LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Thursday, July 14, 2016

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, July 14, 2016

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group ECONOMIC Devry Boughner Vorwerk Have Brazil’s Senior Policy Advisor Cuba Sacks Akin Gump Strauss Hauer & Feld, LLP Economy Minister Joyce Chang Global Head of Research, Problems Cost it Cuba’s government removed JPMorgan Chase & Co. Marino Murillo from his position W. Bowman Cutter and reassigned him to overseeing Former Partner, International Clout? the country’s market reforms. E.M. Warburg Pincus The government named Ricardo Dirk Donath Cabrisas Ruíz to replace Murillo Senior Partner, Catterton Aimara as economy minister. Marlene Fernández Page 2 Corporate Vice President for Government Relations, Arcos Dorados POLITICAL Peter Hakim Mexico Agrees President Emeritus, Inter-American Dialogue to Revise Donna Hrinak President, Boeing Latin America Teacher Exams Jon Huenemann The teacher evaluations have Vice President, U.S. & Int’l Affairs, been among the most controver- Philip Morris International sial parts of President Enrique James R. Jones Interim Brazilian President Michel Temer reportedly plans to attend the BRICS summit later this Peña Nieto’s education reforms, Co-chair, Manatt Jones year in India if Brazil’s Senate permanently removes President Dilma Rousseff from offi ce. // which have led to violent protests. Global Strategies LLC File Photo: Brazilian Government. Page 2 Craig A. Kelly Director, Americas International Brazil continues to suffer through its worst economic Gov’t Relations, Exxon Mobil recession in decades, coupled with political turmoil that has POLITICAL John Maisto Director, U.S. Education made it unclear which person and party will be governing the Brazil’s Lower Finance Group Q country several months from now. Against that backdrop, Nicolás Mariscal House Elects Maia Chairman, media reports have speculated on the role and clout of Brazil in the next New Speaker Grupo Marhnos BRICS summit, scheduled for October in India. Have Brazil’s high-pro- Brazil’s Chamber of Deputies in to- Thomas F. McLarty III fi le problems changed the way the nation sees its role in the world and Chairman, day’s early morning hours elected McLarty Associates as a leader of the “global south?” Has Brazil’s leveraging power on the Rodrigo Maia as its new speaker. Carlos Paz-Soldan international stage been diminished by its ongoing scandals and deep Maia, an ally of Interim President Partner, Michel Temer, replaces Eduardo DTB Associates, LLP economic problems? How would Interim President Michel Temer, who Cunha who is facing corruption Beatrice Rangel reportedly plans to attend the BRICS summit if suspended President allegations. Director, AMLA Consulting LLC Dilma Rousseff is ousted from offi ce in August, change the way Brazil Page 2 José Antonio Ríos deals with the bloc’s agenda, compared to Rousseff’s handling of the Chief Executive Offi cer, Vadium Technology Inc. group of emerging market powers? Gustavo Roosen Chairman of the Board, Envases Venezolanos Margaret Myers, director of the China and Latin America Andrés Rozental Program at the Inter-American Dialogue: “Brazil’s global in- President, Rozental & Asociados and Senior fl uence has undeniably decreased as the country has entered Policy Advisor, Chatham House into a period of economic and political turmoil. Brazil has for Shelly Shetty A Head, Latin America many years been a vocal champion of the new global south, along with Sovereign Ratings, Fitch Inc. China and other emerging powers. It joined BRICS in 2008 and became a Roberto Sifon-Arevalo member of the grouping’s New Development Bank in 2014. Dilma agreed Managing Director, Americas Sovereign & Public Finance Ratings, in 2015 to join the China-backed Asian Infrastructure Investment Bank, or Standard & Poor’s AIIB, a supposed alternative to the Bretton Woods multilaterals, despite Maia // File Photo: Brazilian some Brazilian opposition to the endorsement. At the time, Brazil’s $3 Government. Continued on page 2

