Regional Summary
When Allies Hedge Canada, Brazil, Mexico and Chile are racing to build leverage against Washington while still needing its cooperation. Each showed this week that hedging against American power now requires managing security, trade, diplomacy and domestic politics — and that the balancing act is growing harder to sustain. Mark Carney’s Asia tour is the clearest case. Canada’s prime minister returned with $5.5 billion in trade deals, including a uranium contract with Saskatchewan, to cut dependence on American commerce. Yet from Mumbai he endorsed American and Israeli strikes on Iran’s nuclear programme, a reminder that diversifying trade partners cannot diversify security patrons. Pierre Poilievre, the Conservative leader, spotted the contradiction: if China cannot substitute for the American partnership, then the diversification strategy is more aspiration than architecture. Canada’s economy, which shrank 0.6% in the fourth quarter, lends weight to his scepticism. Mr Carney’s 12-point polling lead buys him time, but the bind — wanting distance from Washington commercially while clinging to it militarily — remains unresolved. Claudia Sheinbaum, Mexico’s president, is managing the same tension with greater finesse and fewer options. She authorised 19 American Navy SEALs to train Mexican marines in Campeche and accepted intelligence sharing that helped kill the Jalisco cartel’s leader, but condemned American strikes on Iran and is considering legal action against Elon Musk. The balancing act extends to the economy: Pemex slashed losses by 94% and foreign investment hit a record $40.9 billion, almost all from American capital. Ms Sheinbaum is cooperating with Washington precisely where she must — security and energy — while preserving rhetorical independence everywhere else. It works as long as American attention stays focused on drugs and trade rather than on Iran or ideology. Chile enjoys no such luxury. Washington revoked the visas of three Chilean officials over a Chinese submarine cable project — the first such sanction since the return to democracy. Gabriel Boric, Chile’s president, called it unacceptable and invoked the Monroe Doctrine, yet the same week his defence ministry accepted a $99 million American contract to maintain Chile’s F-16s. The visa revocations exposed the flaw in Chile’s traditional hedging: when Washington forces a binary choice between Chinese infrastructure and American security guarantees, non-alignment ceases to be a strategy and becomes a liability. Mr Boric condemned both sides equally after the Iran strikes, but equal condemnation is a posture, not a policy. Brazil’s predicament is different in degree but not in kind. Luiz Inácio Lula da Silva, Brazil’s president, wants a meeting with Mr Trump and “equal treatment” from Washington, yet his government condemned the Iran strikes and his poll numbers are collapsing — tied with Flávio Bolsonaro in a hypothetical 2026 runoff, with a rejection rate above 50%. A corruption probe into his son sharpens the sense of a presidency losing altitude. Lula’s room to manoeuvre abroad narrows as his standing at home weakens; a leader who cannot guarantee his own re-election has less to offer Washington and less leverage to resist it. What connects these four countries is a shared discovery: hedging against American power was easier when Washington was distracted and the alternatives were cheap. Now the costs of diversification — diplomatic confrontation with the United States, dependence on Chinese infrastructure, fractured domestic coalitions — are rising faster than the benefits. Each government is improvising a different formula, but the underlying arithmetic is the same. Autonomy from a dominant neighbour demands not just new trading partners but a domestic political consensus willing to absorb the price, and in every case that consensus is thinner than the rhetoric suggests.Country Summaries
Canada
Mark Carney, the prime minister, returned from Asia with $5.5 billion in trade deals, including a $2.6 billion uranium contract with Saskatchewan, as Canada works to cut its economic ties with the United States.
Mr Carney’s nine-day mission to India, Australia and Japan delivered concrete commercial results rather than diplomatic theatre. But even as he courted new partners, he reinforced Canada’s security ties with old ones, backing American and Israeli strikes against Iran’s nuclear programme during a press conference in Mumbai. The New Democratic Party (NDP) criticised the move for not consulting parliament.
Pierre Poilievre, the Conservative leader, used the moment to outline his alternative in a speech to the Economic Club. China cannot substitute for American partnership, he argued, proposing an all-party working group on Canada-United States-Mexico Agreement (CUSMA) negotiations and criticising what he called Mr Carney’s China pivot. The exchange showed the choice facing voters: accelerate trade diversification or repair the continental relationship.
