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For many analysts Gabriel Boric is the perfect example of a generational change among Latin America's left-wing leaders. He took office as Chile's youngest president, at 36, in March 2022. His age meant he had not directly experienced the period of repressive military rule in 1973-1990 (he was only four years old when General Augusto Pinochet was forced to step down after losing a referendum). It meant he grew up and became a student activist in the post dictatorial era, when Chile was mainly governed by moderate, pro-market centre-left governments. On many issues Boric was in opposition to those administrations since he accused them of not doing enough to challenge ongoing poverty and inequality.

Boric and many other radical student leaders refused to accept the Chilean status quo, at least in the form it had reached by the twenty-tens, as a result of continuing evolution. For much of that decade establishment politics consisted of an alternation between moderate left and quite strongly right-wing governments, both ultimately wedded to a free market-first type of approach, often described as neoliberalism. Boric came to international attention during the first right-wing government of Sebastían Piñera in 2010-2014, as a leader of university student protests in 2011-2012. By 2012 he was head of Fetch, the university student federation, close to other student radicals including Camila Vallejo (now his presidential spokeswoman) and Giorgio Jackson (now secretary-general to the presidency). The three opposed Piñera's highly commercialised approach to tertiary education, based on the promotion of student loans to fund education fees. This policy led to higher fees, greater student debt, and an expansion of the number of graduates, alongside what seemed to be a downgrade in the value of degrees in the employment market. Many students incurred heavy debts to fund a degree that did not get them the job they wanted.

Dissatisfaction with the swing to the right under Piñera helped return socialist Michele Bachelet to a second four-year term in office in 2014-2018. To some degree she sought to incorporate the ideas of the new radicals emerging from the earlier student movement. She supported gay marriage and abortion rights, tightened some environmental regulations, and committed to increase corporate taxation to fund free, not-for-profit university education. Yet her reforms were criticised as being too little, too late. The ban on for-profit activity in the university system was only partial, and Chile's Constitutional Court struck down some of her reform proposals as discriminatory.

As a result, when Piñera won a second term in 2018-2022, there was already a powerful undercurrent of social tensions in the country, not only around student issues but also over inequality, low-pay-out privatised pensions, a high cost of living, and a deep sense of frustration with the political class and the institutions of democracy. Set off by a student protest over fare increases on the Santiago Metro system, mass protests broke out in October 2019 and lasted into early 2020. Over 26 people died in clashes between protestors and the security services, with widespread reports of the latter committing serious human rights violations. Faced with an almost existential threat, the Piñera administration eventually chose to seek a negotiated way out of the crisis. In November 2019 Chile's major political parties agreed that the intensity of the institutional crisis required Chile to open a debate on a new constitution, to replace the text of 1980, written under military rule.

In theory at least, after it experienced that deep social crisis in 2019-2020, a combination of events had placed Chile on course that would take it decisively to the left, with a whole range of new and more radical policies. In May 2021 a new 155-strong Convención Constituyente (CC) was elected with a marked presence of left-wing and independent members. In the first round of presidential elections in November, the parties of the old centre-left coalition fragmented. Boric's new-left coalition won most votes - 25.8% - and he went on to triumph in the second round with 55.8%, comfortably ahead of the far-right challenger, José Antonio Kast (44.1%).

Boric took office in March 2022, on what appeared to be the crest of a left-wing wave. But the new president almost immediately ran into political difficulties. Faced by continuing violence by Mapuche indigenous activists in the Araucanía region in the south, the government performed a U-turn, extending a regional state of emergency, something it had promised it would not do, and which it had criticised the Piñera administration for doing. The economy began to slow with the post-pandemic recovery losing momentum and inflation gathering pace.

At the same time public opinion seemed to be turning against the new draft constitution. According to a Cadem poll in late May, Boric's disapproval rating surged by seven percentage points on the previous month to reach 57%, while his approval rating fell by two points to reach 36%. Support for the president fell across most categories of measurement (it dropped to 38% for “authority and leadership”, to 39% for “having a good governing team”, to 32% for “maintaining public order”, to 32% for “managing immigration issues”, and to 25% for “managing the conflict in Araucanía”). The survey also confirmed earlier polls that a majority of respondents (45% to 37%) are inclined to reject the new constitution when it is put to a referendum in September.

There are various ways of interpreting the difficult start to Boric's presidency. One view is that after swinging to the left in 2019-2020 Chilean public opinion is simply moving back towards the centre. Another is that Boric is constrained by the lack of a congressional majority. In fact, the combined forces of both the old-left and the new-left parties in the legislature control 67 seats out of 155 seats, against 53 held by the right-wing opposition and a further 20 held by so-called ‘out-of-coalition’ parties. The net result is that, despite winning the presidential elections on the promise of radical reforms, Boric finds himself having to negotiate difficult-to-achieve agreements across a wide political spectrum. He may show the political expertise and negotiating skills to overcome these challenges, but his initial difficulties show that in Chile and elsewhere the success of a second wave of the pink tide is far from guaranteed.

El Presidente de Ecuador, Rafael Correa, ha tomado varias apuestas desde que llegó al poder en el 2007 –pero ninguna tan grande como ahora. Correa firmó un decreto ejecutivo el 15 de agosto allanando el camino para la explotación del petróleo contenido en el parque nacional Yasuní. Él culpó “al mundo” por no respaldar la innovadora propuesta de su gobierno de pagar a Ecuador por dejar su petróleo sin explotar, aunque en verdad él ya desde hace tiempo se había separado de los “izquierdistas infantiles” con quienes él co-fundó la gobernante Alianza País (AP), y se alejó del espíritu de la Pachamama infundido en su constitución. Él ha adoptado la línea de que las industrias extractivas estimularan el desarrollo de Ecuador aún más que sus antepasados neoliberales. Sin embargo, Yasuní, era el último reducto, una fuente de orgullo nacional cultivada por su gobierno. Los grupos indígenas y una debilitada oposición, ahora tienen un punto de coincidencia para sus protestas.

El proyecto Yasuní Ishpingo-Tambococha-Tiputini (ITT) pedía a la comunidad internacional que desembolse US$3,6mm en un fondo fiduciario administrado por el Programa para el Desarrollo de la ONU (PNUD) para dejar sin explotar los depósitos de petróleo en la reserva de biosfera de Yasuní, que se cree que contiene unos 920m barriles de crudo, o el 20% de las reservas totales de Ecuador. Cuando fue lanzada hace seis años, fue considerada como la iniciativa insignia, dentro de un nuevo modelo de desarrollo para Ecuador. El núcleo de ambientalistas de izquierda de la AP afirmó que era “más que un proyecto político; un cambio en la forma de vida”, pero el Presidente Correa nunca se sintió cómodo con la misma: él denunció las “inaceptables condiciones” impuestas por los potenciales países donantes; se enfrentó con ministros quienes “negociaron la soberanía nacional de Ecuador” y constantemente amenazó con perforar.

Podría alegarse que esta simplemente fue una fuerte táctica de negociación, excepto que Correa empleaba con frecuencia creciente su eslogan: “No podemos ser mendigos sentados sobre una bolsa de oro”, para justificar sus proyectos de petróleo, gas, y mineros. También denigraba a los “indígenas fundamentalistas” quienes citaban, entre otras cosas, “los derechos de la naturaleza” consagrados en la constitución para objetar los proyectos extractivos.

Correa sostuvo que él se había visto forzado a poner fin a la iniciativa y “liquidar” el fondo, debido a que solamente había acumulado US$13m en donaciones reales en seis años y US$116m en futuros compromisos. El gobierno había acordado esperar el doble del tiempo para alcanzar los US$3,6mm. Correa tiene un punto válido en que es injusto esperar que los países más pequeños, más pobres, y menos desarrollados, que necesitan el dinero para combatir la pobreza y elevar los estándares de vida, preserven su medioambiente intacto para salvar al planeta, cuando países más grandes, más ricos, y más desarrollados ya han destruido gran parte de su propio medioambiente y son responsables por la mayor parte de las emisiones de carbono. Él también ciertamente está casi en lo correcto en su predicción de que el total de los US$3,6mm no se hubiera alcanzado. Pero, es muy fácil cargar la culpa al mundo por haberle fallado al Ecuador. Es necesario considerar porqué, para citar a Correa, él no asumió “la corresponsabilidad ante el cambio climático”.

La equívoca posición de Correa sobre Yasuní; su beligerante política exterior; su sistemática acumulación de poder, especialmente sobre la justicia, con el pretexto de expandir la participación democrática; su default sobre la ‘deuda ilegítima’ en el 2008 y su movida para poner fin a los tratados bilaterales de inversión, todo ello ha planteado dudas acerca de si él honraría su compromiso de no explotar el petróleo, especialmente debido a que Correa se resistía a cualquier restricción sobre cómo debían gastarse los fondos. Por ejemplo, ¿había suficientes salvaguardas vigentes para impedir que Correa se apropie del dinero, reúna suficiente poder de gasto para asegurar la reelección por tiempo indefinido y luego explotar el petróleo en una etapa posterior? Si los precios del petróleo se incrementan, como es probable que ocurra, el incluso podría alegar que los US$3,6mm ya no eran suficientes para dejar Yasuní sin explotar.

En un discurso a la nación, transmitido por la TV el 15 de agosto, Correa urgió a la juventud de Ecuador que no se deje “manipular” por ambientalistas izquierdistas. Él alegó que “el mayor error es subordinar los derechos humanos a los aparentes derechos naturales”. Su afirmación de que las perforaciones sólo afectarían el 0,1% del parque (comenzando en Tiputini, que está principalmente fuera del parque), y generará US$18mm, fue por sí misma poco ingeniosa. Él es lo suficientemente políticamente para no anunciar planes para explotar el parque por entero desde el inicio pero una vez aprobado, esta área inevitablemente se expandirá con el tiempo, con nuevas carreteras abriendo el parque al talado ilegal y la bio-prospección.

