All Categories

Colombia’s former president Juan Manuel Santos (2012-2018) has come out all guns blazing after former foreign minister Álvaro Leyva contended that President Gustavo Petro would be perfectly within his rights to convene a constituent assembly without any need for congressional approval. Leyva’s proposal was politically incendiary. Petro first raised the prospect of a constituent assembly in March to overhaul state institutions amid frustration that his reform agenda was being stymied by congress. Despite Petro’s assertions to the contrary, the political opposition immediately interpreted this as an attempt to reform the constitution to enable him to stand for re-election.

Leyva maintained on 3 June that a paragraph in the peace accord struck with the Fuerzas Armadas Revolucionarias de Colombia (Farc) in 2016, when Santos was in office, empowered President Petro to convoke a constituent assembly, conveniently passing over congress, where he would lack sufficient support for such an initiative.

Leyva’s comments provoked a huge backlash. Senator Humberto de la Calle, the head of the government negotiating team with the Farc under Santos, said Leyva was “absolutely wrong”. Former interior minister Juan Fernando Cristo, another former government negotiator, responded by saying that “seven years after the event, Leyva has invented a supposed constituent assembly incorporated into the text [of the accord] that somehow escaped the notice of fierce opponents of peace who neither saw it nor criticised it”.

In an interview with the national daily El Tiempo on 5 June, Santos said he had written a letter to United Nations Secretary General António Guterres asserting that nothing contained within the peace accord with the Farc allowed for a constituent assembly to be convened outside of the constitution; that the whole debate around the matter was “harmful” and “confusing and distracting when the country has much more important problems”; and that if Petro went to New York to seek support from the United Nations Security Council (UNSC) for something that is “openly unconstitutional” he would look “ridiculous” and, in the politest possible way, should be brushed off.

Leyva, who was permanently replaced as foreign minister by Luis Gilberto Murillo on 21 May, having been suspended in February over irregularities [WR-24-08], has refused to back down, even though the paragraph he is referring to contains nothing that could be explicitly interpreted as validating a constituent assembly. Petro, for his part, gave an equivocal response. While he adamantly ruled out any intention of standing for re-election (barred under the present constitution) in a meeting with the diplomatic corps on 4 June he refused to rule out a constituent assembly “in the future”.

Santos said that rather than looking for something that is not in the peace accord, the government should concentrate on implementing what is contained within it. He was scathing of Petro’s determination, revealed on 15 May, to attend the next quarterly progress report meeting of the UNSC to denounce the Colombian state for resiling on its commitment to implement the peace accord with the Farc. “This makes no sense, he is going to make a demand against a state of which he is head, nobody is going to understand that,” Santos said.

Santos criticised the implementation of the accord by the right-wing administration of Iván Duque (2018-2022) but he said that Petro, for all his rhetoric, had done no better and his administration had consistently criticised the transitional justice system (JEP). Santos said that the demobilised former Farc commander Rodrigo Londoño Echeverri (‘Timochenko’), had even said that Duque had done more for the peace accord than Petro. Londoño, now the president of the Farc political party Comunes, implied that Petro was more determined to secure his own legacy by securing ‘total peace’, through peace processes with former Farc dissident groups among others, which was often at the expense of the peace accord.

The fact that the former head of the Farc negotiating team, Luciano Marín Arango (‘Iván Márquez’), who took up arms again in 2019 and now leads the dissident Farc group Segunda Marquetalia, has publicly supported the call for a constituent assembly has deepened distrust of Petro’s intentions. The government is scheduled to begin peace negotiations with Segunda Marquetalia in Caracas on 24 June [WR-24-22].

​Murillo, for his part, downplayed the significance of the constituent assembly debate, after attending a meeting of the UNSC in New York on 6 June. He said that when Petro attends the next session of the UNSC on 11 July he would focus on the difficulties the government had encountered in implementing the peace accord and would not ask for it to endorse a constituent assembly. He said that Colombia as a society needed to make every effort to advance in the construction of peace and reconciliation.

New trade minister

President Petro has dismissed his trade, industry, and tourism minister, Germán Umaña Mendoza, who had held the position since he came to power in August 2022, and replaced him with the head of the national tax agency (Dian), Luis Carlos Reyes, on 11 June. Reyes had resigned as head of the Dian on 22 May. He was criticised by the finance minister, Ricardo Bonilla, for exaggerated forecasts of tax revenue. Petro challenged Reyes to diversify trade away from coal and oil.

Health sector
The health insurance company Sura has announced that it will cease to operate in Colombia’s social security system and will transfer its 3.8m customers to another private health insurer (EPS). The president of Sura, Juana Francisca Llano, said it had been “a very difficult situation” but “the situation of the Colombian health system is a historic and structural problem”. It said it had made net losses of more than Col$360bn (US$93.5m) between 2022 and 2023 and for 2024 was projecting that these would rise to Col$500bn. The president of the Asociación Colombiana de Empresas de Medicina Integral (Acemi), Ana María Vesga, savaged the government’s “destruction of the greatest social advance in the country’s whole history” that would be “irreversible”. Petro maintained that he had no intention of financially suffocating the EPS out of vengeance, claiming that the sinking of his government’s health reform by the senate had “a domino effect of bankruptcy on EPSs”.

In late March Nicaragua’s 92-member unicameral legislature, which like all institutions is controlled by President Daniel Ortega’s Frente Sandinista de Liberación Nacional (FSLN), approved changes to the country’s military code. Among other things the changes introduce a military reserve. They also effectively consolidate the stranglehold on power of Ortega and First Lady Rosario Murillo, now a co-president following the recently implemented sweeping constitutional reform package [SSR-25-01]: both co-presidents are named as heads of the armed forces.

Approved by the legislature on 25 March, one of the changes to the military code which has most alarmed Ortega critics is a provision which creates a “patriotic military reserve” force within the Nicaraguan military. This will comprise, on a voluntary basis, officers, officials, non-commissioned officers, and lower ranking soldiers and sailors who have retired or been discharged from the army, along with any citizen wishing to participate in the armed defence of the nation.

A report published on 26 March by Nicaraguan investigative news outlet Confidencial cites anonymous analysts as saying that the purpose of the new military reserve was “intimidation”. It cites them as comparing the new force with the newly-created voluntary police force, which is considered little more than an institutionalised version of the paramilitary shock groups that played a key role in the helping the police suppress dissent as part of the government crackdown which began in 2018 [SSR-25-03]. One analyst cited by Confidencial said that in practical terms the military reserve makes no sense since “the tasks of the army are not about maintaining internal order, but have to do with the defence of sovereignty and the national territory.” The same analyst also noted that “there is no medium-term threat on the horizon of a military conflict in which Nicaragua would participate.”

The other change drawing major alarm was that giving Murillo control of the armed forces, along with Ortega. This not only reaffirms the military’s subordination to the executive, enshrining what was already a de-facto arrangement, but, in particular, consolidates the grip on power of Murillo who, through the constitutional reform package, was promoted from vice president to co-president. Prominent dissidents such as former Sandinista guerrilla  Dora María Téllez, who was among the 222 political prisoners deported to the US in February 2023 [SSR-23-04], discern in the constitutional changes and figure of the ‘co-president’, Murillo’s “ambition for total power”, as Téllez explained in an interview with Confidencial’s director, exiled journalist Carlos Chamorro, in November 2024, when the constitutional reform package was first unveiled. Murillo’s promotion to co-president is also understood as being part of efforts by the presidential couple to ensure a line of family succession to Ortega, who is 79, with Murillo, 73, and one of the couple’s sons, Laureano Ortega, both widely tipped as successors.

