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The expert who proposes including part of Latin America in the US economic growth plans.

Latin America

Among so many differences that the policy towards Latin America of the president of the United States, Joe Biden, has with that of his predecessor Donald Trump, there is a similarity: migration is a priority.

The US goal remains to reduce the irregular flow of people entering the country; Trump tried with threats and severe measures, Biden promises to address the causes of emigration in Central America, such as poverty, violence or corruption.

But some analysts note that Washington still lacks a broader strategy toward its southern neighborhood, including economic, commercial or even health initiatives in the face of the covid-19 pandemic.

In this context, Richard Feinberg, a professor of international economic policy at the University of California San Diego, launches a bold idea: that the US include the countries of the Caribbean basin in its domestic economic plan.

This would mean adding from Mexico to Central America and Colombia to Biden’s initiatives to improve infrastructure, digitization, education and job training in the United States, explains in an interview Feinberg, who directed inter-American affairs at the National Security Council of the White House during the government of Bill Clinton (1993-1996).

What follows is a synthesis of the talk, translated and edited for clarity, with this expert who also worked in the US departments of State and Treasury and recently published his proposal at the Wilson Center in Washington:

Your proposal probably reflects the idea that something must change in the way the US views Latin America …

The Biden administration is just beginning. The problem is that the region is not doing well enough.

I am not one of those who say that all of Latin America’s problems are due to the failure of US foreign policy. Countries must take responsibility for their own stories.

Now, the United States has an interest, like any great power, in countries of its near exterior.

Western Europe deals with Eastern Europe, Southeast Asian China, in the sense that they see their destinies as inevitably intertwined by geopolitics. This is in the interest of the great powers to promote economic prosperity and political stability.

What I recommend is a series of policies that encourage work with Central American and Caribbean countries, both of interest to the US and the region: more economic growth distributed more equitably and stronger, more vibrant and democratic institutions.

Isn’t the US doing that?

The Biden government has only been in place for 100 days, it is very early.

What he has suggested is a more or less traditional foreign assistance program to the Northern Triangle countries (Guatemala, Honduras and El Salvador) of some US $ 4 billion over four years. Of course, they have to define what they are going to ask for and go through Congress.

The Biden government agrees with many academic analyzes that say that the main problem in the Northern Triangle and in other developing countries has to do with the quality of government: it does not represent the population well, the institutions are weak, they cannot implement policies and a large amount of money disappears into the pockets of corrupt officials and politicians.

The Biden administration wants to focus more on those problems.

I could agree, but I don’t think that’s enough given the depth of the problems that we see in some of the countries in the region.

So I suggest a completely different approach.

The Biden administration is launching a whole series of extremely ambitious initiatives in the domestic economy and society.

But the analysis made by the Biden government is very similar to what can be done in the Caribbean basin: there are problems of infrastructure, digitization, job training, health, education and also urban violence.

These are problems that are seen both in the US and in the countries of the Caribbean basin.

And what do you propose?

What I propose is that the government take many of the programs that are being designed mainly for the domestic economy and extend them throughout the Caribbean basin.

For example, the government has already said that many programs that have to do with climate change and clean energy should also be applied to the Caribbean basin, to try to move countries away from hydrocarbons, invest more in clean energy sources .

That is also true for digitization. Central America and the Caribbean have advanced dramatically in terms of internet access, but there is often a long way to go in smaller towns in rural areas, such as in the United States.

Similarly in infrastructure: roads, ports, airports … As we are doing in the US, we could help finance projects in Central America and the Caribbean.

Ultimately, investment and growth are needed to support good social programs and public sector spending.

The government has advocated for innovation centers or technology centers that it would help fund in the US And this is related to the issue of supply chains: American corporations have become very global in their sourcing policies.

Many of the US companies have located their production facilities in Asia, particularly China. We discovered over the years that this created certain vulnerabilities.

The Biden administration says it would like to see some of those supply chains moved from Asia to the US But in most cases that would not happen because we are not cost competitive on certain production lines.

My point is that some of these centers may also be located in Central America and the Caribbean, and that the US can help finance infrastructure, working with multilateral banks such as the Inter-American Development Bank and the World Bank, as well as with private sector investors, both international and national, to put these centers into operation.

That would create a lot more jobs in the region, to intertwine its economy with that of the US.

Which countries are you referring to exactly when you talk about the Caribbean basin?

