LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Monday, May 18, 2020

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Monday, May 18, 2020

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Will Latin America’s Salvadoran Att’y CEO, DevryBV Sustainable Strategies General Objects to Joyce Chang Global Head of Research, Schools Be Able Bukele’s Decree JPMorgan Chase & Co. El Salvador’s attorney gener- Paula Cifuentes al challenged a decree that Director of Economic & Fiscal Affairs, to Reopen Safely? President Nayib Bukele issued to Latin America & Canada, Philip Morris International extend restrictions related to the Marlene Fernández coronavirus pandemic. Corporate Vice President for Page 3 Government Relations, Arcos Dorados Peter Hakim ECONOMIC President Emeritus, Inter-American Dialogue Mexican Gov’t Donna Hrinak Tightens Grip on President, Boeing Latin America Electricity Market Jon E. Huenemann Former Corporate and The Mexican government issued Government Senior Executive new rules for the operation of the James R. Jones country’s power grid. Industry Chairman, groups say the rules favor state Monarch Global Strategies Governments in Latin America, including Chilean Education Ministry officials, pictured above, electric utility CFE over private Craig A. Kelly are working on plans that involve social distancing for when students return to schools. // File Director, Americas International Photo: Chilean Government. developers. Gov’t Relations, Exxon Mobil Page 3 John Maisto Countries in Latin America are starting to discuss the Director, U.S. Education reopening of schools, which, along with most public places, Finance Group POLITICAL have been closed for nearly two months during the Covid-19 Nicolás Mariscal Brazil’s New Chairman, Q pandemic. Is now the right time for schools in the region Grupo Marhnos to reopen? What should public officials do to ensure that the health of Health Minister Thomas F. McLarty III Chairman, students and staff is protected as classes restart? Do primary and sec- Resigns After Four McLarty Associates ondary schools, as well as higher-education institutions, have enough Weeks in Office Carlos Paz-Soldan Partner, government funding and resources to both educate students and protect New Brazilian Health Minister DTB Associates, LLP their health? Nelson Teich resigned after just Beatrice Rangel a month on the job. Teich had op- Director, posed President Jair Bolsonaro’s AMLA Consulting LLC Ariel Fiszbein, director of the education program at the In- touting of hydroxychloroquine to Jaana Remes fight Covid-19. ter-American Dialogue: “Most countries in Latin America (the Partner, Page 2 McKinsey Global Institute exception being Nicaragua) have closed schools in response Ernesto Revilla Head of Latin American to the Covid-19 pandemic. In spite of the ongoing efforts to Economics, Citi A scale up distance-learning approaches, students and their families are Gustavo Roosen Chairman of the Board, struggling to maintain a normal learning environment. The reopening of Envases Venezolanos schools will most likely be a gradual process depending on the evolution Andrés Rozental of the pandemic and local conditions. Countries will need to develop President, Rozental & Asociados detailed plans that will typically entail the gradual and possibly partial Shelly Shetty reopening of schools with rotating attendance in order to enable some Managing Director, Sovereigns Fitch Ratings social distancing. The state of school infrastructure will be a critical factor. Unfortunately, schools with poor sanitary facilities (for example, no or intermittent running water) and limited space to allow for social distancing will face serious difficulties. Addressing those difficulties will Teich // File Photo: Brazilian require special efforts to upgrade school infrastructure to accompany Government. Continued on page 2

