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  • URUGUAY in brief: Tax overhaul plan; Real wages increase

    24 April 2007 Hits: 486

    * Batlle comes up with tax overhaul.  The Batlle administration has finally submitted to congress one of the reforms the IMF had been urging upon it: an overhaul of the tax system, which has been predicated on the principle that a greater number of people should be forced to pay a smaller amount in tax. 

    The government proposes that the minimum rate of the value-added tax (VAT) be reduced from 14% to 12%, and that the tax's scope be extended to cover more items. 

    At present the minimum rate applies only to basic food items, medication, and tourism services, but the government wants it also to cover health services and long-life milk. 

    At the same time, the government has proposed that the basic VAT rate, of 23%, be applied to sales of petrol and diesel fuel in order to reduce the difference in price between the two products, which used to be taxed under the Impuesto Especí­fico Interno (Imesi). 

    The government also hopes eventually to lower the basic VAT rate to 19% and the minimum rate to 10%, but warned last week that such a reduction would not be possible until certain fiscal targets are achieved. 

    In order to cover the shortfall produced by the cuts in VAT, the government has proposed the establishment of a new tax, the Impuesto a las Rentas Empresariales (IRE), which will group together the current Impuesto a las Rentas de Industria y Comercio (IRIC) and the Impuesto a las Rentas Agropecuarias (IRA). The IRE will increase the number of taxpayers and the amount of tax paid by a wide range of professionals, including sole traders and university workers. 

    The government hopes that the measures will stimulate growth and pull Uruguay out of its long period of recession while ensuring that the fiscal deficit targets are met. 

    * Real wages in Uruguay increased by 0.74% in May; though minimal this has been celebrated as the first monthly rise since November 2001. The driving force behind the increase was the 2.26% increase in public-sector pay.

  • CAFTA: Bid to re-unify stances

    24 April 2007 Hits: 556

    The umbrella business association of Central America (Fecamco) has appealed to the presidents of the subregion to unify the positions of their respective countries as 'a matter of urgency' in the Central American Free Trade Area (Cafta) talks. Failure to do this, says Fenamco, could jeopardise the whole deal and put at risk the whole idea of regional integration. 

    With four rounds of negotiations to go, the Cafta trade talks have reached a crucial stage. In the last round, in Tegucigalpa, Honduras, Guatemala went out on a wing to offer the US better access to its market -tariff-free access for 75% of US products- than the other Central American states. 

    Guatemala's unilateral proposal caused serious friction amongst representatives at the talks and uproar in the press, but this is the first time an influential business group has petitioned the regional governments to resolve their differences. 

    In the petition, Fecamco says that regional businesses have 'invested their hopes in this treaty which will open up access to their main trading partner under a permanent scheme with clear rules.' It expressed serious concern at the Guatemalan government's proposal, which 'breaks the spirit of consensus,' and urged the other governments to heal the rift quickly. 

    Actually, even Guatemalan business associations thought their government had gone out on a limb. 

    What seemed to encourage the Guatemalan government was the apparent abandonment by the US of the notion that it wanted a unified Central American proposal to deal with. 

    This and all, by the end of last week the Guatemalan government was issuing discreet signals that it might, after all, seek to 'harmonise' its stance with the rest of Central America. 

    Others who at one point had imagined it expedient to tag onto the Cafta talks, like the Dominican Republic and Panama, appear now content with the idea of negotiating separate deals --which in any case Washington seems to prefer.

  • Inflation in the region

    24 April 2007 Hits: 393
    Inflation in the region
    Country
    Source
    March
    April
    May
    Last 12m
    Jan-Dec 2002
    Argentina Indec
    0.60
    0.10
    -0.40
    14.30
    41.00
    Bolivia INE
    0.06
    0.32
    0.02
    3.13
    2.45
    Brazil FGV
    1.66
    0.41
    -0.67
    30.05
    26.41
    Chile INE
    1.20
    -0.10
    -0.40
    3.50
    2.80
    Colombia Dane
    1.05
    1.05
    0.49
    7.73
    6.99
    Costa Rica DGEC
    0.65
    0.96
    0.52
    10.17
    9.68
    Ecuador Inec
    0.57
    0.97
    0.17
    8.25
    9.36
    El Salvador Min.Ec.
    0.30
    0.00
    -0.10
    1.60
    2.80
    Guatemala BCG
    0.43
    0.45
    0.25
    5.56
    6.33
    Honduras BCH
    0.40
    0.50
    0.10
    8.10
    8.10
    Mexico Bco.Mx.
    0.63
    0.17
    -0.32
    4.70
    5.70
    Paraguay BCP
    1.20
    1.20
    -1.20
    19.60
    14.60
    Peru INE
    1.12
    -0.05
    -0.05
    2.13
    1.52
    Uruguay DGEC
    1.24
    0.95
    0.37
    26.65
    25.94
    Venezuela BCV
    0.80
    1.70
    2.30
    35.00
    31.20
    US DOL
    0.60
    0.20
    0.20
    2.10
    1.60
    Previous: WR-03-25
  • The region's stock markets

