LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Wednesday, April 8, 2020

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Wednesday, April 8, 2020

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group ECONOMIC Devry Boughner Vorwerk Will Guyana’s Colombia Seeks CEO, DevryBV Sustainable Strategies $11 Billion Credit Joyce Chang Global Head of Research, Election Winner Be Line From IMF JPMorgan Chase & Co. Colombia’s government has Paula Cifuentes requested an $11 billion credit Director of Economic & Fiscal Affairs, Seen as Legitimate? line from the International Mon- Latin America & Canada, Philip Morris International etary Fund to help it face the Marlene Fernández economic damage of the Covid-19 Corporate Vice President for pandemic. Government Relations, Page 2 Arcos Dorados Peter Hakim President Emeritus, POLITICAL Inter-American Dialogue Donna Hrinak Uruguay to President, Boeing Latin America Repatriate Jon E. Huenemann Former Corporate and Stranded Cruise Government Senior Executive Ship Passengers James R. Jones Chairman, Uruguay said it would repatriate Monarch Global Strategies David Granger, Guyana’s president since 2015, is seeking re-election. However, the outcome of 112 Australians and New Zealand- Craig A. Kelly the country’s March 2 vote remains unclear. // File Photo: Government of Guyana. ers from a cruise ship that has Director, Americas International been stranded there after most of Gov’t Relations, Exxon Mobil Guyana’s presidential election, held more than a month ago, the passengers tested positive for John Maisto coronavirus. Director, U.S. Education remains mired in controversy. International observers have Finance Group Page 2 criticized the way in which some votes were tabulated, and Nicolás Mariscal Chairman, Q international actors including the United States and the POLITICAL Grupo Marhnos European Union have said that a president sworn in based on results Thomas F. McLarty III Ecuador’s Correa Chairman, announced last month by electoral authorities “will not be considered Sentenced in McLarty Associates legitimate.” How is the controversy likely to play out? What must happen Carlos Paz-Soldan Absentia to 8 Years Partner, now for the eventual winner to be seen as legitimate? What must Guy- DTB Associates, LLP ana’s political parties do now in order to be able to work together in the An Ecuadorean court sentenced Beatrice Rangel former President Rafael Correa Director, future? and several others on corruption AMLA Consulting LLC charges. Correa has lived in Jaana Remes Belgium since leaving office. Riyad Insanally, ambassador of Guyana to the United States Partner, Page 2 McKinsey Global Institute and the Organization of American States: “The Guyana Ernesto Revilla Head of Latin American Elections Commission (GECOM) agreed last Friday to proceed Economics, Citi with a recount of the ballots cast in the March 2 general and Gustavo Roosen A Chairman of the Board, regional elections. A recount, to which President David Granger and op- Envases Venezolanos position leader Bharrat Jagdeo had agreed and which a team of experts Andrés Rozental from the Caribbean Community was to have observed, had been stymied President, Rozental & Asociados by a court injunction. However, the full court has since dismissed the Shelly Shetty injunction, a decision that the Court of Appeal upheld on Sunday. GECOM Managing Director, Sovereigns Fitch Ratings should now proceed with a region-by-region recount. The situation in Guyana is complicated. Suffice it to say that Guyana remains a sovereign state governed by the rule of law and one in which there is full respect for the separation of powers and the independence of the judiciary. In Correa // File Photo: Ecuadorean this regard, several facts are worth bearing in mind. The election was Government. Continued on page 2