POLITICAL NEWS sity. More than 16,000 people are reported to NEWS BRIEFS have died of the disease in Brazil. Bolsonaro, Brazil’s New Health who has downplayed the threat of the virus Argentina Gets and has pushed for businesses to reopen, fired Counteroffers From Minister Quits After Teich’s predecessor, orthopedist Luiz Henrique Mandetta, over similar disagreements. “Life Creditors in Debt Talks Four Weeks in Office is full of choices, and today, I chose to leave,” International creditors delivered Argentina’s Teich said Friday in stepping down. Earlier in government three counteroffers late on Friday Brazil’s new health minister, Nelson Teich, the week, Bolsonaro allowed some businesses, as the country seeks a deal on restructuring resigned Friday after just four weeks on the job including gyms and hair salons, to reopen, $65 billion in foreign debt, Reuters reported. as the number of coronavirus cases and relat- declaring them essential. The move appeared The Economy Ministry said it was studying the ed deaths spirals upward in the South Ameri- to take Teich by surprise. “Was this announced offers and “their implications for ... restoring can country. Teich, an oncologist, did not say today?” he asked reporters who asked him the sustainability of public debt.” Argentina’s why he was stepping down, but in recent days about Bolsonaro’s decree. “No, it didn’t go government has said its debt is unsustainable he publicly opposed President Jair Bolsona- through the ministry, it’s not our attribution,” he after two years of recession and now amid the ro’s efforts to promote the anti-malaria drug said. “It’s the president’s decision.” Most gover- economic fallout of the Covid-19 pandemic. hydroxychloroquine to fight Covid-19, The Wall nors and mayors in Brazil have kept businesses [Editor’s note: See related Q&A in the May 13 Street Journal reported. Teich also opposed closed through local restrictions. Meantime, issue of the Advisor.] Bolsonaro’s efforts to ease social-distancing São Paulo Mayor Bruno Covas has said the measures in Brazil. The country now has more city’s health system could collapse as demand than 241,000 confirmed cases of Covid-19, the surges for hospital beds, BBC News reported fourth-largest number of cases in the world, today. The public hospitals in Brazil’s largest Two Chilean Gov’t after the United States, Russia and the United city have reached 90 percent capacity and may Ministers Quarantined Kingdom, according to Johns Hopkins Univer- run out of space in two weeks, he said. The Chilean finance and presidency ministers

FEATURED Q&A / Continued from page 1 are both in quarantine after coming in close contact with lawmakers who tested positive procurement of the necessary cleaning mies. Public health and safety concerns for the coronavirus during negotiations with supplies and protective equipment. Teachers continue to drive decisions on the timing and Congress, the ministers said Sunday, Reuters and directors will need to be prepared to implementation of school reopenings, but reported. Finance Minister Ignacio Briones provide remedial education and socioemo- even factors beyond virus control, including and Secretary General of the Presidency Felipe tional support to students in their return to sanitation, school meal availability and ade- Ward both said on Twitter that they had tested classes. Moreover, capabilities for distance quate teacher presence, will require careful negative for Covid-19 but would remain in iso- learning should continue to be upgraded as examination. Many reopening decisions lation until a second test confirmed it. At least the emergency may well continue throughout will need to be made on a phased or even 23 legislators who were in contact with those this and the next academic year. All of this school-by-school basis. Assuming most infected will also begin a quarantine period. strongly suggests that budget demands will countries in the region seek some degree be significant. Countries are experiencing of straightlined budgets to cover recurrent the largest negative shock on human capital costs such as salaries, the challenge will be accumulation in modern times. Attention working quickly and efficiently with what is Hochschild to Restart to immediate needs should not result in available. It is anticipated that multilateral Production at Two underinvestments with dramatic negative lenders and international donors will provide Peruvian Mines long-term effects.” some help to lower-income countries, where possible. All line ministries should Precious metals miner Hochschild Mining Michael C. Lisman, education take a fresh look at their engagement with said today it would restart production at its lead in the Bureau for Latin private-sector entities across the spectrum, Inmaculada and Pallancata mines in Peru, look- America and the Caribbean at such as nonstate schools, contract teachers ing at full output from these locations in the the U.S. Agency for Internation- and ancillary service providers. Such entities coming weeks, Reuters reported. Hochschild A operates two mines in southern Peru and one al Development: “Getting education back on can often be more nimble and can fill needed track is a top priority, with major implications gaps. Access is understandably the priority in Argentina. It said it would reissue its 2020 for Latin American and Caribbean econo- at first, but teaching and learning must be forecast once full production is achieved and the overall impact of suspending operations Continued on page 4 due to Covid-19 lockdowns was clear.