    24 April 2007 Hits: 423
    The stockmarket in figures
    Market Index
    27.06.03
    04.07.03
    Variation (%)
    Buenos Aires Merval
    733.85
    727.28
    -0.90
    São Paulo Bovespa
    13024.12
    13273.65
    1.92
    Santiago IPSA
    1228.08
    1257.53
    2.40
    Bogotá IGBC
    2075.77
    2100.98
    1.21
    San José BCT
    12556.03
    12301.93
    -2.02
    Quito & Guayaquil Interinvest
    75.21
    75.17
    -0.05
    Mexico BMV
    7083.45
    7142.85
    0.84
    Lima ISVBL
    1826.61
    1843.51
    0.93
    Caracas BC
    13852.41
    14220.60
    2.66
    Source: Daily market reports.
  • CHILE: Mapuche court setback

    24 April 2007 Hits: 434

    Relations between the government and the Mapuche people have hit a new low after the supreme court overturned an appeals court ruling that three Mapuche leaders be acquitted of charges of terrorism crimes. The accused -the loncos (literally headmen) Aniceto Norí­n and Pascual Pichún and an indigenist activist, Patricia Troncoso- were imprisoned in December 2001. The appeals court ordered their release on 9 April but the supreme court ruled that it 'did not consider all the evidence.' 

    The three had been accused of setting light to a building and a pine forest in Traiguén in the southern region of Araucaní­a. The building belonged to former agriculture minister Juan Agustí­n Figueroa (1990-1994), a member of the constitutional tribunal and president of the Fundación Pablo Neruda. 

    The Mapuche leadership has rejected the supreme court ruling and accused the government, which was one of the appellants, of 'another set-up and political connivance' against the Mapuche people. 

    The government coalition, which has been ruling since 1990, has failed to keep its promise to the Mapuches for constitutional recognition of indigenous peoples. To be fair, this is not through lack of trying. Government proposals to this end were rejected by the senate in May. Since then armed Mapuche activists have moved in on nearly 20 privately-owned estates in Araucaní­a.

  • PARAGUAY: Feisty congress

    24 April 2007 Hits: 435
    The election of the new president of Paraguay's lower chamber of congress sparked a major row which led to the four opposition parties walking out in protest. The reason: a decision by the outgoing president of the lower chamber, Oscar González Daher, to overrule the swearing in of Eduardo Vera Bejarano of the opposition Partido Liberal Radical Auténtico (PLRA) as his replacement. González Daher supported the decision by an electoral judge of the appeal court to grant an injunction on Vera requested by Carlos Zena, also a Liberal. Zena had asked for the resolution of alleged irregularities in Vera's triumph in party primary elections for the PLRA in the central department of San Pedro, even though the top electoral court had already cleared Vera. The president of the supreme court, Bonifacio Rí­os, also cleared Vera of the charges and sent a note to congress saying he should be sworn in as the new president. Upon hearing the decision, Vera threw his chair at González Daher and stormed out of the building. He was accompanied by all the PLRA legislators, except Zena and Osvaldo Ferrás, and all the legislators from the other opposition parties, Paí­s Solidario, Movimiento Patria Querida and Unión Nacional de Ciudadanos Eticos. The session continued and the 42 legislators left in the lower chamber (half plus two) elected the candidate of the ruling Partido Colorado, Benjamí­n Maciel Pasotti as the new president of the chamber.

  • VENEZUELA: How many referendums?

    24 April 2007 Hits: 707

    The Venezuelan opposition would have liked a package version of the constitutionally available mandate-revocation (or recall) referendum, so they could vote out not only President Hugo Chávez but all of his régime, including pro-Chávez legislators, state governors and local authorities. 

    This no longer seems possible. The Consejo Nacional Electoral (CNE), has so far approved only three of the applications for referendums on whether the heads of municipal and regional governments should remain in office. The three are: for the governor of the state of Nuevo Esparta and the municipalities of Montalbán in the state of Carabobo, and Libertad in the state of Anzoátegui. 

