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 Ecuador, talks between the government and the powerful indigenous movement are taking place. In Chile, the pension withdrawal debate moves to the Senate this week, having damaged the center-right’s presidential candidate, Sebastian Sichel. In Brazil, budgetary matters and fuel prices are on the congressional agenda.
Congress is gearing up to discuss the electricity sector reforms unveiled by President Andres Manuel Lopez Obrador (AMLO) late last week. While the reform was expected, it goes further than anticipated in its efforts to roll back energy liberalization. Under the initiative, the state-run CFE electricity utility would get a guaranteed minimum 54% share of the power market; energy regulators would be absorbed into the Energy Ministry; and the CFE would take over the independent grid operator. As an aside, the reform proposes reserving lithium extraction for the state (while respecting existing concessions). The governing National Regeneration Movement (Morena) and its allies do not have the two-thirds majorities needed in both chambers to pass these constitutional reforms. The Institutional Revolutionary Party (PRI) is most vulnerable to being co-opted.
Separately, speculation about who could succeed AMLO in 2024 reached a high- water mark last week after AMLO made a gesture of support for Mexico City Mayor Claudia Sheinbaum on 29 September. A meeting between Sheinbaum and the Morena Senator Ricardo Monreal, who also wants to succeed AMLO, also fed rumors of a non-aggression pact between the two. Monreal is not favored by AMLO, who has also acknowledged Foreign Minister Marcelo Ebrard’s interest in the presidency. AMLO will need to tread carefully to avoid setting off internal divisions within Morena; he may also hope that his electricity reform proposals help contain the recent bout of premature succession jostling.
A congressional motion of censure against Labor Minister Iber Maravi is seemingly inevitable; the vote relates to his alleged links to the Shining Path (SL) terrorist group and its political wing, the Movement for Amnesty and Fundamental Rights (Movadef). However, Prime Minister Guido Bellido has threatened to trigger a vote of confidence in his cabinet if Congress removes Maravi. Congress has already passed legislation that would limit the executive’s scope to use votes of confidence, but President Pedro Castillo has yet to sign it off. De-escalating tensions will be difficult given Bellido’s belligerent stance towards Congress. Meanwhile, Castillo’s more radical side was in evidence yesterday, 3 October, as he announced an agrarian reform plan; in his speech, Castillo said “there is no centrism” in his government.
Talks between the government and the Confederation of Indigenous Nationalities of Ecuador (Conaie) are scheduled for today, 4 October. The Conaie, whose political arm, Pachakutik (PK), is a major player in the National Assembly (AN), will push President Guillermo Lasso to keep in place costly fuel price subsidies and put plans to grow the extractive sector on hold; both are critical planks of Lasso’s plans to reduce the fiscal deficit and reactivate growth. The talks come after Lasso’s “mega-bill” of reforms was blocked by the body that decides whether the legislature should accept bills. Lasso has also had to contend with serious prison rioting in recent days together with revelations contained in the “Pandora Papers” leak that he made extensive use of offshore trusts.
The Senate’s constitutional commission will on 6 October start its analysis of the initiative that would allow people to withdraw up to 10% of their retirement savings from the private pension (AFP) system – the fourth such initiative since the outbreak of the pandemic. The proposal was passed with the help of 18 votes from the governing Chile Podemos Mas (CP+) coalition in the lower house last week. However, the outlook in the Senate is much more complex because a group of center-left senators sees the fourth withdrawal as both unnecessary as the pandemic wanes and as a risk to inflation.
The pension debate has damaged the CP+’s presidential candidate Sebastian Sichel, who urged CP+ legislators to vote against the fourth withdrawal. Sichel was also embarrassed after it emerged that he himself had withdrawn some of his pension funds in the first withdrawal wave in July 2020. After last week’s vote Sichel altered his position and said he was now in favor of people being allowed to withdraw the entirety of their retirement funds to protect them from the risk of nationalization or confiscation should either of his rivals from the Left win the presidency. According to the latest Cadem poll carried out in the second half of last week, Sichel has been overtaken by the ultra-conservative Jose Antonio Kast, while voter indecision has also risen.
House Speaker Arthur Lira will focus his efforts on finding solutions to two main items this week: (i) the payment of court-mandated judicial claims by the government without which the budget would surpass the official spending ceiling for 2022; and (ii) halting the rise in fuel prices. This comes at a time when the main interested party, Economy Minister Paulo Guedes, was found to be the owner of an offshore company in a tax-haven in the multinational “Pandora Papers” investigation – which is prohibited according to the official public servant code of conduct.