Mr Carney’s political position strengthens at home. Matt Jeneroux, a Conservative member of Parliament, became the third MP to cross the floor in recent months, immediately appointed as special advisor on economic partnerships and included in the India mission. Polls show the Liberals maintaining a 12-point lead, with Mr Carney’s personal ratings well ahead of Mr Poilievre’s. This sparked speculation about a snap election.
Canada’s economy contracted 0.6% in the fourth quarter, worse than the Bank of Canada expected. Inventory drawdowns drove the decline despite growth in exports and household spending. Full-year growth hit just 1.7%, casting doubt on central bank forecasts. Yet the big six banks exceeded expectations with $19 billion in first-quarter profits, up from $14 billion the previous year, as wealth management and capital markets performed strongly.
On defence, applications to the Canadian Armed Forces jumped 13% over eight months. Officials attributed this to global uncertainty. The military aims to rebuild to 71,500 regular force members by 2032. Mr Carney also unveiled an industrial defence policy to create 125,000 jobs and build more military equipment domestically.
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- Carney launches major trade mission to India, Australia and Japan seeking to diversify from US — Prime Minister Mark Carney embarked on a 9-day trade mission (Feb 26-Mar 7) to India, Australia and Japan, meeting with Modi, Albanese and other leaders to secure new trade deals and reduce Canada’s dependence on the United States. The trip resulted in $5.5 billion in commercial agreements including a $2.6 billion uranium deal with Saskatchewan. (cbc.ca)
- Poilievre announces first international trip as opposition leader to UK and Germany — Pierre Poilievre, the Conservative leader, will travel to London and Berlin next week for his first official overseas trip as opposition leader, meeting with parliamentary colleagues and business leaders. The trip comes as Carney is traveling to Asia and represents Mr Poilievre’s effort to build international Conservative relationships. (globalnews.ca)
- NDP leadership race struggles for attention as party rebuilds after election losses — The federal New Democratic Party (NDP) leadership contest continues with low energy and minimal media attention as the party tries to rebuild after losing official party status in 2025. Five candidates are vying to replace Jagmeet Singh, with debates focusing on whether to prioritize electoral success or movement building. (policymagazine.ca)
- Bloc Québécois and Liberals set for rematch in Terrebonne byelection — The Supreme Court ordered a new election in Terrebonne after the original result was decided by a single vote. Bloc candidate Nathalie Sinclair-Desgagné and Liberal candidate Tatiana Auguste will face each other again in a race that could determine whether the Carney government can achieve a majority. (cbc.ca)
Notes
Notes
Carney launches major trade mission to India, Australia and Japan seeking to diversify from US
February 23 – March 01, 2026
Poilievre delivers major speech on Canada-US relations, critiques Carney's China pivot
February 26, 2026
Conservative MP Matt Jeneroux crosses floor to Liberals, joins Carney's India trade delegation
February 24–25, 2026
Canada supports US-Israeli strikes on Iran nuclear facilities, Carney announces from India
February 28, 2026
Liberal polling surge continues as Carney maintains strong lead over Poilievre
February 23 – March 01, 2026
Canada's economy contracts in Q4 2025, raising questions about BoC growth forecasts
February 27, 2026
Poilievre announces first international trip as opposition leader to UK and Germany
February 26–27, 2026
NDP leadership race struggles for attention as party rebuilds after election losses
February 26 – March 01, 2026
Government announces new Defence Industrial Strategy to boost domestic military production
February 22–26, 2026
Other
Brazil
Brazil’s politics has turned vicious as corruption investigators target Lula’s son and polls show the president tied with his main rival for the first time.
A congressional committee voted to lift the bank secrecy of Fábio Luís Lula da Silva over suspected links to a social security fraud. The probe centres on questionable payments and ties to a cannabis business, with Federal Police messages referring to ‘the guy’s son’. For a president who built his comeback on fighting corruption, having his family under investigation undercuts his case.
