LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Wednesday, May 31, 2017
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LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Wednesday, May 31, 2017 BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Trum Director, Columbus Group ECONOMIC Devry Boughner Vorwerk Corporate VP, Global Corporate Affairs Will Brazil Force Ecuadorean Gov’t Cargill Raises $2 Billion Joyce Chang Global Head of Research, Another President in Bond Sale JPMorgan Chase & Co. The sale indicates optimism W. Bowman Cutter Former Partner, From Office? from investors about the ability E.M. Warburg Pincus of new President Lenín Moreno’s Dirk Donath government to curb spending. Senior Partner, Investors have been cheered by Catterton Aimara the placement of offi cials seen Barry Featherman as market-friendly in the central Senior Director, bank. International Government Affairs, Gilead Sciences Page 2 Marlene Fernández Corporate Vice President for Government Relations, ECONOMIC Arcos Dorados Mexico Sees Peter Hakim President Emeritus, Slower Drop in Inter-American Dialogue Oil, Gas Reserves Donna Hrinak Brazilian President Michel Temer has faced single-digit approval ratings and calls for his President, Boeing Latin America resignation. // File Photo: Brazilian Government. Reserves declined again in 2016, Jon Huenemann but at a slower pace, according to Vice President, U.S. & Int’l Affairs, Mexico’s oil commission. Philip Morris International Doubts increased this month that embattled Brazilian Page 2 James R. Jones President Michel Temer would be able to fi nish out his term Chairman, ManattJones after the release of secretly recorded audio in which Temer Global Strategies Q POLITICAL purportedly was heard endorsing the payment of hush Craig A. Kelly Trump Eyeing Director, Americas International money to Eduardo Cunha, the jailed former speaker of the lower house Gov’t Relations, Exxon Mobil Changes on Policy John Maisto of Congress. The development led to massive violent protests in Brazil Director, U.S. Education and calls for Temer’s ouster. Will Temer be able to fi nish his term, or is it Toward Cuba Finance Group As early as June, U.S. President Nicolás Mariscal a matter of time before he is forced from offi ce? If Temer does have to Donald Trump may roll back parts Chairman, step down, who is likely to serve out the rest of his term? What does the Grupo Marhnos of the Obama administration’s possibility of two presidents being forced from offi ce, Dilma Rousseff Thomas F. McLarty III policy toward Cuba. Among them, Chairman, last year and Temer this year, mean for the country’s politics and democ- he may ban U.S. companies from McLarty Associates racy? What does the current political uncertainty mean for investors at making deals with Cuba’s military, Carlos Paz-Soldan which controls much of the Partner, home and abroad who have been watching Temer’s efforts at economic tourism industry. DTB Associates, LLP reforms? Page 2 Beatrice Rangel Director, AMLA Consulting LLC Peter Hakim, member of the Advisor board and president Gustavo Roosen Chairman of the Board, emeritus of the Inter-American Dialogue: “President Temer is Envases Venezolanos not likely to survive much longer in offi ce. His public approval Andrés Rozental President, Rozental & is in the single digits. A late-night meeting with a billionaire Asociados and Senior A Policy Advisor, Chatham House businessman guilty of bribing government offi cials has confi rmed his Shelly Shetty deep involvement in Brazil’s sprawling corruption scandal. Still, Temer is Head, Latin America a talented politician who has had some success at promoting vital, but Sovereign Ratings, Fitch Inc. Roberto Sifon-Arevalo wildly unpopular, reforms needed to lift the economy from recession. Managing Director, Americas Moreover, Temer has no obvious substitute—someone with the unblem- Sovereign & Public Finance Ratings, Standard & Poor’s ished integrity and credibility that Brazilians now demand, coupled with a commitment to keep economic reform on track. Temer has refused Trump // File Photo: White House. Continued on page 3 COPYRIGHT © 2017, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ADVISOR Wednesday, May 31, 2017 POLITICAL NEWS U.S. policy toward the communist-run island. NEWS BRIEFS The developments come as Raúl Castro is Trump Eyeing expected to step down as Cuba’s president. Venezuelan Lawmakers Castro has said that he will leave the post next Ask U.S. Congress to Probe Changes to U.S. February. While the United States still offi cially bans tourism to Cuba, the U.S Treasury allows Goldman Sachs Bond Deal Policy on Cuba Americans to “self-license” under 12 catego- Venezuela’s opposition-led National Assembly ries of travel, including educational tours and is asking the U.S. Congress to investigate U.S. President Donald Trump may roll back participation in sporting events, a practice that