LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Wednesday, April 14, 2021

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Wednesday, April 14, 2021

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Who Has the Edge Venezuela Chief Corporate Affairs Officer, Grubhub Restricts Vaccine Joyce Chang Global Head of Research, Ahead of Peru’s to State Loyalty JPMorgan Chase & Co. Card Holders Paula Cifuentes Director of Economic & Fiscal Affairs, June Runoff Vote? The government of Venezuelan Latin America & Canada, President Nicolás Maduro is Philip Morris International reportedly restricting access to Marlene Fernández Covid-19 vaccines to people with Corporate Vice President for a state loyalty card, known as the Government Relations, Arcos Dorados (McDonald’s) Carnet de la Patria. Page 2 Peter Hakim President Emeritus, Inter-American Dialogue BUSINESS Donna Hrinak Senior VP, Corporate Affairs, Royal Caribbean Group Ecuador Arrests Jon E. Huenemann Officials in Council Member, GLG Inc. Corruption Case James R. Jones Pedro Castillo (center) won the most votes in the first round of Peru’s presidential election on Ecuadorean authorities have made Chairman, Sunday. Former legislator Keiko Fujimori appears to have also secured a spot in the second arrests in connection with an in- Monarch Global Strategies round in June. // File Photo: Castillo Campaign. vestigation into a corruption case Craig A. Kelly Far-left candidate Pedro Castillo emerged as the top at state-run institutions including Senior Director, Americas oil company Petroecuador. Int’l Gov’t Relations, Exxon Mobil vote-getter in the first round of Peru’s presidential election Page 2 John Maisto on Sunday. In the June runoff, it appears that he will face Director, U.S. Education Finance Group Q right-wing former legislator Keiko Fujimori, who looks to POLITICAL Nicolás Mariscal have come in second, ahead of opponents Rafael López Aliaga and Chairman, Haiti’s Prime Grupo Marhnos Hernando de Soto. What accounts for Castillo’s unexpected first-round Thomas F. McLarty III lead, and how will that shape the second round? What are Castillo’s most Minister Resigns Chairman, as Violence Surges McLarty Associates important proposals, and why did they resonate with voters? With far- Beatrice Rangel left and far-right candidates in the running, is there a risk that political Haitian Prime Minister Joseph Director, extremism will come to dominate Peru’s politics in the coming years? Jouthe announced today that he is AMLA Consulting LLC resigning, a move that came amid Jaana Remes a surge in killings and kidnappings Partner, in the Caribbean nation. McKinsey Global Institute Cynthia McClintock, professor of political science and inter- Page 2 Ernesto Revilla national affairs at The George Washington University: “The Head of Latin American two candidates at ideological extremes who reached Peru’s Economics, Citi Gustavo Roosen runoff expose the abyss between the ‘two Perus’—the coast, President, A including Lima, where globalization and progress have been consider- IESA Andrés Rozental able, and Peru’s interior, where citizens have felt abandoned and angry, President, Rozental & and only more so during the pandemic. A schoolteacher in the highlands Asociados department of Cajamarca, Castillo has never held elective office; his Shelly Shetty Managing Director, Sovereigns leadership of a major teachers’ strike in 2017 led to grassroots support Fitch Ratings in remote highland areas (which pollsters did not visit until the final days of election campaigns). Castillo has proposed a new constitution; state intervention of companies in the mining, energy and other sectors; the replacement of the Constitutional Tribunal (Peru’s highest court) with a popularly elected court; and (like almost every candidate) dramatic increases in resources for education and health. On social issues, he Jouthe // File Photo: Haitian Government. Continued on page 3

POLITICAL NEWS NEWS BRIEFS Haiti’s Prime Venezuela Restricting Minister Resigns France Suspends Brazil Flights Over Concerns Vaccine to People as Violence Surges About Coronavirus Variant