Landmark report published

On 3 April the United Nations-appointed panel of human rights experts on Nicaragua (GHREN) released a 234-page report which, for the first time, identifies 54 government, military officials and FSLN members as responsible for the alleged grave human rights violations and other crimes associated with the brutal crackdown on dissent which began in 2018. As well as the presidential couple, those named include current army commander General Julio César Avilés, who has been in the post since 2010 in breach of the military code; and Francisco Díaz, who has served as police chief since 2018. Téllez was cited by local media as describing the GHREN report as “the first big step towards justice”. 

Avilés

General Julio César Avilés’ continuance in the post of army chief flouts the country’s 1994 military code which set out five-year terms for heads of the military. In 2020 he was blacklisted by the US government for his role as commander-in-chief of the army which, according to the US, “provided support to the police and paramilitary gangs that carried out crimes against the Nicaraguan people, including attacks on protesters during the unrest that began in April 2018”. An earlier report by the United Nations-appointed panel of human rights experts on Nicaragua (GHREN), published in February, concluded for the first time that the Nicaraguan army – despite its denials – had participated in the 2018 crackdown [SSR-25-04].

President Federico Franco has taken the bold decision to open the way for the use of genetically modified (GM) crops in Paraguay by approving the use of GM cotton seeds in the country.  His impeached predecessor Fernando Lugo (2008-2012) dallied over the decision as he considered the concerns presented by peasant farmers, who he counted among his core supporters. Franco has shown that he is more decisive, but he has laid himself open to criticism not only from the peasant farmers, but also from other social and environmental groups, at a time when his administration is still looking to consolidate itself.

On 20 August Franco signed a presidential decree (No. 9503) permitting the use of GM cotton seeds in Paraguay. The use of GM cotton had already been approved by Paraguay’s agriculture ministry back in 2011, after it had conducted extensive studies on the Bt and RR seed strands (already extensively used in neighbouring Brazil and Argentina) and determined that it was safe to introduce them in Paraguay. However, Lugo refused to provide final approval, after peasant farmers expressed their opposition. The national peasant farmer federation (FNC) argued that GM cotton would contaminate the existing domestic stock, predominantly affecting the small scale producers reliant upon it. It also claimed that the measure would only help “entrench an economic model which subjects producers to the whims of international agrochemical companies”.  The argument is that the introduction of expensive GM seeds produced by big transnational companies will drive small scale producers out of business as the whole sector becomes dominated by GM crops.

In contrast, large scale producers grouped in the Paraguayan cotton growers association (Cadelpa) maintain that the introduction of GM cotton would help revive the depressed sector by increasing yields and productivity. According to Cadelpa, cotton plantations in 2011/2012 covered only 50,000 hectares (ha), compared to the 320,000 ha planted in 2003/2004. Cadelpa believes that the introduction of GM seeds could increase the planted area to 80,000-100,000 ha, as these seeds are more resistant to the plagues that regularly affect the crop. Moreover, Cadelpa argued that GM seeds would also deliver savings to producers and even help the environment, thanks to reduced fumigations.

Cadelpa began a new lobbying campaign as soon as the new administration took office. In fact, Franco signed the decree shortly after a meeting with the head of Cadelpa, José Luis Rolón, and Agriculture Minister Enzo Cardozo, in which Franco promised to sanction the import of GM cotton seeds before the start of the 2012/2013 planting season in September. After inking the decree, Franco dismissed some of the concerns presented by the FNC as purely “ideological”, saying that increased productivity would only be beneficial for the sector, pointing out small scale producers’ seed purchases are subsidised by the agricultural ministry. Franco added that concerns about potential environmental damages were exaggerated, noting that the approved strands have already been widely used by Paraguay’s neighbours for years without major issues.

Franco’s defence of the measure appeared sound, but many disagreed. A local environmental organisation, Alter Vida, rejected the decree arguing that it violated the country’s environmental laws which stipulate that the introduction of new plant species must be analysed by the bio-security commission comprised of the local environmental agency (Seam), the national plant and seed quality service (Senave) and the ministry of public health and well being. As such Alter Vida said that the decree was illegal and urged the agriculture ministry not to distribute GM seeds. Furthermore, Alter Vida also expressed concerns about the fact that this could set a precedent. There are tests underway already to introduce GM corn and soy seeds. While cotton is a relatively small crop, corn and soy are major crops in Paraguay, a major global producer, making the environmental and health risks higher. More worryingly for Franco administration, the FNC has also claimed the decision illegal and has threatened to mobilise in protest.

Franco defends GM decision

At a mass in Villa Florida, Misiones, on 6 September Bishop Mario Melanio Medina questioned President Franco’s decision to permit the introduction of GM cotton seeds in the country “disregarding environmental and health risks”. Franco was in attendance and immediately stood up to provide a reply. “Do you think, monsignor, that I would do something like this if [I knew that] genetically modified crops harmed the environment and people’s health?” Franco, a devout Catholic and a physician, challenged Medina to provide him with evidence that the GM seeds approved for use were in any way harmful, stating that if this were the case the government would reconsider.

PERÚ | Premiado por S&P. El 19 de agosto la agencia de ratings, Standard & Poor’s (S&P), elevó el rating de riesgo de la deuda soberana a largo plazo de Perú denominada en moneda extranjera de BBB a BBB+; y su rating de riesgo de deuda a largo plazo en moneda nacional de BBB+ a A-, con un panorama estable.

     S&P basó su decisión en el hecho de que el país había logrado reducir su vulnerabilidad a los impactos externos y mejorado su perspectiva de crecimiento del PIB a largo plazo. Además, S&P enfatizó que las altas tasas de crecimiento económico registradas por el país en años recientes han ayudado a mejorar su posición de deuda pública. Como resultado, S&P declaró que “Hemos proyectado que el peso de la deuda del sector público continuará siendo bajo y probablemente decreciendo moderadamente en los próximos tres años. Hemos proyectado que la deuda pública se reducirá a menos del 18% del PIB este año”.

     La agencia también señaló que los activos retenidos por el gobierno y el sector financiero local son mayores que la deuda externa del país, y que los mercados de capital interno de rápido crecimiento proveerían al gobierno la oportunidad de financiar deuda localmente en el caso de haber trastornos en los mercados extranjeros.

     En cuanto al panorama positivo, S&P declara que está basado sobre sus expectativas en que la inversión en los sectores de la energía y la minería continuarán creciendo a un ritmo constante durante el próximo par de años. De hecho, tomando todo esto en consideración, S&P dijo que podría considerar elevar aún más los ratings de la deuda de Perú en el futuro.

     Con la elevación de grado, Perú ahora se convierte en el segundo país de América Latina con rating de deuda más alto después de Chile, superando a México y Brasil (que actualmente tienen ratings BBB), en los ojos de S&P.

     La elevación de los ratings es de gran ayuda para el gobierno del Presidente Ollanta Humala en momentos desafiantes. La administración Humala ha enfrentado críticas internas en semanas recientes después de la difusión de las cifras económicas para el segundo trimestre del año, que mostraron un crecimiento más débil de lo esperado [IL-13-32]. Esto provocó las críticas de la oposición política y de ciertos sectores empresariales sobre el manejo de la economía interna por parte del gobierno.

