Latin America Risk Report - 2 August 2019

Vizcarra proposes new elections in Peru; Abdo avoids impeachment in Paraguay (for now)

Aug 02, 2019

In this edition

Peru may hold early elections
Paraguay update

Peru may hold early elections

President Martin Vizcarra announced he will present a reform in Congress to hold elections in 2020, a year earlier than scheduled. Approval of the reform would require a public referendum. The announcement comes as Vizcarra’s agenda has almost completely stalled in the Congress including a measure to potentially strip immunity from lawmakers accused of corruption.

Vizcarra holds an ace up his sleeve in that he can call another confidence vote in the Congress and call new Congressional elections if that confidence vote fails. If he ties the confidence vote to the electoral reform proposal, it would force new Congressional elections either way. This week’s Economist does a good job outlining some of the options Vizcarra has for pressuring Congress or forcing new elections.

The president’s anti-corruption populism is helping to maintain his support among the citizens of the country. Vizcarra’s opponents claim that the president’s strong-arming of Congress undermines the country’s institutional checks and balances. Vizcarra has stressed that his electoral reform will not allow him to run again, but without a clear successor, Latin American history suggests he may still try to find a way.

Paraguay update

Yesterday, I published a report about President Mario Abdo Benitez facing a major political crisis due to his secret energy price negotiations with Brazil.

On Wednesday night, there were 56 votes in the lower house to open impeachment proceedings, three more than were needed. By Thursday afternoon, the dissident faction of the Colorado Party run by former President Horacio Cartes had withdrawn their support for impeachment, giving President Abdo some breathing space.

The government's story is that Paraguay’s vice president spoke with numerous Colorado lawmakers and convinced them their position would be weaker if the PLRA held the interim presidency. That political reality was combined with the undoing of the recent pricing agreement with Brazil and promises of a more transparent negotiation process. While the official explanation seems reasonable, one analyst in Paraguay stressed to Hxagon, “our politics are always dirtier than that.”

The assumption among local journalists on a WhatsApp group is that some sort of backroom deal was struck between Abdo and a few members of the dissident Colorado Party leadership, though other Colorado members of Congress appear in the dark as to why their faction flip-flopped. PLRA accused Cartes of withdrawing his support for impeachment to save Dario Messer, who was recently arrested in Brazil.

The impeachment box has been opened. As I wrote yesterday, even if Abdo survives this round of threats, the division in the Colorado Party and the ongoing threat of a rapid impeachment process will hang over him the rest of his term.

Corruption Corner

El Salvador, Nicaragua - President Daniel Ortega granted Nicaraguan nationality to former Salvadoran President Mauricio Funes and his family. Funes fled to Nicaragua to escape arrest in El Salvador over accusations of corruption during his presidential term.

Colombia - Mexico’s Cemex denied allegations that it illicitly funded campaigns in Colombia including that of former President Juan Manuel Santos. The US and Colombia are investigating Cemex Latam Holdings (CLH) for potential corruption as it expanded in South America.