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MEXICO | Dispute over revoked lithium concessions. Cadence Minerals Plc, a British investment company working in the mineral resource sector, issued a request for consultations with Mexico’s government on 16 November. According to the request, on 31 August Mexico’s mining authority revoked the concessions it had granted to Mexilit and Megalit, two joint venture companies in which Cadence holds a 30% stake through its subsidiary REM Mexico Limited (REMML).

The concessions form part of a lithium mining project in Sonora state which consists of nine concessions granted to Cadence and Ganfeng Lithium, a Chinese lithium company that holds the remaining 70% stake in Mexilit and Megalit.

MEXICO | Avocados. Mexico is the largest producer and exporter of avocados in the world, with total exports amounting to US$3.14bn in 2022, of which the US made up some US$2.7bn. But these export riches are coming at a significant cost to the environment, according to a long study published by the new US-based NGO Climate Rights International (CRI) on 28 November.

Entitled ‘Unholy Guacamole: Deforestation, Water Capture, and Violence Behind Mexico’s Avocado Exports to the US and Other Major Markets’, the 250-page report argues that the expanding agricultural frontiers for avocados are leading to widespread deforestation and water theft in the western states of Michoacán and Jalisco, with indigenous leaders and other residents “fac[ing] violence and intimidation for defending the environment”. Brad Adams, Executive Director at CRI, blamed the US as well as Mexican authorities: “It doesn’t have to be this way. If exporters, importers, and supermarkets would make the effort to sell only deforestation-free avocados, it would dramatically reduce the economic incentive to clear the forests or attack the people defending them.”

Prime Minister Andrew Holness ended the year by hailing Jamaica’s good economic performance, highlighting strong growth, low unemployment, and healthy public works programmes including road improvements and residential home building. Investors are particularly impressed by reductions in the debt burden.

Earlier, the Planning Institute of Jamaica (PIOJ), a government office, had reported third quarter year-on-year GDP growth of 1.9%, reflecting higher employment, increased capacity utilisation in mining and quarrying, and continuing strong recovery in tourism. Manufacturing also did well. Agriculture contracted however, reflecting the impact of drought on traditional export crops such as banana, coffee, and sugar.

In October international credit ratings agency Moody’s Investors Service upgraded Jamaica from B2 to B1, while revising the outlook to ‘Positive’ from ‘Stable’. Moody’s said the change reflected the country’s resilient response to external shocks such as the coronavirus (Covid-19) pandemic, and the government’s strong focus on fiscal control. It pointed out that Jamaica’s total public debt as a proportion of GDP which stood at 110% in 2020 is expected to end 2023 at a more manageable 78%, and to fall further in subsequent years.

Moody’s said it believes Jamaica is on a “sustained positive fiscal trajectory” as a result of reforms which have improved the effectiveness of fiscal, monetary, and economic policies. Under its existing agreement with the International Monetary Fund (IMF), Jamaica is committed to reducing its public debt-to-GDP ratio to 60% or less by 2027/28, to be achieved by maintaining an annual primary surplus of 7% of GDP.

Despite being firmly on the right of the political spectrum, Ecuador’s President Daniel Noboa sees benefit in maintaining good relations with China.

President Noboa paid a state visit to China from 16-23 August, aimed at improving bilateral ties, and including a meeting with his host President Xi Jinping. He came away with seven cooperation agreements in areas like trade, security, communications, renewable energy, and the digital economy. According to a video posted on social media by Noboa’s office, China offered US$43m for cooperation in healthcare, security, education, and risk prevention, as well as announcing increased imports from Ecuador.

Seen from Noboa’s point of view there is much to be gained by pragmatically balancing relations with China and the US. In the first half of this year, Ecuador exported US$4.13bn of goods to the US, its main export market, and US$3.64bn to China, its second largest market. Exports to China increased by 23.0% year-on-year, against 19.6% for US-bound exports.

In geopolitical terms, Ecuador remains in a close defence and security alliance with the US, with a strong focus on fighting organised crime and drug trafficking.  While recognising ideological differences, Chinese officials are keen to further develop bilateral ties. In a 17 August report, the US-based non-profit China Global South Project points out that Wang Youming, an analyst at the China Institute of International Studies (CIIS), a foreign-policy think tank affiliated with China’s foreign ministry, told the Shanghai Observer, a Chinese news outlet, that the visit did three things: one, stress bilateral continuity despite Ecuador’s move to the right; two, promote a “pragmatic, balanced and diversified” foreign policy; and three, offer a chance to go beyond a pattern of being “politically cold but economically warm” towards China.

Shrimp

China helpfully provided a ‘good news’ item for President Daniel Noboa, ahead of his visit to Beijing, by lifting the suspension of eight of 14 Ecuadorean shrimp exporting companies which had been blacklisted since late 2025 and early 2026. China is Ecuador’s largest shrimp market.

Development: A mega opinion poll commissioned and published on 14 August by the main Colombian daily, El Tiempo, put the four mayoral candidates for the capital Bogotá in the 30 October regional elections on a technical tie.

Significance: The intense competition between Gustavo Petro (Movimiento Progresista), Entique Peñalosa (Partido Verde & Partido de la U), Antanas Mockus (Alianza Social Independiente) and Carlos Fernando Galán (Partido Cambio Radical), means that any one of them could win by a slither. If there were a tie between two or more candidates (whereby candidates receive the exact same number of votes), the election would be decided by a hat draw. The electoral jumble in Bogotá suggets that each of the candidates is gathering support from beyond their individual party political support bases.

Key points:

• According to the Datexco poll, Petro is on 16.44%; Peñalosa is on 14.71%; Mockus is on 14.58%; and Galán is on 12.99%. Just under 12% of respondents were undecided. The survey had a 3.7% error margin.

• Aurelio Suárez, of the Polo Democrático Alternativo (PDA), from which Petro quit over differences with the national directorate, only registered 0.79% support, suggesting that a majority of PDA voters still back Petro.

