Chile’s back on the right path

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

• Chilean left’s last triumph: winning Sunday, losing La Moneda

• The New Reconquista

• Shutdown Showdown: an active executive and a punished party

• What We’re Watching

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Best,

The GCaM Team

Chile heads into Sunday’s elections with the left numerically ahead—but structurally weakened. Polls show Jeannette Jara finishing first, yet every serious forecasting market signals a different outcome.

In perspective. José Antonio Kast remains the overwhelming favorite to become Chile’s next president. The gap between who wins the first round and who governs has rarely been this large in Chilean politics. The latest polls place Jara around a 33 % and likely to top Sunday’s vote, while Kaiser and Kast compete for second place with a technical tie around a 16 %. But Polymarket—the same betting platform that accurately tracked Trump’s 2024 trajectory months before mainstream polling caught up—prices Kast at roughly 70% probability of winning the runoff.

• The message is clear: the left can dominate a fragmented first round, but cannot secure a majority in the second.

• Jara’s biggest obstacle is not the right itself, but her own coalition. The Communist Party brand has a ceiling in Chilean politics, particularly after four turbulent years under Boric.

• Her candidacy energizes the left but repels moderates, independents, and even segments of the center-left who view her platform as a return to maximalist politics that failed twice during the constitutional rewrite processes.

Why it matters. Chile’s election is not an isolated contest; it is part of a broader regional correction. Across South America, left-wing projects that entered office with expansive promises have ended with exhausted coalitions, institutional fatigue, and security crises. Boric became the clearest example, with rising crime, migration pressures, failed constitutional reforms, and eroding trust far beyond the governing bloc. In a runoff, the polls predict Jara’s collapse, dropping from first place to as much as six points behind both Kast and the libertarian Johannes Kaiser.

• Kaiser, however, faces a similar fate to Jara: his libertarianism is too radical for centrists. This leaves an opening for Kast. In a runoff, he would inherit the entire right-wing vote—Matthei’s remnants, Kaiser’s base, and the independents who have shifted toward platforms centered on security and economic discipline.

• As the map stands, Kast enters the runoff as the only candidate capable of building a majority coalition. Polymarket’s latest tracking places him as the frontrunner to become president, with a 71% probability as of Friday.

• The left, meanwhile, struggles with a fractured identity. The Frente Amplio’s internal divisions, the Communist Party’s hard-left posture, and the lack of a credible centrist bridge severely constrain Jara’s chances beyond Sunday.

Between the lines. The election is less about ideology and more about performance. Chileans watched their “Nordic Latin America” narrative collapse under the weight of institutional overreach and security deterioration. The promise of a progressive, modernized Chile faded as Boric’s administration became defined by rising crime, domestic gridlock, and failed constitutional redesigns. This has created a paradox where the left enters the first round strong but without the credibility to command a second-round majority.

• Betting markets capture that asymmetry faster than polls—the same pattern seen in 2024, when Polymarket priced Trump as the likely winner almost the entire cycle despite volatile polling.

• Another dynamic quietly shaping the race: voters across the region are abandoning ambitious transformative projects in favor of stability, order and incremental reform.

• Argentina, Ecuador, Peru, Uruguay, and even Bolivia have recently showed versions of this trend. Chile now completes that arc.

The bottom line. Sunday will likely deliver a symbolic victory for the left, but immediately usher in a deeply unfavorable runoff for Jara. Kast enters with momentum, disciplined coalition structures, and a political environment defined by security anxieties that favor his message.

• Unless a major political shock reshapes alliances, Chile is on track to elect a right-wing president in December. And this time, it would mark not a pendulum swing but the consolidation of a regional realignment.

• The left is poised to win the first round. But the presidency—the actual prize—is Kast’s race to lose.

• Chile isn’t turning right by ideology; it’s correcting after Boric. And once again, betting markets saw the correction before the polls.

Spain is quietly undergoing the most significant demographic shift since its post-Franco immigration wave, and Latin America is now its central engine.

