1. El Universal published a new Buendia & Laredo poll this morning. The topline number gives Mexico President Peña Nieto a 46% approval, 45% disapproval, close to the same that it has been all year. When asked about personal opinion of Peña Nieto, 35% had a good opinion and 40% had a bad opinion, among the worst numbers he's seen since he became a nationally-known political figure.

    However, this graph shows a problem:



    The number of people who say that Mexico is on the wrong path has spiked since May and is at the worst point in EPN's term and around the same as the worst point in President Calderon's term, a period in 2010 when Calderon was facing high levels of violence.

    Why the sudden spike in "wrong path" ratings? The poll doesn't completely say. Based on the poll, there is a solid segment of the population (30-40%) that opposes energy reform. Opponents' opinions on the issue are stronger than those who support the energy reforms, but I don't think those opinions have shifted much in the past three months, even as energy reform finally passed. Neither do I see a major shift in how the public perceives the economy or security issues in the previous three months.
  2. Presidential candidate Eduardo Campos was killed in a plane crash yesterday in Santos, Brazil. Many political analysts and insiders within both the PT and PSDB viewed Campos as a likely future president, even if his chances appeared slim in 2014. 

    Campos had a solid mix of political charisma and pragmatic governing skills. He also brought an ability to balance the language of business, environment, social welfare and economic development that broke through the fairly stale left-right divide in this hemisphere.

    President Rousseff declared three days of mourning and both Rousseff and Neves suspended their campaigns.
  3. The Miami Herald reports that China is considering funding another Panama Canal expansion that would go beyond the current efforts. Debating a fourth set of locks before the "third lane" is done seems ambitious.

    The story frames the debate against the ongoing discussions in Nicaragua about a possible Chinese-funded canal.

    For those paying even closer attention to the news, in recent years China has been rumored to consider funding a "dry canal" consisting of train lines, highways and port infrastructure in both Colombia and Honduras. China is also helping Brazil with its cross-continent infrastructure expansion to get better roads completed to ports in both Peru and Ecuador.

    1) Many of these reports are partially rumors, perhaps exaggerated by local officials after visits with Chinese investors.

    2) China wants more East-West integration across Latin America. They need to bring goods from the Atlantic side to the Pacific. It's a strategic goal.

    3) China doesn't seem to have a solid plan at the moment to accomplish that strategic goal. They appear to be throwing multiple potential options up for grabs to see how the US and local officials respond and which routes appear most serious and viable.
  4. Late last week, Russia imposed a one year import ban on agricultural products from countries that have sanctioned its actions in Ukraine. Putin hopes to counter sanctions by creating a bit of domestic political pressure on the governments that have sanctioned him. This means Russia will not import food from the United States or European Union.

    The big winner: Brazil.

    A major exporter of soy, corn, beef, chicken and pork, they will become a crucial supply link for Russia, a country that doesn't produce enough food to feed its population. Numerous other countries in Latin America including Argentina and Paraguay will also likely benefit from Russia's actions.

    A few questions:
    1) Was this on the agenda at the recent BRICS summit? Did Putin know then that he might be turning to Brazil to evade and counter US and European sanctions?

    2) How does China feel about all this? China has spent billions on infrastructure projects in Latin America in order to increase food exports. It has attempted to lock up portions of markets in both Brazil and Argentina, though local governments have tried to prevent a full lock. With Russia now increasing its imports from Latin America, are they just free-riding on China's investments? Is this going to shift the amount of agricultural goods going to China from South America?

    3) What happens in the unlikely event that Neves or Campos wins the Brazil presidential election? While no Brazilian president is going to suddenly and significantly shift to an anti-Russia, pro-US stance on global affairs, it's quite likely that Neves would be less enthusiastic about supporting Russia's geopolitical ambitions and more likely to offer condemnation when Russia does stupid things like help rebels shoot down passenger planes.
  5. At yesterday's inauguration, Santos promised to focus his second term on the peace process, equality and education. While the president's statements reaffirming his support for the peace process were notable and received the most coverage, his statements on education were also bold. 

    Santos said that he wants Colombia by 2025 to be recognized as the best educated country in Latin America. Stating that the fact private schools have 8 hours of teaching and public schools have 5 hours ("That is where inequality begins"), Santos promised to budget an increase in school hours for children in public schools. He also promised to increase the budget for pre-K and 400,000 scholarships at the university level.

    President Santos's 2015 budget will be the first time in Colombia's recent history that more money in the national budget will be spent on education than on security and defense. That is an important step for a country looking to move beyond a conflict that has defined the past decades of its history.
  6. After decades of activism in attempting to find the children and grandchildren lost to Argentina's dictatorship and dirty war, Estela de Carlotto has found her grandson, now 36 years old. He is the 114th lost grandchild identified via the efforts of the Abuelas de Plaza de Mayo. It's the best story of the week.
  7. A poll done by Reforma in late July shows Mexico President Peña Nieto with 50% approval and 46% disapproval rating.

