In this edition:
Argentina - The Macri government is looking to reschedule billions in bond payments
Mexico - Comments on AMLO’s pipeline deal, violence and polling
Bolivia - Morales botched attempt to show decisive action on Amazon fires
Venezuela - Updates on Maduro’s discussions and the FARC
Argentina - The Macri government is looking to reschedule billions in bond payments
Treasury Minister Hernan Lacunza told reporters that his plan to defer payments is not a default but an acknowledgement of reality and one better dealt with now rather than as an emergency six months from today. Technically, it’s a default.
Argentina’s stocks and bonds dropped yet again on the news as foreign investors saw this rescheduling as a confirmation that the next government will be forced to default in the coming years in a way that is much more serious and painful than a technical rescheduling of payments. The Central Bank burned through currency reserves attempting to keep the peso under 60 to the dollar.
A default under Macri might lead to reasonable negotiations and terms for repayment because Macri has a history of wanting to get the country on financial footing that would renew foreign investment. While markets have largely ruled a potential Macri second term out, earlier this week I published some reasons that Macri may still have a chance to win the election.
A Fernandez government, already blaming the IMF for the crisis and viewing the debt as unfairly and improperly issued, would be more likely to prolong the negotiations, demand bigger cuts in payments, and use the negotiations for propaganda purposes. One of his challenges at the moment is preventing Argentine voters from blaming him for the economic crash that has occurred since his PASO victory.
Mexico - Comments on AMLO’s pipeline deal, violence and polling
Appearing with Carlos Slim at his morning press conference, Lopez Obrador claimed the new agreement over the payments to the Texas-Tuxpan pipeline would save the Mexican government several billion dollars. The concerning factor is the lack of institutional oversight and the role of the president and his whims in terms of negotiating and deciding this arrangement. If AMLO forced renegotiations once, he could do so again.
A massacre at a bar in Veracruz and shootouts in Nuevo Laredo and in rural Tamaulipas near the border all signal a renewed war among criminal groups for control of key corridors in northeast Mexico. The violence is caused by various conflicts among the Zetas, Gulf Cartel, Cartel de Noreste, CJNG, and various local groups. It’s more complicated than any single national narrative about cartel violence can capture. There is no one group driving the violence, giving the government no easy target to resolve the immediate challenge.
In Estado de Mexico, the twelfth journalist this year was killed, almost certainly for reporting on crime and corruption. AMLO previously promised to do more to protect journalists, but not a single one of the cases has been prosecuted.
A poll from El Universal this week confirmed other recent polls that showed AMLO maintaining his approval rating around 70%. In spite of rising violence, a weakening economy and concern from the business community, the vast majority of the Mexican public continues to support the president.
Bolivia’s Morales botched attempt to show decisive action on Amazon fires
Over the past weekend, the G7 discussed the fires in the Amazon, simultaneously offering aid and taking shots at Brazil’s president. While Bolsonaro faces the most international pressure, media and opponents of President Morales in Bolivia have directed their criticisms at the president for allowing large amounts of land to be set on fire.
Morales, currently the front runner and likely to win re-election, has suspended his campaign to focus on fighting the fires. Morales views the criticisms as a plot by right wing opponents who oppose indigenous rights, but he is mindful that the Bolivian public is opposed to environmental destruction and the issue could damage his campaign if he fails to act.
Unfortunately for Morales, his actions turned into a public embarrassment as he got lost during a visit to the forest and needed help.
International commentators want to make the competing environmental tragedies in Bolivia and Brazil about a right vs left debate. Instead, it’s better understood as challenges both countries face in balancing economic development with environmental regulations. The weak responses to the fires also show both countries sharing challenges in terms of presidential leadership.
Venezuela Updates on Maduro’s discussions and the FARC
Amnesty. Offer for amnesty. In an interview with the New York Times and comments to other reporters, Elliott Abrams indicated the US would not seek to prosecute Maduro if he left power and suggested the US had offered Venezuela’s de facto ruler amnesty. Multiple sources in Venezuela suggest that the Venezuelan military leadership have been caught off guard by the news that Maduro and his civilian allies are talking directly with the United States. Maduro, however, continues to avoid offering anything of value in those discussions.
Maduro and the FARC. President Duque accused Maduro of protecting the FARC leaders who have rejoined the fight. His government also claimed the video announcement by the FARC was filmed in Venezuela. As I wrote in a newsletter yesterday, the renewed organization of the FARC highlights the ongoing hemispheric security concerns over the Maduro regime and could place additional pressure on the government in Venezuela. Separate from the FARC, Maduro and his security forces play a key role in drug trafficking and protecting Colombian criminal groups. However, the reemergence of the FARC is far more symbolically important.
Corruption Corner
Honduras - InSight Crime reports on how the testimony of a former mayor ties President Juan Orlando Hernandez to corruption and organized crime. Alexander Ardon (AA), the mayor of El Paraiso, ran drug trafficking routes along the Guatemalan border. A decade ago, Hernandez and his brother allegedly agreed to protect Ardon in exchange for funding for the National Party.
Ecuador - Also reported by InSight Crime, Ecuador investigators and prosecutors continue to target former President Correa and his allies with corruption allegations. Correa’s former Vice President as well as three former ministers - Vinicio Alvarado, Walter Solís and María de los Ángeles Duarte - face charges of corruption related to bribes they took while in office. With elections scheduled for next year, the corruption investigations and media coverage of Correa’s misdeeds are likely to harm the chances of his coalition.
Peru - FT covers President Vizcarra’s proposal to overhaul the entire political system with a new election, something that would lead to his leaving office a year early. The article speculates that Vizcarra wants to use the anti-corruption agenda to become the first president in several generations to leave power with some measure of popularity. He could turn that popularity into political capital to exercise influence from out of office or run for president again several years later.
Reading List
The Guardian - Guatemala in grip of 'mafia coalition', says UN body in scathing corruption report
MercoPress - Central America suffering the worst outbreak of dengue fever in decades
Reuters - Fake-branded bars slip dirty gold into world markets
Reuters - Cold, hard euros: Venezuela turns to European cash after U.S. sanctions
New Yorker - Argentina Considers a Return to Peronism
WSJ - Facebook Said It Aced Brazil Elections. Internally, There Were Doubts.
Financial Express - How Lithium findings in Peru are making it advantageous for India
BBC - Why 500 million bees have died in Brazil in three months
Georgetown Journal of International Affairs - A Transition from Above or From Below in Venezuela?
RAND - The Future of Fentanyl and Other Synthetic Opioids
Wilson Center - Foreign Policy Lessons from Russian International Media Coverage of Venezuela
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