Regional Summary
The Subsidy State Turns Pragmatist North American governments built spending and regulatory machines over the past decade. Now they are tearing them apart and rebuilding them as they go, driven not by ideology but by the recognition that their original bets are failing. It is not a retreat but a frantic improvisation — swapping one set of tools for another while pretending the goals have not changed. Canada offers the clearest case. Mark Carney, the prime minister, scrapped the Electric Vehicle Availability Standard this week and replaced it with $2.3 billion in consumer rebates. This is not a turn to free markets; it is an admission that mandates cannot survive a trade war with the country’s largest customer. The new package cuts Canada’s marginal effective tax rate on investment to 13%, four points below America’s — a plain bid to keep factories open when tariffs threaten to close them. Yet the same government is clawing back subsidies from General Motors for cutting jobs in Ontario, punishing a firm for responding to the market signals Ottawa now trusts. The contradiction is clear in Tiff Macklem’s warning that the pain ahead is “structural, not temporary”: Canada is not choosing between regulation and markets but layering one atop the other, hoping the combination holds. Mexico’s balancing act is older and better rehearsed, but no less improvised. Pemex’s debt fell to $84.5 billion, its lowest in 11 years, after five straight years of cuts — an achievement that sits oddly alongside a central bank forced to hold rates at 7% because inflation will not hit target until 2027. Claudia Sheinbaum, Mexico’s president, cooperates with Washington on Rio Grande water management while dispatching naval vessels to Cuba with humanitarian aid, yielding on substance where her government must and asserting independence where it can. The arrest of four municipal presidents linked to the Jalisco New Generation Cartel shows operational capacity, yet the need for such operations confirms that the security apparatus remains locked in a war of attrition rather than winning decisive peace. Luiz Inácio Lula da Silva, declaring his 2026 re-election bid a “war” and shelving his conciliatory persona, is candid about the logic at work. His moves — sending the Mercosur-EU trade deal to Congress, allocating 30 billion reais for nuclear submarines, shrugging off Nicolás Maduro’s fate as “not a priority” — are not pieces of a grand strategy but hedges against multiple risks. The trade pact reduces dependence on China; the defence spending buys autonomy from Washington; the Venezuela stance avoids a fight with both. Fernando Haddad’s preference for managing the campaign over running for São Paulo governor reveals where the energy flows: not into building institutions but into the electoral machine that will determine whether any of these bets survive 2027. José Antonio Kast, Chile’s incoming president, looks like the exception — a leader with a clear compass, courting Giorgia Meloni and Viktor Orbán, staffing his government with 67% independents over party loyalists. Yet Marco Rubio’s attendance at his inauguration, the first high-level American presence in 12 years, suggests that Mr Kast’s conservatism is as much a bid for external patronage as a domestic programme. His “emergency government” structure, built around technocrats rather than coalition arithmetic, is itself improvisation forced by a congress he cannot control. Even the military-service overhaul — two recruitment cycles a year, 75% pay increases — reads less like strategic modernisation than an urgent fix for a force that could not attract enough volunteers at the old price. From Ottawa to Santiago, governments are quietly abandoning frameworks meant to last a generation and replacing them with whatever seems most likely to work next quarter. Welcome to the age of the policy retrofit: leaders who once sold grand visions now sell improvisation, and voters, facing tariffs, inflation and cartel violence, appear willing to accept the bargain — for now.Country Summaries
Canada
Canada is undergoing a major economic restructuring as Prime Minister Mark Carney abandons regulatory mandates in favor of market incentives while the central bank warns of years of painful structural adjustment ahead.
Mr Carney unveiled a five-point plan transforming the country’s auto sector, scrapping the Electric Vehicle Availability Standard and replacing it with $2.3 billion in consumer rebates for EVs under $50,000. The strategy includes what the government calls the most comprehensive investment incentives globally, reducing Canada’s marginal effective tax rate on investment to 13% versus 17% in the United States. The shift from regulatory to market-based approaches signals adaptation to trade war pressures while the government simultaneously enforces tougher subsidy compliance. Industry Minister Mélanie Joly announced the government will recover millions from General Motors after the company cut jobs at Ontario plants despite receiving $500 million in federal and provincial subsidies, following similar enforcement action against Stellantis.
Governor Tiff Macklem reinforced the message that this economic pain is structural, not temporary. He warned businesses of years of difficult changes due to US tariffs, AI adoption, and slowing population growth, signaling the Bank of Canada would maintain current interest rates and urging businesses to “lean into” disruption rather than resist it.
