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VENEZUELA: Rival accounts of the unrest

The government of President Nicolás Maduro has insistently portrayed the wave of protest actions launched by the opposition earlier this year as a ‘continuing coup attempt’, while the latter have maintained that they were initially provoked by public insecurity, rampant inflation and the widespread shortage of essential goods, which escalated in response to the government’s brutal repression — though the most radical members of the opposition have said that they intend to continue until the Maduro government collapses. Both sides have been marshalling figures (often the same ones with differing slants) in support of their cases.

The protests which began in Mérida in early January, spread in early February to San Cristóbal, Táchira, and days later to Caracas, then rapidly across 16 of the country’s states [SSR-14-03]. As early as 24 February a group of 34 rights advocates issued a document listing instances of excessive repression and violation of human rights by the government.

A month later Alba Ciudad, one of the broadcasting outlets of the government’s Sistema Bolivariano de Comunicación e Información (Sibci) picked up their data and added information gleaned from media reports to back up a report which claimed that there had been 41 fatalities in the protests, of which only six of them were killed by ‘organs of the state’.

On 10 June eight non-governmental organisations* (see next page) issued a 161-page report which went beyond that of February to claim that by end-March as many as 800,000 people had taken to the streets in 16 states, though it focused on detailed information from a survey conducted in seven of them, where there had been 602 protest actions, of which 562 had been peaceful, but 205 had been violently repressed by the Guardia Nacional Bolivariana (GNB), the Policía Nacional Bolivariana (PNB), state police forces and Sebin, the national intelligence service.

This report does not add to the total number of fatalities, but does attribute eight of the fatalities to ‘armed civilians’ acting in concert with the security forces, and it records that 27 deaths were caused by gunfire. It also goes beyond the death toll to note that in the seven surveyed states, 34% of the protest actions, including many that had been peaceful, had been repressed by the security forces. In Zulia and Lara the proportion rose to 50%.

Protests & repression
Seven states, surveyed in February-March 2014*
State N° protests Peaceful Violent Repressed
Capital district 218 208 10 64
Carabobo 112 105 7 40
Bolívar 82 77 5 23
Táchira 57 50 7 16
Lara 56 53 3 28
Mérida 40 33 7 23
Zulia 37 36 1 11
Total 602 562 40 205
*Ranked by number of protest actions.
Source: Provea, with data from Espacio Público.

In the clashes 138 persons were injured; 330 by rubber bullets and 138 by firearms. There were 3,127 arrests which the report classifies as arbitrary (in 2,463 cases the people involved were taken to court). There were 157 complaints of ill treatment or torture, both in detention centres and during transfers — in most cases involving detainees being struck or kicked.

The report also lists 204 raids on residential areas where protests took place, involving illegal entry to homes and damage to private property. The GNB acted in 81% of these raids, state police forces in 17%, the army in 12% and the PNB in 8%. Also involved in 26% of these raids were groups of armed civilians.

*Civilis Derechos Humanos, Espacio Público, Foro Penal Venezolano, Funpaz (Lara), Provea, Comisión Inter-Institucional de Derechos Humanos (Universidad del Zulia), Escuela de Derecho (Universidaad Rafael Urdaneta) and Comisión de Derechos Humanos (Colegio de Abogados, Zulia).

Links

▫ NGO report: http://www.derechos.org.ve/2014/06/10/organizaciones-de-ddhh-presentaron-el-informe-venezuela-2014-protestas-y-derechos-humanos/

▫ Alba Ciudad report: http://albaciudad.org/wp/index.php/2014/04/conozca-los-26-fallecidos-a-un-mes-del-inicio-de-las-protestas-opositoras-la-gran-mayoria-son-victimas-de-las-barricadas/

Violent deaths reported during protests
February-April 2014
Killed attempting to cross barricades 10
Killed by security forces 6*
Killed in roadblocks or barricades 6
Killed while defending barricades 3
Killed at home or in street 2
Killed by accident 3
Killed by other political violence 10
Undetermined 1
Total 41
*June NGO report lists 8 killed by armed civilians acting in concert with security forces.
Source: Alba Ciudad, based on a 24 February document signed by 34 leading rights advocates, updated by Alba Ciudad with media reports.

 

Injuries reported during protests
February-April 2014
Cause N° cases
Beatings 72
Rubber bullets 330
Firearms 138
Blunt objects 34
Other 280
Total 854
Source: Provea.
Published in Andean Group
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Honduras: In a vicious cycle

The economic imbalances in Honduras remain large, particularly for a country where institutions are weak and where the rule of law is absent.

Alarming statistics about Honduras are easy to find. According to the US State State Department’s 2014 International Narcotics Control Strategy Report (INCSR), some 86% of all cocaine entering the US is believed to have come through the Mexico-Central America corridor. Not all the cocaine travels by air (and Caribbean Sea routes have recently been revived, according to the US military’s Southern Command). However, some three quarters of all planes smuggling cocaine out of South America first land in Honduras. “The Caribbean coastal region of Honduras is a primary landing zone for drug-carrying flights and maritime traffic. The region is vulnerable to narcotics trafficking due to its remoteness, limited infrastructure, lack of government presence and weak law enforcement institutions. Drug trans-shipment to points north from the Caribbean coastal region is facilitated by subsequent flights north as well as by maritime and riverine traffic and land movement on the Pan American Highway”, notes the INCSR.

Widespread poverty is a key element. According to the United Nation's Economic Commission for Latin America and the Caribbean (ECLAC), the overall population and the urban population are growing at 1.9% and 2.9% annually. For Honduras as a whole, the poverty rate was 67.4% in 2010 (the latest year for which ECLAC publishes the data). In the countryside, the figure was 76%. Some 42.8% of Hondurans, and 56.8% of rural Hondurans were living in extreme poverty, on the ECLAC 2010 data. Social public expenditure was only 12% of GDP. Since then, the situation has deteriorated to the point that on some estimates by local NGOs, for instance, the overall poverty rate has hit 70% or more.

