LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Friday, April 28, 2017

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Friday, April 28, 2017

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group ECONOMIC Devry Boughner Vorwerk Corporate VP, Global Corporate Affairs What Can Ecuador Nationwide Strike Cargill Joyce Chang Shutters Brazilian Global Head of Research, Expect of its Schools, Factories JPMorgan Chase & Co. W. Bowman Cutter Businesses, schools and public Former Partner, transportation were shut down E.M. Warburg Pincus New President? today in locations across Brazil as Dirk Donath unions led protests in opposition Senior Partner, to President Michel Temer’s Catterton Aimara austerity measures. Barry Featherman Page 2 Senior Director, International Government Affairs, Gilead Sciences IN FOCUS Marlene Fernández Corporate Vice President for Macri Meets Government Relations, Arcos Dorados With Trump at Peter Hakim President Emeritus, White House Inter-American Dialogue The Argentine and U.S. presidents Donna Hrinak met to discuss issues including President, Boeing Latin America trade and security, as well as the Lenín Moreno is to be sworn in as Ecuador’s president on May 24. // File Photo: Moreno Jon Huenemann Campaign. unrest in Venezuela. Vice President, U.S. & Int’l Affairs, Page 3 Philip Morris International James R. Jones Former Ecuadorean Vice President Lenín Moreno was con- Chairman, ManattJones POLITICAL Global Strategies fi rmed the winner of the country’s April 2 presidential runoff Craig A. Kelly election after 10 percent of the votes were re-counted and Only Early Director, Americas International Q Gov’t Relations, Exxon Mobil showed him defeating his opponent, Guillermo Lasso, by a Election Will Solve John Maisto slightly wider margin than had fi rst been reported. Lasso has called for a Venezuela’s Director, U.S. Education Finance Group full recount of all the votes, but the national electoral council has denied Crisis: Capriles Nicolás Mariscal the request. Is Moreno’s mandate weakened by not having a full recount Opposition leader Henrique Chairman, Capriles, the governor of Miranda Grupo Marhnos of the vote? How will Moreno differ from or align with his predecessor, President Rafael Correa? How well will Moreno be able to work with the state, said President Nicolás Thomas F. McLarty III Maduro must allow an early Chairman, Andean nation’s legislature to address Ecuador’s most pressing econom- McLarty Associates presidential election in order for Carlos Paz-Soldan ic issues? Venezuela to emerge from its Partner, political crisis. DTB Associates, LLP Page 2 Beatrice Rangel Vicente Albornoz, dean of business and economics at the Director, at the Universidad de Las Américas in Quito: “On May 24, AMLA Consulting LLC Gustavo Roosen Moreno’s presidency will start with a strong government, but Chairman of the Board, with weak legitimacy. His government will be strong because Envases Venezolanos A his party will be in control of all branches of power, and also of all the key Andrés Rozental President, Rozental & institutions, such as the attorney general and the national accountability Asociados and Senior Policy Advisor, Chatham House offi ce. But at the same time, his government will have a weak legitimacy, Shelly Shetty due to anecdotal (yet not conclusive) evidence of electoral fraud in the Head, Latin America Sovereign Ratings, Fitch Inc. second round of the presidential election. Additionally, his government Roberto Sifon-Arevalo will face a signifi cant reduction in economic activity and maybe, for the Managing Director, Americas Sovereign & Public Finance Ratings, fi rst time since Ecuador has had reliable national accounts, a second Standard & Poor’s consecutive year of GDP decline. The causes for the current economic Capriles // File Photo: Venezuelan slump are related to the high dependence of economic activity on public Government. Continued on page 2

