LatinNews Daily - 09 January 2024

Main Briefing

ECUADOR: Noboa declares nationwide state of exception, curfew

On 8 January Ecuador’s President Daniel Noboa declared a 60-day state of exception that includes a nationwide night-time curfew, between the hours of 11pm and 5am.

Analysis:               

Noboa’s announcement came one day after the escape from prison of one of the country’s top drug traffickers, José Adolfo Macías Villamar, alias ‘Fito’, the leader of the Los Choneros criminal organisation, and as riots took place at six prisons in different parts of the country. States of exception became commonplace under Noboa’s predecessor Guillermo Lasso (2021-2023), primarily to enable the deployment of the military to help fight crime. Noboa’s latest announcement, the first such declaration since he took office in late November 2023, comes as he is continuing to seek alternative strategies for addressing insecurity. On 3 January he unveiled 11 mostly security-themed referendum questions, with a further nine questions announced yesterday, which also cover economic matters.

• Under the state of emergency announced yesterday, the military will be mobilised to assist with policing operations and with the guarding of prisons. Constitutional rights have been suspended, including the right to freedom of assembly, while security personnel will be authorised to enter homes without a warrant. Prisoners’ right to correspondence has also been restricted.
• The attorney general’s office yesterday accused two guards at the La Roca prison in Guayaquil of enabling Macías’ escape. Government spokesman Roberto Izurieta said yesterday that the escape happened shortly before Macías was due to be transferred to a more secure facility.
• Riots took place at six prisons yesterday in the provinces of El Oro, Loja, Azuay, Chimborazo, Cotopaxi and Pichincha on press reports. According to the same reports, at least 16 prison guards were taken hostage.
• Announcing the state of emergency in a televised address, President Noboa said that “no longer will those imprisoned for drug trafficking, murder and organised crime dictate the government’s actions”. He said that “what we’re seeing in the country’s prisons is the result of the decision to fight them,” adding that “these narco-terrorists want to intimidate us and think that we’ll give in to their demands”.
• The new referendum questions announced yesterday aim to allow the extradition of Ecuadorean citizens; to expand the state’s power to seize criminal assets; to authorise the revocation of mining concessions in areas of widespread illegal mining; to enable the president to pardon security personnel accused of excessive use of force; and to require security personnel to be tried by judges specialising in military and policing law.
• Some of the new questions cover issues which are not related to security. One aims to accelerate the legislative process by enabling the president to submit ‘urgent’ bills, which must be voted upon within 30 days, on a wide range of issues (currently this is only permitted for economic legislation).
• The government also included two pro-business proposals in the new questions, asking voters to accept international arbitration in the case of disputes over contracts, investments, or trade, which it says will improve Ecuador’s investment climate. Another question aims to change the employment code to enable hourly employment options.
• Noboa’s insistence on pursuing the referendum and seeking to bypass congress remains controversial, given many of the referendum proposals could have been dealt with via the normal legislative process – a strategy which likely owes to the short period before elections are next due in early 2025. By bypassing congress Noboa will be hoping to make progress on a wider range of issues before voters go to the polls.

Looking Ahead: The referendum questions require approval from the constitutional court, and no date has yet been set for the vote.

Andean

In brief: Annual inflation drops in Venezuela, says think tank

*The Venezuelan economic think tank Observatorio Venezolano de Finanzas (OVF) has calculated that Venezuela’s monthly inflation rate in December 2023 was 3.9%, bringing the annual inflation rate to 193%. Whilst monthly inflation was up from the OVF’s November estimate of 1.8%, annual inflation was down from 286%. On OVF figures, December marked the fifth consecutive month of falling annual inflation, down from 439% in July.

Brazil

BRAZIL: Gov’t marks 8 January riots anniversary

On 8 January the three branches of Brazil’s government held a ceremony to celebrate the resilience of the country’s institutions one year after radical right-wing supporters of former president Jair Bolsonaro (2019-2023) stormed government buildings in Brasília.

