Cuba Activates Cold War–Era “Zero Option” as Regime Defends Socialist Model; Venezuela Hunger Strike Intensifies Outside Zona 7; Carnival and Presidents’ Day Lock Positions Until Midweek
Executive Summary
The Big Picture: Cuba’s government reactivated its Cold War–era “Zero Option” contingency plan this weekend—an extreme protocol designed for scenarios of zero fuel supply, last used during the 1990s Special Period. Deputy Foreign Minister Fernández de Cossío defended the socialist model on Sunday as the only tool to withstand what he called a U.S. “economic, commercial, and financial war.” Blackouts now exceed 20 hours daily, more than 60% of the island is without power during peak demand, and Cuban economist Emilio Morales publicly predicted the regime will not survive until summer. The Cuban peso hit 500 per dollar on the informal market—down from 400 last summer—as state salaries collapse to ~$14/month. Aeroflot’s final Cuba flights operate this week before the February 24 cancellation.
Venezuela’s prisoner standoff entered a new phase Saturday when relatives of political detainees launched a hunger strike outside the Zona 7 detention center in Caracas, demanding the release of 33 prisoners still held at the facility. Earlier that day, 17 inmates were freed from Zona 7 in tearful reunions—the first significant batch from the notorious prison since the January 8 release announcement. Exiled opposition leader María Corina Machado addressed the Munich Security Conference via video, declaring she will continue to push for new elections as part of a democratic transition. The amnesty bill debate resumes Wednesday, February 19.
Argentina’s labor reform now faces its final legislative test in the Chamber of Deputies, with the ruling coalition targeting a vote before March 1. The CGT has promised action on “all necessary fronts: the streets, the justice system, and congress” after up to 71 people were arrested during the Senate vote protests. Mexico’s 40-hour workweek reform moves to its Chamber of Deputies for debate expected February 24–25, with Morena’s supermajority all but guaranteeing passage.
Brazil’s Carnival parades opened Sunday night with a politically charged homage to Lula at the Sambódromo—a giant metallic robot depicting the 80-year-old president traced his life from impoverished boyhood to the presidency, drawing opposition accusations of veiled early campaigning. The presidential race remains a statistical tie (Lula 37%, Flávio Bolsonaro 33%). The Banco Master scandal continues to widen, with the law firm of recently resigned Justice Minister Ricardo Lewandowski now linked to the bank’s retainer network. B3 is closed through Tuesday; political Brasília pauses through Ash Wednesday.
Colombia’s flood emergency across 16 departments (44 dead, 72,000 families affected) continues with the Urrá reservoir operating above overflow level and downstream communities in Córdoba’s Bajo Sinú bracing for further inundation. The COP$8 trillion emergency tax targeting ~15,000 companies faces intense corporate pushback ahead of March 8 elections. The Ecuador trade war remains unresolved with reciprocal 30% tariffs in force.
Risk Snapshot
| Country | Risk Signal | Key Driver |
|---|---|---|
| Cuba | Critical | “Zero Option” activated; 20+ hr blackouts; peso at 500/USD; regime predicted to fall by summer |
| Venezuela | Elevated | Hunger strike at Zona 7; 17 freed Sat; Machado at Munich; amnesty debate resumes Feb 19 |
| Argentina | Elevated | Labor reform to Deputies; 71 arrests; CGT vows action on all fronts; general strike expected |
| Colombia | Critical | Floods: 44 dead, 72K families; Urrá above overflow; emergency tax; Ecuador trade war |
| Brazil | Elevated | Carnival Lula tribute sparks row; election tie; Banco Master reaches Lewandowski; B3 closed |
| Mexico | Constructive | 40-hr workweek to Deputies Feb 24–25; IPC at all-time high; passage expected |
| Ecuador | Elevated | Trade war with Colombia unresolved; 30% reciprocal tariffs; record 52 homicides/100K |
| Chile | Constructive | Kast inauguration Mar 11; immigration tensions in northern regions; IPSA pullback orderly |
Cuba — Regime Activates “Zero Option” Cold War Protocol as Deputy FM Defends Socialist Model; Economist Predicts Collapse Before Summer
What Happened
- —“Zero Option” Activated: Cuba’s government publicly acknowledged this weekend that it has reactivated the “Zero Option” contingency plan—an extreme protocol designed in the 1990s for scenarios of zero fuel supply. The plan includes cuts across all productive sectors, partial suspension of public services, four-day work weeks for state employees, and deeper rationing. More than 60% of the country is without electricity during peak demand hours, public transportation is paralyzed, universities have suspended in-person classes, and non-essential surgeries have been halted.
