Latin America Risk Report - 30 January 2020

Peru has a new Congress; AMLO holds a lottery for his plane

Welcome to the Latin America Risk Report - 30 January 2020

In this edition

  • Peru - Election leads to a divided Congress with fringe parties

  • Mexico - A presidential raffle

Earlier this week, I sent an analysis, map and chart regarding Latin America’s preparedness for a potential infectious disease outbreak such as the Novel Coronavirus. Also this week, paying subscribers to the newsletter received an analysis of Mexico City’s security situation.

Peru - Election leads to a divided Congress with fringe parties

Peru’s election ended up being every bit as divided as the polls predicted. At the moment, nine parties have received seats with Juntos por el Peru falling just short in spite of projections on election night it would cross the 5% mark. Seat totals could still change as additional votes are counted.

No party received over 10% of the total vote and only the centrist Accion Popular received over 10% of the valid votes, excluding blank and null ballots. 

President Martin Vizcarra is claiming victory, highlighting that the previous corrupt Congress has been removed.

While there should be a coalition of parties that support the centrist agenda of the president, the divided vote also allowed fringe parties to make serious gains. Frepap, a party that some consider a religious cult; and Union Por el Peru, which supports fascism, will both have significant representation in the next congress.

On Monday evening, Francisco Toro and I published a column in the Washington Post about Peru’s election and the disillusionment of voters in the country. 

Just days after her party lost most of its Congressional seats in the new election, Keiko Fujimori was sent back to jail pending her trial for corruption and money laundering. Among other accusations, Fujimori allegedly took over US$1 million in Odebrecht bribes. Her party, Fuerza Popular, claims the trial is a political tool for President Vizcarra to remove his leading opponent in the runup to the 2021 presidential elections.

Mexico - A presidential raffle

Mexico has seen major security developments this week including the capture of the wife of El Marro, leader of the CSRL in Guanajuato, and the detention of the nephew of Rafael Caro Quintero, who runs one of the factions of the Sinaloa Cartel. For a president who was elected on a policy of moving away from an HVT strategy, those seem like some very High Value Targets. There was also a large shootout in Quintana Roo related to flights filled with cocaine.

Those security developments seem really important, but have you heard about the fact President Lopez Obrador is raffling off the presidential plane? You probably have because the president continues to focus on the issue, the Mexican media are covering it and the social media memes are everywhere. Unable to sell the presidential plane as he promised when elected, AMLO now plans to issue raffle tickets for 500 pesos each. This will give many Mexican citizens the opportunity to win a relatively new Boeing 787.

As today’s El Universal reports, AMLO has provided at least five different ideas for how the money from the sale of the presidential plane will be used. He’ll help the families of the victims of crime, provide benefits to Central American migrants, rebuild Hidalgo’s public water system, purchase high tech medical equipment and do other unnamed projects that will benefit all of Mexico. 

While fun to discuss, this raffle also demonstrates AMLO’s governing style.

  • AMLO improvises and plays to popular opinion. This raffle is an amazing opportunity to continuously highlight how he is a man of the people, turning down the perks of the presidency and flying coach. Everyone will pay attention because some random citizen is likely to win a plane.

  • AMLO promotes an image of faux austerity. Mexico’s government is not going to save money by not having a presidential plane. AMLO’s commercial flights around the country cost money. Having the plane sit in storage for a year did not save money. The $100 million brought in via a lottery is small change compared to Mexico’s total budget.

  • AMLO wants to focus on the show rather than the tough issues. Homicides are up and the economy is down. This plane raffle is an excellent distraction from tougher questions about his security strategy and economic policies.

Corruption Corner

Central America - Bloomberg reports that tax investigators have uncovered a conspiracy by a Central American financial institution to help companies launder money and evade taxes. Comparing the issue to the Panama Papers; Australia, Canada, the Netherlands, the UK and US plan to crack down on the clients who are illegally hiding their wealth soon.

Mexico - US prosecutors announced that they have linked the investigation of Genaro Garcia Luna to Ivan Reyes Arzate, the former commander of Mexico’s Federal Police who had been among the top officials vetted by US authorities for intelligence sharing. Reyes is accused of taking hundreds of thousands of dollars in bribes from the Beltran Leyva Organization in exchange for sharing information and helping them traffic cocaine. Garcia Luna, who helped design President Calderon’s security strategy, is accused of taking bribes from the Sinaloa Cartel.

Reading List

Insight Crime - 2019 Homicide Round-Up

Americas Quarterly - Justice Reform Puts Mexico at a Dangerous Crossroads

AP - Ally of Venezuela’s Maduro hires DC lobbyist to build ties

NBC - Shooting death of young woman activist returns spotlight to 'femicides' in Juarez and Mexico

Bloomberg - Robots Pose Biggest Risk to the Poorest Countries

Bloomberg - Riots and Slow Growth Can’t Stop Latin America’s Bond Boom

Forbes - What’s Ahead For Mexico’s Renewable Energy Industry?

Reuters - Belt and Road Initiative to boost Chinese lending in LatAm

WSJ - Residents Near Brazil’s Mine Dams Live in Fear

WSJ - USMCA: The Deal’s Been Signed, but the Debate Continues

Washington Post - Belo Horizonte experiences deadly flooding after 32 inches of rain falls in just 27 days

BBC - 'They are invaders': Brazil indigenous group takes on mining giant

Reuters - Amid malnutrition, crop diseases pose threat to Venezuela food supplies

NYT - Bitcoin Has Lost Steam. But Criminals Still Love It.

HuffPost - The Man (And The Mission) Behind Trump’s Clash With Venezuela

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