    The opposition had entertained plans to gather the signatures necessary to hold referendums on 53 leaders. Whether any referendums will be held will be a matter for the new CNE, which is currently being assembled by the national assembly (see above).

  • Exchange rates

    24 April 2007 Hits: 245
    Exchange rates
    Local currency per US$1
    COUNTRY CURRENCY
    Year ago
    Previous
    Current
    28.06.02
    27.06.03
    04.07.03
    Argentina peso
    3.82
    2.82
    2.81
    Barbados dollar
    2.00
    2.00
    2.00
    Belize dollar
    2.00
    2.00
    2.00
    Bolivia boliviano
    7.17
    7.68
    7.69
    Brazil real
    2.82
    2.87
    2.84
    Chile peso
    686.10
    702.00
    701.00
    Colombia peso
    2,398.46
    2,812.24
    2,815.31
    Costa Rica colón
    359.77
    398.53
    399.33
    Cuba peso
    1.00
    1.00
    1.00
    Dominican Rep. peso
    17.88
    31.20
    32.94
    Ecuador dollar
    1.00
    1.00
    1.00
    El Salvador colón
    8.75
    8.75
    8.75
    Grenada EC dollar
    2.70
    2.70
    2.70
    Guatemala quetzal
    7.92
    7.94
    7.93
    Guyana dollar
    180.50
    180.50
    180.50
    Haiti gourde
    27.20
    --
    --
    Honduras lempira
    16.30
    17.52
    17.54
    Jamaica dollar
    48.20
    --
    --
    Mexico nuevo peso
    10.08
    10.50
    10.48
    Nicaragua córdoba oro
    --
    15.25
    15.28
    Panama balboa
    1.00
    1.00
    1.00
    Paraguay guaraní­
    6,050.00
    6,220.00
    6,175.00
    Peru nuevo sol
    3.51
    3.47
    3.48
    Suriname guilder
    2,178.50
    --
    --
    Trinidad & Tobago dollar
    6.09
    --
    --
    Uruguay nuevo peso
    20.00
    27.80
    27.50
    Venezuela bolí­var
    1,371.25
    1,600.00
    1,600.00
    Sources: EFE; Bank of America.
  • Sendero guerrillas deal heavy blow to elite commando unit in Ayacucho

    24 April 2007 Hits: 690

    When the Peruvian government sent several hundred army and marine commandos to help track down a column of Sendero Luminoso (SL) guerrillas, details -even numbers of troops involved- were not divulged on the grounds that it was necessary to retain 'operational secrecy'. This secrecy was breached almost instantly by their prey: on 10 July the senderistas encircled and attacked a force of three combined army-marine patrols, killing an army major, a marine officer, three NCOs and two civilian ronderos (self-defence militia), and injuring 10. This was the highest number of casualties suffered by the Peruvian military for many years. 

    It came just as the government had reiterated its official line that there was no such thing as a 'resurgence' of SL -just a 'reactivation' of small groups that would soon be stamped out. Statistically at least, SL did resurge: officers of the antiterrorist police directorate, Dircote, began to estimate the number of senderistas prowling the departments of Ayacucho, Huancavelica, Apurí­mac and Juní­n (all still under state-of-emergency rules) at 330, an almost threefold increase from what defence minister Aurelio Loret de Mola had ventured the day before the attack. 

    The clash took place near the village of Matucana, some 600 kilometres southeast of Lima, in coca-growing country. Ronderos from Matucana reported that a senderista contingent of perhaps 50 had turned up to buy supplies. 

    Their accounts confirm previous reports. The guerrillas harangued the population, underlining that SL no longer attacked civilian targets, only the military, and that it was in favour of coca-growing.
    An additional detail was that the group was surprisingly well armed, with Israeli assault rifles, grenade launchers and heavy machineguns. 

    First Vice-President Raúl Diez Canseco announced that the government's response would be a 'frontal' attack: 'We know where they are moving, and we have to attack them frontally.' 

    The version leaked to the press is that the main target will be the areas of San Marín de Pangoa and Vizcatán, described as a hitherto 'impregnable bastion of SL. The 'frontal attack' will involve sending in a large number of ground troops, preceded by an aerial bombardment.

    General José Graham Ayllón, commander of the central military region, has set up forward headquarters at the military base of Pichari, not far from where the recent clash took place.

