Qincumbent Jamaican Prime Minister

LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Thursday, September 17, 2020

BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk What Accounts for U.N. Council CEO, DevryBV Sustainable Strategies Accuses Venezuela Joyce Chang Global Head of Research, Voters’ Support of of Crimes Against JPMorgan Chase & Co. Humanity Paula Cifuentes Director of Economic & Fiscal Affairs, Holness in Jamaica? The United Nations Human Rights Latin America & Canada, Council issued a report accusing Philip Morris International Venezuela’s government of perpe- Marlene Fernández trating crimes against humanity, Corporate Vice President for including extrajudicial killings Government Relations, Arcos Dorados and torture. The country’s foreign minister denounced the report. Peter Hakim President Emeritus, Page 2 Inter-American Dialogue Donna Hrinak Senior VP, Corporate Affairs, ECONOMIC Royal Caribbean Group Argentine Bonds Jon E. Huenemann Former Corporate and Fall After Gov’t Government Senior Executive Jamaican Prime Minister Andrew Holness, pictured after casting his vote on Sept. 3, was Unveils Limits on James R. Jones re-elected in a landslide victory. // File Photo: Jamaican Government. Chairman, Foreign Exchange Monarch Global Strategies Argentine bonds plunged after the Craig A. Kelly Incumbent Jamaican Prime Minister Andrew Holness was Senior Director, Americas government expanded limits on Int’l Gov’t Relations, Exxon Mobil re-elected this month in a landslide victory, with his Jamaica foreign exchange in an effort to John Maisto Labour Party securing 48 of the 63 seats in parliament, 15 keep U.S. dollars in the country. Director, U.S. Education Page 2 Finance Group Q more seats than it previously had. What accounts for voters’ Nicolás Mariscal overwhelming support of Holness and the ruling party? What do the Chairman, POLITICAL Grupo Marhnos election results mean for the country’s opposition? Will Holness’ second Thomas F. McLarty III term bring significant changes in his cabinet, and can policy continuity Poll Shows Arce Chairman, With Solid Lead McLarty Associates be expected? Beatrice Rangel in Bolivia Director, A new opinion poll showed that AMLA Consulting LLC Alan Zamayoa, associate analyst at Control Risks: “Support MAS candidate Luis Arce could for Prime Minister Holness and the JLP is mainly due to the Jaana Remes win a first-round victory in Boliv- Partner, McKinsey Global Institute improvement in the country’s economy during their first term ia’s Oct. 18 presidential election. Ernesto Revilla (2016-20). After taking office in 2016, Holness has imple- Page 2 Head of Latin American A mented actions aimed at rehauling and improving the economy. These Economics, Citi Gustavo Roosen include removing or reducing a series of taxes and creating more than Chairman of the Board, 100,000 new jobs. As a result, poverty rates decreased by almost 8.6 Envases Venezolanos Andrés Rozental percent between 2015 and 2018. However, overall concerns about the President, Rozental & continuation of improvements are rising as the Covid-19 pandemic has hit Asociados the country’s economy. The JLP’s landslide victory in the Sept. 3 general Shelly Shetty Managing Director, Sovereigns election has shaken the main opposition party, the People’s National Fitch Ratings Party (PNP), to its core. Peter Phillips won re-election but is resigning as president of the PNP. The process to find his successor as the party’s president will be complex as the PNP is likely to fragment. There is no clear successor after Peter Bunting, who could have replaced Phillips as the PNP’s president, lost his seat representing Manchester Central, a PNP stronghold. The continuation of the policies, especially fiscal and Arce // File Photo: Arce Campaign. Continued on page 3

POLITICAL NEWS “most of them fishermen returning from work.” NEWS BRIEFS The operation also resulted in women being U.N. Council Accuses mistreated and household items being looted, Poll Shows Arce the report said. “Even conservative estimates Could Win First-Round Venezuela of Crimes suggest that Venezuela has one of Latin Amer- ica’s highest rates of killings by state agents,” Victory in Bolivia Against Humanity the Human Rights Council said. The report also An opinion poll published Wednesday shows said the CICPC and the Special Action Forces, Bolivian presidential candidate Luis Arce, of The United Nations Human Rights Council or FAES, units of the National Bolivarian Police former President Evo Morales’ MAS party, with issued a 411-page report Wednesday accus- were responsible for 59 percent of the killings the possibility of winning next month’s election