     Humala no perdió tiempo en explotar la suba de grado y al día siguiente recalcó que esto era evidencia de la robustez de la economía Peruana. Humala dijo que “esto significa que mientras en otros lugares hay tormentas [económicas], en Perú se han abierto las nubes y está soleado […] aunque estamos transitando a través de un áspero sendero, porque la crisis nos está afectando, nuestra economía es sólida y ello nos permite hacer frente a las adversidades sin muchos problemas”.

     Humala agregó que la robustez de la economía era el resultado de la tarea combinada entre su gobierno y los actores económicos locales. También prometió que si esta tarea coordinada continúa los indicadores económicos del año próximo “serán mejores”.

• T-90 Calima

El 19 de agosto la fuerza aérea de Colombia anunció que había iniciado la construcción de su primer avión de uso militar, el T-90 Calima. El proyecto de US$280.000, designado con el nombre de la ciudad pre-colombina, comenzó en el 2009, cuando la fuerza aérea colombiana unió fuerzas con la industria aeronáutica colombiana (Ciac) con el objetivo de diseñar y producir un avión de entrenamiento primario para sus pilotos. El Teniente Coronel Martín Zorrilla, coordinador del proyecto, explicó que la idea es que el nuevo avión reemplace a los aviones Cessna T-41 Mescalero, y al Beechcraft T-34 Mentor, que la fuerza aérea ha utilizado para entrenar a sus pilotos durante los últimos 40 años. Según Zorrilla, una vez que la construcción del avión sea completada, Colombia habría “dado un paso fundamental para convertirse en un líder en la industria aeronáutica regional, detrás de Brasil”.

*** Warning of Violence ahead of Turkey’s local polls.  The main opposition candidate for mayor of Ankara, Mansur Yavas of the Republican People’s Party (CHP), told a press conference on 25 March that there were attempts to foment chaos and violence in the run-up to the 30 March local elections.  He said that armed groups were attempting to provoke violence in Ankara and that assassinations might even take place.  He said: “I am in no position to take measures against assassinations if they happen…If this intelligence is true it is the duty of the ruling party to take the necessary measures.  They will be responsible for even a single drop of blood that is shed.”

He referred to an attack against him and his campaign team on 22 March during a visit to Ivedik when “a bus full of [attackers] was waiting outside to attack the people at the meeting.”

*** Ukraine returns the fascism jibes.  Russia has accused Ukraine of fascist tendencies rooted in its support for the Nazi invading forces.  No doubt seeking to turn the tables, on 25 March the Ukrainian foreign ministry issued a statement expressing its concern about growing manifestations of fascism, xenophobia, and anti-Semitism in Russia.

The head of the ministry’s information department, Yevhen Perebyynis, said: “Despite Russia’s attempts to dig up and, in individual instances, even think up alleged instances of human rights violations against Russian-speaking citizens, priests and journalists in Ukraine, we cannot but be concerned with the actual manifestations of fascism, xenophobia, and ethnically-based offences currently observed in Russia itself.  Such incidents have become considerably more frequent recently.”

According to Perebyynis, some 21 people were killed in Russia in 2013 in such incidents, with a further 178 injured.  He added: “Radical right groups disseminate anti-Semitic literature, and calls for violence against Jews are posted on blogs and on social networks.”

*** An odd precedent for Argentina to latch on to.  On 25 March, Russia’s President Vladimir Putin took a telephone call from Argentina’s President Cristina Fernandez de Kirchner in which the Argentine leader tried to draw useful lessons for Argentina from the Crimea episode.  According to a record of the conversation posted on the Russian presidential website, “the two sides noted the closeness of their positions, above all in attitudes to the unacceptability of the use of the policy of double standards by certain Western states and alliances; and stressed the importance of taking into account the totality of people’s national, historical, and cultural traditions”.  The point that Cristina was trying to make was that the UK was being hypocritical in supporting a referendum held by the Falkland Islanders while opposing the Crimean referendum.

MEXICO | Growth exceeds expectations. Mexico’s GDP grew by an estimated 2.5% in 2015, according to a report released on 17 December by the United Nations Economic Commission for Latin America and the Caribbean (Eclac). This is more than the 2.2% GDP growth registered by the country in 2014.

The Eclac report argues that the higher growth increase was mainly due to “more vigorous [domestic] consumption in the second half of the year, and a moderate expansion in exports”. The report adds that “In 2015, economic policy focused on maintaining macroeconomic stability within an unfavourable international environment, particularly concerning the low international oil price and its impact on public finances”.

Based on the 2015 growth results, Eclac also expects Mexico’s GDP to grow by 2.6% in 2016, boosted by higher external demand for Mexican goods but counterbalanced by lower government expenditure. Mexico’s inflation rate increased by 2.5% in 2015 on Eclac figures, an uncharacteristically low figure that fell well within the target rate of between 2% and 4% per year set by the central bank (Banxico). In addition, unemployment has decreased to 4.3%, half a percentage point lower than the 4.8% registered in 2014. While the difference is marginal it nonetheless makes for encouraging reading for the government led by President Enrique Peña Nieto, which has made reducing unemployment one of its key economic objectives.

On the downside for the government, the increased level of spending last year as part of the government’s efforts to support domestic economic growth has translated into an increase in the fiscal deficit. According to Eclac, Mexico’s fiscal deficit reached 3.5% of the country’s GDP in 2015, which is more than the 3.2% registered in 2014. This runs counter to one of the other key declared economic objectives of the Peña Nieto administration, to run zero-sum national budgets during its single six-year term so as to reduce, not increase the fiscal deficit.

MEXICO | Banxico to align with US monetary policy. On 4 January the governor of Mexico’s central bank (Banxico), Agustín Carstens, said in a radio interview that if the US Federal Reserve (Fed) decides to increase its interest rates gradually this year, Banxico will have to do the same.

In its final meeting of last year, held on 17 December, Banxico’s monetary policy committee decided to increase its benchmark interest rate by 25 basis points to 3.25% for the first time in months, a day after the Fed finally increased its benchmark interest rate which had remained static at virtually zero since the 2008-2009 global financial crisis.

With Mexico and other countries alerted to the fact that an increase in US interest rates could impact them by attracting foreign capital away from their economies, the move was tensely awaited amid debate as to whether Mexico and others would seek to match the Fed’s move or stay put so as to continue to promote growth. Banxico chose the former and based on the latest remarks by Carstens, Banxico will continue to align its monetary policies with the Fed’s in the future.

As Carstens told Radio Fórmula: “If they are going to increase their interest rates, and I think that it will happen very gradually, we will have to increase our rates gradually as a consequence”. In addition, Carstens said that the most important thing for Mexico within the international environment is the recovery of the US economy, which will help drive the Mexican economy both internally and externally.

• Interest rates

Mexico’s benchmark interest rate had been held by Banxico at 3% (a record low) since June 2014 when it was lowered from 3.5%. The decision to lift the interest rate in response to the US Fed’s move marked the first time since mid 2008 that Banxico had increased the interest rate. Banxico justified its decision in a statement in which it said that failure to reciprocate the Fed’s move “could generate additional disorderly depreciation of the national currency and affect inflation expectations and inflation itself”. Banxico is forecasting inflation of only 2% for 2015 and around 3% in 2016.

