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The new Netflix series "The Mechanism" captures sensational elements of the Lava Jato (Car Wash) probe, experts point out.
Aecio Neves, Luiz Inacio Lula da Silva and Dilma Rousseff in 2009. (Photo: Ricardo Stuckert/PR)
Wednesday, April 11, 2018
Trade Talk

TradeTalk: Trump Cancels Summit, Netflix Series Stirs Controversy


Netflix looks at Lava Jato, Donald Trump cancels key Latin America trip.

BY LATINVEX STAFF

Just as former Brazilian president Luiz Inacio Lula da Silva starts his 12-year jail term for corruption, Netflix has launched a controversial new series on the Lava Jato (Car Wash) probe that led to his downfall.

Brazilian prosecutors accused Lula of masterminding the biggest graft scheme in the country’s history, saying the former president enriched himself and orchestrated kickbacks that cost the country billions of dollars.

The Netflix series, “The Mechanism” (O Mecanismo, in Portuguese), was created in part by José Padilha, who also directed Netflix series Narcos and the Elite Force movies.

“The series is enjoyable in that it brings to life many critical aspects of the Lavo Jato investigation, underscoring its sheer size and staggering proportions,” says Matteson Ellis, an attorney at Miller & Chevalier and author of The FCPA in Latin America“It shows the central importance of plea bargaining to the investigative strategies. “

It captures sensational elements of the scheme, such as how Paulo Roberto Costa's daughter destroyed evidence which led to his arrest and highlights how shocking a normal jail in Brazil can be for a white-collar criminal like Costa, Ellis says.  

“Moreover, it does a good job helping viewers appreciate the enormous challenges that Brazilian investigators and prosecutors faced when building the case,” he says.  “For example, it shows the critical jurisdictional challenges that arose along the way and could have killed the investigation. One sees how important an independent judiciary and law enforcement infrastructure can be to successful anti-corruption efforts in Latin America. This is something that Judge [Sergio] Moro and other enterprising anti-corruption leaders throughout the region often talk about.  The series unpacks the real implications of a lack of judicial independence in practice, specifically how adverse influences within government agencies can easily sideline important investigations.”

However, Ellis points out that the series is also controversial due to some parts not being accurate compared with the real-life Lava Jato probe.
 
“It is important to note that the series often times lacks a level of precision with respect to specific characters and statements,’ he says. “This has already caused a stir locally, where Brazilians have lived the saga day in and day out for years now.”

Before surrendering to jail, Lula threatened to sue Netflix over the series, while Lula’s hand-picked successor as president of Brazil, Dilma Rousseff accused Netflix of "distorting reality" and spreading lies about her and Lula.

A small but loud #DeleteNetflix campaign burst forth on Twitter, Bloomberg reported, but only 0.17 percent of Netflix estimated six million Brazilian subscribers had cancelled as of March 28, Valor Economico reports.

But the series doesn’t hold back on Lula’s and Rousseff’s rivals, either.

“Some of the most withering takes are reserved not for Lula and his leftist cohort but the center-right opposition standard-bearer (a thinly disguised version of former social democratic presidential hopeful Aecio Neves), who is painted as a venal opportunist,” points out Bloomberg commentator Mac Margolis.

Neves was accused of passive corruption and obstruction of justice in June 2017, in an investigation related to JBS' plea bargain and Brazilian Supreme Federal Court (STF) will decide April 17 whether to accept the accusation from the Prosecutor General's Office against him, Folha de S. Paulo reports.

TRUMP CANCELS SUMMIT OF THE AMERICAS, COLOMBIA TRIP

And now the turn comes to…Latin America.

President Donald Trump -- who has insulted Mexico and worsened US relations with traditional prewar and postwar allies like the United Kingdom, Germany, Japan and South Korea as well as trade partner China – now has decided to brush off Latin America as well.

For the first time ever, there will be a Summit of the Americas without a US president. Just how important is that? Well, for starters the Summit of the Americas was a US idea. The first summit in 1994 (in Miami) was held to announce the start of negotiations for a Free Trade Area of the Americas (FTAA), which would unite the whole Western Hemisphere from Canada in the north to Argentina in the south by 2005.

Over the next decade, the countries made steady progress. But in 2005, the year the FTAA should have been in place, Argentina’s then-president Nestor Kirchner – with enthusiastic support from Venezuela’s president Hugo Chavez – managed to block the process, effectively killing the FTAA. Kirchner was the host of the fourth Summit of the Americas, which was held in Mar del Plata.

The Summit of the Americas, though, continued, with three such summits held since the Mar del Plata fiasco – most recently in Panama in 2015.

The 8th Summit of the Americas is scheduled to be held this week in Lima, Peru.

