Latin American Electoral Blows, Politics, Economic and Trade Outlook in El Cafecito #6 del 1/11/2024
The best reads in Latin American economy and politics ahead of the weekend. By Prof. Nicolas Forsans
Our selection of the most noteworthy reads and events in Latin America this week begins with the latest in the region’s elections, politics, economic and trade outlook for the region, and organised crime dynamics. In this sixth edition of El Cafecito, we focus on pivotal developments shaping the region, from electoral blows for both Presidents Lula and Boric to the on-going repression in Venezuela and the World Bank’s proposal to tax wealth to tackle the region’s staggeringly high inequalities. With insights on Bolivia’s political turmoil, Argentina’s foreign policy shake-ups, and economic growth prospects from ECLAC, this edition offers a comprehensive view of Latin America’s complex landscape, all from a critical, social justice-focused lens.
Grab a coffee and join us as we bring you the main stories from Latin America this week.
We’re now settling on two posts each week - El Cafecito, your weekly round up of what’s been happening in the region during the week, publishd ahead of the weekend (typically on fridays). In Focus is our longer, more focused series of analyses of significant issues, challenges and opportunities in Latin America, and will typically be out mid-week.
Do let us know your thoughts —what’s missing, and how we could do this work better—by leaving a comment below or messaging us.
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Our thoughts are with our subscribers and readers of Spain affected by the tragic events that affected the regions of Valencia and Castilla-La Mancha and Andalucia. With a catastrophic death toll (200+ as of Friday, see EFE for the latest) and many people still unaccounted for, this disaster will have long-lasting ramifications, in Spain but also in Latin America.
With the Colombian embassy in Madrid estimating at 120,000 the number of Colombians registered in Valencia (Lafm/RCN), this disaster will have touched many communtites.
El Pais continues to provide free coverage of the disaster and the recovery here
RTVE 24 horas provides uninterrupted televised coverage. On social media, EFE Noticias also provides reliable coverage of the disaster.
Latin American Elections
A Runoff in Uruguay
Uruguay, one of the region's most stable democracies, is heading to a runoff between two moderate candidates on 24 November. Yamandú Orsi, the center-left candidate came out ahead of two conservative rivals.
“No cambia casi nada,” (ie. ‘nothing changes’) reads Monday’s lead editorial in Uruguayan newspaper Búsqueda. Key takeaways include Uruguay's continued commitment to democratic stability, with moderate shifts in policy approaches being the focus of the upcoming runoff (The Guardian).
Two constitutional referendums, including a controversial pension overhaul proposal that would have lowered the retirement age in defiance of demographic trends and eliminated private pension schemes in favour of a public model that analysts warned would wreak fiscal havoc were soundly rejected (AP)
Unlike Argentina and Brazil, the country of just 3.4 million people is known for its generally moderate politics, without the sharp right-left divides seen elsewhere in the region.
Brazil: the Center-Right Gains Ground
Voters in Brazil’s biggest city, Sao Paulo, reelected Mayor Ricardo Nunes on Sunday following a tumultuous campaign that had pitted him against a leftist ally of President Luiz Inácio Lula da Silva, reports AP. He secured 59% of the votes, against 40% for leftist candidate Boulos, reports El Pais.
Support for the centre-right has strengthened in towns and cities. Lula’s party, the Workers’ Party only won mayoral races in two of Brazil’s 26 state capitals — Fortaleza and Recife — and in none of the larger cities, such as Rio de Janeiro, Belo Horizonte or Porto Alegre, adds the FT, adding that those results threaten Lula’s re-election prospects in the 2026 presidential elections.
While confirming a right-wing trend, many right-leaning candidates successfully distanced themselves from former President Bolsonaro. This trend underscores a complex dynamic within the right-wing movement in Brazil, highlighting the impact of local politics on broader ideological shifts.
Chile Veers to the Right too
Chile saw significant movement towards the traditional right, with the Chile Vamos coalition gaining ground at the expense of the Contigo Chile Mejor coalition, losing major cities like Santiago. However, Maipú remained under progressive control. This shift hints at challenges for the Boric administration, which is also grappling with a recent scandal involving a senior official (El País).
