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- Presidential race: President Fernández quits as far-right candidate Milei rises
- Bolivian plan to transport gas from Vaca Muerta faces technical challenges
- Top presidential economic advisor resigns amid currency devaluation
- Lula visits Portugal and Spain in hopes of improving relations after pro-Russia statements
- Amazon deforestation on the rise
- Top national security advisor resigns after leaked footage of far-right riot
- Government launches plan to curb rising crime
- Chile moves to nationalize lithium production with new policy
- State-run oil company and private sector to study development of green hydrogen
- Agriculture minister criticizes government energy policy
- ExxonMobil to reduce Colombia operations in May
- Senate passes bill to ban fracking
- Former president Lenín Moreno faces possible INTERPOL detention order
- Ecuador to buy natural gas for the first time
- Value of mining exports grows 41%
- Speculations about president’s health emerge after COVID-19 infection
- Congress empowers air authorities to meet US security standards
- Bank frauds on the rise: Commission for the Protection of Financial Services Users
- Cabinet reshuffle replaces four ministers
- Former president Alejandro Toledo enters prison
- Mining exports fell 29% in February
KEY DEVELOPMENTS IN FULL
Presidential race: President Fernández quits as far-right candidate Milei rises
On 21 April 2023, President Alberto Fernández announced he will not seek reelection. Fernández’s approval rating is lower than 20%. It is still uncertain who is going to be the ruling Peronist candidate, as most voters say they want to see a profound change in the government. A fight is developing in the ruling coalition between the left wing led by Vice President Cristina Kirchner and the centrist wing led by Finance Minister Sergio Massa. Earlier in the week, the latest opinion poll from research firm Management and Fit showed three coalitions being neck and neck with about 25% of the vote. These include candidates in the ruling Peronist camp, the center-right opposition party Juntos por el Cambio (JxC), and the far-right Javier Milei. The Peronist camp and the JxC coalition will choose their presidential candidates during primary elections in August.
Bolivian plan to transport gas from Vaca Muerta faces technical challenges
On 20 April 2023, website EconoJournal reported that the Bolivian government’s idea to use its pipeline network to transport Argentine gas to Brazil has numerous technical challenges. For one, Argentina already has a pipeline connecting the country with southern Brazil that it could use to export gas from the giant Vaca Muerta shale field. It is also unclear how much demand Brazil will have for gas in the next few years, as well as how much the country could boost its own production through government and private investments. Moreover, Bolivia does not specify the tariff it would charge for transportation under its plan. Finally, Bolivia’s idea carries political risk because none of these three countries is a member of the international Energy Charter Treaty governing gas transportation standards.
Top presidential economic advisor resigns amid currency devaluation
On 18 April 2023, the president’s chief economic advisor Antonio Aracre resigned after influential journalists speculated on Twitter that President Alberto Fernández would sack Finance Minister Sergio Massa and appoint Aracre to his position. Aracre, the former CEO of Syngenta in Argentina, showed journalists a roadmap for stabilizing the economy during a week when the Argentinian peso continued losing value. The government statistics bureau INDEC also reported that monthly inflation in March totaled 7.7%. If the current pace persists, inflation will reach 140% by the year’s end. Local economists and traders in Buenos Aires started to fear that the country could be on the verge of hyperinflation.
Lula visits Portugal and Spain in hopes of improving relations after pro-Russia statements
On 21 April, 2023, President Luis Inácio Lula da Silva arrived in Portugal to meet with Portugal’s President Marcelo Rabelo de Sousa. Local analysts and media outlets say this will be a chance for Lula to improve Brazil’s relationship with the EU, which is in discussions with South American trade bloc Mercosur about finalizing a free trade agreement. Lula made pro-Russia comments when receiving Russian Chancellor Sergei Lavrov in Brasilia a week earlier, causing disapproval among American and European diplomats. Portugal and Brazil are expected to sign a bilateral agreement during Lula’s visit. The agreement would allow Brazilian aircraft manufacturer Embraer to build its Super Tucano warplanes in partnership with Portugal-based aerospace company Ogma. The planes will follow NATO standards.
Amazon deforestation on the rise
On 20 April 2023, Brazilian NGO Imazon reported that deforestation of the Amazon rainforest increased 29% in Q1 2023 compared with Q1 2022. A total of 867 square kilometers of forest was cleared — an area larger than that of New York City. Media outlet Poder 360 noted that deforestation increased in eight of the nine Amazon states. Lula’s administration announced a goal of reducing deforestation to zero by 2030, requesting funding from the US and Europe to do so. The biggest drivers of deforestation in the Brazilian Amazon are illegal logging, agriculture and mining. These activities are often linked to drug trafficking groups.
Top national security advisor resigns after leaked footage of far-right riot
On 19 April 2023, top national security advisor General Gonçalves Dias resigned after CNN Brasil reported he was inside the presidential palace while supporters of former President Jair Bolsonaro stormed the building on 8 January 2022. The same day, far-right protesters also breached Congress and the Supreme Court. These protestors said the government is illegitimate because it won a rigged election — a baseless claim — and that a military dictatorship should be sworn in. General Gonçalves Dias had never disclosed to President Luiz Inácio Lula da Silva that he was inside the presidential palace during the violent protests. CNN Brasil aired images suggesting that General Gonçalves Dias was calmly talking to the protesters as his assistant offered them water. A Congressional hearing committee will likely open next week to investigate the episode.
