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Hello, hivers. Here you have the eighteenth delivery of my #latamreports series, where I review the last trends in Latin America's political and economic landscape. Today we come with a report with fewer allusions to violence and corruption in the region, to focus on the recent high-level talks between Venezuela and Russia, today's presidential election in Cuba, and the umpteenth chapter of rhetoric between Mexico and the United States. As always, we update how the region's currencies and markets closed against the dollar. Let's go ride on it ya.
This April 19, coinciding with another anniversary of the historic 1961 defeat of a group of Cuban exile pioneers at Bay of Pigs, sponsored and trained by the Central Intelligence Agency, the newly elected deputies to the Cuban Parliament will elect the President of the Republic for the next five years. It is expected that there will be no surprises and that the current President, Miguel Mario Díaz-Canel Bermúdez, will remain in office.
Miguel Díaz-Canel Bermúdez, the Cuban President (Source)
The Cuban electoral system, with its distances and concepts, could be understood at this point as a free version of the parliamentary system, in which the highest political figure of a country is indirectly elected by Congress. I discussed the main shortcomings but also the potentialities of the Cuban model in this entry for the community, including the problem of the single party.
Cuban National Capitol, the seat of the National Assembly of People's Power (the Cuban Congress). Credit: Daniel Aguilar via Twitter.
The challenges he will confront are humongous, in the context of unstoppable inflation, which fuels the fire of a crisis unparalleled in my opinion in all the years that the Cuban Revolution has been in power since 1959. It is a sort of earthquake that shakes at the same time and with force the political, social, and economic dimensions, with roots in evident problems of internal management, which have not yet been addressed, but which also emerge from the decisive impact of the aggressive U.S. policy towards the island. I'll soon make a section to update the state of relations between the two countries, in light of recent developments. We now turn to other issues.
Russian Foreign Minister Serguéi Lavrov is touring countries in the area that either maintain a position that tends to recognize a certain legitimacy in Russia's arguments in its conflict with Ukraine or that from a more conciliatory point of view, such as that of Brazil, criticize Western discourse and actions in this area.
This Tuesday he was in Venezuela, where he returned to the type of strategic relationship between the two countries. If we go to realpolitik, it is natural that countries such as Cuba, Nicaragua, and Venezuela, battered by the United States sanctions, find in Russia a partner that, even in complicated financial circumstances, can support certain infrastructure projects in the critical energy sector, for example. It has fewer commercial possibilities than China but is historically more committed, and this is an added value. On the other hand, Russia is only demanding right now that they don't abandon it in the diplomatic fight.
Lavrov and Nicolas Maduro, Venezuelan President (Source)
Here we will take a breath for a moment. Yesterday the Mexican Supreme Court of Justice rejected a reform by Andrés Manuel López Obrador that would put certain police forces under military jurisdiction, in an attempt to strike a blow against drug trafficking and organized crime, a failed task talking in general terms.
Criticism of the initiative stems from a natural association between the military and human rights abuses when it meddles in internal public security tasks. AMLO refers that the military is less likely to accept bribes, and harshly criticized a judiciary that, according to him, legislates for an entrenched power.
Andrés Manuel López Obrador, Mexican president (Source)
In another order of things, AMLO submitted to Congress a comprehensive proposal to make the government bureaucratic machinery more efficient, eliminating or merging institutions that, after analysis, it is understood don't play a role that supports their permanence, or that their functions are being advanced by other entities. We talk of 18 such institutions.
López Obrador again confronted the U.S. Government from his podium, this time accusing the Pentagon of spying against Mexican security agencies. This stems from the recent leak of documents from the referred American department that point out internal aspects of the relations between two of them. To a certain extent, AMLO defends himself by attacking the successive accusations (the most recent being an article published yesterday, Tuesday, in the New York Times) against the possible use of the Israeli software Pegasus for surveillance purposes against actors critical of his administration.
The region's currencies and markets ended the day with a mixed balance, without a clear pattern, with the Chilean peso as the best performer. Expectations of at least one more interest rate hike by the U.S. Federal Reserve, no matter the dollar's diminished position against G-10 currencies —partly derived from strong China-related reports—, are the basis for this trend.
| Countries | Local currency balance | Local stock index balance |
|---|---|---|
| Colombia | -1.24% | -0.17% (MSCI COLCAP) |
| México | -0.2% | -0.63% (S&P/BMV IPC) |
| Perú | +0.16% | +0.15% (S&P/BVL) |
| Argentina | -0.26% | +1.07% (S&P Merval) |
| Chile | +0.54% | +0.09% (IPSA) |
| Brazil | -0.75% | +0.14% (Bovespa) |
Daily balance of main currencies and stock indexes in Latin America ( Source).
More than 14,000 people were arrested while more than 8,000 illegal weapons were taken off the market in a wide-ranging operation coordinated by Interpol that took place essentially during March in 15 countries in the region. Honduras, El Salvador, Ecuador, Colombia, and Mexico, five of the countries we regularly bring up here for serious episodes of violence, were in the sample. In addition, 203 tons of cocaine worth US$ 5.7 billion were discovered, according to this AFP dispatch.
Argentina appeared to receive a welcome boost from the United States, with a White House official stating to the EFE news agency that his country will offer "constructive assistance" in its negotiations with the International Monetary Fund. At least that is what we assume Alberto Fernandez was seeking with his visit to Washington last March, and it seems that the talks bore fruit. It remains to be seen whether in practice Biden's support translates into an easing of the conditions to which the South American nation is subject, which have been much criticized by Fernandez.
Lula da Silva finally introduced yesterday in the Brazilian Congress his proposal for a fiscal framework, of which only the outline was available. The current left-leaning president has criticized the inability of the fiscal regime in force to sustainably increase public spending, and his proposal now states that it can reach up to 70% of the increase in recurrent revenues. So far the introduction of the bill did not seem to have an impact on the stock market, but we know that it will be fiercely opposed.
This is all for our eighteenth report. I have referenced the sources dynamically in the text, and remember you can learn how and where to follow the LATAM trail news by reading my work here. Have a nice day.
