After Ecuador’s near coup: Who’s next?

Late last week, Ecuadorean President Rafael Correa, having tried to pass a new public servant law that would have significantly cut police wages, found himself roughed up, tear-gassed, and barricaded inside a Quito hospital by rebellious cops for several hours before loyal officers finally shot their way inside and freed him. It was all the result of Correa’s attempt to roll back spending in one of South America’s most challenged economies, in a context where he has precious few financing options (having defaulted on his country’s debt in 2008, Correa’s finding it a little hard to get loans these days).

Because Ecuador’s military and its top police commanders remained loyal, the coup quickly fizzled and the plotters were soon jailed. Order, for the time being, has been restored. But last week’s unpleasantness in the Andes reflects a broader story with potentially more worrisome implications: how the extended economic downturn is dramatically exacerbating popular discontent with regimes where political instability had already been percolating — and how, in some cases, that discontent can quickly and without warning spiral out of control.

This isn’t much of a concern for the world’s key emerging markets — think China, India, Turkey, or Brazil — since they’ve all performed well over the past year. Nor is it an issue for most of the underperforming developed states, since even the worst of these laggards have enough built-in social and political stability to weather the slow, painful recovery to come (think Japan). Even Greece, basket case that it is, should be able to soldier on, thanks to all the funding and outside support it has received from Europe and multilateral bodies such as the IMF.

But the dangers are out there. In Latin America, the worst fat tail risks — that is, countries where serious unrest is still a relatively low probability but would be massively destabilizing if it erupted — are in Cuba and Venezuela. That’s because both countries are in disastrous economic shape, and are going to need to make some serious, painful cuts to stay afloat; yet in both countries, the regimes face major problems with popular legitimacy, which will make these cuts hard to sell to regular folks. Further afield, Ukraine, with its economic woes, deeply divided population, and perpetually dysfunctional political culture, also deserves to be added to the mix. (Indeed, the new president, Viktor Yanukovych, probably knows this, which is why he’s recently tacked his foreign policy toward Europe, in order to connect to the broader electorate.) And while the developed states are generally well insulated, it’s probably worth keeping half an eye on Spain — which faces one of Europe’s worst economic situations but must contest national and regional elections in the next twelve months. Portugal is also worth watching. This isn’t to suggest that Iberia is about to erupt in flames. But if protests do occur and the Spanish and Portuguese take to the streets in real numbers, the narrow political consensus around the belt-tightening necessary to get through the economic crisis could crumble.

As for literal collapse, that’s a real risk in a few places. Exhibit one is Pakistan, where this summer’s massive floods worsened an already shaky political situation. The one saving grace so far has been that the military has little interest in intervening, since that would force the generals to assuming responsibility for governing the troubled country themselves. That said, don’t rule out the chance of some sort of a sudden power transition. And then there’s North Korea, which is trying to negotiate a leadership succession (from a coddled dipsomaniac to an overweight, untested 28-year-old, no less under disastrous economic circumstances; never an easy move).

The overall prognosis? Stay tuned. Place brittle regimes under great stress, and the one thing you’re almost guaranteed to get is a larger number than usual of "unexpected" regime changes.

Ian Bremmer is president of Eurasia Group and author of The End of the Free Market: Who Wins the War Between States and Corporations?