As chart 1 indicates, crime and poverty have a profoundly negative impact on perceptions of Honduras as a place in which to do business. According to the World Economic Forum (WEF)’s 2013/14 Global Competitiveness Report, Honduras ranked well down at number 111 – of the 148 countries assessed – for overall competitiveness. It ranked last – 148/148 – for the business costs of crime and violence. The country had similarly bad rankings for the wastefulness of government spending (145/148) and the reliability of police services (142/148). Unsurprisingly then, inefficient government bureaucracy, corruption and crime & theft are the three factors that businesses operating in Honduras say they find most problematic.

Honduras is not the only country in the region in which bureaucracy, corruption and weak institutions are seen as major challenges. However, most of the other countries are characterised by macroeconomic environments that are, if not improving, then at least clearly stable. The final two problematic factors identified on chart 1 – access to financing and policy instability – are worrying indicators that this is not the case in Honduras.

Chart 2: Honduras' economy - as the IMF sees it
  2012 2013e 2014e 2015e 2016e 2017e 2018e
Gross domestic product, constant prices (% change) 3.9 2.6 3.0 3.1 3.2 3.0 3.0
Gross domestic product, current prices (US$bn) 18.5 18.8 19.6 20.4 21.1 21.7 22.3
Gross domestic product per capita, current prices (US$) 2,331.2 2,323.1 2,367.8 2,421.7 2,453.7 2,474.9 2,484.1
Total investment (% GDP) 25.9 24.4 23.9 22.7 22.5 22.0 21.9
Gross national savings (% GDP) 17.3 15.7 16.4 16.7 16.9 16.4 16.3
Inflation, end of period consumer prices (%) 5.4 4.9 7.0 6.0 5.5 5.5 5.5
Volume of imports of goods and services (% change) 7.3 -1.3 6.7 4.0 4.1 4.1 4.1
Volume of exports of goods and services (% change) 10.6 -0.8 3.8 3.8 4.1 4.1 4.0
Unemployment rate (% labour force) 4.4 4.4 4.5 4.5 4.5 4.5 4.5
Population (mn) 7.9 8.1 8.3 8.4 8.6 8.8 9.0
General government revenue (% GDP) 22.5 22.4 24.6 24.7 25.6 25.8 25.9
General government total expenditure (% GDP) 26.6 29.8 30.9 30.7 31.3 31.6 31.8
General government gross debt (% GDP) 34.4 40.2 44.9 48.6 52.0 55.5 59.2
Current account balance (% GDP) -8.6 -8.8 -7.4 -6.0 -5.6 -5.6 -5.6
Source: International Monetary Fund, World Economic Outlook Database, April 2014

 

In mid-June 2014, the International Monetary Fund (IMF) concluded its regular Article IV consultation with the government. The IMF's views of the country's prospects are summarised in chart 2. The IMF noted that many of the challenges facing policy-makers in Honduras through 2013 originated from outside the country. Economic growth slowed from around 4% in 2012 to 2.6% in 2013 “owing to lower private investment, a drop in coffee output due to leaf-rust disease, and weaker trade partner growth. Inflation declined to 5%...driven by softer commodity prices, weaker economic activity, and lower currency depreciation. On the external front, the current account deficit rose to about 9% of GDP in 2013, reflecting less favourable terms of trade and a drop in coffee exports”. International reserves rose to 3.7 months of imports, thanks to inflows of foreign direct investment (FDI) and the raising of US$1bn through two global bond issues.

The current account deficit is sufficiently small in absolute terms that it should usually be financed. The main problems stem from public finances. In spite of some moves to improve the tax administration and to control public spending, it appears likely that the government will be running a deficit of around 5%-6% of GDP in calendar 2014 and over each of the next four years. On its own, this would not normally be a problem. However, the lack of competitiveness of the economy means that it is only likely to grow at around 3% annually: further, gross government debt already amounts to around 40% of GDP. According to the IMF's forecasts, the debt/GDP ratio will probably grow steadily through the forecast period to reach 59% by the end of 2018.

Newsflow over the last three months or so has been positive, but has generally alluded to particular initiatives to increase the competitiveness of the economy – and not to wholesale reforms of Honduras' unbalanced public finances. Hondutel, the state owned telecoms operator, has eliminated over half of its management positions as a part of a restructuring process. The company suffered net losses in 2013 of around US$30mn. It only has 146,000 subscribers, while Claro and Tigo – its main private sector competitors – serve a combined 7m. For its part, the government announced that it had received 790m lempiras (US$41.4mn) from Tigo in consideration for a seven-year extension to that company's concession. At the beginning of June, the port authority ENP announced that it is looking for an external consultant to undertake an environmental audit of the expansion of the port of Cortés. The audit will be a part of a wider project to modernise the port, which is being funded by the Inter-American Development Bank (IDB).

In short, our view is that Honduras remains trapped in a vicious cycle of poverty, poor governance, low competitiveness and low growth. Although a financial crisis is not imminent, the risks are growing steadily. The absence of the rule of law and the weakness of Honduras' institutions are exacerbating the economic problems, and vice versa. Over recent years, this has been the challenge in Jamaica too, but in few other countries in the region.

Important new agreements signed by the Cuban state oil company with two Russian oil companies have stirred US interest in Cuba, both from those concerned about security implications, and from business frustrated by sanctions.

In late May officials from the Cuban state oil company, Cupet, signed five agreements in Russia with the companies, Zarubezhneft and Rosneft, for the exploration of hitherto unexplored territory to the north of the island, and the development of a logistical base for oil processing in the new Special Development Zone in the upgraded port of Mariel, to the west of the capital, Havana. Rosneft will also fund some Cuban oil technicians to study petrochemical sciences and train at its production facilities: the first Cubans to be granted scholarships in Russia since the last of the Soviet-sponsored cohort graduated in 1992. The Cuban delegation to Russia will be looking for more partners at the World Petroleum Congress in Moscow on 15-19 June.

In Cuba, the agreements have been heralded as part of the government’s long-standing efforts to secure international financing and technology for the development of its oil reserves, and its more recent drive to expand and diversify international trade. In the US, they are eyed with jealousy and suspicion.

