LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Thursday, June 25, 2020

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, June 25, 2020

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Who Should Lead E.U. May Keep CEO, DevryBV Sustainable Strategies Ban on Travelers Joyce Chang Global Head of Research, the Inter-American From Brazil, U.S. JPMorgan Chase & Co. The European Union is set to ease Paula Cifuentes its entry restrictions next week but Director of Economic & Fiscal Affairs, Development Bank? reportedly may continue a ban on Latin America & Canada, Philip Morris International travelers from Brazil and the Unit- Marlene Fernández ed States, among other countries, Corporate Vice President for over coronavirus fears. Government Relations, Page 2 Arcos Dorados Peter Hakim President Emeritus, BUSINESS Inter-American Dialogue Donna Hrinak Brazilian Gov’t President, Boeing Latin America May Buy $18 Mn in Jon E. Huenemann Former Corporate and Tickets From Gol Government Senior Executive Brazil’s government may buy more James R. Jones than $18 million worth of tickets Chairman, Since its founding, the Inter-American Development Bank has been headed by a Latin Amer- Monarch Global Strategies ican. However, the Trump administration said last week that it would nominate an American, to support Gol Linhas Aéreas Mauricio Claver-Carone, for the position. // File Photo: U.S. State Department. Inteligentes during the Covid-19 Craig A. Kelly pandemic, the airline said. Director, Americas International The administration of U.S. President Donald Trump has an- Gov’t Relations, Exxon Mobil Page 2 John Maisto nounced that it will nominate Mauricio Claver-Carone, cur- Director, U.S. Education rently the head of Western Hemisphere affairs at the Nation- Finance Group POLITICAL Q al Security Council, to be the president of the Inter-American Nicolás Mariscal Sucre Named Chairman, Development Bank, breaking an unwritten agreement since the bank’s Grupo Marhnos inception that a Latin American would lead it. Former President Laura Panama’s New Thomas F. McLarty III Chairman, Chinchilla of Costa Rica has also entered the race. The IDB’s member Health Minister McLarty Associates states and board of governors are scheduled to elect the organization’s Panama’s government announced Carlos Paz-Soldan that Luis Sucre would take over as new president in September. What does the break in protocol mean for Partner, the country’s new health minister. DTB Associates, LLP the IDB and for the role of the United States within the bank and in the President Laurentino Cortizo also Beatrice Rangel announced new officials to lead Director, Western Hemisphere? Given the United States’ control of 30 percent of AMLA Consulting LLC the vote, is Claver-Carone a shoo-in for the bank’s presidency? What the ministries of social develop- Jaana Remes ment as well as housing and land Partner, challenges will the IDB’s next leader face, and what should the bank’s planning. McKinsey Global Institute priorities be during such a critical time for the region? Page 2 Ernesto Revilla Head of Latin American Economics, Citi José Antonio Ocampo, professor at Columbia University and Gustavo Roosen Chairman of the Board, former Colombian finance minister, and Kevin P. Gallagher, Envases Venezolanos professor and director of the Global Development Policy Andrés Rozental Center at Boston University: “According to the World Bank, President, Rozental & Asociados A Latin America is predicted to be the region of the developing world worst Shelly Shetty hit by the Covid-19 crisis. The U.N. Economic Commission for Latin Amer- Managing Director, Sovereigns Fitch Ratings ica and the Caribbean estimates that the number of poor will increase by 30 million or more due to the crisis. The region desperately needs to har- ness the fiscal space and the international financial support to fight the virus and its economic and social effects and build its economies back better than before. The Inter-American Development Bank has a 60-year Sucre // File Photo: Panamanian Government. Continued on page 3

