Regional Pulse: 17 January 2023
Southern Pulse’s weekly review of need-to-know events curated for people who do business in Latin America.
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- Rosario port stoppage drags on
- Inflation at its highest in 32 years
- Value of lithium exports to hit a historical record
- Bolsonaro’s Justice Minister found with draft coup decree
- Bolsonaro supporters attack electricity lines across the country
- Government proposes plan to curb fiscal deficit
- Congress overwhelmingly backs deployment of soldiers to border zones
- Lawmakers approve the new constitutional process
- Rising copper prices strengthen currency and finances
- Government to meet ELN guerrillas in Venezuela on 18 January
- Prosecutor’s Office still pursuing Clan del Golfo leaders despite truce
- Energy Vice Minister forced to resign by government
- Vice President targeted in assassination plot
- Election authority to implement finance transparency measures
- Indigenous group warns mining companies not to invest in Ecuador
- Executive refuses to obey judiciary over crime boss relocation
- President Lasso announces tax reductions
- CJNG tells politicians and rivals it’s the “owner” of Morelos state
- Government in post nationalization talks with lithium miners
- AMLO offers dialogue with Canadian power companies
- Mexico-US-Canada to map mineral reserves to speed green transition
- President Boluarte approval rating at 19%
- State of emergency in Callao, Cusco, Lima and Puno
- Former Bolivian president under investigation over alleged secession plot
- Boluarte under investigation for genocide
KEY DEVELOPMENTS IN FULL
Rosario port stoppage drags on
On 13 January 2023, the government entity Enapro, which manages the port of Rosario, called for the concessionary company TPR to resume operations after a 40-day strike by the Union of Port Workers (SUPA). Last week, the national government mediated a deal between the port manager and SUPA workers, but a minority group of union workers affiliated with far-left political parties rejected the deal and continued to block access to the port. The Argentine Industrial Union (UIA) says the work stoppage had left 1,000 containers by the first week of January. Rosario is the country’s largest export port.
Inflation at its highest in 32 years
On 12 January 2023 the government statistics bureau INDEC disclosed that inflation in 2022 was 94.8%, the highest rate in 32 years. Newspaper Ambito says inflation would be even higher if the government hadn’t curbed utility tariff increases and negotiated a price cap with business conglomerates under the program “Precios Justos.” However, a monthly Central Bank business confidence survey found that local consulting firms and financial market brokers see government measures as unsustainable and foresee 98.4% inflation for 2023.
Value of lithium exports to hit a historical record
On 11 January 2023, the newspaper Ambito reported that lithium exports’ value likely hit a new record in 2022, with the total value of exports between January and November worth USD593 million. Although the official figures for December have not been disclosed, the government already estimates a new record high. The country is the world’s second-largest exporter of lithium (27,500 tons of lithium estimated for 2022), although it is far behind global leader Chile, which exported 186,000 tons, totaling USD7.2 billion.
Bolsonaro’s Justice Minister found with draft coup decree
On 12 January 2023, the Federal Police searched the residence of former justice minister Anderson Torres and found a draft decree that would have allowed the Armed Forces to overturn last October’s elections. The raid came after Torres, who was until recently the Security Secretary for the Federal District, was arrested for allegedly turning a blind eye to pro-Bolsonaro supporters recently storming the presidential palace, the Congress and the Supreme Court. Torres was appointed to that role earlier this year.
Bolsonaro supporters attack electricity lines across the country
On 12 January 2023, a high voltage electricity line in the city of Rio das Pedras, in the state of São Paulo, was attacked by supporters of former president Jair Bolsonaro. The television network CNN Brasil later reported that seven attacks targeting electricity infrastructure have taken place since a pro-Bolsonaro mob stormed the presidential palace, the supreme court and the congress. The other attacks affected power lines in the northern Amazon region and one connected to the Itaipu dam, in the southern region. The government power agency ANEEL issued a warning to companies in the sector to increase their level of security over the next 15 days.
Government proposes plan to curb fiscal deficit
On 12 January 2023, Economy Minister Fernando Haddad and Planning Minister Simone Tebet announced a set of measures to decrease the fiscal deficit to 1% of GDP — down from its current level of 2.3%. These measures would see the government renegotiate pending debts that small businesses have with the tax authority, revoke tax breaks given by the previous administration, and conduct a review of policies in each Ministry to improve efficiency. Veja magazine notes the measures do not tackle problems with the structure of Brazilian state spending or the complex tax system.
