Qguatemalan President Jimmy Morales Said Earlier

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Tuesday, October 23, 2018

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Corporate VP, Global Corporate Affairs Would Billions of U.S. Will Begin Cargill Joyce Chang Cutting Aid to Global Head of Research, Dollars in Loans Central America: JPMorgan Chase & Co. Dirk Donath Trump Senior Partner, President Donald Trump said the Catterton Aimara Benefit Guatemala? United States would start cutting Marlene Fernández aid to Guatemala, Honduras and Corporate Vice President for Government Relations, El Salvador, saying they have Arcos Dorados failed to stop people from illegally Peter Hakim migrating to the United States. President Emeritus, Page 2 Inter-American Dialogue Donna Hrinak President, Boeing Latin America POLITICAL Jon Huenemann Vice President, U.S. & Int’l Affairs, Hurricane Takes Philip Morris International Aim at Mexico’s James R. Jones Chairman, Pacific Coast Monarch Global Strategies During a meeting of the Alliance for Prosperity program this month in Washington, Guatemalan Thousands of people were Craig A. Kelly President Jimmy Morales said his government hopes to secure $15 billion in development loans over the next decade. // Photo: Guatemalan Government. evacuated as Hurricane Willa Director, Americas International approached land. The storm is Gov’t Relations, Exxon Mobil Guatemalan President Jimmy Morales said earlier this expected to make landfall south John Maisto of Mazatlán. Director, U.S. Education month that his country wants $15 billion in develop- Finance Group Page 2 ment loans over the next decade. Morales, who made the Nicolás Mariscal Chairman, Q statement in Washington during meetings with the United ECONOMIC Grupo Marhnos States, Mexico, El Salvador and Honduras, said aid could come in the Thomas F. McLarty III Mexico Eyes Chairman, form of payable credits through the World Bank or the Inter-American McLarty Associates Development Bank, adding that Guatemala had not received “a penny” Tariffs on Carl Meacham Canadian Goods Associate VP for Latin America of the $2.6 billion the United States had pledged under the Alliance for Int’l Advocacy Division, PhRMA Prosperity program, which aims to boost development in the Northern The tariffs would be retaliation Carlos Paz-Soldan Triangle countries of Central America. How likely is it that the United following Canada’s imposition of Partner, tariffs on Mexican steel. Mexican DTB Associates, LLP States or international lenders will grant Morales’ request for billions of Deputy Trade Secretary Juan Beatrice Rangel dollars in loans, and that the funds actually come through? What should Carlos Baker said Mexico was Director, AMLA Consulting LLC Morales’ government do with the money? What was achieved at the “keeping all its options open.” Page 2 Ernesto Revilla Alliance for Prosperity conference? Head of Latin American Economics, Citi Gustavo Roosen Arturo Matute, researcher at the faculty of social sciences Chairman of the Board, Envases Venezolanos at Universidad del Valle de Guatemala: “During the Confer- Andrés Rozental ence on Prosperity and Security in Central America held in President, Rozental & Asociados and Senior Washington, President Jimmy Morales reviled the fact that Policy Advisor, Chatham House A his government has ‘not received a cent’ of the aid pledged and expressed Shelly Shetty Head of Sovereigns Ratings, his concern on the possible non-certification to get a remaining tranche. Latin America, Fitch The plan established from the start that the money would be used to fund Roberto Sifon-Arevalo Managing Director, Americas projects administrated mainly by the United States Agency for Internation- Sovereign & Public Finance Ratings, al Development (USAID) and the Bureau of International Narcotics and Standard & Poor’s Law Enforcement Affairs (INL), not direct transfers to national coffers. President Morales’ alternative proposal to get the funding through loans Baker // File Photo: Mexican Government. Continued on page 3

