All Categories

The Dominican Republic (DR)’s ruling Partido de la Liberación Dominicana (PLD) has opted to amend the constitution to allow for consecutive re-election in a bid to permit President Danilo Medina to seek a second term in next year’s general elections. As anticipated, the move is proving controversial both within the ranks of the PLD and the political opposition [RC-15-05]. But the decision has also led other local organisations to warn the government and legislators against exclusively focusing on the re-election issue while neglecting other pressing matters.

The PLD decided to push for constitutional reform after its political committee (CP) held an extraordinary meeting on 19 April to discuss the issue. Although the proposal to amend the constitution drafted under the PLD government led by former president, Leonel Fernández (1996-2000; 2004-2012), to benefit Medina came from within the PLD, it has divided the ruling party. Those opposed include none other than acting party president Fernández, who has been clear about his presidential ambitions for 2016, as well as other presidential hopefuls. But Medina is proving to be so popular that he has developed a loyal following of his own within the party which sees him as the one candidate able to ensure that the PLD retains power in the next elections. It appears that Medina’s supporters presented a convincing enough argument, as the CP voted (25 to 10) in favour of presenting a constitutional reform bill to the national congress.

However, the CP’s decision was not unanimous and it has been criticised by various PLD leaders (including Vice-President Margarita Cedeño, who happens to be Fernández’s wife, and various PLD senators) who complain that constitutional reform is unnecessary and should not be a priority for the government. Meanwhile the opposition has raised concerns that the proposed reform undermines existing constitutional checks and balances designed to promote the democratic principle of the alternation of power. The objections against the reform proposal sparked intense speculation that the bill could be defeated in the national legislature, even though the PLD holds majorities in both houses of congress.

Since the CP’s decision, supporters of the reform have moved quickly even if the PLD’s full support in congress is not assured (a qualified two-thirds majority would be needed to pass the constitutional reform bill) and its discussion could produce a major rift within the ruling party. A special commission led by PLD party secretary, Senator Reinaldo Pared Pérez, drafted a reform bill and submitted it to the senate on 30 April. The senate quickly agreed that the bill should be evaluated by a bicameral commission in order to expedite its passage. This bicameral commission began analysing the bill on 6 May. But the bill’s submission has exacerbated opposition to plans for the reform. It prompted the PLD-aligned party, Fuerza Nacional Progresista (FNP), to quit the government on 22 April over its disagreement with the plans (see sidebar). Then on 6 May the Movimiento Democrático Alternativo (Moda), another PLD-aligned party, warned that if the PLD continued with its plans to force through a constitutional reform, it too would end its support for the ruling party in congress.

Meanwhile the business lobby, Asociación Nacional de Jóvenes Empresarios (Anje), is demanding that rather than focusing on constitutional reform, the Medina government and national congress should focus on delivering some other relevant pending initiatives such as inking an ‘electricity pact’ with the country’s electricity producers that could help bring an end to the sector’s long-running crisis; to improve education quality as Medina promised to do after assuming office; and the approval of new legislation regulating political parties, that tightens controls on campaign financing among other things, that remains stuck in congress. Anje’s call (in particular the demand for the approval of new legislation regulating political parties) was immediately echoed by the likes of the national lawyers association (Cona) and the Fundación Institucionalidad y Justicia (Finjus), an NGO, which said that these should be priority issues ahead of next year’s elections.

• FNP quits

After issuing a statement outlining the FNP’s disagreement with the proposed constitution reform, on 22 April FNP president Marino Vinicio Castillo announced that the party was quitting the government. Castillo, who presided over the government's ethics directorate, as well as three other FNP government officials- the energy & mining minister, the head of the national border council and the head of the migration directorate- all resigned. President Medina appointed new officials to these posts on 29 April. PLD members Antonio Isa Conde, Donny Santana and José Joaquín Bidó Medina (a CP member), respectively took over as the energy & mining minister, the head of national border council and the head of the ethics directorate. Meanwhile army General Rubén Paulino Sem became the head of the migration directorate.

The government led by President Mauricio Macri is facing a complex standoff with the trade unions and the opposition, with a 24-hour general strike called for next week. Both sides of the political divide have their hard-liners and their more moderate counsellors. A key figure on the government side is María Eugenia Vidal, the governor of Buenos Aires province and currently Argentina’s most popular politician. Currently an exponent of a hard line against striking teachers, how she plays her cards may help define the outcome of the current struggle.

Vidal has a strong political narrative behind her. Her election as governor of Buenos Aires province in 2015 was a major surprise. A representative of President Macri’s centre-right Cambiemos coalition, Vidal won a dramatic victory in Argentina’s largest single electoral constituency, for decades a populist, male-dominated, and heavily trade-unionised stronghold of the Partido Justicialista (PJ, Peronists).

In the 15 months that she has held the job, rather than being engulfed by the machine politics and the financial complexity of the province, Vidal appears to have prospered. Successions of opinion polls place her as Argentina’s most popular politician. One of the most recent, by polling company Julio Aurelio/Aresco, gave her a 53% approval rating in the province – ahead of Macri’s 40.1% in the same district.

Argentina’s Thatcher?

Macri said Vidal was waging a battle of importance to all Argentines – the defence of quality education. Some journalists say that if Macri stands for and wins re-election in 2019, Vidal will almost certainly be the nominee for the ruling coalition the next time around, in 2023.

The Spanish newspaper El País went as far as to describe Vidal earlier this month as “Argentina’s Margaret Thatcher” – claiming that her struggle with the teachers in 2017 could turn out to be as much as a defining moment for Argentina as Thatcher’s struggle with the British miners was in 1984.

Vidal has certainly been uncompromising in her opposition to the wave of 48-hour strikes called by the province’s various teachers’ unions. The unions are demanding wage increases of 35%, while Vidal says her government cannot give more than 19% in three phases, linked to a “trigger clause” that would allow more to be offered if 2017 inflation, as measured by the national statistics institute (Indec), exceeds that level.

In the latest round of negotiations, the provincial government said it might also improve entry-level teacher wages in return for a reduction in absenteeism, reported to be running at 17% and costing the province as much as Ar$14bn (US$908m) a year. The teachers’ unions turned this offer down. Vidal has gained a reputation for straight talking. She has said that meeting the teachers’ demands in full would cost Ar$45bn (US$2.86bn), more than the province’s entire public works and infrastructure budget for this year.

Internal rifts

One of the most radical leaders of the teachers’ unions is Roberto Baradel of the Sindicato Únificado de Trabajadores de la Educación de Buenos Aires (Suteba). The government suspects that Baradel is essentially politically motivated, as he is aligned with the Kicrchnerista Peronists, who, it argues, are intent on disrupting and destabilising the Macri administration ahead of October’s mid-term congressional elections.

However, the politics of the teachers’ strike is complex. Kirchnerismo, nominally loyal to former president Cristina Fernández (2007-2015) is itself showing signs of fracturing into rival groupings. Some analysts say Baradel may be less in control than he would like: various Trotskyist and leftist factions have gained influence among the teachers, and Baradel may be taking a hard-line position in the dispute to stop himself being outflanked.

There is also an ideological battle under way. The strikers are presenting the government’s tough line on wages as part of a neo-liberal and right wing offensive. Ultimately, they say, the government is trying to undermine public education in order to pave the way for large-scale expansion of private schools. Officials deny this, arguing that their entire strategy is aimed at increasing the quality of public education.

The recent APRENDER tests suggested that over 50% of secondary students have comprehension difficulties when reading. Officials also claim the previous Kirchnerista administration itself seriously undermined public education: according to official statistics, during its time in office enrolment in public schools fell by 12% while enrolment in private schools rose by 23%.

The likely outcome is far form clear. What is more clear is that it could have major implications not just for October’s mid-term elections but also for Vidal and Argentina’s medium-term political future.

• Vidal

Much has been said about María Eugenia Vidal’s political promise. President Macri himself recently said she had taken over as governor in Buenos Aires province to conduct “a revolution” in a territory previously dominated by macho men (‘machotes bravos’ as he called them).

BRAZIL | Growth sluggish. Brazil’s national statistics agency (Ibge) has released figures for second quarter growth, which show that the economy is stagnating. GDP grew just 0.2% in April-June compared to January-March this year, stimulated by 0.3% growth in the services sector alone. Although this is in line with economists’ expectations, following the 11-day lorry drivers’ strike that paralysed the country in May, there is concern that the Brazilian economy is failing to pick up momentum after going through its worst recession in decades.

Forecasters subsequently revised predictions for 2018 GDP growth downwards. Brazil’s national trade association (CNC) revised its 2018 prediction to 1.3% growth, down from 1.6%. The central bank (BCB) now predicts 1.44% GDP growth, down from 1.47%. The BCB maintained its predictions for 2019 growth unchanged, at 2.5%.

BRAZIL | Herbicide ban lifted. Brazil’s first region federal court (TRF1) has overturned a provisional ruling that suspended the use of the herbicide glyphosate. A federal judge’s decision to suspend the use of glyphosate earlier in August due to concerns around its adverse health effects was met with protests from the government and the agricultural industry. Agriculture Minister Blairo Maggi said that a glyphosate ban would negatively impact Brazil’s soya and maize production, which relies heavily on the herbicide. Maggi welcomed the overturning of the ruling by the TRF1 as a victory for the agroindustry.