Despite external pressures, Canada’s domestic politics show both stability and continued fragmentation. Conservative Leader Pierre Poilievre received overwhelming endorsement from party delegates with 87.4% support in his mandatory post-election leadership review. His Reagan-inspired speech focused on hope and economic themes while avoiding direct mention of President Donald Trump, consolidating his position despite losing his seat in the 2025 election. Meanwhile, the Liberals continue building their coalition through recruitment from other parties. Ontario New Democratic Party (NDP) deputy leader Doly Begum resigned to run as the federal Liberal candidate in Scarborough Southwest, triggering fierce criticism from federal NDP leadership but demonstrating Mr Carney’s continued success in attracting talent from across the political spectrum.
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Other Stories
- Carney and Poilievre hold meeting amid partisan tensions over economic cooperation — Mr Poilievre met with Mr Carney to discuss economic cooperation and trade issues, with Mr Poilievre calling it an ‘urgent meeting.’ Despite public calls for unity against US trade threats, both leaders continued exchanging political attacks in Parliament. (globalnews.ca)
- Federal NDP leadership race intensifies with Lewis fundraising lead and McPherson endorsements — Avi Lewis maintains a significant fundraising advantage in the federal NDP leadership contest, raising over $1 million, while Heather McPherson secures key endorsements including from MP Gord Johns. The race comes as the party seeks to rebuild after losing official party status. (thestar.com)
- Conservative Party adopts new policies including ‘stand your ground’ law at Calgary convention — Delegates at the Conservative convention voted overwhelmingly to adopt a ‘stand your ground’ law allowing lethal force against home intruders, along with other policy changes including protections for religious freedom. Some social conservative proposals failed to gain support. (ca.news.yahoo.com)
- Polling shows Liberals maintaining lead over Conservatives despite Poilievre’s strong leadership review — New polling data indicates the Liberal Party continues to hold an eight-point lead over the Conservatives nationally despite Mr Poilievre’s overwhelming support at the Conservative convention, with Mr Carney maintaining higher approval ratings than his Conservative counterpart. (press.liaisonstrategies.ca)
Notes
Notes
Carney announces new auto strategy, scrapping EV mandate for rebates and emissions standards
February 05-7, 2026
Carney gains international acclaim for Davos speech challenging US-led global order
February 01-7, 2026
Poilievre survives leadership review with 87% support at Conservative convention
February 01-6, 2026
Ontario NDP deputy leader Doly Begum defects to federal Liberals for Scarborough byelection
February 03-6, 2026
Carney and Poilievre hold meeting amid partisan tensions over economic cooperation
February 02-7, 2026
Federal NDP leadership race intensifies with Lewis fundraising lead and McPherson endorsements
February 03-5, 2026
Conservative Party adopts new policies including 'stand your ground' law at Calgary convention
January 31 - February 05, 2026
Quebec government faces multiple controversies over constitutional project and immigration changes
February 02-7, 2026
Canada supports new Defence, Security and Resilience Bank with major financial commitment
February 02-4, 2026
Polling shows Liberals maintaining lead over Conservatives despite Poilievre's strong leadership review
February 02-6, 2026
Other
Mexico
Mexico’s state oil company posted its lowest debt levels in over a decade this week, a rare bright spot in an economy showing mixed signals under President Claudia Sheinbaum’s early tenure.
Petróleos Mexicanos (Pemex) announced its debt had fallen to $84.5 billion, down from $97.6 billion in 2024 and the lowest in 11 years. The company unveiled a 425 billion peso investment plan for 2026, representing the fifth consecutive year of debt reduction. The $13 billion decrease contradicts the narrative of deepening structural decline that has long shadowed Mexico’s flagship energy company. Yet even as Pemex stabilised, the Bank of Mexico held its benchmark rate at 7% for the first time since June 2024, breaking a 12-cut streak. The central bank cited inflation concerns and pushed back its target convergence to 3% until the second quarter of 2027, signalling monetary tightening amid fiscal pressures.
The Ms Sheinbaum administration continued its careful balance of practical cooperation with the United States while maintaining sovereignty rhetoric. Mexico and America agreed on a technical plan for water management in the Rio Grande basin, establishing minimum delivery commitments during drought conditions under the 1944 Water Treaty framework. At the same time, the Mexican Navy deployed ships Papaloapan and Isla Holbox from Veracruz carrying 814 tons of humanitarian aid to Cuba, including food and personal hygiene items. The pattern reflects Mexico’s calibrated approach — operational accommodation on issues that matter to Washington, symbolic independence where it doesn’t trigger escalation.
