Regional Summary
Learning to Bow Without Kneeling Middle powers facing American pressure have found that compliance can be dressed up as defiance—and the disguise works well enough to keep voters happy. From Ottawa to Mexico City to Brasília, leaders faced American pressure and found a third way: yield on substance while loudly proclaiming sovereignty. This shows less about courage than about how hemispheric politics has changed, where the appearance of autonomy now matters more than its exercise. Mark Carney, Canada’s prime minister, offered a theatrical version. He refused to recant his Davos speech calling for middle power coalitions against American dominance, telling Mr Trump flatly “I meant what I said.” But the bravado comes with a frantic drive to spread trade—deals with South Korea, uranium talks with India—that concedes the very dependence his rhetoric denounces. Mr Carney’s defiance is stagecraft: it strengthens him at home, where even Conservative rival Pierre Poilievre, the opposition leader, won 87% support partly by taking a hard line toward Washington. The audience for Canadian sovereignty talk is Canadian voters, not the White House. Claudia Sheinbaum, Mexico’s president, performed the reverse trick with more honesty. Pemex quietly cancelled oil shipments to Cuba after Mr Trump threatened tariffs, redirecting a tanker carrying 700,000 barrels to Denmark. Ms Sheinbaum called the decision “sovereign”; her foreign minister insisted there was “no subordination.” Mr Trump then praised her as “wonderful and very intelligent,” and the peso rallied. The episode showed how to dress accommodation in nationalist language. It worked because both sides had an interest in pretending Mexico had chosen freely. The coalition unity pact Morena signed days later, covering up strains over electoral reform, suggests Ms Sheinbaum knows the real cost of American pressure falls on domestic unity, not diplomacy. Luiz Inácio Lula da Silva, Brazil’s president, played a more subtle game during a 50-minute call with Mr Trump, proposing a Palestinian seat on Washington’s Peace Council while limiting its scope to Gaza—a move designed to preserve independent positioning at negligible cost. But more revealing was Fernando Haddad, the finance minister, announcing his departure to run for São Paulo governor. This drains the cabinet of its market-trusted figure just as Brazil’s current-account deficit hits an 11-year high of $68.8 billion. Lula’s strategic autonomy abroad sits uneasily beside weakness at home: foreign direct investment rose to $77.6 billion, but commodity dependence remains the load-bearing wall. The Bolsonaro movement showed its strength at a Brasília rally—where lightning injured 89 supporters—proving that polarisation, not sovereignty, will dominate the 2026 contest. Chile, preparing for José Antonio Kast’s presidency, showed what willing compliance looks like. Codelco’s oversubscribed $1.25 billion bond sale and the Supreme Court’s rejection of Tianqi Lithium’s challenge to the Codelco-SQM merger confirmed control over strategic minerals without a whisper of anti-American posturing. Mr Kast’s cabinet is 67% independent technocrats, a makeup that signals pragmatism to markets and Congress alike. His diplomatic courtship of restrictive-immigration models from El Salvador and the Dominican Republic aligns Chile with Washington’s preferences not under duress but by choice—the one form of alignment that requires no face-saving rhetoric. The common thread is not defiance of America, nor submission to it, but the management of the gap between the two. Each government yielded where it had to, held firm where it could afford to, and ensured the domestic story emphasised the holding, not the yielding. This is the emerging hemispheric grammar: sovereignty as performance, accommodation as policy. It works for now, because Washington appears content to collect substance and let its neighbours keep the symbolism. The danger is that leaders who rehearse independence too convincingly may one day be expected to deliver it.Country Summaries
Canada
Prime Minister Mark Carney refused to back down from his challenge to American hegemony this week, explicitly telling President Donald Trump he would not recant his Davos speech criticising US dominance and calling for middle-power coalitions.
The confrontation came during a 30-minute call in which Mr Trump pressed Mr Carney to walk back his World Economic Forum remarks. Treasury Secretary Scott Bessent had claimed Mr Carney was “very aggressively walking back” the speech, but when asked directly whether he had recanted, Mr Carney answered “no” and stated “I meant what I said in Davos.” The exchange confirms that Canada’s strategic reorientation represents a fundamental shift rather than tactical positioning that might be reversed under pressure.
