Regional Pulse: 24 October 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
Massa and Milei to face off in second round of presidential elections
Car manufacturers halt production amid supply chain crisis
Inauguration of three new wind farms increases Argentina’s wind power capacity
BRAZIL
Comando Vermelho gang returns weapons it stole from Army
Weak economic activity pressures government spending
JBS owners to invest USD1 billion in mining operations
CHILE
Immigrant numbers grow as their conditions worsen
Attitudes towards previous social unrest turn negative
Boric attends Belt and Road Forum celebrating 10 years of the initiative
COLOMBIA
Congress approves 2024 budget
Petro to visit Mexico, China, and US
UN announces support of government-FARC cease-fire
ECUADOR
Ecuador continues purchasing electricity from Colombia at a premium
Indigenous confederation publishes 15 demands for Noboa administration
Ecuador’s largest oil field reached record production
MEXICO
Results of Latin American summit fall short to address migration
Unionized workers take over Mexico’s largest copper mine
Congress analyzes new regulations for entrepreneurs
PANAMA
Protests surge against largest open-pit copper mine in Central America
PERU
Petroperú and Perupetro sign contract for work in Talara oil field
Congress attempts to limit National Justice Board
Lack of funds limit Boluarte investigation
KEY DEVELOPMENTS IN FULL
ARGENTINA
Massa and Milei to face off in second round of presidential elections
On 22 October 2023, none of Argentina’s presidential candidates received enough votes to win in the first round of elections. Far-right libertarian Javier Milei (La Libertad Avanza) was expected to win the most votes after his success in August’s primaries. However, continuity candidate Sergio Massa (Unión por la Patria) had the highest share of votes in the first round (36.68%) over Milei (29.98%). Exiting the race are center-right candidate and former security minister Patricia Bullrich (23.83%), Cordoba governor Juan Schiaretti (6.78%), and far-left candidate Myriam Bregman (2.70%). The second round will take place on 19 November.
Car manufacturers halt production amid supply chain crisis
On 18 October 2023, GM Argentina announced it would continue working to rebuild its supply chain after its Chevrolet plant in Santa Fe was forced to halt production. The plant has remained paralyzed since 10 October due to a lack of parts. Overseas suppliers suspended exports when the company failed to pay for them, due to problems with accessing dollars. GM’s Rosario plant was briefly shut down last week for the same reason, and several other car manufacturers have also recently experienced supply chain issues due to non-payment. In response to the difficulties faced by importers, the government expanded its currency swap with China. This increased the central bank’s yuan reserves by the equivalent of USD6.5 billion. This allowed the central bank to grant foreign currency to car manufacturers to pay overseas suppliers in the Chinese currency, with the aim of facilitating imports and restarting production processes.
Inauguration of three new wind farms increases Argentina’s wind power capacity
On 18 October 2023, Argentine petrochemical company Petroquímica Comodoro Rivadavia (PCR) began operating three new wind farms. The company now has a total generation capacity of 527,4 megawatts (MW), which represents 15% of the country’s total wind power generation. PCR invested USD370 million into constructing the three new plants in the provinces of Buenos Aires (2) and San Luis (1), which created more than 800 new jobs. PCR’s six wind farms have the energy potential to power 720,000 households.
BRAZIL
Comando Vermelho gang returns weapons it stole from Army
On 20 October 2023, the Comando Vermelho criminal group returned eight of the 21 weapons diverted from the Army’s Barueri arsenal in São Paulo. Authorities suspect that Comando Vermelho bought the weapons from middlemen who negotiated a deal between the group and those responsible for the theft. On 10 October, the Army admitted that 21 machine guns had been stolen from the São Paulo armory back in September. The discovery of the eight guns came after the criminal group alerted the authorities of their whereabouts. Investigators suspect inside involvement, and service personnel responsible for the armory’s security at the time of the robbery will face investigation. In total, 17 of the 21 guns have now been recovered.
Weak economic activity pressures government spending
On 20 October 2023, the central bank’s latest figures showed the economy receded by 0.77% in August compared with July. This was a larger decline than the 0.3% fall predicted by local analysts, putting more pressure on the government’s already tight budget. The weakened service sector has had a negative impact on GDP growth. This indicates that the government needs to reassess its spending, an expert told CNN Brasil. But as local consultancy firms point out, President Luiz Inácio Lula da Silva will have a difficult time finding the right balance, as the government is a major driver of consumption. So, a government spending cut has the potential to further reduce economic activity.
