LatinNews Daily - 05 July 2018

Development: On 4 July, an Associated Press report citing anonymous sources claimed that on several occasions last year US President Donald Trump met then-Secretary of State Rex Tillerson and National Security Advisor H.R. McMaster to discuss the possibility of a military intervention in Venezuela.

Significance: Although President Trump has openly stated – in August 2017, for example – that he would be willing to use military force to resolve the situation in Venezuela, the report of this meeting is the first suggestion that there have been real intentions behind the rhetoric. The report claims that McMaster eventually succeeded in persuading Trump that invasion would be a dangerous approach.

• Tillerson and McMaster are said to have met Trump in August 2017, the day before he announced a “possible military option” for Venezuela, and to have been stunned when Trump asked why the US could not intervene to remove Venezuela’s President Nicolás Maduro on the grounds that his administration represented a threat to the stability of the region. Trump is also said to have mentioned the possibility to Colombia’s President Juan Manuel Santos, and to representatives of certain Latin American states at a private dinner at the meeting of the United Nations General Assembly in September 2017.
• In response to this report, Diosdado Cabello, the president of the constituent assembly (ANC), announced that on 5 July he would ask the body’s delegates to open an investigation into the “traitors” who openly called for the invasion of Venezuela. According to Cabello, Trump’s interest in opposing Venezuela militarily stemmed from appeals by Venezuelan exiles to overthrow the current government.
• Cabello also reasserted his opposition to opening a channel for the entry of humanitarian agencies supplying aid – chiefly food and medicines – claiming that this would be a pretext for the arrival of military forces.
• In a mark of the ongoing tension between the two countries, US Vice President Mike Pence, during a recent tour of Latin America, described Venezuela’s government as a brutal dictatorship and blamed it for the destruction of the country’s economy and the mass exodus of millions of Venezuelans. In response, Maduro described Pence as “a venomous snake”, adding that every statement made by Pence was motivation to continue on the same policy path.
• Meanwhile, on 3 July, Rocío San Miguel, the president of the NGO Control Ciudadano, claimed that the ‘affirmation of loyalty’ that Maduro introduced on 24 May this year has now become an integral part of ascension up the military ranks. Candidates for promotion are told to sign the affirmation, and if they refuse they lose the right to progress. Maduro is the first head of state in Venezuelan history to demand an oath of personal loyalty, prompting criticism that he is compromising the professionalism of the body out of his deep-rooted concern that it might turn against him.
• Speaking at an armed forces promotion ceremony on 4 July, Maduro encouraged those present to remain vigilant in their role as defenders of Venezuela. In addition to the defence of the country’s territory, he asserted that the role of the armed forces is to protect the country’s political stability – another reference, perhaps, to Maduro’s fears of a brewing military coup.

Looking Ahead: Although the reports are only emerging now, these conversations took place several months ago – indeed, Tillerson and McMaster are no longer involved in the Trump administration. What it offers most of all, then, is a rhetorical boost for President Maduro, something that will no doubt be very welcome as he seeks to shore up his draining support.

Peru: Peru’s trade & tourism ministry (Mincetur) has released new figures which show that Peru’s non-traditional exports have grown consecutively over 22 months. Over the first five months of 2018, exports of non-traditional goods amounted to US$5.277bn, up 19.1% compared with the same period of 2017. Among these products, the best performing exports included grapes, avocados, and squid. As regards traditional exports, the ministry announced that during the first five months of 2018 these exports totalled US$14.202bn, up 17.3% compared with the same period in 2017. This growth owed much to an increase in oil, natural gas, and mining exports. In total, all exports between January and May 2018 amounted to US$19.479bn, up 17.7% compared with the first five months of 2017.

Development: On 4 July Poder360, a local news site, published its latest opinion poll showing that up to 42% of Brazilians plan to abstain or annul their ballot in October’s presidential elections.

Significance: The finding highlights again the disillusionment many Brazilians feel over their options. Although voting is obligatory in Brazil, there is only a very small fine for failing to vote which the electoral authorities often struggle to collect. The danger with a low turn-out is that it may undermine the legitimacy of the next administration. Opposition to the manner of President Michel Temer’s rise to power following the impeachment of Dilma Rousseff (2011-2016) has seriously weakened his government, and his administration looks set to achieve very little in his final year of power.

