Regional Pulse: 18 June 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
Senate approves Milei’s ‘omnibus’ legislative package
Argentina and China renew currency swap agreement
Senate approves 5% increase to provincial mining royalties, pending ‘omnibus’ decision
BRAZIL
Outcry as lower chamber speaker fast-tracks bill to restrict abortion
Rio Grande do Sul rice farmers speak out against imports
Proposal to raise private-sector taxes faces congressional gridlock
CHILE
Flooding disrupts southern Chile
Public consultation begins for regulating sustainability in mining sector
Investigative committee accuses government of protecting lawmakers
COLOMBIA
Chiquita Brands found liable for funding paramilitary group
Whistleblower mentions new ministers in misappropriation investigation
FARC dissidents launch bomb drone attack against military
ECUADOR
Congress votes against investigating Vice President Veronica Abad
Government reduces taxes on imported firearms
Gunvor Group ordered to pay USD93 million to National Treasury
MEXICO
New agreement allows Switzerland to help Mexico’s diplomatic actions in Ecuador
Changes in amnesty law allow the president to issue indiscriminate pardons
Government makes large foreign debt payment to give Sheinbaum flexibility
PERU
Newest poll registers 5% approval rating for Boluarte
New law prevents political parties from being investigated in corruption cases
Mining projects investing USD18 billion to be granted environmental licenses
KEY DEVELOPMENTS IN FULL
ARGENTINA
Senate approves Milei’s ‘omnibus’ legislative package
On 12 June 2024, senators approved President Javier Milei’s “omnibus” legislative package with some changes. With the vote tied, Vice President and Senate President Victoria Villarruel cast the deciding vote. Two Peronist lawmakers also broke rank to help the bill pass. Because of the Senate’s adjustments, the lower chamber must vote again to determine whether the adjusted bill will pass into law. Among the adjustments were two major defeats for the government. The bill would now only pave the way for the privatization of eight state companies, down from the original 41 proposed. There are reports the lower chamber may reject this adjustment to push through the privatization of some companies, which would include airline Aerolíneas Argentinas. To persuade centrist senators, Milei’s government guaranteed the futures of several scientific and academic bodies, including the academic research council (CONICET) and the nuclear energy commission (CNEA). The government also had to concede its proposed pension reform, which would have ended a payment plan for those with less than 30 years of tax contributions. More than 30 people were arrested in protests, during which six Peronist lawmakers were injured in clashes with police. Security Minister Patricia Bullrich said the protest was a coup d’etat attempt against the state, and that detained protesters will be charged with sedition. Social movements involved in organizing the protests deny responsibility for their violent escalation, saying those who set fire to cars and threw Molotov cocktails were infiltrators.
Argentina and China renew currency swap agreement
On 12 June 2024, Argentina and China’s central banks renewed their USD5 billion currency swap agreement. Argentina has made several currency swaps with China since 2009. The current agreement dates to June 2023, when the Alberto Fernández administration activated the USD5 billion swap to help pay for imports and cover debts. Argentina used some of the money from the swap to repay debts to the International Monetary Fund (IMF), aiding China’s ambition to internationalize the yuan. USD2.9 billion of the agreement was due to expire this month, meaning Argentina would have had to begin repayments. The currency swap renewal will give Argentina until July 2026 to repay the swap, with repayments now due to begin in June 2025.
Senate approves 5% increase to provincial mining royalties, pending ‘omnibus’ decision
On 13 June 2023, the Senate voted to allow provinces to charge royalties of 5% on new mining projects. The change would be contingent upon approval of the “omnibus” bill, which is now under discussion in the Chamber of Deputies. The new royalty rate would become effective if the Chamber of Deputies approves the Senate’s modifications to the “omnibus” bill, but provinces would still be allowed to maintain the lower threshold of 3%. Senators voted unanimously to increase royalties, with one abstention from Peronist Alicia Kirchner. Kirchner is the sister of former Peronist president Néstor Kirchner. While existing projects would maintain the 3% cap, new projects would be subject to royalties of 5%. The Chamber of Argentine Mining Companies criticized the increase. AmCham, a non-governmental committee of companies that promote US businesses in Argentina, argued that the royalty increase would go against the large investment incentive plan (RIGI) also included in the “omnibus” bill.
