LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Thursday, July 18, 2019

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, July 18, 2019

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group ECONOMIC Devry Boughner Vorwerk Corporate VP, Global Corporate Affairs How Can Road Brazil’s Bolsonaro Cargill Eyes Economic Joyce Chang Global Head of Research, Safety Be Improved Stimulus Package JPMorgan Chase & Co. Brazilian President Jair Bolson- Marlene Fernández aro said his government will Corporate Vice President for in Latin America? Government Relations, announce a stimulus package to Arcos Dorados boost the country’s economy. The Peter Hakim announcement is timed to mark President Emeritus, Bolsonaro’s 200th day in office. Inter-American Dialogue Page 2 Donna Hrinak President, Boeing Latin America Jon Huenemann BUSINESS Retired VP, U.S. & Int’l Affairs, Philip Morris International Alpargatas to James R. Jones Close Operations Chairman, Monarch Global Strategies in Argentina Craig A. Kelly The textile giant said it is shutter- Director, Americas International Gov’t Relations, Exxon Mobil ing its operations in the country where it was founded. It has John Maisto More than 105,000 people are killed in road crashes every year in Latin America, Claudia Director, U.S. Education Adriazola-Steil says below. // File Photo: Guatemalan Government. reached a deal to sell three plants Finance Group for $14 million. Nicolás Mariscal Page 3 Chairman, Better road safety in Argentina, Chile, Mexico and Brazil Grupo Marhnos could save $29 billion over the next decade, according to POLITICAL Thomas F. McLarty III new research sponsored by Bloomberg Philanthropies. Chairman, ‘El Chapo’ Guzmán McLarty Associates Q Meanwhile, weak vehicle safety standards in the four Carlos Paz-Soldan Sentenced to Life Partner, countries will lead to more than 25,000 deaths over the next decade, DTB Associates, LLP researchers at the U.K.-based Transport Research Laboratory found. Plus 30 Years Beatrice Rangel How does Latin America compare to other parts of the world in terms of Mexican drug lord Joaquín “El Director, Chapo” Guzmán was sentenced AMLA Consulting LLC road safety? Why aren’t higher safety standards and better regulations in in a New York courtroom to a life Jaana Remes place? What steps should countries of Latin America and the Caribbean prison term plus 30 years. His Partner, McKinsey Global Institute take to prevent road fatalities and serious injuries, and what indirect Sinaloa Cartel trafficked billions of dollars’ worth of drugs to the Ernesto Revilla benefits could this bring? Head of Latin American United States. Economics, Citi Page 2 Gustavo Roosen Claudia Adriazola-Steil, director of the Health and Road Chairman of the Board, Envases Venezolanos Safety Program at the WRI Ross Center for Sustainable Andrés Rozental Cities at the World Resources Institute: “More than 105,000 President, Rozental & Asociados and Senior people lose their lives in traffic crashes across Latin America Policy Advisor, Chatham House A every year. While in Europe the fatality rate per 100,000 people can be Shelly Shetty Head of Sovereign Ratings, as low as two, the rate in Latin America ranges from 8.5 (Cuba) to 33.7 Latin America, Fitch (El Salvador). What’s even more concerning is that deaths are trending Roberto Sifon-Arevalo Managing Director, Americas up, increasing more than 8 percent over the last three years. Pedestrians Sovereign & Public Finance Ratings, account for more than half of all deaths, and motorcyclist deaths are Standard & Poor’s also spiking. Despite the alarming trend, road safety is rarely a political priority in the region. In most places, it is managed as a siloed topic with a slim budget. It is not integrated into infrastructure investments or urban Guzmán // File Photo: U.S. Drug planning, and there is an overemphasis on the responsibility of the road Enforcement Administration. Continued on page 2