I am referring to Central America, not just the northern zone —which is what the Biden government focuses on due to immigration— but it would include Nicaragua, Costa Rica and Panama. And then the Caribbean islands, Colombia, Venezuela, which of course is a special case but is part of the basin, and Mexico.

How do you suggest financing this expansion of domestic programs to the region when there are already questions about how the Biden government can finance them at the national level?

If you include the programs in a foreign aid budget, it is very difficult to get Congress to pass them.

So what I suggest is to include the programs in these great domestic initiatives. Biden has advocated for $ 2.7 billion in the Build Back Better Initiative , also known as investing in jobs.

How will they be paid? There are basically two sources: the tax hike, which is what Biden has proposed, and the financing of the deficit. Because interest rates are very low, the government can issue bonds with modest interest rates in the future.

The US already has a free trade agreement with Mexico and another with Central America plus the Dominican Republic that liberalized trade and services. But that did not help reduce the flow of migration, violence or corruption in the region. Why would an initiative like the one you propose have a better result?

These various business initiatives have created many jobs in the region.

On the US-Mexico border there are something like 2 million Mexicans working in maquilas or supply chains linked for the most part to US manufacturing companies.

Trade agreements cannot solve all problems. The fact that there are problems of corruption and inequality in Mexico is not the fault of NAFTA, which did what it is supposed to do: increase commercial investment flows and create more jobs in Mexico.

Similarly in Central America. There are some 500,000 jobs in the region that support perhaps 2.5 million Central Americans in supply chains alone. That is a contribution.

You cite the example of the maquiladoras and propose the creation of different centers in the region to produce for the US market. What would be the difference between these centers and the factories created by free trade agreements that are now seen as symbols of poor labor standards?

Who considers them? If you were a young woman in Central America with six to nine years of education, you would be happy to get a job in one of those factories. I am telling you this because I have talked to a lot of people there.

Now, could conditions improve? Yes, of course. What I am advocating is that the US signs social agreements with host countries that include protections for workers’ rights, the environment, and community rights.

And there would be extensive supervision: national and international auditors of compliance with the agreements.

Another of the great problems of the region is corruption. How would you prevent any investment from ending up in the pockets of officials?

As a requirement for these agreements, oversight mechanisms could be created, including the US government, with agencies that would have their offices in the field, so that there is full transparency to limit corruption.

I am not going to tell you that they are going to eliminate it overnight. But you can put in place mechanisms that provide some guarantees, and then, over time, try to strengthen national institutions and staff training.

You have warned that the US employment plan presented by Biden for domestic politics could harm the Central American economies. Why?

That is if you are serious about wanting American companies that source their supply chains from factories abroad to return to the United States.

There are around 500,000 jobs in Central America alone, and if each worker supports a family of five, there are 2.5 million citizens who would potentially lose their jobs and family income.

Source:

  • Gerardo Lissardy
  • BBC News World, New York

Guillermo Lasso: 3 problems facing Ecuador’s fragile economy (and how the new president intends to overcome them)

Latin America

The 65-year-old former conservative banker Guillermo Lasso assumed the presidency of Ecuador on Monday amid a severe economic crisis aggravated by the covid-19 pandemic.

Lasso aims to stimulate the economy by increasing foreign investment and boosting the production of oil, the most important export product of the South American nation.

During the campaign he promised to create two million jobs and expand the agricultural sector through low-interest loans.

But with a country deeply in debt and with scarce resources in the fiscal coffers, its economic agenda is likely to be an uphill road.

The new president will take over a bankrupt country, a fragmented Congress and strong social discontent.

In a dollarized economy, with few ammunition to fulfill his electoral promises , Lasso will probably face an avalanche of demands from the population in a country polarized between correísmo and anticorreísmo.

These are three of the biggest economic problems that the new president of Ecuador will face.

1- The chronic challenge of financing

The economy of the oil country was already in crisis due to low oil prices and the high level of indebtedness when the coronavirus outbreak broke out in 2020.

It had structural problems (such as a permanent fiscal deficit since 2009) that led President Lenín Moreno to impose painful austerity measures as part of the conditions of a loan of US $ 6.5 billion approved by the International Monetary Fund, IMF, of which already they have disbursed US $ 4,000.

One of those measures was to end the fuel subsidy, a decision that generated a social outbreak in late 2019 that forced President Moreno to back down.

