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June 15, 2020


BY Nicholas Watson, Mario Marconini

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( 6 mins)

This week, the government in Chile will hope for a new impetus in the fight against Covid-19 following a change of health minister and a new fiscal stimulus agreement. Venezuela’s attritional battle for power continues, while Brazil will see more economic measures going through Congress as tensions between the executive and judiciary continue to simmer. The dimensions of Peru’s economic shock are becoming clearer as the health situation remains delicate. Finally, in Mexico, a controversial proposal to fuse regulatory bodies with the competition authority has been dropped.


A new health minister – Enrique Paris – makes his full debut this week after his controversial predecessor Jaime Manalich stepped down on 13 June. Manalich’s departure became inevitable after it was revealed that the government has not been including deaths whose probable cause was Covid-19 in its official daily briefings. Meanwhile, the case count continues to increase; the latest Covid-19 count puts the number of confirmed cases at 174,293 despite much of the Santiago Metropolitan Region (RM) being in lockdown for the last month. Paris has already said that the RM will remain in quarantine for at least the rest of June, while also promising a methodological overhaul, better lockdown enforcement, and a new focus on tracing.

In parallel, the government and three major opposition parties in the early hours of 13 June reached an agreement for an emergency economic support package over the next 24 months. Under the deal, USD 12bn in extra-budgetary resources will be deployed, mostly from the Economic and Social Stabilization Fund (FEES). Some of this will be used to boost the government’s basic emergency income (IFE) program which was designed to support the most vulnerable segment of the population, mostly those who rely on the informal economy, during the Covid-19 crisis.


Opposition leader Juan Guaido faces a new challenge following the Supreme Court (TSJ)’s move to unilaterally appoint a new National Electoral Council (CNE) board on 12 June. Guaido has said he will not recognize this “false CNE”, though in reality, Guaido’s room for maneuver is limited. The new regime-loyal board is likely to move ahead with organizing new legislative elections, and could redesign electoral rules or will simply engineer a fraudulent outcome. Opposition abstention risks undermining Guaido’s position, but so does participating in any election; one major opposition party, Democratic Action (AD), has already said it will not take part. There has also been talk of extending the current legislature’s existing term beyond the end of 2020 but this could undermine the legitimacy of Guaido’s presidential claim.

Even as President Nicolas Maduro has seemingly gained the upper hand on the electoral front, he has suffered a parallel setback. On 12 June, a key Maduro financier, the Colombian national Alex Saab, was arrested in Cape Verde, apparently as a private jet he was travelling in stopped to re-fuel. Saab has been instrumental in brokering deals with Iran and Turkey, most recently involving gold-for-fuel transactions, and is also seemingly a key figure in regime-led corruption networks involving food imports and public housing projects; Saab was indicted by the US in July 2019. A legal tussle over Saab’s possible extradition to the US will now ensue; should he end up in the US, it would represent a serious loss for Maduro.


The Senate should vote this week on job suspension and salary reductions, following the inclusion of exemptions from payroll taxes for 17 sectors until the end of 2021 at the House of Representatives. The order went into force on 1 April and needs to be approved by Congress to become law, and allow for an extension of an additional 90 days. There may also be progress this week in relation to the extension of assistance to unemployed and self-employed workers. The government’s intention to link this to a broader debate regarding all social programs will not succeed as Congress tends to favor the extension of existing benefits: BRL 600 (USD 120) for an additional three months. The economic agenda will also be deeply influenced by news of the resignation of highly respected Treasury Secretary Mansueto de Almeida in the next few months.

The week should also see the end of the Federal Police (PF) investigations into the dissemination of fake news by the so-called “hate cabinet” within the presidency. The Supreme Court (STF), which ordered such investigations, should now authorize the use of their findings as evidence in the continuing trial at the Superior Electoral Court (TSE) against the Bolsonaro-Mourão ticket for recourse to fake news during the 2018 presidential campaign. The trial, which should also end this week, is unlikely to annul the 2018 elections, but its outcome, particularly in the presence of potentially strong evidence against the ticket, will thicken the plot of the ongoing crisis between the government and the judiciary. In connection to this, the week will see the repercussions of a 30-person pro-Bolsonaro protest on Saturday, 13 June, in Brasilia where fireworks were set off against the STF simulating an attack against the institution. In a statement, the STF president formally reprimanded the protest for its anti-democratic character.


New infrastructure investment plans will be unveiled this week as the government looks to reactivate the economy in H2/2020. Finance Minister Maria Antonieta Alva acknowledged on 14 June that the economy had contracted by as much as 40% in April versus April 2019. The heavy toll exacted by the quarantine – in its 92ndday as of 15 June – also lies behind the World Bank’s strikingly pessimistic forecast for 2020: a 12% contraction. The bleak economic outlook is accompanied by a still-complex public health situation, with around 30,000 new Covid-19 cases confirmed in the last week, and the total number of confirmed cases fast catching up on Italy and Spain. The head of the government’s Covid-19 response taskforce, the former health minister Pilar Mazzetti, said over the weekend that economic reactivation needed to be prioritized, and that the quarantine should not be extended beyond its current limit of 30 June.


The government over the weekend backed away from a controversial proposal to combine regulatory bodies for telecoms (IFT) and energy (CRE) with the competition authority (Cofece) to create a single agency to be known as the National Institute for Markets and Competition for Wellbeing (Inmecob). The initiative, which was put forward in the Senate last week and justified partly on money-saving grounds, would have given the president greater control over the bodies and potentially weakened their technical capacities. The U-turn most likely reflects the governing National Regeneration Movement (Morena) party’s lack of the two-thirds majorities required to change the constitution to advance the initiative.

LATAM: Pandemic status and outlook

( 6 mins) Covid-19 caseloads have been dropping across Latin America and the Caribbean in recent weeks. During October, South America has accounted for under 6% of new global daily cases versus 35-40% in June. The improving picture

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( 5 mins) This week, Chile marks two years since the outbreak of protests just as the constituent assembly born out of that unrest starts to debate the content of a new constitution. In Peru, a new stage

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( 4 mins) This week, Chile‘s President Sebastian Pinera faces a bumpy ride as he seeks to defend himself from allegations arising from the “Pandora Papers” leak; at the same time, another presidential debate takes place later today.

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( 5 mins) This week, Mexico‘s electricity sector counter-reforms are in the legislature, where they could muffle recent speculation about the battle to eventually succeed President Andres Manuel Lopez Obrador (AMLO). Political tensions in Peru are rising. In

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PERU: Contradictions and confusion

( 3 mins) Prime Minister Guido Bellido’s threat to nationalize the consortium that operates the Camisea natural gas field unless it agrees to pay higher taxes is unsettling – though not for what might seem the most obvious

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