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HONDURAS | Economic activity picks up

On 20 May the Honduran central bank (BCH) published the latest instalment of its economic activity index (Imae), a GDP proxy, which showed growth of 3.7% in the first quarter of the year. The Imae results are good news for the government led by President Juan Orlando Hernández, as it means that Honduras is well on course to achieve the official 3.5% GDP growth forecast for this year. According to the BCH, the positive Imae results were driven by increased activity in the financial, manufacturing, communications, transport & storage and retail sectors, among others; while the construction sector continued to act as a drag on the overall result.

Providing even more encouraging news for the Honduran economy, on 11 May the rating agency Moody’s upgraded the country’s sovereign debt rating from B3 with a ‘stable’ outlook to B3 with a ‘positive’ outlook. Moody’s cited the country’s fiscal consolidation, the fiscal and structural reforms implemented by the government and reduced liquidity risks as its rationale for improving Honduras’s rating. The Moody’s report says that the refinancing of risks has been reduced due to the lower fiscal deficit in 2014, as well as the lengthening of debt maturities and the increased access to multilateral financing. Last year Honduras saw its fiscal deficit fall to 4.4% of GDP from 7.9% of GDP on the back of the tax reform and spending cuts implemented by the Hernández government.

The reduction of the fiscal deficit even surpassed the government’s own target of 4.7% of GDP for 2014. This suggests that the Hernández government may be able to achieve its goal of reducing the deficit even more quickly than the International Monetary Fund (IMF) projected back in December 2014, when it helped draw up its fiscal and structural reform plans as part of a new US$200m standby agreement.

• Honduras and the IMF

The IMF projected that implementation of the agreed reform plan in Honduras would lead to the fiscal deficit falling to 4.0% in 2015 and to 3.4% in 2016. But the government of President Hernández is targeting a deficit of 3.8% this year and of 3.4% next year. According to the Moody’s report, the proactive approach to debt management adopted by the Hernández government “will support further upward pressure on the rating”.

PERU | Power and corruption. Peruvian political parties in congress signed an accord this week appealing to Keiko Fujimori and her party Fuerza Popular (FP) to desist from its attempts to impeach the country’s attorney general, Pablo Sánchez, for dereliction of duty [WR-17-46]. Sánchez had previously announced that Fujimori would be investigated over irregular financial contributions to her presidential campaigns in 2011 and 2016. The accord was signed by legislators from the ruling Peruanos por el Kambio (PPK), as well as Alianza para el Progreso (APP), Frente Amplio (FA), and Nuevo Perú (NP).

Separately, the FP disciplinary committee suspended for 120 days Deputy Kenji Fujimori, Keiko’s disaffected brother, for publicly disagreeing with the party line. Kenji tweeted his response to the decision: “Fujimorismo is not Fuerza Popular, the people make Fujimorismo”.

VENEZUELA | Petrocaribe bounty. Venezuela will write off the US$100m debt of Dominica accrued through the Petrocaribe regional energy alliance providing oil at preferential prices, the foreign minister, Jorge Arreaza, said last week. Arreaza said Venezuela was aware of “the difficult conditions that our brother people in Dominica are enduring after the passage of Hurricane Maria [in September]” and this would free up reconstruction funds for Prime Minister Roosevelt Skerrit.

The president of the opposition-controlled national assembly, Julio Borges, slammed the decision. “Gifting US$100m is the most conclusive proof that [President] Nicolás Maduro doesn’t care about Venezuelans. They exchanged US$100m for a vote in the Organization of American States. An important sum of money that could have been used on food and medicine,” Borges said. “While we are living through the worst humanitarian crisis of our history, they continue with a plan to destroy the country: 10% of inhabitants are eating rubbish, 80% are losing weight, children are dying from malnutrition in our hospitals, there is a 90% shortage of medication, the pharmacies are empty, and we are indebted to the max, to breaking point,” Borges added. “We cannot afford the luxury of letting other countries off payments”.

Uruguay’s prisons are proving easy to escape from. According to official data from the interior ministry, an average of four inmates per month have managed to escape from the country’s prisons since the start of the year. The statistic has increased worries about the state of the national prison system at time when rising public insecurity remains a primary public concern.

The data on prison breaks from the interior ministry are worrying. It shows that since the start of the year, 22 inmates have managed to escape from the country’s 29 prisons, with only seven of them being recaptured and two turning themselves in of their own accord. The majority of those who had escaped were petty criminals, some of where under an open prison regime. But some of those that managed to escape and have not yet been recaptured include inmates with long criminal records, including murderers.

