Americas Brief newsletter: 6-12 March 2019

The latest Americas Brief newsletter analyses a severe power outage across Venezuela, financial risks in Argentina, and heavy flooding in São Paulo, Brazil.

United States & Canada

• United States – Thunderstorms in south-central states increase travel risks
• United States & Venezuela – U.S. orders diplomats to leave Venezuela

Mexico, Central America & Caribbean

• Regional – Multiple countries, airlines order grounding of Boeing 737 Max jets
• Haiti – Low turnout at opposition protests signals de-escalation in civil unrest

South America

• Argentina – Peso reaches new low, heightening financial risks
• Argentina – Cabin crew strike at domestic carrier heightens travel risk
• Brazil – Twelve dead in São Paulo flooding, as more heavy rain forecast
• Colombia – IED attack on oil pipeline highlights guerrilla group threat
• Venezuela – Nationwide blackout heightens operational, travel risks


United States & Canada

Thunderstorms

United States – Thunderstorms in south-central states increase travel risks
UNITED STATES – Travel risk: Medium
12 March: Thunderstorms are forecast in areas of south-central states including Arkansas, Kansas, Louisiana, Missouri, New Mexico, Oklahoma and Texas this afternoon (12 March). Powerful winds, hail and downpours will accompany the thunderstorms, while there is a heightened risk of tornadoes and isolated flooding. Major urban areas likely to be impacted include Dallas and San Antonio in Texas, and Oklahoma City in Oklahoma. The thunderstorms are forecast to continue into tomorrow (13 March).

Why it matters: Individuals planning to travel in or to the impacted area should re-confirm their journey’s status and allow additional time for travel. Monitor local forecasts, exercise heightened vigilance and be prepared to shelter indoors during the thunderstorms. In light of the weather conditions, logistics managers should instruct hauliers to reduce speed and factor likely travel disruption into drivers’ schedules.

United States & Venezuela – U.S. orders diplomats to leave Venezuela
UNITED STATES – Political risk: Low
VENEZUELA – Political risk: Extreme
11 March: U.S. Secretary of State Mike Pompeo announced that all remaining diplomatic personnel at its embassy in Venezuela will leave the country by the end of this week. According to Pompeo, the decision was prompted by the deteriorating situation in Venezuela and the view that the U.S. staff presence has become a ‘constraint’ on U.S. policy.

In separate but related developments, the U.S. Treasury Department yesterday imposed sanctions on bank Evrofinance Mosnarbank, a Russian-Venezuelan joint venture, over its support for Venezuela’s state oil firm PDVSA. The bank’s U.S. assets have been frozen and U.S. citizens barred from doing business with it. Furthermore, the ongoing blackout has entered its fifth day, with schools and businesses remaining closed until at least 14 March.

Why it matters: The U.S.’s moves on embassy personnel and sanctions come as the country seeks to build pressure on the administration of de facto president Nicolás Maduro, whose government it no longer recognises. Business travellers should avoid all non-essential travel to the country until there is an eventual improvement in the humanitarian, economic and political situation. Compliance officers should factor the measures against Evrofinance into sanctions programmes.


Mexico, Central America & Caribbean

Airplane

Regional – Multiple countries, airlines order grounding of Boeing 737 Max jets
12 March: Numerous countries and airlines around the world have ordered the grounding of Boeing 737 Max aircraft, particularly the Max 8 model, amid heightened concern over safety. This follows the crash of an Ethiopian Airlines Boeing 737 Max 8 jet on 10 March, in which 157 people were killed. Following China and Indonesia’s decision to forcibly ground the aircraft yesterday (11 March), the U.K., Norway, Australia, Malaysia, Singapore, Vietnam and multiple commercial airlines have announced similar measures and restrictions on flying in their airspace in the past 24 hours. Airlines which have grounded their Boeing 737 Max aircraft include: Aerolíneas Argentinas (Argentina), Aeroméxico (Mexico); Cayman Airways (Cayman Islands); Comair (South Africa); Eastar Jet (South Korea); Gol (Brazil); Jet Airways (India); MIAT Mongolian Airlines (Mongolia); Norwegian Air (Norway); and SilkAir (Singapore).

Why it matters: While in some cases, impacted airlines will switch scheduled flights on Boeing 737 Max jets to alternative aircraft, most airlines have limited spare capacity, which will likely result in a large number of flights being delayed or cancelled. The decision of countries including the U.K. and Australia to order the grounding of the aircraft also increases the likelihood that U.S. authorities will do the same, which would cause significant disruption to U.S. routes. Business travellers with scheduled flights on the impacted airlines should re-confirm their flight status prior to travelling to the airport. Individuals with flights on other airlines should continue to monitor announcements from their carrier in anticipation of possible flight disruption.

Haiti – Low turnout at opposition protests signals de-escalation in civil unrest
HAITI – Travel risk: High
7 March: A coalition of political parties and organisations called for protests in major urban areas across the country to demand the resignation of President Jovenel Moïse.