There is a wider debate on the use of agrochemicals going on in Brazil, as the federal chamber of deputies recently approved a controversial draft law that would relax regulations for the use of agrochemicals, but that has been criticised by environmental activists and health organisations.

PARAGUAY | New government presents budget. Paraguay’s new finance minister, Benigno López, has presented the government’s budget for 2019 to congress. The proposed G$80.2tn (US$13.6bn) budget represents a 7.6% increase on last year’s and is based on projections of 4% GDP growth for 2019. Most cabinet ministries will see an increase in their allocated funds, in particular the science and education ministry (11.4%) and the public health ministry (12.5%). López highlighted that this budget is the starting point for the new government, which took office on 15 August, to implement its social and economic policies. The budget must now be approved by both chambers of congress.

URUGUAY | Striving to avoid contagion from Argentina. The ongoing currency crisis in Argentina has sparked concerns in Uruguay that it could impact the domestic economy. The Argentine and Uruguayan economies are closely integrated. Historically economic crises in Argentina have engulfed Uruguay, producing comparable negative outcomes. The fear is that this may once again be the case if the Argentine government fails to restore market confidence in the Argentine peso. The sharp depreciation of the Argentine peso against the US dollar in recent days has been identified as one of the factors that is driving the depreciation of the Uruguayan peso, which also rapidly lost value against the US dollar this week, in line with the general depreciation of emerging market currencies.

After the value of the Argentine peso fell below that of the Uruguayan peso for the first time ever on 29 August, Uruguay’s central bank (BCU) decided to intervene, selling dollars in the local currency market for the first time since June 2017 in order to defend the Uruguayan peso. Since then, the BCU has sold over US$500m in the currency market but this did not stop the Uruguayan peso reaching Ur$32.71/US$1 on 4 September, the highest-ever recorded exchange rate. The significant amount of dollars that the BCU has had to sell to prop up the peso in just a few days has raised concerns that the bank could run out of foreign reserves if it continues selling dollars at such a rate in support of the peso. The Uruguayan authorities have sought to dispel these concerns, with Economy & Finance Minister Danilo Astori saying that Uruguay had sufficient foreign reserves to defend the peso, noting that it currently holds a record high US$17.2bn in foreign reserves.

• Uruguay

Economy & Finance Minister Danilo Astori appealed for market calm, arguing that in the past decade the Uruguayan economy has ‘decoupled’ from Argentina’s, reducing its dependence on it. Indeed, Astori insisted that “what is happening in Argentina will not happen here”. This was echoed by President Tabaré Vázquez who said that Uruguay’s economic fundamentals are “solid” and that while the situation in Argentina was “worrying” Uruguayans could rest assured that any effect on the country would be minor. However, these assurances have not convinced all. Opposition senator Luis Alberto Lacalle Pou noted that, despite the diversification of export markets in recent years, Argentina remains Uruguay’s fourth largest trading partner, and he stated that any economic crisis in Argentina “will notoriously hit us”.

Peru’s President Pedro Castillo has moved to make good on his central pledge in last year’s election campaign: the promise of a new constitution to replace the 1993 document drafted during the authoritarian presidency of Alberto Fujimori (1990-2000). The government sent a bill to congress on 25 April that would pave the way for a referendum on the convening of a constituent assembly. The road ahead is long, however, and Castillo would first need to pass a constitutional amendment that will require the backing of two-thirds of a hostile congress.

President Castillo’s pledge to oversee the drafting of a new constitution is widely considered to have been the driving factor in the massive support he received from poor rural communities in the June 2021 election. He never quite got into the detail of what that new constitution might entail, but his frequent calls for a greater redistribution of mining profits and for drastic action to address inequality suggested that sweeping changes might be in the pipeline.

Yet nine months into Castillo’s presidency, his calls for constitutional change had faded. Torn between a right-leaning congress and the far-left Perú Libre (PL) with which he won power, Castillo jettisoned much of the radical language he had employed on the campaign trail. In October last year, former prime minister Mirtha Vásquez declared that convening a constituent assembly was “not a priority”. In recent weeks, Castillo has moved to quash protests against issues that he himself railed against on the campaign trail, declaring a state of emergency on 21 April to quash anti-mining protests and imposing a curfew in Lima in response to protests over rising fuel prices [WR-22-14].

It was therefore something of a surprise when he suddenly returned to his pledge of a new constitution last week. On 25 April he sent a constitutional reform bill to congress that aims to add a referendum to ballots in the regional and municipal elections this October, asking voters whether they support the formation of a constituent assembly. To hold that referendum, however, Castillo would first need to alter the current constitution, which does not provide for the convening of a constituent assembly. The government’s bill therefore also seeks to incorporate a new article in the constitution stating that “the drafting and approval of a new constitution is the role of a constituent assembly elected by the people, whose proposal for the constitutional text is submitted to a popular referendum for ratification”.

The need to alter the constitution poses a significant challenge for Castillo. Constitutional amendments require the backing of two-thirds of the 130-seat congress (87 deputies). There are around 60 deputies who have voted to keep the government in power in the two impeachment attempts that Castillo has faced since December. Yet those deputies are highly unlikely to support Castillo’s constitutional amendment unanimously, and he would also need to win some support from more hostile right-wing parties.

The president of congress, María del Carmen Alva, of the centrist Acción Popular (AP), described Castillo’s bill as “unconstitutional and inviable,” and she expressed doubt that it would make it past the committee stage in congress. She claimed that it was a pretext to allow the government to carry out its “objective of closing congress” if the bill is rejected. Those claims were dismissed by Prime Minister Aníbal Torres, who said that “if congress rejects the bill…our attitude will be the same as when congress archives other bills we’ve sent it – in other words, there would be no consequences”.

Weak public support

An Ipsos poll, published on 27 April, found that just 7% of respondents thought that the Castillo administration should prioritise convening a constituent assembly. In contrast, 43% of respondents said that the government should prioritise fighting crime. Other issues which were seen as a greater priority than the drafting of a new constitution were corruption (42%), economic reactivation (33%), and poverty and the cost of living (25%).

Ecuador’s state oil company, Petroecuador, announced on 11 April that it has reached a deal with indigenous communities to end protests at two oil drilling sites in the Amazonian province of Orellana. The protests, which ran for three weeks, caused Petroecuador’s oil production to plummet and forced the company to declare a force majeure last month.

Protests of varying intensity had been taking place at five of Petroecuador’s drilling sites since mid-March, harming production at the company’s 16, 67, 43-ITT, 12, and 61 oil blocks. The protests by the Waorani indigenous group were aimed at securing economic support from Petroecuador for communities living near its oil drilling facilities. According to Energy Minister Fernando Santos, the communities are calling for drilling rights to be returned to the Cyprus-operated energy company Petrolia, which they say gave better benefits to residents before the company’s drilling rights expired in December 2022.

Protesters stormed facilities and engaged in clashes with the authorities at the neighbouring 16 and 67 oil blocks on 6 April, leaving two soldiers seriously wounded. Marcelo Huilca, Petroecuador’s head of security, told news website Primicias that some of the protesters were armed with weapons including shotguns and spears. The blockade and damage to facilities caused oil production to plummet. Petroecuador announced on 10 April that there had been “a drastic fall of over 50% in average daily production at these blocks”. This drop, the statement said, was caused by “vandalism” carried out by protesters.

The 11 April announcement of an agreement with protesters at the 16 and 67 oil blocks should enable oil production to recover. Petroecuador stated that it had reached an agreement on a “community relationship plan” with the Dicaro community, which it said would involve the company’s support with issues such as infrastructure development, education, and healthcare.

New Petroecuador CEO

Ramón Correa Vivanco was appointed as Petroecuador’s new CEO on 11 April, replacing interim CEO María Elisa Soledispa, who temporarily took the reins after her predecessor, Hugo Aguiar, resigned in February amid a corruption probe [WR-23-07]. Correa had previously served since August 2022 as Petroecuador’s director of exploration and production.

Fishermen massacred in Esmeraldas

Ecuador’s public security crisis was again underlined on 11 April, when gunmen killed at least nine people on a fishing jetty in the coastal city of Esmeraldas. CCTV footage shows a group of masked gunmen arriving on a speedboat and opening fire on people on the jetty. According to local press reports, police believe that the fishermen were targeted by a criminal gang because they had paid extortion money to a rival criminal group, and are not suspected of having any other links to organised crime. The area around the port is contested between at least two gangs – Los Tiguerones, which has expanded rapidly along the coast over the past two years, and Los Patones, a local gang.

The attack prompted the resignation of the secretary for national security, Diego Ordóñez, who said in his resignation letter that Ecuador is suffering “an unprecedented wave of criminal violence and organised crime” and a “worsening of common crime, similar to that seen in other Latin American nations”. In an allusion to the massacre in Esmeraldas, he highlighted “events clearly aimed at sowing panic and fear among citizens”.