• Mockus and Peñalosa also appear to have the joint support of members of the Partido Verde, which Mockus quit after Peñalosa accepted the backing of the Partido de la U (PU), the ruling party of President Juan Manuel Santos and his predecessor Alvaro Uribe (2002-2010).

• The PU support is harder to define, because if Peñalosa were receiving the full support of its electoral base he ought to be well ahead in the race. However, it seems that PU and Partido Conservador voters (PC) are split between several candidates. Some may even back an independent, Gina Parody, a former PU member (who is on 9.61%).

The past week has reinforced the impression that Japan is determined not to be cowed by China.  On 2 November, it was announced that India and Japan are to increase their bilateral military ties.  On 7 November, senior Japanese politicians met with the Dalai Lama in Tokyo.

India’s Defence Minister AK Antony and his Japanese counterpart Yasuo Ichikawa met in Tokyo on 2 November and pledged to “actively pursue consultations and cooperation in the field of maritime security”.  In 2012 the two sides will hold a defence dialogue in Tokyo and they will increase mutual visits of naval ships and aircraft and carry out bilateral military exercises.

Rajiv Bhatia, a former Indian ambassador who attended an India-Japan maritime security dialogue in Tokyo last month, explains the nature of current India-Japan collaboration in the following terms.  He says that while Japan adheres to the US’s ‘hubs-and-spokes’ alliance policy in Asia, with the US as the hub, it also believes that this “needs to be reinforced by the spokes (such as Japan and India) networking with each other more closely”.  The problem with this, from China’s point of view, is that such a development begins to look more like a ‘contain China’ network of alliances.

On 7 November, a number of Japanese ruling party and opposition parliamentarians met with the Dalai Lama in Tokyo.   Among those meeting the Tibetan spiritual leader was Akihisa Nagahima, special adviser to Prime Minister Yoshihiko Noda on foreign and defence affairs.  Also present was Shu Watanabe, senior vice defence minister.  It was the first meeting between the Dalai Lama and senior members of the ruling Democratic Party of Japan since it came to power in 2009.  China responded by saying that the Dalai Lama “is not a regular religious figure but a political exile engaged for a long period in activities designed to split China”.

CANAL | Toll increase delayed in Panama. On 27 June the Panama Canal Authority (ACP) announced that it would delay planned toll increases on the Panama Canal, which were due to take effect on 1 July.  The decision follows complaints by the International Chamber of Shipping (ICS), along with Ecuador, Chile and Japan. In a statement the ACP noted, “At the request of the industry, in a statement the ACP noted, “At the request of the industry, implementation of the new charges has been postponed from July 2012 to October 2012, giving the industry additional lead time before implementation of the new tolls, as well as providing an additional three months before the second step of increase in 2013”.

POLITICS | El Salvador's Sánchez Cerén steps down as education minister. On 28 June Vice-President and Education Minister Salvador Sánchez Cerén announced his resignation as education minister. The move follows the announcement earlier in the week that he will run as the presidential candidate for the left-wing ruling Frente Farabundo Martí para la Liberación Nacional (FMLN) in the 2014 election. President Mauricio Funes asked that he step down to prevent a “conflict of interests” between his political candidacy and his ministerial responsibilities. Funes has yet to name a replacement.

JUDICIARY | Guatemalan appeals court suspends Ríos Montt case. On 27 June the Asociación de Familiares de Detenidos-Desaparecidos de Guatemala, which represents families of those disappeared during the civil war, presented an appeal before the constitutional court against an appeals court ruling issued the previous day. That ruling suspended the trial, announced in May, against the former dictator Efraín Ríos Montt (1982-1983) in relation to the Las Dos Erres massacre, one of the most brutal civil war atrocities. The appeals court ruling was slammed by human rights groups as a major setback in the efforts to address past impunity. Ríos Montt also faces trial for at least 72 incidents involving an estimated 1,771 deaths and the displacement of nearly 30,000 Guatemalans during his 17-month period in power.

ECONOMY| Canadian aid package. On 22 May Canada’s prime minister, Stephen Harper, on official visit in Peru, revealed that he had agreed a new U$53m aid package with President Ollanta Humala that nearly doubled Canada’s total aid for Peru in 2011-12. The package seeks to strengthen the effectiveness of environmental impact assessments of mining and energy projects and includes resources for education and agriculture. Local environmentalists raised concerns about the fact that the new aid package appears to be closely tied to Canadian mining interests in Peru. Peru is Canada’s third largest destination for foreign direct investment in Latin America, most of it going to the mining sector; there are over a hundred publicly listed Canadian extractive companies operating in Peru. Exports to Canada totalled Can$4.453bn in 2011, mostly from precious metals, mineral ores, fuels and oils, and agricultural products. The two leaders also signed a cooperation agreement that seeks to facilitate transactions involving the purchase of assets and services for the defence sector, which has also benefited from the bilateral free trade agreement inked in 2009.

The government began its salvage operation this week to try and recover President Ollanta Humala’s rapidly dwindling popularity. Prime Minister Juan Jiménez Mayor entertained the first leaders of Peru’s opposition political parties. He said that the meetings were motivated by the need to engage in consensus-building after months of confrontation. Conscious that these meetings are only taking place because the government is perturbed about Humala’s popularity, individual parties have dusted off their wish lists. They are hoping to win backing for some long-cherished proposals in exchange for providing constructive cross-party dialogue to “consolidate the economic system”, a euphemism for buttressing Humala.

Jiménez began the series of meetings with the conservative Partido Popular Cristiano (PPC). He met the party’s founder, Javier Bedoya Reyes, former presidential candidate, Lourdes Flores, and party president, Raúl Castro. The PPC leaders presented Jiménez with a series of proposals, ranging from State reform to combat corruption and the restoration of a bicameral congress, in return for a commitment to ensure stability for the duration of the Humala administration. Flores promised full assistance to eliminate any obstacles to investment, especially in small and medium sized enterprises (SMEs).

Flores is used to propping up struggling politicians. She played a crucial role in ensuring that the mayor of Lima, Susana Villarán (who narrowly defeated Flores in the October 2010 mayoral elections), edged a recall referendum last March. Principles prevailed over party politics for Flores, underpinning her democratic credentials, although her support then was a deft political move, leaving her and the PPC well-placed to benefit. The same is true, to a lesser extent, now.