The corruption probe hits as Lula faces his biggest electoral test. An AtlasIntel poll shows him tied with Flávio Bolsonaro, a senator, in a potential 2026 runoff — 46.3% to 46.2%. Lula’s rejection rating hit 51.5%, while Workers’ Party leaders admit they struggle to reach voters. The numbers show that Bolsonarismo remains a force even with its founder in prison.
Lula is speeding up his campaign. Fernando Haddad, the finance minister, agreed to run for São Paulo governor after months of resistance, giving in to pressure from Lula during dinner at the presidential palace. Mr Haddad plans to leave government after a trip to the United States, becoming the biggest cabinet departure to run for office. Lula needs a strong candidate to challenge Tarcísio de Freitas, the incumbent, in Brazil’s most important state.
Brazil’s courts face electoral pressure too. The Economist called the Supreme Court’s role in the Banco Master scandal an ‘enormous scandal’, highlighting ties between justices Dias Toffoli and Alexandre de Moraes and banker Daniel Vorcaro. The foreign attention deepens a crisis over the court’s credibility just as it has expanded its political role.
Lula wants better ties with Washington. Trump said he ‘gets along very well’ with the Brazilian president and would ‘love’ to meet him, while Lula wants ‘equal treatment’ from the United States. Brazil is preparing for a meeting expected between March 15-20, though Lula was not invited to Mr Trump’s gathering of Latin American allies. Brazil still condemned US-Israeli attacks on Iran, showing it pursues an independent foreign policy even as it seeks closer ties with Washington.
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- Government reverses import tariff increases on electronics and industrial goods after criticism — Mr Haddad defended then partly rolled back increased import taxes on over 1,200 products including smartphones and industrial equipment. Government initially said the measure protected domestic industry but faced criticism over potential price increases and later exempted about 10% of affected products. (em.com.br)
- Lula visits flood-hit areas in Minas Gerais, criticizes Governor Zema, faces hostility in Ubá — Lula toured flood-damaged areas in the Zona da Mata region of Minas Gerais, pledging government support for reconstruction. He criticised Romeu Zema, the governor, for not using available federal funds and was met with hostile crowds in Ubá shouting ‘thief’ and ‘ex-prisoner.’ (em.com.br)
- Brazil condemns US-Israeli attacks on Iran, calls for diplomatic solution as partner targeted — The Foreign Ministry condemned coordinated US-Israeli attacks on Iran, stating negotiation is the ‘only viable path to peace.’ Brazil must balance relations between the US, a trade partner, and Iran, a partner in the BRICS group. The PT issued a statement supporting the government’s diplomatic approach to the conflict. (g1.globo.com)
- Bolsonaro family experiences internal disputes over support for Flávio’s presidential campaign — Public tensions emerged between Eduardo Bolsonaro, Carlos Bolsonaro and other family members over support for Flávio Bolsonaro’s presidential bid. Eduardo criticised Michelle Bolsonaro and Nikolas Ferreira for insufficient campaign support, leading Jair Bolsonaro to intervene to preserve family unity. (em.com.br)
- Carnival controversy over homage to Lula sparks debate about electoral propaganda — Acadêmicos de Niterói samba school honored Lula during Rio Carnival, triggering debate over whether it constituted early electoral propaganda. Lula attended the parade, leading to criticism and a Supreme Court complaint. Polling showed Brazilians split 47.9% to 45.5% on whether it was appropriate. (folha.uol.com.br)
- Central Bank reports R$119.97 billion loss in 2025 while Bolivia invalidates damaged banknotes — Brazil’s Central Bank reported a loss of R$119.97 billion in 2025 due to exchange rate impacts. Separately, Bolivia’s Central Bank invalidated certain Series B banknotes after an aerial accident, implementing verification systems to prevent circulation of recovered bills. (agenciabrasil.ebc.com.br)
- PT admits communication difficulties and plans electoral strategy — Edinho Silva, the PT’s national president, admitted the party has difficulties communicating with society and called for political reform to make the PT an ‘anti-system party.’ The party ordered polls to understand Lula’s approval decline and strategised a response to Flávio Bolsonaro’s electoral gains. (oseringal.com.br)
