In this year, democracy will once again be challenged in Latin America. Six different countries will hold presidential elections, and more than ten will celebrate parliamentary ones. The latter will have macroeconomic consequences for the development of the region. Investors expect a massive shift in financial markets…again.
Political transitions are considered large economic drivers in Latin America. These transitions can go from one regime extreme to the other in a matter of months. Due to the heterogeneity of the main political parties, the countries suffer major changes in their social structure within a short time frame. These ups and downs have improved economic growth in some countries; but they have also driven major economies to the verge of collapse.
Mexico in the 1990s is a good example. It was considered a major investment destination due to its heavy economic potential and the recent opening of its markets following the NAFTA agreements. But in March 1994, the assassination of the then favourite presidential candidate Luis Donaldo Colosio, triggered a total loss of trust in Mexican markets, yielding huge outflows of funds. The resulting crisis, known as The Tequila Effect (for common reasons), had significant consequences for its neighbouring economies, culminating in a bailout package coordinated by the United States and the International Monetary Fund. President Bill Clinton pursued congressional approval for a $50 billion bailout deal, that aimed to decrease the immigration rates at the southern border and to boost investors’ confidence in the country. The crisis left a deep scar in the history of Mexico’s economy, but its trigger gave rise to the question; Is Mexico really a democracy? According to the Mexican National Electorate Institute, 42% of citizens do not trust authorities, and more than half believe elections are a mere protocol, with no political gains.
Mexico is only one example of a Latin American country that has almost given up on democracy. Less than one third of Colombians consider their country a democratic state. More than 55% of Brazilians believe they would not mind having a non-democratic state as long as it solved problems. Paraguay, although finally achieving democracy after the fallout of dictator Alfredo Stroessner in 1989, now believes at a 50% level that undemocratic governments have been better than their counterparts.The list goes on and on, and after more than 150 years of independence, Latin America seems to not be able to adapt to any political order.
Chile has suffered the fist of extreme capitalism, ending up in the disappearance of thousand of civilians. “Communism” in Cuba, has resulted in economic embargos that have halted internal development. “Socialism” is now raising inflation rates above five-digit percentage levels in Venezuela. As for some begin to wonder: Is it time for Latin America to begin developing its own economic and political order instead of following Western ideals? It seems that the answer lies in the upcoming elections, when major political shifts, along with an antagonism from the current US president Donald J. Trump, will merge to realise what society is demanding now.
In the case of Colombia, Peace Nobel prizewinner Juan Manuel Santos has been president of the country for eight years already, making him unable to run again. His main inheritance to Colombia was the signing of the peace agreements between the government and the Revolutionary Armed Forces of Colombia (FARC), who have threatened national peace for over fifty years. These agreements however, turned the FARC organisation into a political party, and they have already selected their main candidate. Although national statistics show that FARC do not show a significant percentage of followers, it is forecasted to increase its influence. This could have severe consequences in the near future of Colombian democracy due to the extremism of their ideals.
Brazil, the largest economy in the region will celebrate elections on October 7th. Brazil has recently been infested by huge corruption scandals. Going from an impeachment of their last elected president Dilma Rousseff in 2016, to the current most famous corruptive organisation. Odebrecht Organisation is a Brazilian conglomerate consisting of diversified businesses; however, in 2017 it was charged with heavy cases of corruption not only in Brazil, but also in the whole Latin America. Among its corruptive operations are the illegal payments made to various presidential campaigns. It is also involved in venues constructed for the 2016 Olympics, the 2014 World Cup and more than one dam and airport terminal in the region. Its influence culminated in the resignation of the last elected president of Peru, Pedro Pablo Kuczynski (PPK), once again turning one of the steadiest economies in Latin America, into a political crisis. The Brazilian society must now swallow its pride and try to go to the polls on October 7th.
The outcome of the upcoming election will heavily depend on the judicial future of former president Lula da Silva. Lula created a period of constant economic growth and his social policies have helped millions of people out of poverty. However, his legacy took a big hit when various corruption allegations emerged against his leftist Workers’ Party. He is currently leading at the polls, but if the court of justice upholds him unanimously, he will be disqualified from aspiring to elective office. Without Lula, however, the electoral competition will have a more even outcome
Cuba this year is the keystone of democracy. It will hold presidential elections in April and will be the first time in over 60 years that the presidential chair is not occupied by a member of the Castro family. Current vice President Miguel Diaz Canel is considered the favourite for the role. Appointed in the Communist Party (the only party allowed in Cuba), Canel follows a history of closeness with Fidel and Raul Castro, a good reason to believe that little to nothing will be the change affecting the Cuban society. Furthermore, Raul Castro is to remain in power by occupying the role of the head of the Communist Party. Hence ensuring the values of the revolution are not faded away, and establishing a good remainder that the Castro family will not be soon forgotten.
Mexico is no exception to this electoral trend. July 1st will be the date when Mexicans will go to the polls to elect their new president. A country that ever since its independence, has never elected a left-wing party for its presidential mandate, is beginning to believe it may be time for Mexicans to try some of that leftist taste. Andres Manuel Lopez Obrador, a left-winger, is the favourite candidate to win the upcoming elections. If he doesn’t, however, he will have lost three consecutive times as a presidential candidate. That’s right, a third time runner is the favourite to lead the country. Many political advisors wonder if the presence of a leftist will yield detrimental economic consequences similar to those of Venezuela when Hugo Chavez raised to power. The Mexican peso is already fluctuating according to this political pattern. It shows appreciation relative to the USD when Lopez Obrador goes down a few points, and depreciation when he manages to increase his popularity rates again.
The presence of a leftist in a neighbouring country is nowhere close to what the US needs. A country that has long antagonised with leftist regimes cannot allow a radical change of administration in its southern border. Therefore there is speculation about US intervention in Mexican elections. Similar to that of Russia in the US ballots.
It is with no doubt an important year for democracy in Latin America, and whether or not the ballots reflect the people’s needs, it is essential that the new administrations work from and for the people. Due to the critical levels of corruption that have filled citizens with discontent and regret, politicians must now avoid bribery scandals at all costs.