POLITICAL NEWS in which he was imprisoned demonstrated NEWS BRIEFS “a lack of respect for human dignity.” Federal ‘El Chapo’ Guzmán sentencing laws required the judge in the Protesters, Police Clash case, U.S. District Judge Brian Cogan, to send Again in San Juan as Sentenced to Life Guzmán to prison for the rest of his life. “The overwhelming evil is so severe,” said Cogan. In Demonstrations Continue Plus 30 Years addition to the prison sentence, Cogan ordered Protesters and police clashed in Puerto Rico Guzmán to pay $12.6 billion in forfeiture, CNN on Wednesday in the fifth consecutive day Joaquín “El Chapo” Guzmán, 62, one of the reported. Due to the sentencing laws, Guzmán’s of demonstrations calling for the ouster of most notorious drug lords in history, was sen- lawyer, Jeffrey Lichtman, spent little time Governor Ricardo Rosselló, NPR reported. tenced Wednesday in a U.S. courtroom to a life asking the judge for leniency. “What occurred Demonstrators, including some of the island’s sentence plus 30 years in prison. Guzmán was here did not uphold an appearance of justice,” famous singers, are pushing for Rosselló to convicted in February on 10 counts, includ- said Lichtman, The Washington Post reported. resign following the leak of hundreds of pages ing murder conspiracies, running a criminal Lichtman said he plans to file an appeal. If his of misogynistic and homophobic texts between enterprise and other drug-related charges. His verdict and sentencing stand, Guzmán, who the governor and his closest aides. San Juan Mexico-based Sinaloa Cartel trafficked billions famously escaped from Mexican prisons twice, reportedly resembled a “war zone” by the early of dollars’ worth of cocaine, heroin, meth- will probably be sent to the U.S. supermax peni- hours of Thursday, with police chasing protest- amphetamines and marijuana to the United tentiary in Florence, Colo., after which he will ers while firing rubber bullets, gas canisters States. At his sentencing in federal court in likely never be seen in public again. and what appeared to be flash bombs. Brooklyn, N.Y., Guzmán angrily denounced his treatment while in custody at Manhattan’s Metropolitan Correctional Center. “When ECONOMIC NEWS extradited, I expected to have a fair trial where Power Plant Breakdowns justice was blind and my fame would not be Caused Cuba Blackouts: a factor, but what happened was actually the Brazil’s Bolsonaro Energy Minister opposite,” Guzmán said through an interpreter, Eyes Economic A series of breakdowns in Cuba’s power plants The Washington Post reported. “I will take this caused several blackouts this week across the opportunity to say there was no justice here.” Stimulus Package island nation, according to the country’s energy Guzmán described his confinement as “psy- minister, the Associated Press reported today. chological, emotional, mental torture, 24 hours Brazil’s government will announce an econom- Energy Minister Raúl García Barreiro told state- a day.” The drug lord, who personally ordered ic stimulus package this week that seeks to run media late Tuesday that three power plants people’s torture and murder, said the conditions revive weak growth as President Jair Bolson- suffered mechanical problems and two others were down as they underwent maintenance. FEATURED Q&A / Continued from page 1

user, rather than planners or policymakers. ment of traffic laws, safer vehicle standards, There is an outdated perspective that is not retrofitting known danger areas with designs USNS Comfort Completes in line with what we know about road safety. that minimize risk, improving data collection Five-Day Mission in Peru To create safer roads, policymakers need and protecting vulnerable road users, such to understand that humans make mistakes as pedestrians and cyclists.” The United States’ USNS Comfort navy hospital and are inherently vulnerable to injury; ship left Peru on Wednesday, completing a five- thus, responsibility needs to be shared to Rodrigo Caudullo, advisor to day mission to “relieve pressure on national eliminate fatalities and serious injuries. the Montevideo Department of medical systems strained by an increase in Leaders needs to be proactive rather than Mobility: “Road accidents are Venezuelan migrants,” the U.S. Southern Com- reactive. This ‘Safe System’ approach to a disease that, in Uruguay, kills mand said in a statement. In Peru, more than A 4,500 patients received treatment and more road safety has been proven to lower injury one person every 16 hours, in addition to and death rates faster and more effectively the thousands of serious and minor injuries than 100 surgeries were performed aboard the than any other model. In Latin America, a they cause annually. Regrettably, different ship. The vessel’s medical mission includes Safe System approach would mean speed national and departmental authorities’ public stops in Colombia, Costa Rica, the Dominican management strategies and better enforce- policies have not had the expected results. Republic, Ecuador and several other countries. [Editor’s note: See related Q&A in the July 11 Continued on page 4 issue of the Advisor.]

COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Thursday, July 18, 2019 aro marks his 200th day in office today, the president said Wednesday, Folha de S.Paulo THE DIALOGUE CONTINUES reported. The measures will be announced during an event at the Planalto presidential palace to commemorate Bolsonaro’s first 200 Will Urzúa’s Exit Destabilize days as president. Economy Minister Paulo Mexico’s Economic Policy? Guedes on Wednesday said the government will free up 63 billion reais ($16.8 billion), of Mexican Finance Minister Car- to a plethora of social ‘objectives,’ while re- which 42 billion reais are from a special fund los Urzúa unexpectedly stepped stricting government salaries and firing tens designated for workers called FGTS and 21 down on July 9, citing “many of thousands of bureaucrats who he blames billion reais from a workers’ social contribution Q disagreements over economic for the country’s ills. Projects such as the fund, Valor Econômico reported. The amount policy” in a strongly worded resignation train to ferry tourists around the Yucatán is much higher than in previously announced letter. Urzúa and President Andrés Manuel Peninsula, a refinery in his home state of Ta- packages. Earlier this year, the Brazilian gov- López Obrador reportedly clashed over basco and a new airport built at an air force ernment was considering freeing up resources several decisions, including one to cancel base far from Mexico City to replace the one of nearly 20 billion reais from the FGTS funds, the construction of a new airport for Mexico that he canceled with a spurious plebiscite, Reuters reported, citing unnamed sources. The City. What does Urzúa’s departure say about are examples of what AMLO has vowed to Economy Ministry did not comment on Guedes’ the direction of Mexico’s economic policy? pursue, notwithstanding opposition on tech- remarks to Valor Econônomico, saying there What can be expected of his successor, Ar- nical and financial grounds. Added to that are no announcements scheduled. Bolsona- turo Herrera? What are the most important were AMLO’s political appointments foisted ro’s economic team will reportedly send two economic decisions facing López Obrador, on Urzúa of loyalists who have little or no different proposals to the president, a source and what is at stake for Mexico’s economy? expertise for the positions they hold. The told Reuters. One of the proposals considers new finance minister will probably not fare freeing up a more modest amount of around 30 Andrés Rozental, member of any better in reining in the president’s whims billion reais to avoid jeopardizing housing fund- the Advisor board, president of at a time when Mexico’s economy is forecast ing, of which almost half the funds come from Rozental & Asociados in Mexico to grow less than 1 percent this year, if at all. FGTS, the source said. The 200-day package City and senior policy advisor at AMLO’s decisions to undermine regulatory will also reportedly include revoking a series of A Chatham House: “Urzúa’s angry resignation bodies, cancel further auctions in the energy presidential decrees the government considers provides ample evidence of a chaotic and sector, call for revisions to contracts for gas outdated or without a purpose. Last week, the undisciplined government under Mexican pipeline projects that were signed before government cut its economic growth forecast President López Obrador (AMLO), as well he became president and his constant for this year from 1.6 percent to 0.8 percent, as of the autocratic style of decision-mak- attacks on the media are beginning to test in line with central bank and market outlooks, ing that has characterized the first seven the patience of both domestic and foreign Reuters reported. months of his administration. Urzúa was investors. If AMLO doesn’t change course considered to be an element of stability and toward a more pragmatic set of objectives reason as the guarantor of fiscal prudence by the end of 2019, Mexico’s economy risks BUSINESS NEWS and good financial management. Clearly, he being seriously damaged.” worked for a president who doesn’t listen to Alpargatas Plans those who know more than he does, and who is convinced that only his ideas are worth EDITOR’S NOTE: The comment above is to Close Operations pursuing. In the short time he was finance a continuation of the Q&A published in minister, Urzúa ran up against AMLO’s Wednesday’s issue of the Advisor. in Argentina propensity to hand out financial largesse