ing the government of Venezuelan President by security forces during the time period that in the first round, Reuters reported. Nearly 40 Nicolás Maduro of crimes against human- the mission examined. Some police officials percent of Bolivians included in the Jubileo ity, including arbitrary killings and the use told the mission that it was “common practice” Foundation poll said they would vote for Arce of torture. “The mission found reasonable to plant weapons in order to simulate confron- in the Oct. 18 election. Opposition remains grounds to believe that Venezuelan authorities tations with officers. Additionally, a training divided among different parties, with former and security forces have since 2014 planned video for the FAES shows officers being President Carlos Mesa coming in second in and executed serious human rights violations, encouraged to “kill criminals without com- the poll with 26.2 percent, while current interim some of which—including arbitrary killings passion,” the rights council said. It added that President Jeanine Áñez had 10.6 percent of and the systematic use of torture—amount to Venezuela’s government “must hold to account support in the poll. crimes against humanity,” said the mission’s those responsible for extrajudicial executions, chairperson, Marta Valiñas. “Far from being enforced disappearances, arbitrary detentions isolated acts, these crimes were coordinated and torture, and prevent further acts of this and committed pursuant to state policies, with nature from taking place.” Venezuelan Foreign Court in The Hague Rules the knowledge or direct support of command- Minister Jorge Arreaza blasted the report, say- in Chevron’s Favor in ing officers and senior government officials,” ing that a group of nations intent on attacking Dispute With Ecuador she added. An independent U.N. fact-finding Venezuela was behind it, the Associated Press The District Court of The Hague on Wednesday mission investigated 223 cases, including reported. “This report plagued by falsehoods ruled in favor of energy company Chevron in a 48 in-depth case studies, and reviewed an was drawn up from afar without relying on longstanding dispute with Ecuador, upholding a additional 2,891 cases in order to “corroborate rigorous methodology by a phantom mission 2018 arbitral award by an international tribunal patterns of violations and crimes,” the Human directed against Venezuela by governments that found that a $9.5 billion Ecuadorean Rights Council said in a statement. The mis- subordinate to Washington,” Arreaza said in a judgment against Chevron was fraudulent and sion said it investigated 16 cases of operations posting on Twitter. the plaintiffs’ legal team was corrupt, including involving Venezuela’s police, military or both by bribing the presiding judge and ghostwriting that resulted in 53 extrajudicial executions. the judgment, according to a statement by the The mission also said that it investigated ECONOMIC NEWS court in The Hague. The tribunal also rejected 140 cases between 2015 and 2017 involving environmental allegations against Chevron. Venezuela’s Operation for People’s Liberation, or OLP, which was “purportedly established Argentine Bonds Fall to fight crime,” and discovered that the group After Gov’t Unveils had committed arbitrary detentions and General Becomes Brazil’s extrajudicial executions. The mission said OLP Exchange Limits Third Health Minister operations resulted in 413 people being killed, During Pandemic “sometimes shot at point blank range.” The Hu- Argentine bonds plunged Wednesday after man Rights Council said, “Senior government the government expanded limits on foreign Brazilian Gen. Eduardo Pazuello took office officials repeatedly praised the operations, exchange in a bid to hold on to U.S. dollars as Wednesday as the country’s third health which typically involved hundreds of armed reserves decline, Bloomberg News reported. minister during the Covid-19 pandemic, the officers storming an area, sometimes using ar- Benchmark sovereign notes issued only several Associated Press reported. A logistics expert, mored vehicles and helicopters.” It added that days ago following the country’s $65 debt Pazuello had no prior health-related experience one operation by the OLP in the Santa Rosa de restructuring lost approximately two cents before being named deputy health minister last Agua area of Maracaibo in September 2015 on the U.S. dollar, and Argentine companies’ April. His two predecessors as health minister left five men dead and more than 60 detained, debt also fell. The peso weakened as much departed after clashing with President Jair Bol- sonaro on how to fight the novel coronavirus.