Urgent efforts to reduce energy dependence

The Cuban oil sector has been open to foreign investment for two decades, but heightened political uncertainty in Venezuela has encouraged the authorities to intensify their search for new partners. Most of the oil consumed in Cuba is imported from Venezuela, which also supplies Cuba with crude for refining (at the Cienfuegos refinery, completed in 2008) and export. Domestic oil production, which covers only around one third of the country’s needs, is declining as existing wells are being exhausted.

Current Cuban oil production of around 60,000 barrels per day (bpd) is from deposits along the coastal zone to the north of central and eastern provinces, but far larger reserves are thought to lie in the country’s deep water Exclusive Economic Zone (EEZ) in the Mexican Gulf. A 2004 US Geological Survey estimate for undiscovered reserves in the zone cited a figure of 4.6bn barrels of oil, 9.8trn cubic feet of natural gas and 0.9bn barrels of natural gas liquids; Cuban scientists’ oil estimates are even higher, at 20bn barrels. However, international interest is inhibited by US sanctions, and of Cuba’s 59 license blocs in the EEZ, less than half have so far been taken.

Without access to the US market, and with obstacles to the use of US technology and logistics, the potential rewards for foreign investors from third countries are substantially reduced relative to costs and risks.

Investors have been further discouraged by the fact that none of the four exploratory wells that have been drilled in the EEZ over the past decade by international consortia (involving companies from Spain, Norway, India, Venezuela, Vietnam, Malaysia, Brazil, Canada and China) have found oil in commercial quantities. The last of these withdrew from Cuban waters in 2013.

US responses to Cuban-Russian oil deal: suspicion, concern, interest

Echoes of past Cuban-Russian ties have stirred unease among some observers in the US. Concerns about the political significance of the agreements were underlined by the presence of the Russian president, Vladimir Putin, at the signing ceremony, and the security cooperation that has also been agreed during recent Cuban-Russian talks.

The potential development of a Cuban oil industry in the Mexican Gulf has also raised concerns about the vulnerability of the southern coast of the US to any oil spills. The need to mitigate the risks has resulted in new cooperation between the two governments to allow their respective environmental protection agencies to exchange information, and for a special exception to be made for US technology transfer in this field. This cooperation has been instrumental – along with cooperation in other areas of mutual interest, including migration and anti-drugs trafficking efforts – in helping to build confidence between officials over the past few years.

This confidence-building has encouraged US businesses to re-evaluate Cuba’s potential, with growing expectations that the current US administration led by President Barack Obama might take new measures to ease sanctions in its final years of office.

Industry experts suggest that, if oil were discovered, Cuba could be producing around 250,000 bpd – sufficient to become a net exporter – within five to seven years. US oil companies would want to be involved in such an industry, and other businesses are growing more aware of the possibilities that might emerge from a more dynamic Cuban economy. These prospects, together with Cuban economic reforms that signal a renewed official interest in cultivating ties with foreign partners, including US businesses, encouraged a delegation led by the president of the US Chamber of Commerce, Thomas J. Donohue, to visit Cuba in late May, despite criticism from hard-liners.

US sanctions remain a major obstacle to foreign investment

The changes in Cuba that have generated most interest among US and other foreign businesses are the foreign investment law passed by the Cuban National Assembly in March, which will take effect from 28 June, and the Mariel Special Development Zone. Since its inauguration in January, the zone has hosted a series of international visitors, not only from Russia and the US but also from Brazil, Central America, Mexico, Europe, South Korea and China. However, US laws remain a major obstacle for foreign businesses investigating Cuban potential.

The lack of access to US markets, supplies or technologies severely limits the possibilities for production for export in Cuba, and the threat of falling foul of US sanctions serves as a strong deterrent for most companies. Removal of the US ban on trade with Cuba would require the approval of the US Congress. Although the majority of US citizens now favour such a move, it appears to be effectively blocked by the pro-sanctions lobby. President Obama could use his executive powers to ease restrictions on travel, but this would make no difference to foreign businesses.

A US move that would have a far greater impact on third country business interests would be the removal of Cuba from the State Department’s list of ‘state sponsors of terrorism’. Cuba’s inclusion, which now has no convincing justification, hampers international companies’ ability to raise finance and make payments for Cuba business and, perhaps more importantly, the risk of prosecution is sufficient to deter others. Until now, there has been little political pressure within the US for removing Cuba from the list, and international pressure has been weak. However, in the wake of a debate in Europe sparked by the threat of a record fine for BNP Paribas for transactions with countries on the list, the anachronistic inclusion of Cuba is now more likely to be raised by the European Union (EU) in bilateral talks. A breakthrough on this issue would significantly increase European business links with Cuba.

  • Sherritt International

Cuban energy ministry officials have also confirmed that an agreement had been reached to extend and expand the activities of Sherritt International, a Canadian partner that has been extracting oil from the coastal fields since the 1990s.

Published in Caribbean

Peru is debating whether to amend or repeal a law just passed by congress that allows the military to become directly involved in antidrug actions — as distinct from fighting ‘narcoterrorists’ — against a backdrop of warnings that not only the fate of the antidrugs effort but even the forthcoming elections are threatened by the pervasive penetration of the country’s institutions by organised crime.

The warnings have been escalating since early April, when interior minister Walter Albán called in a television interview which received widespread media coverage for a broad agreement between ‘people of different ideological options’ to face the reality of ‘mafias that have grown and become very powerful.’ As an example of this said that a ‘mafia’ linked to illegal mining had managed to appropriate, thanks to a court order, half a tonne of gold that had been seized by Sunat (the customs and tax authority). Some ‘mafias’, he said, hire police officers through security firms: ‘In the Peruvian state, and the national police is no exception, corrupt practices have been embedded for a long time [...] We are going to do everything necessary to eradicate it, but if we want to eradicate it completely we need a medium-term plan with a great scope.’

Albán was speaking to a public already sensitised by the scandal involving high-ranking police officers with a man with convictions for illegal arms possession and acts of corruption who had been a participant in the notorious network Vladimiro Montesinos, intelligence chief under the now-jailed President Alberto Fujimori [SSR-13-12].

