Trump expolits Latin America split to push adviser for IDB post

The Donald 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 United States 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 (IDB). 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 US$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 it is expected to trigger. The region has eight percent of the world’s population but currently about half of the new virus deaths.

The United States seized the opportunity after Latin America’s leading nations were unable to agree on a candidate. While Argentina got Mexico’s support to launch its candidate, Secretary for Strategic Affairs Gustavo Beliz, Brazil planned to present its own candidate, former UBS and Bank of America executive Rodrigo Xavier.

Beliz, a close adviser to President Alberto Fernández, previously worked at the IDB for close to 15 years, ending his ties with the institution in October 2019 before joining the government.

Lack of union

Despite having a combined 23 percent voting stake in the bank and being historical allies, relations between Brazil and Argentina have deteriorated in recent months amid an ideological clash between Fernández’s Peronist coalition and the hard-right administration of President Jair Bolsonaro. 

President Fernández, who took office last 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 sceptic of multilateral organisations, trying to get people ideologically closer to him into some of these spaces.”

Claver-Carone’s stance on Venezuela may be particularly thorny. He has been one of the Trump administration’s staunchest opponents of President Nicolás Maduro’s government, working toward his ouster, and the champion of opposition leader Juan Guaidó. Brazil and Colombia share the US view that Maduro must leave, while Argentina and Mexico warn against intervention in another nation’s politics.

In March, the region’s democracy watchdog, the Organisation of American States, re-elected its US-backed head Luis Almagro in a win for Trump’s hard-line policy against Maduro, fending off a challenger backed by Mexico and Argentina.

Beliz candidacy damaged

After the US Treasury Department nominated Claver-Carone, Ecuador and Paraguay announced their support on Tuesday night, and were followed by Colombia, Honduras and Uruguay on Wednesday. 

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 authorised to speak about the process.

Yet Beliz’s candidacy now looks unlikely to take off. The 30 percent voting power wielded by the US at the bank and a stipulation that the president must be elected with the participation of at least 75 percent of shareholders gives the US a de facto veto over the process. Brazil and Argentina are next in voting power with 11.3 percent each, followed by Mexico at 7.3 percent.

The governments of Brazil, Mexico and Argentina didn’t know in advance about the US plan to nominate Claver-Carone, according to people familiar with the process.

“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, the 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 US candidacy, which shows the US government is “firmly committed with the future of the IDB.” But the country was expecting to get US 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.

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.

“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.”