LatinNews Daily - 06 August 2020

On 5 August, Colombia’s President Iván Duque responded to the house arrest of former president, Álvaro Uribe (2002-2010), by proposing a programme of reform to correct “failures” in the judicial system.

Analysis:

The debate over judicial reform in Colombia is long-running, but the timing of this latest proposal, the day after the arrest of Duque’s political mentor and key ally Uribe, has seen Duque and his government accused of posing a threat to judicial independence. Uribe, a sitting senator, remains one of the most influential (and divisive) figures in Colombian politics, and his preventative detention – announced by the supreme court (CSJ) on 4 August – sent shockwaves through the country. The ramifications for the Duque government are significant, and it can be expected to do whatever possible to clear Uribe’s name; while this will bolster support among loyal ‘uribistas’, a fierce reaction can be expected from the former president’s many critics.

• After becoming the first former Colombian president to face trial before the CSJ in October 2019, Uribe has now made history as the first to be detained in any capacity, while he awaits sentencing on charges of witness manipulation and procedural fraud. The case in question dates back to 2012, when Uribe accused opposition Senator Iván Cepeda, of the left-wing Polo Democrático Alternativo (PDA), of bribing witnesses in order to accuse Uribe of collaborating with paramilitary groups while in power.
• The CSJ absolved Cepeda, but in turn launched investigations into Uribe himself over allegations of witness manipulation, after his lawyer Diego Cadena was recorded both threatening and offering to bribe former paramilitary members to change their testimonies. Cadena has already been charged for these crimes, but insists Uribe was not involved; while the CSJ is yet to issue a final ruling, this house arrest order does not bode well for Uribe.
• The CSJ order prompted polarised reactions among both the general public and the political establishment, split between celebration and condemnation of the move. Cepeda celebrated that “no-one is above the law, no matter how powerful”, while Duque insisted that “I will always believe in the innocence and honour of a man who has earned a place in the history of Colombia”.
• The ruling Centro Democrático (CD) party, founded by Uribe in 2014, raised eyebrows with its call for the appointment of a constituent assembly to reform the judiciary, in order to “depoliticise justice and recover confidence in institutions”. Yesterday Duque acknowledged this proposal, but argued that such a process would be too slow, and sought a more immediate solution, given “the urgency of the reform”. 
• Judicial reform in some capacity is widely supported in Colombia, but critics of the government fear that it seeks to make changes that will erode the independence of the judiciary, already thought by many to be too weak. Uribe’s arrest is an indication that this may be changing, but could in turn provoke a new attack on judicial autonomy; the attorney general’s office issued a statement yesterday “reminding all branches of public power of the imperative to abide by and comply with judicial decisions”.

Looking Ahead: The political impact of Uribe’s arrest is undeniable – he leads CD in congress, and plays a key role in uniting the party. More broadly, his critics hope that this arrest could pave the way for charges relating to alleged human rights abuses committed during his time in power – Duque, who has faced similar (albeit lesser) allegations, thus has more at stake than just his loyalty to Uribe.

* Bolivia’s national statistics institute (INE) has released data on GDP growth for the first quarter of 2020, according to which the country’s economy grew by 0.6% year-on-year, the worst quarterly performance since 2001. INE acting director, Rubén Aguilar, noted that this compares favourably with the rest of Latin America, with many countries registering GDP contractions in the first quarter, in light of a crash in global oil prices and the onset of the coronavirus (Covid-19) pandemic. However, Bolivia is expected to feel the impact of both shocks more strongly in the second quarter, after INE’s economic activity index (Igae), a monthly indicator of GDP, recorded a 5.6% decline between March and April, and a 7.9% decline between April and May. According to the most recent projection by the United Nations Economic Commission for Latin America and the Caribbean (Eclac), Bolivia’s economy could contract by 5.2% in 2020 as a whole.

On 5 August, Brazil’s supreme court (STF) voted unanimously to maintain a ruling which orders that the federal government take further action to protect the country’s indigenous peoples from the coronavirus (Covid-19).

Analysis:

This is a remonstrance to the federal government led by President Jair Bolsonaro, whose widely criticised response to the coronavirus pandemic in general has been deemed particularly deficient where the country’s indigenous population is concerned. The ruling also sets an important judicial precedent for Brazil’s indigenous peoples, as it is the first time that a petition directly filed with the court by indigenous representatives, represented by an indigenous lawyer, has been accepted.