All of this exposes a number of problems with Uruguay’s national prison system. First and foremost, it shows that the country’s prison facilities are dilapidated and possibly no longer fit for purpose (in a number of instances, inmates have escaped by climbing out of windows and cutting holes in perimeter security fences). It also shows that the internal security in Uruguay’s prisons is weak. There have been cases of some inmates smuggling firearms into prisons and then using them to intimidate guards into setting them free. Moreover, there have been instances of inmates staging riots after botched jailbreak attempts, in which they have taken over control of their prison wings and sequestered guards at gunpoint.

• Comcar riot

The last prison riot in Uruguay took place on 29 June when a group of three inmates from the ‘Santiago Vázquez’ prison in Montevideo tried to escape but were turned back after they were discovered by the military guards stationed outside the prison. Some of the inmates then broke into one of the guard houses, disarmed the three guards resting there, and took them hostage. The inmates then took control of a wing of the prison housing 31 other prisoners and demanded a ransom to release the police officers. The riot ended when the prisoners agreed to release the police officers in exchange for being transferred to another prison, complaining that conditions at the Santiago Vázquez prison were poor.

Further pointing to weak internal security, interior ministry data also show that 17 inmates were killed by fellow prisoners inside Uruguay’s prisons in 2017. This figure is the highest since 2006. More strikingly, the number of murders registered in prisons last year equates to 154 per 100,000 people, almost 20 times higher than Uruguay’s national murder rate of 8.1 per 100,000 people. Meanwhile the number suicides registered in 2017 was 10, three fewer than in 2016 but still considerably high.

The number of riots and suicides registered in Uruguayan prisons also points to another problem that affects the prison system: overcrowding. Some of the riots and the instances of suicide observed in prisons have been attributed to the poor conditions in which inmates are held. This was highlighted in a report on the state of the country’s prisons presented to congress by the congressional commissioner for the penitentiary system, Juan Miguel Petit, last year. Petit told congress that Uruguay’s prison population has been steadily increasing since 2009 to reach a record high of 11,253 and that the construction and updating of prison facilities have failed to keep pace with his growth.

Indeed, Petit noted that Uruguay’s prison population was equivalent to 320 per 100,000 people; and that this puts Uruguay among the top 30 countries in the world with the highest prison population by percentage of population. The commissioner was clear that in order to address the overcrowding problem, the authorities would have to develop a new prison policy aimed at improving prison facilities as well as rehabilitation rates that would allow for the gradual reduction of the inmate population.

Since then, the government has approved a new penal code which has been designed to reduce the number of prisoners by limiting the use of pre-trial detentions. This has helped to reduce the prison population, which according to the latest figure now stands at 10,241. However, it is clear that this alone will not solve all of the prison system’s problems and that the development of a comprehensive prison policy is still necessary.

MEXICO | Moody’s remains positive on Mexico. The international credit ratings agency Moody’s released a generally positive economic outlook for Mexico on 13 August. According to the report, Mexico will enjoy largely stable corporate credit quality following the inauguration of President-elect Andrés Manuel López Obrador in December, and low single digit GDP growth is forecast for 2018-2019. The fiscal deficit is also predicted to remain relatively stable.
          However, Moody’s cautioned that possible changes to energy policies could increase risks for the oil and gas industry, while uncertainty surrounding the new administration and the ongoing renegotiation of the terms of the North American Free Trade Agreement (Nafta) could lead to more volatile financial markets.
        The agency believes that the incoming López Obrador administration will likely hand over construction of a new Mexico City international airport (NAICM) to the private sector rather than cancelling it. López Obrador has expressed misgivings about the US$13bn NAICM project, which is currently under construction, considering that it does not represent value for money. He has presented alternative projects and said that he will submit the matter to a binding public consultation before making a final decision.
           Meanwhile, in a separate report released on 7 August, Moody’s predicted that the incoming López Obrador administration will increase public borrowing in order to boost domestic economic growth. But it expressed confidence that Mexico’s development banks boast strong quality indexes and a high level of capital, which will allow their financial fundamentals to remain unaffected if borrowing is increased at a sensible rate.

Sidebar: Common trend

In 2017, Mexico recorded a homicide rate of 25 per 100,000 inhabitants, the worst on record. With worsening violence in the capital during the first half of 2018, it appears that CDMX is now being affected by the same problems as large swathes of the rest of the country. CDMX Governor José Ramón Amieva revealed that two hitmen connected to Roberto ‘Betito’ Moyado Esparza were arrested in the east of the city carrying military-grade weapons, and a concerted effort will be needed to prevent the situation spiralling out of control.