Textile giant Alpargatas has announced it is investors that control sandal maker Havaianas MercoPress reported. Alpargatas’ units in the shuttering its operations in Argentina due to and sportswear brand Topper, Crónica report- provinces of Corrientes and Chaco will go to financial difficulties, MercoPress reported ed. “With the current transfer of these assets to Argentina’s Mafra, while Fibran Sur will take Thursday. The company has reached a deal their respective buyers, which will be effective over the company’s plant in Catamarca. The to sell three plants, which were about to close on Oct. 1, Alpargatas Argentina will stop work- textile company’s economic troubles date down, for $14 million. Alpargatas, which was ing in the textile segment,” the company said back to at least 2016, when 360 workers were founded in Argentina, previously sold 22.5 in a briefing to the São Paulo stock exchange, suspended at the Calzar plant in La Pampa. percent of the company to the same Brazilian

FEATURED Q&A / Continued from page 2 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2019 At the level of vehicle regulations, there are to influence the burden of road traffic many reasons why, in this part of the world, deaths and serious injuries in Argentina, Erik Brand we are still 20 years behind, as compared Brazil, Chile and Mexico. TRL was able to Publisher [email protected] to developed countries. This occurs not use its understanding of passenger vehicle because of ignorance of international reg- safety standards and the effect they have on Gene Kuleta Editor ulations, but rather because when thinking populations to consider their potential in the [email protected] about the auto industry, we see only some region. The method estimated the cost-bene- Anastasia Chacón González aspects, such as job creation, tax collection fit for car occupants of regulating electronic Reporter for exports and value added to production. stability control, approved seat belts and [email protected] But we don’t see the damages caused by the anchorages for all seating positions, and circulation of unsafe vehicles in countries occupant protection in frontal and lateral

of the region. At the country level, there is a collisions. For pedestrians and cyclists, the Michael Shifter, President great dissociation and lack of unity among cost-benefit model estimated the impact of Genaro Arriagada, Nonresident Senior Fellow the different organizations to really address regulating an advanced emergency braking Sergio Bitar, Nonresident Senior Fellow the problem. The same also exists at the system capable of detecting pedestrians Joan Caivano, Director, Special Projects regional level. Countries, with their usual and cyclists, which prevents collisions, Michael Camilleri, Director, Peter D. Bell Rule of Law blindness and locked into their respective and the pedestrian protection regulation Program territorial limits, do not see beyond. I do not regarding front bumper and hood design, Kevin Casas-Zamora, Nonresident Senior Fellow see another way out than to make those which mitigates the injuries resulting from Ariel Fiszbein, Director, Education Program in power aware of this deadly disease and a collision. This work is core to the societal Peter Hakim, President Emeritus to commit them to at least sit down to impact we strive to deliver by making trans- Claudio Loser, Senior Fellow negotiate and find the best solution for all portation safer. It also supports the overall Nora Lustig, Nonresident Senior Fellow parties, to address this serious problem that aim for priority vehicle safety standards to Margaret Myers, Director, Asia and Latin America Program concerns us all and thus mitigate the nega- be adopted for all new vehicles globally. We Manuel Orozco, Director, Migration, tive consequences reflected in the current know that these basic measures will save Remittances & Development statistics, which don’t seem to stop rising.” lives. This report demonstrates the scale Jeffrey Puryear, Senior Fellow of benefits that appropriate legislation will Tamar Solnik, Director, Finance & Administration Jolyon Carroll, vehicle safety achieve. It found that, in total, if Argentina, Lisa Viscidi, Director, Energy Program and technology consultant at Brazil, Chile, and Mexico adopted the full Denisse Yanovich, Director of Development and the Transport Research Labo- set of priority vehicle safety standards from External Relations ratory: “With the World Health 2020, more than 25,000 lives could be saved A Latin America Advisor is published every Organization estimating that the number of and over 170,000 serious injuries prevented, business day, except for major U.S. holidays, road traffic deaths has reached 1.35 million by 2030.” by the Inter-American Dialogue at 1155 15th Street NW, Suite 800 per year, we are delighted that Bloomberg Washington, DC 20005 Philanthropies asked us to deliver this The Advisor welcomes comments on its Q&A www.thedialogue.org cost-effectiveness study. The topic was section. Readers can write editor Gene Kuleta ISSN 2163-7962 the potential for vehicle safety standards at [email protected]. Subscription inquiries are welcomed at [email protected]

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