The Americas - The Middle Powers Monitor

Regional Summary

The Announcements Were the Easy Part Building institutions is easy. Governing through them is not. The Americas spent this week showing the difference. Canada under Mark Carney, the prime minister, is the most active case. In a single week, his government claimed a seat at the European Political Community, won unanimous selection by 19 founding countries to host the new Defence, Security and Resilience Bank — designed to raise up to £100 billion for NATO members and allies — and created the country’s first sovereign wealth fund. Three bodies built to reduce Canadian dependence on the United States. But Canada has not begun formal trade talks with Washington, nine weeks before the July 1 review of the Canada-United States-Mexico Agreement (CUSMA). Mr Carney has ruled out using energy or critical minerals as leverage, quietly contradicting Tim Hodgson, the natural resources minister, who had called them Canada’s “strongest cards.” The three new bodies are real. The trade relationship they are meant to offset has not changed. Mexico’s version of the gap is starker because it involves sovereignty — the thing Claudia Sheinbaum, the president, claims most loudly. When a US federal court unsealed an indictment charging Rubén Rocha Moya, the governor of Sinaloa, with cartel conspiracy, it emerged that Mexican intelligence had surveilled him for years over the same alleged ties and done nothing. The same pattern appeared in the arrest of a senior cartel figure after a 19-month operation that the Guardian reported had relied on US intelligence throughout. Mexico issued a formal diplomatic protest over an unauthorised CIA operation in Chihuahua. That same week, its Senate voted 90 to 1 to allow US military personnel into Mexican territory under the National Defence Plan. Mexico has rarely exposed the distance between its sovereignty rhetoric and its actions so plainly in a single week — and it enters formal CUSMA renegotiation in four weeks, with its economy contracting 0.8% in the first quarter and its central bank posting its second-largest operating loss on record. Brazil’s crisis is different in kind: a president losing his grip on the institutions he needs to govern. Luiz Inácio Lula da Silva — known universally as Lula — suffered two historic defeats on the same day: the Senate rejected his Supreme Court nominee for the first time in 132 years, and a bill cutting sentences for January 8 rioters passed over his veto by comfortable margins. Both defeats turned on the same Senate-opposition coalition, organised by Davi Alcolumbre, the Senate president. The government’s congressional liaison acknowledged that Lula knew the Supreme Court vote would fail and pressed ahead anyway; Lula had also held no meetings with congressional leaders in 2026. The defeats were partly self-inflicted — not because the opposition was too strong, but because Lula had stopped doing the coalition work his position requires. Pre-defeat polls already showed him tied with Flávio Bolsonaro in a presidential runoff. The next president may appoint up to four Supreme Court justices. The stakes of October are now explicit. Chile’s José Antonio Kast, the president, faces a gentler version, but the pattern holds. His economic package — more than 40 measures built around a corporate tax cut and a $1.4 billion employment subsidy — landed with 73% of Chileans already opposing its centrepiece, the fourth consecutive month of falling approval, and the swing bloc his government needs still attaching conditions. His deportation programme, the pledge that most sharply distinguished his campaign, can process roughly 2,400 removals a year against a Venezuelan population of more than 252,000 who cannot legally be expelled without working consular ties to Caracas. That gap has already forced him to reach toward the Venezuelan government he campaigned hardest against. The institutions are stable and his coalition holds for now — but practical constraints are overriding campaign rhetoric before the flagship agenda has even passed. Canada has nine weeks to test whether its new institutions produce an actual trade negotiation. Mexico has four weeks before CUSMA talks begin, carrying a governing pattern — gather intelligence, defer action, wait for Washington to force the issue — its own legislature has now written into law. Lula must fight an October election from behind, with a Supreme Court seat vacant and a Congress that has shown it can act without him. Mr Kast governs with a flagship agenda the political arithmetic does not yet support. In each case, the gap that opened this week will be harder to close: Canada’s CUSMA talks must start before the institutions it has just announced are even operational, Mexico’s trade leverage depends on an economy in contraction, and Lula must rebuild a congressional coalition while trailing in the polls. The announcements were the easy part.