Even as tensions with Washington escalate, Mr Carney is accelerating trade diversification. He signed an auto deal with South Korea and announced plans to visit India in March for agreements on uranium, energy and artificial intelligence. The Indian High Commissioner indicated that talks on a Comprehensive Economic Partnership Agreement should begin in March. The moves support Mr Carney’s strategy to double non-US exports within a decade.
The confrontational approach appears to be strengthening rather than weakening Mr Carney’s domestic position. Conservative Leader Pierre Poilievre won his mandatory leadership review this week with 87.4% support at the Calgary convention, exceeding Stephen Harper’s 84% result in 2005. The strong showing consolidates Mr Poilievre’s position despite losing his own seat in last year’s election and recent caucus defections to the Liberals.
But traditional tensions persist even as external pressure mounts. Mr Carney’s Quebec City speech describing the 1759 Battle of Plains of Abraham as symbolising “partnership” between two peoples drew fierce criticism from separatist leaders. Parti Québécois leader Paul St-Pierre Plamondon said “Quebec does not exist because of Canada” while Bloc Québécois leader Yves-François Blanchet demanded an apology. Mr Carney refused and stood by his comments. The exchange prompted sovereigntist leaders to rally their forces at the PQ’s annual convention, with Mr St-Pierre Plamondon declaring that a “battle of ideas” had begun with Mr Carney as the federalist standard-bearer.
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- Carney announces trade deals and diversification efforts amid US tensions — Prime Minister Carney signed an auto deal with South Korea and announced plans to visit India in March for trade agreements on uranium, energy and AI. The moves are part of his strategy to double non-US exports within a decade as tensions with Trump escalate. (nytimes.com)
- Carney announces grocery rebate and affordability package — Prime Minister Carney unveiled the Canadian Groceries and Essentials Benefit, expanding the Goods and Services Tax (GST) credit to provide relief for rising food costs. The package also includes measures for food security and affordability as the government faces opposition pressure over cost of living. (cbc.ca)
- NDP leadership race finalizes five candidates as Singh steps down — The federal New Democratic Party (NDP) confirmed five candidates for its March leadership convention: Rob Ashton, Tanille Johnston, Avi Lewis, Heather McPherson and Tony McQuail. Lewis leads in fundraising after the party lost official status following Singh’s resignation post-election defeat. (globalnews.ca)
- US ambassador warns NORAD could change if Canada abandons F-35 purchase — United States Ambassador Pete Hoekstra warned that the North American Aerospace Defense Command (NORAD) would have to be ‘altered’ if Canada pulls back from its planned purchase of 88 F-35 fighter jets, saying the United States would need to fly more aircraft into Canadian airspace. The State Department later clarified the comments amid continental defence concerns. (cbc.ca)
- Parti Québécois and Bloc Québécois rally sovereigntist forces at convention — The Parti Québécois held its annual convention in Saint-Hyacinthe with Bloc Québécois leader Yves-François Blanchet offering support ahead of Quebec’s fall election. Leaders accused Carney of launching the referendum campaign and renewed ties between federal and provincial sovereigntist parties. (cbc.ca)
- Canadian Armed Forces member dies in Latvia deployment — A Canadian Armed Forces member died while deployed in Latvia as part of Operation Reassurance, the CAF’s largest overseas mission. The deceased was Master Corporal Cristian Halmagean, based at 5th Canadian Division Support Base Gagetown, who had served nearly three years. (cbc.ca)
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Mexico
Mexico suspended oil shipments to Cuba under US pressure this week, providing the clearest test yet of President Claudia Sheinbaum’s strategy for managing bilateral tensions.