BRAZIL
Outcry as lower chamber speaker fast-tracks bill to restrict abortion
On 12 June 2024, Chamber of Deputies speaker Arthur Lira fast-tracked a bill that would equate abortion after 22 weeks with homicide. The bill will go straight to a lower house vote without scrutiny from specialist committees. It would also have to pass in the Senate, whose president Rodrigo Pacheco said he would not fast-track the bill. Under current laws, abortion is legal in cases of fetal abnormalities, rape, or danger to the mother’s life. The bill would restrict these exceptions so that any woman or healthcare professional terminating a pregnancy after 22 weeks could be charged with homicide and sentenced to up to 20 years in prison. Critics say the change would disproportionately affect children under 13, who make up 60% of Brazil’s rape victims. After mounting pressure, President Luiz Inácio Lula da Silva spoke out against the bill and called it “insanity.” No date has been set for the lower house to vote on the bill.
Rio Grande do Sul rice farmers speak out against imports
On 14 June 2024, rice farmers in the flood-stricken Rio Grande do Sul state asked the government not to import rice after the 2024 harvest exceeded pre-flood expectations. In May 2024, the government announced it would import nearly 900,000 tons of rice to cover potential shortages after floods devastated much of Rio Grande do Sul, which provides 70% of Brazil’s rice supply. The government planned to subsidize the cost of imported rice by charging consumers only USD0.70 per kilogram — well below the average retail price. The body representing Rio Grande do Sul’s rice farmers (IGRA) said it is confident that the state’s rice harvest can meet national demand. It announced that just more than 5% of the state’s rice fields had been lost to flooding, with the 2024 harvest yielding more than 7 million tons of rice.
Proposal to raise private-sector taxes faces congressional gridlock
On 11 June 2024, Senate President Rodrigo Pacheco overturned an executive order issued by the Luiz Inácio Lula da Silva administration that would raise federal taxes for private businesses. Finance Minister Fernando Haddad said the measure would be the only way to compensate for the tax exemptions Congress granted for municipalities and 17 economic sectors a week earlier. The government’s decision to implement a tax hike without congressional approval sparked anger among Brazil’s most influential lobbies, CNN Brasil analyst Daniel Rittner said. These include the agribusiness, energy, and manufacturing business councils. The biofuel sector calculated that the tax increase would cost the industry about USD6 billion if enacted, while the wheat chamber (Abtrigo) said raising costs would mean higher prices for the final consumer. The Brazilian financial market perceives that the federal government is unwilling to curb fiscal deficits. This has led investors to distance themselves from the local stock market and from the Brazilian Real, which has lost 6% of its value against the US dollar since April 2024. In 2023, Brazil had a USD50 billion fiscal deficit. Now, Lula’s government and congressional leaders are still negotiating how they will back the country away from a fiscal cliff.
CHILE
Flooding disrupts southern Chile
On 15 June 2024, Interior Undersecretary Manuel Monsalve confirmed the government will disburse emergency payouts of up to USD1,900 to individuals affected by flooding after heavier-than-usual seasonal rainfall. A major weather front has caused major flooding in nine of Chile’s 16 regions, including the Santiago Metropolitan Region. The Biobío region was the worst hit by the flooding, with 11,000 people affected. This includes 3,000 who have been cut off by the floods. Starting 17 June 2024, schools in affected areas can close.
Public consultation begins for regulating sustainability in mining sector
On 13 June 2024, a public consultation opened regarding the government’s proposed climate change plan for the mining sector (PSCC). The manufacturing and mining industries jointly produce 14.7% of Chile’s carbon emissions. The PSCC will regulate sustainability in the mining sector. Proposed measures include: obliging mining companies to consider climate change during every stage of mining projects, reducing suppliers’ carbon emissions, and using renewable energy where possible. Chilean citizens can read and leave comments on the PSCC via a government platform until 9 September 2024. The public consultation process was partly designed by the Inter-American Development Bank. The PSCC is a vital component of President Gabriel Boric’s climate change mitigation plan, which sets the goal of achieving carbon neutrality by 2050.
