August 10, 2021

Latam

LATAM PULSE

BY Mario Marconini, Nicholas Watson

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( 5 mins)

This week, Peru‘s chaotic new government will remain under the spotlight. Brazil‘s voting system remains a subject of political controversy. Venezuela‘s opposition is set to embark on a new round of talks with representatives of President Nicolas Maduro’s regime. Poverty statistics coincidentally released in the same week in Argentina and Mexico demonstrate the hard-hitting social impact of the pandemic. In parallel, Argentina is embarking on a new round of loosening of coronavirus restrictions. Finally, Mexico‘s political dispute centered on the Supreme Court should now ease.

Peru

The make-up of 24 congressional commissions should be settled this week. With its 37 legislators, the governing Peru Libre (PL) party should theoretically preside over seven commissions, though its failure to get its congressional leadership slate elected could be a warning of difficulties to come. The PL wants the constitutional commission most of all since this would help in President Pedro Castillo’s quest to change the constitution. The opposition Fuerza Popular (FP) party also wants control over the same commission to “defend” the 1993 constitution. Whether the PL uses the allocation of congressional commissions as a bargaining tool to get the new cabinet approved remains to be seen; a congressional vote of confidence in the new cabinet is supposed to take place on 23 August.

In parallel, Castillo’s pick for prime minister (PCM), Guido Bellido, has been trying to project moderation, though the government remains in disarray as officials contradict each other and the PL engages in factional in-fighting. Over the weekend, two vice-ministers in the Interior Ministry (not appointees of the current administration) resigned, citing their disagreement with moves in policing policy. Amid this disarray, a Datum poll carried out in the first half of last week showed Castillo’s disapproval rating (41%) already above his approval rating (39%) after less than a week as president.

Brazil

House speaker Arthur Lira should put to a plenary vote this Wednesday the proposal for a constitutional amendment (PEC) that would replace the widely acclaimed electronic voting system for paper balloting. The PEC was voted down in a special committee last week (23-11), but the speaker decided to bring it to the plenary following the electoral court’s decision to launch an investigation against the president for abuse of political power in claiming without evidence that electronic voting is fraudulent. A second likely rejection will be a significant defeat for the president who has used the issue to divert attention from the Senate inquiry into the pandemic, rally his diehard supporters, and prepare the ground for the rejection of the October 2022 election results in case of defeat.

Venezuela

Regime-opposition talks are reportedly set to open in Mexico on 13 August at the earliest. Although President Nicolas Maduro has talked about a seven-point agenda, many details of the talks remain unclear, including who will mediate the talks and who will represent the opposition. Previous talks have enabled Maduro to posture without committing to substantial change, though this time around the regime is clear that it wants sanctions relief and international recognition. Another possible complication could come this week as the Cape Verde constitutional court rules on the extradition to the US of the Colombian national Alex Saab, a key Maduro financier and fixer, who was arrested in the West African country in 2020.

Argentina/Mexico

Policymakers and electoral strategists will be taking note of poverty data that was published last week in both Argentina and Mexico. In Argentina, 39.5% of the population classified as below the poverty line in Q1/2021, a rise of 2.5mn people from the largely pre-pandemic Q1/2020. In Mexico, 43.9% of the population was in poverty at the end of 2020, a rise of 3.8mn people from 2018. Given low levels of government assistance to Mexican households during the pandemic, this relatively low figure may be surprising, though booming remittances from the US could help explain why the poverty increase was not larger. Argentina’s increase in poverty represents a major obstacle for the government, especially given persistently high inflation; mid-term legislative elections are scheduled for November.

Argentina

The government has announced an easing of various Covid-19 restrictions after ten consecutive weeks of decreasing cases. The measures include plans to reopen in-person schooling and expand the number of daily arrivals at the main international airport of Ezeiza (Buenos Aires), which has been subject to strict quotas. Although there is concern about what could happen if/once the Delta variant spreads, the government is keen to create a “feel-good” factor ahead of September’s obligatory primary votes for the November mid-terms. In this context, the government is likely to spin July’s monthly inflation rate, which will be confirmed on 12 August, as a move in the right direction even though it is likely to come in at around 3% for the month; inflation in June was 3.2%.

Mexico

A controversy that has been swirling for the past four months should now subside after the Supreme Court (SCJN) President Arturo Zaldivar on 6 August rejected an extension to his term that was included in a judicial reform bill passed in April, probably in the view of the fact that a majority of SCJN judges were opposed to the extension. The extension would have extended Zaldivar’s term by two years to 2024 – i.e. the rest of Andres Manuel Lopez Obrador (AMLO)’s presidency. Critics saw the initiative as a test of a possible future presidential term extension and/or as a way for AMLO to ensure the SCJN remains loyal and biddable through 2024.

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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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( 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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