Pemex cancelled a scheduled oil shipment to Cuba and removed it from the export calendar after President Donald Trump threatened tariffs on countries supplying oil to the island. The Swift Galaxy tanker carrying 700,000 barrels was redirected to Denmark. Ms Sheinbaum defended the decision as “sovereign” while Foreign Minister Juan Ramón de la Fuente asserted there was “no subordination” to the US. The episode demonstrated Mexico’s calibrated approach — operationally accommodating US pressure while maintaining sovereignty rhetoric. Mr Trump and Ms Sheinbaum then held a 40-minute phone call discussing security cooperation and bilateral relations. Mr Trump publicly praised Ms Sheinbaum as “wonderful and very intelligent,” with investors viewing the conversations positively for the peso.
The sovereignty sensitivity forced Ms Sheinbaum to manage domestic coalition tensions more formally. The National Regeneration Movement (Morena), Labour Party (PT) and Ecologist Green Party of Mexico (PVEM) party leaders signed a unity declaration reaffirming their coalition for the 2027 elections after weeks of strain over electoral reform. The agreement notably excluded specific mention of electoral reform and Coahuila elections where the PVEM will run separately. Ms Sheinbaum also reshuffled Senate leadership, with Senator Ignacio Mier replacing Adán Augusto López as Morena’s Senate coordinator. Mr López stepped down to focus on territorial party strengthening ahead of 2027 elections, while Mr Mier prioritised electoral reform and called for party unity.
Security operations continued at high tempo under Security Secretary Omar García Harfuch. He reported linking the Los Chapitos faction to attacks on Citizens’ Movement deputies in Sinaloa and coordinated federal-state operations in Baja California. Thirty-seven criminals were extradited to the US, with the Defence Ministry deploying 1,600 soldiers to Sinaloa.
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- De la Fuente defends Mexico’s humanitarian aid policy amid Cuba pressure — Foreign Minister Juan Ramón de la Fuente stated Mexico will continue providing humanitarian aid to countries that require it, emphasizing there is ‘no subordination’ to the US. His comments came amid Mr Trump’s threats of tariffs on countries supplying oil to Cuba. (cronica.com.mx)
- García Harfuch intensifies security operations with major arrests — Security Secretary Omar García Harfuch reported significant operations including arrests of cartel leaders, linking Los Chapitos to attacks on Citizens’ Movement deputies in Sinaloa, and coordinated federal-state operations in Baja California. Multiple high-value targets were detained and 37 criminals extradited to the US. (elfinanciero.com.mx)
- Banxico presents 2026 monetary program with gradual approach — Bank of Mexico released its 2026 Monetary Program maintaining 3% inflation target and signaling more gradual monetary policy adjustments. Banxico also launched commemorative 100-peso note for its centenary and met with Ms Sheinbaum to discuss economic outlook. (eleconomista.com.mx)
- Military operations intensify with Naval Secretariat seizures and Defence Ministry deployments — The Naval Secretariat (SEMAR) seized over 19,000 cartridges in Sonora and reinforced operations in Nayarit. The Defence Ministry (SEDENA) deployed 1,600 soldiers to Sinaloa and conducted operations in Escuinapa. The Naval Secretariat also announced major structural changes in the institution. (jornada.com.mx)
- Electoral reform negotiations face coalition resistance — Morena’s electoral reform proposal encounters obstacles as the Labour Party and Ecologist Green Party of Mexico show reluctance to support certain aspects. Government sources suggest the reform may be watered down or delayed without consensus from coalition partners who hold decisive votes. (lasillarota.com)
- Rubio and de la Fuente hold phone call on bilateral cooperation — US Secretary of State Marco Rubio and Mexican Foreign Minister Juan Ramón de la Fuente held a telephone conversation discussing bilateral priorities and security cooperation, with both sides reiterating willingness to advance shared interests. (nmas.com.mx)
- Sheinbaum criticizes research institute researchers as neoliberal — President Claudia Sheinbaum labelled researchers at the Centre for Economic Research and Teaching (CIDE) as neoliberal following leadership changes at the institution, telling them not to forget ‘who pays for their studies’ and calling for greater institutional participation in national development. (elfinanciero.com.mx)
- Morena politicians engage in public social media confrontations — Institutional Revolutionary Party (PRI) coordinator Rubén Moreira and Morena senator Gerardo Fernández Noroña clashed on social media over electoral reform, with Mr Fernández Noroña calling Mr Moreira a ‘pig’ and threatening to meet him in person. The confrontation reflects broader tensions over electoral reform opposition. (proceso.com.mx)
Notes
Notes
De la Fuente defends Mexico's humanitarian aid policy amid Cuba pressure
January 31 - February 01, 2026
Morena coalition signs unity pact with PT and PVEM for 2027 elections
January 29 - February 01, 2026
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Brazil
Brazil’s 2026 election race is accelerating as major figures abandon government posts to position for the campaign. Finance Minister Fernando Haddad confirmed he will leave his position in February after communicating with President Luiz Inácio Lula da Silva, under pressure from the Workers’ Party (PT) to run for office. He is the PT’s only plan for the São Paulo governor race, though he has expressed reluctance to be a candidate. The departure represents the most significant cabinet reshuffling yet as parties organise for what promises to be another polarised contest.