- —Regime Doubles Down on Ideology: Deputy Foreign Minister Carlos Fernández de Cossío denounced on Sunday what he described as a U.S. “economic, commercial, and financial war” and defended the socialist system as a shield against external pressure. The speech, delivered at the same time the population endured 20+ hour blackouts, signals the regime is framing the crisis as existential resistance rather than moving toward accommodation with Washington.
- —Peso Collapses, Economist Sets Timeline: The Cuban peso hit 500 per dollar on the informal market—down from ~400 last summer—making the average state salary worth approximately $14/month. Cuban economist Emilio Morales of the Cuba Siglo 21 think tank publicly predicted that the regime will not survive until summer, citing the “collapse of the energy matrix,” healthcare system deterioration, transportation breakdown, and productive sector paralysis. Energy expert Jorge Piñón at the University of Texas warned that oil will completely run out by April.
- —Tourism Contrast Draws Fury: A tourist posting from the Sol Palmeras hotel in Varadero described abundant food, on-demand egg preparation, and clean facilities with daily towel exchanges—a description that went viral among Cubans who cannot find basic food or medicine, reigniting debate over the regime’s prioritization of tourist-facing resources over its own population.
- —Markets: No traded equity market. The informal peso rate of 500/USD is the only real-time economic indicator. Tourism revenue effectively zeroed out with 30+ hotels closed and most international airlines suspended.
Why It Matters
The “Zero Option” is not just policy—it is symbolism. When the Cuban government reaches back to Special Period protocols, it is telling its own population and the international community that it views the current crisis as comparable to the worst years after the Soviet collapse. But unlike the 1990s, there is no Fidel Castro to generate emotional consensus. Díaz-Canel lacks the symbolic legitimacy to sustain prolonged sacrifice, the population has experienced years of protests (2021, 2022, 2024), and information flows freely enough through mobile data that the contrast between tourist hotels and civilian suffering is visible in real time. The question is no longer whether the crisis is existential but whether the regime’s response—doubling down on ideology rather than seeking accommodation—accelerates or delays the reckoning.
Risk Level: Critical
Venezuela — Hunger Strike at Zona 7 as 17 Freed Saturday; Machado Calls for Elections from Munich; Amnesty Debate Resumes Wednesday
What Happened
- —Hunger Strike Launched: Ten relatives of political prisoners began a hunger strike Saturday outside the Zona 7 detention center in Caracas, demanding the release of the remaining 33 detainees held at the notorious facility. The Committee for the Freedom of Political Prisoners said the action would continue until all Zona 7 prisoners are freed. Relatives have been sleeping outside the facility since January 8.
- —17 Freed from Zona 7: Earlier Saturday, 17 prisoners were released from Zona 7 in tearful reunions with families—the first significant batch of liberations from the prison that has been at the center of detention controversies. While hundreds of dissidents have been freed from other facilities in recent weeks, releases from Zona 7 had been conspicuously scarce.
- —Machado at Munich: Exiled opposition leader María Corina Machado addressed the Munich Security Conference via video on Saturday, declaring she will continue to push for new elections as part of a democratic transition. She rejected suggestions that chaos would follow a government change, citing a “cohesive, united” civil society with majority support from the armed forces.
- —Amnesty Debate Postponed to Feb 19: The National Assembly debate on the Amnesty Law for Democratic Coexistence, suspended Thursday after lawmakers clashed over Article 5’s requirement that beneficiaries appear in court, will resume Wednesday. The debate also remains unresolved on whether Venezuelans who fled the country to avoid detention can be granted amnesty. Foro Penal’s most recent count confirms approximately 380 releases since January 8, with nearly 690 still detained.