The Esmeraldas attack came just ten days after President Guillermo Lasso issued a decree allowing civilians to carry and use firearms in self-defence [WR-23-14]. Whilst that decree may have represented an attempt to shore up support from right-wing parties ahead of a likely impeachment trial next month [WR-23-13], it also came amid a very real public security crisis. Ecuador’s homicide rate reached an all-time high of 25.32 deaths per 100,000 residents in 2022, up from 14.06 in 2021 and more than triple the 7.80 per 100,000 that was registered in 2020.

Brazil’s supreme court (STF) ordered the technology companies Google, Meta (owner of Facebook and Instagram), Spotify, and Brasil Paralelo, on 2 May, to take down any ads, articles, and other content which spread the claims made in an official blog post by Google, entitled ‘The Fake News bill could increase the confusion about what is true or false’, a link to which was shared on the search engine’s Brazil homepage on 1 May. This was in reference to the Brazilian government’s controversial legislation currently being reviewed in congress, PL 2630/20 – commonly known as the ‘fake news’ bill.

The latest draft of the bill was presented to the lower chamber of congress on 27 April by Orlando Silva, a member of the Partido Comunista do Brasil (PCdoB), an ally of the Partido dos Trabalhadores (PT) which leads Brazil’s left-of-centre governing coalition. The government led by President Luiz Inácio Lula da Silva has argued that online regulation is needed in order to tackle misinformation, hate speech, and other toxic forms of online discourse that could encourage violence.

If approved, a new law – the Lei Brasileira de Liberdade, Responsabilidade e Transparência na Internet – would be created, which would oblige big tech companies to follow new content moderation rules for their online platforms and would see them fined if they failed to flag up and delete any posts or accounts considered harmful. Tech companies would also have to submit content moderation assessment reports to the authorities and pay news organisations for their journalistic content.

A ‘techlash’ sentiment could have gained popular support in Brazil due to rising concerns about security and the state of democracy or the series of violent incidents in schools around the country (there were four high-profile attacks between 27 March and 11 April). However, the government’s efforts at online regulation are facing resistance from both tech companies, such as Google, and from right-wing parties in congress, such as the Partido Liberal (PL), the party of the far-right former president Jair Bolsonaro (2019-2023), whose supporters stormed government buildings in Brasília on 8 January.

Telegram ban lifted

The messaging app Telegram had its temporary ban lifted on 29 April. The First Federal Court of Espírito Santo state had banned the use of the app in Brazil on 26 April because of the platform’s failure to comply with the order to submit user data to Brazilian authorities. Police have been investigating neo-Nazi and other extremist groups suspected of inciting attacks on schools, and Telegram was believed to be their main point of communication, due to the app’s emphasis on its end-to-end encryption which grants privacy to its users’ messages.

Ecuador’s president-elect, Daniel Noboa, announced on 6 November that the economist Sariha Moya will be his finance minister after he takes office on 20 November. Moya, who for the past six years has held high-ranking positions in the interior ministry’s planning department, will be tasked with delivering Noboa’s goal of boosting employment in order to deliver growth – a strategy which he also believes will help contain a dramatically worsening violent crime wave.

Time is of the essence, and not just because Noboa is only serving out the remainder of President Guillermo Lasso’s truncated term before another election is due in 18 months’ time. During a trip to Washington for meetings with multilateral lenders, Noboa warned that Ecuador is at risk of defaulting on a loan repayment schedule that will kick in in 2026, warning that “if we don’t have programmes that will generate jobs, that will increase the income of the state in terms of tax revenue, in terms of exports, it will be very hard for the state to not default in 2026 and 2027”.

Therefore, Noboa said that his government would request a “bridge loan” for a period of nine months, which he said would help fund tax incentives for companies that hire new staff. This will have been discussed in his meetings on 6 November with representatives from the International Monetary Fund (IMF) and the World Bank. Writing on social media following the meeting with the IMF, Noboa said that the talks were aimed at “establishing alliances that enable financial support and increase foreign trade”, as well as “encouraging foreign investment”.

Tax reform

In comments to the Inter-American Dialogue, a Washington-headquartered think tank, President-elect Noboa said that he was planning to submit bills proposing a wider reform of the tax system and the energy sector, although he did not specify what these would entail beyond his plans to incentivise job creation.

Argentina’s former president Alberto Fernández (2019-2023) has been accused of subjecting his ex-wife to domestic abuse, in a scandal which forced him on 14 August to step down as leader of the Peronist opposition Partido Justicialista (PJ). While far-right President Javier Milei has relished this opportunity to criticise his centre-left predecessor, the scandal has also shone a spotlight on the deep-rooted issue of gender violence in Argentina. In contrast to the Fernández administration, which sought to implement feminist policies, Milei’s right-wing government has shut down authorities such as the women’s ministry.

The scandal first emerged in early August, after national daily Clarín leaked messages from a corruption case involving insurance contracts in which Fernández has been implicated. As part of that investigation, authorities seized the phone of Fernández’s former secretary, which contained messages and images which suggested that former first lady Fabiola Yáñez had been suffering from physical and emotional abuse at the hands of Fernández. The images included pictures of Yáñez with bruises and a black eye. On 6 August she decided to press charges against Fernández, and on 14 August federal prosecutor Ramiro González formally opened an investigation into Fernández’s alleged abuse of Yáñez. The investigation is being overseen by federal judge Julián Ercolini, the same judge in charge of the insurance contracts corruption case.

The former president has denied the accusations. When he resigned as leader of the PJ, he claimed that this was to protect the party from persecution by the media. But calls for Fernández’s resignation had already been intensifying within the Peronist movement, particularly among the left-wing Kirchnerismo wing of the movement. The PJ’s La Cámpora youth organisation, closely associated with Kirchnerismo, released a statement on 7 August to express solidarity with Yáñez and said that Fernández was “trivialising and mocking the banners, premises, and conquests that we feminists have carried forward”.

In addition to criticism from the left, Fernández has faced condemnation from the far right. In a social media post on 7 August, President Milei indirectly accused Fernández, and the Argentine left in general, of hypocrisy. He went on to argue that the solution to address violence against women “is not to create a women’s ministry” but to “be tough against those who commit [crimes]”. When Fernández took office in December 2019, he created the ministry for women, gender, and diversity. Four years later, Milei decreed the closure of the ministry during his inauguration. First the ministry was provisionally reduced to a women’s sub-secretariat, and on 6 June it was completely dissolved.

Argentine women’s rights organisations, such as La Casa del Encuentro, fiercely criticised the dissolution of the ministry. On 6 June the NGO took to social media to question what will happen to initiatives overseen by the women’s ministry to address gender violence, such as the ‘Programa Acompañar’ and the ‘Plan Nacional de Acción contra las Violencias por Motivos de Género’. On 10 June the Argentine branch of international human rights NGO Amnesty International (AI) released a statement expressing regret at the dismantling of the authorities responsible for protecting women.

AI also cited figures from the supreme court (CSJN) which showed that there were 250 femicides in Argentina last year. In May this year, the CSJN’s office for domestic violence (OVD) reported that it attended to 17,603 people affected by domestic violence last year.

Domestic abuse figures

The annual report of the supreme court’s office (OVD) for domestic violence showed that 75% of women who survived domestic abuse experienced physical attacks. A total of 2,215 survivors received medical attention from healthcare professionals tied to the OVD. The medical units found that the most cases involved women aged 30-39, with 482 women in this age group receiving medical attention for physical abuse in 2023; 68% of these cases showed signs of repeated injuries. The OVD report noted that 59% of domestic violence cases last year involved ‘daily or weekly’ violent episodes, while 12% were ‘fortnightly or monthly’.

BRASIL | Industria naval de Uruguay. El gobierno brasilero ha anunciado que considerará cualquier producto hecho por la industria naval de Uruguay como siendo de origen interno, para el propósito de procesos de licitaciones públicas, en un esfuerzo por incrementar la integración regional. La medida sin precedentes fue anunciada en Montevideo luego de una reunión entre el ministro de industria y comercio exterior de Brasil, Fernando Pimentel, y su contraparte de Uruguay, Roberto Kreimerman. En una conferencia de prensa subsiguiente, Pimentel y Kreimerman dijeron que la medida, que entrará en vigencia en octubre, está enmarcada dentro de “un nuevo paradigma de relación bilateral que busca profundizar el modelo”.

Brasil y Uruguay son miembros fundadores del Mercado Común del Sur (Mercosur). Kreimerman dijo que “la integración latinoamericana está avanzando, y nosotros queremos que Uruguay y Brasil ofrezcan un ejemplo de cómo esto puede trabajar y profundizar el espíritu del Mercosur”. Además, agregó que la industria naval tenía potencialmente un valor de millones de dólares, considerando el rol que jugará en el desarrollo económico de América del Sur”. Kreimerman explicó que este sector será fundamental para los actuales esfuerzos de exploración y explotación del petróleo que en la actualidad tienen lugar en aguas del Atlántico, y para aprovechar la ventaja de las vías de agua del sub-continente.