POLITICAL NEWS economist who worked in banking before enter- NEWS BRIEFS ing politics, Reuters reported. He has signaled Brazil’s Lower that he would support Temer’s efforts to pass Mexico Agrees to Revise economic reforms to pull Brazil out of its deep Teacher Evaluation Exam House Selects Maia recession. “I will talk to Temer, who enjoys the support of my party. We are convinced that this The Mexican government has agreed to revise as New Speaker government will overcome this crisis and the the evaluation exam given to all teachers, lower house will help in that task,” Maia told re- which has been a focal point of teacher pro- Brazil’s Chamber of Deputies in today’s early porters after the vote, Reuters reported. Maia, tests, ofﬁ cials said Wednesday, the Associated morning hours selected Rodrigo Maia, an a strong opponent of suspended President Press reported. Education Secretary Aurelio ally of interim President Michel Temer as the Dilma Rousseff, won the speakership with 285 Nuño made the announcement the same day lower house’s new speaker. Voting began in votes, defeating Rogerio Rosso of the Social the Mexican government was set to hold its Democrats party, who garnered 170 votes. ﬁ rst working group meeting with represen- tatives from the protesting teachers’ union. We are convinced that Nuño emphasized that the move was not a this government will ECONOMIC NEWS concession to some teachers’ demands for the overcome this crisis reforms, which were approved in 2013, to be and the lower house completely voided. [Editor’s note: See related will help in that task.” Cuban Gov’t Sacks Q&A in the July 7 issue of the Advisor.] — Rodrigo Maia Economy Minister the chamber on Wednesday at about 5:30 p.m. The Cuban government announced Wednes- Salvadoran Supreme and stretched past midnight, with Maia winning day night that its economy minister, Marino Court Strikes Down the election on the second ballot, Bloomberg Murillo, was removed from his post following News reported. Maia replaced Eduardo Cunha, Civil War Amnesty Law Cuban President Raúl Castro’s warning last who resigned last week as the lower house’s week that Cubans would have to tighten their El Salvador’s Supreme Court on Wednesday speaker amid a graft investigation that could belts amid socialist ally Venezuela’s ongoing struck down a 1993 amnesty law that blocked lead to his expulsion from Congress. Cunha economic crisis, BBC News reported today. prosecution for human rights abuses commit- denies wrongdoing. Maia is a member of the The government announced Murillo would now ted during the country’s civil war, the Associat- right-leaning Democrats party as well as an be in charge of spearheading market reforms. ed Press reported. The high court declared that parts of the law were unconstitutional. FEATURED Q&A / Continued from page 1

billion capital subscription to the bank was Brazil seeks a prominent global role. For the a tall order for a slowing domestic econ- time being, however, Brazil’s global clout has Argentine, Bolivian State omy. One year later, Brazil’s deteriorating diminished. The Olympics will be a critical Energy Companies to economic situation has further weakened litmus test of Brazilian leadership’s capacity Jointly Explore for Gas the country’s ability to support these to govern even at home.” institutions. Active participation in new and Argentine state-run energy company YPF existing fi nancial institutions is also far less Gary Clyde Hufbauer, Reginald signed an agreement Wednesday with Bolivian politically viable now that Brazilians are Jones Senior Fellow at the state energy company YPFB to explore an area facing growing infl ation and unemployment Peterson Institute for Inter- in eastern Bolivia with potential natural gas at home. Brazil’s potential for economic A national Economics: “Political reserves totaling 2.7 trillion cubic feet, EFE re- growth and global leadership is nonethe- upheaval plus a deep recession should ported Wednesday. YPFB CEO Guillermo Acha less immense. It is still the region’s largest inspire radically different trade policies and YPF’s vice president for natural gas and economy, and one that is rich in agricultural in Brazil. Hardship opens the way for new energy, Marcos Browne, signed the deal on the and other resources. Brazil has aspired to thinking, and Brazil’s trade policies certainly second day of a petroleum conference in Boliv- great power status for more than a century, need fresh air. The geo-economic alliance ia. Acha told reporters that YPF would become moreover. This recent boom period was not with Russia, India, China and South Africa a new participant in Bolivia’s hydrocarbons the fi rst time, and will not be the last, that gave Brazil a high profi le on the world stage sector. The agreement covers the 383 square mile Charagua area in the eastern province of Continued on page 4 Santa Cruz.

