Latin America Advisor

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, October 1, 2020

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group ECONOMIC Devry Boughner Vorwerk What’s Driving New Latin America CEO, DevryBV Sustainable Strategies Loses 34 Mn Jobs Joyce Chang Global Head of Research, U.S. Restrictions The International Labor Organiza- JPMorgan Chase & Co. tion’s latest count of jobs lost in Paula Cifuentes Latin America is more than double Director of Economic & Fiscal Affairs, on Cuba Activity? its previous estimates, set in early Latin America & Canada, August, that 14 million jobs had Philip Morris International been lost in the region. Marlene Fernández Page 2 Corporate Vice President for Government Relations, Arcos Dorados ECONOMIC Peter Hakim President Emeritus, Peru to Allow Inter-American Dialogue Donna Hrinak Some Int’l Flights Senior VP, Corporate Affairs, President Martín Vizcarra Royal Caribbean Group announced that his government Jon E. Huenemann will allow international flights Former Corporate and Government Senior Executive to seven countries starting next In addition to travel restrictions on U.S. citizens, the administration of U.S. President Donald James R. Jones week. The flights have been halted Trump has also blocked the import of cigars and rum from Cuba. // File Photo: Marcus61 via Chairman, for months due to the coronavirus Pixabay. Monarch Global Strategies pandemic. Craig A. Kelly U.S. President Donald Trump recently announced new Page 2 Senior Director, Americas Int’l Gov’t Relations, Exxon Mobil restrictions that will prohibit U.S. travelers from staying at John Maisto properties owned by the Cuban government, as well as block POLITICAL Director, U.S. Education Finance Group Q the import of Cuban cigars and liquor. What motivated the Bolsonaro Lashes Nicolás Mariscal Trump administration to draw up the new rules, and how significant are Out at Biden Over Chairman, Grupo Marhnos they? In what ways will they affect Cuba’s economy, its citizens and the Debate Remark Thomas F. McLarty III Communist government’s hold on power? Will Trump’s clampdown on Brazilian President Jair Bolson- Chairman, McLarty Associates Cuba, the latest in a string of reversals over the past four years of the aro attacked U.S. presidential candidate Joe Biden for saying in Beatrice Rangel Obama-era loosening of restrictions related to the island, help achieve Tuesday’s presidential debate that Director, U.S. goals with the country and in the region more broadly? AMLA Consulting LLC the South American nation would Jaana Remes suffer “significant economic con- Partner, Angela Mariana Freyre, principal at Squire Patton Boggs and sequences” if devastation of the McKinsey Global Institute Amazon rain forest continues. Ernesto Revilla former special advisor for Cuba policy at the U.S. National Page 2 Head of Latin American Security Council: “The new measures are the continuation of Economics, Citi Gustavo Roosen an electoral strategy to win Florida, which the president won Chairman of the Board, A by a very narrow 1.2 percent margin in the last election and where he is Envases Venezolanos Andrés Rozental currently trailing Vice President Biden in the polls. Given that there is no President, Rozental & travel to Cuba during this pandemic, the significance of the hotel/rum/ Asociados cigar/travel prohibitions is primarily symbolic and calculated for domestic Shelly Shetty Managing Director, Sovereigns political effect. In a post-pandemic Cuba, the prohibitions will have some Fitch Ratings negative impact on Cuba’s economy, people and government as a result of the lack of revenue. That said, to be removed from the restricted list, a hotel could be sold to foreign investors thus transferring title away from the Cuban government and becoming available to U.S. travelers. Also, rentals of private rooms and residences would see an increase in activity and have a beneficial effect on the growing class of self-employed in Bolsonaro // File Photo: Brazilian Government. Continued on page 3

