1. Colombia Reports:
    Gabriel Garcia, who was director of an institute that managed roadway concessions and later Uribe’s vice minister of transport, is the first person arrested in connection with investigations into bribes by Odebrecht.

    “The prosecutor general has evidence that Mr. Garcia sought payment of $6.5 million to guarantee that Odebrecht was the company chosen for the Ruta del Sol Dos, excluding other competitors,” attorney general Nestor Humberto Martinez told reporters.
    Reuters:
    Colombian authorities have arrested a former senator for allegedly taking $4.6 million in bribes to help Odebrecht SA win a road-building contract, as fallout from a massive corruption scandal continues to bite Latin America's No. 1 engineering firm.

    Otto Bula Bula, a Liberal Party senator until 2002, was tasked by Odebrecht with ensuring a certain number of higher-priced tolls were included in a contract to build the Ocaña-Gamarra highway, Colombia's Attorney General's office said late on Saturday.
    Colombia is taking the Odebrecht scandal seriously, using the evidence to investigate and prosecute former officials. This shouldn't be remarkable. It should be what every country named in the scandal does.
  2. I used to be fairly dismissive of reports that Russia had specific and targeted intentions to influence the politics of the Western Hemisphere, but the events of the past 18 months have begun to change my mind. Given recent success in the US and Europe, why not try to influence elections in Mexico or Brazil or Ecuador or Chile? Why not try to break up the OAS and other inter-American institutions the way Russia is targeting NATO? To speculate that Russia has those goals and may place resources towards those goals does not mean they will succeed. However, I do think the story of Russia’s agenda in the Western Hemisphere deserves more attention in the coming four years than I provided it in the previous eight.

    With that thought in mind, a few additional unfiltered ideas that I’m working through.

    It is worth considering what Russia’s goals might be. I think too many analysts would jump to the conclusion that Russia wants AMLO in Mexico or Lula in Brazil without considering the alternatives. Remember that this is no longer about left vs right. Russia supported Trump in the US and is happy to support far-right and far-left candidates in Europe that meet their objectives. They want to discredit the democratic system and they want candidates that support their international goals. With that in mind, taking this out of the left-right framework, let’s start thinking about what those objectives may be and which candidates from the left, right, center or outside the spectrum might be their preferred options.

    The era of the Monroe Doctrine is over. It’s not the US’s job to stop Russia or China or others from operating in Latin America. Every country has a right to have relationships and investments with whomever they want. However, the hemisphere should also have an interest in democracy, human rights, anti-corruption and greater regional integration. Opposing illegitimate foreign influence in elections and policymaking that attempts to undermine those hemispheric values should be a goal of the whole hemisphere. The US has not always stood up for those values in the past, but that can’t be used as an excuse for local politicians or foreign powers (including the US) to undercut those values in the present or future.

    I worry about how the previous two paragraphs conflict with each other. I’m concerned about Russia’s influence in Latin America and want to work to stop some very negative outcomes of that influence, but I don’t want a renewed Monroe Doctrine justified with that concern. The US (both the US government and US civil society organizations outside of government) need to manage a very careful balance on that front. Overreaching and creating a more interventionist US policy towards the hemisphere could play right into the hands of US opponents regionally and globally. Sitting back and failing to provide any leadership may also play into the hands of US opponents. As I wrote, it will require a careful balance.

    Journalism and civil society are needed more than ever. Transparent media reporting and deep investigations into the money and power influencing the political system are some of the limited safeguards that exist outside of government institutions.
  3. Taiwan President Tsai Ing-wen met with Nicaragua President Daniel Ortega for nearly two hours this week. It was a surprise meeting, catching journalists and even diplomats from Taiwan off-guard as it was arranged at the last minute. Tsai is touring Central America and attempting to shore up support. There are concerns that another country (rumors point to Nicaragua or Dominican Republic) will recognize Beijing in the near future. Ortega, for his part, promised to fight for Taiwan's recognition moving forward.
  4. Donald Trump didn't talk about many substantive issues during yesterday's press conference, but he did stress two points that are relevant to Latin America, especially Mexico. The first is that he will implement a border tax on companies that produce outside the US. His focus was on car companies that move plants overseas, but without details, this could impact a variety of industries. The second is that he expects Mexico to in some way reimburse payments for the border wall that he plans to construct.

    I know analysts who dismiss both ideas as very unlikely, especially the second one. Mexico has insisted they will not pay for the wall. But Trump has long said that the payment may not be a direct payment, but rather some form of tariff or tax on trade or money transfers.