Why it matters: The demonstrations, which were linked to those held last month, were not well attended, signalling a de-intensification of protest activity. The protests were first organised amid public anger over the alleged misappropriation of funds from the PetroCaribe subsidised oil programme by government officials. Despite recent low turnout at protests, A2 Global advises individuals in Haiti to monitor local updates, exercise extreme vigilance, and avoid all protests as a precaution. If protests do occur, individuals should not attempt to cross roadblocks and only travel to Toussaint Louverture International Airport (PAP), which serves Port-au-Prince, if authorities say that it is safe to do so.


South America

Argentine peso

Argentina – Peso reaches new low, heightening financial risks
ARGENTINA – Political risk: High
7 March: The peso (ARS) fell more than four per cent against the U.S. dollar (USD) to ARS42.34:USD1, a new record low. Over the week prior to 7 March, the currency lost approximately 8 per cent of its value against the USD.

Why it matters: The fall comes amid heightened investor concern over the country’s difficult economic situation, the ability of government-led measures to lower inflation and boost growth, and the upcoming presidential elections, scheduled for October 2019. While the administration of President Mauricio Macro has implemented a series of unpopular spending cuts in an effort to substantially reduce public debt and fulfil the terms of an IMF standby agreement, these have not halted the peso’s fall. This began in early 2018, and has led to a series of demonstrations. A2 Global warns that a continued depreciation of the peso will increase the cost of imported goods, further fuelling inflation – which stands at approximately 50 per cent. Businesses should factor the peso’s slide into financial planning, and adjust currency strategies to reflect a likely continued depreciation of the peso in the one-month outlook.

Argentina – Cabin crew strike at domestic carrier heightens travel risk
ARGENTINA – Travel risk: Medium
13 March: Cabin crew members at domestic airline Austral represented by the AAA union will strike for 24 hours. The strike is over the airline’s proposal to reduce the number of cabin crew on Embraer E190 jet flights from three to two. The strike action, which is set to commence at 0000 local time, is likely to lead to the cancellation of multiple flights on 13 March, with residual disruption likely continuing into 14 March.

Why it matters: Business travellers planning to fly with Austral on 13 March should contact the airline to confirm the strike’s impact on their flight. Individuals requiring domestic flights on 13 March should consider alternative carriers, such as Aerolíneas Argentinas, Andes Líneas Aéreas and LATAM. Individuals with planned Austral flights on 14 March should re-confirm their flight status due to the risk of residual disruption.

Brazil – Twelve dead in São Paulo flooding, as more heavy rain forecast
BRAZIL – Natural hazard risk: Medium
12 March: Twelve people have been killed in flooding in the south-eastern business hub of São Paulo since heavy rain began on 10 March. Four of those who died were killed when a house collapsed in the city’s south-eastern Ribeirão Pires municipality, five people drowned as rivers swelled, while others, including one infant, were killed in mudslides. Nearly 11cm of rain fell between the afternoon of 10 March and yesterday afternoon (11 March), around 70 per cent of March’s usual total rainfall in the city. More heavy rain and strong winds are forecast today (12 March).

Why it matters: Business travellers in São Paulo should monitor local forecasts and minimise travel where possible. Exercise extreme caution and do not attempt to cross flooded roads; strong winds will cause trees and powerlines to fall, heightening road travel risks. Consider sheltering in secure places during the height of the storm. Managers in the São Paulo area should consider allowing staff to work remotely to mitigate the travel risk.

Colombia – IED attack on oil pipeline highlights guerrilla group threat
COLOMBIA – Security risk: High
6 March: On the evening of 6 March, an improvised explosive device (IED) attack led to a fire on a section of the Trasandino oil pipeline in the south-western state of Nariño, state oil company Ecopetrol announced. The attack, which took place in the rural Mallama municipality, did not result in any casualties. The pipeline, which transports fuel from oil fields in neighbouring Putumayo department, was not operational at the time of the incident.

Why it matters: The attack is the fourth on the Trasandino pipeline in 2019. While Ecopetrol did not comment on the likely perpetrators, the location and nature of the attack are similar to those of previous incidents carried out by the National Liberation Army (ELN), or dissident members of the FARC, which demobilised under a 2016 peace agreement. The attack also highlights the wide geographical spread of the threat posed to energy infrastructure in the country; on 5 March, a similar attack took place in the north-eastern state of Arauca. A2 Global advises energy companies operating in Colombia to factor such IED attacks into security assessments, and minimise non-essential staff travel to areas that have been targeted.

Venezuela – Nationwide blackout heightens operational, travel risks
VENEZUELA – Political risk: Extreme
7 March: A major power outage struck across the country, impacting the capital Caracas and 15 of Venezuela’s 23 states. The outage, which began at approximately 1700 local time on 7 March, led to significant transport disruption. In Caracas, the lack of power supplies resulted in the suspension of metro services, while flights at Maiquetía ‘Simón Bolívar’ International Airport (CCS), which serves the city, were diverted. State-owned electricity firm Corpoelec blamed the outage on an act of ‘sabotage’ at the Guri Dam, a hydroelectric power station which supplies a large amount of Venezuela’s electricity requirements.

Why it matters: While outages have become increasingly frequent since 2016 – when the government declared a 60-day nationwide state of emergency over the issue – they have rarely affected such a large area. Companies with sites in Venezuela should monitor updates, anticipate power disruption, factor these into operational plans, and adjust services accordingly. Individuals with flights to or from airports across Venezuela should re-confirm their flight status.

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