The new president will inherit the toughest part of the IMF’s requirements, which include a fiscal reform to get the equivalent of 2% of GDP in new income.

The great challenge will be how to implement economic adjustment in the midst of a crisis that last year caused an economic contraction of 7.8%.

And Lasso will take up the challenge without a majority in the Legislative Assembly, with a third of the population in poverty and close to five million Ecuadorians earning less than the basic salary.

While Ecuador’s public debt is around 63% of the Gross Domestic Product (about US $ 63,000 million) and the fiscal deficit exceeds 7%, the country faces the great challenge of financing a high level of public spending.

“The indebtedness is enormous for a country like Ecuador that has a high country risk, the debt service is very expensive and the fiscal expenditure is gigantic,” Vicente Albornoz, dean of the Faculty of Economics and Administration of the University of the America (UDLA).

In the last decade the weight of the debt has grown year by year and despite negotiations with international creditors, the doors of the international financial market are practically closed.

Without new sources of financing available and with a high country risk of close to 1,200 points, Lasso will have to cut public spending if he wants to access more funds from the IMF or other multilateral organizations.

Or go into debt with China, which has not closed its doors, but charges high interest or oil guarantees.

One way to reduce the deficit is to lower spending and raise taxes, but just as in Ecuador it was impossible to eliminate the fuel subsidy, it would not be easy to reform the tax system either.

2- Dependence on oil

Ecuador depends on oil. In 1998 a barrel of crude was sold at US $ 7 a barrel and in 2008 it soared to US $ 117.

“It was like winning the lottery , but unfortunately we spent every last penny,” Albornoz said.

“We not only spent all the money, but we also got into debt.”

Then there was another cycle of oil bonanza between 2010 and 2014 but, since there were no savings, those profits were spent to the same extent that petrodollars entered the country.

In those years, former President Rafael Correa (who is convicted of bribery), increased fiscal spending and distributed a part of the benefits of the oil boom in aid for the most vulnerable sectors.

Resources from crude oil accounted for about a third of fiscal revenue.

Starting in 2014, a period of lean cows began. The economy began to roll downhill, indebtedness increased even more and the pandemic ended up turning the stagnation into a devastating crisis .

Currently both a barrel of WTI oil, which is traded in the US, and Brent (in the UK) are around US $ 60.

As the world economy recovers, expert projections are that in the future the price of crude should show an upward trend, giving the Ecuadorian economy a break. But that remains to be seen.

3 – The economic management of social demands

In Ecuador, one in four children under the age of 5 suffers from chronic malnutrition, according to Unicef. Poverty reaches 35% of the population and although formal unemployment is barely 6%, a large part of the population lives from underemployment (in precarious conditions).

In recent years, the cost of living has risen as much as that of the oxygen tanks that are now sold in the informal market to help the victims of the pandemic.

The country has deflation (or negative inflation of 0.8%) because there is very little consumption and people usually buy only the essentials.

And although the minimum wage is US $ 400, higher than in other Latin American countries, the cost of living is also high.

In a country with squalid fiscal coffers, with serious difficulties in increasing social spending, without the possibility of borrowing in the financial market and with the IMF imposing an adjustment on it in the midst of the crisis, Lasso will have to overcome many barriers.

In this context, a potential social outbreak could put the new government in check if it does not find a quick way to finance its electoral promises.

What does Lasso propose?

Faced with such a complex scenario, Lasso told BBC Mundo before the elections that he wanted to promote alliances between the public and private sectors to attract both local and foreign investment.

“The global oil sector will see the invitation that Ecuador will make to come and invest in joint venture contracts,” he assured during the campaign.

And he added that it will respect contracts in the formal mining sector “by processing environmental licenses with greater agility, to generate more tax revenue.”

Regarding the agreement with the IMF, Lasso indicated that he would respect the pact, except in one point.

“We are not going to ignore the agreement with the International Monetary Fund. What we are not going to do is raise the VAT, ” Lasso said, clarifying that the fiscal accounts can be put in order without increasing this consumption tax.

Even the candidate assured during the campaign that it would be even “bolder” than the goals set by the IMF.

“They talk about reducing the deficit, I talk about reaching a zero deficit , because the day Ecuador reaches a zero deficit there will be no more debt.”

To get resources, Lasso proposed doubling oil production, incentives for foreign investment, reducing both public spending and the size of the state, and fighting corruption.