With less than six months until Bolivia’s general election, President Evo Morales is facing renewed protests from cocaleros affiliated with Bolivia’s traditional Yungas coca-producing area (La Paz department), a movement known as Asociación Departamental de Productores de Coca de Los Yungas de La Paz (Adepcoca). Announced on 24 June, the protests once again highlight divisions within one of Morales’s key support bases between the Yungas cocaleros and those from the Chapare, in Cochabamba department (the home turf of Morales, himself a former cocalero).

Adepcoca was already upset over a 2017 law on coca passed by the Morales administration which raised the amount of coca permitted to be grown legally to 22,000 hectares (ha) (up from 12,000ha designated by the previous 1988 law). Adepcoca argued that the law favours the Chapare cocaleros.

• 2017 law

Ahead of approving the 2017 law on coca, the MAS government had initially proposed a legislative initiative which would have enshrined the 20,000ha limit currently tolerated. Of this 20,000ha, 13,000ha would have been permitted in Los Yungas and 7,000ha in the Chapare, Cochabamba department. However, this prompted violent protests from Adepcoca which complained that this amount for the Yungas is less than the 14,000ha grown at the time (on figures from the July 2016 UNODC annual monitoring survey). Meanwhile, the quota for the Chapare was 1,000ha more than is currently grown, according to the same UNODC survey. Following protests, the government changed the limit to 22,000ha.

Another long-running bone of contention has been the continued legal battle over Adepcoca’s leader Franklin Gutiérrez, who has been held in preventative detention since August 2018, accused of murder. Adepcoca complains that Gutiérrez’s detention is a political move by President Morales and his Movimiento al Socialismo (MAS) government, as the Adepcoca leader had revealed plans to run for the presidency for his own political project (although he stood little chance of success). A further source of conflict has stemmed from government coca-eradication efforts – an issue which made headlines in August 2018 when two cocaleros were killed in clashes with coca-eradication officials in La Asunta municipality, La Paz department.

Adepcoca’s latest announcement regarding the protests was prompted by various developments: the murder of a young cocalero leader, Miguel Coico, killed in a knife attack on 22 June, and reports of a supposed parallel legal coca market (Chuquiaguillo) in La Paz, in addition to the legally recognised Villa Fátima market, which belongs to Adepcoca. Adepcoca is calling for the authorities to clarify the circumstances surrounding Coico’s death and for the Chuquiaguillo market to be closed, although on 13 June, the rural development and land minister, César Cocarico, denied its existence, insisting instead that a “deposit” had been authorised there for producers to keep their coca.

Since 24 June, protests have become increasingly violent, with cocaleros throwing rocks and detonating dynamite in an effort to block roads in the Yungas region. The response by the police – which has fired tear gas and imprisoned a handful of cocaleros, accused of firing explosives in South Yungas – has served only to harden Adepcoca’s resolve. Meanwhile the MAS government has yet to show any sign of agreeing to dialogue with the cocaleros, while its recent defence of Gutiérrez’s continued detention and suggestion that it will request a 30-year prison sentence for him looks set to further exacerbate tensions.

Legal markets

According to the most recent (August 2018) monitoring survey by the United Nations Office on Drugs and Crime (UNODC), the regions of Yungas of La Paz, the Tropic of Cochabamba (Chapare) and the North of La Paz represented 65%, 34% and 1% respectively, of the areas under cultivation in the country.

According to government data, the amount of coca leaf sold in the two authorised markets (Villa Fátima and Sacaba in Cochabamba department) was 22,967 tonnes (t) in 2017. Around 91% of coca leaves were sold in Villa Fátima; the remaining 9% in Sacaba.

Overall, coca cultivation in Bolivia increased by 6% in 2017 compared with 2016, while the area under cultivation increased by 1,400 hectares (ha), from 23,100 ha in 2016 to 24,500 ha.

The 40^th anniversary of the start of the South Atlantic military conflict, when Argentina invaded the Falklands/Malvinas islands in 1982 and was eventually defeated by British forces, fell on 2 April. Both governments repeated their long-established positions on the sovereignty dispute, offering little chance of meaningful negotiations in the immediate future.

In a speech marking the anniversary, Argentina’s President Alberto Fernández reasserted his country’s claim to sovereignty over the South Atlantic islands and called on the UK to follow UN decolonisation motions favouring a “peaceful negotiated solution”.

He also called on the British government to remove its military presence from what he called a “zone of peace and international cooperation”. On the same day, UK Prime Minister Boris Johnson said his country retained a “firm commitment” to support the inhabitants of the islands. Foreign Secretary Liz Truss described the islanders as “part of the British family” whose rights to self-determination would be upheld.