Security Secretary Omar García Harfuch maintained his aggressive operations against organised crime, announcing the detention of four municipal presidents including the mayor of Tequila for extortion schemes targeting tequila companies and links to the Jalisco New Generation Cartel (CJNG). The coordinated operation involved the Defence Ministry, Navy, Attorney General’s Office and National Security Secretariat. Mr García Harfuch also announced the arrest of Jesús Emir Bazoco Peraza, a Los Chapitos operative responsible for communications and surveillance in the January 28 attack on Movimiento Ciudadano deputies in Sinaloa, demonstrating sustained capacity amid cartel succession conflicts.
The Fourth Transformation movement (4T) coalition showed continued institutional management through ongoing electoral reform negotiations. National Regeneration Movement (Morena) coordinator Ricardo Monreal confirmed that talks with the Labour Party (PT) and Green Ecologist Party of Mexico (PVEM) were advancing on electoral reform, moving toward drafting agreed points while elimination of proportional representation deputies remained under discussion. The Senate also completed a leadership transition, with Ignacio Mier assuming coordination of the Morena caucus, replacing Adán Augusto López, who stepped down for territorial work.
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- Ms Sheinbaum announces electoral reform negotiations with allied parties, extends timeline — President Sheinbaum extended the timeline for presenting electoral reform legislation and confirmed negotiations are advancing with PT and PVEM allies. The reform would include changes to plurinominal deputy selection and other electoral system modifications. (jornada.com.mx)
- Ms Sheinbaum rejects New York Times allegations of government collusion with cartels — President Sheinbaum firmly rejected claims made in a New York Times article alleging that her government avoids confronting cartels due to political collusion. She called the article ‘fiction’ and contrasted it with documented cases like former security secretary García Luna’s proven cartel ties. (nytimes.com)
- Federal Electricity Commission launches modernisation programme with new digital meters and free internet chips — The Federal Electricity Commission (CFE) announced a modernisation programme including installation of digital meters that provide more accurate readings and may affect billing, plus distribution of free internet chips to vulnerable populations as part of digital inclusion efforts. (wradio.com.mx)
- Ms Sheinbaum announces massive infrastructure investment plan worth 5.9 trillion pesos through 2030 — President Sheinbaum unveiled the Infrastructure Investment Plan for Development with Welfare 2026-2030, allocating 722 billion pesos for 2026 alone as part of a total 5.9 trillion peso investment over the sexenio to strengthen national development. (lja.mx)
- Morena experiences internal crisis in Campeche as local deputies break with Governor Sansores — Ten of 16 Morena deputies in Campeche’s Congress broke with Governor Layda Sansores, accusing her of political persecution. The legislators restored their constitutional immunity and spent the night in the legislature building to avoid potential arrest. (jornada.com.mx)
- Defence Ministry announces new military service requirements and training schedule for 2026 — The Defence Ministry informed that the 2026 National Military Service training phase will begin in February under a new 13-session Saturday model. Registration remains open until October with liberation of military cards scheduled for December 2026. (proceso.com.mx)
- Navy opens recruitment in multiple regions and conducts anti-organised crime operations — The Navy announced job openings in the Fourth Naval Region of Mazatlán and dismantled CJNG recruitment centres in Nayarit, seizing illegal slot machines used as recruitment tools and money laundering operations by organised crime. (adn40.mx)
- Ms Sheinbaum maintains 69% approval rating in January 2026 polling — President Sheinbaum registered 69% approval in El Financiero’s January poll, showing stability in her ratings but revealing negative evaluations in areas like economy, corruption, security, and America-Mexico relations, with 74% disapproving of corruption management. (elfinanciero.com.mx)
