LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Monday, July 29, 2019
Total Page:16
File Type:pdf, Size:1020Kb
LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Monday, July 29, 2019 BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Corporate VP, Global Corporate Affairs What Factors U.S., Guatemala Cargill Sign ‘Safe Third Joyce Chang Global Head of Research, Are Weighing on Country’ Deal JPMorgan Chase & Co. The controversial agreement Marlene Fernández would require migrants passing Corporate Vice President for Mexico’s Economy? Government Relations, through Guatemala to apply for Arcos Dorados asylum there first instead of con- Peter Hakim tinuing to the United States. President Emeritus, Page 2 Inter-American Dialogue Donna Hrinak President, Boeing Latin America ECONOMIC Jon Huenemann Retired VP, U.S. & Int’l Affairs, Mexico to Help Philip Morris International Honduras Create James R. Jones Chairman, 20,000 Jobs Monarch Global Strategies Mexico pledged to help the Cen- Craig A. Kelly tral American nation create 20,000 Director, Americas International Gov’t Relations, Exxon Mobil jobs by December. Mexico is also vowing to help coffee farmers John Maisto Mexican President Andrés Manuel López Obrador’s administration is facing a softening econo- Director, U.S. Education my. // File Photo: Mexican Government. who have been hurt by low prices Finance Group for the crop. Nicolás Mariscal Page 2 Chairman, Mexico’s industrial output declined 2.1 percent in May as Grupo Marhnos compared to April, the country’s National Statistics Institute POLITICAL Thomas F. McLarty III said July 12. The sharpest drop in industrial output in a Chairman, Ecuador to McLarty Associates Q decade, the statistic was among recent data that suggest Carlos Paz-Soldan Require Visas Partner, the country’s economy slipped into a recession in the second quarter, DTB Associates, LLP following a 0.2 percent contraction in the first three months of the year. of Venezuelans Beatrice Rangel What factors are most weighing on Mexico’s economy? What does Mex- Ecuadorean President Lenín More- Director, no signed a decree requiring Ven- AMLA Consulting LLC ico need in order to return the country to growth? How well is President ezuelans to have visas in order Jaana Remes Andrés Manuel López Obrador managing the economy, and how would a to enter the country. More than Partner, McKinsey Global Institute recession affect his agenda? four million Venezuelans have fled their home country’s political and Ernesto Revilla Head of Latin American economic crises, the U.N. refugee Economics, Citi Charles Seville, senior director for Americas sovereigns agency said last month. Gustavo Roosen at Fitch Ratings: “Mexico’s overall output has stalled, as Page 2 Chairman of the Board, Envases Venezolanos shown by the economic activity indicator for May. As ever, the Andrés Rozental data present a mixed picture. Households are continuing to President, Rozental & A Asociados and Senior spend, and manufacturing and exports (7 percent higher year-on-year in Policy Advisor, Chatham House May) are holding up. U.S. growth remains supportive. Investment is the Shelly Shetty Head of Sovereign Ratings, main weak spot. Part of this may relate to global trade uncertainty, but Latin America, Fitch domestic policy considerations are also weighing on sentiment. Business Roberto Sifon-Arevalo Managing Director, Americas confidence is still in positive territory but has weakened. Microeconom- Sovereign & Public Finance Ratings, ic policy interventions by the government have increased uncertainty Standard & Poor’s in some areas. Actions to tackle some of the weaknesses in Mexico’s business environment and reduce corruption will take time to pay off. Moreover, monetary and fiscal policy are also tight. Real interest rates Moreno // File Photo: Ecuadorean are among the highest in the region, yet core inflation is still higher than Government. Continued on page 2 COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ADVISOR Monday, July 29, 2019 POLITICAL NEWS signing such a deal with the United States. In a NEWS BRIEFS tweet, Trump had threatened to impose tariffs, U.S., Guatemala “remittance fees” and other penalties on the Ecuador’s Moreno Central American nation, saying its officials Signs Decree Requiring Sign ‘Safe Third had broken their pledge to sign the agreement. Two weeks ago, Morales had been scheduled Venezuelans to Have Visas Country’ Agreement to visit the White House but canceled the trip Ecuadorean President Lenín Moreno on Friday just before the Constitutional Court’s decision. signed a decree requiring visas for Venezue- The United States and Guatemala on Friday On Friday, Morales’ government seemed to be lan citizens wishing to enter the country, who signed a “safe third country” agreement, which going around the court ruling by avoiding the previously could cross the border with just if it takes effect as scheduled within weeks, use