LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Wednesday, August 19, 2020

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Wednesday, August 19, 2020

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group ECONOMIC Devry Boughner Vorwerk Can Guyana’s New Chile’s GDP CEO, DevryBV Sustainable Strategies Plunges 14.1% in Joyce Chang Global Head of Research, President Get Off Second Quarter JPMorgan Chase & Co. Chile’s economy plunged 14.1 Paula Cifuentes percent year-on-year in the second Director of Economic & Fiscal Affairs, to a Strong Start? quarter as the country closed Latin America & Canada, Philip Morris International businesses in an effort to fight the Marlene Fernández spread of Covid-19. Corporate Vice President for Page 2 Government Relations, Arcos Dorados Peter Hakim BUSINESS President Emeritus, Inter-American Dialogue El Salvador Donna Hrinak Sets Conditions President, Boeing Latin America for Claro Buys Jon E. Huenemann Former Corporate and El Salvador’s antitrust regulator Government Senior Executive said it will allow Claro, a unit James R. Jones of América Móvil, to buy two Chairman, Telefónica units as long as it Monarch Global Strategies Mohamed Irfaan Ali took office earlier this month as president of Guyana, following a long adheres to competition and con- Craig A. Kelly legal battle. // File Photo: Facebook Page of Mohamed Irfaan Ali. Senior Director, Americas sumer protection safeguards. Int’l Gov’t Relations, Exxon Mobil Page 2 John Maisto Opposition presidential candidate Mohamed Irfaan Ali was Director, U.S. Education declared the winner of Guyana’s presidential election and Finance Group POLITICAL sworn into office on Aug. 2 amid a protracted legal battle Nicolás Mariscal Colombia’s Uribe Chairman, Q that followed the country’s March 2 vote. However, former Grupo Marhnos President David Granger has refused to concede and has vowed to Resigns From Thomas F. McLarty III Chairman, challenge the results. What are the most pressing issues Ali faces as Senate Amid Probe McLarty Associates president, and what will be at the top of his agenda? Will legal battles Former Colombian President Beatrice Rangel Álvaro Uribe announced his resig- over the election continue, and how has the controversy affected foreign Director, nation from the country’s Senate, AMLA Consulting LLC investors’ views of the country’s political stability? How will the protract- where he has served since 2014. Jaana Remes Earlier this month, Colombia’s Su- Partner, ed fight over the election affect Ali’s ability to govern? McKinsey Global Institute preme Court placed him on house arrest amid witness-tampering Ernesto Revilla Head of Latin American Ivelaw Lloyd Griffith, senior associate at the Center for allegations, which he denies. Economics, Citi Strategic and International Studies: “The winds of change Page 2 Gustavo Roosen Chairman of the Board, that delivered the presidency to Dr. Mohamed Irfaan Ali did Envases Venezolanos so at a time when Guyana is experiencing racial-political Andrés Rozental A President, Rozental & stress accentuated by the electoral saga and is on the cusp of petro-pow- Asociados er transformation, but also is coping with the global pandemic that is Shelly Shetty creating new norms in all facets of life. President Ali soon will appreciate Managing Director, Sovereigns Fitch Ratings that despite its disconcerting dimensions, winning the elections was the easy part; there is a rough governance road ahead. He should keep four Imperatives in mind in navigating that road. First is the Healing Imperative, to build racial-political bridges. Triumphalism and witch hunts should be eschewed, and constitutional reform embraced. The elections highlighted the detriment of the winner-take-all political architecture. Uribe // Photo: @AlvaroUribeVel Second is the Anti-corruption Imperative, which necessitates having via Twitter. Continued on page 2