Analysis:

The anniversary of the most high-profile attack on Brazil’s democratic institutions in recent memory has renewed the pressure to punish those who participated in and organised the riots. In September, the supreme court (STF) began its trials to sentence those who were arrested on the day of the attack. So far, it has only been individual rioters who have been imprisoned, rather than those who organised the riots. Around 2,000 people were arrested on 8 January and in the aftermath of the riots, and 30 have been convicted for serious offences such as attempting a coup.

• In his speech yesterday, Lula did not name Bolsonaro directly, but he referred to his predecessor as a “putschist ex-president”. Although no charges have been pressed against Bolsonaro in relation to the riots, the federal police (PF) has been investigating him as a potential ‘intellectual author’ of the anti-democratic attack and, in June 2023, the top electoral court (TSE) found him guilty of abusing his presidential platform to spread misinformation seeking to undermine the electoral process, barring him from running for office for eight years.
• The display of unity between the branches of power in defence of democracy was undermined by some notable absentees. STF president Luís Roberto Barroso and senate president Rodrigo Pacheco stood by Lula, echoing his comments about the strength of democratic institutions, but the president of the lower house, Arthur Lira, did not attend the ceremony. Conservative parties, such as Bolsonaro’s Partido Liberal (PL) and Lira’s Progressistas (PP), enjoy a strong presence in the lower house.
• In addition to federal government officials, 12 of Brazil’s 27 governors attended yesterday’s ceremony. However, the governors of Brazil’s three most populous states (Tarcísio de Freitas of São Paulo, Romeu Zema of Minas Gerais, and Cláudio Castro of Rio de Janeiro) did not attend. De Freitas and Zema are widely seen as rising stars of the Brazilian right and potential torchbearers to rally conservatives in future elections.

Looking Ahead: The PF has launched the next phase of its operations to identify those who financed the 8 January riots. PF investigators made one arrest yesterday and served 46 search & seizure warrants.

In brief: Rise in Brazilian chicken exports

*The Brazilian meat industry lobby group, Associação Brasileira de Proteína Animal (Abpa), has released its annual figures for chicken meat exports in 2023, registering 5.14m tonnes (t) of poultry exported, up 6.6% from 2022. Chicken meat exports in December 2023 totalled 467,200 t, up 20.9% year-on-year and marking a record figure for the month of December. The current monthly record was set in March 2023, when 514,600 t of chicken meat were exported. The top export destinations in December were Japan (55,900 t), China (50,300 t), and the United Arab Emirates (44,300 t). The top chicken-producing states were in Brazil’s southern region. Paraná exported 2.09m t, while Santa Catarina registered 1.10m t and Rio Grande do Sul registered 739,000 t. In a press release, Abpa’s president, Ricardo Santin, was cited as praising the sector’s effective measures implemented last year to contain the spread of bird flu (avian influenza). Since the first cases of the H5N1 strain of bird flu were detected among wild birds in May 2023, in the south-eastern state of Espírito Santo, the government had registered three cases among domestic birds and zero cases among commercial poultry.

Central America & Caribbean

GUATEMALA: Arévalo names his cabinet

On 8 January Guatemala’s president-elect Bernardo Arévalo unveiled his cabinet picks.

Analysis:

Fears that reformist outsider Arévalo, who won the 20 August run-off on an anti-corruption pledge and has faced multiple challenges from the discredited attorney general’s (AG) office, would be prevented from taking office have dampened since a constitutional court ruling last month guaranteeing the transition of power on 14 January. For the first time in Guatemala’s history, the 14-member cabinet reflects gender parity. Arévalo’s choices, which include figures from outside of his left-of-centre Movimiento Semilla (Semilla) party, reflect an awareness of the need for consensus and the huge challenges he will face given a hostile legislature and other institutions afflicted by endemic corruption.

