LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Monday, October 5, 2020

Home , Carlos Mesa, Luis Arce, Luis Fernando Camacho

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Monday, October 5, 2020

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Will Bolivia’s Next Covid-19 Death CEO, DevryBV Sustainable Strategies Rates Reportedly Joyce Chang Global Head of Research, Election Put an End Falling in Region JPMorgan Chase & Co. Latin America, which has been hit Paula Cifuentes hard by the coronavirus pandemic, Director of Economic & Fiscal Affairs, to Political Unrest? is seeing falling rates of new Latin America & Canada, Philip Morris International reported cases and deaths from Marlene Fernández Covid-19. Corporate Vice President for Page 2 Government Relations, Arcos Dorados Peter Hakim BUSINESS President Emeritus, Inter-American Dialogue Guyana, Exxon Donna Hrinak Sign Deal to Senior VP, Corporate Affairs, Royal Caribbean Group Develop Payara Jon E. Huenemann Offshore Oil Field Former Corporate and Government Senior Executive Guyana’s government and MAS party candidate Luis Arce (center) campaigned in Cochabamba last week. // Photo: Arce James R. Jones U.S.-based oil major ExxonMobil campaign via Twitter. Chairman, have signed an agreement for Monarch Global Strategies the development of the offshore Craig A. Kelly Interim Bolivian President Jeanine Áñez on Sept. 17 with- Payara oil field. Senior Director, Americas Page 2 Int’l Gov’t Relations, Exxon Mobil drew from the country’s upcoming presidential election, John Maisto saying she wanted to unify opposition against Luis Arce, the Director, U.S. Education POLITICAL Finance Group Q candidate of former President Evo Morales’ MAS party. How Nicolás Mariscal will Áñez’s withdrawal affect the race? What issues are Bolivian voters Nicaragua Eyes Chairman, Grupo Marhnos most concerned about? Will the Oct. 18 election, a redo of the country’s Legislation to Thomas F. McLarty III flawed October 2019 presidential election, raise or lower Bolivia’s level Clamp Down Chairman, McLarty Associates of political instability? on Journalists Beatrice Rangel Nicaragua’s National Assembly, Director, which President Daniel Ortega’s AMLA Consulting LLC Iván Rebolledo, managing partner of TerraNova Strategic Sandinista Party controls, is Partners and president of the Bolivian American Chamber of Jaana Remes considering legislation that would Partner, McKinsey Global Institute Commerce: “President Áñez’s withdrawal from the race was place new restrictions on journal- Ernesto Revilla long overdue. Her popularity was severely damaged when she ists working in the country. Head of Latin American A Page 2 reneged on her early pledge to serve only as a caretaker, announcing that Economics, Citi Gustavo Roosen she would run in the presidential election, alienating centrist voters. Her Chairman of the Board, controversial policies backfired, galvanizing opposition from the country’s Envases Venezolanos Andrés Rozental Indigenous majority and hindering her ability to effectively govern. Howev- President, Rozental & er, the Covid pandemic and its ensuing economic crisis were determining Asociados factors in her decision to withdraw. With her exit, there are now just two Shelly Shetty Managing Director, Sovereigns viable conservative candidates (Mesa and Camacho), severely curtailing Fitch Ratings Luis Arce’s chance of a first-round victory. One can assume that the most pressing issues to the average Bolivian voter would include: how the government will continue to confront the pandemic, school reopenings and economic reactivation (employment and basic services). The persistent issues of weak governance, political volatility, crippled public institutions and economic hardship will plague whoever wins the Oct. 18 election. Ortega // File Photo: Nicaraguan Government. Continued on page 3

