LATIN AMERICA ADVISOR
www.thedialogue.org
BOARD OF ADVISORS
Diego Arria
Director, Columbus Group
Devry Boughner Vorwerk
Corporate VP, Global Corporate Affairs
Cargill
Joyce Chang
Global Head of Research,
JPMorgan Chase & Co.
W. Bowman Cutter
Former Partner,
E.M. Warburg Pincus
A DAILY PUBLICATION OF THE DIALOGUE
FEATURED Q&A
TODAY’S NEWS
How Well Is
Mexico Battling
Organized Crime?
Dirk Donath
Senior Partner,
Catterton Aimara
Barry Featherman
Senior Director,
International Government Affairs,
Gilead Sciences
James R. Jones
Chairman, ManattJones
Global Strategies
Craig A. Kelly
Director, Americas International
Gov’t Relations, Exxon Mobil
John Maisto
Director, U.S. Education
Finance Group
Nicolás Mariscal
Chairman,
Grupo Marhnos
Thomas F. McLarty III
Chairman,
McLarty Associates
Carlos Paz-Soldan
Partner,
DTB Associates, LLP
Beatrice Rangel
Director,
AMLA Consulting LLC
Gustavo Roosen
Chairman of the Board,
Envases Venezolanos
Andrés Rozental
President, Rozental &
Asociados and Senior
Policy Advisor, Chatham House
Shelly Shetty
Head, Latin America
Sovereign Ratings, Fitch Inc.
Roberto Sifon-Arevalo
Managing Director, Americas
Sovereign & Public Finance Ratings,
Standard & Poor’s
Brazil, OAS Chief
Call on Venezuela
to Hold Elections
Brazilian Foreign Minister Aloysio Nunes said the international
community must hold Venezuela
accountable. Protesters took to
the streets again Monday in Caracas to demonstrate against the
government of President Nicolás
Maduro.
BUSINESS
Peter Hakim
President Emeritus,
Inter-American Dialogue
Jon Huenemann
Vice President, U.S. & Int’l Affairs,
Philip Morris International
POLITICAL
Page 2
Marlene Fernández
Corporate Vice President for
Government Relations,
Arcos Dorados
Donna Hrinak
President, Boeing Latin America
Tuesday, April 11, 2017
Chihuahua Governor Javier Corral said Mexico’s government is not doing enough to help the
state fight organized crime. // File Photo: Mexican Government.
Q
Mexico’s Chihuahua state is unable to tackle its problems
with organized crime and needs more federal help, Governor
Javier Corral said last month. Corral added that the country’s
federal government is “notably absent” in the fight against
violence in the northern border state. More than four years into his term,
how well has President Enrique Peña Nieto addressed organized crime
in Mexico? What must he do in order to combat drug cartels and other
criminals more effectively? What is the outlook for security cooperation
between Mexico and the United States during U.S. President Donald
Trump’s administration?
A
Raúl Benitez Manaut, researcher at the Center for Interdisciplinary Research in Science and Humanities at the National
Autonomous University of Mexico (UNAM): “President Enrique Peña Nieto’s government has failed in its attempt to implement a new strategy to fight drug trafficking. He continued the strategy
of fighting the war on drug trafficking that was started by his predecessor,
Felipe Calderón, and which has received U.S. support through the Mérida
Initiative. In 2016, the level of violence grew to more than 20,000 homicides and expanded to other states in the country, such as Jalisco and
Nayarit. In Chihuahua state, where the number of homicides had been cut
in half, Ciudad Juárez had been said to have succeeded in restoring order.
However, since last year, it has returned to the levels of violence that it
saw in the tragic years of 2008 to 2010. Also in Chihuahua, under current
Governor Javier Corral, assassinations of journalists have occurred, and
the newspaper El Norte decided to shut down because of aggression
Continued on page 3
COPYRIGHT © 2017, INTER-AMERICAN DIALOGUE
Brazil’s Azul
Raises $645 Mn
in Initial Public
Offering
The amount raised by the Brazilian
airline was more than expected.
High investor demand led Azul to
increase the size of the deal by
nearly one-fifth.
Page 2
POLITICAL
Chile’s Lagos Exits
Presidential Race
Former Chilean President Ricardo
Lagos withdrew from the race
after the governing Socialist Party
endorsed Alejandro Guillier as its
presidential candidate. Lagos had
been polling in the single digits.
Page 2
Lagos // File Photo: Inter-American
Dialogue.