    This is one of the better poll ratings in recent months for Mexico's president. A recent NYT article cited EPN at 37% approval and 54% disapproval which is the lowest number I've seen. Several polls have given the Mexican President the low to mid-40's range of approval ratings.

    Yet, even within the Reforma data, there are troubling signs. EPN does not get 50% approval on any of the issues rated, and the only two issues on which he receives net positive approval are health (46/30) and education (43/31).

    In spite of a major government publicity campaign, only 34% of citizens approve of energy reform while 40% disapprove. 61% think they will pay more for electricity or gasoline; 66% believe there should be a citizen referendum on the reforms before they are enacted.

    55% of citizens believe that telecom reform will benefit the current monopolies while only 22% believe it will increase competition in the market.

    You can see the other ratings on various issues in the graphic. Approval ratings on EPN's efforts to improve public security (26/52), the economy (20/56), jobs (21/56), and corruption (19/62) are far lower than the president's general approval rating of 50%. At the base level of all these low ratings is the combination of a weaker than expected economy and continued public security challenges.

    For Mexico's president and his team, these numbers have to be troubling. They have spent a lot of time and effort trying to promote the various economic and institutional reforms that President Peña Nieto has pushed through the Congress. They have a large cheering section among foreign media and analysts, particularly in the United States, but their support among Mexico's citizens is not where the government needs or wants.
  8. For the fourth time in 40 years and eighth time in its history, Argentina has defaulted on its debt.

    1. There are some very creative ideas for deals and solutions on the table, including Argentina’s banks taking on some of the non-restructured debt from the holdouts (a private arrangement that wouldn’t trigger the RUFO clauses). However, both Argentina and the holdouts refused a deal yesterday, with each side blaming the other. Whether for financial, political or public relations reasons, both sides believed default was better than a deal, at least in the short term, and they got it.

    2. Kirchner and Kicillof have done a poor job managing this issue. They’ve treated it as a public relations challenge rather than an economic one. Blaming the judge for the technical reasons behind the default may be a good domestic political message, but it negates the fact that they should have seen this potential ruling coming (it’s been on the books for over two years) and been working on other payment options for months, not waiting for the final 48 hours of negotiations.

    3. Argentina was in the middle of a major political and economic crisis when it chose to default and restructure bonds in 2001-2002. Argentina today, even if Kirchner’s poll numbers aren’t great and the economy faces stagflation, is nowhere near the crisis levels of 13 years ago. Some may argue that a default right now will create a political/economic crisis in the coming months or years. However, a default leading to a hypothetical crisis would be quite different from a crisis that led to a default. The two situations aren’t really comparable.

    4. So will there be a political or economic crisis? Probably not in the short term. The Kirchner/Kilcillof team still has room to maneuver and negotiate and there are deals that can still be worked out. Over the mid-term (next five year time frame), I think this default and the overall economic environment in Argentina are going to lead to more problems.

    5. Two of the better articles I’ve read in English on this economics behind this default are by Felix Salmon and Matt Levine. Go read them.
  9. Two recent polls show Bolivia President Evo Morales with a large lead in the 12 October election this year.

    Ipsos Apoyo has Morales winning in the first round with 59%. His main challengers are Samuel Doria Medina with 18% and Jorge Quiroga and Juan del Granado both with 4%.

    The Ipsos Apoyo poll also shows President Morales with 70% approval and only 18% disapproval.

    A poll by the firm Tal Cual published in Los Tiempos shows a closer result, but still a significant lead by the president. In that poll, it's Morales 44, Doria Medina 19, Quiroga 7, del Granado 4. That poll also includes 24% of the population that is undecided.

    To win in the first round, Morales would either need 50% or 40% and a margin of victory over 10%.
  10. CSM and Quartz both write that Japan Prime Minister Abe is traveling to Latin America as part of the country's global competition with China. Japan's goals are export markets, energy, raw materials and a UN Security Council seat bid that is opposed by Beijing. Abe has traveled to 47 countries to increase Japan's international standing since taking office in 2012, but has not yet traveled to China or South Korea.

    Abe arrived in Mexico last Friday (and his security detail closed off a street I was trying to run on, thanks a lot), followed by trips to Trinidad and Tobago, Colombia, Chile and Brazil.

    Japan appears to have lined up energy agreements in Mexico, Colombia and the Caribbean. Both Mexico and Chile are part of the TPP negotiations that Japan has joined, making those trips particularly important for Abe's trade agenda. Japan is directly competing against China in bids on Brazilian infrastructure including high speed rail systems. Abe held a meeting with Caricom's leaders in Trinidad and Tobago to ask for their support at the UN.

    In contrast, China President Xi Jinping traveled to Argentina, Brazil, Venezuela and Cuba. Chinese media is tracking Abe's trip, framing it in terms of trade, the UNSC seat and potential diplomatic statements about territorial disputes among the Asian countries.

    Viewing LatAm relations through a China vs Japan framework is an interesting counterpoint to the many articles over the past two weeks that viewed Xi's recent trip as a challenge to US foreign policy. Not every event that happens is about the US.
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