POLITICAL NEWS to change our pathetic Immigration Laws! NEWS BRIEFS Remember the Midterms! So unfair to those U.S. Will Begin who come in legally.” On Sunday, Mexican Thousands Evacuated as authorities mainly left the migrants alone as Hurricane Bares Down Cutting Central they trekked north in Chiapas State, the Voice of America reported. Mexico’s government on Mexico’s Pacific Coast America Aid: Trump has vowed to process asylum requests for Authorities on Monday evacuated thousands any migrants who apply. Between Friday and of people along Mexico’s Pacific coastline as President Donald Trump said Monday that Sunday, 1,028 migrants had requested status Hurricane Willa, a powerful category 4 storm, the United States would begin cutting off aid as refugees, Mexico’s interior ministry said. approached land, Reuters reported. The storm to Central American nations, saying they are had maximum sustained winds of nearly 130 not doing enough to stop people from illegally Violent Deaths of miles an hour and was located about 150 miles migrating to the country. “Guatemala, Honduras south-southwest of Mazatlán and moving and El Salvador were not able to do the job of Venezuelans in north at 6 a.m. local time, according to the U.S. National Hurricane Center. The hurricane is Colombia Soar expected to make landfall this afternoon. Guatemala, Honduras and El Salvador were The number of Venezuelans killed in violent not able to do the job deaths in Colombia more than tripled between Mexico’s AMLO Vows Safe of stopping people January and September in comparison to the same period last year, according to a Environment for Banks from leaving their new report by Colombia’s national institute country and coming Mexican President-elect Andrés Manuel López of forensic sciences released Monday, El Obrador on Monday told Banco Santander’s illegally to the U.S.” Espectador reported. In the first nine months executive chair, Ana Botín, that his govern- — Donald Trump of this year, 310 violent deaths of Venezuelans ment will create a safe environment for banks were registered in Colombia, a 244 percent because “we need the investment,” Reuters jump from the 90 incidences recorded a year reported. Santander committed to an invest- ago. Of these deaths, 56 percent, or 174 in ment of 15 billion pesos ($773 million) in stopping people from leaving their country and total, were homicides, followed by car crashes, Mexico between 2017 and 2019. The same day, coming illegally to the U.S. We will now begin Botín said the Spanish bank plans to continue cutting off, or substantially reducing, the mas- investing in Mexico. López Obrador will take sive foreign aid routinely given to them,” Trump office on Dec. 1. said in a tweet. Trump’s comments came as a group of thousands of migrants, mainly from Honduras, moved through Mexico toward the United States to escape violence and poverty Facebook Shuts Down at home, the Voice of America reported. In Pages Associated With another posting on Twitter, Trump added, Brazilian Marketing Firm “Sadly, it looks like Mexico’s Police and Military Duque // File Photo: Colombian Government. are unable to stop the Caravan heading to the Facebook on Monday shut down 68 pages and 43 accounts associated with Brazilian market- Southern Border of the United States. Criminals which accounted for 18 percent, the report ing group Raposo Fernandes Associados, or and unknown Middle Easterners are mixed in. I said. Most incidents occurred in cities in the RFA, for violating the social media website’s have alerted Border Patrol and Military that this border departments of Norte de Santander and misrepresentation and spam policies in the last is a National Emergy [sic]. Must change laws!” La Guajira, a reflection of the massive exodus week ahead of the country’s highly polarized The situation is unfolding two weeks ahead of Venezuelans fleeing shortages of food and election, O Estado de S. Paulo reported. of the U.S. midterm congressional elections, medicine amid an economic crisis in their Facebook said RFA created pages through and Trump blamed the mass migration on home country and taking refuge in Colombia, fake accounts or multiple accounts with the Democrats. “Every time you see a Caravan, or Reuters reported. The Colombian government same name and circulated massive amounts of people illegally coming, or attempting to come, estimates that the number of Venezuelans clickbait. The group was the main network of into our Country illegally, think of and blame living in Colombia could grow to four million by support for far-right candidate Jair Bolsonaro, the Democrats for not giving us the votes 2021, costing the recipient country some $9 bil- the newspaper reported.

COPYRIGHT © 2018, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Tuesday, October 23, 2018 lion. Colombian President Iván Duque has been FEATURED Q&A / Continued from page 1 asking for international support. On Monday, Duque began a three-day trip to Europe, where seems aimed at circumventing the condi- the follow-up conferences now seem to he is scheduled to meet with E.U., Italian and tions set in Congress’ appropriations acts be more of an instrument to check on the Belgian officials to discuss the migration crisis, that include cooperating with ‘commissions progress of the countries in their fulfillment El Tiempo reported. against impunity.’ In strict macroeconomic of U.S. demands for tighter borders.” terms, Guatemala can take on a lot more debt. Its current liabilities amount to 23.4 Miguel Castillo, professor of ECONOMIC NEWS percent of GDP, among the lowest in the political studies and interna- world. But Morales’ government doesn’t tional relations at Francisco Mexican Gov’t provide the confidence necessary to ensure A Marroquín University: “Guate- malan President Jimmy Morales’ request Considering Tariffs for loans came as a surprise because of the very high sum he asked for and because Morales’ government on Canadian Goods there is no public record as to where the doesn’t provide the money would be invested, although it will Mexico is considering tariffs on a series of confidence necessary supposedly finance infrastructure, which is Canadian products in retaliation for Canadian to ensure the currently in a state of virtual collapse (in- tariffs on Mexican steel, government officials correct use of funds.” cluding roads, ports, airports and railways, said Monday, Reuters reported. Mexican — Arturo Matute among others). Over the past few decades, Deputy Trade Secretary Juan Carlos Baker said the main source of corruption in Guate- Mexico was “keeping all its options open,” mala has been infrastructure, and due to including taking action at the World Trade corruption, its quality has suffered since the Organization, in response to Canada announc- the correct use of funds. His continued 1970s. In an effort to avoid new graft cases, ing earlier this month that it would impose a fight against the International Commission state procurement laws became stricter, 25 percent tariff on seven import categories to against Impunity in Guatemala (CICIG) to to the point of making it nearly impossible several countries, including Mexico, as of Oct. avoid his own prosecution and of the con- to realize any type of sale or acquisition 26. Mexico estimates that Canada’s tariffs on servative clique around him has produced of products. Concessions of the most expen- its steel products would cost it some $200 mil- political instability resulting in deteriorated sive projects to private companies have not lion worth of its exports. Earlier this year, the financial risk assessments for Guatemala. advanced due to distrust and bureaucratic United States also imposed tariffs on steel and His government has hidden its negligent procedures. The request for loans seems to aluminum from Mexico and Canada. Also on response in emergencies and has faced be President Morales’ last resort, taking into Monday, Mexico’s deputy secretary for industry continued scandals with regard to malfea- account U.S. support of him in other issues and commerce, Rogelio Garza, said he hoped sance in infrastructure projects, for which (including CICIG) and the scarce interna- to resolve the steel disputes with Canada and the money is being requested. The need to tional credit that Guatemala uses. However, the United States before the three countries strengthen democratic institutions in the re- the argument that his administration has sign the revamped version of the North Amer- gion seemed to be understood in the Obama not had more access to the funds of the ican Free Trade Agreement, known as USMCA, era during which the conditions for funding so-called ‘Alliance for Prosperity’ that the in late November Televisa reported. through the plan were established. However, United States promotes to address social Continued on page 4