Late last year a survey conducted by GFK and published by La República showed that 68% of the respondents were convinced that groups linked to Montesinos during the Fujimori era — often collectively labelled montesinismo — remain influential nowadays within political parties across the spectrum: 62% said that montesinismo had penetrated the fujimorista Fuerza Popular (FP), 33% that it had infiltrated the Partido Aprista Peruano (PAP) and 22%, the ruling Partido Nacionalista (PN) — indeed 48% believed that there are contacts between the Humala government and past associates of Montesinos.

The broader threat

Montesinos himself has a history of links with drug traffickers, but the current wave of concern goes beyond montesinismo. In late April this year the two agencies in charge of organising and supervising the elections, the Oficina Nacional de Procesos Electorales (ONPE) and the Jurado Nacional de Elecciones (JNE) issued an alert about the likelihood that organised crime would try to influence the elections scheduled for October. Political analyst Jaime Antezana followed up with a claim that a six-month investigation had identified about 40 ‘narco-candidacies’ across the country.

In May antidrugs procurator Sonia Medina warned of the spreading influence of the drugs trade on ‘some high-level institutions [...] including the judiciary’. She called on the ONPE and JNE not to confine themselves to issuing an alert, ‘since it is their job to prevent this.’ She also urged Antezana to make available the names of the ‘narco-candidates’.

To illustrate the extent to which public institutions have been corrupted she cited the case of the Áncash regional government, where two-term regional president César Álvarez Aguilar has been arrested on suspicion of involvement in the 14 March murder of former regional councillor Ezequiel Nolasco. Investigations led to the arrest of a suspect who chose to become a protected witness and offered evidence that the region’s chief prosecutor was in the pay of Álvarez Aguilar.

The inquiry into the murder of Nolasco is running in tandem with another by the office of the anti-corruption procurator who is looking into allegations that Álvarez Aguilar was the head of a network that included two congressmen and two businessmen, plus a dozen other people involved in shady public contracts, shielded by a number of corrupt magistrates. Analyst Ricardo Uceda has noted that the murder investigation is proceeding far more rapidly than the anti-corruption one and warned of the risk that the latter could be obstructed, keeping the lid on ‘the black money that has enabled the huge political, media and judicial cover’ for criminal activity.

Greater military role?

The prospect of ‘narco-candidacies’ or other manifestations of drugs-trade influence on the political parties comes just as the government appears to be gearing up for a massive drive to eradicate coca plantations in the Apurímac-Ene-Mantaro valley (Vraem) and as it is contemplating the resumption of its long-suspended shootdown policy [SSR-14-03;04].

On 15 April the congress approved a law that allows the military to engage in the interdiction of drug shipments on land, sea and air. The law was promoted by the fujimorista legislator Carlos Tubino, who first submitted it in August 2011. Tubino say that it will ‘strengthen the state’s fight against drug trafficking’. Up to now the military deployed in the Vraem were barred from acting directly against the drugs trade — which, according to Tubino, meant that they could not destroy the ‘logistical support enjoyed by the narco-terrorists.’

Defence minister Pedro Cateriano has said that the executive will ‘analyse what is most convenient’ regarding the law. President Ollanta Humala has been more explicit. ‘The constitutional responsibility for the fight against drugs,’ he said, ‘does not lie with the armed forces but with the police [and] we believe that the police has the required capability to perform this task.’ The chairman of the defence committee in congress, Hugo Carrillo (PN), has said that the executive’s ‘observations’ would be evaluated.

Tubino argues that Humala has not read the text of the new law with enough attention. The law, he notes, ‘does not say that the military should replace the police but allows them to support the [police’s] interdiction efforts and the capture of the drug traffickers [...] In the Vraem the armed forces have 27 bases, while Dirandro [the police’s antidrugs directorate] has only one.’ On 20 May an executive decree extended the deployment of the military in support of the police confronting illegal miners in Arequipa, Puno and Madre de Dios.

On 12 May the newspaper El Comercio published an editorial that reminds Cateriano that the Tubino law had been submitted to his ministry for observations, and that amendments had been made as a result of those observations. It also points out that the law says the military should act, when confronting resistance, according to legislation that has been in place since 2010: legislative decree 1095, which governs the use of force by the military.

Another reminder followed: that legislative decree 826 of 1996 allows the navy and the air force to interdict drug shipments at sea or in the air, and to use force if they are resisted. This is the ‘shootdown’ law, which is still on the books though its application has been suspended since 2001 — and that prime minister René Cornejo said could be reactivated.

Published in Andean Group
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REGION: Too many small businesses?

Small enterprises are often believed to play a very positive role in developing (and developed) economies: they are associated with innovation, flexibility and the ability to seize new opportunities in a way that ponderous, process-bound large organisations cannot. So it is perhaps surprising to hear that one of the conclusions of a 2013 report by the Development Bank of Latin America (CAF), is that Latin America has too many small businesses.

According to the CAF report, entitled Emprendimientos en América Latina: desde la subsistencia hacia la transformación productive (2013), about one third of Latin America’s employed labour force (28%) is currently working in a small company of some kind.

In some countries, such as Honduras, the proportion rises higher, to around 45%. Pablo Sanguinetti, head of the CAF research team that wrote the report, doesn’t mince his words. “There are too many small companies in Latin America”, he says. His basic argument is that too many people end up working in small businesses, not from a positive desire to become an entrepreneur equipped with the necessary tools to succeed, but simply for a lack of alternatives. Because of this, many of these businesses bump along a survival path, unable to spread their wings and perform any kind of economic take-off.

The numbers in part explains the problem. Proportionately, there are many more small businesses in Latin America than in developed economies. While one in three Latin Americans are running his or her own business, the proportion in the US is only one in ten. This is linked to the much greater size of the informal and non-wage earning sector in Latin America. In the US, 80.4% of those in employment are wage earners, while in Latin America the average comes down to only 54.8%. Within this regional average, the proportion of wage earners relative to the total in employment in Latin America is lowest in Bolivia (37.2%), Peru (41.5%), and Colombia (41.7%). It is highest in relatively more developed local economies such as Argentina (71.3%), Costa Rica (70.6%) and Chile (68.5%).

Self Employment Not Necessarily An Aide To Development?

