Latin America Advisor

A Daily Publication of The Dialogue

What Does the Year Ahead Have in Store for Latin America?

Photo of Luiz Inácio Lula da Silva Among the biggest news stories of the past year in the region was the election of Luiz Inácio Lula da Silva as president of Brazil. Lula returns to the presidency on New Year’s Day. // File Photo: Facebook Page of Luiz Inácio Lula da Silva.

The past year in Latin America and the Caribbean has been marked by major events including the comeback of Luiz Inácio Lula da Silva, who in the span of three years went from a prison cell, where he served more than a year and a half, to becoming Brazil’s president-elect. Also in 2022, the region saw the election of Gustavo Petro, a former guerrilla, as the first leftist president of Colombia, the ouster of Pedro Castillo as Peru’s president after a chaotic 16 months in office and increasing instability in Haiti, where gangs tightened their control over territory and the country’s government appealed for international help to stop them. What will be the most important political hot spots to watch in the region in 2023? Where will political risk be on the rise in Latin America and the Caribbean in the coming year? What lessons should the region’s leaders take from 2022 into 2023?

Michael Shifter, senior fellow and former president of the Inter-American Dialogue: “In 2023, a rough global outlook, together with the region’s dire economic conditions, social distress, political divisions and institutional weakness, are unlikely to temper the turbulence that dominated the region in 2022. Peru’s instability will persist, though hopefully the decision to hold new elections in April 2024 will help calm the waters. The declared war on gangs and states of emergency in El Salvador and Honduras are not expected to end any time soon. Guatemala’s 2023 election offers virtually no hope that the deterioration in governance and spread of organized crime will abate. Haiti’s multiple, unrelenting crises pose a conundrum, with no good policy options to curb violent gangs and create minimal conditions of governance. In 2023, Lula’s ability to govern and enact his agenda in a bitterly divided country with a powerful Congress will be complicated and challenging. In Venezuela, where Chavismo has presided over the destruction of a country with the world’s largest refugee flows, negotiations between the opposition and the government are expected to yield clues about whether a presidential election will take place in 2024—and under what conditions. Argentina, which in October 2023 will hold Latin America’s most closely watched election, has helped define the region’s shift to the right with Mauricio Macri in 2015, and to left with Alberto Fernández in 2019. The electoral outlook is uncertain and will test the remarkable streak of anti-incumbent victories in Latin America. Fortunately, though democracy is under severe stress, it remains resilient, as reflected in the institutional responses to the fraught Brazilian elections and to Peru’s attempted self-coup in 2022.”

Jennie K. Lincoln, senior advisor for Latin America and the Caribbean at The Carter Center: “2022 brought signs of hopeful change for the hemisphere, which is facing a decline in democracy. The world was coming to grip with the pandemic, multiple elections were on the horizon and the Biden administration hoped that the Summit of the Americas would help repair U.S. relations with Latin America and the Caribbean. Poverty, corruption, migration, institutional weakness and rampant disinformation are issues that have challenged every government. The 2022 report from the U.N. Economic Commission for Latin America and the Caribbean notes that 32 percent of the inhabitants of the region, 201 million people, are in poverty, with almost half in extreme poverty. Transparency International’s Global Corruption Barometer reports high levels corruption with citizen distrust of governmental ability or willingness to respond. Migration continued to increase with pressures throughout Latin America, not just on the U.S.-Mexico border. Calls to address root causes of migration have required time and resources. Meanwhile, the region has grappled with the migrant flows that increased in number and diversity. Nicaragua became tragic with political opponents, business leaders and now priests in prison. Prayers for divine intervention—or at least the pope’s—bore no fruit. The Ortega regime surpassed the Somoza dictatorship in cruel control. Haiti’s human condition also fell to depths of despair with no functioning government and the international community struggling to determine a response, yet again. Old problems remain. New leaders—Boric in Chile, Petro in Colombia, Lasso in Ecuador and Lula in Brazil, will face the polarized societies that gave them narrow victories. Peru’s removal of Castillo is the latest example of the fragility of democracy at risk. Will Venezuela’s government and opposition shifts address entrenched polarization? How will elections in Argentina and Guatemala confront electoral disinformation? 2023 will bring more challenges of polarized politics, a condition that will persist.”

Peter DeShazo, visiting professor of Latin American, Latino and Caribbean Studies at Dartmouth College and former U.S. deputy assistant secretary of state for Western Hemisphere affairs: “Latin America and the Caribbean in 2023 will be confronted by a confluence of longstanding challenges exacerbated by current trends. Economic growth is projected to slow to less than 2 percent at a time when the region is still recovering from the ravages of Covid-19 and is beset by high inflation, poverty rates above pre-pandemic levels and lesser state capacity to employ deficit spending to address social needs. Weak public confidence in government capability and the perception and reality of widespread corruption in many parts of the region facilitate populists on the far left and right, polarizing politics and hollowing out the political center. Organized crime is deeply entrenched in some countries. Social and economic inequality remain embedded. These factors conspire to undermine state authority, effective governance and political stability. Political risk in the region in 2023 and beyond will be influenced by how countries deal with these challenges, the quality of macroeconomic policymaking, progress in building societal consensus and by exogenous factors such as global demand for the region’s commodities. Haiti is in a class of its own in terms of proximity to failed state status. Peru’s chronic political disarray threatens a high performing economy and deepens social tension. The extreme vulnerability of the Northern Triangle of Central America to natural disasters places those countries at constant risk. Unpredictable shocks—such as Chile’s political crisis in 2019—are potentially more likely in the region under current circumstances.” 

Beatrice Rangel, member of the Advisor board and director of AMLA Consulting in Miami Beach: “The defeat of incumbents was written on the wall after Covid-19 ruptured the thin veil that covered massive deficiencies in the delivery of public services. Thus Boric, Petro, Lula and Castillo could easily ride the crisp sea of discontent. The truly shuddering development was the sentence of Cristina Fernández de Kirchner in Argentina because it sets a precedent in the region. To be sure, over the last 30 years since democracy was recovered in the region no acting ruler has been tried, found guilty and sentenced. The good news is that Latin America’s democratic institutions seem to be more resilient than we thought. Democratic and law enforcement institutions responded right on constitutional cue to Castillo’s attempted coup against Peru’s congress. The judiciary in Argentina showed independence. Haiti, on the contrary, has mutated into an anarchic narcostate with no signs of redemption or of an international rescue action in sight. But I believe that 2023 will bring into the limelight a notable development: Latin American civic societies are beginning to mobilize to defend democracy. This had not happened since the 1980s. Perhaps 2023 will be the year of democratic recovery in many nations.”

Latin America Advisor logo.The Latin America Advisor features Q&A from leaders in politics, economics, and finance every business day. It is available to members of the Dialogue’s Corporate Program and others by subscription.

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