With Loyalty Card Haitian Prime Minister Joseph Jouthe France on Tuesday suspended all flights to and announced early today that he was resigning, from Brazil over concerns of the P.1 variant of Venezuela’s government is restricting access a move that comes amid a surge in killings the novel coronavirus, which originated in the to Covid-19 vaccines to people holding a state and kidnappings in the Caribbean nation, South American nation’s Amazon region and is loyalty card that is used to keep track of voter the Associated Press reported. President more contagious than other strains of the virus, support and grant state subsidies, Bloomberg Jovenel Moïse has reportedly named Claude the Associated Press reported. The variant is News reported today. The country began Joseph to succeed Jouthe, who had served ravaging Brazil and many other countries in the vaccinating elderly people last week, and the as prime minister since March 2020. Jouthe region, including Uruguay, Chile and Peru. “We government said it was selecting holders of the did not explain why he was stepping down. note that the situation is getting worse, and so loyalty card, known as the Carnet de la Patria. Jouthe’s resignation came amid an escalating we have decided to suspend all flights between The card is disproportionately held be people number of killings and kidnappings in Haiti. Brazil and France until further notice,” French who depend on state aid and are more likely to On Tuesday, Moïse vowed to “do everything Prime Minister Jean Castex said in announcing be loyal to the government of President Nicolás the law allows” in order to secure the release the move to parliament. Maduro, the news service reported. Medical ex- of 10 people, including seven Catholic clergy perts, nongovernmental organizations and the members, who were kidnapped on Sunday, BBC opposition have criticized the use of th registry, News reported. The people were abducted in Bogotá to Repeat which includes approximately 20 million people the town of Croix-des-Bouquets as they were of the country’s population of 28 million. on their way to the installation of a new priest. Three-Day Lockdown in Maduro’s government in recent years has used The people kidnapped included five Haitians Effort to Slow Infections the loyalty card as a condition for receiving as well as a French nun and a French priest. Bogotá will repeat a three-day lockdown welfare payments, fuel subsidies and access The archdiocese of Port-au-Prince said in a this weekend in an effort to slow Covid-19 to government food programs. “Not even in statement that Haiti is facing a “descent into infections, Mayor Claudia López told reporters the cruelest of dictatorships there’s discrim- hell,” The Guardian reported. “For some time Tuesday, Reuters reported. The lockdown will ination to access a vaccine,” said opposition now, we have been witnessing the descent into be in force from Friday through Sunday. A leader Juan Guaidó, whom several countries hell of Haitian society,” the archdiocese said in similar lockdown last weekend helped slow recognize as Venezuela’s legitimate president. a statement, the newspaper reported. infections, said López. Venezuela’s Health Ministry did not reply to request for comment by Bloomberg News. On Tuesday, the head of the government-controlled BUSINESS NEWS National Assembly said the government wants Guatemala’s Congress to use money frozen in the United States for Refuses to Seat Crusading buying Covid-19 vaccines, Reuters reported. Ecuador Arrests Jorge Rodríguez said the government needs High Court Justice the “kidnapped” funds. In 2019, the United Officials in Guatemala’s Congress on Tuesday refused States froze $342 million that the Venezuelan Corruption Case to appoint a graft-fighting judge as president central bank had been holding in the United of the country’s Constitutional Court, a move States. The money was put under the control critics say could hinder Guatemala’s combat Ecuadorean authorities on Tuesday arrested of Guaidó and his interim government, but against corruption, Reuters reported. Mag- the country’s comptroller and a former energy accessing the money requires a license from istrate Gloria Porras is recognized as one of minister as part of a probe in connection with the U.S. Treasury’s Office of Foreign Assets Central America’s leading figures in the fight a corruption case at three state institutions, Control, or OFAC. Allies of Guaidó and health for the rule of law and efforts to end impuni- including oil firm Petroecuador, the national’s ministry officials have been in talks for months ty. She was to take her seat today following prosecutor’s office announced, Reuters report- on accessing the funds through a working re-election, but she was unable to do so due to ed. The arrests follow the recent guilty plea group created last year to ensure Venezuela’s open legal challenges against her, according to of an employee of Switzerland-based trading access to the global COVAX initiative. Congress President Allan Rodríguez. She has house Gunvor Group, Raymond Kohut, who described the lawsuits as unfounded attacks.

COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Wednesday, April 14 2021 said he was engaged in a bribery scheme that FEATURED Q&A / Continued from page 1 involved securing business with Petroecuador from 2012 to August of last year, Bloomberg is conservative. Critics have charged that response to the pandemic, leaving families News reported. Ecuadorean prosecutors Castillo has ties to Shining Path’s political to fend for themselves in the face of over- said they arrested a total of eight people in arm, which he denies. On the campaign trail, crowded public hospitals and price gouging connection with the case, including Ecuador’s Castillo is lucid—not a firebrand—and it is for life-saving oxygen and medicines, has comptroller and a former presidential secretary possible that his positions will moderate. also fueled voter discontent. The result: Peru whom they identified as Pablo C. and José Indeed, at one time he was a candidate for has one of the world’s highest Covid fatality A.B., respectively, the wire service reported. a mayoralty for Alejandro Toledo’s moderate rates. Peru’s economy, once lauded for its The current comptroller is Pablo Celi, and José party. He swept the highlands vote, even record-breaking levels of growth, has tanked, Augusto Briones was secretary for President defeating mainstream leftist candidate largely because of the pandemic, fueling Lenín Moreno before taking over the energy Verónika Mendoza in her Cusco base. By inequality and hunger. Last year, Peru’s Con- ministry in November 2019. Briones resigned contrast, rightist candidates—Keiko, de Soto gress ousted a sitting president, fueling a from that post in March of last year. An attor- and López Aliaga—swept the coastal vote. political crisis in the midst of the pandemic, ney for Celi said the authorities’ actions were Extremes prevailed because the ‘muddy leaving Peruvians distraught at the oppor- “excessive,” adding that “prosecutors have not middle’ was disgusted by mainstream poli- tunism of their political leaders. Postponing yet indicated the reasons for which he was ticians’ corruption and pre-occupied by the the elections would have been reasonable in arrested.” Reuters could not reach Briones for devastating—and yet worsening—pandemic. this context. The scant legitimacy of Peru’s comment. “We’re finally seeing a prosecution At more than 25 percent, absenteeism was democratic institutions meant that this was that is acting according to the information in unprecedented. In addition, candidates could not seriously considered, pushing the coun- its possession,” Mauricio Alarcón, a lawyer not campaign conventionally, and citizens try, zombie-like, toward elections despite the and head of transparency watchdog Fundación could not meet to assess them; the large surging rates of Covid infections and deaths. Ciudadanía y Desarrollo, told Bloomberg News. field failed to narrow sufficiently, and it was Castillo’s anti-establishment discourse not possible to know which moderate candi- appeals to Peruvians left behind by Peru’s date had a chance. Peru’s highly fragmented neoliberal ‘miracle,’ abandoned by Peru’s Televisa, Univisión legislature will include ideological extremes; anemic state and treated like second-class Strike Deal to Merge legislatures can impeach presidents on the citizens because of the color of their skin. vague grounds of ‘moral incapacity.’ The He articulates an idea every Peruvian learns Television Content risks of extremism and instability are high.” as a child: Peru is a poor country, sitting on a pile of gold. He promises to change all of Mexican broadcast and media company Grupo Jo-Marie Burt, associate this. More than his professed Marxism or his Televisa has agreed to merge its television con- professor at the Schar School admiration for Fidel Castro, this is what led tent business with Univisión Communications of Policy and Government at to his rapid rise among a fragmented field of into a new company, to be called Televisa-Uni- A George Mason University and candidates to make him a contender for the visión, the firms announced Tuesday, The Wall senior fellow at the Washington Office on presidency of Peru.” Street Journal reported. The merger, which Latin America: “Pedro Castillo’s surprise intends to expand streaming-video services in victory is similar in many ways to that of Rocío Verástegui, professor Spanish-speaking markets, comes as tradition- Alberto Fujimori in the first-round elec- in the Department of Social al broadcasters and cable TV firms struggle tions in 1990. Neither Castillo nor Fujimori Sciences and the School of to compete with streaming services that have registered in public-opinion polls and only A Government at Pontificia Uni- huge budgets for film and series production as emerged as real contenders just weeks versidad Católica del Perú: “Understanding more and more viewers get their programming before the first-round vote. In both cases, the electoral results in Peru allows us to directly over the Internet. The new Televi- their meteoric rise was rooted in a context understand the country as a whole, and what sa-Univisión is set to receive a $1 billion equity of intense economic, social and political citizens expect from their representatives. investment by a consortium led by SoftBank crisis. Castillo’s first-round victory is rooted My hypothesis about support surrounding Group through its SoftBank Latin America in a crisis of political representation not a leader such as Castillo in the first round Fund, which also includes Google and The dissimilar from the one that brought Fujimori is related to the issues that have been left Raine Group, the newspaper reported. Televisa, to power in 1990, mediated not by an insur- pending in Peruvian democracy over the which owns 36 percent of Univisión, will be the gency but rather by Covid-19. The failure of years (and perhaps also in other democ- largest shareholder in the merger. the Peruvian state to mount a meaningful racies)—a democracy that does not take Continued on page 4

