LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Friday, January 29, 2021

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Friday, January 29, 2021

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Will U.S.-Mexico Colombia Tribunal Chief Corporate Affairs Officer, Grubhub Accuses Eight Joyce Chang Global Head of Research, Relations Become Ex-FARC Leaders JPMorgan Chase & Co. A special tribunal in Colombia ac- Paula Cifuentes cused eight former commanders Director of Economic & Fiscal Affairs, More Strained? of the disbanded Revolutionary Latin America & Canada, Philip Morris International Armed Forces of Colombia with Marlene Fernández war crimes stemming from the Corporate Vice President for country’s decades-long armed Government Relations, conflict. Arcos Dorados (McDonald’s) Page 2 Peter Hakim President Emeritus, Inter-American Dialogue BUSINESS Donna Hrinak Senior VP, Corporate Affairs, Brazil’s Nubank Royal Caribbean Group Raises $400 Mn Jon E. Huenemann Former Corporate and in Funding Round Government Senior Executive Mexican President Andrés Manuel López Obrador and new U.S. President Joe Biden are Brazilian digital bank Nubank’s James R. Jones navigating bilateral relations that have been strained recently. // File Photos: Mexican and U.S. Chairman, latest funding round gives the Monarch Global Strategies governments. company a valuation of $25 billion. Craig A. Kelly In recent weeks, Mexico’s government has delivered jabs to Senior Director, Americas Page 2 Int’l Gov’t Relations, Exxon Mobil the United States—saying it would offer asylum to WikiLeaks John Maisto founder Julian Assange and also threatening to take to Director, U.S. Education POLITICAL Finance Group Q international courts a dispute over former Mexican Defense Ecuador’s Moreno Nicolás Mariscal Secretary Gen. Salvador Cienfuegos, against whom Mexico accuses Chairman, Meets With Grupo Marhnos the United States of fabricating a drug trafficking case. What does the Thomas F. McLarty III future hold for Mexico-U.S. relations under Mexican President Andrés Officials During Chairman, Washington Trip McLarty Associates Manuel López Obrador and new U.S. President Joe Biden? How much Beatrice Rangel damage has the Cienfuegos case done to the security relationship Ecuadorean President Lenín Director, between the two countries, and to what extent will organized crime Moreno met with top members of AMLA Consulting LLC the U.S. Senate Foreign Relations Jaana Remes benefit? What parts of the bilateral relationship pose the most difficulty Committee on Thursday, the Partner, for Biden, and how should he seek to work with López Obrador? fourth day of his visit to Wash- McKinsey Global Institute ington. Ernesto Revilla Page 2 Head of Latin American Arturo Sarukhan, board member of the Inter-American Dia- Economics, Citi Gustavo Roosen logue and former Mexican ambassador to the United States: Chairman of the Board, “The Cienfuegos case is not the disease; it’s a symptom. Envases Venezolanos Andrés Rozental It’s the end result of the slow unraveling in both capitals of President, Rozental & A holistic bilateral security cooperation under the aegis of the Mérida Initia- Asociados tive. It commenced with Peña Nieto, accelerated with Trump’s disregard Shelly Shetty Managing Director, Sovereigns for interagency coordination in Washington and his political pimping of Fitch Ratings Mexico, and then deepened when López Obrador assumed office. Mutual trust, which took decades to build after the low point in the 1980s and 1990s, may have now been irredeemably shattered in the medium term. It will not be easy to repair, despite attempts by the Biden administration to reset bilateral relations that have been structurally damaged these past four years. The Mérida Initiative was much more than just about Moreno // File Photo: Ecuadorean Government. Continued on page 3

POLITICAL NEWS burned remains were found in northern Mexico, NEWS BRIEFS Reuters reported. Bishop José Torres, the Colombia Tribunal Mexican Catholic Church’s spokesman for Biden Administration Will migration, said the government must guarantee Review U.S. Policy Toward Accuses Eight Ex- the rights of migrants in Mexico and establish policies that are humane, according to the Cuba: White House FARC Commanders letter, seen by Reuters. “In the name of the The administration of President Joe Biden highest values of humanity, we ask the federal will review U.S. policy toward Cuba, White Colombia’s Special Jurisdiction for Peace, government for an exhaustive investigation,” House press secretary Jen Psaki told reporters the tribunal set up to process