Pimentel dijo que Brasil había acordado considerar los productos de la industria naval uruguaya como reuniendo las reglas de contenido nacional de Brasil, como una manera de promover la “complementación”, y para avanzar en la industrialización de la región. Según Pimentel, la medida asegurará la futura demanda para barcazas y otras embarcaciones marinas construidas en Uruguay. Además, él dijo que esto podría conducir a una incrementada integración tecnológica y la creación de empleos de “valor agregado” en Uruguay.

CHILE | Acuerdo con China. El 9 de septiembre, el canciller de Chile, Alfredo Moreno, firmó un acuerdo suplementario de inversión con China, el último paso previsto en el tratado de libre comercio (TLC) firmado por ambos países en el 2005. Moreno explicó que la firma del nuevo tratado traería US$1mm en inversiones chinas solamente este año. Dijo además que en el mediano plazo él espera que Chile pueda atraer más inversiones chinas, pues los dos países ahora comenzarán a trabajar en el desarrollo de un programa conjunto de inversiones.

Aunque China es el principal socio comercial de Chile, sus inversiones en Chile desde 1974 han totalizado solamente US$94,7m, 0,1% de la inversión extranjera directa en Chile durante este periodo. Mientras tanto, las firmas chilenas hace tiempo han expresado su interés en tener una presencia más comercial y física en China, pero han sido indecisas en hacerlo, debido al hecho de que un previo acuerdo bilateral de promoción y protección de las inversiones (APPI), firmado en 1995, había tenido un alcance limitado y reglas vagas con relación al arbitraje de las disputas.

PARAGUAY | Buscando otra emisión de bonos locales. El 11 de septiembre, el ministerio de finanzas de Paraguay anunció que estaba preparando una emisión de bonos del tesoro para reunir fondos para cubrir algunas deudas del sector público y gastos de capital que enfrenta el gobierno. El ministerio explicó que dado el actual déficit presupuestario, emitiría dos series de bonos en el mercado de valores de Asunción. Señaló que bajo el actual presupuesto, el país tiene permitido emitir hasta US$260,2m en bonos este año. Desde junio, antes del juicio político al ex presidente Fernando Lugo (2008-2012), el gobierno había emitido US$136,8m en bonos; pero, tan pronto asumió la nueva administración del Presidente Federico Franco, el nuevo ministro de finanzas, Manuel Ferreira Brusquetti, anunció que el gobierno emitiría más bonos para equilibrar los libros.

El ministerio de finanzas ha anunciado que planea emitir US$54,2m en bonos con fechas variables de maduración y tasas de interés de 7,75%; 8,75% y 9,75%, entre ahora y octubre. El año pasado, el gobierno no emitió bono después de que registró un superávit fiscal como resultado del extremadamente exitoso desempeño de la economía interna en el 2010. Sin embargo, esto no fue replicado en el 2011 y se espera que la maltratada economía sufra una contracción este año. Si la emisión es exitosa, y el gobierno alcanza su meta, se convertirá en la mayor deuda en bonos de Paraguay de los últimos cinco años.

• Brasil crea área de vino con DOP

El 11 de septiembre, el instituto nacional de la propiedad industrial (Inpi) de Brasil concedió a los vinos producidos en el área del Vale dos Vinhedos en Río Grande do Sul, el estatus de Denominación de Origen Protegido (DOP). El estatus DOP reconoce que un producto específico tiene una serie de características que lo hacen de una particularmente alta calidad o bien-reconocido, y parte del patrimonio de la región y como tal su marca debe ser protegida. El presidente de la asociación local de viñateros (Aprovale), Rogério Carlos Valduga, dijo que ahora los 31 miembros de Aprovale deberán usar un sello distintivo a fin de proteger la identidad de sus vinos. Los productos que tienen DOP usualmente logran un mayor precio en el mercado e Inpi explicó que su decisión es parte de los esfuerzos de Brasil para promocionar su industria nacional del vino.

BRAZIL | Tombini forecasts 4% growth for 2013. On 23 October the president of Brazil’s central bank, Alexandre Tombini, said that Brazil’s economy will post an annual growth rate of 4% for the second half of this year and for the whole of next year.

The Brazilian economy, Latin America’s largest and the economic driving force of the Southern Cone, has been posting less-than-impressive growth figures this year as its commodity export levels have been affected by the global economic crisis which in turn has produced some uncertainty among local investors.

Indeed, in recent months Brazil’s private sector and international organisations such as the International Monetary Fund (IMF) have substantially revised down their growth forecasts for the economy this year and the consensus forecast for year-end growth for the Brazilian economy now stands at 1.5%. While forecasts for 2013 have remained more stable and roughly in line with Tombini’s predictions, these carry the caveat that if there are no signs that the global economic crisis is subsiding, these could also be slashed.

Yet Tombini told business leaders in a meeting in São Paulo that although he believed that the global economic slowdown will be prolonged, Brazil’s economy is still “relatively closed” and, as such, more dependent on what is happening in its domestic market. Tombini explained that while the fact that the international scenario was affecting Brazil’s exports and overall growth could not be ignored, the domestic economy was still showing low levels of unemployment, high levels of job creation, increases in salaries and the expansion of credit - all of which suggest that it is still going through an expansionary period.

Moreover, Tombini added that the full effects of the measures adopted by the central bank to continue stimulating growth, such as reducing interest rates and easing banks’ reserve requirements, “have not yet been felt”. According to Tombini, as these measures begin to take hold more they will promote increased levels of public and private investment in the country which will not only fuel further growth, but also help to raise the competitiveness of the Brazilian economy.  

Moving on lithium: This month Morales unveiled a US$40m investment plan for a pilot lithium battery manufacturing plant in the town of La Palca, Potosí. The announcement is the latest sign of government efforts to move on its pledge to develop the lithium sector using the country’s reserves. These are mostly located in the Uyuni salt plains and total some nine million tons (mt), according to the latest US Geological Survey (updated in January 2012); however, Morales has previously said these could be closer to 100mt. This follows the August inauguration of a semi-industrial potassium chloride (KCl) plant in Uyuni, which Morales hailed as the start of the lithium industrialisation process and part of the first stage of the national lithium industrialisation strategy. According to the strategy, unveiled in 2010, the second stage involves expanding the pilot plant with a further US$485m investment, researching better methods of obtaining lithium and potassium and developing technology to produce batteries. In March last, the head of the directorate of evaporative resources of Bolivia’s state mining company (Comibol), Luis Alberto Echazú, admitted that the industrialisation process had been delayed for two years.

Exports: According to the most recent report by the Bolivian institute for foreign trade (IBCE), published on 1 November, the country’s exports in the first nine months of 2012 reached US$8.3bn, up 22.25% on the same period of 2011. As previously, the main export sector was hydrocarbons, accounting for 49% of the total (up 37% on the same period of 2011). Manufacturing industry overtook mining as the second biggest export sector, accounting for 28% of the total (as compared with 18% for mining which had accounted for 28% of the total in 2011). Brazil remains Bolivia’s biggest export market (as a result of hydrocarbons sales), accounting for 32.34% of the total, followed by Argentina (10.47%) and the US (9.47%).

In June US Deputy Assistant Secretary of State for Western Hemisphere Affairs Liliana Ayalde paid a visit to San Salvador to evaluate the implementation of the US’s Partnership for Growth (PFG) programme in the country. El Salvador was the only Latin American country and one of four countries world-wide to be included in the PFG – one of various initiatives announced by President Barack Obama during his historic March 2011 visit to El Salvador. Ayalde’s visit, during which she highlighted that the US had earmarked US$91.2m for the five year plan and affirmed bilateral ties, is the latest sign of the strength in relations between the US and its traditional ally in Central America.

The PFG aims to rapidly expand broad-based economic growth in El Salvador through addressing crime and insecurity and low productivity in the tradables sector –considered the two restrictions to El Salvador’s anaemic growth (1.6% in 2012, the lowest in Central America). It is just one area of bilateral cooperation to have taken place under El Salvador’s first left-wing Frente Farabundo Martí para la Liberación Nacional (FMLN) government which took office in June 2009 led by President Mauricio Funes. It shows that concerns raised ahead of the 2009 election by US government and former government officials, who warned Salvadorans about the potential consequences should they elect an FMLN presidential candidate, failed to materialise. These concerns stemmed from traditional animosity between the FMLN and US prior to Funes’ election, evidenced in disagreements over issues like the Dominican Republic – Central American Free Trade Agreement (DR-CAFTA), dollarization, Cuba and Venezuela, Salvadoran troops deployed to Iraq and privatizations. Aside from the fact that Funes was an independent and a moderate, elected on the FMLN ticket, the US government’s willingness to work with the FMLN also changed with the 2008 election of President Barack Obama.  

From the start the US indicated a readiness to work with the new FMLN government – as was clear by then secretary of state, Hillary Clinton’s, attendance at Funes’ inauguration. President Obama then invited Funes to the White House in March 2010 to discuss a variety of bilateral and multilateral economic, political, and security concerns. Funes also met Secretary Clinton in Washington, D.C. in September 2010. Finally, the importance of relations between the US and El Salvador were further cemented with President Obama’s historic March 2011 visit to El Salvador.

