LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Wednesday, October 24, 2018 BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Corporate VP, Global Corporate Affairs How Well Is Peru’s Second Migrant Cargill Joyce Chang Caravan Heading Global Head of Research, Gov’t Fighting Toward U.S. JPMorgan Chase & Co. A new group of about 1,500 mi- Dirk Donath Senior Partner, grants, mainly Hondurans, headed Catterton Aimara Corruption? toward the United States after Marlene Fernández spending the night in the eastern Corporate Vice President for Guatemalan city of Zacapa. A Government Relations, larger group of migrants contin- Arcos Dorados ued its journey north in Mexico. Peter Hakim President Emeritus, Page 2 Inter-American Dialogue Donna Hrinak ECONOMIC President, Boeing Latin America Jon Huenemann Argentina Sees Vice President, U.S. & Int’l Affairs, Philip Morris International First Trade James R. Jones Surplus Since 2016 Chairman, Monarch Global Strategies The arrest of Keiko Fujimori, the leader of Peru’s Popular Force Party, came just a week after The country recorded a $314 mil- Craig A. Kelly the country’s Supreme Court overturned the pardon granted last December to her father, former lion trade surplus in September, Director, Americas International President Alberto Fujimori. // Photo: TV Perú. according to the government’s Gov’t Relations, Exxon Mobil statistics agency. The figure Peruvian opposition leader Keiko Fujimori was arrested Oct. John Maisto reflects a drop in imports after a Director, U.S. Education 10 and detained for a week before being released in con- steep decline in the peso’s value. Finance Group nection with an investigation into illicit campaign financing. Page 2 Nicolás Mariscal Chairman, Q Nineteen others were detained along with Fujimori, and days Grupo Marhnos later, two of her top advisors were also arrested. Fujimori, the leader of POLITICAL Thomas F. McLarty III Chairman, the Popular Force party, has previously denied wrongdoing and has said Bolsonaro Keeps McLarty Associates the allegations against her are politically motivated. Fujimori’s arrest Lead Ahead of Carl Meacham Associate VP for Latin America came just a week after Peru’s Supreme Court overturned the pardon Brazil Election Int’l Advocacy Division, PhRMA granted last December to Fujimori’s father, former President Alberto Fu- Far-right presidential candidate Carlos Paz-Soldan Partner, jimori. Are the arrests politically motivated, or do the cases have merit? Jair Bolsonaro maintained his DTB Associates, LLP How will Keiko Fujimori’s detention affect Peru’s opposition? How well is lead over Fernando Haddad of Beatrice Rangel Peru’s government fighting corruption in general? the Workers’ Party, according to Director, a poll released just days before AMLA Consulting LLC Sunday’s vote. Ernesto Revilla Page 2 Head of Latin American Katya Salazar, executive director of the Due Process of Economics, Citi Law Foundation: “The criminal investigation against Keiko Gustavo Roosen Fujimori for alleged illegal financing of her political party, Chairman of the Board, Envases Venezolanos Fuerza Popular, is part of a broader investigation into money Andrés Rozental A laundering related to the activities of Odebrecht in Peru and the Lava Jato President, Rozental & Asociados and Senior case in Brazil. Fujimori’s preliminary detention was aimed at protecting Policy Advisor, Chatham House the investigation from external interference and preventing her from flee- Shelly Shetty Head of Sovereigns Ratings, ing the country. It was not on the merits of the case. However, according Latin America, Fitch to an appeals court, the evidence submitted was not sufficient and thus Roberto Sifon-Arevalo Managing Director, Americas Keiko was released. Will there be enough evidence to warrant a convic- Sovereign & Public Finance Ratings, tion against her for money laundering at the end of this process? It’s Standard & Poor’s difficult to say, but at this point it is clear that Fuerza Popular developed a structure to raise and file funds in violation of the law. Whether this was Bolsonaro // File Photo: Bolsonaro Campaign. Continued on page 3 COPYRIGHT © 2018, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ADVISOR Wednesday, October 24, 2018 POLITICAL NEWS ECONOMIC NEWS NEWS BRIEFS Second Migrant Argentina Registers Willa Makes Landfall on Mexico’s Pacific Coast Caravan Moving First Trade Surplus as Category 3 Hurricane Toward United States Since December 2016 Hurricane Willa made landfall Tuesday night as a category 3 hurricane, pounding Isla del A second large group of Central American mi- Argentina had a trade surplus of $314 million Bosque, south of Mazatlán, with maximum grants, mainly Hondurans, is headed north on in September, the country’s official statistics sustained winds of 120 miles an hour, NPR a trek to the United States, Guatemalan news- agency said on Tuesday. It is the first surplus News reported. The storm, which struck land at paper El Periódico reported today. The