LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Thursday, March 21, 2019

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, March 21, 2019

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk How Successful Venezuelan Gov’t Corporate VP, Global Corporate Affairs Cargill Agents Detain Key Joyce Chang Global Head of Research, Was Bolsonaro’s Aide to Guaidó JPMorgan Chase & Co. Venezuelan government agents Marlene Fernández early this morning raided the Corporate Vice President for Trip to Washington? home of attorney Roberto Marrero, Government Relations, Arcos Dorados a key aide to National Assembly Peter Hakim President and internationally President Emeritus, recognized acting President Juan Inter-American Dialogue Guaidó. Donna Hrinak Page 2 President, Boeing Latin America Jon Huenemann Vice President, U.S. & Int’l Affairs, ECONOMIC Philip Morris International Argentina OKs James R. Jones Chairman, New Natural Gas Monarch Global Strategies Craig A. Kelly Exports to Chile Director, Americas International Brazilian President Jair Bolsonaro met Tuesday with U.S. President Donald Trump at the White Argentina authorized new ship- Gov’t Relations, Exxon Mobil House. // Photo: Brazilian Government. ments of gas to Chile by state oil John Maisto company YPF and France’s Total. Director, U.S. Education Finance Group Jair Bolsonaro visited Washington for the first time as Bra- Page 2 Nicolás Mariscal Chairman, zil’s president this week and on Tuesday discussed issues POLITICAL Grupo Marhnos including trade ties, military cooperation and the ongoing Thomas F. McLarty III Q turmoil in Venezuela with U.S. President Donald Trump. Nicaragua Vows Chairman, McLarty Associates What came of the visit, and how might it affect Brazil-U.S. relations go- to Release All Carlos Paz-Soldan ing forward? What are the most important areas of cooperation between Jailed Protesters Partner, DTB Associates, LLP the two countries, and what issues remain major sticking points? What Nicaraguan President Daniel Beatrice Rangel is motivating Bolsonaro’s policy toward the United States, and how much Ortega’s government said it will Director, release all demonstrators who of a turnaround will it be from the approach of past Brazilian administra- AMLA Consulting LLC have been detained since violent Jaana Remes tions? anti-government demonstrations Partner, erupted in the Central American McKinsey Global Institute country last April. The opposition Ernesto Revilla Peter Hakim, president emeritus at the Inter-American Head of Latin American has long demanded the prisoners’ Economics, Citi Dialogue: “The prospect of a re-energized U.S.-Brazil relation- release. Gustavo Roosen ship has fired up both nations’ governments. Bilateral ties Page 2 Chairman of the Board, Envases Venezolanos A have been cool and detached for the past half-dozen years. Andrés Rozental Presidents Bolsonaro and Trump demonstrate a special affinity—sharing President, Rozental & Asociados and Senior similar worldviews, convergent policy priorities and matching tempera- Policy Advisor, Chatham House ments. Both have proclaimed enthusiasm for deeper, more robust eco- Shelly Shetty nomic, political and security relations. The United States wants Brazil on Head of Sovereign Ratings, Latin America, Fitch its side. Recently, the White House has focused much of its Latin America Roberto Sifon-Arevalo attention on Venezuela and Cuba, pursuing regime change in both. The Managing Director, Americas Sovereign & Public Finance Ratings, United States has steadily escalated pressures on the Maduro govern- Standard & Poor’s ment, even suggesting a willingness to employ military force. Washington sees Brazil’s backing as essential for a successful strategy. For its part, Brazil views U.S. support on trade and other economic issues as crucial to its struggle to recharge its static, troubled economy—the Bolsonaro Ortega // File Photo: Nicaraguan Government. Continued on page 3