También existe el riesgo de derrames de petróleo. Las repercusiones legales de un enorme derrame por Texaco en la Amazonía, un derrame que Correa condenó esta semana como “cinco o seis veces peor” que el del Golfo de México en el 2010, y que aún se sigue palpando 40 años más tarde. La petrolera estatal, Petroecuador, difícilmente tiene un record de seguridad ejemplar. El pasado junio, admitió que un oleoducto había perdido 420.000 galones de petróleo después de un desprendimiento de tierra. Correa tuvo que pedir disculpas a Perú “por los problemas que hemos causado” cuando el derrame fluyó a través de la frontera.

La apelación de Correa a “mis queridos jóvenes” fue un claro reconocimiento a la fuerza de la oposición contra la explotación de petróleo en Yasuní. Aunque no solo está confinada a los jóvenes. Las encuestas sugieren que hasta el 90% de los ecuatorianos apoyan la iniciativa de Yasuní. Incluso permitiendo que parte de este apoyo esté dirigido a Correa y no a la iniciativa per se, es obvio porqué Correa prefirió aguardar hasta después de su triunfo electoral en febrero, antes de hacer el anuncio. A finales del año pasado, durante una charla en Londres, Guillaume Long, el ministro del conocimiento y talento humano, dijo que si cualquier presidente quería explotar petróleo en Yasuní tendría que convocar un referéndum, pues era tal la fuerza del apoyo a la iniciativa. Sin embargo, Correa, pese a vincular su compromiso con la participación democrática, optó contra esto y envió su decreto a la Asamblea Nacional para su aprobación (su partido AP convenientemente obtuvo una mayoría en las elecciones).

Correa afirmó que estaría feliz de llamar a un referéndum si los oponentes recolectan las 500.000 o más firmas requeridas, pero rápidamente buscó minimizarlo, diciendo que agregaría otra pregunta proponiendo que solamente los periódicos digitales sean permitidos a fin de ahorrar papel y “evitar que tantos árboles sean cortados” para proveer papel a la prensa escrita. En entrevista en TV él también aventuró, en un desafío a los militantes pro-Yasuní, que la iniciativa podría ser salvada si los subsidios a los combustibles, que valen US$3mm al año, fueran removidos y se agregados al fondo. “Veamos quién acepta esto,” Correa dijo.

La recientemente electa presidenta del movimiento político indígena, Pachakutik (PK), Fanny Campos, tiene una causa política instantánea alrededor de la cual convocar a las divididas organizaciones indígenas de Ecuador, aunque la criminalización de las protestas sociales por el gobierno le presenta un formidable desafío. Sin embargo, ella insistió en que “el jaguar está despertando”. El PK ya ha lanzado una ofensiva en la Asamblea Nacional. El diputado Cléver Jiménez alegó que el Artículo 57 de la constitución establece específicamente que “todos los tipos de actividad extractiva están prohibidas” en áreas donde los pueblos indígenas están viviendo en aislamiento voluntario: esto se aplica a las tribus Tagaeri y Taromenane en Yasuní. No observar esta prohibición, establece el artículo, constituirá “etnocidio”.

• Olinguito

Por un golpe de real coincidencia, los defensores del Yasuní recibieron un regalo el mismo día en que el Presidente Correa puso fin a la iniciativa que lo protegía: el descubrimiento de una nueva especia de mamífero carnívoro en Ecuador. Bautizado como ‘Olinguito’, está cercanamente relacionado con el Olingo, hallado en otras partes del país, pero es más pequeño, de ahí el diminutivo, y sin una cola prensil. Es imposible saber qué otras especies el parque Yasuní, considerado como uno de los últimos espacios naturales vírgenes del mundo, podría contener. Por ejemplo, se estima que una hectárea del Yasuní contiene más especies de árboles que toda América del Norte combinada.

The background

Nicaragua’s 1987 constitution was partly reformed in 1995 and again in subsequent years. The 1987 document, the ninth constitution in the country’s history, was written some years after the 1979 revolution and sought, up to a point, to capture its socialist ideals. Despite this, it also established a democratic political system (with both the president and legislators elected for five-year terms), acknowledged the separation of powers, and expressed support for a mixed economy. The changes introduced in 1995 were more mainstream in character, giving greater power and independence to the national assembly, strengthening property rights, and allowing the legislative power to override a presidential veto with a simple majority vote.

Underpinning the country’s various constitutions is the fact that Nicaragua has had a troubled history in both the 20^th and 21^st centuries. The US occupied the country directly for over 20 years between 1912 and 1933, and then ruled indirectly through the Somoza family dynasty, which maintained tight political control aided by a mixture of corruption and repression, for just over the subsequent four decades (1933 to 1979). After years of growing public discontent, the left-wing Frente Sandinista de Liberación Nacional (FSLN) guerrilla movement seized power in 1979. It took its name from Augusto Sandino, a leader who had fought a guerrilla war against the US occupation forces.

Led by Daniel Ortega, in the early 1980s the FSLN enacted land reform, launched a literacy campaign, nationalised industries, and expanded health services. The US, concerned by what it saw as a communist threat, stepped up its opposition to the FSLN during the presidency of Ronald Reagan (1981-1989). Washington armed and supported counter revolutionary forces (known as contras) and helped trigger a civil war that caused tens of thousands of deaths. The war and a US trade embargo plunged the economy into recession. Ortega was elected president in 1984, but in new polls held in 1990, he and the FSLN were defeated. There followed a succession of three governments led by market-friendly, centre-right politicians. During this period the FSLN had also moderated its political positions, now describing itself as a supporter of “Christian socialism, solidarity, and a mixed economy.”

In 2006 Ortega made a political comeback, winning re-election and benefitting from subsidised oil sales by Venezuela, then experiencing its own “Bolivarian revolution” led by Hugo Chávez (1999-2013). However as Venezuelan aid eventually came to an end, the Nicaraguan government became increasingly authoritarian, reforming the constitution to do away with checks and balances and increasing its political controls, paving the way for repeated re-election. Some concluded that the Somoza dynasty was in effect being replaced by an Ortega dynasty. Set off by an attempted reform of the pension system, mass anti-government protests broke out in late 2018 with widespread arrests of political leaders, journalists and human rights activists. The death toll from the repression of those protests is widely estimated to be over 300. 

What happened?

A new round of constitutional reforms was presented to the government-dominated unicameral legislature, the Asamblea Nacional (AN), in late 2024, and formally enacted in February 2025. The reform was wide-ranging with 148 of the constitution’s 198 articles being amended.

One of the core changes is to article 132 which now gives the presidency the right to coordinate the legislative, judicial, and electoral branches of government, as well as regional and municipal bodies. Most constitutional specialists believe the “coordination” role in fact asserts the prevalence of the executive and the subordination of all other branches of government. The presidency in effect is expected to directly “coordinate” not only the Nicaraguan army but also the ministry of the interior and the national police.

The change to article 133 is also potentially far-reaching. It creates what has been called a diarchía where sovereign power is vested in two persons with equal authority. The text says there shall now be two co-presidents, both holding equal presidential power, elected by an absolute majority through universal, free, and direct suffrage. President Ortega and his wife and, until now, Vice President Rosario Murillo become co-presidents with equal powers. Co-presidents can appoint an unlimited number of vice-presidents.

Most analysts see this as a measure intending to maximise family control over the succession process. Ortega and Murillo have eight children living in Nicaragua, some already holding senior positions in government. The changes mean that in the event of the death of 79-year-old Ortega, 73-year-old Murillo will automatically succeed him without the need for new elections. In other changes the presidential term is lengthened from five to six years. Article 136 further increases the power of the presidency stating that only the executive can propose candidates for the supreme court and exercise the right to veto legislative proposals.

Looking forward

Political and human rights organisations have described the new constitution as a step towards full dictatorship. Reed Brody, co-author of a critical United Nations (UN) report on Nicaragua, said the constitutional changes were like a “monarchical decree” seeking to fuse the FSLN, the ruling party, with the institutions of the state. He added that the Ortega government had systematically dismantled the remaining checks on its power, reducing the other powers to mere organs of state. He also noted that the new constitution allows the army to be deployed as a domestic public security force.

Human rights lobby group Washington Office on Latin America (WOLA) said the constitutional reform and other measures annulled the separation of powers, closed spaces for the participation of civil society, and removed protections against human rights violations. In particular, WOLA noted that under article 97 the new constitution has institutionalised the role of “voluntary police”, street gangs which have attacked anti-government protestors on various occasions.

While the Ortega regime remains firmly in power and has shown itself to be resilient in the face of Latin American criticism and US and European sanctions, the likelihood is that on the medium-term anti-government protests and activities are likely to resume. If it seeks to build credibility, any eventual post-Ortega government will likely have to contemplate a new round of constitutional reform restoring the separation of powers.

The central bank is forecasting GDP growth of between 3.5% and 4% in 2012 and inflation of between 8% and 9%.

The central bank president, Antenor Rosales, said that export-led growth would drive the economy in 2012, but that remittances, activity in the free-zones and tourism all looked well set. In 2011 the economy grew 4% and inflation was 7.95% down from 9.23% in 2010.

Rosales expects exports to rise by 16% in 2012 to US$2.62bn, up from US$2.26bn in 2011. The country’s main export markets are: the US (which bought 28% of its exports in 2011); Venezuela (13%) and Canada (11%). He expects imports to rise 8% from US$4.87bn in 2011 to US$5.23bn in 2012.

