SIM REPORT: Latin America & Caribbean, Issue 1

issue 01, 3 oCTOBER 2019


Brazil: Bolsonaro faces international condemnation over Amazon fires

On 24 September, Brazilian President Jair Bolsonaro gave the first leader’s speech of the 74th United Nations (UN) General Assembly at the institution’s headquarters in New York City. In his speech, which came after several weeks of international outcry over a sharp increase in wildfires in the Amazon rainforest, Bolsonaro denied that the Amazon was being ‘devasted or consumed by fire, as the media deceitfully says’. Bolsonaro further accused the international press of ‘sensationalist attacks’, and said that foreign critics questioned Brazil’s sovereignty over its areas of the Amazon in a ‘colonialist’ manner. Rebutting international critics of his administration’s environmental policies, which have facilitated logging and farming in the Amazon, Bolsonaro claimed, without evidence, that Brazil is ‘one of the countries that most protects the environment’.

Global attention on Brazil’s wildfires – which occur annually with varying intensities – was sparked after data from the National Institute for Space Research (INPE) revealed a steep increase in the number of fires burning this year. INPE data recorded a 76 per cent rise in the number of fires in the year to 29 August, compared to the previous year. This number – the highest since 2010 – coincided with growing civil society concern over the pace of climate change, and calls for government action to address it. A global movement, personified by 16-year-old climate activist Greta Thunberg and epitomised by the actions of environmentalist group Extinction Rebellion, has prompted millions of people to take to the streets in 2019, and increased awareness of extreme weather events.

Since becoming president in January, however, far-right Bolsonaro has imposed a series of measures promoting economic activity in the Amazon. On his second day in office, Bolsonaro signed an executive order transferring responsibility for decisions concerning indigenous land rights from the FUNAI indigenous affairs agency to the ministry of agriculture. The current administration has also reduced the budget for Ibama, the country’s environmental protection agency, by 25 per cent since January; funding for the prevention and control of forest fires has decreased 23 per cent. Bolsonaro’s support for economic activities in the Amazon, and the measures imposed since he took office, have likely encouraged illegal logging in the Amazon, and prompted further illegal deforestation for cattle ranching.

While Bolsonaro has sought to deflect attention from the wildfires, even posting distasteful comments on the appearance of French President Emmanuel Macron’s wife on social media, these have incited overwhelming international condemnation of his government’s environmental policies and response to the wildfires. Several foreign companies, including US clothing giant VF Corporation and Sweden-based fashion company H&M, have announced they will halt purchases of Brazilian leather over environmental concerns, while there have been calls from civil society groups for a boycott of Brazil’s products. Furthermore, member states of the European Union have said they will block the provisionally-agreed EU-Mercosur trade agreement unless more action is taken to prevent environmental damage. On 18 September, lawmakers from nearly all of Austria’s parties rejected the draft deal in the parliament’s European Union subcommittee. The increase in the number in wildfires, and Bolsonaro’s uncompromising response to them, highlight the growing significance of climate change in political and corporate affairs. In light of these developments, executives should assess the links between their supply chains and environmental damage.


Mexico: Insecurity on major highways poses risks to supply chain security

Insecurity on highways in central areas of the country is compelling hauliers to relocate to safer locations in northern Mexico, according to recent reports in the local press. In comments published in the El Sol de San Luis newspaper on 29 September, Raúl Torres Mendoza, the national advisor of the AMOTAC hauliers’ organisation, stated that more than 300 drivers from the north-central state of San Luís Potosí have relocated to the border city of Nuevo Laredo this year, amid a 30 per cent increase in robberies against vehicles from San Luís Potosí while crossing other states. Torres Mendoza highlighted that drivers are choosing to re-locate to Nuevo Laredo as the risk of vehicle and cargo theft is lower on Federal Highway 85, which links it to Mexico City.

The area of the country which has experienced the sharpest increase in highway crimes is the central El Bajío region. This includes areas of Aguascalientes, Guanajuato, Jalisco, and Querétaro states, which have significant agriculture, automotive, and manufacturing sectors. According to Torres Mendoza, the risk of vehicle theft has increased particularly quickly in Guanajuato’s cities, including León, Guanajuato, and Silao. Elsewhere in the country, there is a heightened risk of theft in the states of Puebla, Tlaxcala, Veracruz, and Michoacán.

Cargo theft poses a significant risk to the personal security of drivers, as well as to integrated supply chains. As Mexico’s economy is highly integrated with those in the US and Canada, with whom it has traded on preferential terms since the NAFTA agreement came into force in 1994, disruption to logistics within Mexico also affects producers and retailers north of the border. According to a July report from TT Club and BSI Supply Chain Services & Solutions, Mexico accounts for 68 per cent of all cargo theft across North America, with attacks often characterised by aggressive and sometimes violent hijackings. Ensuring that drivers and cargo in Mexico remain safe has also been prioritised by US politicians, who are yet to ratify the USMCA, which is set to supersede NAFTA. In early September, Democrat congressman Vicente Gonzalez, who represents a border district in Texas, wrote to Mexico’s ambassador and secretary of security and civilian protection, and urged them to ensure safety on Highway 40D – a major east-west route in Mexico – prior to the US Congress’ vote on the trade agreement.

