Regional Pulse: 27 June 2023

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

• Jujuy protests continue amid partial constitutional reform
• Interest groups say Jujuy protests are a threat to development
• Presidential candidates register 13 tickets for August primaries

BRAZIL

• Government declares Yanomami territory ‘free of illegal mining’
• Lula’s personal lawyer appointed to Supreme Federal Court
• Bolsonaro trial suspended until 27 June

CHILE

• Government launches peace commission for southern region
• Court of Appeals rejects annulment of pension fund merger
• CleanTech Lithium DLE tests yield promising results

COLOMBIA

• Senate shoots down bill to legalize cannabis
• Labor reform fails to advance in Congress
• Electoral reform likely to worsen party fragmentation in Congress

ECUADOR

• Non-oil exporters request tax exemptions
• Low rice reserves to face El Niño

MEXICO

• Supreme Court invalidates president’s electoral reform
• President denies power outages amid heat wave
• Drug cartel offers truce to stop violence

PERU

• Labor confederation and civil organizations to stage mass protest on 19 July
• Fujimorista party pressures Chinese-backed Chancay port project
• Congressional committee approves bill to create national lithium plant

KEY DEVELOPMENTS IN FULL

ARGENTINA

Jujuy protests continue amid partial constitutional reform

As of 24 June 2023, 90 people had been arrested and 170 injured after a week of violent clashes between the Jujuy provincial government and anti-reform protesters. Protests erupted on 16 June after the provincial government voted through controversial reforms to Jujuy’s constitution. The reforms included restrictions on the freedom to protest, as well as changes to private property laws and how natural resources are used and regulated. Indigenous and environmental activists argue that these changes would ease restrictions for mining projects. While the reforms focused on land use and indigenous rights were withdrawn, the government pushed through restrictions on roadblocks and occupations that escalated protests. As of 25 June, 10 national highways and four provincial highways were blocked. Jujuy is home to part of Salinas Grandes, Argentina’s largest lithium exploration site. Projects there are owned by Canadian, French, and Australian firms.

Interest groups say Jujuy protests are a threat to development

On 22 June 2023, leading trade associations and interest groups called for an end to ongoing protests in Jujuy due to the potential unrest they could cause in the mining sector. The groups expressed concern that social unrest will affect Jujuy’s ability to reach a projected USD18 billion in mining exports by the year 2030, discourage investment, impede job growth and disrupt development in Argentina’s historically neglected northwest. The report was produced by the trade associations Forum for Business Convergence, ACDE, the Argentine Chamber of Mining Entrepreneurs (CAME), the Group of Six (which represents the bank association Adeba and others) and more than 1,000 Argentine business leaders. The group also fears protests may add to Argentina’s trade deficit, which in May was at a five-year high of negative USD1.2 billion.

Presidential candidates register 13 tickets for August primaries

On 24 June 2023, the deadline closed for presidential candidates to register with the electoral board for August’s primary elections. There are 13 official tickets. Economy Minister Sergio Massa announced he will run alongside Cabinet Chief Agustín Rossi, which represents continuity with the current left-wing ruling coalition. The largest opposition coalition, Juntos por el Cambio, is offering two tickets. Buenos Aires Mayor Horacio Larreta will run with embattled Jujuy Governor Gerardo Morales, the latter of which is currently facing mass protests against his constitutional reforms. Former security minister Patricia Bullrich, known for her law-and-order stance on crime during former president Mauricio Macri’s administration, is running with former Mendoza lawmaker Luis Petri. The controversial libertarian economist and far-right lawmaker Javier Milei will run alongside conservative lawmaker Victoria Villaruel, who has praised the former military dictatorship in recent interviews.

BRAZIL

Government declares Yanomami territory ‘free of illegal mining’

On 20 June 2023, the Secretariat of Social Communication announced that Yanomami indigenous reservations in the Amazon rainforest are now free of illegal mining. No illegal activities have been detected so far this month. In the same week, Security Minister Flávio Dino announced that 323 camps and 151 vessels belonging to illegal miners have been destroyed this year, as well as USD420 million worth of goods. In January, the Brazilian government declared a health crisis in the Yanomami community and began operations to expel about 20,000 illegal miners accused of bringing disease, contamination, habitat destruction, and conflict to their territories.

Lula’s personal lawyer appointed to Supreme Federal Court

On 21 June 2023, Lula’s former lawyer Cristiano Zanin was appointed to the Federal Supreme Court. The Senate approved Zanin’s appointment by 58 votes to 18. Zanin, who defended Lula during the Lava Jato corruption investigation, will be inaugurated on 3 August. Prior to his appointment, 32 senators questioned Zanin for nearly eight hours. Local analysts observed that Brazil’s Senate has never voted against a Supreme Court appointment, making it merely a routine. Even the far-right senator and son of former president Jair Bolsonaro, Flávio Bolsonaro, gave a green light to Zanin’s appointment. This suggests broad support in Congress against the Lava Jato anti-corruption operation. Zanin will serve in the Supreme Court until he turns 75 in 2050.