One of the outstanding features of the last four decades is how virtually no progress whatsoever has been made towards solving the dispute or improving bilateral relations. Both countries have simply ratified their underlying positions. Argentina says the islands are part of its sovereign territory because they form part of its continental shelf and were taken by force in 1833; there is therefore a historic case for decolonisation. The UK counters that it legitimately took possession of the islands when they were uninhabited and frames the issue as one of self-determination of the islanders.

The four decades since the military conflict came to an end have seen a succession of different approaches, but nothing has been found capable of breaking the deadlock. Argentine policy has oscillated between attempts at seduction and the application of economic sanctions. During the presidency of Carlos Menem (1989-1999), then-foreign minister Guido Di Tella created the idea of a ‘diplomatic umbrella’ which would allow the two countries to discuss practical cooperation in the South Atlantic without affecting the underlying sovereignty issues. Travel restrictions were relaxed and Di Tella tried to buy good will by sending somewhat eccentric Christmas gifts to the islanders (such as Winnie the Pooh teddy bears).

There was a change after 2003 when presidents Néstor Kirchner (2003-2007) and Cristina Fernández (2007-2015) took a harder line, banning oil and fishing companies that secured operating licences in the islands from doing any business in Argentina. Unmoved by this tactic, the British authorities continued signing fishing and hydrocarbons drilling licences that have led to something of an extended economic boom for the 3,000 inhabitants. They are estimated to have a per capita income well in excess of the average for Argentina.

Former Argentine diplomat Juan Pablo Lohlé says “The balance of bilateral relations over the last 40 years is strongly favourable to Great Britain because of its policy of unilateral development of fishing and oil exploration”. The sense of an irreversible deadlock was accentuated in 2013 when over 99% of the islanders voted in a referendum to remain part of the UK. Argentina rejected that exercise as illegitimate.

Prospects for a more collaborative approach in the next few years are low. The UK’s departure from the European Union makes it more likely to follow go-it-alone nationalist policies and to regard Argentina with suspicion. The Russian invasion of Ukraine is in any case leading to a recalibration of European security alliances – and possibly a new Cold War which will push South Atlantic issues further down the priorities list.

The islands also encourage ritualistic Argentine nationalism which appears frozen in time. They remain a symbol of national unity, an aspiration shared by all Argentine political parties, but one that has not progressed in practical terms. Because of the deadlock both countries may end up missing significant opportunities to develop rich South Atlantic natural resources.   

Death toll

During the 1982 Falklands/Malvinas War a total of 649 Argentine soldiers, 255 British military, and three islanders died.

In late August, representatives of the Central American integration system (SICA) discussed a proposal put forward by El Salvador’s vice president, Félix Ulloa, which would establish a ‘Central American union’ (UNCA) to replace SICA. The proposal comes as SICA has faced controversy over its decision to name Nicaragua’s Werner Vargas as its secretary general.

On 22 August Ulloa, who in 2020 President Nayib Bukele named as his delegate in charge of integration issues, floated the proposal during a conference on the ‘Future of Central America’ held by SICA. He said the UNCA would oversee economic, political, monetary, fiscal, social, democratic security, and environmental issues. The institutional framework, which would resemble that of the European Union, would include a council – comprising the heads of state of member countries - a parliament (Parlacen), and a court. Ulloa added that the new entity would originally comprise the eight SICA member states (Belize, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, and the Dominican Republic).

According to Ulloa, the aim is to produce a final proposal in 2024 and reform the 1991 Protocol of Tegucigalpa which established SICA. He said the new proposal would spearhead the regional transition from “integration to union”, although “constitutional engineering” and “legislative architecture” would be essential. The institutional model of the proposed ‘union’ would mirror the current SICA framework, which has a meeting of presidents, council of ministers, executive committee, general secretariat, as well as a parliament (Parlacen) and court of justice (CCJ) among other institutions. The difference between both models would lie in their powers: according to Ulloa’s proposal, the decisions of the new organs would be binding. The approval and ratification of the constituent treaty by each SICA member state would be necessary to establish the new union.

A controversial appointment

The recent conference on SICA’s future took place after Ulloa received a visit from Vargas on 17 August. The Nicaraguan was appointed to his current post for the period of 2022-2026 on 11 August, having served as the executive director of the SICA from 2014-2020. The post had been vacant for over a year. However, His appointment proved controversial amid more general concerns regarding the dismantling of democratic institutions in Nicaragua which has taken place under President Daniel Ortega: Costa Rica’s President Rodrigo Chaves received a letter dated 25 June from eight of his predecessors dissuading him from supporting Vargas as the preferred candidate. The letter highlighted concerns such as the human rights situation in Nicaragua, most recently expressed on 13 September by the United Nations (UN) High Commissioner for Human Rights (OHCHR), and bilateral tensions including Nicaragua’s 2010 invasion of Costa Rica and occupation of Isla Calero, as decided by a December 2015 ruling by the International Court of Justice (ICJ) at The Hague.

