Latin America’s leaders will have plenty of headaches

By Michael Reid: Bello columnist; senior editor, Latin America and Spain The Economist

FOR LATIN AMERICA’S leaders 2021 will be about steering economic recovery while fending off a debt crisis and trying to persuade their citizens that democracy can still deliver results. What are the prospects around the region?

With populations ravaged by covid-19 despite long lockdowns, many countries may have some degree of “herd immunity”. But the socio-economic consequences of the pandemic will linger: after economies contracted by 8% or so in 2020, Latin America will have some 40m “new poor”, taking those living in poverty to at least one in three of the population. Frustrations will show up in street protests—watch Argentina and Colombia in particular—and the threat of populist victories in elections. Armies may be called upon to play a more prominent role in enforcing order and propping up governments, though many will be reluctant. Even so, democracy, predominant in the region since the 1980s, could succumb in some places. Look out for El Salvador’s authoritarian president, Nayib Bukele, in that regard.

In 2021 most countries will struggle to claw back much more than half of the output lost. Recovery will be led by Brazil and some other South American countries. The damage will be greater in Mexico, where investors distrust the president, Andrés Manuel López Obrador. With public debt likely to start the year at over 80% of GDP, Latin America will be pushing for more aid from the IMF. Without it, the region will face recovery-crushing fiscal austerity or a debt crisis, or both.

Presidential elections in Ecuador (February), Peru (April) and Chile (November) could see populists winning, though conservatives have a chance, too. In Ecuador, Rafael Correa, a leftist populist who ruled from 2007 to 2017, is barred from running by his conviction in absentia for corruption. He hopes to return via a proxy candidate, Andrés Arauz, a young economist. Mr Arauz faces a tough fight against Guillermo Lasso, a conservative banker, and Yaku Pérez, an indigenous leader. Peru’s election is wide open and may result in the triumph of a political outsider. In Chile, a bulwark of capitalist stability until it was shaken by protests in 2019, the election will take place in parallel with deliberations on a new constitution, which is likely to give a bigger role to the state in health care, education and pensions. The left will mount a strong challenge for the presidency but may lose to Joaquín Lavín, a mildly populist conservative. Mid-term legislative elections in Argentina (October) and Mexico (June) will provide an important pointer to the strength of the presidencies of Alberto Fernández, a moderate Peronist, and Mr López Obrador.

Will change come at last to Latin America’s leftist dictatorships? In Cuba the Castro dynasty will formally come to an end after more than 60 years. At a Congress of the ruling Communist Party in April, Raúl Castro (aged 89) will step down as its first secretary, having handed over the country’s presidency in 2019 to Miguel Díaz-Canel, a younger party bureaucrat. (Raúl inherited both jobs from his elder brother, Fidel.) Cubans will be watching to see whether Mr Díaz-Canel becomes head of the party too, or whether he will share leadership, and whether the Stalinist or reformist wing of the party comes out on top in the new politburo. The Castros aren’t quite finished: Raúl’s son, Alejandro, runs the intelligence services.

Nicaragua’s dictator, Daniel Ortega, will use an election in November to inaugurate his dynasty, seeking to turn his eccentric wife, Rosario Murillo, into his successor as president. Electoral fraud is guaranteed, and so is a new wave of protests.

Venezuela’s political conflict will enter a new phase in 2021. The mandate of Juan Guaidó, the opposition speaker of the National Assembly who is recognised as “interim president” by almost 60 countries, ends in January. Nicolás Maduro, the country’s dictator, has divided the opposition. But he has run out of money, thanks partly to American sanctions. Having so far failed to oust Mr Maduro, the United States may negotiate with him to try to achieve a return to democracy. The United States is due to host the ninth summit of the Americas, involving all countries in the hemisphere, at some point in 2021. Venezuela will be at the top of the agenda.

Michael Reid: Bello columnist; senior editor, Latin America and Spain The Economist ■

This article appeared in the Americas section of the print edition of The World in 2021 under the headline “Between the virus and the vote”