The central bank expects free-zone exports to be up 3% at US1.75bn, though some free-zone advocates are pencilling in US$2bn in sales and 3,000 new jobs. Currently 97,000 people work in the free-zones, mostly in the textile and footwear industries.  A German car manufacturer, BMW, is due to visit Managua next month to discuss a project, the government said, while Taiwan is interested in building motorbikes in Nicaragua.

Remittances should be US$930m in 2012, up from US$905m in 2011.

• Nicaragua’s total debt ended 2011 at US$0.7bn. Central bank reserves stood at US$1.9bn. In 2011, the country received US$572m in bilateral and multilateral support. Of this, US$247m came from multilateral financial organisations.

Latin America’s weak educational attainment has been singled out for many years as a critical factor holding back economic and social progress. Regional countries are improving, but there is some way to go.

As usual, Asia was top of the class in the latest (2015) global education survey carried out by the Organisation for Economic Co-operation and Development (OECD). The OECD’s Program for International Students Assessment (PISA) surveyed 540,000 15-year old students in 72 countries, focusing on science, reading, and mathematics.

Students from Singapore were the highest all round performers. Japan was second, followed by Estonia, Taiwan and Finland. Canada was seventh, while the UK ranked at 15^th and US was well down the list at 25^th.

“Only in Canada, Estonia, Finland, Hong Kong (China), Japan, Macao (China), Singapore and Vietnam do at least nine out of ten 15-year-old students master the basics that every student should know before leaving school”, the OECD said in a statement. In terms of maths, China was well ahead. “More than one in four students in Beijing-Shanghai-Jiangsu-Guangdong (China), Hong Kong (China), Singapore and Chinese Taipei are top-performing students in mathematics, a higher share than anywhere else,” the report noted.

The OECD stressed again the need for skills in science, in the context of “massive information flows and rapid change”. Yet globally, only one in ten students were working at the highest level in science (albeit in Singapore it was one in four). And more than one in five fell below the baseline proficiency in science.

In Latin America, Chile placed first for its overall education system, a position it has held since 2006. Uruguay was ranked at no. 47 of the total 72 countries surveyed, followed by Costa Rica (55), Colombia (57), Mexico (58), Brazil (63), Peru (64) and the Dominican Republic (70).

The average score among OECD countries is 500 points and the standard deviation is 100 points. These were the results of countries participating within the region:

Science
Chile 447
Uruguay 435
Costa Rica 420
Colombia 416
Mexico 416
Brazil 401
Peru 397

Reading
Chile 459
Uruguay 437
Costa Rica 427
Colombia 425
Mexico 423
Brazil 407
Peru 398

Mathematics
Chile 423
Uruguay 418
Mexico 408
Costa Rica 400
Colombia 390
Peru 387
Brazil 377

Argentina

Notably, Argentina, traditionally one of the better performing Latin American countries, was not included in the 2015 PISA survey, after the OECD decided not to include the sample submitted by the left-wing government led by President Cristina Fernández (2007-2015) on the grounds that it was not properly representative and suffered from certain omissions. The insinuation was that some weaker results had been left out. In any case, the OECD said the sample was not comparable to the previous survey in 2012 and so did not include it.

The Fernández administration had had a testy relationship with OECD/PISA. In 2012, the-then education minister, Alberto Sileoni, threatened not to take part in the survey, arguing that the OECD’s standardisation of variables failed to take account the “particularities” of local student cohorts and education systems. This, he argued, would go some way towards explaining Argentina’s drop in the ranking from a respectable no. 37 in 2000, when the OECD first began the survey, to 53 in 2006 and 58 in 2009. Argentina had also slipped to no. 6 in Latin America by 2009, prompting consternation in a country proud of its regional leadership in social development.

Sileoni suggested Argentina not take part in 2012, however the decision of the city Buenos Aires to submit its own sample forced his hand. At that time the mayor of Buenos Aries was Mauricio Macri (now Argentina’s president). His then education secretary, Esteban Bullrich, is now the federal education minister.

Bullrich says that Macri government had been told earlier this year by the OECD and its independent experts that there were “serious errors” in the methodology used by the previous government to construct the sample for the 2012 survey. Sileoni defended the sample submitted by the Fernández government, noting that a sectoral reorganisation had meant some schools were joined with others, other closed and so on, which affected the sample size and representativeness.

Bullrich said that Argentina would participate in the next survey (due in 2018), with “proper statistics”. He revealed that the OECD has agreed to publish Argentina’s results separately, but that because the latest data was not comparable, the country could not be included in the global ranking.

In its 2012 report, the OECD found that 53.6% of 15-year olds in Argentina did not meet minimum reading standards, while 50.9% did not understand science-related questions. Two thirds (66.5%) could not do calculus.

Peru

Peru has pulled itself up from bottom of the PISA table, making “statistically significant” progress across the three core subjects since 2012, when it ranked of the table at no 65 (of the-then 65 countries included) for reading, maths and science.

In the latest survey, it was among the countries to make most progress, not only in the region but also globally. According to the education ministry, Peru was the fourth country with most progress in science on the global list, the fifth with the most progress for reading and the sixth with most progress in maths.

The latest survey covered 281 schools across the county, selected by the OECD (of which Peru is seeking membership). Almost 7,000 15-year old students were surveyed last year.

In science, Peru is now ranked at no. 63, in reading it has risen to 62 and in maths it is now placed at no, 61, above Brazil and Indonesia. Peru’s (now former) education minister, Jaime Saavedra, who was retained in his post earlier this year by the new president, Pedro Pablo Kuczynski, said that the results showed that Peru “is on the correct path”. “This is like an 8,000-metre mountain and we have climbed the first 1,000 metres”, Saavedra told the daily El Comercio. Saavedra said it was notable that the OECD was comparing Peru to Brazil, and while acknowledging that the country’s education system was still not comparable with that of Chile or Uruguay, he emphasised that the gap between Latin American countries is falling. Saavedra added that he expected to see further progress in 2018, following the introduction of a new school curriculum in Peru in 2017.

However, Saavedra was later forced out of office, after the main right wing opposition party, Fuerza Popular (FP), voted to censure him in congress following allegations of corruption the in ministry. A furious Kuczynski tried but failed to save his minister, one of the few well-liked politicians in the country. Saavedra has been replaced by Marilú Martens Cortés, who moves over from the general directorate of special services for education and has spent her career in the education sector.

The total number of Cuban self-employed workers, known as ‘cuentapropistas’, rose to 522,855 in September, up by 4.8% on the number at the end of last year. Although from time to time the government led by President Raúl Castro seems to have nurtured ideological doubts about the advisability of fostering a growing private sector, small businesses look set for further growth.

Self-employment has been permitted in Cuba since 2010, when the Castro government promoted it as a way of offsetting cuts in employment levels within the country’s dominant state-owned sector. Officially, self-employment is seen as playing a complementary and subsidiary role to that performed by the state, as the authorities seek to modernise some aspects of the Communist system.

This new private enterprise is limited to 201 specific activities or professions. The better known include small-scale in-home restaurants, known as paladares, that have grown in step with the expansion of tourism. But many other ventures have also launched. These include a wide range of retail outlets including hairdressers and beauty salons, car repair shops, gyms, bars, estate agents, gift shops, photography studios, and more latterly, mobile apps. Despite Cuba’s limited Internet connectivity, a growing number of on- and off-line services are also being offered including magazines, food guides and home delivery.

The number of cuentapropistas first broke through the half-million mark in 2015, but then dipped back down to about 490,000 before beginning to climb again this year. Some economists believe there are at least another 500,000 people who, although lacking formal cuentapropista permits, are illegally/informally involved in some kind of private sector activity. Some have attributed the fluctuations in the officially reported data on cuentapropistas to shifts in the government’s stance on self-employment.

In September and October this year, for example, there was a hardening of attitudes towards the paladares. New licences were frozen and existing paladares were subject to a series of inspections, as the authorities said they were seeking to crack down on unlicensed bars and prostitution. However, by end-October, licences were being issued again. So far this year, a total of 1,870 licences to operate restaurants have been issued, compared to 1,650 in calendar 2015.

More than half – 65% – of the self-employed are located in the provinces of La Habana, Matanzas, Villa Clara, Camagüey, Holguin and Santiago de Cuba. The authorities say that an estimated 68% of cuentapropistas were previously unemployed.

According to a survey covering the first eight months of this year, 31% of cuentapropistas are young, 31.4% are women, and 11.7% are pensioners. In addition, aside from farm cooperatives there are also almost 400 non-agricultural cooperatives in operation, working in areas such as retailing, personal services, restaurants, taxis, construction and manufacturing.

Cuentapropistas and cooperatives have expanded despite facing a number of challenges. Prensa Latina, the state-owned news agency, has recognised “inadequacies and dissatisfaction” relating to taxation levels, the lack of inputs, access to financing, higher prices and “obstacles to going forward without breaking the law”.

Official policy towards small and medium-sized enterprises (SMEs) is also unclear. To date, cuentapropistas have lacked the opportunity to set up formal companies with clearly defined legal and property rights. Such a legal framework could be used, for example, to allow such entities to deal with banks, foreign investors and State-owned companies. A new 32-page document, released in May in the wake of the Communist Party’s 7^th congress in mid-April, stated that “Private property in certain means of production contributes to employment, economic efficiency and well-being, in a context in which socialist property relations predominate”. For some, this suggested that Cuban SMEs could be given legal recognition in the relatively near future. Others warned that the process of reorganising property ownership in Cuba could still take a number of years.

Most cuentapropistas are also currently blocked from accessing raw materials and other products at wholesale prices. (While some wholesale markets have been introduced in agriculture, they remain the exception). Neither can cuentapropistas officially import (or export).

Expanded activity by Haiti's criminal gangs is adding to the country's economic problems, marked by rising food insecurity.

