LatinNews Daily - 23 April 2021

Main Briefing


MEXICO: López Obrador’s disconnect with Biden becomes clear

On 22 April Mexico’s President Andrés Manuel López Obrador said that Mexico will continue to exploit its oil reserves for domestic use.

Analysis:

López Obrador made the remarks during his speech at the Leaders Summit on Climate virtual conference hosted by US President Joe Biden in which the US president challenged world leaders to commit to more ambitious carbon emissions reduction targets to combat climate change. López Obrador’s failure to commit to any new targets and his defence of Mexico’s oil industry have been heavily criticised by environmental groups, analysts, and diplomats. These argue that it shows that López Obrador is out of step with the Biden administration; and led to warnings that it could produce serious bilateral frictions.

  • President Biden opened the virtual summit by asking attendees to “step up” and do more to transition to cleaner energy use to “overcome the existential crisis of our times”. But López Obrador, who did not actively take part in the summit preferring to host his daily morning press briefing over listening to other leaders speak, did not propose any action that Mexico could take to reduce its emissions. In his speech, delivered during his press briefing, López Obrador said that Mexico is trying to generate more clean energy through the modernisation of its existing hydroelectric dams.
  • But López Obrador, who has made bolstering Mexico’s state-owned oil firm (Pemex) a key energy policy objective, made it clear that Mexico will continue to use its oil for fuel and to produce electricity, while nonetheless reiterating his government’s objective to limit oil production for domestic use and keep oil consumption at stable levels. “Although we have found some major hydrocarbon deposits, this oil will be used to cover internal market fuel demand. We will not export oil… in this way we will help to prevent the excessive use of petrol fuels”, López Obrador said.
  • López Obrador devoted much of his speech to outline his proposal for the US to finance a ‘trees-for-visas’ reforestation initiative. This would involve encouraging the plantation of fruit and timber trees in Central America by offering assistance to producers and the opportunity to apply for US work visas after successful participation in the scheme. López Obrador said that the scheme would promote reforestation and help stem irregular migration from Central America. However, the proposal had already been dismissed by Biden government officials earlier this week when López Obrador first floated it, with US officials saying that the issues of migration and climate change should be kept separate.
  • López Obrador’s speech was broadly criticised. Environmental organisations such as Greenpeace were quick to note Mexico has already fallen behind on its commitments, assumed under the Paris Agreement on climate change, to reduce emissions and transition towards a cleaner energy matrix and accused López Obrador of being disinterested in the matter. Meanwhile political analysts said that López Obrador’s actions show how little he cares about an issue that is seen as top priority for other world leaders including Biden.

Looking Ahead: Diplomats such as Mexico’s former ambassador to the US, Arturo Sarukhán (2007-2013), criticised López Obrador for “not taking the summit seriously” and warned that this could have “consequences”.

Andean


COLOMBIA: Armed attack on indigenous in Cauca

On 22 April, at least 31 people were injured in Colombia’s Cauca department after an armed group opened fire on a group that had gathered to protest the murder of the indigenous leader Sandra Liliana Peña, who was killed on 20 April.

Analysis:

The attack demonstrates the dangers faced by indigenous communities in Cauca, many of whom live in areas of strong criminal control. The latest act of violence appears to be the result of opposition to coca cultivation in the area, and follows the assassination of Peña, a high-profile activist, who opposed coca crops in indigenous territory. According to the defence ministry, two dissident units of the disbanded Fuerzas Armadas Revolucionarias de Colombia (Farc) guerrilla group are active in the department, as well as the Ejército de Liberación Nacional (ELN) guerrilla group. Dissident Farc units have been increasingly assertive in Cauca in recent months, and were blamed by the government for a car bombing in Corinto municipality in March.