MEXICO | Pemex. On 5 January it was discovered that an oil pipeline had been illegally tapped right under the noses of the police in the municipality of León, Guanajuato state.

It is the third time in the last two months that the pipeline, belonging to the state oil company Pemex, has been tapped in the same place, leading to oil leaks, just a stone’s throw from a building known as ‘the Pentagon’, which houses the municipal police headquarters and municipal prison.

Guanajuato is one of four states where there has been a surge of illegal oil taps in recent months (see the latest edition of our Latin American Regional Report: Mexico & Nafta for an in-depth analysis of the government’s efforts to combat oil theft).

Making an unexpected visit to the Vatican at the end of his latest tour of key oil producers, President Nicolás Maduro might have lit three candles at St Peter’s, one for a rebound in oil prices, one for a miracle in domestic supplies, and one for his own political survival.

Maduro’s whirlwind tour took in Azerbaijan, Iran, Saudi Arabia and Qatar. The Venezuelan leader is seeking to encourage participation in a proposed deal between the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC producers like Russia to cap global crude output, in a bid to put a floor under prices. The proposal would reduce output from the current record levels (33.6bn barrels per year in September) to 32.5bn-33bn barrels; the hope is that this would lift prices to around US$50-US$60/barrel (/b). Following two rounds of talks at the International Energy Forum in Algeria on 27-28 September and the World Energy Congress in Istanbul, Turkey, on 9-13 October, a deal is supposed to be finalised at the next OPEC meeting in Vienna on 28-29 November.

However, producers like Russia, Iran and Iraq remain non-committal. Accompanied by his wife and First Lady, Cilia Flores, Foreign Minister Delcy Rodríguez, Oil Minister Eulogio Del Pino, Information Minister Ernesto Villegas, and the recently-appointed secretary of the presidency, Admiral Carmen Meléndez (who formerly served a stint as defence minister), Maduro began his tour in Azerbaijan, where President Iham Aliev was supportive.

Likewise, Iran’s President Hasan Rohani declared upon Maduro’s visit that the country would support any measure that aimed for “stabilising oil markets, fair price and equitable quotas for producers”. Later, Maduro said that he had a “positive” meeting in Saudi Arabia with Crown Prince Mohamed Bin Nayef, declaring that he was “more optimistic than ever…we are closer to an agreement than ever”. Del Pino, who is also president of the state oil company Pdvsa, likewise tweeted that “Saudi Araba supported Venezuela’s proposal to reach a consensus that permits market stability”. Maduro and his delegation finished their tour on 24 October in Qatar, hosted by the economy minister, Sheik Ahmed bin Jassim Al Thani.

That same day, however, Iraq’s oil minister, Jabar Ali al-Luaibi, sent global oil prices back down towards the US$50-mark, when he declared that Iraq, which is the second-largest producer in OPEC, wanted to be exempt from any output cuts, on the grounds that it urgently needs more funds to fight Islamic State militants.

The Iraqi comments, preceded by similar obfuscation by the chairman of Russia’s state giant Rosneft, Igor Sechin (who at one point appeared to contradict President Vladimir Putin over Moscow’s commitment to the proposed deal), served to underline the fact that Maduro, for all his roving diplomacy, will have little bearing on the final decision. Ultimately, any global oil deal will be dictated by the big players like Saudi Arabia and Russia, whose representatives have been holding separate talks of their own ahead of the scheduled Vienna meeting. As such, despite boasting the largest land-based oil reserves in the world (beyond even those of Saudi Arabia), Venezuela these days is something of a minion in terms of its weight in OPEC, which it helped found along with Iraq, Iran, Kuwait and Saudi Arabia way back in 1960.

Crucially, unlike the likes of Saudi Arabia and Iran, which can more or less switch the taps on and off at will, Venezuela is simply not in a position to increase production and exports so as to compensate for weak world prices. For reasons including a lack of (productive) investment since re-nationalisation, the diversion of billions of dollars in earnings to the socialist government (and the alleged loss of billions more to corruption), Pdvsa’s production has been more or less stagnant at about 2.5m-2.8m barrels per day (b/d) for over a decade (since a major oil strike paralysed the company in 2003), a problem that has only gotten worse since the global oil-price shock hit with such unexpected force in mid-2014.

With earnings falling by half overnight, and the government squeezing the company for every last cent to prop up the Revolution and remain current on external debt obligations, Pdvsa’s output since then has fallen further, with key partners (including US drilling companies) reportedly reducing activity for lack of payment. According to OPEC data, Venezuela’s oil output hit a low of just 2.33m bpd in August, from an estimated 2.68m bpd in 2014 and the lowest since the 2003 strike.

Thus, even if OPEC and independent producers do agree to a global output cap, Venezuela will most likely not be able to participate – it cannot cut production any further without breaching existing supply agreements and falling even further behind on its payments, at a time when it is already on the verge of default. This fact also erodes considerably its diplomatic clout within OPEC, it is worth noting.

In its current predicament, a price war to the bottom – as tacitly threatened more than once by Saudi Arabia and Iran – is the very last thing Venezuela needs. Del Pino has been vocal in warning about the dangers of a potential price war between producers. “Without agreements, without coordination, prices could collapse to less than US$20 a barrel, which would bring crisis”, he declared in September, stressing the need for a global agreement to “avoid a catastrophe in prices”.

For cash-starved and deep-in-recession Venezuela, the proposed global oil agreement would give the country an immediate revenue boost, without having to increase output – and potentially also without having to cut output. And while this would not be enough to get it out of its current fiscal and balance of payments dilemma, at this point in time any relief at all would be welcome for the beleaguered Maduro, as Venezuela’s internal catastrophe worsens by the day.

Argentine trade unions, civil-society groups, and even small business organisations have renewed their mobilisations in rejection of the ‘economic adjustment’ being implemented by the government led by President Mauricio Macri. The demonstrations are not overwhelming but they are noisy and suggest that, three years into Macri’s current four-year term, public support for the government’s economic policies may be waning due to worse-than-expected results. Producing positive results this year is the main political challenge facing Macri and the ruling centre-right Cambiemos coalition if he hopes to win re-election in 2019.

The main public gripe in Argentina remains the high level of inflation and overall cost of living. Macri’s Cambiemos government assumed office in December 2015 promising to bring inflation under control and return Argentina to the path of sustainable economic growth. In order to achieve this the Macri government implemented a series of economic reforms, such as the liberalisation of the exchange rate and the reduction of energy sector and public transport subsidies, that it said may initially prove to be painful but that would lead to macroeconomic stability and economic growth in the medium term. However, three years on, GDP may once again be growing but the level of inflation remains well above the 10% a year annual rate that the government promised to deliver. And along with increased public transport and energy tariffs, Argentine workers are continuing to feel the pinch.

Pointedly, the latest inflation figures released by Argentina’s national statistics institute (Indec) showed that the monthly inflation rate in March was 2.3%, bringing the cumulative inflation rate for the year to 6.7%. This means that the inflation rate is already at around half the central bank (BCRA) target of 15% for the whole of 2018, which is now unlikely to be met.

Problematically for the government, the Indec has attributed the high inflation to the falling value of the Argentine peso against the US dollar and the increase in public transport fares. The end result of this high cost of living is that local trade unions are once again demanding significant increases during collective salary negotiations.