Congress overwhelmingly backs deployment of soldiers to border zones
On 11 January 2023, Congress, in a rare share of cross-party support, approved a bill that would allow the president to deploy the military to patrol border zones amid rising insecurity. Last week, the national military police revealed that in 2022, the country had a 43% increase in homicides compared to the previous year. The country’s deadliest regions are located on its northern border. The region of Tarapacá, which borders Bolivia, registered 10.3 homicides per 100,000 habitants — double the national average. Newspaper La Tercera said public discontent over rising violence is fueling the 70% disapproval of President Gabriel Boric. To become legislation, the bill must pass a second vote in Congress.
Lawmakers approve the new constitutional process
On 11 January 2023, Congress, in a 109 to 37 vote, approved the procedure for writing a new constitution after the government and opposition struck a deal in December on its rules. Far-right Republicanos and the anti-establishment Partido De La Gente voted against it. Now, a supermajority of 57% of the Congress must approve 24 experts to assist the constitutional assembly. The election for the members of the constitutional assembly will be on 7 May 2023.
Rising copper prices strengthen currency and finances
On 11 January 2023, copper, the country’s top export, traded on London Stock Exchange for more than USD4 per pound, achieving a level not seen since June 2021 and prompting La Tercera newspaper to note the appreciative effect on the national currency and government finances. If prices remain above USD4 per pound, the central government could boost its revenues by up to USD500 million above its original projection for 2023. The increase in the price of copper is due to markets’ optimism about China reopening its economy as COVID measures are lifted.
Government to meet ELN guerrillas in Venezuela on 18 January
On 14 January 2023, El Tiempo announced that the government and the ELN guerilla group would meet in Caracas, Venezuela, on 18 January to resume peace talks. It is expected that this meeting, which will last a week, will address President Gustavo Petro’s 31 December 2022 decision to unilaterally announce a truce that the ELN later dismissed. Both parties are also expected to agree on a timetable for their upcoming negotiations in Mexico next month. Achieving “total peace” with all armed groups is one of the Petro administration’s priorities.
Prosecutor’s Office still pursuing Clan del Golfo leaders despite truce
On 13 January 2023, the General Prosecutor’s Office announced that it would not suspend its arrest warrants against several Clan del Golfo organized crime leaders. The government had requested prosecution efforts be suspended shortly after a six-month truce was agreed with the armed group. Roy Barreras, Congress President and close ally of Petro, supported the Prosecutor’s decision. He argued that members of organized crime groups should be judged according to ordinary justice, while guerrillas should be judged according to transitional justice.
Energy Vice Minister forced to resign by government
On 11 January 2023, Vice Minister for Energy, Belizza Ruiz, was asked to resign by the Colombian government amid reported tensions between Ruiz and Energy Minister Irene Vélez. According to El Tiempo, both officials disagreed on policy, with Vélez stating on social media that she will not allow “adversaries” to “weaken” the government’s reforms. Ruiz had a close relationship with energy companies, and her removal has generated uncertainty within the sector, according to Portafolio. The government has also requested the resignation of Hydrocarbons Director, Camilo Rincón. Petro’s government has outlined plans to reduce Colombia’s production and reliance on fossil fuels.
Vice President targeted in assassination plot
On 10 January 2023, Vice President Francia Márquez reported on Twitter that her security team had discovered over seven kilos of explosives planted on the road that leads to her house in Suárez, Cauca in an apparent assassination attempt. The device was found during a routine security check. No culprit has been identified, but Márquez stated that this was not the first attempt on her life. The government is currently negotiating a wide range of peace agreements with paramilitary, guerrilla and organized crime groups.
Election authority to implement finance transparency measures
On 14 January 2023, newspaper El Universo reported that the National Electoral Council (CNE) will launch a new system to monitor the finances of political parties. The new system will track currency inflows and outflows, and will make all information available publicly. It will be implemented in time for the 5 February 2023 local elections. The announcement comes shortly after a parliamentary commission reported that the Prosecutor’s Office is investigating over 20 local election candidates over links to organized crime.
Indigenous group warns mining companies not to invest in Ecuador
On 13 January 2023, the Ecuadorian Confederation of Indigenous Nationalities (CONAIE) outlined plans to impede mining investments in their territories. In a national assembly, CONAIE warned national and international companies not to invest in the country. The announcement comes as President Guillermo Lasso published a book celebrating several agreements that the government had struck with CONAIE following massive protests last year. According to CONAIE, these agreements have not been fulfilled.
Executive refuses to obey judiciary over crime boss relocation
On 11 January 2023, the presidency announced that it would not comply with a request by the judiciary to relocate a prisoner. The inmate, Freddy Anchundia, leader of organized crime group R7, was ordered to be returned from a maximum security prison in Guayaquil to Santo Domingo. Anchundia had been removed from Santo Domingo in May 2022 after allegedly orchestrating a prison riot which ended with 44 dead. The executive argues the judiciary has been benefiting criminals in its rulings, while the judiciary maintains that the relocation is within Anchundia’s rights.
