LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Thursday, January 7, 2021

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, January 7, 2021

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk What’s at Stake Latin American CEO, DevryBV Sustainable Strategies Leaders Express Joyce Chang Global Head of Research, in Ecuador’s Horror at Attack JPMorgan Chase & Co. on U.S. Capitol Paula Cifuentes Director of Economic & Fiscal Affairs, Presidential Vote? Latin American political leaders Latin America & Canada, were among those around the Philip Morris International world condemning Wednesday’s Marlene Fernández violent attack on the U.S. Capitol Corporate Vice President for by a mob of supporters of U.S. Government Relations, Arcos Dorados (McDonald’s) President Donald Trump. Page 2 Peter Hakim President Emeritus, Inter-American Dialogue ECONOMIC Donna Hrinak Senior VP, Corporate Affairs, Royal Caribbean Group Mexicans Send Jon E. Huenemann Home $40.6 Bn Former Corporate and Government Senior Executive in Remittances Among the front runners ahead of Ecuador’s Feb. 7 presidential election is Andrés Arauz James R. Jones Mexicans living abroad sent home (center), the handpicked candidate of former President Rafael Correa. // File Photo: Arauz Chairman, Campaign. a record level of remittances last Monarch Global Strategies year, the government announced. Craig A. Kelly Ecuadoreans are heading to the polls in February to elect a Page 3 Senior Director, Americas Int’l Gov’t Relations, Exxon Mobil new president and National Assembly. How are the presi- John Maisto dential and legislative races shaping up, and what’s at stake POLITICAL Director, U.S. Education Finance Group Q in the election? Who are the most important candidates European Union Nicolás Mariscal to watch, and what are the main differences in their platforms? What Chairman, Drops Recognition Grupo Marhnos issues are emerging as the most salient for voters? of Guaidó Thomas F. McLarty III The European Union has dropped Chairman, McLarty Associates Daniela Chacón Arias, executive director at Fundación TAN- its recognition of Venezuelan Beatrice Rangel DEM and former Quito vice mayor and city council member: opposition leader Juan Guaidó as Director, Venezuela’s interim president. The AMLA Consulting LLC “This election is shaping up to be one of the most uncertain move followed the seating of a Jaana Remes ones in the last decades. The weeks leading up to the start new National Assembly controlled Partner, A by allies of President Nicolás McKinsey Global Institute of the campaign on Dec. 31 were stained with a controversy between Maduro. the electoral authorities as to who the candidates were. Only a few days Ernesto Revilla Page 2 Head of Latin American before this date, the National Electoral Council finally decided upon a Economics, Citi Gustavo Roosen final list of candidates that excluded banana businessman Álvaro Noboa, Chairman of the Board, the man who created the controversy. Nonetheless, the damage is done. Envases Venezolanos Andrés Rozental The uncertainty that has been the trademark of this electoral process President, Rozental & heightens mistrust in the electoral authorities to carry out a transparent Asociados process amid the pandemic and a deep political and economic crisis. As Shelly Shetty Managing Director, Sovereigns of now, three candidates are leading the polls: Guillermo Lasso, a conser- Fitch Ratings vative right-wing businessman, Andrés Arauz, Rafael Correa’s handpicked candidate, and Yaku Pérez, the Indigenous and left-wing leader. The pandemic and its economic effects have definitely shaped the candidates’ platforms, in which employment, security and safety are the most important issues. But the political and institutional crisis is also part of the discourse, and the divide between those who want Rafael Correa and Guaidó // File Photo: Facebook page of Juan Guaidó. Continued on page 3

POLITICAL NEWS 20. In the episode, rioters broke windows to NEWS BRIEFS enter the Capitol, forcing lawmakers to recess E.U. Drops for several hours and flee the chambers of the Critical Care Hospital Senate and the House of Representatives be- Units in Peru, Bolivia at Recognition of fore reconvening in the evening and ultimately certifying Biden’s victory early this morning. Risk of Collapse: Report Venezuela’s Guaidó Among the countries reacting to Wednesday’s Critical care units of major hospitals in Peru riot was Venezuela, which the Trump admin- and Bolivia are at risk of collapsing as they The European Union is no longer recognizing istration has slapped with several sanctions struggle to keep up with Covid-19 cases opposition leader Juan Guaidó as Venezuela’s in efforts to force President Nicolás Maduro following end-of-year holidays, reflecting interim president, a blow to Guaidó’s weakened from