Trump Uses Latin America Split to Boost Ally to Top Bank Job
Trump Uses Latin America Split to Boost Adviser to Top Bank Job
(Bloomberg) -- The Trump administration’s unprecedented decision to compete for the presidency of Latin America’s most important development bank surprised even close allies, exploiting growing political divisions in a region that’s struggling to contain the coronavirus.
The U.S. on Tuesday launched Mauricio Claver-Carone, a senior adviser to President Donald Trump, as a candidate to head the Washington-based Inter-American Development Bank. While Claver-Carone portrays himself as a breath of fresh air for an institution that has had just four chiefs in six decades, his eventual presidency would also mean breaking a non-written tradition where this key bank is headed by a Latin American.
The institution, which expects to lend $15 billion this year to projects ranging from infrastructure to health and education across 26 countries in Latin America and the Caribbean, has an outsized role in facing the pandemic and the devastating recession that its expected to trigger. The region has 8% of the world’s population but currently about half of the new virus deaths.
The Cuban-American’s election is poised to plant a Trump ally in the IDB for the next half decade, even if Trump loses his re-election bid in November. The U.S. seized the opportunity after Latin America’s three largest economies failed to agree on a candidate. While Argentina secured the support of Mexico for Gustavo Beliz, an adviser to President Alberto Fernandez, Brazil planned to present its own candidate, former UBS AG and Bank of America executive Rodrigo Xavier.
Despite having a combined 23% voting stake in the bank and being historic allies, relations between Brazil and Argentina have deteriorated in recent months amid an ideological clash between Fernandez’s left-wing coalition and the hard-right administration of President Jair Bolsonaro. Fernandez, who assumed power in December, still hasn’t had a single known phone conversation with his Brazilian counterpart.
“There’s a lack of union within Latin America,” said Veronica Ortiz, chief executive officer of the Mexican Council on Foreign Relations in Mexico City. “That makes consensus difficult and created a window of opportunity for Trump. We’ve seen Trump, who is a big skeptic of multilateral organizations, trying to get people ideologically closer to him into some of these spaces.”
Venezuela Division
Claver-Carone’s stance on Venezuela may be particularly thorny. He has been one of the Trump administration’s staunchest opponents of President Nicolas Maduro’s government, working toward his ouster, and the champion of opposition leader Juan Guaido. Brazil and Colombia share the U.S. view that Maduro must leave, while Argentina and Mexico warn against intervention in the politics of other nations.
Last year, the IDB recognized Guaido’s adviser, Ricardo Hausmann, as Venezuela’s representative to the bank after the opposition leader called Maduro’s appointees invalid.
In March, the region’s democracy watchdog, the Organization of American States, re-elected its head Luis Almagro in a win for Trump’s hard-line policy against Maduro, fending off a challenger backed by Mexico and Argentina.
After the Treasury Department nominated Claver-Carone, Ecuador and Paraguay announced their support on Tuesday night, and were followed by Colombia, Honduras and Uruguay on Wednesday. El Salvador, Panama and Jamaica also said they’ll back him.
Still, the move drew criticism from five prominent former presidents including Brazil’s Fernando Henrique Cardoso and Colombia’s Juan Manuel Santos, who said in a letter posted on Twitter that country members should reject the U.S. nomination.
Argentina and Mexico stand by their plan to back Beliz, according to people familiar with their plans, who asked not to be named because they weren’t authorized to speak about the process.
Yet Beliz’s candidacy now looks unlikely to take off. America’s 30% voting power at the bank and a stipulation that the president must be elected with the participation of at least 75% of shareholders gives the U.S. a de facto veto over the process. Brazil and Argentina are next in voting power with 11.3% each, followed by Mexico at 7.3%.
The governments of Brazil, Mexico and Argentina didn’t know in advance about the U.S. plan to nominate Claver-Carone, people familiar with the process said.
“No one expected the United States to throw its hat in the ring,” said Benjamin Gedan, deputy director of the Latin America program at the Wilson Center, a Washington-based think tank. “The failure of Latin Americans to coalesce around a candidate opened the door to some alternative approach.”
In a terse joint statement, Brazil’s economy and foreign affairs ministries said Wednesday the country received positively the announcement of a U.S. candidacy, which shows the U.S. government is “firmly committed with the future of the IDB.” But the country was expecting to get U.S. backing for Xavier, according to two people familiar with the matter. Brazil’s statement didn’t explicitly state whether the nation will support Claver-Carone.
Oliver Stuenkel, a professor of international relations at Fundacao Getulio Vargas in Sao Paulo, wrote in a tweet that Trump’s decision was a “slap in the face” for Bolsonaro, showing that Brazil’s candidacy wasn’t taken seriously.
A Latin American traditionally holds the job of IDB president, with an American serving as executive vice president, the second-highest job. The question of who will occupy that job also remains to be answered.
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“These are really delicate diplomatic choreographies,” Gedan, who served as the South America director on the National Security Council in the Obama administration, said of the IDB contest. “The Trump administration has characteristically upended this dynamic.”
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