POLITICAL NEWS has nearly recovered from Covid-19, Reuters NEWS BRIEFS reported. Giammattei has described himself as Covid-19 Death Rates a high-risk patient because of pre-existing med- At Least Six Killed as ical conditions and his excess body weight. Tropical Storm Gamma Reportedly Falling On Friday, Giammattei wished U.S. President Donald Trump, who tested positive for the Hits Mexico’s Yucatán in Latin America disease last week, a speedy recovery. [Editor’s At least six people were killed, and thousands note: See related Q&A in the Sept. 8 issue of had to evacuate, in southeastern Mexico as Latin America, one of the regions hit hardest the Advisor.] Tropical Storm Gamma hit the Yucatán Penin- by the coronavirus pandemic, is seeing a slow- sula with winds that nearly reached hurricane down in new cases and deaths from Covid-19, Nicaragua Eying levels in Tabasco and Chiapas states, authori- The Wall Street Journal reported Friday. Across ties said Sunday, the Associated Press report- the region, the novel coronavirus has killed Legislation to Clamp ed. Mexico’s civil defense agency said that more than 300,000 people since the pandemic four of the deaths were caused by a landslide began, with its economic effects plunging Down on Journalists in Chiapas, while the other two deaths were millions back into poverty and wiping out years registered in Tabasco, where water dragged of economic and social gains in the region. Nicaragua’s National Assembly is considering away one person, and another drowned. However, slowdowns in new cases and deaths legislation that would place new restrictions are leading to cautious hope from experts, on journalists, The Washington Post reported the newspaper reported. Brazil has among Sunday. One measure would require journal- Guatemala Halts Caravan, the highest reported daily death tolls from ists who work for foreign media companies Covid-19 in the world, at more than 700, but the to register with Nicaragua’s government as Returns Thousands of country has experienced a nearly 40 percent foreign agents and refrain from “intervening in Honduran Migrants drop in deaths from the disease since July and questions, activities or matters of internal poli- Authorities in Guatemala said Saturday that a more than 40 percent decline in new cases tics,” the newspaper reported. Another piece of they have sent more than 3,000 Honduran mi- since then, The Wall Street Journal reported. legislation would set jail sentences of as long grants back to their home country, halting most Mexico’s number of reported Covid-19 deaths as four years for people using a computer to of a caravan of migrants that had been heading peaked at more than 800 in June, but it has spread “false and/or misrepresented informa- north toward the United States, Reuters recorded fewer than 600 deaths a day for the tion which causes alarm.” Opponents of the reported. Thousands of Hondurans had entered past six weeks. Since August, Colombia’s new measures say the government of President Guatemala from Honduras last Thursday, push- cases have declined approximately 40 percent, Daniel Ortega, whose party holds a majority in ing past Guatemalan troops. As of Saturday, and its daily number of deaths has fallen the National Assembly, could use the measures more than 3,500 migrants had “opted to return,” by half during that time. “Across the region to target anyone writing anything unfavorable Guatemala’s government said. we’ve seen a high level of deaths and cases to the government. A vote could come as early since the end of May but these numbers are as this week. [Editor’s note: See related Q&A in now slowly starting to fall,” Eliseu Waldman, the Sept. 16 issue of the Advisor.] an epidemiologist at the University of São A.M. Best Removes Paulo, told The Wall Street Journal. Brazil has Barbados’ Ocean Re the world’s third-highest number of reported BUSINESS NEWS cases of Covid-19, at more than 4.9 million, From Under Review behind the United States and India, according A.M. Best on Friday affirmed its financial to Johns Hopkins University. Brazil also has Guyana, Exxon Sign strength rating of A- and its long-term issuer the second-highest reported death toll from the Deal to Develop credit rating of a- of the Barbados-based Ocean disease, at more than 146,000, after only the International Reinsurance Company, also United States. Several world leaders, including Payara Oil Field removing it from under review. The agency’s Latin American heads of state, are among outlook for the ratings is stable. A.M. Best cit- those who have contracted Covid-19. In Latin Guyana has signed a deal with U.S. oil giant ed Ocean’s Re’s “balance sheet strength, which America, the presidents of Brazil, Honduras, ExxonMobil for the development of the Payara A.M. Best categorizes as strongest, as well as Guatemala and Bolivia have tested positive for offshore field, the company announced last its adequate operating performance, neutral the disease. On Friday, Guatemala’s govern- week in a statement. Exxon said it had made business profile and appropriate enterprise ment said President Alejandro Giammattei its final investment decision to proceed with risk management” as the reasons behind the ratings.