Salvadoran Attorney COMINGS & GOINGS General Challenges Presidential Decree Marriott Group Appoints New Leadership for the Americas Division El Salvador’s attorney general on Sunday chal- The Marriott Group has appointed new leadership to head the Americas division after former lenged a decree that President Nayib Bukele President Dave Grissen stepped down, the company said, the Caribbean Journal reported in issued the previous evening to extend coronavi- May. Grissen, who had worked at Marriott for 36 years, oversaw all of the Americas’ lodging rus restrictions after declaring a state of emer- business for the group, including more than 5,640 properties. Marriott has appointed Liam gency without the approval of Congress, El Faro Brown to take over as president for North America, and Craig Smith will assume the role of reported. The country’s Legislative Assembly group president, which includes overseeing all non-North American operations, including Latin had approved an emergency declaration in America and the Caribbean, according to the report. March to respond to the Covid-19 pandemic, but after an extension last month, the measure was set to expire on Sunday, Reuters reported. Legislators had planned to discuss a second NetApp Names Former Microsoft extension when they reconvened today. How- Latin America Head as its President ever, Bukele on Saturday night issued a decree to prolong the state of emergency 30 more Cloud data services firm NetApp has named César Cernuda as president, reporting to CEO days, which includes suspension of classes, George Kurian, effective in July, NetApp said in a statement on May 12. Cernuda, who most restrictions on movement and bans on large recently served as president of Microsoft Latin America and vice president of Microsoft Corpo- gatherings. Lawmakers last week had blocked ration, will lead NetApp’s global go-to-market operations, spanning sales, marketing, services the extension, arguing that the administration and support, according to the statement. had not made public a roadmap of its response to the pandemic or any coronavirus-related expenditures, El Faro reported. “All presidents in the democratic history of our country have Affronti Takes Over as YPF Chief Executive had the power to declare a state of emergen- Argentine state-controlled oil company YPF has named oil industry veteran Sergio Affronti as cy and have exercised it, without legislative its new chief executive, Argus Media reported in early May. The announcement came after oil approval,” Bukele wrote Sunday on Twitter. prices crashed in March and coronavirus-linked lockdown measures have driven down demand “Will a president be prevented for the first time for most oil products. Affronti replaces Daniel González, who had served as YPF’s chief from exercising that vital power?” Lawmakers financial officer before being named chief executive in April 2018. The appointment is part of a and civil society groups urged an investigation shake-up at the company after President Alberto Fernández took office in December. Affronti’s to determine whether Bukele exceeded his career began at YPF, and he has since held several international positions, including when power, a recurring allegation over the past few the company was controlled by Spain’s Repsol and as country manager for Repsol in Ecuador, months. [Editor’s note: See related Q&A in the Argus Media reported. April 30 issue of the Advisor.]

blasted the new rules, saying they favor struction, which together total $6.4 million in Mexican state-owned electricity utility CFE over investments, much of it from foreign firms, the ECONOMIC NEWS private developers and roll back the opening Associated Press reported. “This represents a of the power market to foreign investors. The frontal attack on legal security for investments Mexico Tightens Grip Energy Ministry said on Saturday that the in Mexico and causes serious consequences reason for halting solar and wind plants’ entry for the country, including the loss of jobs and on Electricity Market into operation was the plunge in demand due investor confidence,” Mexico’s Business Coor- to coronavirus lockdowns, which raised the dinating Council wrote on Sunday. “This does The Mexican government on Friday issued new need for a more “reliable and continuous” not just discriminate against renewable energy, rules for the operation of the country’s power power supply, The Wall Street Journal reported. it also allows authorities to artificially inflate grid, affecting dozens of renewable energy Industry associations said the new rules will the price of electricity and arbitrarily displace projects, The Wall Street Journal reported. affect 28 solar and wind projects that were any private sector power generation project,” it Energy companies and local industry groups set to go online, as well as 16 more under con- added.

