Regional Pulse: 22 November 2022

Southern Pulse’s weekly review of need-to-know events curated for people who do business in Latin America.

We help our clients operate successfully throughout the region with enhanced due diligence services, risk assessments, and threat monitoring. Get in touch here to learn how we can help you.

KEY DEVELOPMENTS

ARGENTINA

BRAZIL

CHILE

COLOMBIA

ECUADOR

MEXICO

PERU

KEY DEVELOPMENTS IN FULL

ARGENTINA

More than 100kg of cocaine seized of in truck drug bust

On 18 November 2022, National Gendarmerie officers found more than 100 kilos of cocaine hidden in several corn trucks at a police checkpoint near the city of Concordia in Entre Ríos province. The trucks, originally from Paraguay, belong to the same transport company and were traveling to Uruguay.

Analysts at Moody’s say debt risk remains high

On 16 November 2022, credit ratings agency Moody’s gave the country a Ca rating, one of the worst on its risk scale, citing the possibility of Argentina defaulting on its ARS-issued debt. However, Gabriel Torres, a senior analyst with Moody’s, said even though the country’s ARS default risk is high, there is no reason to believe Argentina will not meet its IMF debt payment obligations next year in USD.

China agrees USD5 billion currency swap deal

On 15 November 2022, Chinese President Xi Jinping authorized a USD5 billion currency swap extension with Argentina. The announcement came after a bilateral meeting was held with President Alberto Fernández during G20 talks. Beijing’s decision will help the country fulfill future debt repayment deadlines and strengthen FX reserves — two targets seen as essential for complying with the IMF’s debt restructuring deal.

Gang members threaten prosecutors and police

On 13 November 2022, Los Monos gang members fired 12 rounds and left threatening messages near the Marcos Paz federal prison in Buenos Aires province. Police believe the incident was meant to intimidate prosecutors who are investigating the criminal organization. Los Monos’ leader, Ariel Cantero, is currently imprisoned in Marcos Paz, serving a 96-year prison sentence.

BRAZIL

Transition team presents federal budget plan for 2023

On 17 November 2022, PT Senator-elect Wellington Dias, chief negotiator for the new administration’s transition team, announced a budget plan involving spending cuts in areas deemed non-essential, while setting aside BRL100 billion (USD19 billion) for federal investment. This budget is separate from another PT budget proposal calling for nearly BRL200 billion (USD38 billion) in extra spending on the social welfare program Bolsa Familia (formerly Auxilio Brasil).

Lula sets preservation of the Amazon as priority

On 16 November, President-elect Luiz Inácio Lula da Silva delivered a high-profile speech at the COP27 in Egypt calling for more international climate financing, greater integration of the Amazonian region, and stricter laws to preserve tropical rainforests. In a reversal from President Jair Bolsonaro’s less regulated approach to land-use, the president-elect said his government would enforce laws prohibiting mining, logging and cattle ranching in protected areas of the Amazon.

Petrobras oil revenues breaks all-time record

On 17 November 2022, the Brazilian Center for Infrastructure Studies (CBIE) announced that state-owned energy company Petrobras’ revenue from oil exploration hit an all time high of BRL368 billion (USD70 billion) over the last fours years. According to the CBIE, the record results are due to high oil prices, the strength of the US dollar, and Petrobras’ investment in drilling infrastructure over the past two decades.

CHILE

Last minute offer pauses strike at world’s largest copper mine

On 21 November 2022, a union representing 2,000 workers at Minera Escondida, the world’s largest copper mine, paused a strike scheduled for 21, 22, and 23 November 2022 while they reviewed a one-time bonus offer made by the mine’s owner, BHP. The associated union had cited poor working conditions, poor safety standards, and a lack of negotiations as the strike’s rationale. Union leaders are now considering the proposal.

Government attempts second constitutional rewrite

On 17 November 2022, government parties in Congress presented a new constitutional rewrite process after its first constitutional proposal was voted down in a referendum on 4 September 2022. The new proposal includes an expert commission tasked with drafting a non-binding proposal that would act as the base for the new constitution. This 32-person commission would be elected proportionally by members of Congress. A new “constitutional caucus” would then be directly elected to finish drafting. A referendum to ratify the text would be scheduled for December 2022 or January 2023 after five months of drafting.

Chile won’t pick sides in US-China rivalry, says Boric

On 17 November 2022, President Gabriel Boric said Chile would not choose between China or the US as a strategic ally, despite pressure from both sides. Boric claims the nation is caught in the middle of a trade war between the two world powers, but that Chile can maintain strong relations with both. He highlighted that China is currently Chile’s main commercial partner. The statement was made during the Asia-Pacific Economic Cooperation forum (APEC) 2022.