Jiménez next met the small Restauración Nacional (RN), whose leader Humberto Lay Sun, pushed for an overhaul of the education system, which he said was “the key to solving the three biggest problems we face: corruption, poverty and citizen security”. Then it was the turn of Perú Posible (PP), the party of former president Alejandro Toledo (2001-2006), with which the government has had a strained alliance in congress. Toledo, at a conference in Europe, did not attend but other party bigwigs, such as the secretary general, Luis Thais, met Jiménez. The PP called for a law against floor-crossing (which afflicted the PP when Toledo was in power) and, like the PPC, a bicameral congress. If the government were to help grant this wish it would almost certainly cement Humala’s unpopularity: in a survey conducted only last week congress was voted the most corrupt state institution; it is unlikely that the public would look kindly on adding another chamber of congress with the associated extra expense and bureaucracy.

Informal mining accord

While the meetings with party political leaders were getting underway, the government struck an accord with informal miners on 22 August to end four days of protests. The government is keen to formalise the informal mining market, especially gold, which accounts for some 20% of national gold production, about US$2.6bn in gross value, in order to increase the tax take. This is particularly relevant as mining royalties are falling. The informal miners have considerable political influence, however, in congress and over regional and municipal authorities.

The formalisation process includes a series of steps including a “statement of commitment” by the miners to comply with all the requirements to mine legally, and undertake various environmental commitments. The deadline for completion of the whole process is April 2014, but the government is now offering to be more flexible. Critics argue that the government is not being tough enough with informal miners who have failed to present a statement of commitment and must close all illegal mines in Peru.

• García and Fujimori

Potentially the most interesting meetings are yet to come. They are with the Partido Aprista Peruano (PAP), of President Humala’s predecessor Alan García (2006-2011), and Fuerza Popular (FP) led by Keiko Fujimori. Both parties have been fiercely critical of the Humala administration.

*** Towards Afghanistan’s presidential election.  Registration as a candidate for Afghanistan’s 5 April 2014 presidential election closed on 6 October.  Informed sources say that the election is likely to go to a run-off between whichever candidate President Hamed Karzai supports and opposition leader Abdollah Abdollah, who came second last time with 31% against Karzai’s 49%.

One difference this time around is that the international community is likely to insist on the elections being more transparent.  This could favour Abdollah, who now enjoys the support not only of his allies from 2009 but also that of Vice-President Marshal Fahim, influential Hazara party leader Mohammad Mohaqeq, and the Hezb Eslami – all three of whom sided with Karzai in 2009.  Abdollah, who was foreign minister from 2001 to 2006 and now leads the largest opposition group, the National Coalition of Afghanistan, is half Tajik and has won the backing of most of the significant Tajik powerbrokers.

It is not yet certain whom Karzai will back, but his backing will be key as he should be able to persuade rival candidates to drop out of the contest and support his chosen one.

*** Israelis not hopeful of Rowhani.  An opinion poll published in Israel on 4 October showed that 84% of Israelis do not believe that Iran intends to halt its nuclear programme.  Furthermore 47% of Israelis don’t believe that President Obama will consult with Israel on everything to do with the negotiations.  Some 66% agree that Israel should stand alone against Iran if necessary.

*** Greece pledges itself to Israel.  One of the consequences of the fallout between Israel and Turkey has been a gradual coming together of Israel and Greece.  Greece’s Prime Minister Antonis Samaras was in Israel on 8 October pledging his country to a long-term strategic partnership with his hosts.  He said Greece and the Israeli people had much in common having both suffered from the Nazis, and that both were “united by common conviction, summed up in two powerful words: Never Again!”  He added that the relationship between the two countries was “a long term strategic partnership and we want to evolve it as such”.

Samaras called for cooperation between Greece, Cyprus, and Israel over energy resources, saying: “Greece and Cyprus and Israel can together become a beacon of hope for all nations and for all peoples in our area.”  It is doubtful if Turkey sees it like that.

El Presidente de Uruguay, José Mujica, comenzó su último año en el poder el 1 de marzo presentando al congreso su informe anual para abrir la nueva sesión. El informe fue notable, no tanto por lo que dijo como por lo que él no dijo. En el mensaje introductorio al informe, Mujica no hizo ni una sola mención de ninguna clase de Argentina y, de alguna manera perversamente, tampoco hubo incluso ninguna mención del país en el informe del ministerio de relaciones exteriores. En cambio, el informe identificó como los socios estratégicos de Uruguay a países como Brasil, México, y Venezuela.

Es axiomático que los lazos de Uruguay con Argentina han estado tensos en años recientes, pero la tensión bilateral en meses recientes ha sido casi palpable. El Presidente Mujica se reunió con su par de Argentina, Cristina Fernández, en Cuba, al margen de la cumbre de la Comunidad de Estados Latinoamericanos y del Caribe (Celac) el 28 de enero, pero él se fue con poco para mostrar por el encuentro. La Argentina no ha retirado la amenaza de una nueva visita a la Corte Internacional de Justicia (CIJ) de La Haya, por la decisión de Mujica del pasado octubre de permitir el incremento en la producción de la planta de pulpa de celulosa de propiedad de la firma UPM de Finlandia en los bancos del Río Uruguay, la frontera natural entre los dos países, alegando que conduciría a la contaminación adicional, en violación de los términos de la resolución original.

La administración Mujica está furiosa ante lo que ve como una medida retaliadora por Argentina, cuya autoridad nacional de puertos ha restringido los trasbordos de carga marítima con los países con los que no tiene acuerdos de transporte marítimo, como Uruguay, que se estima que podría resultar en que los puertos uruguayos de Montevideo y Nueva Palmira pierdan US$100m al año. El recientemente nombrado ministro de economía & finanzas de Uruguay, Mario Bergara, dio una entrevista el mes pasado en la cual trató (sin mucho éxito) de restarle importancia a la vulnerabilidad de Uruguay ante la estrategia de la política económica en Argentina, al mismo tiempo que criticaba la enorme incertidumbre que se cierne sobre la dirección de la política económica de Argentina, y quien está a cargo de ella. Esto provocó una feroz réplica del jefe de gabinete de Argentina, Jorge Capitanich, quien calificó los comentarios de Bergara como “inadmisibles”.