Addressing the United Nations (UN) Economic and Social Council (Ecosoc) in June, deputy secretary-general Amina Mohammed listed Haiti as one of the countries “of very high concern” among the world's major “hunger hotspots”.  Canada's representative at the UN, Bob Rae, said that the situation facing Haiti's population was worsening due to poor agricultural harvests, gang violence, and corruption. The Inter-American Development Bank (IDB) said it was working on a US$60m cash transfer programme to support vulnerable populations in Haiti and Honduras. Rose-May Guignard, representing NGOs active in the country, said that the gangs were disrupting market, educational, and health systems. As a result of gang violence, metropolitan areas were witnessing massive displacements of population.

Haiti’s economy has taken a severe battering over the last two years, suffering three major shocks. Starting in March 2020 the coronavirus (Covid-19) pandemic caused major harm. With up to 60% of the 11m-plus population displaying vaccine hesitancy, the virus continues to spread and cause damage. In July last year President Jovenel Moïse (2017-2021) was assassinated, ushering in a still unresolved political crisis. Haiti remains under a caretaker administration with high levels of political uncertainty. Then, in August 2021, a magnitude 7.2 earthquake hit Haiti, killing over 2,200 people, and causing an estimated US$1.6bn in losses (equivalent to 9.6% of GDP). Not surprisingly, GDP is estimated to have contracted for three fiscal years in succession: down by 1.7% in 2018/2019, by 3.3% in 2019/2020, and by 1.8% in 2020/2021. A further fall in 2021/2022 (the year to end-September 2022) is also expected.

These negative shocks came in what remains one of the poorest countries in the Western Hemisphere. Haitian per capital GDP stood at US$1,272 in 2020 on World Bank (WB) figures, compared with the Latin America and Caribbean regional average of US$7,243 in 2020. Meanwhile 59% of the population lives on less than US$2 a day while the majority of the population works in the informal sector. Half the country’s children do not attend school while the latest UN figures estimate that at least 4.5m people are forecast to need urgent food assistance this year.

In late June Haiti’s central bank (BRH) said that the quarter ending last March (second quarter of the 2021-2022 fiscal year) had been marked by rising international inflation and uncertainties over the war in Ukraine. The country’s twin deficits - on the domestic budget and on the current account - had worsened. Higher global commodity prices had raised import costs. Poor harvests and production bottlenecks had increased domestic inflation and weakened the currency. Annual inflation reached 26.7% in April, the highest in 19 years.

In the first five months of fiscal year 2022 (running to end-February) the trade deficit widened with exports of US$472.4m and imports of US$1.932bn. Government spending via the Treasury was G143.378bn (US$1.24bn), of which 40% was raised in taxes and 60% from borrowing, an unsustainable fiscal formula. The BRH said the economic outlook was “mixed”. Higher rainfall might boost agriculture and lift the economy but shortages of inputs such as fertilisers would have the opposite effect, deteriorating security conditions would hit production, increase imports, and weaken the currency.

A more dramatic commentary came from Wilhelm Lemke, president of local private sector group, Association des Industries d’Haïti (ADIH), who in June said that the Haitian government “is helplessly watching the decay of all public institutions. Everything is out of control.” He highlighted the government's “progressive loss of control” over parts of the country, a custom workers’ strike which had disrupted trade and triggered shortages, and a wave of kidnappings. He added that the government should take adequate measures to fight insecurity, to restore confidence among the population, “but also to allow businesses, which provide jobs, to ensure the continuity of their operations”. To date, gang wars are estimated to have displaced at least 17,000 people.

UN Special Representative for Haiti, Helen La Lime, explained the rising gang problem. She said kidnappings were running at an average of seven a day. Victims included schoolchildren and UN staff (one UN staff member had been killed in crossfire between rival gangs). “The pervasive and deepening sense of insecurity, exacerbated by the [national police’s] seeming inability to address the situation and the manifest impunity with which criminal acts are being committed, is dangerously fraying the rule of law,” she said.

The police force says that it has arrested hundreds of gang members and killed more than 120, but that with 12,800 officers in a country of over 11m it remains understaffed and under-resourced. La Lime said that gangs are creating a “state of terror” in Haiti, and she blamed the ongoing instability on what she called a “prolonged institutional vacuum.”

• IMF approves SMP for Haiti

The International Monetary Fund (IMF) has approved a staff monitored programme (SMP) with the Haitian government. SMPs are informal agreements between national authorities and IMF staff to monitor the authorities’ economic programme. According to the IMF, the SMP – which does not include financial assistance – aims to help the government restore macroeconomic stability and lower inflation. It adds that the programme comprises “realistic measures suited to Haiti’s fragility and, if implemented, could pave the way to an upper credit tranche IMF-supported programme”. It notes that the authorities have committed to implementing a series of administrative measures, including measures to simplify the tax system, raise resources for productive spending, and reduce monetary financing of the fiscal deficit.

The government’s plan

The main focus of this report is to assess the mainly opposition-led recovery plans for Venezuela. But it is also useful to look at the Maduro government’s own plans, such as they may be. This is because, as we have noted, a negotiated political transition could involve the formation of an interim government with the participation of the PSUV and all or some of the opposition parties. It may also be that some existing policies are adopted or adapted by a future government, whatever its political colours. The difficulty is that the Maduro administration has been inconsistent, announcing multiple policy twists and turns.

One approach therefore is to focus on one of the most significant ‘twists’ in recent years, the announcement of the “Programme for economic recovery, growth, and national prosperity” by President Maduro on 28 August 2018. This was important because it was the first time the government publicly acknowledged the failure of its economic model, based on printing money to fund the fiscal deficit, as well as on rigid state control of prices and the exchange rate, and on seizing public ownership of all key industries in the country. The plan included promises to reduce the fiscal deficit to zero, to liberalise the exchange rate, to promote the Petro as a new currency, to allow US-dollar based transactions, and to crack down on fuel smuggling across the border with Colombia.

While the government did not even come close to meeting some of these objectives (such as achieving a zero fiscal deficit or turning the Petro into an alternative currency) the plan did herald a major change in approach. It might be an overstatement to claim that Maduro effectively lurched from “savage socialism” to “savage capitalism” but the government certainly moved towards a more laissez-faire approach to the economy, particularly by permitting de-facto dollarisation. According to consultancy Ecoanalítica, by February 2020 no less than 64% of Venezuela’s domestic commercial transactions were conducted in US dollars, with some also conducted in Colombian pesos or euros. The company believes that the value of physical US dollars in circulation in the country is now somewhere between US$2.5bn and US$3bn.  

By February 2020 (just before the advent of the Covid-19 pandemic) the New York Times was reporting on a mini-boom enjoyed by wealthy members of the ruling elite in certain parts of Caracas, complete with new dollar-based shopping warehouses (known as bodegones), new restaurants and bars, and other forms of conspicuous consumption.

The newspaper’s assessment was that “after years of nationalising businesses, determining the exchange rate and setting the price of basic goods – measures that have long contributed to chronic shortages – Mr Maduro seems to have made peace with the private sector and let it loose. And while the country’s economy continues to contract overall, the declining regulations have encouraged companies serving the wealthy or the export market to invest again”.

Although this mini boom was restricted to the elite, some middle-class sectors also benefited from dollarisation, which meant that remittances sent home by expatriate family members could be used to offset the fall in their living standards. It is estimated that 40% of Venezuelan households now receive remittances from abroad, and that they may total around US$3bn a year. Government spending on social programmes for the poor has meanwhile been cut back by as much as 25%. The vast majority of the population remains excluded from the benefits of dollarisation. The assessment of Ramiro Molina, an economist at Universidad Católica Andrés Bello, is that “the fight for survival has forced the government to become pragmatic. Only the narrative is still socialist.” Some analysts have concluded that the ‘Chinese model’ – a state capitalist system where business-led economic development is coupled with a Communist Party political monopoly - is an attractive scenario for Maduro, although some members of the PSUV may see it as an ideological sell-out.

The government’s change of approach even led it to seek funding from the International Monetary Fund (IMF), an organisation it has shunned since 2007 claiming it is an instrument of US imperialism. In March 2020 at the outset of the coronavirus crisis Venezuela requested US$5bn in assistance from the Fund (later reduced to US$1bn). The Fund’s response was that it could not consider the request because it did not recognise Maduro as the country’s legitimate president.     

Opposition plans

In April 2019 leaked documents from the Inter-American Development Bank (IDB) suggested that the multilateral funding agency was considering putting together a US$48bn rescue package in the event that Maduro were to be removed from office and replaced by a more legitimate administration. According to a press report the documents outlined a four-year plan to open up the country to foreign investment through a combination of privatisations, structural reforms, and public-private partnerships. The reports suggested the money would be spent across three key “recovery areas” identified as the “urgent needs of the population”, “basic infrastructure”, and “institutional reforms”.

The IDB documents expressed some optimism about Venezuela’s longer-term capacity to recover. Opportunities for future development were said to include abundant natural resources such as hydrocarbons and minerals, and a “resilient private sector committed to recovery”. The documents suggested that with annual investment of around US$14bn, oil production could recover to over 3m bpd by 2029

In August 2019, on a visit to Brazil and Peru, US Commerce Secretary Wilbur Ross said a total of 14 US government agencies had come together to produce a blueprint to rebuild Venezuela’s economy under democratic rule. The first phase would prioritise humanitarian aid in months 1-3; the next priority, which Ross suggested would be relatively easy, would involve dismantling socialist controls in months 3-12. This would be followed by a longer-term focus on sustainable economic growth.

He said: “Reversing socialism will be done by facilitating private investment, rehabilitation of power generation and oil-bidding rounds.” Ross added that the US would ease sanctions, promote domestic and international trade credit, deploy technological advisers, and engage international financial institutions. The Washington administration would help restore oil production, revive farming, and develop financing. There would also be a privatisation process. Ross noted that “Venezuela’s infrastructure needs are far more severe, on a relative basis, than any other Latin American country because of years of neglect and mismanagement”.

