April 6, 2021



BY Mario Marconini, Nicholas Watson

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This week, Peru sees a series of televised debates between the presidential candidates ahead of the 11 April first-round election. In Mexico, energy policy will again be the subject of legal challenges, this time centering on the downstream sector. President Andres Manuel Lopez Obrador’s pandemic management will also be the subject of political controversy. Chile’s mega elections scheduled for 10-11 April could be postponed amid the worsening public health situation. Brazil’s foreign minister is under pressure as failings in pandemic management continue to cause political tensions. Finally, the Mercosur trading bloc has just had a fractious 30thbirthday which leaves the bloc facing renewed uncertainty.


This week sees three debates over three days between the 18 presidential candidates, starting today, 29 March. The debates, which are being organized by the JNE electoral board, offer one of the last opportunities for the five or six leading candidates to make an impact on the roughly 25% to 30% of voters who remain undecided less than two weeks before voting. Today’s debate involves among others George Forsyth, Veronika Mendoza, and Keiko Fujimori. The 31 March debate includes poll leader Yonhy Lescano and Rafael Lopez Aliaga, though the ultra-conservative candidate says he will decide on the day itself whether he will take part. An IEP survey carried out last week suggests Lescano’s rise in the polls has slowed, while the economist Hernando de Soto has been rising.


Plans to restore the state to a predominant role in the fuels market will be at the center of political debate this week after a bill was submitted to the lower house on 26 March. The bill would allow permits granted to private companies for various downstream activities including transport and distribution to be suspended for vaguely defined national security reasons; set new minimum storage requirements, seemingly in a bid to hinder private fuel importers; and potentially make official permit denials easier. These highly discretionary features of the bill will almost certainly trigger legal challenges. Whether the bill progresses quickly and/or is blocked by the courts, the effect on investor confidence towards the energy sector and wider business environment is likely to be chilling.

Separately, the government’s controversial approach to managing the Covid-19 crisis will be under scrutiny again this week. This follows the publication by the Health Ministry on 27 March of a report into excess deaths during the pandemic. By mid-February, there were in fact 294,287 Covid-related deaths, 61.4% higher than the confirmed total at that point. If the more than 26,000 deaths from Covid since mid-February are added to this tally, the death toll exceeds 320,000, which would push Mexico above Brazil (which has around 85mn more inhabitants) in deaths from Covid-19. Last week, the government’s Covid czar Hugo Lopez-Gatell railed against the media for its reporting on the death toll from the coronavirus, saying that critical newspaper reporting reflected powerful economic interests opposed to political change.


The government will today table a constitutional reform bill to postpone the upcoming 10-11 April elections amid a continuing surge in Covid-19 cases. President Sebastian Pinera late last night confirmed the plan to push back the mayoral, municipal council, gubernatorial, and constituent assembly elections to 15-16 May, with gubernatorial run-off votes reset to 4 July to coincide with party presidential primaries. The decision follows the unanimous position of the government’s coronavirus advisory council in favor of a postponement, citing among other reasons, the rapid spread of new variants. A poll last week also showed growing public support for postponing voting. Health authorities aim to have administered at least one vaccine dose to everyone aged 40 and over – or 9.3mn people – by mid-May. The need for two-thirds majorities in Congress means that opposition support for a postponement is necessary; some parties are calling for the April elections to go ahead but over three days of voting instead of two.


Tension should peak this week regarding the future of Foreign Minister Ernesto Araujo, whose dismissal has become the epicenter of a new executive-congressional crisis. Araujo has been singled out as the one to blame for delays in Covid-19 vaccine and active ingredient (API) purchases due to an undiplomatic stance towards China. He is currently the main exponent of the far-right Olavista faction of the Bolsonaro administration (named after their political “guru” Olavo de Carvalho), supported unconditionally by the president of the House foreign relations committee Eduardo Bolsonaro, the youngest of the president’s three politician sons. Over the weekend the minister tweeted that Congress wants to take him out because he is against “giving 5G to China”, which has been interpreted by many as his last message aimed at Bolsonaro supporters before leaving office.


Another period of introspection and uncertainty for the Mercosur trading bloc is likely after an uneasy virtual summit held on 26 March to commemorate 30 years since the bloc was set up. The summit saw a heated discussion between Uruguay’s President Luis Lacalle Pou and his Argentine counterpart Alberto Fernandez; Uruguay has been pushing for years for greater flexibility in Mercosur rules to allow individual members to pursue their own trade deals but Lacalle Pou has pushed the Uruguayan campaign up a notch, much to Fernandez’s annoyance. Argentina last year rejected other member countries’ push for accelerated trade talks with the likes of South Korea, Singapore, and Canada. Brazil’s Jair Bolsonaro also criticized the need for consensus decisions being used as a “permanent veto” – before he left the online summit early. Nor was there any breakthrough in the stalled European Union-Mercosur trade deal ratification process, which continues to have powerful European detractors.

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