Source: CAF, data compiled from various years 2005-2012

The fact that many Latin Americans form small businesses as a survival strategy also skews the structure of the sector. Sanguinetti says over 90% of small businesses in the region are very small, with less than four employees. Within this group, the vast majority have no employees at all, but are single-person enterprises or cuentapropistas. “They are there, not because they are able to run a dynamic business, but basically because they have no other employment opportunities” Sanguinetti says. Given poor initial skills, low productivity, and limited or zero access to training, most of these companies are therefore unable improve their capacity and skills base, and in consequence are poorly placed to manage a growth transition to the formal, wage paying sector. This is described as an “informality/low productivity trap”. Of the total number of small businesses in the region, CAF estimates that only 25% - one in four – have the capacity to break out and achieve dynamic growth.

The report notes that its findings have important implications for economic policy. It suggests that some governments counter-productively use the tax system to limit the growth of larger, more productive companies, while offering incentives for the “creation and survival of micro-enterprises that provide employment only for the founder and a few family members, and which offer poor value added.” Instead, it recommends a “multidimensional approach” around promoting four key factors in the small company “ecosystem”: business talent, innovation, access to finance and skills training programmes.

Chile’s new mining minister, Aurora Williams, on 20 May said the Santiago government would continue to respect an environmental ruling blocking the development of the Pascua Lama gold mine.

The Pascua Lama gold and silver deposits straddle the border between Chile and Argentina in the Atacama region of the Andes. Canada’s Barrick Gold has a US$8.5bn development project for the mine, but it has been held up by environmental concerns on the Chilean side. Impatient with the delays, Argentina’s mining minister, Jorge Mayoral, has called on the Chilean government led by Michelle Bachelet to “put on its pants” and reach a decision over the mine’s future. Williams retorted that her government “has a very clear idea of how to act and react to projects like these”, and would respect environmental legislation.

The problem is that members of Chile’s Diaguita indigenous community have taken legal action against Barrick’s plans, arguing that it threatens their water supply and pollutes nearby glaciers. In May 2013, Chile’s environmental regulator ruled there were “very serious” violations of environmental regulations in the development plan presented by Barrick, which needed to be put right. In October, the company suspended work, partly because of the remedial work required to become compliant, and partly because of other issues such as rising costs and falling gold prices.

Barrick is reportedly back in talks with the Santiago government to get the project going again. This appears to have raised interest on the Argentine side, where Mayoral expressed his impatience for a decision. Rather undiplomatically, he also described Chilean and Peruvian mining policies as “failures” that Argentina would not copy, concentrating instead on a ‘national’ model, using domestic suppliers and technicians.

Chile’s refusal to be hurried may lead Argentina to decide to proceed alone with its side of the binational project (known as Lama), but this will be a smaller and more costly option.

  • A delicate matter for Bachelet

In her 2013 election campaign President Bachelet signalled a tougher stance on environmental issues. She has also made a point of seeking to improve relations with Argentina. Her first official overseas trip as president was to Buenos Aires, where she met her opposite number, Cristina Fernández. So the Pascua Lama issue is a tricky one for Bachelet.

Published in Postscript
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CUBA: First round of EU-Cuba talks

Negotiators from the European Union (EU) concluded an initial round of talks with Cuban foreign ministry officials in Havana on 30 April in preparation for a new bilateral political dialogue and co-operation agreement, expected to be inked in 2015. The Cuban team was led by the deputy foreign minister, Abelardo Moreno. Christian Leffler, head of the Americas at the European External Action Service (EEAS), said that the two sides had established “the general structure” for future talks and “the principal elements to be included”.

Leffler noted that political and economic issues would be the first priority on the agenda, hinting that EU concerns about civil liberties and democratic participation would be addressed later. He said the two sides had not touched upon the EU ‘Common Position’ on Cuba, dating to 1996, which conditions full relations on democratic reform on the island, and which the Cuban government rejects outright as sovereign interference. Despite the Common Position, some 18 EU member countries have their own bilateral cooperation accords in place with Cuba, which critics say makes the Common Position somewhat redundant in practice, if not in theory.

There has been mounting pressure for a shift in EU-Cuba policy in recognition and support of Cuba’s economic ‘updating’; the mass release of political prisoners in 2010 (supported by Spain); and other incremental changes including last year’s reform to migration rules. In a historic visit to the island in January (the first by a senior Dutch official since the 1959 Cuban Revolution), the Dutch foreign minister, Frans Timmermans, called for a “revision” of EU policy towards Cuba, while on 12 April Laurent Fabius became the most high-ranking French minister to visit Cuba for more than 30 years. Fabius, who met his peer Bruno Rodríguez and President Raúl Castro, said Cuba’s approval of a new foreign investment law was “encouraging”.

However, in a 10 February statement announcing the European Council’s adoption of negotiating directives for an agreement with Cuba, the EU’s High Representative for Foreign Affairs and Security Policy, Catherine Ashton, said: “This is not a policy change from the past. Just as we want to support reform and modernisation in Cuba, we have consistently raised human rights concerns which will remain at the core of this relationship”. In other words, the Common Position is likely to remain in place for now, potentially until a Cuban ‘transition’ in 2018, when Castro has pledged to step aside (and at which point the US might also be better placed to engage more actively with the post-Castro administration).

The European Commission and the EEAS are jointly overseeing the talks. Observers say that the inclusion of the EEAS signals the concern of pro-Common Position countries like Germany, Sweden, and some of the former Communist States like Poland and the Czech Republic, to ensure that human rights issues are prioritised. Leffler gave no date for the next round.

State companies given more autonomy

New regulations published in Cuba's official gazette on 29 April give Cuban state companies greater administrative and managerial autonomy, including allowing them to retain up to 50% of their earnings after taxes, 20% more than was cited when deregulation details for the state corporate sector were first unveiled back in July 2013. Companies will be permitted to sell surplus products at market prices to non-state third parties, and will be able to operate on the basis of plans approved by their boards, which will no longer be bound by the mandate of their respective ministry. Companies will be allowed to run their own payment systems, again free of consultation with ministries, and will no longer be obliged to return unused reserves to the government, but they will neither be allowed to import or export freely nor form mixed companies with private investors without prior government permission.

