“A bullet in the brain would be less damaging than what they’re doing,” Juan Francisco Torres Landa, Managing Partner of the Mexico City office at Hogan Lovells, told the Financial Times after the Constellation “referendum”.

In the latest case against foreign companies, AMLO this month cut off natural gas supply to Brazilian-Mexican petrochemical company Braskem Idesa, Reuters reported. In a statement, Braskem Idesa said AMLO violated the rule of law and the company will take actions to defend its rights and assets, El Financiero reports.

AMLO has also been pressuring big foreign companies to pay more taxes despite the economic crisis and fallout from COVID-19. His targets included Walmex (the Mexican unit of US-based retailer Walmart), Coca-Cola bottler and convenience store operator Femsa, IBM and Canadian mining company First Majestic Silver.

AMLO is also planning to ban outsourcing, but agreed to delay the measure until next year following protests from the private sector.

AMLO’s changes to renewable energy regulations caused condemnation from the US, Canadian and European Union embassies and chambers. The American Petroleum Institute complains of systematic discrimination against US fuel companies in favor of state oil company Pemex. (See Mexico: US Energy Sector Complains of Discrimination).

Despite the dramatic crisis caused by COVID-19, AMLO decided to provide no meaningful stimulus. Meanwhile, he continued to pour money into his three pet projects: a $8 billion Pemex refinery (Dos Bocas), a $6.5 billion train (Maya Train) and a $3.5 new airport (Santa Lucia).

That comes on top of paying for the continued high losses at Pemex, which has been the worst performer in Latin America for years. Last year, Pemex led losses among Latin America’s top 500 companies, according to the Latinvex 500. Its losses of $18.4 billion last year were twice as high as the losses in in 2018.

#3 Argentina Returns to Failed Past

Argentina’s new government led by President Albert Fernandez was expected by some to provide a pragmatic version of previous Peronist governments. Yet, in the end he provided more of the same anti-business policies, combined with chaos and a perception that he may or may not actually be in control.

While he inherited an economic crisis from his predecessor, Mauricio Macri, Fernandez has not helped with his actions since assuming office a year ago.

In May, Argentina defaulted on its foreign debt, leading to months of tense negotiations with creditors before reaching a deal in August to restructure nearly $110 billion in foreign currency debt.

However, despite that “success” Fernandez has not won over foreign investors thanks to his capital controls, threats of expropriation and wealth tax.

The capital controls threaten a deal with the IMF to renegotiate $40 billion. Investors said tighter controls could muddy those talks, according to Reuters.

In December, the Argentine Senate approved his plan to impose a so called "wealth tax," which Fernandez hopes will raise 300 billion pesos (approximately US$3.75 billion), Reuters reported.

It is intended to be a one-time tax aimed at helping alleviate the fallout from COVID-19, but the powerful Argentine Rural Society (SRA) criticized the measure, fearing it would become permanent. That view was echoed by Carlos Caicedo, senior principal analyst for Latin America at IHS Markit.

“The government indicated that this would be a one-off levy; however, the risk is that it could become permanent,” he told CNBC. “History shows that once these benefits are introduced it would be very difficult to remove them. Overall, the new tax would further undermine Argentina’s already deteriorated business environment,” he added.

The tax comes three months after the government further restricted access to dollars.

The central bank on September 15 added a 35 percent tax on people who tap a $200 monthly quota, said card payments abroad would be included in the allowance and also limited corporate access to foreign currency, Reuters reported.

The move sparked a selloff of Argentine bonds and stocks, while the price of dollars in unofficial markets spiked, widening a large gap with the official rate.

“It shows total desperation,” Agustín Monteverde, an economist at consultancy Massot Monteverde & Asociados in Buenos Aires, told Reuters. “They have just hung a sign around their necks that says ‘meltdown’.”

In June, Fernandez backtracked on plans to expropriate financially ailing soymeal exporter Vicentin.

Investors complain that they don’t see any well-thought-out plan by government to get out of the crisis, just short-term measures that do more harm than good.

"They’re just slapping on small band-aids here and there,” Jorge Piedrahita, managing partner at Gear Capital Partners in New York, told Bloomberg.

#4 Peru Politics Ruin Business

For years, Peru was among the shining stars in Latin America, thanks to a combination of business-friendly governments, sound macro economics and strong growth potential for nearly every business sector.

However, with the resignation of Pedro Pablo Kuczynski in March 2018 – less than two years into his five-year mandate – all that changed.

He resigned after allegations of vote buying to avoid losing impeachment votes, which had become frequent thanks to the opposition-controlled Congress.

Kuczynski was succeeded by one of his vice presidents Martin Vizcarra, who ruled until November this year. Vizcarra was popular for his reforms against corruption, but made a controversial move to dissolve the unpopular Congress in September.

Lawmakers “paid him back” in November by ousting him in what would become an infamous week of Peru having three different presidents.

Vizcarra’s unpopular successor, Manuel Merino (who had been Speaker of Congress when Vizcarra was impeached) had to resign after a week amidst massive protests.

In the end, Congress elected Francisco Sagasti, who has a doctorate from the University of Pennsylvania and was a former head of strategic planning at the World Bank.

The one-week chaos, following a year of political uncertainty, has clearly undermined Peru’s reputation among foreign direct investors.

Although Vizcarra managed to rule for more than two years, he – like Kuczynski before him – was perpetually under threat of being impeached by Congress.

In a surprise, Peru did manage to issue a $4 billion bond in November, showing faith among institutional investors. But many multinationals have lost their earlier enthusiasm for the Andean country.

The combination of political uncertainty and COVID-19 will likely result in Peru’s economy plunging a whopping 13.9 percent this year, according to the IMF. That would be the worst among all countries in Latin America except for basket case Venezuela.

It would also be Peru’s worst performance in more than 40 years, even surpassing the 13.4 percent fall during the global crisis of 1989, according to a Latinvex analysis of IMF data since 1980.

#5 Annus Horribilis for Chile

While it could be argued that 2020 was an annus horribilis for the whole world due to the COVID pandemic, Chile has been particularly hard hit this year due to additional factors.

It started the year still roiling from massive and often violent protests late last year that closed streets, central squares and many small businesses, hotels and restaurants.

Insurance premiums to protect shops and offices doubled as insurers scrambled to cover losses, Reuters reports.

Even before COVID-19, Chilean hotels were complaining of low occupancy due to the aftermath of the violent riots last year.

Then, when the pandemic hit, Chile became one of the worst hit.

“Chile’s virus fight seems to have fallen victim to the same factors that sparked crises in other emerging markets -- poverty, overcrowding and a massive off-the-books workforce,” Bloomberg reported.

Added to its problems, is uncertainty after a constitutional reform, which was overwhelmingly approved in October.

“Although expected, the outcome injected another layer of economic uncertainty into an economy that was already buffeted by the coronavirus pandemic and the social crisis of 4Q19,” Fitch ratings said in a report.

The combination of protests, COVID-19 and uncertainty linked to a new constitution have helped drag the economy to an expected 6 percent decline this year, according to the IMF. That will be its worst performance since the country's 1982 crisis.

“Fitch Ratings expects the ratification of a new constitution to likely affect the future business environment in Chile,” it said. “Potential changes to the status quo may include higher corporate taxes, increased corporate regulation, restrictions on water rights owned by the private sector and greater environmental restrictions. Uncertainty about the economic and political environment will deepen the downward trend in corporate-sector investment.”

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