Why It Matters
The hunger strike at Zona 7 creates a focal point that the Rodríguez government cannot easily ignore. The 17 releases on Saturday suggest the pressure is working, but the remaining 33 detainees—and the roughly 690 across the system—represent a continuing test of whether the post-Maduro government is genuinely liberalizing or simply managing the pace of concessions to Washington. Machado’s Munich appearance signals the opposition is internationalizing its demands beyond Washington, reaching European security and policy circles. The February 19 amnesty debate will be the most consequential legislative session since Maduro’s capture.
Risk Level: Elevated
Argentina — Labor Reform Heads to Deputies as CGT Vows Fight on “All Fronts”; 71 Arrested in Congress Clashes; Milei to Washington Wednesday
What Happened
- —Deputies Timeline Set: Following Thursday’s 42–30 Senate passage, the ruling coalition is now pushing for a Chamber of Deputies vote before March 1—when regular congressional sessions begin. Sources indicate the coalition believes it has approximately 129 votes, above the simple majority needed. The 200+ article bill, which allows 12-hour workdays, caps severance, introduces company-level bargaining, and restricts the right to strike, must survive what promises to be an even more contested lower-house debate.
- —Street Violence Escalates: The protests surrounding the Senate vote were among the largest labor mobilizations of Milei’s presidency. Police deployed water cannons and tear gas; up to 71 people were arrested. The CGT declared it would fight the reform on “all necessary fronts: the streets, the justice system, and congress.” The International Trade Union Confederation called the reforms “an attack on democracy.”
- —Milei to Washington Feb 19: Milei attends Trump’s Board of Peace in Washington on Wednesday—a meeting that carries domestic political weight as the MERVAL sits 14% below its January 28 all-time high and the reform faces its final legislative hurdle.
- —Markets: Argentine markets closed for Carnival Monday–Tuesday. The MERVAL’s last close was 2,816,128 on Friday (−1.25%), extending its drawdown to over 14% from the January 28 ATH. The reform’s Senate passage has not stemmed selling.
Why It Matters
The 42–30 Senate margin was Milei’s broadest coalition—La Libertad Avanza, UCR, PRO, and provincial caucuses—but the 28 concessions required to secure it reveal the political cost of structural reform. The CGT’s multi-front pledge and the arrest of 71 protesters signal that the Deputies phase will be fought not just in committee rooms but on streets. The fundamental tension is between Milei’s argument that Argentina’s 40%+ informal labor rate requires modernization and unions’ counter that the reform strips protections that took decades to build. With the MERVAL in sustained retreat and inflation re-accelerating, the reform must pass quickly or risk becoming a liability.
Risk Level: Elevated
Colombia — Urrá Reservoir Above Overflow as Flood Death Toll Reaches 44; Emergency Tax Battle Intensifies Before March 8 Elections
What Happened
- —Urrá Reservoir Pressure Builds: The Urrá I reservoir continues operating above overflow level, maintaining dangerous pressure on downstream Sinú River stages despite a slight decrease in inflows. Montería’s mayor ordered preventive evacuation of 13 neighborhoods on the left bank. Floodwaters are now advancing through the Bajo Sinú subregion toward the Caribbean coast, threatening municipalities including Cereté, San Pelayo, and Lorica. The overall toll across 16 departments under Petro’s 30-day emergency decree stands at 44 dead, 72,000+ families affected, and 870+ km² submerged. Córdoba remains 80% underwater with agricultural losses in banana, plantain, coffee, and cattle expected to drive food-price inflation through H1 2026.
- —Emergency Tax Contested: The government’s COP$8 trillion (~$2.2 billion) emergency wealth tax targeting companies with net assets exceeding COP$10 billion (approximately $2.7 million) faces intense corporate resistance. With progressive rates up to 1.2% on high-net-worth holdings, an estimated 15,000 companies would be affected. The measure’s timing—three weeks before the March 8 legislative elections—makes it as much a political instrument as a fiscal one.