But with the government having proposed a general ceiling on salary increases of 20%, reaching salary deals has proved elusive. This has led the unions to resort to staggered strikes and demonstrations in support of their salary demands. Teachers’ unions in Buenos Aires province have been striking since February but in recent weeks banking sector workers and public transport sector workers have also staged strikes. The Asociación Bancaria banking sector workers’ union staged its sixth strike of the year on 17 and 18 April. Meanwhile one Buenos Aires subway workers’ union (Agtsyp) began striking on 16 April in rejection of the 15% salary increase recently agreed by the Buenos Aires municipal government with the other subway workers’ union (UTA).

The discontent expressed by the unions is shared by local civil society-groups and organisations that represent small and medium-sized enterprise (SMEs), which have been staging demonstrations in the capital in rejection of the public transport and energy tariff increases and the government’s general economic policies. The likes of the Confederación de Trabajadores de la Economía Popular (CTEP) and Barrios de Pie have been holding noisy demonstrations outside the federal congress demanding a repeal of the tariff increases and rejecting the government’s proposed tax, pensions, and labour reforms.

The demonstrations look set to continue as the Central de Trabajadores de la Argentina (CTA) umbrella trade union has called for a ‘pots and pans’ demonstration for 18 April and a candlelit vigil for 19 April in Buenos Aires, in rejection of the public transport fares and energy tariff increases.

Political challenge

Seeking to harness this discontent, the political opposition in the national congress is now trying to approve a bill declaring a social emergency and calling for a freeze on all utility tariffs until December 2019. The bill is being promoted by former president and incumbent senator Cristina Fernández (2007-2015), who has expressed her support for demonstrations called by the CTA.

In announcing the bill on 16 April, Fernández said that the “growing concerns by families, retailers, business leaders, industrialists, SMEs, neighbourhood associations, and the general public burdened by the excessive [tariff] increases that they have been suffering for the past two years in a context of rising inflation and a fall in consumption”, justify the call for a tariff freeze. Compounding the political pressure on the Macri executive, some within the Cambiemos coalition are now also starting to question economic policy.

National deputy Elisa Carrió, the leader of the Coalición Cívica-Afirmación para una República Igualitaria (CC-ARI) party, a Cambiemos member, has called for the Macri government to clarify the criteria and formula used to come up with its utility tariff schedule. The outspoken Carrió complained that the successive tariff increases were harming the general public and only benefiting firms in the energy sector, which have seen an increase in revenue. Carrió’s call has been backed by the Unión Cívica Radical (UCR), the senior partner in Cambiemos, which is becoming increasingly restless with the Macri government.

• UCR grumbles

In the clearest example yet of the UCR’s discontent with the Macri administration, during a public event on 11 April the party’s president, Alfredo Cornejo, heavily criticised the government for failing to deliver on its electoral economic pledges. “After transmitting so much hope and after so much marketing, now they need to give explanations,” Cornejo said in allusion to the still high inflation rate and rising utility tariffs. He went on to say that the 2015 Cambiemos electoral campaign had been “populist” but that now reality is starting to bite people were becoming disillusioned. Cornejo said that his party has warned the Macri executive about the growing public dissatisfaction but complained that it is not always “willing to listen” to the UCR.

• Fiscal deficit

Argentina’s primary fiscal deficit was Ar$31bn (US$1.5bn) between January and March this year, and reached 0.3% of GDP, below the 0.6% target, the finance minister, Nicolás Dujovne, said during a press conference in Buenos Aires on 13 April. This was 25% lower than the fiscal deficit recorded over the same time period last year. Dujovne said Argentina was on track to meet its fiscal deficit target of 3.2% of GDP for the whole of 2018.

Within the space of five months, three separate courts have deemed Ecuador’s former president Rafael Correa (2007-2017) to have been guilty of bribery during his time in office [WR-20-14]. Following the rejection on 7 September of his final appeal, made in the court of cassation, Correa condemned the decision, which he said had been “made in record time”, as “an attack on democracy”, but was forced to accept that his hopes of running as a vice-presidential candidate in next February’s presidential elections are over.

Correa’s lawyer, Fausto Jarrín, confirmed that the former president would appeal against his eight-year sentence in international courts, but any resolution there will come far too late for next year’s vote. Correa has long accused his opponents of using judicial tactics, or “lawfare”, as a tool of political persecution; following this latest ruling, he took aim at outgoing president Lenín Moreno, who had been Correa’s vice president between 2007 and 2013, before their acrimonious split after Moreno came to power himself in 2017. In particular, Correa questioned the likelihood that elite-level bribery - of which 17 others were also convicted, including Correa’s other former vice president, Jorge Glas (2013-2018) – only started after Moreno’s time as vice president, and ceased as soon as he took the top job.

Even before this verdict, Correa’s electoral prospects had seemingly been undermined by his failure to register his candidacy in person, as he lives in exile in Belgium with his family. As a result, the Unión por la Esperanza (Unes) coalition, and its presidential nominee Andrés Arauz, will need to find a new running mate. Correa’s exclusion will stir the indignation of his supporters, which could well bolster Arauz’s campaign. Correa’s claim, following the verdict, that “all they are doing is increasing popular support” will add to speculation that his failed candidacy had been no more than an electoral gambit all along, intended to rally support for Unes, against the spectre of lawfare.

• Vice presidential options

Journalist Carlos Rabascall had been thought of as the favourite to replace former president Correa, having previously been considered as a possible presidential candidate for Unes, and pre-registered with the CNE in August. Correa mentioned Rabascall as a strong option following his exclusion, but further suggested that his sister, Pierina Correa, could bring the boost associated with “having a Correa on the ballot”. She would not be the only one, however – their brother, Fabricio Correa, is the presidential candidate for the centre-right Movimiento Justicia Social, although is not expected to be among the frontrunners.

Despite a record 16 candidates having registered with the country’s national electoral council (CNE), at present the coming campaign looks like becoming something of a two-horse race, with Ecuador’s centre-right uniting behind Movimiento Creo candidate Guillermo Lasso, a two-time presidential runner-up in 2013 and 2017. After Cristina Reyes of the Partido Social Cristiano (PSC) withdrew her candidacy in favour of an alliance with Lasso last week, the Creo candidate announced on 7 September that 43 (mostly local) political movements had declared their support for his campaign. Lasso further appealed for Moreno’s former vice president Otto Sonnenholzner (2018-2020) and five-time former presidential candidate Álvaro Noboa – both surprise absences from next February’s contest – to join his team.

The coronavirus (Covid-19) pandemic has led to a big boost in online sales, taking e-commerce penetration in Chile’s retail sector up to near-European levels.

Data for the second quarter of 2020 – when the Covid-19 pandemic and Chile’s associated national lockdown was in its most acute phase – shows that there has been a big increase in online retail sales. According to the Cámara Nacional del Comercio (CNC), Chile’s main retail association, online retail sales (excluding tourism and entertainment) surged by 75.6% to US$1.048bn in the second quarter, measured on a quarter-on-quarter basis.

Presenting its second-quarter results, retail conglomerate Cencosud, which controls the Jumbo and Santa Isabel supermarket chains, said that its online penetration ratio (online sales as a proportion of total sales) had grown to a record 13.6%, ahead of levels achieved by some supermarkets in France and the United Kingdom, considered to be at the forefront of the e-commerce wave. In August, the company formed an alliance with US-based Cornershop (owned by Uber) designed to increase the efficiency of home delivery logistics. Competitor SMU, which owns the Unimarc chain, said its e-grocery sales had surged by 105.6% in the second quarter.