• Key picks include Francisco Jiménez, who will reprise his former role as interior minister (2008-2009) which he held under the late president Alvaro Colom (2008-2012) of the Unidad Nacional de la Esperanza (UNE).
• Foreign affairs went to Carlos Martínez, a career diplomat who served as deputy foreign minister under outgoing president Alejandro Giammattei, as well as under former presidents Ramiro de León Carpio (1993-1996), Óscar Berger (2004-2008), and Jimmy Morales (2016-2020), and former interim president Alejandro Maldonado (2015-2016)
• One figure associated with the powerful economic elite is incoming minister of communications, infrastructure & housing (CIV), Jazmín de la Vega, a former national deputy (1996-1998), who served in the unit for construction of state buildings (UCEE) under Berger, and reportedly has close links to the country’s leading private sector lobby, Cacif, and national chamber of construction (CGC).
• Others closely associated with Semilla have received posts: finance went to Jonathan Menkos, former director of local think-tank Instituto Centroamericano de Estudios Fiscales (Icefi), a core member of Semilla’s team, who was elected national deputy and must seek permission to leave the congressional post.
• One of Semilla’s founders, Anabella Giracca will pick up education, while social development went to Semilla’s general secretary, Abelardo Pinto, and agriculture to former Semilla mayoral candidate for Antigua (Sacatepéquez department), Maynor Estrada.
• Other future ministers are: Gabriela García-Quinn (economy), María José Iturbide (environment), Óscar Cordón (health), Brigadier General Henry David Sáenz (defence), Miriam Roquel (labour), Anayté Guardado (energy & mining) and Liwy Grazioso (culture & sport).

Looking Ahead: So far over ten heads of state have confirmed their attendance at the inauguration ceremony, which Organization of American States (OAS) Secretary General Luis Almagro, who has been overseeing the transition, will also attend.

In brief: Costa Rica posts highest deflation of last decade

*Costa Rica’s national statistics institute (Inec) has released new figures which show the country posted annual deflation of -1.77% in December 2023 – the highest deflation of the last ten years. This follows 7.88% annual inflation in December 2022, 3.30% in December 2021, and 0.89% in December 2020. In monthly terms, inflation in December was 0.01%, up from -0.23% registered in November (when the annual rate was -1.64%) but up from October (0.21%) when the annual rate was -1.28%.

Mexico

MEXICO: Blow to Morena as CDMX AG denied second term

On 8 January state legislators in Mexico City (CDMX) voted against ratifying Ernestina Godoy to serve a second term as head of the capital’s attorney general’s office (FGJCDMX).

Analysis:

Tensions have been running high around Godoy’s bid to continue as attorney general (AG) in CDMX, a position she has held since 2018. Godoy is affiliated with the federally-ruling Movimiento Regeneración Nacional (Morena) which, together with its allies, holds 33 seats in the CDMX congress – short of the 44 votes needed for ratification. Opposition legislators denounced a lack of transparency in the ratification process and stressed the need for political autonomy in the role, while Morena has accused the opposition of wanting Godoy out due to corruption investigations she was leading. 

• CDMX congress voted by 41 votes in favour and 25 against Godoy’s ratification, falling three votes short of the required supermajority.
• Morena figures including CDMX mayor Martí Batres and federal interior minister, Luisa Alcalde, have stated the opposition voted against Godoy as she was investigating a retail corruption network implicating the right-wing opposition Partido Acción Nacional (PAN) and a human trafficking ring linked to the centrist opposition Partido Revolucionario Institucional (PRI).
• Xóchitl Gálvez, the 2024 presidential candidate for the main opposition coalition, Fuerza y Corazón por México, celebrated the vote, stating that, “the imparting of justice in Mexico has to continue being autonomous, not an instrument of political persecution.”
• The opposition has accused Morena of threatening deputies to vote in its favour. Local PRI deputy Guadalupe Barrón claimed she had received death threats on 8 January after her vehicle was shot outside her home. She said this was due to her intentions to vote against Godoy. The FGJCDMX said it had opened an investigation into the attack but denied using “threats or aggressions to intimidate any legislator”.
• The run-up to the vote was fraught with controversy for Godoy, following a report published in The New York Times in November claiming her office had engaged in spying activities. On 5 January, Mexican investigative news website Latinus published a report claiming Godoy had plagiarised her law thesis. Godoy has denied all accusations.