  • Economic tendencies

Retired World Bank consultant Carlos Quijano told a Miami conference on Cuba that there are three economic tendencies in Cuba: ‘“statists” who want to largely retain the current model; “economicists” [sic], who favor some type of market socialism; and democratic socialists who favor broader use of cooperatives’, according to a 10 May report on the conference in the Miami Herald.

Published in Caribbean
%PM, %07 %660 %2014 %14:%May

New body unearths old failings

Mexico’s education system needs a radical overhaul. That is the boiled down version of a report presented by the new institute for educational evaluation (INEE) to the senate on 29 April. The INEE, which was created under the education reform driven through congress by the government led by President Enrique Peña Nieto last year, exposed a series of severe challenges facing the education system. Sylvia Schmelkes, the president of the INEE, highlighted an unacceptably high school drop-out rate and child labour, but principally inequality in terms of access to quality education. Schmelkes said that programmes to address this were woefully inadequate.

The INEE report, simply entitled ‘The right to quality education’, was the first by the body since it was formally established under the secondary legislation to enact the government’s education reform last year. Schmelkes presented the report to the president of the senate, Raúl Cervantes, and senators representing all of the country’s political parties. Schmelkes called for more resources, and better targeting. “All additional spending in education should be channelled towards the poorest”, she said, while underscoring the principal point of the report which is that inequality, in terms of access, opportunities, infrastructure and teaching standards, is the principal problem facing the country’s education system.

Schmelkes said that the school drop-out rate is 20% at secondary school level and 40% at higher levels. The report said that this dramatically increased the risk of unemployment, as well as youths drifting into organised crime, while schools did not always provide the requisite climate of wellbeing, respect and security for pupils. Schmelkes said that it was imperative that the government improve funding and programmes to improve schooling, especially in poor, small, rural areas.

In the latest (2012) Programme for International Student Assessment (PISA) tests carried out by the Organisation for Economic Co-operation and Development (OECD), which assessed the competencies of 15-year-olds in reading, maths and science (with a focus on maths) in 65 countries, Mexico came last of the 34 OECD members. It came 53rd out of 65 countries assessed in maths, albeit of the eight Latin American countries that took part in the tests only Chile (just) fared better. Mexico also came 55th for science and 52nd for reading (see table below). PISA conducts the tests every three years. Schmelkes said Mexico had barely improved at all from one PISA assessment to the next. A total of 55% of Mexican pupils were below the basic competence level in mathematics; 47% in science and 41% in reading.

Programme for International Student Assessment (PISA) 2012
Maths Science Reading
Position Score Position Score Position Score
1 China 613 1 China 580 1 China 570
36 US 481 28 US 497 24 US 497
51 Chile 423 46 Chile 445 47 Chile 441
53 Mexico 413 51 Costa Rica 429 47 Costa Rica 441
55 Uruguay 409 54 Uruguay 416 52 Mexico 424
56 Costa Rica 407 55 Mexico 415 54 Uruguay 411
58 Brazil 391 58 Argentina 406 55 Brazil 410
59 Argentina 388 59 Brazil 405 57 Colombia 403
62 Colombia 376 60 Colombia 399 60 Argentina 396
65 Peru 368 65 Peru 373 65 Peru 384

The INEE argues that for Mexico to improve in the PISA rankings it needs to reduce inequality and end the differences within the State education system. There are big differences in the quality of education from state to state. The difference between pupils from the state with the best results —Aguascalientes— and the worst—Guerrero—is 70 points, the equivalent of almost two grades. In

Guerrero 80% of pupils were beneath the basic competence level for maths, 72% for science, and 69% for reading. The impoverished southern states of Tabasco and Chiapas were next worst and Schmelkes suggested that had Michoacán and Oaxaca taken part in the PISA tests they would have been right down there too.

Schmelkes said that behind “the differences between states […] another difference, of a socio-economic and cultural nature, is hiding”.

Schmelkes urged better training for teachers and more rigid adherence to a curriculum in the classroom. She also said that carrying out performance appraisals of teachers was essential to address regional differences in educational standards. The INEE’s remit includes setting the curriculum; designing and overseeing teacher training and recruitment; and introducing a meritocratic system of promotion, freeing teachers from “discretionary criteria” (which had allowed teacher posts to be bought and sold like goods in a store) by means of a ‘professional recruitment service’. Under the new evaluation system, teachers will have to undergo three performance assessments, and will be pushed into administrative positions for the rest of their careers (while retaining retirement pensions and other privileges) if they fail to make the grade.

Peña Nieto takes legal action against states

President Peña Nieto served notice of his determination to improve the standard of teaching in Mexico and the country’s poor international standing in late April by filing four constitutional complaints against the states of Chiapas, Michoacán, Oaxaca and Sonora before the supreme court of justice (SCJN) for failing to harmonise state education laws with his government’s education reform.

The legal suit filed by Peña Nieto specifically accused the Oaxaca state government of failing to adopt the precepts of the education reform in its legislation by the 12 March deadline, and of refusing to implement the secondary legislation creating a professional recruitment service to assess and continuously evaluate teachers. The performance appraisals are the aspect of the reform most reviled by the Coordinadora Nacional de Trabajadores de la Educación (CNTE), Mexico’s second largest teachers’ union, which organised disruptive protests in Mexico City against the education reform for weeks on end last August.

The Oaxaca state government approved a request by the CNTE to allow union delegates to evaluate teachers instead of professionals appointed by the federal government. Similar charges were brought by Peña Nieto against Chiapas, Michoacán, and Sonora which, while they changed their laws, allowed teacher performance appraisals to be performed by union delegates. Given the CNTE’s hostility to the appraisals, this is rather like allowing a prisoner to choose his length of sentence, and is a sure-fire way to ensure the preservation of the current corrupt system of hereditary posts or allowing retiring teachers to sell their positions.