Bernardita Silva, research manager at CNC, has suggested online sales are following a kind of ratchet effect. Before the pandemic, online sales represented around 6% of total sales. During the peak of the lockdown, the ratio surged up to around 20%. However, as the economy reopens, Silva expects online sales to stabilise at around 10%-12% of the total. Chilean retailers are having to rethink their operations. One example is Falabella, which is cutting back its physical operations in Argentina but at the same time investing to improve its e-commerce offer in its home market in Chile.

Falabella said one of the lessons it learned from the second quarter was that click-and-collect did poorly, with home delivery in contrast achieving exponential growth, up by a factor of six compared to year-earlier levels. The company has just announced that it plans to pull together all its different brands (Falabella Retail, Sodimac, Tottus, and Linio) into a single e-commerce platform which will also sell products from third parties (similar in some ways to the Amazon model in the US). Falabella says the platform will eventually feature 7m products and 10,000 sellers, many of which will be small and medium-sized enterprises and will promote its Fpay payments system and CMR debit card.

One issue of concern for CNC members is that “informal” online sales – conducted by companies that are not registered for tax or other regulatory requirements – have also been growing. Informal sales in the second quarter totalled an estimated US$198.8m, divided between Chilean and international websites.

Informal sellers took six of every 100 pesos spent online during the third quarter of last year when CNC began tracking them through a regular online survey, but that proportion then rose up to 20 out of every 100 pesos in the second quarter of this year. Informal sellers are most likely to be offering prepared meals, food, home decorations, and footwear. They are also most likely to use social media to market their goods. CNC says rising unemployment and the wider economic crisis is pushing many people to try and sell goods through informal online channels.

COSTA RICA | Budget approved. Costa Rica’s 2021 budget was approved by 43 votes to three in the legislative assembly, with 11 legislators absent, this week. Deputies trimmed US$270m from the draft budget sent by the government led by President Carlos Alvarado, which they deemed to be non-essential spending in the context of a fiscal crisis and economic recession caused by the coronavirus (Covid-19) pandemic.

The eventual budget, for US$18.73bn, is equivalent to 31.9% of GDP. According to the government, the budget reduced primary spending by 5.3% compared with this year’s budget but it is 4.8% bigger due to greater debt repayment obligations (42.4% of the whole budget).

Bolivia’s centre-right opposition Comunidad Ciudadana (CC) proposed an “accord” with the left-wing Movimiento al Socialismo (MAS) government for judicial reform on 23 August. CC, which is led by former president Carlos Mesa (2003-2005), called for the replacement of Attorney General Wilfredo Chávez and for changes to the election process for his office and for high court magistrates as a condition for supporting the trial of former president Jeanine Áñez. The proposal was flatly rejected by Justice Minister Iván Lima, who slammed it as an attempted “second coup” to remove key figures in the judiciary and attorney general’s office.

CC’s call for judicial reform followed a report commissioned by the Inter American Commission on Human Rights (IACHR) that drew damning conclusions about human rights abuses during the Áñez administration but which also cautioned that Bolivia’s judicial system is ill-equipped to give her a fair trial [WR-21-33]. The proposal was framed as a means of “reconciliation” in order to “prevent the political polarisation of today from driving us into chaos, confrontation, and violence tomorrow”. If the reform is accepted by the government, CC says it will “support the trials of those responsible for the acts of violence” outlined in the IACHR report.

Foremost among the CC’s demands are the replacement of Attorney General Chávez for his “omissions, delaying [of judicial process], and arbitrary use of criminal charges”. The proposal calls for a de-politicisation of the election of future attorneys general via the introduction of a law to ensure that candidates are vetted by a committee of civil society representatives prior to having to secure the approval of two-thirds of the legislative assembly. The same process would also apply at the regional level for departmental attorneys general.

The proposal also calls for high court judges – currently elected by popular vote from a shortlist compiled by the legislative assembly – to be vetted by a citizens’ committee prior to running for election. This, CC claims, would “guarantee the independence and suitability of the heads of the judicial branch”.

Luis Fernando Camacho, of the right-wing opposition Creemos, said that his party would support the CC’s proposal, arguing that for Áñez’s trial to go ahead “there must first be an integral reform of the justice system, not only in terms of judicial authorities but also at the level of prosecutors”.

Whilst the opposition’s pitch for reform marked a shift in tone regarding Áñez – since her arrest in March, both CC and Creemos have called unconditionally for her release – it appears to be a political play rather than a bargaining tactic. That was the view of Justice Minister Lima, who referred to it as “a rhetorical exercise”. Lima went on to shoot the proposal down, arguing that “forcing judicial authorities to retire” would “be nothing less than a second coup d’état” of the sort that the MAS maintains took place against Áñez’s predecessor, Evo Morales (2006-2019).

Whilst the government may like to rule out a judicial reform, CC’s proposal comes as President Luis Arce is under renewed international pressure over Áñez’s wellbeing in prison after a week in which she self-harmed and her family tweeted that she “no longer wants to live”. A UN delegation visited Áñez on 22 August and reported that she is “physically weak and deeply emotionally troubled” and called for improved suicide prevention measures in Bolivian prisons.

Wildfires

Yovanka Rosada, the director of forest fire control in the Santa Cruz departmental government, said on 24 August that 597,459 hectares within the department have been affected by wildfires in the last two months. “Around 73% of the department is at extreme risk of forest fires considering the climatic conditions, the drought in the forest, the stronger winds than usual, and the high temperatures that we’re seeing,” Rosada warned. Bolivia’s national government has deployed the military to help control the blazes. Rosada urged a legal investigation to determine how the fires started, calling for the authorities to “set a precedent” in prosecuting anyone found to have deliberately torched land.

A major factor in Haiti’s current multifaceted crisis is the role of the country’s gangs which have exploited the power vacuum left by the July 2021 murder of former president Jovenel Moïse (2017-2021). Such is the gravity of the situation that in October 2022 the United Nations Security Council (UNSC) approved a resolution authorising a sanctions package for Haiti to address gang violence. With the UN humanitarian coordinator in Haiti warning on 8 December that gangs were controlling 60% of the capital, Port-au-Prince, we consider an October 2022 report by Geneva-headquartered NGO Global Initiative against Transnational Crime (GITC) which looks at the main gangs currently dominating the country.

In its report GITC highlights as a key criminal organisation the G9 alliance (An Fanmi e Alye), which was formed in 2020 by former police (PNd’H) officer Jimmy ‘Barbecue’ Chérizier and brings together nine powerful gangs in the capital: Delmas 6 Gang (led by Chérizier); Baz Krache Dife; Baz Pilate; Nan Ti Bwa; Simon Pelé’s gang; Baz Nan Chabon; Waf Jérémie; Nan Boston; and the Belekou gang. According to GITC, these gangs exercise power mainly in Port-au-Prince and consist of former and serving PNd’H members, young former members of Fanmi Lavalas (FL), of former president Jean-Bertrand Aristide (1991; 1994-1996; 2001-2004) and Moïse’s party, Parti Haïtien Tèt Kale (PHTK), deportees, and former soldiers. The UNSC sanctions package announced in October 2022 specifically targeted Chérizier.

