Latin America Update: June 22, 2011

POLITICS:

(1) Ollanta Humala defeated Keiko Fujimori in Peru’s presidential elections. Although a close race, polls indicate a 70% approval rating for President-Elect Humala. Despite media headlines to the contrary, data indicates that Ollanta Humala will not follow the political path of Venezuela’s president Hugo Chavez. (2) Honduran President Porfirio Lobo accepted the return of exiled Honduran leader Manuel Zelaya days before the Organization of American States (OAS) voted to allow Honduras to resume its participation in the organization. (3) Cuban President Raul Castro turned 80 this month and publicly expressed his concern regarding the availability of a successor who will continue the socialist “revolution.”

ECONOMICS:

(1) China is aggressively locking down commodities around Latin America through large loans, investments and other financial arrangements. At the same time, Chinese companies have secured a decade’s worth of oil from Venezuela and Brazil, as well as steady supplies of wheat, soybeans and natural gas from Argentina. (2) The airline merger between TAM (Brazil) and LAN (Chile) could be delayed until March of 2012; the merger will create one of the world’s largest airlines. (3) Brazil celebrates that, “for the first time in history,” it’s risk of default within the Credit Default Swap (CDS) marketplace is less than the United States. (4) Claro, a unit of América Móvil owned by Mexican Carlos Slim (the world’s richest man), said that it will invest $1 billion in Peru over three years — the first major investment announced by a foreign firm since Ollanta Humala won the presidency.