No overall costing was presented, but the Commerce Secretary suggested much of the investment needed would come from the private sector, as well as from multilateral lending agencies. He added that pumping oil from the country’s vast reserves could generate US$50m a day in revenue (equivalent to US$18.2bn per annum). Perhaps anticipating the accusation that this plan sought to impose policy choices on a sovereign country, Ross clarified that the ideas in the blueprint would be submitted to a future elected government for consideration.

In October 2019 opposition and AN leader Juan Guaidó said a future Venezuelan transition government would honour the country’s “legitimate” foreign debt. Without giving further details Guiadó said his team was involved in conversations with creditors on future debt management strategy. The opposition leader said Venezuela’s foreign debt had grown from US$20bn in 1999, when chavismo came to power, to over US$130bn (the latter number is low, compared to other independent estimates). He also said that his parallel government had started legal action in the United States to have PDVSA 2020 bonds declared null and void. The bonds had been issued using US subsidiary CITGO (now controlled by the opposition) as collateral. Guaido’s legal team argued that the bonds had not been duly authorised by the legislature as required by the Venezuelan constitution.

The key opposition document setting out an economic policy for a post-Maduro Venezuela was launched in December 2019 and called Plan País (Country Plan), sub-titled “Political agreement to rescue Venezuela from social crisis and economic collapse”. A team led by Ricardo Hausmann, a Venezuelan economist and former planning minister (1992-1993) and now a Harvard professor, had been working on what he called “the morning after” plan for around three years. Hausmann has described the collapse of the Venezuelan economy as worse than Spain suffered in the Civil War in the 1930s.

As with earlier proposals, the plan envisages a three-stage approach. In this version the stages are, first, to deal with the humanitarian crisis, second to stabilise the economy, and third to implement structural reforms. It proposes an initial fiscal expansion to be funded through international foreign currency aid; social programmes compatible with fiscal objectives; tax reform; reform of state enterprises, including giving their workers an ownership share as part of privatisation programmes; gradual adjustments in energy and public utility tariffs; Central Bank independence; and an end to exchange rate controls. It also talks in general terms of the introduction of a mechanism to “anchor” both domestic inflation and the exchange rate.

Hausmann has said the plan is designed to address two “binding constraints” on any recovery. These are, first, price controls and the threat of expropriation and, second, the scarcity of foreign currency – in this case, US dollars. He argues that, combined, these two factors will effectively prevent a free market from functioning. The plan therefore concentrates on removing both constraints. Removing price controls and the threat of expropriation mainly requires a new government to regain the trust of the business sector and consumers. As part of that process it is suggested that reforms should introduce an independent Central Bank.

To solve the dollar scarcity Hausmann envisages emergency foreign borrowing in excess of US$60bn, paid out by international financial institutions (eg the IMF) over three or five years. Venezuela would retain a national currency and some kind of exchange rate anchoring mechanism. This could be a currency board (where the Central Bank by law can only print local currency when foreign currency reserves increase) or an exchange rate crawling peg system which would allow a more gradual and flexible reduction of both inflation and inflationary expectations. Hausmann is believed to favour the crawling peg approach (the currency board tends to be more rigid: Argentina introduced one in the 1990s which was initially successful but then collapsed under extreme balance of payments pressure in 2001).

The longer-term solution to dollar scarcity is envisaged as coming through a revival of the oil industry. The opposition dominated AN has drafted a proposed new Hydrocarbons Law which would retain existing royalty and tax rates. However, it would remove the current requirement for PDVSA to hold a majority stake in all production projects. Foreign companies would be allowed a majority stake as well as to own sub-surface deposits outright, thereby, it is hoped, giving them greater legal security and boosting their willingness to invest. The plan would also involve attracting émigré Venezuelan oil and gas industry specialists to return to the country.

Green concerns are sometimes dismissed in the region as little more than an urban middle class fad along with healthy eating and superfoods. It is clear that progress on decarbonisation will ultimately come up short if voters of most backgrounds fail to back the idea and see its benefits. There has been little systematic polling on attitudes to the environment, but the evidence suggests that voters do largely understand and support the need for environmental protection.  A poll by Brazilian market research agency Ipec, published in June 2023 in collaboration with Yale University, found that an overwhelming majority – 94% of respondents – believed that climate change is real and is happening now. Three out of four said global warming was the result of human activity. 70% of respondents believed climate change would have a negative impact on themselves and on their families. And 74% felt it was more important to protect the environment even if that might mean less economic growth and fewer jobs. Only 17% took the opposing view, prioritising growth and jobs over the environment.

What do you consider most important?

Source: Instituto de Tecnologia e Sociedade do Rio de Janeiro (ITS)

Crucially, although levels of concern have dropped a little since 2021, project member Anthony Leiserowitz of Yale says the latest results show “there is much more political wind” than had been imagined for any political party or candidate to assert that fighting climate change is an issue that their voters care about. Roughly half of all respondents (up from 42% in 2020) said they have chosen candidates for election considering where they stood on environmental protection issues. More than half (54%) said they thought the return of Lula to the presidency would be better for the environment.

The poll suggests that green sentiment remains strong among Brazilian voters in general, but it is also true that there are important regional variations and pockets of resistance. For example, after the October 2022 elections the right and far-right did particularly well in the gubernatorial races in all of the nine Amazon region states. There, settlers and urban residents tend to value rapid economic development over and above environmental protection. Despite national sentiment captured in the Ipec poll, this right-wing local and regional alignment will act as a limiting factor to the greener policies sought nationally by the Lula government. Creomar de Souza of Brasília-based consultancy Dharma Political Risk and Strategy says “the right has successfully painted environmentalism as the enemy of the people”. However, he notes that the federal government has instruments that it can use to fight back, such as offering subsidised farm credits to those who can show they are not involved in illegal deforestation.   

Colombia’s first known Covid-19 case was detected on 6 March 2020; the virus spread rapidly from that point onwards. A year later, by mid-March 2021, over 2.26m coronavirus cases had been confirmed, with over 60,000 deaths reported, placing the country 12^th in the world by total number of deaths. “Sixty-thousand deaths is obviously a very big, a serious number” says Víctor Muñóz, head of the department of the presidency in the right-wing government of President Iván Duque. However, Muñoz highlights what he says are the government’s achievements in dealing with the pandemic. He notes that the country was able to double the number of ICU beds from 5,700 to over 12,000. It also boosted its capacity to conduct PCR (polymerase chain reaction) tests, transitioning from having only one PCR-enabled laboratory at the start of the outbreak, to 165 one year later. PCR testing is considered a key a tool in testing and tracking the virus.

A strict national lockdown regime was introduced in late March 2020, and continued for nearly six months, running up to 1 September, at a high economic cost. According to the Bogotá Chamber of Commerce, around 53,000 businesses in the capital city were forced to close down. A separate study in October suggested that 10% of the country’s small businesses had closed, while six out of ten of them said they lacked working capital to maintain normal operation. Unemployment peaked at 21% in April, but as quarantine restrictions began to be lifted it fell back to 13.4% in December 2020.

Overall, the government calculates it paid out subsidies and emergency help programmes totalling US$4.16bn. These included programmes for poor households and the elderly. Hardship was nevertheless widespread; before the outbreak began 37.5% of the population, just over one in three households, was living below the poverty line. Shaken by the lockdowns, Colombia’s normally resilient economy contracted by 6.8% in 2020. However, the government is focusing on achieving a 5% recovery in 2021 through over 500 infrastructure, energy, housing, road building, and digital-access investment projects.

In the first quarter of 2021, having experienced two big waves of contagion with peaks in August and January, the Bogotá government was focused on launching a national vaccination programme, aiming to reach 35.2m people, or 70% of the total population. As in other countries there was a rather slow start with delays in vaccine delivery, as the government initially prioritised health workers and adults over the age of 80.

As China and Latin America’s love affair deepens, San José is one of the many suitors seeking to woo Beijing. In early January, President Luis Guillermo Solís travelled there for an hour-long meeting with Chinese President Xi Jinping to discuss the creation of a special economic zone on Costa Rican soil. The two leaders signed an agreement to authorise a study on the viability of the idea, as well as a deal to facilitate the export of Costa Rican lobsters to the massive Chinese market.

Costa Rica’s affection for China is relatively recent. Until 2007, the Central American country was an ally of Taiwan and had no diplomatic relations with Beijing. “In these years our links have grown and have shown, beyond a shadow of a doubt, that the free trade agreement (in place since 2011) was fundamental to the development of our relationship,” Solís said.

The planned special economic zone follows a Chinese development model. In the 1980s, China designated a number of areas as such, granting them a degree of economic autonomy from the central government. One of the most successful areas is Shenzhen, the city neighbouring Hong Kong, where many of the world’s most popular electronic gadgets are now assembled.

While in China, Solís visited Tianjin, an area dedicated to “technological development” around 200km from Beijing. The Costa Rican government is looking to establish an industrial and economic base away from San José and the more prosperous interior of the country, in an effort to develop the country’s poorer coastal regions. Two flagship projects designed to do just that have run into problems. The development of the Moín port terminal, on the Caribbean coast, has been delayed by legal disputes and industrial protests, while the construction of the highway to Limón has also been beset with difficulties.

Tourism

President Solís also used his visit to China to promote Costa Rica’s tourism industry, by meeting the head of the China National Tourism Authority, Li Jinzao. Solís told the press that he had asked the Chinese for more information about the preferences of the typical Chinese tourist in order to make Costa Rica a more appealing destination. A new Costa Rican consulate has been opened in the city of Shanghai. Government officials also signed an agreement to increase the teaching of Mandarin to Costa Rican tourism operatives and discussed the possibility of direct flights between the two countries.

