LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Thursday, August 22, 2019
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LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, August 22, 2019 BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Will a New Panel U.S. Homeland Former Corporate VP, Cargill Security Chief Joyce Chang Global Head of Research, Fight Corruption Arrives in Panama JPMorgan Chase & Co. Acting U.S. Homeland Security Paula Cifuentes Secretary Kevin McAleenan Director of Economic & Fiscal Affairs, in El Salvador? arrived in Panama, where he is Latin America & Canada, Philip Morris International expected to discuss migrant Marlene Fernández smuggling and drug trafficking Corporate Vice President for with top officials. Government Relations, Page 2 Arcos Dorados Peter Hakim President Emeritus, BUSINESS Inter-American Dialogue Donna Hrinak Antofagasta President, Boeing Latin America Reports 44% Jon E. Huenemann Former Corporate and Earnings Rise Government Senior Executive for First Half James R. Jones Chairman, President Nayib Bukele is planning to create a new commission to fight corruption in El Salva- The Chilean copper mining com- Monarch Global Strategies dor. // File Photo: Salvadoran Government. pany said an increase in copper Craig A. Kelly production and lower costs Director, Americas International By early September, Salvadoran President Nayib Bukele boosted its earnings. Gov’t Relations, Exxon Mobil Page 3 John Maisto said he wants to establish an independent commission to Director, U.S. Education investigate corruption. The panel would be known as the Finance Group Q International Commission Against Impunity in El Salvador, ECONOMIC Nicolás Mariscal Chairman, or CICIES, and would be similar to the U.N.-backed CICIG in Guatemala. Brazil’s Senate Grupo Marhnos Does El Salvador need an independent anti-graft body, and how would OKs Measure to Thomas F. McLarty III Chairman, it do its work? What sorts of challenges would CICIES have to tackle? Cut Bureaucracy McLarty Associates How likely is it to be launched in less than a month? How well is Bukele Brazil’s Senate approved a dereg- Carlos Paz-Soldan Partner, addressing corruption and impunity in El Salvador, and what are the ulation package aimed at simpli- DTB Associates, LLP biggest differences between his approach and those of past administra- fying business in order to spur the Beatrice Rangel country’s economy. President Jair Director, tions? Bolsonaro’s administration wrote AMLA Consulting LLC the legislation, and the president Jaana Remes is expected to sign it. Mari Carmen Aponte, former U.S. ambassador to El Salvador Partner, Page 2 McKinsey Global Institute and former acting assistant secretary of state for Western Ernesto Revilla Head of Latin American Hemisphere affairs: “Unquestionably, there is a national con- Economics, Citi sensus in El Salvador about the need to combat corruption Gustavo Roosen A Chairman of the Board, and impunity. President Bukele’s election, overwhelmingly rejecting tradi- Envases Venezolanos tional political parties, came from desire for profound change and intense Andrés Rozental rejection of corruption and graft. One of Bukele’s most resounding and im- President, Rozental & Asociados portant campaign promises was the establishment of a CICIES. Specific Shelly Shetty details of the inner CICIES structure, however, do not yet appear finalized. Head of Sovereign Ratings, Latin America, Fitch Conversations as to the structures with the United Nations and the OAS Roberto Sifon-Arevalo are ongoing. Similarly, key factors such as the commission’s composition Managing Director, Americas Sovereign & Public Finance Ratings, and financing are not completely cemented. What seems to be on track is Standard & Poor’s the commission’s role in providing support and technical assistance in lo- cal investigations, but not in originating inquiries. The commission would Bolsonaro // File Photo: Brazilian Government. Continued on page 3 COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ADVISOR Thursday, August 22, 2019 ECONOMIC NEWS POLITICAL NEWS NEWS BRIEFS Brazil’s Senate Acting U.S. Homeland Brazil Moving Financial Activities Control Board Approves Measure to Security Secretary Under Central Bank Unit Reduce Bureaucracy Arrives in Panama Brazil’s government has issued a decree to move the Financial Activities Control Board, Brazil’s Senate on Wednesday passed a deregu- Acting U.S. Homeland Security Secretary Kevin or Coaf, into a new financial intelligence unit lation package aimed at boosting the country’s McAleenan arrived Wednesday in Panama, within the central bank, MercoPress reported sluggish economy by simplifying business, where he plans to discuss migrant smuggling Wednesday. The move gives the central