Latin America Risk Report - 30 July 2020
How will Latin America manage the US political transition?
In this edition: How will Latin America manage the US political transition?
I published three other newsletters this week:
Monday - Comments the rising homicide rate in Brazil
Tuesday - Comments on China’s promise of a vaccine to Latin America
Wednesday - An update on politics and polls from Chile and Brazil
I’ve dropped the paywall on Tuesday’s newsletter on China, so feel free to click here and read.
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How will Latin America manage the US political transition?
The United States only has one foreign policy at a time and that foreign policy is currently led by Donald Trump. But six months from now, US foreign policy will probably be run by Joe Biden.
This note isn’t directly about Biden’s Latin America policy. If you are interested in that, there have been a number of things published in the past two weeks including this overview from Juan Gonzalez. Dan Restrepo looked at Biden’s potential policy towards Venezuela. Peter Hakim discussed how Biden may change US policy towards Brazil.
Instead, I want to first address the question of how Latin American leaders will manage the next six months. Most of the region’s leaders have three strategy options, each of which has its own risks and rewards:
Engage with Trump until the very end
Attempt a cautious balance between the current administration and the likely future administration
Jump to supporting Biden’s agenda early and hope to reap the rewards of a better alliance in 2021.
In a typical year, Latin American governments would be trending towards a mixture of A and B, engaging the current administration on issues of immediate concern while practicing a careful neutrality about the upcoming election.
As you are all aware, 2020 is not a typical year and Trump’s administration is not typical for US engagement with the region. The result is not what you’d expect from an election that Biden is strongly expected to win.
Many of Latin America’s presidents are all-in for Trump
Polling from around the region suggests that a very large majority of Latin America’s population is eager for an end to the Trump administration. However, several of Latin America's presidents have taken steps in favor of the current administration, planning to get as much out of Trump as they can before the administration changes.
President Lopez Obrador made his first foreign trip to visit Trump and give the US president a photo-op that was immediately used in political ads.
President Bolsonaro and his family, even as their advisors have encouraged them to attempt to portray neutrality towards US domestic politics, have made clear that they prefer the current US president to his opponent.
More broadly, the Trump administration appears to have gathered enough votes to have Mauricio Claver-Carone elected as the president of the Inter-American Development Bank. This is in spite of the fact that the bank is traditionally led by a president from Latin America and the concern that Claver-Carone’s election may place the IDB at odds with the policies of the next administration in the United States.
An early challenge for Biden
It’s possible that the Latin American presidents’ signals in favor of Trump may be pragmatic. They likely fear getting on the wrong side of Trump. They also know, to paraphrase Juan Gonzalez from a recent podcast, that the Democrats will “act like adults” and not hold a grudge because there will be important work to get done come 2021.
But that view may underplay the political challenge in the region for the incoming Biden administration. Go through the countries of the region from north to south and name the leaders who are democratically elected center-left presidents who will be an easy natural ally of Biden. There aren’t many of them. Biden had some great relationships with a number of presidents of Latin America when he was vice president, but most of those leaders are gone and have been replaced by their political opponents. The region’s presidents from the Obama era who are still in power are quite problematic.
The Biden administration will be eager to promote a reset in the US relationship with Latin America. But with few eager partners among Latin American governments, many of whom appear to prefer Trump, the new administration will have to reach out directly to Latin American populations and civil society. Biden and his administration will have a lot more support among Latin American populations, but that outreach beyond the presidential level could cause some unexpected political tensions in the opening months of 2021.
Corruption Corner
Mexico - Former Pemex CEO Emilio Lozoya declared his innocence and promised to provide evidence of corruption by others at the opening of his trial. He is accused of accepting a multi-million dollar bribe in exchange for directing Pemex to purchase two fertilizer companies that were poorly valued.
President Lopez Obrador appears eager to use the Lozoya trial to highlight progress on the anti-corruption agenda and begin making the case to roll back the energy reform passed under the Peña Nieto administration.
AMLO’s critics have accused the president of focusing on the corruption trial as a way to distract from his own failures to manage Pemex’s finances. Pemex announced billions in additional losses this week.
Guatemala/Panama - The sons of former President Martinelli have requested immunity from prosecution and extradition based on their election to Parlacen. However, the Central American organization appears to have denied them their positions, meaning that they will not have legislative immunity. The US has requested their extradition to face trial in a corruption case related to the Odebrecht scandal.
Peru - Nadine Heredia, the wife of former President Ollanta Humala, faces potential criminal charges over her acting as a “de facto public official” that directed the Gasoducto del Sur contract to Odebrecht in exchange for a kickback.
Reading List
Wall Street Journal - Coronavirus Corruption Draws Public’s Ire in Latin America
CNN - Latin America is battling one disaster as a mammoth recession looms
New York Times - Latin America Is Facing a ‘Decline of Democracy’ Under the Pandemic
Forbes - Can Human Rights Due Diligence Help Investors Understand Latin America?
Economist - The return of rigged elections in Latin America
Guardian - Tsunami of fake news hurts Latin America's effort to fight coronavirus
New York Times - The Coronavirus Unleashed Along the Amazon River
Wilson Center - Building a Sustainable Future in Brazil
Guardian - Investors drop Brazil meat giant JBS
Vice - Sinaloa Cartel Used Encrypted Phone Network Hacked By Police, FBI Document Says
El Universal - El necesario regreso a lo local
Reuters - Venezuela's 'shadow opposition' scrambles to find candidates for election
Associated Press - Maduro’s hold on Venezuela tightens as coronavirus surges
Bloomberg - Companies Flee Argentina, and Coronavirus Is Just One Reason
New York Times - ¿Por qué no explota Argentina?
Business Insider - In latest $740 billion defense bill, Alexandria Ocasio-Cortez and a progressive ally send a warning to one of the US's closest allies
Reuters - Colombia was deadliest country for land rights activists in 2019
Global Witness - The climate crisis and threats against land and environmental defenders
Washington Post - Colombian guerrillas are using coronavirus curfews to expand their control. Violators have been killed.
Guardian - Alarm over discovery of hundreds of Chinese fishing vessels near Galápagos Islands
Agence France Presse - Spain Security Firm Probed For Spying On Ecuador's Ex-president
Associated Press - El Salvador arrests ex-defense minister for gang pact
Associated Press - Guatemala burying dozens of unidentified COVID-19 dead
Wall Street Journal - In Nicaragua, Doctors Who Spoke Up About Covid-19 Lost Their Jobs
Economist - MercadoLibre is a wannabe Alibaba
Foreign Policy - Russia’s Shadowy Mercenaries Offer Humanitarian Aid to Clean Image
Thanks for Reading
This newsletter will relaunch in a different format on 17 August. More on that next week.