LatinNews Daily - 30 November 2022

On 29 November, Brazil’s media reported that president-elect Luiz Inácio Lula da Silva (Partido dos Trabalhadores, PT) has informed close allies that he intends to nominate his defence minister and new commanders for Brazil’s three armed forces (army, navy and air force) next week.

Analysis:

Since his campaign, Lula had made it clear that he intended to name a civilian to head up the defence ministry and it was expected that he would make this appointment before making a final decision about the heads of the armed forces. However, according to Brazilian newspapers Folha de S. Paulo and Estado de S. Paulo, the three top commanders have decided to bring their resignations forward to next month, before he takes office in January. Now, Lula is rushing to find replacements that, at the same time would be loyal to the new government but also respected by a large part of the military. Brazil’s society has been deeply divided since the 30 October election, in which Lula narrowly defeated President Jair Bolsonaro (Partido Liberal, PL) and there have also been significant signs of polarisation in the armed forces. Bolsonaro drew members of the military to his support base, giving them power, resources, and positions in his government, so many remain loyal to the outgoing president and it has been a challenge for the PT to deal with some radical military figures.

• The commanders Marco Antônio Freire Gomes (army), Carlos de Almeida Baptista Júnior (air force) and Almir Garnier (navy) are expected to leave their posts at the end of December, although this has not been officially announced.
• Two former defence ministers interviewed by Folha de S. Paulo classified the commanders’ decision as an act of “insubordination”, although a source from the military said it aimed to “make the power transition easier” for the new government.
• The defence ministry was created in 1999 and was led by a civilian until 2018. The favourite to lead the ministry today is José Múcio, the former president of Brazil’s federal account court (TCU). Monteiro served as federal deputy for Pernambuco’s state (1991-2007), has good relationships with military officers, and is considered a skilled negotiator. Even Bolsonaro’s vice-president, general Hamilton Mourão (Republicanos), suggested he would support Múcio’s nomination.
• Also yesterday, a group of PT deputies asked the country’s supreme court (STF) to investigate a member of the military Ronaldo Ribeiro Travassos, who appears in a video and audio messages circulated on social media incentivising colleagues to participate in the protests that are asking for a military coup to prevent Lula’s inauguration on 1 January. In the messages, Travassos also defends the killings of Lula’s supporters. Travassos works for the presidential cabinet for institutional security (GSI) which is currently led by General Augusto Heleno, one of Bolsonaro’s closest allies.
• On 28 November, a letter signed by some members of the military reserve forces began circulating on social media, indirectly criticising the armed forces’ lack of response to pro-Bolsonaro protesters’ plea for help in overturning the election results. According to Folha de S. Paulo, the military leadership is analysing possible sanctions for active military personnel that might have signed the letter. 

Looking Ahead: According to Brazilian news web site G1, the favourite candidates for the armed forces are Júlio César de Arruda (army), Aguiar Freire (navy) and Marcelo Damasceno (air force). The three are among the generals that have served for the longest time in Brazil’s armed forces and are well respected by members of the military. 

On 29 November, Ecuador’s opposition-controlled national assembly voted to repeal the tax reform that was introduced by President Guillermo Lasso’s government in November 2021.

Analysis:

The vote to repeal the tax reform is for now largely symbolic – President Lasso has the power to veto the opposition’s bill, meaning that his economic programme would be safe for at least a year. However, the vote demonstrated the near-total unravelling of Lasso’s alliance in the national assembly; he has totally lost the support of the indigenous Pachakutik, which offered the key to steering his economic reforms through the legislature. Faced with the prospect of legislative gridlock for the remainder of his four-year term, Lasso is instead preparing to secure constitutional reforms via an eight-question referendum. Yesterday, he issued a decree confirming the calling of this referendum, which must now be organised by the national electoral council (CNE).

• With 100 votes in favour and 13 against, the national assembly voted to repeal the government’s tax reform, which had scraped through the legislature late last year. The reform had boosted government revenues by cutting tax exemptions for higher earners and imposing a temporary wealth tax on high earning citizens and businesses. Lasso had argued that these reforms were necessary to address the widening of the fiscal deficit during the coronavirus (Covid-19) pandemic.
• The tax reform is a key pillar of the fiscal adjustments agreed upon in Ecuador’s extended fund facility (EFF) deal with the International Monetary Fund (IMF), which was entered into by former president Lenín Moreno (2017-2021) in 2020 and extended by the Lasso administration in September 2021.
• The bill to repeal the reform was submitted by Viviana Veloz, of the left-wing Unión por la Esperanza (Unes) coalition which is the largest grouping in the legislature. Veloz argued that the tax reform is harming the middle class and highlighted a 28 October ruling by the constitutional court which declared certain parts of the tax reform to be unconstitutional – including its elimination of inheritance tax for certain groups and its tax provisions for entrepreneurs, among other things.