BUSINESS NEWS of its Latin America branches, Bloomberg rested in connection with a billion-dollar money News reported today, citing a spokeswoman laundering scheme involving Venezuelan state for the private bank. Beatriz Sánchez, head oil company PDVSA. In August, Krull pleaded Julius Baer Closing of the Swiss bank’s Latin America business, guilty to participating in a plan to launder $1.2 has been reviewing the Panamanian unit as billion from PDVSA, a scheme that prosecutors Units in Panama, part of an overall regional evaluation. Julius have said involved banks, real estate firms and Peru: Report Baer manages roughly 40 billion Swiss francs, money managers and brokerages. Krull is cur- or $40 billion, in assets in Latin America. The rently awaiting his sentence. Julius Baer has Julius Baer Group is closing its operations in Panamanian business came under scrutiny said it is undergoing an internal probe, though Panama and Peru as part of a strategic review after a former employee, Mathias Krull, was ar- the bank has not been charged.

FEATURED Q&A / Continued from page 3 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2018 conditions that provoke migration seems stop the migrants and threatening to cancel to be a call for Washington to be ‘flexible’ U.S. economic aid, it does not seem that Erik Brand in the face of Guatemala’s incapability to the U.S. government will go out of its way to Publisher [email protected] comply with the necessary requirements in address Morales’ requests. The photographs exchange for the money. Jimmy Morales is of massive migration on the front pages of Gene Kuleta Editor in the final stage of his term, and evaluations The New York Times and The Washington [email protected] of it constantly say it lacks results. The re- Anastasia Chacón González quest is his last attempt to leave a legacy in Reporter the area of infrastructure and, in this, avoid [email protected] being remembered as the most ineffective It does not seem that president in Guatemala’s democratic era.” the U.S. government

will go out of its Michael Shifter, President Gustavo Berganza, Guatema- way to address Genaro Arriagada, Nonresident Senior Fellow la-based sociologist, political Morales’ requests.” Sergio Bitar, Nonresident Senior Fellow analyst and journalist: “In his — Gustavo Berganza Joan Caivano, Director, Special Projects opening remarks to Central A Michael Camilleri, Director, Peter D. Bell Rule of Law American presidents during the ‘Alliance for Program Prosperity’ meeting in Washington on Oct. Kevin Casas-Zamora, Nonresident Senior Fellow 11, U.S. Vice President Mike Pence told Gua- Ariel Fiszbein, Director, Education Program temalan President Jimmy Morales, “We en- Post, and the importance that both CNN and Alejandro Ganimian, Nonresident Fellow courage you to devote even more resources Fox News have given the exodus, makes one Peter Hakim, President Emeritus to securing your border. Take full advantage think that Trump’s administration will opt for Claudio Loser, Senior Fellow of the border-security task forces the United the stick rather than the carrot. At least in Nora Lustig, Nonresident Senior Fellow States has already established.’ One of the the short term, Morales will not receive the Margaret Myers, Director, Asia and Latin America Program purposes of securing the border is con- United States’ support for the World Bank Manuel Orozco, Director, Migration, trolling the passage of migrants at a border and the Inter-American Development Bank Remittances & Development that has proven to be extremely porous. Less to facilitate new loans and provide more Jeffrey Puryear, Senior Fellow than a week later, thousands of Hondurans donations.” Tamar Solnik, Director, Finance & Administration were crossing the Suchiate River from Guate- Lisa Viscidi, Director, Energy Program mala to Mexico, on their way to the United The Advisor welcomes comments on its Q&A Denisse Yanovich, Director of Development and States. In this context, with Trump urging the section. Readers can write editor Gene Kuleta External Relations presidents of Honduras and Guatemala to at [email protected]. Latin America Advisor is published every business day, except for major U.S. holidays, by the Inter-American Dialogue at 1155 15th Street NW, Suite 800 Washington, DC 20005 LATIN AMERICA ADVISOR www.thedialogue.org ISSN 2163-7962 Subscription inquiries are welcomed at [email protected]

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