Five points on Uruguay’s elections
Plus additional commentary on protests in Colombia and elsewhere
Welcome to the Latin America Risk Report - 27 November 2019.
In this edition:
Five points on Uruguay elections
Regional protest wave update
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Five points on Uruguay’s elections
1. Uruguay joins the anti-incumbent wave. Luis Lacalle Pou of the National Party* defeated Daniel Martinez of the ruling Frente Amplio (the official victory announcement is still pending technical verification, but it’s fairly safe to say Lacalle has won). Voters respond to local conditions and in this case, Uruguayan voters demonstrated fatigue with the Frente Amplio’s economic policies, declining security conditions, and some minor corruption scandals. Lacalle won by building a broad coalition that included supporters from a center-left technocrat (Talvi) and a far right former general (Manini) who came in third and fourth place in the first round.
*Correction: I originally wrote Colorado Party. It’s been corrected here.
2. A questionable honeymoon without a majority mandate. With 90% voter turnout, Lacalle won with fewer than 50% of the vote (blank and invalid ballots took up around 4% of the vote). His lack of a majority mandate combined with a diverse coalition means he may struggle to implement an agenda that can win the support of all his partners. The new president will encounter a still very powerful Frente Amplio opposition force that retains a large number of legislative seats.
3. Lacalle will own the economy. Uruguay’s fiscal situation isn’t as bad as its neighbors, but is still one of the immediate challenges the new president confronts. The social safety net put in place during more than a decade of Frente Amplio rule weighs heavily on the government budget. Some reforms are clearly needed, yet any reform touching pensions or programs for the poor will be politically unpopular. There will be a temptation for the new president to blame his early economic challenges on his predecessors. That excuse won’t last for long. Within a few months, Lacalle will get the credit or blame for the economic and political fallout, even if some of it is outside of his control.
4. Indirect challenges due to Argentina and Brazil’s domestic state of affairs. Uruguay faces headwinds from the country’s two much larger neighbors. Argentina’s economic crisis is likely to continue into next year and default is likely. Brazil’s economy is doing better, but still lags and will receive far less boost from pension reform than many local businesses expect. Meanwhile, Brazil’s security situation has driven the country’s largest gangs into Uruguayan territory to engage in crime and transnational trafficking. Uruguay’s security challenges are directly linked to how Brazil’s security situation develops over the coming year.
5. Changes to the region’s foreign policy dynamics. Lacalle plans a modest transition of Uruguay’s foreign policy. He will place the country more in line with Brazil’s Bolsonaro than Argentina’s Fernandez when it comes to Mercosur. He will also likely join the Lima Group in recognizing Juan Guaido as president of Venezuela. Lacalle will also influence the upcoming reelection campaign for OAS Secretary General Almagro. The current OAS SecGen is from Uruguay, from the Frente Amplio, but had angered the party in recent years with outspoken opinions that went against the government’s foreign policy, particularly on Venezuela. Almagro’s reelection is more likely if Lacalle backs him, but domestic party politics make the decision complicated for the president-elect.
Regional protest wave update
On Monday I published a lengthy analysis on Colombia’s protests. The key points:
Colombia’s protests fit into the broader regional protest narrative. People are angry at the political class due to corruption scandals and economic concerns. The protests are mostly non-violent, but violent groups have caused damage to transportation infrastructure. The protests are escalating in part due to the perception of a heavy-handed response by security forces.
However, Colombia-specific elements including the presence of large illegal armed groups, well trained and combat tested security forces, and an anti-immigrant backlash against Venezuelan refugees add security and stability threats that are specific to the country.
Protests are likely to continue in the coming weeks as the government will be forced to consider actions, not just dialogue, that will meet some of the protest demands. One big debate over the past 24 hours has been tax reform.
The ability of these Colombian protests to surge without a catalytic event adds to the evidence that Latin America is experiencing a wave of protests. Regionally, analysts should adjust their predictions of protests to this “new normal” for the coming months.
Part of my newsletter last week on 2020 protests likely being worse was republished by Business Insider. I also commented on the protests for the RadioLAND podcast.
In those comments, I said Brazil is likely to be hit by the protest wave at some point in the coming year. Brian Winter offers some thoughts as to why that might not be likely in an essay titled “Is Brazil next?” Also in Americas Quarterly: Why Latin America’s Protests Could Slow Brazil’s Economic Reforms.
Meanwhile, Bolsonaro warns Brazil: Don’t try it here. By threatening a military response against protests, Bolsonaro appears to not be learning the lessons of Ecuador, Chile and Colombia, where images of repression and excessive force by police escalated the protests.
As several other analysts have noted online, Brazil already had its wave of protests in 2013 and the fallout from that protest movement, ultimately leading to the election of Bolsonaro, could serve as a warning for Chile and Colombia. The WSJ’s Antigovernment Protests Unsettle Chile’s Elite discusses how Chile’s business community is concerned that these protests could lead to reforms that undermine the country’s economy. Bloomberg covers the high cost of Chile’s proposed reforms.
One place protests were smaller than expected was Venezuela on Monday. Juan Guaido defended the turnout, saying not every protest needs to have hundreds of thousands of people. Guaido also promised that small-scale protests will remain a key part of the effort to resist Maduro. While large protests have diminished, there have been well over 10,000 protests this year in Venezuela, with numerous small protests in the past month held by students, teachers and healthcare workers.
Corruption Corner
Mexico - “Everything has a common denominator: money transfers to Emilio Lozoya.” That damning quote summarized a presentation by Santiago Nieto, the head of Mexico’s financial intelligence unit. Lozoya is accused of taking bribes for the purchase of a fertilizer plant as well as kickbacks from Odebrecht and OHL. There are additional reports that Lozoya will face charges related to taking money from those who stole oil from Pemex facilities.
Venezuela - The Washington Post reported Rudy Giuliani and his business partners in the Ukraine scandal met with Alejandro Betancourt in Spain. Betancourt is a Venezuelan businessman who was allegedly part of the Derwick scam. Giuliani lobbied the US Department of Justice to drop the investigation into Betancourt.
Reading List
NYT - The Coup Temptation in Latin America
WSJ - In Latin America, Pot-Banging Signals Trouble for Those in Power
World Politics Review - How AMLO Is Undermining Mexico’s Clean Energy Goals
Bloomberg - Pemex Communications Still Spotty After Crippling Cyberattack
Time - Colombia Must Protect the Women Risking Their Lives to Defend Black Communities
NYT - Venezuela’s Kids Are Dying. Are We Responsible?
Reuters - Once allies, Nicaragua's elite aim to unseat Ortega
Confidencial - “Regreso a hacer periodismo en Nicaragua”
InSight Crime - Bogotá Raid Shows Importance of Mexico Cartels for Colombian Coca
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