Qformer Ecuadorean President Rafael

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Friday, September 4, 2020

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Is Correa Still a Jamaica’s Ruling CEO, DevryBV Sustainable Strategies Party Re-elected Joyce Chang Global Head of Research, Driving Force in in Landslide Vote JPMorgan Chase & Co. The ruling Jamaica Labour Party Paula Cifuentes overwhelmingly won the Caribbe- Director of Economic & Fiscal Affairs, Ecuador’s Politics? an nation’s elections, winning 49 Latin America & Canada, Philip Morris International of the 63 seats in parliament. Marlene Fernández Page 2 Corporate Vice President for Government Relations, Arcos Dorados ECONOMIC Peter Hakim President Emeritus, Mexico Likely to Inter-American Dialogue Cut Oil Production Donna Hrinak President, Boeing Latin America Targets: Legislator Jon E. Huenemann Mexico will likely be forced to Former Corporate and lower its targets for crude oil Government Senior Executive production next year, ruling-party James R. Jones legislator Erasmo González told Chairman, Even if his name is not on the ballot, former Ecuadorean President Rafael Correa could still in- Monarch Global Strategies fluence the country’s election next year, commentators say below. // File Photo: @MashiRafael Bloomberg News in an interview. via Twitter. The country missed its production Craig A. Kelly targets this year. Senior Director, Americas Former Ecuadorean President Rafael Correa in August an- Int’l Gov’t Relations, Exxon Mobil Page 3 John Maisto nounced his intention to be leftist candidate Andrés Arauz’s Director, U.S. Education running mate in the Andean nation’s presidential election Finance Group ECONOMIC Q next year. However, the country’s electoral council rejected Nicolás Mariscal Costa Rica’s Chairman, the candidacy of Correa, whom an Ecuadorean court earlier this year Grupo Marhnos found guilty of corruption charges and now lives in Belgium. Correa, who Chinchilla Drops Thomas F. McLarty III Chairman, was president from 2007 to 2017, has repeatedly denied wrongdoing. Bid to Lead IDB McLarty Associates How much of an impact will Correa have on Ecuador’s presidential race? Former Costa Rican President Beatrice Rangel Laura Chinchilla withdrew her can- How much popular support does he enjoy in Ecuador? To what extent Director, didacy to be the next president of AMLA Consulting LLC will current circumstances, including the government’s handling of the the Inter-American Development Jaana Remes Bank. The election has been con- Partner, coronavirus pandemic and talks to renegotiate its debt, play a role in the McKinsey Global Institute 2021 elections? troversial because of the Trump Ernesto Revilla administration’s nomination of a Head of Latin American U.S. citizen for the role. Economics, Citi Daniela Chacón Arias, executive director of Fundación TAN- Page 2 Gustavo Roosen Chairman of the Board, DEM and former Quito vice mayor and city council member: Envases Venezolanos “Due to several legal impediments (a prior conviction and a Andrés Rozental President, Rozental & re-election ban), it is very unlikely that the electoral council Asociados A will allow Correa to be Arauz’s running mate. Nonetheless, Correa doesn’t Shelly Shetty need to be on the ticket for the election to be about him. Lenín Moreno Managing Director, Sovereigns Fitch Ratings has justified all of his government’s shortcomings with Correa’s wrongdo- ings. And given Moreno’s failed handling of the coronavirus pandemic and his unmet promise to combat corruption, there are many voices reminding the electorate that things were better under Correa. The renegotiation of the debt is very important for the country, but it will not play a major role in the elections as voters are more preoccupied with unemployment, poverty and lack of social safety networks. The right-wing candidates Chinchilla // File Photo: Inter-Amer- ican Dialogue. Continued on page 3

