Latin America Risk Report - 30 January 2019
Bukele likely to win El Salvador's elections; Maduro not likely to remain in power
In this week’s edition:
Venezuela stability analysis
El Salvador elections this weekend
Vale dam vs Bolsonaro’s environmental policy
This week’s newsletter to paying subscribers focused on the current situation in Venezuela. The summary is the first article below.
Venezuela stability analysis
Hxagon’s model shows a 60% chance that Maduro leaves power in 2019. That is up from around 35% at the beginning of the year. I’ve been running some form of prediction model about potential political change in Venezuela for over five years and this is the first time that the probability has risen above 50% for potential change in the coming 12 months.
The shift is due to five things that have occurred in recent weeks:
The unprecedented change in recognition to President Guaido by a large number of countries.
The fact that the change in recognition is leading to a change in financial flows for the Maduro regime including the sanctions announced by the US government Monday.
The fact Guaido has not been detained by security forces (other than a very brief detention by Sebin), suggesting divisions within the chain of command and confusion over strategy by Maduro and his inner circle.
Reports suggesting divisions within the top levels of the military and at lower levels of the security forces. While the military leadership are not flipping to Guaido, there is significant discontent with Maduro.
The strength of protests in areas of the country that used to be strongly in favor of Maduro.
For more on the factors that could push Maduro out or allow him to re-consolidate control, subscribe and read the full report here.
Bukele likely to win El Salvador presidential election
El Salvador’s election is this Sunday, 3 February.
The poll numbers have barely moved in the final two months of the election. That is in spite of Bukele failing to attend debates and reports of corruption that have refused to dent his popularity. Nayib Bukele retains a 20 point lead over his nearest competitor. His lead is undoubted; the only question is whether or not he will pull off a first round victory. With over 15% still undecided or refusing to respond to pollsters, Bukele has 46% of support. Once the remaining undecided voters are factored in, Bukele is more likely than not to win over 50% in the first round.
This newsletter covered the Salvadoran election back in December.
Vale dam breach could impact Bolsonaro’s environmental policies
The bursting of a tailings dam near a Vale-owned mining site has been the biggest news of the week in Brazil. Though President Bolsonaro himself is out of the media picture while recovering from surgery, the Bolsonaro government has responded with promises of tough action against Vale and the potential to target similar dams for regulation.
The government response is understandable given the anger in Brazil over this tragedy. However, Bolsonaro came to office promising to roll back regulations on environmental protection and many of his wealthier supporters do not want to see increased regulations. This sets up a big test for the government and environmental activists. Two months from now, when this issue is no longer in the headlines but the effects continue to hit the region, will the Bolsonaro administration hold to its promises to act or will it go back to an anti-regulatory posture when it comes to issues that may cause environmental damage?
Corruption Corner:
Among countries that declined were Mexico and Colombia, both of which saw a worsening perception of corruption in an election year in which corruption was a key voter issue. Any sentiments regarding the new administrations, particularly in Mexico, will not be picked up until next year’s survey.
One country that improved was Argentina. Since the 2015 election brought Macri to power, most of the corruption scandals have involved prosecutions of officials in the government of former President Kirchner rather than the current administration.
Brazil - The wife of President Jair Bolsonaro is also under investigation for corruption, adding to the allegations that are hitting the Bolsonaro family and threatening his image as a reformer.
Reading list:
Stephanie Leutert and Shaw Drake, NYT - ‘We Are Full’: What Asylum Seekers Are Told
Foreign Policy - The U.S. Sought to Derail Michelle Bachelet’s Bid for Top U.N. Human Rights Job
Eugenio Sosa, AulaBlog - Honduras: Will Political Reforms Go Anywhere?
InSight Crime - Ecuador Warned of Potential Cross-Border Attack by ELN
Confidencial (Nicaragua ) - El colapso económico ya comenzó
Alejandro Hope, El Universal - Will there be a National Guard in Mexico?
Michael Shifter, NYT - Can Venezuela Have a Peaceful Transition?
Michael Camilleri and Fen Osler Hampson, Washington Post - Seize the money of Venezuelan kleptocrats to help the country and its people
Thanks!
It’s been a busy few weeks of news out of Latin America and there is more I’d like to expand upon. Your feedback influences which topics I cover. Please email me with your comments, questions and requests for future coverage.