LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Friday, July 6, 2018

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Friday, July 6, 2018

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group BUSINESS Devry Boughner Vorwerk Corporate VP, Global Corporate Affairs How Well Has Boeing Taking Cargill Joyce Chang Over Commercial Global Head of Research, Juan Manuel Santos Jet Business JPMorgan Chase & Co. Dirk Donath of Embraer Senior Partner, Chicago-based Boeing signed a Catterton Aimara Led Colombia? deal with Brazil’s Embraer to take Marlene Fernández over its commercial jet and ser- Corporate Vice President for Government Relations, vices business. Boeing will hold a Arcos Dorados $4.75 billion, 80 percent stake in a Peter Hakim new joint venture. President Emeritus, Page 2 Inter-American Dialogue Donna Hrinak President, Boeing Latin America ECONOMIC Jon Huenemann Vice President, U.S. & Int’l Affairs, Puerto Rico Sues Philip Morris International Federal Fiscal James R. Jones Chairman, Control Board Monarch Global Strategies President Juan Manuel Santos, who became Colombia’s president in 2010, leaves office next The U.S. territory filed a lawsuit Craig A. Kelly month. // File Photo: Colombian Government. against the board over two Director, Americas International budget plans. Puerto Rico claims Gov’t Relations, Exxon Mobil Colombian President Juan Manuel Santos’ second term will the board is overstepping its John Maisto authority. Director, U.S. Education come to an end on Aug. 7, when President-elect Iván Duque Finance Group Page 3 will be sworn in as the country’s new leader. Santos received Nicolás Mariscal Chairman, Q a Nobel Peace Prize in 2016 for negotiating a peace agree- POLITICAL Grupo Marhnos ment with the Revolutionary Armed Forces of Colombia, or FARC, ending Thomas F. McLarty III Brazilian Labor Chairman, almost 50 years of war. The treaty was controversial in Colombia, where McLarty Associates many, including Duque, criticized aspects of the accord. Looking back Minister Resigns Carl Meacham After Suspension Associate VP for Latin America on Santos’ eight years in office, what were the country’s main challenges Int’l Advocacy Division, PhRMA when Santos became president in 2010, and how do they compare to Brazilian Labor Minister Helton Carlos Paz-Soldan those Colombia faces today? How did Colombia fare under Santos? What Yomura resigned after the coun- Partner, try’s Supreme Court suspended DTB Associates, LLP were his major achievements and shortcomings? Has Santos achieved a him in connection with a cor- Beatrice Rangel lasting peace with the FARC? ruption investigation. He denies Director, AMLA Consulting LLC wrongdoing. Page 2 Ernesto Revilla Head of Latin American Sergio Guzmán, analyst for global risk analysis at Con- Economics, Citi trol Risks in Bogotá: “Juan Manuel Santos will likely be Gustavo Roosen remembered as a historic president, although his approval Chairman of the Board, Envases Venezolanos ratings do not necessarily reflect it today. Santos staked his Andrés Rozental A entire political legacy on the idea of peace and attempted an ambitious President, Rozental & Asociados and Senior agreement with a tenacious counterpart. Santos delivered an agreement, Policy Advisor, Chatham House and although it was hailed internationally as a landmark deal, opponents Roberto Sifon-Arevalo Managing Director, Americas chastised the agreement as brittle and overly generous. All the more, Sovereign & Public Finance Ratings, Standard & Poor’s Santos has maintained economic stability, despite an environment of declining oil prices. He continued the country’s intertwining to the international trade order by leading the creation of the Pacific Alliance and obtaining the country’s membership to the OECD. Santos is criticized for his financial profligacy on the peace deal, but in time, this too shall pass. Yomura // File Photo: Brazilian Labor Ministry. Continued on page 3