Investigative committee accuses government of protecting lawmakers
On 15 June 2024, a special committee of lawmakers responsible for investigating the “Convenios” corruption scandal accused the government of protecting coalition member lawmakers from scrutiny. The case centers on allegations that members of the left-wing Democratic Revolution party — which forms part of President Gabriel Boric’s ruling coalition — misappropriated an estimated USD96 million in public funds via the nonprofit organization Democracia Viva. Antofagasta Housing Minister Carlos Contreras and National Deputy Catalina Pérez were among the politicians facing charges in the case, with Contreras in preventive custody. Former Social Development Minister Giorgio Jackson, a close friend and ally of Boric, was also forced to resign. The scandal broke in June 2023, when Antofagasta-based investigative outlet Timeline revealed that unexplained sums were being passed from the Antofagasta Housing Ministry to Democracia Viva.
COLOMBIA
Chiquita Brands found liable for funding paramilitary group
On 10 June 2024, Chiquita Brands International was held liable in a US district court for funding the Autodefensas Unidas de Colombia (AUC) paramilitary group between 1997 and 2004. Chiquita will now have to pay USD38.3 million to eight families who filed a suit against the company for the deaths of their relatives. The litigation process began in 2007, when the US Justice Department pressed charges against the company for funding paramilitaries in the departments of Antioquia and Magdalena. That year, a court ruled that the company would have to pay a USD25 million fine for being involved in the activities of the US-designated terrorist group. Civil suits followed after the affected families failed to receive compensation for damages. Chiquita plans to appeal the verdict, NPR reported.
Whistleblower mentions new ministers in misappropriation investigation
On 13 June 2024, El Colombiano reported that former National Unit for Disaster Risk Management (UNGRD) director Olmedo López added more officials to the list of those allegedly involved in an investigation into possible misappropriation of funds within the entity. After signing a full immunity agreement in May, López accused high-ranking members of Gustavo Petro’s administration of diverting public funds to bribe lawmakers and fund electoral campaigns. La Silla Vacia has deemed this among the biggest corruption cases during Gustavo Petro’s presidency.
FARC dissidents launch bomb drone attack against military
On 12 June 2024, FARC dissident group Estado Mayor Central (EMC) attacked Colombian military forces and police officers in the department of Cauca. Semana reported that it was a “terrorist attack” with no human casualties that used bomb drones. This was just one of the 17 attacks the EMC carried out in the region since 2022. Defense Minister Iván Velásquez acknowledged that the EMC and other criminal organizations have expanded their ranks in 2023, making way for the group to occupy more territory.
ECUADOR
Congress votes against investigating Vice President Veronica Abad
On 14 June 2024, the National Assembly voted against proceeding with an investigation into Vice President Veronica Abad about her alleged involvement in a corruption case. Lawmakers denied the motion to move forward with the investigation of Abad’s case. The Attorney General’s Office has reason to believe that Abad is involved in an influence-peddling case called “Caso Nene” involving her son Sebastian Barreiro, who is being held in preventive detention. Abad’s team claims the case is “political persecution.” The investigation is set to continue after Abad’s term ends in 2025.
Government reduces taxes on imported firearms
On 12 June 2024, President Daniel Noboa approved a tax reduction on firearms imports by executive decree. Tariffs reached the 300% mark before the change, and are expected to reduce to 30% once the executive order becomes effective on 1 July 2024. El Comercio reported that about 10,000 different firearms and pieces of explosive equipment have been sitting in customs waiting for the lower tariffs to be applied. The tariffs reached the 300% mark after the Local Court of Pichincha overturned a previous decree signed by former president Guillermo Lasso that stipulated a 30% tax on imported firearms.
Gunvor Group ordered to pay USD93 million to National Treasury
On 11 June 2024, Gestión reported that Switzerland-based company Gunvor Group was ordered to pay USD93 million to Ecuador’s National Treasury. The company pleaded guilty to violating the Foreign Corrupt Practices Act earlier this year after paying officials to secure contracts with Petroecuador. The Ecuadorian state-run oil company was involved in the bribery case during Rafael Correa and Lenin Moreno’s presidencies. The information received allowed Gunvor to make USD384 million between 2012 and 2020 from their mining activities, Primicias reported. The group has lost upwards of USD700 million in confiscated assets and fines paid to both Swiss and Ecuadorian authorities since the beginning of March 2024, when the company agreed to pay more than USD661 million to resolve a US Justice Department Investigation.