The Bolsonaro movement demonstrated it retains formidable mobilisation capacity despite its leader’s legal troubles. Lightning struck supporters gathered for a former President Jair Bolsonaro rally in Brasília, injuring 89 people with 47 hospitalised. The rally itself showed continued organisational strength even with Mr Bolsonaro imprisoned. Meanwhile, the PT is consolidating an anti-Big Tech narrative as a central 2026 campaign theme following Lula’s recent statements against social media platforms, though national and São Paulo state party levels diverge on gubernatorial candidacy strategy.
Even as the political system prepares for electoral battle, institutional legitimacy faces new pressure through the Master Bank scandal. The case has exposed secret meetings between Lula and banker Daniel Vorcaro, connections to Supreme Court ministers including contracts with Justice Alexandre de Moraes’s wife’s law firm, and coinciding visits by Justice Dias Toffoli to a resort linked to JBS. The bar association of São Paulo proposed an ethics code with transparency and conflict rules in response to the revelations.
In foreign policy, Lula maintained Brazil’s strategic autonomy while engaging with the United States. During a 50-minute phone call with President Donald Trump, the two discussed Venezuela, UN reform, and arranged a potential Washington meeting. Lula proposed a Palestine seat in Mr Trump’s Peace Council and limiting its scope to Gaza issues, preserving Brazil’s independent positioning while engaging diplomatically. The opposition offered a competing vision when presidential pre-candidate Flávio Bolsonaro met Prime Minister Benjamin Netanyahu and promised to transfer Brazil’s embassy to Jerusalem if elected.
Economic patterns continued within familiar constraints. State oil company Petrobras cut gasoline prices by 5.2% for distributors and reported proven reserves reached 12.1 billion barrels, up 6% from 2024. Brazil’s Central Bank reported foreign direct investment reached $77.6 billion in 2025, up 3.5% from 2024, while the external accounts deficit grew to $68.8 billion — the largest in 11 years. The figures reflect continued investor confidence amid persistent structural vulnerabilities from commodity dependence.
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- Lula undergoes successful cataract surgery, returns to work — President Lula underwent cataract surgery on his left eye in Brasília without complications and was expected to resume official activities the following Monday. This was his second such surgery, having had the right eye done in 2020. (g1.globo.com)
- Supreme Court (STF) proposes ethics code amid controversy over ministerial conflicts — Supreme Court President Edson Fachin proposed creating a conduct code for court ministers after controversies involving family members working as lawyers and potential conflicts of interest. The São Paulo bar association submitted its own ethics proposal. (www1.folha.uol.com.br)
- Brazil reports strong foreign investment despite growing external deficit — Brazil’s Central Bank reported foreign direct investment reached $77.6 billion in 2025, up 3.5% from 2024, while the external accounts deficit grew to $68.8 billion, the largest in 11 years. (agenciabrasil.ebc.com.br)
- Foreign Ministry opens diplomatic concourse with 60 positions available — Brazil’s Foreign Ministry published the notice for its annual diplomatic career competition, offering 60 positions for third-secretary rank with starting salary of R$ 22,500. The process is considered one of Brazil’s most difficult public exams. (g1.globo.com)
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Haddad announces departure from Finance Ministry in February amid candidacy pressure
January 25 - February 01, 2026
Petrobras announces gas price cuts and reports record reserves growth
January 26 - February 01, 2026
Lula and Trump hold phone call discussing Venezuela and potential Washington meeting
January 26 - February 01, 2026
Other
Chile
Market confidence in Chile remained robust this week as the National Copper Corporation (Codelco) secured $1.25 billion through an oversubscribed bond sale as the country prepares for President-elect José Antonio Kast to take office.