Murillo’s replacement is another veteran politi- cian, Ricardo Cabrisas Ruíz, who has overseen THE DIALOGUE CONTINUES Cuba’s recent debt restructuring. Castro has told Cubans to brace for tough economic times during the second half of this year as govern- Will More Latin Americans ment institutions restrict energy consumption. Embrace Mobile Education? The decision to transfer Murillo to a new post indicates growing uncertainty surrounding Mexican telecommunications we want students to become smarter than a Cuba’s economy, according to BBC News. In magnate Carlos Slim last month smartphone, we need to think harder about recent months and years, Cuba has made some launched Aprende, a free online 21st century pedagogies. Technology can changes to its economy, including legalizing Q educational platform that will amplify great teaching, but great technology small and medium-sized private businesses offer training opportunities for anyone with does not replace poor teaching. What could and allowing the country’s state-controlled ag- Internet access and a smartphone. Have we gain if we fi xed those problems? The riculture sector to be made into co-operatives. Latin Americans been embracing mobile most obvious gain is to dramatically expand Cuba has also opened itself up to the possibili- learning opportunities? How well have ty of more foreign investment with the thawing formal education systems in the region Great technology of tensions with the United States last year. incorporated online and mobile learning in their curricula? What audiences should does not replace Cienfuegos Refi nery providers of online learning tools seek poor teaching.” to target? What are the main barriers to — Andreas Schleicher to Partially Close for accessing and using such tools? How much will mobile education platforms change Maintenance education outcomes in the region? access to content. Why should students be limited to the textbook that was printed two Cuba’s 65,000 barrel-per-day Cienfuegos Andreas Schleicher, director years ago and maybe designed 10 years ago refi nery will be partially shut down for 120 days at the Directorate of Education when they could have access to the world’s for maintenance and will produce only the min- and Skills at the OECD: “New best and most up-to-date textbook? Equally imum output, a top offi cial at Venezuelan state A technology platforms open up important, technology allows teachers and oil company PDVSA said Tuesday, Reuters amazing opportunities for people to decide students to access specialized materials reported. The announcement about the refi nery, what they learn, where they learn, how they well beyond textbooks, in multiple formats, a joint venture between Cuba and Venezuela, is learn and when they learn. But the reality with little time and space constraints. We part of a larger trend of reduced output for the remains far behind the dream of lifelong can support new pedagogies with learners South American nation. Venezuelan crude oil and ‘lifewide’ learning. PISA data show that as active participants and as tools for production dropped to a 13-year low in June, today, digital technologies tend to reinforce inquiry-based pedagogies and collabo- according to the International Energy Agency, rather than moderate the impact of social rative workspaces, such as experiential Bloomberg News reported Wednesday. Data background on educational success. One learning with remote and virtual labs, or showed production down 240,000 barrels interpretation is that building deep con- project-based and enquiry-based pedago- per day as compared to last year. This 2.18 ceptual understanding and higher-order gies, and we can deliver more formative million bpd output is the lowest the OPEC thinking processes requires sophisticated real-time assessment. Second, collaboration nation has experienced since an oil workers’ teacher-student interactions, and technology for knowledge creation is perhaps the most strike in February 2003. The IEA also predict- just distracts from this by making learning obvious and effective use in the short-term, ed continued decline with a drop to 200,000 more superfi cial. Another interpretation is and again there are many examples where barrels per day for the year, which was double that we haven’t yet become good enough technology provides great collaboration the expected decline last month. “While Iran is at the kind of pedagogies that leverage the platforms for teachers to share and enrich clearly OPEC’s biggest source of supply growth potential of technology, and that adding teaching materials.” this year, Venezuela is notching up the largest 21st century platforms to 20th century decline,” the IEA said Wednesday in a report. instructional practices will just reduce the Following power outages from April through effectiveness of learning. If students use EDITOR’S NOTE: The comment above is a June, Venezuela’s oil production dropped smartphones to copy and paste answers to continuation of the Q&A published in the by 120,000 barrels per day. IEA experts say prefabricated questions, that’s surely not July 6 issue of the Advisor. the slump “looks unavoidable” with involved going to help them to become smarter. If parties facing payment delays.

