Latin America Risk Report - 7 November 2019
Post-election tensions in Bolivia; Challenges for the IMF in Argentina
In this edition:
Bolivia - Post-election tensions increase
Argentina - The IMF is in a lose-lose-lose position
Bolivia - Post-election tensions increase
Former President Carlos Mesa continues to increase pressure on President Evo Morales. However, Mesa’s public role has been eclipsed by Luis Fernandeo Camacho who has been increasingly taking on the face of the opposition to President Morales. Camacho flew into La Paz airport where he had a showdown with authorities and a crowd of angry Morales supporters.
Camacho is ordering Morales opponents to blockade government buildings and otherwise disrupt the country while groups supporting Morales go out and try to prevent the blockades of roads and buildings.
At least one person has died and dozens were injured in post-election violence in Cochabamba among protesters, security forces and government supporters. Many of those injured were opponents of Morales. However, in one small town in Cochabamba province, a pro-Morales mayor was attacked by a mob of opposition protesters and the incident is getting widespread international coverage. Protests and injuries also occurred in La Paz and Santa Cruz.
Morales is defiant. He claims his opponents do not respect the constitution, Supreme Court and electoral results. Morales has cautiously called for everyone to await the outcome of the OAS review process while also making clear he is unlikely to support an OAS audit that fails to confirm the result he prefers.
Morales’s opposition has already announced that they want Morales to resign and a new vote to take place, regardless of what the OAS audit finds. Sources monitoring the international community’s efforts to mediate the crisis think the opposition may be overplaying its hand.
At least one side of this dispute is going to be angry at the outcome of the OAS process and will reject its conclusions. Protests are likely to continue in the coming weeks. They will likely increase in January as the dispute over the next presidential term converts into a fight over the legitimacy of the president.
Argentina - The IMF is in a lose-lose-lose position
President-elect Fernandez visited President Andres Manuel Lopez Obrador in Mexico. It was a sign of who Fernandez views as his ideological ally in the region and a snub of Brazil. Bolsonaro has been critical of Fernandez’s election and the tensions between Brazil and Argentina appear likely to continue for the months to come.
Fernandez continued to make announcements from Mexico that give indications of a strong economy ministry and greater government involvement in the economy.
Fernandez also met with Mauricio Claver-Carone, one of Trump’s top Latin America advisors, to discuss the US-Argentina relationship and potentially the role of the IMF moving forward.
The IMF has indicated it is ready to negotiate with Fernandez, but the situation in Argentina places the IMF in a difficult situation.
If they continue supporting Argentina, then the new president drives the terms of the relationship, using the IMF as a convenient scapegoat until the day he chooses to drop them. Additionally, the IMF loses leverage in future discussions with other countries who will view its reform demands as recommendations that can be ignored under the correct political circumstances.
If the IMF moves quickly to cut Argentina’s access to IMF funds out of concerns over Fernandez’s proposed policies, they will be portrayed as the bad actor in Argentina and may be blamed for the continuing economic collapse. Additionally, the institution will face a major challenge in getting repaid on the money already delivered to Argentina, a substantial line item on its balance sheet.
The IMF is not a single actor but a coalition that includes the Trump administration as the major voting participant. This means issues outside of economics including Fernandez’s position on Venezuela may interfere in the IMF’s Argentina policy, even if the IMF tries to stick to economics and the already complicated politics around economic policy.
This gets more complicated due to the mixed messages on the US-IMF-Argentina relationship. President-elect Fernandez claims that he received a call from Donald Trump that indicated the US has instructed the IMF to work with the new administration. The US did not acknowledge that comment and Treasury Secretary Mnuchin indicated the US expects Fernandez to commit to economic reforms in exchange for IMF support. With controversy in the US over the transcripts of presidential-level calls, Fernandez may be playing into the US political debate in a sneaky and dangerous way by quoting Trump on a critical issue in a way that can’t be confirmed or rejected.
Corruption Corner
El Salvador - The CICES may not be authorized to conduct investigations in the country, but the organization has a Twitter account. Critics have already said the organization is a propaganda tool for the Bukele government, but nearly every review of the CICIG’s lessons learned indicated that a smart media strategy was key to building the organization’s legitimacy and political capital.
Brazil - JBS, the largest meat producer in the world, is under criticism in the US media and by US politicians for a number of reasons including corruption in Venezuela. A recent Washington Post article highlighted criticisms of the company from across the US political spectrum.
Reading List
Washington Post - The Migrant Debt Cycle (on microfinance in Guatemala)
Bloggings by Boz - El Salvador’s Bukele doesn't have a magic security wand
InSight Crime - Esmeraldas: An Ecuador Province Gripped by Drug Conflict
Ozy - America’s Opioid Crisis Heads South to Mexico
Forbes - Mexico Needs A New Strategy For Fighting Crime
WPR - Chile’s Protests Are a Rejection of the Excesses of Neoliberalism
WSJ - Vale CEO Dismissed Warning on Mines Before Deadly Disaster in Brazil
Washington Post - As loggers destroy the Amazon, this ‘guardian’ stood in their way. Now he’s been killed.
NYT - Stalking the Endangered Wax Palm (Colombia)
NYT - ‘A Very Dangerous Game’: In Latin America, Embattled Leaders Lean on Generals
Washington Post - Mastermind or scapegoat? Besieged South American leaders blame Venezuela’s Maduro for historic wave of unrest.
Miami Herald - Who will be Cuba’s prime minister? A general and former Castro son-in-law stands out
Guardian - Argentina could become 'sacrificial country' for plastic waste, say activists
Associated Press - Censorship or caution? Culture war burns in Brazil
Global Americans has three new papers on climate change in the Caribbean, the Venezuelan refugee crisis and Latin America’s role in the world.
NYT - The Rising Threat of Digital Nationalism
Thanks for reading
I appreciate everyone who read my Mexico update yesterday as well as the on-going commentary on Twitter. Paying subscribers will receive an update on Venezuela tomorrow. Please encourage your friends and colleagues to subscribe at https://boz.substack.com