Energy cooperation

Another result of Solís's trip to China was an agreement to set up a feasibility study on the construction of an oil refinery in Limón. Costa Rica’s National Oil Refinery, Recope, is due to oversee the project, following the cancellation of a previous US$1.5bn joint venture over a conflict of interest by the comptroller-general’s office. A subsidiary of the Chinese National Petroleum Corporation (CNPC) had carried out the original feasibility study. According to Sara Salazar, the president of Recope, the new refinery would produce biofuels and would refine gasoline and diesel. At present, Recope does not refine any fuel for the national market. Ahead of any construction work, Salazar promised an “exhaustive” review of Soresco, the Chinese-Costa Rican Reconstruction Corporation, the joint partnership between the CNPC and Recope formed to build the new refinery.

Opposition legislators rally to thwart Solís labour reforms

In late December, Sala IV, the constitutional chamber of Costa Rica’s supreme court, agreed to study a request by 21 opposition legislators to annul a presidential decision. Earlier that month, on 12 December, President Solís lifted a veto signed by his predecessor, Laura Chinchilla (Partido Liberación Nacional, 2010-2014), on a bill to reform the country’s labour procedures law. Solís, and his supporters, argue the bill updates Costa Rica’s antiquated labour laws; his opponents claim it will hand power to trade unions and terrify foreign investors.

Speaking at a press conference on 12 December Solís argued that the current labour laws were seven decades old and that, “by lifting the veto on this law we are coming to terms with our times,” adding that the bill would not become law until May 2016, giving legislators plenty of time to ensure it was fit for purpose.

Among the bill’s articles are provisions to speed up labour disputes, which can drag on for up to ten years, and greater protections for pregnant women and vulnerable workers. But when it was originally approved by congress in 2013, Chinchilla justified her veto by saying the bill would create a loophole for legalizing strikes in essential services, such as public health care, public security and transportation.

To allay these fears, Solís has signed an executive decree reiterating his administration’s pledge to ensure essential services are maintained. But the group of opposition legislators seeking to challenge the constitutionality of the bill argue that such a decree is “unworkable”.

Mario Redondo, a deputy from the Alianza Demócrata Cristiana, said, “President Solís’ action constitutes an interference by the executive branch of the legislative branch. He’s in a huge mess and now he doesn’t know how to get out of it.”

Many of those who supported the bill at the time have now cricitised Solís’s decision, arguing that as it stands the text will “bring destabilisation”. Some of the loudest voices come from Costa Rica’s business leaders who fear that the bill will facilitate strike action and hurt the country’s competitiveness.

Speaking on 12 December, Francisco Lobet, the president of Costa Rica’s chamber of commerce, said, “the country’s situation will worsen because the government’s decision will increase instability for the business sector”.

• Environmental monitoring

Costa Rica’s national technical environmental secretariat (Setena) has approved the licence to build the container terminal at the port of Moín, in the Caribbean coastal province of Limón. The work on the port, to be carried out by a Dutch consortium APM Terminals, is due to begin on 19 January. The company has also been obliged to put down a US$10m deposit against environmental damages. Setena insists it will closely monitor the project.

Date: 4 October. Run-off for presidential and gubernatorial elections to be held on 25 October if no candidate receives over 50% of the valid votes in the first round.

Type: Presidential, federal legislative elections (all 513 seats in the chamber of deputies and two thirds of the 81-member senate), gubernatorial, and state legislative elections.

Main contenders: President Luiz Inácio Lula da Silva (Partido dos Trabalhadores, PT); Senator Flávio Bolsonaro (Partido Liberal, PL); Ronaldo Caiado (União Brasil), the governor of Goiás state; Romeu Zema (Partido Novo), the governor of Minas Gerais state; Renan Santos (Missão); Aldo Rebelo (Democracia Cristã, DC).

President Luiz Inácio Lula da Silva has been ranked in recent pre-election opinion surveys as the favourite to win re-election, although this does not necessarily indicate widespread public support for his administration. Several long-term social and political trends suggest a general shift to the right in Brazil, which means that opposition-aligned figures could have opportunities in the coming months to boost their popularity. However, the Brazilian right is currently disunited. Uncertainty remains as to whether Flávio Bolsonaro, the eldest son of former president Jair Bolsonaro (2019-2023), can present himself as a candidate who appeals to both far-right and centre-right voters.

It is expected that Lula will sweep up the support of most left-wing and centre-left voters, just as he did in the 2022 presidential race. Despite concerns over the PT’s future, especially following its disappointing results in its north-eastern political strongholds during the 2024 municipal elections, Lula’s party has for decades been the dominant party of the Brazilian left, and its well-oiled campaigning machine will be behind his re-election bid. While the left has no strong alternative to Lula, several right-wing contenders have declared intentions to run for president. The list of presidential pre-candidates could change before October, as several prominent conservative figures may still throw their hat in the ring before April, with public officials such as mayors and governors needing to step down from their posts six months before the election if they plan to run for president.

Currently, Flávio Bolsonaro appears to be the main candidate of the far-right populist ‘Bolsonarismo’ movement, but the name that has loomed over pre-election speculations for months has been Tarcísio de Freitas (Republicanos), the governor of Brazil’s wealthiest and most populous state, São Paulo. De Freitas’ name is often included in pre-election polls, despite his public denials of plans to run for president. He has instead insisted that he will run for another term as São Paulo’s governor. But political pundits have highlighted that De Freitas is one of the few names who is favoured by the markets, due to his pro-business stance and pushes for privatisation and spending cuts; who can appeal to moderate non-populist conservatives due to his relatively professional, pragmatic personal leadership style; and who could also win over supporters from the more radical Bolsonarismo movement, given his closeness to Bolsonaro himself.

Bolsonaro legal woes

De Freitas served as Bolsonaro’s infrastructure minister from 2019-2022 and has frequently expressed support for his former boss, especially during Bolsonaro’s legal woes last year. In September 2025, the supreme court (STF) found Bolsonaro guilty of plotting a coup d’etát in 2022 to overturn his election defeat to Lula. He is now serving a 27-year prison sentence with his son, Flávio, considered his proxy candidate. Rather than throwing their weight behind De Freitas, Bolsonaristas appear to be hoping that their torchbearer can emulate the political comeback of Lula, who was convicted on corruption charges in 2017 and was behind bars from 2018-2019. Despite being in prison, Lula declared plans to run in the 2018 presidential race, but ultimately his political protégé Fernando Haddad (the current finance minister) ended up running as his proxy and lost to Bolsonaro in the run-off in October 2018.

Lula’s convictions were later overturned in 2021, clearing the way for his comeback in the presidential race the following year. There has been some speculation in the media that this is what Bolsonaro hopes to achieve – to have his conviction cleared or his sentence reduced so that he can run again in a future election, such as the 2030 or 2034 presidential race. Therefore, it might not matter much to Bolsonaro whether his son manages to defeat Lula. The main priority for the Bolsonarismo movement in the coming months may well be to keep the Bolsonaro family name in the national headlines and to keep the momentum behind Bolsonaro’s narrative that judicial authorities are persecuting him.

Rallying cries of the right

STF justice Alexandre de Moraes, the lead judge presiding over Bolsonaro’s coup plot trial, is one of the most reviled figures for the far right. Bolsonarista rallies in recent years have featured as much if not more vitriol directed at De Moraes than at Lula. The far-right hatred towards De Moraes is nothing new. During Bolsonaro’s presidency, the former president and his supporters frequently criticised and insulted De Moraes and other STF judges in public speeches and on social media. In 2022 De Moraes also served as the head of Brazil’s superior electoral court (TSE). Bolsonaristas painted him as the personification of Brazil’s supposedly tyrannical institutions, and they spread misinformation seeking to undermine the electoral process and push the argument that the 2022 election could have been stolen from Bolsonaro.

It is unclear how much far-right ire will be directed at the current TSE president, STF justice Cármen Lúcia Antunes Rocha, given that she is considered a discreet figure who rarely makes public comments on divisive political topics. Media reports also indicate that Antunes Rocha will step down later this year before the October elections, leaving the TSE presidency to STF justice Kássio Nunes Marques, who was appointed to the judiciary by Bolsonaro in 2020. If a Bolsonaro nominee is leading the electoral authority, it is less likely that Bolsonaristas will criticise the TSE in the same way they did in 2022.

However, the Bolsonarismo movement thrives on confrontation and portraying its leaders and members as victims oppressed by the establishment or the system. The 2018 and 2022 elections saw the Bolsonarismo movement tap into anti-establishment discontent and expand from a radical fringe movement to become a mainstay in Brazil’s political landscape. It is expected to remain a major political force in 2026 and beyond. Bolsonarismo will command a significant political estate, and if the movement wants to help Flávio stand a fighting chance against Lula, it will likely need to channel its energy towards drumming up rage against the incumbent government.

The main issue that the Brazilian right could highlight is insecurity. Despite Brazil’s national homicide rate falling in recent years, the statistics do not correlate with a rising public feeling of safety. Instead, there is significant public appetite for tough-on-crime policies, rather than the holistic crime-fighting strategies advocated by security policy researchers, which involve better police intelligence to track and intercept the money laundering networks of criminal gangs and better community policing and poverty reduction initiatives to discourage young people in low-income communities from turning to a life of crime. This feeling of distrust towards the professional opinions of experts and increasing public preference for the supposed short-term fix of mass incarceration or tough police raids on gang-controlled areas could play into the hands of Bolsonarismo, which has often called for hardline measures.