atrocities he said. Mexican authorities discovered the Thursday, Reuters reported. Psaki said Biden’s that occurred during the country’s armed bodies in the state of Tamaulipas. Guatema- policy will aim to support democracy and conflict, on Thursday accused eight former lan families believe relatives migrating to the human rights in Cuba, as well as the interests commanders of the disbanded Revolutionary United States were among the victims. of Cuban Americans. Former President Donald Armed Forces of Colombia, or FARC, of war Trump had toughened sanctions and restric- crimes, The Wall Street Journal reported. Ecuador’s Moreno tions on Havana. Earlier this month, Trump The tribunal’s move stems from the former returned Cuba to the U.S. list of state sponsors rebels’ practice of kidnapping people during Meets With Officials of terrorism. [Editor’s note: See related Q&A in Colombia’s decades-long armed conflict. The the Jan. 22 issue of the Advisor.] eight people accused belonged to the FARC’s in Washington secretariat, its top decision-making body, Agence France-Presse reported. They include Ecuadorean President Lenín Moreno met with Peru Expecting 10% Rodrigo Londoño, who is currently the head members of the U.S. Congress on Thursday, the of the Common People’s Party, the political fourth day of his visit to Washington, El Univer- Growth This Year party that the FARC transformed into after the so reported. Moreno met with Sen. Robert Me- Peru’s government expects its economy to country’s 2016 peace accord with the rebels. nendez (D-N.J.), the incoming chairman of the grow by around 10 percent this year, state news Also among those charged are Pablo Catatum- Senate Foreign Relations Committee and other agency Andina reported Thursday. Economy bo and Julian Gallo—two of the former rebels legislators including the committee’s chairman, and Finance Minister Waldo Mendoza said he who now occupy unelected seats in Colombia’s Jim Risch (R-Idaho), to discuss economic rela- expects a slight downturn in economic growth Congress. The peace accord allocated 10 seats tions, security and development, according to a in February due to public health measures in Congress for a decade to the former rebels. statement from Menendez’s office. During his related to the Covid-19 pandemic, but that the One of the former rebels on the list is former visit to Washington, Moreno has also met with rollout of vaccines will lead to a more robust FARC high command leader Ermilo Cabrera, Inter-American Development Bank President recovery. “The vaccine not only leads to an who died on Wednesday. “Depriving people Mauricio Claver-Carone, International Monetary improvement in public health, but also in the of their liberty and placing conditions on their Fund Managing Director Kristalina Georgieva economic situation,” he said. release is a war crime, specifically the taking and Juan González, the senior director for of hostages,” said tribunal Judge Julieta Lemai- the Western Hemisphere at the U.S. National tre. If the former rebels accept the charges, Security Council, El Universo reported. Moreno they face restrictions on their freedoms for also discussed the defense of democracy Brazil’s Nubank Raises between five and eight years, Reuters reported. and human rights as well as the fight against $400 Million in Funding If they reject the charges, they could face up to poverty and other topics with Organization Round, Valued at $25 Bn 20 years in prison. of American States Secretary General Luis Brazilian digital bank Nubank has raised $400 Almagro. The Ecuadorean president’s visit to million in a Series G funding round, giving the Washington came two weeks after the U.S. company a valuation of $25 billion, Finextra Mexican Bishop Calls International Development Finance Corpora- reported Thursday. The latest funding round tion, or DFC, struck a deal with the Ecuadorean for Probe Into Deaths was led by GIC, Whale Rock and Invesco, government that will help the South American while Sequoia, Tencent, Dragoneer and Ribbit of 19 Found Burned nation repay billions of dollars in loans to participated. The round brought Nubank’s total China and also increase development in ex- funding to $1.2 billion in seven years. Since A prominent Catholic bishop in Mexico called change for excluding China-based companies its Series F funding round, which raised $400 Thursday on the country’s government to fully from its telecommunications networks, the million in July 2019, the company has grown its investigate the deaths of 19 people whose Financial Times reported earlier this month. customer base from 12 million to 34 million.