FEATURED Q&A / Continued from page 2 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2020 addressed. Most countries of the region are during the current semester (that is, before opting for a policy of ‘automatic promotion’ mid-July), and nearly 40 percent reported Erik Brand (meaning moving all students up a grade that they would not send their children back Publisher [email protected] level), which is not ideal, but probably war- until 2021. Add to this the deep reticence to ranted and backed by relevant international returning to in-person instruction expressed Gene Kuleta Editor evidence. In this unprecedented scenario, repeatedly by the leadership of Chile’s [email protected] equipping schools and teachers to efficiently largest teacher unions, and it is easy to see Anastasia Chacón González assess and address the learning and psycho- that we are probably a ways off before any Reporter & Associate Editor social needs of their students will become serious consideration of a reopening.” [email protected] the overarching goal. Formative assessment data is crucial to being able to develop and Maria Soledad Bos, educa-

provide flexible, differentiated and remedial tion lead specialist at the Michael Shifter, President instruction.” Inter-American Development Rebecca Bill Chavez, Nonresident Senior Fellow A Bank: “When considering the Sergio Bitar, Nonresident Senior Fellow Timothy Scully, emeritus direc- reopening of schools, four key sanitary Joan Caivano, Director, Special Projects tor of the Institute for Educa- criteria must be kept in mind to allow Michael Camilleri, Director, Rule of Law Program tional Initiatives at the Universi- students and teachers to return to class Kevin Casas-Zamora, Nonresident Senior Fellow A ty of Notre Dame: “On March 16, safely. First, ensure social distancing. This Héctor Castro Vizcarra, Nonresident Senior Fellow the Chilean Ministry of Education suspended can entail gradual or staggered reopening of Julia Dias Leite, Nonresident Senior Fellow in-person classes throughout the country. schools, where different groups of students Ariel Fiszbein, Director, Education Program Since that time, the country’s educational take turns to return to school, reducing Peter Hakim, President Emeritus establishments have been struggling with the number of students there at the same Nora Lustig, Nonresident Senior Fellow the challenges of engaging distance learning time. Schools can also increase the space Margaret Myers, Director, Asia and Latin America Program with students at all levels. This is especially between students’ desks, avoid group activ- Manuel Orozco, Director, Migration, challenging in contexts where many underre- ities and restrict the number of students in Remittances & Development sourced households experience the lack of hallways and bathrooms. Second, schools Xiaoyu Pu, Nonresident Senior Fellow adequate access to personal computers and should be kept clean and sanitized, including Jeffrey Puryear, Senior Fellow poor Internet connectivity. These challenges a first deep cleaning and disinfection upon Mateo Samper, Nonresident Senior Fellow will only be reinforced by the economic students’ return to school. Regular clean- Tamar Solnik, Director, Finance & Administration impact of Covid-19 on those families ing of all classrooms, furniture, common Lisa Viscidi, Director, Energy Program in lower-income categories, as a recent areas and especially frequently touched Denisse Yanovich, Director of Development and ECLAC study predicts that the poverty rate surfaces should be intensified. Third, ensure External Relations is anticipated to rise by 50 percent due to that students and teachers arrive and stay Latin America Advisor is published every the crisis. Chile’s Ministry of Health has yet healthy at school by checking the health business day, except for major U.S. holidays, to determine the exact protocols if schools status of students upon entering school by the Inter-American Dialogue at 1155 15th Street NW, Suite 800 wish to reopen, but the sheer infrastructure as well as communicating to parents and Washington, DC 20005 challenges are daunting. And even if schools students the importance of staying home if www.thedialogue.org were prepared to receive students, it’s not they do not feel well. Fourth, ensure access ISSN 2163-7962 at all certain that parents and guardians will to handwashing stations, with constant and Subscription inquiries are welcomed at allow their children to return to school any sufficient access to soap and water or other [email protected]

time soon. In a recent survey of elementary hand-cleaning items.” The opinions expressed by the members of the Board of and secondary school parents undertaken Advisors and by guest commentators do not necessarily represent those of the publisher. The analysis is the sole by the Chilean Association of Municipali- The Advisor welcomes comments on its Q&A view of each commentator and does not necessarily ties, 96.3 percent of those asked said they section. Readers can write editor Gene Kuleta represent the views of their respective employers or firms. would not send their children back to school at [email protected]. The information in this report has been obtained from reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have any questions relating to the contents of this publication, contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in a retrieval system, or transmitted without prior written permission from the publisher.