LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Wednesday, February 17, 2021
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LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Wednesday, February 17, 2021 BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group ECONOMIC Devry Boughner Vorwerk Will Peru’s Pension Rolling Blackouts Chief Corporate Affairs Officer, Grubhub Hit Mexico, Plants Joyce Chang Global Head of Research, System Undergo Forced to Close JPMorgan Chase & Co. Rolling blackouts hit several Paula Cifuentes Mexican states as much of the Director of Economic & Fiscal Affairs, a Major Reform? country grapples with an electrici- Latin America & Canada, Philip Morris International ty shortage. Severe winter storms Marlene Fernández in Texas have restricted Mexico’s Corporate Vice President for supply of natural gas, from which Government Relations, it derives most of its power. Arcos Dorados (McDonald’s) Page 2 Peter Hakim President Emeritus, Inter-American Dialogue BUSINESS Donna Hrinak Senior VP, Corporate Affairs, IDB, Businesses Royal Caribbean Group in Partnership for Jon E. Huenemann Council Member, Region’s Recovery GLG Inc. The Inter-American Development James R. Jones Peruvian lawmakers are considering an overhaul of the country’s pension system. An office of Bank and a coalition of 40 global Chairman, Peruvian pension fund manager AFP Integra is pictured before the Covid-19 pandemic. // File Monarch Global Strategies Photo: Asociación de AFP. corporate executives launched a new partnership for the economic Craig A. Kelly A congressional committee in Peru last month approved Senior Director, Americas recovery of Latin America and the Int’l Gov’t Relations, Exxon Mobil legislation that would replace the country’s private and Caribbean. John Maisto public pension plans with a government-run system, sending Page 3 Director, U.S. Education Finance Group Q it to the floor of the unicameral Congress. What are the most Nicolás Mariscal important elements of the proposed legislation? What are its major POLITICAL Chairman, Grupo Marhnos benefits and drawbacks? Is Congress likely to speedily approve it ahead Mexico to Raise Thomas F. McLarty III of April’s presidential election, and to what extent is the electoral race Concerns About Chairman, playing a role in its passage? McLarty Associates Vaccine Access at Beatrice Rangel Director, United Nations AMLA Consulting LLC Luis Miguel Castilla, former Peruvian finance minister: “This Mexico will raise concerns about Jaana Remes ‘reform’ does little to improve the main challenges confront- unequal access around the world Partner, to Covid-19 vaccines, said Foreign McKinsey Global Institute ing Peru’s pension system: its low coverage (one in three Pe- Minister Marcelo Ebrard. ruvians contribute to a pension fund) and insufficient pension Ernesto Revilla Page 2 Head of Latin American A payments. This bill creates a new public entity to consolidate both public Economics, Citi Gustavo Roosen and private schemes and relegates the private pension system to an Chairman of the Board, asset management role. Moreover, it mandates that an undefined portion Envases Venezolanos Andrés Rozental of all individual funds be set aside to finance a minimum pension for the President, Rozental & poor, invoking the need for more solidarity. These are not sound ideas giv- Asociados en the government’s poor track record in managing long-term savings and Shelly Shetty Managing Director, Sovereigns the lack of a guarantee that fiscal voracity may divert pension receipts Fitch Ratings to other uses in the future. Furthermore, creating a compulsory contribu- tion will further increase labor informality (the main reason behind the low density of contributions). General taxation revenues should finance minimum pensions. Although the interim head of Congress intends to first submit the proposal to the specialized congressional commissions for further debate (supposedly seeking inputs from all technical bodies), the Ebrard // File Photo: U.S. State Department. Continued on page 3 COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ADVISOR Wednesday, February 17, 2021 POLITICAL NEWS the government said it would distribute them NEWS BRIEFS across the country, including in rural areas. “We Mexico to Raise made the decision to start in the municipalities Former Ecuadorean that are the farthest away, the most marginal- President Noboa Dies at 83 Concerns at U.N. ized, with the poorest population in the coun- try,” López Obrador told reporters on Sunday. Former Ecuadorean President Gustavo Noboa, About Vaccine Access [Editor’s note: See the Advisor’s video interview who helped to restore a measure of stability to on vaccine nationalism with Arachu Castro of the country after a severe economic crisis at Mexico will raise concerns this week at the Tulane University on vaccine nationalism.] the beginning of the century, died Tuesday at United Nations Security Council about unequal age 83, the Associated Press reported. Noboa access around the world to the Covid-19 died in Miami following