Looking Ahead: Lasso is expected to veto the bill, but the tax reform is still at risk in the long run. Under Ecuador’s constitution, the national assembly must wait a year to reconsider a bill following a presidential veto. However, the veto can then be overturned with the support of two-thirds of legislators.

* Lorry drivers in Peru have ended a strike that had seen key highways blocked around the country since 22 November. A spokesman for the truckers’ union Gremio de Transportistas y Conductores (GTC), Javier Corrales, told local radio station RPP Noticias that lorry drivers had been ordered to end the strike action following the reaching of an agreement between 37 unions and the transport and communications ministry. This includes a preliminary agreement on a 70% reduction in the consumer tax (ISC) on fuel paid by lorry drivers. Corrales said that “it’s been agreed that this must be done without any sort of restriction”.

* Brazil’s labour ministry has published the latest figures from the national employment registry (Novo Caged), which show that a net 159,454 new jobs were created in the formal sector in October, the lowest number since March 2022. This is the result of 1.78m job openings and 1.63m job losses during the month and brings the total number of formal jobs in Brazil to 42.99m. From January to October 2.32m formal jobs were created in the country. Despite the slowdown, Labour Minister José Carlos Oliveira, said the October figures raise hopes that Brazil could end 2022 with a total of 2.5m formal jobs created. “Our economy is on the right path,” he said.

On 29 November, the Inter-American Court of Human Rights (Corte-IDH) declared the Nicaraguan government led by President Daniel Ortega in contempt of court for ignoring its rulings on political prisoners.

Analysis:

The Corte-IDH is an arm of the Organization of American States (OAS), from which the Ortega government announced its withdrawal in November 2021. This followed the OAS’s condemnation of the election that month which produced a re-election victory for Ortega but was widely slammed as a sham. The Ortega government’s refusal to heed the Corte-IDH rulings is not a surprise, having similarly proven deaf to multiple other rulings, resolutions and sanctions by the international community over its relentless crackdown on dissent and the deteriorating human rights and democracy situation in the country. The Corte-IDH’s declaration, which came days after the United Nations (UN) Committee on Torture (CAT) warned that the government has refused to cooperate in its review, will further leave it open to international condemnation and comes as it is alienating other left-wing governments in the region – notably that led by President Gabriel Boric in Chile.

• According to a Corte-IDH statement, the Ortega government has failed to observe rulings issued in 2021 (24 June, 9 September, 4 and 22 November) and 2022 (25 May and 4 October) regarding the fate of 46 detained Nicaraguans. Corte-IDH, which highlights that the Nicaraguan government failed to send representatives to its last session on the issue on 9 November, considers them political prisoners.
• Human rights groups tally over 219 political prisoners in Nicaragua.
• Also indicative of the government’s refusal to cooperate with the international community, on 15 November CAT issued a statement regretting that “Nicaragua ignored its obligation under the [UN] Convention [against Torture] and refused to cooperate in the review”. According to a CAT statement, it proceeded with the examination of Nicaragua in the absence of a State delegation in July and adopted its final findings in November.
• The CAT cited particular concern about numerous reports indicating that the national police (PNN), “the directorate of special operations and agents in civilian clothes used lethal force, arbitrary detentions and acts of torture to repress protesters participating in demonstrations since April 2018”.

Looking Ahead: The Corte-IDH instructs its president to present a report before the OAS permanent council regarding Nicaragua’s contempt of court, which is likely to subject the Ortega government to further international condemnation.

* El Salvador’s President Nayib Bukele has issued a second offer to repurchase sovereign debt bonds maturing in 2023 and 2025, setting the maximum for the repurchase at US$74m. The 2023 and 2025 bond offerings were US$800m each. President Bukele’s announcement comes amid continued concerns that El Salvador could default on its debt amid the impact of the government’s decision to adopt the cryptocurrency bitcoin as legal tender last year. In September the government announced a voluntary cash buyback of US$360m for its 2023 and 2025 bonds, having proposed a US$560m transaction in July. Bukele tweeted that the September buyback was “was so successful that we have decided to launch another offer for the remainder of the 2023 and 2025 bonds.” Indicative of these default concerns, in September international credit ratings agency Fitch downgraded El Salvador citing the potential risk of default. Also that month, S&P Global maintained El Salvador’s “CCC-plus” rating but said that it could cut its already negative credit rating within six to 18 months if it does not make “adequate progress” on debt reduction.

On 29 November, the local press reported that a migrant shelter in northern Mexico was closing due to threats from organised crime groups.

Analysis: 

Tensions have been on the rise at the border following the implementation of a new bilateral Mexico-US migration agreement allowing US authorities to expel Venezuelan migrants to Mexico under the US federal order Title 42. The agreement has led to a build-up of Venezuelan migrants in Mexican border towns. This latest indication that organised crime groups are capitalising on the vulnerability of migrants will likely heighten scrutiny on what President Andrés Manuel López Obrador’s government is doing to protect migrants in Mexico.