PAGE 1
Tuesday, April 11, 2017
LATIN AMERICA ADVISOR
POLITICAL NEWS
Brazil, OAS Chief
Call on Venezuela
to Hold Elections
The Brazilian government and the secretary-general of the Organization of American
States, Luis Almagro, on Monday called on
Venezuela to hold elections, Reuters reported. Following a meeting in Brasília, Almagro
said elections would be the only way to solve
Venezuela’s political crisis. In some of the government’s strongest words against President
Nicolás Maduro’s administration, Brazilian
Foreign Minister Aloysio Nunes said the
international community must hold Venezuela
accountable. “Brazil supports an honest and
effective international political dialogue to
guarantee the full restoration of democracy.”
Venezuelan opposition protesters took to
the streets again on Monday to demonstrate
against the government and the economic crisis under the Maduro administration, continuing what has been the longest-running surge
of anti-government protests in three years.
Maduro’s government last year blocked the
prospect of a recall election, and on Friday the
government banned opposition leader and twotime presidential candidate Henrique Capriles
from holding office for 15 years.
Lagos Drops Out
of Chilean
Presidential Race
Former Chilean President Ricardo Lagos on
Monday dropped out of the country’s presidential race, a day after the country’s ruling
Socialist Party endorsed Alejandro Guillier as
its presidential candidate, El Mercurio reported.
Lagos, who served as Chile’s president from
2000 to 2006, launched his candidacy last
September to return to the office, but he said
in televised remarks Monday that his did not
receive the support necessary to continue his
candidacy. “We detailed our platform ... but
I must admit that my own political home, the
center-left, has not converged around it,” he
said, Reuters reported. The former president
had been polling at only about 3 percent support, according to polling firm Adimark. Lagos
is chair emeritus of the board of directors of
the Inter-American Dialogue, which publishes
NEWS BRIEFS
Guillier // File Photo: Guillier Campaign.
U.S., Canada, Mexico
Launch Joint Bid
for 2026 World Cup
the Advisor. His departure from the race means
Guillier, a former journalist and current senator,
is likely to face former President Sebastián
Piñera, a conservative, in November. Piñera,
who was in office from 2010 to 2014, has a
pro-growth free-market agenda, while Guillier
has vowed to undertake social-democratic
reforms. Guillier’s outsider image has become
an asset amid a weak economy and corruption scandals in Chile. Guillier registered 23
percent support in a recent Adimark poll, while
Piñera was ahead with 27 percent. Center-left
presidential candidate Carolina Goic of the
Christian Democratic Party, who was polling
at just 2 percent, said Monday that she might
not participate in the New Majority coalition’s
primary, set for July. The race also includes
leftist Beatrice Sánchez and conservative populist Manuel José Ossandón, who are polling
in the single-digits. [Editor’s note: See Q&A on
Chile’s presidential race in the Jan. 23 issue of
the Advisor.]
BUSINESS NEWS
Brazil’s Azul Raises
$645 Million in IPO
São Paulo-based airline Azul, along with
several shareholders, raised a larger-than-expected 2.02 billion reais, or $645 million, in
COPYRIGHT © 2017, INTER-AMERICAN DIALOGUE
At Least Seven Killed
in Collapse at Mexico City
Parking Garage
At least seven people were killed and 10 injured
in Mexico City by concrete slabs that collapsed
on workers who were building a parking garage
on Monday, emergency services said, Reuters
reported. The head of the Mexican capital’s
emergency services, Fausto Lugo, said the collapse occurred when workers were attempting
to place a concrete beam in the structure.
The United States, Canada and Mexico on
Monday launched a joint bid to host the 2026
World Cup. The United States said it would
be the senior partner in the bid, hosting 60 of
the tournament’s 80 games as well as all of
the games from the quarterfinals through the
final, The New York Times reported. As soon
as this week, the three countries are to present
to FIFA, world soccer’s governing body, a plan
for the World Cup that is to involve more cities,
teams and players, the newspaper reported.
Following an expansion, the 2026 World Cup is
to comprise 48 teams, up from the current 32.
Ecuador’s Economy
Contracts 1.5 Percent
Ecuador’s economy contracted by 1.5 percent
last year due to lower oil prices, a strong
dollar that hurts the dollarized export-oriented economy and a severe earthquake, the
country’s central bank said Monday, Reuters
reported. The economic decline was Ecuador’s
first contraction in a decade. The country’s
economy grew by 0.2 percent in 2015, and the
central bank said the economy could grow by
a projected 1.42 percent this year. Outgoing
President Rafael Correa said the economy
grew by 1.5 percent year-over-year in the fourth
quarter of last year.