  • PERU: Background to the return of Sendero

    24 April 2007 Hits: 1059

    UNCLEAR FACTOR: RELATIONS BETWEEN SL FACTIONS  

    International attention was drawn to the reemergence of Sendero Luminoso (Shining Path, SL) by the 9 June kidnapping of 71 members of a pipeline-laying team in the south-central department of Ayacucho --the birthplace of the SL insurgency 23 years earlier. Within Peru, though, the issue had been the subject of heated discussion since the beginning of the previous month, when the US State Department issued a warning to its nationals to beware terrorist acts between 17 May and 24 July.  

    The warning was not the product of extraordinary prescience or even good intelligence. The US had become sensitised to SL since March 2002, when it set off a bomb in front of the US embassy in Lima, just before the arrival of President George Bush Jr. In the past, SL had made it a practice of staging spectacular actions at this time of year, when it celebrated the anniversary of the beginning of its 'armed struggle' in the Andean locality of Chuschi, in 1980.  

    The State Department warning was dismissed as an exaggeration by the Peruvian government (and by many local experts on insurgency and related matters). However, the debate was fuelled later in the month, when countrywide protests and riots led the government to declare a state of emergency: the hand of SL was descried in these events, particularly behind the teachers' strike, by officers of the police's antiterrorist directorate, Dircote, and even by prelates of the Catholic church.  

    After the July mass kidnapping, past and present members of the security services knitted together the activities of the senderista groups still devoted to armed struggle and the prospect of imminent release of many others currently serving prison sentences, who are ostensibly aligned with the 'political solution' advocated by their historic leader, Abimael Guzmán. Interpretations by experts within and without the security apparatus became very contradictory.  

    In the upper reaches of government, officials began to oscillate between restating their earlier line that there was no such thing as a resurgence (rebrote) of SL and accepting that there was a 'very worrying' new trend.  

    The March 2002 bombing. Until very recently the official line was that all that remained of SL was a small remnant, linked to the coca economy in the valleys descending eastward from the Andes, who engaged sporadically in acts of violence. The prevailing attitude was that they were more of a nuisance than a threat, and this continued to be the case after the March 2002 bombing.  

    From the government's point of view, what most mattered regarding that incident was that the police had tracked down and arrested eight of the alleged perpetrators. However, one of the prosecutors handling that case, Marí­a del Pilar Peralta, says that the investigation turned up a revealing detail. Most of those arrested belonged to SL's northern regional command, reputedly led by Darnon Flores (aka Norman), who was based somewhere in the department of Ancash, north of Lima. The planning of the attack, though, appeared to have been the handiwork of SL's central regional command, headed by 'Artemio', whose base was somewhere in the coca-growing Upper Huallaga valley.  

    This not only suggested a higher degree of organisational sophistication than imagined at the time, but also appeared to establish a link between the residual 'armed struggle' faction and those areas north of Lima --the departments of Ancash and La Libertad-- where the senderistas had been considered involved wholly in 'political' work, most notably proselytising in places like the Universidad Nacional del Santa, in Chimbote. The spread of SL influence to these 'non-traditional' areas is considered to have radiated from networks built around the Picsi prison in Chiclayo, in the northwestern department of Lambayeque.  

    Mistaken identity. In early June, before the mass kidnapping, Marco Miyashiro, head of Dircote, claimed that the striking teachers' union, Sindicato Unitario de Trabajadores de la Educación de Perú (SUTEP) had been infiltrated by 'a faction of Sendero Luminoso [called] Patria Roja.' He also said that Patria Roja had links, possibly even financial, with the Farc guerrillas of Colombia.  

    This is the repetition of a claim floated a year earlier --as 'uncorroborated information'-- by Juan Velit, head of the Central Nacional de Inteligencia (CNI; state intelligence agency), who also said at the time that Farc guerrillas had entered Peruvian territory 'with uniforms and ID, almost like a regular army.'  

    It is also based on a mistake: Patria Roja, like SL, was a splinter of a Maoist splinter of Peru's Communist party, which has long been devoted to legal politics (and because of this is reviled by purist senderistas).  

    Following the mass kidnapping in June, President Alejandro Toledo stated publicly that there was no evidence of links between the Farc and SL.  

    Beyond the kidnapping. The 9 June kidnapping, which ended with all hostages freed unharmed the following day, was a departure for SL, which unlike other guerrilla groups in the region had not previously engaged in abductions for ransom. The government and the company involved, Techint of Argentina, say that no ransom was paid: police sources and hostages have said the contrary.  