President Gabriel Boric had tried to relaunch his presidency halfway through his mandate, reports the FT. His government has been marred in the mishandling of a rape scandal against the former security secretary. Boric’s approval rating has reached a low of 25 percent, jeopardising the minority government’s effort to pass its main pensions and tax reforms, as well as a pledge to legalise abortion.
These elections were the first to take place with mandatory voting reinstated. Particpation was high, at around 85% of the electorate cast their vote, but so were the proportion of blank and spoiled votes —nearly 1.5 million votes out of a total of 13 million.
“Chileans tried youthful utopianism. Now they crave maturity and moderation”, writes The Economist in a portrait of center-right Evelyn Matthei, the mayor of upper-class Providencia neighbourhood in Santiago who now appears to be the front-runner in the 2026 presidential elections in which Boric is prevented by the Constitution to seek re-election.
“Chileans are fed up with extremism and yearn for moderation and common sense”, she says. Security concerns are high on the agenda following a near doubling of the homicide rate in the country, at 6.7 per 100,000 population in 2022, and gang violence is becoming more common. Chileans blame immigration, as the country witnessed an influx of immigrants, in particular from Venezuela, and associated gang violence in a country where murders tended to be rare. The share of foreign-born population of 20m jumped from 1% in 2006 to almost 9% in 2022.
Ecuador: Noboa to seek re-election
Daniel Noboa, interim President of Ecuador, has announced his standing in the February 2025 presidential elections, along with María José Pinto for the Acción Democrática Nacional (ADN) party, reports El Universo.
Under Ecuadorian law, Noboa (and all other candidates) must take a mandatory leave of absence during the official campaign period, which for this election runs from January 5 to February 6, 2025. The Center for Economic and Policy Research (CEPR) adds this requirement is problematic, as Noboa is keen to avoid transferring the presidency to Vice President Verónica Abad, with whom he has “a strained relationship”. He has maneuvered, both explicitly and behind the scenes, to create reasons to dismiss or discipline her, or to pressure her to resign, they write.
President Noboa faces declining approval ratings due to the ongoing security situation and the more recent energy crisis (which we covered last week). The latest blackout schedule mandates 11 to 13 hours of daily outages until November 3, with further extensions likely. The Minister of Energy and Mines Antonio Gonçalves, the third to hold that position under the Noboa administration, resigned on October 9.
More on Ecuador in our ‘Organised Crime’ section below 👇
Latin American Politics
Attempted assassination in Bolivia
Bolivia’s former President Evo Morales claims he survived an assassination attempt on Sunday after unidentified men opened fire on his car (AP), raising concerns about Bolivia's political stability amidst lingering tensions. He blamed President Luis Arce’s government for the outburst of violence, saying it was “part of a coordinated campaign by Bolivian authorities to sideline him from politics”.
“The exercise of any violent practice in politics must be condemned and clarified,” President Arce wrote on social media as he pledged to fully investigate the incident. The Deputy Security Minister confirmed one of the theories to be investigated included the possibility of a ‘self-attack” aimed at reviving Morales’s political fortunes.
This follows a power struggle between Arce and Morales and their supporters within the ruling Movement Toward Socialism (MAS) left-wing political party ahead of presidential elections next year. Both Morales and Arce mobilise loyal supporters willing to take to the streets to show their backing for their candidate (BBC). On Wednesday, Arce demanded that sectors close to Morales lift the roadblocks they have been carrying out for 17 days and warned that they would take "constitutional" measures to "safeguard" the country's well-being (EFE).
Evo Morales served as president from 2006 to 2019. He is facing legal issues including investigations for alleged statutory rape and human trafficking, which he denies. He argues those accusations are part of a “right-wing vendetta against him” by Luis Arce who replaced him in office after his resignation in 2019 following vote-rigging allegations.
We explored Bolivia’s recent political and economic challenges in this post published in July:
Peru, home to the world’s Least Popular President
Peru’s unelected president, Dina Boluarte, remains in office despite abysmal approval ratings in a country witnessing a devastating wave of crime and extortion that has pushed the capital, Lima, to a breaking point. “With a 92 percent disapproval rating, Peru’s Dina Boluarte is testing the very limits of disdain”, writes The Intercept this week.
