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LatinNews Daily - 02 June 2021

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Main Briefing

On 1 June Haiti’s Episcopal Conference (CEH) issued a statement warning that now is "not the moment” to hold a referendum on a new constitution which is scheduled for 27 June.

Analysis:

The CEH statement adds to mounting pressure on President Jovenel Moïse to suspend plans to hold the referendum ahead of the general election, the first round of which is scheduled for 19 September. As well as being deeply contentious and sparking repeated protests by the political opposition, which already maintains that Moïse’s presidential term ended in February, the proposed referendum has lost the support of the international community, leaving Moïse looking increasingly isolated. Further upping the pressure on Moïse to abandon the proposal is the current health emergency stemming from the coronavirus (Covid-19) pandemic: the government yesterday was forced to announce an extension to a state of emergency announced last month in response to a surge in cases.

  • In its statement the CEH highlights that there have been “many voices” calling for changes to the constitution or a new constitution but urges the need for a “correct and agreed” way of achieving this. Listing insecurity, gang violence, political instability, and now the pandemic, the CEH warns that the conditions are not currently in place for staging a referendum. It adds that the decision to replace the constitution should not be made in a “full political crisis” with no consensus yet reached regarding a way out.
  • Indicative of waning international support for the referendum, on 18 May US Acting Assistant Secretary for Western Hemisphere Affairs Julie Chung said that the decision to hold a referendum “further adds to the controversy, especially without an inclusive and credible consultative process that fully incorporates civil society”. Chung noted that these reservations had been expressed by “likeminded international partners” such as the United Nations (UN) Integrated Office in Haiti (Binuh) as well as in a 26 April statement by the Core Group that groups the ambassadors to Haiti from Germany, Brazil, Canada, Spain, the US, France, the European Union, the Special Representative of the Organisation of American States and the Special Representative of the UN Secretary General.
  • Further casting doubt on the plans to hold the referendum, yesterday Moïse confirmed a 15-day extension to the eight-day state of emergency which he decreed initially to begin on 24 May to stop the spread of the virus. Among other things this imposed a nightly curfew banning all outdoor activity from 10pm until 5am; made the use of face masks mandatory for anyone out in public; and ordered public and private institutions to reduce staff on duty by 50%.
  • His latest decision followed a record 220 new daily infections reported on 28 May on the latest available health ministry (MSPP) data, bringing the total to 14,931 cases and 321 fatalities. There are currently 2,292 people hospitalised, prompting MSPP director general, Lauré Adrien, to warn that the health system is at risk of collapse - concerns further exacerbated by the government’s hitherto failure to begin a vaccine roll-out.

Looking Ahead: While the international community has come out against the referendum, it continues to push for a general election as a way out of the political crisis. On 26 May the OAS announced it would deploy a five-member mission to Haiti “no later than mid June” to facilitate a dialogue that would lead to “free and fair elections”. However, Moïse has previously conditioned the elections on the referendum taking place, casting further doubt on the future of the electoral process.

Andean

On 1 June, thousands of Peruvians marched in opposition to Keiko Fujimori, the right-wing Fuerza Popular candidate, who will face off against Pedro Castillo of the far-left Perú Libre party in the presidential election run-off vote on 6 June.

Analysis:

With many supporters of Castillo and Fujimori entrenched in vehement opposition to the opposing candidate, there is a serious risk of post-election instability. Peru is facing an election between two candidates who portray their rivals as authoritarians in the making, and the consistently vicious rhetoric from both campaigns is creating deep divisions in Peruvian society that will not be easily bridged after the election.

  • A large demonstration was held in the capital, Lima, where protesters expressed fears that a Keiko Fujimori victory would continue the legacy of her father, the authoritarian former president Alberto Fujimori (1990-2000). Alberto is currently serving a 25-year prison sentence for his role in the formation of an anti-communist death squad, and yesterday’s march was attended by relatives of civilians murdered by this unit.
  • There is mounting concern that the intense polarisation could lead to post-election unrest. Yesterday, the former director of the national electoral office (Onpe), Fernando Tuesta Soldevilla (2000-2004), condemned recent claims by both campaigns that they could only lose through fraud. Emphasising that Peru’s electoral process is secure and would be monitored by international observers, Tuesta expressed fears that the loser will not accept defeat, which “could lead to uncontrollable levels of instability”. He also warned that the divisive rhetoric from both candidates makes it unlikely that the winner would seek to unify the country after the election.
  • Castillo and Fujimori held their final televised debate on 30 May, which, as with previous debates, featured more personal attacks than policy proposals. Castillo continued to emphasise his humble origins, hoping to sustain his connection with Peru’s poor, and repeatedly attacked Fujimori for the corruption allegations against her. Meanwhile, Fujimori sought to associate Castillo's “communist” rhetoric with violence against her campaign staff, brandishing a rock that she said had been thrown at her entourage.  

Looking Ahead: The most recent voting intention polls indicate that the election could go either way. A survey published by Ipsos on 30 May gave Castillo 45.1% of the predicted vote compared to Fujimori’s 43.1% - a technical draw, with Castillo’s lead falling within the +/-2.52 percentage point margin of error.

