that is inching closer to his protégée, president Dilma Rousseff. The country is heading for the worst recession in a century. And if the Zika epidemic scares visitors away from the Olympics in Rio this summer (even though the risk then will be lower), things could get even worse.
But the story here isn’t so simple. In Argentina, Macri’s reforms face stiff opposition, especially from unions. His predecessors in power are already complaining that he’s using the courts in a vendetta against them, which amounts to a warning that they could do the same to him. In any case, top-down reforms like his are little match for entrenched corruption and cronyism.
Brazil’s turmoil, on the other hand, is the result of an ambitious investigation into just that kind of corruption and cronyism. Political opposition could still slow or blunt it, but the probe is too far along to be derailed altogether. In Argentina, a corresponding attempt to clean out the muck at the heart of the political system hasn’t even begun.
Brazil may have to spend some time in political and economic purgatory; Argentina may be due for a spell in the sunny uplands. But like so many of their regional brethren (just look at Colombia, which was once a basket case, and Venezuela, which once wasn’t), they’ll change places again, in time.