In this edition:
Uruguay- Going to a second round.
Colombia - Energy sector cautiously optimistic
Argentina - Fernandez transition is on
Venezuela - Maduro enjoys the regional protests
It’s been a busy month with protests and political disputes and the Nationals winning the World Series. Paying subscribers this week received an update covering Ecuador, Peru, Chile and Bolivia. Spoiler alert: there are a lot more protests coming. However, less than 15 minutes after I sent a newsletter warning that the APEC protests would be very violent in Chile, President Piñera cancelled the APEC and COP25 summits. I did not send an email update related to those cancellations, but they are an obvious sign of how much pressure Piñera faces.
Uruguay- Going to a second round
Daniel Martinez of the ruling Frente Amplio won 41% of the vote in the first round and will face Luis Lacalle Pou of the National Party in a second round. The third and fourth place finishers have both announced their support for Lacalle Pou. Should all their voters transfer, it would give the opposition candidate, who only won 30% in the first round, a narrow majority of support in the second round. Most analysts believe Lacalle Pou is the favorite, but polling shows a relatively close race.
For an opposition victory, Lacalle Pou needs to avoid fractures in his coalition and keep his partners actively campaigning for him. Talvi and Manini come from opposite sides of the political spectrum and both will expect some concessions on policy and personnel by Lacalle Pou in exchange for their support. He needs to keep up the enthusiasm for defeating the ruling party and put off disputes until after the election.
For the ruling Frente Amplio to attempt to win the presidency again, Martinez will need to pull a number of moderate voters who went for Talvi in the first round in spite of Talvi’s endorsement of the opposition. He will attempt to do so by painting Lacalle Pou’s alliance with Manini as being too extreme for the average moderate Talvi voter.
One sign of hope for Martinez is the failure of the referendum on enhanced security measures including the creation of a military police force. Martinez actively opposed the referendum. That failure comes in spite of security regularly polling as a top issue and homicides reaching record levels (for Uruguay, still quite low compared to many other Latin American countries). The fact the referendum did not pass shows that the security vote may not be as strong as some pollsters claim, which would undermine a key argument for Lacalle Pou.
Colombia - Energy sector cautiously optimistic
On Tuesday I attended the Institute of the Americas event on oil and gas in Colombia in Bogota. Thanks to the organizers for the invitation. Here are a few takeaways in terms of the regional context.
Colombia recognizes that they have a significant opportunity for investment given the recent instability in Ecuador, Peru and Bolivia, AMLO’s energy populism in Mexico, and the expectation of a less than friendly business environment in Argentina.
At the same time, many of the panelists from the oil and gas industries acknowledged that Colombian energy firms and the government must be cautious in the current political environment. The country has already seen protests over other issues and energy controversies could spark greater unrest. “Be humble and listen to communities’ concerns” is how one panelist put it. Another panelist stressed the importance of making sure poor communities have access to energy supplies and see benefits from the operations.
Panelists also referenced the recent elections where Duque and the Centro Democratico did poorly against a range of opponents from the center and left including Claudia Lopez, a left wing politician who won the mayoral race in Bogota. The elections signaled that the political pendulum could swing away from business-friendly politicians in upcoming elections, meaning that any projects not developed now may face further hurdles.
Argentina - Fernandez transition is on
Multiple sources in the media and in Argentina pointed to Matias Kulfas and Cecilia Todesca as leading the economic discussion for the Fernandez transition team. Neither is particularly orthodox, likely to make the IMF and international creditors nervous. Both choices suggest an economic team that is closer to Alberto Fernandez than his vice president Cristina Fernandez de Kirchner.
I published a newsletter on Monday predicting a very difficult first year for Fernandez. On my blog, I offered an alternate point of view looking back at how many predictions missed the economic boom during the Nestor Kirchner years.
Venezuela - Maduro enjoys the regional protests
The Miami Herald commented that Maduro has had a good month thanks to all the social unrest in other countries. Many of Maduro opponents in the region including Piñera and Moreno are distracted by domestic politics. The coming government change in Argentina removes one of Maduro’s top opponents in the hemisphere.
Several government officials in South America accused Maduro of being behind the protests. There is some limited evidence that Venezuela has financed and helped organize a few violent protest cells. However, nobody believes those protest cells account for the vast majority of protesters. Governments who blame Maduro for the protests risk undermining their own credibility in failing to recognize the legitimate grievances of their populations.
Worse, Maduro has embraced the criticisms and contrived leadership role in the protests that his opponents have pushed on him. He has been gleeful in describing the protests in other countries (except in Bolivia, where he obviously sees a US-backed coup). Maduro regime officials have gone out of their way to criticize the human rights abuses by security forces in other countries, especially Chile. You can point out Maduro’s hypocrisy; he doesn’t care.
Hiding behind the regional news, Maduro has his own protest problems. In particular, teachers and healthcare workers are striking and holding public protests against the government. There have been increasing protests in several poor neighborhoods over the abuses of the FAES and other government security forces who have assassinated community leaders. Juan Guaido plans a large opposition march in mid-November, but these smaller individual protests go beyond the “Maduro vs Guaido” top level narrative and instead suggest the beginnings of a grass-roots rebellion that could grow.
Sanctions discussion
I’ll be joining RANE for a one hour conference call on global sanctions where I’m fairly certain I’m going to be asked a lot of questions related to Venezuela. You can register for the call here.
Corruption Corner
Brazil - Jornal Nacional reported that one of the murderers of Marielle Franco indicated that he was going to President Bolsonaro’s residence on the day of the murder. Though Bolsonaro was in Brasilia on the day of the murder, having his name appear in the trial will trigger additional legal reviews as well as scrutiny on Bolsonaro’s known ties to violent militia groups. Bolsonaro filmed an angry 4AM response from Saudi Arabia, where he was meeting with government officials, accusing TV Globo and Rio Governor Wilson Witzel of conspiring against him.
Mexico - Karime Macias, the wife of former Veracruz Governor Javier Duarte, was detained in the UK on corruption charges and may be extradited to Mexico. Jorge Torres, the former governor of Coahuila, was extradited to the US on money laundering charges. These events should be feathers in AMLO’s cap, progress on two high profile cases involving PRI corruption at the state level that generated significant public anger. Instead, there is an unusual reticence by Lopez Obrador to discuss these anti-corruption probes.
Mexico - A new report by Mexicanos Contra la Corrupcion documents the failures by Mexico’s prosecutors and judicial system to successfully prosecute high level criminals for organized crime.
Region - Council of the Americas is holding an event on anti-money laundering in Latin America on 12 November.
Reading List
International Crisis Group - Venezuela Guyana border tensions
International Crisis Group - Fight and Flight: Tackling the Roots of Honduras’ Emergency
Atlantic Council - Belt and Road in Latin America: A regional game changer?
Inter-American Dialogue - China’s Social Credit System: Implications for Latin American Companies
Inter-American Dialogue - New report on Media and Democracy in the Americas
Latin America Advisor - Will Protests Lead to Drastic Changes in Chile?
Wilson Center - Environmental Security Risks in South America
Foreign Affairs - Why Latin America Was Primed to Explode
Bloomberg - Trump White House Wants Direct Control Over Where Cars Are Made
Thanks for reading!
Happy Halloween. Good luck to all the other Nationals fans out there staying awake today after a late night of baseball and celebration.