Government launches plan to curb rising crime
On 18 April 2023, the national government launched an initiative called Calles Sin Violencia. The project aims to curb crime in all regional capital cities, as well as municipalities with the highest homicide rates. The government plans to deploy more military police officers to prevent violent crime. Many local analysts have criticized the plan, arguing that simply increasing the number of police officers does not solve the problem. Furthermore, mayors of certain cities that will not see an increased police presence fear that criminals will move into these areas. Opinion polls show that rising crime is the biggest concern for Chileans.
Chile moves to nationalize lithium production with new policy
On 20 April 2023, President Gabriel Boric announced a new national lithium policy that requires state-owned companies to participate in the exploration of any lithium basin. The government will create a state-run company called Empresa Nacional de Litio in the second half of the year. State-run copper giant Codelco will open negotiations to participate in the exploration of the Salar de Atacama, the only lithium field in the country that companies are exploring. This salt flat, which contains 30% of the world’s salt production, is being exploited by US chemical company Albemarle and Chile’s petrochemical and mining giant SQM. SQM is partly owned by China-based company Tianqi Lithium. Albemarle and SQM will now enter into a negotiation phase with Codelco, which would allow the state-run mining company to explore the Salar de Atacama as well. SQM’s exploration contract, which leases 75% of the salt flat, ends in 2030. Albemarle, which leases 25% of the salt flat, ends in 2043. The new lithium policy also aims to help the country industrialize lithium for battery manufacturing and establish environmental regulations to adopt extraction methods using less water.
State-run oil company and private sector to study development of green hydrogen
On 17 April 2023, state-run oil company ENAP signed a deal with three companies to study options for converting a southern port into a terminal for exporting green hydrogen. ENAP will work with Chilean private company HIF Global, Danish HNM Energy and French Total Enrie on the project, which focuses on the Toledo port in the southern Magallanes Region. The agreement comes a month after ENAP announced a pilot project to generate green hydrogen from the Vientos Patagónicos wind power plant in the same region. Reporte Minero noted that ENAP built the Toledo port in the 1970s, and that preparing infrastructure for exporting green hydrogen would be a strategic step for Chile to become an international player in this area.
Agriculture minister criticizes government energy policy
On 19 April 2023, Agriculture and Rural Development Minister Cecilia López criticized the energy transition policy supported by Mines and Energy Minister Irene Vélez as “naïve.” López was speaking at an economic policy event organized by the newspaper El Colombiano. López also said the administration’s agenda on decarbonization was limited to “parroting” the discourse from “rich countries” while demanding “poor countries” to sacrifice growth. López served as a senator for years in the centrist Liberal Party, which is part of President Gustavo Petro’s ruling coalition. This party has publicly disagreed with several key policies the Petro administration is pushing, such as its proposed health reform bill that Congress plans to debate this week.
ExxonMobil to reduce Colombia operations in May
On 19 April 2023, US energy company ExxonMobil announced that it would withdraw from a number of exploration and production projects in Colombia by next month. ExxonMobil currently has contracts to explore and produce oil in the Magdalena River Valley region. The company is also withdrawing from its contracts to explore gas production via fracking. The Senate passed a bill to ban fracking on 18 April, which Congress plans to discuss on an unspecified date. The chamber of oil, gas and energy, CAMPETROL, expects private investment in exploration and production projects to fall by 4% in 2023. In January 2023, the government announced a ban on all further oil and gas exploration in the country that it later reversed. CAMPETROL argued that social unrest in producing areas is also dissuading investors.
Senate passes bill to ban fracking
On 18 April 2023, the Senate passed a bill to ban fracking with 62 votes in favor and nine against. Environment and Sustainable Development Minister Susana Muhamad said fracking would be energy inefficient and create conflicts over water. Mines and Energy Minister Irene Vélez said the ban did not affect the country’s energy security. Legislators from the Democratic Center opposition party argued that the ban would cause Colombia to run out of gas reserves, thus forcing it to import gas from abroad. Congress will debate the bill twice before voting on it. Decarbonization has been a priority for Petro since taking office in August 2022.
Former president Lenín Moreno faces possible INTERPOL detention order
On 19 April 2023, prosecutors at a National Court of Justice (CNJ) hearing requested preventive prison and an INTERPOL detention order against former president Lenín Moreno. Moreno was charged with failing to appear before court in a case focusing on an alleged graft scheme by Chinese infrastructure company Sinohydro. The company allegedly paid USD76 million in bribes to a number of officials between 2009 and 2016, including Moreno and certain family members. Moreno lives in Paraguay and rejects all charges against him. Ecuador and Paraguay have an extradition agreement that the two governments could invoke.