She has never been loved, adds The Economist. She came to office because she was the vice-president of Pedro Castillo following his impeachment and arrest when he declared a coup against Congress and the courts, wrote this summer. Politicians in Peru, and especially presidents, tend to finish in prison as every person elected president since 1985 has faced prosecution for acts of repression or corruption carried out during their time in office, adds the website.
Her slide to the bottom appears to have begun last spring, following the “Rolexgate” scandal. In April, after reports of the suspicious number of luxury watches Boluarte was wearing in public appearances, police raided her home as part of allegations of illegal enrichment. The economy has languished on her watch, while crime and poverty have risen.
Peru is implementing restrictive measures for Venezuelan migrants, requiring formal contracts for work and housing, alongside tightened controls on remittances. These policies face criticism for potentially discriminating against migrants who often lack the means to secure formal employment contracts (Efecto Cocuyo). The country will also monitor remittances to prove the origin of Venezuelans’ income when they send remittances abroad.
Argentina’s Cultural Battle
Argentina’s President Javier Milei fired foreign minister Diana Mondino over pro-Cuba vote, reports the FT, reflecting Milei's alignment with hardline anti-socialist policies and reshaping Argentina’s foreign policy (Financial Times).
Earlier in the day Argentina had voted to back the UN’s 32nd resolution condemning the US economic embargo on Cuba (AP). Only the USA and Israel voted against it. While defending free-market capitalism Milei had pledged during his presidential campaign that he would not “do business with communists”.
The FT adds that Mondino had played a key role in smoothing over diplomatic disputes between the Milei and Argentina’s traditional allies, such as Brazil and Spain, and China, now the country’s second-largest trading partner. However, her influence in the government had diminished in recent months and Milei has embarked on a “cultural battle to shift the foreign service” (Buenos Aires Times). At least 30 high-level officials have left Milei’s government following dismissal or resignation.
About 41% have a positive image of President Javier Milei, according to a new poll, but approval has been in decline as austerity measures bite (Buenos Aires Times). This rating puts him slightly ahead of former president Cristina Fernández de Kirchner (with 38 percent) and Buenos Aires Province Governor Axel Kicillof, with 36 percent according to LatAm Pulse, a survey conducted by AtlasIntel for Bloomberg News.
The city of Buenos Aires woke up on Wednesday to long lines at bus stops, the only means of transport operating in the Argentine capital due to a 24-hour strike affecting planes, trains, the capital's subway (Subte) and taxis (EFE). “The unionists won’t let you work” was the response from Javier Milei’s government that appeared on Wednesday at the Retiro station, one of the main transport hubs in Buenos Aires.
Cuba’s migration
An increasing number of Cuban migrants have perished attempting to cross dangerous waterways, with over 600 deaths reported. The real toll is suspected to be even higher due to limited tracking and reporting capabilities (El País).
Repression in Venezuela
Data from Foro Penal, a Caracas-based NGO tracking political dissent in Venezuela reveal that, as of 22 October there were 1,953 political prisoners in the country, a 745% increase on the previous year (via Americas Quarterly). It is unclear whether this is the aftermath of July 28th elections, or the sign of a hardening of Maduro’s grip on power.
The independent UN mission in Venezuela has described the dictatorship’s strategy as the “reactivation and intensification of the harshest and most violent modality of its repressive machinery”.
Now that the “democratic transition appears to have failed, the U.S. should do more to ensure respect for the will of the Venezuelan people, such as imposing fresh sanctions on Maduro’s closest allies, including business people who support him, and using its diplomatic leverage over Cuba, which provides intelligence to Venezuela’s repressive machinery,” writes Human Rights Watch executive director Tirana Hassan.
Hopes for a transition faded away with the exile to Spain of Edmundo Gonzales and the weak response of an international community preoccupied by wars in Ukraine and the Middle East.