- —Ecuador Trade War Unresolved: Reciprocal 30% tariffs between Colombia and Ecuador remain in force. Ecuador’s 900% pipeline tariff increase ($3 to $30/barrel) continues to raise Ecopetrol’s export costs. Colombia’s electricity suspension to Ecuador persists. The Andean Community tribunal proceeding continues without resolution. Petro’s request for Trump to mediate remains unanswered.
- —Markets: The COLCAP closed Friday at 2,369 (+1.73%), recovering most of Thursday’s selloff on the U.S. CPI relief. Trading resumes normally Monday.
Why It Matters
Colombia is fighting on three simultaneous fronts: a humanitarian disaster that meteorologists warn could worsen as seasonal rains arrive in March and April, a corporate tax battle that threatens to define the fiscal politics of the March 8 elections, and a trade war that has already disrupted $2.8 billion in bilateral commerce with Ecuador. The Urrá reservoir’s continued operation above overflow level is the most immediate physical risk—any increase in inflows could trigger catastrophic downstream flooding in communities already underwater. Politically, the emergency tax is Petro’s most consequential fiscal gamble: it could fund reconstruction or alienate the business sector three weeks before voters decide the composition of the next congress.
Risk Level: Critical
Brazil — Carnival Lula Tribute Ignites Election-Year Controversy; Banco Master Scandal Reaches Former Justice Minister; B3 Closed Through Tuesday
What Happened
- —Carnival Opens with Political Charge: Rio Carnival’s Sambódromo parades launched Sunday night with samba school Acadêmicos de Niterói dedicating its entire procession to President Lula—including a colossal metallic robot depicting the president. The opposition immediately denounced the tribute as veiled early campaigning for the October 4 election. With 462 blocos scheduled and the Cordão da Bola Preta expecting over one million attendees, Carnival remains both a consumer confidence gauge and now an overtly political stage.
- —Election Race Frozen Over Carnival: With polling suspended during the holiday, the race remains effectively tied: Lula at 37% and Flávio Bolsonaro at 33% in first-round intentions per the latest Genial/Quaest survey. In a simulated runoff, Lula’s lead has compressed to five points. São Paulo Governor Tarcísio de Freitas’s endorsement of Flávio consolidated the right in late January, but recent reports suggest Tarcísio is distancing himself from visiting the elder Bolsonaro in prison—a sign of emerging tensions within the opposition coalition.
- —Banco Master Widens to Lewandowski: The law firm of Ricardo Lewandowski—who recently resigned as Lula’s Justice Minister and is a former Supreme Court justice—was revealed to have been held on retainer by Banco Master, the bank whose liquidation has uncovered an estimated R$40 billion fraud. The scandal now implicates justices Toffoli and Moraes, governors across the political spectrum, Centrão lawmakers, and the largest Bolsonaro 2022 donor. Brazil’s worst-ever Transparency International corruption score of 35/100 provides the backdrop.
- —Markets: B3 is closed Monday and Tuesday for Carnival. The Ibovespa’s last session was Friday Feb 13 at 186,464 (−0.69%), with three consecutive red sessions erasing 3,535 points from Wednesday’s 190,000 peak. The real held near R$5.20. Trading resumes Wednesday Feb 18 alongside the FOMC minutes release.
Why It Matters
The Carnival Lula tribute crystallizes the politicization of every public space in an election year where the race has tightened beyond what anyone in Brasília expected. The Banco Master scandal’s expansion to Lewandowski—a Lula appointee—erodes the firewall the president had maintained by reportedly refusing to intervene on the bank’s behalf. If the scandal continues to implicate figures across the spectrum, it fuels Flávio Bolsonaro’s anti-establishment narrative and his central plank of amnesty for January 8 participants. B3’s Wednesday reopening will be the first opportunity for markets to price Carnival-week developments and the FOMC minutes simultaneously.
