Regional Pulse: 30 January 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
Milei fires infrastructure minister over alleged information leaks
Milei confronted with national strike after just 45 days in office
Changes to Omnibus Law would benefit oil companies
BRAZIL
Bolsonaro’s son becomes target of illegal spying investigation
Agriculture Ministry plans to help farmers as soybean price falls
Northeast cities at risk from erosion as sea levels rise
Lula gives up on top pick for Vale CEO
CHILE
Prosecutor’s Office opens investigation into grace pensions
Cencosud names new CEO
Chamber of Deputies approves pension reform
COLOMBIA
Colombia declares national disaster after forest fires
Manufacturing declines for the ninth consecutive month
Colombia to invest USD2.2 billion in renewable energy in 2024
ECUADOR
US and Ecuador to discuss military assistance deal
Ecuador reports largest-ever cocaine seizure
Debate on extending Yasuní ITT oil field closure extension
MEXICO
New Cartel of Chiapas and Guatemala issues warning against other gangs
Mexico state attorney general attacked while traveling
German Continental announces USD90 million investment
PERU
USD800 million investment in high-voltage lines
Gold mining gangs ramp up attacks
Canada’s Hannan Metals gets green light for copper and silver exploration project
KEY DEVELOPMENTS IN FULL
ARGENTINA
Milei fires infrastructure minister over alleged information leaks
On 25 January 2024, President Javier Milei fired Infrastructure Minister Guillermo Ferraro for allegedly leaking information about cabinet meetings to the press. According to local media reports, unknown ministerial cabinet members accused Ferraro of leaking details from a meeting in which the president reportedly said he would leave provincial governments “without a peso” under the wide-ranging fiscal cuts he proposes to reduce Argentina’s deficit. Ferraro is the first cabinet minister under Milei to lose their job. Peronist-controlled provincial governments have warned the president his proposed cuts will severely affect vital social services. Ferraro was one of the most politically experienced politicians in Milei’s cabinet. He served in the Peronist national government under former president Eduardo Duhalde and worked as an advisor to former center-right president Mauricio Macri during his time as Buenos Aires’ mayor.
Milei confronted with national strike after just 45 days in office
On 24 January 2024, Argentina’s largest trade union federations CGT and CTA led a nationwide general strike to protest against President Javier Milei’s “mega-decree” and Omnibus Law bill. Milei announced the decree and Omnibus Law in December shortly after taking office. Both propose introducing austerity measures and reforming labor laws. But Milei’s measures have been unpopular with the president’s left-wing Peronist critics, provoking the quickest national strike in Argentine history just 45 days after he took office. The Peronist trade unions were joined by left-wing political activists and numerous social movements, while the participation of public transport workers disrupted airline, train, bus and subway services across the greater Buenos Aires area. The strike took place in cities across the country, despite new anti-protest protocols intended to minimize disruption. On 27 January, three UN human rights rapporteurs signed a non-legally binding document asking Security Minister Patricia Bullrich to review the protocol, which they said violated the right to peacefully protest.
Changes to Omnibus Law would benefit oil companies
On 26 January 2024, EconoJournal reported that the government made two key changes to the Omnibus Law that would allow oil companies to renew exploration concessions without undergoing a new bidding process. President Javier Milei’s Omnibus Law, currently under congressional review, would reform Argentina’s economy by deregulating the market and aiming to cut the country’s deficit. The proposed law originally would have required companies to undergo a new bidding process each time their exploration concession ended. The changes introduced during the review, however, would allow oil companies to seek an extension of their concessions directly from the provincial governments where the exploration takes place. This would bypass the need to undergo a fresh bidding process, with companies potentially losing the concession to a competitor. The changes would take effect if the Omnibus Law passes through Congress. State-controlled oil and gas company YPF would be one of the main beneficiaries, as it holds two concessions due to expire in 2026 and 2027.