POLITICAL NEWS Panama’s deputy health minister since last NEWS BRIEFS July. The pace of the disease’s spread has E.U. May Keep Ban been accelerating in recent weeks in Panama. López Obrador to Meet “The country has a debt to [Turner] that cannot With Trump in Early July on Travelers be repaid,” said President Laurentino Cortizo. “A task of this magnitude certainly constitutes Mexican President Andrés Manuel López Obra- From Brazil, U.S. a marathon that cannot be victorious without dor said on Wednesday that he plans to meet a solid sense of teamwork and without the with his U.S. counterpart, Donald Trump, in ear- The European Union plans to reopen its necessary replacements to ensure the achieve- ly July to mark the entry into force of the United borders to international travelers on July 1, but ment of a strong victory.” Panama has more States-Mexico-Canada Agreement, or USMCA, travelers from Brazil and the United States may than 28,000 confirmed cases of the disease Agence France-Presse reported. “It’s very continue to be banned from entering due to the and 547 deaths from it. Also on Wednesday, probable that I will go to Washington,” López countries’ high levels of Covid-19, Euronews Cortizo, who marks one year in office next Obrador said, adding that he hopes Canadian reported Wednesday. The two countries, along week, named new ministers to lead the govern- Prime Minister Justin Trudeau will also join the with Russia and Qatar, are on a draft list of ment’s social development as well as housing meeting. The North American countries’ new nations from which travelers will continue to and land planning ministries. trade deal comes into effect July 1. [Editor’s be banned as Europe reopens its borders, an note: See related Q&A in Wednesday’s Advisor.] unnamed European diplomat told the France- based television network. The diplomat said Peru Reaches Deal officials “could not reach an agreement” and With Clinics on Rates Massive Saharan that talks would continue “at the ambassa- Dust Cloud Sweeps dorial level.” Earlier this month, the European for Covid Patients Commission published recommendations on Over Caribbean nonessential travel to Europe, and officials The Peruvian government and private clin- A massive cloud of Saharan dust swept over have said the list of countries from which travel ics have reached an agreement on rates much of Cuba on Wednesday and started to will be allowed should take into account the for Covid-19 patients, National Agreement affect air quality in parts of Florida, prompting Covid-19 infection rates in those countries. Executive Secretary Max Hernández said warnings for people with respiratory illnesses “Travel restrictions should not be lifted as Wednesday night, state news agency Andina to stay home, Agence France-Presse reported. regards third countries where the situation is reported. The announcement came just hours Over the past week, strong winds have pushed worse [than] the average in the EU+ area,” said after President Martín Vizcarra threatened a dust cloud from Africa across the Atlantic, the recommendation. The United States still to temporarily take over the Andean nation’s reaching Puerto Rico on Sunday. Conditions in has a ban on entry by foreign citizens who have Havana are expected to worsen today. It’s an traveled in the prior two weeks in 28 European annual phenomenon, but this year has been the nations, Brazil and China, ABC News report- worst the Caribbean has seen in decades, CNN ed. The 28 European nations include Britain en Español reported. and Ireland, as well as the 26 countries that comprise the Schengen Area including France, Germany, Italy and Spain, which have few border restrictions between them. Brazil May Buy More Than $18 Mn Worth of Panamanian Vizcarra // File Photo: Peruvian Government. Tickets From Airline Gol Brazil-based Gol Linhas Aéreas Inteligentes private health care clinics if they failed to reach Gov’t Taps New said Wednesday that the South American a deal with his government in 48 hours over country’s government may buy 100 million Health Minister fees for treating coronavirus patients, Reuters reais’ ($18.84 million) worth of tickets from reported. Private clinics had been at odds with it in order to support it during the coronavirus Panama’s government on Wednesday named the government for three weeks regarding a fair pandemic, Reuters reported. The carrier’s chief Luis Sucre as the country’s new health minister, rate of care, following reports of overcharging executive officer, Paulo Kakinoff, said Brazil’s replacing Rosario Turner, who had been the for patients who require mechanical ventilators state development bank, BNDES, could provide public face of the country’s response to and intensive care as a result of Covid-19. the terms of an aid package worth as much as Covid-19, Reuters reported. Sucre had been “We cannot wait indefinitely,” Vizcarra said in 2 billion reais as soon as next week.