Lula and the Brazilian left more broadly have struggled to present a convincing counter-narrative against the sentiment of ‘bandido bom é bandido morto’ (the only good criminal is a dead criminal), a slogan that has been attributed to various politicians in the 20^th century and has in recent decades become a common phrase in debates on social media especially among right-wing Brazilians. While it is unlikely that Lula’s campaign rhetoric will veer too strongly towards the hardline stance, he will likely try to highlight how his government is taking the fight against organised crime seriously.

Economic outlook

In addition to focusing more on security issues, Lula is expected to highlight the encouraging macroeconomic data for Brazil. The country’s unemployment rate in the rolling quarter of September-November 2025 fell to 5.2%, which is the lowest figure on record since 2012, when the national statistics institute (Ibge) began recording the metric in the current historical series. Ibge’s data also shows that annual inflation in 2025 stood at 4.26%, which is within the target range of 3.0% +/-1.5. Lula is less likely to be hit by anti-incumbent frustration if the public is feeling less anxiety over the cost of living and the job market is stronger.

Regarding the economic outlook for Brazil and how it could affect consumer confidence and the public mood ahead of the election, it is worth noting that interest rates are still very high. As of January 2026, the benchmark interest rate (Selic) set by the BCB stood at 15.0%. Market analysts are expecting a rate-cut cycle at some point this year, although forecasts of private sector economists consulted by the BCB suggest that the Selic could still close this year at 12.25%. A decrease of a few percentage points in the Selic could bring consumers and businesses some sense of relief, but borrowing costs will still be high and there is unlikely to be a wave of increased consumer confidence and spending unleashed before October to lift the public mood.

To boost his own popularity, Lula could implement a more generous fiscal policy, throwing cash around through social programmes, infrastructure projects, and subsidised credit. Right-wing figures could seek to reiterate their arguments that Lula and leftists more widely are irresponsible spendthrifts and that four more years of a Lula government could spell disaster for public finances. However, it is uncertain whether voters will care as much about potential fiscal profligacy if they feel improvements in their personal finances and living standards ahead of the election. Indeed, in 2022 Bolsonaro ramped up spending on welfare and social programmes, which was widely considered an effort to boost his re-election bid. He began 2022 as the underdog, with pre-election polls showing Lula as the strong favourite against the unpopular far-right firebrand, but the October 2022 run-off turned out to be a knife-edge vote, with Lula narrowly winning on 50.9%. It is debatable how much Bolsonaro’s generous fiscal stance in the final year of his presidency contributed to him coming so close to victory in 2022, but it could provide a lesson for Lula to apply in 2026.

With the left clearly behind Lula, he and his campaign team will face a choice as to whether he should try to defeat Bolsonarismo by shoring up the support of his core left-wing voter bases or by making conciliatory gestures to win over centrist or centre-right voters. The 2022 election was regarded as a polarised contest in which many centrist voters ultimately chose Lula because they viewed him as the lesser of the two evils. In 2026 Lula could opt for boosting his left-wing credentials and riding the wave of polarisation to victory, but he will likely need to take care not to alienate moderates who lent him their support four years ago, especially centrist voters in Brazil’s densely populated south-eastern region, which includes states such as São Paulo, Minas Gerais, and Rio de Janeiro.

Fragmented right

The Brazilian left does not appear to have any strong option aside from Lula, whereas the right is currently divided between potential candidates representing various shades of conservatism. Despite some signals in 2025 of attempts to shore up ties between centre-right and far-right parties, it is uncertain if Flávio Bolsonaro will give up on his presidential bid in the coming months and endorse a right-of-centre candidate. Some far-right figures, such as Bolsonaro’s second son Carlos Bolsonaro, have publicly insulted moderate conservative governors, calling them “rats” and accusing them of trying to steal Bolsonaro’s political estate after his conviction. 

Battle for congress

In July 2025 Bolsonaro said at a rally that he wanted at least 50% of congress. Political pundits have highlighted how Brazil’s system of checks and balances places great power in the hands of lawmakers, and it is in congress that Bolsonaro would most likely hope for a way to reduce his sentence or be released from prison. Bolsonaro’s wife, Michelle Bolsonaro, and his second son, Carlos Bolsonaro, are expected to run for seats in the senate, the legislative chamber which handles the appointment of supreme court justices and can also launch proceedings to impeach a justice. 

Strength of the centrão

After the 2024 municipal elections, the parties that won the most mayorships were big tent parties such as the Partido Social Democrático (PSD), the Movimento Democrático Brasileiro (MDB), and other parties associated with the so-called ‘centrão’ (big centre), a loose grouping of parties which lean to the centre-right but are flexible in their political stances. The strength of the centrão in local politics does not necessarily mean that a centre-right figure would perform well in the presidential race, but local election results often correlate with federal congressional election results, which could suggest that the centrão is likely to continue dominating the national legislature.

Last month international human rights organisations like the International Federation for Human-Rights expressed concern about the expulsion of two representatives of the US-based NGO, Center for Justice and International Law (Cejil), who were visiting Nicaragua at the invitation of a local human rights group, Centro Nicaragüense de Derechos Humanos (Cenidh). The expulsion of the two foreign nationals - Luis Carlos Buob, a Peruvian-Swiss lawyer and his Spanish colleague, Marta González –was linked to their efforts to denounce human rights violationS relating to the ‘Gran Canal’ project - the US$50bn build-operate contract for which the Frente Sandinista de Liberación Nacional (FSLN) government led by President Daniel Ortega awarded in 2013 to Hong Kong Nicaragua Canal Development Company (HKND).

According to a Cejil press release, Buob was refused entry to Nicaragua after initially being accused of drug trafficking, after which Nicaraguan authorities reportedly said that “Nicaragua had the sovereignty to decide who entered the country”. González was initially allowed entry but was subsequently detained after it was revealed that she was travelling with Buob. A Cenidh statement described the deportation of the two as “arbitrary and illegal” and said that both had been subject to “hostile treatment, theft, violence, and unjustified denial of entry”. The local human rights NGO said that Buob had been thrown to the floor and handcuffed, and that both his and González’s mobile phones had been forcibly taken from them.

In an 18 May press release by Freedom House, a US independent watchdog organization, Carlos Ponce, the director for Latin American programs, said that the deportation of the two was evidence of how the Nicaraguan government was “increasingly harassing journalists and human rights defenders because of their work on behalf of populations affected by the proposed new canal connecting the Caribbean with the Pacific Ocean”. Cenidh has also suggested that the deportation of Buob was a reprisal for his recent criticism of the Nicaraguan government’s handling of the Canal project. In March Buob had been the Cejil representative at a hearing at the Inter-American Commission on Human Rights (IACHR) in Washington D.C., during which Cenidh and other Nicaraguan organisations denounced the land expropriations carried out by the FSLN government and the repression of the ensuing protests [WR-15-14].

Meanwhile in its annual report on human rights in Nicaragua, published on 29 May, Cenidh registered a 10% increase in the number of reported human rights violations in 2014 compared to the previous year, identifying the ‘Gran Canal’ project as one of the main factors contributing to this increase. Cenidh also criticised the government’s aggressive response to the protests against the Canal, triggered, according to the NGO, by “the threat…of being stripped of their land and forcibly evicted”. In particular it noted the abuses committed by the police in December 2014 against those who participated in marches held in El Tule and Rivas [RC-15-01], calling them the “consequences of the police’s institutional weakness”. According to the Cenidh report, the police as an institution received the highest number of complaints regarding human rights violations (47.49%) – or 749 of 1577 cases.

• Renewable energy

Renewable energy is another area attracting investment. The Eclac report on foreign direct investment (FDI) points out that until now, “Nicaragua has received less FDI in renewable energy generation than other Central American nations, though the US-based Viaspace has invested in a 12 MW biomass power plant”. Last year the Frente Sandinista de Liberación Nacional (FSLN) government announced that it aims to have 90% of its electricity generated by renewable sources, particularly wind and hydroelectric power. The Eclac report notes that “the construction by a Brazilian conglomerate of the 253MW Tumarín dam is getting underway, but with ownership of the project shared between the State-owned electricity companies and foreign investors.”

In both countries public debate over fentanyl is deeply influenced by electoral politics. Mexico is preparing for presidential and general elections in June 2024. The US is in the early stage of the primaries campaign, ahead of the general election due in November 2024. Politicians in both countries are therefore looking to develop vote-winning narratives around issues of crime, drug trafficking, and migration. Conventional wisdom suggests Mexican politicians do well appealing to nationalist and anti-US sentiment, although this may be changing. Likewise, US politicians have gained from articulating anti-immigrant sentiment, particularly over drugs, immigration, and the alleged loss of US blue collar jobs resulting from trade with Mexico. In the current developing primaries campaign, important sections of the US Republican party seem to believe once more that there are votes to be won by taking a hard-line anti-Mexico stance.

This year various Republican contenders have outlined a whole range of extreme proposals for dealing with the fentanyl crisis. In July a group of Republican think-tanks published an open letter warning that US-Mexico collaboration on drugs and security issues had “collapsed”. It said the AMLO government was working in a “conscious and willing symbiosis” with the cartels and accused the Mexican president of having “expressed his openness to a pact with the cartels”.  

Earlier, in April, advisers to former president Donald Trump, widely expected to win the Republican nomination (despite multiple legal cases against him), said he had discussed “sending special forces” and “using cyber warfare” to target cartel leaders. A report by Rolling Stone magazine said Trump’s advisers had briefed the former president on “battle plans” with a range of options including unilateral military strikes and troop deployments conducted without Mexican government approval.

