Latin America Risk Report - 24 October 2019
Bolivia's protests were expected. Chile's protests were not.
In this edition:
Bolivia protests after questionable first round victory by Morales
Chile’s protests continue in spite of presidential concessions, threatening upcoming international events
Russia fights for long-term control of Venezuelan oil
Bolivia protests after questionable first round victory by Morales
On Sunday night, with 85% of the vote counted, Bolivia’s election appeared headed to a second round runoff between President Evo Morales and former President Carlos Mesa.
Then the vote count stalled. When it resumed 24 hours later, the trends changed and Morales appeared to obtain a narrow ten percent margin that would allow him an outright victory in the first round. Then as protests and international outcry hit, the margin dropped just below the ten percent threshold. But as of Thursday morning, with 98% of the vote counted, Morales had a 10.02% lead.
In monitoring these results, we’re not watching an actual vote count. We’re watching a political battle play out in which Morales is trying to gauge whether or not he can steal this election.
Bolivia’s vote counting system “failure” benefitting the incumbent party is a repeat of events that occurred in 1988 in Mexico and 2017 in Honduras. The international community let Daniel Ortega’s rig various votes in the 2010s. Nicolas Maduro remains in power in spite of a reelection bid that was widely condemned as fraudulent. The question is whether all of those previous examples make Evo Morales and other leaders believe they can steal elections with impunity.
Protests will increase if Morales steals the election
This is how I opened my Bolivia election preview two weeks ago:
No matter which candidate is declared winner in Bolivia’s presidential election this year, the opposite side is likely to contest the validity of the result. An institutional fight and protests are likely. The region may even see another country where two people claim to be the legitimate president.
In the wake of the probable election fraud, Morales opponents looted and set fire to government buildings. Police repressed protests, firing tear gas and detaining protesters they believed had caused significant damage.
Those protests will strengthen if Morales’s first round victory is announced by Bolivia’s electoral institutions. While Morales has shown himself in the past to be a smart negotiator when it comes to managing protest groups, he will find it difficult to offer concessions when the main point of contention is his hold on power.
There have not yet been significant pro-Morales protests to counter the current protest movement. In spite of Bolivia’s president claiming there is a “coup attempt” against him and even though he claims to have won 2.7 million votes in the country, his supporters are not rushing to his defense.
If and when militant pro-Morales supporters hit the streets during an extended anti-Morales protest movement, that clash would lead to a drastic increase in violence and injuries. That is a scenario that Morales and his opponents should both wish to avoid.
If a second round occurs and is counted fairly, Mesa should win.
The pre election polling largely suggested that Mesa would beat Morales. The one Ipsos poll that showed Morales winning in a hypothetical matchup significantly missed the actual results in the first round. The current results, while not totally credible, still suggest that a united opposition would win a majority of voters against Morales.
The OAS is encouraging Morales to hold a second round regardless of the “official” results due to the immense doubts in how that vote count played out. Morales is a negotiator and is certainly going to consider that option. The question then becomes how fair that second round balloting will be.
The security forces matter
As is true in every Latin American crisis this month, the support of the military and other public security forces matters to the president’s ability to maintain power. While not going as far as Venezuela to turn the military into an apparatus of the ruling party, Morales has worked hard to purge the military of any potential political opposition and ensure loyalty within the top ranks. The Bolivian military retains a level of professionalism and may not want to be involved in significant violence or repression against the population, but also doesn’t want to return to the era of coups. This protest movement could place them under immense pressure and potentially divide the security forces against each other.
Chile’s protests continue in spite of presidential concessions, threatening upcoming international events
Brief recap of the events:
The Chilean government announced an increase in the metro fare.
The increase, while minor, became symbolic of the public’s discontent over the cost of living.
Students decided to protest by jumping the gates on the metro system.
The government responded with significant police presence and repression at metro stations, leading to clashes and reportedly one death.
Violent protests exploded on Friday night and continued through the weekend. Metro stations were burnt and businesses were vandalized and looted. One estimate suggests several hundred million dollars in damages have occurred.
The government responded with a state of emergency, putting military on the streets in a number of cities and issuing a curfew.
At least 15 people are dead, hundreds injured among the police and protesters, and over 1,700 detained.
Piñera dropped the fare increase, but that failed to reduce the tensions.
The Piñera government announced new social spending including an increase in pensions in the hopes of placating the public.
Instead, unions have now joined the protest and are looking for even greater concessions from the government.
Nobody predicted this level of destruction.
Student protests are a regular occurrence in Chile. Chile’s high levels of income inequality mean a large portion of the public have not benefited from the country’s economic gains. Public discontent with the government’s economic policies is clear in the polling. All of that was known prior to the recent protests.
Following the protests, several excellent analyses of the reasons behind them have been written including this one by Patricio Navia in America’s Quarterly.