POLITICAL NEWS BUSINESS NEWS NEWS BRIEFS

Brazilian Labor Boeing to Take Over At Least 24 Killed in Explosions in Mexico’s Minister Resigns Commercial Jetliner ‘Fireworks Capital’ After Suspension Business of Embraer A series of explosions in a pyrotechnics work- shop Thursday in Mexico resulted in at least Brazilian Labor Minister Helton Yomura U.S. aircraft manufacturer Boeing and Brazilian 24 people dead and dozens injured, including resigned Thursday after the country’s Supreme aerospace company Embraer have signed a children and government officials, CNN re- Court suspended him in connection to a cor- deal for a joint venture, in which Boeing would ported. The fireworks manufacturing ware- ruption investigation, Globo reported. Yomura take over Embraer’s commercial aircraft and house is located in the La Saucera area of the stands accused of involvement in a fraudulent services business, Boeing said Thursday in municipality of Tultepec, which lies just north scheme connected to the registration of trade a statement. Boeing will hold an 80 percent of Mexico City and calls itself the country’s unions, Bloomberg News reported. Yomura, a stake in the joint venture, which the company “fireworks capital,” CNN reported. Similar fatal member of the Partido Trabalhista Brasileiro, said was worth $4.75 billion, and Embraer will incidents have occurred there in the past, with or PTB, had been labor minister only since hold the remaining 20 percent stake. The new blasts earlier this year killing seven people, commercial jet company would be managed BBC News reported. in Brazil, but the venture would be controlled Yomura denies by Boeing in Chicago, The New York Times wrongdoing in the reported. “The agreement with Boeing will cre- ate the most important strategic partnership Pence, Colombia’s Duque corruption case. in the aerospace industry, strengthening both Meet at White House companies’ leadership in the global market,” Colombian President-elect Iván Duque met with said Paulo Cesar de Souza e Silva, Embraer’s U.S. Vice President Mike Pence at the White April, when President Michel Temer appointed president and CEO, in the same statement. The House on Thursday, where they discussed him to the post amid a cabinet shuffle ahead two companies, which have collaborated for the Colombian peace agreement, economic of the country’s October elections. Candidates years, also said they were discussing an addi- engagement, and illegal immigration, the White running for office must resign their positions tional joint venture comprising “new markets House said in a statement. Duque and Pence in the executive branch at least six months for defense products and services.” The move committed to continue battling drug produc- before the election. Temer’s current chief of comes after Boeing’s main rival, European man- tion and trafficking, and they emphasized the staff, Eliseu Padilha, will take over as interim ufacturer Airbus, closed a deal with Canada’s importance of pressuring Venezuelan President labor minister, O Estado de S.Paulo reported. Bombardier regarding production of smaller Nicolás Maduro and dealing with the “tragic Padilha will continue to serve as chief of staff, aircraft earlier this week, The New York Times collapse of democracy” there, the statement the Associated Press reported. Yomura denies reported. said. wrongdoing in the corruption case. His defense team released a statement saying, “Minister Helton Yomura, even without knowing what Argentine Court Brazil May Be Forced acts he is accused of, vehemently denies any Rejects Action accusation of a crime or irregularity.” Fed- to Import Soybeans: eral prosecutors allege lawmakers and civil Against Chevron Exporters Group Official servants manipulated the procedure by which Brazil, which exports more soybeans than any unions are registered with the government. An Argentine appeals court rejected an attempt other country in the world, may have to resort As part of the probe, police were executing to enforce a $9.5 billion Ecuadorean court this year to importing the oilseed from the Unit- three arrest warrants and 10 search warrants. judgment against the U.S.-based oil major, the ed States, an executive of Anec, an exporters Authorities did not say who the targets were, company said Thursday. The three-judge panel association, said Thursday, Reuters reported. A but the AP reported that police searched the unanimously dismissed the action against trade war between China and the United States offices of Nelson Marquezelli, a member of the Chevron due to lack of jurisdiction, saying the may lead the Asian nation to demand more soy- Chamber of Deputies. Marquezelli told Globo company has no legal presence or assets in beans from Brazilian processors, the executive, TV that he had “nothing to fear.” He added, “I’ll Argentina and that the company’s subsidiar- Luis Barbieri, said at an event in São Paulo, the await their report.” ies in Argentina are separate legal entities. wire service reported.