BRAZIL
Bolsonaro’s son becomes target of illegal spying investigation
On 29 January 2024, the Federal Police raided the office and home of former president Jair Bolsonaro’s son, Carlos Bolsonaro, as part of an investigation into illegal spying allegations. Carlos Bolsonaro, a Rio de Janeiro city councilor, allegedly received classified documents from his close friend and head of Brazil’s intelligence agency (ABIN) Alexandre Ramagem during his father’s presidency. Carlos Bolsonaro has yet to comment on the raid, but has taken to X (Twitter) to accuse President Luiz Inácio da Silva’s ABIN appointee of interfering in the investigation. Ramagem is accused of having used the Israeli spy software FirstMile to monitor Bolsonaro’s political opponents. The accusations are yet another scandal for the former president, who has been barred from running in the next two elections for spreading disinformation about the electoral system and is under investigation for inciting an attempted coup in January 2023.
Agriculture Ministry plans to help farmers as soybean price falls
On 28 January 2024, the Agriculture Ministry announced plans to reschedule producers' debts and open additional credit lines to aid farmers amid falling soybean prices. The price of soybeans has fallen 21% when comparing January 2023 and January 2024 — the largest price drop since 2015. Soybean prices reached a historic high during the 2022-2023 harvest, but are currently at their lowest point since 2020. In 2023, Brazilian soybean exports were greater than the total exports of any South American country, totaling USD125.2 billion.
Northeast cities at risk from erosion as sea levels rise
On 28 January 2024, residents of Icapuí in the northeastern state of Ceará evacuated after severe erosion caused by rising sea levels made their homes unstable. Coastal erosion has been threatening communities for the last 20 years throughout Ceará, which has the fourth-lowest GDP per capita of any Brazilian state. The ocean has moved up to 400 meters inland in some areas of Ceará state since 2000. Eighteen of Ceará’s 20 coastal municipalities are now at risk of seeing 45% erosion of their beachfront neighborhoods, which are critical to the state’s tourism industry.
Lula gives up on top pick for Vale CEO
On 27 January 2024, Valor reported that President Luiz Inácio Lula da Silva was no longer seeking to have his former Finance Minister Guido Mantega appointed CEO of mining giant Vale. Vale is a former state-run company in which the Brazilian government still holds a golden share. Mantega was Finance Minister from 2006-2011 under Lula, and again from 2011-2015 under Lula’s successor Dilma Rousseff. In 2016, he was arrested as part of the Operation Car Wash corruption investigation for misappropriation of public funds. Mantega was responsible for implementing failed economic policies that contributed to Brazil’s 8% recession between 2014 and 2016.
CHILE
Prosecutor’s Office opens investigation into grace pensions
On 26 January 2024, the State Prosecutor’s Office opened an investigation into so-called “grace pensions” awarded to people the government designated to be victims of the 2019-2020 social outbreak. Grace pensions are benefits awarded at the president’s discretion to those who have contributed to the country or society. However, the Prosecutor’s Office opened an investigation after lawmakers from the center-right National Renovation (RN) party complained of irregularities. In total 418 people have received these pensions under President Gabriel Borc and previous president Sebastián Piñera, The Clinic reported, with 69 having criminal records for crimes including sexual abuse and storage of child pornography. Of these, at least 48 reportedly received grace pensions under Boric. The government has announced that it is now planning to revoke about 20 of the grace pensions it awarded.
Cencosud names new CEO
On 26 January 2024, the board of Cencosud, Chile’s largest retail company, named Rodrigo Larraín as its new CEO. Cencosud employs more than 116,000 people across Chile, Argentina, Brazil, Colombia, and Peru, competing with Walmart and Brazilian distribution company GPA. Larraín, the current CEO of the company’s real estate branch Cencosud Shopping, was the favorite to replace ex-CEO Matías Videla. Videla resigned after the Financial Market Commission sanctioned him for insider trading. Videla was accused of using privileged information in the acquisition of a Brazilian supermarket chain and fined nearly USD450,000 in December 2023. Larraín will take over as the CEO of Latin America’s third-largest retailer on 1 March.