The big stone in his shoe is that he has only a four-year mandate to implement his agenda.

International investors and analysts welcomed Lasso’s triumph as good news.

“Public debt will follow a sustainable path and will probably boost the country’s dollar sovereign bonds in the short term,” said Nikhil Sanghani, Emerging Markets economist at Capital Economics consultancy.

While the investment bank Credit Suisse, based in Zurich, Switzerland, noted that “much of its economic program focuses on creating conditions for entrepreneurship , less regulation and more efficient processes.”

During his campaign, Lasso offered to raise the minimum wage to US $ 500 a month , give a US $ 210 salary to housewives and “urgently assist 300,000 families who feel hungry.”

By delivering these and other benefits, you will likely have a hard time matching your promises with fiscal discipline.

It is a fine line that the new president of Ecuador will have to walk to move forward with his economic and political agenda and ensure the governance of the country.

AstraZeneca: what is known about the distribution in Latin America of the covid-19 vaccine produced between Mexico and Argentina

Latin America

The long wait for what some called “the Latin American vaccine” for covid-19 seems to be coming to an end.

After weeks of delay on the plan of Mexico and Argentina to produce and distribute between 150 and 250 million doses of the AstraZeneca vaccine, both governments confirmed on Tuesday that the first of the vaccine packages will be released over the weekend.

“It is great news. It is to increase production with a combination of efforts from the public sector, the private sector, and that Latin America has production, let’s say, its own: Argentine active substance, bottled and filled in Mexico, access to many countries of Latin America “, highlighted the Mexican Foreign Minister, Marcelo Ebrard.

“It is great news, it is solidarity and it is what we have been demanding in the world, that there be equity, that there be access,” he added.

Nine months ago, both Latin American countries announced the plan to produce and package the AstraZeneca coronavirus vaccine in the region, thanks to funding from the Mexican magnate Carlos Slim’s foundation.

However, the ambitious project presented in its day as a success as a result of the cordial relationship between Mexico and Argentina has faced various problems such as the shortage of some supplies that resulted in delays over the scheduled date to release the vaccines.

How many vaccines will be available?

This Tuesday, however, Ebrard confirmed that it will finally be this week when the first vaccines produced and packaged in Latin America will be distributed.

“We only need the release of AstraZeneca in London which should be this week, that’s what they told us, so that the weekend, finally from August 2020 to May 2021 (…) we can say that the weekend there will be a flight that it will take to Argentina what corresponds to them “, announced Ebrard.

“Mexico will receive 800,000 and Argentina the other 800,000, half and half,” the foreign minister advanced.

According to the Federal Commission for the Protection against Sanitary Risks (Cofepris) of Mexico, the four batches that are expected to be released this week contain a total of 3,403,080 doses.

In the second week of June, it is planned to release a batch of almost 895,000 doses (June 7), another two batches of 1,800,000 in total (June 9) and a fourth batch still in production, once the tests are completed. those who undergo vaccines to confirm their safety and efficacy.

“It is expected that between four and six batches can be produced per week,” Cofepris head Alejandro Svarch predicted on Tuesday.

When will they reach the rest of Latin America?

Ebrard said that, after the release this weekend, production and packaging will continue so that the rest of the doses can continue to be distributed in Mexico, Argentina “and also to many Latin American countries that made contracts with AstraZeneca.”

The authorities did not clarify at the moment which countries will be, the number of vaccines that each will receive or on what date.

Last year, Mexico and Argentina announced that the vaccines would be distributed equitably among the interested countries at the request of the governments of the region except Brazil, which made an independent agreement.

“We are being more independent in Mexico, Argentina and Latin America,” said the president of Argentina, Alberto Fernández, who participated by videoconference in the press conference where the announcement was made in Mexico.

“That agreement that we made (…) what will allow is that Mexicans and Argentines have joined the effort, the joint work, to have vaccines for Mexicans and Argentines, but also for all our Latin American brothers,” he stressed.

“There are no borders, we are together, I would say that in the same cause, seeking the welfare of our peoples,” agreed his Mexican counterpart, Andrés Manuel López Obrador.

What caused the delays in the process?

In August 2020, it was announced that the Argentine laboratory mAbxience, of the Insud group, would manufacture the active substance of the AstraZeneca vaccine and the Mexican Liomont would be in charge of packaging it, before its distribution to the rest of the region.

