Regional Pulse: 20 September 2022
Southern Pulse’s weekly review of need-to-know events curated for people who work in Latin America.
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Key developments
ARGENTINA
- USD750 million investment announced in Vaca Muerta shale gas deposit
- Central Bank hikes interest rate to 75%
- Federal Police arrest 12 in coordinated drug trafficking raids
BRAZIL
- Datafolha poll indicates hardening voting preferences
- Both Lula and Bolsonaro promise income tax cuts if elected
- Voters fear political violence
CHILE
- Record food inflation threatens thousands with poverty
COLOMBIA
- Maduro to guarantee ELN peace talks
- Petro to gradually reduce gasoline subsidy
ECUADOR
- China contests US Army’s claims of illegal fishing and mining
- Security forces voice concerns over personnel killed by gangs
- Petroecuador and Petrochina strike new O&G deal
- President Lasso announces questions for national referendum
MEXICO
- Student protestors attack military base near massacre site
- Senate approves National Guard’s incorporation into Defense Ministry
PERU
- Newport postpones USD350 million mining investment
- General Elections unlikely to happen next year
- Castillo ally censured by Congress
ARGENTINA
USD750 million investment announced in Vaca Muerta shale gas deposit
On 16 September 2022, Argentine midstream company Oldelval announced a USD750 million investment that will double pipeline transport capacity out of the Vaca Muerta shale gas deposit in the country’s west. The announcement comes after the government extended Oldelval’s existing concession until 2037. Economy Secretary Flavia Royón estimates the project will allow the country to export around 250,000 barrels of oil per day and help boost low foreign exchange reserves.
Central Bank hikes interest rate to 75%
On 15 September 2022, the Central Bank raised its benchmark interest rate to 75%. Consumer prices have risen sharply, exacerbated by an annual inflation rate that is predicted to reach 100% by the year’s end. This is the bank’s ninth rate hike this year.
Federal Police arrest 12 in coordinated drug trafficking raids
On 14 September 2022, federal agents with the anti-drug division in Rosario arrested 12 people with connections to the Los Monos gang. Authorities conducted 16 simultaneous raids in the early hours of the morning, finding cocaine and marijuana ready for commercialization, weapons, and more than ARS3 million (USD20,000) in cash. The investigation is ongoing.
BRAZIL
Datafolha poll indicates hardening voting preferences
On 16 September 2022, Datafolha’s latest poll for the upcoming presidential election still showed former President Luiz Inácio Lula da Silva in the lead, with 45% of the vote, and President Jair Bolsonaro trailing, with 33%. Other top candidates such as Ciro Gomes (PDT) and Simone Tebet (MDB) garnered 8% and 5%, respectively. With the elections just weeks away, it is unlikely that there will be a significant shift in voting intention, according to CNN Brasil.
Both Lula and Bolsonaro promise income tax cuts if elected
On 15 September 2022, O Estado de São Paulo newspaper outlined the tax reform proposals of President Jair Bolsonaro and former president Luiz Inácio Lula da Silva, both of whom propose extending income tax exemptions to higher salary brackets. While Lula did not present specific numbers, Bolsonaro has promised new income tax exemptions to people earning up to the equivalent of five minimum wages, or about BRL6,060 (USD1,176) per month. Currently, the exemption is for those who make under BRL 2,500 (USD485) per month.
Voters fear political violence
On 15 September 2022, Datafolha released a poll showing that 67% of Brazilians fear political violence ahead of the October election. About 5 million people, or 3.2% of the country’s population, have already suffered political violence, where they were verbally or physically assaulted for their political opinions. According to some political scientists, this is unprecedented in the country since the re-establishment of democratic rule in 1985.
CHILE
Record food inflation threatens thousands with poverty
On 13 September 2022, the Social Development Ministry reported a record 22% increase in the price of the basic food basket in August. Eighty-five percent of products saw a price increase. Rising inflation is expected to push 217,509 more people into poverty. This means 2.3 million, or around 12% of the population, will earn less than a living wage. Another 73,999 people will fall into extreme poverty — classified as living on under USD2 a day and being deprived of basic needs. This would increase the number of people suffering from extreme poverty to 905,231.
