Wed | Mar 3, 2021

Walter Molano | The 2021 regional political landscape

Published:Friday | January 22, 2021 | 12:17 AM
AP
Vice-President Maria Alejandra Munoz talks to reporters after she received the first 50,000 doses of the Pfizer vaccines at Mariscal Sucre International Airport in Quito, Ecuador, on Wednesday, January 20. Ecaudor will be the first of the larget Latin A
AP Vice-President Maria Alejandra Munoz talks to reporters after she received the first 50,000 doses of the Pfizer vaccines at Mariscal Sucre International Airport in Quito, Ecuador, on Wednesday, January 20. Ecaudor will be the first of the larget Latin American countries to hold presidential elections, scheduled for February.

With only three of the large Latin American countries slated for presidential elections in 2021, the political calendar appears to be light. However, a closer look shows a slew of local, municipal and midterm elections, as well as a pretty heavy schedule for Central America and the Caribbean.

Moreover, the lingering effects of the COVID-19 pandemic will certainly have major ramifications for the region, due to continued social distancing measures and travel restrictions.

As a result, aggregate gross domestic product, or GDP, is expected to decline 9.2 per cent. Countries which depend heavily on tourism, such as Costa Rica and much of the Caribbean, have been particularly hard hit. This has pushed millions of households into poverty.

The pain was partially offset in Central America and Mexico by an increase in remittances. Nevertheless, the economic distress will register on the political scene, boosting leftist and populist agendas.

Ecuador will be the first of the larger Latin American countries to hold presidential elections in 2021. They are scheduled for February 7. Andres Arauz Galarza, of the Unes party, is leading the field, with 36.5 per cent of the vote. The 35-year-old economist is a graduate of the University of Michigan. He worked at the central bank after returning to Ecuador, and never held public office. And he has become a close associate of former President Rafael Correa, and is his chosen successor.

One of the major electoral issues has been whether he will pardon the former president if elected, thus allowing him to return to the political scene.

Guayaquil businessman and former presidential candidate Alvaro Noboa is in second place with 23 per cent of the vote, and indigenous leader Yaku Pérez is in third place with 21 per cent of the vote. If no candidate wins in the first round, a run-off election will be held between March 19 and April 8.

Peru is the next large Latin American country to hold elections, which are scheduled for April 11. It has been in the midst of major political turmoil for the past few years – impeaching, prosecuting and imprisoning presidents. Not surprisingly, the inscription process has been very slow.

So far, a handful of lists have started to make their way through the process. The most prominent candidate is Keiko Fujimori, the polemic daughter of former President Alberto Fujimori.

Chile will be the last election scheduled in a large Latin American country. It is scheduled for the 21st of November. The country is in the midst of a controversial, and wrong-headed, rewriting of the constitution. The process is akin to opening a Pandora’s box, where anything can come out. So far, the political parties on the left have been quick to capitalise on the situation, and there is a fair chance that Chile will take a turn to the left. So far, the leading candidates have poll numbers in the single digits, hence it is too early to go into details. Nevertheless, Chile will be in the spotlight for most of the year.

Regarding midterm elections in the larger countries, Mexico and Argentina are at the top of the list. Mexicans will go to the polls on June 6 to vote for governors, mayors, local congressmen and other municipal positions and issues. President Andres Manuel Lopez Obrador will take the opportunity to tighten his grip on the levers of power.

The same will occur on October 24 in Argentina, as the Fernandez-Kirchner junta try to deepen their chokehold on the political apparatus.

Paraguay will hold municipal elections on October 10, but it should not have much of an effect on the country’s credit situation.

Honduras, El Salvador and Belize will hold elections this year. Honduras will hold general elections on November 28. At stake will be the fate of 128 congressional seats and 298 mayors. President Juan Orlando Hernández is ending his second term in office under a dark cloud of allegations, and cannot run again. The electoral slate is just starting to take shape, and there are no leading candidates so far.

Honduras is one of the better credits in Central America, but it could take a hit if more allegations of corruption and narcotrafficking charges come to the surface.

El Salvador will hold legislative and municipal elections on February 28. President Nayib Bukele will try to increase control of the legislature, a relationship that has been confrontational since he took office. This could be bad for the credit. Bukele is a populist, similar to Chavez, intent on seizing absolute power.

Belize, the real serial defaulter of the emerging world, will hold local elections.

In the Caribbean, Trinidad & Tobago will hold elections for its House of Assembly on January 25.

And Cayman will hold general elections on May 26.

Clearly, the pace of the economic recovery and the availability of vaccines will drive the electoral agenda in most of the region.

Dr Walter T. Molano is a managing partner and the head of research at BCP Securities LLC.

wmolano@bcpsecurities.com