POLITICAL NEWS stemming from his role as governor of Miranda NEWS BRIEFS state. Capriles and other opposition members Only Early Election blame Maduro for the country’s political and Jamaica Extradites Eight economic crises, while Maduro blames his to U.S. in Connection Will Solve Venezuela’s opponents and the United States, saying they have sabotaged the economy. With ‘Lottery Scam’ Crisis: Capriles Eight Jamaicans have been extradited to the United States to face charges in connection Only an early presidential election will put an ECONOMIC NEWS with a “lottery scam” that bilked 90, mainly el- end to Venezuela’s political crisis, opposition derly, victims out of more than $5.7 million, the leader Henrique Capriles told BBC News in an Nationwide Strike Bismarck Tribune reported Thursday, citing the interview. Nearly 30 people have been killed U.S. attorney for North Dakota. The eight were this month in the Andean country, where the Shutters Businesses, arrested in Jamaica more than a year ago. residents are grappling with shortages of basic goods including food and medicine, as well as Schools in Brazil skyrocketing infl ation. Capriles said President Brazil Agriculture Nicolás Maduro must allow an early presiden- Brazilian unions nationwide led strikes early tial election in order to end the crisis. “How Friday in protest of President Michel Temer’s Minister Seeks Tariff s long can Maduro stand denying Venezuelans government and the administration’s austerity on Ethanol Imports the right to vote? I don’t think much longer,” measures, closing down factories, businesses Brazilian Agriculture Minister Blario Maggi has said Capriles, the news service reported today. and schools, Reuters reported. Protesters used asked the country’s foreign trade council to “Nothing that the government is doing is in burning tires and other materials to barricade enact tariffs on ethanol imports in the wake defense; it’s repression, savage repression that highways and major airports, while police of an increase of shipments from the United violates our constitution and human rights.” clashed with the demonstrators, blocking them States, an offi cial said Thursday, Reuters Capriles lost the country’s 2013 presidential from entering the airports and fi ring tear gas to reported. Brazil is the United States’ main election to Maduro and this month was banned clear roads. The strike could be Brazil’s largest importer of ethanol, and imports have surged by the government’s comptroller’s offi ce in more than two decades if participation in recent months as cane farmers in Brazil turn from holding political offi ce for 15 years over numbers meet union leaders’ expectations. “It to producing sugar, due to higher expected allegations of “administrative irregularities” is going to be the biggest strike in the history revenues from the product. Ethanol imports FEATURED Q&A / Continued from page 1 from the United States to Brazil quintupled to a record of 720 million liters in the fi rst quarter, expenditure. Since the fall of oil prices, pub- Francisco X. Swett, chairman of worth approximately $363 million. lic expenditure has been declining, and due Pallas Management Corp. and to the lack of confi dence in public policies, former Ecuadorean minister of the probability of private investment becom- A fi nance, member of Congress ing the new driver of growth in the economy and central bank president: “Mr. Moreno’s Bomb Attack Halts Flow is remote. Moreno’s economic policies will opponent, Guillermo Lasso, fought a gallant, of Oil in Colombia’s Caño- differ in some aspects from his predeces- yet unsuccessful, fi ght against the power of Limón Coveñas Pipeline sor’s, mostly because his ideology is further the state. The electoral authorities, all hand- to the left and because he has almost no picked for their closeness and unswerving Colombian state-run oil company Ecopetrol experience in economic management. He allegiance to President Correa, confi gured a on Thursday halted the fl ow of crude oil in the will need to rely more heavily on his advi- court not seen since the times of Torque- country’s second-largest oil pipeline, Caño- sors, and, considering the current rumors, mada. The vote-counting and structure, Limón Coveñas, following a bombing of the those advisors will be selected on the basis borrowed from the Venezuelan franchise, pipeline early Thursday morning, which caused of ideology rather than pragmatism. His rela- worked to perfection, going off the grid an oil spill, the company said, Reuters reported. tionship with the legislative branch will also when it had to; switching the servers, and The attack has not had an effect on production be different from Correa’s, because this time reversing the trends that when upwards of at the Caño-Limón fi eld, which is operated by the government will be managing ‘scarcity,’ 80 percent of the votes had been count- U.S.-based Occidental Petroleum, or exports rather than ‘abundancy,’ and that will create ed, had favored Lasso. Justice was later from the fi eld. The company said the oil spill is tensions inside the government’s party.” denied when the court of electoral appeals, affecting a water source for 3,500 Colombians Continued on page 4 living near the pipeline.

COPYRIGHT © 2017, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Friday, April 28, 2017 of Brazil,” said Paulo Pereira da Silva, the president of trade union group Força Sindical. IN FOCUS Workers are striking in protest of the prog- ress this week of legislation in Congress that would weaken labor regulations and change Trump Meets Macri at White House the country’s national pension system, forcing many Brazilians to work for years longer than for Talks on Trade, Security traditionally stipulated before drawing pension payments. The strike was called for 24 hours By Nicole Wasson starting just after midnight on Friday morning. Demonstrations are expected to take place WASHINGTON—U.S. President Donald After meeting with Trump at the White across the country, and more than 200 million Trump and First Lady Melania Trump on House, Macri expressed enthusiasm for people are projected to participate. Brazil has Thursday welcomed Argentine President strengthening Argentina-U.S. economic and seen repeated violent protests over the last few Mauricio Macri and his wife Juliana Awada diplomatic ties during an event at the Center years, as the country struggles with its worst to the White House, where the two presi- for Strategic and International Studies, recession on record and a corruption scandal dents discussed a range of bilateral issues, which was cosponsored by the Inter-Ameri- that has implicated many Brazilian politicians, including trade and security, as well as Ven- can Dialogue and the Brookings Institution. including a third of Temer’s cabinet and some ezuela’s political of his congressional allies. Protests also broke crisis. Macri said Argentina out last year over former President Dilma Rous- and the United States seff’s impeachment. “We’re just have ample opportunity going to be great to collaborate on ener- friends. Better gy matters. The South than ever before,” American country’s BUSINESS NEWS Trump told report- energy sector can thrive ers in the Oval with the help of “access Total to Invest Offi ce. “And we’re to your technology, be- off to a wonderful Trump, Macri and their wives met Thursday at the White cause you have already House. // Photo: Argentine Government. $500 Mn in Argentina start, because I’ve developed shale gas in Shale Production known Mauricio for so many years, and I the United States.” Macri said development know the kind of person he is. He’s a great of Argentina’s energy sector would help person and he’s a great leader. He will do a boost the economy across many sectors. If France’s Total is planning to spend $500 fantastic job for Argentina.” the country has access to secure energy at million over the course of three or four years a good price, “the chance of developing all to develop a shale-gas fi eld in Argentina, the Trump told Macri that he is reviewing the types of industries in Argentina increases.” oil and gas company’s chief executive offi cer issue of Argentine lemons, imports of which told reporters Thursday on the sidelines of a his administration has blocked. During The Argentine president also condemned the conference in Paris, Bloomberg News reported. former President Barack Obama’s adminis- political and economic crisis currently taking “We have giant resources of non-conventional tration, the two countries negotiated a deal place in Venezuela. “In Venezuela, you don’t gas under our feet in Argentina,” said CEO to allow Argentine lemons to be imported have any respect for human rights; that’s Patrick Pouyanne. “It’s the beginning of a nice into the United States after a 15-year ban. not democracy, that’s not working,” Macri story.” The company is planning to proceed The Trump administration suspended that said, calling on the Venezuelan government with the fi rst phase of the Aguada Pichana Este decision for 30 days in January and extend- to hold elections and to release political license in Argentina’s Vaca Muerta formation, ed the stay in March. prisoners. His statement came a day after and it plans to boost its interest in a license, the Venezuelan government announced it which is co-owned by YPF, Winterhall Energia “I know about the lemons. And believe it plans to withdraw from the Organization of and Panamerica Energy, to 41 percent from or not, the lemon business is a big, big American States in reaction to OAS member about 27 percent, subject to local authori- business,” Trump said alongside Macri at states convening an emergency meeting to ties’ approval, the news service reported. To the White House. “But we are going to give discuss the country’s crisis. [Editor’s note: encourage drilling at Vaca Muerta, Argentina’s that very serious consideration. One of the See Q&A on U.S.-Argentine relations in government has extended a program that reasons he’s here is about lemons.” Thursday’s Advisor.] guarantees a minimum price until 2021 for the gas that companies produce.