    In any case, this episode was followed by a string of actions across the departments of Apurí­mac, Amazonas, Ayacucho, Huánuco and Juní­n (ambushes, clashes between guerrillas and security forces, multiple holdups of vehicles) that suggested a force greater than the 130-or-so senderistas the government had been estimating.  

    The authorities deployed a large force of élite troops to reinforce police in the area, to some effect: on 4 July the army killed SL leader Ví­ctor Quispe (aka 'Martí­n'), suspected of participation in the June mass kidnapping, and the following day police arrested Florentino Cerrón Cardozo, one of the few members of SL's central committee still at large since Guzmán's capture in 1992.  

    According to Dircote chief Miyashiro, the only remaining member of that central committee still at liberty is 'Artemio', the head of the central regional command who led the Techint kidnapping.  

    Abimael enigma. This leaves unclear the current relationship between the different factions of SL. Colonel Benedicto Juárez of Dircote maintains that, from prison, Abimael Guzmán is directing operations to 'test the waters': his overt commitment to a 'political solution', he says, is just a sham --in his view the real aim continues to be 'the conquest of power through armed struggle.'  

    This interpretation is not shared by many in Peru's cohort of experts on SL and guerrillas generally: most tend to consider the split between factions quite real.  

    In any case, it should be kept in mind that before it first initiated armed action 23 years ago, Sendero spent a decade devoted to preparing the political groundwork.

  • VENEZUELA: 'Caracas about to buy 50 MiGs'

    24 April 2007 Hits: 855

    CLAIM IN BOGOTA DISMISSED AS PROPAGANDA  

    When Juan Manuel Santos claimed quite categorically that Venezuela was about to close a purchase of 50 MiG fighter-bombers, even many sceptics hesitated before dismissing the notion out of hand. Santos, a former Colombian minister of foreign trade, briefly a designado (stand-in for the President), member of the family that owns the Bogotá newspaper El Tiempo, and cousin of Vice-President Francisco Santos, is usually considered a well-informed person.  

    He was not the originator of the story: it had been making the rounds of the media, though a much smaller number of MiGs had been mentioned. Santos made a point of insisting on his figure as accurate. He added that Venezuela had insisted on having the planes fitted with the most up-to-date equipment and weaponry.  

    Santos did not say from whom Venezuela was supposed to be buying the MiGs, but the implication of his emphasis on state-of-the-art fittings was that this was not a purchase of 'surplus' aircraft from some former member of the Soviet Union.  

    Another implication is that this would strengthen Cuba's influence over President Hugo Chávez , as the readiest source of MiG pilots to act as trainers is Cuba.  

    'Triangulation' counterclaim. Venezuelan foreign minister Roy Chaderton says that the story, which is false, is no more than 'a montage [...] designed to exacerbate extremist groups in Colombia and Venezuela.'  

    Chaderton suggested that it was part of a 'triangulation' effort between Santos, 'a US person with high official rank' and a Colombian TV station which is 'hostile to Venezuela'. Though he did not name the US official, the context made it clear that he was referring to special envoy Otto Reich, who days ago told an Italian journalist that Washington's greatest worries in Latin America 'come from Cuba and Venezuela.'  

    The TV station is Radio Cadena Nacional (RCN), which last week published a report claiming to reveal links between Colombia's Farc guerrillas and a Venezuelan NGO, Renacer. As to Santos, Chaderton recalled that when he was a minister, Santos had praised the 2002 coup that briefly deposed Chávez , and that, once Chávez had been reinstated, he 'continued to support the coup-mongers.'  

    Military sources in Caracas also dismiss Santos's claim, on the grounds that it would make no sense for Venezuela to shift from Nato to non-Nato equipment. One pointed to the long-term headaches caused in Peru by a military government's decision in the 1970s to buy Soviet military hardware as a gesture of independence from the US.

  • COLOMBIA: Uribe referendum OK'd, with a catch

    24 April 2007 Hits: 698

    VOTERS WILL HAVE TO DECIDE ON EACH ITEM SEPARATELY 

    Depending on which way the legal arithmetic is read, President Alvaro Uribe has just been given, by the constitutional court, the go-ahead for his most important project -a referendum on drastic cost-cutting and political reform- or he has been saddled with one of the most improbable political challenges of his presidency. 

    There was, last week, a sigh of relief in Colombian officialdom at the fact that the constitutional court did not throw out en bloc Uribe's referendum draft. On 9 July the court issued a ruling approving 15 of the 19 points in Uribe's draft. 