PAGE 2
Tuesday, April 11, 2017
LATIN AMERICA ADVISOR
a dual initial public offering in São Paulo and
New York on Monday, Reuters reported. High
investor demand caused Brazil’s third-largest
airline to increase the size of the deal by nearly
one-fifth. Azul priced the equivalent of 72
million preferred shares at 21 reais each, which
was the midpoint in the suggested price range.
Investors bid more than
five times the amount of
Azul stock on offer.
Another 13 million shares were sold in the IPO,
with investors bidding more than five times the
amount of Azul stock on offer. Seventy percent
of the IPO was in New York, with the rest in São
Paulo. A person with knowledge of the deal
said the IPO values Azul at a 4 percent premium to larger Brazilian airline rival Gol Línhas
Aéreas Inteligentes. Azul’s successful offering
indicated that Brazilian securities regulator
CVM’s decision on Thursday to suspend the
IPO for up to 30 days, due to several reports
that the company had given some investors information that was not included in the transaction’s official documentation, did little to stifle
interest in the offering. Azul received clearance
to pursue the IPO on Friday after agreeing to
include estimates of projected gains from
Azul’s investment in TAP Transportes Aéreos
Portugueses in its official prospectus.
F E A T U R E D Q & A / Continued from page 1
against its reporters. Donald Trump’s arrival
as president of the United States has worsened the situation, as it reduces cooperation
amid his insistence on building a wall along
the border. Mexican families in the United
States are worried that their relatives will
be deported, and a main risk is the renegotiation of NAFTA, which could lead to a
profound economic crisis in Mexico. Another
risk is that Trump’s aggressions will lead
to increased anti-U.S. sentiment, leading
to a freeze in the countries’ cooperation
in fighting organized crime. Public opinion
in Mexico is turning to favor a more firm
position against Trump, which can lead to
revived nationalism.”
in the armed forces, clouded relations with
suspicion and distrust, raising concerns that
Mexico would be treated unfairly. But the
armed forces needed new organizations,
such as special forces, and had to modernize a wide range of capabilities, such as
A
radars, helicopters and drones. There was
no history of constructive bilateral defense
relations. The U.S. military realized in the
1990s that closer military ties made sense,
but developing collaboration with a prickly
neighbor proved a frustrating challenge.
Since 2007, after the Mérida Initiative,
bilateral defense relations moved slowly but
positively toward mutual respect and trust
based on shared responsibility. The only
way to successfully confront transnational
organized crime is to work hand-in-hand.
To do so, the U.S. side came to realize,
quoting former Defense Secretary Robert
Gates, that ‘Mexico has its foot on the gas
John Cope, visiting senior fellow at the Institute for National
Strategic Studies at National
Defense University: “President
Calderón ordered Mexico’s armed forces to
fight organized crime 10 years ago, making
the military the centerpiece of security
cooperation. The military’s role expanded
as successive administrations worked to
reform and restructure the country’s weak
police forces. Early on, the Secretariat of
National Defense (Army and Air Force) and
the Secretariat of the Navy realized that U.S.
assistance would be essential. However,
Mexico’s emotional nationalism, particularly
The only way to
successfully confront
transnational
organized crime is to
work hand-in-hand.”
— John Cope
Continued on page 4
Southern Copper
Says Peru Mines Near
Normal Amid Strike
Southern Copper said operations at its Cuajone
and Toquepala mines are near normal, despite
a strike that started Monday, El Comercio
reported. The two mines were operating at
98 percent capacity, while the company’s Ilo
refinery was operating 100 percent normally,
said the company, which is owned by Grupo
México. A union representative, however, said
the work stoppage has affected 80 percent
of the mines’ capacity. The company did not
offer more details about the strike, but in
previous strikes, the mining company has put
contingency plans into action, the newspaper
reported. José Espejo, head of the unified
union of Southern Copper workers, which
represents 2,200 miners, said striking workers
would prevent the company from transporting
copper concentrates to the Ilo refinery. “We are
settled in on each side of the rail line, and we’re
not going to let the train pass,” he said. Espejo
added that another union of 800 workers at the
Toquepala mine is planning to join the strike
on Wednesday, Reuters reported. A spokesman
for the company said union leaders would meet
with company representatives in order to try to
COPYRIGHT © 2017, INTER-AMERICAN DIALOGUE
reach a solution to the conflict. Workers at the
Southern Copper mines are demanding better
working conditions and increased profit-sharing, according to Metal Bulletin. The strike at
the Southern Copper mines follows labor disputes earlier this year at Peru’s largest copper
mine, Cerro Verde, and Chile’s Escondida, the
world’s largest copper mine. Southern Copper
last year increased its production to 900,000
metric tons of copper last year, a 21 percent
year-on-year increase, following an expansion
of one of its mines in Mexico. The strike is the
first since unions at the Cuajone and Toquepala mines and the Ilo smelter formed a single
union, Platts reported.