Number of political prisoners in Venezuela, 2014-2024 (Source: Foro Penal)
Latin American Economy
Regional - Addressing Inequalities through Wealth Taxation
Latin America and the Caribbean is “close to winning the battle on inflation and turning the corner on the macroeconomic dislocations” wrought by the pandemic, argues The World Bank in a report released this week. But it adds that the region’s GDP growth rate for 2024, estimated at 1.9%, will be the lowest among all global regions, highlighting “persistent structural bottlenecks”. In 2025, the region is forecast to grow by 2.6 %.
Percentage change in GDP, 2010-2025 (Source: World Bank) It adds investment, both public and private, remains depressed, and data suggest that the region is potentially missing the boat on “nearshoring”. To accelerate growth, it recommends that governments seize this momentum.
Corporate tax rates in Latin America & the Caribbeans are higher than the OECD and Asia averages, and these limit investment and economic growth. They exceed 30 percent in many large countries of the region—compared to the 19 percent average in Asia—and are seen as disincentives to domestic investment and any FDI resulting from the move to nearshoring.
Statutory CorporateTax Rates in Latin America and the Caribbean and average rates for OECD and Asia (Source: World Bank) To address the issues of continued inequality, high taxes on productive investment that limit growth, and continued lack of fiscal space, the report argues taxing wealth is a possible means of addressing all three issues.
Wealth taxation involves taxing an individual’s net worth. The region has relatively low amounts of wealth tax collection, collecting just 2.7 percent of total tax revenues compared to 12.8 percent in North America and 4.3 percent in Western and Central Europe —although there is significant variation among LAC countries.
Surprisingly, LAC countries typically collect only 2 percent of tax revenue from property taxes—below the global average—despite the fact that 80 percent of wealth in the region is held in real estate, even among the top 10 percent of earners. Property taxes are also much easier to manage administratively than financial assets.
Wealth tax revenues as a percentage of GDP and tax revenues, by region (Source: World Bank)
Although taxing the wealth of billionaires has moved to centre stage in policy debates, and has the potential to raise the hoped-for funds for the green transition, it is unlikely to be a magic bullet for the region’s broader fiscal shortfalls. The region has few billionaires, they are less wealthy than those elsewhere, and they are extremely mobile. As with most sources of taxation, including income and the VAT, there is a need to expand the base of those who pay the tax.
Regional - International Trade Outlook
A new report by ECLAC issued this week predicts that regional goods exports will recover in 2024 after falling by 1% last year in a context of contracting global trade.
The greatest projected increase in value will be seen in agricultural exports (+11%), followed by mining and oil (+5%) and manufactured goods (+3%). By subregion, the Caribbean (+23%) and South America (+5%) will benefit most. The high figure for the Caribbean is due mainly to a marked increase in the volume of oil shipments from Guyana and Suriname.
Exports to China (6%), the United States (4%) and the European Union (3%) will increase most while intraregional exports are seen falling by 5%.
Services exports will increase by 12% in 2024 for the fourth continuous year, driven mainly by tourism and digital services. Regional services imports, however, are projected to grow by just 1% in 2024, given the weak dynamism of economic activity.
LATAM, the world’s most Unequal Region
The London School of Economics had a panel discussion on Tuesday night focusing on the drivers of staggeringly high inequalities in the LAC region, and what can be done from a policy perspective. For a limited time you can watch the recording of the event here.
We will synthesise the discussion and bring you an extensive post as part of our In Focus series of deeper analyses of complex issues affecting the region. Susbcribe for free so you don’t miss a post.
Mexico’s Vulnerability to US politics
If former President Trump is reelected and follows through with his promise to slap new tariffs on all imports to the USA, Mexico would be more vulnerable than any other countries given its proximity to, level of integration with the USA and its exposure to trade, with 83% of exports sent north of the border (LA Times).
The Economist adds that “triple trouble awaits Mexico if Donald Trump wins” —on trade, migration and security. It is clear that Trump and his political allies see Mexico as “a problem rather than a solution”, and on all three issues Trump’s position has hardened since he left office in 2021. The US elections are scheduled to take place on November 5, with results to be proclaimed afterwards (?)
“While U.S. authorities give much of the credit to their Mexican counterparts for stemming the flow to their shared border, organised crime maintains stricter control of who moves here than the handful of federal agents and National Guardsmen standing by the river”, writes AP in How Mexican cartels manage the flow of migrants on their way to the US border.