Adam Boehler, the head of the DFC at the time, FEATURED Q&A / Continued from page 1 signed the deal with Moreno’s government on Jan. 14, just days before Donald Trump left ‘drugs and thugs.’ It was about processes, reinforce cooperation. Until recently, howev- office as president of the United States. “It is interagency coordination on either side of er, President López Obrador (AMLO) was not a novel approach that very strongly combines the border and a whole-of-government ap- welcoming. He also placed a serious legal both missions of the DFC. The first is that we proach to bilateral collaboration by the two wrench in Mexico-U.S. anti-crime cooper- are going to impact development in Ecuador in governments. In many ways, it performed ation. One can debate why AMLO adopted a very positive way,” Boehler, told the Financial the role of air-traffic control in the security Times before his term ended on Jan. 20 along and law enforcement relationship, ensuring with Trump’s. “DFC was created was so that no coordination—within each government and Mexico and the single authoritarian country had undue influ- then across the border with its counterpart— United States ence over another country, and we are address- preventing duplication and overlap of efforts cannot escape the ing that factor with this agreement.” Writing in and ensuring the rational use of resources, need to collaborate.” The Hill this week, Boston University professor tools, protocols and operations. Moreover, — Earl Anthony Wayne Kevin Gallagher said some of the DFC’s loans it also became the midwife for broader are contingent upon Ecuador privatizing oil and regional and global security cooperation, infrastructure assets and called on the Biden as well as intelligence sharing and bilateral this stance, but the challenge is whether the administration to revise its terms with clean military-to-military relations, in the process leaders and their teams can rebuild enough economy goals in mind. enhancing North American common domain trust to find and implement solutions. The awareness. Restoring normalcy to the stakes are immense. Legal trade is about $1 bilateral relationship by a U.S. administra- million per minute. That represents about BUSINESS NEWS tion that certainly understands the role that 80 percent of Mexico’s imports. That trade institutionalization has played in U.S.-Mexico supports almost five million U.S. jobs. Illicit ties in recent decades is a first step. But the drug trade fuels tens of thousands of deaths Spain’s Santander bigger question is whether President López in each country via drug overdoses and Expanding Brazil Obrador is willing to accept that reboot or if criminal violence. A new surge of Central he’ll stick to a meat-and-potatoes relation- American migrants would spark a crisis for Agriculture Business ship of a bygone era in our bilateral ties.” the Biden administration. U.S. companies and unions are worried about Mexico’s Spain’s Banco Santander is expanding its ag- Earl Anthony Wayne, former implementation of the USMCA. Much work riculture sector business in Brazil, Bloomberg U.S. ambassador to Mexico and remains to deal with the pandemic’s effects. News reported Thursday. Plans include expand- co-chair of the Mexico Institute The neighbors should quickly establish the ing the bank’s commodity risk desk, increasing A Advisory Board at the Wilson dialogue and processes to manage these the number of products it offers five-fold, as Center: “Mexico and the United States can- challenges well.” well as boosting its share of commodity trade not escape the need to collaborate. The big finance for local and international companies test is how well the governments can work Raúl Benítez Manaut, research- with agriculture business in Brazil, according together with the arrival of President Joe er at the Center for Research on to the report. Prices of soy, corn and other Biden. The action agenda is urgent: handling North America at the National commodities have returned to multi-year highs. migration from Central America, deepen- A Autonomous University of Meanwhile, some other global banks have ing anti-crime coordination, managing the Mexico (UNAM): “As during all changes of pulled out of the business in the South Ameri- pandemic and recovery, and implementing government in Mexico and the United States, can country, opening a window for Santander, the USMCA trade agreement including Mex- there will be adjustments to the bilateral Luiz Masagão, a treasury director with the bank ico’s treatment of energy investments and relationship. It is necessary to make a in São Paulo, told the wire service. Banks in protection of labor rights. The opportunities distinction between the structural and the Brazil have been doing relatively well despite are also great: building on the USMCA to personal relationships. AMLO built a very last year’s recession, due largely to lower inter- boost both economies, enhancing homeland good friendly relationship with Trump, based est rates and pandemic-related liquidity needs, security and reinforcing trust undermined in on subordination. Trump was very tough the CEO of Itaú Unibanco, Candido Botelho recent years. President Biden arrives with on Mexico. He threatened to completely Bracher, told the Advisor this month. [Editor’s the deepest understanding of Mexico of any withdraw the United States from NAFTA note: See related Q&A in the Jan. 14-27 issue U.S. president. His strong predilection is to and impose 25 percent tariffs on Mexican of the Financial Services Advisor.] 