- America recognises Mexico’s compliance with water treaty obligations under Ms Sheinbaum administration — The American government acknowledged President Sheinbaum’s efforts to fulfil bilateral water commitments, with Secretary Rubio describing it as a win for American producers. This recognition comes amid ongoing bilateral water management issues between the two countries. (agua.org.mx)
- Central bank launches commemorative 100-peso bill for its centenary but clarifies it’s not for circulation — The Bank of Mexico unveiled a commemorative 100-peso banknote featuring the central bank’s historic building and works by Manuel Centurión to mark its centennial, but clarified the bill is for collectors and cannot be used for transactions. (sinembargo.mx)
- Ms Sheinbaum responds to South Korean president about BTS concerts and Ticketmaster fines — President Sheinbaum revealed receiving a response from South Korea’s president regarding her letter about BTS concerts in Mexico. She also announced that Ticketmaster faces a 5m peso fine for issues related to ticket sales for the K-pop group’s concerts. (elfinanciero.com.mx)
Notes
Notes
Pemex reports major financial recovery with debt at 11-year low and announces massive 2026 investment
February 04, 2026
Sheinbaum announces electoral reform negotiations with allied parties, extends timeline
February 01-7, 2026
Operation Enjambre detains four municipal presidents including Tequila mayor for organized crime links
February 05-6, 2026
Sheinbaum rejects New York Times allegations of government collusion with cartels
February 05-6, 2026
Morena undergoes leadership changes as Ignacio Mier replaces Adán Augusto López in Senate
February 01-6, 2026
CFE launches modernization program with new digital meters and free internet chips
February 03, 2026
García Harfuch announces arrest in attack against Movimiento Ciudadano legislators in Sinaloa
February 03-4, 2026
Sheinbaum announces massive infrastructure investment plan worth 5.9 trillion pesos through 2030
February 03-4, 2026
Morena experiences internal crisis in Campeche as local deputies break with Governor Sansores
February 02-3, 2026
SEDENA announces new military service requirements and training schedule for 2026
December 21, 2025 - February 03, 2026
SEMAR opens recruitment in multiple regions and conducts anti-organized crime operations
February 03-4, 2026
US recognizes Mexico's compliance with water treaty obligations under Sheinbaum administration
February 04, 2026
Banxico launches commemorative 100-peso bill for its centenary but clarifies it's not for circulation
February 04-6, 2026
Sheinbaum responds to South Korean president about BTS concerts and Ticketmaster fines
February 02, 2026
Other
Brazil
President Luiz Inácio Lula da Silva formally declared his 2026 reelection bid this week, telling supporters the campaign would be a “war” and that the “Lulinha paz e amor” phase has ended.
Speaking at the Workers’ Party’s 46th anniversary celebration, Mr Lula adopted a combative tone that signals Brazil’s political system is shifting from campaign preparation into active electoral combat. The rhetoric confirms that the fundamental Lula-Bolsonaro polarisation that has defined Brazilian politics remains intact, with both camps now mobilising for what promises to be another bruising contest. Finance Minister Fernando Haddad reflected the acceleration of campaign dynamics, indicating his preference to coordinate Mr Lula’s reelection effort over pursuing elected office himself, even as he navigates pressure to run for São Paulo governor. Mr Haddad also confirmed suggesting economist Guilherme Mello for a Central Bank directorship, part of the broader cabinet transitions expected as the 2026 race intensifies.
Even as election year politics dominate, Brazil continues pursuing its established strategic agenda on multiple fronts. Mr Lula sent the long-negotiated Southern Common Market (Mercosur)-EU trade agreement to Congress for approval, a concrete step toward creating what would be the world’s largest free trade zone and reducing Brazil’s dependence on Chinese markets. The government allocated R$30 billion over six years for Armed Forces strategic projects outside the fiscal framework, with the Navy receiving the largest initial share for nuclear submarine and development programmes. On Venezuela, Mr Lula maintained Brazil’s independent stance, declaring that former dictator Nicolás Maduro’s return after his capture by American forces is “not a priority” and emphasising that Venezuelan matters should be resolved by Venezuelans themselves.
