Up Front

The Upcoming Electoral Cycle in Latin America in the Midst of Social Unrest: What Lies Ahead?

Ernesto Talvi and Harold Trinkunas

Latin America and the Caribbean will celebrate at least 12 major national elections before the end of 2014. This is good news. It reflects a region that has by-and-large consolidated democracy, and where an entire generation has now grown up with the expectation that elections are the only legitimate way to select national leaders.

However, this cycle of elections in Latin America is taking place at a very different juncture than the ones that took place during the first decade of the 21st century, with important consequences for the geopolitical and economic dynamics of a region where democracy itself still faces significant challenges.

Latin America — particularly the commodity-exporting and less dependent on the U.S. economic cycle — had close to a decade of exceptional growth, doubling its long-run average. This period of exuberance was underpinned by sound macroeconomic policies, but largely propelled by cheap and abundant foreign inflows of capital and high commodity prices. High growth and active redistribution policies made possible by plentiful fiscal resources led to a 13 percentage point decline in poverty rates, 5 percentage point decline in extreme poverty rates and the emergence of an incipient middle class. The natural consequence was that in the previous electoral cycle, salient presidents generally ended their terms with very high degrees of popularity.

Two years ago, Latin America’s growth rates started to cool off substantially as growth in key emerging economies lost steam, commodity prices weakened and, more recently, international financial conditions tightened. Lower growth and less abundance of resources to redistribute led to the increasing frustration of the electorate, which, in many cases, manifested itself in spontaneous social protests, such as those that erupted Chile, Colombia, Brazil and Peru, while in others it manifested as prolonged conflicts for budgetary resources.

This cycle of elections will thus take place at a moment when social and political contestation is on the rise and, in many cases, reflects the concerns of an emerging but still vulnerable middle class that not only fears for its economic well-being, but is also dissatisfied with the quality of government services and personal security. As a result, incumbent presidents in the current electoral cycle are much less popular than their predecessors at the same point in their terms. For example, the current Brazilian incumbent Dilma Rousseff is much less popular going into this election than her predecessor Luiz Inácio Lula da Silva was.  The same goes for other current presidents, for example, President Juan Manuel Santos vs. former President Álvaro Uribe in Colombia; Sebastián Piñera vs. Michelle Bachelet in Chile; José Mujica vs. Tabaré Ramón Vázquez in Uruguay; and Cristina Kirchner I vs. Cristina Kirchner II in Argentina.

The new wave of leaders to be elected in the next 14 months will have to deal with a more adverse external environment, stricter financial constraints and significant economic challenges. Reigniting growth will require domestic transformations that are politically complex (e.g., education reform in Mexico) and take time to produce effects. At the same time, preserving macroeconomic stability and fiscal probity at a time when a dissatisfied electorate, with high expectations due to a decade of very high growth, will put pressure on governments to accommodate immediate popular demands at the expense of sound policies. How these tensions are resolved will be key in determining the economic prospects of the region in the coming years.

On the other hand, democracy itself faces major challenges. Although they no longer benefit from the tailwinds provided by a decade of economic exuberance and in spite of a loss in popularity, incumbents and familiar faces are still favored to win upcoming elections. Given the level of dissatisfaction registered in public opinion polls, the predicted outcomes reflect the power of incumbency across Latin America and the Caribbean.  In a small number of states this is the result of creeping authoritarianism. In others, electoral rules and campaign finance laws may need reform to ensure a scrupulously level playing field for all political contenders.

Moreover, dramatic levels of criminal violence in Mexico, Central America, Venezuela and some Caribbean island states have heightened public concern not only over personal safety but over the capacity of organized crime to challenge the institutional power of the state. As a result, there is already an increasing diversity of policy responses to criminal violence and organized crime. Mexico’s new administration has reconsidered confrontational tactics against organized crime. Colombia, Guatemala and Uruguay have raised questions on the global consensus on drug policy and called for greater attention to the possibility of decriminalizing some narcotics. El Salvador has experimented with fostering a truce among its highly violent gangs, raising the possibility that governments may facilitate agreements among criminals to reduce conflict, in spite of the impact this may have on the rule of law. The lack of success of many existing counternarcotic and anti-organized crime efforts in the region will only prompt further experimentation by governments, with uncertain outcomes.

Finally, the region enters into this electoral cycle increasingly divided geopolitically, with the members of the Pacific Alliance (Chile, Peru, Colombia and Mexico) deepening their commitment to free trade, free markets and a fluent relationship with the U.S., while the large members of Mercosur (Brazil, Argentina and Venezuela) remain committed to protectionism and to a more adversarial relationship with the U.S.

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To summarize, the region is at a decisive juncture. For better or worse, in the next decade we will witness the emergence of a very different Latin America than the Latin America we saw in the previous one.