• With three months to go until polling day, far-right ex-army captain Jair Bolsonaro leads in all scenarios on 21% without former president Lula da Silva (2003-2011), who will likely be barred from standing. However, Bolsonaro has fallen four percentage points from the last Poder360 poll in May. Maverick left-winger Ciro Gomes (from Partido Democrático Trabalhista, PDT) comes second on 13%, followed by former São Paulo governor Geraldo Alckmin on 8% and former environment minister and environmental campaigner Marina Silva (7%). Bolsonaro would win in a second-round run-off against all possible rivals, the survey showed.
• The number of those who plan to annul their vote or abstain has risen from May, when it was 36%. While the candidates themselves insist that the electorate is distracted by the World Cup, that fails to explain why so few of the major political parties have settled electoral alliances. Elections and World Cups have coincided since 1994, but in the past coalitions have been determined well in advance. The survey was carried out by automated voice messages, with 5,500 voters questioned in 229 cities across the country between 25 and 29 June.

Looking Ahead: Politics is likely to start rising up the agenda again as the World Cup comes to an end in ten days’ time. Campaigning proper begins on 16 August. The unsettled scenario at present shows that the electoral landscape still has the potential to change significantly before the vote. Around half of Brazilians say they won’t change their vote ahead of polling day.

* Brazil’s state oil company Petrobras has signed a letter of intent with China National Petroleum Corporation (CNPC) to conclude construction of the Complexo Petroquímico do Rio de Janeiro (Comperj) petrochemical and refinery project. Petrobras had already spent some US$14bn on the Comperj before it was suspended in 2015 in the midst of the ‘Operation Car Wash’ corruption investigation. “The strategic association will strengthen ties between the companies and contribute to deepening the global strategic association between Brazil and China, both members of the BRICS,” a Petrobras statement read.

Development: On 4 July Humberto Ortega, President Daniel Ortega’s brother, called on Ortega to bring forward elections and disband paramilitary groups which have emerged since the crisis erupted in Nicaragua mid-April sparked by State repression of anti-government protesters.

Significance: A former head of the army (1979-1995) who has been increasingly critical of President Ortega in recent years, Humberto Ortega addressed his call to those involved in the Catholic Church-brokered national dialogue process (currently at a standstill) between the opposition Alianza Cívica por la Justicia y la Democracia (comprising students, civil-society groups, and the private sector) – which is also calling for the elections to be brought forward from 2021 to 2019 – and the Frente Sandinista de Liberación Nacional (FSLN) government. His call comes as President Ortega is under mounting pressure to disband the paramilitary groups (which along with the police, PNN, have been responsible for the violence) while the military (which has so far refrained from getting involved) is also facing public pressure to intervene.

• In his letter, Humberto Ortega said “Today, Nicaraguans suffer unpunished acts of illegal hooded armed civilians, parapolice, who shoot indiscriminately and exercise controls only allowed by law to the police or military authorities.”
• Humberto Ortega’s call adds to concerns raised by human rights institutions such as the Inter-American Commission for Human Rights (IACHR) and NGO Amnesty International (AI). Believed to comprise members of a pro-FSLN organisation known as the Sandinista Youth, plain-clothes police officers and local gang members, these paramilitary groups make it harder to attribute human rights abuses to state security forces, enabling Ortega to distance himself so as to evade sanctions for the violence which has so far left 309 people dead on the latest (3 July) figures from local NGO Asociación Nicaragüense Pro Derechos Humanos (ANPDH).
• The army is also facing pressure to take a stand against the paramilitary groups. On 26 June, 13 political organisations sent an open letter to General Julio César Avilés, the head of the armed forces, recalling that Art. 95 of the country’s 1987 Constitution states that “no more armed units may exist in the national territory or more military ranks than those established by the law”. The letter warns that the country is currently in a situation of emergency in which these unidentified armed groups have become “an army of occupation in national territory”, and urges the military to disband them.

Looking Ahead: That the threat of violence fails to deter those calling for Ortega to stand down was most recently suggested by the fact that yesterday (4 July) thousands of Nicaraguans formed a human chain in Managua to demand his departure – an event organised by the Alianza Cívica.

Honduras: Honduras’s central bank (BCH) has released figures which show that inflation in June was 4.15% year-on-year. This compares with 3.65% the previous year. Accumulated inflation for the first half of 2018 was 2.03%, less than that observed in the same periods in 2016 and 2017 respectively (2.27% and 2.60%).

Development: On 4 July the victor in Mexico’s presidential elections, Andrés Manuel López Obrador, held a meeting with Juan Pablo Castañón, the president of one of the country’s main umbrella business associations, Consejo Coordinador Empresarial (CCE), to discuss future cooperation.

