This week, Peru is likely to see more political tumult after Pedro Castillo’s stormy start as president, though the belated appointment of a moderate to the finance ministry could help offset market jitters. Brazil ‘s inquiry into the government’s handling of the pandemic resumes as Congress returns after a recess. Meanwhile, the outcome of Mexico‘s referendum on investigating former presidents will showcase President Andres Manuel Lopez Obrador (AMLO)’s ability to spin a flop as a success; in parallel, a long and difficult reset in bilateral relations with the US continues. Chile‘s constituent assembly has little to show after one month. Finally, Ecuador ‘s Covid-19 vaccine campaign has accelerated since Guillermo Lasso became president, but even bigger challenges are looming.
The belated appointment of Pedro Francke as Finance Minister over the weekend could help calm markets early this week. Francke had initially balked at serving in a cabinet led by Guido Bellido, who is President Pedro Castillo’s pick for prime minister (PCM). Bellido is a leftist radical who is under investigation as an apologist for terrorism. As a result, it is far from clear that Congress will approve Bellido. Whether Bellido’s appointment is a strategy designed to provoke Congress into withholding its endorsement could become clearer in the coming days. If Congress refuses to grant its endorsement for the president’s cabinet picks twice, the president is able to dissolve Congress. The fact that a congressional dissolution is on the cards and that numbers for a possible impeachment are already being tallied less than a week since Castillo was inaugurated speaks to the degree of political uncertainty.
All three branches of government resume their work this week after a 15-day recess. In the lower house, a constitutional amendment to reintroduce paper ballots (strongly supported by President Jair Bolsonaro), a new report for an income tax reform, and a new bill for the privatization of the post office are all on the agenda and could be voted. In the Senate, the inquiry into the pandemic will resume testimonies by witnesses and investigated persons in the context of irregular vaccine purchases. Finally, in the Judiciary, Supreme Court justices are expected to react to last week’s provocations by the president against the existing electronic voting system.
Final results from the public referendum held yesterday, 1 August, should be ready later today. The referendum was held to decide whether to investigate ex-presidents for corruption and other wrongdoing. Preliminary figures suggest turnout was no more than 7.74% (or around 6.5mn people). For the referendum to have legal validity, turnout needed to be above 40%, or 37mn votes. Regardless, President Andres Manuel Lopez Obrador (AMLO) will undoubtedly use the fact that over 90% of those who voted did so in favor of investigating former presidents as validation for the vote and his presidency as he gears up for the 2022 recall referendum. AMLO could also resume his attacks on the National Electoral Institute (INE).
Separately, Mexico-US security cooperation will remain high on the agenda as both sides continue to search for common ground. Last week Foreign Minister Marcelo Ebrard described the Merida Initiative, which was designed to boost Mexican law enforcement capabilities and strengthen the criminal justice system, as “dead.” AMLO was always opposed to the Merida Initiative, which was crafted under Felipe Calderon’s presidency. However, what replaces it is unclear; the Joe Biden administration must tread carefully to avoid rousing AMLO’s nationalism and harming the broader bilateral agenda, including its own goals to reduce levels of migration northwards. Former US ambassador to Mexico Christopher Landau earlier this year said that AMLO had a “pretty laissez- faire attitude” towards drug cartels.
The constituent assembly on 4 August marks one month since it was established. The assembly has experienced numerous teething issues and frictions in the past four weeks. However, on 29 July, assembly president Elisa Loncon and her deputy Jaime Bassa announced that the installation of the assembly was complete. Bassa’s expectation is that substantive debates will only start in September. The assembly has up to 12 months to write the constitution. The Lista del Pueblo (LDP), an anti-status quo bloc that arose out of the 2019 protests, has already lost two of its members over the bloc’s dogmatic stance on certain issues. Meanwhile, there have been tensions between the Broad Front (FA) and Communist Party (PC), which are supposed to be electoral allies for the upcoming presidential race.
President Guillermo Lasso announced on 31 July that 9mn people (51% of the population) have now received at least one dose of a coronavirus vaccine. To meet Lasso’s election campaign pledge to fully vaccinate 9mn people by 31 August (Plan 9/100), the vaccine rollout needs to continue at speed; currently, around 2.3mn people are fully inoculated. The vaccine rollout is critical for economic reactivation and as a way to boost Lasso’s political capital, given his weak position in the National Assembly. In parallel, talks with the International Monetary Fund (IMF) should also start in earnest this month as the government hopes to reach a revised deal and unlock the next disbursement of USD 800mn. A full economic plan is only likely to materialize once a deal with the IMF is solidified.