    Trump has very few detailed policy proposals. Most of his administration's coming policies towards the region are completely undefined. His ability to focus on only a small number of issues at one time means that many issues will not be defined by him, but by his cabinet and bureaucracy. But the fact he takes the time to talk about these two proposals for Mexico means that he is serious about finding some way to get them done. The election is over and analysts should not dismiss these policies as unrealistic. Some version of them is likely to happen.
  5. One week into 2017, Mexico faces two simultaneous crises. One is the public anger over the increase in gas prices (NYT, Guardian). The second is the potential economic impact of the incoming US administration and its trade policies. Specifically, those trade policies threaten the auto industry, which has been critical to Mexico’s economic growth in recent years (WSJ). More generally, those trade policies threaten the entire manufacturing sector including the border maquila industry.

    The Mexican government shouldn’t conflate these crises. They have different roots and will require different solutions. The Mexican public certainly sees a difference in the problems and fully blames the government for the gas price increase while only partially blaming the government for its failure to better manage relations with its northern neighbor.

    President Peña Nieto’s distance and poor management of both of these issues is part of the ongoing problem. While many of the responses to his rhetorical “what would you have done?” question were biting, they also contained some significant truths. Governments can’t reward politicians with giant Christmas bonuses while citizens suffer. The fact that numerous former governors of the PRI party stole hundreds of millions of dollars and remain free from prison is not separate from the country’s current economic challenges. Imposing a gas price hike just years after promising energy reform would avoid gas price hikes may be economically necessary, but the contradiction between 2013’s energy reform ad campaigns and 2017’s results cannot just be waved away as irrelevant.

    No government is particularly good at solving two crises at the same time. Attempting to find an elegant solution that somehow fixes both challenges is a dangerous temptation that likely leads to no positive movement on either problem. Separate the challenges, find solutions, and treat the current situation like a governing crisis, giving both challenges the attention they deserve.
  6. Venezuela President Maduro named Tareck El Aissami his new vice president yesterday. The vice president has little official power, but is an incredibly important position as of this month. Prior to this month, if Maduro resigned or died, the constitution requires new elections (though whether those new elections would have been held was a matter of debate). As of this month, the vice president will finish the president's term. Maduro's biggest threat has always been a coup from within his own party. But the fact Maduro can be removed without new elections makes that threat larger.

    A VP change this month was expected, but naming Tareck, someone who faces numerous criminal and corruption allegations, was not.

    Perhaps Maduro thinks that having Tareck as VP makes his removal less likely. Or perhaps the corrupt leadership within the PSUV is finally ready to take control.
  7. Good news: Colombia's homicide rate in 2016 was 24.4 per 100,000 population. That is a 4% reduction from 2015, representing 500 fewer deaths. It's the lowest murder rate in 40 years.

    Bad news: Via today's WashPost (which matches local media reports in recent months), there is "a pattern of attacks on left-wing activists, indigenous leaders, human rights advocates and members of Marcha Patriótica, with the pace picking up in recent months as the government finalized a controversial peace accord with Marxist FARC rebels to end Latin America’s longest-running conflict."

    So even as Colombia has made significant progress at creating a more secure country for the broader population, there remains a problem of targeted killings of individuals who are politically important to the country's long term democracy and stability.


  8. Mexico President Peña Nieto is facing protests over rising gasoline prices. Ford just announced it is cancelling a $1.6 billion factory in San Luis Potosi. The negative news comes as EPN’s approval ratings are near record lows and long-term failures to resolve security and corruption issues remain prominent in the local media. For a country hit hard in 2016, the first 72 hours of 2017 aren’t looking much better.

    Opposition politicians are going to use all of this negativity to jockey for position in the 2018 election. In particular, I expect 2017 to be a year of full AMLO hype, with the populist candidate gaining both domestic and international media coverage as he is a strong voice against the failures of the Peña Nieto government. Unfortunately for Lopez Obrador, the election isn’t this year and he has a history of overextending and fading once in the spotlight for too long.

    In spite of the current opposition to EPN and the PRI, it's worth remembering that no Mexican politician or political party currently has majority support and the Mexican public has largely turned against politicians of all ideologies and personalities. We have yet to see the president’s opposition coalesce around the PAN or PRD or Bronco or AMLO or anyone else. Amid a divided political opposition, the PRI still has an amazingly capable election and policy machine built on a mixture of party loyalty, corrupt money, clientelism and political power. They hold the levers of power at the federal level and in many states. EPN still has the ability to implement policies in spite of public anger. It’s way too early to count the ruling party out of the next election cycle.

  9. Looking across Latin America for 2017, it's quite possible that Brazil President Michel Temer has one of the worst potential years ahead of him. His predecessor was forced from office before her term was complete, setting a low-bar precedent for presidential removal. He faces questions over the funding of the 2014 campaign as well as the Petrobras scandals, two separate scandals that could lead to removal or impeachment.

    Worse, Brazil's economy will see near zero growth this year and the country's states face massive debt crises that could blow up. The proposed austerity measures may help the long term macroeconomic outlook, but they are going to be politically unpopular and not deliver quick growth for a population that needs it.