JBS owners to invest USD1 billion in mining operations
On 18 October 2023, the Batista family behind J&F Investimentos announced it would invest USD1 billion in the Santa Cruz and Urucum mining projects it bought from Vale last year. J&F Investimentos is the parent company of Brazil’s third-largest company, meatpacker JBS. It also owns shares in Havaianas. The Batista family made its money from the meat industry, but also has investments in the cellulose, banking, energy and cosmetics sectors. The Batistas will now begin constructing a railway to serve its latest venture — mining. The railway will run 50 kilometers from their mines in Mato Grosso do Sul to the port of Gregório Curvo, which the family also owns. The rail investment is part of the nearly USD8 billion the family plans to invest across Brazil between 2023 and 2026.
CHILE
Immigrant numbers grow as their conditions worsen
On 18 October 2023, a new report from think tank Libertad y Desarrollo showed that immigrants in Chile now make up 8.7% of the population compared with just 2.3% a decade ago. The largest growth is among Venezuelan immigrants, a population that has grown from 2% of Chile’s foreign-born population in 2013 to 49% in 2022. Chile’s immigrant population grew to more than 1.7 million in 2022, and the country receives about 200,000 immigrants each year. The report also highlighted that immigrants in Chile earn considerably less than those born in Chile, despite having a higher level of education and workforce participation. As a result of poor pay, the proportion of immigrants living in multidimensional poverty is nearly double that of non-immigrants (30% compared to 16%). The report was released as the country nears the new constitutional referendum, which may introduce new laws to clamp down on immigration.
Attitudes towards previous social unrest turn negative
On 18 October 2023, Chile commemorated four years since the mass protests known as the Estallido Social (social outburst) erupted in 2019. The protests mobilized hundreds of thousands across the country. Lawmakers then approved a process for drafting a new constitution in 2019, and left-wing President Gabriel Boric took office in 2022. According to a Criteria poll, support for the protests peaked in 2020, with 67% of the population believing they were positive for the country. However, the latest Criteria poll shows that just 33% believe the Estallido was positive, while 55% believing it is more negative than positive for the country. The Estallido started out as a protest against rising public transport fares, but soon turned into a nationwide outburst against the cost of living, unemployment, privatization and inequality. However, the latest opinion polls suggest the majority of Chileans now value order and stability over social reform.
Boric attends Belt and Road Forum celebrating 10 years of the initiative
On 20 October 2023, President Gabriel Boric returned from a five-day trip to China in which he celebrated 10 years of the Belt and Road Initiative alongside Chinese officials. He met with China’s President Xi Jinping and attended the third Belt and Road Forum in Beijing. During the trip he was accompanied by Camila Vallejo (Communist Party of Chile), a senior government spokesperson. Government spokespeople have ministerial status, but rarely accompany presidents on international visits. Communist Party representative Vallejo’s inclusion is likely a signal to Xi that Boric is prioritizing relations with China. Boric secured USD230 million in investment from steel and nickel firm Tsingshan to develop the lithium industry in Chile’s patch of the Lithium Triangle. The Chilean government also signed a deal with telecommunications firm Huawei to provide digital literacy and IT training in Chile.
COLOMBIA
Congress approves 2024 budget
On 18 October 2023, Congress approved a USD118 billion national budget for 2024. This represents a 18.9% increase over 2023 and is equal to 29.6% of the country’s GDP. The education, health, defense, and treasury ministries will receive the majority of funds in 2024. Andrés Velasco, technical director of Congress’ Autonomous Fiscal Rule Committee, claimed during the budget debates that financing sources for the general budget could create structural expenses through irregular financing, potentially resulting in non-compliance with the fiscal rule.
Petro to visit Mexico, China, and US
On 20 October 2023, news outlet Infobae reported that Colombian President Gustavo Petro began an international tour in late October. He will visit Mexico, China and the US. On 21 October, Petro attended the Latin-American and Caribbean Conference on Migration in Chiapas, Mexico. He focused on Colombia’s role in irregular migration and shared his views on how it directly ties into climate change. The president then plans to speak with Chinese President Xi Jinping in Beijing on 25 October, in part to focus on coordinating construction of the Bogotá Metro public transit system. In 2019, two state-owned Chinese companies (China Harbour Engineering Company and Xi’an Metro Company) won the contract to construct the capital’s first subterranean metro line. Finally, Petro plans to visit the US on 3 November to attend the Alliance for Economic Prosperity in the Americas event in Washington D.C.