COPYRIGHT © 2020, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Monday, October 5, 2020 the development after receiving government FEATURED Q&A / Continued from page 1 approvals. Payara, the third project in the Stabroek oil block, is expected to produce as The recent ratings downgrade, primarily due interim government. A Mesa presidency many as 220,000 barrels of crude per day after to weaker foreign exchange earnings, has could mark a return to brokered democracy starting operations in 2024, Exxon said. The Bolivia in its first formal recession since (1982-2004), when parties without clear $9 billion investment “will target an estimated the 1980s—which is another hurdle that political affinities divided up ministries and resource base of about 600 million oil-equiv- the new president will have to quickly deal government institutions, leading to gridlock. alent barrels” and is set to include 10 drill with. Bolivia is a very hard country to lead Arce states that his victory would return the centers and as much as 41 wells, the company under normal circumstances, but in these country to sound macroeconomic policies, added. “ExxonMobil is committed to building times of Covid and post-Evo, governing will allowing it to pull out of the acute economic on the capabilities from our Liza Phase 1 and be extremely challenging to whomever is 2 offshore developments as we sanction the victorious, including the MAS candidate.” The results will be Payara field and responsibly develop Guyana’s hotly contested, and natural resources,” Liam Masson, president of Kathryn Ledebur, director of the protracted post- ExxonMobil Upstream Oil & Gas Company, said Andean Information Network in in the statement. “We continue to prioritize Cochabamba: “A Sept. 16 poll electoral conflict high-potential prospects in close proximity projected a first-round win for appears likely...” A — Kathryn Ledebur to discoveries and maximize value for our Luis Arce, with 36 percent. Carlos Mesa fell partners, which includes the people of Guyana.” far behind with 13 percent. Áñez, with only The project is the “single largest investment 7 percent, fell to fourth, after Camacho. Her crisis brought on by the pandemic and made in the history of Guyana,” according to Natural decision to withdraw and block a first-round worse by mismanagement under Áñez. Resources Minister Vickram Bharrat, the MAS victory should have little impact on the The results will be hotly contested, and Caribbean Media Corporation reported. Guyana final outcome. If Arce does not win in the protracted post-electoral conflict appears is expected to benefit with 7.4 trillion Guyanese first round, the most likely scenario is for all likely, exacerbated by the presence of violent dollars (around $35.4 billion) in government the opposition parties to ally against MAS in anti-MAS para-state groups connected to revenue, Bharrat added. the runoff. In that case, the outcome is un- the Bolivian right. Acute voter suppression clear. Although Mesa projected a more mod- also appears likely. Initial plans for electoral erate stance in the October 2019 elections, observation have been dramatically reduced, ECONOMIC NEWS he has done little to denounce human rights ostensibly due to the pandemic. The OAS violations, unconstitutional actions and delegation will have the same leadership as repeated cases of corruption during Áñez’s its controversial 2019 observation mission. Colombia’s Mining Continued on page 4

Future Is Metals, Oil said mining concessions cover just 3 percent ters reported. However, Mesa said contracts of the country’s territory and that mining for fracking pilot projects are expected by the Still Crucial: Mesa operations are present in less than 1 percent. end of this year, adding that drilling could start However, Mesa pointed out that developing as soon as 2021. “Any economic activity has Colombia’s mining future lies in metals and not nonconventional energy deposits will be key an impact on the environment,” Mesa said. “We coal, though developing oil and gas projects, for Colombia’s economy. “Fossil fuels remain want to be sure exploitation of these resources including nonconventional deposits, will con- absolutely essential for the economic develop- can be done in a responsible way.” Colombia in tinue to be key, said Mines and Energy Minister ment of the country,” Mesa said. Adding, “It’s June cut its outlook on oil production for this Diego Mesa, Reuters reported Friday. In an irresponsible to think that in the short- to medi- year to between 820,000 barrels per day (bpd) interview with the wire service last week, Mesa um-term Colombia can simply do without fossil and 850,000 bpd. The country’s energy ministry said the coronavirus pandemic has intensified fuels.” The development of nonconventional said last week that oil production in August problems with the coal sector, forcing Colom- deposits has been delayed in the country due fell to approximately 742,000 bpd, a 15 percent bia, the world’s fifth-largest coal exporter, to to controversy regarding the use of hydraulic decrease as compared to the same month last evaluate ways in which it can quickly boost its fracturing, or fracking. According to critics, year, Dinero reported. As compared to July, oil mining industry. “Metals are the big opportunity fracking’s negative environmental impacts, production in August was up 0.97 percent. In for Colombia because they’re the mineral with including threats to health and water climate, the first eight months of the year, average oil the greatest demand,” Mesa said, adding that do not offset the gains it could bring and could production was 794,330 bpd, a 10.57 percent the Andean nation is “practically unexplored” instead add to the global climate crisis, Reu- decline, year-on-year. in terms of gold, copper and nickel mining. He