U.S. courts have found that the Ecuadorean FEATURED Q&A / Continued from page 1 judgment was obtained through fraud. The long-running case stems from 1993 when a Peace agreements themselves are delicate sive demise of the peace agreement. Santos group of Ecuadoreans sued Texaco, which things, and Santos has not delivered peace failed because he believed Colombia could Chevron later acquired, arguing that oil drilling itself—rather, he delivered a peace frame- be put on the path to peaceful settlement sickened local villagers. work, which will likely suffer alterations of a guerrilla war, lasting peace, civility, and modifications by Iván Duque, who also security and political, economic, social, and has staked his political ambitions against ECONOMIC NEWS the agreement. Duque will face a difficult scenario as he has to uphold his promise to renegotiate large parts of the agreement— Puerto Rico Sues some which threaten its core—while at the Peace with the FARC Federal Fiscal same time conserving Colombia’s orthodox is ephemeral, at best.” economic model when the public demands — Maria Velez de Berliner Control Board economic populism, and also providing security and state services in rural areas Puerto Rico on Thursday sued a federal fiscal without prompting a significant escalation control board over two proposed budget plans of conflict. This is already a tall order and a that seek to bring the U.S. territory out of delicate balancing act.” an 11-year recession, the Associated Press cultural fairness, and relative equality by the reported. Puerto Rico Governor Ricardo Ross- Maria Velez de Berliner, manag- stroke of his pen. Given Colombia’s history elló says that the federal board’s $8.75 billion ing director of Red Team Group, of political violence, widespread inequality budget excessively controls every aspect of Inc.: “President Santos was and economic, political, social, economic, Puerto Rico’s public finances and over-steps A expected to continue former and cultural cleavages of all sorts, how sadly its authority. Rosselló also claims the board President Álvaro Uribe’s democratic security, mistaken President Santos was.” is attempting to “illegally usurp” the island’s operations to defeat the FARC militarily, ae- leadership and “impose its policy preferences,” rial spraying to eliminate coca and increase Luz Ángela Sánchez, senior the support of the traditional economic director at Llorente y Cuenca in and political establishment. Once Santos Bogotá: “Santos’ main challeng- failed to deliver on the first three, he had an A es when he became president in implacable opponent in ex-President (now 2010 were reducing poverty and unemploy- Senator) Uribe and his followers, for whom ment; improving security in relation to armed Santos could do no right. The now-disin- conflict, urban criminality and drug traffick- tegrating FARC peace agreement and the ing; improving the economy by increasing favorable, legal concessions made to FARC state income and redistribution of the roy- under the agreement’s Special Jurisdiction alties; transforming the country’s infrastruc-

Rosselló // File Photo: Commonwealth of Puerto Rico. for Peace contribute to Colombians believ- ture at all levels; and rebuilding international ing Santos is the country’s worst president relationships with the region, especially which include several austerity measures, such in two generations. Colombia has higher Venezuela. Colombia has achieved some of as cutting a yearly Christmas bonus, El Vocero rates of violence and insecurity than when this. However, President-elect Duque has to reported. The board’s budget also eliminates a Santos took over; coca growing skyrocketed; consolidate important things that Santos $50 million annual fund for cities still grappling and the FARC’s dissident groups and sundry started, for example, the implementation of with the consequences of Hurricane Maria last criminal organizations proliferate and wreak the peace agreement and the continuation September and a $25 million yearly scholarship havoc in Antioquia, the country’s southwest of the negotiations with ELN guerrilla. More- fund for the University of Puerto Rico, the AP and Catatumbo on the Venezuela-Colombia over, Duque needs to control the migratory reported. The governor signed another budget, border. Peace with the FARC is ephem- crisis in the Venezuelan border, strengthen which legislators had approved, earlier this eral, at best. Peace was signed with the the fight against corruption that the current week. The lawsuit will decide which budget aged, jungle-tired members of the Central government started with a package of plan will be implemented, but it is also expect- Command, not with the whole organization. legislative initiatives, improve the quality of ed to determine the functions and limits of the Therein lays the weaknesses and progres- the health benefit and increase economic federal board. Continued on page 4