FEATURED Q&A / Continued from page 2 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2017 presided over by yet another faithful servant legitimacy of Moreno’s mandate will not be of the state, refused to hear the petition for the result of a failure to capture a majority of Erik Brand a full recount, or when the electoral council the popular vote, but will be due to Lasso’s Publisher [email protected] mounted a reality show with pristine, unfold- ability to create such an appearance, despite ed, ballots that replaced the dirty and wrin- all concrete and documented evidence to Gene Kuleta Editor kled ones. So, Moreno is the president-elect, the contrary. Moreno is no radical, but rather [email protected] but, who will govern? Correa is the alpha a moderate who has a pattern of reaching Nicole Wasson type, and he owns the party. What are the Reporter, Assistant Editor obstacles ahead? Well, Moreno’s mandate is [email protected] feeble, and made weaker by formidable, and Moreno is no radical, possibly insurmountable, ﬁ scal problems but rather a moderate that cannot be cured with more taxes or debt who has a pattern of (all maxed out) and require the type of med- reaching out to Michael Shifter, President Genaro Arriagada, Nonresident Senior Fellow icine—that is, deleveraging the government opponents with sector—that will not be accepted. Further, Sergio Bitar, Nonresident Senior Fellow conciliatory gestures.” de-dollarization is a clear and present dan- Joan Caivano, Director, Special Projects — Marc Becker ger for the government’s staying power; the Kevin Casas-Zamora, Nonresident Senior Fellow caretaker will confront an opposition that is Ariel Fiszbein, Director, Education Program newly aware of their capabilities; widespread Alejandro Ganimian, Nonresident Fellow Peter Hakim, President Emeritus and uncured corruption; and a majority of Ec- out to opponents with conciliatory gestures. Claudio Loser, Senior Fellow uadoreans who appear to have had enough.” He already has met with different interest Nora Lustig, Nonresident Senior Fellow groups—including indigenous movements— Margaret Myers, Director, China and Marc Becker, professor of his- in an attempt to gain support for his poli- Latin America Program tory at Truman State University: cies. Since his Alianza PAIS movement has a Manuel Orozco, Director, Migration, “Lasso and his supporters are majority presence in the National Assembly, Remittances & Development A warning about Ecuador becom- Moreno should be able to able to gain pas- Jeffrey Puryear, Senior Fellow ing another ‘Venezuela,’ which is ironic, sage of the legislation necessary to address Tamar Solnik, Director, Finance & Administration because it is their challenge to democratic pressing economic issues. A larger question Lisa Viscidi, Director, Energy Program governance that will destabilize Ecuador. is whether conservatives will continue to Latin America Advisor is published every This is the parallel with Venezuela: when resort to illegal measures, not with an eye business day, except for major U.S. holidays, conservatives lose elections, they attempt to solving problems but only with a goal of by the Inter-American Dialogue at 1155 15th Street NW, Suite 800 to disrupt the smooth operation of society returning themselves to power.” Washington, DC 20005 so that they can regain their class privileg- www.thedialogue.org es by any means necessary. The threat to The Advisor welcomes comments on its Q&A ISSN 2163-7962 institutional structures comes not from the section. Readers can write editor Gene Kuleta Subscription inquiries are welcomed at left, but from the right. Any erosion of the at [email protected]. [email protected]

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