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- Workers’ Party (PT) celebrates 46th anniversary with major political event setting 2026 election tone — The Workers’ Party held its 46th anniversary celebration in Salvador with Mr Lula delivering combative speeches about the upcoming election being a ‘war.’ The party approved resolutions criticising the Central Bank’s monetary policy, defending inflation target revision, and outlining campaign priorities including ending the 6x1 work schedule. (veja.abril.com.br)
- Former President Jair Bolsonaro completes 6 months in prison with health issues and privilege controversies — Mr Bolsonaro marked six months in Papudinha prison, with his defence seeking house arrest based on medical reports showing neurological changes. The case has generated controversy over his treatment compared to Mr Lula’s imprisonment, with reports of better prison conditions and medical care. (www1.folha.uol.com.br)
- Arthur Lira faces parliamentary amendments investigation as Supreme Federal Tribunal (STF) authorises confrontation — Supreme Court Justice Flávio Dino authorised Federal Police to conduct a confrontation between former Chamber President Arthur Lira and Deputy José Rocha regarding alleged irregularities in parliamentary amendments distribution. Mr Lira is expected to challenge the decision, arguing the distribution criteria are political. (cnnbrasil.com.br)
- Brazilian Armed Forces begin historic incorporation of women soldiers — For the first time in Brazilian military history, women are being incorporated as soldiers in initial military service. A total of 1,467 women will join the Armed Forces across 13 states and the Federal District, with the first group of 159 women being incorporated in Rio de Janeiro’s Military Command. (g1.globo.com)
- Brazilian Intelligence Agency (ABIN) opens disciplinary investigation against intelligence agent with YouTube channel — The agency opened an administrative disciplinary process against intelligence officer Glauber Mendonça, who maintains a YouTube channel with over 3 million subscribers while on medical leave. The case raises questions about compatibility between intelligence work and public exposure on social media. (g1.globo.com)
- Supreme Court targeted as main victim of disinformation in Brazil during 2025 — According to Agência Lupa, the Supreme Federal Tribunal was the main target of disinformation in Brazil in 2025, topping the ranking of false narratives for the second consecutive year. (jota.info)
Notes
Notes
PT celebrates 46th anniversary with major political event setting 2026 election tone
February 06-8, 2026
Bolsonaro completes 6 months in prison with health issues and privilege controversies
February 03-6, 2026
Arthur Lira faces parliamentary amendments investigation as STF authorizes confrontation
February 04-5, 2026
Petrobras expands internationally with Namibia acquisition and receives major payment
February 03-6, 2026
ABIN opens disciplinary investigation against intelligence agent with YouTube channel
February 03, 2026
Government allocates R\$30 billion for Armed Forces strategic projects over six years
February 03, 2026
Other
Chile
US Secretary of State Marco Rubio will attend President-elect José Antonio Kast’s inauguration next month, marking the highest-level American representation at a Chilean presidential swearing-in in 12 years.
Mr Rubio was the first to congratulate Mr Kast on election night and praised their “shared priorities” on security and immigration, signalling a significant improvement in bilateral relations after cooling during the Gabriel Boric administration. The gesture reflects the Donald Trump administration’s strategic interest in the incoming government and suggests potential for deeper security cooperation ahead.
The diplomatic upgrade comes as Mr Kast builds a broader conservative international network. He completed a European tour with his fourth meeting with Italian Prime Minister Giorgia Meloni, delivered an ideological speech in Brussels criticising “ideological feminism” and environmentalism, and invited Ms Meloni to his inauguration. The tour included meetings with Hungarian Prime Minister Viktor Orbán and participation in Brussels conservative forums, marking Mr Kast’s most explicit ideological positioning since his election victory.
Mr Kast has now completed his governance architecture with the announcement of 39 subsecretaries and 16 regional delegates, finishing appointments that were postponed during his international tour. The picks maintain a 67% independent composition over party members, continuing the technocratic approach that prioritises technical competence over political affiliation. This finalises his “emergency government” structure that adapts to congressional constraints through merit-based appointments rather than traditional coalition distribution.
Chile is also modernising its military capacity. The country launched a new military service phase with two recruitment dates annually and 75% compensation increases, raising salaries to 230,165-394,611 pesos monthly for first-year conscripts. The changes include reincorporation of Special Military Instruction Course and enhanced equipment training programmes. Separately, the Chamber approved a new Intelligence Law with 107 votes, strengthening State Intelligence System oversight after seven years of drafting, while Carabineros received new patrol boats to expand operational capacity in southern regions.
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- Bachelet UN candidacy creates tensions between outgoing and incoming governments — Former President Michelle Bachelet’s candidacy for UN Secretary General has created friction, with polls showing mixed public support and incoming President Kast avoiding explicit endorsement while the Gabriel Boric government formally nominates her. (emol.com)
- Chile advances to Copa Davis quarterfinals, will face Spain — Chile defeated Serbia 4-0 in Santiago to advance to the Copa Davis quarterfinals, where they will host Spain in September. (infobae.com)
- Central bank interest rate changes affect financial products — Chilean financial institutions adjusted interest rates on savings accounts and deposits following central bank monetary policy decisions, with rates declining from previous highs. (chocale.cl)
- US Embassy issues demonstration alert for Santiago — The US Embassy in Chile issued a security alert about a planned demonstration outside the embassy in Santiago, warning US citizens about potential disruptions. (cl.usembassy.gov)
Notes
Notes
Kast concludes European tour with meetings on immigration and conservative ideology
February 04-5, 2026
Bachelet UN candidacy creates tensions between outgoing and incoming governments
February 02-6, 2026
Other