  • According to the Consejo Regional Indígena de Cauca (CRIC), a council comprising different indigenous communities in Cauca, at least 31 people were injured in Caldono municipality after an armed group opened fire on a minga (meeting of indigenous representatives). CRIC reported that 12 of the attackers were subsequently captured by members of the Guardia Indígena community defence force, an indigenous patrol set up to combat coca cultivation. The minga was called following Peña’s killing, and prior to the attack had agreed to intensify the coca eradication efforts that she had promoted before her murder.
  • Peña, the governor of the Laguna Siberia indigenous reserve (Caldono municipality), had been a vocal opponent of coca cultivation in Caldono, where weak state presence has led to the creation of Guardia Indígena patrols as a means of countering criminal expansion.

Looking Ahead: Following Peña’s murder, on 21 April Defence Minister Diego Molano Aponte held an emergency meeting with regional authorities and representatives from the military, police and attorney general’s office. Molano announced that efforts would be intensified to dismantle dissident Farc units, and that coca eradication efforts in Cauca would be assisted with Col$1bn (US$275,000) from the interior ministry to help local farmers substitute coca for other crops.

In brief: Ecuador’s parliament approves bill to strengthen dollarisation

* Ecuador’s national assembly has approved a bill intended to strengthen dollarisation in the country. The bill devolves monetary policy from the executive branch to the central bank’s (BCE) committee for the regularisation of monetary policy (JRPM), which will be responsible for establishing monetary policy strictly on technical criteria. Supporters of the initiative, which was backed by the government, say that this will guarantee economic stability and strengthen the dollarised economy by building US dollar reserves and increasing liquidity, as well as attracting investment and increasing transparency in the financial system. Critics have likened the reform to a privatisation of the central bank, arguing that it restricts monetary sovereignty. The JRPM will be subject to oversight by the attorney general’s office, the national assembly, the comptroller, and the presidency. In an adjustment to the bill’s original text, maximum interest rates will be established following concerns that interest rates would be completely liberalised. The bill was approved with 86 votes in favour, 41 against, and seven abstentions, and will now go on to President Lenín Moreno to be sanctioned.

Brazil


BRAZIL: Bolsonaro’s climate speech met with scepticism

On 22 April, Brazil’s President Jair Bolsonaro took part in the Leaders Summit on Climate organised by the US, during which he said Brazil will end illegal deforestation by 2030 and become carbon neutral by 2050.

Analysis:

Bolsonaro’s speech at yesterday’s summit was eagerly anticipated as a measure of how willing he and his government are to bend to international pressure on tackling climate change, which in the case of Brazil focuses on efforts to end deforestation in the Amazon. The contents of the speech show that Bolsonaro has recognised the necessity of embracing a rhetoric aligned with global preoccupations on the environment; however, whether this rhetoric will translate into action remains very much in doubt.

  • As well as the promises on illegal deforestation and carbon neutrality, Bolsonaro spoke of targets for emissions reduction and of increasing funding for environmental law enforcement efforts. He assured that Brazil is committed to “the construction of a global environmental agenda”, while repeating that developed nations bear most of the responsibility for global emissions and that Brazil should be compensated for its conservation efforts. 
  • In a press briefing after Bolsonaro’s speech, Environment Minister Ricardo Salles echoed the points made by the president, reiterating the vague pledge to double funding for environmental enforcement agencies and insisting on the need for foreign funds to help Brazil’s environmental efforts.
  • Bolsonaro’s discourse was met with widespread scepticism amongst environmentalists, who question how he proposes to reach these climate targets considering that his administration has actively pursued an anti-environmental agenda so far. “Bolsonaro spent half of his speech asking the world for money for previous governments’ environmental achievements, the same ones he has been trying to undo from the day he was sworn in,” Marcio Astrini, executive secretary for the Observatório do Clima, a network of environmental NGOs, said.
  • Other NGOs similarly accused Bolsonaro of distorting facts and making claims completely out of step with the political reality in Brazil. Meanwhile, opposition lawmakers outright accused the president of lying in his speech.     