POLITICAL NEWS the truth,” he wrote. Uribe, who was Colombia’s NEWS BRIEFS president from 2002 to 2010 and had served in Colombia’s Uribe the Senate since 2014, is under investigation Hurricane Genevieve on claims that he participated in an alleged Expected to Brush Baja Resigns Senate Seat scheme to persuade former paramilitaries to testify in his favor. Uribe denies the allegations California Peninsula Amid Investigation against him and has not been charged. [Editor’s Hurricane Genevieve on Tuesday strengthened note: See related Q&A in the Aug. 14 issue of into a powerful Category 4 storm and churned Former Colombian President Álvaro Uribe on the Advisor.] toward Mexico’s Baja California Peninsula, the Tuesday resigned his seat in the country’s Sen- Associated Press reported. The storm’s center ate, saying that a Supreme Court investigation may not hit land, but it still is expected to bring into witness-tampering allegations against him ECONOMIC NEWS strong winds. As of 6 a.m. local time today, has impeded his abilities to fulfill his role as a the storm was located about 160 miles south senator. In his resignation letter, which Uribe Chile’s GDP Plunges of the peninsula’s southern tip, with maximum posted on Twitter, the former president blasted sustained winds of 115 miles an hour, and the Supreme Court’s decision earlier this month 14.1 Percent in moving north-northwest at 9 miles an hour, ac- to place him on house arrest, saying the court’s cording to the U.S. National Hurricane Center. move violates his rights and “eliminates any ex- Second Quarter pectation of being able to return to the Senate,” the Associated Press reported. “I dream that Chile’s economy contracted by 14.1 percent Poll Shows Close Colombia can recover from so many difficulties year-over-year in the second quarter, the central without putting freedom at risk,” he wrote in bank said Tuesday, due to coronavirus-relat- Race Between Mesa, the letter. In stepping down from the Senate, ed lockdowns putting a brake on economic Arce in Bolivia Uribe said eight of his rights to due process activity, Agence France-Presse reported. In the Former Bolivian President Carlos Mesa and had been violated, including the right of his first quarter, Chile’s gross domestic product Luis Arce, an ally of former President Evo attorneys to cross-examine witnesses. He also had risen slightly, by 0.2 percent. “The result Morales, are neck-and-neck ahead of Bolivia’s reiterated a call from his party for reform of the is the consequence of the health emergency October election, according to a poll by Mer- country’s judiciary, including the way in which associated with Covid-19, which has had an cados y Muestras published Tuesday, Agence magistrates are selected. “They should arrive impact on people’s mobility and the normal France-Presse reported. They each have 23 at the high court at a mature age that has functioning of production establishments,” the percent of support. The twice-delayed vote, dissolved vanity and reinforced adherence to central bank said in a statement. Among the which amid controversy has been set for Oct. FEATURED Q&A / Continued from page 1 18, would go to a second round if the leading candidate fails to win 50 percent, or 40 percent relevant laws, strong regulatory institutions R. Evan Ellis, Latin America with a 10-point margin, AFP reported. and transparency to deal with the corruption research professor at the U.S. likely to accompany the oil boom. Third, the Army War College’s Strategic Sovereignty Imperative requires prosecuting A Studies Institute: “After 20 the territorial case with maximum efficiency. months of political turmoil from the Decem- U.S. Customs Intercepts Guyana cannot afford to ‘lose’ the Essequibo ber 2018 no-confidence vote to delays and Venezuela-Bound Jet territory to Venezuela. Kudos to the govern- struggles over the election and vote count, ment for retaining the services of former the PPP government of Irfaan Ali will move Loaded With Weapons APNU Foreign Minister Carl Greenidge forward quickly, but with moderation, while U.S. customs officials in South Florida for the proceedings before the ICJ. This regional partners and investors breathe a intercepted a private jet heading to Venezuela also is reassuring in terms of the Healing sigh of relief and embrace the new normal. loaded with 82 firearms, including a sniper Imperative. Finally is the Capital Relocation The authoritative legal rulings to date sug- rifle, and 63,000 rounds of ammunition, U.S. Imperative. Guyana faces a climate change gest that an electoral reversal on appeal is authorities said Tuesday, the Associated Press existential threat, with a 285-mile-long unlikely. The Ali government will likely focus reported. Two Venezuelan pilots were arrested Atlantic coast that is six feet below sea level on resolving accumulated administrative on Saturday and charged with smuggling cash in some places and hosts its capital and 80 and legal issues for petroleum development, and goods from the United States as well as percent of the population.” including the Natural Resources Fund, inspir- illegally possessing firearms, U.S. Customs and Continued on page 4 Border Protection said. It is unclear why the weapons were purchased.