Initially, it was said that the doses would be available in the first half of 2021, although later other specific dates were announced that were not met.

Last March, for example, Foreign Minister Ebrard announced that distribution in Mexico and the rest of Latin America – where the second wave of the coronavirus was strongly felt, especially in South America – would begin “from the third week of April.”

Peru doubles deaths from covid-19 after a revision of figures and becomes the country with the highest per capita mortality rate in the world

Latin America

Deaths from covid-19 in Peru are more than double those recorded until now.

Authorities reported this Monday that more than 180,000 people have died from coronavirus in the South American country , which is 2.5 times more than the figure of almost 70,000.

This also ranks Peru as the country with the highest per capita death rate in the world in the pandemic.

The new number is consistent with the so-called “excess deaths,” a measure of how many more people are dying compared to trends in previous years.

The president of the Council of Ministers Violeta Bermúdez indicated that the death toll was reviewed by a council of Peruvian and international experts.

The highest rate in the world

Peru has been one of the countries most affected by the pandemic in Latin America, with a saturated public health system and a crisis due to lack of oxygen tanks.

Until now, deaths from the pandemic have only included the deaths of symptomatic patients with a positive test for COVID-19 .

However, the National Death Information System showed that there was an underestimation of deaths.

In April, the Executive created a panel of experts to review the figures.

With the information as of May 22, the total number of deaths from covid-19 was established at 180,764, a large increase compared to the 69,342 that had been counted.

Neighbors Colombia and Bolivia have registered 88,282 and 14,000 deaths, respectively. In contrast, Brazil has one of the highest death figures in the world, with more than 460,000.

But Peru now has the highest number of deaths from covid-19 in the world in relation to the size of its population , (about 32.5 million): around 500 deaths per 100,000 inhabitants.

Hungary previously had the worst number of deaths per capita with a rate of 300 per 100,000 people.

 

Waiving IP rights will not boost vaccine production, says pharma group

Latin America

Exempting Covid-19 vaccines from intellectual property rights will not speed up production or distribution of the jabs, a pharmaceutical industry association argued Tuesday.

Proponents of doing away with IP rights say more companies could produce the vaccine, which could then be used in poorer nations that have yet to receive any jabs.

But the head of a pharmaceutical group said Tuesday that managing the complex logistics of rolling out vaccines was what was slowing down jabs, not patents.

“Taking away patents now or imposing a waiver wouldn’t give you a single dose more,” said Thomas Cueni, the head of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA).

“It is really about the know-how, it is about the skill set… you still wouldn’t know how to roll them out on a large scale,” he added, speaking at a virtual briefing in Geneva.

His comments come amid a push at the World Trade Organization (WTO) to introduce a temporary IP waiver during the pandemic. The proposal, which was first put forward last year by India and South Africa, has been gaining momentum with the backing of more than 100 countries.

But several nations, including the United States and Switzerland along with the European Union, oppose the move. The opposition means the proposal cannot move forward in the WTO, which makes decisions by consensus.

Jim Robinson, in charge of the Covid vaccine manufacturing strategy at the Coalition for Epidemic Preparedness Innovations (CEPI), warned against waiving vaccine patents.

Pointing to the many people already sceptical about vaccines, he warned that poor-quality or unsafe vaccines by underqualified manufacturers could have devastating consequences.

“We don’t want to stretch so far that we break the system and we do harm,” he said, adding that vaccine production has been much more successful than anticipated.

Some 10 billion doses are expected to be produced this year – double the manufacturing capacity for all vaccines combined in 2019.

But manufacturers have faced a number of supply chain issues and bottlenecks, and there are still “significant gaps” between the expected output and the current manufacturing capacity, Cueni said.

Leftist Arauz, conservative Lasso advance to Ecuador presidential run-off

América Latina

Leftist economist Andrés Arauz will face conservative Guillermo Lasso in the upcoming second round of Ecuador’s presidential election, officials confirmed Sunday. Third-place finisher, indigenous leader Yaku Pérez, vows to appeal.

Thirty-six-year-old Arauz won the first round with 32.72 percent of the vote – not enough to win outright. His opponent in the second round will be ex-banker Lasso, who took 19.74 percent to beat left-wing indigenous leader Yaku Pérez’s 19.39 percent, according to the final results of the February 7 poll.

The run-off will take place on April 11, after the first round results were approved by four out of the five members of the National Electoral Council (CNE) at a meeting that lasted into the early hours of Sunday morning.