POLITICAL NEWS account, which he said was a loan. Correa can NEWS BRIEFS appeal the conviction, but he will be subject to Former Ecuadorean arrest in Ecuador if he returns, The New York Uruguay to Repatriate Times reported. The court on Tuesday also Passengers From President Correa banned Correa and the others convicted in the case from politics for 25 years. After the Stranded Cruise Ship Sentenced to 8 Years sentence was announced, Correa asserted Uruguay said on Tuesday that it would repatri- his innocence in a posting on Twitter. “I know ate 112 Australians and New Zealanders from Former Ecuadorean President Rafael Cor- the process and what the judges say is a LIE. a cruise ship that has been stranded in the La rea, who now lives in exile in Belgium, was They’ve proved absolutely NOTHING. Pure false Plata River near the capital city of Montevideo sentenced Tuesday in absentia to eight years testimony without evidence,” he said. since March 27, Reuters reported. Most of the in prison after being convicted on corruption 219 passengers on the vessel have contracted charges, El Comercio reported. The court Colombia Requests coronavirus. Uruguay’s Foreign Ministry said it also sentenced Correa’s vice president, Jorge had reached an agreement with Australia for a Glas, and more than a dozen others on related $11 Billion Credit charter flight to arrive on Thursday to fly the 96 charges. Glas was imprisoned in 2017 and is Australians and 16 New Zealanders aboard the serving a six-year term in a separate case for Line From IMF cruise ship to Melbourne. accepting a bribe from Brazilian construction conglomerate Odebrecht. Correa, who was Colombia has asked the International Monetary Ecuador’s president from 2007 to 2017, was Fund for a credit line of $11 billion to help it S&P Downgrades convicted on charges that he accepted money face the fallout of the coronavirus pandemic, from private businesses for his re-election the Finance Ministry said Tuesday, Portafolio Argentina’s Credit Rating campaign in 2013 in exchange for government reported. “The International Monetary Fund is After Payment Delay contracts, Agence-France Presse reported. currently reviewing our request to have access, S&P Global Ratings on Tuesday downgraded Ecuadorean Attorney General Diana Salazar as a country, to $11 billion of what is known as Argentina, the third ratings agency to revise said businesses paid $7 million in bribes to liquidity facility,” Minister Alberto Carrasquilla down its sovereign credit rating in less than a secure the contracts. Correa was accused of said in a video. The measure, known as the week as the coronavirus pandemic worsens accepting a $6,000 payment into his private IMF’s “Precautionary and Liquidity Line,” is de- the indebted country’s economic outlook, FEATURED Q&A / Continued from page 1 Reuters reported. S&P downgraded Argentina’s long-term foreign currency rating to SD from conducted according to Guyana’s constitu- Jason Calder, Washing- CCC- after the government’s announcement tion and laws. GECOM, an independent body ton-based head of office at on Sunday that it plans to delay payments on that is constitutionally charged to conduct Saferworld: “On March 16, Car- as much as $10 billion of dollar-denominated and supervise the elections, is managing icom Chair and Barbadian Prime A debt issued under local law. [Editor’s note: See the electoral process. The executive branch Minister Mia Mottley brokered an agreement related Q&A in the April 2 issue of the Advisor.] has never tried to influence, interfere with or between President Granger, the leader of the instruct GECOM. The president attempted, incumbent APNU+AFC coalition, and oppo- with the agreement of the leader of the sition leader Bharrat Jagdeo of the PPP/C opposition, to find a way forward by inviting for a full recount of all the votes under the Chile Registers Trade Caricom to support a recount by GECOM. At supervision of Caricom. Soon thereafter, a Surplus of $1.24 Billion all times, the executive branch, GECOM and, down-ballot candidate from the APNU+AFC indeed, all stakeholders have respected the coalition lodged a court petition to chal- as Imports Fall rulings of the courts. The electoral process lenge the legality of the recount. Caricom Chile registered a trade surplus of $1.24 billion is not yet completed. GECOM has not issued observers were recalled. Three weeks later, in March, the central bank said on Tuesday, any declaration. Once GECOM conducts a the Court of Appeal cleared the way for with imports plunging to $4.45 billion, down recount, the results will be declared in full a recount. A full and transparent recount nearly 20 percent as compared to a year ago, accordance with the law, paving the way for should lead to a credible result. Whether Reuters reported. Exports also fell, 6.5 percent the legitimate swearing-in of a president. this will happen is uncertain. The novel to $5.69 billion, pushed downward by a 7.6 Finally, there is no breakdown in the rule of coronavirus pandemic has hit Guyana, and percent drop in the value of copper shipments. law or public order in Guyana.” the government has ordered a lockdown. It The world’s number-one copper producer, Chile Continued on page 4 said it exported $2.64 billion worth of the red metal last month.

