Americas Brief newsletter: 4-8 January 2019

This week's 5858 Brief newsletter – a round-up of our assessments of events and policies that may impact commercial interests, personnel and assets – looks at the ongoing US government shutdown, disruption to fuel supplies in Mexico, and violent unrest in north-eastern Brazil. United States & Canada • Canada – Central provinces to experience snowstorm today • United States – Shutdown continues as new Congress sworn-in • United States – Northern California to face storm conditions tonight • United States & China – Trade officials meet in Beijing for talks Mexico, Central America & Caribbean • Mexico – Government measures prompt fuel shortages in nine states • Mexico – Seven individuals gunned down in south-eastern tourist town South America • Brazil – Deployment of federal forces to northern state extended to March • Brazil – Federal troops ordered to north-eastern city after attacks • Chile – Eco-terrorist group claims responsibility for capital IED attack • Ecuador – President calls for probe into predecessor’s oil infrastructure works
United States & Canada Snowstorm Canada Canada – Central provinces to experience snowstorm today CANADA – Natural hazard risk: Elevated 8 January: Canada’s weather authorities have issued a winter storm warning today (8 January) for parts of south-eastern Ontario province and south-western Quebec province which will remain effective until the early hours of today (local time). Snowfall is forecast across the southern sections of the country with Montreal expected to receive 10cm of snow and Ontario anticipated to received 20cm of snow. The snowstorm will include strong winds which will hamper visibility on the roads, increasing road travel risks. Why it matters: A2 Global advises business travellers in the impacted areas to avoid road travel where possible and to anticipate potential flights delays at the Québec City Jean Lesage International Airport (YQB) and the Ontario International Airport (ONT). Logistics managers should consider the weather’s impact on their hauliers, factor likely delays into schedules and ensure vehicle-fleets are fit for purpose in the 24-hour outlook. United States – Shutdown continues as new Congress sworn-in UNITED STATES – Political risk: Low 3 January: The new Democratic Party-held House of Representatives voted to end the ongoing partial government shutdown. The bills passed (H.J. Res. 1 and H.R. 21), however, are unlikely to be supported by the Republican Party-held Senate or receive the sign-off of President Donald Trump, due to their lack of funding for the latter’s proposed southern border wall. Why it matters: Various departments of the federal government have been partially shut since 21 December over a dispute on funding for Trump’s proposed border wall with Mexico. Trump and his Republican Party seek USD5 billion for the proposed wall, while the Democrats are unwilling to provide more than approximately USD1.6 billion for border security. Given the lack of consensus in Congress and Trump’s insistence on maintaining the shutdown until funding for the border wall is approved, the shutdown is set to continue until a funding compromise is agreed. Firms requiring non-essential services from affected departments – Homeland Security, Justice, Housing, Agriculture, Commerce, Interior, and the Treasury – should factor the shutdown into operational planning and consult with government partners on service availability. United States – Northern California to face storm conditions tonight UNITED STATES – Natural hazard risk: Elevated 8 January: A new storm is anticipated in northern parts of the western state of California tonight (8 January). This comes after a winter storm that took place over the weekend (5-6 January) cut power to nearly 90,000 homes in the state’s capital, Sacramento. California’s Bay Area will bear the brunt of the coming rainfall, while lighter rain will dampen urban areas farther north such as Portland, Oregon and Seattle, Washington State. Authorities have warned of gale force winds and snow, which are expected in the state’s northern Donner Summit mountainous area, with residents warned that they may face evacuation orders. Why it matters: While today’s storm will not be as strong as the previous one, it will likely hamper emergency services’ efforts to clean up and restore power to affected residents. A2 Global advises individuals in Northern California to anticipate disruptions to power supply and expect adverse driving conditions such as icy roads and limited visibility. Individuals should monitor the local weather conditions and follow the instructions of local authorities. United States & China – Trade officials meet in Beijing for talks UNITED STATES – Political risk: Low CHINA – Political risk: Medium 7 January: The U.S. and China resumed trade talks on 7 January, in China's capital Beijing, with U.S. officials arriving for the first face-to-face negotiations since China’s President Xi Jinping and President Donald Trump of the U.S. agreed to a 90-day truce in their trade war at December's G20 summit. The U.S. trade delegation is led by Deputy U.S. Trade Representative Jeffrey Gerrish, and is seen as a precursor to higher level meetings between the two sides. Why it matters: Although the heads of state will not be attending, the meeting between China and the U.S. can be seen as a de-escalation in the ongoing trade war that officially began on 6 July 2018. A2 Global advises companies which export to China to closely monitor further announcements to gauge whether this represents the beginning of a rapprochement between the world’s two biggest economies.