Chamber of Deputies approves pension reform
On 24 January 2024, the Chamber of Deputies voted in favor of President Gabriel Boric’s pension reform. Lawmakers approved the reform without an extra 6% contribution from employers that the government had hoped to include. The pension reform bill will now have to pass through the Senate, but the government is confident the bill will pass through relatively quickly. The pension reform would increase the universal guaranteed pension if approved, with a special focus on increasing pensions for women. Boric’s left-wing government has suffered several legislative defeats, including a failed tax reform bill in March 2023 and losing the 2022 constitutional referendum. Boric has long hoped to reform Chile’s pension system, which dictator Augusto Pinochet privatized in 1980. Conservative lawmakers do not believe the government has the fiscal space to allocate additional funds for pension reform.
COLOMBIA
Colombia declares national disaster after forest fires
On 27 January 2024, the government issued a national disaster decree to allocate resources in response to widespread forest fires that have broken out in recent weeks. Colombia has requested international assistance to combat the active hotspots and potential new fires in light of the El Niño weather phenomenon, marked by a decrease in rainfall and heightened temperatures. The United States, Peru, Chile, and Canada have already responded to the request for international assistance. Peru donated equipment, and the US sent natural disaster experts. The Institute of Hydrology, Meteorology, and Environmental Studies (IDEAM) calculates that more than 500 municipalities are on high alert due to fire risk. More than 17,000 hectares have been affected by the wildfires, which have worsened Bogotá’s air quality.
Manufacturing declines for the ninth consecutive month
On 18 January 2024, Colombia’s national statistics bureau (DANE) reported that manufacturing production decreased 6.4% in November 2023 compared to November 2022. This marks the ninth consecutive month of year-over-year decline for the manufacturing sector, which has experienced a decrease in sales and employees by 7.3%, and 1.9%, respectively. The five most affected industrial sectors were vehicle manufacturing, garment manufacturing, non-metallic mineral products, food products, and the iron and steel industries. These data are keeping the country’s 2023 GDP growth forecasts below 1.3%.
Colombia to invest USD2.2 billion in renewable energy in 2024
On 25 January 2024, Reuters reported that Colombia's renewable energy sector could receive up to USD2.2 billion in investment in 2024. It cited a report from the renewable energy association SER Colombia. Colombia is actively developing solar, wind, and geothermal renewable energy sources as President Gustavo Petro aims to reduce its reliance on fossil fuels. In the northern department of La Guajira, 12 wind energy projects are planned to be operational by this year, El Espectador reported. This would add more than 6,990 megawatts (MW) to Colombia's energy system. However, several obstacles could keep investments from reaching their full potential. Wind projects in La Guajira are delayed due to resistance from the Wayuu indigenous community, and the country lacks enough trained government personnel to technically evaluate projects. Petro has also said he opposes new oil exploration on several occasions, despite oil and gas currently constituting 36% of Colombia's export value.
ECUADOR
US and Ecuador to discuss military assistance deal
On 24 January 2024, Ecuador’s Defense Minister Gian Carlo Loffredo met with US Southern Command (SOUTHCOM) commander Laura Richardson to discuss a military cooperation agreement. This comprehensive agreement, valued at USD93.4 million, aims to fund the fight against organized crime. It includes providing military equipment to Ecuador, military training, cooperation for cyber security, intelligence sharing, and an increase in US Federal Bureau of Investigation (FBI) personnel in Ecuador. The Ecuadorian Constitutional Court has ruled that Congress does not need to vote on this bilateral agreement. The US and Ecuador previously signed a maritime agreement under the previous Guillermo Lasso administration in September 2023, which focused on combating illicit maritime activities such as illegal fishing and the smuggling of drugs, arms and migrants.
Ecuador reports largest-ever cocaine seizure
On 25 January 2024, Ecuadorian authorities destroyed 21.5 tons of cocaine that the National Police seized from an underground warehouse in Los Rios province. The seized cocaine blocks, worth about USD1 billion in international markets, showed different markings indicating potential criminal destinations. Authorities believe that the warehouse served as a distribution hub for drug traffickers targeting North America or Europe. Ecuador has emerged as a major player in the fight against drug trafficking, ranking third globally in drug seizures after Colombia and the United States.
