Latin America Risk Report - 16 April 2020

What comes after quarantine? A protest wave and/or a crime wave.

Apr 16, 2020

In this edition:

Will there be a post-coronavirus protest wave?
Criminal Groups are active and adapting

Also this week, I published commentary on AMLO’s Energy Policies and some charts on how the coronavirus curve in Latin America is still flattening.

Will there be a post-coronavirus protest wave?

I previously predicted protests would increase in 2020. I failed to predict that we’d all be stuck inside our houses for weeks on end (big credit to anyone who wrote a report in 2019 with that prediction).

So what happens to a protest wave postponed due to pandemic? Here are three scenarios for what may happen as quarantines ease in the coming months:

Pent up anger over old issues leads to protests in late 2020. Protester demands have been put off by political systems that are distracted with a new crisis. However, those demands have not gone away and people will want action.

A protest wave hits in late 2020 over new issues, driven by economic crisis and government failures in coronavirus response. The coronavirus-driven recession and the tens of thousands dead from the virus are solid reasons for new protests to emerge.

Protests reduce as countries move on to new issues and new political leaders emerge. The political situation post-coronavirus will look very different from the end of the 2010s. This event could well serve as the fissure between the decades.

Certainly the scenarios will vary by country. However, as a general trend, I think there is a greater likelihood of more protests than fewer protests due to a combination of scenarios one and two. Latin American populations entered this crisis significantly disillusioned with their leadership and very few leaders will somehow perform at a level that allows them to break out of that cycle. Economic crises tend to cause greater political disruption.

Criminal groups are active and adapting

Both international and local media in various Latin American countries have increased their coverage of criminal groups acting in a governing capacity as it pertains to coronavirus. Criminal groups are enforcing quarantines and other restrictions. They are changing their extortion, human trafficking and kidnapping efforts. They have reduced homicides but increased looting and other forms of robbery and burglary. In a few cases, groups have been seen providing food, medicine, supplies or other types of subsidies to local communities that have been hit by the economy.

But why is media coverage increasing? It’s possible media coverage is increasing because it’s a cool story to cover as journalists eagerly search for a different angle on a story that has been going on for over a month.

However, it’s more likely that criminal groups are adapting to the situation. Week four of coronavirus quarantines looks very different from week one and a larger number of groups are involved now than were operating in the opening days of quarantine. The criminal organizations are watching how other groups in their country and around the hemisphere act and are learning from them. Essentially, the early media coverage of these groups is pushing other groups to innovate in their own neighborhoods.

One of the big risks for governments in the hemisphere is that they cannot focus on these criminal groups and their adaptations. Government attention and resources, especially security force personnel are focused on coronavirus-related issues. There is nothing sustainable about the current quarantine-driven drop in homicides across much of the hemisphere. Governments that are cheering the drops in crime rates over recent weeks must acknowledge that crime hasn’t dropped because their countries’ institutions have improved.

The same way I write above about a potential wave of protests as economies return to normal, governments should prepare for a wave of crime later this year due to pent up criminal demand. Small and local criminal groups are likely hurting for resources with the drop in the economy and local business. An increased number of young men lacking jobs and educational opportunities are going to be prime recruiting targets for gangs. Those factors are going to worsen in the coming months.

Other notes

DR - The Dominican Republic postponed its election to 5 July. Similar to my recent comments on Bolivia, postponing the election in the DR is almost certainly necessary. However, given the controversies over voting in recent elections and the protests over the rerun election earlier this year, citizens are going to question every step the current government takes. Postponing elections is never good, but it is particularly difficult when citizens are already questioning the validity of the system.

Nicaragua - Daniel Ortega reappeared. Two of his key messages were that Nicaragua is totally prepared for coronavirus’s impacts and he will not shut down the country’s economy over coronavirus. It has been up to Nicaragua’s business community, civil society, and individual citizens to implement social distancing efforts in the face of government inactivity.

Venezuela - Venezuela has an energy crisis in the middle of a health crisis in the middle of its ongoing political and economic crises. The current energy crisis is worse than anything seen during the energy sector’s challenges of the past two decades. Specifically, challenges with electricity production, electricity transmission and liquid fuel shortages, all of which have been seen before, are hitting at the same time. The impact on food production and distribution will exacerbate the humanitarian crisis. The Maduro regime, the military and the colectivos are also low on fuel to move around the country, which could make repression more difficult if protests reappear in the coming weeks.

Corruption Corner

Venezuela - OCCRP published an investigation into corruption in the Venezuelan military, listing 35 generals who control companies in Venezuela. The investigation also looked at companies in the US owned by family members of General Vladimir Padrino Lopez, the minister of defense, that appear to profit from Venezuelans in exile. The general’s family also owns properties that may be money laundering fronts.

Colombia - Comptroller claims it detected over US$20 million in overcharges by companies for food and medicine contracts to state and local governments.