COPYRIGHT © 2020, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Wednesday, April 8, 2020 signed to help countries in the face of adverse shocks, according to the international lender’s THE DIALOGUE CONTINUES website. “The government is convinced that [the pandemic] is a storm; it’s a fast-flowing river. Our bridge fell apart, and we have to build Will Emergency Measures Amid a provisional bridge, but we’ll make it to the other side,” Carrasquilla said. The announce- the Pandemic Threaten Democracies? ment came one day after President Iván Duque In the face of the Covid-19 aggrieved populations diminish their range extended the country’s lockdown until April health crisis, some Latin Ameri- of responses to national crises. Effective, 27 in an effort to curb the spread of the virus, can and Caribbean governments established, reliable cooperation among gov- which has reportedly infected more than 1,700 Q have implemented tough mea- ernment, industry and labor are prerequisites people and caused at least 50 deaths in Colom- sures to keep citizens at home, including to effective and timely crisis management. bia. The Andean nation is one of 14 countries temporarily waiving constitutional rights Layoffs and employers’ closings aggravate in Latin America and the Caribbean that have such as freedom of movement. At the same the distrust of workers toward employers. gone to the IMF for help as the region braces time, some governments have invoked for its worst recession in 50 years, Alejandro extraordinary powers to pass emergency Werner, the head of the Fund’s Western Hemi- economic packages without consulting the Checks and balances sphere Department, told the Financial Times. legislative branch. To what extent do such on presidential power [Editor’s note: See related Q&A in the March 27 drastic measures pose risks for democra- are regional illusions.” issue of the Advisor.] cies in the region once the pandemic has — Maria Velez de Berliner passed? How can governments ensure their systems of checks and balances hold up, BUSINESS NEWS even during times of crisis? What lessons And employers with a history of perceiving can be drawn from the current circumstanc- government and labor as hindrances to an Crisis Will Forever es in terms of areas to be improved on in unfettered market economy are reluctant Latin American and Caribbean democracies, to negotiate with labor and/or government Change How People including the strengthening of state institu- when their company’s profits go downward. tions and the rule of law? Governments’ haphazard response to Live: Scotiabank CEO Covid-19 is reinforcing the historic weakness Maria Velez de Berliner, manag- of the regions’ institutions and social bonds. The Covid-19 pandemic will permanently ing director of RTG-Red Team Unfair, rigged, fraudulent and bought-for change the way people live and work, Bank of Group, Inc.: “The region’s de- elections, the region’s political reality, do Nova Scotia CEO Brian Porter said Tuesday at mocracies were under pressure not democracies make. And presidents who the company’s annual shareholder meeting, the A from disaffected groups before Covid-19 prop their administrations with repressive, Financial Post reported. “While the magnitude struck. ‘Shelter in place’ keeps these groups corrupt militaries and police forces become of the coronavirus pandemic is unlike anything at bay now. However, their heightened leaders of democracies in name only. This we have faced in recent memory, it is certainly dissatisfaction is a distinct probability, if crisis represents an opportunity for all not the first crisis we have navigated,” Porter regionwide poverty, inequality, unfairness, stakeholders to come together in search said at the meeting, which was held online be- criminality, insufficient education and health and implementation of equitable solutions cause of the pandemic. “There will undoubtedly care, and concern about meager pensions across the board, to the extent internal be learnings from the crisis for us, at the bank, grow, and if unemployment and employers’ constraints permit. If these governments fail and for society more broadly. There will be closings escalate. Checks and balances on to handle Covid-19 fairly and effectively, they permanent changes to the way people live, in- presidential power are regional illusions. are risking a regionwide turn to demagogu- teract and work. New habits will be formed and The region’s presidential systems, senato- ery and authoritarianism under the veneer of behaviors ingrained.” Porter said the banking rial majorities and corrupt, or corruptible, democracy’s name.” system will survive the crisis, as will Scotia- judiciaries have combined to give presidents bank, which has spent more than 15 billion control over the institutions responsible for Canadian dollars ($10.7 billion) on technology and tasked with curbing presidential procliv- EDITOR’S NOTE: The comment above is a over the past five years. The Toronto-based ities to authoritarianism and demagoguery. continuation of the Q&A published in Mon- lender has operations in several countries in A combination of perpetual international day’s issue of the Advisor. Latin America and the Caribbean. borrowing, poor revenue collections and