POLITICAL NEWS escalated into general anti-government demon- NEWS BRIEFS strations and calls for him to leave office and Nicaragua Vows allow new elections. [Editor’s note: See related U.S. Senator Rubio Meets Q&A in Tuesday’s Advisor.] With Haitian President to Release All in Port-au-Prince Venezuelan Gov’t Jailed Protesters U.S. Senator Marco Rubio (R-Fla.) on Wednes- Authorities Detain day met with Haitian President Jovenel Moïse Nicaraguan President Daniel Ortega’s govern- and lawmakers in Port-au-Prince, where they ment on Wednesday promised to release all Key Aide to Guaidó discussed the reshuffling of Moïse’s cabinet protesters who have been jailed since violent following the ouster of Jean-Henry Céant as anti-government demonstrations erupted in the Venezuelan government security forces early prime minister through a vote of no confidence Central American country nearly a year ago, the this morning detained a key aide to opposition in Congress, Reuters reported. Moïse, who in Associated Press reported. The government leader Juan Guaidó, who has international recent weeks has faced an internal crisis fol- said it would release the demonstrators within recognition as the country’s acting president, lowing paralyzing nationwide protests against 90 days, according to Waldemar Sommertag, the Associated Press reported, citing an him, on Twitter said he and Rubio had spoken the papal nuncio in Nicaragua, who announced opposition legislator. Intelligence agents raided about security and holding parliamentary the Ortega administration’s decision along- elections. side officials from the government and the opposition. The prisoners’ release has been a We don’t know where top demand of the opposition for continuing he is. He should be talks with Ortega’s government. In return for Argentina Authorizes freed immediately.” the release of the protesters, Ortega is asking YPF, Total to Export — Juan Guaidó for sanctions against his government to be Natural Gas to Chile lifted, the wire service reported. Some 640 Argentina’s energy secretariat has authorized demonstrators are estimated to be behind the Caracas home of lawyer Roberto Marrero, state oil company YPF to export 500,000 cubic bars. Talks that began Feb. 27 would resume capturing him in an overnight operation, said meters per day and France’s Total to send 1.5 today, the statement said. The situation in the the lawmaker, Sergio Vergara, whose home was million cubic meters per day of natural gas to Central American country has been particularly also searched. Agents woke up Vergara in the Chile during the eight-month period of lower lo- tense in recent days since security forces early morning hours by banging on his door and cal demand in Argentina, the government said broke up demonstrations last weekend. On pointed weapons at him when he answered, Wednesday, Reuters reported. The announce- Saturday, police used tear gas against pro- he said. Vergara and Marrero recently traveled ment came after a meeting between Argentine testers and temporarily detained about 100 of with Guaidó on a tour of Latin American coun- Energy Secretary Gustavo Lopetegui and them amid an anti-government demonstration, tries to shore up support for the opposition’s Chilean President Sebastián Piñera in Buenos MercoPress reported. The Civic Alliance for efforts to push President Nicolás Maduro from Aires. Argentina resumed gas exports to Chile Justice and Democracy, or ACJD, said Tuesday office. “We don’t know where he is,” Guaidó last October after an 11-year pause. that it would not participate in talks with the said of Marrero in a tweet. “He should be freed government until all “political prisoners” are immediately.” Guaidó returned to Venezuela on released and authorities cease repression of March 4. anti-government protesters. The statement that Trump to Meet With said talks would resume today added that the Caribbean Leaders discussions would focus on electoral reforms, ECONOMIC NEWS the Associated Press reported. Ortega has U.S. President Donald Trump is planning to been accused of seeking to remain in power meet with the leaders of several Caribbean indefinitely. At least 325 people have been Brazil’s Bolsonaro nations on Friday at his Mar-a-Lago resort in killed in connection with the anti-government Proposes Military Florida, The Hill reported Tuesday, citing a protests since last April, according to the White House statement. Trump will meet with Inter-American Commission on Human Rights. Pension Reform the leaders of the Bahamas, the Dominican Re- The protests began as a public reaction to cuts public, Haiti, Jamaica and Saint Lucia and will stress his administration’s “strong friendship in social security benefits. Ortega’s government Brazil’s government on Wednesday sent with and commitment to these countries,” the backed off from those cuts, but the protests lawmakers a proposal that seeks to save a White House said.

COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Thursday, March 21, 2019 net 10.45 billion reais ($2.8 billion) over 10 FEATURED Q&A / Continued from page 1 years by imposing tougher retirement rules for the military, The Wall Street Journal reported. government’s most critical task. This would created an opportunity to advance in several President Jair Bolsonaro, a retired army cap- help build confidence of domestic banking areas, such as trade, defense, security and tain, personally went to Congress to deliver the and corporate communities and reassure in- innovation. However, it does not represent a military pension reform plan, accompanied by ternational investors about Brazil’s economic complete turnaround from the approach of Economy Minister Paulo Guedes and Defense future. Will the gains from Bolsonaro’s visit past Brazilian administrations, as the differ- Minister Fernando Azevedo, as well as army lead to a broader reshaping and deepening ence on how to deal with Maduro suggests. commander Edson Leal Pujol, Folha de S.Paulo of bilateral ties? Will they generate momen- Brazil and the United States have a wide area reported. The government’s bill would raise tum for new U.S.-Brazil trade arrangements, of convergence and asymmetries. In the last payroll contributions to 10.5 percent from 7.5 cooperation on nuclear proliferation and few years, defense and security have been percent and increase the minimum number energy development, or backing for Brazil’s added as another focal point for domestic of years members of the military would have aspiration for a permanent seat on the U.N. to serve before retiring from 30 to 35. Among Security Council? It is too early to say. The those affected would not only be the armed obstacles remain substantial: Brazil’s tradi- Facts in the future forces, but also military police and firefighters. tion of diplomatic independence, divergent will show the concrete The conservative government submitted the interests of the two nations and existing results of Bolsonaro’s military pension reform proposal exactly one Brazilian commitments to other partners, visit and how month after delivering its plans for a major including Argentina and China. Trump and permanent they are...” pension overhaul that would save more than Bolsonaro are rather anomalous leaders. — Rubens Barbosa $240 billion in taxpayer money over 10 years if They could profoundly change their coun- approved in its current form. However, analysts tries or depart without leaving much behind. expect Congress will water down the reform. Brazil could diminish its global stature by and regional considerations. There are [Editor’s note: See related Q&A in the March 14 yielding its international autonomy and tying pending trade restrictions in both countries issue of the Advisor.] itself to the United States. Similarly, by once that were not resolved during the visit, with again embracing a strongman leader, it may the exception of wheat and pork. From the see its global status shrink.” Brazilian point of view, the Trump adminis- BUSINESS NEWS tration’s decision to support Brazil’s effort Rubens Barbosa, former to join the OECD, as well as Trump support Brazilian ambassador to the for non-NATO ally status and the positive Citigroup to Sell Gold United States: “Diverging from conclusion of the space technology safe- Venezuela Used as A a longstanding Brazilian foreign guard agreement represent important steps policy tradition, Bolsonaro’s second visit forward and are the most significant results Collateral for Loan abroad took place in the United States. Both of the visit. Bolsonaro is the first president governments are saying that there was a fun- to have been elected with a rightist platform Citigroup is planning to sell several tons of damental change in bilateral relations and in Brazil: liberal on the economy and very gold that Venezuela’s central bank had used that a North-South alliance will be created, conservative in values and social principles. for collateral on a $1.6 billion loan, Reuters given the close personal relationship be- There are clear ideological affinities with reported Wednesday, citing unnamed sources. tween the two presidents. Facts in the future President Trump and his policies, including Under the terms of a 2015 deal with Citibank, will show the concrete results of Bolsonaro’s support for the wall along the border with Venezuela was due to repay $1.1 billion of the visit and how permanent they are, but it has Mexico.” loan on March 11, according to four sources Continued on page 4 familiar with the matter. The financial services company plans to sell the gold it received due next year. The move will put further pres- ally recognized interim President Juan Guaidó, as collateral, which has a market value of sure on embattled President Nicolás Maduro’s Reuters reported. The Venezuelan central bank approximately $1.36 billion, to partially recover government, which is also facing fresh U.S. is also reportedly considering a declaration the loan. The difference in price from when the sanctions against state gold miner Minerven. of force majeure, which protects players in gold was acquired to current levels, roughly “Citibank was told that there was a force ma- the commodities industry from liability if they $260 million, will be deposited into a bank jeure event in Venezuela, so the grace period can’t fulfill a contract for reasons beyond their account in New York, sources said, Bloomberg was necessary, but they did not grant it,” said control, arguing in this case that U.S. sanctions News reported. Another payment on the loan is one of the sources, who supports internation- hit its finances, Bloomberg News reported.

