Latin America Risk Report - 24 May 2019
CFK runs for VP in Argentina; Maduro's resources running thin
In this edition
Argentina’s former president runs for VP
Venezuela update
Argentina’s former president runs for VP
While many former presidents try to maintain influence by picking their successors, former President Cristina Kirchner is attempting something different by running as the vice presidential candidate on the same ticket as Alberto Fernandez, her late husband’s chief of staff. Over at the blog last weekend, I wrote that putting CFK as VP aims to:
Keep her base motivated for the election
Ensure someone with high name recognition is on the ticket
Protect her interests if Fernandez is elected president (because we’ve seen in other cases how hand-chosen successors turn against their predecessors)
Provide immunity from prosecution
Kirchner’s move has shaken up the media coverage of the campaign, raised questions about potential additional alliances, and forced Macri to answer to critics within his own party that want him to consider allowing another candidate to stand for president. At the same time, there are no indications that the polling or the key narrative of the election has shifted since the announcement. The virtual tie between Macri and Kirchner remains, even as both face negative approval ratings. If a different candidate could enter the second round, they would likely win, but none of the second tier candidates has been able to gather momentum.
Venezuela update
Representatives of Guaido and Maduro continue to meet with potential facilitators for negotiations in Norway, though the process remains in pre-negotiation phase. Both Guaido and Maduro have key stakeholders in their camps who strongly oppose and argue against negotiations, making the internal politics for both sides quite difficult. Ultimately, Guaido’s insistence that Maduro leave power will be the key question in the negotiation process and whether the negotiations move forward.
India announced it will no longer accept oil from PDVSA. This is significant as India is one of the few remaining customers for Venezuelan oil that pays cash to the Maduro regime. Russia and China take a majority of their Venezuelan oil as part of debt payments.
Newsletter subscribers this week received an analysis of how Maduro’s allies are actually harming his chances of remaining in power by draining his few remaining resources.
Guaido’s government made a significant debt payment last week to prevent a court battle over the control of Citgo. Guaido has called on the Trump administration to take action that would prevent seizure from creditors. The Trump administration has been reluctant to take that step. A bipartisan bill moving through the US Senate would provide greater US support for the Guaido government including financial aid and could push the executive branch to be more supportive on the question of the PDVSA debt.
Corruption Corner
Mexico - Emilio Lozoya, the former head of Pemex under the Peña Nieto administration, has been barred from public office for ten years due to misstating his assets on financial forms. This is a very minor anti-corruption victory amid criticisms that President Lopez Obrador has been slow to prosecute corruption. Lozoya is also believed to be under investigation for accepting bribes from Odebrecht and anti-corruption activists would like to see greater movement on that effort.
Mexico - Last week, the US issued sanctions against former Nayarit Governor Roberto Sandoval Castañeda under the Global Magnitsky Act for his corruption and accepting bribes from the CJNG. It was unique that they sanctioned Sandoval under the Magnitsky Act while using the same press release to sanction a judge and a number of businesses under the typical counter-narcotics related Kingpin Act. As InSight Crime writes, the sanctions against Sandoval will be another test for Mexico’s anti-corruption efforts under AMLO.
Reading List
NYT - Guatemala’s Anti-Corruption Fight Inspired Latin America. It May Be Shut Down.
NYT - Colombia Army’s New Kill Orders Send Chills Down Ranks and follow up article on change in policy.
Bloomberg - Argentina’s Financial Crisis Creates an Opportunity for China
Economist - Guns from the United States are flooding Latin America
Thanks for reading
The newsletters were delayed this week as I’m traveling for work in Denver. Hope everyone has a great weekend!