Looking Ahead: Godoy’s number two, Oliver Ariel Pilares Viloria, will take over as AG until a new one is named. The citizen judicial council must present a three-candidate shortlist to the head of CDMX government, which will present its pick to the state congress.

In brief: Mexico hails FDI flows

*Mexico’s Finance Minister Rogelio Ramírez de la O has said that the government is expecting foreign direct investment (FDI) flows in the first three quarters of 2023 to total US$33bn, in comments widely distributed by the local press. Speaking at the 35^th annual meeting of heads of embassies and consulates at Mexico’s foreign ministry (SRE), Ramírez de la O said the FDI flows were partly explained by “the favourable situation of multinational industry moving to diversify its investments beyond Asia”, as well as the economic policies of President Andrés Manuel López Obrador, which he said focused on promoting economic development, improving purchasing power, and reducing inequality.

Southern Cone

ARGENTINA: Caputo and Posse meet IMF team

On 8 January Argentina’s economy minister, Luis Caputo, and cabinet chief Nicolás Posse met a visiting team from the International Monetary Fund (IMF) in the Casa Rosada presidential palace to discuss the country’s debt restructuring accord and the release of fresh funds as sizeable repayments fall due.

Analysis:

This was the first high-level meeting since the arrival of the IMF team after several days of technical meetings. The government is keen to unblock the US$3.3bn withheld by the IMF since November last year to meet more than US$2.6bn of repayments to the multilateral due over the next few weeks. It is hopeful that the IMF will look favourably on its opening moves to slash the fiscal deficit and reduce public expenditure. But the far-ranging proposals contained within the government’s omnibus reform bill are meeting opposition in congress, where President Javier Milei’s far-right personalist party La Libertad Avanza (LLA) has a weak presence, and its passage is far from assured.

• The government is trying to ratchet up the pressure on congress to approve the omnibus reform bill, arguing, among other things, that it is essential to fulfil commitments in the IMF accord. But the omnibus bill is highly contentious, going way beyond economic matters, and also requiring that congress award Milei emergency powers to legislate by decree for the next two years.
• Milei made it clear on 7 January that he was not prepared to engage in “negotiations” with opposition parties in congress over any aspect of the omnibus bill, although he agreed to “accept suggestions” to improve it, which in practice looks like a matter of semantics. Martín Menem, the LLA president of the lower chamber of congress, added yesterday that the ruling party was “prepared to listen”.

Looking Ahead: Meetings between the IMF team, led by Luis Cubeddu, Assistant Director in the IMF’s Western Hemisphere Department, Ben Kelmanson, the IMF’s senior resident representative in Argentina, and Ashvin Ahuja, the mission chief for Argentina, will continue in the coming days. Meanwhile, the lower chamber of congress is beginning to debate the omnibus bill, with various cabinet ministers due to appear before deputies to discuss the reform proposals.

In brief: Chile registers monthly deflation

*Chile’s national statistics institute (INE) has released new figures which show that in December 2023, monthly inflation stood at -0.5%, bringing the yearly rate to 3.9%. This compares to monthly inflation of 0.7% in November, when the annual inflation rate stood at 4.8%. Ten out of the 12 categories making up the IPC registered price decreases in monthly terms, the most significant being food & non-alcoholic drinks (-0.8%) and recreation & culture (-2.8%). The only category to register monthly price increases was restaurants & hotels (+0.8%), while education showed no variation on the previous month. The monthly deflation exceeded all estimates in a Bloomberg survey, which had a -0.1% median forecast. The drop is likely to precede a further interest rate cut by Chile’s central bank (BCCh), with a monetary policy announcement due at the end of the month.