MEXICO
New agreement allows Switzerland to help Mexico’s diplomatic actions in Ecuador
On 16 June 2024, Mexico signed an agreement with the Swiss Ministry of Foreign Affairs to allow the European country to conduct diplomatic and consular operations on its behalf in Quito, Ecuador following the breakdown of Mexico-Ecuador bilateral relations. Foreign Relations Minister Alicia Bárcena said the agreement also allows the Swiss mission to protect Mexican properties in Quito. Mexico broke off relations with Ecuador after Ecuadorian authorities raided Mexico’s embassy in Quito on 5 April 2024. They were arresting former vice president Jorge Glas, who was seeking political asylum in Mexico. The agreement came during Bárcena's visit to Switzerland, where she attended the Peace Summit for Ukraine.
Changes in amnesty law allow the president to issue indiscriminate pardons
On 14 June 2024, modifications to the amnesty law entered into force. The changes allow the president to remove previous sanctions and grant amnesty to any person directly — regardless of the crime committed — in exchange for “useful” information. Previously, amnesty could only be granted after an Interior Ministry review. President Andrés Manuel López Obrador said he will use the new powers to help with the case of 43 Ayotzinapa students going missing in 2014. Opposition parties said they would challenge the modifications before the Supreme Court. Their members claimed the president could use the law to favor political allies and affect the system of checks and balances.
Government makes large foreign debt payment to give Sheinbaum flexibility
On 12 June 2024, the Finance Ministry (SHCP) announced it paid USD894 million in foreign debt to give greater fiscal flexibility to President-elect Claudia Sheinbaum’s administration during her first year in office. Mexico's Finance Ministry said this is the third payment it has made on debt maturing in 2025, which together total USD4 billion. Finance Undersecretary Gabriel Yorio said this is part of a series of operations to help finance all of Mexico’s foreign debt due in 2025, which would provide Sheinbaum with greater financial stability in the first year of her administration. The announcement comes after Mexican stock indices fell more than 6% following the results of the 2 June general election, which would give majorities in Congress to the ruling party coalition MORENA-PVEM-PT.
PERU
Newest poll registers 5% approval rating for Boluarte
On 10 June 2024, Peruvian news outlet El Comercio published the results of the newest Datum poll, showing that President Dina Boluarte’s approval rating is only 5%. Boluarte has the lowest approval rating of any Peruvian president since 1980. Media outlets including La República link the “Rolexgate” case to her decline in popularity, while others including El Pais attribute it to her lack of transparency. Boluarte’s popularity has continued to decline since she took office in December 2022, with ongoing protests on the rise across the country.
New law prevents political parties from being investigated in corruption cases
On 11 June 2024, Dina Boluarte’s administration announced a law that keeps political parties from being found liable in domestic cases. The newest legislation approved by Congress modifies an article in the criminal code that points responsibility to the individuals involved, rather than the political parties behind them. These actions come just weeks before opposition leader Keiko Fujimori, the daughter of former president Alberto Fujimori, is scheduled to appear before the judiciary on 1 July 2024 in an audience related to the Odebrecht Case. She was allegedly involved in a money laundering scheme in which the Brazilian construction company Odebrecht illegally financed the Fuerza Popular party’s presidential campaigns. Former president Pedro Castillo’s far-left Perú Libre could also benefit from the new law. The party is currently under investigation over illegal campaign financing, and its party president Vladimir Cerrón is a fugitive accused of unlawful enrichment.
Mining projects investing USD18 billion to be granted environmental licenses
On 12 June 2024, Environment Minister Juan Carlos Castro confirmed that his office plans to grant licenses for companies investing a total of USD18 billion in the mining sector. In an interview with the Mining Engineers Institute of Perú, Castro said 32 companies are currently awaiting approvals, adding that the goal is to grant the licenses within eight to 12 months. Nevertheless, Castro said that bureaucratic processes have caused a four-year delay in companies being granted the permits and starting operations. Peru is a global leader in the mining industry, with one of the most abundant reserves of zinc, gold, and silver. The country’s mining industry revenue accounts for more than 8% of the country’s GDP while representing 64% of total exports.
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