One far-right think tank, the Center for Renewing America, has outlined possible justifications and procedures for a Trump presidency to “formally” declare “war against the cartels”. Two Republican members of congress have drawn up a bill seeking authorisation for the use of military force to “put us at war with the cartels”. Senator Tom Cotton, a Republican from Arkansas, says he is open to sending US troops into Mexico even if Mexican permission is withheld. Mike Waltz, a Lower Houser member from Florida and former Green Beret, says: “We need to start thinking about these groups more like we do ISIS and less like we do the mafia.” In both houses of congress there have been proposals to designate the cartels as foreign terrorist organisations (FTOs).

Candidates for the Republican presidential nomination appear to be competing among themselves to see who can come up with the most draconian and headline-grabbing ideas. In a campaign video, Trump said that if re-elected he would “order the Department of Defense to make appropriate use of special forces, cyber warfare, and other overt and covert actions to inflict maximum damage on cartel leadership, infrastructure and operations”. Vivek Ramaswamy, another contender for the Republican nomination, said that using military force without Mexican permission “would not be the preferred option, but we would absolutely be willing to do it”.

If they were adopted as official policy, such hard-line postures would have massively uncertain outcomes, but at the moment they are primarily seen as an instrument to rally US conservative sentiment. Moderate Republicans have nevertheless warned of the enormity of the risks involved. Some analysts point out that conducting military operations on the territory of a foreign country, without its approval, in effect constitutes an act of war. One Republican congressional aide told the Politico website: “If you thought Iraq was a bad situation, wait until you invade a country on our border…our grandchildren will be dealing with this.”

This source said that according to US military assessments 30% to 35% of Mexican territory is currently “ungoverned” meaning that any invasion would likely trigger a surge of people with legitimate claims to seek asylum in the US, highly counterproductive for any political party that wants to reduce inward immigration. Others point out that these ideas only address the supply side of the fentanyl problem, not the public-health problem of excess US demand.

Some US politicians may seek to conflate the surge in undocumented migrant inflows with the trafficking of fentanyl across the border. However, the evidence does not point in that direction. Around 90% of fentanyl seizures take place at legal points of entry. Mexican cartels largely hire US citizens, not migrants, to smuggle the drug into the country. US citizens represent over 85% of those convicted on fentanyl charges. One of the more typical forms of fentanyl smuggling is to hide the drug in concealed vehicle compartments driven by US citizens with US number plates.

Fentanyl drug traffickers are overwhelmingly U.S. citizens, not illegal immigrants
Citizenship status of defendants convicted of fentanyl drug trafficking, 2018-2021

Source: Cato Institute

The suggestion by some members of the US congress from both major parties for Mexico’s two major criminal organisations, the Sinaloa cartel and Cartel Jalisco Nueva Generación (CJNG), to be designated as foreign terrorist organisations (FTOs) is particularly notable because US legislation authorises military strikes against FTOs. However, opponents of the idea say the cartels’ current designation as Transnational Criminal Organisations (TCOs) already gives the Washington administration significant powers, including the ability to apply economic and financial sanctions. Seeking to raise that to FTO status would deeply alienate the AMLO government for no significant corresponding gain in law enforcement.

That said, the issue is likely to remain on the US political agenda as it gives Republicans a rallying call to mobilise their supporters. In early 2023 two Republicans, Dan Crenshaw (Texas) and Mike Waltz (Florida), introduced a bill titled “[Authorisation for the Use of Military Force] Cartel Influence Resolution” which would allow the US president to use “all necessary and appropriate force” against foreign nations, organisations or persons that the president “may determine have committed drug-related offences”. Meanwhile, 18 state attorneys wrote to President Biden requesting that he designate fentanyl as a “weapon of mass destruction”. Florida governor and presidential contender Ron de Santis said he favoured “direct action” including a possible blockade of Mexican ports. Brian Finucane of the International Crisis Group (ICG) lobbying organisation has warned that what he calls “war talk” will “only serve to strain US-Mexico ties, potentially complicating the two neighbours economic relations and their capacity to work together in promoting safe, orderly migration and fighting transnational crime”.

Date: 24 October.

Type: Midterm federal legislative elections, half of the seats in the chamber of deputies and a third of the seats in the senate will be renewed.

Main contenders: Partido Justicialista (PJ, Peronists), Juntos por el Cambio (JxC).

Testing the unity of Peronism

These elections will be a test of the Peronists capacity to maintain unity and retain the congressional majority won in the 2019 general election after two difficult years for the government led by President Alberto Fernández. Peronism united behind Fernández’s candidacy two years ago after it went into the 2015 general election deeply divided and lost to the opposition. But the PJ’s newfound unity looks uneasy, with moderate and radical party factions having different views on many issues. With Argentina suffering from a deep economic recession that has been exacerbated by the coronavirus (Covid-19) pandemic, the differences over government policy actions have become more pronounced.

The PJ’s 2018 electoral victory is largely attributed to former president Cristina Fernández (2007-2015), the leader of the radical leftist Kirchnerista PJ faction, agreeing to play second fiddle to Alberto Fernández and be his vice-presidential running mate. This brought Cristina Fernández’s breakaway Unidad Ciudadana movement back into the main PJ fold. Kirchnerismo has a solid electoral base, and harnessing this support is key for Peronism to win elections. The Frente de Todos coalition of the PJ and Kirchnerista movements delivered a comfortable victory for President Fernández and clear majorities in both houses of congress. The Frente de Todos has 41 senators in the 72-seat senate and 119 deputies in the 257-seat lower chamber. The centre-right JxC opposition coalition has 25 senators and 115 deputies, with the smaller parties making up the remainder.

The congressional majority has allowed the Fernández administration to pass emergency economic legislation and to renegotiate Argentina’s debt with foreign bondholders. However, this has not been enough to lift Argentina out of the recession it fell into in 2018, and the country continues to have a high fiscal deficit and a persistently high (double-digit) inflation rate. The exacerbation of the recession due to the pandemic has led to massive jobs losses and a sharp rise in the poverty rate (to around 40% compared with 33.6% in 2018).

The economic collapse has undermined public support for the government. A recent public opinion poll found that 65% of respondents disapprove of the Fernández government, with 76% unhappy with the situation in the country and 74% considering that the situation deteriorated in 2020 compared with 2019. President Fernández’s disapproval rating stands at 61% but more ominously for the PJ, 73% disapprove of the chamber of deputies and 71% of the senate. The dismal economic situation has also prompted criticism from withing the PJ’s ranks, particularly from the more radical factions. Vice President Fernández herself has publicly complained about the government’s macroeconomic management, condemning the rise in poverty and demanding more social spending despite the fiscal deficit and a still heady public debt (around 90% of GDP).

These grumblings have raised speculation that Peronism is once again becoming divided. This could undermine the PJ’s electoral prospects and provide JxC with a chance to take away control of congress from the PJ, but to capitalise on this, JxC would also have to rediscover the unity it lost following the 2018 electoral defeat.

Abortion legalisation another vote-loser?

Another factor that could cost the Partido Justicialista (PJ, Peronists) votes in the midterm legislative elections is President Alberto Fernández’s controversial decision to push through congress a new law legalising abortion. While support for legalising abortion has increased in Argentina in recent years, particularly among the young, it still divides society and the PJ. Many Peronist voters are socially conservative Catholics and previous Peronist governments deliberately avoided pressing the issue. The approval of the abortion legislation in December 2020 was deplored by Pope Francis, himself a Peronist sympathiser, and the Argentine Episcopal Conference. Moreover, opinion polls show that most Argentines (over 50%) remain opposed to unrestricted abortion, suggesting that most of the electorate might be unhappy with the new legislation.

El Salvador’s President Nayib Bukele announced a partnership with artificial intelligence firm xAI to use AI tools in public schools throughout the country in a statement published 11 December.

xAI, which is owned by US tech mogul Elon Musk, said that it will bring its Grok chatbot to over 5,000 public schools in El Salvador over the next two years, in what it calls the world’s first nationwide AI-powered education programme. The partnership will work on “delivering personalized learning to over one million students and empowering thousands of teachers as collaborative partners in education,” according to the statement. “This initiative will create adaptive, curriculum-aligned tutoring that adjusts to each student's pace, preferences, and mastery level - ensuring every child, from urban centers to rural communities, receives world-class education tailored to their needs,” it adds.

Bukele hailed the deal, claiming that it “proves that nations can leapfrog directly to the top through bold policy and strategic vision,” while acknowledging that El Salvador is “a testbed for innovation”.

This is not the first time that a government has partnered with an AI firm to use its tools in public schools, with pilot programmes also agreed in Iceland, Estonia, Greece, and the UK, but it is the largest such project to date.

Although the stated aim is to help close learning gaps and help increasingly overworked teachers, the use of AI in schools has led to some concerns, particularly given Grok’s documented history of generating inflammatory and inappropriate outputs, which have been widely reported in international media. Although xAI has apologised for Grok’s outbursts, the company has done little to assuage concerns over the kind of safeguarding features necessary to protect young children from harmful outputs. 

As AI education strategist Dan Fitzpatrick wrote in an op-ed for Forbes published on 14 December, students should not be expected to bear the same innovation risks as other early adopters of technology such as AI. “Responsible AI in classrooms is contingent on transparency, human oversight and clear lines of accountability,” he wrote. “If xAI is to be taken seriously as an educational partner, it will have to prove, not only the new features, but also a far more meaningful safety culture, better accountability mechanisms, and independent scrutiny suitable to the ethical weight of education.”

El Salvador’s public education system is in need of investment to boost human capital and enable Bukele’s drive to make the country a tech hub, but at this stage it is far from clear that rolling out a tool that is still very much in development is the best way to improve education attainment. While the agreement certainly chimes with Bukele’s desire to position the country at the vanguard of digital technology, as he also did in adopting the cryptocurrency bitcoin as legal tender, there is a risk that it does more to curry favour with US powerbrokers like Musk than it does to help Salvadorean children and teachers, who will not have the opportunity to opt out of becoming part of the experiment.