The Latin American country where populism risk is seen highest in 2021

Latin America is preparing for a grueling electoral year against a backdrop of elevated levels of social discontent fed by COVID-19 fallout that will weaken incumbents and open the door for populist candidates.

And the risk of a populist donning the presidential sash is highest in Ecuador. 

That’s according to global political risk analysis and consulting firm Eurasia Group.

Like other countries in the region that spent to help mitigate the economic impact of the pandemic, cash-strapped Ecuador has weakened fiscal firepower.

Ecuadorans are due to hold general elections on February 7, with President Lenín Moreno’s approval ratings standing in the single digits. 

Like Chile, Bolivia, Peru and Colombia, Ecuador was rattled in 2019 by protests. The common narrative is that these all stemmed from a confluence of social and economic factors, including the cost of living, the quality of public services and disillusionment with the political class. 

Ecuador was the first country in the region hit by COVID-19, and as elsewhere, sanitary and social distancing measures impacted the economy – already struggling with a sovereign debt crisis and weaker oil prices – and the daily life of citizens. 

“Poor governance, populism, protests will be more common this year [in the region],” Eurasia Group chairman Cliff Kupchan said during a webcast hosted by the firm to accompany the launch of its Top Risks report for 2021, an annual forecast of the political risks most likely to play out over the course of the year.

“The transmission belt, the way this is all going to manifest itself, is through a very heavy electoral cycle,” he added. 

“In most of the presidential election countries, populists will pose real threats, Ecuador being the ripest for trouble.” 

Moreno took power in 2017 on a center-left platform but later changed his economic policy stance, shifting to the right of center, alienating some of those who voted him into office but winning the support of others.   

Ecuador’s fiscal situation, although eased by IMF backing, remains fragile and the outcome of February’s election will be a determining factor in the country’s future economic trajectory.

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Sixteen candidates have thrown their hats into the ring, among them at least one populist. There are several frontrunners.

“Ecuador's economic performance in 2021 is completely dependent on the February elections that will pit three diametrically opposed candidates against each other: banker Guillermo Lasso, a free-market proponent; the populist Andrés Arauz, a protégé of former president Rafael Correa; and old-school socialist Yaku Pérez, who claims to represent the indigenous movement and opposes the extractive industries,” the BNamericas 2021 Outlook report reads.

Latin America is already home to two high-profile populists: Brazilian right-winger Jair Bolsonaro and Mexico’s leftist Andrés Manuel López Obrador.

Elsewhere on the electoral calendar, mid-terms are due in Argentina and Mexico while Chile, Peru and Honduras are scheduled to choose new presidents. Chileans will also elect the 155 people who they want to draft their new constitution.

Eurasia Group ranks a Latin America that “disappoints” as 10th in a list of 10 top global risks. The No. 1 risk is deep political division in the US, where a big chunk of the country thinks president-elect Joe Biden stole the election and lacks legitimacy. 

Eurasia considered risk likelihood, imminence and impact when building the ranking.

The second major risk outlined is delays in getting populations vaccinated and recovering from the crisis hangover.

The third centers on energy, where competition among countries in the clean technology space is expected to increase while global coordination is forecast to weaken.

“China will launch a massive domestic decarbonization program as part of its 14th five-year plan while using its state capitalist model to dominate global supply chains for new technologies,” the report says. 

“And as the US scrambles to catch up to China in what will quickly become a global clean energy arms race, it will make climate and the energy transition a matter of industrial and national security policy.”

A broadening of China-US tensions is seen as the fourth biggest risk. Eurasia said 2021 will see "bilateral rivalry as intense as that of last year."

"Following Trump's exit, the US-China relationship will not be as overtly confrontational. Both sides will seek some breathing space. But the desire for stability will be offset by three new and underappreciated factors: a spillover of tensions from the United States to its allies, a competition to heal the world, and another to green it," the report said.

Read the Eurasia Group report here