Duque stands to win Colombia’s elections. But then what?

On June 17, Colombians are going to decide who will be the country’s next president between Iván Duque, from the Centro Democrático (CD), and Gustavo Petro, from Colombia Humana. FSG’s base case is that Iván Duque will emerge victorious from next Sunday’s runoff, as it was presented to our clients in an executive breakfast held in Bogotá on May 9.

Duque’s win in the first round on May 27 puts him on the right track to gather most of the centrist voters who voted for Sergio Fajardo (23% of the electorate), who finished third. Duque has managed a successful campaign by outlining detailed policies that resonate with moderate and economy-driven voters alike, by gaining publicity from competing in an internal primary on March 11, and by unifying the right-leaning voters of Colombia’s atomized political spectrum.

However, a Duque victory does not necessarily mean that he and his party coalition will have an easy ride in congress. Although the distance between Duque and Petro is over 20 points according to latest polls, Petro’s political base of almost five million voters in the first round will provide him with enough political capital to try to impose some of his populist agenda or at least water down market-friendly reforms proposed by Duque. Colombia’s constitution guarantees that whoever losses the runoff has a seat in the Senate, and it is likely that Petro will try to lead the opposition to Duque’s administration from there.

Given that Petro’s platform gained traction on the back of his attacks to endemic corruption in Colombia and the need to protect the current peace agreement with the FARC, Iván Duque will be forced to articulate a clear view on both fronts not to lose popularity during his first months in office.

What should multinationals pay attention to after the elections?

Political uncertainty has been a constant in Colombia in the last year but it should start abating after this upcoming Sunday’s runoff and once the next president presents his cabinet ministers, signaling the economic policies his administration will pursue. Consequently, MNCs should pay attention to two key elements in the upcoming days:

  1. Duque’s margin of victory: Iván Duque will be able to capitalize the right and center-leaning voters on June 17. Currently, his lead is between 15% and 20% against Petro. But, if the polls are incorrect, and Duque ends up winning with a slim margin or with a high abstention rate (Colombian voters have the option to cast a “blank vote,” leaving their ballot blank instead of voting for either of the two candidates), Duque will need to reach across the aisle to form a stable coalition. Sergio Fajardo has already announced that his movement (Coalición Colombia) will not endorse either candidate in the second round. Although blank votes do not impact election outcomes in Colombia, a “blank vote” that exceeds 10% of the ballot would be symbolic because it would signal that a vast proportion of Colombians would have preferred a more centrist approach not represented by either of the two remaining candidates in the presidential race.
  2. Duque’s ability to build a strong coalition with parties that have influence in Congress: The Centro Democrático became the strongest political force in Colombia’s legislative body last March. It obtained 19 senators and 32 representatives. Duque’s candidacy has been able to bring around him the rest of right and center-right parties with significant presence in Congress: Cambio Radical, Partido Conservador, Partido Liberal, and MIRA, which have already announced their support for Duque in this Sunday´s runoff. If Duque wins, the support of these parties to his administration would be enough to enact necessary economic reforms to reignite growth. However, companies should monitor the proposals announced by Duque before and after June 17 on issues such as the peace accord implementation, corporate taxes, and strategic industries such as oil and gas, because there are different views regarding them among this coalition; the most contentious one being the potential revision of the peace accord.

FSG will continue to track developments in Colombia as the new president is elected next Sunday, and their impact on the country’s economy. For more information about what a Duque administration will mean for Colombia, clients can read our report Colombia Elections Scenarios, or contact your Client Services Director for an in-depth briefing.

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