Teniendo en cuenta la reciente historia de tensión, no fue particularmente sorprendente que Uruguay opte por no incluir a Argentina en su reducida lista de socios estratégicos en la región, pero el hecho de no mencionar para nada a la Argentina fue sorprendente por decir lo menos. Quizá hubo una referencia indirecta a Argentina en los comentarios de Mujica de que “las principales incertidumbres” que afectan al proyectado crecimiento del PIB de Uruguay “vienen del mundo y, particularmente, de la región”, y “nuestra escala nos hace vulnerables a las contingencias externas”.

Minería

Otra cuestión que brilló por su ausencia en el informe fue el controversial proyecto minero de Aratirí. El gobierno logró la aprobación de legislación en el congreso el pasado agosto, permitiendo la minería a cielo abierto en el país, ante la feroz oposición del sector agrícola, con el objetivo principal de explotar las 250m de toneladas de los depósitos de mineral de hierro en Aratirí, que cubre unas 14.000 hectáreas que abarcan a los tres departamentos centrales de Durazno, Florida, y Treinta y Tres. El ministro de industria, Roberto Kreimerman, dijo el 20 de febrero que el proyecto se acordaría dentro de poco con la firma minera India, Zamin Ferrous, y podría significar un ingreso neto de US$400m anuales para el país durante los próximos 20 años.

La omisión de Aratirí en el informe fue muy evidente debido a que el informe enfatizó la importancia de un planeado puerto de aguas profundas en la costa del Atlántico, que el ministerio de transporte y obras públicas describió como la obra más ambiciosa en tiempos recientes que “refundaría el país y la región”. El puerto está vinculado estrechamente con Aratirí, al que estaría conectado con un ducto de 212kms y que exportaría desde ahí.

• Marihuana

Durante la presentación del informe anual del International Narcotics Control Board (INCB) el 4 de marzo, Raymond Yans, el presidente del cuerpo de la ONU, reiteró sus comentarios de que la ley de Uruguay que legaliza la marihuana contraviene la convención única sobre drogas narcóticas de 1961, y recordó a Uruguay la necesidad de respetar los tratados. Yans dijo que la ley era “una iniciativa desacertada”, agregando que era “esencial que los esfuerzos globales para frenar el problema de la droga sean unificados”. El informe mismo no menciona la nueva ley de Uruguay, explicó Yans, porque está fue aprobada por el senado recién en diciembre después de que el informe de INCB ya estaba concluido.

Two years and counting. That is how long the founder of the whistle-blowing website WikiLeaks, Julian Assange, has been holed up in Ecuador’s embassy in London. In a joint press videoconference with Assange in Quito and London, Ecuador’s foreign minister, Ricardo Patiño, announced on 19 June that his government’s support for Assange would continue for “the whole of the mandate” of President Rafael Correa which concludes in 2017 (and presumably beyond if Correa succeeds in amending the constitution to allow for indefinite re-election).

Assange entered the Ecuadorean embassy in London on 19 June 2012. Soon afterwards Ecuador granted Assange ‘diplomatic asylum’ on humanitarian grounds, but Britain has refused to grant him safe conduct. The British police have carried out 24-hour vigilance of the embassy, which has apparently cost some UK£6m (US$10.2m) so far.

This time last year Patiño flew to London to meet his British peer William Hague to try and make progress on the standoff. Both men agreed at the time to create a working group. But Patiño conceded during the videoconference that this had completely failed to get off the ground. “There seems to be an impasse from a legal point of view. We could not agree on specific objectives for the group so we haven’t even formed the group a year later,” Patiño said.

Patiño also condemned “the resounding silence” of the newspapers Der Spiegel, Le Monde, El País, The New York Times and The Guardian, which all published material from WikiLeaks, such as compromising US diplomatic cables. Patiño said the papers had hung Assange out to dry.

Meanwhile, Assange told the videoconference that his lawyers had advised him that extradition to the US was still a “serious risk” if he gave up political asylum. Assange faces charges of sexual assault in Sweden but both he and the Ecuadorean government are convinced that he would face onward extradition to the US.

YASunidos fights on

The advocacy group YASunidos is refusing to give up the fight over the imminent exploitation of oil in Ecuador’s Yasuní nature reserve. On 18 June the lawyers for YASunidos, Julio César Trujillo and Pablo Piedra Vivar, presented an appeal to the contentious electoral tribunal (Tribunal Contencioso Electoral [TCE]) against the resolution of the national electoral council (CNE) that the group had failed to collect the requisite number of valid signatures to trigger a referendum over the extraction of oil in Yasuní. Piedra also revealed that Yasunidos had requested that the Inter-American Commission on Human Rights (IACHR) issue precautionary measures in favour of those who signed the petition.
A group of professors from the Escuela Politécnica Nacional (EPN) and the Universidad Andina Simón Bolívar (UASB) have claimed that the verification process carried out by the CNE of signatures calling for a referendum on the drilling was flawed. In a statistical analysis of the signatures presented by YASunidos, the professors concluded that 673,862 of the total of 757,623 were valid, which would have been enough to trigger a referendum.

The professors analysed a sample of 2,508 forms containing 20,064 signatures, using a computer programme to compare the names with identity numbers. They concluded that while some of the signatures were imperfect (‘failing to fulfil all of the formalities’) they were technically valid.

The reserves in the 1bn barrel Ishpingo-Tambococha-Tiputini (ITT) oil field are expected to come on-stream from mid-2016.