- Arthur Lira supports PT deputy for audit court position amid congressional negotiations — Arthur Lira, president of the Chamber of Deputies, expressed support for a PT deputy from Minas Gerais for a position at the Federal Court of Accounts, highlighting the deputy’s dialogue skills and balanced approach. The move reflects ongoing political negotiations in Congress. (partiurolecwb.com.br)
- Brazilian Army promotes first female general across all military branches — The Brazilian Army indicated its first female general, completing the process for all three military branches to have female generals. Like the Navy and Air Force, the Army’s first female general is a doctor, marking a milestone for gender equality in the armed forces. (agenciabrasil.ebc.com.br)
Notes
Notes
Lulinha under investigation in INSS fraud scandal as CPI approves financial secrecy breach
February 25–28, 2026
Fernando Haddad accepts Lula's invitation to run for São Paulo governor after months of resistance
February 23–28, 2026
Supreme Court faces credibility crisis amid Banco Master scandal and ethics concerns
February 22–28, 2026
Lula and Flávio Bolsonaro in statistical tie for 2026 as polling shows president's approval declining
February 25–28, 2026
Government reverses import tariff increases on electronics and industrial goods after criticism
February 25–28, 2026
Trump and Lula express mutual goodwill amid plans for March meeting in Washington
February 22–27, 2026
Lula visits flood-devastated areas in Minas Gerais, criticizes Governor Zema, faces hostility in Ubá
February 25 – March 01, 2026
Brazil condemns US-Israeli attacks on Iran, calls for diplomatic solution as BRICS partner targeted
February 28 – March 01, 2026
Petrobras becomes most valuable Latin American company amid stock surge and new hiring
February 22–28, 2026
Bolsonaro family experiences internal disputes over support for Flávio's presidential campaign
February 23 – March 01, 2026
Carnival controversy over homage to Lula sparks debate about electoral propaganda
February 23–26, 2026
Central Bank reports R\$119.97 billion loss in 2025 while Bolivia invalidates damaged banknotes
February 27 – March 01, 2026
PT internal struggles as party admits communication difficulties and plans electoral strategy
February 26 – March 01, 2026
Arthur Lira supports petista deputy for TCU position amid congressional negotiations
February 26, 2026
Other
Mexico
Mexico’s state energy companies posted their best results in years, with Pemex cutting losses by 94% and the Federal Electricity Commission (CFE) reporting record profits, while Claudia Sheinbaum, the president, expanded military cooperation with the United States even as she distanced herself from American foreign policy elsewhere.
Pemex reduced losses to 45.2 billion pesos in 2025, down 94% from 2024, while cutting debt to its lowest level in over a decade and raising refinery processing by 44%. CFE made 139 billion pesos in profit, its best performance in years. The turnaround comes as Mexico drew record foreign investment of $40.9 billion last year, with the United States remaining the top investor. Carlos Slim’s Grupo Carso won a contract for the Macavil oil field under new mixed development deals that blend state control with private investment.
The financial recovery coincided with closer security ties with Washington. Congress authorised 19 American Navy SEALs to train Mexican marines in Campeche for two months, focusing on maritime, land and air operations plus counter-terrorism. The training uses Hercules C-130 aircraft for transport and represents formal cooperation beyond the ad hoc intelligence sharing that helped kill the Jalisco cartel’s leader last month.
Yet Ms Sheinbaum kept her distance from American foreign policy when it did not serve Mexican interests. After American and Israeli forces struck Iran, her foreign ministry urged diplomacy and activated citizen protection protocols in the Middle East. “We want peace,” Ms Sheinbaum said, positioning Mexico as a neutral mediator.
At home, Ms Sheinbaum’s coalition cracked over electoral reform. Her Morena party secured 253 deputies’ support, but its allies in the Labour Party and Green Party asked for more time to study the proposals. Ricardo Monreal, a Morena leader, said the party would proceed “however it goes” while keeping its allies on side on other issues. Opposition critics warned that Morena would benefit most from the new system for electing proportional representatives.
Notes
Notes
Sources: globalenergy.mx, elfinanciero.com.mx, jornada.com.mx, elimparcial.com, eluniversal.com.mxContext: The 2024 judicial reform framework continues operating as established. The Supreme Court held its first session outside Mexico City, meeting in Tenejapa, Chiapas, but this represents procedural innovation rather than institutional change.