Country Summaries

Canada

Mark Carney’s government spent months announcing that Canada needed to diversify away from the United States. This week, it started building. Three new bodies took shape in quick succession. Mr Carney travelled to Yerevan, Armenia, for the eighth European Political Community summit — the first time a non-European country had sat at the 48-nation gathering. He met Donald Tusk, the Polish prime minister, Roberta Metsola, the European Parliament president, and Nikol Pashinyan, the Armenian prime minister, framing the visit around Ukraine defence support and trade ties as a counterweight to US tariff pressure. Canadian diplomats rejected any suggestion of EU membership; the point was presence, not accession. At home, the government confirmed Canada as the unanimous choice of 19 founding countries to host the new Defence, Security and Resilience Bank — a multinational body designed to raise up to £100 billion in long-term financing for NATO members and allies, with initial contributions counting toward NATO spending targets. Isabelle Hudon, chief executive of the Business Development Bank of Canada, led the negotiations through three rounds of talks in Montreal. The bank needs legislative approval from all 19 founding governments before it can operate, and Britain and Germany have kept their distance — so this is a bet, not a working institution. But the hosting decision places Canada at the centre of a new NATO-linked financing structure. The third body was the Canada Strong Fund — the country’s first sovereign wealth fund, with an initial $25 billion endowment drawn from a lower-than-forecast deficit. Unlike Norway’s or Singapore’s sovereign funds, which draw from surpluses, this one will borrow to invest in clean and conventional energy, critical minerals, agriculture, and infrastructure through an arm’s-length Crown corporation. Mr Carney put it plainly: “The US has changed, that’s their right. And we are responding, that’s our imperative.” Pierre Poilievre, the Conservative leader, called it a “sovereign debt fund” — the label sticks, at least arithmetically. The fiscal update tabled by François-Philippe Champagne, the finance minister, gave those structures a mixed foundation. The deficit for 2025-26 came in at $66.9 billion — $11.4 billion lower than the prior forecast, helped partly by oil revenue from the Iran war. Non-US exports are growing. But deficits run through 2030-31 with no path to balance, and the numbers drew fire: Mr Poilievre called it double the Trudeau 2024 projection; Bloc Québécois called it inadequate for Quebec; the New Democratic Party protested the absence of pharmacare. The Bank of Canada added a constraint. Tiff Macklem, the bank’s governor, held the benchmark rate at 2.25% for the fourth straight meeting but warned that consecutive hikes were possible if the oil shock proved persistent — a headwind to deficit-financed infrastructure spending. He cited two uncertainties: the Iran war’s energy effect and the Canada-United States-Mexico Agreement (CUSMA) review. Canada had not yet begun formal talks with US officials on CUSMA — that was the sharpest independent check on the week’s optimism. Canada has built three institutions to support its push to diversify; the trade relationship it is moving away from remains formally unaddressed, with nine weeks to the July 1 review. The energy leverage question complicated the picture further. In his first interview since taking office, Mr Carney ruled out using energy or critical minerals as “leverage” in CUSMA negotiations. He kept his options open through careful language — asking aloud whether further energy integration with a country that sees that integration as leverage made sense — but his public position was firm. This followed a separate statement from the US trade representative to visiting Canadian politicians making the same request. It also contradicted Tim Hodgson, the natural resources minister, who had previously described energy as Canada’s “strongest cards” — a gap Mr Carney did not acknowledge but effectively closed. Then came the intelligence report. The Canadian Security Intelligence Service (CSIS) tabled its 2025 annual document in Parliament on April 30. For the first time, CSIS formally used the term “Canada-based Khalistani extremist” and named India alongside China, Russia, Iran, and Pakistan as a primary foreign interference actor. Roughly 16 of the document’s 22 tracked sources were Indian media outlets, suggesting New Delhi read it as a diplomatic signal rather than a routine domestic security document. The timing is awkward: Mr Carney completed a restoration visit to India earlier this year, signing eight agreements including uranium supply terms and the opening of trade talks. Naming India in a formal CSIS document weeks later creates a problem for the trade talks that careful language will not fully fix. Parliament confirmed the government’s majority. Three byelection winners took their seats, bringing the Liberal caucus to 174, and the government immediately restructured all 25 House committees to reflect the new majority. Its first use of that control was to block documents related to a $6.6 billion government IT project — a contract originally budgeted at $1.7 billion in 2017. The opposition called it undemocratic. The government did not argue the point. Polls show Liberals leading by 11 to 14 points nationally, with 30% of Conservative supporters telling Angus Reid that Mr Poilievre should be replaced. For now, the majority holds and the opposition has no strong answer. Whether blocking IT oversight documents eventually becomes one is a question for a quieter week.