In perspective. New data compiled from Spain’s Permanent Immigration Observatory shows an extraordinary surge in citizenship grants to Latin Americans: Guatemala, Nicaragua, and Honduras top the global ranking, each multiplying naturalizations by more than 40- to 60-fold compared to a decade ago.

• This trend is not accidental. It is the product of converging political incentives inside Spain and powerful socioeconomic pressures across Latin America.

• And while it offers Madrid a short-term demographic lifeline, it may also activate cultural and political backlash—likely accelerating the rise of Spain’s reactionary movements.

Behind the scenes. Spain’s two major parties—PSOE on the left and the PP on the center-right—have both embraced expanded naturalization. For PSOE, the narrative is ideological: humanitarian solidarity, historical debt to the descendants of Spaniards abroad, and a “progressive” migration framework that frames Latin Americans as culturally compatible newcomers.

• Yet that framing is selective. The same government resists broader African or Middle Eastern inflows, exposing a political contradiction masked as humanism.

• For the PP, the logic is openly Hispanist. The party sees cultural, linguistic, and religious affinity with Latin America as a strategic asset: a way to strengthen Spain’s global soft power, repopulate shrinking towns, and counterbalance demographic decline without relying on migration from culturally distant regions.

• This fits neatly with the party’s “Iberosphere” project — a pragmatic, soft-nationalist version of the old imperial imaginary.

Plain and simple. In practice, both incentives lead to the same result: record naturalizations concentrated in Central America. Guatemala, now the fastest growing source of new Spanish citizens, reflects this convergence perfectly. Spain has streamlined documentation requirements, consular capacity and civil-registry processes for Latin Americans, especially those with proven ancestry.

• The outcome is a demographic influx more than 60 times larger than a decade ago.

Why it matters. Large demographic shifts carry political costs. Spain is aging rapidly; its fertility rate (1.16) is among the world’s lowest. Migration is no longer optional; it is existential. Yet who gets to become Spanish—and how fast—is a front-line cultural battleground. VOX has already framed this expansion as a “backdoor amnesty,” accusing PSOE and PP of engineering a “demographic replacement” favorable to their electoral coalitions.

• Whether accurate or not, the narrative resonates with segments of conservative and working-class voters who feel economically strained and culturally insecure.

• PSOE’s humanistic storyline and PP’s Hispanist strategy both underestimate this.

• Voters rarely react to demographic change with technocratic gratitude. They react with identity-based anxiety, the very raw material that VOX has mastered.

What could happen. If current trends continue, VOX could turn Spain’s Latin American naturalization boom into a political accelerant. The party’s messaging is already adapting: fewer references to Europe’s “Great Replacement” rhetoric and more emphasis on “uncontrolled nationalizations” driven by elites.

• Spain is experiencing a demographic shock that resembles a reverse Reconquista: not Spain expanding into the Americas, but the Americas returning to Spain.

• In the short term, this influx fills labor shortages, revitalizes depopulated municipalities, and reinforces cultural ties across the Atlantic.

Digging deeper. But long-term, it tests Spain’s political cohesion. If PSOE and PP fail to frame this process transparently, and to invest in integration, housing, labor mobility, and civic education, the backlash will not be abstract. It will be electoral. And VOX is poised to capitalize.

• Spain could be solving one crisis: demographic decline. But unless it manages the cultural and political consequences, it may be planting the seeds of another.

The longest shutdown in U.S. history was not just administrative chaos; it was a stress test of America’s polarized political economy and of its credibility as a global power.

In perspective. The recent shutdown showed how domestic partisan clashes coexist with a hyperactive presidency and state-level electoral punishment. The shutdown began as a dispute over what kind of federal state Americans are willing to finance amid deep, mutual mistrust between the parties.

• The closure lasted weeks, disrupting federal paychecks, airports, food assistance, and routine administration, until a minimalist deal reopened government at roughly current spending levels and postponed the fight over health-care subsidies.

• On the surface, Trump-aligned Republicans blocked a spending bill that renewed expanded ACA subsidies, calling them evidence of an oversized welfare state, while Senate Democrats turned those subsidies into a red line to protect the safety net and their standing with lower- and middle-income voters.