But on April 10 – three days before the start of the Summit – The White House announced that Trump wouldn’t be going, citing his focus on Syria as the reason. He also cancelled a planned visit to Colombia. Political pundits, though, say the real reason is his anger of the April 9 FBI raids against the offices and homes of Trump’s personal attorney Michael Cohen.

Whatever, the reason, Trump was harshly criticized by many US lawmakers and Latin American experts.

“President Trump is again ceding U.S. leadership in the Americas by skipping the upcoming Summit of the Americas,” US Representative Eliot L. Engel, Ranking Member of the House Committee on Foreign Affairs, said in a statement. “Since its inception, every U.S. president – from both Republican and Democratic Administrations – has attended the Summit. If the President of the United States is indeed the leader of the free world, that person should be able to walk and chew gum at the same time.”

 

Richard Feinberg, the principal architect of the 1994 Summit of the Americas in Miami and former Latin America advisor to President Bill Clinton, went even further.

 

“This is a shocking abandonment of U.S. leadership in our own hemisphere,” he told The Miami Herald. “He’s clearly afraid of being in the room with people he’s continually insulted for the last three years and he shirks from confrontation.”

Jason Marczak, director of the Atlantic Council’s Adrienne Arsht Latin America Center, says Trump’s decision not to attend the Summit of the Americas in Peru this week sends the “wrong message” to many of the United States’ friends in Latin America.


Roberta Braga, an assistant director in the Latin America Center, said that by forgoing his visit to Latin America, Trump “risks sending the message that the US relationship with Latin America is not a priority.”


“This would have been the moment for Trump to show his continued commitment to supporting our allies in the region,” she said in a statement

 

“With the potential for a trilateral meeting with Mexico and Canada, it was also a chance to show continued momentum around a successful NAFTA renegotiation.”

 

The hemisphere is facing serious challenges, including the crisis in Venezuela, and the U.S. void will be deeply felt, adds Engel.

 

“Unfortunately, today’s announcement should come as no surprise from an Administration whose policy toward the region begins with building a wall between our country and our southern neighbors,” he said.

 

FITCH: GLOBAL GROWTH, COMMODITIES HELP LATAM

Synchronized global growth, more favorable commodity prices and stronger or stable growth in the big regional economies (Brazil, Argentina and Mexico) should help Latin America's real GDP growth to recover this year, Fitch Ratings says in a new report.

“Shocks to inflation and external accounts have been dissipating and are largely absorbed, leading to a more benign macroeconomic environment in the region,” Fitch says.

However, political and fiscal risks persist, with the region's heavy election cycle perhaps being the most relevant one this year, it warns. 

Mexico is holding presidential elections in July, while Brazil is scheduled to hold elections in October. In Mexico, the front-runner is leftist Andres Manuel Lopez Obrador, while in Brazil the frontrunner until now was former president Luiz Inacio Lula da Silva, who started a 12-year jail sentence on Saturday for corruption.

The Trump Administrations efforts to change or scrap the North American Free Trade Agreement (NAFTA), also poses a risk, the ratings agency warns.

 “We remain focused on the evolution of the NAFTA renegotiations, which in addition to being important for Mexico could set the overall tone of U.S> protectionism," it says.

PDVSA LAWSUIT DETAILS TRADING FRAUD

Bloomberg reports on the US lawsuit by Venezuelan state oil company PDVSA against oil trader Helsinge, which is alleged to have bribed a PDVSA tech employee to gain “direct access” to secret information on oil auctions on a real-time basis. Helsinge then used the information, such as details on competing bids, to win the lucrative auctions, the suit alleges, often by suspiciously small margins, the news agency reports.

COSTA RICA: UNCLEAR FISCAL OUTLOOK

Costa Rica's fiscal outlook still faces considerable uncertainty despite the pledge by President-elect Carlos Alvarado for comprehensive reforms to reduce the deficit significantly, says Fitch Ratings.

Political challenges facing the ruling PAC party's fiscal reform attempts persist despite a greater sense of urgency to address the country's large fiscal imbalance, it warns.

Costa Rica's fiscal deficit grew to 6.2 percent of GDP in 2017 due to structural spending pressures unaccompanied by revenue increases. Fitch revised the Rating Outlook on Costa Rica's 'BB' ratings to Negative from Stable in January due to the sovereign's deteriorating fiscal position and signs of diminished financing flexibility.

“The outgoing Solis administration enacted tax administration measures but was unable to advance bigger reforms needed for greater fiscal improvement,” the ratings agency says. “A fragmented congress and disagreement over the sequencing and relative weight of tax hikes versus spending cuts have hindered progress, despite recognition across the political spectrum on the need for fiscal reforms.”

Urgency around the fiscal issue has grown in the past year due to growing pressures on local interest rates and signs of tight government liquidity, Fitch points out.


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