Still, even with that knowledge, the rapid escalation of the protests and the levels of violence caught everyone including the Chilean government off guard. These protests were far more destructive and disruptive than any previous round of protests since democracy returned to the country.
Small groups of very violent and destructive protesters made things worse
A small portion of the overall protesters engaged in significantly destructive actions and appeared to be provoking authorities into increasingly repressive responses in order to move public opinion. Those violent groups appeared well organized.
While that description is similar to my description of protests in Ecuador, one key difference is no key political organization in Chile represents the majority of the protesters. Moreno was able to negotiate with CONAIE and end the vast majority of protests in Ecuador while Piñera has no clear single group with which to negotiate. Additionally in Chile, no politician has successfully grabbed on to the protests as a way of opposing the Piñera government and positioning themselves for the next election (though Beatriz Sanchez and Marco Enriquez-Ominami are certainly among those trying to do so). That leaves the movement leaderless and without anyone to channel the protests into something more productive than burning infrastructure.
Chile has long had issues with small groups of anarchists and leftist activists who engage in violence, but the number of those individuals is far smaller than the number who engaged in violence over the past week.
Piñera’s response shows why he’s unpopular
Piñera attempted to differentiate between the protesters with legitimate grievances and those who are violent. However, Piñera claimed the country is “at war” and told Chileans they need to pick a side. The comments showed a lack of empathy, charisma, and leadership that make the situation worse. He later apologized for some of his comments, but the damage was done to both Piñera and Chile’s military.
Upcoming International Summits in Santiago
The protests create concerns for Chile’s ability to hold the APEC summit in November and UN Climate Change Conference in December. Leaders may question whether they want to appear at the APEC summit, scheduled to include meetings between the US and Chinese delegations about their ongoing trade war.
These two events were supposed to highlight Chile’s economic progress over the past three decades. Instead, Piñera must now scramble to make sure they are not a further embarrassment for the country and his presidency.
Venezuela update focused on oil issues
Russian media reported that Rosneft was considering taking over PDVSA operations. Other outlets downplayed that report, but suggested more modest efforts by the Russian oil company to reform and control PDVSA.
In an interview with the Financial Times, Elliot Abrams discussed the importance of Rosneft. There is an ongoing debate over if and how the US should sanction the Russian firm for its support for Maduro. The sanctions would be challenging given Rosneft’s important role in global oil markets.
The US granted several oil companies including Chevron a waiver in part due to the belief that cancelling US oil operations in Venezuela would only further increase the control by Russia.
China’s HQC has ended contracts with local service providers due to the difficulties of operating in Venezuela and managing the payment system in a way that is compliant with sanctions and Venezuela’s problematic economy.
Juan Guaido continues to look for ways to negotiate or legally prevent the seizure of Citgo assets if the PDVSA 2020 bonds go into default.
This is a long term battle for control over Venezuelan oil
In the short term, the Maduro regime must increase output and find buyers in order to have the money they need to survive. Many of the points above related to a longer term battle for control over Venezuelan oil in a post-Maduro environment. Russia, in particular, wants to make sure they have the physical and legal infrastructure in place that any future government, even one by Juan Guaido, will be forced to continue working with them in some capacity.
Corruption Corner
Honduras - Tony Hernandez was convicted on four charges including drug trafficking. The case exposed links between President Juan Orlando Hernandez and key drug traffickers in Honduras. Evidence was presented that drug money - including bribes from the Sinaloa Cartel - made its way into the National Party campaign funds and the president’s family’s personal bank accounts. Anti-government protests, which have continued all year at some level, increased over the past week in response to the conviction. While the US government response to the news of the conviction has been muted, the US has called for Hernandez to renew the mandate of the OAS-backed MACCIH.
The NYT covers the Hernandez’s social media campaign to manipulate the coverage against them. Hernandez has previously used social media posts and paid botnets to promote topics and attack domestic rivals. That infrastructure was turned against foreign reporters and commentators who were covering the trial. At the same time, major Honduran media outlets have downplayed their coverage of the trial because the owners are close to the president.
Reading List
America’s Quarterly - The entire magazine is dedicated to water issues in Latin America.
LA Times - Did jailing ‘El Chapo’ matter? In seizing a city, the Sinaloa cartel shows it’s still strong
NYT - Venezuela’s Water System is Collapsing
Business Insider - The US and Russia, and their fighter jets, are looming over Venezuela's latest dispute
FT - Evo Morales: ‘We are not a country of beggars any more’
Bloomberg - Infighting in Brazil’s Ruling Party Costs Bolsonaro Key Allies
Washington Post - Argentina’s economy is collapsing. Here come the Peronistas, again.
Washington Post - Disappeared in El Salvador: The return of a Cold War nightmare
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