(Bloomberg) -- Fears over crime and a failure to keep promises of social reform are starting to take down some of Latin America’s leftist leaders, making room for the return of more business-friendly governments in the region.
In Colombia, the country’s first leftist president, Gustavo Petro, has presided over a moribund economy, a surge in violent crime and a huge wealth exodus. Over in Chile, young leftist President Gabriel Boric has twice tried and failed to rewrite the constitution. Instead, he’s now pushing the country’s biggest effort yet to stop the spread of organized crime. Both were catapulted into leadership as the answer to waves of protests and social unrest in the world’s most unequal region at the start of the decade.
The left will face a crucial test next year, when voters head to the polls in Ecuador, Bolivia and Chile, and in 2026, when Brazil, Colombia and Peru hold their elections. No matter how individual candidates perform, the new LatAm Pulse poll by AtlasIntel and Bloomberg News shows that Latin Americans are growing sympathetic to more business-friendly economic models — a trend that is sure to accelerate if the shock therapy implemented by libertarian President Javier Milei proves successful in Argentina.
“You look across the region and where, right now, does it look like a leftist incumbent, at any level, is coasting to reelection?” said Will Freeman, a fellow for Latin America studies at the Council on Foreign Relations. “I can’t think of a single place.”
At 40% and 39% respectively, Petro and Boric have the lowest approval ratings among leaders in Latin America’s biggest economies, according to the poll. The notable exception is Brazil’s Luiz Inacio Lula da Silva, who has managed to secure the backing of a slim majority of the population nearly two years into his mandate. Mexico’s Claudia Sheinbaum, who took office this month, is enjoying a post-election honeymoon with voters.
Economic conditions are key to understanding the downfall of Latin American leftists. More than half of respondents in Chile and Colombia consider the state of their economy and job market bad. By contrast, Brazilians are more upbeat as gross domestic product is growing more than expected and the unemployment rate is the lowest in more than 10 years.
Corruption, crime and narcotrafficking are among the top concerns for all those surveyed. Crime in particular has become a huge issue across the region — driving up xenophobia as many blame migrants for increased violence and insecurity, and playing a growing role in recent local elections. Already, leaders across the region are mimicking the strong-arm crime-fighting tactics from El Salvador President Nayib Bukele, who used to refer to himself as the “world’s coolest dictator.”
Meanwhile, a shift away from state intervention could help the region achieve a greater degree of economic stability, and offer businesses more confidence that they won’t see taxes surge or have contracts and regulations overhauled when the next administration enters office. That also means any winners in the coming elections will find it politically difficult to pursue populist policies of expropriations and price controls that have decimated Venezuela’s economy despite vast oil reserves and hurled Bolivia toward economic disaster.
A highly contested election in Venezuela has put Nicolas Maduro’s longtime allies in Brazil and Colombia on the defensive and exposed them to attacks that they are taking their respective countries in the same direction. The country’s economy has suffered for years, with nearly 80% of its citizens living in poverty.
“Economic liberalism has become much more entrenched and grown roots in society,” said Andrei Roman, the chief executive officer of polling firm AtlasIntel. “The average Latin American citizen is not that different from the average US citizen.”
Still, the concept is far from being accepted. While more than 40% of respondents in each of the five countries surveyed — Argentina, Brazil, Chile, Colombia and Mexico — strongly agreed with the idea that governments should cut spending instead of raising taxes, there is no consensus about privatizations, price controls or state intervention to shield certain economic sectors from competition.
Lula’s relative success in shoring up Brazil’s economy, and his popularity, set the stage for what’s expected to be another tight election in 2026. While his Workers’ Party elected more mayors this month than in 2020, candidates backed by former President Jair Bolsonaro had an even stronger performance to the detriment of centrist parties that continue to crumble amid the country’s polarization.
“In Brazil, the left-wing party is in charge, but with a lot more problems and less power than Lula 1.0,” said Isabela Kalil, an anthropologist who studies right-wing movements.
Lula’s economic model is vying with what’s being implemented in neighboring Argentina, where Milei unabashedly campaigned on the need to take a chainsaw to state spending. A key question for the libertarian is whether his popularity will survive a roaring recession with more than half of the population now living below the poverty line. Most notably, Milei hasn’t backed away from his commitment to a fiscal surplus, even when it comes to sacred cows like higher education and social security. Milei recently vetoed two bills, passed by wide margins in congress, that would have raised spending — an extraordinary feat in deficit- and crisis-prone Argentina.
“There’s not a lot of libertarian presidents so, basically, a lot of things had to go wrong for me to get here,” Milei joked at a recent business conference in Buenos Aires.
Argentines had a whopping $277 billion outside the system during the first quarter, roughly 10 times more than the pesos in circulation, according to official statistics. As a result of Milei’s incipient success and generous tax amnesty, Argentines so far have brought $13 billion worth of greenbacks back into the system — about double as much as under a similar drive by former pro-business President Mauricio Macri.
“When you look at dollar deposits, what is happening is shocking,” Milei said at the same event.
Reforms to Argentina’s oil industry are unleashing a wave of investments in the heralded Vaca Muerta shale formation where, according to consultancy Rystad Energy AS, production could surpass a million barrels a day during Milei’s term.
In contrast to the increasingly divided left, the right — led by figures like Milei and Bukele — have been vocal about organizing conferences up and down the continent under offshoots of the Conservative Political Action Committee, or CPAC, and rubbing shoulders with former President Donald Trump, despite key differences in their stances on tariffs and trade.
“We have a lot of fractures in the left. Meanwhile, we have a lot of differences between Trump and Bolsonaro or Bukele and Milei but I think they are in a phase of accepting their differences,” Kalil said. “These conferences are important because they have helped to connect important actors and representatives from the right.”
To be sure, the left isn’t dead. Sheinbaum won a resounding victory in Mexico even after her predecessor, Andres Manuel Lopez Obrador, eroded business confidence in the region’s second-largest economy. In Ecuador, Daniel Noboa has failed to replicate Bukele’s success at squashing gang violence and is at risk of losing re-election to a more liberal candidate as a result.
Even in Bolivia, where the socialist economic model is in collapse, the political opposition is so discredited and disliked by the indigenous majority that it doesn’t have a clear leader to take advantage of a split in the ruling party.
In Chile, Boric cannot run again given the country’s one-term limit — but the success or defeat of his party depends as much his own record as who the opposition runs. If the rival is too far to the right it could give his party an opening to remain in office.
“The reality in Latin America, with few exceptions, is that incumbents are losing,” said Erika Mouynes, a former minister of foreign affairs of Panama and a fellow at Harvard University. She pointed to how much of the region still doesn’t have access to even some of the most basic needs and services, such as access to clean water.
“The political pendulum swings back and forth as the region searches for solutions that address its needs,” Mouynes added. “We face deeply troubling indicators of inequality that are not improving.”
--With assistance from Andrea Jaramillo.
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