Pérez, however, said he would appeal. He last week submitted a request for a recount in 17 of the country’s 24 provinces, but that secondary tally was suspended Wednesday.

“We’re going to challenge thousands of votes,” Pérez, a 51-year-old environmental lawyer, said Sunday, before joining indigenous people and supporters marching on the capital Quito.

He has alleged there was fraud to keep him out of the run-off after he was narrowly displaced by Lasso from second to third place in the middle of the count.

“This resistence continues in the legal, judicial, social and political fields,” said Pérez, adding that “we cannot allow electoral fraud to remain unpunished.”

The marchers, who left last Wednesday from close to the southern border with Peru, are expected to arrive in Quito on Tuesday.

“Rivers of people will arrive, rivers of our hearts to say that our vote is worth defending, our vote must not be stolen. We need to recover the votes,” Pérez said.

Lasso, who last week supported Pérez’s call for a partial recount, has already started looking forward to the next round.

“Today democracy has triumphed, we are going with courage and optimism to this second round,” Lasso said in a statement following the announcement.

Incumbent President Lenín Moreno, whose term in office ends on May 24, did not seek re-election.

President Fernández arrives in Mexico for talks on business, vaccines

América Latina

Alberto Fernández landed in Mexico City today for an official visit geared towards “strengthening commercial ties” between two countries. President set to meet Mexican counterpart Andrés Manuel López Obrador, billionaire businessman Carlos Slim and visit an AstraZeneca vaccine laboratory.

Mexico’s Foreign Minister Marcelo Ebrard was on hand to welcome President Fernández and his entourage as they arrived at Mexico City airport.

Government sources said that “for sanitary reasons” the president had travelled on a private charter flight, rather than take a normal plane. He was accompanied by First Lady Fabiola Yañez; Secretary General to the Presidency Julio Vitobello and the Communications and Press Secretary Juan Pablo Biondi.

Foreign Minister Felipe Solá; Economy Minister Martín Guzmán, Deputy Cabinet Chief Cecilia Todesca, Secretary for Strategic Affairs Gustavo Beliz and presidential advisor Ricardo Forster also made the trip, which has the stated aim of “strengthening commercial ties” between the two countries.

Two government-aligned lawmakers who were also set to travel with the president, Senator Jorge Taiana and Deputy Eduardo Valdés, were taken off the flight list after it emerged that they had been vaccinated ahead of schedule in the so-called ‘VIP vaccination’ scandal that broke over the weekend.

“I want to welcome the President of Argentina, Alberto Fernández, who arrived very early today,” said López Obrador at the beginning of his morning press conference, confirming the Argentine leader’s arrival.

López Obrador’s will host an official welcome on Tuesday. Afterwards, the Peronist leader will attend López Obrador’s morning conference, then join him in a working breakfast.

Packed schedule

Fernández has a packed schedule, which started Monday morning with a meeting in the Hotel InterContinental Presidente with Mexican businessmen who have investments in Argentina.

The president will then visit the Liomont laboratory where the Anglo-Swedish AstraZeneca-Oxford University vaccine is being produced, in co-production with Argentina, touring various rooms including the refrigeration chambers holding the shot’s main active ingredient, which was sent to Mexico in January by the local laboratory mAbxience .

Mexico and Argentina plan to co-produce around 200 million doses of the AstraZeneca jab to meet the demand in Latin America.

On Tuesday after his official welcome, Fernández will meet with Carlos Slim — the billionaire Mexican telecommunications tycoon who has provided resources for the production of the AstraZeneca vaccine.

Later that evening, he will attend a meeting at the Argentine Embassy with a host of “intellectuals and cultural leaders.”

The following day, Fernández will go to the state of Guerrero for a ceremony commemorating 200 years of Mexican independence, where he will be in attendance as the special guest of López Obrador.

“Having been invited by his Mexican counterpart, Fernández will be one of the speakers at the ceremony, which will take place at the Cerro del Tehuehue” in Iguala, the Presidency confirmed in a statement.

Oil giant Petrobras sheds US$19 billion in value over two days

Latin America

A sell-off in Brazil’s state-controlled oil firm Petrobras picked up on Monday after a group of analysts downgraded the stock within 24 hours, following Jair Bolsonaro’s decision to replace the company’s chief executive officer.

