InterRegional for Strategic Analysis


        
<p>The Latin American continent is headed for tough challenges in 2023, through ongoing political shifts amid the awaited outcome of critical elections in some countries, growing possibilities of domestic instability and popular protests against deteriorating economic and social conditions, left-wing governments’ difficulties in governing, and the trend toward peaceful settlements of political conflicts, especially in Venezuela and Colombia. Abroad, the continent’s countries are facing a reordering of the map of international alliances, amid the ongoing war in Ukraine and rising international polarization.</p>



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<p class="has-vivid-red-color has-text-color"><strong>Mounting Tension</strong></p>



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<p>It seems that Latin America is on the verge of a looming wave of political, economic, and social changes in 2023, fueled by instability, mounting problems, and difficult challenges at all levels. In this framework, the most significant expected trends in Latin America in 2023 can be highlighted as follows:</p>



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<p><strong>1. Ongoing shifts on the Latin American political scene: </strong>After a series of decisive electoral victories for the left in Latin America in 2022, and even before that, it is likely that 2023 will see a swing back to the right, with the possibility that some right-wing candidates will win the upcoming presidential elections in Paraguay (April) and Argentina (October). This is a basic reflection of the trend toward voting against the incumbents in a region facing another hard year of mediocre economic growth and social discontent. After the economy grew by 3.5% in 2022, according to the IMF, the economies of the region may expand by only 2% in 2023.</p>



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<p>This expectation is also reinforced by sharp political polarization in the region’s countries, which was strongly expressed in the results of the recent presidential elections, particularly in Brazil, Latin America’s largest country. Since Brazil’s return to democracy in 1989, the current president, Jair Bolsonaro, is the first presidential candidate to lose his re-election bid. The election results recorded the narrowest margin of victory for the winner, Lula da Silva, compared to his opponent, who lost by less than two percentage points, reflecting high polarization and low voter confidence.</p>



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<p><strong>2. Growing potential for domestic instability: </strong>In 2023, Latin American countries are likely to see a new wave of popular protests and demonstrations against declining economic and social conditions due to the pandemic and the war in Ukraine. Although making up only 8% of the world’s population, the region recorded more than 40% of all COVID-19 deaths during the first year of the pandemic and also suffered its largest economic downturn in more than a century. During the pandemic recovery phase, the region began to rebound economically, but it quickly suffered the two-fold shocks of the war in Ukraine and the global economic crisis. As of October 2022, average inflation has approached 15%—i.e, nearly three times the level in Asia and one-third higher than sub-Saharan Africa—while public debt levels rose to more than 70% of regional GDP.</p>



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<p>Until now, the wave of popular discontent mostly was expressed at the voting booth, with candidates supported by the ruling party losing at least the last 15 presidential elections in the region. However, in other countries, popular discontent with inflation and government austerity measures has begun to take on more disruptive forms in Panama, Argentina, and Haiti. Given that few voters are willing to bear the side effects of the current economic crises, social turmoil is likely to continue in 2023, reflecting a general trend in Latin America when historically high food and energy prices fuel public discontent and political protest in the region.</p>



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<p><strong>3. The left faces serious difficulties in governing:</strong> Currently, Latin America’s six largest economies are governed by leaders, parties, and streams from the left and center-left, after electoral victories in Argentina, Mexico, Peru, Colombia, and Brazil. The left-wing leadership of these countries was motivated by a desire for change and driven by widespread popular anger at chronic poverty and social inequality. However, the leaders of the new Latin left-wing wave are likely to face much more serious difficulties in governing in 2023, than during the first wave of the left’s rise in the 2000’s, when a boom in commodity prices helped left-wing leaders expand social security programs.</p>



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<p>The current global economic crisis and rising inflation are putting leaders throughout the continent in a quandary. Many governments increased public spending during the pandemic and now have very limited financial room to expand food and energy subsidies, which will restrict their ability to move forward with their reform programs. For example, the popularity of Chile’s president, Gabriel Boric, declined a few months after his electoral victory, and demonstrations engulfed the country’s streets. In Peru, President Pedro Castillo is fighting to stay in power after numerous attempts by the right-wing opposition to remove him.</p>



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<p>At the same time, left-wing leaders will face strong right-wing opposition in congress, which will work to obstruct their plans to expand social security programs and implement proposed environmental measures. For example, Lula da Silva, who will officially take office in Brazil on January 1, 2023, will face a congress with a majority of seats controlled by the extreme right-wing opposition.</p>