How Mexico exported the Day of the Dead to the whole world (El Pais). In the last decade, the Mexican festival with pre-Hispanic roots has reached “unprecedented popularity beyond its borders, driven by tourism promotion and the entertainment industry”.
Organised Crime
Colombia peace talks
Delegations from the Colombian government and the National Liberation Army (ELN) guerrilla group were expected to meet this Friday, November 1, in Venezuela with the aim of resuming the stalled peace talks (EFE).
The dialogue, which restarted in November 2022 in Caracas, stalled at the beginning of this year due to the ELN's demands that the Colombian government remove them from the list of “terrorist groups” and abandon the regional dialogue with Comuneros del Sur, supposedly a split-off from the ELN.
During the various rounds of negotiations in Caracas, Havana and Mexico City, the parties reached several partial agreements and agreed to a one-year bilateral ceasefire, the longest maintained with the guerrilla group. It ended on August 3. When the truce was not renewed, the ELN resumed its attacks against public forces and infrastructure in different parts of the country. The group attacked an army base in the Arauca department on the border with Venezuela on September 17, killing three soldiers and wounding more than 30.
Coca cultivation in Ecuador
Ecuador’s president announced “unprecedented coca cultivation figures” this week, highlighting the country’s role as a fledgling cocaine producer, though uncertainty remains as to the true extent of coca crops in the country, reports InsightCrime.
“Cultivators are growing about 2,000 hectares of coca crops in Ecuador”, in plantations that first appeared three years ago, he said in a televised address. He cited satellite data provided by the United States. The figure is the first official estimate of coca crop cultivation in Ecuador.
If correct, those estimates would make Ecuador the world’s fourth largest coca-cultivating nation behind Colombia, with 230,000 hectares, Peru (with 95,000 hectares), and Bolivia, according to estimates. Small plots of coca have been reported in other Latin American nations like Venezuela, Honduras, Mexico, and Guatemala.
Recent high-profile arrests of gang leaders underscore the government's intensified efforts against organised crime, though concerns remain about potential violence from gang fragmentation
InsightCrime adds that “a lack of comprehensive monitoring, however, means the true extent of cultivation will remain a contentious issue”
For more on Ecuador’s fight against organised crime, see my earlier piece published last year
El Salvador - Haiti
El Salvador’s congress approves sending troop contingent to Haiti, specifically for medical evacuations (AP).
Judicial
Brazil
More than six years after Brazilian councilwoman and Black LGBTQ activist Marielle Franco was murdered by former police officers Ronnie Lessa and Elcio Queiroz, in a murder suspected to have ties to drug trafficking, her killers were finally sentenced to 78 and 59 years in prison respectively on Thursday (France 24).
AP adds Marielle Franco was “an icon of Brazil’ s political left whose killing sparked outrage”. Raised in one of Rio’s favelas, she became known for her efforts to “improve the lives of ordinary residents”.
Following her election in 2016, she fought against violence targeting women while defending human rights and social programs.
Mexico
Eight of eleven members of Mexico’s Supreme Court opted to resign in protest of controversial judicial overhaul rather than compete in judicial elections scheduled for next June (AP).
Last month, Mexico’s Congress passed — and a majority of states ratified — then-President Andrés Manuel López Obrador’s initiative to make all of the country’s judges subject to election. He and Claudia Sheinbaum argued the change will help rid the judicial system of corruption. Critics say the courts will become less independent and more subject to political forces
Quevedo is back
If you liked and partied over ‘Quedate’ three years ago, you’ll probably enjoy ‘Duro’, Quevedo’s first single in three years. He said he would take a break, get off socials and retire. But that did not last long.
Quevedo won a Grammy Latino award along with Bizarrap in 2023 when Quedate won the award for Best Urban Song for 'Quevedo: Bzrp Music Sessions, Vol. 52' (El Pais). Now he’s back with a new single (and explicit lyrics).
That’s all this week.
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Next week our focus piece will assess Milei’s economic reforms in Argentina and where the country is heading.
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