Regional Pulse: 13 February 2024
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
Retail transactions fell 28.5% in January
Milei announces Argentina to move embassy to Jerusalem
Milei fires more top government officials
Government announces public hearing on new gas and electric subsidies
BRAZIL
Brazil's auto industry to receive USD20.4 billion in investments
Health Ministry doubles test production amid rise in dengue cases
Federal Police launch new operation against Bolsonaro coup attempt
CHILE
Boric’s comments at Piñera’s funeral divide left-wing coalition
Boric activates National Reconstruction Fund after wildfires
National Mining Company VP under pressure for closing Paipote foundry
COLOMBIA
UN Security Council shows support for peace process during visit
Government and FARC dissident group Segunda Marquetalia begin peace talks
Petro-backed protesters clash with police amid appointment of new attorney general
ECUADOR
National Assembly ratifies free trade agreement with China
US Treasury Department imposes financial sanctions on Los Choneros gang
Russia partially bans banana exports from Ecuador after US weapons deal
MEXICO
Tax revenue system failure cost millions in customs delays
AMLO presents Biden with 10 proposals to tackle irregular migration
AMLO’s controversial law changes lay ground for general elections
PERU
Nonprofit accuses major palm oil suppliers of deforestation
Report suggests mass protests could recur as dissatisfaction with democracy hits 91%
Peru agrees with Belgium and Netherlands to fight drug trafficking in port cities
KEY DEVELOPMENTS IN FULL
ARGENTINA
Retail transactions fell 28.5% in January
On 6 February 2024, the Argentine Confederation of Medium-Sized Businesses (CAME) declared January 2024 a “lost” month for retail, with sales down 28.5% on average compared to January 2023. The most essential sectors were the worst hit, with food and drink sales down 37.1% and pharmaceutical sales down 45%. CAME attributed the falling sales to rising prices and stagnating salaries.
Milei announces Argentina to move embassy to Jerusalem
On 6 February 2024, Argentine President Javier Milei told Israeli Foreign Minister Israel Katz that he intended to move Argentina’s embassy from Tel Aviv to Jerusalem during his first presidential state visit to Israel. Argentine Foreign Minister Diana Mondino said while the current administration is committed to the move, the process would take at least four to five years. If Milei is successful in moving the embassy, Argentina would stand apart from the other 190 UN members that recognize Tel Aviv. Milei first announced his desire to move the Argentine embassy to Jerusalem during the campaign trail.
Milei fires more top government officials
On 9 February 2024, President Javier Milei fired Mining Secretary Flavia Royón and National Social Security Administration (ANSES) head Osvaldo Giordano. Milei threatened to fire officials after his Omnibus Bill failed to pass in Congress and was sent back to the General Legislation, Budget and Finance and Constitutional Affairs committees for further changes. Royón, who served as energy secretary under previous president Alberto Fernández, kept a high-level post thanks to an agreement between Milei and Peronist provincial governors from the country’s north. When Milei’s government refused to increase funding to the provinces, the deal collapsed and Royón lost her post. Milei reportedly forced Giordano out of ANSES after Giordano’s wife and Peronist lawmaker Alejandra Torres voted against the Omnibus Bill.
Government announces public hearing on new gas and electric subsidies
On 7 February 2024, the government announced it would hold a hearing on 29 February about plans to reduce gas and electric subsidies. The virtual meeting will cover basic energy subsidies for vulnerable households and a subsidy scheme for households relying on gas tanks. Meanwhile, Argentina’s National Energy Regulator (ENRE) is expected to announce new tariffs for Edenor and Edesur, the country’s two largest electricity providers. Unions have claimed that reduced subsidies coupled with soaring prices will make energy unaffordable for many households. On 5 February, the government clarified the price hikes would only apply to the top 35% of gas and electricity users. Fuel subsidies will also be calculated based on geographic location, with colder regions receiving larger subsidies.
BRAZIL
Brazil's auto industry to receive USD20.4 billion in investments
On 8 February 2024, Brazil’s Vice President Geraldo Alckmin and Brazilian Association of Automotive Vehicle Manufacturers (ANFAVEA) President Márcio de Lima Leite announced that the Brazilian auto sector would receive USD20.4 billion in investments between 2024 and 2029. Alckmin said that most of this investment would focus on electric vehicles (EV), ethanol and hybrid vehicles. The government hopes to encourage national production with subsidies and higher import tariffs for EVs. Brazil already has two EV and hybrid manufacturing plants from Chinese firms BYD (which plans to invest USD612 million by 2029) and Great Wall Motors (USD2 billion by 2032). Chinese company Chery also announced a new EV plant in the country. Nissan, Stellantis, Volkswagen, and General Motors are also expected to invest billions in Brazil’s automotive sector over the next five years.