Migration

Nicaragua-Costa Rica relations, which have historically been strained, are under particular pressure amid the continued rise in Nicaraguans fleeing to Costa Rica. In March 2022, the UN refugee agency (UNHCR) said that around 3% of Costa Rica’s population is now made up of Nicaraguan refugees and asylum seekers. Doubling in number over the eight months to February 2022, UNHCR estimates that over 150,000 Nicaraguans crossed the southern border, seeking refuge in Costa Rica. Also in March 2022, UNCHR spokesperson Boris Cheshirkov told a press conference that these figures (as of February 2022) confirm more Nicaraguans are currently seeking protection in Costa Rica than all the refugees and asylum seekers combined, during Central America’s civil wars in the 1980s.

• Symbolic implications

In an interview with Nicaraguan investigative media Confidencial, published at the end of June, Costa Rica’s former president Luis Guillermo Solís (2014-2018), one of the signatories of the letter to Chaves, said with regard to Vargas’s appointment that, “ I think that there are more implications symbolically than in practice because SICA is very much in decline and is an institution that for several years has had very little impact on Central American life…but symbolically it is terrible, because it means almost normalising the presence of Nicaragua in SICA” – a position to which he objected given the democracy and human rights related concerns surrounding the Ortega government.

President Gabriel Boric has delivered on a campaign promise to halt the proposed US$2.5bn Dominga copper and iron mining project in the central region of Coquimbo. A committee of ministers determined on 18 January that the mining project, which would have comprised an open cast copper and iron mine, desalination plants, and a large port, did not satisfy environmental requirements and would provide too significant a threat to water sources, air quality, and wildlife, particularly a nearby protected Humboldt penguin reserve, as well as bottlenose dolphins and several species of whale. The right-of-centre Chile Vamos opposition coalition accused the government of politicising the issue. Andes Iron, the mine owner and operating company, said it would appeal the decision.

Part of the debate has focused on the loss of opportunities for La Higuera, one of the poorest municipalities in the country, where Dominga is located. Yerko Galleguillos, the local mayor who is also a member of the Unión Democrática Independiente (UDI), the right-wing party within Chile Vamos, said it was time to stop talking about the extinction of “little fish and birds” and focus instead on the “extinction of my neighbours, who can’t get a job”.

However, the government appears to have anticipated this line of criticism; the economy minister, Nicolás Grau, has announced an eight-year, US$600m plan for the region, including improved services, investment in infrastructure, and social programmes. Grau also sought to reassure investors by saying that the range of projects being developed in the country to deal with climate change “outside of being an obstacle, will be an opportunity and a catalyst for both national and foreign investment”.

Dominga mine

The Dominga mining project, which was projected to produce 12m tonnes (t) of iron ore and 150,000t of copper concentrate per year, has been mired in controversy for a decade. In 2021, the then left-of-centre opposition presented an impeachment motion against then-president Sebastián Piñera (2010-2014; 2018-2022) for lack of probity and compromising the honour of the nation in relation to the sale of his family’s shareholding in the mine carried out during his first term in 2010, unveiled in the ‘Pandora Papers’ leak in 2021. The deal was conditional on it achieving environmental approval, later issued by his government, but suspended in 2017. Piñera denied any wrongdoing and the opposition had insufficient seats in the senate to impeach him.

Wildfires are sweeping across Chile’s tinder-dry south-central region, destroying forests over an estimated area of 293,000 hectares, killing at least 24 people, and prompting the government to declare a state of emergency.

Chile has suffered over a decade of drought and a combination of very high summer temperatures (up to 40 degrees Celsius) and strong winds are now creating ideal conditions for fires to spread. The worst affected regions are Biobío, La Araucanía, Ñuble, and Maule, all areas with important farming and logging activities.

As of 8 February, a total of 311 fires were reported, of which more than half were said to be under control. An estimated 1,180 homes had been destroyed. Interior Minister Carolina Tohá said T-122 aircraft were dumping water to douse the flames. International help had been drafted in from Mexico, Spain, Brazil, Colombia, and Venezuela, among others.

One of the main causes of the emergency has been climate change. Due to alterations in weather patterns and the periodic El Niño/La Niña meteorological cycle, the country has experienced over 10 years of drought. The last big outbreak of forest fires was in 2017.