of the “safe third country” term, but the a passport or other form of identification, would require asylum seekers who are passing Trump administration did use the term, which Reuters reported. The measure is part of a through Guatemala to request asylum there could give fuel to a legal challenge in Guatema- wider security plan for migrants, which outlines instead of continuing to the United States. la, The New York Times reported. The United tighter regulations and a non-obligatory census Guatemalan Interior Minister Enrique Degen- States still must take several steps before the of Venezuelans in Ecuador to help them access hart signed the controversial agreement at the agreement can be fully implemented. Among education, health and welfare benefits. Asso- White House. U.S. President Donald Trump has them, the U.S. Justice Department and the ciations of Venezuelan migrants in Ecuador been seeking to limit the number of asylum Department of Homeland Security must certify celebrated the initiative but criticized the visa claims, particularly from a surging number of that Guatemala has a “full and fair” asylum sys- requirement. Central Americans who have been crossing the tem and can protect asylum seekers from other United States’ southern border and overwhelm- nations if the United States sends them there, ing border agents. “Look, we’ve been dealing the newspaper reported. Under the agreement, for many years, I would say, with Guatemala migrants could be sent from the United States Mexico’s Government and with other countries, and we are now at to Guatemala, regardless of their country of to Help Honduras a point where we are—we just get along. And origin. In an interview with CBS News, U.S. Rep. Create 20,000 Jobs they’re doing what we’ve asked them to do and Norma Torres (D-Calif.), the only member of the Mexico’s government announced Saturday I think it’s going to be a great thing for Gua- U.S. Congress born in Guatemala, called the that it would help Honduras create 20,000 jobs temala,” Trump said at the signing in the Oval agreement “an insult to common sense.” She amid an effort to stem migration to the United Office, CBS News reported. The deal will “put added, “It is inconsolable to think Guatemala— States, Reuters reported. After a meeting coyotes and the smugglers out of business,” the country that has one of the highest murder between the two countries’ presidents in Vera- Trump added, UPI reported. “These are bad rate in the world… could be a safe country for cruz, Mexican Foreign Minister Marcelo Ebrard people.” The signing came three days after people coming from Venezuela, from Cuba said his country would help Honduras create Trump threatened to punish Guatemala over and some countries that are in deep trouble. the jobs between now and December. Mexico is its Constitutional Court’s ruling that blocked To think that [Guatemala] is a country that is also pledging to help Honduran coffee farmers. President Jimmy Morales’ government from going to accommodate asylum seekers from FEATURED Q&A / Continued from page 1 the central bank would like. Lower govern- A still relatively new administration faces a Qatar Petroleum Buying ment spending is subtracting from activity. classic trade-off between maintaining the Stake in Guyanese Oil, We expect this effect—typical of the first confidence of investors in the policy frame- year of a presidential term—to fade. Public work and supporting the economy. So far, it Gas Blocks From Total investment has been cut over successive has chosen the former. Meeting the fiscal Qatar Petroleum has reached a deal with years, but higher investment, not to mention target of a 1 percent of GDP non-financial French oil company Total to acquire a stake in some proposed programs, will be difficult public sector primary surplus is within reach two oil and gas blocks offshore Guyana, the to accommodate within the current fiscal in 2019, but meeting a higher target in 2020 Qatari firm said Monday, Reuters reported. framework. Pemex will receive more resourc- may prove challenging. We expect Banco de Qatar Petroleum said it will buy 40 percent es to carry out a revised business plan. The México will cautiously start cutting rates this of Total’s 25 percent participating interest in company announced that it had stabilized year, helped by a more dovish global rates the Orinduik block, as well as a 40 percent crude production in the second quarter, picture.” of Total’s 25 percent participating interest in although we think it’s too early to celebrate. Continued on page 4 the Kanuku block. Tullow Oil holds 60 percent participating interest in the blocks, and EcoAt- lantic has a 15 percent interest. COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Monday, July 29, 2019 anywhere else in the world—that is ridiculous.” Humanitarian groups also blasted the deal. JOB POSTINGS Refugees International President Eric Schwartz called the agreement a violation of U.S.