Health Ministry doubles test production amid rise in dengue cases
On 8 February 2024, the Health Ministry asked the state-run laboratory Fiocruz to double the number of dengue tests it produces to 600,000 amid a rise in cases. The city of Brasília is currently experiencing a dengue epidemic and the military has had to set up field hospitals to deal with the surge in demand for treatment. Fiocruz’s infectious disease doctor Julio Croda told CNN Brasil in January that he expected dengue cases to triple in 2024, noting that 2023 was already a record year. Croda said climate change is a leading factor in cases rising. Nearly 500,000 dengue cases have been reported in Brazil this year so far, causing more than 270 suspected deaths. The tests will be ready in the next few weeks. Brazil will also be the first country to introduce vaccines, with about 5 million available at first.
Federal Police launch new operation against Bolsonaro coup attempt
On 8 February 2024, the Federal Police launched an operation to search the properties of former President Jair Bolsonaro and five military officials after finding video footage on a computer belonging to Bolsonaro’s former aide Mauro Cid. The video from a July 2022 meeting shows Bolsonaro and government officials discussing plans to spread false fraud theories during the October 2022 elections. The group also planned a military intervention to keep Bolsonaro in power, which ultimately failed when the group was unable to garner enough support from high-ranking military commanders. The police have now issued 33 search and seizure warrants under the operation.
CHILE
Boric’s comments at Piñera’s funeral divide left-wing coalition
On 8 February 2024, President Gabriel Boric said during the funeral of former right-wing President Sebastián Piñera that the left was too critical of his administration. The comment has divided Boric’s left-wing coalition. Sebastián Piñera, who died in a helicopter crash on 6 February, was in power during the 2019 demonstrations led by left-wing activists protesting against his government. Far-left supporters of Boric’s Broad Front coalition and the Communist Party, which has a pact with the coalition, spoke out against Boric’s comments at Piñera’s funeral. However, members of the center-left Social Convergence Party, also part of the Broad Front, came out in support of the President.
Boric activates National Reconstruction Fund after wildfires
On 8 February 2024, President Gabriel Boric announced the government would begin accepting donations to the National Reconstruction Fund to help rebuild the Valparaíso region after wildfires tore through the area last week. The National Reconstruction Fund incentivizes individuals and businesses to make donations towards rebuilding neighborhoods destroyed by fires with tax credits. Former President Sebastián Piñera created the fund in the aftermath of the 2010 earthquake. Boric and Finance Minister Mario Marcel hope to attract donations primarily from large and small businesses in return for a tax credit for 50% of the donation. More than 130 people are known to have died in the fires, while over 200 remain missing.
National Mining Company VP under pressure for closing Paipote foundry
On 7 February 2024, Ex-Ante reported that National Mining Company (Enami) Executive Vice President Iván Mlynarz has come under pressure over his decision to suspend operations for at least 90 days at the Paipote foundry during a modernization process between January and April 2024. Regional authorities, workers and company unions fear the decision might lead to job losses in the area. Enami, a vital player in President Gabriel Boric’s National Lithium Strategy, racked up a debt of USD1 billion during the tenure of previous Enami Executive Vice President Jaime Pérez de Arce. Within a month of Mlynarz taking over the company in August 2023, the company reported USD130 million in losses between January and September 2023. Enami now hopes to bring its deficit down to zero by the end of 2025. The modernization of sites like Paipote is part of the company’s strategy to reduce its deficit.
COLOMBIA
UN Security Council shows support for peace process during visit
From February 7 to 11, United Nations Security Council (UNSC) members visited Colombia to express support for the implementation of the 2016 peace process and to assess its progress. The UNSC members met with President Gustavo Petro and peace signatories in Bogotá, Caquetá, Buenaventura, and Cartagena. This marks the UNSC’s third visit since the 2016 peace accords between the government and the FARC guerrilla.