• STF Justice Luís Roberto Barroso had emitted a partial injunction on 8 July ordering that the government adopt certain measures to protect indigenous people from Covid-19, in response to a petition filed by the Articulação dos Povos Indígenas do Brasil (Apib) indigenous grouping, also signed by six opposition parties.
• The court began discussing the issue after it returned from recess on 3 August, and Barroso’s ruling was upheld by all nine magistrates yesterday. The court has notably established that the government must create a sanitary barrier to protect isolated indigenous communities, set up a committee to oversee its actions, and elaborate a protocol to remove illegal invaders from indigenous lands. This latter measure is deemed insufficient by indigenous representatives, who argue that illegal invaders should be removed immediately.  
• Brazil’s indigenous people (who number around 900,000) are the segment of the population most threatened by the coronavirus, with their immunological vulnerability compounded by the presence of illegal loggers and miners on their land. According to Apib, there have been a total of 22,656 Covid-19 cases amongst 148 indigenous communities, including 639 deaths. Nationally, Brazil has recorded close to 2.9m cases and 97,256 deaths, according to the health ministry’s latest figures.

Looking Ahead: With the STF due to discuss and vote on a number of resolutions which, like this one, challenge the federal government’s actions and positions, this latest ruling could contribute to reviving tensions between Brazil’s highest court and the Bolsonaro executive.

* The monetary policy committee (Copom) in Brazil’s central bank (BCB) has cut the benchmark interest rate (Selic) by 25 basis points, from 2.25% to 2%. This expected cut brings the Selic to its ninth consecutive record low. The Copom evoked signs of a “partial recovery” of the Brazilian economy, while highlighting the still “challenging” global outlook for emerging economies, amid the economic crisis caused by the coronavirus (Covid-19) pandemic. The Copom has signalled that it will likely now interrupt this cycle of rate cuts, noting that the space for using monetary policy is increasingly small, but did not discard gradually decreasing the Selic again in the future, depending on “the perception of the fiscal trajectory as well as new information that [would] change the Copom’s current assessment on prospective inflation”.

On 5 August Guyana’s new president, Irfaan Ali, swore-in 19 members of his cabinet. 

Analysis:

Ali was himself sworn-in on 2 August, precisely five months after a bitterly contested general election, the result of which President David Granger and his A Partnership for National Unity-Alliance for Change (Apnu-AFC) government had refused to accept. Ali appointed a number of veterans of the previous People’s Progressive Party/Civic (PPP/C) administration led by Bharrat Jagdeo (1999-2011), the party leader and strongman who was confirmed as vice president, but he also sought to infuse the cabinet with a more youthful dynamic.

• The most eye-catching appointment was that of Vickram Bharrat, who picks up the natural resources portfolio. With Guyana having come into game-changing oil wealth, this position is far more important than ever before. A computer scientist and teacher, Bharrat is not steeped in experience in the sector, although he is not a political neophyte, having previously served as a PPP/C parliamentarian. 
• Bharrat said his priority would be to establish a petroleum commission. He said a related bill would (not for the first time) be sent to the 65-seat national assembly, where the PPP/C won a narrow majority, forthwith. He argued that it was essential to ensure the sector is not subjected to undue political interference.
• Ali gave roles to some PPP/C stalwarts. Robeson Benn, a public works minister under Jagdeo, becomes public security minister, while Priya Manickchand and Pauline Sukhai, reprise the role of education minister and minister of Amerindian affairs respectively, that they held under Jagdeo. 
• But, the youngest head of state in Guyana’s history at 40, Ali also placed an emphasis on youth. In addition to Bharrat, also 40, he named youthful appointees to head his own former ministry, housing and water (Colin Croal), as well as local government (Nigel Dharamlall), and culture, youth, and sport (Charles Ramson). Eight of the 19 ministers are female.

Looking Ahead: Ali called for efficiency and transparency from his cabinet ministers and, pointedly, spoke of the need for constitutional and electoral reform, potentially thorny issues with the now-opposition Apnu-AFC still adamant that it was denied victory by anomalies and irregularities.

* Panama’s food security agency, Autoridad Panameña de Seguridad de Alimentos (Aupsa), has confirmed that it has banned 26 Costa Rican dairy producers from exporting products to Panama because they did not hand in the required documents on time to renew their permits. The ban includes cooperative Dos Pinos, which owns Panamanian dairy brand Productos Nevada. The general manager of Productos Nevada, Andrés Solís, has warned that “restricting the entry of dairy products from Costa Rica puts their supply [in Panama] at risk in times of a pandemic when access to food is vital”. Solís explained that Panama has a higher per capita consumption of dairy products in comparison to other Central American countries and its domestic milk production cannot satisfy demand with the country having to import 33% of its total milk consumption. 

On 5 August, audio recordings in which Mexico’s environment minister, Víctor Manuel Toledo, complains about the lack of a clear government plan and “serious contradictions” in government policies appeared in the Mexican media.