power. “The government of the Bolivian regionwide concerns about countries’ public campaign to oust President Nicolás Maduro, Republic of Venezuela expresses its concern health capacities, Reuters reported Wednesday. the Financial Times reported Wednesday. The with the acts of violence that are taking place While cases in the region remain below last change in tone came a day after a new National in the city of Washington, United States,” Vene- year’s peak, exhausted resources and medical Assembly stacked with Maduro allies took zuelan Foreign Minister Jorge Arreaza said in a workers, alongside a recent wave of severe office following a vote in December that was statement. “Venezuela condemns the political cases, are taking a toll on already ailing health widely denounced as not meeting the basic te- polarization and spiral of violence that only re- care systems across the region, officials say, nets of free and fair elections and which major flects the profound crisis that the political and Reuters reported. opposition parties boycotted. In a statement, social system of the United States is currently the European Union’s high representative for experiencing.” He added, “With this unfortunate foreign affairs, Josep Borrell, said the bloc episode, the United States suffers the same as regretted the installment of the new legislature, what they have generated in other countries Vale, Minas Gerais State saying that the recent vote “failed to comply with their aggressive policies. Venezuela hopes Discussing Compensation with the international standards for a credible that the acts of violence will soon cease and Following 2019 Dam Burst process.” However, Borrell referred to Guaidó the American people can finally open a new Brazil’s Minas Gerais state officials will meet as one of “the political and civil society actors path toward stability and social justice.” Vene- with representatives of mining company Vale striving to bring back democracy to Venezuela,” zuelan opposition leader Juan Guaidó, whom today, with the two parties expected to begin rather than interim president or head of the as- the United States recognizes as Venezuela’s talks on compensation for a 2019 dam burst in sembly. Much of Guaidó’s clout has been based legitimate interim president, called the assault one of the company’s mines in the town of Bru- on strong international support for his claim to on the Capitol an attack on democracy. “My madinho, which left more than 260 people dead the presidency. thoughts are with the citizens and officials and caused serious environmental damage, who feel that the roots of their country were at- Reuters reported. Minas Gerais state is seeking tacked,” he said. The Organization of American to win at least 28 billion reais ($5.3 billion) in Region’s Leaders States’ General Secretariat on Incidents said it compensation, according to state secretary “condemns and repudiates the attack against Express Horror at general Mateus Simōes. A court-mediated institutions being carried out today in the Unit- hearing is scheduled for this month. U.S. Capitol Attack ed States by protesters who disavow recent electoral results ... The exercise of force and Heads of state and other political leaders in vandalism against the institutions constitutes a Latin America were among those around the serious attack against democratic functioning.” Credit Suisse Cuts world expressing shock and horror Wednesday U.N. Secretary General António Guterres was Ties With Some Wealth after a mob of supporters of U.S. President “saddened” by the episode, said spokesman Clients in Venezuela Donald Trump surrounded and broke their way Stephane Dujarric, Reuters reported. “In such into the U.S. Capitol in a violent scene that left circumstances, it is important that political Switzerland-based financial services company at least four people dead. One woman was leaders impress on their followers the need Credit Suisse has cut assets it manages for fatally shot in the violence, and the three others to refrain from violence, as well as to respect some of Venezuela’s wealthy by more than 50 who died suffered medical emergencies, CNN democratic processes and the rule of law.” percent over the past several years, to about $2 reported. The rioters stormed the building in However, Brazilian President Jair Bolsonaro, billion, Bloomberg News reported Wednesday, an apparent attempt to stop Congress from an ally and admirer of Trump, said, “I followed citing sources familiar with the matter. The certifying the November victory of Presi- everything today. You know I’m connected bank’s decisions come as it considers the risks dent-elect Joe Biden, who takes office on Jan. to Trump, right? So you already know my of doing business with politically exposed answer.” Argentine President Alberto Fernán- clients in the Andean nation.

COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Thursday, January 7, 2021 dez condemned the violence in a tweet. “We FEATURED Q&A / Continued from page 1 express our condemnation of the serious acts of violence and the affront to Congress that oc- his policies back and those who oppose him complete the mess, the private media have curred today in Washington, D.C. We trust that continues to dominate the electoral scene. done little to make the many candidates’ there will be a peaceful transition that respects Even though the concerns are the same, the concrete proposals transparent to the public, the popular will, and we express our stron- main candidates’ platforms vary significant- which is reflected in around 50 percent of gest support for President-elect Joe Biden,” ly as they represent opposing ideological voters being undecided. In short, there is said Fernández. Trump was widely criticized views. One might think Arauz and Pérez are enormous uncertainty in the face of the elec- Wednesday for inciting the violence by telling more similar as they are leftists, but Pérez tions, which will define the country’s future.” supporters who had gathered in Washington to brings the Andean Indigenous worldview, “fight” and go to the Capitol. “We will never give which marks an important difference.” John Polga-Hecimovich, up, we will never concede,” Trump said, Time assistant professor of com- reported. “History is going to be made ... We’re Hernán Reyes, professor at parative politics at the U.S. going to see whether or not we have great and Universidad Andina Simón A Naval Academy and associate courageous leaders, or whether or not we have Bolívar and Universidad Central researcher at FLACSO-Ecuador: “Not since leaders that should be ashamed of themselves. A del Ecuador: “Since 1979, when Ecuador’s return to democracy has there If they do the wrong thing, we should never, Ecuador was emerging from the military been 16 presidential candidates seeking ever forget that they did.” After violence had dictatorship and returning to constitutional election. This reflects a fragmentation of already erupted, Trump told his supporters in democracy, the country has not experienced the electorate and a party system largely a tweet to “remain peaceful” and “go home.” an electoral process so overshadowed by bereft of programmatic proposals and clear Since Biden’s victory in November, Trump has tensions, apparent irregularities, so many ideologies. The only three candidates polling continued to pursue claims of electoral fraud, presidential candidates and so little citizen in double-digits are ex-President Rafael Cor- which several courts have rejected as base- interest. Now, 40 years later, and in the face rea’s handpicked candidate, Andrés Arauz, less. In a statement this morning, Trump said of the presidential and legislative elections two-time presidential runner-up Guillermo he would leave office when Biden is sworn in, on Feb. 7, the electoral scene has revived Lasso and Indigenous activist Yaku Pérez. CNN reported. “Even though I totally disagree those old ghosts. Finally, we know there are Given Ecuador’s two-round system for the with the outcome of the election, and the facts 16 candidates qualified to compete, though presidency, with a vote requirement of 50 bear me out, nevertheless there will be an businessman Álvaro Noboa, who was quite percent or 40 percent plus 10 percent ahead orderly transition on January 20th,” he said. well positioned in the polls, has been defin- of the second-place candidate, it seems itively left out. Add to this that there is an likely that this contest will move to a second unusual confrontation between the electoral round. The leading contenders represent ECONOMIC NEWS authorities themselves, an issue that is be- a wide range of policy visions. Front-run- ing heard before the ordinary courts of jus- ner Arauz has pitched himself as a leftist tice. With Covid-19 surely affecting turnout, populist and Correa protégé. He has said his Mexicans Send and a growing political disaffection caused government will not comply with Interna- Home $40.6 Billion, by terrible government management of the tional Monetary Fund (IMF) conditions that last four years, the situation is dramatically were part of a 2020 loan and would instead Setting New Record more complicated. To make matters worse, increase public spending. Meanwhile, the although there is an unexpected number candidate of the right, Lasso, is a social Mexicans living abroad sent home $40.6 billion of candidates on the presidential ballot, conservative and an advocate of orthodox, in remittances last year, a record level, the for now, three of the 16 candidates seem free-market economics and would likely cut government announced Wednesday, Bloomberg to stand out: the ‘correísta progressivism,’ social spending; his candidacy is the one News reported. President Andrés Manuel with Andrés Arauz, a young economist, at most boosted by the exclusion of Álvaro López Obrador called the amount of money its head; the right-wing CREO movement, Noboa from the ballot. Third, Pérez is an transfers, which was an 11 percent increase which for the third time has millionaire environmental activist who played a promi- from the previous year, a “heroic” effort. “Last banker Guillermo Lasso as its candidate; nent role in the October 2019 anti-austerity year was an exceptional year,” López Obrador and Yaku Pérez, who defines himself as an protests and will likely siphon some left-wing told reporters in his regular morning news ecologist and ‘defender of water,’ and who is votes from Arauz. Whoever wins will find it conference. “Our migrant countrymen acted as supported by a segment of the Indigenous difficult to govern. The next administration heroes, as heroines, the equivalent of doctors movement and sectors of the radical left. To needs to balance the country’s legitimate and nurses who are saving lives.” 