Debate on extending Yasuní ITT oil field closure extension
On 25 January 2024, the environmentalist organization Yasunidos and the Confederation of Indigenous Nationalities of Ecuador (CONAIE) responded to President Daniel Noboa's comments about the possibility of extending the deadline for halting oil drilling in Yasuní ITT for an additional year. Both organizations warned that Noboa could face an impeachment inquiry if he does not comply with the Constitutional Court's order to stop oil exploration in the Yasuni ITT oil field within a year. Yasuní ITT produces approximately 11% of the national oil production and generated USD1.2 billion for the state in 2022, according to Petroecuador. Despite this, Noboa raised the possibility of extending the exploitation of Yasuní ITT to finance the fight against organized crime.
MEXICO
New Cartel of Chiapas and Guatemala issues warning against other gangs
On 28 January 2023, residents of the Villa Corzo municipality in southern Chiapas state witnessed the abandonment of a corpse attributed to the recently emerged Cartel of Chiapas and Guatemala. The gang is the self-styled name of a group of armed men who, without giving any information about their identities or their place of origin, present themselves as regional residents fed up with the presence of criminal groups and their apparent links with state security officials. In a video, alleged members of this new criminal organization warned of a wave of attacks against police forces in retaliation for the alleged protection that Chiapas' security undersecretary Francisco Javier Orantes Abadía gave to local Sinaloa Cartel operator Jesús Esteban Machado Meza, aka “El Güero Pulseras.”
Mexico state attorney general attacked while traveling
On 25 January 2023, the attorney general for the State of Mexico, José Luis Cervantes, was attacked by an armed group. The Prosecutor's Office reported that his van was shot twice and that one person had been arrested. According to initial reports, Cervantes was on his way to the state’s capital Toluca when an armed group followed him for several kilometers on the highway and caught up with his vehicle to shoot him. Two large cartels — the Familia Michoacana and the Jalisco New Generation Cartel — are fighting for control of State of Mexico territory. Some thirty local criminal groups are also fighting for illicit business there, holding down a marginalized and poor population. The State of Mexico is the most populated state in the country, with 17 million residents.
German Continental announces USD90 million investment
On 25 January 2023, German company Continental announced it would invest USD90 million in a new plant to produce hydraulic hoses for industrial purposes in North-Central Mexico. Continental's new factory, which will be located in Aguascalientes state, will increase regional manufacturing capacities and plans to generate about 200 jobs at first. Construction on the new, 85,000-square-meter plant in the Vesta Industrial Park will begin in the second half of 2024. The plant is expected to start operations in the second half of 2025. This will be Continental's twenty-second facility in Mexico, where it employs some 23,000 workers.
PERU
USD800 million investment in high-voltage lines
On 25 January 2024, the Energy and Mines Ministry announced it signed a concession for two electricity projects in the north of the country, which would expand the country’s high-voltage lines by more than 1,000 kilometers. Colombia's Interconexión Eléctrica S.A., which will invest USD800 million for the two projects, will build the structure to serve 7 million residents of northern Peru. The general manager of the private company Red de Energía del Perú (ISA Rep), Cristian Remolina, stated that the new high-voltage lines will integrate clean energy from wind power projects in the regions of Talara, Piura and Cajamarca.
Gold mining gangs ramp up attacks
On 23 January 2024, Insight Crime reported that the growing presence of gangs involved in illegal gold mining in Peru's La Libertad province has worsened the province’s security situation. It cited attacks against security forces and one of the nation's largest mining companies, La Poderosa. The most significant attack took place in early November 2023, when suspected criminals raided the company's tunnels. Nine workers were killed and 15 others injured, Reuters reported. Illegal mining in La Libertad has increased amid rising international gold prices and a lack of police or military presence in the mining areas, usually remote and with poor transportation infrastructure and basic public services.
Canada’s Hannan Metals gets green light for copper and silver exploration project
On 25 January 2024, the Canadian company Hannan Metals received an environmental permit to start exploration activities at the San Martin copper and silver project. This permit allows the company to research the mining potential of a 2,700-hectare area. Mining accounts for more than 60% of Peru’s exports. Copper is the country's top export, followed by gold and silver. Peru ranks as a major global copper producer, with 2.4 million tons produced in 2022.
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