Mexico

A US federal indictment charging Rubén Rocha Moya, the governor of Sinaloa, and nine other state officials with cartel conspiracy has produced the deepest political crisis of Claudia Sheinbaum’s presidency — and exposed more plainly than any previous episode the gap between Mexico’s sovereignty rhetoric and its institutional behaviour. The Southern District of New York unsealed the charges last week. Mexico’s foreign ministry received the extradition request on April 28 and immediately said the documents came without supporting evidence. The attorney general opened an investigation but declined to arrest Mr Rocha. Mr Rocha then took voluntary leave, stripping himself of immunity — a step that, as a former Supreme Court justice noted, means he can now be detained like any citizen. An interim governor, a Rocha ally, was installed in Sinaloa. Sheinbaum offered her calibrated formula: no one found guilty would be defended, but any trial would happen in Mexico, not the United States. The formula is legally defensible. The political cost is high. Proceso documented years of public support for Mr Rocha from both Sheinbaum and her predecessor. A poll found nearly half of Mexicans see the indictment as a blow to the image of the National Regeneration Movement (Morena). The deeper problem is what the intelligence files show. Multiple outlets confirmed that Mexico’s defence ministry and national intelligence agency had surveilled Mr Rocha for years over his alleged ties to the Chapitos faction of the Sinaloa cartel — and did nothing. Domestically, the intelligence sat unused. The United States forced the issue. This pattern — intelligence gathered at home and acted on only when Washington intervenes — is now visible in two simultaneous cases: Mr Rocha, and El Jardinero. Naval Secretariat forces arrested Audias Flores Silva, known as El Jardinero — El Mencho’s former head of security and one of the main contenders to lead the Jalisco New Generation cartel — after a 19-month operation in Nayarit. The arrest involved 120 direct-action troops, 400 support elements, four fixed-wing aircraft, four intelligence surveillance platforms and four helicopters, and was conducted without a shot fired. Omar García Harfuch, the security secretary, called the operation entirely Mexican-led, though the Guardian reported that US intelligence contributed. A federal judge then blocked the US extradition request — Washington had a $5m reward out on El Jardinero and an outstanding extradition order. He will be held in Mexico. Documents confirmed that a 2021 letter had already alerted the defence ministry to El Jardinero’s operations in Nayarit, raising the same five-year surveillance-to-arrest question the Rocha case has raised. The most significant development of the week was nearly invisible in the press. In the same days that Mexico issued a formal diplomatic protest over the unauthorised CIA operation in Chihuahua, the Senate voted 90 to 1 to allow US military personnel into Mexican territory, under a decree linked to the National Defence Plan 2025–2030. The full text remains unavailable — the finding rests on a government-source document snippet — but the contrast is stark: Mexico protests one unauthorised US security operation through diplomatic channels while its legislature formally approves another category of US military presence. The government is closing the CIA incident on its own terms: the Chihuahua state attorney general resigned after it emerged that officials had concealed the CIA agents behind a false cover story, that the state had created an unauthorised investigative unit, and that the state transferred all case files to the federal attorney general. Mr García Harfuch, who confirmed that Maru Campos, the governor of Chihuahua, had no knowledge of the CIA operation, appears to consider the matter closed with the attorney general’s departure. All of this is happening as Mexico enters the final four weeks before formal renegotiation of the United States-Mexico-Canada Agreement (USMCA) begins. Three bad numbers arrived at once this week. Mexico’s economy contracted 0.8% in the first quarter of 2026, worse than the consensus forecast of 0.5%, with every sector — agriculture, manufacturing, services — declining. The secondary sector, exposed directly to trade-policy uncertainty, contracted 1.3% year-on-year. Itaú cut its full-year forecast to 1.1%; Banamex cut to 1.3%. Mexico’s central bank (Banxico) reported a 410 billion peso operating loss for 2025 — the second-largest on record — driven by the peso’s 13.4% appreciation against the dollar, which shrinks the peso value of foreign reserves. The central bank will transfer nothing to the federal government this year; the last transfer was under 18 billion pesos. Victoria Rodríguez Ceja, the central bank’s governor, told senators that Banxico would evaluate one final rate cut, to 6.5%, at its May 7 meeting, signalling the end of an easing cycle that began in May 2024. Pemex posted a first-quarter net loss of 46 billion pesos, worse than the same period last year, though its total debt fell to 79 billion dollars — the lowest since 2014. Sheinbaum announced plans to travel to Brazil to sign a Pemex-Petrobras cooperation agreement on oil exploration and biofuels, a diversification move unlikely to help the budget soon. Inside Morena, the party moved quickly to contain the damage. At its eighth extraordinary national congress — 1,828 delegates at the World Trade Centre in Mexico City — the party installed Ariadna Montiel as president by unanimous vote, completing the restructuring Sheinbaum began the previous week when she moved Luisa María Alcalde to the presidential legal office. Montiel addressed the Rocha crisis directly in her opening speech: this leadership will not tolerate corruption in any Morena government, and anyone seeking to stand as a candidate in 2027 must have an impeccable record — including those who had already won internal surveys. Alfonso Durazo, the governor of Sonora, acknowledged that Morena faces tensions, the first sitting governor to say so aloud under this administration. The congress served two purposes at once: formalising the new party structure and raising the bar for 2027 candidates before any figures close to Mr Rocha can consolidate support. The midterms will be the first Morena has had to defend rather than expand — and it will fight them with a damaged reputation, a reorganised apparatus and an economy in contraction at precisely the moment Mexico needs a strong position in trade talks.

