Six stories - 1 May 2025
Do the elections in Ecuador and Canada show us leaving the global anti-incumbent environment?
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In today’s newsletter:
T&T
Canada
Did we leave the anti-incumbent environment?
Haiti
Venezuela
Stablecoin credit cards and Argentina
Feel free to respond to this email with feedback, comments, and questions.
This week’s most important election took place after the prime minister for the past decade resigned, and the new prime minister called snap elections. Obviously, I’m talking about Trinidad and Tobago.
During Monday’s elections, the opposition United National Congress (UNC), led by Kamla Persad-Bissessar, defeated the ruling People’s National Movement (PNM). Stuart Young, previously the energy minister, had taken over the prime minister spot after PM Keith Rowley stepped down. Young only held the position for 43 days. Persad-Bissessar, who served as prime minister from 2010-2015, will now return to the top spot in the country.
The UNC won 26 of the 41 seats in parliament. The PNM won 13 seats, while two previous PNM seats went to the Tobago People’s Party (TPP). The end result is an overwhelming win and mandate for the UNC and Persad-Bissessar.
Why did the opposition win?
Security problems - T&T is among the most violent nations in the world in terms of homicides per capita. The country has been under a state of emergency for several months due to gang warfare.
Economics - High unemployment and high inflation drove citizen anger at the ruling party.
Incumbent fatigue - Ten years in office for any ruling party generally leads to a desire for change, particularly when things aren’t going great.
One issue to watch will be whether this impacts T&T’s foreign policy and, in particular, its relationship with the Trump administration. The PNM was pragmatically friendly to the Maduro regime in Venezuela and had been trying to develop joint oil and gas projects with PDVSA. Persad-Bissessar is less friendly toward Maduro and seems open to negotiating with the United States for trade and security assistance. In turn, the Trump administration may ask for energy deals or a different policy towards Cuba or Venezuela. Foreign policy was not a high priority in the campaign, but the outcome could lead to a shift in how the country approaches the US, Venezuela, Guyana, Caricom, and Haiti.
In the other election this week, Prime Minister Mark Carney held on to his position as Canada’s prime minister. Canada’s Liberal Party will form a minority government and Conservative leader Pierre Poilievre failed to even win his own riding in Ontario.
If Trinidad and Tobago’s election looks like many other anti-incumbent elections in the hemisphere over the past seven years, Canada’s looks like a sea change in the other direction. I don’t usually cover Canada in this newsletter, but what occurred in the election there is important for thinking about Latin America in the coming two years.
This should have been a simple anti-incumbent narrative and an obvious victory for the Conservatives. Instead, Donald Trump’s chaos, tariffs, and anti-Canada rhetoric turned Canadians against a Conservative Party that had begun to lean too pro-Trump. It also awakened a nationalism within Canada (even Quebec) and within the Liberal Party that will change the political debate for the next decade.
Privately, much of Latin America and the Caribbean is thrilled. A year ago, before Trump, the region was probably neutral on whether there was a change in Ottawa. Now, most of the region welcomes a Canada that is aggressively pushing back against the US and looking for economic agreements to rebalance the trade war. Even Mexico, where business leaders and diplomats remain resentful for what they perceive as poor treatment during the final months of the Trudeau administration, seems eager to work with Carney. Sheinbaum is likely glad she doesn’t have to deal with a Trump-pleasing Poilievre government as Mexico’s other USMCA partner. Far better to have the other US neighbor pushing back aggressively and potentially aligning with Mexico in the process.
The incumbent victories in Ecuador and Canada in 2025 look different from the incumbent victories in 2024. I could explain incumbent party wins in Mexico, El Salvador, and the Dominican Republic as simple exceptions to the anti-incumbent trend in that they were pro-incumbent votes by a president/party that dominated the political space. Voters were happy with the people in power and voted to keep them. In contrast, both Ecuador and Canada had all the hallmarks of an anti-incumbent atmosphere - a weak economy, a president/PM polling below 50% approval, and a population demanding change/improvement on various key issues - before the ruling party pulled off a victory.1
Yet, Ecuador’s and Canada’s incumbent victories also look quite different from each other.
In Ecuador, the president ran on stability, promising to improve security amid the chaos of gang violence, economic recession and blackouts. Daniel Noboa made a bet that while people want improvements, they did not want radical change at a moment when the world feels chaotic. The fear of radical change was an attack that he was able to use against his opponent. He also ran on a relatively pro-Trump agenda. He promised to bring in US military and private security contractors. He is banking on his relationship with Trump to promise better trade deals and keep the IMF money flowing. He visited Trump just weeks before the election, getting a photo at Mar-a-Lago that amounted to an endorsement from the US president.
Canada was the exact opposite, an election in which the incumbent party ran hard against the US president. I think every analyst agrees that the anti-Trump message succeeded and is the singular reason for the Liberal Party’s success among voters. The Conservatives tried to pivot away from Trump, but simply could not pull it off.