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<p><strong>4. Expected peaceful settlements of political conflicts:</strong> It is possible that 2023 will see a type of political settlement of the domestic conflicts some Latin American countries are experiencing. For example, negotiations between the Venezuelan government and opposition resumed in Mexico City, Mexico in November 2022, four years after socialist President Nicolás&nbsp;Maduro’s re-election in elections widely seen as fraudulent, which led to a political crisis in Venezuela and international isolation of the Maduro regime. Norway brokered the resumption of negotiations, which include discussions on the conditions for holding the presidential elections in 2024, after they were suspended last year.</p>



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<p>The success of these negotiations in achieving a political breakthrough to the conflict in Venezuela depends on several factors, including Washington easing the sanctions imposed on the country. The first indication of this began with the US Treasury Department granting a license to the American oil company, Chevron, to expand its activities in Venezuela. On the one hand, this will contribute to improving deteriorating economic conditions, and, on the other hand, the Maduro regime will seek to use this to strengthen its position vis-à-vis the opposition. Another factor is the Venezuelan government’s degree of seriousness in making fundamental concessions in order to move forward with efforts to strengthen democracy in the country, as well as the opposition’s ability to unite in order to pressure the government to fulfill its pledges. The US Congress, especially the Republican-led House of Representatives, will also play an important role in this crisis. It will likely seek to draft new legislation in 2023 to delay and limit any possible easing of the harsh US policy toward Venezuela.</p>



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<p>In Colombia, almost four years after the administration of former President Iván Duque suspended peace talks with the leftist National Liberation Army (ELN), the administration of President Gustavo Petro officially resumed the talks in November 2022, in Caracas. Since the ELN is the oldest and most powerful armed group in Colombia and Latin America, many hope that it will demobilize and disarm. However, the success of efforts to bring permanent peace to Colombia depends largely on the Venezuelan government’s commitment to participate alongside the Colombian government in negotiations with the ELN, which operates on the Colombian-Venezuelan border. There are allegations that the Venezuelan regime offers support and shelter to ELN members, which explains the Colombian president’s eagerness to choose Venezuela as a guarantor and host for the peace talks with the ELN, and his resumption of diplomatic and military relations between his country and Venezuela.</p>



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<p>Opportunities to achieve peace in Colombia also remain dependent on the government’s success in integrating the ELN’s active and powerful elements into the peace talks. This is the key to guaranteeing the compliance of the rest of the fighters in the movement, especially the extremists, as well as the participation of the political opposition in these talks to legitimize any forthcoming peace agreement and to address the root causes of the conflict in Colombia.</p>



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<p><strong>5. Reshaping the map of international alliances:</strong> The year 2023 is expected to see&nbsp; changes in the map of international partnerships and alliances for Latin American countries, which have long been seen as a "natural" partner of the West due to many shared democratic values. However, the war in Ukraine has been a critical turning point for Latin relations with Western countries (Europe and the US). Few Latin American leaders have been outspoken in their criticism of Russian President Vladimir Putin, and some of the region’s countries abstained from voting to condemn Russia in international forums. Moreover, a broad sector of Latin American citizens believe that NATO is responsible for the outbreak of the war, like Russia and that Western sanctions, not the war, are the cause of the current global economic crisis.</p>



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<p>Thus, Latin relationships with both Russia and China are expected to strengthen, as the countries of the region aspire to use these relationships to serve their economic interests. Likewise, the Russian and Chinese presence in Latin America is seen as a means to balance American influence, promote regional autonomy, and increase Latin American negotiating power with Washington. The Latin position on the war appears to be provoking a long-term rejection of US hegemonic policies in the region and the world, and it also reflects the marked decline of American and European influence in Latin America over the past decade, allowing Beijing and Moscow to fill the vacuum in a way that serves their geostrategic interests.</p>



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<p><strong>Finally, to hinder the increasing Russian and Chinese expansion on the Latin American continent, Washington must work hard to frame a long-term regional effort and adhere to a bolder agenda with respect to trade and investment in Latin American countries, to help them mitigate the negative repercussions of the war in Ukraine. If the US cannot rethink its policy toward Cuba and Venezuela, China and Russia will surpass it in its own backyard. Meanwhile, the EU hopes to restore its influence in the region through a leadership summit with EU and Latin American countries at the end of 2023, when Spain assumes leadership of the EU.</strong></p>

      

Tough Challenges for South American Governments in 2023