This week, Venezuela stages controversial legislative elections, the outcome of which is a foregone conclusion. Peru holds a congressional vote of confidence in the new cabinet. Brazil could see its stalled congressional agenda unblocked. In Chile, the debate over a second withdrawal from the private pension system continues, while separately, Chinese investment in the country will be under scrutiny this week. Finally, the presidents of Argentina and Brazil will speak for the first time today as Mercosur faces important questions ahead.
National Assembly (AN) elections for the five-year term starting in January take place on 6 December. Most opposition parties are boycotting the vote, though small pliant opposition groups – some of them using the party names and branding of genuine opposition parties such as Democratic Action (AD) – will participate, allowing the regime to simulate democratic competition. Turnout is not seen as rising above 30%, though the regime may claim higher participation rates. Food handouts will be the main mechanism the regime uses to mobilize voters. In parallel, the opposition is holding its own, unofficial, and mostly online vote from 5 December to 12 December to repudiate the Nicolas Maduro regime and boost its own legitimacy for the period ahead.
Congress is set for a vote to endorse the cabinet recently appointed by caretaker President Francisco Sagasti either on 3 or 4 December. To avoid another crisis flaring up, Congress should approve the new cabinet. However, a separate vote on a proposal to allow an extraordinary withdrawal from the state pension fund (ONP) that is scheduled for 2 December could create some tensions prior to the cabinet vote; Sagasti has said that if the pension bill passes, he would challenge it at the Constitutional Court (TC). Separately, a court hearing today, 30 November, could see the opposition Fuerza Popular (FP) party led by Keiko Fujimori banned for up to two and a half years over corruption allegations. A ban would effectively block Fujimori from running for the presidency in 2021.
This week may see an intensification of discussions on the agenda for 2020 and 2021, particularly if the Supreme Court (STF) rules in favor of the re-election of congressional presiding officers – namely, House Speaker Rodrigo Maia and Senate Chairman David Alcolumbre – on 4 December. This would unblock deliberations on all issues, including first and foremost the choice of rapporteur for the budget directives law (LDO) that sets out the contours of the annual budget law (LOA). Both of these might then be in a position to be approved in December.
Discussions this week could also clarify whether there might be movement in the so-called emergency constitutional amendment (PEC Emergencial) in December, which would signal the commitment by government and congress to adopt spending containment measures as soon as possible, thus increasing the chances of delaying the rolling over of public debt beyond the first four months of 2021. Discussions will also include whether the PEC Emergencial will include the president’s favored cash transfer program Renda Cidada by freeing funds currently spent on subsidies.
The government’s bill to allow people to make a second withdrawal from their retirement savings will go to a lower house vote in the first half of this week. The government released its own version of the initiative as a way to block a parallel opposition-tabled bill, which failed to attain the necessary threshold in the Senate last week. The government’s version makes withdrawals for higher earners subject to tax; legislators in the lower house will probably try to strike this feature down. However, they are under pressure to pass the bill quickly because of both government and opposition promises to make pension funds available for Christmas.
Separately, the lower house economy commission will be questioning Interior Minister Rodrigo Delgado and Defense Minister Mario Desbordes tomorrow, 1 December, in a session to examine Chinese investment in the electricity sector. The session was prompted by the announcement that China’s State Grid Corp is buying Chile’s largest electricity distribution company, CGE, for USD 3bn. If the CGE acquisition goes ahead, State Grid would be the biggest player in the local distribution market. The commission head, Jaime Naranjo, has described the issue as “extraordinarily delicate.” Chinese investment in Chile has grown significantly in the last four years and China is now the primary investor in the country as well as its lead trade partner.
Argentina’s Alberto Fernandez and Brazil’s Jair Bolsonaro are holding a videoconference today, 30 November, in what will be the first encounter between the two presidents, almost a year since Fernandez was sworn in. Relations between the two presidents have been icy, with both trading acerbic remarks over their handling of the Covid-19 pandemic and style of governing. However, the pandemic means the two do not actually have to meet in person. Argentina’s imminent assumption of the pro tempore Mercosur presidency means that frictions over trade could become more concrete in the coming months. For one, Argentina favors and Brazil opposes the accession of Bolivia as a full member of the bloc. Sign-off of the Mercosur-EU FTA will also be on today’s agenda even as Brasilia faces European pressure over its environmental record.