COPYRIGHT © 2020, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Thursday, September 17, 2020 as 3 percent in the “blue chip swap” market FEATURED Q&A / Continued from page 1 of international trading. The news came after central bank chief Miguel Pesce announced economic, implemented during Holness’ first Nonetheless, work still remains in reducing measures aimed at keeping dollars in the coun- term will continue. Most members of cabinet the country’s vulnerabilities. Indeed, Fitch try, including new levies on purchases of the are likely to remain part of Holness’ team, Ratings puts Jamaica’s debt burden at 92 U.S. currency as well as a demand that firms although there are likely to be some reshuf- percent of GDP, which is still high, while the with more than $1 million in monthly debt pay- fles, and they will head different ministries current account balance of payments could ments through March find a way to delay those from those they used to lead. Meanwhile, obligations. Among other things, the foreign among the newcomers are Aubyn Hill and exchange restrictions “partially [limit] access to Everald Warmington, who were appointed as Despite the JLP’s the official [U.S. dollar-Argentine peso] market ministers without portfolio in the Ministry of sweeping victory, for corporate debt service,” Ezequiel Fernández, Economic Growth and Job Creation.” Holness faces sub- head of research at Balanz Capital in Buenos stantial challenges...” Aires, said in a note. “[It is] a concerning and Scott MacDonald, chief econ- — Scott MacDonald partly unexpected event for both Argentina omist at Smith’s Research & credits and equities, as investors could link Gradings and senior associate this to an eventual full ban on dollar-access for A at the Center for Strategic and hit 5 percent of GDP for the year. Consider- corporates,” Fernández added. International Studies (CSIS): “Considering ing the nature of the economic and medical the Covid-19 hit to the Jamaican econo- challenges, Holness has accomplished a my (which could contract anywhere from significant political victory, but any optimism Ecuador to Delay 5 percent to 10 percent in 2020), Prime has to be tempered by the tough socioeco- Loan Payment to Minister Andrew Holness and his Jamaica nomic landscape ahead.” Labour Party’s overwhelming victory was a China’s ExIm Bank considerable achievement for the JLP, giving Beverly Shirley, program officer rare back-to-back electoral wins. Face masks for British Overseas Territories Ecuador has reached a deal to delay a $474 and temperature checks were compulsory at The University of the West million loan payment to the Chinese state-con- in polling stations, where the pandemic A Indies Open Campus: “On Sept. trolled and trade-focused ExIm Bank until contributed to a historically low voter turnout 3, the Jamaica Labour Party celebrated a 2022, the Andean nation’s government said on of 37 percent. Turnout in the last election landslide victory over the People’s National Wednesday, Reuters reported. Ecuador entered in 2016 was 48 percent. The JLP won the Party. In 2016, the PNP had secured 31 restructuring processes for its foreign debt election because of the country’s improved seats and the JLP 32, so then, what could after oil prices plummeted earlier this year, economic performance over the past decade have caused such a divide? The surge of taking a toll on the government’s revenue. Oil (including the efforts of the last People’s the Covid-19 pandemic in Jamaica during is Ecuador’s main export. Additionally, the National Party government in 2012-2016), the election may have had some impact on country reached a deal in August with the lower unemployment (achieving a historic voting. Reports have shown that voter turn- China Development Bank, another state lender, low of 7.3 percent in January, from a peak of out declined by 11 percent in comparison to to delay another $417 million payment by one 16.3 percent in 2013) and reduced poverty. voting in the 2016 elections. Within this con- year. It also reached a deal to exchange some Moreover, the opposition PNP ran what many text, 9,219 fewer people voted for the JLP, $17.4 billion owed to bondholders into new considered a lackluster campaign. Despite while 127,871 fewer voted for the PNP in bonds with later maturity dates. “We have the JLP’s sweeping victory, Holness faces the 2020 elections. This therefore prompts reprofiled the debt with ExIm Bank,” President substantial challenges, including dealing the question concerning the inability of the Lenín Moreno said on Twitter. “We have now with the still raging pandemic, reactivating PNP to mobilize its base as it did in 2016. negotiated $891 million with Chinese banks. the economy (not expected to be back to As mobilization is a resource-led activity, We continue reducing strain on public finances, pre-Covid