Risk Level: Elevated
Mexico — 40-Hour Workweek Moves to Deputies for Feb 24–25 Debate; Reform Would Take Effect May 1 if Approved
What Happened
- —Deputies Debate Set: Mexico’s Chamber of Deputies is preparing for debate on the 40-hour workweek constitutional reform, with the Plenary vote expected between February 24 and 25. Congressional leader Ricardo Monreal confirmed the Constitutional Points and Labor committees will jointly review the draft this week and invite Labor Minister Marath Bolaños to testify Monday. With Morena’s supermajority in both chambers, final approval is widely expected. The reform would take effect May 1 (Labor Day), with the first two-hour reduction beginning January 2027.
- —Implementation Details Sharpen: Legal analysis is now focused on how “effective working time” will be defined—a distinction that could determine whether standby periods, idle time, and hybrid arrangements count toward the weekly cap. Sectors with significant wait time (call centers, customer service, security) may see the most disruption. The reform also explicitly prohibits salary reductions during the transition, raising questions about cost absorption for small businesses in the informal-heavy economy.
- —Mining Concessions Recovered: The Sheinbaum government reported recovery of 1,126 mining concessions covering 889,512 hectares—approximately the size of Querétaro state—including more than 700 within Protected Natural Areas.
- —Markets: The IPC closed Friday at 71,479 (+0.83%)—a new all-time high on the U.S. CPI relief rally. The peso held near ~17.20. Banxico remains at 7.00%. Reports that Trump plans to roll back steel and aluminum tariffs could benefit Mexican exporters. BMV operates normally Monday.
Why It Matters
The unanimity of the Senate vote (121–0) and the speed of the Deputies timeline signal a political consensus rarely seen in Mexico—even opposition parties backed the principle. The real legislative battle shifts to secondary legislation and the definition of “effective working time,” which will determine whether the reform delivers meaningful change for 13.4 million workers or leaves loopholes exploitable by employers. With a 13% minimum wage increase already in effect for 2026, workplace violence prevention reforms live since January 15, and the USMCA renegotiation approaching this summer, Mexico is rewriting its labor compact in real time.
Risk Level: Constructive
Regional Snapshot
Ecuador
The Ecuador–Colombia trade war entered its third week with reciprocal 30% tariffs still in force after the February 6 Quito summit failed. Ecuador’s 900% pipeline tariff increase ($3 to $30/barrel) continues, and Colombia’s electricity suspension persists—critical as Ecuador historically relies on Colombia for up to 10% of its power grid during dry season. Border protests at Rumichaca continue; 38% of border city Ipiales’ economy depends on cross-border commerce. Ecuador closed 2025 with a record 52 homicides per 100,000 (one per hour). Noboa positioning as Trump ally on narcotics enforcement.
Chile
The IPSA suffered its worst session since April 2025 on Tuesday, falling 2.14% to 11,009 after Latam Airlines’ sixth secondary ADR sale and Entel’s 12.6% collapse following Telefónica’s sale of its Chilean operations to Millicom/NJJ. Orderly pullback from all-time highs continues. Kast inauguration March 11 with a technocratic, pro-business cabinet. Immigration tensions building in northern regions ahead of inauguration as migrants use alternate Bolivia routes. Chile remains the world’s top-performing equity market over three months.
Panama
CK Hutchison’s legal escalation (ICC arbitration, investment treaty claim) continues without new weekend developments. Port operations under temporary administration remain uninterrupted. China’s investment freeze and cargo rerouting guidance in place. The $23 billion port sale to the BlackRock-led consortium remains entangled in Panama’s Supreme Court decision. U.S. strategic interest in canal control sustains pressure.
Haiti
Prime Minister Fils-Aimé leads executive authority alone after the Transitional Presidential Council’s mandate expired February 7. The UN authorized a 5,550-member Gang Suppression Force but funding and deployment remain uncertain. Haiti has qualified for the 2026 FIFA World Cup—the first time in 50 years—but Trump’s ban on Haitians entering the U.S. means fans cannot attend. Gang control continues to expand beyond Port-au-Prince.
Peru
April 12 general elections approaching with crime, corruption, and the Chinese-operated Chancay megaport as top voter concerns. A U.S. warning was issued after a judicial ruling limited oversight of Chancay. Protests over extortion continuing. Peru’s Select equity index fell sharply last week.