Bolsonaro trial suspended until 27 June

On 22 June 2023, the Superior Electoral Court trial examining former president Jair Bolsonaro was interrupted and scheduled to restart on Tuesday 27 June. Bolsonaro is on trial for abuse of power and other irregularities, including a speech he made in 2022 in which he espoused baseless claims about the integrity of the electronic voting system in front of an audience of foreign diplomats. That particular speech, which was also broadcast on the state-run TV channel, infringed on campaign rules. The Superior Electoral Court will also hear evidence against the former president regarding his alleged role in planning the January 2023 attempted coup. If found guilty, Bolsonaro will be ineligible for election until 2030.

CHILE

Government launches peace commission for southern region

On 21 June 2023, President Gabriel Boric launched the Presidential Commission for Peace and Understanding. The eight-member commission will address the Mapuche conflict through land restitution in the country’s southern region. It will evaluate national and international recommendations for ending the conflict between the state, businesses and Mapuche communities in Chile’s southern “Macrozone” comprising the regions of Araucanía, Biobío and Los Ríos. The commission’s members include former President Sebastián Piñera’s foreign minister, a union leader, the president of an agricultural association and high-profile Mapuche politicians and representatives. Boric expects the commission to publish its findings in late 2024.

Court of Appeals rejects annulment of pension fund merger

On 23 June 2023, the government pensions regulator announced the Santiago Court of Appeals’ long-awaited decision on whether to annul the 2015 merger between private pension funds AFP Cuprum and Argentum. The Court rejected the annulment, finding in the regulator’s favor. Former lawmaker Fuad Chahín brought the annulment case to court in 2017. Despite being approved by the regulator, the deal was controversial because Argentum was known to be a so-called “paper fund,” or entity created solely for a merger. The merger allowed Cuprum to avoid paying USD128 million in taxes. The Court released a statement explaining the decision, citing Chahín’s failure to prove the annulment was in the public interest.

CleanTech Lithium DLE tests yield promising results

On 19 June 2023, American mining firm CleanTech Lithium reported promising results in their direct lithium extraction (DLE) pumping tests at two sites in the Atacama region. High transmissivity calculations at both the Laguna Verde and Negro Francisco sites exceeded expectations, and signal the potential to produce lithium with minimal environmental impact in Chile. The Chilean government encourages DLE methods as part of its National Lithium Strategy. CleanTech also owns Llámara, a site in the Tarapacá region in northern Chile. The firm plans to invest USD400 million into each of its three sites, with an expected yield of 20,000 tons.

COLOMBIA

Senate shoots down bill to legalize cannabis

On 21 June 2023, the Senate rejected a highly-awaited bill to legalize the commercialization of cannabis with 47 votes in favor — seven short of the 54 needed. While the government coalition supported the bill, it was opposed by the Conservative party that broke with the coalition in recent weeks. An analysis from La Silla Vacía shows that the Senate has now become a stronghold for the opposition, as the government coalition is a few seats shy of a majority. The bill’s sponsors were disappointed to find that the justice minister — in charge of drug policy — did not appear in the Senate to see the vote through. A poll of the general population showed that 58% oppose the legalization of cannabis.

Labor reform fails to advance in Congress

On 20 June 2023, a highly-publicized labor reform bill sponsored by President Gustavo Petro failed to pass its first debate in Congress. The bill, which was one of the government’s main reforms, proposed reducing the work week from 48 to 42 hours and providing an hourly bonus for Sunday work equivalent to 100% of the hourly salary. It also proposed starting the night shift at 7 p.m. instead of 9 p.m. President Gustavo Petro blamed “the owners of capital and media” for the failure. The government coalition, however, said it will try again next month.

Electoral reform likely to worsen party fragmentation in Congress

On 20 June 2023, Congress approved an electoral reform expected to increase party fragmentation by lowering the threshold to be recognized as a political party. Prior to the reform, parties needed to gain at least 3% of the vote in a Senate election to be legally recognized as a political party and access public financing. With the reform, this threshold is now applied to the number of votes received by a whole coalition in either Congress or the Senate. So, if a coalition of several parties gathers 3% of the vote for a position in Congress, all parties in the coalition are legally entitled to public financing. An analysis from La Silla Vacía points out that the number of political parties has increased from 14 in 2018 to 34 in 2023. While the reform passed with a majority, some lawmakers who opposed it have argued it is unconstitutional. The Constitutional Court will now scrutinize the reform.

ECUADOR

Non-oil exporters request tax exemptions

On 24 June 2023, non-oil exporters from the trade association CORDEX requested that the government include supply chain components in customs exemptions to lower production costs. CORDEX’s president pointed out that producers of shrimp — Ecuador’s main non-oil export — had lost USD1 billion. The loss was driven by increased production costs and lower demand from the US, China and the European Union. CORDEX said non-oil exports grew by “only” 4% in Q1 2023, a figure they viewed as worrisome.

