Latin America This Week: September 7, 2023

Petro’s latest scandal could reenergize Colombia’s lackluster conservative opposition. Ever since early 2022, when Gustavo Petro became the favorite to win Colombia’s presidency, the country’s conservatives have been adrift. But Petro’s latest scandal—likely his biggest yet—could give them a new lease on life. In an interview on September 3, Juan Fernando Petro, the president’s brother, described the existence of a pre-election pact brokered between Petro’s team and ex-politicians jailed for corruption and murder to suspend extraditions and prison sentences in exchange for votes from the politicians’ historic strongholds. Juan Fernando’s story corroborates earlier reporting by Colombian journalist Ricardo Calderón, who exposed Petro’s team’s secret pre-election trips to Bogotá’s La Picota prison. The latest scandal—together with the illicit campaign finance cases implicating his son, Nicolás—puts immense pressure on Petro to explain how he made it to the Casa de Nariño, and who helped him get there. With no end in sight to the stream of troubling allegations involving Petro, Colombia’s left turn could soon be eclipsed by a pivot back toward the right.

Foreign direct investment in Latin America defies global downturn. While foreign direct investment (FDI) worldwide fell over 12 percent between 2021 and 2022, Latin America came out ahead. Investment inflows rose by more than 50 percent year on year to $208 billion in 2022. Brazil captured most of the gains, its take increasing by two thirds to $86 billion. A big share were bets on renewables by European companies including Enel, Engie, and Vinci, as well as Chinese companies such as State Grid and State Power Investment Corporation. Mining and agriculture, too, saw gains in investment, including into phosphate mines and palm oil production. With the Lula administration leaning into clean energy, and European and other nations around the world returning to the Amazon Fund and other environmentally friendly investment vehicles, the uptick will likely continue. 

Mexico’s more modest uptake—FDI grew 12 percent to some $35 billion in 2022—reflects in large part the deterrent effects of government policy. With energy increasingly off limits for private money, investments went into primarily manufacturing and transportation. Still, Mexico needs upwards of $40 billion in investment in power generation and distribution to keep pace with growing electricity demand.  If the new president, who will take office in October 2024, changes tack, investment could grow too.