* Ecuador’s central bank (BCE) has released its latest GDP growth forecast which expects the country’s economy to grow by 2.8% in 2021. This follows an historic 7.8% contraction last year, as a result of the coronavirus (Covid-19) pandemic-induced double-hit to the economy due to both the slide in the global price of oil, as well as the paralysis of many economic activities during the national and regional quarantines.

Brazil

On 1 June, a judge on Brazil’s supreme court (STF), Ricardo Lewandowski, asked the federal government led by President Jair Bolsonaro to provide explanations for its plans to host the Copa América regional football tournament in the midst of the coronavirus (Covid-19) pandemic.  

Analysis:

Lewandowski’s order came a few hours before the Bolsonaro government confirmed that Brazil would indeed be hosting the football championship, despite severe misgivings that this could precipitate the onset of a third wave of Covid-19 infections in the pandemic-stricken country and represent a risk to visiting football teams. With criticisms as to the public health implications of welcoming the Copa América games and little economic incentives given the matches will be played to empty stadiums, it is unclear what the Bolsonaro government stands to gain from its decision.

  • Lewandowski’s request for information “considering the importance of the matter and the public health emergency resulting from the coronavirus outbreak” was issued in response to a complaint filed by the opposition Partido dos Trabalhadores (PT) the previous day. The Bolsonaro government has five days to respond.
  • Despite widespread backlash following the South American football confederation’s (Conmebol) announcement that Brazil would host the championship instead of Argentina, Bolsonaro yesterday expressed his support for Brazil to receive the Copa América. He then went on to confirm that the country will host the championship, which is due to start on 13 June, in four states: Rio de Janeiro, Mato Grosso, Goiás, and the Federal District.
  • Bolsonaro cited the other football games which are currently taking place in Brazil, such as the Copa Libertadores regional club competition and the FIFA World Cup qualifiers, saying “We decided that...following the same protocols, we were in a position to host the Copa América in Brazil”. Chief-of-staff Luiz Eduardo Ramos also confirmed that the games would be played without an audience.   

Looking Ahead: The assurance that sanitary protocols will be put in place to minimise the public health risk of hosting an international championship may dispel some of the concerns regarding the Brazil-based Copa América; but should Lewandowski find these protocols and the government’s explanations to be lacking, he could rule that the Brazilian government cannot host the championship.

* Brazil’s national statistics institute (Ibge) has released the latest GDP figures, which show that the Brazilian economy grew 1.2% in the first quarter of this year, compared with Q4 2020. In year-on-year terms, Q1 GDP grew 1%. With this result, which exceeded economists’ expectations, Brazil’s GDP has returned to the levels of Q4 2019, prior to the coronavirus (Covid-19) pandemic which caused the economy to contract by 4.1% in 2020. This strong performance was driven by the agricultural sector, which grew 5.2% year-on-year, and gross fixed capital formation (investment), which expanded 17% year-on-year. The industrial sector also saw year-on-year growth of 3%, while the services sector (which accounts for three-quarters of Brazil’s GDP) contracted 0.8%. Meanwhile, household consumption and government spending fell in both quarterly (-0.1% and -0.8%) and year-on-year (-1.7% and -4.9%) terms. These results have buoyed economic forecasts for the year, with for example investment bank Goldman Sachs revising up its 2021 GDP projection for Brazil from 4.6% to 5.5% on the back of the Q1 figures.

Central America & Caribbean

* Panama’s President Laurentino Cortizo has announced a new US$1bn investment for the construction of a natural gas energy project, Generadora Gatún, to be located in Colón province which will have an installed capacity of 670MW. To be constructed by Consorcio Group Energy Gas Panamá, which comprises US-based InterEnergy Group and AES Panamá, a local subsidiary of US energy company AES, the project will generate over 3,000 direct jobs and “thousands of indirect jobs” in its construction phase according to Cortizo. InterEnergy Group will own a 51% stake, the Panamanian state, 25%, and AES Corporation, 24%. President Cortizo said the investment was in line with a newly unveiled plan for the comprehensive development of the electricity sector which seeks to make it more competitive in terms of price and quality and ability to generate cleaner energy.

Mexico

On 1 June thousands of teachers affiliated with Mexico’s Coordinadora Nacional de Trabajadores de la Educación (CNTE) teachers’ union staged a march in the southern state of Chiapas demanding the opening of a new dialogue table with President Andrés Manuel López Obrador over the implementation of the federal education reform.

Analysis:

Teachers’ unions were one of the bases of support for López Obrador and the nationally ruling Movimiento Regeneración Nacional (Morena) party in the 2018 general election. But the CNTE appears to have become disillusioned with the López Obrador government, which it accuses of reneging on its promise to fully repeal the education reform approved by the Enrique Peña Nieto administration (2012-2018). Failure to address the CNTE’s demands quickly could lead to López Obrador and Morena losing the union’s support in the upcoming 6 June midterm federal legislative, state, and local elections, as well as to unrest in Chiapas and other states.

