The Next Latin American Proxy Battle

Get ready for the next test of whether Latin America's leftward slide will continue. The arena now is Ecuador, where next month's presidential runoff will be between fruit magnate Alvaro Noboa and Hugo Chávez admirer Rafael Correa.

Mr Correa has promised to shut down the US military’s base in Ecuador and has vowed never to restart talks with Washington on a bilateral trade treaty. He has also hinted that he might default on Ecuador’s debt payments and has pledged to impose higher taxes on foreign investors in the oil industry such as Repsol of Spain, Brazil’s Petrobras, Andes Petroleum of China and Perenco of France.

Noboa did better than expected in the first round, and the bond markets are hopeful that he will prevail against Correa. Expect Chávez to do all he can to prove them wrong.