Looking Ahead: Bolsonaro’s stated commitments are unlikely to allay international pressure on his government to reduce deforestation. In a press conference yesterday, US climate czar John Kerry said Bolsonaro’s comments at the summit had “surprised” him in a positive way, but added: “Will they do them [the actions Bolsonaro pledged]?” and “What’s the follow through and enforcement?”.

In brief: Moody’s warns about Brazil’s budget exceptions

* International ratings agency, Moody’s Investors Service, has raised concerns over the provisions for extra coronavirus (Covid-19) spending falling outside of the fiscal cap in Brazil’s 2021 budget. “The decision to exclude additional covid-related expenditure from the spending ceiling this year is negative for Brazil’s credit profile,” Samar Maziad, Moody’s lead sovereign analyst for Brazil, was reported as saying, adding that if “recurrent exceptions” are made for spending outside of the constitutional spending cap, “the credibility of the spending ceiling as a fiscal anchor” will be brought into doubt, “with negative implications for Brazil’s borrowing costs and debt dynamics”. Moody’s currently has a sub-investment rating of Ba2 on Brazil’s sovereign credit. The ratings agency’s warnings followed a deal between congress and the executive in Brazil, which put an end to weeks of deadlock over the budget by establishing that the government’s pandemic-related spending will not have to abide by fiscal rules. President Jair Bolsonaro went on to sanction the budget yesterday (22 April) with some vetoes, notably to the ‘emendas parlamentares’ funds for congress (to the tune of R$10.5bn [US$1.9bn]) and the government’s discretionary spending (R$7.9bn).

Central America & Caribbean


PANAMA: Police face renewed complaints

On 22 April Panama’s association of feminist lawyers (Afempa) denounced “alleged police and judicial abuse”.

Analysis:

Afempa’s accusations relate to arrest of three protesters, who were also fined, during demonstrations staged in the capital Panama City on 19 April against a recent supreme court (CSJ) ruling exonerating Arquesio Arias, a national legislator for the ruling Partido Revolucionario Democrático (PRD), of sexual misconduct charges. Afempa’s accusations will fan existing concerns about the PN following allegations of police abuse at the end of last year during demonstrations held to protest measures taken by the government of President Laurentino Cortizo in response to the coronavirus (Covid-19) pandemic. More generally, the high-profile case involving Arias and the CSJ ruling, which was announced on 16 April, has sparked outrage and reignited complaints regarding the weakness of the judiciary. These come as the private sector is calling on President Cortizo to make good on a key pledge – constitutional reform. He declared this a priority upon taking office in July 2019, in order to strengthen Panama’s institutions, but after his initial reform package was rejected in 2019, this has yet to be approved.

  • The three protesters were arrested for “altering the public order” while they took part in demonstrations. The CSJ began the case against Arias in August last year while a second case was opened against him in September, again based on charges of sexual misconduct.
  • In a press release yesterday Afempa said the three protesters had received what it described as “excessive fines” of between US$300 and US$1,000 for “exercising their right to protest…a right enshrined in the…constitution”. It said that it will file an appeal against these sanctions.
  • Indicative of ongoing concerns about the PN, a report presented on 21 April by the Inter American Press Association (IAPA), a US-based press advocacy group, highlighted “an increase in violence on the part of the national police against journalists during public protests”.

Looking Ahead: On 18 April Panama’s main private sector lobby, Cámara de Comercio, Industrias y Agricultura de Panamá (CCIAP) issued a statement calling for constitutional reform. Cortizo is under mounting pressure to address the weakness of Panama’s institutions – in particular to address what critics have described as a de facto ‘non-aggression pact’ between the legislature and judiciary as currently only the national assembly may initiate corruption investigations against CSJ judges and vice versa.