Winning approval for his education reform was always going to be easier than implementing it for Peña Nieto, but having faced down the CNTE in Mexico City, he is adamant that states will not be allowed to dilute the reform through re-interpretation, or simply ignore aspects of it they dislike. While choosing to take legal action against the four states Peña Nieto would have also been acutely aware that his reputation for modernising Mexico could be fatally undermined if it becomes apparent that the first of his sweeping reforms, while impressive on paper, has amounted to little in practice.

  • PISA breakdown

In Mexico, the average performance in reading of 15-year-olds is 424 points, compared to an average of 496 points in other Organisation for Economic Co-operation and Development (OECD) countries. Girls perform better than boys with a statistically significant difference of 24 points. On average, 15-year-olds score 413 points in mathematics, the main topic of PISA 2012, compared to an average of 494 points in other OECD countries. Boys perform better than girls with a statistically significant difference of 14 points. In science literacy, 15-year-olds in Mexico score 415 points compared to an average of 501 points in other OECD countries. Boys perform better than girls with a statistically significant difference of 6 points.

  • Supreme court on education reform

Mexico’s supreme court must rule whether to compel the states of Chiapas, Michoacán, Oaxaca and Sonora to comply with the education reform promulgated by the federal government to the letter and adjust their laws accordingly, or whether to uphold their right to place their own interpretation on the reform.

Published in Education
%AM, %07 %475 %2014 %10:%May

El Salvador still debating gang truce

On 17 April El Salvador’s justice & public security minister, Ricardo Perdomo, proposed a new broader-scope and more ‘transparent’ agreement with “the gang leaders who still believe in the pacification process”. Perdomo urged them to “stop killing and extorting the population” and join “representatives of civil society” to work out the new pact.

This came after he had accused unnamed gang leaders of having ordered from prison attacks on “police, military and the civil population” which had resulted in the sharp increase in violent deaths in recent weeks.

Perdomo, however, has not ordered the return of the gang leaders to the maximum security prison of Zacatecoluca, from which 30 of them had been transferred in March 2012 to a more lenient regime as a counterpart to their agreement to call a truce.

Perdomo also blamed the judiciary for its resistance to invoke the anti-terrorism law against those responsible for attacks on police officers, prosecutors and judges. Recourse to the anti-terrorism law has been urged by chief prosecutor Luis Martínez and the deputy director of the national police (PNC), Mauricio Ramírez Landaverde.

From 1 January to mid-April there were 16 exchanges of gunfire with the PNC: three officers and 11 of the attackers were killed, 11 of them were injured and 51 were arrested. The institute of forensic medicine (IML) has reported that in the first quarter of the year there were 794 cases of homicide, 44% more than in the same period of last year. IML director, Miguel Fortín, attributes this to the police’s “slightly stronger position of confrontation with the criminals [and] a response from the criminals”.

The PNC reports that during the Easter holiday period (12-17 April), usually a period of increased violence, there were 51 homicide cases — 39% more than in 2013. This took the total since the beginning of the year to 945, an average of 8.9 per day as against six in the comparable period of last year (the average for the whole of 2013 was 6.8 per day).

A communiqué issued by the justice & public security ministry on 6 April said that “The PNC has information and evidence that the gangs have increased their criminal activity, expanded their organisation and presence across the territory, increased their social and institutional penetration, acquired more military-use armament and become more involved in the drugs trade”. This communiqué put the number of attacks against the police in the first quarter of the year at 47, compared with 30 in the same period of 2013.

Minister Perdomo said that the gangs were receiving ‘military training’ and were operating in coordination with the Mexican Gulf drug trafficking organisation (DTO), groups of Guatemalan drug traffickers and one that operates in Acajutla. The police, he said, was paying special attention to 39% of the recent homicide cases because their modus operandi was unusual and the perpetrators could not be readily identified as gang members. “We are investigating”, he said, “because we don’t yet know who is training the gangs”.

The only evidence cited in support of the purported ‘military training’ was the use of Uzis and M-16 rifles in some of the recent homicide cases. Perdomo also said that many members of maras were being hired as contract killers.

Defence minister David Munguía Payés said that military intelligence had detected that in certain parts of the country, such as Guazapa, San Vicente and Morazán, camps had been set up to train gang members. He dismissed claims that gang members had infiltrated the armed forces — but said that the vetting procedures for new recruits had been tightened to prevent any such development.

Rise and fall of homicide stats

Number of cases and rates[1]

Year       Cases    Rate       Year       Cases    Rate       Year       Cases

2004       3,897     64.5        2009       4,382     71.1      2014[3]   794

2005       3,882     64.1        2010       3,987     64.4

2006       3,928     64.6        2011       4,371     70.2

2007       3,497     57.3        2012       2,594     41.2

2008       3,179     51.8        2013[2]   2,490     39.6

1Per 100,000 inhabitants. 2Provisional PNC figures. 3First quarter, IML data.

Notes: Peak year in bold. Figures for rates have been rounded to one decimal.

Source: Alertamérica (OAS) save where indicated.

Published in Security Update
%PM, %29 %615 %2014 %13:%Apr

MINING: Mining bill proves contentious

Hopes for swift approval of a new mining bill unveiled by President Evo Morales in March [RA-14-03] were premature. Late-March protests by mining cooperatives (cooperativistas) over congressional changes made to the bill resulted in two deaths and forced President Morales to replace his mining minister. The incident has raised questions about the fate of the legislation, considered key to boosting Bolivia’s stalled mining sector.

The proposed legislation, the fruit of three years of talks between the government, the private sector, unions and cooperativistas, would replace the existing mining framework, approved in 1997 under the government led by Gonzalo Sánchez de Lozada (1993-1997; 2002-2003).

The cooperativistas specifically objected to an amendment to Article 151 of the proposed bill, which appeared to authorise cooperatives to sign independent mining contracts with private companies. On 29 March, the lower chamber of the plurinational legislature struck this out on the grounds that it was unconstitutional, stipulating that only the Bolivian State is in fact authorised to sign contracts with private investors to exploit natural resources. This led the cooperativistas to announce protests and stage road blockades in five of Bolivia’s nine regions - La Paz, Oruro, Potosí, Sucre and Cochabamba.

