Connections and Blackouts in Latin America

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

• The Undersea Cable Poised to Reshape Global Influence and Information

• Mexico’s Democracy on 13%

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The GCaM Team

Amid rising global tensions and increasingly complex geopolitical dynamics, digital infrastructure has emerged as a critical arena for economic influence and strategic advantage.

• In a landmark public-private partnership with Google, Chile is spearheading the construction of the first submarine fiber optic cable linking South America directly to Oceania and Asia—an unprecedented initiative in the region.

• More than a bid for faster connectivity, the project signals a bold assertion of digital sovereignty and regional leadership in the global tech landscape.

Panorama. The Humboldt cable will extend 14,800 kilometers between Valparaíso, Chile, and Sydney, Australia, with a stop in French Polynesia. Scheduled to become commercially operational by early 2027, it will deliver data at a speed of 144 terabytes per second and is designed to operate for 25 years.

• The total investment is projected at $300–500 million, including $25 million in public funding from Chile.

• Once active, Humboldt is expected to significantly reduce latency and improve connectivity across the southern Pacific, enabling advances in telemedicine, cross-continental data transfer for astronomy, and mining operations.

• The project builds on Google’s expanding digital infrastructure in Latin America. Chile already hosts one of the company’s two cloud regions in the region and serves as a landing point for the Curie cable—linking Valparaíso to Los Angeles via Panama—which has been operational since 2020.

Economic Outlook. The cable is being developed as an open-access digital corridor, not a proprietary asset controlled by Google. The initiative is expected to attract billions in foreign direct investment and position Chile as Latin America’s leading digital hub.

• By creating a direct, low-latency connection to Asia-Pacific markets—particularly significant given that China is increasingly becoming South America’s top trading partner—the project reduces dependence on North American data routes and establishes a strategically valuable second transoceanic corridor.

• Following the precedent of Google’s Curie cable, which boosted Chile’s outbound digital capacity by 30% and is projected to generate $19.2 billion in economic impact and 67,000 jobs by 2027, Humboldt is expected to yield similarly transformative returns.

• Key industries—including cybersecurity, high-frequency trading, and digital content platforms such as TikTok—stand to benefit from the enhanced data transfer speeds.

Geopolitical Stakes. With a digital economy exceeding $3 trillion, submarine cables have become critical infrastructure—carrying nearly 99% of international data traffic and facilitating over $10 trillion in daily financial transactions. No longer neutral conduits of connectivity, they have evolved into strategic assets that shape global power dynamics.

• As U.S.–China competition escalates, anchoring a high-capacity cable that links Latin America directly to Asia offers the region greater strategic autonomy.

• China stands to benefit from improved access to the region without the diplomatic friction that might arise from direct engagement with U.S. authorities, who remain outspoken critics of Chinese telecom expansion.

• Conversely, Google’s leadership in the Humboldt project offers a politically palatable alternative for Western-aligned nations concerned about Beijing’s growing technological influence.

What’s Next. Ultimately, Humboldt is more than a cable—it is a strategic conduit for data and security that solidifies Chile’s role as Latin America’s premier digital hub, with far-reaching benefits for neighboring economies across the Western Hemisphere.

• Rather than a standalone initiative, the project fits within a broader strategic vision. The Chilean government is already advancing plans for a subsea cable to Antarctica.

• Looking ahead, future eastward extensions—potentially including a direct connection to China—could circumvent geopolitical chokepoints that have hindered similar Google-led efforts, such as the Echo and Apricot cables in contested maritime regions.

Mexico concluded last Sunday a political experiment that, in the name of direct democracy, may mark a turning point in the country’s institutional framework.

The Big Picture. With voter turnout barely reaching 13%, Mexico held its first nationwide judicial elections — a process that, by 2027, will result in every judge in the country being popularly elected.

• Given the thousands of positions at stake, the vote count remains slow; authorities expect final results to take at least ten days.

• Still, one outcome is already clear: the big winner is Morena. The ruling party has effectively secured sweeping influence—if not outright control—over the Supreme Court.

• Though many judges are yet to be confirmed, the absence of opposition candidates strongly suggests that the vast majority of victors are aligned with the governing party.

Between the Lines. Former President López Obrador passed on to then President-elect Claudia Sheinbaum a sweeping—and highly contentious—initiative intended to crown his so-called Fourth Transformation. But the political gains have come at a significant cost: rising economic uncertainty and a legal system increasingly at risk. Concerns over a judiciary fully subordinated to political power—or worse, exposed to criminal capture—have sent ripples of anxiety through Mexico’s business community.