• The local press reported that the Embajada Migrante shelter in Tijuana (Baja California state) had to close due to threats against migrants and staff. Hugo Castro, the founder of Coalición SOS Migrante, the organisation that runs the shelter, told the local press that the shelter had suffered “threats, extorsion attempts, and criminals even entering at night […]asking migrants for US$200 each to let them cross the border”.
• This comes as the Mexican authorities appear to have upped efforts to detain migrants in recent weeks. Yesterday, the national guard (GN) and agents from the national migration institute (INM) reportedly interrupted a migrant caravan in the city of Tapachula (Chiapas state) made up of some 2,000 migrants planning to travel from Mexico’s southern border to the US.
• On 21 November, the INM announced that it had detained 16,096 migrants between 17 November and 20 November. The majority were from Central and South American countries, including 4,968 Venezuelans.
• The safety of migrants in Mexico has been scrutinised by rights groups following the expansion of Title 42 to include Venezuelans. On 23 November, Alejandro Solalinde, a Catholic priest and migrant rights activist, said that the deaths of at least four Ecuadorean migrants who drowned when attempting to enter Mexico by sea on 21 November, was just one reflection of the “disastrous handling” of migration from the INM and Mexican State.
• Prohibitive US migration policy has led to more migrants seeking asylum in Mexico, with Chiapas alone receiving 64,360 asylum applications between January and October, according to Mexico’s national refugee commission (Comar).

Looking Ahead: Tensions are likely to rise further in the run up to the lifting of Title 42, set for 21 December, with US and Mexican authorities expecting an influx of migrants.

*Mexico’s national statistics institute (Inegi) has published new figures which show that in October the unemployment rate stood at 3.3% of the economically active population – people over the age of 15 who are employed or seeking employment – equating to 2m people. This is slightly up from 3.2% registered in September on seasonally-adjusted figures and is 0.6 percentage points less than in October 2021. According to the Inegi figures, the number of people in Mexico’s economically active population who were employed in October numbered 58.4m – 2m more than in October 2021. According to Inegi, 4.4m people, or 7.5% of the employed population, were underemployed in October 2022, meaning they had the capacity and need to work more hours. This is down from 7.7% in October 2021.

On 29 November, Chile’s deputy interior minister, Manuel Monsalve, said an agreement had been reached with the remaining striking truckers’ unions and that a working relationship had been established between the government, transport and business sectors.

Analysis:

Chile’s powerful truckers’ unions initiated coordinated strike action on 21 November, demanding lower fuel prices and better protection from highway crime, and setting up roadblocks which caused serious disruption to food supply chains. The government reached an agreement with several unions on 27 November, but the Confederación Gremial de Transportistas Fuerza del Norte (CGFTN) and Confederación de Camioneros Centro Sur had vowed to continue striking. The fact that these two final unions have now agreed to lift the strike will serve as a relief for the government led by President Gabriel Boric, given that food and fuel shortages were beginning to bite in certain areas of the country.

• A tripartite dialogue took place on 28 November featuring Monsalve and acting transport minister Cristóbal Pineda, union leaders Cristián Sandoval and Freddy Martínez and representatives from the national agricultural society (SNA) and Confederación de la Producción y del Comercio (CPC), which groups together businesses in the industrial, mining, banking, agricultural, and retail sectors.
• The agreement addressed the demands of the truckers for improved road security and a freeze in fuel prices. Among specific demands of these unions was for smaller trucking companies to be shielded from eventual fuel price rises, which was agreed with CPC.
• Yesterday, Monsalve said the agreement was not just about ending the strikes, but also about “establishing a space for sustainable dialogue” and avoiding conflict.
• Agriculture Minister Esteban Valenzuela Van Treek welcomed the agreement, stating that the supply chain could begin to function again. Chile’s fresh fruit exporters association (Asoex) has said that losses from the strike could amount to some US$500m for the sector. 
• The agreement follows that made with the Confederación Nacional de Transporte de Carga (CNTC) and Fedequinta, and four regional truckers’ unions on 27 November. That included freezing the price of diesel for 120 days and restricting increases in the price of petrol, as well as paying US$1.5bn into Mepco, the fund created to subsidise fuel prices, alongside a commitment to improve security.

Looking Ahead: The agreement signed on 28 November included a commitment for all parties to maintain dialogue. An initial meeting is set to take place in Santiago no later than 15 December.

* Chile’s lower chamber and senate have voted to approve a report by congress’s mixed commission, which was written to resolve differences in the versions of the 2023 national budget approved by both chambers of congress. The revised budget, which increases spending by 4.2% compared to the 2022 budget, includes some changes in the way funding is divided across government ministries and makes adjustments to the way student finance is allocated. The mixed commission’s recommendations were approved with 135 votes in favour, one against, and two abstentions in the lower chamber, and with 42 votes in favour and none against in the senate.