COPYRIGHT © 2020, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Thursday, June 25, 2020 a televised speech on Wednesday. Hernández FEATURED Q&A / Continued from page 1 later announced that 55,000 soles (around $15,633) would be the flat rate for as long as record of helping countries to strengthen will faithfully continue his work to promote the treatment lasts. “It may be a day or two or their development patterns and recover from initiatives that advance economic prosper- even beyond 30 days,” Hernández said, Andina crises. During that time, in cooperation with ity, stability and democratic order in our reported. Peru has been hit hard by the corona- the United States, the IDB has earned the hemisphere.” virus pandemic despite a nationwide lockdown. trust of the countries across the Americas. The country has confirmed more than 264,600 Breaking the 60-year tradition of having Eduardo Ulibarri, sociopolitical cases of Covid-19 and 8,586 deaths. a Latin American at the helm, which was analyst and former ambassador President Eisenhower’s intent when he led of Costa Rica to the United the creation of the IDB, will erode that trust A Nations: “I am afraid that, more ECONOMIC NEWS at a time when the institution is needed than a break in protocol, Claver-Carone’s most. It is also one of the very few interna- nomination means a break in good faith tional organizations led by a Latin American. among partners and a great risk for the U.S. Sanctions integrity and the role of the IDB. Given this Iranian Ship Captains prospect, former President Laura Chinchilla We should not forget is the safest bet for the bank. She deserves for Venezuela Cargoes that a U.S. citizen has the support of its members. Professionally always been president and technically speaking, Claver-Carone is a The U.S. Treasury Department on Wednesday of the World Bank.” good candidate. The problem is his record slapped new sanctions on five Iranian ship — José Antonio Ocampo & Kevin P. Gallagher as chief officer for Latin America in the captains who recently delivered gasoline to National Security Council, his uncompromis- Venezuela, CNBC reported. Earlier this week, ing ideological zeal, his abrasive style and five Iranian tankers shipped approximately 1.5 It should be added that the United States his closeness to President Donald Trump, million barrels of fuel to the Andean nation, has always had the number-two position in whose commitment to multilateralism and which has been facing a sharp shortage of the institution, which is an appropriate way regionalisms is, to say the least, highly gasoline and was once a prominent global of recognizing the United States as a large doubtful. The first risk is that, given the fuel exporter. “The Treasury Department will shareholder. Finally, we should not forget eventual success of his candidacy, the IDB target anyone who supports Iranian attempts that a U.S. citizen has always been president may become more an ideological battlefield to evade United States sanctions and who of the World Bank, and it would be unfor- than a policy-oriented financial institution; further enables their destabilizing behavior tunate that a U.S. citizen would also lead more a ground for transactions than for con- around the world,” Treasury Secretary Steve a regional multilateral development bank. sensus. And this will occur precisely when Mnuchin said in a statement. “The Iranian We therefore strongly support the principle the hemisphere and the bank face one of regime’s support to the authoritarian and that the presidency of the Inter-American the most acute challenges in recent history: corrupt regime in Venezuela is unacceptable,” Development Bank should continue to be Covid-19, economic deceleration (or reces- he added. The announcement follows another held by a Latin American, and fully support sion), increasing poverty and potential social round of sanctions last week on more than a in that regard the statement issued by five turmoil. Such is the second, and long-lasting, dozen individuals, their businesses and tankers prominent former presidents of Latin Ameri- big risk. Laura Chinchilla will offer a safe, for allegedly being involved with as much as can countries (Cardoso, Lagos, Sanguinetti, competent and more open option. There are 40 percent of Venezuela’s crude oil exports in Santos and Zedillo) endorsing that principle. no doubts about her democratic credentials. recent weeks, The Wall Street Journal reported. The region has put forth candidates of high Her policymaking experience, as president of Among them were Mexico’s Libre Abordo and merit who can fruitfully continue that 60-year Costa Rica and beyond, is unmatched by the a related company, Schlager Business Group, tradition.” U.S. candidate and would provide the bank as well as both of their owners. It was the first with more trusting, stable, competent and formal action by the United States against Mex- Marco Rubio, member of the forward-looking leadership. However, good ican firms involved in trading Venezuelan oil, U.S. Senate (R-Fla.): “I’m reasons are not enough for success. The Reuters reported. Libre Abordo said its lawyers pleased that the administration diplomatic and financial clout of the United would review the decision, which it said wrong- A has nominated Mauricio Claver- States, both inside and outside the IDB, is a ly linked the firm to unrelated entities. [Editor’s Carone to be president of the Inter-American monumental challenge, and it has already note: See related Q&A in the June 12 issue of Development Bank. I have no doubt that he been noticed through at least eight coun- Continued on page 4 the Energy Advisor.]

FEATURED Q&A / Continued from page 3 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2020 tries’ support of Claver-Carone. Competition Andrés Martínez-Fernández, will be intense. At the same time, it will be senior research associate at the Erik Brand unbalanced.” American Enterprise Institute: Publisher [email protected] “The next IDB president will A Gene Kuleta Cynthia J. Arnson, director of face many challenges in the coming years. Editor the Latin America program at Chief among these is facilitating the region’s [email protected] the Woodrow Wilson Center: recovery from the Covid-19 pandemic. Latin Anastasia Chacón González “Donald Trump came into office America’s development bank will also need A Reporter & Associate Editor pledging to put ‘America First.’ His withdraw- to address more deep-seated troubles, such [email protected] al from the Paris climate accord and the as the inequality and corruption that helped 12-nation Trans-Pacific Partnership demon- spark widespread protests late last year.