FEATURED Q&A / Continued from page 2 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2020 will be difficult for international observers PPP/C conveniently uses to bolster its case. to deploy for the recount given health and In the past, both sides have been accused of Erik Brand travel restrictions. Of greater concern was engaging in electoral fraud, and there is no Publisher [email protected] Mottley’s observation that there were forces reason to believe that this was not the case that do not want the recount to proceed, in this election. But that is a mere symptom Gene Kuleta Editor alluding to those responsible for the con- of a larger problem whereby the two major [email protected] tested results. Two coalition parties have ethnic groups, Indian and African Guyanese, Anastasia Chacón González called for the eventual election winner to have refused to accept leadership by the oth- Reporter & Associate Editor form a national unity government. Thus far, er group. This has been the case since 1955 [email protected] neither of the major parties has embraced those calls. A time-limited power-sharing

arrangement leading to a reform of the It is more than Michael Shifter, President winner-take-all election system and the electoral fraud Rebecca Bill Chavez, Nonresident Senior Fellow constitution has often been argued as a way and disrespect for Sergio Bitar, Nonresident Senior Fellow out of the country’s deep-seated ethno-politi- the rule of law...” Joan Caivano, Director, Special Projects cal divisions. This time, however, these calls — David Hinds Michael Camilleri, Director, Rule of Law Program are not gaining traction given the allegations Kevin Casas-Zamora, Nonresident Senior Fellow of electoral fraud. There also is a good Héctor Castro Vizcarra, Nonresident Senior Fellow argument that any such arrangement should when the ethnically united nationalist inde- Julia Dias Leite, Nonresident Senior Fellow include civil society and smaller political pendence movement split along ethnic lines. Ariel Fiszbein, Director, Education Program parties to reduce the automatic tendency Post-election anxiety and violence have been Peter Hakim, President Emeritus toward polarization. This crisis is a long commonplace as the losing party has always Nora Lustig, Nonresident Senior Fellow time coming, and some say it has set ethnic claimed fraud by the winner. The refusal Margaret Myers, Director, Asia and Latin America Program relations back 50 years. Guyana’s leaders to move away from the winner-takes-all Manuel Orozco, Director, Migration, need to agree on when and how to conduct majoritarian political system has compound- Remittances & Development a credible recount in light of the pandemic. ed the problem as such a system inexorably Xiaoyu Pu, Nonresident Senior Fellow This should not stop them also from dis- produces a winner and a loser. Both groups Jeffrey Puryear, Senior Fellow cussing the steps they could take together fear relinquishing power to the other on the Mateo Samper, Nonresident Senior Fellow to address the underlying divisions that hold grounds that such an outcome would lead to Tamar Solnik, Director, Finance & Administration Guyana back and threaten its future.” ethnic domination by the winner and margin- Lisa Viscidi, Director, Energy Program alization of the other. With the imminence of Denisse Yanovich, Director of Development and David Hinds, associate pro- new oil wealth, the stakes are much higher External Relations fessor of African Diaspora and this time around. The conflict will not be Latin America Advisor is published every Caribbean Studies at Arizona solved by the declaration of a winner and business day, except for major U.S. holidays, State University: “The final the installment of a one-party government. by the Inter-American Dialogue at A 1155 15th Street NW, Suite 800 outcome of Guyana’s elections has not been The best outcome would be the installation Washington, DC 20005 declared. This is due in part to a series of of a government of national unity in which www.thedialogue.org court cases that began when the opposition the two sides share executive power. Such a ISSN 2163-7962 PPP/C sought a court order to stop what government should move swiftly to overhaul Subscription inquiries are welcomed at it viewed as an attempt by ‘agents’ of the the country’s electoral laws and governance [email protected]

ruling APNU+AFC coalition to rig the elec- system to ensure that all ethnic groups and The opinions expressed by the members of the Board of tions in favor of the incumbent. Invariably, their representatives are guaranteed a place Advisors and by guest commentators do not necessarily represent those of the publisher. The analysis is the sole this initial move by the PPP led to counter- at the table of national decision-making.” view of each commentator and does not necessarily suits and appeals by both political sides. represent the views of their respective employers or firms. The ruling coalition insists that it won the The Advisor welcomes comments on its Q&A The information in this report has been obtained from reliable sources, but neither its accuracy and completeness, election, but the PPP/C claims that it is the section. Readers can write editor Gene Kuleta nor the opinions based thereon, are guaranteed. If you have real victor. It is more than electoral fraud and at [email protected]. any questions relating to the contents of this publication, contact the editorial offices of the Inter-American Dialogue. disrespect for the rule of law, arguments the Contents of this report may not be reproduced, stored in a retrieval system, or transmitted without prior written permission from the publisher.