POLITICAL NEWS since March 2016. [Editor’s note: See related NEWS BRIEFS Q&A in the Aug. 24 issue of the Advisor.] Jamaica’s Ruling Head of Puerto Rico’s Elections Board Resigns ECONOMIC NEWS Party Re-elected in After Botched Primary Landslide Election Costa Rica’s The head of Puerto Rico’s elections commission, Juan Ernesto Dávila, announced Thursday The ruling Jamaica Labour Party, or JLP, over- Chinchilla Drops that he was stepping down immediately, NBC whelmingly won the Caribbean nation’s elec- News reported. Dávila’s resignation came after tions on Thursday, securing 49 of the 63 seats Bid to Lead IDB the U.S. territory’s chaotic Aug. 9 primary elec- in parliament, 16 more seats than it previously tion, in which dozens of polling places were had, BBC News reported. While face masks Former Costa Rican President Laura Chinchilla unable to open because of missing or delayed and temperature checks were mandatory at on Thursday withdrew her candidacy to be the ballots, and several others turned voters away polling stations to curb the spread of the novel next leader of the Inter-American Development because they did not have enough ballots. coronavirus, turnout was among the lowest in Bank. In a letter to Costa Rican President Dávila said he was stepping down due to the Carlos Alvarado, which Chinchilla posted on well-being of his family, adding that he didn’t her Twitter page, she said she found fault with “want to be a distraction.” the process of selecting the institution’s next leader. “To continue forward with our national aspiration would amount to endorsing a U.S. Official Reportedly process that I do not consider convenient for the IDB or for the hemisphere in the present Tells El Salvador’s conditions,” Chinchilla wrote. The former Costa Bukele That Aid Is at Risk Rican president said a factor in her decision A senior U.S. official has reportedly told El was the “abrupt change in the rules that since Holness // File Photo: Jamaican Government. Salvador’s government that aid from the United the creation of the IDB have regulated the pro- States is at risk over President Nayib Bukele’s the country’s history, at 37 percent. By compar- cess of presenting and selecting candidates.” clashing with his country’s Supreme Court ison, 48 percent of the electorate participated She added that since the bank’s creation, a and Congress, the Associated Press reported in the 2016 elections, BBC News reported. Latin American or Caribbean citizen has always Thursday. In a May 29 letter to one of Bukele’s Prime Minister Andrew Holness had called for occupied the IDB’s presidency. “However, the aides, Thomas Kelly, acting vice president of the early vote last month amid the pandemic. government of the United States of America the Millennium Challenge Corporation (MCC), Most experts saw it as an attempt to capitalize decided to alter this norm that was in force for an independent U.S. foreign aid agency, warned on people’s satisfaction with his response to 60 years, without prior consultation processes that recent actions by Bukele have “raised the virus and his economic agenda, BBC News or institutional agreements and presented its questions about the government’s commitment reported. “There are many Jamaicans who did own candidate.” The U.S. nomination of Mau- to the MCC’s eligibility criteria.” not participate, there are many Jamaicans, ricio Claver-Carone, a U.S. citizen, earlier this who for fear of the virus, did not come to the year to head the IDB has been controversial polls, but for other reasons, apathy, frustra- as he would be the first person from outside tions, decided not to participate,” Holness said Latin America and the Caribbean to lead the Chile’s Government following his party’s victory. “We are honoured institution. The vote is scheduled for Sept. 12, Reaches Deal With to continue to serve you and we look forward though several countries, including Costa Rica, Truckers to End Strike to #RecoveringStronger,” he wrote on Twitter. Argentina, Mexico and Chile, as well as Euro- Holness has been Jamaica’s prime minister pean Union foreign policy chief Josep Borrell, Chile’s government and truck drivers who held have called for the vote to be delayed, Reuters protests over the past week have reached an SUBSCRIBER NOTICE reported. Claver-Carone has said 17 countries agreement to end the strike, France24 reported The Latin America Advisor will not be support his candidacy. Argentina has nominat- Thursday. More than 2,000 truckers, who were published on Monday, Sept. 7 in obser- ed Gustavo Beliz, the country’s strategic affairs demanding better security, blocked roads for vance of the Labor Day holiday in the secretary, for the IDB presidency. [Editor’s note: seven days, leading to supply disruptions. The United States. We will resume publishing See related Q&A in the June 25 issue of the government agreed to invest approximately $7 on Tuesday, Sept. 8. Advisor.] million in policing infrastructure in the southern region of the country.