• Murder rate

“After 20 or 25 years we have been able to reduce the murder rate to a single digit,” the interior minister, José Serrano, announced in mid-June. The murder rate fell to 3.7 per 100,000 inhabitants in the first five months of 2014, Serrano said. In January the interior ministry reported that the murder rate had been 10.87 per 100,000 in 2013, down from a record high of 18.88 in 2008, early in the mandate of President Rafael Correa. At the end of 2011 the Correa administration launched a citizen security initiative including security cameras, intelligence work, and a purge of the police force. Serrano said that 322 members of the police force had recently been fired for disciplinary reasons. Of these 126 face charges, ranging from drug-trafficking and murder to theft and extortion.

MEXICO | Third phase of ‘Round 1’ of oil concessions launched

On 11 May Mexico’s national hydrocarbons commission (CNH), the sector regulator, announced that it had approved the terms of the public tender process for the third phase of ‘Round 1’ of oil and gas concessions. The award of hydrocarbon exploitation concessions open to national and foreign oil firms is a key part of the flagship energy sector reform passed under the federal government led by President Enrique Peña Nieto last year, which aims to boost Mexico’s flagging oil and gas production levels.

According to a CNH statement, this phase of Round 1 is the first to include independent oil and gas production licenses open to private oil firms, as opposed to the previous two phases, which were only for joint production licenses with the state-owned oil firm, Pemex. The statement goes on to add that this new phase includes 26 mature onshore oil and natural gas fields “many of which are already in production” and that have a combined production capacity of up to 350,000 barrels of oil per day (bpd) and 225m cubic feet of gas per day. Five of the fields up for tender are located in the state of Chiapas; eight in Nuevo León; five in Tabasco; two in Tamaulipas and six in Veracruz.

The launch of the public tender process was made official following publication of the terms in the official gazette on 12 May. The CNH has said that it expects to award the concessions of the third phase of Round 1 by December.

MEXICO | Joining forces with Canada to pressure US at WTO

On 18 May the governments of Mexico and Canada announced that they would jointly seek authorisation from the World Trade Organization (WTO) to apply retaliatory trade measures against the US if it continues to discriminate against their beef and pork exports. The announcement came after the WTO issued a final ruling on a long-running dispute between the three members of the North American Free Trade Agreement (Nafta) over the US’s 13-year old meat-labelling rules, which stipulate that US supermarkets must include labels identifying whether beef and pork meat cuts came from livestock born, raised and slaughtered in the US.

Mexico and Canada complained that the labelling system discriminated against their producers and violated international trade laws as this had nothing to do with food safety as claimed by the US authorities and was simply a protectionist measure designed to prevent the free entry of foreign meat products into the US market.

After years of analysing the claims from both sides the WTO agreed with Mexico and Canada in its final ruling. The ruling was celebrated in a statement jointly signed by Mexico’s economy and agriculture ministers, respectively Ildefonso Guajardo and Enrique Martínez, and their Canadian counterparts, Edward Fast and Gerry Ritz. The joint statement added that the ruling left the US with two options: either fix its legislation so that it abides by its international trade obligations, or be subjected to punitive tariffs on a range of goods, agricultural and non-agricultural.

MEXICO | Banxico cuts growth forecast

On 19 May Mexico’s central bank (Banxico) announced that it was cutting its official GDP growth forecast for the year from 2.5%-3.5% to 2%-3%, due to a loss of dynamism in the domestic economy. Banxico’s new forecast is lower than the consensus forecast of 2.8% registered in the bank’s latest survey of local economists.

The announcement of the growth revision was made by Banxico’s president, Agustín Carstens, during the presentation of the bank’s quarterly inflation report. Carstens said that the revision was due to the fact that some of the downside risks that Banxico analysts had feared had materialised, such as still relatively weak economic activity in the US; lower consumer and investor confidence due to increased volatility in financial markets; and lower domestic oil production. In particular, Carstens pointed to the 7.7% fall in oil production in the first quarter and the fall of Mexican crude prices from US$92.41 per barrel in the final quarter of 2014 to US$44.48 per barrel in March as one of the main factors behind the revision. As for inflation, Carstens said that Banxico expected that this would close the year at around Banxico’s target of 3%.

• Oil theft losses

On 18 May the Mexican daily, El Universal, published a report based on information obtained through a freedom of information request calculating that as a result of oil theft Mexico’s state-owned oil firm, Pemex, lost some M$20bn (US$1.29bn) in 2014. According to El Universal, information obtained from Pemex shows that the number of clandestine thefts from oil pipelines across the country last year was 3,348, significantly higher than the 2,614 found in 2013. El Universal points out that the number of thefts discovered has dramatically increased since 2007, when only 324 were found. El Universal attributes this increase to the growing participation of organised crime in the petrol black market, where a litre of petrol is traded at between US$0.30 and US$0.50, half the official price.

CUBA | Agreement with Paris Club

On 8 June diplomats from member countries of the Paris Club announced that they had reached an agreement with Cuba over the size of its debt to its Paris Club creditors since the Caribbean nation decided to suspend the payments on its debt in 1986. Reaching an agreement with the Paris Club is a significant and necessary first step to allow Cuba to renegotiate its foreign debt, which in turn could lead to the country regaining access to international capital markets.

According to diplomats who spoke to the international media on condition of anonymity, the two sides had agreed to set the value of Cuba’s debt owed to the 16 Paris Club members at US$15bn. “The final sum of US$15bn was agreed by both sides. This is a great first step and the creditors will now meet to set the guidelines for formal talks,” one of the diplomats said. The figure was set to include principal payments, service charges, interest and penalties. Cuba began holding talks with the Paris Club in 2000 and last year it agreed to move towards establishing negotiations to settle its debt with France, its largest creditor in the Paris Club.

The diplomats added that the agreement represented another sign that the Cuban government led by President Raúl Castro is interested in fully reintegrating into the global economy and respecting the rules of international finance. The two parties are now poised to take the next steps towards settling Cuba’s debt, which consists in establishing the terms of the payment.

DOMINICAN REPUBLIC | Falling unemployment

The government led by President Danilo Medina announced on 4 June that so far this year 28,650 formal jobs have been created in the Dominican Republic. According to the government this brings the total number of jobs created since Medina assumed office in August 2012 to 327,000, or 82% of the 400,000 new jobs that he hoped to create before the end of his four-year term in 2016.

