🫵🤞 Fingers pointed and fingers crossed

Hello, and welcome to the Latin America Weekly newsletter! In this issue: The climate crisis had regional consequences this year. False accusations against Uruguay’s presidential frontrunner Yamandú Orsi. And how Argentina became fashionable for investors once again. 

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Brazil floods are part of a much bigger regional climate drama 

The devastating floods that killed 147, displaced over half a million, and directly affected over 2 million Brazilians in the state of Rio Grande do Sul dominated the regional news cycle, opening a debate on how vulnerable Latin American cities are to ever-more-frequent climate calamities.

• This vulnerability was the subject of a new report from the World Meteorological Organization (WMO), released in the wake of the Brazilian crisis, but which sounds the alarm about climate-related issues across the continent.

It’s getting hot in here. The report starts by stressing that 2023 “was by far the warmest year on record,” making the region susceptible to droughts, heatwaves, heavy rains, floods, and rising sea levels — jeopardizing “human health, ecosystems, and wildlife” and “undermining economic development, food, and energy security.” 

• “It was a year of record climatic hazards in Latin America and the Caribbean,” WMO Secretary-General Celeste Saulo says.

El Niño. The study focuses on El Niño, a cyclical climate pattern that has for centuries caused extreme weather variations and socioeconomic effects. Such events can be exacerbated when “combined with long-term human-induced climate change,” Ms. Saulo warns.

By the numbers. Nearly 80 percent of the 67 climate hazards reported last year were “storm and flood-related,” says the Centre for Research on the Epidemiology of Disasters (CRED), causing around USD 21 billion in economic damages and plunging 13.8 million people into acute food crises.

• “The actual amount of damage is likely to be worse because of under-reporting and because data on impacts are not available for some countries. This is especially the case for heat-related extremes,” says the report. 

Why it matters. The study is centered on Q3 and Q4 2023 but says the impact of this period “will likely be felt in 2024 and beyond” — the Rio Grande do Sul floods being the most alarming example of this. 

Regional climate crisis. The ongoing Brazilian calamity is also reaching its neighbors, as Uruguay has also reported that over 4,000 people were displaced by the same flood, while parts of Argentina have also been affected by higher-than-usual rain levels, with 500 locals already evacuated.

• Other parts of the continent are suffering from insufficient rain, as droughts in Colombia and Ecuador have caused power cuts and water rationing. 

• Venezuela, meanwhile, witnessed the melting of its last glacier this month, as the Sierra Nevada (Spanish for Snowy Mountains) de Mérida mountain range sadly fulfilled experts’ thawing forecasts. 

• Mexico is also facing an energy crisis due to heat waves, Honduras shut down schools and imposed remote work due to poor air quality, while Panama’s canal struggled with low water levels.

• Moving on to the Caribbean, Haiti and Puerto Rico are on alert due to heavy rains and landslides, which have already killed 13 Haitians this month.

What next. Altogether, almost every country in the region is facing climate-related challenges this year, but the report warns that Latin America still lags in terms of weather forecasting technology, which is “pivotal in enhancing decision-making” and taking quick action when needed.

Two arrested for falsely accusing Uruguay’s Orsi of attacking sex worker

The complaint against Uruguay’s center-left presidential hopeful Yamandú Orsi, who was accused of sexual abuse by two transgender women with ties to the rival ruling right-wing National Party, had always seemed fishy. 

• These doubts were seemingly confirmed last week, when the accusers were arrested, and one of them was handed a 20-month prison sentence for “criminal association” and committing “slander” and “defamation” against the candidate.

The case. In March, National Party activist Romina Celeste brought to light an undetailed complaint filed by an unknown “42-year-old transgender former sex worker” who accused Mr. Orsi of physically attacking her after hiring her services in 2014.

The twist. The politician denied the claims from the beginning, but the case took a twist when Ms. Celeste herself admitted that the accusations were “false,” adding that they were part of a plot concocted by her party to harm a strong political opponent. 

• After claiming that the party had offered her a seat as a lawmaker in exchange for the dirty job, Ms. Celeste backpedaled and said that “no National Party member was behind it” and that she lied simply to catch the attention of the press.

Why it matters. Mr. Orsi’s reputation is a matter of national interest, as the former Canelones governor is the favorite to win the left-wing Broad Front party primary on June 30 and is also leading polls for Uruguay’s October 27 general election.

Orsi. As The Brazilian Report has recently explained, Mr. Orsi is the Broad Front’s main shot to regain power after uninterruptedly ruling the country between 2005 and 2019, given his much larger appeal among conservative rural voters.

• His rival will be Montevideo Mayor Carolina Cosse, who is backed by Uruguay’s Communist and Socialist parties. 

Celeste. In response to the scandal, Uruguay’s National Party expelled Ms. Celeste from its ranks, as well as the faction she led, known as “Juntos por el Pueblo.” 

• Ms. Celeste is a well-known “anti-communist” militant who had already made the headlines this year, when she was jailed after protesting against Brazil’s President Lula during a visit to Montevideo, where she called Lula a “criminal” and spat on a municipal officer.