    Brazil's neighbors and main trading partners aren't going to bail them out. China's growth is weakening. Argentina may slowly return to growth, but isn't expected to boom in 2017. Venezuela is collapsing and isn't going to pay back what it owes Brazil any time soon. The US trade agenda with South America will be a wild card, likely to help Brazil but I wouldn't hinge my hopes on it.

    When Temer replaced President Rousseff, there were hopes he could move past the the political crisis and return to policymaking in a way that would help the economy. Now the question is whether he finishes his term.
  10. Several analysts have previously pointed out that Rex Tillerson, Trump’s nominee for Secretary of State, is unlikely to have positive relations with Venezuela given Exxon’s recent history there. Tim Gill’s article outlining the 2007 seizure of Exxon’s assets in Venezuela and the subsequent dispute over fields in Guyana is excellent. That is, it is excellent until the final paragraph, which reads:
    Given Tillerson’s background at ExxonMobil, we can expect the Trump administration to take an aggressive stance toward Venezuela. This may include sanctions on more Venezuelan state officials and even an end to high-level diplomatic meetings. Expect more friction over the next few years.
    Really, that’s your vision of an aggressive stance? More sanctions and fewer high level meetings is the worst you’ve got?

    I don’t mean to criticize Gill specifically, but his article is reflecting what I see as a wider lack of imagination among analysts over what options the incoming administration in the US could take in Latin America and elsewhere in the world.

    It’s to the credit of the Obama administration that they have been cautious, perhaps overly cautious, preferring inaction to doing something that could cause more harm than good. But the judicious restraint of US power in the hemisphere, something that Obama promised in Trinidad and Tobago in 2009 and has followed through upon during his administration, is not something we should take for granted moving forward.

    We’ve gone eight years in which our most contentious Venezuela policy debates were over 1) whether we should sanction a limited number of human rights offenders, 2) if the pro-forma wording of an executive order was perhaps mistaken and 3) if we should hold a vote at the OAS that was almost certain to lose. Given the entire range of diplomatic, intelligence, military and economic tools at the disposal to US policymakers, what we've had is a very limited policy debate over minor details. It's that limited debate over details that makes "sanctions on more Venezuelan state officials and even an end to high-level diplomatic meetings" seem like a radical departure from current policy.

    Let me offer scenarios that are worse. I'm not predicting anything here, but I am arguing that we need to think outside the box of what was a plausible range of options for the current administration when thinking about what the next administration has the capacity to do.

    1) Making the delusional rantings of Maduro come true.
    Presidents Hugo Chavez and Nicolas Maduro spent two decades claiming the US was behind insane and untrue plots of military intervention, covert intelligence operations, economic warfare, diplomatic isolation and the backing of an anti-democratic alternative to the current regime. While their conspiracies have been untrue before, it is within US power to make one or many of them a reality.

    Could the US use diplomatic and economic leverage to bully and pressure others in Latin America to kick Maduro around more? Could a covert cybersecurity attack damage various industries critical to the economy? Could the US help orchestrate and back a military coup? Yes, yes, and yes. Those tools would be poor uses of US power and I hope they don't occur, but they are all in the US toolbox and wouldn’t be completely unthinkable in a region where US intervention used to be the norm.

    2) Working with the Vlads. 
    If option one is extreme US intervention against Maduro, then option two is the opposite extreme of US policy turning towards supporting Maduro and his most likely successor, Padrino Lopez. While that may seem even less likely than scenario one, it could happen given changes in US-Russia policy. Trump and Tillerson promise a new policy towards Russia and President Vladimir Putin. For example, they promise to work with Putin in Syria, completely reversing the previous US alliance with the rebels there. Putin is an ally of the Venezuelan and Cuban governments with significant investments in both countries. So while it’s not likely, it’s also not unthinkable that the US works with Russia in this hemisphere to support and stabilize the current government (perhaps after Maduro is removed for a more flexible Chavista alternative) and turns its back on pro-democracy forces in Venezuela.

    3) The ball is dropped.
    The two scenarios above sound really awful, but it’s this third scenario that I fear is the most likely. Given the incoming US administration’s various focuses and lack of policy expertise, it’s completely likely that Venezuela is simply forgotten about, even as it degrades, collapses or implodes. The humanitarian and security crisis worsens, with food shortages leading to starvation and the lack of security leading to the further spread of small arms and light weapons in the hemisphere. 2016 has been bad, but if Venezuela is now forgotten while the situation deteriorates, the country could become far worse than the current situation and go beyond hope of recovery for a long time to come. While some in the hemisphere have long said they want the US to just leave Latin America alone, a lack of US leadership at this critical time makes it far more likely that Venezuela faces a long term period of civil war or other internal conflict and humanitarian disaster.
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