The bond closed with favourable spreads of 130-132 basis points over US Treasury yields and received a BBB+ rating from S&P, with proceeds funding a long-term investment programme aimed at extending mine life by 50 years. (Multiple outlets) The economic validation continued when Chile’s Supreme Court rejected Tianqi Lithium’s final appeal against the Codelco-Sociedad Química y Minera (SQM) merger, allowing the Novandino Litio partnership to proceed unimpeded through 2060. The Chinese firm, which owns 22% of SQM, had challenged the deal through various legal channels but lost definitively, confirming regulatory sovereignty over strategic minerals governance. (Multiple outlets)
Mr Kast meanwhile continued building his technocratic governance structure, with analysis showing only 8 of 24 cabinet ministers are party members — a 67% independent composition reflecting adaptation to congressional constraints through expert appointments rather than partisan coalition building. His diplomatic engagement with restrictive immigration models persisted despite logistical challenges: weather forced cancellation of his El Salvador meetings with President Nayib Bukele and President José Raúl Mulino, but he successfully met with President Luis Abinader of the Dominican Republic to discuss migration control, border security, and the Dominican biometric identification system as a model for Chile’s planned Border Shield policy. (Multiple outlets)
Even as the transition proceeded smoothly, judicial accountability processes continued. The corruption case involving former Supreme Court Minister Ángela Vivanco and Codelco advanced with new testimony revealing how the Belaz Movitec consortium allegedly used connections to influence court rulings. Prosecutors detailed how Ms Vivanco leaked advance notice of favourable rulings to consortium representatives, who then contacted Codelco leadership. She was ordered into preventive detention. (Multiple outlets) The Chilean Armed Forces maintained routine international cooperation, with US Army South recognising General Eduardo Valdivia for regional interoperability leadership as he returns to command the I Division, while the Navy incorporated officers from Argentina, South Korea, the US, and Mexico into staff courses. (Multiple outlets)
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- Right-wing parties propose congressional coalition excluding Communist Party and Frente Amplio — Right-wing forces in Congress are offering a power-sharing agreement to centrist parties (the Christian Democratic Party, the Socialist Party, the Party for Democracy) that would exclude the Communist Party and Frente Amplio from key positions. The proposal seeks to establish a majority coalition for the four-year legislative period. (latercera.com)
- Boric administration faces harsh criticism over final fiscal balance performance — President Gabriel Boric’s government received strong criticism from economists after announcing it will miss the structural balance target for the third consecutive year. Experts warned about credibility loss and concerns for the incoming Kast administration. (emol.com)
- Court reopens malversation case against former President Boric — Santiago Appeals Court revoked the definitive dismissal that had favoured Mr Boric in a case involving alleged misappropriation of public funds, reopening the investigation promoted by Fundación Fuerza Ciudadana. (radioalborada.cl)
Notes
Notes
CODELCO corruption scandal investigation advances with Vivanco detention and new testimony
January 25-30, 2026
Kast finalizes cabinet and regional delegate appointments with independent profile
January 25-29, 2026
CODELCO-SQM lithium merger receives final approval after Supreme Court rejects Chinese challenge
January 27, 2026
Right-wing parties propose congressional coalition excluding Communist Party and Frente Amplio
January 26, 2026
Chilean Armed Forces participate in international cooperation and commemorative activities
January 25-31, 2026
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