This week, Ecuador gets a new president: the conservative ex-banker Guillermo Lasso. Peru is in the crucial final fortnight of the presidential run-off campaign amid signs that Keiko Fujimori may have reached her ceiling. The situation in Colombia remains deeply unsettled nearly four weeks after the outbreak of anti-government protests. In Brazil, congressional support for the government has been visibly decreasing. Mexico’s Central Bank (Banxico) has been under scrutiny. Argentina has returned to a strict lockdown not seen since the pandemic first hit in March 2020. Finally, the Chilean Left’s internecine battle for supremacy shows how the political ground has shifted since the 2019 unrest.
Guillermo Lasso is inaugurated as president today, 24 May. Lasso’s first priority will be the health crisis. Lasso has promised that 9mn Ecuadoreans will have had a vaccine jab within 100 days of his inauguration. A deal to obtain the Russian-developed Sputnik V vaccine should be confirmed imminently, though with under 1.8mn doses applied so far, the challenge facing the new administration will be immense. Lasso has also promised to unveil tax reforms as another priority; these should include the elimination of the ISD tax on USD outflows as well as the introduction of VAT holidays. Incoming Finance Minister Simon Cueva has already talked about tweaks to the International Monetary Fund (IMF) agreement. The fragmented incoming National Assembly (AN) will represent one of Lasso’s biggest challenges.
A televised debate between Pedro Castillo and Keiko Fujimori is scheduled for 30 May. Castillo has sidestepped additional debates against his more experienced rival but has agreed to next Sunday’s event, partly because a ban on polls in the final few days of the campaign means that if he performs poorly, it may not matter. The event will probably be more significant than yesterday’s stilted debate involving both candidates’ key advisors. A vote simulation organized by Ipsos on 21 May suggests that Castillo has regained his lead over Fujimori since the previous simulation a week earlier had suggested they were in a technical tie. An IEP poll from late last week puts Castillo in a more commanding lead of 10.4 points. The final phase of the long campaign will be crucial for undecided voters.
Defense Minister Diego Molano faces a motion of censure vote in the Senate today, 24 May, over the excessive use of force by security forces since anti-government protests started in late-April. Even if he survives the vote, Molano could face a similar challenge in the lower house. Molano’s ejection would put President Ivan Duque under new pressure after the government’s peace commissioner, Miguel Ceballos – who has been leading on-off talks with the National Strike Committee (CNP) – resigned over the weekend. Ceballos criticized Duque’s mentor, former president Alvaro Uribe (2002-2010), as he stepped down. The next few days should determine whether a) talks to end the protests can advance and b) Duque can continue to resist making deeper changes to his cabinet. Meanwhile, the economic disruption caused by the protests continues to worsen.
The longest serving health minister out of three others in the Jair Bolsonaro administration, Army General Eduardo Pazuello, testified in the ongoing Senate inquiry (CPI) into the handling of the pandemic on 19-20 May. He denied facts that are widely publicly available in speeches, press conferences, live streams and postings in social media by himself, the president and other members of government, thus risking indictment and imprisonment for lying under oath. Congress has visibly been decreasing the level of support for the government. Reforms are at great risk of being sidelined by a more self-serving agenda led by electoral interests of parliamentarians.
The Central Bank (Banxico)’s autonomy is likely to remain the subject of speculation (again) following recent comments by President Andres Manuel Lopez Obrador (AMLO). AMLO last week criticized the bank for failing to transfer any of its operating surplus to the government. While the peso appreciation of late-2020 meant the surplus had decreased (to around MXN 200bn), AMLO was still hoping for the extra funds. AMLO accused Banxico of a lack of transparency and accused the Banxico Governor Alejandro Diaz de Leon of bias against his administration, though he also said he would continue to respect the bank’s autonomy. Shortly afterwards, AMLO confirmed that Diaz de Leon’s term would not be renewed when it expires in December. This is not the first time the bank has got caught up in political controversy under AMLO; last year the government pushed – but later dropped – a controversial bill that would have obliged the Banxico to become the buyer of last resort for excess USD that commercial banks are sometimes unable to return abroad.
Much of the country is in a strict lockdown that began on 22 May and will run until 30 May, to be followed by another lockdown on the weekend of 5-6 June. A return to the strictest level of lockdown, which President Alberto Fernandez had categorically ruled out, comes amid a new peak of Covid-19 infections and as caseloads reach record levels. Health authorities have subsequently revealed that they plan to use similar intermittent lockdowns during the approaching winter season. To manage the economic fallout, the government has unveiled a support package worth around 1.3% of GDP to be financed from extra revenues from commodity export taxes plus the proceeds of the new wealth tax; a resumption of the massive monetary emission seen in 2020 could worsen already problematic inflation.
The fallout from last week’s frenetic maneuvering by parties on the Left and Center-Left ahead of the deadline to register for the July presidential primaries has almost certainly not finished. The left-wing Broad Front (FA) and Communist Party (PC) will compete against each other for the nomination, while the Center-Left’s plans remain less clear after the FA-PC vetoed a broader alliance. The question now is whether the Senate president Yasna Provoste (Christian Democrats, DC) could still run for president or possibly compete in another primary against the Socialist Party (PS)’s Paula Narvaez after July. The confusion seemingly marks a shift in the center of political gravity to the more radical, anti-establishment Left, though at the same time, the divisions and rancor that have arisen among left-leaning parties contrast with the relatively calm state of the governing Chile Vamos(CV) coalition’s presidential nomination contest.