COLOMBIA

Government promises to honor past peace accords

On 18 November 2022, President Gustavo Petro said his Total Peace plan would honor commitments made in the 2016 peace accords with FARC guerrillas and the early 2000s peace accords with the AUC paramilitary groups. His comments came after mounting speculation that the government might use the latest peace plan to scrap some financially costly elements of past agreements.

Petro surprises staunch right-wing critic with peace talk invite

On 18 November, President Gustavo Petro invited cattle union leader and former right-wing politician José Félix Lafaurie to be part of the team negotiating with the ELN, the country’s largest active guerilla group. A staunch critic of Petro with alleged links to paramilitary groups once deeply opposed to the Colombian left, the visibly shocked Lafaurie accepted the call and said he would not stand in the way of peace.

Ecopetrol says offshore block can double country’s gas reserves

On 18 November 2022, Ecopetrol President Felipe Bayona said Colombia had the potential to more than double its dwindling natural gas reserves, currently standing at eight years. The perforation of the offshore Tayrona block earlier this year raises the prospect of extracting around 3.4 to 5.5 trillion cubic feet of gas, doubling national reserves. Ecopetrol hopes to begin exploitation of the block along with its US partner Occidental Petroleum in 2024.

Petro celebrates 100 day legislative accomplishments

On November 15 2022, President Gustavo Petro completed his first 100 days in office by highlighting his accomplishments. He pointed to the passage of the Total Peace legal framework, which details how the government will negotiate with the country’s remaining armed groups, and a major tax overhaul. Land reform measures and subsidies for farmers and single mothers also got special mention. Petro noted these legal changes were passed in spite of a divided congress.

ECUADOR

US and Ecuador agree to more flight traffic and discuss gang violence

On 16 November 2022, President Guillerrmo Lasso signed a bilateral open skies agreement with the US, allowing for the expansion of direct passenger and cargo flights between both countries. In the same meeting, the two parties discussed ways to strengthen cooperation against organized crime, a key area of concern for the Lasso government.

Latest prison riot kills 10

On 18 November 2022, 10 inmates were killed at the El Inca prison in Quito in the latest prison riot to hit the country. Some analysts have blamed the latest deaths on President Guillermo Lasso’s policy of relocating crime bosses to jails away from their area of influence. The incident comes a month after 13 inmates at a prison in Guayaquil were killed.

MEXICO

Fitch keeps Mexico’s credit rating at BBB-

On 18 November 2022, credit rating agency Fitch Ratings kept Mexico’s BBB- rating, citing a stable scenario with robust, reasonable macroeconomic policies. However, Fitch also warned of poor governance, state interference, and a highly indebted PEMEX, the state’s O&G company, as reasons for concern.

Social progress continues to decline, reports NGO

On 17 November 2022, Mexican NGO ¿Cómo Vamos? reported a second consecutive year in the deterioration of basic human needs nationwide, with the southeast the hardest it. The NGO uses the internationally recognized Social Progress Index, which measures the degree to which governments meet citizens’ social and environmental needs. The pandemic is mostly to blame for the fall in the index after nearly five years of improvement from 2016.

Massive demonstrations against government-backed election reform

On 13 November 2022, hundreds of thousands of people marched in multiple cities against an electoral reform proposed by President Andrés Manuel López Obrador. There are concerns the changes will leave the National Electoral Institute (INE), the country’s election watchdog, impotent, consolidating power in the executive. According to polls conducted right before the protests, 61% of Mexicans approve of the INE as an organization. López Obrador has called for counter protests on 27 November, which coincide with his four years in power.

PERU

Indigenous leaders demand US banks stop financing Petroperú

On 14 November 2022, indigenous leaders from the Amazon region traveled to the US to ask the likes of Citibank, JP Morgan, and Goldman Sachs to stop financing state-owned energy company Petroperú following recent oil spills. The company went to international markets in September to acquire USD1.6 billion in funds to expand its oil drilling in the Amazon. An oil spill which locals have blamed on Petroperú recently saw more than 100 tourists taken hostage.

Constitutional corruption complaint against Castillo moves forward

On 17 November 2022, Congress’ Subcommittee on Constitutional Accusations admitted a constitutional complaint against President Pedro Castillo for allegedly heading a criminal organization, influence peddling and collusion. This constitutional complaint could be forwarded to a Permanent Congressional Commission and eventually to a Congressional plenary, leading to his potential removal.

Protests at Las Bambas cut production by 30%

On 17 November 2022, protesters at La Bambas, one of the country’s largest copper mines, increased roadblocks, cutting production by 30%. The protest started on 7 November 2022 over harsh working conditions at the mine. The mining company responsible for Las Bambas has accused the provincial and the national government of not doing enough to remove the roadblocks. The mine has been affected by frequent protests this year.

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Image credit — Map of Latin America: Southern Pulse

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Southern Pulse

Southern Pulse provides strategic advisory services to help businesses operate successfully in Latin America.