POLITICAL NEWS to prevent the Amazon’s destruction. The NEWS BRIEFS president’s son, Federal Deputy Eduardo Bol- Brazil’s Bolsonaro sonaro, has made frequent trips to Washington, Peru to Allow Some Round sometimes wearing a hat with Trump’s slogan, Trip International Flights Lashes Out at Biden “Make America Great Again,” and in a recent tweet endorsed Trump for president in this Peruvian President Martín Vizcarra announced Over Debate Remark year’s election, Foreign Policy reported. Wednesday that his government will allow international flights to seven countries starting Brazilian President Jair Bolsonaro on Wednes- next week, El Comercio reported. The flights day attacked U.S. presidential candidate Joe ECONOMIC NEWS have been halted for months due to the coro- Biden for saying in Tuesday’s presidential navirus pandemic. At a press conference at the debate that the South American nation would government palace, the president said 11 desti- suffer “significant economic consequences” Latin America Loses nations in seven Latin American countries had if devastation of the Amazon rain forest 34 Million Jobs been approved for round-trip travel: Colombia, continues under his presidency, the Associated Ecuador, Panama, Paraguay, Uruguay, Bolivia Press reported. “The greed that some countries and Chile. The U.N.’s International Labor Organization have over the Amazon is a reality,” Bolsona- said Wednesday that at least 34 million jobs ro said on Twitter. “But the confirmation by have been lost in Latin America due to the someone who is fighting for the command of coronavirus pandemic, the Associated Press Migrant Caravan Gathers his country clearly signals that he wants to give reported. The ILO urged countries in the region up a cordial and profitable coexistence.” The in Honduras, Heads North to adopt “immediate strategies” to deal with far-right Bolsonaro, who has repeatedly alleged Hundreds of migrants began walking Wednes- the problem. The count was more than double day night from a city in northern Honduras the ILO’s previous estimate, set in early August, toward the Guatemalan border, Telemundo that 14 million jobs had been lost in the region. reported. Calls on social media to begin a The ILO figures are based on data from nine new migrant caravan from the San Pedro Sula countries which account for 80 percent of the bus station on Oct. 1 had been circulating for region’s workforce. The ILO lists Latin America weeks. Guatemala reopened its borders in Sep- and the Caribbean as the worst-hit region tember after closing them for months to curb in the world in terms of lost working hours, Covid-19 infections. Groups of migrants mov- with a drop of 20.9 percent in the first three ing north toward the United States captured quarters of the year, compared to an average headlines last year as they clashed with border Biden // File Photo: Biden Campaign. of 11.7 percent worldwide. Most employment authorities in countries along the route. in Latin America is concentrated in the service that foreign entities are trying to take over the sector, which is typically more informal and Amazon, also labeled Biden’s comments as has higher self-employment rates, the World “disastrous and gratuitous.” Biden said during Bank said in a report published this week. “The Coca-Cola Moves South Tuesday’s debate with U.S. President Donald economic impact of Covid-19 is unprecedent- Trump, an ally of Bolsonaro, that he would work America Headquarters to ed in size and scope. It has quickly evolved with international partners to raise $20 billion from a health emergency into an employment Brazil From Argentina for Brazil to stop Amazon deforestation. The crisis,” its authors wrote. “The accelerated Atlanta-based beverage company Coca-Cola is Trump administration has been relatively quiet transformation of jobs calls for a rethinking of moving its Southern Cone headquarters from amid an unprecedented international outcry labor regulations and social protection policies Argentina to Rio de Janeiro, La Nación reported over the Amazon. Deforestation in Brazil’s geared towards wage earners employed in the Wednesday. The company has offered a Amazon rose 34 percent between July 2019 formal sector of the economy,” they added. In voluntary retirement plan for those executives and the same month this year, Brazil’s official Brazil, South America’s largest economy, the not wishing to make the transfer to Brazil. The period for measuring deforestation, according unemployment rate reached an unprecedented company will seek to hire a Brazilian national to preliminary statistics from government 13.8 percent in the quarter ending in July, Folha to manage the new office, according to the space research agency Inpe, Reuters reported de S.Paulo reported Wednesday, citing new report. Luisa Ortega, who currently runs the this week. Bolsonaro has found a supporter data from the state-run Brazilian Institute of Buenos Aires office, will now work in Central in Trump despite international pressure from Geography and Statistics, or IBGE. Experts wor- America. The company says it will continue to traditional U.S. allies in Europe to take action ry that some countries of Latin America and operate in Argentina.