what it is calling an “immoral” deal in which parts of the Obama administration’s thaw with allows virtually anyone to travel to the island. New York-based Goldman Sachs purchased Cuba as early as June, CNN reported today, Trump could end that loophole, sources told $2.8 billion of Venezuelan bonds for pennies citing a U.S. government offi cial involved in CNN. on the dollar, Reuters reported. The bank has the review of Washington’s policy toward the faced criticism for going through with the deal, island nation. By next month, Trump could Brazilian Supreme which infuses the government with desperately announce that the United States will make no needed cash. Goldman in a statement said it further unilateral concessions to Cuba, which Court Orders Temer bought the securities from a broker and did the Obama administration was accused of not communicate with the government, The to Testify in Writing Wall Street Journal reported. “We recognize that ... Venezuela is in crisis,” the bank said. The Brazilian Supreme Court justice in charge I’m 1,000 percent “We agree that life there has to get better, and of the massive “Car Wash” graft case on we made the investment in part because we sure the president is Tuesday ruled that President Michael Temer believe it will.” going to deliver on would have to testify in writing “on the grounds his commitment.” of the exceptionality of the investigation,” the —Rep. Mario Diaz-Balart Financial Times reported. Temer would be Mexico Sees Slower required to respond within 24 hours once the questionnaire is delivered, the Supreme Court Drop in Oil, Gas Reserves said. The order came nearly two weeks after The Mexican oil commission said that the doing, according to the offi cial, as well as other the release of a recording in which Temer is al- country’s proven and possible oil and natural current and former administration offi cials legedly heard endorsing the payment of bribes gas reserves dropped again in 2016, but that and Cuba experts. Trump is also expected to to jailed former Chamber of Deputies Speaker the rate at which they dropped seemed to have demand the extradition from Cuba of fugitives Eduardo Cunha by Joesley Batista, the former moderated, the Associated Press reported such as Assata Shakur, who escaped from a chairman of meatpacking company JBS. Temer Tuesday. Unproven but possible reserves that U.S. prison and received political asylum in has denied the allegations. are known as “2P” increased by 5.7 percent to Cuba after being convicted of killing a New 16.8 billion barrels of crude equivalent, while Jersey state trooper. Trump also is expected unproven but possible reserves that are known to prohibit U.S. companies from making deals ECONOMIC NEWS as “3P” decreased by 1.1 percent to 25.9 billion with Cuba’s military, which controls much of barrels. the country’s tourism industry. While Trump is not expected to roll back all of former Ecuadorean Gov’t President Barack Obama’s thaw with Cuba, he Raises $2 Billion is expected to make symbolic gestures to the Brazilian Government to U.S. lawmakers who are staunch opponents of in Bond Off ering Sell Shares in IRB Brasil the Cuban government as well as conservative Brazil’s government is among the entities sell- Cuban-American voters. “I’m 1,000 percent The Ecuadorean government raised $2 billion ing all or a portion of their shares in IRB Brasil sure the president is going to deliver on his from its most recent bond offering on Tuesday, Resseguros through an initial public offering, commitment,” Rep. Mario Diaz-Balart (R-Fla.), indicating that investors were optimistic about Reuters reported Tuesday, citing documents recently told the National Journal. “I have no the ability of new President Lenín Moreno to fi led with the country’s securities regulator, doubt that you’re going to see in short order a curb spending, Reuters reported. Moreno’s CVM. The FGEDUC state-owned fund will sell different policy.” Cuban offi cials have not pub- narrow victory initially caused concern that he an undisclosed amount of common shares in licly commented about the possible changes in might not make the necessary policy moves to IRB. COPYRIGHT © 2017, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Wednesday, May 31, 2017 lower public spending, but investors say they FEATURED Q&A / Continued from page 1 have seen positive signs from his government. “Some market friendly people have been put to step down, but the Supreme Electoral David Fleischer, emeritus into key posts of the central bank,” said Sean Tribunal could depose him with a fi nding professor at the University of Newman, a portfolio manager at Invesco. Citi- that his election as vice president (with his Brasília and editor of Brazil group priced the offering, with a $1 billion six- predecessor Dilma Rousseff) was illegally A Focus: “Brazil is going through fi nanced. Or, Temer could, like Rousseff, be very diffi cult times.