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Latin America in 2015: the political prospects

In this year’s electoral agenda of Latin America, of special note are the three presidential elections (in Argentina, Guatemala, and Haiti), three legislative elections (in El Salvador, Mexico, and Venezuela), and several municipal elections, in Uruguay, among others. Latin America is starting off 2015 with a clear economic slowdown.

The world economy is not helping and the downward trend in raw materials prices, are factors that work against the region today. The presence of two geo-economic blocs and the influence of the global powers will be important issues for Latin American countries during the year.

In Argentina, President Cristina Fernandez de Kirchner cannot be re-elected and the opposition is ahead according to voting-intention polls. But a split opposition, as it is now, could give an advantage to the governing party. The country has a particular electoral system. The Constitution establishes that there is no runoff if, in the first round, a candidate obtains at least 40% of the vote and is ahead of the second rated by more than 10 percentage points. Not even in Guatemala is President Otto Perez Molina’s re-election possible. The country has generally been governed by centre-right representatives, and this is unlikely to change.

With regard to Haiti, a country characterized by strong political instability and high rates of poverty, President Michel Martelly marks the first President in the Haitian history who was not forced from office before his term ends. In Uruguay, after the re-election of President Tabaré Vázquez, local elections will be held next March, the leftist coalition Frente Amplio is very likely to win in most departments. The legislative elections in Mexico and in Venezuela will also be of key importance in the field of governance. A few months ago,

in Mexico, Enrique Peña Nieto and the PRI faced this event clearly ahead of the opposition; they were going to achieve an absolute majority without any alliances. However, recent events such as the massacre of 43 students in Iguala, and the country’s weak economy clouded the aforementioned outlook, and could threaten the reforms project the government has been promoting since 2012. In Venezuela the legislative elections that will take place in the late 2015 are a great opportunity for the opposition, since Nicolás Maduro’s popularity has deteriorated considerably during the last months and the economic situation has worsened as well and, quite possibly, will continue declining throughout 2015. Also El Salvador will hold local elections.

The elections in Latin America will take place in a changing economic cycle marked by slowdown, volatility, devaluation of the local currencies and drops in the prices of export raw materials. In this context, economic growth will barely pick up speed this year. In 2014 the lowest economic growth rates were recorded since the 2008-2009 crisis. The two largest economies of the region, Brazil and Mexico, which together make up two-thirds of the region, are expected to have a low market growth this year, despite Rousseff, who was sworn into her second term in office, last January, and is planning to implement key reforms similar to what Mexico has done under Peña Nieto.

In turn, Argentina and Venezuela are expected to be in recession with high inflation rates. Brazil, Mexico, Argentina and Venezuela all together account for three quarters of the economy of the 20 Latin American countries. Social indicators, such as job creation, poverty levels, rising middle class and so on, will not show any relevant recovery during 2015. Not even some significant improvement in solving the three structural plagues of the region, insecurity, inequality and corruption is expected. With regard to the first two problems the region has the worst rates in the world, while in general Latin America is below the world average on the Corruption Perception Index; the region in fact ranks second last. Venezuela will not have an easy strategy to avoid default, while Argentina with a new administration taking office in December 2015 may succeed in avoiding or at least postponing its “technical” default.

The international game of power in the region and its division into geo-economic blocs will be central issues. The US will try to regain positions in Latin America, although Washington’s interests will remain mainly focused on the third of the region which is north of the Panama Canal. The re-establishment of relations with Cuba will allow Obama to use the April 2015 Summit of the Americas as a diplomatic opportunity to finally fulfil a commitment he had previously made to the Latin American countries to advance and consolidate a more fruitful relationship with Cuba.

It is hard, however, to think that a Republican-led Congress will lift the embargo on Cuba, also considering that Obama’s efforts to pass an immigration reform have been stalled in Congress, thanks largely to Republican Party lawmakers. The visit of the President of Brazil to Washington as head of State in September, will involve the rebuilding of the bilateral relationship, altered by the leak of electronic espionage. China will continue to increase trade and investment, not only in South America, as it did in the first decade of the twenty-first century, but also in Central America, Mexico and the Caribbean, as the plans of a Chinese company to build a canal across Nicaragua show.

Russia, trying to compete with the US, will try to establish strategic agreements with Latin American countries, such as Venezuela and Argentina, but its policy will not be facilitated by the new diplomatic links between Washington and Havana. While China will continue to improve investments in infrastructure (railways, hydroelectric dams, roads, etc.), Russia will try to sell weapons and advanced technologies, also in the nuclear field. The Pacific Alliance (the Pacific coastal countries generally embracing more open economies) and Mercosur ( the Atlantic coastal countries with more protectionist economies) will remain relevant realities. It will not be an easy task trying to narrow the gap between the two competing trade blocs. (R.F.)

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