COPYRIGHT © 2020, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Thursday, October 1, 2020 especially in the Caribbean will suffer a decade FEATURED Q&A / Continued from page 1 of historically high debt burdens as a conse- quence of social program spending needed to Cuba. Coupled with further restrictions on has reversed many Obama administration support jobless citizens through the pandemic. remittances, it is clear that the president concessions. However, he has not reversed [Editor’s note: See related Q&A in yesterday’s has no concern for the Cuban people or the suspension of the wet foot-dry foot poli- issue of the Advisor.] Cuban-Americans who aid their families cy, which Raúl Castro obtained from Obama. in Cuba. The pandemic, coupled with U.S. The regime faces widespread unrest. The Eu- sanctions, has been particularly hard on the ropeans who joined America in the coalition BUSINESS NEWS Cuban people, creating food shortages and against Nicolás Maduro should deny Havana other challenges, the effects of which have resources as well. The end of Communism been partially mitigated by Cuban-Ameri- will bring about the end of Marxist agricul- UBS, Banco do Brasil cans and U.S. humanitarian organizations ture, which resulted in hunger everywhere it Launch New Bank engaged in Cuba. Limiting this assistance was tried. Instead of importing U.S. frozen only hurts the Cuban people. These new chicken, Cubans should be allowed to raise policies are a continuation of the failed and sell their own, as it was done before Switzerland-based UBS and state-run Banco strategy pursued by U.S. administrations 1959, just as other products. Havana’s do Brasil today unveiled the new name of for decades and condemned by the global support for violence and mayhem through- their strategic partnership in South America community. President Obama changed the out the region also would end. A prosperous as well as its executive leadership team. In a course of that policy when he normalized democratic Cuba will not generate unregulat- joint statement, the companies said UBS BB relations with Cuba and allowed Americans ed migration. A democratic Cuba will oppose Investment Bank will provide banking services and Cuban-Americans to engage with the all tyrannies at the United Nations.” in Brazil, Argentina, Chile, Peru, Paraguay and Cuban people and create a new future of Uruguay. Based in São Paulo, Daniel Bassan, U.S.-Cuba relations based on mutual respect Lenier González, fellow at the formerly the head of global banking for Brazil and benefit. We need to return to those Inter-American Dialogue and at UBS, will serve as chief executive officer. principles swiftly.” co-founder of Cuba Posible: UBS holds a 50.01 percent ownership stake in “These new measures, as well the company, and Banco do Brasil holds 49.99 A Frank Calzon, executive director as those previously taken by the Trump percent. of Center for a Free Cuba: administration, have at least two objectives. “Income from tourism, which First, they want to satisfy sectors of the Cu- Argentine Mobile A goes directly to the GAESA and ban-American electorate settled in Florida. Gaviota military conglomerates, supports I wonder: why do they consider it ethical Payments Startup repression, the luxurious lifestyle of the to obtain votes in Miami at the cost of the Opens in Mexico Castros and their associates and what the suffering of the immense majority of the OAS Secretary General has denounced as Cuban people? Second, the administration ‘a Cuban army of occupation in Venezuela.’ has sought at all costs to block the entry of Argentina’s Ualá, a mobile payments startup, The recent restrictions’ impact on the people international currencies into Cuba in order to is launching its prepaid card operations in is not great; if Cuba can pay in cash, it may generate discontent and create conditions Mexico, Bloomberg News reported Tuesday. buy American products. The U.S. embargo for an eventual ‘popular outbreak’ on the Ualá’s founder and chief executive officer, targets the regime, not the Cubans. Cuban island. The concrete result of this policy, Pierpaolo Barbieri, has been planning to set tobacco farmers suffer a government tobac- applied in the middle of a pandemic, and up operations in Latin America’s second-larg- co monopoly, akin to Spain’s during colonial together with the known structural deficits of est economy for 18 months, with more than rule. As the ILO has confirmed, Cuban the Cuban economy, has caused a growing 100 employees now working on the launch, workers enjoy no labor rights, no collective and dramatic deterioration of the living according to the report. Ualá, which has issued bargaining and no right to strike. A greater conditions of the Cuban people, a logical en- 2 million prepaid cards in Argentina since it impact would occur if the regime lifted the trenchment by the authorities and increased started operating in 2017, has set a goal to internal blockade of its citizens and released government pressure on civil society actors. sign up 30,000 new users in Mexico by year- farmers from prison. The treatment of The Trump administration’s actions could end. The company is backed by early investors Cubans in the island is not new. Independent not be more counterproductive with respect George Soros and Point72 Ventures, as well as farmers are coming together to demand to the strengthening of U.S. influence on more recent investments by Tencent Holdings property rights to the land they toil. Trump the island. The broad ties and growing and SoftBank Group. Continued on page 4

