(Bloomberg) -- Bolivia’s President Evo Morales faces his toughest electoral challenge yet as he seeks a fourth term in office amid voters’ waning enthusiasm for South America’s longest-serving leader.
Morales needs 50% of the ballots in a first-round vote Sunday -- or 40% together with a 10-point lead over his closest rival -- to avoid a run-off vote. Polls suggest he has a good shot at pulling that off, though unlike in previous contests, the result may be close. An Ipsos Bolivia poll published Oct. 13 put Morales at 40% with his closest rival, Carlos Mesa, at 22%, with a 2% margin of error.
The lone survivor of the so-called pink tide of leftist leaders that reshaped the continent’s politics during the 2000s, Morales has presided over more than a decade of strong economic growth, rising incomes and falling poverty. But after ignoring the result of a 2016 referendum on presidential term limits, Bolivia’s leader faces an opposition increasingly critical of his democratic credentials as well as signs that his unorthodox economic model is starting to run out of road.
“It’s going to be a tighter race without a doubt,” Kathy Ledebur, the director of the Andean Information Network, a think-tank in Cochabamba, Bolivia’s third-largest district. “But there’s a good chance he’ll win in the first round.”
Mixed Model
An Aymara Indian in a country historically ruled by a richer, white elite, Morales swept to power after his 2005 election promising to “nationalize everything.” In fact, his Movement Towards Socialism party (MAS) has proven considerably more pragmatic than much of his rhetoric suggests.
“It’s neither an absolutely socialist model or a strictly liberal one,” Hugo Siles, an economist in La Paz, said by telephone. “It’s main characteristic is the nationalization of strategic public companies combined with a free market economy when it comes to determining the prices of basic goods.”
To date, that model has proved remarkably successful, with GDP expansion averaging 4.9% between 2004-2014, the longest period of growth in the country’s history. Both poverty and inequality have fallen significantly.
But just three commodities make up over 70% of Bolivia’s exports: gas, zinc and gold. With exports of gas in decline, the country’s future sources of income look less secure.
When commodity receipts started to fall, the Morales administration stepped in to maintain levels of public spending. Public sector debt rose from 38% of GDP to 53% between 2014 and 2019 while Bolivia’s international reserves sank from just over $15 billion to $8 billion.
Bolivia had one of the highest fiscal deficits in the region in 2018 at 8.1% of GDP. Though the government is aiming for under 7% this year, that’s still an “unsustainable” level according to Siles. But despite the prospect of tougher times ahead, the election campaign has barely touched on questions of economics, focusing instead on issues like healthcare and security. Bolivian dollar-denominated bonds maturing in 2028 yield just slightly over 5%, well below other South American nations like Argentina and Ecuador.
Election Campaign
The chief threat to Morales comes from Mesa, a former journalist who spent a little under six months as president from 2004-2005 during a period of severe political turmoil. Some polls have put him within the 10-point margin behind Morales that would force the election to a second round.
But Mesa, a long-serving politician, has alienated both the left and the right over the years, according to Ledebur, and has no real electoral base.
In an interview in June, Mesa accused Morales of having “authoritarian” inclinations and fostering “brutal corruption.” Mesa himself has also been dogged by allegations of graft.
In third place appears Oscar Ortiz, a senator from the wealthy agricultural heartland of Santa Cruz, who enjoys a clean reputation but hardly represents a political rupture. Running under the banner “Bolivia Says No!” -- in reference to the 2016 referendum -- Ortiz’s campaign is also focused on attacking Morales.
All three candidates’ plans for government reveal few significant differences, according to Amaru Villanueva, a sociologist and coordinator at the Friedrich-Ebert-Stiftung Foundation in La Paz.
“The main opposition parties are not aiming at privatization, fundamentally reducing taxes or removing conditional cash transfers, but at improving state governance,” he said.
While Mesa may stand a chance if the election goes to a second round on Dec. 15, there’s no guarantee that Ortiz’s voters will back him over Morales, particularly given the former journalist has a famously difficult relationship with Santa Cruzenos, after labeling them provincial.
Many of Bolivia’s business elite -- including those in agriculture -- may prefer continuity over change.
“Business sees Evo as the best guarantor of stability,” Eduardo Gamarra, a political science professor at Florida International University said. “It’s curious, but he’s probably a 21st century socialist in name only.”
Future Challenges
Even if Morales pulls off a fourth presidential victory, most analysts expect his MAS party to lose its two-thirds majority in Congress. But should Mesa win, he’ll have to work with a legislature that’s likely to contain a simple majority of lawmakers loyal to Morales.
Some form of adjustments to stanch the bleeding in the public finances also seems inevitable even if austerity is likely to prove a tough sell in a still-poor country that has benefited from years of generous government spending.
When Morales attempted to eliminate a fuel subsidy in 2010, he was forced to backtrack following major street protests -- in much the same way as his Ecuadorian counterpart, Lenin Moreno -- more recently.
“No matter who wins, the fact that they are going to have to deal with the economic situation is going to trigger unrest,” Gamarra said.
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