FEATURED Q&A / Continued from page 3 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue ISSN 2163-7962 into account all its citizens and does not tillo’s rise came at the cost of mainstream guarantee rights. The right to life in the left-of-center candidates, such as Yonhy Erik Brand context of the coronavirus pandemic, and Lescano of Acción Popular and Verónika Publisher [email protected] the right to health and education, are voters’ Mendoza of Juntos por el Perú. What set great demands, combined with a questioning Castillo apart was his activism in the labor Gene Kuleta Editor of corruption and extreme inequality. Since movement (gaining prominence as a union [email protected] the 2006 elections, in an investigation I Anastasia Chacón González conducted, I found similar electoral maps Reporter & Associate Editor that showed voters’ demand for rights. Castillo’s rise came [email protected] Castillo’s claim, ‘No more poverty in a rich at the cost of Diana Roy country,’ resonates with his voters, and his mainstream left-of- Editorial Intern experience as a patrol leader and pub- center candidates...” [email protected] lic-school teacher connects with a large part — Nicolás Saldías of the population. His main proposals are a constitutional change and a new economic Michael Shifter, President model that promotes a greater presence of leader during the 2017 teachers’ strike), his Rebecca Bill Chavez, Nonresident Senior Fellow the state. Peru has the opportunity to reflect working-class roots and style, his in-person Bruno Binetti, Nonresident Fellow and recognize itself, to listen to citizens, to campaigning, as well as his mixture of Sergio Bitar, Nonresident Senior Fellow think of a decentralized country, to listen to statist policies and socially conservative Joan Caivano, Senior Advisor our diversity and strengthen our citizenship, stances. Castillo’s policies include a consti- Michael Camilleri, Director, Rule of Law Program even when the risk of polarization is present, tutional reform by summoning a constituent Kevin Casas-Zamora, Nonresident Senior Fellow as the population has resorted to ideological assembly, threatening to nationalize strate- Julia Dias Leite, Nonresident Senior Fellow Ariel Fiszbein, Director, Education Program extremes in order to kick out corruption and gic sectors of the economy, such as mining, Sandra García Jaramillo, Nonresident Senior Fellow social precariousness.” as well as revising or pulling out of Peru’s Selina Ho, Nonresident Senior Fellow free trade agreements. If enacted, it would Edison Lanza, Nonresident Senior Fellow Nicolás Saldías, analyst for represent a rejection of Peru’s orthodox eco- Nora Lustig, Nonresident Senior Fellow Latin America and the Ca- nomic model. Recent polls show that most Margaret Myers, Director, Asia Program ribbean at The Economist Peruvians want the state to play a larger role Manuel Orozco, Senior Fellow Intelligence Unit: “Although in the economy, but it seems unlikely they A Xiaoyu Pu, Nonresident Senior Fellow Pedro Castillo saw last-minute growth in would endorse such radical statist policies. Jeffrey Puryear, Senior Fellow support, his victory in the first round was Castillo will face Keiko Fujimori in the runoff. Tamar Solnik, Director, Finance & Administration unexpected. His electoral triumph is largely She has diametrically opposed economic Lisa Viscidi, Director, Energy Program a result of a highly fragmented field of 18 policies and will utilize long-standing animus Denisse Yanovich, Director of Development presidential candidates and widespread toward the left by a portion of the population disenchantment with the political class that to garner support. As a result, the likelihood Latin America Advisor is published every business day, except for major U.S. holidays, allowed an outsider like Castillo to become of political destabilization is high leading up by the Inter-American Dialogue at a viable candidate for the presidency. Cas- to the June 6 runoff and beyond.” 1155 15th Street NW, Suite 800 Washington, DC 20005 www.thedialogue.org Subscription inquiries are welcomed at [email protected]

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