Government and FARC dissident group Segunda Marquetalia begin peace talks
On February 9, Colombia’s High Commissioner for Peace officially launched peace talks with Segunda Marquetalia, a FARC dissident group that refused to demobilize after the 2016 peace agreement. Both parties agreed to immediately establish an agenda and protocols for negotiations aimed at de-escalating the conflict. Segunda Marquetalia, which has about 1,670 members, is led by Luciano Marín Arango (aka Ivan Marquez). The group operates in the mountainous region between Colombia's northern Arauca department and Venezuela's Apure state. In Colombia's Nariño department, Segunda Marquetalia has partnered with the Ejército de Liberación Nacional (ELN), another group engaged in peace talks with the government. The ELN recently extended its ceasefire for another six months. Both groups have expressed their commitment to dialogue with the government under Gustavo Petro’s “Total Peace” policy, which concurrently negotiates with rebel groups and criminal organizations in the country. The Special Jurisdiction for Peace reported that the policy has helped to a significant conflict de-escalation in 2023, with a 47% decrease in attacks against state forces and a 46% reduction in forced civilian displacement.
Petro-backed protesters clash with police amid appointment of new attorney general
On February 8, supporters of President Gustavo Petro and police clashed after demonstrators blocked the entrance to the Supreme Court of Justice in Bogota. President Petro summoned protesters, claiming Attorney General Francisco Barbosa was attempting to oust him from power. As Supreme Court judges weighed President Petro's three nominees for a new attorney general to replace Barbosa, protesters rallied outside and demanded that they make the decision immediately. No injuries were reported. Barbosa is an outspoken critic of Petro's government. In recent weeks, the Office of the Inspector General suspended Foreign Minister Alvaro Leyva for three months over a controversy regarding the selection process for passport vendors. The Attorney General’s office also searched Petro’s party, Colombia Humana, as part of an investigation into allegedly illegal electoral campaign finances. The Organization of American States issued a statement calling to elect a new attorney general and rejected “threats of interruption” to Petro's term.
ECUADOR
National Assembly ratifies free trade agreement with China
On February 7, the National Assembly ratified the May 2023 free trade agreement (FTC) with China, allowing 99.6% of Ecuadorian exports to enter China without tariffs. China is Ecuador’s second trading partner after the United States, with more than USD5 billion exported to China in 2023 and a USD544 million trade surplus in favor of Ecuador. China is also the main market for Ecuadorian non-oil exports. La Voz de America reported that although a majority of the Assembly ratified the deal, some representatives voiced criticism about the presence of Chinese fleets conducting illegal fishing in the exclusive economic zone of Galápagos and the failure of China to comply with the regulations. In 2021, Ecuador exported goods worth USD4 billion to China, including shellfish (56.8% of exports), copper ore (21%), crude petroleum (11%), and bananas (2.4%).
US Treasury Department imposes financial sanctions on Los Choneros gang
On February 7, The US Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned the organized crime group Los Choneros and its leader Jose Adolfo Macias Villamar (aka Fito). Los Choneros is one of the country’s most violent drug trafficking groups. The measure prohibits US citizens or anyone in the US from carrying out transactions that involve property or interests belonging to Los Choneros or its leader. Fito escaped from a maximum security facility, prompting a wave of violence that prompted President Daniel Noboa to declare a state of “internal armed conflict.” US Assistant Secretary for International Narcotics and Law Enforcement Affairs Todd Robinson visited Guayaquil, Ecuador’s main port city, to deliver USD1.3 million in anti-narcotics equipment to the Navy. Last month, US Southern Command Army General Laura Richardson announced a cooperation agreement that included military equipment, humanitarian assistance, and disaster response training valued at USD93.4 million.
Russia partially bans banana exports from Ecuador after US weapons deal
On February 5, Russia’s import ban on bananas from five Ecuadorian companies came into effect. The ban centers on the alleged presence of the humpbacked fly plague in a shipment, representing more than 21% of the country’s total banana exports. Russia also banned the import of Ecuadorian carnations. Russia’s decision comes after President Daniel Noboa categorized Ecuador’s old, Russian-made military weaponry as scrap metal, the Associated Press reported. Ecuador plans to deliver the weapons to the US later this year in exchange for new equipment valued at USD200 million. A 2008 bilateral agreement between Ecuador and Russia states that neither party can sell or transfer military products without the other’s prior written consent. Between January and November 2023, Ecuador exported 1.3 million tons of bananas valued at USD689 million. Russia is Ecuador's largest banana importer with 21.2% of imports, followed by the US with 11.6%. Russia is also a main client of President Noboa’s family banana conglomerate, which has not been a target of the ban so far.