Bradesco BBI, BTG Pactual, Credit Suisse, JPMorgan, Nau Securities, Santander, Scotiabank and XP Investimentos cut their ratings on the shares after Brazilian President Jair Bolsonaro on Friday decided to fire the oil company’s CEO following a spat over hikes in fuel prices and moved to appoint Joaquim Silva e Luna, a former Army general, as a replacement. Company’s board still needs to confirm the decision.

Shares in Petrobras tumbled in Sao Paulo, erasing about 102.5 billion reais (US$18.8 billion) in market value in the past two sessions. The company’s American Depositary Receipts fell 21 percent in New York.

Investors are concerned the hasty appointment of a new CEO may signal a potential shift away from market-friendly policies. The oil company’s discount to global peers is expected to widen and the sale of its refineries could also face delays as a result, hindering deleveraging plans, analysts said.

“Fundamentals are unlikely to be the main driver of the stock in the near term,” Morgan Stanley analysts led by Bruno Montanari wrote in a report dated February 21, moving the stock to not-rated from overweight. “We will have to weigh the role of a much increased risk perception in the sector, the country, and PBR specifically.”

 

The price of soybeans surpassed US $ 500 in Chicago and reached its highest value since 2014

Latin America

01/06/2021

The main causes for this rise, which reached 2014 values, are the tight global supply and the lack of rainfall in Argentina. By-products of soybeans, such as oil and flour, accompanied the positive trend.

The price of soybeans finally exceeded US $ 500 in the Chicago Market and closed the day at US $ 501.64, an increase of US $ 5.60 compared to the day before, reaching its highest value of the last six and a half years.

In this way, the price of the oilseed maintains the upward trend that began more than five months ago, in which it accumulated a 55% increase in its price -adding more than US $ 178.62- and around 40% at the same time. throughout 2020 .

Indeed, at the beginning of the day, soybeans reached values ​​above US $ 505, reaching its highest price since July 2014.

With the passage of hours, it began to trade for US $ 503.94 and finally closed the day at US $ $ 501.64.

The Rosario Stock Exchange (BCR) indicated that the fundamentals of the rise again lay in “concerns regarding global supply as the lack of rainfall is noted in the main producing regions of South America, particularly in Argentina” and Brazil.

Speaking to Télam, the analyst of the Buenos Aires Stock Exchange (BCBA), Juan Pablo Giana, said that “the world market and, in particular, the United States are with the lowest stocks since 2013 to a great extent due to the strong Chinese presence that has been recovering economically and demand to supply its pig production “.

“Whenever the dollar weakens, US exports become more competitive. In addition, it makes hedge funds position themselves as buyers in the market, increasing the variability of the price increase,” added Giana.

In coincidence, the head of the Market Analysis Department of Grassi SA, Ariel Tejera, observed that “the revaluation of assets and commodities works as a counterpart to the loss of value” of the US currency.

The upward rally of the oilseed began at the end of August last year and, despite some intervals, has continued to date.

Indeed, the arrival of the coronavirus pandemic at the end of March occurred in a context in which the global economy was already plunged into a deep crisis, which also determined that the commodity markets were hit by uncertainty and the fall of the activity.

In this framework, from March to August, the price of soybeans was within a range of between US $ 300 and US $ 320 per ton and then began to rise with the rebound in world activity.

In this way, in the last five months the price of the oilseed grew by 55% (US $ 178.62), if one takes into account that on August 6 of last year, the closest position of soybeans closed to the US. $ 323.62.

If the positive dynamics continue, it would be good news for Argentina in general – since it would increase the inflow of foreign exchange – and for the agro-export complex in particular.

Due to the rise in commodity prices, in 2021 the Argentine agribusiness sector will contribute foreign exchange for about US $ 31.1 billion, US $ 4.6 billion more than this year (17%), according to a report by the Mediterranean Foundation.

In this regard, Giana pointed out that for the country “the immediate positive impact would be related to higher foreign exchange income, higher collection (mostly due to export duties, but more value added from the chain is also generated and increased collection due to other taxes). “.

“It also generates an increase in the margin for producers, if it is sustained over time,” said Giana, estimating that the upward trend will continue in the short term, which will allow greater investment possibilities for the coming season.

“The only factor that could correct in the short term would be movements of hedge funds, sudden sales to recover profits. However, the world supply is limited and for this to be corrected we must wait for the next campaign,” concluded the analyst of the BCBA.