Outside of Colombia, El Salvador has been one of the US's strongest regional allies. Salvadoran troops were deployed to Iraq in 2003 and its last soldiers did not return home until 2009. While President Funes re-established diplomatic relations with Cuba shortly after his inauguration [RC-09-07], he has done little more than that to improve relations with the communist island. Instead, he has strengthened political and economic ties with the US, including sending a small contingent of non-combatant troops to Afghanistan in 2011, and accepting the transfer of two Uighur detainees from Guantanamo Bay in 2012. When former president Manuel Zelaya (2006-2009) was illegally removed from the Honduran presidency in June 2009, the Funes and Obama administrations coordinated their responses to the coup. President Funes supported US diplomatic efforts to resolve the crisis, initially including Zelaya’s return to the presidency, and then with the US’s decision to move forward with the election of Porfirio Lobo even though doing so was not popular within the FMLN and within the region. The US and Salvadoran governments also do not consider legalization or decriminalization an appropriate alternative to regional drug policy.

• Continuing trade and investment cooperation

In 2004, the US and El Salvador entered into a preferential trade agreement through DR-CAFTA. Two years later, the US awarded El Salvador a five-year US$461m Millennium Challenge Corporation Compact. The five-year investment was designed to develop the northern border region where over 50% of the population lives in poverty. The investments included technical assistance and financial services to farmers and rural businesses, education and training to improve public services in poor communities, and the rehabilitation of the Northern Transnational Highway. The Compact was signed by the right-wing Alianza Republicana Nacionalista (Arena) government of President Elías Antonio Saca (2004-2009) and completed during Funes’ fourth year in office. The Compact’s success led to the ongoing negotiation of a second five-year US$270m compact to promote coastal and maritime development to improve ports and airports, increase access to water, electricity, and education, and develop a tourism and communications hub.

Points of contention

Like any partnership, the US and El Salvador have not always seen eye-to-eye. El Salvador’s national assembly approved the US-backed public private partnership law (the "P3 Law") in May last over the strong objections of public workers and much of civil society. In mid-2012, a constitutional crisis erupted over the appointments of five supreme court justices which its constitutional chamber (Sala IV) found unconstitutional. While President Obama and his administration encouraged President Funes and the parties involved to find a politically and constitutionally acceptable solution to the crisis, US congress members blamed the FMLN for the crisis and threatened to withhold the second MCC Compact if they did not abide by the court’s ruling This stand-off which eventually saw the legislature back down [RC-12-09], followed a 2011 crisis brought about by Arena and other right-wing parties’ passage of Decree 743 which would have weakened the constitutional chamber. The bill was signed into law by President Funes before pressure from civil society and the international community led the legislature to repeal it.  

Another point of contention was President Funes’ appointment of Manuel Melgar, a former left-wing guerrilla, as his justice & public security minister. The US holds Melgar responsible for a 1985 attack that killed four off duty US military personnel and eight civilians and allegedly pressured Funes into replacing Melgar as a condition for the country receiving PFG assistance – which he did in November 2011. Melgar’s appointment hindered security cooperation with the US while his removal worsened Funes’ relations with the FMLN. Funes then appointed retired general David Munguía Payés as his new security minister – an appointment criticised both by the FMLN and civil society as it threatened both the spirit and the letter of the 1992 peace accords which had removed the military from overseeing public security functions. In 2013, the constitutional chamber ruled that Munguía Payés’ appointment was indeed unconstitutional and he was replaced although he has since been drafted back into the cabinet, as defence minister (see sidebar) As justice & public security minister, Munguía Payés was responsible for spearheading a March 2012 truce between country’s two main gangs, MS-13 and the M-18, which cut homicides rates by roughly half. However, the US remains sceptical and appears to be pursuing its economic and security policies towards El Salvador as if the truce does not exist.

For the last thirty years, the US has developed working partnerships with Salvadoran administrations led by the Partido Demócrata Cristiano (PDC) (1984-1989), Arena (1989-2009), and the FMLN. Approximately two million Salvadorans live in the US, sending home nearly US$4bn in remittances each year; the US is El Salvador’s most important trading partner both in terms of exports and imports; and, according to the Global Attitude Project of the Pew Research Center, Salvadorans maintain more favourable views of the US than any other people in Latin America. Yet policy differences between the US and the FMLN old guard persist while US embassy cables released by Wikileaks indicate US concern about alleged corruption which took place under Saca – who remains a strong contender for the 2014 presidency (see sidebar). As a result, there is every likelihood that US-El Salvador relations could undergo significant changes with a victory by the FMLN hardliner, Salvador Sánchez Cerén or Saca in 2014 and/or with a Republican Party victory in 2016.

• Polls

A survey published on 21 July in conservative daily El Diario de Hoy showed the FMLN’s Salvador Sánchez Cerén topped the poll for the first time since announcing his candidacy last October, with 29.9% of voting intention. Arena’s Norman Quijano, who had a huge lead in early polls six months ago, was second on 28.9%, with former president Tony Saca (2004-2009), who is running for the centre-right coalition Movimiento Unidad, on 27.7%. The survey interviewed 1,204 people nationwide between 6-9 July and had a 3% error margin.

• Munguía Payés

On 12 July President Mauricio Funes swore-in General David Munguía Payés as his defence minister, replacing General José Atilio Benítez, who stepped down unexpectedly earlier that day. Munguía Payés returns to the post he previously held between June 2009 (when Funes first took office) and November 2011, before he was controversially moved to head up the justice & public security ministry. His reappearance in the cabinet came amid fears that the truce between the country’s mara gangs – in which Munguía Payés was considered to play a key role - was in danger of unravelling after a spate of homicides at the turn of the month.

Después de tres accidentes y 54 muertes en el último año y medio, el gobierno anunció su decisión de nacionalizar la línea del ferrocarril Sarmiento desde el 24 de octubre. El motivo para esta decisión tiene menos que ver con el costo acumulativo de la mala administración del ferrocarril, y más con la fría lógica política de otro accidente, que en esta ocasión dejó 99 heridos, faltando sólo una semana para las elecciones legislativas del 27 de octubre.

El día 19 de octubre, a las 7:00 a.m. hora local un tren que iba desde el barrio de Moreno en el oeste chocó contra las barreras de la estación Once de Buenos Aires. Un accidente en la misma estación en febrero del año pasado causó la muerte de 51 personas; esta semana, gracias en gran medida al hecho de que era un sábado por la mañana y de que el tren estaba relativamente vacío, nadie resultó muerto. La mayor parte de los heridos eran pasajeros que esperaban en la plataforma, quienes fueron heridos por trozos de vidrios lanzados por el impacto. Una multitud intentó atacar al operador del tren; el conductor, Julio Benítez, fue hospitalizado bajo escolta policial. Más tarde se supo que Benítez había dejado el tren con el disco duro que contiene la grabación del accidente de la cámara de seguridad.

Hablando en una conferencia de prensa el 23 de octubre, el ministro de transporte, Florencio Randazzo, dijo que en la mañana del accidente, UGOMS, la firma privada que realiza las pruebas para evaluar la aptitud de los conductores para trabajar, solamente había hecho una prueba de alcoholemia a Benítez, y ninguna otra evaluación física. De acuerdo con los registros de UGOMS, el conductor no fue sometido a más pruebas debido a un “acuerdo sindical”; un acuerdo que Randazzo dijo que no existe. El ministro también dijo que el video dentro de la cabina del conductor muestra a Benítez quejándose de cansancio, luego poniéndose unos anteojos de sol y acomodándose en posición de dormir. Más investigaciones revelaron que los operadores de trenes no estaban usando los nuevos protocolos de comunicación con el centro de control de la línea.

Como resultado, Randazzo anunció que la línea Sarmiento sería ahora operada por la Sociedad Operadora Ferroviaria (Sofse), conducida por el Estado. En la actualidad, Sofse, una compañía establecida en el 2008, sólo opera unas pocas líneas menores en el interior del país, tales como la ruta Lincoln-Realicó y el tren de la costa. Otras líneas metropolitanas, tales como las operadas por Emepa-Ferrovías y Metrovías-BRT, permanecerán en manos privadas. Randazzo advirtió  a estas compañías que si no cumplen con las obligaciones de seguridad no dudaría en poner fin a sus contratos, pero señaló que todos los recientes accidentes, incluido el de la estación Castelar en junio, ocurrieron en la línea Sarmiento. “Sarmiento es un problema político. Desde ahora en adelante es la responsabilidad del ministerio de transporte. Si sale mal, yo tendré que irme”, dijo.

Cristina en la oscuridad

Llamativamente, Randazzo reveló que él no había informado a la Presidenta Cristina Fernández del accidente o de la decisión de tomar el control de la línea, porque “ella está bajo estrictas órdenes médicas de permanecer ausente de todas las noticias [pero]. Yo sé que la presidenta tiene la misma línea de pensamiento sobre esta cuestión”. Cuando Fernández fue admitida por primera vez en el hospital hace dos semanas, para someterse a una cirugía debido a un hematoma subdural, su jefe de gabinete, Juan Manuel Abal Medina, insistió en que la presidenta sería informada sobre las decisiones clave.