    Then came the second thoughts. One of the four items ruled out by the court was the government's provision for voters to approve or reject the package as a whole. The court said that voters should be able 'to choose with clarity and vote point-by-point each question.' 

    Also thrown out was Uribe's proposal to extend the mandates of local governments, so as to save the inconvenience and cost of elections. Elections for governors, mayors and town councillors whose mandates run out in December will take place in October. 

    A personal setback for Uribe was the rejection of a hobby-horse of his that few of his own team share: the penalisation of drug possession for personal use -he intends to insist on this via congress. 

    A huge challenge. The government will have to persuade 25% of the electorate (about 6m people) to turn out -in a country where clearcut presidential contests rarely draw half of the voters to the polls. Without that minimum, nothing the voters choose is worth anything. 

    Even with that minimum, each proposal must attract 50%-plus-one of the votes cast in order to pass. Invamer Gallup surveys suggest that all 15 questions would be approved -but that only about 5m voters would turn out, rendering the entire exercise moot. 

    Other opinion polls suggest that most of the public has no knowledge of the content of the referendum -a fact the government was well aware of; hence its insistence on a formula of blanket approval or rejection, which would allow a simpler play. 

    President Uribe has put a brave face on the constitutional court's refusal to allow this. He quipped, 'This will oblige us to do quite a bit of pedagogy in these months.' 

    It is quite a challenge: pollsters suggest that it would take each voter close to half-an-hour to scan intelligently through all 15 questions and arrive at a decision -and this is more than the electoral system is designed to cope with. 

    There is not much time, either, to educate the public, as the legal window for this referendum is both soon and narrow: between the second week in August and the first in December.

  • VENEZUELA in brief: Exchange controls; Bond issue

    24 April 2007 Hits: 619

    President Hugo Chávez announced over the weekend that Venezuela's exchange controls will remain in place. For the past six weeks the government has been hinting that it would overhaul the system. Chávez said that the system would be made more flexible, but the essence of it would remain. 

    The government introduced exchange controls at the beginning of February. The purpose was to prevent the haemorrhaging of foreign exchange. The controls have been effective and foreign exchange reserves have recovered from the dangerously low levels (verging on US$10bn) they had hit at the end of January; they were back at more secure levels of over US$16bn. Chávez said that now this had happened the tourniquet could be loosened. 

    Business has been grumbling at the shortage of foreign exchange. There is no evidence that the exchange controls were targeted at particular businesses: everyone seemed to suffer indiscriminately. Chávez said that US$50m in foreign exchange would be made available to importers. He also paid lip service to the idea that Venezuela would clear its US$300m debt to Colombian suppliers. He said that although Venezuelan businesses were asking for the dollars, if they weren't available they would have to find some other way to clear the debt. 

    The government of Venezuela is about to test whether its international creditworthiness has really improved, as one credit rating agency asserts. The finance ministry says that it has commissioned Credit Suisse First Boston and Morgan Stanley to sound out investors about a 10-year bond issue for about US$2bn. The ministry said that part of the money will be raised by reopening a euro issue. 

    The rating agency in the spotlight is Fitch, which last month bravely raised its rating on Venezuela from CCC+ to B-. The agency argued that the government deserved credit for restoring oil production so quickly. Others may look askance at the continuing gridlock in congress, which remains unable to select a new electoral council.

  • COLOMBIA: US military aid, continuation & challenge

    24 April 2007 Hits: 1998

    It now appears that Colombia will lose even less US military aid than expected. On 8 July the State Department certified to the US Congress that Colombia had met the human rights standards set by the legislature, and that in consequence it will be receiving US$31.6% of this year's US$252m programme. 

    This, State underlined, is unaffected by the military aid cut-off due to non-signing of a bilateral agreement shielding suspected US war criminals from prosecution by the International Criminal Court (ICC). That means that Colombia might yet get another US$31.6m if it passes the second human rights test this year. 

    Meanwhile, the Colombian judicial system seems to be determined to test Washington. The chief prosecutor's office has asked the US to find and deliver three US airmen suspected of having been responsible for a 1998 aerial bombing that killed 17 civilians. The Colombian air force pilots who dropped the cluster bomb say that they were given the coordinates by these privately-contracted US crew members.

  • COLOMBIA: Uribe caught off guard by deficit

    24 April 2007 Hits: 601

    President Alvaro Uribe warned on Friday that the government might have to revise its tax plans after having discovered that it is likely to face a fiscal deficit of Col$2.5tn (US$888m) in 2004. 