Brazil

Within 18 hours this week, Brazil’s Congress handed Lula the worst legislative defeats of his third presidency — twice. On April 29, the Senate voted 42 to 34 to reject Jorge Messias, the solicitor general, as Lula’s nominee to the Supreme Court — the first such rejection in 132 years. Davi Alcolumbre, the Senate president, had warned Lula three times that Messias would fail; Lula reportedly knew the risk and pressed ahead anyway. Messias cleared the Senate commission that morning and fell in a secret full-chamber vote by afternoon. Hours later, the Chamber voted 318 to 257 and the Senate 49 to 41 to override Lula’s veto of the Dosimetria bill, which reduces sentences for those convicted over the January 8 riots. Both margins were comfortable — orchestrated coalition victories, not last-minute squeakers. The Supreme Court will operate with ten rather than eleven justices, and Mr Alcolumbre has told allies he will hold no confirmation hearing before the October election. Opposition senators said plainly that the seat should await the next administration. The Dosimetria bill — if the Supreme Court does not strike it down — cuts Jair Bolsonaro’s 27-year sentence to roughly 22 years and could halve the mandatory closed-prison period, potentially moving him to an open regime as early as 2028. The law also benefits roughly 280 January 8 convicts. The Workers’ Party (PT) announced a court challenge; analysts noted the Supreme Court has little appetite to reverse it quickly. Both defeats turned on the same mechanism: a Senate-opposition coalition under Mr Alcolumbre coordinating with the Liberal Party. Both fell on the same day, making the week historically notable — the coalition blocked Lula’s influence over court composition and reduced the sentences of his political opponents in a single session. The October stakes are now explicit: the next president may appoint up to four Supreme Court justices. Flávio Bolsonaro, Jair Bolsonaro’s son and the leading opposition presidential candidate, framed the Messias defeat as “a win for the opposition” and predicted senators would be “elected in October based on whether voters think Supreme Court justices can be impeached.” Tarcísio de Freitas, the São Paulo governor, declared that “the PT cycle is ending.” Lula’s isolation from Congress made the defeats partly self-inflicted. Poder360 confirmed that Lula had held no meetings with congressional leaders in 2026 — a breakdown in the coalition management his government depends on. Randolfe Rodrigues, the government’s congressional liaison, acknowledged the president “knew the risk but made a conscious decision to take Messias to the end.” The comfortable override margins suggest that even active lobbying might not have changed the result. But the absence of any engagement gave the opposition coalition room to organise without friction. Before the defeats, Lula’s electoral position was already precarious. Two polls — AtlasIntel/Bloomberg, surveying 5,008 people, and BTG Pactual/Nexus, surveying 2,028 — both showed the race tied in a Lula-versus-Flávio Bolsonaro runoff. AtlasIntel put Mr Flávio Bolsonaro at 47.8% against Lula’s 47.5%, the closest of all tested runoff scenarios; BTG/Nexus showed Lula at 46%, Mr Flávio Bolsonaro at 45%. Both polls were conducted before the congressional defeats. The economy brought its own pressure. Petrobras