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The author is chairman of Rockefeller International

In 2024, an epic conflict is brewing. In a boom year for elections, with national contests from the United States to India, incumbents seeking another term will be tempted, as always, to increase public spending before the vote. That puts them on track to clash with global bond watchdogs, who, awakened from a long slumber by the new era of high interest rates, will quickly punish wasteful politicians.

As I noted earlier this year, elections in more than 30 countries will give two out of every three adults a say in the democratic world – a record election year since data collection began in the early 1960s. This historic celebration of democracy will be an opportunity for parties to engage in their usual tactics of pre-election spending. But if the money flows too freely, the newly awakened vigilantes will emerge to spoil the fun and sell off the country’s government bonds and currency. Many governments that incurred huge debts during the pandemic are now particularly vulnerable to these attacks.

Battles are most likely to take place in countries where leaders are under the most pressure to increase spending because their own popularity is so low. The problem: This applies to most countries. I track surveys in 10 developed and 10 developing countries; Approval ratings have fallen in three out of four countries over the past year, with the average now at just 45 percent in developing countries and a record low of 36 percent in the ten developed countries.

Bond watchdogs, usually triggered by inflation, will also act quickly in countries where a free-spending leader worsens a poor fiscal situation. Six leaders face elections in 2024 in countries where deficits have risen steadily and are now in what many bond investors would consider a danger zone – above 5 percent of gross domestic product. They range from India and Bangladesh to South Africa and the United States, where the deficit has almost doubled from the pre-pandemic trend to around 6 percent of GDP, the largest deficit among major industrialized countries.

South Africa is also at high risk. There is an unpopular candidate running for re-election who is struggling with a growing deficit, and a large portion of the government’s debt – 25 percent – is owned by foreigners. Amid power cuts and rising inflation, President Cyril Ramaphosa’s approval rating fell nearly 10 points last year to just over 40 percent, and the country’s deficit has tripled to more than 5 percent since the 2000s. Recent moves to restrain spending have also led to a shift toward goals likely to please voters, such as higher public sector pay, and the national debt is still growing.

India’s risks are partly offset by the country’s higher economic growth and fiscal restraint during the pandemic. But many heads of state have been playing a game of competitive populism lately. If Prime Minister Narendra Modi’s party suffers setbacks in this month’s national polls, he too may be forced to increase spending on popular programs.

Meanwhile, Mexico’s deficit is rising rapidly toward 5 percent of GDP, its highest level since the 1990s, and popular President Andrés Manuel López Obrador is passing the problem on to an untested successor. While several border economies from Ghana to Sri Lanka have been forced to cut spending as they face bankruptcy in recent years, their leaders will find it increasingly difficult to stay the course in an election year.

No country is immune. Research shows that since at least 1960, world leaders have often increased spending or cut taxes to improve their re-election prospects. In recent decades they have tended to get away with it. Borrowing costs were so low in the 2010s that bond investors looked the other way, except in extreme cases like Argentina.

That changed in 2022 with the return of inflation and higher interest rates. Since then, the vigilante groups have targeted nations around the world. They helped force British Prime Minister Liz Truss from office by selling off British bonds and currency in response to a budget-damaging tax system. They forced two old populist warhorses, Recep Tayyip Erdoğan from Turkey and Luiz Inácio Lula da Silva from Brazil, to exercise fiscal restraint. Erdoğan shelved his bizarrely unorthodox policies and appointed financial market veterans to restore investor confidence.

Note the pattern. The financial markets are now so large that they dwarf any economy that vigilantes usually gain the upper hand. Managers undertake them at their own risk. In the US, where complacency is high and many seem to believe that global investors will never tire of buying American debt, it is worth pondering the fate of the losers. Brazil, Turkey and the United Kingdom have changed their wayward ways under the pressure of vigilantism and are far better off for it. Fighting vigilantes is mostly a losing battle, but that won’t stop many politicians from trying.

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