bank The Wall Street Journal reported. Measures and drug trafficking with officials in the Central president control over who heads the new unit, include launching a fast-track process to open American country, the Associated Press as well as which officials are appointed to it. new firms, waivers for some permit require- reported. McAleenan said he is not seeking The Financial Intelligence Unit is designed to ments and expanding the acceptance of digital any specific agreement during his trip. On produce and manage financial intelligence documents, among others. “It is an attempt to Wednesday morning, The Washington Post re- information “for the prevention and combat of level Brazil’s regulatory environment with that ported that the Trump administration wants to money laundering, terrorist financing and the of global economic powerhouses by reducing designate Panama a “safe third country,” which financing of the proliferation of weapons of the state’s interference in business,” André would allow it to send asylum seekers there mass destruction,” according to the decree. if they passed through the country on their Brazil ranks 109th of way to the United States. There is a growing number of migrants from locations including 190 nations in the World Africa and Asia who arrive in South America Argentina to Use Dollar Bank’s Ease of Doing and make their way through Panama en route Reserves to Bolster Peso: Business index. to the United States, the newspaper reported. New Finance Minister Last month, McAleenan reached a deal with the Argentina will use its dollar reserves to shore Guatemalan government that would allow the up declines in its currency, said new Finance Marques, a lawyer with the firm Guerra Batista, United States to send asylum seekers there if Minister Hernán Lacunza, as debt ratings told The Wall Street Journal. “They will let mon- agency Fitch warned that the peso’s recent ey circulate more freely.” Brazil is well known depreciation “suggests a real risk of default,” for its crippling bureaucracy, with the country BBC News reported. The run on the peso also ranking 109th out of 190 nations in the World “raises the potential for a sharper deterioration Bank’s Ease of Doing Business index, lower in economic growth,” Fitch added. than 10 other Latin American countries, includ- ing Mexico, Chile and Colombia. Opponents of the deregulation package have expressed concern over its implications on labor rights Fintechs Aiding Financial and environmental protections. “This is very McAleenan // File Photo: U.S. Dept. of Homeland Security. Inclusion, Not Displacing harmful,” said opposition Senator Humberto Costa from the Workers’ Party, The Wall Street they transited Guatemala first. Five days after Large Banks: Moody’s Journal reported. “Reducing bureaucracy won’t signing the safe third country agreement with Fintechs in Mexico will not displace larger create jobs,” he added. Others have criticized Guatemala, McAleenan traveled to Guatemala banks, but they will foster financial inclusion, a regulatory change that allows businesses to City, where he met with business leaders, Moody’s said in a note on Wednesday. While operate without getting environmental permits. reporters and other prominent Guatemalans fintechs will focus on expanding services to the President Jair Bolsonaro is now expected to and said the United States was negotiating unbanked and underbanked, which are a siz- quickly sign the bill into law. Economic activity with Panama, Brazil, Honduras and El Salva- able portion of the population in Mexico, they in Brazil fell slightly in the second quarter, dor. “You have to have partnerships between will not be displacing large Mexican banks any suggesting the country may have slipped into the source, transit and destination countries,” time soon, Moody’s said, adding that smaller recession, Reuters reported. [Editor’s note: McAleenan said, The Washington Post reported banks might lose customers to new entrants if See related Q&A in the July 24 issue of the Aug. 1. On Wednesday morning before he they fail to adapt to digitization. [Editor’s note: Advisor.] departed for Panama, McAleenan said his See related Q&A in last week’s issue of the Financial Services Advisor.] COPYRIGHT © 2019, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Thursday, August 22, 2019 trip was part of a “broader agenda” and not FEATURED Q&A / Continued from page 1 to negotiate a specific deal. “We’re going to talk about our broad security relationship, and include aspects of prevention and reform, will be working with the principal partner, the building on a strong foundation for partnership conducting educational campaigns, thus attorney general’s office, a proven necessary and information-sharing with Panama,” he told incorporating