Experts say that both then and now the mass planting of single tree species by logging companies has increased fire risk. Chile is also said to have been matching the 30-30-30 rule, which says forest fires are most likely to break out when temperatures exceed 30 degrees Celsius, humidity falls below 30%, and winds exceed 30km an hour. “The thermometer has reached levels that we’ve never seen until now,” Tohá said as temperatures approached 40 degrees Celsius.

A difficulty is posed by the fact that Chile’s fire service is a mixture of volunteers and private contractors hired at municipal level. While major efforts are being made, resources are scarce, and coordination is complex. After an incident in which a Mexican helicopter pilot was denied access to water in a privately owned swimming pool, President Gabriel Boric said that, if necessary, the government would requisition water, machinery, and any other equipment needed to fight the fires.

The authorities have decreed a state of catastrophe and constitutional exception in Ñuble, Biobío, and La Araucanía, which allows special measures including declaring local curfews.  

Another issue is whether there have been any cases of negligence or even arson. On 5 February the interior ministry said it had arrested 10 people in connection with the fires, and that anyone found guilty of starting them would face jail sentences ranging from five to 20 years. Boric repeated the message, saying that there was evidence of “malicious negligence” which would face “the full force of the law”.

Two of the regions most affected – La Araucanía and Biobío – are also conflict areas where radical Mapuche indigenous groups have led a long-running campaign of violence and arson to demand the return of ancestral lands, many of which are now held by farmers and logging companies. There is as yet no evidence of arson in these areas, but in one incident in Vicuña, Ercilla municipality, Malleco province in La Araucanía, community members are said to have threatened firefighters and taken their water.    

Boric visit

President Boric cut short his holiday to visit the municipality of Coronel in Biobío region on 5 February. He visited the family of a voluntary firefighter, Yesenia Muñoz, who had lost her life in tackling the raging wildfires. Boric paid fulsome tribute to Muñoz in particular and the country’s firefighters in general.

The dubious exclusion from the 25 June general elections of Thelma Cabrera, an indigenous presidential candidate for the Movimiento para la Liberación de los Pueblos (MLP), who enjoyed the backing of leading indigenous group Comité de Desarrollo Campesino (Codeca), underlines the marginalisation of Guatemala’s indigenous sector which accounts for nearly 44% of the country’s population – the highest proportion in Central America. The dire situation facing the sector was recently highlighted by a group of international legal experts (IDIL) which carried out an independent fact-finding mission to Guatemala’s Alta Verapaz region, as well as other recent reports by institutions like the United Nations (UN) Office of the High Commissioner for Human Rights (OHCHR).

According to a 31 March press release by UK-based NGO Peace Brigades International UK (PBI) regarding the IDIL’s visit, the fact-finding group of lawyers travelled to Alta Verapaz to meet indigenous communities, civil-society groups and government representatives in light of recent reports of human rights violations, particularly in relation to agrarian conflict. The PBI statement highlights an OHCHR report released at the end of January which noted the continued recurrence of agrarian conflicts, documenting five cases of forced evictions which affected 250 families. According to the OHCHR, the evictions did not comply with international human rights standards, which require prior notification, the proportional use of force, the non-destruction of homes, and the relocation and adequate transfer of the persons affected. It also highlights a lack of dialogue with the affected communities, as in the case of the community of Chicoyou (Alta Verapaz).

The PBI statement also cites a December 2022 report by international NGO Indigenous Peoples Rights International (IPRI) which urgently called on the Guatemalan state to stop evictions and aggression by the security forces against the indigenous Maya Poqomchi’ and Maya Q’eqchi’ communities of Sierra de Minas, Purulhá municipality, Baja Verapaz department. This was in response to a military and police (PNC) deployment in late November 2022 which, according to IPRI, aimed to arrest indigenous leaders, forcefully evicting them from their lands in favour of farmers (specifically the Thomae family, an influential landowning family of German origin), and “facilitate the establishment of extractive companies”.

According to IPRI, 15 communities were directly affected by the deployment, including Pancoc, Monjón, Santa Rita, Washington, Dos Fuentes, Kalijá, and Moxante, while 80 more communities were indirectly impacted. The NGO notes that while the deployment of “over 2,000 police and military personnel” was subsequently withdrawn, the threats of eviction continue, and “a group of armed civilians at the service of the landowners continues to terrorise the communities”. It also cites the continued existence of a military detachment, installed since 2012 on the lands occupied by the landowners.

Indigenous groups

According to the latest (17 April) report by international human rights NGO International Work Group for Indigenous Affairs (IGWIA), Guatemala has a population of 14.9m inhabitants, of which 6.5m (43.75%) belong to the Mayan peoples (Achi', Akateco, Awakateco, Chalchiteco, Ch’orti’, Chuj, Itza’, Ixil, Jacalteco, Kaqchikel, K’iche’, Mam, Mopan, Poqomam, Poqomchi’, Q’anjob’al, Q’eqchi’, Sakapulteco, Sipakapense, Tektiteko, Tz’utujil and Uspanteko), as well as the Garifuna, Xinka, and Creole or Afro-descendant peoples.