The figures represent a significant political boon for Medina. They suggest that it is likely that his ambitious job creation target could be reached within the next 11 months leading up to the May 2016 general elections, in which Medina looks poised to seek re-election [WR-15-22].

The job creation figures were presented by Medina’s labour minister, Maritza Hernández, during the 104^th Session of the International Labour Organization (ILO)’s International Labour Conference currently being held until 13 June in Geneva, Switzerland. Hernández highlighted that the rapid pace of job creation under the Medina government’s national employment development plan has led the Dominican Republic’s employment rate to fall from 7.01% in 2012 to 5.97% last year as formal employment increased by 5.95% in 2012-2013 and by 5.62% in 2013-2014.

According to Hernández, the main sectors which have created more jobs are trade (34.04%); industry (33.26%); and services (23.42%). In addition, 120,819 of the jobs (36.86%) were created by micro, small and medium enterprises (SMEs). Hernández said this was achieved thanks to the Medina government’s policies of providing more credit for SMEs and of ensuring that the Dominican State purchases up to 20% of the production of registered SMEs.

• El Salvador tax accord

On 8 June the government of El Salvador announced that it had signed the Organisation for Economic Co-operation and Development (OECD)’s Convention on Mutual Assistance in Tax Matters. An official statement explained that the Convention, which is designed to facilitate the exchange of tax information with a broad network of countries so as to combat tax fraud and offshore tax evasion, was undersigned by the government led by President Salvador Sánchez Cerén on 1 June, thanks to the implementation of the tax reforms it introduced last year. El Salvador has become the 86^th country to sign up to the Convention but only the third Central American country to do so after Costa Rica and Guatemala.

Peru’s President Martín Vizcarra visited congress on 9 August bearing three constitutional reform projects he sees as pivotal to address the country’s current political and judicial crisis. That Vizcarra elected to go to congress in person underscored the importance he attaches to the swift approval of the reforms that will then go to a public referendum. Vizcarra was received by the head of congress, Daniel Salaverry, a member of the right-wing opposition Fuerza Popular (FP, Fujimoristas). Although Salaverry promised cooperation, Vizcarra is acutely aware that the fate of the reforms is in the hands of the FP, which dominates congress. For this reason, Vizcarra has gone over the party’s heads to arguably a higher power – the public – to support his cause.

The first of the reforms presented to congress would restore a bicameral legislature, the senate having been abolished in 1992 by former president Alberto Fujimori (1990-2000). Conscious that the unpopularity of congress could make this a hard sell to the electorate, the Vizcarra administration made clear that the two chambers combined would only come to 130 seats, the current size of the unicameral congress. There would be a 30-seat senate and a 100-seat lower chamber, barely half the size of the 60-seat senate and 180-seat lower chamber in place until 1992.

The new senate would approve treaties, present constitutional reform projects and organic laws, approve the budget, and make key appointments: the ombudsman, comptroller general, members of the constitutional tribunal, and the three directors of the central bank. It would not be possible to dissolve the senate. Senators would be elected from a closed list of candidates, with no preference allowed in the vote, for a period of five years. The lower chamber would carry out day-to-day business, legislate, and summon (and censure) cabinet ministers. It would be possible to dissolve the lower chamber. Deputies would be elected from a closed list, allowing voter preference, for five years. Congressional lists would need to be 50% female and 50% male to ensure gender equality.

Deputies would be elected by electoral microdistricts and senators by macrodistricts. Grouped by technical criteria to be defined by law, these would overlay existing administrative boundaries of regions, provinces, and municipalities, not supplant them. Two deputies and senators would be elected from each microdistrict and macrodistrict respectively. Drawing up these new electoral boundaries will inevitably be the cause of fierce debate in congress. It is not clear what the criteria for the new districts would be, whether seats would be assigned by population size, economic or social complementarity.

There is much more public support for the Vizcarra administration’s other two proposals which would place a bar on congressional re-election, and controls on campaign financing of political parties. An opinion survey by the national pollster Datum, published as Vizcarra sent the projects to congress, showed 78% of respondents favoured no re-election (see sidebar).

Vizcarra said he wanted congress to approve the reforms in time for a referendum on 7 October, to be held alongside regional and municipal elections or, at the latest, by the second round of these elections in December “given the sense of urgency to reform our political and judicial system”. But the proposed reforms will have to be approved at committee level before going before the full congress. And there is, unsurprisingly, far more appetite among deputies for the judicial reforms already sent to congress than disallowing their own re-election.

Sidebar: Popularity

The most recent Datum poll showed that President Vizcarra’s approval rating leapt by 10 percentage points from 39% to 49% over the previous month. The pollster concluded that Vizcarra had successfully tapped into public disenchantment with the political and judicial class by announcing his intention to call a referendum during his state-of-the-nation address on 28 July.

Last week, the international heads of state who were gathered in Argentina for the G-20 summit reiterated their commitment to the “irreversible” Paris Agreement on climate action. US President Donald Trump continues to stand alone in his decision to withdraw from it, although he might have found an ally in his condemnation of the agreement had Brazil’s President-elect Jair Bolsonaro been in attendance.

Bolsonaro is not a climate change denier, although members of his future government appear to be – his designated foreign minister has called climate change a Marxist plot. He is, however, a vocal critic of the Paris Agreement; of the rules that come with international commitment to sustainability; and of the environmental protection laws in place in Brazil.

While incumbent President Michel Temer, under whom Brazil’s environmental record has worsened, was in Buenos Aires reaffirming his commitment to implementing the Paris Agreement, Bolsonaro was criticising the country’s “radical environmentalism” and “industry of environmental fines”. Bolsonaro’s principal grievance with environmental policies is that they have prevented Brazil from developing and reaching its full economic potential, by turning swathes of land into protected areas and penalising the agricultural industry.

As with many of his policy areas, it is unclear what exactly Bolsonaro proposes to do. He will likely cut the dwindling budget of the environment ministry (MMA) further still; try and diminish the influence of Ibama and ICMBio (the MMA’s environmental protection and conservation agencies) in favour of the agriculture ministry; and open up protected areas to agriculture and infrastructure projects. Brazil’s decision to rescind its offer to host the 25^th Conference of the Parties (COP25) climate talks next year, pushed for by Bolsonaro, gives a further indication of where he will stand on the international stage.

