Regional Pulse: 28 June 2022
Southern Pulse helps businesses operate successfully in Latin America.
Follow us on Twitter and LinkedIn.
Our weekly review of need-to-know events curated by the Southern Pulse team for people who work in Latin America. Looking for something more tailored to your needs? Let’s chat.
Key developments
ARGENTINA
- Fernández administration seeks to join BRICS
- Truckers protest over lack of diesel
BRAZIL
- Bolsonaro to boost welfare spending ahead of October vote
- Lula maintains comfortable lead in latest election poll
- Vale to spend USD400 million decommissioning tailing dams
CHILE
- CODELCO workers end strike over foundry closure
- Police intelligence chief accused of undermining the presidency
COLOMBIA
- Liberal Party backing edges Petro closer to congressional majority
- Stock market tumbles after Petro victory
- Petro wins the presidency
ECUADOR
- President Lasso tests positive for COVID-19 amid protests
- US issues new travel warning
- Emergency decree and curfew expanded
MEXICO
- Bank of Mexico makes largest rate hike in more than a decade
- Gun battle with security forces leaves 12 dead in Jalisco
PERU
- Agricultural Ministry cancels tender after irregularities spotted
- Percentage of banked Peruvians jumps by 11%
- China asks where community payments for mega mine have gone
ARGENTINA
Fernández administration seeks to join BRICS
On 24 June 2022, President Alberto Fernández asked for Argentina to join the BRICS economic group at the grouping’s latest summit in Beijing. The bloc comprises Brazil, Russia, India, China, and South Africa and represents 42% of the world’s population and 24% of its GDP. According to Argentine news outlet Página 12, China and Russia would endorse Argentina’s addition.
Truckers protest over lack of diesel
On 22 June 2022, truck drivers blocked the Buenos Aires-La Plata highway for two hours over diesel shortages. The protesters lifted the blockade after provincial security minister Sergio Berni promised to arrange a meeting with Transport Minister Alexis Guerrera. In addition to Buenos Aires, protests and blockades have also recently taken place in the provinces of Catamarca, Córdoba, Corrientes, Entre Ríos, Neuquén, Río Negro, Santa Fe, and Santiago del Estero over the fuel’s shortage. Lack of diesel is affecting supply chains and agricultural activity across the country.
BRAZIL
Bolsonaro to boost welfare spending ahead of October elections
On 23 June 2022, Senator and presidential loyalist Carlos Portinho said the government plans to increase President Jair Bolsonaro’s Auxilio Brasil welfare program from BRL400 (USD77) to BRL600 (USD115) in the coming weeks. The government will also raise the amount paid in gas vouchers and create a temporary monthly fuel aid program for truckers to offset rising diesel prices. The increased social spending comes less than four months before presidential elections in October.
Lula maintains comfortable lead in latest poll
On 23 June 2022, the latest presidential poll by Datafolha found presidential hopeful Luiz Inácio Lula da Silva (Partido dos Trabalhadores, PT) would get 47% of the vote, versus 28% for incumbent Jair Bolsonaro (Partido Liberal, PL). Lula needs 50% of the vote to win outright in the first round. Lula’s voter base is predominantly drawn from the north-east, the youth, and people earning less than USD470 per month (the equivalent of two minimum wage incomes). Bolsonaro is popular among evangelicals and wealthier people whose monthly income is more than USD2,350 (10 times the minimum wage).
Vale to spend USD400 million decommissioning tailing dams
On 21 June 2022, Reuters reported Brazilian mining company Vale would spend USD400 million this year to decommission five more tailing dams in Minas Gerais. Vale began the decommissioning program in 2019 after 270 people died from a breach in one its tailing dams, which are used to store mineral waste. So far the company has eliminated seven of the structures. Vale plans to retire all 30 by 2035.
CHILE
CODELCO workers end strike over foundry closure
On 23 June 2022, workers from state-owned copper company CODELCO and the government negotiated an end to a national strike declared on 21 June. Over 45,000 workers had blocked roads over the Boric administration’s closure of the Ventanas foundry in Valparaíso due to pollution. After negotiations, the government agreed to support Ventanas workers using CODELCO’s profits.
Police intelligence chief accused of undermining the presidency
On 22 June 2022, the head of police intelligence (DIPLOCAR) Luis Lopresti was accused by anonymous public officials of conspiring to increase perceptions of insecurity, delaying information reporting to the presidency, and sharing classified information with the political opposition. Lopresti reportedly planned to use this strategy to diminish Boric and his allies, who he allegedly described as “moral and political enemies.” The Chilean police (Carabineros) have provided the Public Ministry with all information on file for an investigation.