FEATURED Q&A / Continued from page 3 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2020 influence that the Obama administration will be able to support fewer types of travel managed to build through its diplomatic to Cuba. It is hard to understand how these Erik Brand team in Havana—with the government and new sanctions will have any serious impact Publisher [email protected] with the entire spectrum of civil society, the on Cuba’s economy, its citizens or the Cuban opposition, the more dynamic and empow- government’s power. To be sure, less U.S. Gene Kuleta Editor ered emerging sectors and the Cuban people money will flow into Cuba. Nevertheless, few [email protected] in general—was destroyed by the actions of U.S. persons are traveling right now or in Anastasia Chacón González the current administration. Despite the de- upcoming months because of the pandemic. Reporter & Associate Editor fensive attitude that the Cuban government The United States is essentially alone in [email protected] has assumed since 2016 regarding Obama’s its stance as to Cuba. European and Asian policies, this type of bilateral relationship travelers are free to go to Cuba for tourism

continues to be the most plausible path for purposes. There is little reason to think that Michael Shifter, President relations between the two countries, and the the Cuban government will be motivated by Rebecca Bill Chavez, Nonresident Senior Fellow one that shows the most convergence with these latest sanctions to try to normalize Sergio Bitar, Nonresident Senior Fellow respect to the interest of both Cuban and relations with the United States.” Joan Caivano, Senior Advisor U.S. citizens.” Michael Camilleri, Director, Rule of Law Program Anya Landau French, senior Kevin Casas-Zamora, Nonresident Senior Fellow Lawrence Ward, partner at policy advisor in the Cuban Héctor Castro Vizcarra, Nonresident Senior Fellow Dorsey & Whitney: “According practice group at Akin Gump: Julia Dias Leite, Nonresident Senior Fellow to President Trump, last week’s A “The Trump administration’s new Ariel Fiszbein, Director, Education Program A sanctions were part of his restrictions on travel to Cuba will not imme- Peter Hakim, President Emeritus administration’s continued fight against diately affect Cuba, but they are expected to Nora Lustig, Nonresident Senior Fellow Communist oppression. For the past year or energize hardline Cuban-American voters to Margaret Myers, Director, Asia and so, that fight has been laser-focused on Chi- turn out to vote for President Trump. Once Latin America Program Manuel Orozco, Senior Fellow na—it is somewhat surprising that the Trump the Covid-19 pandemic is under sufficient Xiaoyu Pu, Nonresident Senior Fellow administration shifted focus to Cuba, which control that travel to Cuba may resume at all, Jeffrey Puryear, Senior Fellow generally is not regarded as the same level some would-be U.S. travelers will manage to Mateo Samper, Nonresident Senior Fellow of national security threat. The timing of the adjust their lodging to stay in private homes. Tamar Solnik, Director, Finance & Administration sanctions strongly suggests that President But for capacity, access and other reasons, Lisa Viscidi, Director, Energy Program Trump was hopeful that the sanctions would many others will simply postpone their travel Denisse Yanovich, Director of Development, bolster his support among the Cuban-Amer- altogether. Because of the U.S. traveler’s External Relations & Special Projects ican population in Florida. This latest round tendency to seek out Cuban entrepreneurs of sanctions continues to ‘roll back’ the for transportation, meals and guide services Latin America Advisor is published every business day, except for major U.S. holidays, Obama administration’s efforts to normalize during their stays, the lodging change and by the Inter-American Dialogue at relations with Cuba. However, most of the elimination of the general license for many 1155 15th Street NW, Suite 800 Washington, DC 20005 travel general licenses that led to an influx of group trips from the United States will www.thedialogue.org U.S. visitors to Cuba were abandoned more further harm an already crippled private ISSN 2163-7962 than a year ago by the Trump administration. sector in Cuba if they continue beyond the Subscription inquiries are welcomed at That rollback was fairly significant because pandemic. Given Cuba’s ongoing financial [email protected] it meant that U.S. persons could visit Cuba difficulties, which have been magnified by The opinions expressed by the members of the Board of for a very narrow set of activities. Any funds the pandemic’s impact on Cuban tourism, Advisors and by guest commentators do not necessarily flowing to the Cuban government from U.S. every source of income loss adds up. The represent those of the publisher. The analysis is the sole visitors essentially ceased at that time. restrictions will no doubt be felt by the view of each commentator and does not necessarily represent the views of their respective employers or firms. Because the Cuban government owns nearly Cuban government. But at this point, the The information in this report has been obtained from all of the hotels there, the new sanctions administration is running out of means to reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have further limit U.S. travel to Cuba since visitors further squeeze the Cuban government, if in any questions relating to the contents of this publication, will have few options for lodging. Addition- fact doing so might have achieved the stated contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in ally, the U.S. travel industry—which has been goals of the administration. In reality, the a retrieval system, or transmitted without prior written battered in recent months by the pandem- Cuban embargo long ago ceased to be an permission from the publisher. ic—will be hurt since travel service providers instrument of U.S. foreign policy.”