According to GITC, 400 Mawozo, which is based mainly on the outskirts of Ganthier commune and areas of the capital, is considered the largest gang in the country. Comprising deportees, former leaders of popular opposition organisations, former smugglers, and PNd’H officers, the gang made headlines in October 2021 with the kidnapping of 17 North American missionaries. In November 2022, the US sanctioned two of its leaders, Lanmo Sanjou, aka Joseph Wilson, and Jermaine Stephenson, aka Gaspiyay. In May 2022 Haitian authorities extradited another 400 Mawozo leader, Germine Joly (‘Yonyon’), to the US to face charges of armed kidnapping of US citizens and arms smuggling. 400 Mawozo has reportedly since aligned itself with G-Pep, a second gang alliance based in the Cité Soleil neighbourhood of the capital which aims to counter the G9’s dominance.

Other notable gangs include Grand Ravine and 5 Segonn, which consist mostly of young people from the metropolitan area and former members of vigilante brigades and popular organisations with links to FL. GITC reports that it is based in the Martissant region of the capital and now controls most of the motorbike-taxi ranks as well as the southern exit of Port-au-Prince. Meanwhile Baz Galil, which GITC says is “powered by its strong connections to drug lords in the PHTK”, is made up mainly of deportees from the US over the last 15 years and specialises in kidnapping and drug transportation.

Worsening security figures

On 23 January, United Nations Secretary-General António Guterres released his latest report on Haiti which warned that “gang-related violence reached levels not seen in decades and remained the major threat to public security in Haiti”. Highlighting a “steady increase in major crime trends and gang-related incidents” over the past several months, the report notes a 35.2% rise in reported homicides in 2022 compared with 2021, with 2,183 victims reported. It also highlights that kidnappings continued to rise, with 1,359 victims recorded in 2022, up 104.7% on 2021.

Sanctions

Since the UNSC resolution’s approval in October 2022, the US and Canada have sanctioned a string of high-profile Haitians in connection with their alleged links to gangs. Those targeted include former president Michel Martelly (2011-2016), former prime ministers Laurent Lamothe (2012-2014) and Jean Henry Céant (2018-2019), former interior minister Liszt Quitel and justice minister Berto Dorcé, who were replaced in November having been in their posts since July and November 2021 respectively, as well as three high-profile members of the economic elite in Haiti – Gilbert Bigio, Reynold Deeb and Sherif Abdallah.

Amid rampant inflation and the long-running depreciation of the Venezuelan bolívar, the issue of dollarisation looks likely to be a key dividing line between candidates in the presidential primary election being held by the opposition coalition Plataforma Unitaria Democrática (PUD) on 22 October.

It has sometimes been difficult to draw clear policy distinctions between the 13 PUD primary candidates, given that campaigns have so far focused almost exclusively on the authoritarianism of President Nicolás Maduro’s government and its alleged efforts to disrupt the primary contest. With virtually all candidates centring their campaigns around issues of human rights and democracy, their proposed remedies for Venezuela’s economic crisis have largely remained in the background. Yet it is economics which offers the clearest dividing line between candidates.

One candidate, Henrique Capriles Radonski, moved to distinguish himself from his rivals on 4 September with a call to dollarise salaries – a measure which he said should remain in place “until there is a strong currency in the country”. Capriles said that “the government is talking about economic recovery…we can’t talk about economic recovery while a public worker…is earning 130 bolívares [US$3.95] a month”. At least one other candidate, Andrés Velásquez, has also floated the idea of formally dollarising Venezuela’s economy.

The leading pre-candidate according to some polls, María Corina Machado (who, like Capriles, is running despite a ban on holding public office), has not endorsed dollarisation. Instead, Machado is proposing a sweeping overhaul of the economy that would see national debt swapped for shares in public companies that she would privatise, alongside a renegotiation of Venezuela’s debt with the country’s creditors.

An unofficial dollarisation process has already been underway for several years, driven by the relentless depreciation of the bolívar. Venezuela’s currency fell by 9.4% against the US dollar in August, with the central bank’s official exchange rate now standing at 32.81 bolívares to the dollar. This followed a monthly depreciation of 5% in July. This brought the currency’s accumulated depreciation over the first six months of the year to 37.34% against the dollar.

At the same time, inflation continues to climb at a remorseless pace. The independent economic think tank Observatorio Venezolano de Finanzas (OVF) estimates that the monthly inflation rate in August was 13.6%, which it said was the steepest monthly rise recorded this year and brings the annual inflation rate to 422%. This follows the OVF’s estimates of 7.2% monthly inflation in July and 8.5% in June.

BRICS cooperation?

Vice President Delcy Rodríguez met Brazil’s former president Dilma Rousseff (2011-2016), the current president of the New Development Bank, an institution set up by the BRICS countries (Brazil, Russia, India, China, and South Africa), on 6 September. According to a foreign ministry statement, Rodríguez and Rousseff discussed ways of strengthening ties in “strategic and commercial areas” between Venezuela and the BRICS bloc. According to the South African government, Venezuela was one of 23 countries which issued formal expressions of interest in joining the BRICS ahead of its summit in Johannesburg in late August, where it was announced that membership would be extended to Argentina, Egypt, Ethiopia, Iran, and the United Arab Emirates.

Protests against sanctions

The Venezuelan anti-sanctions lobby group Observatorio Venezolano Antibloqueo (OVA) stated on 1 September that the Venezuelan government has over US$22bn in assets frozen in the “international financial system” due to US-led economic sanctions. According to the OVA, the government has “93 accounts blocked abroad belonging to [government] entities and public companies”.

Protests against the sanctions were held by government supporters in several cities on 2 September, with demonstrations reported to have taken place in the capital, Caracas, and in the states of Anzoátegui, Bolívar, Lara, Monagas, Sucre, and Portuguesa.

After a year in which little more could have gone wrong for Chile’s President Gabriel Boric, there may be some light at the end of the tunnel in 2024.

Inflation has fallen and is projected to hit the central bank’s target of 3% this year. There are signs the economy has bottomed out and will grow faster than expected on the back of recovering mining activity and cheaper borrowing costs. Indeed, Chile’s economy expanded more than expected in November (0.3% month-on-month and 1.2% year-on-year) as gold and copper mines, as well as services, ticked up, the central bank’s Imacec index showed.

That may be enough to have officially avoided a contraction last year, said Finance Minister Mario Marcel. “We overcame the ghost of recession last year. We are starting 2024 on the right foot,” Marcel said following the latest growth indicator.

Now the Boric administration foresees an expansion of 2.5% for this year, which would beat regional average growth of 1.6% as forecast by Fitch Ratings. Recent years have been a rollercoaster ride for Chile. GDP growth plummeted from 11.7% in 2021 to 2.4% in 2022, and near stagnation in 2023.

Relaunch

An economic recovery would be welcome news for a lame duck president who is seeking to relaunch his stalled reform agenda. The 37-year-old former student leader has overseen not only a dramatic economic slowdown, but also two failed attempts to rewrite the country’s constitution, and the implosion of his legislative agenda. His approval rating in early January stood at 31%, around which it has fluctuated for the most part of his time in office, according to the latest Cadem poll. Rare occasions, such as his state of the union address and the Panamerican games, bump his ratings higher.

During his New Year’s address Boric extended an olive branch to his political opponents in hopes of agreeing on a minimum reform agenda. “If in politics we are able to get out of the trenches and listen to each other, dialogue, and put the country and its people above any consideration, I am sure that we can reach important agreements that will benefit you,” Boric said in his televised address. “People expect solutions from politics, not pettiness or fights.”