As well as violent evictions and the deployment of security forces,  which local human rights groups like Centro para la Acción Legal en Derechos Humanos (Caldh) warn evoke memories of the 1960-1996 civil war in which indigenous people accounted for 80% of victims, according to a UN historical clarification commission (CEH), the OHCHR states that the “indigenous sector continued to face multidimensional forms of discrimination and economic and social inequalities that affected the exercise of their rights”.

It highlights that the national human development report released in July 2022 entitled “Challenges and opportunities for Guatemala: towards an agenda for the future – The speed of change, a territorial view of human development 2002–2019” shows a 20% gap between indigenous and non-indigenous persons in the three areas measured by the human development index, namely education, health, and income, with the greatest inequality in education.

Meanwhile the 17 April IGWIA report, which emphasises a structural racism at the root of inequality and social exclusion in Guatemala, underlined that indigenous people continued to suffer the effects of the “government’s policy of denying their rights throughout 2022”. IGWIA also presents various stark indicators of this inequality: it notes that the state invests US$0.4 per day in each indigenous person but US$0.9 per day in each non-indigenous person, that poverty affects 75% of indigenous people but only 36% of non-indigenous people, while chronic malnutrition affects 58% of indigenous people compared to 38% of non-indigenous people. In terms of political participation, indigenous people make up no more than 15% of members of congress or high-ranking public officials, according to the IGWIA.

Cabrera’s exclusion

On 28 January Guatemala’s electoral authority (TSE) announced its decision to exclude Cabrera and her running mate, former human rights ombudsman (PDH) Jordán Rodas, who was previously linked with anti-impunity efforts. Rodas said the TSE’s decision related to the supposed lack of valid documentation (finiquito) which is provisional attestation to the nonexistence of debt claims (debt extinguishment), issued by the comptroller general’s office (CGC) for those who have managed public funds. Via Twitter, Rodas condemned the TSE’s argument, insisting on the validity of his documentation. It has since been questioned by figures like the United Nations High Commissioner for Human Rights, Volker Türk, who on 30 March raised alarm at the “arbitrary grounds” on which candidacies such as that of Cabrera were rejected.

Indigenous groups in Nicaragua

According to the latest (17 April) report by international rights NGO International Work Group for Indigenous Affairs (IGWIA), Nicaragua has seven indigenous peoples: the Chorotega (221,000), Cacaopera or Matagalpa (97,500), the Ocanxiu or Sutiaba (49,000) and the Nahoa or Nahuatl (20,000) live in the Pacific, centre and north of the country, while the Caribbean (or Atlantic) coast is inhabited by the Miskitu (150,000), the Sumu or Mayangna (27,000) and the Rama (2,000). Other peoples who also enjoy collective rights according to the Nicaragua’s 1987 constitution are people of African descent, known as the Creole or Kriol (43,000) and Garífuna (2,500). In its latest human rights report, the US State Department noted that indigenous people constitute approximately 5% of the population in Nicaragua, and live primarily in the Raan and South Atlantic autonomous region (Raas).

International alarm over indigenous massacres in Nicaragua

While the unremitting crackdown by Nicaragua’s government led by President Daniel Ortega on dissent continues to make headlines [SSR-23-04], a rise in attacks targeting indigenous communities has drawn mounting alarm from international rights institutions.

Widely attributed to settlers from other parts of Nicaragua known as ‘colonos’, who invade indigenous land for illegal logging and cattle-raising, the issue again made headlines following the brutal murder on 11 March of least six indigenous Mayangna members of the Wilu community, in the Mayangna Sauni As territory in the North Atlantic autonomous region (Raan).

The six were killed when an “indeterminate number” of “heavily armed” ‘colonos’ stormed the territory, setting most of the homes alight and threatening residents, resulting in the forced displacement of local inhabitants, according to a statement by the OHCHR released three days later. The 11 March attack was the third attack that month alone. The previous day three members of the Musawás community, Bonanza municipality, in the Raan, were kidnapped by an armed group while travelling through the Waspuk river and subsequently released. On 6 March members of the Sabakitang community, also in the Raan, were attacked by armed individuals, which resulted in the forced displacement of 30 families.