  • The CNTE, which has hundreds of thousands of affiliates and a strong presence in southern states, is highly combative and has significant political clout. It conducted a disruptive and often violent national protest campaign against the education reform throughout Peña Nieto’s term, considering that it undermined their historic rights.
  • During his election campaign López Obrador promised teachers that if elected he would repeal the reform and draft a new one in consultation with teachers. A new education reform was passed in 2019 but the CNTE complains that some aspects of the previous reform, such as centralising the allocation of posts, have been kept.
  • The CNTE has been calling for the implementation of the new reform to be suspended until changes that take into consideration its demands are included. These calls turned into protests in Chiapas following the repression by the state government of the demonstrations staged by trainee teachers last month in demand for more job opportunities.
  • According to local press reports, some 4,000 teachers marched in Chiapas’ capital, Tuxtla Gutiérrez, yesterday demanding the installation of a dialogue table with President López Obrador.

Looking Ahead: The CNTE has set up a protest camp in Tuxtla Gutiérrez and says that it is prepared to extend its protests around the country if its demands are not met, which suggests tensions are likely to rise in the next few days. 

* Mexico’s economy ministry (SE) has announced that following the publication in the official gazette of a series of decrees on preferential tariff arrangements, the Mexico-United Kingdom Trade Continuity Agreement (TCA) has now come into full force. The TCA replaces the trade agreement that Mexico has with the European Union (EU) and that governed bilateral trade with the United Kingdom (UK) until it decided to leave the EU. Signed in December 2020, the TCA allows reduced tariff trade to continue between the two countries as it had done under the previous agreement with the EU for the next three years. An SE statement said that the agreement “means that Mexican products have preferential access to the United Kingdom market” while the two countries explore the possibility of signing a broader agreement. “The main objective of the current agreement is to preserve preferential trade conditions… and provide a platform for greater bilateral trade liberalisation”, the SE statement explains. According to SE figures, the UK is Mexico’s fifth largest export market in Europe with bilateral trade reaching US$5.2bn in 2019, a 12.5% increase on the previous year.

Southern Cone

On 1 June Santiago Cornejo, director for country engagement at Covax, the World Health Organisation’s (WHO) initiative aimed at guaranteeing equitable access to coronavirus (Covid-19) vaccines, said that Argentina had rejected offers to receive the Pfizer vaccine through Covax.

Analysis:

Cornejo’s comments, which suggest that Argentina could have had access to more vaccines than is currently the case, have potentially sparked another vaccine scandal for the government led by President Alberto Fernández as the country faces the most severe moment of the pandemic yet and criticisms that it failed to secure a sufficient number of vaccines. The Fernández government has already lost a health minister over a vaccine queue-jumping scandal and has been pilloried by the political opposition for allegedly seeking bribes from Pfizer; these latest revelations are likely to put it even more on the back foot.

  • Speaking at a virtual event organised by the Consejo Argentino para las Relaciones Internacionales (Cari), a non-profit academic institution, Cornejo said that Argentina has an optional purchase agreement with Covax, allowing it to choose which vaccines it receives, and that Argentina had rejected doses of the Pfizer vaccine. Cornejo was replying to a question from Claudia Najul, a national deputy for the centre-right opposition Juntos por el Cambio (JxC) coalition.
  • Najul then slammed the Fernández government on Twitter, accusing it of neglect and saying that the legislature will demand explanations. “[The government] are playing with people’s health while they continue to hide the reasons why they did not sign [a contract] with Pfizer”, she said. Argentina, which currently has the AstraZeneca vaccine, Russia’s Sputnik V, and Chinese firm Sinopharm’s vaccine, has vaccinated 21.4% of its population with at least one dose according to Our World in Data.  
  • The government has reacted to Cornejo’s comments, with the health ministry issuing a statement saying that the information that it refused Pfizer vaccines via Covax is “false” and that it is Covax that “excluded” the Argentine government rather than the other way round.

Looking Ahead: Fernández's chief-of-staff, Santiago Cafiero, is due to appear before the senate tomorrow (3 June) to present a report on the government’s policies, in which he replies to a record 1,160 questions presented by senators on a wide variety of issues including efforts to tackle the second Covid-19 wave. Cafiero may now face further questioning on the government’s vaccine procurement process following Cornejo’s comments.

* The monthly influx of foreign currency to Argentina from the export of grains and derivatives has reached its highest level in 18 months, according to the Cámara de la Industria Aceitera de la República Argentina (Ciara) and Centro de Exportadores de Cereales (CEC), chambers representing oilseed producers and cereal exporters. In a joint press release, Ciara and the CEC announced that in May, companies from this sector received US$3.545bn from their exports, bringing the total of foreign currency that they have earned in 2021 to US$13.301bn. The amount of foreign currency earned in May was 16.9% greater than the April total, and represented an 82.2% year-on-year increase. Ciara and the CEC attributed the increase to rising commodity prices, and said that it was achieved in spite of difficulties posed by strikes in the shipping industry and the persistent low levels of the Paraná river in Santa Fe province.

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