posted record production of 3.23 million barrels of oil equivalent per day in the first quarter, a 16% year-on-year rise, with a platform commissioned ahead of schedule at the Búzios field. But the company also raised natural gas prices 19.2% for distributors and jet fuel 18% in May — the third such increase since the Iran war began, bringing the cumulative rise to 100%. The Brazilian Association of Airlines noted that Petrobras supplies nearly all the jet fuel consumed domestically. Diesel for freight remains subsidised separately. China’s share of Brazil’s oil exports reached 62% in the first quarter, roughly double a year earlier — a dependency that now extends from soybeans to crude. To offset some of the domestic cost, Lula issued provisional measures unlocking R$17 billion in extraordinary credit, with R$14.5 billion earmarked for fleet renewal for self-employed truckers — a constituency that voted heavily for Jair Bolsonaro in 2022.

Chile

José Antonio Kast unveiled his government’s signature economic package this week — more than 40 measures built around a four-year corporate tax cut and a $1.4 billion employment subsidy — only to find that 73% of Chileans already oppose its centrepiece. The People’s Party, a swing bloc whose votes Mr Kast needs in a divided legislature, has attached conditions to its support. Coalition friction cut one measure before the package was introduced. The legislative arithmetic was difficult before the announcement; it has not improved. The politics make passage harder still. Approval has fallen for the fourth month in a row, to 33%, while disapproval has reached 53.3% — a term high. Cabinet approval has dropped to 27%. A scandal over a government lunch at La Moneda accelerated the slide — a reminder of how quickly small stories grow when a government is already under pressure. The clearest illustration of Mr Kast’s governing bind, though, came from his immigration agenda. The government ran its first deportation flight, making good on a campaign pledge. But the numbers exposed the gap between promise and capacity: the programme can process roughly 2,400 deportations a year, against a Venezuelan population of more than 252,000 who cannot legally be expelled without working consular ties to Caracas. That gap forced an awkward step — an overture to Venezuela, the country Mr Kast built much of his campaign against. It is the first clear sign of practical constraints overriding campaign rhetoric. At Codelco, Chile’s state copper company, a management change has become a rescue operation: production fell roughly 8% in the first quarter, adding to the government’s fiscal pressure at a moment when the reconstruction plan needs funding. Meanwhile, Gabriel Boric, the former president, has re-emerged on the international circuit, promoting Michelle Bachelet’s candidacy for United Nations Secretary-General without government backing. The split is visible — Mr Boric as progressive voice abroad, Mr Kast governing at home — but manageable for now. Mr Kast still has his coalition behind him and the institutions are stable. But this week showed how wide the gap between campaigning and governing can be.

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​Regional Summary

​Country Summaries

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​ Mexico

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​ Chile