Low rice reserves to face El Niño

On 21 June 2023, the state-owned company tasked with managing the country’s emergency rice fund (UNA) revealed that reserves are empty. The company, established in 2013, has been in liquidation since January 2023 after the Attorney General’s office found several irregularities in its accounts and management. In January 2023, UNA was said to hold about USD1.8 million worth of rice that, according to its interim administrator, is now missing. The country is now facing potentially severe droughts due to El Niño without any food reserves. In response, the agriculture ministry has announced it will purchase 30,000 tons of rice from Colombia to lower prices. Ecuador currently consumes about 60,000 tons of rice monthly.

MEXICO

Supreme Court invalidates president’s electoral reforms

On 22 June 2023, the Supreme Court of Justice (SCJN) declared that the second part of President Andrés Manuel López Obrador’s electoral reforms were invalid due to violations of the legislative approval process. The reforms, informally known as “Plan B,” sought to modify how the next presidential election process would be conducted. But with the Supreme Court’s ruling, no new changes to the law can be made. In April 2022, President López Obrador presented an electoral reform informally known as “Plan A.” That reform sought to eliminate the National Electoral Institute (INE). However, Congress rejected the bill. In November 2022, the executive branch announced a series of reforms to secondary electoral laws called “Plan B.” These reforms attempted to modify the next presidential election process. The Supreme Court invalidated the first part of “Plan B” on 8 May 2023. Amid the Court’s rulings, President López Obrador said he would launch “Plan C,” which aims to obtain sufficient party votes to put “Plan A” back into action.

President denies power outages amid heat wave

On 20 June 2023, the National Energy Control Centre (CENACE) reported that the electricity grid was operating with low capacity in an “operational alert state.” This is due to high power demand caused by a heat wave, which has prompted blackouts in many parts of the country. Hotels in Cancún and major tourist sites have complained to the Federal Electricity Commission (CFE) about a handful of power outages as maximum temperatures reach 40ºC (100ºF). The heat wave also interrupts drinking water supplies, which depend on high-voltage electricity to operate. President Andrés Manuel López Obrador said that he carried out an evaluation of the country’s electricity capacity and assured that there would be no blackouts. He then blamed his opponents for generating “unfounded alarms.”

Drug cartel offers truce to stop violence

On 25 June 2023, alleged members of the Northeast Cartel (CDN) addressed President Andrés Manuel López Obrador in a video, agreeing to a truce with other criminal organizations to stop violence. Delia Quiroa Flores, a spokesperson for a group representing mothers searching for their missing children, called on 10 drug cartels to sign a “peace and eradication agreement on the forced disappearance of persons.” President López Obrador backed the activist’s petition on 30 May. In the video, the alleged CDN member said “we are all Mexicans. We also have mothers, fathers, children, brothers and sisters. We have spoken with the CDG (Matamoros Gulf Cartel) and we are in peace talks.”

PERU

Labor confederation and civil organizations to stage mass protest on 19 July

On 21 June 2023, the national labor confederation (CGTP) called on President Dina Boluarte to resign before 19 July 2023. On that day, CGTP and a number of civil society organizations plan to march in Lima to protest the government. The CGTP and grassroots organizations have called for a number of regional assemblies to mobilize their followers for the march, hoping to bring about 15,000 to 20,000 people to the capital. In response, the government is readying about 8,000 policemen to respond. Widespread protests rocked Boluarte’s government between December 2022 and March 2023, and organizers of the July protest hope their action will reignite wider opposition.

Fujimorista party pressures Chinese-backed Chancay port project

On 21 June 2023, the right-wing party Fuerza Popular (FP) endorsed creating an independent congressional committee to supervise construction of a port in Chancay after several houses collapsed during construction work in May 2023. The USD3.5 billion project is financed by the Chinese state. FP leader Keiko Fujimori was the runner-up for president in the 2021 elections, and has led FP during the past three presidential elections. Cosco Shipping, the Chinese state-owned company building the port, described the move as a “political persecution.” A surveyor’s report about the collapses is expected sometime in mid-July 2023. The port was due to be finalized by December 2024 and inaugurated by Chinese president Xi Jinping. However, construction delays and fears over congressional interference may delay the date by as much as three months, newspaper La República reported. The port, which is about 43% complete, would reduce travel time between China and Peru to about 10 days.

Congressional committee approves bill to create national lithium plant

On 20 June 2023, Congress’ Energy and Mines Committee approved a bill declaring that the creation of a state-owned lithium company is “in the national interest and the public need.” The bill proposes creating a state-owned lithium company to explore, extract and process the mineral, prioritizing national consumption before exporting any unused excess. The bill now must be scheduled for debate in Congress. This is the latest move by a lithium-producing country to increase state control over its reserves. Chile announced a national strategy increasing state presence in the lithium sector in April 2023, and in June 2023 Australia announced a national strategy to guide its relationship with private partners in the lithium industry.

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