The global environmental outlook is grim, and turning back on international commitments to mitigate climate change would have devastating socio-environmental effects. Deforestation in Brazil, by far the country’s biggest source of greenhouse gas emissions, is on the rise again. Brazil is already the world’s deadliest country for environmental defenders, and the Catholic Church’s land commission (CPT) notes that rural violence and attacks on indigenous people as well as Ibama and ICMBio teams increased in October and November this year, during and right after the electoral period.

Beyond the environment and human rights, other areas will be negatively affected if Bolsonaro pursues an agenda indifferent to fighting climate change. Over the past decades, Brazil has successfully built up a reputation as a global leader on environmental issues and sustainable development, as Temer pointed out when the country had offered to host the COP25. Bolsonaro’s approach is already tarnishing Brazil’s international image and diminishing its influence, in the only area in which the country can credibly claim global leadership. This could also risk harming agriculture, the very industry Bolsonaro aims to support.

The agribusiness sector fears that its exports could be punished on the international market if the country rolls back its environmental protection commitments. Yet agriculture and sustainability do not have to be mutually exclusive, as shown in a report by a Brazilian group of environmentalists, academics and agribusiness representatives, released this week to coincide with the COP24. The report defends the development of agricultural activity in Brazil in line with efforts for environmental protection and emissions reduction.

• Mystery environment minister

After going back on his decision to merge the agriculture and environment ministries, President-elect Bolsonaro is struggling to choose his minister for the environment. The appointment has been expected and repeatedly pushed back for weeks now, with reports of internal disagreements on the matter within the government transition team. Half a dozen names are reportedly under consideration, and the agriculture lobby is expected to have a say in the final appointment.

Venezuela’s de facto president Nicolás Maduro has declared an emergency in the state-run oil company Pdvsa. Maduro made the announcement directly after the US government slapped sanctions on the trading arm of Russia’s state-owned oil producer Rosneft last week [WR-20-07]. Pdvsa is no stranger to emergencies. Twice in 2017 Maduro announced a decisive restructuring of Pdvsa to much fanfare. Then, it was ostensibly designed to snuff out rampant corruption but was motivated by a clear political agenda. It was the first time the armed forces had been put in control of the state cash cow, but the promised surge in oil production has not been forthcoming, declining even further. Now, Maduro is empowering civilians to try and set things straight, albeit with a strong military presence.

“I declare an energy emergency in the hydrocarbons industry with the aim of adopting urgent and necessary measures to guarantee national energy security and protect the industry from imperialist aggression,” Maduro said at Pdvsa headquarters in Caracas on 19 February. Maduro said the oil industry would be transformed in accordance with “a new model of 21^st-century socialist management”. Creating new layers of bureaucracy to carry the nation to a great victory is the customary response of the Bolivarian government to recurrent emergencies in Venezuela. But this change is more eye-catching because the military, essential to keeping Maduro in power, has seen its wings clipped.

Maduro designated the economic vice president, Tareck el Aissami, as the head of a presidential commission that will have full powers to restructure the oil industry, with former oil minister Asdrúbal Chávez serving as his deputy. This is an indirect acknowledgement that the military has failed to turn Pdvsa’s fortunes around. Maduro was naturally keen not to present it as such. Indeed, he pointed out that the defence minister, Vladimir Padrino López, and his number two, Remigio Ceballos, would both sit on the commission, “in order to harness all of the power of the armed forces”. The current oil minister and president of Pdvsa, Major General Manuel Quevedo, who has presided over a sustained slump in oil production, will also sit on the commission but this is technically a demotion.

Oil production

Nicolás Maduro said the presidential commission would start work immediately and begin a process of “revision and recovery”. Maduro said there would be no more excuses, crude production would be lifted to at least 2m barrels per day (bpd), a figure which would once have been disappointing but which now is a pipe dream. According to the Organization of the Petroleum Exporting Countries (Opec), citing secondary market sources, oil production in Venezuela last December stood at just 714,000 bpd. Even by the government’s own inflated figures oil production was only 907,000 bpd.

MEXICO | Increase in FDI in 2021. Mexico’s economy ministry (SE) released preliminary figures on 21 February showing that the country attracted US$31.62bn in foreign direct investment (FDI) in 2021. This represents an 8.7% increase on the previous year, when FDI amounted to US$29.08bn.

According to the SE, the majority of FDI was in the manufacturing sector (39.7%), followed by mining (15.2%), financial services and insurance (15%), transport (8.8%), and trade (8.5%).

In terms of the origin of the investment flows, the US was the biggest investor in Mexico, accounting for 47.5% of FDI in 2021. It was followed by Spain (13.7%), Canada (6.5%), the United Kingdom (5.7%), Germany (5.2%), and Japan (5%).

*** OECS TO PRIORITISE REGIONAL TRANSPORT. Leaders of the Organisation of Eastern Caribbean States (OECS) met in Montserrat on 19 October. The meeting was hosted by Premier Joseph Farrell who highlighted that the lack of an integrated regional transport system, particularly since the collapse of Caribbean airline LIAT, was hampering the movement of people and goods within the OECS. He told the assembled leaders: “We as a region must therefore work together and with other interest groups to find a lasting solution to reliable transportation.”

Prime Minister Dickon Mitchell of Grenada made the point that leaders were only able to get to Montserrat by charter flight. He said: “This cannot continue.”

*** LOW INSURANCE COVERAGE A PROBLEM. At the bi-annual meeting of Caribbean Community (Caricom) central bank governors, held in The Bahamas from 3-4 November, the deputy managing director of the International Monetary Fund (IMF), Bo Li, told delegates that insurance penetration in the Caribbean “relative to climate-related damage is generally lower than in Latin America…” As a result, Bo Li said, governments often need to provide financial support to repair public infrastructure and assist uninsured households, and “this increases public debt and the risks to domestic financial institutions”.