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 © 2021 products. He ‘forced’ AMLO to deploy the dent wants nothing more than for the United National Guard and the police from all over States to allow him free rein to implement Erik Brand the south of the country to stop the caravans his Fourth Transformation suite of domestic Publisher [email protected] of migrants from Central America. Mexico policies designed to rid Mexico of ‘neoliber- ultimately had to accept the status of a safe alism,’ he needs U.S. cooperation on issues Gene Kuleta Editor third country for migrants. When Gen. Salva- ranging from migration to water and trade. [email protected] dor Cienfuegos was arrested in Los Angeles, Anastasia Chacón González AMLO faced great pressure from the Mexi- Reporter & Associate Editor can army to negotiate with Trump for his re- Simply put, the two [email protected] turn. The United States returned Cienfuegos, sides have lost confi- and AMLO thanked Trump by not quickly ac- dence in one another.” cepting Joe Biden’s win. His argument was — Pamela Starr Michael Shifter, President the doctrine of nonintervention. AMLO made Rebecca Bill Chavez, Nonresident Senior Fellow inexplicable statements, such as offering Sergio Bitar, Nonresident Senior Fellow political asylum to Julian Assange, and he Joan Caivano, Senior Advisor accused the DEA of ‘fabricating’ the lawsuit Equally, the U.S. president would prefer not Michael Camilleri, Director, Rule of Law Program against Cienfuegos. The two presidents to add Mexico to his long list of domestic Kevin Casas-Zamora, Nonresident Senior Fellow mocked justice. Democrats will surely press and international problems that need his Héctor Castro Vizcarra, Nonresident Senior Fellow human rights issues with Mexico, and that immediate attention. But he also needs a Julia Dias Leite, Nonresident Senior Fellow will put AMLO in a difficult spot. On other is- good working relationship with Mexico given Ariel Fiszbein, Director, Education Program sues such as energy, there will be problems. the deep interdependence of our two econo- Peter Hakim, President Emeritus In Mexico, the army is trying to get the DEA mies and societies. Nevertheless, there will Nora Lustig, Nonresident Senior Fellow out of the country, and parts of the National be tensions. Security cooperation has been Margaret Myers, Director, Asia and Security Law were written to control foreign badly damaged by the Cienfuegos case and Latin America Program Manuel Orozco, Senior Fellow agents, though they will be difficult to apply. the associated tight limits placed on the Xiaoyu Pu, Nonresident Senior Fellow Difficult times are expected ahead, but the operations of U.S. personnel operating in Jeffrey Puryear, Senior Fellow two countries are interdependent and are Mexico. Simply put, the two sides have lost Mateo Samper, Nonresident Senior Fellow determined to collaborate with each other. confidence in one another. Equally, President Tamar Solnik, Director, Finance & Administration If the countries’ security relationship and Biden’s climate change agenda conflicts Lisa Viscidi, Director, Energy Program cooperation deteriorate, organized crime will directly with AMLO’s carbon-based energy Denisse Yanovich, Director of Development, win the battles.” strategy, and Mexico’s broader energy strate- External Relations & Special Projects gy runs contrary to provisions in the USMCA. Pamela Starr, senior advisor And Democrats in the U.S. Congress will Latin America Advisor is published every business day, except for major U.S. holidays, at Monarch Global Strategies continue to pressure Mexico to implement by the Inter-American Dialogue at and associate professor at the the labor provisions of the USMCA. Finally, 1155 15th Street NW, Suite 800 Washington, DC 20005 University of Southern Cali- concerns about U.S. meddling in Mexican A www.thedialogue.org fornia: “The U.S.-Mexico relationship is so affairs have revitalized AMLO’s nationalist ISSN 2163-7962 important for both countries that it is hard sensibilities. Mexico will be a prickly partner Subscription inquiries are welcomed at to imagine either side allowing it to sour for the next four years, but an essential one.” [email protected] despite recent tensions. This preference for The opinions expressed by the members of the Board of cooperation over conflict was evident in the The Advisor welcomes comments on its Q&A Advisors and by guest commentators do not necessarily December and January calls between Biden section. Readers can write editor Gene Kuleta represent those of the publisher. The analysis is the sole and López Obrador. While the Mexican presi- at [email protected]. view of each commentator and does not necessarily represent the views of their respective employers or firms. 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 permission from the publisher.