Welcome back to Foreign Policy’s Latin America Brief.
The highlights this week: The presidents of Argentina and Ecuador seek an economic lifeline in Beijing, Haiti is stuck between two road maps for its political future, and Costa Rica prepares to elect a new president.
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Balancing Toward the East
While political delegations from countries including the United States, Canada, United Kingdom, and Australia are boycotting the opening ceremony of the 2022 Beijing Olympics over Chinese human rights abuses, Argentina’s and Ecuador’s presidents will both be in attendance.
The leaders traveled to China this week with financial proposals to talk through with President Xi Jinping, with whom Ecuadoran President Guillermo Lasso meets Saturday and Argentine President Alberto Fernández meets Sunday. Fernández is coming off a Thursday stopover in Moscow, where he lunched with Russian President Vladimir Putin.
No other Latin American head of state is due to attend the Olympic opening ceremony, perhaps a reflection of Washington’s urgings to stay away. But Lasso and Fernández have been vocal about the importance of their relations with China in recent weeks and could announce significant new business ties with Beijing after the visits.
Both leaders have, until now, also maintained good relations with Joe Biden’s administration in the United States—a hallmark of what some Latin American scholars call “active nonalignment” amid great-power tensions—though Fernández’s comments to Putin yesterday that “Argentina has to stop having such big dependence on the [International Monetary Fund] and the United States” strayed from this more pragmatic stance and were surely unwelcome in Washington.
Buoyed ties with Beijing could give Lasso and Fernández some progress to show amid troubles at home.
In Ecuador, Lasso’s legislative agenda has been slow to get off the ground since he took office in May, and the country has been shocked by a series of prison massacres in recent months. Homicides in the country almost doubled between 2020 and 2021.
In Argentina, Fernández is facing a stagnant economy and a crisis within his political coalition. On Jan. 28, Buenos Aires reached a crucial preliminary agreement with the International Monetary Fund (IMF) that set out a road map to renegotiating the country’s over $44 billion debt. Under the deal, the government would cut its budget deficit to zero over three years, reduce central-bank money printing, and earn a four-and-a-half-year grace period on repaying the debt.
But the leader of Fernández’s congressional bloc—Máximo Kirchner, the son of Vice President Cristina Fernández de Kirchner—resigned Monday, the culmination of long-building tensions between the radical Kirchnerists and Alberto Fernández’s more moderate wing of the coalition. Some among the far-left opposed any kind of budget cutting to satisfy the IMF. Since deals with the IMF must be approved by Argentina’s Congress, the move casts major doubt over the new agreement’s prospects for approval.
Against these similarly gloomy backdrops, both Lasso and Fernández set off for Beijing.
Lasso, for his part, hopes to begin talks on a bilateral free trade agreement between Quito and Beijing. The first eight months of his presidency saw him seek trade deals with both China and the United States, without luck so far.
One upside of such a deal for Ecuador could be diversifying its total exports away from dominance by a single commodity: oil. Lasso said in January he hoped a treaty with Beijing would boost exports in products such as shrimp (already Ecuador’s top export to China), bananas, and pitaya fruit.
Lasso also wants to renegotiate Ecuador’s over $4 billion in debt to China, which currently includes guarantees that some repayments be made in oil. In exchange, China may angle to guarantee its own companies can fully participate in auctions to build infrastructure in Ecuador. Washington has sought to block such an expansion in Ecuador’s telecommunications sector, saying Chinese firms pose a security risk.
Argentina’s government, meanwhile, has signaled that Chinese investments in upwards of 10 infrastructure projects could be announced in Beijing. Buenos Aires sent a list of 17 proposed investments to Beijing in December 2021, including projects for railway expansion and hydroelectric, wind, and nuclear power.
It’s even possible that Argentina officially joins China’s Belt and Road Initiative on this trip, which would make it the first of South America’s four largest economies to do so. Some 19 other Latin American countries are part of the initiative, including Ecuador, Peru, and Chile.
Fernández also reportedly will request that around $3 billion worth of Chinese currency reserves be added to an existing swap between Argentina and China’s central banks, in which each country’s central bank maintains accounts in the other’s currency. Argentina’s own international reserves are dwindling, and in the past, it has converted some of its Chinese currency reserves into dollars.
For China, the operation has an upside, too. “From Beijing’s perspective, this is a useful tool to increase the internationalization of the renminbi,” Mitch Hayes of the China Signal told Foreign Policy.
Fernández’s visits to both Russia and China prompted a letter of warning from Amnesty International Argentina about human rights violations in both countries and the possibility of an armed conflict in Ukraine, calling for Fernández to raise those concerns directly with authorities.
Reports out of Moscow suggest no such objections were raised.
But as hard as Fernández might find it to continue balancing between the United States and its biggest rivals after this week’s trips, it may yet prove easier than maintaining unity in his own coalition at home, where a potential tanking of the IMF agreement would have grave consequences for the Argentine economy.
Without an IMF deal, foreign investors’ confidence to invest in Argentina would certainly drop, too—including China’s.
Sunday, Feb. 6: Costa Rica holds general elections.
Friday, Feb. 18: The United Nations Security Council discusses Haiti.