On 31 March over 50 people were injured (most of them police officers) in clashes between the protesters and police, while two cooperativistas died from gunshot wounds. The incident forced the executive to the table, no doubt mindful of threats made by Alejandro Santos, leader of the Federación de Cooperativas Mineras (Fencomin), which represents the cooperativistas, that “just as we brought Evo to power, so too can we remove him”. As well as replacing Mining Minister Mario Virreira (who had been in the post since January 2012 and as such was held responsible for the mining bill) with a trusted MAS ally, César Navarro (see below), the Morales team also held talks with Fencomin, announcing a compromise over Art. 51 on 21 April.

The compromise agreement establishes that cooperatives can form mixed companies with the state mining company, Corporación Minera de Bolivia (Comibol), but not with foreign or local private companies. At the time of writing, the government had yet to clarify whether it intended to make good on its earlier proposal to redraw the entire mining bill from scratch.

Cooperatives

According to figures from the deputy minister of mining cooperatives cited in the government mouthpiece Cambio on 25 April, as of end December 2013 there were 1,642 mining cooperatives in Bolivia, providing 114,920 jobs in the mining sector, or 88% of the total 130,932 jobs in the sector.

According to the same report, 7,902 people are employed by the state company Comibol, with the rest (8,110) employed by the private sector.

On 6 April Interior Minister Carlos Romero told reporters that in 2013, cooperatives contributed US$31.7m in mining royalties to treasury coffers (or 23% of the total), while the private sector contributed US$94.5m (70%) and the state US$8.4m (6%).

Profits

According to Bolivia’s deputy minister for the budget and fiscal accountability, Jaime Durán Chuquimia, state companies registered total profits of B$6.6bn (US$959m) in 2013, up from B$6.4bn (US$932m) in 2012 and B$69m (US$9.9m) in 2005. Of the 23 state companies currently operating in the country (up from six in 2005), Durán said that the state oil company YPFB accounted for an overwhelming 96.7% of the earnings, contributing B$6.4bn (US$932m). This was followed by the state mining company, Corporación Minera de Bolivia (Comibol), with B$297m (US$43m); the national electricity company Empresa Nacional de Electricidad (Ende), with B$187m (US$27m); and the mining company, Metalúrgica Vinto, with B$34m (US$5m).

Morales faces military revolt

Calls for reform of the armed forces (FFAA) from lesser-ranking military officials are proving an unexpected challenge for President Morales. To date 719 non-commissioned officers (NCOs) from the navy, army and air-force have been removed for “sedition and disrespect”.

The unrest began on 21 April after the president of Bolivia’s national association of NCOs and sergeants of the armed forces (ASCINALSS), NCO Johnny Gil Leniz, called a national strike in response to a decision announced the previous day by Defence Minister Rubén Saavedra to fire four NCOs who had been calling for internal reform of the FFAA. The sacked officials (two air force officials, one army official and a naval officer), had presented a proposal on 3 April citing the need to address “discrimination within the FFAA” against the mostly indigenous NCOs.

Among other things, the proposal calls for NCOs to be allowed the same educational opportunities as their seniors; for the ranks of NCO and sergeant to be replaced with the position of “technical officer”; as well as health and other benefits. The striking officers are now also calling for the ejected officials to be reinstated. The FFAA commander-in-chief, Admiral Víctor Baldivieso, on 24 April stated that “discrimination is not a pretext for sedition and promoting a coup d’état”.

There are currently 9,666 NCOs, while the latest (2014) Military Balance from the UK’s International Institute for Strategic Studies puts the total number of FFAA members at 46,000.

While Baldivieso, who assumed the post in December 2013, might have mentioned a “coup”, the Morales government is unlikely concerned that this “rebellion” will spread up the ranks.

Baldivieso’s predecessor, General Edwin de la Fuente, had raised eyebrows with his description of the FFAA as “socialist”, “anti-capitalist” and “anti-imperialist”, echoing comments made in November 2010 by then-head of the FFAA, General Antonio Cueto, and which were then repeated by his successor, General Tito Gandarillas, during his inauguration in January 2012. (The co-opting of the military by the government is characteristic of the regional left-wing integration bloc Alianza Bolivariana para los Pueblos de Nuestra América [Alba] set up by the late Venezuelan president Hugo Chávez [1999-2013]).

Instead the Morales government appeared more concerned that the unrest would spread to other sectors – particularly the police, which in 2012 staged revolts in demand of better wages and conditions. The day after Gil announced the strike, the government announced a deal with the national police association (ANSSCLAPOL) to increase daily food expenses for police officers to B$7 (US$1), up from B$4.50 (US$0.65).

While some organisations allied to the government like the Confederación Nacional de Mujeres Campesinas, Indígenas Originarias-Bartolina Sisa (CNMCIO-BS), one of the three main campesino groups, bought Saavedra’s line that the political opposition was behind the unrest, others like the main workers’ union confederation, Central Obrera Boliviana (COB), called for a solution to the conflict because “it is putting democracy at risk”. Meanwhile Albino García Choque, the leader of the national confederation of cooperatives (Concobol), expressed support for the NCOs.

  • Navarro

On 8 April Bolivia's Morales named César Navarro, the presidential delegate for the 2025 patriotic agenda, as his new mining minister. A former MAS deputy, Navarro, who previously served as deputy minister for coordination with social movements (2010-2013), is a trusted Morales ally. His appointment got a mixed response, however. While some highlighted his experience in dealing with social conflicts as useful, Senator Efraín Condori (MAS) questioned his lack of sectoral experience.

  • TA president sacked

On 10 April four of seven magistrates on Bolivia’s environmental court (Tribunal Agro-ambiental [TA]) voted to sack their president, Bernardo Huarachi, for inefficiency, replacing him with Judge Lucio Fuentes. Along with the plurinational constitutional court (TC), the supreme justice court (CSJ) and the council of magistrates (the judicial oversight body), the TA is one of Bolivia’s top courts. The move is the latest sign of crisis in the judiciary after the TC and CSJ presidents, Ruddy Flores and Gonzalo Hurtado respectively, stepped down in February [RA-14-02]. The justices were among the 54 senior judges elected in brand new national elections for the judiciary, held in October 2011.

Published in Bolivia
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