Bolivia
President Rodrigo Paz continues to navigate fuel subsidy elimination fallout after the December decree sparked the highest protest levels since ACLED began coverage. The COB union reached an agreement to suspend the decree but the elimination of subsidies persists under revised terms. Departmental elections March 22. MCC selected Bolivia for new partnership. $200 million World Bank emergency loan supporting cash transfers. Lithium sector opening proceeds.
Sports & Culture
Rio Carnival’s Sambódromo Special Group parades continue tonight and tomorrow (Feb 16–17), Champions Parade Feb 21. Brazil won its first-ever Winter Olympics gold medal when Lucas Pinheiro Braathen took the men’s giant slalom at Milan-Cortina 2026. Venezuela’s Navegantes del Magallanes won the Serie de las Américas baseball championship with a historic 10–9 comeback over Colombia. The World Baseball Classic opens March 5 with nine Latin American nations in the draw. U.S. markets closed Monday for Presidents’ Day.
Markets at a Glance
| Index / Currency | Level | Last Session | Context |
|---|---|---|---|
| Mexico IPC | 71,479 | +0.83% (Fri) | New ATH; CPI relief rally; 40-hr workweek to Deputies; BMV open Mon |
| Ibovespa (Brazil) | 186,464 | −0.69% (Fri) | B3 CLOSED Mon–Tue (Carnival); 3rd straight red; reopens Wed w/ FOMC |
| MERVAL (Argentina) | 2,816,128 | −1.25% (Fri) | CLOSED Mon–Tue (Carnival); −14% from Jan 28 ATH; reform not stemming selling |
| COLCAP (Colombia) | 2,369 | +1.73% (Fri) | Bounce after Thu −2.00%; flood emergency + Ecuador trade war |
| Chile IPSA | 10,898 | −0.70% (Fri) | Pullback after Tue −2.14% rout; Latam ADR + Entel collapse; Kast Mar 11 |
| USD/BRL | ~R$5.20 | Slight weakening | Near May 2024 lows; B3 closed until Wed |
| S&P 500 | 6,836 | +0.05% (Fri) | NYSE CLOSED Mon (Presidents’ Day); CPI 2.4% YoY below consensus |
The Week Ahead
| Date | Event | Significance |
|---|---|---|
| Feb 16 | U.S. Presidents’ Day (NYSE closed) | No U.S. trading; EM exposed with no exit |
| Feb 16–17 | Rio Carnival Sambódromo Special Group parades | Political staging ground; consumer confidence gauge |
| Feb 16–17 | B3 & BYMA closed (Carnival) | Brazil, Argentina positions locked |
| Feb 18 | B3 reopens; FOMC minutes released | Post-Carnival repricing; Fed rate path after CPI beat |
| Feb 19 | Venezuela amnesty bill debate resumes | Article 5 + exile provisions; hunger strike ongoing |
| Feb 19 | Milei at Trump’s Board of Peace (Washington) | Bilateral optics amid MERVAL −14% drawdown |
| Feb 21 | Rio Carnival Champions Parade | Final Sambódromo event |
| Feb 24 | Aeroflot cancels all Cuba service | Russia completes evacuation; only Iberia remains |
| Feb 24–25 | Mexico Chamber of Deputies: 40-hr workweek debate | Final legislative hurdle; Morena holds supermajority |
| By Mar 1 | Argentina Chamber of Deputies labor reform vote target | Final hurdle for Milei’s reform; general strike expected |
| Mar 8 | Colombia legislative elections & primaries | Bellwether amid floods, emergency tax, Ecuador trade war |
| Mar 11 | Kast inauguration (Chile) | Policy direction, cabinet; immigration enforcement begins |
| Mar 18 | BCB rate decision (Brazil) | Expected start of easing cycle from 15% Selic |
| Mar 22 | Bolivia departmental elections | Test of Paz consolidation after fuel subsidy protests |
| Apr 12 | Peru general elections | Crime, corruption, Chancay megaport as top issues |