As corruption charges fly, the presidents of Ecuador, Colombia and Bolivia duck for cover

By James Bosworth

Though Peru’s protests are nowhere near over, they have entered a quiet lull in recent weeks. But the rest of Peru’s neighbors in the Andes are now experiencing their own political challenges, with the presidents of Ecuador, Colombia and Bolivia having all hit their own rough patches in recent weeks.

While the details of their political crises are different, two big trends connect them. First, the macroeconomic environment — including continued inflation, slow growth and high interest rates that make debt more expensive — has affected all three countries’ economies, leading to popular discontent and lower approval ratings for their leaders. The International Monetary Fund said last year in its economic forecast for 2023 that “the worst is yet to come.” While many of its projections for global growth have been revised upward in recent months, the challenges stacking up for much of Latin America mean that its original prediction of a bad year will likely come true in the region.

Colombia President Gustavo Petro

The second trend involves corruption allegations that could create difficulties for all three countries’ presidents. Most of the allegations don’t directly implicate the president, though some involve family members. Others are backed by weak evidence. But all three countries’ populations are primed for anger at political elites. So piling corruption allegations on top of economic challenges will make it more difficult for these leaders to assemble a political coalition to get their agendas passed.

In Ecuador, President Guillermo Lasso is still facing the political fallout from the referendum he lost in January. Moreover, in the concurrent municipal elections, not only did his preferred candidates do poorly, but the candidates backed by former President Rafael Correa won several key posts, including the mayoral races in Quito and Guayaquil. Lasso hoped to use the referendum, which was over questions on security and politics that would normally have been quite popular with voters, to boost his own political capital. Instead, it turned into a way for citizens to demonstrate their rejection of the president.

Sensing Lasso’s weakness, the Congress appears ready to once again begin impeachment proceedings against him, with 104 out of 137 legislators casting a nonbinding vote to approve a report that accuses Lasso of corruption. Specifically, Lasso is alleged to have handed out government positions and accepted bribes in exchange for state contracts. While the evidence is not particularly solid, the report sets the stage for a political battle over whether Lasso can remain in office.

Ecuador President Guillermo Lasso

Meanwhile, the Ecuadorian government’s negotiations with Indigenous groups appear to have broken down, after the main organization representing them, CONAIE, walked away from the table. In June 2022, those groups shut down much of the country and set off weeks of clashes in Quito. After initially responding with a violent crackdown, Lasso’s government agreed to a dialogue with the Indigenous groups over a core set of economic demands, including restoring fuel subsidies in the face of high prices and addressing environmental damage caused by mining. But since then, despite concessions offered by Lasso’s administration, they have been unwilling to make any compromises, suggesting they are more interested in confrontation than in negotiations.

There is a significant chance that another round of protests could erupt just as Lasso faces an impeachment showdown in Congress. The president has the constitutional option to call for new elections, and amid all these challenges threatening his hold on power, he may avail himself of it.

In Colombia, seven months into his term, President Gustavo Petro’s honeymoon period is officially over, and the real governance challenges are now beginning. His government has had a rough few weeks, including Cabinet changes, scandals and pushback against his legislative proposals from both Congress and the judiciary. Inflation is running around 13 percent, the country’s highest level in many years, and fuel prices are rising every month. When he attempted to launch a new round of reform packages last month, Petro’s health care proposal was opposed by several of his own Cabinet ministers. After Petro fired Education Minister Alejandro Gaviria, who had served as health minister during the administration of former President Juan Manuel Santos, markets reacted strongly, fearing it was a sign Petro was moving away from the centrist, technocratic management style he had signaled with his initial Cabinet choices.

Meanwhile, although Petro is not directly accused of corruption, several scandals have hit close to home. His son, Nicolas, has been accused of taking campaign donations in exchange for Cabinet positions, and Petro’s brother, Juan Fernando, has been accused of taking payments from drug-trafficking groups so they can be included in the president’s signature “Total Peace” program that will negotiate with armed groups. Petro has called for an independent investigation of both accusations, but even if he manages this by the book, the scandals are likely to harm his ability to keep his congressional coalition together.

Petro’s aggregate polling approval is now below 50 percent, and most of those polls were taken before his recent difficulties. With a substantial legislative agenda still to be enacted and regional elections scheduled for October, how Petro responds to these challenges could very well define the rest of his term.

In Bolivia, rumors of dollar shortages are creating the potential for a run on the banks. This past week saw long lines at the Central Bank, as people tried to change dollars at the official rate. Some currency exchange houses report a lack of dollars, and black-market currency rates are offering a major markup on the official rate, the first time that has happened in many years. The biggest problem with this sort of crisis is that it can become a self-fulfilling prophecy: If enough people believe there will be a run on the bank, it will trigger a run on the bank. That would be a major headache for the government.

Politically, President Luis Arce is facing criticism from opponents as well as from within his own party. Arce’s opponents accuse him of doing former President Evo Morales’ bidding in jailing and prosecuting top opposition politicians. Meanwhile, Morales is accusing Arce’s family of profiting from government contracts. Similar to Petro, the corruption allegations don’t directly involve the president. But unlike in Colombia, the accusations in Bolivia appear to be a sign that the ruling party is breaking apart.

The situations in Ecuador, Colombia and Bolivia demonstrate the current governing challenges around the region. While the temptation for the three countries’ presidents will be to blame outside factors and political opponents, citizens expect their leaders to take some responsibility and try to find solutions. That will be harder for them to do if they are all weakened and distracted by charges of corruption that exacerbate popular grievances, regardless of whether or not they have merit.
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James Bosworth is the founder of Hxagon, a firm that does political risk analysis and bespoke research in emerging and frontier markets. He has two decades of experience analyzing politics, economics and security in Latin America and the Caribbean.

Credit: World Politics Review