Significance: The CCE arguably provided more effective opposition to López Obrador during the electoral campaign than either of his principal presidential rivals. But that has now been consigned to the past. López Obrador was full of praise for Castañón who, in turn, embraced one of the incoming president’s flagship proposals: youth apprenticeships.

• The CCE, along with Mexico’s other main business lobby, the Consejo Mexicano de Negocios (CMN), succeeded in getting under López Obrador’s skin during the campaign where his presidential rivals failed, forcing him into a number of intemperate outbursts more characteristic of his failed presidential campaigns in 2006 and 2012 than the measured and moderate tone he adopted in 2018.
• López Obrador emerged from a two-and-a-half-hour meeting with Castañón, however, saying that they had established a “mutual confidence” that would guarantee “the country’s transformation”. López Obrador said the conversation had been “very cordial” and “very respectful”, describing Castañón as “a business leader with a civic vision and social dimension”.
• The two men agreed to drive López Obrador’s ‘Jóvenes Construyendo el Futuro’ programme designed to guarantee 2.6m young people scholarships and job training. Businesses will be the main beneficiaries of a M$110bn (US$5.66bn) government investment package to pay the wages of young people serving apprenticeships. “We will have to come up with this funding…even if it means losing the shirts on our backs,” López Obrador said.
• The businesses will provide young people participating in the programme with instructors and training programmes. They will not be required to provide them with a job upon completion of their training but issue them with a certificate of competence.

Looking Ahead: López Obrador said he would hold future meetings with the business sector to deepen cooperation. This should instil market confidence. His conciliatory rhetoric saw the peso strengthen against the US dollar yesterday and the Mexican stock exchange (Mexbol) rallied.

* Mexico’s virtual president-elect Andrés Manuel López Obrador has announced a M$40bn (US$2.04bn) package to provide a universal pension for elderly Mexicans and to create a universal pension. López Obrador insisted that the funds for the universal pension would be found without the need to raise taxes or issue public debt. Instead, he said that his proposed ‘Republican austerity’, cutting wasteful government expenditure, as well as combating official corruption, would provide his government with the requisite funds.

Development: On 4 July a Santiago guarantees judge announced that Carlos Alberto Délano and Carlos Eugenio Lavín, the founders of Penta, a Chilean financial group, as well as Pablo Wagner, a deputy mining minister (2010-2012), would face an abbreviated trial procedure in relation to the illegal campaign finance case involving Penta.

Significance: In a decision likely to enrage anti-corruption activists, Justice Daniel Aravena ruled that the two Penta founders would be sentenced for tax offenses rather than the initial charges of bribery and money laundering while, Wagner would be sentenced for the additional charge of illicit enrichment. The case known as ‘Pentagate’ broke in October 2014 and had, along with other illegal campaign finance scandals such as that involving mining company Sociedad Química y Minera SA (SQM), proven highly damaging for both the centre-right Chile Vamos coalition which is now in government led by President Sebastián Piñera as well as the former leftist Nueva Mayoría coalition government led by Michelle Bachelet (2006-2010; 2014-2018).

• The case involved the creation of a trail of fictitious invoices that allowed companies both to channel funds to political parties and at the same time to evade taxes fraudulently.
• A further source of outrage for anti-corruption groups has been Aravena’s decision to exclude from the proceedings the state defence council (CDE) (a public agency that defends, represents, and provides legal advice to the Chilean state over its proprietary and non-proprietary interests), and NGO Ciudadano Inteligente which had filed the bribery accusations. It is accepting Chile’s tax administration (SII) as the only legitimate plaintiff in the case.
• Manuel Guerra, the Santiago prosecutor leading the case against the three, had said in June 2016 that he would not accept an abbreviated trial procedure that would exclude the bribery accusation, stating at the time that as the case affected public probity, it was “effectively non-negotiable”. On 4 July he retracted, saying that it was not possible to prove these accusations. He has received the public backing of attorney general Jorge Abbott.
• Ciudadano Inteligente’s deputy director Colombina Schaeffer has slammed Aravena’s decision to exclude the NGO from the proceedings as illegal and a breach of their right to be plaintiffs.

Looking Ahead: Aravena is due to announce sentences for the three men on 9 July.

Uruguay: Uruguay’s national institute of statistics (INE) has released its latest inflation figures for June 2018 which show that inflation was 0.99% compared with the previous month, bringing the year-on-year rate to 8.11%.