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National Defence Secretariat (SEDENA) kills CJNG leader ‘El Mencho’ in Jalisco operation with US intelligence support — Mexican military forces killed Nemesio Oseguera Cervantes (‘El Mencho’), leader of the Jalisco New Generation Cartel, in a February 22 operation in Tapalpa, Jalisco. The operation involved coordination with US intelligence and triggered widespread cartel retaliation across multiple states.Central bank raises Mexico’s 2026 growth forecast to 1.6% despite inflation delays — Mexico’s central bank improved its GDP growth forecast for 2026 from 1.1% to 1.6%, citing better consumption and investment outlook. However, the bank pushed back its inflation target timeline to Q2 2027. The OECD also lifted its Mexico growth estimate.Ms Sheinbaum considers legal action against Elon Musk over cartel accusations — Claudia Sheinbaum announced she is considering legal action against Elon Musk after he accused her of taking orders from drug cartels on social media. The dispute arose following Musk’s reaction to Mexico’s security strategy against cartels.García Harfuch’s 44th birthday celebrated publicly as mother posts emotional message — Security Secretary Omar García Harfuch turned 44 on February 25, with actress mother María Sorté posting an emotional birthday message that went viral. García Harfuch also made an unusual public appearance walking in downtown Mexico City without heavy security.Foreign Minister de la Fuente meets with OECD Secretary-General on economic cooperation — Juan Ramón de la Fuente, the foreign minister, received OECD Secretary-General Mathias Cormann at the Foreign Ministry to discuss Mexico’s economic progress and the 2026 Economic Study. The meeting highlighted Mexico’s poverty reduction achievements and strengthened multilateral cooperation ties.
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- National Defence Secretariat kills CJNG leader ‘El Mencho’ in Jalisco operation with US intelligence support — Mexican military forces killed Nemesio Oseguera Cervantes (‘El Mencho’), leader of the Jalisco New Generation Cartel, in a February 22 operation in Tapalpa, Jalisco. The operation involved coordination with US intelligence and triggered widespread cartel retaliation across multiple states. (eluniversal.com.mx)
- Mexico achieves record foreign direct investment of $40.871 billion in 2025 — Mexico registered historic foreign direct investment of $40.871 billion in 2025, representing 10.8% annual growth. The US remained the top investor, followed by Spain and Canada. Claudia Sheinbaum highlighted this achievement as evidence of economic stability. (elfinanciero.com.mx)
- Pemex reduces losses by 94% and achieves lowest debt level in 11 years — Pemex reported a significant financial recovery with losses cut to 45.2 billion pesos in 2025, down 94% from 2024. The company achieved its lowest debt level in over a decade and increased refinery processing by 44%. Carlos Slim’s Grupo Carso won the valuable Macavil field contract. (elfinanciero.com.mx)
- Central bank raises Mexico’s 2026 growth forecast to 1.6% despite inflation delays — Mexico’s central bank improved its GDP growth forecast for 2026 from 1.1% to 1.6%, citing better consumption and investment outlook. However, the bank pushed back its inflation target timeline to Q2 2027. The OECD also lifted its Mexico growth estimate. (expansion.mx)
- Sheinbaum considers legal action against Elon Musk over cartel accusations — Claudia Sheinbaum announced she is considering legal action against Elon Musk after he accused her of taking orders from drug cartels on social media. The dispute arose following Musk’s reaction to Mexico’s security strategy against cartels. (elfinanciero.com.mx)
- García Harfuch’s 44th birthday celebrated publicly as mother posts emotional message — Security Secretary Omar García Harfuch turned 44 on February 25, with actress mother María Sorté posting an emotional birthday message that went viral. García Harfuch also made an unusual public appearance walking in downtown Mexico City without heavy security. (hola.com)
- Foreign Minister de la Fuente meets with OECD Secretary-General on economic cooperation — Juan Ramón de la Fuente, the foreign minister, received OECD Secretary-General Mathias Cormann at the Foreign Ministry to discuss Mexico’s economic progress and the 2026 Economic Study. The meeting highlighted Mexico’s poverty reduction achievements and strengthened multilateral cooperation ties. (elfinanciero.com.mx)
Notes
Notes
SEDENA kills CJNG leader 'El Mencho' in Jalisco operation with US intelligence support
February 23–27, 2026
Sheinbaum's electoral reform proposal faces resistance from Morena allies PT and PVEM
February 25–28, 2026
CFE achieves record profit of 139 billion pesos, best performance in recent history
February 26, 2026
García Harfuch's 44th birthday celebrated publicly as mother posts emotional message
February 25–26, 2026
Foreign Minister de la Fuente meets with OECD Secretary-General on economic cooperation
February 26, 2026
Other
Chile
The United States revoked visas for three Chilean officials over a Chinese submarine cable project, marking the first time Washington has sanctioned Chilean government personnel since the country’s return to democracy.