Ecuador to buy natural gas for the first time
On 18 April 2023, state energy company CELEC announced that it is looking to buy 45 million cubic feet of natural gas per day to increase its electricity production. The purchases would start in October 2023.The company expects a dry period between October 2023 and March 2024 to reduce electricity supply in the country. This would be the first time Ecuador has ever had to purchase natural gas, and the country is still deciding whether it would import it by land or by ship. The country currently processes 16 million cubic feet of gas per day at the thermoelectric plant Termogas Machala, which has a capacity of 60 million daily cubic feet. CELEC plans to convert other diesel-powered thermoelectric plants to gas. However, the country’s recent plans to increase gas production on a national level have failed.
Value of mining exports grows 41%
On 18 April 2023, the Central Bank announced that mining exports for February 2023 had reached USD334 million, an increase of 41% over the same month of 2022. Minerals became Ecuador’s third most profitable export in February, behind oil and shrimp. The mining industry has been growing since 2019, mainly due to increases in gold and copper production. The mining ministry says the country plans to produce more gold and copper as worldwide demand for these metals is expected to grow in coming years. The country currently has at least three mining projects nearing the construction stage, which together have a value of about USD1 billion.
Speculations about president’s health emerge after COVID-19 infection
On 23 April 2023, President Andrés Manuel López Obrador announced via Twitter that he contracted COVID-19. This forced him to pause all planned public activities. He also said Interior Secretary Adán Augusto López Hernández would be in charge of conducting all morning press conferences during his leave. The president’s health has been one of the main topics of conversation on social media recently. Prior to the announcement, local paper El Diario de Yucatán published a story saying President López Obrador suffered a heart attack and fainted during a security briefing, but the Office of the President later denied those allegations. Last year, President López Obrador underwent a catheterization procedure after suffering a small heart attack.
Congress empowers air authorities to meet US security standards
On 20 April 2023, the lower house of Congress approved a series of changes to airport security laws aimed at helping Mexico regain its Category 1 aviation safety rating from the US Federal Aviation Administration (FAA). The FAA downgraded Mexico’s safety rating in 2021 due to its airspace redesign in the Mexico City metro area. The changes would legally empower both Mexico’s Communications, Infrastructure, and Transportation Secretariat and Civil Aviation Agency to conduct any technical or administrative changes needed to ensure that Mexico meets international standards. The redesign of airspace in Mexico City is one of the consequences of constructing the new Mexico City Airport Felipe Angeles (AIFA), a work that has faced criticism for operating only a small number of flights despite its pricey infrastructure.
Bank frauds on the rise: Commission for the Protection of Financial Services Users
On 19 April 2023, Mexico’s consumer protection agency (CONDUSEF) reported an increase in frauds of over US5,500 in the country. CONDUSEF’s President Oscar Rosado said that while frauds of less than US550 have decreased, thefts of more than US5,500 are rising due to criminals having more technical knowledge and sophistication. CONDUSEF reported that frauds exceeding US5,500 are more frequently felt by banking customers, but can also happen through direct extortion to businesses. Between January and October 2022, 125,884 complaints were registered against the financial sector.
Cabinet reshuffle replaces four ministers
On 23 April 2023, President Dina Boluarte swore in four new ministers. They include Justice and Human Rights Minister Daniel Maurate, Education Minister Magnet Márquez, Labor and Employment Promotion Minister Fernando Varela Bohórquez and Foreign Trade and Tourism Minister Juan Carlos Mathews Salazar. Prime Minister Luis Alberto Otárola Peñaranda expressed his intention to remove Jose Tello Alfaro from the Ministry of Justice and Human Rights last week, as Otárola disagreed with the ministry’s policy of providing reparations to families of the protestors killed during the violent demonstrations between December 2022 and March 2023. Boluarte took office in December 2022 after Congress successfully impeached former president Pedro Castillo for an attempted self-coup.
Former president Alejandro Toledo enters prison
On 23 April 2023, former president Alejandro Toledo (2001–2006) was transferred to Barbadillo prison. He will serve 18 months of preventive detention for alleged corruption during the selection process for the Inter-Oceanic Highway connecting Peru and Brazil. Toledo was flown to prison via helicopter under police escort after being extradited from the United States. He reportedly will face the same prison conditions as former presidents Pedro Castillo and Alberto Fujimori, who are also serving time at Barbadillo. Toledo is under investigation for alleged collusion, influence peddling and money laundering. These charges are related to bribes paid by the Peruvian unit of Brazil construction company Odebrecht during the selection process for the Inter-Oceanic Highway.
Mining exports fell 29% in February
On 19 April 2023, the national society of energy, mining and oil (SNMPE) reported that mining exports fell by 29% in February 2023 compared with the same month of 2022. Exports amounted to USD2.4 billion in February 2023, compared with USD3.4 billion in February 2022. According to SNMPE figures, copper fell both in value (-18.7%) and production (-15.6%) during the year period. Meanwhile, gold production fell by 30% while its price only dipped slightly (-0.2%). Tin production fell 82% while its price fell by 39%. Peru’s mining regions saw severe social unrest between December and March that impacted production.