Crime partners. Her partner in crime, Paula Díaz, was also arrested, as she retracted her accusation against Mr. Orsi as well. Investigators are looking into a trip the duo made to Argentina on the day of Javier Milei’s presidential win, and searching for who might have coached Ms. Díaz on how to lie to authorities.

A puppet master? Audio messages from Ms. Celeste’s phone show her convincing Ms. Díaz of the advantages of making the accusation, as it would bring her fame and allow her to charge more for her sex work. 

• But while fame might have convinced Ms. Díaz, many believe Ms. Celeste might have had another motive. This includes Prosecutor Sandra Fleitas, who said that “there are other interests behind the two people that we have formally accused.”

• “I find it very hard to believe that two women simply woke up in a bad mood one day and decided to do this. I am not saying that there is a political party behind this, but I think there were clearly political reasons,” Mr. Orsi added.

With pledges of reform, Argentina’s Milei has financial markets believing

Libertarian President Javier Milei of Argentina may be facing austerity protests at home, but investors abroad seemingly believe his pledges to make Argentina great again.

• Driven by a seemingly unwavering commitment to eradicate the country’s deficit and free-market rhetoric that has enticed some of the world’s most influential investors, Argentinian assets have experienced a fantastic streak since his November victory.

Asset boom. Argentina’s stocks and bonds are benefitting from a U-turn in market sentiment following a four-year slump between 2018 and 2021, in which key stocks lost up to 90 percent of their value. 

• 2022 and 2023 were already positive, amid signs that the country would take a pro-market turn no matter who won the election, which put Argentina among the best-performing markets in the world for two consecutive years.

• But the Milei presidency took things to a new level. Banco Galicia, the country’s most liquid stock, tripled in value from USD 12.50 per share on the day before the runoff to a peak of USD 37.75 per share last week.

• Sovereign bonds, once trading lower than 30 cents on the dollar, have now nearly doubled, and the peso’s closely monitored black market exchange rate has also stabilized.

Cuts, cuts, cuts. Enthusiasm for Argentinian assets has been driven by Mr. Milei’s austerity package, which helped deliver a fiscal surplus in Q1 2024, the first for the country since 2008, taking debt payments into account.

• The president, who has been implementing stricter cuts than those mandated by the International Monetary Fund, described the achievement as “a feat of historic proportions.”

Endorsements. International endorsements have also helped, as Milei has captivated wealthy foreign audiences since he spoke at Davos’ World Economic Forum.

• Last week, former hedge fund manager Stanley Druckenmiller, one of the world’s most influential investors, said he instructed his team to buy Argentinian ADRs immediately after that appearance.

• “The only free market in the world right now, bizarrely, is in Argentina of all places,” Mr. Druckenmiller said in a recent T.V. interview. “Javier Milei is going to be an interesting experiment.”

Musk and Thiel. President Milei was also boosted by U.S. billionaire Elon Musk last week. “I recommend investing in Argentina,” Musk said on X after their second meeting in Los Angeles, in a statement that was warmly welcomed by the Argentinian government.

• With a much lower profile, PayPal and Palantir co-founder Peter Thiel also met with Mr. Milei last week, while other key players in Silicon Valley have also praised him in public.

Bank research. Reports from Santander and BTG Pactual have also recommended Argentinian assets, with the former suggesting a “strong upside” potential tied to economic stabilization. 

Yes, but. Argentina is a country of booms and busts and was already the market darling not long ago, during the center-right presidency of Mauricio Macri (2015-2019), which ended with a massive debt crisis and the largest IMF bailout in history.

• President Milei’s approval ratings remain high, but economic activity is taking a big hit, and the government has faced two general strikes and massive street protests.

• The president has also struggled to pass bills through Congress and postponed tariff hikes and debt payments, but so far he has markets believing that this time will be different.

Quick catch up 

After severing relations with Israel, Colombian President Gustavo Petro said Prime Minister Benjamin Netanyahu “will go down in history as a genocidist” for bombing Palestinians. 

Bogotá taxi drivers went on strike and rallied across the city, protesting against the unregulated growth of ride-hailing apps such as Uber.

Chilean truckers organized a new round of protests in the north and in the country’s capital Santiago, as soaring crime has become the top concern for Chileans of all trades.

The European Union provisionally eased some sanctions against Venezuela, looking to improve its relationship with the Nicolás Maduro government ahead of July’s elections.

The U.S. Department of Homeland Security changed asylum-seeking regulations to speed up the rejection of those with criminal or terrorist backgrounds. 

President Santiago Peña said the new tariff Brazil will pay to use the binational Itaipu dam will inject more than USD 1 billion per year in Paraguay’s economy. 

Still scarred by a scandal over luxury watches, President Dina Boluarte of Peru is now accused of leaving her post to undergo cosmetic procedures. 

Prosecutors in Ecuador are investigating a luxury real estate project linked to First Lady Lavinia Valbonesi, potentially harmful to protected mangroves on the beach of Olón. 

Environmentalists celebrated as Nicaragua’s Congress shelved plans to build an interoceanic canal financed by Chinese capital. 

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