Analysis:

Toledo’s remarks reinforce the notion that there is growing discontent inside the government led by President Andrés Manuel López Obrador over its overall policy line, and that there are serious disagreements within the ministerial cabinet. Coming just two weeks after the resignation of López Obrador’s communications & transport minister over his differences with the government’s actions, Toledo’s complaints suggest that the division inside the López Obrador administration is deepening, which could undermine the government’s ability to achieve any of its declared objectives. 

• The recording is said to be of a virtual meeting of environment ministry (Sermanat) officials in which they are discussing policy objectives. Ecologist Toledo complains that despite the government’s professed commitment to protecting the environment, the conflicting energy and economic policy objectives mean that there are serious contradictions inside the ministerial cabinet, which affects its functioning.
• Toledo outlines that he has serious differences with Energy Minister Rocío Nahle over the efforts to move towards cleaner energy production; and that he is also in constant confrontation with the Agricultural & Rural Development Minister Víctor Villalobos over his defence of the use of glyphosate herbicides. 
• Meanwhile Toledo also accused the chief of staff of the presidency, Alfonso Romo, of being intent on “blocking all environmental initiatives”, including any moves to transition to a cleaner energy matrix or more environmentally friendly agricultural practices, which Romo considers could undermine big business.  
• Scathingly, Toledo argues that the conflicting objectives show that there is a lack of an integral government plan.“In effect the 4T [fourth transformation, as López Obrador describes his government] does not have a clear and well-defined set of objectives. On the contrary the 4T is full of brutal contradictions that manifest themselves in power struggles inside the cabinet”, Toledo states. 

Looking Ahead: President López Obrador has yet to comment on the recordings but the speculation is that they may prompt Toledo’s departure and potentially a wider cabinet reshuffle. 

* Mexico’s national statistics institute (Inegi) has announced that the unemployment rate in Mexico rose to 5.5% in June, up from 4.2% in May and from the 3.6% observed in June 2019. This meant that 2.8m economically active people were out of work in June, an increase of 901,000 from the previous month. However, Inegi added that 48.3m economically active people were currently in work, an increase of 4.8m compared with the previous month. Unemployment has been rising as a result of the fall in economic activity due to the coronavirus (Covid-19) pandemic, which has led to the loss of thousands of jobs. But Inegi notes that following the lifting of some of the Covid-19 containment measures, economic activity began picking up in June and this has allowed some people to return to work. 

On 4 August, Argentina’s chamber of deputies gave final approval to a bill for the restructuring of the US dollar-denominated sovereign debt issued under domestic law. 

Analysis:

The vote came after Argentina confirmed it had reached a much-celebrated accord with private bondholders over the restructuring of some US$66bn of debt issued under international law. The broad cross-party support for the bill yesterday appears to dispel any doubts over whether the foreign-law debt restructuring agreement will be approved once it is put to the legislature. It likewise bodes well for congressional backing for the outcome of the upcoming debt negotiations with the International Monetary Fund (IMF), although such negotiations will typically revive historical tensions between the IMF and the more hard-line members of the ruling Partido Justicialista (PJ, Peronists).

• The bill, which had already been passed by the senate, was approved with 247 votes to just two against in the 257-seat lower chamber. According to the national congress’s budgetary office, the approved bill concerns a total of US$41.72bn of local-law US dollar-denominated bonds, which represents 12.9% of the country’s total debt and 12.5% of GDP. A total of 35% of these bonds are in private hands, the rest being held by public bodies. The bill would provide the government payment relief of US$19.6bn until 2030. 
• Following the vote, leaders from both sides of the political divide expressed their support. The president of the chamber’s finance commission, PJ Deputy Fernanda Vallejos, told Argentina’s official news agency Telam that the restructuring of the local debt will provide Argentina with “more freedom” to respond to the country’s economic crisis, which has been aggravated by the coronavirus (Covid-19) pandemic.
• Meanwhile, the leader of the main opposition coalition Juntos por el Cambio (JxC) in the chamber of deputies, Mario Negri, said that the bill and the agreement with foreign bondholders will allow Argentina to resolve its current debt default and “improve access to finance for the nation, provinces, and private sector”.

Looking Ahead: Argentina has set a deadline of 24 August to formalise the agreement with international bondholders. The agreement will then have to be approved by the legislature. Following this process, Argentina will turn its sights to reprofiling its US$44bn debt with the IMF. 

* Uruguay’s national statistics institute (INE) has released the latest figures for the consumer price index (IPC), according to which annual inflation reached 10.13% in July. The IPC registered a monthly variation of 0.55%. This signals a slow-down in inflation after 10.36% inflation in June and a peak of 11.05% in May, which was in part attributed to a price agreement reached in May on a number of products in the basic basket of goods, due to expire next week. Inflation remains well outside the central bank’s (BCU) 3%-7% target range.