February 16, 2021

Latam

LATAM PULSE

BY Mario Marconini, Nicholas Watson

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( 5 mins)

This week, Ecuador’s electoral tensions will continue after the conservative former banker Guillermo Lasso reached a run-off vote by the narrowest of margins. Controversial electricity sector reforms in Mexico will go to a lower house vote. In Brazil, political interference in state-controlled oil company Petrobras is under the spotlight. Argentina has been hit by a scandal over preferential access to Covid-19 vaccines; that will undermine one of the goals of President Alberto Fernandez’s trip to Mexico this week, where a new regional left-leaning alliance could be in the making. Finally, in Colombia, the dents in former President Alvaro Uribe (2002-2010)’s legacy, which were dramatically highlighted last week, could weaken his ability to influence next year’s election process.

Ecuador

Electoral tensions will persist this week after the National Electoral Council (CNE) announced yesterday, 21 February, the final line-up for April’s presidential run-off. The conservative Guillermo Lasso narrowly beat the indigenous movement’s Yaku Perez to come in second behind the leftist Andres Arauz, former president Rafael Correa (2007-2017)’s protégé. However, Perez has filed legal challenges against the CNE, which controversially now faces an audit of its digital voter database. Perez is also fronting a march of his supporters, which will arrive in Quito tomorrow, 23 February. Perez’s contestation is more about posturing than getting the results overturned, though some of his rhetoric makes any alliance with Lasso more difficult. Arauz, meanwhile, will up his efforts to demonstrate his moderation and independence from Correa, both of which are highly moot.

Mexico

The electricity supply should normalize fully this week as gas supply problems ease off following the disruption caused by severe winter weather, mainly in Texas; two LNG shipments have already arrived at Mexican ports, while pipeline deliveries from the US are also returning to more normal levels. However, President Andres Manuel Lopez Obrador (AMLO) is using last week’s outages as a justification for his controversial reform of the Electricity Industry Law (LIE), which goes to the lower house plenary tomorrow. The reform is set to alter grid dispatch rules to benefit the state-run CFE electricity utility at the expense of private companies.

Brazil

The dismissal of the president of state oil company Petrobras and his likely replacement by yet another army general will dictate the course of events this week. Markets have reacted strongly to rising concerns over interference in the management of the publicly traded company. The Petrobras board should ratify President Jair Bolsonaro’s appointment on 23 February. Bolsonaro’s appointee, General Joaquim Silva e Luna, will certainly be called to clarify what he meant when he said that state-controlled companies should be “fully integrated into society” and “contemplate social questions.” It remains to be seen whether Bolsonaro will deliver on his promise to lower the price of gasoline by at least 15% or continue to reshuffle top positions in the energy sector, as he committed to do last week.

In parallel, the future of Economy Minister Paulo Guedes has become once again questionable, raising additional concerns about the future of the reform agenda. The week also should see whether the emergency assistance will be reinstated in compliance with current fiscal rules or under a newly negotiated state of calamity.

Argentina

The government is embroiled in a scandal over Covid-19 vaccines that led to the replacement of Health Minister Gines Gonzalez Garcia on 19 February. Gonzalez Garcia was forced out after it emerged that he provided vaccines to a select group of friends and officials and was himself inoculated amid a generally slow and uneven vaccine rollout. So far, under 250,000 people have received the required two doses of the Sputnik V vaccine. Following the pattern of other ministerial substitutions and key appointments, newly promoted Health Minister Carla Vizzotti is close to VP Cristina Fernandez. It has also emerged that Finance Minister Martin Guzman was also inoculated, though the government will look to shield him from pressure to resign. The scandal completely overshadowed the launch of the president’s new Social and Economic Council, which is designed to explore long-term policies to “normalize” Argentina.

Argentina/Mexico

Fernandez will hope – probably in vain – that the vaccine scandal blows over while he pays a visit to Mexico in the early part of this week. For Fernandez, the trip is an opportunity to present himself as a diplomatic bridge between Mexico and the US. Fernandez also wants to raise his international profile by echoing Mexican government calls for wealthier countries to stop “hoarding” vaccines. Meanwhile, AMLO – normally indifferent to foreign policy – may now see a chance to help Fernandez build up a new regional left-leaning alliance; Bolivia’s Luis Arce could be AMLO’s next guest, followed by Ecuador’s Andres Arauz should he win election. Both Fernandez and AMLO will likely steer clear of any meaningful utterances on the Venezuela crisis with the line that Venezuelans themselves hold the solution to their problems.

Colombia

Former President Alvaro Uribe (2002-2010)’s legacy – and future – will remain front and center of the political debate after last week’s report by the Special Jurisdiction for Peace (JEP) into extrajudicial killings. The report by the JEP, the transitional justice mechanism set up as part of the 2016 peace deal, concluded that at least 6,402 civilians were falsely passed off as enemy kills in the period 2002-2008 – triple the amount previously estimated. The report, which Uribe has rejected, could undermine the former president’s ability to steer the 2022 succession. There is already recognition within Uribe’s Democratic Center (CD) that the party will have to ally with the Conservative Party and other figures on the Right if it is to retain the presidency after Ivan Duque leaves office next year. Leading figures within the Conservatives are scheduled to meet later this week to discuss this very issue.

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