Mexico, Central America & Caribbean Pemex gas station Mexico – Government measures prompt fuel shortages in nine states MEXICO – Security risk: Elevated 7 January: Petrol stations across nine central states are currently affected by fuel shortages, leading to closures at some stations and long queues at those which still have supplies. The impacted states are Guanajuato, Hidalgo, Jalisco, State of Mexico, Michoacán, Nuevo León, Puebla, Querétaro, and Tamaulipas. The shortages have occurred after the new government of Andrés Manuel López Obrador began delivering fuels from the Salamanca refinery in Guanajuato state to petrol stations via tankers rather than a pipeline, in an effort to cut fuel theft. As transporting fuels via tankers is slower, it has led to shortages at petrol stations. Why it matters: In the two-week outlook, there is a high likelihood that shortages continue as Pemex – the state-owned oil company – adjusts to the new distribution strategy. A2 Global advises individuals to anticipate disruption to travel in the affected areas and to implement contingency measures, such as ride-sharing in company vehicles or using a vetted hotel-approved taxi service. Business travellers in major cities in the impacted states, including Guanajuato’s León, Nuevo León’s Monterrey and Guadalajara in Jalisco, should monitor local updates and avoid all large gatherings due to the heightened risk of protest, both outside petrol stations and in central areas and main squares. Mexico – Seven individuals gunned down in south-eastern tourist town MEXICO – Security risk: Elevated 7 January: Seven men died in a shooting attack at a bar in the town of Playa del Carmen, located in the Yucatán Peninsula in the south-east of the country. State police indicated that the attack happened at a low-income area of the city located 7.1km from the beachside tourist zone. Why it matters: Playa del Carmen is a popular destination for tourists, and Mexico’s leading cruise ship destination. A2 Global advises visitors to Playa del Carmen to avoid areas outside the hotel resorts after dark, when the likelihood of violent crime grows.
South America Brazil police Brazil – Deployment of federal forces to northern state extended to March BRAZIL – Security risk: Medium 4 January: The deployment of federal forces to the northern state of Roraima, which shares a border with Venezuela and Guyana, was extended to 31 March last week. While the decree was issued by former president Michel Temer, it will remain in force under new president Jair Bolsonaro. Federal forces deployed in Roraima are tasked with maintaining law and order amid an influx of Venezuelan migrants. Why it matters: While the extension of the deployment is likely to reduce security risks in Brazil’s northernmost state, the heightened presence of the security forces, many of whom patrol the state’s frontiers with Venezuela and Guyana, is likely to lead to continued friction with migrants at the border. Firms with operations in Roraima state should factor the extension of the deployment into security planning. As there is a high likelihood that large numbers of Venezuelan migrants will continue to travel to Roraima state in the one-year outlook, companies with cross-border operations should monitor local updates and develop contingency planning in case authorities temporarily close the frontier. Brazil – Federal troops ordered to north-eastern city after attacks BRAZIL – Security risk: Medium 6 January: The country’s Ministry of Justice and Public Security ordered 300 troops to be sent to the north-eastern city of Fortaleza, capital of the state of Ceará, to deal with a surge in criminal activity. The decision was made after dozens of attacks against public transport, banks and public infrastructure took place in the city last week by rioters who oppose the introduction of stricter measures in local prisons. The rioters are seen to be protecting the interests of criminal gangs who generally control the country’s prisons. The soldiers will patrol Fortaleza, and other parts of Ceará. Why it matters: The troop deployments come just days after the inauguration of president Jair Bolsonaro, who has pledged to fight criminal gangs across the country. A2 Global advises business travellers and tourists in the country to avoid Fortaleza and affected areas of Ceará due to the high threat of violence, and to monitor the situation in local and international news. Chile – Eco-terrorist group claims responsibility for capital IED attack CHILE – Terrorism risk: Minor 4 January: At approximately 1145 local time on 4 January, an improvised explosive device (IED) exploded at a bus stop on the intersection of Vicuña Mackenna avenue and Curicó street, a central location in the capital Santiago, injuring five people. None of those injured are in a critical condition. The explosion reportedly occurred when an individual waiting at the bus stop touched a bag which had been left there, triggering the blast. The bus stop is located close to the Hospital del Trabajador, a private hospital, and Plaza Italia, a major square where rallies are often held. Responsibility for the attack has been claimed on social media by ‘Individualists Tending to the Wild’, an international eco-terrorist group which operates in Chile and opposes infrastructure projects and extractive industries which may damage the environment. Why it matters: While the investigating authorities have yet to determine who was responsible for the attack, the eco-terrorism group’s claim is largely credible, due to members of the group being located in Chile, and the lack of plausible alternative perpetrators. Since the incident, the group has issued a statement pledging to carry out further attacks. A2 Global warns business travellers to Santiago in the one-year outlook of the heightened risk of eco-terrorist attacks, particularly in central areas of the capital. Business travellers should exercise heightened vigilance, avoid unfamiliar objects, and report any suspicious person or object to the law enforcement authorities. Ecuador – President calls for probe into predecessor’s oil infrastructure works ECUADOR – Political risk: Elevated 3 January: President Lenín Moreno asked the public prosecutor’s office to investigate USD4.9 billion of oil-related infrastructure projects commissioned by the administration of former president Rafael Correa, his predecessor. The claims relate to an upgrade to the Esmeraldas oil refinery, as well as works on the Pacific Refinery, Monteverde Sea Terminal, Pascuales-Cuenca polyduct and a natural gas liquefaction plant. Appearing on national television, Moreno claimed that the projects should have cost half the amount they did and that ‘this theft of public funds cannot go unpunished’. Why it matters: Since becoming president in May 2017, Moreno has had a fractious relationship with Correa, a former political ally to whom he served as vice-president from 2007 to 2013. There is a high likelihood that the projects will be investigated, in particular for cost overruns and opaque bidding processes. A2 Global advises firms involved in the five projects to ensure that all financial transactions are accounted for, monitor updates on the possible investigation and cooperate with the authorities.