Latin America is experiencing a wave of authoritarianism and populism, and populist authoritarianism, eroding and, in some cases, destroying democracy. This will continue in 2022. Companies and investors should plan accordingly. History (recent and 20th century) in the region teaches us that the erosion of democracy and the concurrent entrenchment of authoritarianism inevitability begets the deterioration of the business environment and investment climate even for the most intrepid, risk tolerant companies.

During the first half of his six-year presidential term, ending in 2024, popular Mexican President Andrés Manuel López Obrador (AMLO) displayed marked authoritarian tendencies. These included concentrating power in the executive (or, more precisely, himself), blatantly disregarding nominally independent regulatory institutions and excessively relying on the military, including beyond its traditional role. AMLO has hailed his term in office as the “Fourth Transformation”. This is his much-vaunted – or much-maligned, depending on whom you ask – transformative project aimed primarily at shaking up the political and business establishment with the laudable if quixotic aim of creating a more equitable society. AMLO will deepen the transformation in 2022 and over the remainder of his term.

Mexico is not alone in its authoritarianism. Beyond the longstanding examples of Cuba and Venezuela, countries to watch in 2022 include Nicaragua and Central America’s “Northern Triangle” – Guatemala, Honduras, and El Salvador. In the latter, President Nayib Bukele, another populist, has employed a concerning but politically effective blend of populism and authoritarianism – accompanied with a dash of radical digital monetary policy – during his first two years in power.  

One need only look at nearby Nicaragua under the husband-wife regime of President Daniel Ortega and Vice-President Rosario Murillo to see El Salvador’s direction of travel.  By running roughshod over legislative and constitutional norms, through widespread electoral fraud, and with the systematic and sanguinary repression of the opposition, the couple have concentrated, consolidated, and perpetuated power in their and their family’s hands over the last 15 years. They’re not going anywhere and Nicaragua’s transition from enticing emerging market to pariah state is complete.

Sanctions imposed by the US and others will continue to rain down on the Central American isthmus in 2022, but to what avail? Pervasive corruption and impunity will persist. Human rights will continue to suffer. And democracy will remain imperiled. In South America, beyond Venezuela, the outlook does not appear quite as stark. Nevertheless, authoritarian figures are likely to take centre stage with adverse implications for democratic institutions and electoral processes. Brazilian President Jair Bolsonaro has already called into question the efficacy of the country’s electronic voting system ahead of the 2022 general election. Meanwhile, Bolivian President Luis Arce has displayed authoritarian inclinations – for example, the persecution of opposition figures – during his first year in office that are the hallmark of this concerning regional trend.

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