COPYRIGHT © 2020, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Wednesday, August 19, 2020 worst-hit sectors in the country are manufac- turing and construction, as well as the hotels s and restaurant sectors. The only sector that saw an increase in activity was the country’s s Subscriber Notice key mining industry, up 1.6 percent, in large part boosted by Chinese demand. Mining rep- Online Event: resents as much as 15 percent of Chile’s GDP and half of the country’s exports. Analysts at 24th Annual CAF Conference Capital Economics said there has been a gradu- al pickup in activity in August, which coupled SPEAKERS INCLUDE with large fiscal and monetary stimuli, “should Luis Almagro Monica de Bolle mean that Chile’s recovery strengthens from Secretary General, OAS Senior Fellow, here,” AFP reported. Peterson Institute Brigitte Baptiste Chancellor, Carissa F. Etienne Universidad Ean Director, PAHO BUSINESS NEWS Alicia Bárcena Rebeca Grynspan Executive Secretary, Secretary General, SEGIB El Salvador Regulator ECLAC Carmen Reinhart Sets Conditions for Luis Carranza VP & Chief Economist, President, CAF – Develop- World Bank Group Claro Acquisitions ment Bank of Latin America Joseph Stiglitz Kevin Casas-Zamora Professor, El Salvador’s antitrust authority said Tuesday Secretary-General, Columbia University that it will allow expanded market share for International IDEA telecommunications firm Claro, a unit of Mexico’s América Móvil, given guarantees ...AND MANY OTHERS that it will comply with competition and consumer protection safeguards, Reuters reported. América Móvil, which is controlled Sept. 9, 10 and 11, 2020 by the family of Mexican billionaire Carlos Slim, is looking to buy for $315 million two units of Spain’s Telefónica that operate in the To RSVP, click here Central American nation, a move El Salvador’s Competition Superintendent, or SC, said in a statement could create “limits on competition.” Salvador but has not outlined the percentage buyers, the sources told the news service, “If Claro complies with the conditions, it will of Telefónica Multiservicios it wants to acquire, asking not to be identified because of the be able to execute the purchase,” the antitrust Reuters reported. private nature of the talks. Such a sale could agency said. Among the conditions set are that reportedly appeal to larger payments compa- Claro must rule out the future use of the part of nies including Global Payments and Fiserv. The the spectrum currently used by Movistar, which Payment Processor talks are ongoing, and Evertec could choose must be certified by authorities, and once the Evertec Explores to remain independent, Bloomberg News sale is completed, Claro must also keep for reported. Representatives for Evertec, Global seven years “all of the marketing strategies de- Potential Sale: Report Payments and Fiserv declined to comment to veloped by Movistar and by Claro,” the SC said. the news service on the report. The company’s América Móvil is currently reviewing the ruling, Puerto Rico-based payments processor Evertec shares soared 10.59 percent Tuesday on the El Universal reported. The units, Telefónica is exploring a potential sale, among other stra- New York Stock Exchange to close at $34.46. Móviles El Salvador and Telefónica Multiservi- tegic options, Bloomberg News reported Tues- There has been consolidation recently in the cios, both operate under the Movistar brand. day, citing unnamed sources with knowledge of payments sector. Last year, Global Payments They belong to Telefónica Centroamérica the matter. A financial advisor is working with acquired Total System Services, and Fiserv Inversiones. The Mexican company is looking the company to gauge interest from potential acquired First Data Corp. to buy 99.3 percent of Telefónica Móviles El

FEATURED Q&A / Continued from page 2 LATIN AMERICA ADVISOR is published every business day by the Inter-American Dialogue, Copyright © 2020 ing investor confidence about contractual elections, several aspects of the NRF have validity, security and due process, plus reas- not been operational, including the estab- Erik Brand suring APNU-affiliated constituencies that a lishment of a public oversight committee, Publisher [email protected] PPP government will not unfairly skew po- whose role will be to ensure government litical power and the benefits of the new oil compliance with the NRF Act—critical to Gene Kuleta Editor bonanza to Indo-Guyanese. Bharat Jagdeo, transparency and accountability with respect [email protected] now returning as vice president, will clearly to the sovereign wealth fund. Another area Anastasia Chacón González exert significant influence (as in the past) Reporter & Associate Editor with the young but innovative governing [email protected] team. This will concern some, but also allow Efficiently run insti- the administration to move forward quickly tutions are a critical