Juan Carlos Muñoz, the transport minister, Claudio Araya, the telecommunications undersecretary, and his chief of staff lost their American visas after working on the Hong Kong-Valparaíso cable project. Marco Rubio, the secretary of state, accused the project of threatening regional security. Gabriel Boric, the president, condemned what he called unacceptable pressure and linked it to Monroe Doctrine thinking. The crisis forces Chile into a binary choice between American security demands and Chinese economic ties — exactly the kind of choice Chile’s traditional hedging strategy was designed to avoid.
Yet even under American pressure, Mr Boric maintained Chile’s non-aligned diplomatic stance. When the US and Israel attacked Iranian targets and Iran retaliated, he condemned both sides equally, calling for an end to the “cycle of barbarities.” The Foreign Ministry reaffirmed Chile’s commitment to non-proliferation principles. The balanced response shows Chilean diplomacy holding its course despite the submarine cable tensions.
Meanwhile, Chile’s institutions kept running normally. The National Copper Corporation of Chile (CODELCO), the state copper company, signed a partnership agreement with Rio Tinto and issued $1.25 billion in international bonds. The US Defence Department awarded BAE Systems nearly $99 million to maintain Chile’s F-16 fighter fleet through 2037. Mr Boric decorated 49 newly promoted generals and admirals in a ceremony at La Moneda.
The transition to José Antonio Kast brings both preparation and controversy. Mr Kast confirmed he will live in La Moneda starting March 11, becoming the tenth Chilean president to reside in the government palace. He made key military appointments and named Mario Farren, a former Citibank executive, to run BancoEstado. But Mr Kast also sparked legal complaints by releasing an official presidential portrait featuring the national coat of arms before taking office — a protocol violation that shows oversight working, even if noisily.
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- Universidad de Chile defeats Colo Colo 1-0 in Superclásico at Estadio Monumental — In the 199th edition of Chile’s football Superclásico, Universidad de Chile beat Colo Colo 1-0 at the Estadio Monumental in Santiago. The match was broadcast exclusively by TNT Sports and HBO Max, marking the fifth date of the 2026 Liga de Primera championship. (elcomercio.pe)
- Chile confirms international friendlies with Portugal and FIFA Series participation — Chile’s national football team confirmed a friendly match against Portugal on June 6, marking a reunion with Cristiano Ronaldo’s team ahead of the 2026 World Cup. Chile will also participate in the FIFA Series tournament in New Zealand, facing various opponents as preparation continues despite missing World Cup qualification. (24horas.cl)
- Chile Open tennis tournament begins with Chilean players competing — The Chile Open ATP 250 tennis tournament started in Santiago at San Carlos de Apoquindo, featuring five Chilean players including Alejandro Tabilo, Cristian Garin, and Nicolás Jarry competing for the title. The tournament receives extensive television and streaming coverage. (encancha.cl)
Notes
Notes
US sanctions Chilean officials over proposed Chinese submarine cable, sparks diplomatic crisis
February 22–27, 2026
José Antonio Kast's presidential transition preparations and controversial official portrait
February 23 – March 01, 2026
Boric condemns both US-Israeli attacks on Iran and Iranian retaliation in Middle East
February 28 – March 01, 2026
CODELCO signs strategic partnership with Rio Tinto and issues international bonds
February 23–26, 2026
Chile confirms international friendlies with Portugal and FIFA Series participation
February 23–25, 2026
Other