FEATURED Q&A / Continued from page 1 Mexico Likely to have reached a consensus to back Guillermo around him is still the largest nonideological Cut Oil Production Lasso’s candidacy, which will polarize the reference. Although there will be a dozen Targets: Lawmaker election between the correista and noncor- presidential candidacies, it seems likely that reista options. This could rally the leftist and for the second round, correista candidate Mexico will likely be forced to cut its targets undecided votes to support Arauz in order to Andrés Arauz will face Guillermo Lasso, for crude oil production next year after missing prevent the banker from reaching his lifelong now the leader of a large right-wing alliance this year’s goal, ruling party legislator Erasmo dream. The indigenous movement candi- following the resignation of other leaders of González told Bloomberg News in an interview date or a populist outsider can also play an this ideological trend and the support of the published Thursday. González, who heads the important role in this election if they are able powerful Christian Social Party.” lower house’s Budget Committee, said the gov- to fill the void for a centrist option. Correa ernment’s initial output target of 2.027 million still has strong support, enough to reach the Carlos de la Torre, director of barrels per day (bpd) for next year is stretched, runoff election. If his opponents continue to the Center for Latin American adding, however, that state oil company Pemex make the election about him, instead of what Studies at the University of the country needs in order to tackle poverty A Florida: “When Rafael Correa got and structural inequalities, this split will end to power in 2007, Ecuador had lived a major up deciding the winner.” crisis of political representation. With high oil prices, his administration reduced pover- Hernán Reyes Aguinaga, pro- ty, increased the size of the middle class and fessor at Universidad Andina wasted money on pharaonic projects. In 10 Simón Bolívar and Universidad years, Correa or his allies won 11 elections A Central del Ecuador: “The or plebiscites, and all debates and conflicts Ecuadorean election, whose first round will centered around his persona. He was so be held in February, has unprecedented char- powerful that after changing his own consti-

González // File Photo: @erasmoglz via Twitter. acteristics: it is marked by the serious social tution to allow for his permanent re-election, is still on track to increase its production from effects resulting from the terrible govern- he decided to not participate in order to not current levels. In July, the firm saw its lowest ment management of the Covid-19 pandem- govern under an economic crisis. He put his levels of production since October 1979, at 604 ic, by the deep economic crisis that shows vice presidents, Lenín Moreno and Jorge million bpd, down 4.2 percent year-over-year, historical unemployment rates and the Glas, in office. Moreno dissociated from his according to data from the National Hydrocar- prioritizing of foreign-debt payments over mentor, put businesspeople in charge of the bons Commission. In the first seven months social spending, thus an almost absolute economy and allowed the prosecutor and of the year, crude production levels in Mexico disapproval of the management of current comptroller to investigate cases of corrup- averaged 1.692 million bpd, below the 1.83 mil- President Lenín Moreno’s government. Even tion. Glas is in jail, and if Correa sets foot in lion bpd the Finance Ministry expected. Pemex worse, the constant corruption scandals Ecuador, he would end up as his cellmate for was among the companies that saw the sharp- have provoked a very strong disaffection attempting to kidnap an opposition politician est drop in output in July, Publimetro reported. toward politics and its institutions, which and for corruption. Correa unsuccessfully Combined with lower selling prices, the be- will affect the candidates’ legitimacy. In this tried to be candidate for the vice presi- low-target production levels have slashed the unusual environment, whether or not former dency but, according to the law, needed to government’s oil revenue to just 56 percent of President Rafael Correa is a candidate for register in person. Yet the Correa dynasty its target. The government is expected to pres- the vice presidency is a weighty factor. For will continue to play a major role in politics. ent next year’s budget proposal to Congress on now, it seems almost impossible that his His sister Pierina Correa is candidate for the Tuesday. González told Bloomberg News that candidacy will be accepted because he is legislature under Rafael’s party, and his older the plan will be “the most complex of the last not physically present in Ecuador, a move brother Fabricio is running for president nearly 100 years in the modern history of our that was not feasible due to a court ruling as an anti-Communist, Catholic business country” due to the pandemic. González also against him. However, even with the leader entrepreneur. Fabricio is the right-wing out- said the importance of public health has made living in Belgium, his electoral pull remains sider who wants to become an Ecuadorean it very difficult to design the plan, adding that strong. It is estimated that correísmo has Bolsonaro, gathering under his leadership the government is likely to boost spending on the highest percentage of the hard vote, all of those opposed to abortion, LGBTQ health care faster than on Pemex. around 20 percent, and the polarization rights and a strong interventionist state. His 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 © 2020 platform is against