Latin America Risk Report - 12 February 2020
Mexico arrests high value targets; Guaido is back in Venezuela
In this edition:
Mexico - AMLO uses the Navy to target criminal leaders
Venezuela - Guaido returns; the oil industry is in flux
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Mexico - AMLO uses the Navy to target criminal leaders
The WSJ reports AMLO has ordered Mexico’s Navy to return to the fight against criminal organizations, crediting the group with recent arrests of top cartel leaders in Mexico City, Guanajuato and Sinaloa. The article suggests the move comes in part due to pressure from the US government (on a related note, the US Congress is holding a hearing this morning about US-Mexico security cooperation).
Mexico’s Navy is very good at high value target operations. They are professional in how they operate and less corrupt than local police. However, those HVT operations were denounced by AMLO during the campaign because they tend to do little to improve security and may actually deteriorate security as they cause groups to splinter. Additionally, the Navy cannot be expected to take out entire criminal organizations nor are the resources available for them to secure every city in the country.
Part of providing better security requires Lopez Obrador to focus resources on specific locations and specific criminal groups. It is possible the Navy’s return to action is part of a larger strategy that focuses resources which would be positive for Mexico. However, it is more likely that AMLO’s return to using the Navy in HVT operations is an attempt to “do something” in the face of rising homicides and failures to stop criminal groups over a year into his term. Both the Mexican public and the US government want to see progress on security. Capturing cartel leaders, while it may not improve security in a sustainable way, does create the appearance of making progress. For a president who starts every day with a televised press conference, perhaps the show is what he needs.
Venezuela - Guaido returns; the oil industry is in flux
Juan Guaido is back in Venezuela. Traveling back on a plane from Portugal, he entered through the main international airport, passed through immigration, walked through a mob sent by Maduro to harass him, and reentered Caracas to give a speech announcing how he returned to place greater pressure on Maduro.
Guaido is strong. This is the second time this year Guaido’s side has overpowered and embarrassed Maduro, the first being the moment in which they reclaimed the National Assembly building. By returning in front of media and crowds at the capital’s main airport, Guaido demonstrated that he can come and go as he pleases, even though Maduro claims to have a travel restriction on him. He did not let the mob or the surface-to-air missiles deployed around the runway intimidate him. Guaido still has more freedom of movement than Maduro, who rarely announces his travels ahead of time and often hides behind multiple layers of military protection out of fear.
There are other analysts who believe Guaido is not being detained because he is weak and represents no threat. I disagree. If that were true, Maduro would have ignored Guaido’s return rather than make a big deal with military hardware, police presence and a mob.
Guaido is still limited. Though Guaido remains the key leader of the anti-Maduro coalition who threatens the president’s stability, he’s still limited in what he can do. He has no army. Street mobilizations are limited in what they can accomplish. Maduro has harassed, detained and tortured key allies of Guaido with impunity and there is little Guaido can do to respond.
Tensions over PDVSA’s future. Two articles published last week are key to understanding the current state of Venezuela’s oil industry. The Washington Post wrote on how Russia has been the big winner of sanctions. The New York Times reports on how PDVSA no longer controls Venezuela’s oil industry as a number of foreign companies including Rosneft have taken over production. Added to this, as S&P reports, Rosneft’s exports to the US have risen as Venezuela’s exports to the US have declined.
Source: S&P Global
The Hill reports that US lawmakers are increasingly concerned about Russian involvement in Venezuela’s oil industry. Members of Congress and officials within the Trump administration continue to hint at potential actions against Rosneft and other Russian companies to punish their actions in Venezuela, but no firm actions have been announced.
Analysts Hxagon has spoken with in recent weeks are divided about the impact Maduro’s shifts on the oil industry have on his stability. Nearly every analyst agrees there are tensions within the ruling circles about who controls the oil and the amount of influence Maduro has handed over to the Russians. However, most analysts suggest that those tensions are just the normal give and take and that anyone who has stuck around with the regime this long is not going to split over this specific issue. Only a small number of analysts surveyed believe that the tensions over the oil question could lead to a top official splitting away from Maduro at this moment.
Corruption Corner
Mexico - Emilio Lozoya, the former head of Pemex, was arrested in Spain. He is accused of engaging in multiple corruption and money laundering schemes. The arrest appears related to charges by the Mexican government that Lozoya accepted bribes from Odebrecht. On one hand, the detention and eventual trial would be among the highest profile corruption cases ever prosecuted in Mexico, making it a public relations victory for AMLO who was elected on promises to fix corruption in the country. On the other hand, the targeting of Lozoya while corruption within the current government is ignored and anti-corruption institutions are weakened will further the allegations that AMLO is politicizing the anti-corruption fight.
Brazil - The NYTimes covered money going from the US for farm bailouts to JBS, a large Brazilian meat processing company. There are questions about whether the company used corruption or unfair influence in the US to obtain those payments. Additionally, lawmakers are concerned about corruption allegations against JBS in Latin America. In particular, those who want more pressure for democracy to return in Venezuela question whether JBS engaged in corrupt contracting schemes with the Maduro regime.
Brazil - Brazilian police in the Bahia state killed Adriano da Nobrega, a hitman linked to the Marielle Franco murder. Nobrega, a former police captain, was also allegedly connected to the Bolsonaro family. Nobrega was hiding in a house owned by a politician connected to the president. There are questions in Brazil about whether the hitman was killed to avoid his speaking out about what he knew regarding corruption among political elites.
Honduras - Honduran authorities detained Leonel Luciano Sauceda, the national police chief, and accused him and his wife of money laundering. Authorities say Sauceda had bank accounts worth over a half million dollars and failed to report thousands of dollars he received per month from a private security firm. Several cars and three properties in Olancho were also seized.
Reading List
Bloomberg - Maduro Wants Dollars to Feed His Cronies, Not His People
WSJ - A Cry for Help: Vigilantes Enlist Children to Fight Mexican Cartels
WOLA - The Costs of Restarting Aerial Coca Spraying in Colombia
AP - Warren Buffett’s son helps Colombia kick cocaine curse
The Guardian - 'It's a pain you will never overcome': crisis in Venezuela as babies die of malnutrition
Al Jazeera - A refugee camp grows on the US-Mexico border
Washington Post - Showdown in El Salvador shows growing role of military in Latin American democracies
Washington Post - In agricultural giant Brazil, a growing hazard: The illegal trade in pesticides
Muros Invisibles - Grayzone, Grifters and the Cult of Tank
El Universal - Va cacería en la CDMX contra “La Unión Tepito”
Thanks for reading
Foreign Affairs has an article this week: The Amazon Is Nearing the Point of No Return. On that note, I’ll be offline and in the Amazon for part of next week. I will attempt to send a newsletter to paying subscribers early in the week, but there may be delays. The free weekly Thursday newsletter should go out as usual.
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