Toss-up election. Costa Rica holds the first round of its presidential elections Sunday, and so far, there is no clear front-runner. While the country has won kudos for its plans for a green recovery from the COVID-19 pandemic focused on small-scale agriculture, digital jobs, and clean technologies, it has also been fraught with legislative gridlock that proved a barrier to effective action to address its mounting national debt. Costa Rica now has the third-highest public debt to GDP ratio in Latin America.
The three candidates who are polling slightly above the rest of the crowded field are a conservative evangelical singer and preacher, a center-right lawyer and former vice president, and a centrist former president and industrial engineer. Incumbent Carlos Alvarado Quesada cannot run for reelection due to term limits.
Third time’s a charm? Peruvian President Pedro Castillo was forced to carry out his third cabinet reshuffle in less than a year after his prime minister resigned on Jan. 31, saying it was “impossible to reach consensus” within Castillo’s government on critical issues. Market-friendly Finance Minister Pedro Francke left his post, too, and was replaced with another former central bank economist.
The turmoil does not bode well for Castillo’s governance prospects. The earlier reshuffles were carried out after scandals emerged or were related to tensions with the hard-left faction of his party, Perú Libre.
“A cursory look at the team assembled within the space of a day and a half suggests Peru’s government will remain a mix of unfamiliar faces, differing ideologies, and the same old problems,” analyst Andrea Moncada wrote for Americas Quarterly.
Surprising success. In Foreign Policy, political scientist James Loxton writes that Panama’s successful economic growth seems to break some rules of his discipline: It was democratized through a military invasion, its strongest post-democratization party was one that represents a former authoritarian regime, and it has grown economically despite a high level of perceived corruption.
Panama played a key role in two of the biggest offshore leaks scandals of recent years, the Panama Papers and the Pandora Papers. One reassuring lesson, Loxton writes, is that the country’s remarkable economic rise has coincided with the time it has spent as a democracy.
Doubling up. Reduplication, the process of repeating a sound to create a new word, is more common in Brazilian Portuguese than the Portuguese spoken in Portugal, reports the Economist. Usually, the doubled sound creates a word with a similar meaning. Some examples include “empurra” (she pushes) to “empurra-empurra” (jostling crowd, or mosh pit) and “choro” (crying) to “chororô” (cry fest or crybaby).
While it’s most used in Brazil, this redoubled Portuguese is crossing the ocean to Europe. “The urge to reduplicate may reflect a culture that is younger, less conservative, and more open to experimentation, some surmise,” Sarah Maslin writes.
While many countries in the world recouped their pandemic economic losses in 2021, Brazil and Mexico—Latin America’s two largest economies—technically entered recessions after the third and fourth quarters of that year, when each experienced two consecutive quarters of negative real GDP growth.
The poor results in both countries occurred even though they implemented very different aid policies in response to the pandemic. Brazil spent heavily, while Mexico was more austere.
Adriana Dupita of Bloomberg cited supply chain issues, policy uncertainties, and structural problems as factors behind the poor performance.
The Caribbean Series is an annual baseball tournament between the national teams of Colombia, the Dominican Republic, Mexico, Panama, Puerto Rico, and Venezuela. This year’s edition started on Jan. 28.
In what country is the tournament being played?
The Dominican Republic
In Focus: Haiti’s Next Steps
For Haiti, mired in political turmoil, a highly symbolic date is approaching. Monday, Feb. 7, is the day that would have marked the end of former President Jovenel Moïse’s term, had he not been assassinated last July. Since then, his chosen nominee for prime minister, Ariel Henry, has also been ruling Haiti as interim president.
Many in the country argue this means Henry, too, should step down Feb. 7. But Henry says he will remain in place until new elections are held this year, though no date for a contest has been set. Some Haitians who think otherwise have even elected a transitional government they say should replace Henry, setting the country up for a leadership standoff.
Discontent with Henry, journalist Monique Clesca writes in Foreign Affairs, stems in part from the fact that helped usher him into power, and in part because ties between Henry and a key suspect in Moïse’s killing, Joseph Felix Badio, have emerged in the still-inconclusive Haitian government probe into the assassination.
Henry held two phone calls with Badio shortly after the killing, according to telephone records seen by the New York Times. When a Haitian prosecutor sought to question him about the connection, he fired the prosecutor.
Henry says he plans to eventually oversee new elections in the country after changing its constitution. The civil society coalition that elected a transition government—of which Clesca is part—argues the transitional leaders should oversee a two-year process of preparing for elections, as widespread gang violence and doubts about the integrity of the political system make them impossible in the immediate term.
U.S. officials told the Miami Herald they are dialoguing with Henry and the coalition of civil society groups, which organize under the name the “Montana Accord” after Port-au-Prince’s Hôtel Montana, where a key meeting took place.
At a conference on Jan. 21, Canada pledged over $39 million in humanitarian aid to Haiti, and U.S. Assistant Secretary of State for Western Hemisphere Affairs Brian Nichols said the United States was providing security assistance that included police advising, support for community policing programs, and training of special weapons and tactics teams.
“There is reason to hope that this enduring and complicated crisis and the current chaos can serve as a clarifying moment for Haiti’s long-delayed reckoning,” Clesca wrote. “The path ahead should include American and foreign solidarity, but not foreign interference, political meddling, or an imposition of choices on the Haitian people.”