Tax and pension priorities

Boric’s focus will be to push his stalled pension reform as well as his repackaged tax reform, now dubbed a fiscal pact. It was following the defeat of his first tax reform proposal in March that Boric reshuffled his cabinet to incorporate more moderate and seasoned politicians into his cabinet [EB-23-04].

But any chance of approval for either bill will require considerable concessions. Opposition legislators will agree to measures that boost economic activity, combat tax evasion, and maybe finance some social spending, but they will oppose any further tax hikes. Similarly, they will shoot down any proposal to do away entirely with privately-run pension funds, known as Administradores de Fondos de Pensiones (AFPs).

Adding to the challenge, the window of opportunity to approve any major legislation is small, with municipal elections coming up in October 2024 and the attention shifting to the presidential race just over a year later.

Unpopular politicians

It is not just President Boric who suffers from low approval ratings in the world of politics. Political parties have an approval rate of only 12% among Chileans, the lowest of any institution in the country. Police and firefighters are the only institutions with an approval rating above 80%, according to Cadem.

When Marta Suplicy served as mayor of São Paulo from 2001-2005, she was considered an influential figure in the left-wing Partido dos Trabalhadores (PT). After falling out with the party leadership, she left the PT in 2015, but on 2 February the ruling PT officially welcomed back its prodigal daughter, who will be the running mate of Guilherme Boulos, the candidate of the left-wing Partido Socialismo e Liberdade (PSOL) in the São Paulo mayoral race this October.

After her tenure as mayor of Brazil’s largest city, Suplicy went on to hold lower-profile roles in the federal government. She served as tourism minister in 2007-2008, during the previous term of President Luiz Inácio Lula da Silva (2007-2011) and as culture minister in 2012-2014 under Lula’s protégée, former president Dilma Rousseff (2011-2016). Suplicy’s relations with the party deteriorated during Rousseff’s presidency and, as a senator affiliated with the centre-right Movimento Democrático Brasileiro (MDB), Suplicy voted in favour of Rousseff’s impeachment in 2016.

Even though Suplicy is seen by some on the Brazilian left as a traitor, the party leadership has seemed willing to forgive her rupture with the PT. At a ceremony to reinstate her as a party member on 2 February, Lula highlighted the strength of the Boulos-Suplicy mayoral ticket, saying that Boulos would appeal to left-wing social movements and younger, more progressive voters, while Suplicy brings years of experience in São Paulo’s local politics. Gleisi Hoffmann, the PT’s national party chairperson who had served as Rousseff’s chief of staff from 2011-2014, committed the full force of the PT’s campaigning machine in São Paulo to the Boulos-Suplicy partnership.

Since the end of the military dictatorship (1964-1985), the PT and its right-of-centre rival, the Partido da Social Democracia Brasileira (PSDB), have been dominant at the local level in São Paulo. The PT and PSDB have each won three São Paulo mayoral elections since 1985. However, this year will likely be the first election in the past three decades that neither the PT nor the PSDB will field a candidate from their own ranks to run for mayor of São Paulo.

The campaigning resources of both establishment parties will be dedicated to supporting candidates from other parties. The PT leadership has thrown its weight behind Boulos, while local media reports have suggested that the PSDB is torn between supporting incumbent mayor Ricardo Nunes (MDB) or backing the campaign of Tabata Amaral, affiliated with the centre-left Partido Socialista Brasileiro (PSB). Nunes was the running mate of Bruno Covas (PSDB), who won the 2020 São Paulo mayoral election but passed away several months after taking office.

In recent months Nunes has been seeking to forge an alliance with the Partido Liberal (PL), the party of right-wing former president Jair Bolsonaro (2019-2023). Moderate PSDB members uncomfortable with Nunes’ alignment with Bolsonaro have reportedly considered backing Amaral, who has the endorsement of Vice President Geraldo Alckmin, currently a member of the PSB but who was once a major figure within the PSDB.

Building her campaign narrative as a ‘middle-way’ candidate, Amaral has frequently spoken of the need to overcome polarisation, given that the contest between current frontrunners Boulos and Nunes has often been described in the media as a proxy battle between Lula and Bolsonaro.

Right unites behind Nunes  

Federal deputy Ricardo Salles, of the right-wing Partido Liberal (PL) and former environment minister during Jair Bolsonaro’s presidency, ended his campaign to run for mayor of São Paulo on 31 January. According to national daily Folha de São Paulo, the former president and the PL leadership have firmly backed the re-election bid of centre-right mayor Ricardo Nunes (MDB). To appease Bolsonaro, the incumbent mayor is likely to name a close Bolsonaro ally as a running mate. A likely candidate being floated in press reports is Ricardo Mello Araújo, a former commander of the state military

MEXICO | Trade deficit widens in January. On 27 February Mexico’s national statistics institute (Inegi) released the latest figures on the county’s trade balance, showing a deficit of US$6.48bn in January. This was up 24.3% on the deficit recorded in January 2025 and compares unfavourably with a US$2.43bn surplus in December.

Total exports in January reached US$48bn, with oil exports falling by 33.5% year-on-year to US$1.11bn and non-oil exports rising 9.8% to US$46.9bn.

Meanwhile, total imports increased 9.8% to US$54.49bn, with oil imports declining 21.3% to US$3.32bn and non-oil imports climbing 12.7% to US$51.16bn. Mexico closed 2025 with a trade surplus of US$771m, contrasting with the US$18.54bn deficit recorded in 2024.

MEXICO | Working week cut. The Mexican government published a decree on 3 March in the official gazette reducing the length of the working week from 48 to 40 hours, which required a constitutional amendment necessitating two-thirds majorities in both chambers of congress, and the approval of more than half of the 32 state legislatures.

The change will be gradual, with two hours removed in 2027 and each of the following three years so that the 40-hour week will formally enter into force in 2030. Overtime will also have to be paid at double the standard rate and is capped at 12 hours a week, while at least one day off every six days will be mandated.

This will involve a significant shake-up for a country with a workforce of 30.6m of which nearly a third currently work in excess of the 48-hour weekly limit, with ramifications particularly felt by small and medium sized enterprises (SMEs).       

According to the Organisation for Economic Co-operation and Development (OECD), Mexico has some of the world’s longest working hours at 2,226 per worker, per year. It also has the lowest labour productivity and lowest wages among the OECD’s 38 member states.

President Claudia Sheinbaum is also seeking to reform Article 127 of the constitution in order to limit ‘golden pensions’ enjoyed by senior civil servants. The proposal is to cap top pensions at no more than 50% of the president’s monthly salary, which is currently M$134,290 (US$7,600). The text of the draft reform says current top civil service and state enterprise pensions are “disproportionate” relative to national average levels for the population at large. Senator Laura Itzel Castillo said the measure could save M$5bn (US$280m) a year. 

Unemployment up in January

Mexico’s national statistics institute (Inegi) released its latest national employment survey (Enoe) on 26 February, showing that the unemployment rate in January 2026 stood at 2.7% of the economically active population - people over the age of 15 who are employed or seeking employment. This equated to around 1.7m people. This represents a year-on-year increase of around 8,000 unemployed people, while the unemployment rate remained unchanged at 2.7% compared with January 2025. In monthly terms, the unemployment rate rose by 0.3 percentage points, up from 2.4% in December 2025.