UN announces support of government-FARC cease-fire
On 17 October 2023, the United Nations Security Council published a press statement reiterating its full support for ongoing peace processes in Colombia. These include the cease-fire between the government and the FARC dissident group Estado Mayor Central (EMC), as well as dialogue with the Ejercito de Liberation Nacional (ELN). The Security Council also stressed the importance of continuing to implement the Final Peace Agreement agreed to with the FARC during the 2016 peace process. In contrast to ongoing EMC and ELN dialogue, the paramilitary group Autodefensas de la Sierra Nevada de Santa Marta reported that, despite their wishes to start a peace process with the government, the government has yet to establish dialogues. The paramilitary group signed a cease-fire with the government 1 January 2023, but has yet to establish an official peace process.
ECUADOR
Ecuador continues purchasing electricity from Colombia at a premium
On 16 October 2023, Ecuador’s national electricity operator Cenace reported that the cost of electricity it is purchasing from Colombia reached a new high of USD0.57 per kilowatt hour(KWh). This is six times more than the price of electricity produced in Ecuador. This is partly due to the energy being produced from thermal power plants — a more expensive process than locally producing it at hydroelectric plants. Given a drought across the country, the eight principal hydroelectric plants only satisfied 66% of the country’s demands, as opposed to meeting 95% of demands during the rainy season. Ecuador’s largest hydroelectric plant, Coca Codo Sinclair, is currently functioning at 45% capacity. Colombia sold Ecuador a total of 902.6 KWh between January 2023 and 16 October 2023, costing Ecuador USD20 million per week.
Indigenous confederation publishes 15 demands for Noboa administration
On 19 October 2023, Ecuador’s Indigenous Nationalities Confederation (CONAIE) published a list of 15 demands for Daniel Noboa’s incoming administration set to take office on 25 November. CONAIE President Leonidas Izao called upon Ecuador’s citizens to oppose conservative candidates before the October 15 election, but now must work with right-leaning Noboa. The 15 demands include reforms to mining and extractive economies, including closing the Yasuní ITT oil field in the Amazonian Yasuní National Park. Other demands for the new administration include reforming land ownership legislation, boosting education spending and providing financial support to the agricultural sector. News outlet Primicias reported that some demands may be more complicated to achieve than others, including those related to suspending free trade agreements, limiting private banking and conducting a general audit.
Ecuador’s largest oil field reached record production
On 22 October 2023, oil company Petroecuador announced that the Sacha oil field reached a daily production record of 76,000 barrels of crude oil per day. Located in the Amazonian province of Orellana, the Sacha oil field has two operational oil towers and four more undergoing repairs. Having been operational for 50 years, the oil field has approximately 350 million barrels in reserve. Petroecuador has a current production capability of 406,210 barrels of crude oil per day, representing 80% of Ecuador’s total extraction capacity.
MEXICO
Results of Latin American summit fall short to address migration
On 22 October 2023, the Latin American leaders’ summit on migration held in Mexico concluded with a joint declaration lacking concrete measures to address the phenomenon in the region. The document included rejections to US-led “coercive measures,” a pledge to respect migration as a human right, and a call for more legal alternatives for irregular migration. Twelve countries signed the declaration: Belize, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Panama, and Venezuela. As a first point, the countries agreed to create a high-level dialogue with a new international working group led by foreign affairs ministries. The Mexican government summoned international leaders following an unprecedented flow of up to 16,000 migrants arriving daily at Mexican borders.
Unionized workers take over Mexico’s largest copper mine
On 20 October 2023, about 100 workers affiliated with the National Mining Union of Mexico (SNTMMSSRM) took over the largest copper mine in the country for three days to demand that the federal government resolve a historic labor dispute. The Buenavista del Cobre mine in northern Sonora state is owned by the Grupo México (GM) consortium, and is one of the largest copper mines in the world. The workers blocked the mine’s entrances, impeding access for trucks transporting personnel, supplies, and external providers. The blockade also affected thousands of subcontractors carrying out maintenance and infrastructure works. Workers lifted the blockade three days later after they agreed to establish a dialogue between authorities, GM representatives, and workers on December 31, 2023 in Mexico City. The takeover was part of a labor dispute beginning in 2007. During that year, GM reduced the mine’s workforce, but it was forced to operate at full capacity again in 2010 following a court ruling.
