Latin America Risk Report - 3 October 2019
Haiti's president faces increased protests
In this edition
Haiti - Moïse is still president, but not acting presidential
Peru update - VP resigns
Argentina - I still don’t trust the polls
Paying subscribers received an update on security in Mexico, highlighting how the CJNG expansion has increased violence.
Haiti - Moïse is still president, but not acting presidential
In February 2019, as Haiti protests worsened, I wrote:
President Jovenel Moïse would remain in power in spite of calls for his resignation,
Protests would continue, and
Legislative elections scheduled for October would be delayed.
Six months later, all three points remain true. However, the situation for Moïse looks worse today than it did six months ago. The protests have worsened in recent weeks due to ongoing fuel shortages and anger over the stalled political situation that is failing to address the country’s dire economic challenges. Several analysts believe additional food shortages are likely in some areas in the coming weeks due to the logistics challenges that aid agencies face.
The odds of Moïse being pushed out of power have gone up in recent weeks due to the increased protests and the president’s own lack of leadership. If he is pushed out of power, the most likely scenario is that the head of the Supreme Court would take over as president.
Haiti’s political class is its own worst enemy.
The public is angry about corruption. The president’s nominee for prime minister, Fritz-William Michel, is symbolic of everything the public is protesting against. Michel is a mid-level bureaucrat living in a multi-million dollar mansion thanks to money siphoned off government contracts. He reportedly spent several hundred thousands of dollars bribing members of the legislature to attempt to win the vote on his nomination.
The public is angry about impunity for high ranking politicians. After the vote on Michel, Senator Jean Marie Ralph Fethiere pulled out a gun and fired it into a crowd of reporters, wounding two. He then drove away and authorities have not arrested him in spite of witness accounts and videos.
Even if the president remains in office, he can’t govern
Moïse is spending long periods of time out of public view, only giving brief speeches, including one in the middle of the night. Legislation is not passing and the parliament is on the verge of losing its legitimacy as legislative terms end without new elections. Protesters have half-seriously dedicated their protests to to slogan “Where is Moïse?” intent on finding the president so they can remove him from power.
Moïse’s political opposition in the legislature appears relatively united against the president, but the opposition to Moïse by political elites remains separate from and unrepresentative of the citizens and civil society groups protesting in the streets. For many protesters, Moïse’s main political opponents are just as corrupt as the president.
That division between political elites and the street benefits the president’s chances of staying in power, even as it makes the country harder to govern and solutions harder to find.
The government does not have a clear strategy in the face of protests. In some cases, security forces have backed down and refused to repress protests in spite of orders from local political leaders. In other cases, security forces have used excessive force, including live rounds against protesters.
The international community will continue pushing for negotiations leading to credible elections. One big threat is that they move too quickly, choosing to accept a swift election process over a transparent and democratic one. A rapidly planned poor election process is likely to continue and enhance Haiti’s current challenges.
Peru update - Back to one president as the VP resigns
Vice President Mercedes Araoz, who Congress attempted to name as acting president on Monday, resigned. That decision reflects the political reality of President Vizcarra’s strong position in the ongoing institutional battle.
Having only one person claim to be president is a much better situation in terms of short term stability. However, the battle between the Congress and President is ongoing. The majority in the Congress refuses to recognize the president’s decision to dissolve the legislature and hold new elections.
One of the worst case scenarios would be the president pushing forward with new elections while the current Congress refuses to leave. That would lead to two competing legislatures each claiming legitimacy in early 2020. At some point, the security forces would determine which of the competing institutions could sit in the official building.
Fortunately, the international community including the OAS is pushing for dialogue to resolve the problem. One challenge is that many within the international community think the country’s courts should decide this issue while the makeup of the judicial branch is a key piece of the dispute.
Argentina - I still don’t trust the polls
In a podcast with the Wilson Center, I build on an argument that I wrote about several weeks ago regarding the fact that the market is underestimating Macri’s chance of winning. While I agree with the conventional wisdom that Fernandez is most likely to win, I estimate Macri has about a 25% chance of pulling off the upset.
Nearly every poll published in recent weeks has fallen in a five point range close to the PASO results (adjusting for some undecideds). This is a process referred to as “herding,” and it occurs when polling firms adjust their models in a way that they all match each other. This makes it more likely that the polling firms all make the same errors together.
As I comment in the podcast, polling errors can happen in either direction. It’s possible that the polls are wrong and the gap between the top two candidates has tightened. It’s also possible that the polls are wrong and Fernandez actually has a much wider lead than the polls currently show.
Macri received a bit of good news last week as an ally of his won a majority in Mendoza’s gubernatorial election, more than a dozen points better than Macri did in the PASO.
Speaking of the Wilson Center, they are hosting an event about Argentina’s politics featuring Sergio Massa on Friday, 4 October.
Corruption Corner
Honduras - US prosecutors made a major new accusation during the opening arguments of the case against Tony Hernandez, claiming he took a one million dollar bribe from Sinaloa Cartel leader Chapo Guzman. Guzman wanted the money passed on to his brother, President Juan Orlando Hernandez in exchange for protection of traffickers and safe passage of cocaine. The Honduran president’s office has denied that he accepted any bribes.
Mexico - Manuel Bartlett, the head of the Federal Electricity Commission (CFE), is significantly wealthier than his financial disclosure forms show according to an investigation by Carlos Loret. AMLO has stood by Bartlett and said the accusations of corruption are politically motivated. A local anti-corruption group has formally presented evidence of the corruption to the authorities.
Reading List
BBC - In pictures: Indigenous Bolivians demand action over fires
BBC Mundo - Interview with Costa Rican President Carlos Alvarado
Bloomberg - The Secretive Gold Deal Keeping Venezuela Afloat
Armando.info - Unos “navegaos” son los nuevos magnates del turismo a la cubana
Washington Post - These two places symbolized Venezuela’s strength. Now they epitomize its implosion.
Forbes - How Beer And Tacos Explain Modern Mexico
WSJ - Argentine Farmers See Hard Times Ahead With Peronists Poised for Victory
Univision - How the DEA helped rescue Honduras from the narcos, and the president's brother ended up being arrested
Thanks for reading!
Thanks for all the positive comments on the Peru and Mexico newsletters this week. Please keep letting me know if there are other issues you want me to cover.