FEATURED Q&A / Continued from page 3 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2019 Fernando Cutz, senior associate to continue moving the positive momentum at The Cohen Group, global forward and not take actions that would Erik Brand fellow at the Wilson Center drive American investors away.” Publisher [email protected] and former senior advisor to A Gene Kuleta the national security advisor in the White Jana Nelson, former Brazil desk Editor House: “The personal bond between Trump officer at the U.S. Department [email protected] and Bolsonaro was on full display during the of State: “President Bolsonaro’s Anastasia Chacón González visit. The presidents clearly have chemistry first trip to Washington and first A Reporter that transcends just a general like-minded- meeting with President Trump went better [email protected] ness or similar worldview. With President than expected. The visit resolved longstand- Trump, that kind of personal connection ing issues that had been on the agenda for

will go a long way in advancing the broader decades, such as the space technology Michael Shifter, President bilateral relationship. That can be seen in safeguard agreement and Brazil’s accession Genaro Arriagada, Nonresident Senior Fellow some of the agreements that were reached, process to the OECD. It also opened several Sergio Bitar, Nonresident Senior Fellow and some of the surprising concessions that fronts of bilateral cooperation for the future, Joan Caivano, Director, Special Projects rekindling ministerial-level dialogues that are Michael Camilleri, Director, Peter D. Bell Rule of Law expected to further collaboration on energy, Program The presidents clearly defense, consular issues and trade. Pres- Kevin Casas-Zamora, Nonresident Senior Fellow have chemistry that ident Bolsonaro is the Brazilian president Ariel Fiszbein, Director, Education Program transcends just a gen- in recent history who has most advanced Peter Hakim, President Emeritus eral like-mindedness bilateral ties. The major pending items in Claudio Loser, Senior Fellow Nora Lustig, Nonresident Senior Fellow or similar worldview.” the bilateral relationship are economic and consular issues. A bilateral tax treaty has Margaret Myers, Director, Asia and — Fernando Cutz Latin America Program been on the U.S. agenda for years. It would Manuel Orozco, Director, Migration, benefit both Brazilians and Americans who Remittances & Development both sides made. The major non-NATO ally earn income in both countries. Another Jeffrey Puryear, Senior Fellow status that the United States supports for pending item is Global Entry for Brazil- Tamar Solnik, Director, Finance & Administration Brazil is a big deal and will bring about many ians. This would require collaboration and Lisa Viscidi, Director, Energy Program advantages to Brazil’s military. President information exchange between the Brazil- Denisse Yanovich, Director of Development and Trump’s surprise declaration that he will sup- ian Federal Police and the Department of External Relations port Brazil’s accession into the OECD will be Homeland Security. Both agreements would Latin America Advisor is published every a big win for Bolsonaro, and it shows what strengthen ties between domestic agencies business day, except for major U.S. holidays, a strong personal relationship with Trump in the United States and Brazil, making the by the Inter-American Dialogue at 1155 15th Street NW, Suite 800 can get a country. Likewise, Brazil ending countries’ relationship more interconnect- Washington, DC 20005 the need for visiting Americans to secure ed. Admiration for President Trump and www.thedialogue.org visas is a win for the United States, but also for the United States motivates President ISSN 2163-7962 a win for Brazil. Tourism is likely to go up, Bolsonaro’s policy, but also a pragmatic Subscription inquiries are welcomed at boosting local economies, and business understanding that the alliance with South- [email protected] travelers having easier access to the country South countries has not yielded many results means an easier pathway toward securing other than agricultural trade with China. It is The opinions expressed by the members of the Board of Advisors and by guest commentators do not necessarily the additional foreign direct investment a significant break from previous Brazilian represent those of the publisher. The analysis is the sole that Brazil needs. Some work remains to be administrations, which preferred to keep view of each commentator and does not necessarily represent the views of their respective employers or firms. done on trade, particularly on an agricultural the United States at arm’s length, wary of an The information in this report has been obtained from trade agreement and perhaps even the start asymmetrical relationship.” reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have of negotiations toward a free trade agree- any questions relating to the contents of this publication, ment. But overall, the visit should widely be The Advisor welcomes comments on its Q&A contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in a seen as a success for U.S.-Brazil bilateral section. Readers can write editor Gene Kuleta retrieval system, or transmitted without prior written permis- relations. It’s now up to President Bolsonaro at [email protected]. sion from the publisher.