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 © 2021 social and economic grievances with the Correa-Arauz campaign, while the most likely need for fiscal responsibility. Moreover, the fraud scenario is in favor of Arauz due to Erik Brand new president must lead the country out of Correísta influence in the electoral council.” Publisher [email protected] a double-digit economic contraction caused by the Covid-19 pandemic. Unfortunately, Fernando Carrión, professor Gene Kuleta Editor despite overdue changes to the electoral and researcher in the Depart- [email protected] system aimed at strengthening parties, the ment of Political Studies at Anastasia Chacón González party system will likely remain fragmented, FLACSO in Ecuador: “Ecuador A Reporter & Associate Editor and the president will probably have to has started the electoral campaign with [email protected] legislate without a majority.” a strenuous, unprecedented and not very democratic struggle of power surrounding

Ramiro Crespo, president of issues of contempt, malfeasance, electoral Michael Shifter, President Analytica Securities in Quito: obstruction and conflict of powers, between Rebecca Bill Chavez, Nonresident Senior Fellow “The limited reliable poll data the National Electoral Council, the Electoral Sergio Bitar, Nonresident Senior Fellow A shows that Ecuador’s electoral Contentious Tribunal, the comptroller gen- Joan Caivano, Senior Advisor campaign is lackluster and full of uncertain- eral, the attorney general and the Supreme Michael Camilleri, Director, Rule of Law Program ty. It appears certain that the next president Court. What will follow is also unclear. Two- Kevin Casas-Zamora, Nonresident Senior Fellow won’t have a majority in Congress. To hundred-eighty-three political organizations, Héctor Castro Vizcarra, Nonresident Senior Fellow some extent, the campaign is the opposite known as ‘rental parties’ because they are Julia Dias Leite, Nonresident Senior Fellow of Bolivia’s, with the center-right showing sold to the highest bidder, will participate Ariel Fiszbein, Director, Education Program impressive coalescence around Guillermo in the electoral process. This system of Peter Hakim, President Emeritus Lasso, while the hard left is split among representation embodies a paradox between Nora Lustig, Nonresident Senior Fellow several candidates in a field of 16. Lasso dispersion, due to the excessive number Margaret Myers, Director, Asia and pledges a deepening of economic reforms of organizations, and the political polariza- Latin America Program Manuel Orozco, Senior Fellow begun by President Lenín Moreno under tion between the right (Lasso) and the left Xiaoyu Pu, Nonresident Senior Fellow the duress of reality. His main opponent is (Arauz), according to the polls; all this has Jeffrey Puryear, Senior Fellow Andrés Arauz, a protégé of populist former led to a high degree of indecision among the Mateo Samper, Nonresident Senior Fellow President Rafael Correa, found guilty of electorate a month before the first round on Tamar Solnik, Director, Finance & Administration bribery. Arauz is demagogically promising to Feb. 7. According to the polls, the two can- Lisa Viscidi, Director, Energy Program distribute $1 billion to voters within a week didates who will go to the second round will Denisse Yanovich, Director of Development, of taking office and another $3 billion as an have between 20 percent and 25 percent of External Relations & Special Projects economic stimulus, along with providing free popular support, which shows polarization Internet. Besides Arauz, Pachakutik candi- and little political legitimacy. Meanwhile, Latin America Advisor is published every business day, except for major U.S. holidays, date Yaku Pérez, his main rival on the left, is 15 national, 116 provincial and six foreign by the Inter-American Dialogue at promising an esoteric Indigenous program assembly members will be elected. A highly 1155 15th Street NW, Suite 800 Washington, DC 20005 including universal basic income funded by fragmented National Assembly is the most www.thedialogue.org issuing ‘electronic currency.’ The economy is likely outcome, with no less than 11 to 12 ISSN 2163-7962 front and center in the election, including the parliamentary blocs, and with none having Subscription inquiries are welcomed at lack of jobs. A victory by Lasso would show a majority. Against this backdrop, power [email protected] that Ecuadoreans are willing to continue struggles are envisioned between a weak The opinions expressed by the members of the Board of with reform. If Arauz wins, an Argentine-type executive and a fragmented legislature, an Advisors and by guest commentators do not necessarily crisis would immediately emerge, with dire expression of a system of political represen- represent those of the publisher. The analysis is the sole economic consequences. In this context, a tation that is typical of a democracy without view of each commentator and does not necessarily represent the views of their respective employers or firms. letter sent to the U.S. secretary of state by a political parties.” The information in this report has been obtained from group of U.S. legislators, including the dis- reliable sources, but neither its accuracy and completeness, nor the opinions based thereon, are guaranteed. If you have tinguished Alexandria Ocasio-Cortez, should The Advisor welcomes comments on its Q&A any questions relating to the contents of this publication, be strongly condemned for siding with the section. Readers can write editor Gene Kuleta contact the editorial offices of the Inter-American Dialogue. Contents of this report may not be reproduced, stored in baseless questioning of the election by the at [email protected]. a retrieval system, or transmitted without prior written permission from the publisher.