levels until 2022) and reducing could it be that access to resources in order and attracting more resources,” Moreno added. violent crime. He also promised to take a to mobilize a largely unemployed, dependent Earlier this month, Fitch Ratings upgraded tougher stance on widely despised corrup- electorate was problematic in the absence Ecuador’s long-term foreign currency issuer tion. In the pre-Covid-19 pandemic period, of legal frameworks? Other questions for default rating and assigned ratings of “B-“ to Jamaica had made considerable progress discussion range from leadership selection new securities issued as part of the country’s in restructuring its economy, improving processes, internal rifts, the discarding of bond exchange. [Editor’s note: See related Q&A government finances and reducing debt. Portia Simpson Miller, the seeming unrealis- in the July 16 issue of the Advisor.] 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 tic manifesto to its inability to connect with services such as health and education for millenniums, and how they may have contrib- the majority remain in parlous conditions. Erik Brand uted to the twist of events. The absence of Local infrastructure such as roads and water Publisher [email protected] a strong opposition weakens the democratic continue to be elusive for many people, structures of any country. Now having the particularly in rural areas. Thus, many Ja- Gene Kuleta Editor free rein of full political dominance, the maicans may have asked themselves—why [email protected] JLP will strategically seek to consolidate Anastasia Chacón González its hegemony by placing die-hards in key Reporter & Associate Editor positions. Therefore, the discourse concerns We are in a moment [email protected] whether the Holness-led administration with in which differenc- an extremely weak opposition can move be- es between the two

yond the green (the color is one of the JLP’s parties are virtually Michael Shifter, President electoral symbols) to substantively represent indistinguishable.” Rebecca Bill Chavez, Nonresident Senior Fellow all Jamaicans.” — Anthony Bogues Sergio Bitar, Nonresident Senior Fellow Joan Caivano, Senior Advisor Anthony Bogues, Asa Messer Michael Camilleri, Director, Rule of Law Program professor of Humanities at vote? Why vote when it is generally known Kevin Casas-Zamora, Nonresident Senior Fellow Brown University: “The Sept. that politics is a game by which some get Héctor Castro Vizcarra, Nonresident Senior Fellow A 3 general election in Jamaica rich and the state has not found ways to Julia Dias Leite, Nonresident Senior Fellow was a first. Not since 1944, when the island stymie corruption? Party politics in Jamaica Ariel Fiszbein, Director, Education Program held its first general election under univer- has been historically robust because often Peter Hakim, President Emeritus sal adult suffrage while still under British there was a feeling of hope for better. In this Nora Lustig, Nonresident Senior Fellow colonialism, was the voter turnout so low. election there was no such hope, thus the Margaret Myers, Director, Asia and Jamaican general elections are robust af- historic low voter turnout. It signals a deep Latin America Program Manuel Orozco, Senior Fellow fairs within a two-party electoral democratic alienation away from party politics for vast Xiaoyu Pu, Nonresident Senior Fellow system, so to have only 37 percent of the sections of the Jamaican people.” Jeffrey Puryear, Senior Fellow electorate participating sends an important Mateo Samper, Nonresident Senior Fellow signal. Some have argued that the election Editor’s note: This issue has been corrected. Tamar Solnik, Director, Finance & Administration held under Covid pandemic conditions In an earlier version, Alan Zamayoa’s com- Lisa Viscidi, Director, Energy Program contributed to the low voter turnout. This mentary incorrectly said that Peter Phillips Denisse Yanovich, Director of Development, does not fully explain it. We are in a moment lost re-election and represents Manchester External Relations & Special Projects in which differences between the two parties Central. In fact, Phillips was re-elected and are virtually indistinguishable. The economic represents St. Andrew East Central. Latin America Advisor is published every business day, except for major U.S. holidays, policies of austerity and adjustment first by the Inter-American Dialogue at implemented through IMF agreements and The Advisor welcomes comments on its Q&A 1155 15th Street NW, Suite 800 Washington, DC 20005 then continued by both governments postu- section. Readers can write editor Gene Kuleta www.thedialogue.org late a language of fiscal discipline as basic at [email protected]. ISSN 2163-7962 Subscription inquiries are welcomed at [email protected]

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