Take the above two examples, and you end up with at least three explanations for why we might shift away from the anti-incumbent environment regionally/globally.
Voters see the global chaos and want stability, leading them to vote to keep leaders in power.
Voters want leaders who can work with the US under Trump given how transactional the US is. Better to have an alliance with Trump than draw his anger.
Voters see what is happening in the US and want to aggressively counter Trump and politicians who look/act like Trump.
Those are three very different explanations, and the two of them directly contradict each other. It’s not a cohesive theory, nor is it explanatory. It doesn’t lead to a clear model to predict how things will turn out in Honduras, Bolivia, Argentina, Chile, Colombia, Brazil or any of the other elections in the coming 18 months. And none of those points played out in T&T.
It’s still worth keeping the three narratives above in mind while thinking through how to understand the upcoming elections. The chaos that Trump has brought to the global environment has shaken up simple explanations that voters will reject leaders facing tough economic conditions. Parties in power facing pressure from voters are going to play to either the Ecuador or the Canada model of campaigning in the coming two years. Domestically, they will try to demonstrate stability to counter global chaos. And as foreign policy plays a bigger role in many elections, they will run either to make deals with or fight back against the US president.
At the very least, a few elections into 2025, this now appears like a different environment from the nearly unbroken string of anti-incumbent elections we saw from 2018-2023.
This week’s World Politics Review column is a pessimistic analysis of the current situation in Haiti:
The gangs are about to win within months if not weeks. That is a dark analysis, but likely accurate, and analysts must not just warn that Haiti might collapse but begin thinking about what it means for Haiti to be under the full control of violent gangs instead of a recognized government.
In making a prediction like this, one thing I want to do is pre-mortem it. If it turns out a year from now that I’m wrong and the Haitian government is still firmly in control and making progress against the gangs, what did I get wrong?
One reason would be potentially underestimating the capabilities of the police, military or foreign forces in Haiti. It’s possible that they are far more numerous or capable than I give them credit for and can manage to fight back.
A second explanation would be that I’m overestimating the capabilities and coordination of the gangs. It’s possible that from outside the country, they look like a bigger threat than they are. Their infighting and lack of professional coordination could lead their offensive to falter. It could also be a situation where they simply lack the experience and bureaucracy to govern the territory they try to control, leading them to fail relatively quickly once they attempt to run a city. It’s harder to build that destroy after all.
A third scenario would be a wild card foreign intervention. It’s possible that some country or multinational coalition chooses to come in and attempt to fix Haiti after a specific red line is crossed but before the transitional government falls.
I don’t think any of those three points are true, but if I end up wrong, it’s probably because I misjudged one of those three.
Human Rights Watch published an important report on Venezuela’s repression since last year’s election. The report includes documented cases of extrajudicial executions and torture. It highlights the role of paramilitary gangs and colectivos in the repression. The Maduro regime, of course, has tried to cover up much of the evidence and has refused to assist in the investigations of the grave abuses.
You know all these allegations in general terms. But there is a real value in getting this info documented in detail, case by brutal case. Take a minute to open up the 104 page report. You’re not going to read it all. But scroll somewhere in the middle and pause to read a page of what documented evidence of mass human rights abuses looks like in detail and with all the footnotes.
Visa is launching a credit card in six Latin American countries (Argentina, Chile, Colombia, Ecuador, Mexico, Peru) that will allow users to spend stablecoins. Mastercard also announced a stablecoin credit card initiative, though not directly related to Latin America.
I was thinking about this in the context of Bloomberg’s reporting that Argentines are beginning to deposit dollars in banks again. While a billion more dollars is a lot, it’s also quite little compared to the amount of dollar savings likely hidden in Argentina. Trust is low because the government once seized everyone’s dollar-denominated bank accounts, converted them to pesos, and then devalued. That means Argentina has some of the world's largest dollar holdings outside of formal banking systems, and that includes stablecoins. Milei wants dollars to be formalized in the system, but tech-savvy Argentines with dollar savings may now choose a credit card linked to stablecoins rather than a local bank account. There are some interesting potential impacts on Milei’s economic plans as the fintech ecosystem competes for the dollar holdings.
The other thing these credit cards potentially do is reshape cross border cash transfers. Rather than use traditional money transfer companies, it’s hypothetically a lot cheaper to transfer stablecoins and make sure your friends, family, and contractors have a card that can use them. Crypto enthusiasts have been touting how the technology can displace money transfer for years. So far, the numbers have not moved anywhere near as much as predicted. But eventually they may be correct. Getting big credit cards (with their compliance systems) into the game rather than the mess of crypto wallets is a step in that direction.
Thanks for reading.
Yes, you can blame weak oppositions in both cases, but it’s better as a post-hoc analysis than anything predictive. Defining “weak opponent” is not a simple variable.