with the oil companies. Prime Minister Mark requirement to en- Michael Shifter, President Phillips will play a visibly important role as a sure that the country Rebecca Bill Chavez, Nonresident Senior Fellow successful military officer who understands benefits fully from its Sergio Bitar, Nonresident Senior Fellow Guyana’s political dynamics, and as an natural resources.” Joan Caivano, Senior Advisor indispensable symbol that Afro-Guyanese Michael Camilleri, Director, Rule of Law Program — Vangie Bhagoo-Ramrattan interests are represented. I expect a mix of Kevin Casas-Zamora, Nonresident Senior Fellow pragmatism and innovation in foreign policy Héctor Castro Vizcarra, Nonresident Senior Fellow from both Jagdeo and Foreign Minister Hugh that should be a priority for the government Julia Dias Leite, Nonresident Senior Fellow Todd (who has great potential), with positive is the business environment. Guyana is Ariel Fiszbein, Director, Education Program gestures toward the United States and Great ranked 134th (out of 190 countries) in terms Peter Hakim, President Emeritus Britain, enhanced Guyana-Suriname collabo- of ease of doing business and has a low Nora Lustig, Nonresident Senior Fellow ration, renewed outreach to China, and also ranking in specific areas such as construc- Margaret Myers, Director, Asia and Latin America Program to India, Europe and Asia, with a moderniza- tion permits, getting electricity, trading Manuel Orozco, Senior Fellow tion of the Cheddi Jagan discourse of Guy- across borders and resolving insolvency. An Xiaoyu Pu, Nonresident Senior Fellow ana’s sovereign independent foreign policy.” effective business environment is conducive Jeffrey Puryear, Senior Fellow to attracting investments, given the fledging Mateo Samper, Nonresident Senior Fellow Vangie Bhagoo-Ramrattan, head oil and gas sector. Efficiently run institutions Tamar Solnik, Director, Finance & Administration of the economic research unit are a critical requirement to ensure that Lisa Viscidi, Director, Energy Program at First Citizens in Port-of- the country benefits fully from its natural Denisse Yanovich, Director of Development, A Spain, Trinidad and Tobago: resources. There were delays in approvals External Relations & Special Projects “The recently inaugurated president of for the Payara-Pacora development, where Guyana, Irfaan Ali, will have much work to first oil was expected in 2023. Based on Latin America Advisor is published every business day, except for major U.S. holidays, do during his tenure, especially as one of research done by Rystad Energy, Guyana lost by the Inter-American Dialogue at his biggest challenges will be presiding over around $300 million in net present value as 1155 15th Street NW, Suite 800 Washington, DC 20005 the country’s nascent energy sector. It was a result of project delays associated with www.thedialogue.org announced on Aug. 10 that the office of the the elections. The Guyanese economy is ISSN 2163-7962 president will have direct oversight over the poised to strongly outperform in 2020 and Subscription inquiries are welcomed at country’s finances and natural resources. 2021. Focus on critical areas will ensure an [email protected] Of immediate importance is the governance equitable distribution of the energy windfall The opinions expressed by the members of the Board of structure of the Natural Resource Fund and the sustainability of economic growth in Advisors and by guest commentators do not necessarily (NRF) and the management of Guyana’s en- the country.” represent those of the publisher. The analysis is the sole view of each commentator and does not necessarily ergy windfall. With first production occurring represent the views of their respective employers or firms. in late 2019, the NRF has been established The Advisor welcomes comments on its Q&A The information in this report has been obtained from with $95 million held at the Federal Reserve section. Readers can write editor Gene Kuleta reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have Bank of New York. Due to the delayed at [email protected]. any questions relating to the contents of this publication, contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in a retrieval system, or transmitted without prior written permission from the publisher.