Tejera agreed that the global scenario is likely to remain that way due to strong demand from China, but was cautious about local production, warning that “the South American supply is not in optimal conditions.”

“The climate is one of the main questions, leaving an open end to the volume that will finally be contributed by Argentina and Brazil,” the specialist completed.

Meanwhile, in the local market of the Rosario Stock Exchange, contractual soybeans closed with a rise of $ 5 to reach $ 29,225, thus continuing the upward trend of recent weeks.

Finally, the president of the Argentine Soybean Chain Association (Acsoja), Luis Zubizarreta, told Télam that the strong rise in soybeans “is an opportunity for Argentina but it is also a consequence of the dry climate and what is important to be able to To take advantage of prices is to have a good production and therefore that it rains “.

“We have to increase production by removing some disincentives that currently exist that do not allow us to take full advantage of this favorable situation, we have stagnant production 10 years ago, while Brazil had a significant increase in the same period,” added the business leader.

“It is time to increase production, add value and export more to generate more quality employment,” concluded Zubizarreta.

Congress finally certified Biden’s electoral victory

Latin America

01/07/2021

Republican Vice President Mike Pence certified the vote of 306 large voters in favor of the Democratic candidate, compared to 232 for Trump.

The United States Congress ratified Democrat Joe Biden as the winner of the presidential election, after violent protesters stormed the Capitol in an attempt to reverse the election result, undermine the country’s democracy and allow the outgoing Republican president, Donald Trump , still in the White House.

With the country still shaken by the riots, which left four dead, Republican Vice President Mike Pence certified the vote of 306 voters in favor of the Democratic candidate, compared to 232 for Trump.

After the chaos sown on Wednesday by the supporters of the outgoing president for hours until they were evicted by the police, the legislators decided to continue on Wednesday night with the process of validating the elections, in a sample for the country and the world of their commitment with the will of the voters and a peaceful transfer of power.
The process was carried out with the nation on alert and the city of Washington under an unusual curfew decreed after the riots, which left four dead.

Trump, who has refused to accept his defeat, said in a statement immediately after the vote that there will be an orderly transition on the day of Biden’s inauguration, January 20,

“Although I strongly disagree with the outcome of this election. and the facts support me, there will be a transition in order on January 20, “he said in a statement, the AFP news agency reported.

“This represents the end of one of the best first presidential terms and it is just the beginning of our fight to restore America to its greatness,” he added.
The ratification came after a day with few precedents in US political history, with the Capitol besieged by Trump supporters and lawmakers seeking refuge under desks and protected by gas masks as police tried to erect barricades around the building. congressional.

A woman died after being shot in the chest inside the Capitol and three other people died in the vicinity of Congress from “medical emergencies,” police said.
The protest was called and encouraged by Trump himself, who for weeks has been making false complaints about the transparency of the November 3 elections, in which he was defeated by Biden.

The session was already extraordinary due to the fact that several Republican legislators were raising objections to the results when the procedure had to be interrupted by the violent irruption of Trump supporters.

Both the protests and the objections of Republican lawmakers constituted an unthinkable challenge to democratic principles and exposed the deep divisions in the United States, which worsened dramatically during Trump’s four years in the White House.
Congress reconvened at nightfall, amid condemnations of protests by legislators from both parties and determined to certify Biden’s triumph, even if it took all night.
Pence reopened the procedure in the Senate addressing the protesters directly: “You did not win,” he said.

Senate Republican leader Mitch McConnell said the “failed insurrection” underscored the duty of Congress to confirm Biden’s victory.

The Speaker of the House of Representatives, Democrat Nancy Pelosi, said Congress must show the world “what America is made of” and complete its certification work.
The outgoing president emboldened his supporters hours before the violence with a morning rally outside the White House where he urged them to march to the Capitol.
At the request of his advisers and from the Oval Room of the White House, Trump issued a couple of tweets and recorded a video in which he asked the protesters to “go home in peace”, although he also supported their cause.
Grim-faced, President-elect Biden said the country’s democracy was “under unprecedented assault,” a sentiment echoed by numerous lawmakers in Congress.
The dead woman was part of the crowd that stormed Congress and broke through a barricade that protected a room where armed police officers were present, police said.
She was shot in the chest by Capitol agents and taken to a hospital where she died. Three other people, a woman and two men, died around the Capitol “due to medical emergencies.”