FEATURED Q&A / Continued from page 3 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2018 growth. Santos had an advantage that was just 50.95 percent of the vote, in an election the opportunity to govern for two consec- perceived by many as a referendum for the Erik Brand utive periods in which the country reached peace process. After four years of success- Publisher [email protected] great achievement in all the subjects. The es and disappointments at the negotiation infrastructure improved both on roads and table, in September 2016, the Colombia’s Gene Kuleta Editor airports, the poverty was reduced almost government signed a peace accord with [email protected] by 50 percent, 43 percent more of school Anastasia Chacón González graduates go to university, there were also Reporter zero political prisoners and an improvement [email protected] of the justice system. Colombia also entered President Santos will the OECD and NATO, and last but not least, leave to his succes-

Santos ended 60 years of conflict with the sor a better country Michael Shifter, President biggest armed group in Latin America. than the one he took Genaro Arriagada, Nonresident Senior Fellow Santos hasn’t achieved a lasting peace with charge of in 2010...” Sergio Bitar, Nonresident Senior Fellow the FARC because the road for that is just — Ana Caridad Joan Caivano, Director, Special Projects beginning. To get there, Colombia needs Michael Camilleri, Director, Peter D. Bell Rule of Law years in which transitional justice will be Program the main character. What Santos achieved Kevin Casas-Zamora, Nonresident Senior Fellow was the end of a 60-year war, but the next Ariel Fiszbein, Director, Education Program government is responsible for consolidating the FARC-EP, bringing the country’s more Alejandro Ganimian, Nonresident Fellow that peace, reducing the levels of drug crops than 50-year-long civil war to an end, a war Peter Hakim, President Emeritus and defeating the FARC dissidents.” that has cost the lives of at least 220,000 Claudio Loser, Senior Fellow Colombians, displaced close to six million Nora Lustig, Nonresident Senior Fellow Ana Caridad, program asso- people, and left more than eight million Margaret Myers, Director, China and Latin America Program ciate for the Latin America victims. Colombians narrowly rejected the Manuel Orozco, Director, Migration, and Caribbean Program at agreement with the guerrilla in a referendum Remittances & Development A The Carter Center: “President (after a renegotiation the agreement was Jeffrey Puryear, Senior Fellow Santos came to power in 2010 in a landslide then ratified by Congress), in a reminder that Tamar Solnik, Director, Finance & Administration victory committed to continue Álvaro Uribe’s building sustainable peace in Colombia will Lisa Viscidi, Director, Energy Program campaign to defeat the Revolutionary Armed require commitment to structural changes Denisse Yanovich, Director of Development and Forces of Colombia-People’s Army (FARC- for generations to come. President Santos External Relations EP). Clashes between government troops will leave to his successor a better country Latin America Advisor is published every and the guerrilla on election day, which left than the one he took charge of in 2010, as business day, except for major U.S. holidays, 10 government troops dead, were a strong the FARC-EP have turned in their weapons, by the Inter-American Dialogue at 1155 15th Street NW, Suite 800 reminder that, despite major gains in secu- trading armed insurgency to become a Washington, DC 20005 rity, the country was still at war. However, political force. The chance to build sustain- www.thedialogue.org once he took office, President Santos made able peace in the country cannot be allowed ISSN 2163-7962 it clear that additional policies were required to slip away. The incoming administration Subscription inquiries are welcomed at to bring peace to Colombia. In 2012, the should embrace this as an opportunity for a [email protected] Colombian government initiated direct mandate of inclusive peace-building.” The opinions expressed by the members of the Board of peace negotiations with the FARC-EP in Oslo Advisors and by guest commentators do not necessarily and then continued in Havana. The talks The Advisor welcomes comments on its Q&A represent those of the publisher. The analysis is the sole continued into 2013 and 2014—the year in section. Readers can write editor Gene Kuleta view of each commentator and does not necessarily represent the views of their respective employers or firms. which President Santos was re-elected with at [email protected]. The information in this report has been obtained from reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have any questions relating to the contents of this publication, contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in a retrieval system, or transmitted without prior written permis- sion from the publisher.