    [Later, finance minister Alberto Carrasquilla said that he expected the fiscal deficit to reach Col$3.3tn (US$1.15bn) next year -33% higher than Uribe's figure. This will jeopardise the IMF-set target for 2004 of a fiscal deficit worth no more than 2.1% of GDP.] 

    Uribe's announcement reveals what is essentially a simple miscalculation by Bogotá. To the surprise of economists, given the strong growth in the first part of the year, the government is now struggling to provide adequate funds for social security and defence. 

    A salary freeze for public sector workers and a temporary restructuring of pensions are among the options being considered by the president. Uribe is thought to favour two other solutions to deal with the forthcoming fiscal deficit. He wants either to issue new bonds or to bring forward an increase in Colombia's value-added tax, which was initially scheduled for 2005. 

    As Colombia has recently won plaudits from the IMF for its efforts in dealing with the debt burden, the government is unlikely to indebt itself further by issuing new bonds. This makes bringing forward the 2% VAT hike the more attractive option, despite the impact it will have on the consumer. Moreover, a jump in VAT will also have an inflationary impact at a time when Colombia's central bank appears to have got on top of the problem. 

    In June consumer prices fell 0.05% month-on-month -the sharpest drop since 1988. The drop, which was well below market forecasts for a 0.07%-0.37% rise, was due largely to a bumper harvest which brought food prices down 1.06% from May's figure. 

    The central bank's strategy appears to be paying off. Having raised interest rates by a single percentage point in late April, in an attempt to meet the 5.5% inflation target for this year, inflation for January-June stood at 5.01% -down from 5.06% in the first five months of the year.

  • BOLIVIA: Morales - 'consituent assembly or revolt'

    24 April 2007 Hits: 631

    MST BACKS DOWN ON INVASIONS AND AGREES TO TALK 

    The big MST landgrabbing offensive fizzled out last week when the government, following a show of force at one of the ranches occupied by the movement of landless peasants (WR-03-26), agreed to negotiate. No sooner had this happened than the government's nemesis, coca-growers' leader Evo Morales, was launching a new attack on a different flank, this time wearing his political hat as leader of the Movimiento al Socialismo (MAS). 

    The government of President Gonzalo Sánchez de Lozada countered the MST's campaign with three simultaneous moves. First, the demonstration that it was in earnest about evicting occupiers by force if necessary. Second, the distribution of communal titles to 'ancestral' lands of Quechua communities (22 were handed out last week, amid proclamations that this represented the satisfaction of 'genuine' indigenous aspirations). 

    Third and decisive, the government agreed to talk to the MST leaders, putting on the table its 'detection' of more than 500,000 hectares of state-owned land that could be distributed to landless peasants. 

    This falls well short of the 12m ha the MST has been citing as the minimum necessary, but it is a starting point. 

    Evo's new tack. As the land squats were being abandoned, in congress Evo Morales was renewing his campaign demand for a constituent assembly to rewrite Bolivia's constitution. He reminded legislators that not only the MAS but also the Nueva Fuerza Republicana (NFR, third in last year's presidential contest) had promised a constituent assembly. Together, he noted, they could muster the two-thirds' majority required to approve a constitutional amendment calling elections for an assembly. 

    Morales says that the existing constitution supports the 'hegemony of the traditional and rightwing parties'. What Bolivia needs, he says, is a 'refounding'. 

    If congress doesn't act, he warns, 'the people will [...] in an uprising like that of 1952.' 

    The subtext: a constituent assembly can declare itself sovereign and terminate existing mandates.

  • ECUADOR: Once again Pachakutik threatens pullout

    24 April 2007 Hits: 1051

    PROSPECT OF PSP-PSC DEAL PROMPTS TALK OF REALIGNMENT 

    President Lucio Gutiérrez's tactic of joining forces with the conservative Partido Social Cristiano (PSC) to attack former President Rodrigo Borja (WR-03-25) may have backfired, nullifying the breather he had achieved by agreeing to some of the demands of the indigenous confederation, Conaie. 

    Over the past few days his coalition ally, Pachakutik (the indigenous party sponsored by Conaie) has renewed its threats to go into opposition, on account of what they see as a clear tilt of Gutiérrez's Partido Sociedad Patriótica (PSP) to the right. Most vocal in the denunciation of the 'PSP-PSC pact' is Pachakutik leader Virgilio Hernández, who resigned as deputy interior minister a fortnight ago. 