Fernández fue dada de alta del hospital la semana pasada y actualmente está en la residencia presidencial de Olivos con su hija Florencia, y su hijo Máximo. Se rumorea que Máximo está conduciendo mucho del gobierno en su ausencia. Las estrictas órdenes médicas impiden que Fernández tome un aeroplano, por lo tanto no podrá volar a su casa en la provincia de Santa Cruz para depositar su voto el domingo. Esto también le impedirá visitar el mausoleo  de su esposo, Néstor Kirchner, en Río Gallegos, el 27 de octubre, el tercer aniversario de su muerte.

• Reprimiendo el dólar ‘blue’

A pesar de la persecución sobre las ‘cuevas de cambio’ en el sector financiero de Buenos Aires, el mercado negro del dólar de EU fue comercializado a Arg$10,05, mientras que la tasa oficial se mantenía en Arg$5,82. La demanda de dólares se está incrementando antes de la elección del domingo. El turismo y los viajes al exterior son vistos como probables blancos para la intervención del gobierno después del 27 de octubre.

After two postponements, the Mercosur presidential summit (due to be attended by the leaders of Argentina, Brazil, Paraguay, Uruguay and Venezuela) was due to be held in Caracas at the end of January, but as we went to press was delayed again until the first fortnight in February. In the run-up to the meeting, the list of disputes and issues requiring the attention of the heads of state was looking daunting.

As with most big international summits, the Mercosur presidential summit is likely to conclude with an up-beat statement talking of progress and positive steps towards the group’s aims of boosting trade, cooperation, and development. Real progress is of course absolutely possible, but it is far from certain and in the weeks before the meeting the list of disputes requiring resolution looked long and difficult. There was the question of Paraguay formally rejoining the block after its political expulsion in June 2012, following the impeachment of the-then president Fernando Lugo (2009-2012).

In Paraguay’s absence, Venezuela was finally admitted as a full member, a decision Asunción had long opposed and prevented. Following the August 2013 elections, Paraguay’s new president, Horacio Cartes, began steering Paraguay back into the group, accepting Venezuelan membership of the club as a fait accompli (membership was finally ratified by the conservative Paraguayan congress in December; the congress for several years had been the single remaining legislature unwilling to accept Venezuela’s Mercosur entry).

But there are still tensions and matters to be resolved on this front. Paraguay had been demanding that it be given the next rotating Mercosur presidency (this no longer seems to be a demand and the presidency is due to pass from Venezuela to Uruguay); more importantly, Paraguayan officials also warn against any assumption that the country will retrospectively validate all decisions taken in its absence.

Next, there is a longstanding dispute between Argentina and Brazil, the two largest economies in the bloc, primarily focused on protectionist measures taken by the Argentine authorities against imports from Brazil. Tensions in this particular quarrel have in fact eased a bit in the last few months, following Argentina’s ministerial reshuffle in November, which saw the departure of the controversial domestic trade secretary Guillermo Moreno (who despite his job title was seen as the main advocate of the import restrictions). “The issue that has been upsetting our exporters has been resolved”, Brazil’s trade minister Fernando Pimentel said during a visit to Buenos Aires in December, which unblocked Brazilian car and footwear exports to Argentina stuck at the border for months. Based on prior experience, it is worth noting, however, that these disputes can flare up again quite easily, particularly since Argentina’s dollar shortage forces it to try and limit imports.

Other important disputes include a battle between Argentina and Uruguay. Because Argentina opposes increased production at Uruguay’s UPM paper and pulp plant – which it claims pollutes the River Uruguay, it has slapped protectionist measures on Uruguayan shipping. Uruguay has responded by announcing long term plans, partly funded by a US$500m investment from Brazil, to develop a new deep sea port at Rocha. Roberto Kreimerman, Uruguay’s energy and mining minister, has suggested that while relations will Argentina will improve from their current low point, bilateral trade between the two countries is unlikely to recover to its previous peaks.

Montevideo port ‘strangled’ by Argentina

On 8 January Uruguay’s civil navigation centre released a report which claimed that as result of the recent cargo transhipment restrictions imposed by Argentina, maritime cargo traffic passing through the port of Montevideo fell by 43% year on year in the last two months of 2013. Commenting on the report, Mario Baubeta, the head of the civil navigation centre, said that the figures show that Argentina’s November decision to forbid shipments destined from being unloaded in Uruguayan ports was harming the Uruguayan economy. Pointing out that Uruguay’s maritime transport industry is “deeply concerned” by the matter, Baubeta called on the government to “quickly” negotiate a bilateral agreement with Argentina at the next Southern Common Market (Mercosur) summit scheduled to take place in Caracas on 31 January.

One of Mercosur’s underlying internal difficulties is that its members are following very different economic policies, to the point that the trade bloc’s very raison d’etre is called into question. The new government in Paraguay is centre-right in outlook. Both the Brazilian and Uruguayan governments are centre-left, but their economic policies can be described as broadly pragmatic and market-friendly. Venezuela, followed by Argentina to a somewhat lesser degree, pursues what could be described as ‘market-unfriendly’ policies reliant on rising state intervention in the economy. Of particular importance is the fact that both those economies suffer high inflation, operate multi-tier exchange rates, and are forced into protectionist trade measures to try and conserve limited foreign currency reserves.

These centrifugal economic policies within Mercosur may explain why the 22-year old organisation is no longer achieving high levels of internal trade growth. From 2000 to 2013, world exports multiplied by a factor of 2.9, rising to US$23.5trn. Mercosur exports grew faster (up by a factor of 3.6 to US$436bn), but this was spearheaded by Brazil (growing 4.3 times to US$235bn), with Argentina and Venezuela lagging (up by factors of 3.2 and only 2.8 respectively). The key point is that Mercosur itself seems to have contributed little to this growth. In 2013, 12% of Mercosur exports went to destinations within the bloc (i.e. to other member countries), down from 17% in 2000. One sharp-tongued and pessimistic Brazilian trade official is alleged to have commented on the bloc’s economic policy divergences by saying, “Brazil is becoming Argentina, Argentina is becoming Venezuela, and Venezuela is becoming Zimbabwe”.

This is an over dramatisation, but the internal difficulties in the bloc are clearly having a negative impact on its wider negotiations, particularly with the European Union (EU). Mercosur has been trying to reach a common bloc-to-bloc free trade agreement with the EU for almost 20 years (since late 1995). Having petered out in 2003, talks were formally re-launched in May 2010 and both sides had undertaken to exchange lists of proposed import duty reductions (formally, ‘market access offers’) before the end of 2013. In December 2013, EU officials were reported to be seeking tariff reductions on goods representing 90% of existing trade between the two blocs. The Brazilians are said to have a list representing 87%, while Argentina was suggesting it might be able to make proposals on up to 70%-80%.

In the event, Brussels was reported to have suggested postponing the deadline for the tariff proposals, first to January and then to February, purely because of scheduling difficulties. Mercosur analysts suspect the delays are not just a scheduling issue but reflect divided counsel within the bloc, particularly between Brazil and Argentina. On 9 January, the Argentine foreign ministry angrily rejected reports by the Brazilian business daily Valor Económico that it had held up the process.

Prospects have become further complicated by an EU decision to open a complaint against Brazil at the World Trade Organisation (WTO) over a range of import tax increases introduced in 2011 and levied on cars, computers, smartphones and semi-conductors. Brazil increased import tariffs to 35% - the maximum allowed under WTO rules – but it also allowed exceptions for domestic producers (for example there is a lower 30% rate on auto-parts for importers who meet a 65% domestic content requirement), and the EU believes these exceptions are discriminatory and in violation of WTO rules. EU car exports to Brazil are reported to have fallen more than 11% in 2013 because of the higher taxes, according to Daniel Caspary, a German member of the European Parliament. An EU official close to the negotiations commented that “The protection of Brazil’s domestic industry comes at the expense of goods imported from Europe and that is unacceptable”. Both sides have 60 days to resolve the issue, and if they cannot do so it will go to a ruling by a WTO panel. While Brussels says this WTO process should not affect the wider trade agreement discussions, it clearly does not make for a good climate; Argentina too is angry over EU anti-dumping measures taken against its bio-diesel exports.

• EU-Mercosur

According to the EU Commission, the objective of the talks with Mercosur is to negotiate a comprehensive trade agreement, covering not only trade in industrial and agricultural goods but also services, improvement of rules on government procurement, intellectual property, customs and trade facilitation, and technical barriers to trade.

• Trade breakdown

Mercosur's main exports to the EU comprise agricultural products (40% of total exports) and raw materials (28%), while the EU mostly exports manufactured products to Mercosur, notably machinery and transport equipment (45% of total exports) and chemicals (22%). The EU is also a major exporter of commercial services to Mercosur (EUR16bn in 2011, on EU figures).

• Exit from GSP puts pressure on Mercosur

All Mercosur countries, with the exception of Paraguay, as of 1 January 2014 no longer benefit from the EU’s Generalised Scheme of Preferences (GSP, which allows developing country exporters to pay lower duties on their exports to the EU), due to their classification as high middle-income countries. However, they remain GSP-eligible countries, according to the EU Commission.