COLOMBIA
Maduro to guarantee ELN peace talks
On 17 September 2022, Venezuela President Nicolás Maduro agreed to become guarantor for future peace negotiations with the ELN, Colombia’s largest guerilla group. Peace talks would be held in Caracas. The ELN currently has a foothold in Venezualan territory in the regions of Táchira and Apure.
Petro to gradually reduce gasoline subsidy
On 13 September 2022, President Gustavo Petro announced he would gradually reduce gasoline subsidies due to the high toll it takes on the country’s budget, the need to finance social programs, and the importance of transitioning to cleaner energy. The subsidy makes Colombia the country with the third cheapest gas in Latin America after Venezuela and Bolivia. The Petro administration envisions the subsidy’s complete elimination, but no time frame for this has been provided yet.
ECUADOR
China contests US Army’s claims of illegal fishing and mining
On 15 September 2022, the Chinese Embassy in Quito issued a statement repudiating remarks made by the US Army Southern Command representative General Laura Jane Richardson who accused China of practicing illegal fishing in Ecuador’s territorial waters and predatory mining in breach of environmental laws. The Chinese government countered the claims saying it has established cooperation mechanisms with Ecuador in the fishing sector and it upholds the highest environment in its mining operations. General Richardson’s declaration comes a few weeks after President Guillermo Lasso announced a free trade agreement with China might be reached by the end of 2022.
Security forces voice concerns over personnel killed by gangs
On 14 September 2022, the armed forces and police expressed concerns over the number of uniformed security officers who have been killed by criminal gangs. By early September 2022, 25 uniformed officers had been murdered in what security forces call orchestrated killings. In all of 2021, the number of officers killed was 21. Security forces also say police stations and Army bases have been directly attacked, suggesting gangs are actively targeting and intimidating security officials.
Petroecuador and Petrochina strike new O&G deal
On 14 September 2022, Petroecuador and Petrochina signed an agreement that gives Petroecuador another three years to ship over 76 million barrels of crude oil to China. However, the agreement is conditional on Petroecuador sending an additional 80 shipments of crude oil, each carrying some 316,000 barrels of the fossil fuel. The deal is part of a wider restructuring package to address a credit agreement struck under the presidency of Rafael Correa (2007–2017) with China.
President Lasso announces questions for national referendum
On 12 September 2022, President Guillermo Lasso outlined eight potential questions on environmental protections, security, and democracy for a national referendum, which may occur next year. The national referendum is one of Lasso’s promises to help reduce insecurity and promote political stability after the June civil unrest. The results of this vote could lead to a significant constitutional reform in the coming years.
MEXICO
Student protestors attack military base near massacre site
On 14 September 2022, student protestors in Ayotzinapa, Guerrero, attacked a military base linked to the disappearance of 43 students in 2014. Students and parents protested while some threw molotov cocktails into the base and lit its doors on fire. The truth commission report, published last month, found 20 soldiers were involved in the students’ disappearance, and declared the incident a “state crime.” The report implicated the former colonel of the military base in question with the murder of six students.
Senate approves National Guard’s incorporation into Defense Ministry
On 9 September 2022, the Senate approved the inclusion of the National Guard, previously a national police force, into the Defense Ministry. Human rights organizations have expressed concern over the militarization of the former police force. This is because judicial protections akin to the military may represent less accountability for National Guard units involved in human rights abuses.
PERU
Newport postpones USD350 million mining investment
On 15 September 2022, US mining giant Newport announced it would postpone to mid 2024 a USD350 million investment in the Yanacocha gold mine in Cajamarca, in the country’s northern highlands. Newport cited the war in Ukraine and rising inflation as the main reasons for the postponement. No domestic considerations were given.
General Elections unlikely to happen next year
On 15 September 2022, Congressman Carlos Anderson (Podemos) told newspaper La República that the two proposed constitutional amendments, which would change the 2026 general elections to 2023, did not have votes to pass in the Congressional Plenary. Some politicians had hoped bringing forward the election would be an effective way to end the current political crisis caused by the multiple corruption allegations against President Pedro Castillo’s government.
Prominent Castillo ally censured by Congress
On 15 September 2022, Congress overwhelmingly voted to censure the Transport and Communications Minister Geiner Alvarado for allegedly colluding with criminal organizations. A censure by the country’s Congress is a public reprimand of any public official who is thought of having committed unethical acts as a public servant. There are growing calls for the resignation of Geiner, who is considered a key ally of President Pedro Castillo.