FEATURED Q&A / Continued from page 3 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2020 The European Union, which initially an- shepherd a loose coalition. That scenario is nounced approximately 90 observers, will very reminiscent of Mesa’s brief presidency Erik Brand only send five or six observers.” following the forced resignation of Gonzalo Publisher [email protected] Sánchez de Lozada in 2003. Then, Mesa Miguel Centellas, Croft instruc- threatened numerous times to resign, and Gene Kuleta Editor tional assistant professor of finally did so, setting of a succession crisis. [email protected] sociology and international Let’s hope Mesa (and others) have learned Anastasia Chacón González studies at the University of Mis- from that experience.” A Reporter & Associate Editor sissippi: “As an interim president who came [email protected] to power under dubious circumstances, Holly Sonneland, editorial Jeanine Áñez should never have campaigned manager at AS/COA Online:

for the Bolivian presidency. Her recent “Áñez said she was dropping her Michael Shifter, President withdrawal from the race is a welcome A bid because she didn’t want the Rebecca Bill Chavez, Nonresident Senior Fellow sign and will likely alleviate tensions. But it anti-MAS vote to be so fractured that MAS Sergio Bitar, Nonresident Senior Fellow also introduces additional problems. Áñez wins. But she’s yet to endorse a candidate, Joan Caivano, Senior Advisor withdrew after the ballots were printed and and her supporters could easily go toward Michael Camilleri, Director, Rule of Law Program candidate inscription deadlines closed. So, the center to Carlos Mesa or toward the Kevin Casas-Zamora, Nonresident Senior Fellow the electoral court has annulled her entire right, most likely to Luis Fernando Camacho. Héctor Castro Vizcarra, Nonresident Senior Fellow slate of candidates and will count votes for She says she intends to support the candi- Julia Dias Leite, Nonresident Senior Fellow her Juntos alliance as spoiled ballots. While date with the better shot at beating MAS’ Ariel Fiszbein, Director, Education Program most voters will likely do what Áñez hopes Luis Arce, arguably Mesa, but she’s closer to Peter Hakim, President Emeritus and shift their votes to Carlos Mesa (the Camacho ideologically. Her administration’s Nora Lustig, Nonresident Senior Fellow leading anti-MAS candidate), many will not. actions, meanwhile, continue to polarize the Margaret Myers, Director, Asia and Additionally, many prominent and competent electorate. The economy and jobs are Boliv- Latin America Program Manuel Orozco, Senior Fellow political figures who have spent more than ians’ top concerns (53 percent), followed by Xiaoyu Pu, Nonresident Senior Fellow the health crisis (21 percent) and corruption Jeffrey Puryear, Senior Fellow (20 percent), according to a CELAG poll Mateo Samper, Nonresident Senior Fellow Luis Arce ... is released Oct. 2. By the end of September, Tamar Solnik, Director, Finance & Administration likely to win a Bolivia saw only the earliest signs of the new Lisa Viscidi, Director, Energy Program plurality but not cases curve flattening and had the world’s Denisse Yanovich, Director of Development, secure enough votes fourth-highest rate of deaths per capita at External Relations & Special Projects to avoid a runoff.” 70 per 100,000 people, according to Johns Hopkins University. Much will depend on Latin America Advisor is published every — Miguel Centellas business day, except for major U.S. holidays, how much Bolivian voters personally identify by the Inter-American Dialogue at with a candidate and party, or if they are dis- 1155 15th Street NW, Suite 800 Washington, DC 20005 a decade trying to build a party apparatus affected by the personalities but can muster www.thedialogue.org are now left entirely out of the process. The enough enthusiasm for a candidate they see ISSN 2163-7962 most recent polls suggest that Luis Arce (the as providing a stable transition. More than Subscription inquiries are welcomed at MAS candidate) is likely to win a plurality 40 percent of those polled said they’ve yet to [email protected] but not secure enough votes to avoid a decide on a candidate. The Oct. 18 election The opinions expressed by the members of the Board of runoff against former President Carlos Mesa is a critical exercise in Bolivia’s democra- Advisors and by guest commentators do not necessarily and his Comunidad Ciudadana coalition. cy. Political stability will depend much on represent those of the publisher. The analysis is the sole This means Bolivia will face its first-ever whether voters see the process as valid and view of each commentator and does not necessarily represent the views of their respective employers or firms. presidential runoff election and may very secure, and if leading candidates and party The information in this report has been obtained from well see a president elected without a legis- leaders accept results and instruct their reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have lative majority. If Carlos Mesa wins, he will supporters to do so as well.” any questions relating to the contents of this publication, face a MAS legislative plurality and have to 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 permission from the publisher.