President Lasso announces tax reductions
On 10 January 2023, President Guillermo Lasso announced the reduction of three taxes: on remittances (ISD), VAT, and on some special products (ICE). ISD, currently at 4%, will be halved by December, with reductions taking place in February and July. ICE will be reduced on certain products, including alcohol, beverages and tobacco. It will also be lowered on firearms to help law enforcement resupply its arsenals. Finally, VAT will be reduced from 12% to 8% in all touristic activities during a total of 11 days, spread across Carnival (18 to 21 February), Easter (7 to 9 April) and All Souls Day (2 to 5 November).
Canada launches consultations for possible FTA
On 9 January 2023, Mary Ng, Canada’s minister for international trade, announced that the government was initiating “consultations’’ towards an FTA with Ecuador. In 2021, trade between both countries was valued at USD759 million. The announcement comes a few days after Ecuador signed an FTA with China.
CJNG tells politicians and rivals it’s the “owner” of Morelos state
On 12 January 2023, alleged members of the Cártel de Jalisco Nueva Generación (CJNG) circulated a video on social media warning leaders of other criminal cells and various politicians that its leader, Nemesio Oseguera Cervantes, aka El Mencho, is the “owner” of Morelos state. The video comes amid a recent surge of violence in the state, which lies south of the national capital, Mexico City. Local authorities say the clashes between various criminal gangs are over drug routes to the capital.
Government in post nationalization talks with lithium miners
On 12 January 2023, President Andrés Manuel López Obrador said his administration was encouraging private mining companies that have started lithium mining projects in Mexico to abandon their plans. López Obrador did not say whether compensation would be offered, but made it clear that private miners wouldn’t be allowed to produce lithium independently. In 2022, Mexico nationalized lithium mining and gave exclusive rights to a state-run company.
AMLO offers dialogue with Canadian power companies
On 11 January 2023, President Andrés Manuel López Obrador agreed to hold conversations with Canadian electricity companies unhappy with power sector policies that favor the government’s utilities provider. The announcement came after President López Obrador met with Canadian Prime Minister Justin Trudeau during the North American Leaders Summit in Mexico City.
Mexico-US-Canada to map mineral reserves to speed green transition
On 10 January 2023, President Andrés Manuel López Obrador, US President Joe Biden, and Canadian Prime Minister Justin Truedeau committed to review and map potential critical mineral reserves in North America to accelerate the region’s clean energy transition. Minerals, such as copper and rare earth metals, are frequently used in renewables projects and demand is expected to increase dramatically.
President Boluarte approval rating at 19%
On 15 January 2023, a poll by the Peruvian Studies Institute (IPE) found that 19% of Peruvians support President Dina Boluarte’s record in government. The poll, undertaken between 7 and 12 January, also found that just 9% of Peruvians have a positive opinion of Congress. With regards to the recent protests, 50% of those polled support them, although 66% reject former president Pedro Castillo’s attempted coup. Only 1% of respondents think Castillo should not be judged for his actions.
State of emergency in Callao, Cusco, Lima and Puno
On 15 January 2023, the government announced a state of emergency for 30 days in the regions of Cusco, Lima and Puno, as well as the province of Callao (near Lima), and the southern provinces of Andahuaylas, Mariscal Nieto, Tahuamanu and Tambopata. In addition, there will be a 10-day curfew in the province of Puno. During a state of emergency several constitutional rights, including the freedom of movement and assembly, are suspended. On 9 January 2023, an estimated 17 people were killed in protests in the city of Juliaca, Puno.
Former Bolivian president under investigation over alleged secession plot
On 13 January 2023, the Prosecutor’s Office of the southwestern state of Puno opened an investigation into former Bolivian president, Evo Morales, for allegedly promoting the secession of the country’s south into an independent state. Also under investigation is Vladimir Cerrón, founder of Perú Libre (PL), and former ally of ex-president Pedro Castillo. The Prosecutor is examining a complaint from conservative congressman Jorge Montoya (Renovación Popular). This investigation was followed on 14 January by a statement from President Boluarte, in which she argued that illegal weapons were arriving in Peru through its southern border. She claimed these weapons were behind much of the recent unrest in the country.
Boluarte under investigation for genocide
On 11 January 2023, the Prosecutor’s Office announced an investigation into President Dina Boluarte and Prime Minister Alberto Otárola for genocide, following deadly clashes between protestors and law enforcement in recent weeks. Also under investigation are Interior Minister Víctor Rojas, Defence Minister Jorge Chávez, as well as Pedro Angulo, former prime minister, and César Cervantes, former interior minister. An estimated 45 people have died since protests began in December 2022, following former president Pedro Castillo’s removal from office.
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