Increasing insecurity on major highways highlights the broader challenges facing President Andrés Manuel López Obrador, who took office in December 2018. Despite pledging to tackle insecurity in his election campaign and demilitarise the country’s fight against drugs cartels and organised criminal groups, violence has steadily increased during his tenure. The number of murders reached an all-time high in the first half of 2019, with 14,603 murders nationwide between January and June. While López Obrador has launched a new integrated national police force, the National Guard, to tackle insecurity across the country, it has yet resulted in de-escalation of violence or crime. Security managers at organisations whose supply chains are dependent on the transport of goods from Mexico, should monitor local and national security developments, and assess how staff and supply chain security can be improved.


Uruguay: Insecurity and sluggish economy likely to be key issues in presidential race

On 27 October, voters across Uruguay will go to the polls to elect the country’s next president, as well as most members of the bicameral legislature. The election, for which approximately 2.7 million people are eligible to vote, comes after 14 consecutive years of government by the Frente Amplio, a coalition of left-wing parties. In the likely scenario that no candidate secures a majority in the poll, a run-off election will be held in late November.

The election is likely to be a closely-fought contest between Frente Amplio candidate and former mayor of capital Montevideo, Daniel Martínez, and Luis Alberto Lacalle Pou, a 46-year-old senator with two decades of legislative experience from the centre-right Partido Nacional. Other prominent candidates in the election will include Ernesto Talvi, an economist and academic from the centrist Partido Colorado, and Guido Manini Ríos, a retired general, from the right-wing Cabildo Abierto party. According to a poll from Opción Consultores released on 26 September, Martínez is currently leading the race and polling at 30 per cent, followed by Lacalle Pou on 23 per cent, and Talvi and Manini Ríos both on 12 per cent. Recent polls simulating a run-off between Martínez and Lacalle Pou, however, have Lacalle Pou slightly ahead.

The election campaign is likely to focus on two particular issues: rising insecurity, particularly in Montevideo, and the country’s sluggish economy. Last year, homicides increased 35 per cent nationwide amid increased competition between drugs gangs and local criminal organisations. The violence, which has mostly been concentrated in poorer peripheral areas of Montevideo, has coincided with the expansion of transnational drugs cartels’ operations in the country, many of which target the Port of Montevideo as a gateway to lucrative markets in Europe and Asia. This deterioration of security prompted Partido Nacional senator Jorge Larrañaga to launch a campaign for a public security reform plebiscite under the banner ‘Live without Fear’, which received over 400,000 signatures, surpassing the threshold needed to hold such a vote. Alongside their presidential ballot, electors will also vote on a package of security reforms intended to increase punishments for serious crimes and grant more powers to law enforcement bodies.

Candidates will also focus on proposals to stimulate the country’s economy; GDP growth is forecast to be just 0.6 per cent in 2019, however the government estimates annual inflation will reach 7.5 per cent this year. Unemployment, meanwhile, is close to 8 per cent. Furthermore, the country’s economy faces several external threats, particularly the economic crisis in neighbouring Argentina, low growth in Brazil, and threats to global trade, including the proliferation of tariff and non-tariff barriers.

A2 Global assesses that while Lacalle Pou is the most likely victor of the presidential race, given the multiple security and economic challenges facing the country incurred under three consecutive Frente Amplio governments, Martínez and the Frente Amplio retain high levels of support among Uruguay’s working classes. A run-off between Lacalle Pou and Martínez, which is the most likely outcome of the 27 October poll, would particularly favour Lacalle Pou, who would earn the vote of many supporters of Talvi and Manini Ríos. Companies which operate in Uruguay should monitor election-related developments in the one-month outlook and assess how each candidate’s programmes would impact operations and planned investments.


Open Source Intelligence Review

CORRUPTION RISK

ECUADOR

6 September 2019

Ecuador will not grant contracts to Odebrecht until it compensates corruption damage

The Ecuadorian government will not grant contracts to Odebrecht until that Brazilian company compensates the damages caused by the delivery of bribes in exchange for contracts in the country, Ecuadorian President Lenin Moreno said Thursday (5 September).

Source: RFI (in Spanish)

A2 Global comments: Odebrecht has been at the centre of corruption allegations across the world, and especially within Latin America, since the Operation Car Wash scandal emerged in 2014. The company sought to bribe high-level officials across the region for more than a decade, in an effort to gain major contracts. In Ecuador, former Vice-President Jorge Glas was sentenced to six years in prison in December 2017 for receiving bribes from the company. Moreno’s comments likely reflect politicians’ aversion to granting Odebrecht contracts across the region, particularly in the five-year outlook, due to likely backlash from the public.