corruption, even though and a steep challenge in case they make it to he had millionaire contracts with the state the runoff election.” Erik Brand under his brother’s presidency.” Publisher [email protected] Fernando Carrión, professor and Grace Jaramillo, postdoctoral researcher in the Department of Gene Kuleta Editor fellow at The University of Political Studies at FLACSO in [email protected] British Columbia: “Ecuador’s Ecuador: “The first round of next A Anastasia Chacón González elections will again be polarized year’s elections in Ecuador will be atypical: A Reporter & Associate Editor between the supporters of former President there are 282 legally recognized political [email protected] Rafael Correa and the rest of the political operators, which has produced a very spectrum. There are many reasons for this. strong fragmentation, with 19 presidential

For one, incumbent President Lenín Moreno candidates and, paradoxically, polarization Michael Shifter, President belonged to the same political party as between correísmo and anti-correísmo. In Rebecca Bill Chavez, Nonresident Senior Fellow President Correa, and the falling out of that addition, there is a discredit of politics being Sergio Bitar, Nonresident Senior Fellow personal relationship became the best claim expressed as citizens’ indecision, in the Joan Caivano, Senior Advisor for Correa’s followers to accuse the current absence of political parties’ legitimacy and Michael Camilleri, Director, Rule of Law Program government of treason and the remaining amid a crisis of representation. Corruption Kevin Casas-Zamora, Nonresident Senior Fellow political parties in Congress of co-governing has a lot to do with this. Rafael Correa Héctor Castro Vizcarra, Nonresident Senior Fellow with his former vice president and political cannot run for president because the Con- Julia Dias Leite, Nonresident Senior Fellow ally. The second reason is that the Moreno stitution bans re-election, but he is seeking Ariel Fiszbein, Director, Education Program administration handled the economy badly, the vice presidency—following the Argentine Peter Hakim, President Emeritus refusing to perform necessary reforms example. However, for him, there are three Nora Lustig, Nonresident Senior Fellow until 2019. The pandemic only aggravated setbacks: 1.) the only function of the vice Margaret Myers, Director, Asia and an already difficult situation created by an president is to substitute for the president, Latin America Program Manuel Orozco, Senior Fellow unmanageable streak of fiscal expenditure 2.) the registration of his candidacy must be Xiaoyu Pu, Nonresident Senior Fellow and external loans to Chinese financial in person, but he lives in Belgium because Jeffrey Puryear, Senior Fellow institutions and international banks during of a preventive detention order against him Mateo Samper, Nonresident Senior Fellow the Correa administration. Even with a suc- in Ecuador and 3.) the impediment arising Tamar Solnik, Director, Finance & Administration cessful renegotiation with external creditors from an additional bribery trial that is in its Lisa Viscidi, Director, Energy Program and the IMF, the dire economic situation for final phase. The question remains: is his Denisse Yanovich, Director of Development, the majority of Ecuadoreans could still play candidacy an electoral strategy of victim- External Relations & Special Projects favorably for Correa’s party in next year’s ization? Correísmo is the largest national elections. Memories of the bonanza years political force, but it does not reach 20 Latin America Advisor is published every business day, except for major U.S. holidays, under his administration are evidenced percent support due to the dispersion of the by the Inter-American Dialogue at by the fact that he maintains significant vote. However, its support will be enough to 1155 15th Street NW, Suite 800 Washington, DC 20005 popular support among Ecuadorean citizens. be the benchmark of the electoral campaign. www.thedialogue.org Different opinion polls have put that support It has proposed Andrés Arauz, a 35-year-old ISSN 2163-7962 between 20 percent and 36 percent of the politician, as its presidential candidate in Subscription inquiries are welcomed at electorate. Notwithstanding, Correa himself an effort to capture younger voters. He is [email protected] could not register as part of the ticket. There also the main opponent of current President The opinions expressed by the members of the Board of are several criminal lawsuits against him, Moreno. To that will be added the issues of Advisors and by guest commentators do not necessarily one of which was already upheld by two Covid-19, the economic crisis (the economic represent those of the publisher. The analysis is the sole courts of appeals. Moreover, the two largest model) and the social crisis, including unem- view of each commentator and does not necessarily represent the views of their respective employers or firms. center-rights parties—Creo and the Social ployment, poverty and violence.” The information in this report has been obtained from Christian Party—signed an alliance this week reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have to run together for all elective offices up and The Advisor welcomes comments on its Q&A any questions relating to the contents of this publication, down the ticket. This strategic move will section. Readers can write editor Gene Kuleta contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in make harder for Correa’s movement to win a at [email protected]. a retrieval system, or transmitted without prior written defining majority at the National Assembly permission from the publisher.