In brief: Costa Rica’s central bank warns economic growth below potential

* Costa Rica’s central bank (BCR) has released a new report saying that economic activity remains far below levels registered prior to the coronavirus (Covid-19) pandemic. The report highlights that the latest monthly economic activity index (Imae) showed a 4.7% decrease in February. It notes that while unemployment has moderated, reaching 18.5% in the December 2020-February 2021 rolling quarter, it is far above the level registered prior to the pandemic. The 18.5% figure was a decrease of six percentage points on the previous rolling quarter (November 2020-January 2021), but represents a 6.3 percentage-point increase on the unemployment rate in the same quarter a year earlier. According to the latest (29 March) World Bank (WB) report, Costa Rica’s GDP shrank by 4.6% in 2020. The WB is forecasting Costa Rica’s GDP will grow 2.6% in 2021.

Mexico


In brief: Mexico’s unemployment improves

* Mexico’s national statistics institute (Inegi) has released its latest results from the national employment survey (Enoe), which show that unemployment in March remained above pre-coronavirus (Covid-19) pandemic levels, but had improved compared with the previous month. The unemployment rate totalled 3.9% in March 2021, down from 4.4% in February but up one percentage point on the March 2020 figure. The underemployment rate stood at 13.2% in March, up 4.1 percentage points on the March 2020 figure.

Southern Cone


ARGENTINA: Elections postponed as pandemic takes hold

On 22 April Argentina’s main opposition coalition Juntos por el Cambio (JxC) agreed to push back the simultaneous and mandatory open primaries (Paso) and the federal legislative elections due later this year.

Analysis:

The decision to postpone the elections comes as Argentina is struggling to contain a second wave of the coronavirus (Covid-19) pandemic. The political accord reached between the ruling Frente de Todos (FdT) coalition, led by the Partido Justicialista (PJ), and the JxC comes amid heightened political tensions over the measures taken by the administration led by President Alberto Fernández to slow the spread of Covid-19.

  • The interior minister, Eduardo de Pedro, proposed postponing the Paso from 9 August to 12 September, and the legislative elections from 24 October to 14 November.
  • The JxC, which comprises the centrist Unión Cívica Radical (UCR), the centre-right Propuesta Republicana (PRO) of former president Mauricio Macri (2015-2019), and the centre-left Coalición Cívica (CC), issued a statement agreeing to the postponement of the elections, while pointedly expressing the coalition’s willingness to “contribute to the best management of the pandemic”.
  • The JxC has been fiercely critical of President Fernández’s use of an urgent and necessary decree (DNU) on 15 April to impose a circuit-breaker lockdown for two weeks to contain the spread of the virus in the Buenos Aires metropolitan area (Amba), where public schools have been closed and the federal police and military deployed to enforce an extended curfew. The JxC has accused Fernández of exceeding his remit and targeting the Amba because its main constituent part, the city of Buenos Aires (Caba), is run by the PRO politician Horacio Rodríguez Larreta.
  • These tensions delayed talks over the postponement of the elections, with the FdT threatening to cancel the Paso altogether. Juan López, the head of the CC bench in the lower chamber, was particularly critical of the suggestion to cancel the Paso, which are enshrined in law, “in one fell swoop in an electoral year”.

Looking Ahead: With the JxC’s support, the requisite legislation will easily be approved in the lower chamber and the senate before a deadline of 10 May.

In brief: Argentine economy suffers monthly contraction

* Argentina’s national statistics institute (Indec) has released the latest figures for its monthly indicator of economic activity (Emae), a preview of GDP growth, which saw a 1.0% contraction in February compared with January. This is the first negative variation of the Emae in nine months, as monthly economic activity grew after the deep contractions in March-April last year caused by the onset of the coronavirus (Covid-19) pandemic. In year-on-year terms, the February Emae contracted 2.6%. After a deep 9.9% contraction last year, Argentina’s GDP is forecast to grow 6.7% this year, according to the latest monthly survey of private sector analysts by the central bank (BCRA), but a surge in coronavirus infections and renewed restrictions are likely to blight current projections.