surgery for a brain vaccines, Foreign Minister Marcelo Ebrard said ECONOMIC NEWS tumor. He was Ecuador’s president from 2000- Tuesday, Reuters reported. “The countries that 2003, following Jamil Mahaud, who was ousted produce [vaccines] have very high vaccination in a military coup. rates, and Latin America and the Caribbean Rolling Blackouts Hit much less,” Ebrard told reporters. He added Mexico, Factories that access to the vaccines was “not fair.” At Colombian Attorney the same event, Mexican President Andrés Forced to Close Manuel López Obrador said his government General’s Ecuador wanted to see the United Nations address Rolling blackouts hit several Mexican states Visit Draws Criticism the issue of vaccine hoarding and equitable on Tuesday as officials struggled to adapt to a The recent visit of Colombia’s attorney general access to the shots so that “all countries have shortage of electricity caused by severe winter to Ecuador amid the latter’s electoral recount the possibility of vaccinating their inhabi- storms in Texas, the Associated Press report- has sparked criticism in both countries, Agence tants.” Mexico’s government has struck deals ed. Bitterly cold winter weather north of the France-Presse reported Monday. Colombia’s with international drug makers for millions U.S.-Mexico border cut supplies of natural gas Francisco Barbosa met with his counterpart to of doses of Covid-19 vaccines. In a Q&A that much of northern Mexico relies upon to discuss information that allegedly links Ecua- published in the Advisor last June, Andrew generate electricity, leading numerous factories dorean left-wing presidential candidate Andrés Rudman, a then-managing director of Monarch in Mexico to shut down. The National Council Arauz with the ELN, an armed Colombian guer- Global Strategies, said it would be “tragically of the Maquiladora Industry said as many as rilla group considered a terrorist organization. short-sighted” for any country to exercise “vac- 1,600 plants were forced to halt operations Arauz, who will face a yet undetermined candi- cine nationalism,” or restrictions on the expor- because of a lack of power, putting hundreds date in Ecuador’s runoff in April, has denied the tation of Covid-19 vaccines. “Seeking to control of thousands of people out of work, the wire accusation, calling it a “coarse lie.” access through some sort of export control or service reported. Authorities were announcing expropriation of a commercially developed vac- rolling blackouts via Twitter without coordinat- cine would expose the implementing country ing with the factories, said the organization’s to the risk of retaliation in the future and likely president, Luis Hernández. Rosalina Torres, the Church Leaders Urge provoke similar behavior by other nations,” he leader of the maquiladora council in Matam- Biden to End Trump Suit said. On Tuesday, Mexican health authorities oros, said all the factories in the border city Blocking Puerto Rico Aid said the country will likely save more lives were closed. “The losses are going to run into Catholic Archbishop Roberto González of San with its limited supply of Covid-19 vaccines by the millions,” she told the AP. Much of northern Juan and leaders from other churches in the diverting some of them into poor rural com- Mexico was without reliable power on Tuesday, United States on Tuesday called on President munities, Bloomberg News reported. Remote and blackouts stretched into central Mexico, as Joe Biden to immediately withdraw a lawsuit areas are at a greater risk from the virus than far south as Guerrero state. Beginning late Sun- filed by the Trump administration to block $2.3 are cities, said Hugo López-Gatell, the country’s day, unexpectedly low temperatures in Texas billion in additional income payments to around coronavirus czar. Social inequality “has led us froze natural gas pipelines, cutting off private 300,000 elderly, blind and disabled Puerto Ri- to believe that our vaccination efforts should plants that supply some 80 percent of northern cans, Reuters reported. They also urged Biden be directed to the places where there’s the Mexico’s electricity. Mexico uses natural gas to to support bringing more pharmaceutical and greatest need, because that’s where there’s generate approximately 60 percent of its power manufacturing jobs to the U.S. territory. “Nearly the greatest risk of complications,” he told nationwide. The winter storm has caused at 60 percent of Puerto Rico’s children, U.S. reporters. This week, Mexico received 870,000 least 23 deaths in Texas, The New York Times citizens, live in poverty and would benefit from doses of the AstraZeneca/Oxford vaccine, and reported. The storm led the state’s power grid these measures,” they wrote in a letter. COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Wednesday, February 17, 2021 to become overwhelmed amid soaring demand FEATURED Q&A / Continued from page 1 for electric heat. “No one’s model of the power system envisioned that all 254 Texas counties prevailing populist stance may well prevail. and without technical advice.