FEATURED Q&A / Continued from page 2 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2016 and helped torpedo the Doha Round, but it politics. The disapproval rate of interim did less than nothing to spur the Brazilian President Michel Temer is as high as that Erik Brand Publisher economy. Instead, the alliance provided a of Dilma Rousseff. The interim government [email protected] cover for dirigiste protection (often through has seven ministers accused of corruption Gene Kuleta local content requirements) that has hob- and one accused of murder. Eduardo Cunha, Editor bled the industrial and service sectors. The [email protected] Temer government wants to join the Trade in The country is experi- Nicole Wasson Services Agreement (TiSA), a welcome step Reporter, Assistant Editor toward bringing effi ciency to the Brazilian encing a transition of [email protected] economy. It is quietly exploring ways to jet- political forces with Jen Wagman tison Venezuela from Mercosur, opening the a power struggle that Editorial Intern way for Mercosur to actually promote trade goes beyond the 2018 rather than spout anti-market rhetoric. More presidential election.” ambitiously, the new government is putting — Evandro Menezes de Carvalho Michael Shifter, President out feelers to the Pacifi c Alliance, which Genaro Arriagada, Nonresident Senior Fellow might lead to a pan-South American agree- Sergio Bitar, Nonresident Senior Fellow ment. And most ambitiously, depending on Joan Caivano, Director, Special Projects the outcome of the U.S. presidential election who presided over the Chamber of Deputies’ Kevin Casas-Zamora, Director, and ratifi cation of the TPP, Brazil might impeachment proceedings, is involved in a Peter D. Bell Rule of Law Program explore membership in a second phase of corruption scandal and resigned from his Ramón Espinasa, Nonresident Senior Fellow accessions (after the likes of Korea, the position. Rousseff received harsh criticism Ariel Fiszbein, Director, Education Program Philippines and Colombia). Along the way, when she predicted a public account defi cit Alejandro Ganimian, Nonresident Fellow rather than playing the role of naysayer to of 92 billion reais. Temer, however, sent a Peter Hakim, President Emeritus post-Doha initiatives in the WTO, Brazil could proposal that predicts a defi cit around 170.5 Claudio Loser, Senior Fellow Nora Lustig, Nonresident Senior Fellow use its diplomatic heft to promote promising billion reais. Brazilian foreign policy probably Margaret Myers, Director, China and plurilateral pacts. If pursued energetically, will focus on negotiations with the United Latin America Program such possibilities could do much to stimu- States and Europe. China will remain a major Manuel Orozco, Director, Migration, late the lagging Brazilian economy.” trade and investment partner for Brazil, even Remittances & Development considering the Chinese economy’s new nor- Jeffrey Puryear, Senior Fellow Evandro Menezes de Carvalho, mal. Bilateral relations can be affected only Tamar Solnik, Director, Finance & Administration professor of International Law where there are direct confl icts of interest Lisa Viscidi, Director, Energy Program at the Getulio Vargas Founda- with Western powers. Temer’s government Latin America Advisor is published every A tion and Fluminense Federal will not give the same strategic dimension to business day, except for major U.S. holidays, University in Rio de Janeiro, and member of the BRICS as former President Lula. Howev- by the Inter-American Dialogue at 1211 Connecticut Avenue NW, Suite 510 CECLA: “The economic downturn is exacer- er, he will seek to preserve Brazil’s position Washington, DC 20036 bated by Brazil’s political crisis and refl ects in the New Development Bank. Despite www.thedialogue.org the end of a more-than-two-decade era this, there won’t be as much political will to ISSN 2163-7962 during which politics were dominated by two support the BRICS in international forums. Subscription inquiries are welcomed at fi gures: former presidents Fernando Hen- Temer’s foreign policy will not be bold or [email protected] rique Cardoso (of the PSDB) and Luiz Inácio creative. He will evaluate Brazil’s position Lula da Silva (from the PT). Now, the country according to the agenda laid out by the main The opinions expressed by the members of the Board of Advisors and by guest commentators do not necessarily is experiencing a transition of political forc- powers, assessing costs and benefi ts. In represent those of the publisher. The analysis is the sole es with a power struggle that goes beyond other words, Brazil will be more reactive than view of each commentator and does not necessarily represent the views of their respective employers or fi rms. the 2018 presidential election. The rupture active.” The information in this report has been obtained from of democratic process through an impeach- reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are ment, whose legitimacy and legality is widely The Advisor welcomes comments on its Q&A guaranteed. If you have any questions relating to the con- discussed, contributes to the economic section. Readers can write editor Gene Kuleta tents of this publication, contact the editorial offi ces of the situation and contradictions of the current at [email protected]. Inter-American Dialogue. 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