Latin America Risk Report - 16 January 2020

Morales comments create controversy as Bolivia's election campaign begins

Jan 16, 2020

This is the Latin America Risk Report - 16 January 2020

In this edition:

Bolivia - Morales comments create controversy as election campaign begins
Venezuela Update
Corruption Corner

I published two reports this week for paying subscribers on Guatemala’s new president and Argentina’s debt negotiations. If you like this free Thursday newsletter and you want to receive additional analysis every week, you can subscribe for $9 per month or $90 per year at https://boz.substack.com

I also did a 20 minute podcast with AS-COA looking at issues around the region.

Bolivia - Morales comments create controversy as election campaign begins

Former President Evo Morales said his supporters should organize “armed militias” similar to those in Venezuela and indicated that his supporters should have a “Plan B” as they go to elections.

With elections scheduled for 3 May, the comments have created a new political controversy. The Añez government has accused Morales of terrorism and issued a warrant for his arrest. They have opened corruption investigations into hundreds of Morales’s political allies. The military also warned against the potential creation of armed militias.

In a separate controversy, a PDVSA employee was detained with $100,000 in undeclared cash as she attempted to fly from Bolivia to Argentina. The Añez government claims the money is proof that Venezuela is helping finance MAS activities in the country.

Some politicians have called for MAS to be banned from the next election process. Activists within MAS believe that they will face restrictions or unfair treatment. The new head of the Supreme Electoral Tribunal (TSE) has promised that the MAS will have the right to participate in the presidential and legislative elections and that they will have the same rights as other candidates.

These controversies will likely continue in the coming weeks, with Morales perhaps even attempting to provoke the government into a crackdown to highlight what MAS views as its anti-democratic tendencies.

Large candidate field

From his exile in Argentina, Evo Morales will announce the MAS candidates for president and vice president in the coming weeks. The leading contenders are Andronico Rodriguez, David Choquehuanca and Luis Arce.

The polling suggests that MAS will take one of the top two spots for the presidential election, which will almost certainly go to a second round.

The anti-Morales coalition does not have the benefit of having an individual who will help them consolidate on a single candidate, though Añez says she will try. Carlos Mesa leads the current polling. Other candidates include Luis Fernando Camacho, Marco Antonio Pumari, Chi Hyung Chung, Samuel Doria Medina and former President Jorge Quiroga. It is too early in the campaign to know whether Mesa can hold on to his lead or if one of the other candidates will rise up to challenge him.

The other downside to the wide anti-Morales field is that many of those candidates bring their own party structures, something that will divide the legislative vote and almost guarantee that MAS wins the plurality of the seats in the next legislature.

Venezuela update

Thanks to everyone who participated in last week’s Q&A session.

This week, violent paramilitary groups blocked Juan Guaido and others of his coalition from entering the National Assembly. Police and National Guard members stood by as armed civilians attacked politicians and journalists.

Nicolas Maduro gave his annual address to the ANC instead of the National Assembly. He claimed that sanctions had harmed the country’s economic performance but that he remained in power.

Among his proclamations, Maduro indicated that an increasing number of government functions would be priced in the Petro cryptocurrency. Currently, most Petro-priced transactions also offer payments in foreign currencies including US dollars or Euros. If transactions become restricted to Petros, it could create problems for companies that risk violating US sanctions if they use that currency.

The US government announced new sanctions against the CLAP coalition, the legislators who were bribed by the Maduro regime to turn against Juan Guaido. The US also announced that Raul Gorrin, a corrupt businessman who has already been sanctioned and indicted, has been placed on ICE’s most wanted list. At some point in the coming week the Trump administration will announce whether or not US oil companies will continue to receive a waiver from sanctions.

Bloomberg reports Erik Prince was in Venezuela with Ian Hannam and that the two were in discussions regarding gold mining projects. If true, it would place the Trump ally in direct contradiction of US government policy to stop the spread of illegal mining and gold shipments out of Venezuela. In an interview with the Washington Examiner, Eliot Abrams was critical of Prince and Giuliani’s freelancing outside of the US government while pretending to represent US government interests.

The Wilson Center held an event on the importance of illegal economies in Venezuela.

Corruption Corner

Colombia - Semana Magazine reported that General Nicacio Martinez was removed from his position as the commander of the Army due to his illegal use of intelligence capabilities to spy on politicians, judges and journalists who he considered enemies. The magazine claims that a military vehicle was parked outside its offices while they were investigating the issue. The general has denied involvement in the scandal. President Duque said there will be punishment if people broke the law.

Honduras - Honduras faces the decision on whether to renew the MACCIH in the coming days. Eric Olson comments that the delay in announcing its renewal raises concerns President Hernandez and his allies in Congress are planning to cancel the mission totally or trying to limit the time and scope of the MACCIH mandate. He also notes that any step back on the anti-corruption efforts will further harm Hernandez’s reputation.

Mexico - Carlos Loret de Mola reports the son of former mining union leader and Senator Napoleon Gomez Urrutia has shown off at least 31 expensive cars on his social media accounts, suggesting a value of millions of dollars. Gomez was accused of stealing millions of dollars from a mining pension fund as well as signing off on the safety of a mine just weeks before it exploded in 2006. He spent over a decade in exile, but as a strong supporter of AMLO, returned and became senator in 2018. The existence of the cars suggests corruption, but the Lopez Obrador administration has shown itself reluctant to investigate corruption within its own ranks.