In early 2016, financial stress in Mexico reached the highest level since the global financial crisis according to one measure. This appears to have been the result of investors’ general aversion to emerging markets risk. The IMF’s approval, at the end of May 2016, of a new two-year US$88bn flexible credit line (FCL) should mean that any further slowing of the global economy, or future volatility in financial markets, should have limited impact on Mexico.

Since early 2009, some countries with strong track records on economic management have been eligible for FCLs from the IMF. These are essentially emergency credit facilities that governments can draw on if needed, and are normally provided for a limited and specific period of time. Mexico’s first FCL was put in place on 17 April 2009. This was replaced by successor FCLs on 25 March 2010, 10 January 2011, 30 November 2012 and 26 November 2014.

The latest FCL, for an amount equal to around US$88bn, replaces its predecessor, which was worth around US$67bn. The latest FCL is valid for two years. The Mexican government has indicated that it hopes to phase out its usage of FCLs over time.

The background to the announcement is that the Mexican economy is exposed to two broad sets of risks. This is in spite of the general resilience of activity and the IMF’s assessment that macroeconomic policies and policy frameworks remain very strong. One set of risks arises from the integration of Mexico with the global economy in general and the US economy in particular (including through the North American Free Trade Agreement). A measure of this is the stock of inwards foreign portfolio investment, which amounted to US$456m, or 40% of GDP, at the end of last year.

The other set of risks arises from shifts in global investor sentiment towards emerging markets. According to the Bank of International Settlements (BIS), the Mexican peso is the most actively traded emerging markets currency globally, with average daily trading volumes of US$135bn.

In spite of the fundamental strengths of the economy, Mexico’s financial markets suffered badly in January and February, when global investors showed a strong aversion to emerging markets risk. The peso fell further than other emerging markets currencies and was more volatile. One measure of composite financial conditions in Mexico compiled by the IMF rose to the highest level since the global financial crisis. Since the first two months of the year, global investors’ appetite for risk has improved somewhat.

Over recent months, projections for global economic growth have been revised downwards. Given the complexity of the problems facing the largest emerging markets, but especially China, Brazil and Russia – and, indeed, many of the larger developed economies – it is quite possible that investors will again develop an aversion to emerging markets risk. Nevertheless, the new FCL means that these problems are unlikely to have a significant or lasting impact on Mexico.

Alejandro Guillier registered his presidential candidacy for Chile’s ruling left-wing coalition Nueva Mayoría before the electoral authorities (Servel) on 4 August ahead of November’s general elections. Guillier was accompanied to the Servel headquarters by around 1,000 supporters including the presidents of six of the constituent parties of the Nueva Mayoría supporting his candidacy. The seventh party, Democracia Cristiana (DC), which is presenting its own presidential candidate, Carolina Goic, is embroiled in infighting. But Goic, who had threatened to withdraw her candidacy, has confirmed that she will remain in the race.

“The diagnosis is clear: the current crisis is an ethical crisis, one of values, [political] abuse, lack of faith in the society in which we live,” Guillier said. He promised to crack down hard on corruption and the price collusion scandals that have rocked public confidence in the public and private sector, and provide untrammelled support for laws on transparency in public administration and private development. “The abuse of big [monopolies] is over,” he declared. “Whoever thinks that with just the growth of big economic groups we are going to solve Chile’s problems will face the spectre of ungovernability,” he added.

After the registration of his candidacy, Guillier needs to make an impression – and fast. Recent opinion polls have him trailing not just former president Sebastián Piñera (2010-2014) of the right-of-centre coalition Chile Vamos but also Beatriz Sánchez, the presidential candidate of the nascent radical left-wing Frente Amplio (FA).

Piñera remains the clear favourite to triumph in November’s elections but there is tension within Chile Vamos. After an acrimonious primary election which saw Piñera emerge victorious, the principal parties within the coalition, the centre-right Renovación Nacional (RN) and ultra-conservative Unión Demócrata Independiente (UDI), have been unable to agree on a list of congressional candidates with junior partners Partido Regional Independiente (PRI) and, particularly, Evópoli.

Piñera felt compelled to lecture the parties on the importance of overcoming their differences. “It is not just an option; it is their duty to reach an agreement,” he said, rather than engage in petty squabbling over “one more candidate here and there when there is so much at stake”. But in spite of this rhetorical dressing down Piñera has pointedly refrained from intervening in the selection process. The president of Evópoli, Francisco Undurraga, penned Piñera a letter explicitly calling for him to intervene. The PRI president, Alejandra Bravo, lashed out, saying that Evópoli’s “desire to grow at the expense of the other parties [in Chile Vamos] is a true obstacle to unity”.

Meanwhile, Goic announced on 3 August that she would remain the DC’s presidential candidate despite a fierce clash with the party’s national executive committee. Goic threatened to pull out after the body endorsed a list of congressional candidates that included on its senate slate Ricardo Rincón, an incumbent congressional deputy who was charged with domestic violence in 2002 [WR-17-30].

Goic argued, much like Guillier, that opinion surveys showed the paramount importance of political parties being “intolerant of abuse” and “raising their ethical standards”. The DC’s senior leadership rallied behind Goic, empowering her to veto any congressional candidacy of which she disapproved. She promptly announced that Rincón would be moved from the list (see sidebar).

• Goic

Ricardo Rincón is not going quietly. He accused Carolina Goic of needing “a poster boy” because her candidacy had failed to take off, and promised to continue campaigning, presumably in the (not unfounded) hope that she might yet withdraw from the race given her low level of support. The latest survey, published by Adimark on 2 August, gave Goic just 1% support, and it could be that she is using the dispute over Rincón to try and raise her profile. It has certainly won her extensive media coverage.

DOMINICAN REPUBLIC | Employment. More than a quarter of the Dominican workforce in formal employment has been temporarily laid off since mid March as a result of the coronavirus crisis, according to the presidential spokesman, Roberto Rodríguez Marchena.

In absolute terms this equates to 655,000 workers, almost 28% of those employed in the formal sector. Rodríguez said that almost 80% of those affected would receive financial assistance from the Fondo de Asistencia Solidaria para Empleados (FASE), with the government agreeing to pay between RD$5,000 (US$92) and RD$8,500 a month in April and May towards salaries. However, Dominicans working in the informal sector, who comprise more than 50% of the national workforce, will not be eligible for this assistance.

The Ejército de Liberación Nacional (ELN) has proposed a 90-day bilateral ceasefire, ostensibly in response to a resolution issued by the United Nations Security Council (UNSC) calling for a halt to armed conflicts globally in the midst of the coronavirus (Covid-19) pandemic. The guerrilla group said it could pave the way for a renewal of peace negotiations. But President Iván Duque gave a dismissive response. Five days earlier the Colombian authorities arrested ELN operatives allegedly involved in the car bomb which claimed the lives of 22 cadets at a Bogotá police academy in January 2019, an attack which torpedoed the peace talks.

The ELN declared a unilateral ceasefire as a “humanitarian gesture” in April but resumed hostilities at the end of the month. On 1 July, after more than a three- month delay, the UNSC passed a resolution supporting UN Secretary-General António Guterres’s call for a global ceasefire during the pandemic for at least 90 days. The central command (Coce) issued a statement on 7 July proposing such a ceasefire to the Duque administration.

In the days between the UNSC resolution and the Coce’s statement, the Colombian authorities arrested eight members of an ELN urban guerrilla cell during a series of raids, including a premises with the company name Quesera Los Andes in a poor neighbourhood in Bogotá, where the bomb detonated outside the police academy was believed to have been concealed ahead of the attack.

President Duque said in a national address on 2 July that the investigations leading to the arrests, and the subsequent raids, had confirmed that the Coce was behind the fatal attack. This would hardly have predisposed Duque to accept the Coce’s offer of a bilateral ceasefire, even if he had been so inclined, and he gave the suggestion short shrift on Twitter. Duque stressed that his government would “never fail to comply with the constitutional duty to face crime throughout our country,” demanding that the ELN “release its hostages and end its criminal actions”.

Two days after the arrests, on 4 July, Jhon Fredy Cortés Buriticá (‘Culebrito’), the chief lieutenant of Gustavo Aníbal Giraldo (‘Pablito’), an ELN military leader and part of the Coce, was killed in a military operation in the north-eastern department of Norte de Santander bordering Venezuela. Duque claimed that Cortés Buriticá was involved in planning and carrying out the Bogotá bomb attack. The fact that the ELN made its offer of a ceasefire against this backdrop prompted speculation that it was motivated less by humanitarian considerations than the chance to regroup.

Cuba

President Duque would have been particularly irked by the Coce’s assertion that “our diplomatic delegation, located in Havana, is empowered to process all operational details [of the ceasefire]”. Diplomatic relations with Havana were strained by the US State Department’s inclusion of Cuba on its terrorism blacklist in May for refusing to heed the Duque administration’s call for the extradition of the ELN peace negotiators who have remained on the island since the collapse of talks. This prompted the Cuban foreign ministry at the time to blame the Duque administration for “facilitating the aggressive objectives of the US against Cuba” [WR-20-22].

