Latin America Risk Report - 20 February 2019
Taiwan's divided policies and another update on Venezuela
In this edition:
Taiwan’s divided policy towards Latin America
Venezuela Update
Paying subscribers this week received an update on Haiti’s protest movement.
Taiwan’s divided regional policy
Last week, Taiwan offered $500,000 to the humanitarian aid efforts led by Venezuela’s Interim President Guaido. This week, Taiwan offered Nicaraguan President Ortega a $100 million loan package to bailout his government that currently faces severe financial imbalances.
Even if Guaido’s government is unlikely to recognize Taiwan, China’s continued backing of Maduro is becoming a strategic error Taiwan wants to capitalize on. Taipei understands that every day Beijing backs Maduro, China’s actions harm its reputation among the majority of LatAm countries that back Guaido. A relatively small investment of aid today could pay off with future meetings, investments or other diplomatic opportunities.
Meanwhile, Nicaragua is one of the few countries remaining in Taiwan’s camp in Central America. Ortega has privately threatened to flip recognition and has also allowed mainland Chinese companies to invest, most notably in the mythical canal project.
Taiwan is always looking to maintain and build support against a growing Chinese presence in Latin America. Though its reasons for each individual act are understandable, the combination of the two looks hypocritical and perplexing against the broader hemispheric narrative of the moment.
At some point, Taipei may pay a cost for its support for Ortega the same way Beijing is paying a cost for its support of Maduro. Though the hemisphere has mostly ignored Nicaragua in 2019 to deal with the bigger and more immediate challenge of Venezuela, Ortega’s brutal repression of the opposition has left it largely isolated in the region. Taiwan faces potential backlash from Nicaragua’s opposition if they ever come to power, and potential backlash from other countries in the hemisphere that view Nicaragua and Venezuela within the same strategic framework.
Venezuela update
With the showdown over aid at the borders set for this weekend, three short comments.
1. Guaido has the advantage. Maduro is increasingly likely to be forced from office this year, more likely sooner than later.
2. Time does not help Maduro. Each week that passes brings greater diplomatic and economic pressures that make it harder for him to control the country’s security institutions. Unfortunately, every week that passes also increases the suffering for people in Venezuela, which is why Guaido is pushing to get humanitarian aid in to the country sooner rather than later.
3. Reconstruction and recovery is going to be harder than expected. “Ending the usurpation” will end up being the easiest part of Guaido’s three step plan. At that point, the coalition of Maduro’s opponents will find themselves arguing over the political and economic challenges that will come with the transitional government and new elections as well as the return of democracy.
These three points are contrary to much of the media narrative of the past week which suggests Guaido’s strategy has stalled and Maduro can hold on. This incorrect media narrative, about a resilient Maduro, is likely to grow if Guaido isn’t 100% successful this weekend in delivering aid into the country. Many people are caught up in the high speed narrative and expect results in the space of a tweet. Taking a slightly longer view can help recognize incremental progress being made week after week. This longer view can also help prepare for the lengthy recovery process ahead.
Venezuela’s and Guaido’s challenge does not end with Maduro’s fall from power. That’s actually where it begins.
Corruption Corner
Brazil - President Bolsonaro fired one of his top aides, Gustavo Bebianno, who was in charge of coordinating congressional affairs. Bebianno, who ran Bolsonaro’s Social Liberal Party in last year’s election, had been accused of misuse of campaign funds. The firing was a disorganized mess as Bolsonaro’s sons appeared to influence their father by firing his aide over social media.
Ecuador - President Lenin Moreno announced the launch of an anti-corruption organization modeled along the lines of the CICIG.
Mexico - AMLO accused Guillermo Ignacio Garcia Alcocer, the head of Mexico’s Comisión Reguladora de Energía (CRE), of corruption and having conflicts of interest. Cabinet officials later clarified that Garcia Alcocer had a family connection to a business regulated by the CRE in 2016 and 2017 and it would be investigated. The accusation came after Garcia Alcocer criticized several AMLO appointees to the CRE as being too political. AMLO has cut budgets and staff to energy regulators since entering office.
Reading List
Eric Olson, World Politics Review - AMLO Promised a New Approach to Mexico’s Security Crisis. Is He Delivering?
NYT - El Chapo Highlighted Mexican Corruption, but Drug Money Also Lubricates U.S. Border
Alejandro Hope, El Universal - No pases por Salamanca
InSight Crime - Mexico’s Santa Rosa de Lima Cartel Risks Burning Too Bright, Too Fast
Shannon O’Neil, Bloomberg - Mexico Is Making the Wrong Bet on Venezuela
The Guardian - Panama Papers ‘tightened the noose’ on offshore assets of Maduro’s inner circle
Bloomberg - Venezuelan Opposition Sends Medical Help to Nation's Slums
Imdat Oner, El Pitazo - “Los hechos sugieren un mecanismo de intercambio de oro por alimentos entre Ankara y Caracas”
Thanks for reading!
This time next week I’ll be on a plane to Buenos Aires for the ISMA-OSAC conference. I hope to do some interviews and reporting on the upcoming election and the economic situation while I’m there. If you’re around in Argentina and would like to meet up, please reach out.