MEXICO
Tax revenue system failure cost millions in customs delays
On 6 February 2024, the Tax Revenue Office’s (SAT) system suffered a technical failure that caused significant cargo processing delays and millions of dollars in estimated losses. Authorities said the failure impeded the validation of imports and exports at international bridges, borders, and ports throughout the country. However, those in US border cities such as Juárez and Nuevo Laredo experienced the most delays, given the high number of cargo shipments that pass through the area every day. The delays also caused production plants to shut down due to a lack of raw materials. Commercial activity was re-established after 36 hours, SAT said.
AMLO presents Biden with 10 proposals to tackle irregular migration
On 6 February 2024, President Andrés Manuel López Obrador presented a list of 10 proposals to US President Joe Biden to mitigate irregular migration. The proposals include regularizing Mexican migrants who have been living in the US for more than five years, offering a USD20 billion budget to support Latin American countries, suspending sanctions against Venezuela, lifting the blockade on Cuba, maintaining the US program to receive migrants through legal channels, avoiding building walls along the US-Mexico border, combating drug trafficking and fentanyl consumption, regulating the weapons trade, and boosting trade with each other and Canada. The proposals stem from a 3 February call between López Obrador and Biden, in which the presidents agreed on actions to tackle irregular migration toward the US. President Biden did not comment on whether he would implement the proposals.
AMLO’s controversial law changes lay ground for general elections
On 5 February 2024, President Andrés Manuel López Obrador presented a package of 18 constitutional amendments and two secondary law changes related to politics, economics, labor, education, elections, and social programs. Among the most controversial proposals is to formally prohibit fentanyl for drug consumption and open-pit mining. He also proposed eliminating autonomous bodies such as the Transparency Institute (INAI), the Telecommunications Institute (IFT), and the antitrust authority COFECE, with the aim of absorbing their responsibilities into various government ministries. The executive intends to restructure the National Electoral Institute (INE) and permit government spending in political campaigns. Additionally, the president proposed that judiciary members be elected by popular vote. Since the ruling MORENA party and allies lack sufficient votes in the Senate, changes to the constitution are unlikely. Modifications to secondary legislation are likely, although opponents most likely would challenge them in court. López Obrador presented the package seven months before the end of his administration, and four months before general elections.
PERU
Nonprofit accuses major palm oil suppliers of deforestation
On February 7, the UK-based nonprofit Environmental Investigation Agency (EIA) issued a report accusing 10 palm oil suppliers of deforesting the Peruvian Amazon rainforest without permits. The report alleges that some of those products “entered the supply chains” of companies including Kellogg’s, Nestle, and Colgate-Palmolive. The report alleges that the companies cleared more than 13,000 hectares of Amazon rainforest, illegally acquired titled land, and violated the rights of indigenous communities. The report also “points to cases of government complicity in illegal behavior” the EIA alleged. Peru-based Ocho Sur, a palm oil supplier for companies including Nestle, Kellogg's and Colgate, denied the accusations in a statement to Reuters. The EIA reported that Peru loses 138,728 hectares of forests annually, which is roughly the size of Los Angeles. On January 11, the Peruvian Congress passed a law easing deforestation in rural zones, which several large business associations supported. The report claims that this move sidesteps a new EU regulation barring commodities from illegal deforestation. Palm oil, extracted from palm fruit, is widely used in products from soap to chocolates, as well as in cosmetics and biofuels.
Report suggests mass protests could recur as dissatisfaction with democracy hits 91%
On February 8, the think tank International Crisis Group (ICG) warned of potential social unrest due to simmering factors that had sparked protests in recent years, including widespread distrust of politicians, economic inequality, political corruption, and deep polarization. ICG noted that in the latest mass protests, in early 2023, state security forces repressed protestors and those grievances are also a factor fuelling discontent towards the Dina Boluarte’s administration. The ICG report cited the Latinobarómetro survey, where 91% of Peruvian respondents said they were dissatisfied with their country’s democracy — the highest rate in the region. ICG also reported that the toll of the COVID-19 pandemic in Peru and the sluggish economy are also factors fueling public discontent toward ruling politicians.
Peru agrees with Belgium and Netherlands to fight drug trafficking in port cities
On February 4, the Peruvian government and authorities from Belgium and the Netherlands agreed to establish cooperation channels to address organized crime and drug trafficking. These include appointing liaison officers in each other’s capitals to exchange information. In addition, the Belgian Customs and Peruvian Tax agency (Sunat) signed a memorandum of understanding to jointly combat customs crimes and reinforce supply chain security between both countries. A record 116 tons of cocaine was seized in the port of Antwerp last year, while Rotterdam registered its largest-ever consignment of cocaine shipped from Ecuador via Panama.
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