On October 18th, 2020 socialist Luis Arce won a surprise victory over the moderate Carlos Mesa. Pre-election polls had predicted a close race between the two candidates, and a run-off victory for Carlos Mesa before the elections. However, the Bolivian people gave a resounding victory to the Movement to Socialism (MAS), with Arce winning 52% compared to 31% for Mesa. Both Carlos Mesa, and Jeanine Anez, the acting president, have accepted the results and a peaceful transition to power is expected. MAS's victory is a repudiation of the hard right policies pursued by Anez, including her heavy handed arrests and use of the courts to prosecute MAS supporters. More subtly, it is also a subtle repudiation of the authoritarian tendencies, as Luis Arce won by a margin of at least 5% than Morales in 2019.

Luis Arce will be inheriting Bolivia in a deeply precarious situation. Bolivia has been hit harder than all but a handful of nations, with 8,500 people losing their lives. While the spread of COVID-19 has slowed down dramatically in recent weeks, there is always a risk of resurgence. Luis Arce must deal with the conspiracy theories peddled by his own party and legislature such as toxic bleach being a cure for COVID-19. Moreover, Luis Arce, the former finance minister of Bolivia, will need to balance the need for fiscal stimulus and reconstruction funds with a budget deficit of 7.2% of GDP, one of the widest in the world.

Bolivia has long benefited from an unprecedented boom in natural gas prices and production. However, natural gas prices are at all time lows and underinvestment in resource extraction have resulted in a production drop of 20% over the last five years. Many have hoped that Bolivia's lithium reserves could finance long term growth in Bolivia. Indeed, Evo Morales has made allegations that he was overthrown precisely so that Tesla and other electric car battery makers could get access to lithium. However, such claims are implausible given that Bolivian lithium is extremely expensive to process and massive discoveries of lithium in Nevada and Mexico that are together ten times larger than those of Bolivia. Bolivia, unlike other socialist Latin American states, will have to figure out how to grow without natural resource wealth.

Ultimately, the victory of Luis Arce is a victory of democracy in Bolivia. A government seen as legitimate by the Bolivian people with a democratic mandate is more important than any potential economic mismanagement by MAS. Many in the right have disturbing ties to fascist movements, and the eastern lowlands of the country have a history of violent secessionism. The victory of Arce, a figure more moderate and less polarizing than Evo Morales, so far seems palatable to even his most strident critics. While far from perfect, the victory of Arce marks an important step forward for Bolivia. Democratic institutions, more than any individual set of policies, are essential for Bolivia's long term success.