Latin America Risk Report - 26 March 2020

Coronavirus cases expanding in Central America

Mar 26, 2020

In this edition:

Region - Coronavirus hits Central America
Brazil - Bolsonaro vs the governors and the population
Region - Looting likely to increase

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Coronavirus hits Central America

Every country in Central America except Nicaragua has implemented some form of serious travel ban, border shutdown and curfew/quarantine.
Only Panama and Costa Rica have crossed the 100 case mark, with the cases in Panama matching the pattern of exponential spread in many South American countries.
For the Northern Triangle, a combination of early and strict quarantine measures plus a lack of testing contribute to the very small number of cases being reported thus far. It is quite possible that the virus is more widespread than reported.
As with South America, a large portion of the public in Central America supports swift and severe quarantine measures to block the spread of the virus.
At the same time, the governments of El Salvador and Honduras have leaned towards more repressive quarantine measures that should be questioned as potentially politicized or excessive. Nicaragua, while behind the curve on quarantine, is repressive as usual.
On average, public health systems and hospitals in Central America are far less equipped than their South American counterparts, meaning that if and when the virus begins to spread, particularly in the Northern Triangle, it will overwhelm those systems quickly.
Additionally, with relatively poor populations, the patience for quarantine measures may be much thinner in Central America than other parts of the hemisphere. Protests in Honduras by people struggling to make enough money to eat are an early sign of potential problems that could hit any country in the region in the coming weeks.

Above: Graphic from Our World in Data

Guatemala - The Giammattei administration has recognized the seriousness of the threat, banning all international flights early, but he has gone slower than his neighbors to the south in mandating quarantine efforts. Last weekend, the president imposed a curfew from 4pm to 4am every day this week. The Congress extended the state of emergency in the country. Reports from Guatemala City suggest that there is still significant movement of people and vehicles around the capital, with social distancing efforts not being overly enforced by the authorities.

Honduras - De facto President Juan Orlando Hernandez has used the coronavirus response to implement quarantine requirements that appear to assert his control over the military and the territory of the country. Travel bans and mandatory quarantines have been strictly enforced. Given recent controversies over corruption and drug money, the coronavirus crisis is an opportunity for Hernandez to change the subject. Images of security forces using tear gas on people at a market demonstrate an excessive level of force against a population that is struggling to survive. Hernandez has promised to use the military to distribute food to some of the population as well. There have been several days of protests this week.

El Salvador - El Salvador has implemented one of the harshest quarantines in the world in spite of a very low number of reported cases. There is a full travel ban, mandatory quarantine for nearly all citizens, harsh penalties for those who break the rules. Additionally, private sector companies must pay the salaries of vulnerable populations as they take time off and some subsidies have been offered to businesses. Bukele has public support for his policies broadly and for these policies in particular. As with much of what Bukele does, there is a concerning whiff of authoritarianism in his eagerness to impose these harsh restrictions on society. One source in El Salvador who works for the media said he is worried that Bukele, having used these emergency powers, will be hesitant to give them all up.

Nicaragua - Along with Brazil and Mexico, CNN described Nicaragua as the third country in the hemisphere failing to take the threat of coronavirus seriously. However, Nicaragua’s health system is far less developed and prepared than those other two countries, making it a larger danger for the country’s citizens if the virus spreads. The country has reported two Covid-19 cases and nobody believes their methodology. Daniel Ortega has been almost completely silent on the issue of coronavirus. He often drops out of the public eye, most believe for health-related reasons, but the timing of his disappearance in this case as the entire world faces a major health crisis has led to questions about a power vacuum within his government.

Costa Rica - President Alvarado has blocked foreigners from entering the country and said foreigners who leave the country could lose their visa or asylum status in an attempt to limit the global spread of the virus. Some social distancing including a nighttime curfew is being enforced. The Alvarado government was facing a major corruption scandal prior to the arrival of coronavirus.

Panama - One of the most globalized countries in the hemisphere thanks to its critical location for trade and travel, Panama has been hit hard by the virus. The Cortizo government has reacted by shutting down international flights and implementing strict quarantine and curfew measures. This week there were reports about potential looting being organized by groups in Colon angry at the government’s lack of economic support.

Brazil - Bolsonaro vs the governors and the population

President Jair Bolsonaro gave another public address downplaying the threat of coronavirus to Brazil and criticizing mayors and governors who have imposed quarantine measures that have hit the economy.

The president’s own cabinet ministers and military leaders appear to contradict him. Governors and municipal leaders are attempting to coordinate actions across their states without the help of the federal government.

The division among the various levels of government is likely to lead to policy confusion moving forward. If Bolsonaro is just grandstanding, it may not matter. However, if he hampers the federal response and orders economic activity reopened over the governors’ objections, the situation has the potential for a political and even a constitutional crisis.

Brazilians confined to their homes are banging on pots and pans to demand the ouster of the president for his failure of leadership. Several Brazilian sources commented that the country seems more ready for protests now than it was three months ago, but it’s unclear what shape those protests would take given the social distancing policies.

Bolsonaro retains the support of about a third of Brazilians. However, his dismissiveness of the virus is unique among South American leaders, both popular and unpopular, who have moved with public opinion in favor of more restrictive measures.

Region - Looting likely to increase

In last week’s newsletter, I said prisons would become a source of tension. Unfortunately, Colombia’s prison riot this week that killed 23 is only the beginning. More prison riots are likely as quarantines continue, as prisoners worry about the health impacts, and as prison gangs attempt to take advantage of a difficult situation.

In the coming two weeks, I think there will also be an increase in the number of organized robberies of stores, which will be portrayed as lootings. There have been several reports of lootings and robberies in Latin America during the past week, including a string of social media messages in Mexico attempting to organize looting in the capital.

As these incidents increase, these robberies will be organized and led by small and mid-sized gangs, some of which are hurting for funds after the recent slowdown of economies and illicit trafficking routes. At times, the gangs may use social networks to encourage local populations to loot at the same time the robberies are taking place. The quarantine and economic shutdowns allow opportunistic criminals to take advantage of desperate populations. This will help add to the confusion and make the robberies more successful.

Corruption Corner

Mexico - Following the referendum to halt the construction of a brewery in northern Mexico, President Lopez Obrador claimed without evidence that the construction project received its permits via corruption. The statement was a clear example of AMLO politicizing the anti-corruption agenda to promote his preferred policy outcomes.

Mexico - The Mexican government formally requested the extradition of Emilio Lozoya, the former head of Pemex. Lozoya, who served in the Peña Nieto administration, is accused of multiple acts of corruption including taking millions in bribes from the Brazilian construction firm Odebrecht.

Peru - A US judge said former President Alejandro Toledo can be released on bail as they consider him less of a flight risk during the coronavirus pandemic. Peru is demanding his extradition due to his accepting bribes from Odebrecht. Toledo will be required to surrender his passport and wear a GPS tracker.