new the South American country has registered 7 p.m. local time, was downgraded to a tropical caravan, of about 1,500 people, passed through in 20 months, since December 2016, but the depression as it moved inland and weakened. the eastern Guatemalan city of Chiquimula on figure reflects a significant drop in imports However, a “life-threatening storm surge, wind Monday and spent Tuesday night in the city after the Argentine peso’s value was more than and rainfall” persist, the U.S. National Hurri- of Zacapa. “We know this won’t end in a few halved against the U.S. dollar so far this year, cane Center said. Mexican officials said there days, and will be a long process of migration,” Perfil reported. Imports in September declined were power outages and damage to flimsy Mauro Verzeletti, director of Casa del Migrante, by 21.2 percent, while exports fell just 4.8 buildings, the Associated Press reported. a Guatemala City migrant shelter, told Reuters. percent, compared to a year ago. “The trade The shelter had aided more than 11,000 people surplus in September was the first sign of the in the past week, said Verzeletti. The second expected trade and current account adjust- caravan set off for the United States as a ment following the large currency devaluation Bolsonaro Maintains Lead larger group, which has angered U.S. President Ahead of Brazil Election Donald Trump, continued its journey north Brazilian far-right presidential candidate Jair through Mexico. The original group, also mainly Bolsonaro leads the race five days ahead of Hondurans fleeing poverty and violence in their the runoff vote scheduled for Sunday, Globo country, on Tuesday was in the town of Huixtla reported. The latest Ibope poll, released in Chiapas State. Mexico’s government has Tuesday, shows the former army captain with said the group includes about 4,500 people and 57 percent support among valid votes, and added that as of Tuesday it had received 1,699 Fernando Haddad of the Workers’ Party with 43 requests for refugee status. Trump has vowed percent support. Bolsonaro saw a two-percent- to begin cutting millions of dollars in aid to Ramos // File Photo: Goldman Sachs. age point drop compared to the previous poll, Honduras, Guatemala and El Salvador, saying but the new survey’s margin of error is also two the countries are failing to stop people from and sharp slowdown in investment spending,” percentage points. trying to migrate illegally to the United States. Goldman Sachs economist Alberto Ramos said Trump and other Republicans have made the in a research note, Reuters reported. Econo- mass migration a campaign issue just ahead mists, including at Argentina’s finance ministry, of the U.S. midterm congressional elections on expect the trade surplus trend to continue as Alibaba’s Ant Financial Nov. 6. The election will determine whether the a more competitive peso benefits exporters, to Buy Stake in Brazilian Republicans retain control of the Senate and Los Andes reported. The country has an overall Card Processor StoneCo House of Representatives. Trump and other trade deficit of $6.5 million so far this year, conservatives have claimed that “criminals and larger than last year’s $5.1 million during the Ant Financial, an affiliate of Chinese billionaire unknown Middle Easterners” were among the same period. Earlier this year, Argentina suf- Jack Ma’s Alibaba, has agreed to buy $100 mil- migrants in the caravan but have presented no fered a sharp blow to its exports as the worst lion in shares in Brazilian card processor Stone- evidence to support those claims. The asser- drought in 60 years hit the agriculture sector, Co’s initial public offering, Reuters reported tions have not been corroborated, an unnamed dragging the economy into recession. The Bue- Monday. The Brazilian company’s IPO has also U.S. counterterrorism official told Reuters. nos Aires Grains Exchange said last month that drawn interest from Warren Buffet’s Berkshire The official said U.S. authorities have been it expects favorable weather conditions to help Hathaway, according to two unnamed sources, searching for signs that militants have inserted bring record harvests next year, which could the wire service reported. Such major investors themselves into the caravan, but have found no also contribute to a continued trade surplus, have helped boost interest in StoneCo’s IPO, evidence of that. Reuters reported. which could raise up to $1.1 billion. StoneCo is expected to price its IPO on Thursday. COPYRIGHT © 2018, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Wednesday, October 24, 2018 BUSINESS NEWS FEATURED Q&A / Continued from page 1 just a small-scale scheme of illegal financing the judicial system and proceed with the in- Visa Announces or a component of a highly sophisticated vestigations. Keiko Fujimori and APRA, who Investment in mechanism of money laundering, only the control Congress, claim political motivations investigation of brave prosecutor José and try to block the investigations.