 

POLITICAL RISK

ARGENTINA

28 September 2019

Argentina's Macri launches election push with Buenos Aires march

Argentine President Mauricio Macri told a crowd of thousands of supporters on Saturday that he could still turn the tide and win the upcoming presidential election, despite his main opponent’s wide lead.

Source: Reuters

A2 Global comments: Macri is currently behind leftist candidate Alberto Fernández in the polls. A victory for Fernández is the likely outcome, however executives at businesses with operations in the country should scenario plan for either election outcome.

COLOMBIA

30 September 2019

Unemployment increases again and reaches 10.8 per cent

The National Administrative Department of Statistics (Dane) reported that in August unemployment continued to grow to 10.8 per cent nationwide, while in the same period of 2018 the figure was 9.2 per cent.

Source: La FM (in Spanish)

COLOMBIA

18 September 2019

Colombia can only suspend app drivers' licences for three years, not 25: Court

Colombia can only suspend the licenses of drivers who provide services via ride-hailing apps for three years, not 25, the president of the Constitutional Court said on Tuesday (17 September).

Source: Channel Asia News

A2 Global comments: Ride-hailing apps such as Uber are illegal in Colombia, however these are popular with many people, who prefer the service and flexibility these platforms afford. The court’s decision, which reduces the penalty for driving for a ride-hailing app, may lead to police de-prioritising the stopping of drivers, and incentivise more individuals to work for the company. Business travellers in Colombia should not use ride-hailing apps due to their illegal status, and instead use company vehicles or hotel-booked taxis.

MEXICO

27 September 2019

New probe begins into Mexico's missing Ayotzinapa students case

Mexican officials on Thursday (26 September) said prosecutors are exploring new lines of investigation ignored by the previous administration in order to solve the case of the 43 missing students from a rural teacher's college in Ayotzinapa who disappeared five years ago while under police custody.

Source: Al Jazeera


HEALTH RISK

CENTRAL AMERICA

27 September 2019

Dengue fever spreading rapidly across Central America

Dengue fever is spreading rapidly across Central America, the International Federation of Red Cross and Red Crescent Societies said 27 September.

Source: Voice of America

A2 Global comments: Cases of dengue have increased this year throughout Central America, particularly in the Guatemala, Nicaragua, El Salvador, Honduras and Costa Rica. This is largely due to continual heavy rainfall and high temperatures, which lead to the formation of water pools in which the mosquito – the insect which transmits the infection – can breed. Security managers of organisations with staff and assets in Central America should ensure that there are no pools of stagnant water around the office environment, and that staff are advised to DEET-based mosquito repellents and long-sleeved clothing. 


TRAVEL RISK

COLOMBIA

17 September 2019

Colombia to strengthen protections for politicians after candidates' murders

Colombia will increase protection for political candidates running in October's local and regional elections after the murders of seven aspirants, President Ivan Duque said on 16 September.

Source: NBC News

A2 Global comments: Local politicians and civil society activists throughout Colombia face extreme security risks from both organised criminal groups and guerrilla organisations, particularly in rural areas where criminal organisations may operate. Companies with operations in the country should monitor updates on political violence, which is likely to peak in the run up to elections, and ensure that security measures for staff and assets are fit-for-purpose.

 

SECURITY RISK

MEXICO

30 September 2019

Four of Mexico's cartels are fighting for control of the avocado business

Four competing drug cartels are extorting avocado producers in Michoacán, Mexico, showing how the fruit is becoming an increasingly important source of illicit profits in the context of shifting criminal dynamics in the state.

Source: Business Insider

A2 Global comments: Approximately eighty per cent of Mexico’s avocados are produced in Michoacán, a central-western state on the Pacific coast. Producers are likely being targeted due to the success of state’s avocado sector, and attempts to diverse income sources for cartels. Police resources, which are stretched throughout the country, are likely to be diverted to mitigate cartels’ extortion attempts, however these are likely to have little impact given insufficient resources and corruption among the police force itself.


VENEZUELA

1 October 2019

New blackout affected more than eight states in the country

On 1 October, a blackout was registered in several states of Venezuela. The power failure affected more than eight states across the country.

Source: EVTV Miami (in Spanish)

A2 Global comments: Throughout 2019, blackouts have occurred intermittently across the country. While the government has attributed these to hostile foreign actors, these are more likely caused by failures in the country’s energy infrastructure, often due to lack of maintenance. Companies which operate in Venezuela should ensure that backup generators are fit-for-purpose as further outages, including in the capital Caracas, remain likely in the six-month outlook.


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