PAGE 3
Tuesday, April 11, 2017
LATIN AMERICA ADVISOR
LATIN AMERICA ADVISOR
F E A T U R E D Q & A / Continued from page 3
pedal … and would determine how quickly
we would expand our cooperation, and set
the priorities for collaborative initiatives.’
WikiLeaks disclosures severely rocked the
emerging relationship. With the leadership of
Presidents Calderón and Obama, despite the
Mexican armed forces being sullied in the
cables, both countries continued to engage,
and the relationship deepened. Today, President Trump’s hostile and bombastic rhetoric
about Mexico and its military presents a
similar challenge. Thus far, senior U.S. and
Mexican military leaders recognize that
sometimes politicians can say things that
put relations at risk. However, both defense
institutions value the collaboration to date
and want to keep it going.”
A
Amanda Mattingly, director
for Latin America at The Arkin
Group: “The governor of Chihuahua is not the only one to make
this claim—the attorney general of Guerrero
recently said his state does not have the
capacity to confront organized crime either.
The consistency of the message from Chihuahua to Guerrero indicates that President
Enrique Peña Nieto has been unable to face
down the security challenges of Mexico. In
his tenure, the level of violence has continued unabated as a result of organized crime
groups and drug cartels operating in large
swaths of the country with impunity. Reportedly, the homicide rate has even spiked since
the capture and extradition of ‘El Chapo’ to
the United States on drug charges. This was
supposed to be a victory for Peña Nieto,
who is still under fire for the botched federal
investigation into the disappearance of 43
students in Guerrero in 2014. But instead,
the murder rate has increased as members
of the various organized crime groups and
Unfortunately, a
wall will not solve
the security
challenges in Mexico.”
is published every business day by the
Inter-American Dialogue, Copyright © 2017
Erik Brand
Publisher
[email protected]
Gene Kuleta
Editor
[email protected]
Nicole Wasson
Reporter, Assistant Editor
[email protected]
— Amanda Mattingly
Michael Shifter, President
drug cartels are vying for power. Bringing ‘El
Chapo’ to justice was also supposed to be
an example of good cooperation between
Mexican and U.S. authorities, but now that
has been overshadowed by the growing
difficulties between the two countries over
trade, immigration and the proposed border
security wall. Unfortunately, a wall will not
solve the security challenges in Mexico, and
deteriorating relations between Mexico and
United States will only exacerbate these
challenges and could lead to a breakdown in
security cooperation altogether. This is poor
timing, as the Mexican government needs
support if it is to implement a real security
plan that strengthens the judicial system and
law enforcement, cracks down on corruption and impunity, and provides economic
opportunities for communities overrun by
organized crime.”
Genaro Arriagada, Nonresident Senior Fellow
Sergio Bitar, Nonresident Senior Fellow
Joan Caivano, Director, Special Projects
Kevin Casas-Zamora, Nonresident Senior Fellow
Ariel Fiszbein, Director, Education Program
Alejandro Ganimian, Nonresident Fellow
Peter Hakim, President Emeritus
Claudio Loser, Senior Fellow
Nora Lustig, Nonresident Senior Fellow
Margaret Myers, Director, China and
Latin America Program
Manuel Orozco, Director, Migration,
Remittances & Development
Jeffrey Puryear, Senior Fellow
Tamar Solnik, Director, Finance & Administration
Lisa Viscidi, Director, Energy Program
Latin America Advisor is published every
business day, except for major U.S. holidays,
by the Inter-American Dialogue at
1155 15th Street NW, Suite 800
Washington, DC 20005
www.thedialogue.org
ISSN 2163-7962
The Advisor welcomes comments on its Q&A
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at [email protected].
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