    The leader of the Pachakutik bloc in congress, Antonio Posso, has already been floating the possibility of an alliance in congress with Borja's party, Izquierda Democrática (ID), the Movimiento Popular Democrático (MPD, which last week pulled out of the ruling coalition), the Socialists (PS), Democracia Popular (DP), Partido Roldosista Ecuatoriano (PRE) and even the Prian, party of banana magnate Alvaro Noboa. The trigger for this alliance would be a formal PSP-PSC entente. 

    This may well be no more than a negotiating gambit: this week the top leadership of Pachakutik has a meeting scheduled with Gutiérrez to discuss the future of the coalition.

  • ECUADOR: IMF-agreed civil service reform bill

    24 April 2007 Hits: 683

    Ecuador's President Lucio Gutiérrez has sent part of an IMF-agreed civil service reform bill back to congress with an 'urgent' tag, which gives congress 30 days to approve or reject it. 

    Passage is necessary to secure a US$42m disbursement from the IMF. This latest change of tack has irked already disgruntled legislators (see story above), who are due to begin their month-long summer recess today. 

    Gutiérrez had originally tagged the whole reform bill 'urgent' but backed down after congressmen complained there wasn't enough time for proper consideration. 

    Last week Gutiérrez withdrew the bill and sent back a portion which regulates the civil service and seeks to improve its efficiency, with the 'urgent' tag attached. 

    The idea is that the remainder of the original bill, which unifies a range of pay items for state employees, will be submitted after the summer recess.

  • ARGENTINA: Corrupt healthcare service is taken over

    24 April 2007 Hits: 2112

    FEDERAL INTERVENTION FREES HANDS OF KIRCHNER'S APPOINTEE 

    In another change of tack, President Néstor Kirchner decided that he would, after all, use the power given him by congress and 'intervene' (place under federal administration) Pami, the corruption-ridden state healthcare system for pensioners (WR-03-24). 

    Placed in charge was the executive's representative on the board (and its chairman), Juan González Gaviola -so what this move means is that he will, for the next six months, not be fettered by the formalities of consultation with the other directors. 

    This is important, because in this period González Gaviola is expected to draw up plans for a complete overhaul of Pami, which will include reducing the representation of the unions on the board. 

    These are expected to put up considerable resistance, as they did earlier when González Gaviola asked them to reduce their US$1,000-a-month salaries. 

    Long-haul reform. Pami, which manages an annual budget of Arg$2.7bn (US$960m), is weighed down by a debt of Arg$1.8m (US$640,570). Its payroll has been inflated with people who draw salaries but do no work; the fees it pays for services have often been fraudulently inflated and huge healthcare provision contracts have been awarded to friends of the directors. 

    The intended beneficiaries, pensioners who must on average survive on Arg$210 (US$75), must frequently endure long waits for treatment. 

    González Gaviola has said he intends to decentralise the administration of the system, review all appointments and seek to promote the ablest and most experienced employees. With the unions, he says, he will have 'mature conversations' to redefine their participation. He is already warning, though, that straightening out the service will take some time: 'No-one should expect miracles overnight.'

  • ARGENTINA: Crackdown on US$100m car-theft business

    24 April 2007 Hits: 2693

    A CRIME ASSOCIATED WITH 40% OF ALL HOMICIDES 

    To deal with what governor Felipe Solá describes as 'a state of security emergency' in the province of Buenos Aires, the central government has agreed to deploy 2,000 agents of two federal agencies, the Gendarmerí­a (paramilitary border police) and Prefectura Naval (riverine police and coastguard) to assist in an anti-crime drive which will first target auto theft. 

    This is not meant as a sop to the middle-class victims of this crime: car theft, a US$100m-a-year enterprise, is at the core of other headline crimes. It accounts for 40% of all homicides -and 80% of all killings of policemen. 

    On average, 11,000 cars are stolen every day in the province of Buenos Aires. Over the past year the provincial police recovered more than 25,000 vehicles and arrested more than 3,000 people involved in either stealing them or breaking them down for spare parts. 

    The latter is by far the biggest part of the business. Breakers' yards pay car robbers Arg$300-500 (US$107-179) per vehicle; they then sell the individual parts for the equivalent of Arg$10,000-15,000 (US$3,570-5,357) per vehicle. 

    One major yard in the city of Trenque Lauquen was found to have about Arg$30m (US$11m) worth of car parts in its store rooms, ready for shipment to various parts of the country. 

    In the first weekend of the offensive against the car-theft business, the Buenos Aires provincial police recovered 40 stolen vehicles and made 40 arrests.