Congress analyzes new regulations for entrepreneurs
On 20 October 2023, Congress’ lower house received a law reform proposal that would reduce informality among entrepreneurs through a new regulatory framework. Juanita Guerra Mena, deputy of the ruling MORENA party, introduced the proposal. The reform seeks to create a new entrepreneurship institute. The new body would be in charge of providing opportunities for entrepreneurs, such as access to financing and training. It would also encourage micro, small, and medium enterprises (MSME’s) to become formal entities. The proposal will be discussed in the lower house’s plenary session. If approved, it would move to the Senate for discussion. The Institute would have a council made up of officials from the economy, interior, foreign affairs, labor, and well-being ministries. This council would also determine the nature of incentives and financing opportunities for entrepreneurs. MSMEs are responsible for 52% of the country’s GDP and generate 72% of formal jobs. However, according to the Mexican Institute for Competitiveness (IMCO), eight out of 10 entrepreneurs are informal.
PANAMA
Protests surge against largest open-pit copper mine in Central America
On 23 October 2022, protesters and security forces clashed in Panama City over the government deal with Canadian mining firm First Quantum Minerals regarding Central America’s largest open-pit copper mine. After two years of negotiations with the government, First Quantum Minerals agreed to pay USD375 million as mining rights — 10 times more than the amount outlined in a previous government contract. This contract secured a 20-year period of exploration at the Cobre Panamá mine. Indigenous organizations and worker unions claim that the company has not paid enough for the rights, given the risk to the local environment and the mine’s size. The mine is responsible for 4% of Panama’s GDP, with a production capacity of 300,000 tons of copper per year. The protests affected the outskirts of the capital city and metro stations as protesters set fire to tires and cut several roads. Fifteen protesters were detained by police.
PERU
Petroperú and Perupetro sign contract for work in Talara oil field
On 21 October, Perupetro President Isabel Tafur Marín and Petroperú President Pedro Chira Fernández signed a contract assigning Petroperú the rights to Lots I and VI in the Talara oil field. Petroperú further announced plans to complete 10 repairs to infrastructure in Lot VI, and six in Lot I. Petroperú anticipates Lot I will produce up to 516 barrels of crude oil and 3.4 million cubic feet of natural gas per day. Lot VI is projected to produce 2,000 barrels of crude oil and 4 million cubic feet of natural gas per day.
Congress attempts to limit National Justice Board
On 18 October 2023, the congressional Justice Commission held an extended session where it attempted to remove seven members for the National Justice Board (JNJ) for undefined “grave reasons.” News outlet Infobae reported that Úrsula Indacochea, a lawyer specializing in judicial branch independence, claimed that Congress wants to limit the separation of power between the legislative and judicial branches and weaponize the JNJ in order to influence judges. JNJ Vice President Aldo Vásquez said that the attempt was illegal and unconstitutional in an interview with news outlet RPP Noticias. United Nations Special Rapporteur Margaret Satterthwaite expressed concern over the attempt, saying it could challenge the country’s separation of powers, JNJ independence, and judges’ impartiality.
Lack of funds limit Boluarte investigation
On 22 October 2023, news outlet Infobae reported that an investigation into whether President Dina Boluarte laundered money and illegally funded her campaign had stalled. The investigation was halted after the Public Ministry claimed the government has insufficient funds to renew contracts for 14 investigators leading the inquiry. Prosecutor Richard Rojas has been investigating Boluarte since 21 August 2023 for alleged money laundering and illicit campaign financing for the Perú Libre political party. However, he claims that the lack of personnel has impeded the investigation. Both former president Pedro Castillo and fugitive former senator Vladimir Cerrón are also implicated in the investigation. Infobae also reported that while the Public Ministry claims there are no funds available for those contracts, the ministry financed a seven day trip to Italy for Attorney General Patricia Benavides — a close Boluarte ally.
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