• Primaries that reward hard-liners intensified the standoff, with an increasingly fatigued Republican base concentrated in rural and small-town areas hit by trade wars and Chinese tariffs on U.S. farm exports.

Why it matters. The shutdown exposed how dramatically the balance of power has tilted toward an executive that can continue reshaping the world order even as Congress stalls. Despite much of government being frozen, Trump kept the machinery of the presidency in motion—intensifying ICE enforcement at home, greenlighting aggressive counternarcotics and security operations overseas, and recalibrating U.S. commitments with key allies.

• A Supreme Court increasingly sympathetic to a strong executive has upheld the dismissal of independent regulators and validated broad emergency powers, tightening presidential control over the administrative state.

• This triangle—assertive president, weakened Congress, and a deferential Court—turns shutdowns from moments of paralysis into opportunities for the Executive to centralize power and impose its strategic priorities.

Between the lines. Even with an expanding executive branch, both the president and the Republican Party paid a visible cost. Polls during the shutdown showed growing personal impact on voters and broad disapproval of the crisis, with Trump’s approval reaching new lows in his second term, driven especially by his handling of immigration and use of executive power.

• Democrats swept a series of high-visibility races, including a historic, large-margin mayoral victory in New York City, plus solid wins in New Jersey and Virginia.

• This has been widely interpreted as a referendum on Trumpism in urban areas, shutdown politics, and the affordability squeeze.

• Republicans now face a paradox: structurally advantaged in many congressional districts and in the Senate map, yet increasingly vulnerable in major population centers.

In conclusion. For Trump, another shutdown would be too risky for his international agenda, even with a Supreme Court jurisprudence that reinforces the presidency’s ability to operate abroad during domestic deadlock.

• The political cost has already materialized at the ballot box, with Republicans paying an electoral price even as financial markets reacted positively once the budget deal removed immediate uncertainty.

• For allies, the episode signals a United States whose executive remains highly capable on the global stage but whose internal bargaining tactics can rapidly convert into domestic political penalties—underscoring the volatility of governing through confrontation.

What We’re Watching 🔎 . . .

If Trump attacked Venezuela, these sites could become targets [link]

Samantha Schmidt, Dan Lamothe, Ana Vanessa Herrero, Júlia Ledur and Hannah Natanson, The Washington Post

U.S. forces are now fully positioned to strike targets inside Venezuela if President Trump gives the order. The deployment, led by the USS Gerald R. Ford and reinforced air assets, has already carried out deadly maritime operations, killing more than 75 alleged traffickers since September, and now appears poised for the next phase.

U.S. planners have drafted strike options on military bases, cocaine labs, airstrips and units protecting Nicolás Maduro, relying on a legal theory that labels the Cartel de los Soles a “narcoterrorist” structure, allowing action without a declaration of war. But the risks are high. Analysts warn that even limited strikes could trigger guerrilla retaliation, spill over into Colombia, and produce only marginal effects on cocaine flows. Inside the administration, officials admit the danger of sliding into a regime-change operation without a clear endgame.

Noboa Cracks Down on Protests While Pushing to Rewrite the Constitution [link]

Pedro Labayen Herrera, CEPR

Ecuador’s President Daniel Noboa is facing mounting scrutiny after a forceful crackdown on protests this week. Security forces detained dozens, deployed tear gas and rubber bullets, and blocked demonstrations triggered by fuel-price hikes and Noboa’s proposed constitutional reforms. The government argues the measures were necessary to prevent infiltration by criminal groups—an argument that resonates in a country overwhelmed by cartel violence. But rights organizations warn that Ecuador is edging toward an expanded, discretionary use of state force.

The timing heightens concerns. Noboa is pushing a referendum that would broaden presidential security powers, allow deeper military involvement in policing, and tighten limits on public protest. For the U.S., which sees Ecuador as a key security ally, the episode signals a growing tension between stability and democratic safeguards. The challenge now is whether Noboa can confront crime without weakening the institutions he pledges to protect.