strated his suspicion of multilateralism Now more than ever, the IDB needs to be a Michael Shifter, President and preference for a muscular, go-it-alone vehicle for promoting inclusive market-ori- Rebecca Bill Chavez, Nonresident Senior Fellow foreign policy. The nomination of Mauricio ented economic growth and opportunity in Sergio Bitar, Nonresident Senior Fellow Claver-Carone to head the Inter-American the Americas. Closely related to this goal Joan Caivano, Director, Special Projects Development Bank shows not suspicion, but are priorities such as hemispheric economic Michael Camilleri, Director, Rule of Law Program disdain for regional norms and sensitivities. integration, infrastructure development, Kevin Casas-Zamora, Nonresident Senior Fellow Claver-Carone’s economic credentials do the rule of law, and the empowerment of Héctor Castro Vizcarra, Nonresident Senior Fellow not appear to be in question; he has held women and marginalized communities. Firm Julia Dias Leite, Nonresident Senior Fellow senior positions in the U.S. Treasury and U.S. support for Mauricio Claver-Carone’s Ariel Fiszbein, Director, Education Program IMF. What is at stake is more fundamental: candidacy makes him the odds-on favorite Peter Hakim, President Emeritus it’s respect—for Latin American leadership to lead the IDB. Yet, the possibility that Nora Lustig, Nonresident Senior Fellow and the longstanding tradition upheld by all Claver-Carone would bring along the Trump Margaret Myers, Director, Asia and former U.S. administrations that Latin Amer- administration’s aggressively politicized Latin America Program Manuel Orozco, Director, Migration, ica’s most important international financial approach to international development is a Remittances & Development institution be led by someone from the re- valid source of unease for IDB staff and the Xiaoyu Pu, Nonresident Senior Fellow gion. The issues for which Claver-Carone is region. Costa Rica’s subsequent nomina- Jeffrey Puryear, Senior Fellow best known—hardline policies against Cuba tion of former President Laura Chinchilla Mateo Samper, Nonresident Senior Fellow and Venezuela—are (with the exception of also shows a desire to maintain the IDB’s Tamar Solnik, Director, Finance & Administration the issue of Venezuelan refugees) irrelevant tradition of a regional president. However, Lisa Viscidi, Director, Energy Program to resolving the region’s profound economic Claver-Carone’s experience at the Treasury Denisse Yanovich, Director of Development and crisis. The Trump White House has been out Department and the IMF, and with initiatives External Relations of step with the region on key issues the IDB such as América Crece, offer reason to Latin America Advisor is published every must continue to address, including climate believe he would be a capable steward of business day, except for major U.S. holidays, change and progressive tax reform. Just as the IDB. Claver-Carone’s tenure could also by the Inter-American Dialogue at 1155 15th Street NW, Suite 800 egregious is the timing, only months before herald an unprecedented U.S. commitment Washington, DC 20005 the November U.S. presidential election. The to regional development and economic www.thedialogue.org vast social disparities brought to the fore by engagement after years of neglect have ISSN 2163-7962 the Covid-19 pandemic require urgent atten- left numerous openings for exploitation by Subscription inquiries are welcomed at tion, not just by the private sector but also by Chinese ambitions. If Claver-Carone’s bid for [email protected]

an efficient and reformed state, itself under the presidency is successful, he will have to The opinions expressed by the members of the Board of heavy citizen pressure to deliver quality overperform to disprove skeptics and shep- Advisors and by guest commentators do not necessarily services and greater equality. The egoisms herd the integrity of the IDB and the United represent those of the publisher. The analysis is the sole view of each commentator and does not necessarily and nationalisms behind Latin America’s States as an economic partner.” represent the views of their respective employers or firms. failure to unite around a successor to Luis The information in this report has been obtained from reliable sources, but neither its accuracy and completeness, Alberto Moreno have opened the door to a Editor’s note: Laura Chinchilla is a co-chair of nor the opinions based thereon, are guaranteed. If you have reassertion of U.S. unilateralism. The region, the board of directors of the Inter-American any questions relating to the contents of this publication, contact the editorial offices of the Inter-American Dialogue. and U.S. soft power, will suffer as a result.” Dialogue, which publishes the Advisor. Contents of this report may not be reproduced, stored in a retrieval system, or transmitted without prior written permission from the publisher.