US military presence

The Duque administration is fighting a legal ruling on 2 July by the administrative tribunal of the central department of Cundinamarca, which ordered that the US Army’s 1st Security Force Assistance Brigade (SFAB) should cease all operations in Colombia. The SFAB arrived in Colombia in late May to provide “training, advising and assisting host units with strengthening capabilities”, according to a statement released by US Southern Command (Southcom) [WR-20-23]. But the presidents of Colombia’s senate and council of state, Lidio García and Álvaro Namén respectively, maintained that they had not been consulted by President Duque over a decision which required their authorisation. The Cundinamarca tribunal instructed Duque to send the senate full details of the SFAB’s role in Colombia and the length of its stay. The defence minister, Carlos Holmes Trujillo, said the Duque administration would appeal the ruling on the grounds that it did not believe that senate authorisation was necessary as the SFAB was only performing a training and advisory role.

The revelations about dubious dealings involving Paraguay’s state-owned oil firm (Petropar) forced the resignation of a senior Paraguayan government official over the Christmas period. With another scandal involving Petropar emerging in the New Year, corruption at the oil firm appears to be a recurrent problem for the government led by President Mario Abdo Benítez. The situation puts Abdo Benítez under pressure to take decisive action to resolve the issue once and for all.

Prosecutor General Sergio Coscia tendered his resignation on 24 December after his office was accused of pressuring Petropar to agree to an unfavourable settlement with Argentine oil firm Texos Oil SRL. Back in 2011 Texos sued Petropar over the cancellation of a US$68m supply contract it had been awarded (but which was never formalised) by the state-owned firm.

Petropar maintained that it had decided against signing the contract amid questions over Texos’s ability to fulfil its terms after finding out that the Argentine firm only had Ar$10,000 (US$117.65) in capital. Texos is seeking US$31.3m in compensation for damage to its reputation.

The advice from Petropar’s legal team was that the Texos case is weak and that it would be likely to be dismissed in court. However, on 23 December the local press revealed that the prosecutor general’s office (PGR) and Petropar had reached an agreement in principle with Texos to settle the case out of court for some US$7m.

Official documents obtained by the press show that the settlement agreement had already been approved by the head of Petropar, Denis Lichi, and by Coscia. When confronted about this, Lichi said that the PGR had urged him to accept the agreement, insisting that it was the best course of action.

Coscia admitted that he recommended settling with Texos. When asked why, Coscia argued that settling for US$7m would be preferable to going to court. But Coscia failed to justify why he thought that Petropar could lose the case. It later emerged that Coscia has personal links to Texos’s lawyer, Abel Germán Ávalos, who under the agreement was due to receive US$3m for brokering the deal.

The suspicion is that Coscia, Ávalos, and Lichi were all working in cahoots with Texos to embezzle Petropar funds. Coscia and Lichi deny this but an official investigation has been opened, which is what prompted Coscia’s departure.

• Departure

In his resignation letter, Prosecutor General Sergio Coscia said that he had decided to resign in order to “protect my image and my integrity, as well as that of my family and the government”. The resignation was accepted by President Abdo Benítez, who refrained from commenting on it. A few days later, on 28 December, the government announced that Abdo Benítez had appointed Juan Rafael Caballero as the new PGR head. Since then, Caballero has promised to cooperate with the investigations into the Texos settlement case and to make all documents related to the case public.

Lichi, who was appointed to the post in April 2020 after his predecessor was forced to resign over corruption allegations [WR-20-17], is currently refusing to step aside, insisting that he has not done anything wrong. This has led the local media to urge President Abdo Benítez to dismiss Lichi, who it argues is politically responsible and at the very least has demonstrably failed to defend Petropar’s interests.

Further increasing the pressure on the Abdo Benítez administration to intervene in Petropar, on 2 January the Washington Post revealed that Petropar had also sought to settle its debt with Venezuela’s state-owned oil firm Pdvsa through shady dealings with representatives of Juan Guaidó, Venezuela’s opposition leader and internationally recognised interim president. According to the Post, Guaidó representatives secretly met Paraguayan government officials in November 2019, when they allegedly offered to negotiate a settlement over Petropar’s US$265m debt. Reportedly, the two sides reached a draft agreement under which half of the debt would be written off in exchange for expedited payments, including sizable commissions for the lawyers brokering the agreement.

The fact that these negotiations were kept secret once again sparked suspicions of a potential manoeuvre to embezzle Paraguayan public funds, this time by Guaidó and Petropar officials. Amid demands for an explanation by the political opposition, on 5 January Abdo Benítez’s cabinet chief, Juan Ernesto Villamayor, gave a press conference in which he admitted that discussions had been held with Guaidó emissaries.

Villamayor has denied any wrongdoing, however, and insists that the aim of the negotiations was to reach a favourable settlement. He claimed that the agreement was ultimately not carried out because the Abdo Benítez government was concerned that its legitimacy could be challenged by the de facto Venezuelan government. But Villamayor’s explanations have not fully satisfied the opposition, which is demanding a full investigation into Petropar and its dealings.  

Japan

Japan’s foreign minister, Toshimitsu Motegi, visited Uruguay, Argentina, and Paraguay this week as part of a whistlestop five-nation tour of Latin America, which began in Mexico and will conclude in Brazil. In Uruguay, Motegi signed a customs mutual assistance agreement with his peer Francisco Bustillo aimed at facilitating bilateral trade, and clamping down on the smuggling of drugs, guns, and contraband, and the infringement of intellectual property rights. Motegi’s Paraguayan counterpart Federico González discussed the opening of the Japanese market to the country’s meat exports.

US president Joe Biden fulfilled an electoral promise on 8 March by offering Temporary Protected Status (TPS) to approximately 320,000 Venezuelan migrants living in the US. Could this be the first, preparatory move in an eventual negotiation with the Caracas government?

A first assessment is that granting TPS is an important but otherwise stand-alone measure that, for the moment at least, changes absolutely nothing in the state of US-Venezuela relations. Under TPS, Venezuelans who are already in the US, will be able to live and work there legally for an initial period of 18 months. The Biden administration said this was a primarily humanitarian decision reflecting “extraordinary temporary conditions” in Venezuela which include “widespread hunger and malnutrition” as well as a “growing influence of non-state armed groups and crumbling infrastructure”. As a result, it adjudged that it was not safe for US-based Venezuelans to return home.

Officials also briefed journalists that US sanctions against Venezuela are unlikely to be modified in the short term. They repeated an earlier formulation that the administration is “in no rush” to lift sanctions but will in due course make changes to the “maximum pressure” policy of the previous administration led by Donald Trump to make sure that the sanctions that do stay in place are effective and do not “unnecessarily” punish the Venezuelan people.

Otherwise, the US is continuing to recognise opposition leader Juan Guaidó as the legitimate president of the country. It has spoken in general of the need for fair and free elections, and of a possible negotiation in which sanctions are lifted in a gradual and calibrated way, in return for concrete “confidence building” steps by the Caracas government. A White House official, speaking on condition of anonymity, told Reuters news agency on 8 March that there would be no toleration for the government of Nicolás Maduro using negotiations as a “delaying tactic” to divide the opposition and maintain its hold on power, while having no intention of offering any meaningful compromise.

That said, some politicians were quick to suggest the TPS decision might somehow begin to break the deadlock over sanctions. The prize for wishful thinking went to Venezuelan foreign minister Jorge Arreaza who on the same day as the TPS announcement was made, rapidly tweeted that Washington should “immediately lift” all “arbitrary” sanctions. He made no mention of any steps that Venezuela might want to consider taking in return.

From a different political vantage point, some US members of Congress also suggested movement might be possible. US Democratic Senator Bob Menéndez described the TPS decision as a “strong blow” against the Maduro “dictatorship”, without elaborating further. Republican Senator Marco Rubio supported the decision and called for the US to work with its allies for a “Venezuela free from tyranny”.

Political dialogue

While no substantial negotiations are underway or likely in the short term, some positioning is taking place within Venezuela. Gubernatorial and municipal elections are due later this year, and some attempts are being made to secure a more politically diverse national electoral council (CNE), unlike the government-controlled body that oversaw last December’s congressional elections, a process that led to the main opposition parties declaring a boycott. A total of 70 NGOs have now presented a list of 15 CNE candidates to form a more independent council. Guaidó has said he would support naming a new CNE on condition that its members not be chosen unilaterally by the government majority in the national assembly (AN).

Meanwhile, AN president Jorge Rodríguez has been pressing on with his own version of a national dialogue from which the main opposition leaders have either been excluded or have decided to stay away. While this looks like nothing more than a pro-government talking shop, Rodríguez has managed to persuade the business association Fedecámaras to participate. Its leading members are close to the opposition, so a communications channel could in theory be put in place.

State Department response

When questioned this week whether the Biden administration was seeking regime change in Venezuela, the US State Department spokesperson avoided a direct answer but stressed that “at the root of much of the misery and the suffering of the people of Venezuela stands one individual, and we have been very clear that…Maduro is a dictator…and we are committed to supporting the people through humanitarian measures and also targeting regime officials and their cronies involved in human rights abuses and corruption.