In July, President-elect Claudia Sheinbaum repeated campaign pledges to address issues surrounding water supplies in central Mexico.

Speaking during a visit to Tula, Hidalgo state, on 14 July, Sheinbaum said she would develop a water plan for Mexico City (CDMX), Estado de México (Edomex), and Hidalgo. Record high temperatures and delayed rains have raised concerns about the future of water supplies, with many communities suffering shortages and increased exposure to contamination.

These plans are part of a national strategy to overhaul the sector which was set out in Sheinbaum’s campaign manifesto. In the document, the president-elect recognises that water is vital for household consumption, food security, economic growth, energy generation, and public health. She also says that this year’s prolonged drought has demonstrated the dangers of climate change, meaning that efforts must be made to avoid overexploitation and contamination of water sources.

Sheinbaum proposes reforming the national water law to “protect the human right to water” and strengthening the national water commission, Conagua, as well as reviewing existing water concessions to prevent water hoarding and unregulated water sales. She has also proposed efforts to ensure that no water source is overexploited for an extended period, as well as promising to clean up water sources such as the Tula River in Hidalgo state.

The president-elect also promises to invest in infrastructure such as aqueducts, dams, and desalination plants, and aims to reduce the number of regions with high and very high levels of water stress to zero by 2030. Seven of 13 ‘hydrological-administrative’ regions delimited by Conagua are currently suffering high levels, and one very high. Sheinbaum also promises to boost the number of water quality monitoring stations from 2,000 to 10,000 by 2030, as well as boosting the proportion of municipal wastewater that is treated from 49% today to 70% in 2030 and the proportion of industrial wastewater that is treated from 33% to 70%.

Another focus is efforts to improve the efficiency of water use in the agricultural sector, which currently uses 76% of water available, compared to 15% dedicated to household use, according to the manifesto. Sheinbaum aims to expand the use of treated wastewater on farms to free up fresh water for use in homes, as well as the use of modern irrigation technology. The aim is to introduce new irrigation systems to 750,000 hectares of agricultural land by 2030, which would boost the area covered by them by 50% from current levels. Sheinbaum also plans to halt deforestation after around 4.2m hectares of forest were lost from 2001-2021, equivalent to 6% of the nation’s forests, mainly to expand agriculture. These plans could prove difficult for some producers, but Sheinbaum’s nominee for minister of agriculture, Julio Berdegué Sacristán, has said that farmers and industry groups would be involved in discussions.

Collaboration

In May, Juan Cortina, president of Mexico’s agriculture and livestock confederation (CNA), told newswire Reuters that the sector would largely be open to Sheinbaum’s plans. However, he argued that enforcement and investment would be more important than a new law. “The truth is that we have not invested in the national water system for many decades,” Cortina said. “This requires more than a change in the law.”

That same month, the CNA also made a public call on presidential candidates to develop a national water plan with a vision for the next few decades, including the construction of dams and the renovation of distribution canals to reduce water losses. Cortina also called for Conagua to be strengthened and for modern irrigation systems to be introduced on more farms.

In July, Jorge Ramírez of Mexico’s Coparmex industrial lobby said in a press conference that the organisation hopes to work with Sheinbaum on issues such as water supplies, adding that the government will need private sector investment to advance its plans. In February, Coparmex published a list of proposed solutions to Mexico’s water crisis, including a new water law and the creation of a ministry for water.

Although both the CNA and Coparmex have made encouraging noises about aligning with Sheinbaum’s plans, the devil will be in the detail. Legal reforms that impose onerous new requirements on industry or agriculture will likely face fierce lobbying from both organisations.

Risks

At the same time, Mexico is keen to secure foreign direct investment (FDI) as part of the nearshoring boom, but most companies want to be based in the north of the country, close to the US border, in areas which are already facing high levels of water stress. Sheinbaum faces a difficult task balancing a desire to increase FDI as an engine for economic growth with the water needs of local people. Indeed, there have already been protests in some areas over claims that industrial water users are allegedly being prioritised over residents. There have also been social conflicts linked to water use in the northern state of Baja California, and central states of Querétaro and Puebla.

Perhaps the biggest political risk to Sheinbaum’s presidency is the deteriorating situation in the Valle de México area (comprising CDMX and surrounding areas in Edomex), where water shortages that have long impacted disadvantaged neighbourhoods have also been affecting wealthier communities. As a former mayor of the capital from 2018-2023, Sheinbaum has the advantage of a deep understanding of the issues facing the city, and she could also benefit from the fact that the incoming mayor, Clara Brugada, is a fellow member of the ruling Movimiento Regeneración Nacional (Morena) party. This is also true of the governors of Edomex (Delfina Gómez) and Hidalgo (Julio Menchaca), further boosting the prospects for a comprehensive plan for the centre of the country.

Nonetheless, fixing water supply issues will require serious investment due to decades of underinvestment and crumbling infrastructure. However, making the necessary investments will be difficult given Sheinbaum’s promise to get a handle on a fiscal deficit which the government forecasts to increase to over 5% of GDP this year. She has proposed a maximum fiscal deficit for 3.5% of GDP for 2025, without raising taxes, which would be a tough task even without plans to invest in water infrastructure and other areas. It would also risk damaging the economy, say economists, with growth already slowing.

The new government is facing the prospect of worsening water shortages due to climate change, increasing contamination, and an existing system of water governance that makes it impossible to enact the necessary changes and plan for the future. While Morena’s massive majority in congress improves the outlook for a new water law and other reforms, there will likely be some opposition to measures that impose extra costs on business, as well as issues enforcing any new rules on the ground and finding the necessary funding for infrastructure projects. In sum, while Sheinbaum appears committed to addressing the issue head on, there are serious obstacles in her way and any measures that she does introduce will take some time to have any effect on a deteriorating situation.

Financing

Sheinbaum’s agriculture minister, Berdegué, has said that the government will seek other forms of financing outside the national budget, but this could be complicated by plans to overhaul the judiciary, which has spooked markets due to concerns in some quarters that it would constitute an authoritarian shift.