Thursday, January 5, 2017

Key cabinet shuffles in Venezuela and Mexico (Jan. 5, 2017)

Maduro names hardliner VP

In a cabinet reshuffle yesterday Venezuelan President Nicolás Maduro appointed former interior minister Tareck El Aissami as his vice president. The post is particularly significant this year due to opposition efforts to oust Maduro, which could leave the youthful El Aissami in charge of the country until the next election scheduled for 2019, reports Deutsche Welle.

If the opposition succeeds in holding a recall referendum, polls indicate it's likely Maduro will lost his post. But constitutionally he would be replaced by his vice president for the rest of his mandate. (The opposition had been angling to hold the referendum last year, which would have triggered a new national election.) The appointment is considered a form of protection against his potential ouster, according to Efecto Cocuyo

El Aissame is viewed as a ruling-party hardliner and one of the administration's younger stars, reports the Miami Herald. He served as interior minister under Hugo Chávez, and currently holds the post of state governor of Aragua. Efecto Cocuyo has a bio. 

El Aissame replaces Aristobulo Isturiz, who served as intermediary with the opposition-led National Assembly, notes Reuters.

He is also one of the country's senior officials under investigation by U.S. federal prosecutors for allegedly aiding drug shipments from Venezuela, according to a Wall Street Journal report from 2015. Maduro has previously promoted officials accused by the U.S. to top posts.

Maduro also named Ramón Lobo, a low-ranking lawmaker from the western Merida state his sixth new economy minister in three years yesterday, reports the Wall Street Journal. Lobo has previously advocated weakening the currency and price controls that many blame for the country's economic meltdown. He will also hold the post of finance minister, making him the country's top economic authority, according to Reuters.

Nelson Martínez, head of Venezuela’s oil refineries in the U.S., will lead the oil ministry, while the former oil minister Eulogio del Pino will head Pdvsa. The economic and oil changes are a bid to avoid worsening hyperinflation, according the Financial Times, which reports on a quietly issued $5 billion in bonds to finance food and medicine imports.

Efecto Cocuyo lists several other new appointments announced yesterday. About a third of his cabinet currently comes from the military, according to Control Ciudadano.

Venezuela aside: Still no sign of the new bills that would replace the 100 bolivar note, reports Efecto Cocuyo. (See Dec. 19's post.)


Mexican advisor lauded by Trump to head foreign ministry

Mexican President Enrique Peña Nieto named a close advisor who played a key role in organizing a campaign visit with Donald Trump to head the foreign ministry, reports the Wall Street Journal. Luis Videgaray, a former finance minister, resigned a week after the August meeting, in which Peña Nieto's failure to stand up to the then-candidate provoked widespread anger. (See post for Sept. 8, 2016.)

Videgaray has been charged with starting a close relationship with the new U.S. administration -- no easy task considering Trump's inflammatory campaign promises such as building a wall between the two countries (and making Mexico pay for it), tearing up NAFTA and deporting millions of migrants. (See post for Nov. 9, 2016, for example.)

But he has been praised by Trump, who tweeted after his Sept. resignation that "with Luis, Mexico and the U.S. would have made wonderful deals together—where both Mexico and the U.S. would have benefited.”

The appointment is a reversal of fortunes for a key Peña Nieto advisor, who has been called the brains behind the throne, notes the Financial Times. Until the disastrous visit he was a power player in the administration and was considered a contender for next year's presidential election, reports the New York Times. In light of Trump's win, the visit seems less misguided, however, and there have been rumors of Videgaray's return.

One of the country's leading economists, Videgaray spearheaded Peña Nieto's economic reforms and has a good relationship with the Trump transition team. However others criticize that his appointment makes Mexico appear weak, that there will be no penalty for Trump's bashing during the campaign, reports the Washington Post.

Concerns over the bilateral relationship were further fanned by Ford Motor Co.'s announcement this week that it was canceling a planned $1.6 billion investment in a new assembly plant in Mexico, and instead will invest $700 million in a new plant in Michigan. The decision further devalued the Mexican peso against the dollar (prompting Central Bank intervention to raise it back up) and raised concerns that protectionist U.S. policies could hurt Mexico's manufacturing sector, according to the WSJ. Some analysts fear the decision could have a domino effect on other businesses, reports Animal Político.

Trump made NAFTA bashing a central issue of his campaign, arguing that Mexico's economy won at the expense of U.S. workers. But Mexicans increasingly feel that as a development strategy the free trade agreement fell very short, reports the New York Times. The poverty rate has remained the same since before NAFTA was implemented, and wages have stagnated for over a decade, despite enormous investment in the country. But the failure is more of the Mexican government than the agreement, argue some experts. Nonetheless, despite negative consequences to Mexican agriculture and a national dependence on U.S. imports, most Mexican authorities want to keep the treaty and say undoing it would be disastrous for both countries.

The Financial Times paints a far rosier picture of NAFTA's benefits for Mexico, which include permitting the country to become the world’s seventh largest car manufacturer and fourth-largest exporter. A success story that is of course threatened by Trump's stance on U.S. companies investing in Mexico.

News Briefs
  • Protests over gas price hikes of up to 20 percent in Mexico turned into looting yesterday, reports Reuters. (See yesterday's briefs.) Dozens of stores were looted, and 170 were blockaded yesterday, reports the Associated Press. One police officer was killed, and five more injured yesterday, and the government announced the intervention of the federal police in affected areas, reports Animal Político. Nonetheless, Peña Nieto defended the reforms that resulted in the increases yesterday, arguing that "if this decision had not been taken, the effects and consequences would have been far more painful," and that the reforms are aimed at protecting family economies, reports Animal Político.
  • Grand infrastructure projects worth billions of dollars were contracted to Brazilian construction giant Odebrecht by the Venezuelan government. But most remain frozen, another symptom of the corrupt practices that led the company to sign a massive plea deal with U.S., Brazilian, and Swiss authorities last month, reports the Wall Street Journal. (See Dec. 22's briefs.)
  • Over a hundred inmates remain at large after a prison riot in Brazil left 56 dead and permitted 184 to escape, reports the Wall Street Journal. (See Tuesday's post.)
  • Yesterday President Michel Temer said the federal government wasn't asked for help in controlling the riot in a privately run prison. But he said that state governments should seek reinforcement from federal forces in such situations, reports Reuters. He promised a new national security plan featuring a more prominent role for federal authorities on security issues. Currently policing and prison administration are largely state responsibilities.
  • A government order of food worth $400,000 for Brazilian President Michel Temer's 2017 plane trips -- a budget than included 500 cartons of Haagen-Dazs ice cream and nearly 1.5 tons of chocolate cake -- and it's subsequent cancellation amid public outrage, demonstrates the tone deaf nature of the Temer administration, reports the Associated Press. His approval rating is at about 10 percent and the misstep is particularly problematic in light of his austerity policies. Let them eat cake ... 400 kilos of Strawberry and fruit cake, that is. A separate Associated Press piece has more highlights from the list, including 500 truffles. 
  • A new investigation by Repórter Brazil, a civil society organization, found that monitoring systems at so-called sustainable coffee plantations failed to spot serious labor violations, reports the Guardian.
  • Heading into a reelection campaign, Honduran President Juan Orlando Hernández announced this week that key cabinet ministers will be leaving the administration, including defense, health, and infrastructure and public services. He did not announce replacements, but emphasized that they were in order to free up the politicians in question to devote themselves to political activity, reports EFE.
  • Former President Sebastian Pinera and independent center-left Senator Alejandro Guillier are leading polls for Chile's presidential election in November, reports Reuters.

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