Banana republics are making a comeback in Latin America

Banana republics are making a comeback in Latin America From Peru to Venezuela, insecurity and militarised politics are eroding democratic legitimacy. South America is at a crossroads. The attack on Caracas, the abduction of Nicolas Maduro and the threats towards the Colombian and Mexican presidents by the US president are an ominous sign of the years ahead. In addition to armed external meddling, elections have sharpened political tensions from La Paz to Santiago, Buenos Aires to Quito, and the region’s biggest democracies are heading to the polls again later in 2026. Unequal dividends from decades of growth, combined with the post-pandemic erosion of state capacity, have widened the appeal of hard-line, populist responses. The danger is not only domestic: the region’s drift towards militarised politics, and the open threats by the US, surface the risks of external influence, a modern rehash of the banana republic and gunboat diplomacy playbook. Taken together, these dynamics point to a dangerous convergence. Rising insecurity, hollowed-out political representation and renewed external coercion are reinforcing one another, weakening institutions and making the region once again vulnerable to domination rather than self-determination. Peru is a stark cautionary tale. For two decades, the country had above-average economic growth, attracted heavy foreign investment, and even sought OECD membership. By early 2026, the sol is widely regarded as South America’s most stable currency. Yet prosperity has not translated into institutional stability: seven presidents in nine years speak to a deeper political dysfunction. The sociologist Julio Cotler has argued that Peru’s elites, enriched by exports of raw materials, had scant incentives to share gains or build capable and inclusive institutions. The result is a brittle political economy, where colonial hierarchies linger, inequalities across gender, class and ethnicity persist, and state services are dysfunctional, weakening legitimacy and representation. That brittleness is now colliding with insecurity. In Lima, transport strikes over rising violence and extortion have repeatedly paralysed the city; dozens of bus drivers were murdered in broad daylight throughout 2025. Protests turned deadly in October 2025, when a rapper and street artist was shot near the government palace during demonstrations against the new president, José Jerí. The president of Congress called the victim a “terruco” (once a label for terrorists), illustrating the toxicity of Peru’s political landscape, as this term is a slur aimed at dissenters, often Indigenous or peasant, to delegitimise their protests and demands. This is not an isolated phenomenon, but a symptom of how political systems treat social conflict as a policing problem, something to be repressed rather than addressed. Peru’s response has been the militarisation of public space. Under Jerí, the government declared a state of emergency and sent soldiers to patrol the streets “until insecurity is eradicated”. Ecuador has tried something similar, going so far as to declare an “internal armed conflict”, leading to increasing human rights violations. When political demands are marginalised in favour of military or police force, political representation collapses into patronage or fear. Peru’s Congress illustrates this collapse of representation. It has become...

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