Chilly Chile, Frenemies, Iran Nuclear Deal 2.0, Commodity Pricing and the Week in Review 

Blog / Weekly Review

Chilly Chile, Frenemies, Iran Nuclear Deal 2.0, Commodity Pricing and the Week in Review 

Happy Friday! The podcast is here. LatamPolitik is here. A video of the North Korean military marching to the Bee Gees is here. Email us at to set up a call to discuss what geopolitical services we provide or how geopolitics is affecting your investments. Cheers.

No Chill. Chile held elections for 155 citizens to redraft the Chilean constitution. Chilean President Sebastian Piñera’s center-right coalition Chile Vamos expected to win at least one-third of the total seats of the Constitutional Convention (the proportion necessary to block any changes). Instead, Chile Vamos won just 37 seats. 46 seats went to political independents. The Chilean peso dropped 3.6 percent and Chilean stocks plunged almost 10 percent in response.

What it means: Markets and global media seem surprised by the election turn-out. We don’t understand why they are surprised. Probably because they haven’t been reading LatamPolitik and therefore don’t know that Chilean President Sebastian Piñera’s approval rating plummeted to 9 percent in April for opposing a popular bill that allowed Chileans to withdraw 10 percent of their pension funds to cope with COVID-19 economic disruption.

Why can’t we be friends? U.S. Secretary of State Antony Blinken met with Russian Foreign Minister Sergei Lavrov. After the meeting, both sides spoke of their “serious differences” – but also emphasized the need to find ways to cooperate “in spheres where our interests collide.” In Blinken’s words, the U.S. wants “a predictable, stable relationship with Russia.”

What it means: Could it be that rarest of things – the U.S. constructing foreign policy based on its long-term strategic interests rather than on its ideological preferences? Thus far the Biden administration has been stridently tough on the Russian government, and we were worried about the negative trajectory in bilateral relations since well before Biden entered the White House. We’re having a Russian political analyst on our next podcast episode, so we’ll be sure to get his take on this, but for now, we’ll take a fairly innocuous attempt by both sides to find some common ground to the bickering and finger-pointing that has defined the relationship in the last year.

Iran Nuclear Deal 2.0. Negotiations between Iran, the U.S., and the various other countries involved in the JCPOA (aka the Iran nuclear deal) continue and according to a Russian negotiator have made “significant progress” – to the extent that some media reports suggest an agreement is “within reach.”

What it means: The U.S. is overloaded with issues. It is squaring off with China, attempting to revamp its position in Latin America, and attempting to repair its relations with the European Union. Because the U.S. is a major energy producer, it does not have the same strategic imperatives in the Middle East that it used to. As a result, the U.S. is trying to reduce its footprint in the Middle East, and the best way to do that is to set up a (relatively) stable balance of power where no one country can dominate the others. And that means trying to reach some kind of accommodation with Iran. The real question is – will whoever replaces Hassan Rouhani next month go along? If so, the consequences will reverberate throughout the region and global energy markets.

Commodities top? China’s National Development and Reform Commission (NDRC) said it expected commodity prices to spike in the middle of this year before declining in the latter half of the year and into 2022. The NDRC also said it was prioritizing its efforts on iron ore, including accelerating domestic projects and finding new overseas iron ore resources.

What it means: You’ve probably been reading or hearing that inflation is increasing, that the price for everything is going up, etc. Well, here is China saying that we may be at the peak, at least for some commodities. Is Beijing right? It’s a little too early to say – we think food prices at the very least have a ways to go, especially if countries like Argentina start suddenly banning exports of key products (as the Fernández government did with beef this week). As for the bit about iron – China is trying to wean itself off of Australian iron exports as quickly as possible. That bilateral relationship seems irreparably damaged for the foreseeable future.

Honorable Mention

Fidelity will make brokerage accounts available for 13-17 year-olds. This will end well.

Ethiopia postponed elections over “logistical issues.” This is very bad news and a very negative indicator for Ethiopia’s immediate future.

AMLO’s Morena party is slipping in polls ahead of next month’s legislative elections.

The European Union and the United States made a joint announcement expressing their commitment to work together to address excess capacity in the global steel and aluminum markets.

Hostilities continued this week between Israel and Hamas in Israel and the Gaza Strip. As of this writing, Israel and Hamas have agreed to a ceasefire, but the situation remains fluid.

Spain deployed military forces to its border with Morocco near Ceuta in response to a surge of 8,000 migrants to the Spanish-controlled enclave in northern Africa.

Argentina’s National Energy Secretariat signed a deal with a consortium of Chinese companies, including Powerchina and Shanghai Electric Power Construction, to study and potentially build and even finance a revamped pipeline system for the transport of Argentine natural gas.

Armenia accused Azerbaijan of violating its borders earlier this week, and on Thursday announced it had deployed additional forces to the border and fired warning shots against Azerbaijani forces allegedly encroaching on Armenian territory.

Mexico’s National Meteorological Service (SMN) is expecting a very active tropical cyclone season this year with as many as 40 named storms in the Atlantic and Pacific Oceans. The U.S. National Oceanic and Atmospheric Administration issued its predictions and forecasts a 60 percent chance of an above-normal season and a 30 percent chance of a near-normal season.

Indonesia is reportedly seeking to reopen boundary negotiations with Australia.

The Hong Kong Economic, Trade and Cultural Office (Taiwan) has temporarily suspended all operations in Taiwan.