• For Sheinbaum, the priority was to act swiftly and eliminate lingering uncertainty. The result was a rushed, disorganized process that left many voters confused.

• Remarkably, even AMLO’s widely criticized presidential recall referendum saw higher turnout (18%) than this judicial vote.

• Despite broad public opposition to the reform—including from Morena’s own base—the results will stand. Valid votes accounted for roughly 9% of the electorate, but that will be enough to ratify the outcome.

The Missed Opportunity. Despite Morena’s success, analysts point to the opposition’s absence as a decisive factor. Alex González Ormerod, editor-in-chief of The Mexico Political Economist, called the opposition’s decision to boycott the process a “petulant” move that handed victory to the ruling party unopposed.

• Ironically, Morena suffered significant defeats the same day in state-level elections in Durango and Veracruz. According to González Ormerod, the landslide majority Morena achieved six months ago is already beginning to erode.

• Had opposition parties participated, they might have secured a more balanced Supreme Court. Instead, they ceded total control.

• Morena now controls all three branches of government — a result of both political strategy and what González Ormerod describes as “an atomized, woefully inept opposition despised across much of the country.”

On the Radar. The election also exposed key vulnerabilities. Ballot boxes were transferred from polling stations to counting centers without supervision from media or independent observers. While mechanisms remain to safeguard the process, the risk of irregularities in the 2027 elections is significant unless reforms are introduced.

• So far, Morena has mirrored the PRI’s old model of state capture — but with a crucial difference: it has achieved this without relying on the violence once used to suppress dissent.

• Aside from the emerging Movimiento Ciudadano, Morena has faced little resistance on its path to full dominance.

• Despite losing public support at a rapid pace since her election, Claudia Sheinbaum inherits what critics are calling the PRI’s dream of a “perfect dictatorship” — enabled not by coercion, but by the negligent complicity of an opposition that has handed over all three branches of government.

Bottom Line. Beyond the political missteps and the erosion of Morena’s opposition, the ruling party’s judicial reform—long criticized as a threat to national stability—has, in practice, revealed itself to be entirely divorced from the very principles Morena invoked to justify it.

• With only 13% of the electorate participating, the promise of greater representativeness in Mexico’s judiciary has proven to be little more than a naïve illusion.

• The explanation for the low turnout is straightforward: most voters simply do not care who the judges are. Unlike governors or mayors, judges are not perceived as having a direct impact on people’s daily lives—making the case for mass engagement far less compelling.

• Perhaps Morena will eventually come to recognize its fatal mistake: representation should not be pursued everywhere, simply for its own sake. Entrusting every aspect of governance to the shifting tides of public sentiment is a dangerous game. Judges are not meant to be popular—they are meant to uphold and enforce the law, even when doing so is unpopular.

What We’re Watching 🔎 . . .

Panama port owner’s deal fuels fears of dominance by world’s top shipping group [link]

Chan Ho-him, Haohsiang Ko y Peter Foster, Financial Times

The sale of 80% of CK Hutchison’s global port network for USD 23 billion to a consortium led by Terminal Investment Limited (TiL)—a subsidiary of Mediterranean Shipping Company (MSC)—and backed by BlackRock’s infrastructure division, has raised alarms in the logistics industry over its potential impact on global competition.

The transaction includes 43 terminals across 23 countries—two of them in Panama—positioning MSC as the world’s largest container port operator, with a projected market share of 8.3%.

This level of consolidation could restrict fair access to port infrastructure, raise barriers to entry, and give MSC competitive advantages through control of sensitive data. While the consortium has pledged to operate without discrimination, the deal is facing intense regulatory scrutiny—including from Chinese authorities—due to its geopolitical implications and the potential to distort competition in international trade.

Venezuela ramps ups taxes on private sector as Chevron oil exit bites [link]

Reuters

Amid declining oil revenues driven by renewed U.S. sanctions, Nicolás Maduro’s regime has intensified fiscal pressure on Venezuela’s private sector through tax hikes, increased fees, audits, penalties, and advance tax payments.

The government is seeking to offset a potential 30% drop in the USD 15 billion projected for 2024 oil exports. Tax revenue for the year is expected to reach USD 13 billion, with companies allocating up to 50% of their profits to the state, in an environment shaped by 48% inflation in 2024 and projections of up to 200% in 2025.

Meanwhile, 77% of business leaders cite the tax burden as their main operational challenge, raising fears of capital flight. Nevertheless, in May 2025, oil exports remained steady at 779,000 barrels per day, buoyed by increased shipments to China following Chevron’s exit.