COLOMBIA
Liberal Party backing edges Petro closer to congressional majority
On 23 June 2022, the Liberal Party confirmed its support for president-elect Gustavo Petro’s Pacto Histórico coalition, bringing it closer to a majority in Congress. Petro already has support from the Alianza Verde party, the allotted seats for indigenous communities, and demobilized FARC representatives. The Liberal Party, the second largest party in congress, had opposed Petro during his campaign.
Stock market tumbles after Petro victory
On 21 June 2022, the Colombian Stock Market COLCAP index fell 5.4% following Gustavo Petro’s election victory. The COLCAP index has now fallen some 2.5% since the start of the year. One of the biggest losers is state-owned energy company Ecopetrol which saw its share price drop 11.9% on the first day of trading this week, likely driven by Petro’s promise to freeze future oil exploration. The Colombian Peso also fell against the USD, but has since stabilized.
Petro wins the presidency
On 19 June 2022, center-left candidate Gustavo Petro won the presidential runoff with over 11 million votes, or 50.4%. Petro, a longtime member of Congress, former mayor of Bogotá, and ex M-19 rebel, will be the first left-wing president in Colombian history. His victory speech promised an inclusive and conciliatory government and the equitable development of modern capitalism. He also called for peace and social justice. Petro’s administration will begin on 7 August, 2022.
ECUADOR
President Lasso tests positive for COVID-19 amid protests
On 22 June 2022, the presidential press office announced that President Guillermo Lasso, 66, had tested positive for COVID-19. It added that Lasso, who has been vaccinated, was continuing to work and did not have any symptoms.
US issues new travel warning
On 22 June 2022, the US State Department issued a new travel warning for Ecuador, “due to civil unrest and crime.” The advisory tells US citizens to reconsider travel to the country.
Emergency decree and curfew expanded
On 20 June 2022, President Guillermo Lasso expanded a state of emergency decree first issued on 18 June to cover three new provinces amid nationwide protests. The provinces under the decree are Chimborazo, Cotopaxi, Imbabura, Pastaza, Pichincha and Tungurahuaaxi. It allows for the Armed Forces to support policing efforts and enforces a curfew, which begins at 22:00 and ends at 05:00.
MEXICO
Bank of Mexico makes largest rate hike in more than a decade
On 23 June 2022, the Bank of Mexico increased interest rates from 5.5% to 7.75% to combat inflation and keep in line with the US Federal Reserve’s recent increase. The rate hike is the largest in Mexico’s recent history.
Gun fight with security forces leaves 12 dead in Jalisco
On 23 June 2022, state security forces and a heavily armed group of men clashed in El Salto, Jalisco, leaving 12 dead and at least five wounded. Four municipal policemen were killed and eight criminals were gunned down. At least five civilians were wounded during the battle. The assailants were not identified, but Jalisco is well known as a stronghold for the powerful Cártel de Jalisco Nueva Generación.
PERU
Agricultural Ministry cancels tender after irregularities spotted
On 23 June 2022, the Agricultural Ministry canceled the purchase of 73,000 tonnes of fertilizer from Brazilian company MF Fertilizantes after the country’s spending watchdog spotted irregularities in the associated tender. The ministry had disqualified US company Global Investments Group (GIG) for providing ISO documentation in English but allowed MF to provide the same documentation in Portuguese. GIG had also offered the fertilizer for USD8 million less.
Percentage of banked Peruvians jumps by 11%
On 22 June, national statistics agency INEI found the number of citizens with access to the financial system had increased from 42.2% in 2019 to 53.2% in the first trimester of 2022. Rates of access were highest among the young, with 61% of 18–29 year-olds banked. The data suggests much of the increase occurred during the height of the COVID-19 pandemic.
China asks where community payments for mega mine have gone
On 20 June, China’s ambassador to Peru, Liang Yu, told national newspaper Gestión that Chinese-controlled mining company MMG would no longer make payments to communities located near Peru’s massive Las Bambas copper mine. Yu said MMG had already paid PEN2.5 billion (USD659 million) to 500 community members and suggested the Castillo administration investigate where the money had gone. Recent protests by residents living near the mine, which is one of the largest of its kind, have paralyzed production.