In February 2022 the Inter-American Commission on Human Rights (IACHR) expanded precautionary protection measures in favour of indigenous people from the Musawás, Suniwas and Wilu communities in Mayangna Sauni As territory whom it deemed to be at risk of violence. It attributes this to the presence of ‘colonos’ in these indigenous communities who have not yet received the title deeds for their land.

In its latest annual human rights report on Nicaragua, released on 20 March, the US State Department cites “widespread” reports of outsiders threatening to encroach on indigenous community lands and natural resources. It adds that there were reports of violence and killings of indigenous persons. However it points out that reporting on these incidents was “difficult” due to the shuttering of NGOs that performed environmental advocacy and protected indigenous rights in the area amid the wider crackdown on NGOs under Ortega [SSR-23-01].

Esta semana el gobierno de Argentina, liderado por la Presidenta Cristina Fernández se vio forzado a echarse atrás sobre un decreto (1307/12) relacionado con los ajustes en la escala de pagos para las fuerzas de seguridad paramilitares –la gendarmería (GNA) y la prefectura naval (PNA)– después de que los cambios provocaran protestas masivas, con las fuerzas quejándose de que las medidas habían resultado en recortes en los pagos de entre el 30% al 60%. Al anunciar la suspensión de la medida y ofrecer pagos retroactivos a los agentes en octubre para así asegurar que ellos tendrán el mismo salario que en septiembre, el jefe de gabinete, Juan Manuel Abal Medina, dijo que el gobierno lanzaría una detallada investigación para determinar si los recortes habían sido el resultado de una “desastrosa” implementación del decreto o si fueron resultado de causas más siniestras por personas desconocidas “buscando crear el caos, usando a aquellos por debajo para mantener los privilegios de aquellos en lo alto. Nosotros no vamos a mezclar justos con pecadores”.

Como parte de esta investigación, renunciaron los jefes de las dos fuerzas –el Comandante General Héctor Schenone (GNA) y el Prefecto General Enrique Julio Congolani (PNA). El nombramiento de dos nuevos jefes de relativamente baja antigüedad dentro de su rango –el Comandante General Enrique Zach (GNA) y el Prefecto General Luis Alberto Helier (PNA)– significa que al menos otros 10 altos oficiales en cada fuerza, de mayor antigüedad, han sido sobreasados para ocupar los puestos y efectivamente pasados a retiro. La ministra de seguridad Nilda Garré aún debe identificar a aquellos oficiales.

Los agentes insisten en que su acción de protesta es “pacífica” y relacionada solamente con la cuestión salarial. El 3 de octubre votaron contra una propuesta para marchar a la histórica Plaza de Mayo, debido a la asociación que el público podría tener con una decisión de ese tipo como un intento de golpe. Raúl Maza, uno de las más francas voces de los gendarmes en protesta, declaró, “Que nadie se equivoque. Este no es un golpe de estado. Nadie tiene armas”, dijo, y pidió que una bandera que recordaba al fallecido líder Carapintada de un fracasado golpe, Mohamed Alí Seineldín, sea removida de la demostración. No obstante, las protestas indicaron claramente que la cadena de mandos había sido rota, no solamente dentro de la jerarquía de las fuerzas, sino también a nivel político; los agentes de la PNA y la GNA, debían haber obedecido al llamado de la ministra Garré de retornar a sus tareas activas, pero en cambio, la GNA ha declarado una huelga nacional hasta el martes (9 de octubre), abandonando todos los puestos, que incluyen todos los cruces de fronteras, hasta que el gobierno responda a una petición conjunta de seis puntos sometida al ministerio de seguridad por la PNA. Las dos fuerzas se mantendrán dentro de sus cuarteles hasta entonces.

El decreto en cuestión, apuntaba a “regularizar” las escalas de pago y “formalizar” [esto es, para fines fiscales] algunos de los bonos que los agentes reciben por extender sus turnos o por trabajar fuera de sus provincias natales, etc. También buscaba eliminar totalmente algunos de los bonos. El resultado fue una aguda reducción en los salarios, dependiendo de la antigüedad y las escalas de pago. Esto provocó una protesta inicial de la PNA en la ciudad de Buenos Aires, el 2 de octubre, que rápidamente se extendió a otras fuerzas y otras partes del país. El ministerio de seguridad apresuradamente se echó atrás en el programado ajuste de pagos para la GNA este mes, pero ya fue muy tarde; la GNA se había unido a la protesta en solidaridad con la PNA.

El 3 de Octubre los protestantes ocuparon el cuartel general de la prefectura en Buenos Aires, El Edificio Guardacostas, y el puerto de Rosario, en la provincia de Santa Fe. La GNA hizo demonstraciones en la provincia de Buenos Aires (Zárate, Dock Sud, La Plata, Ensenada, Mar del Plata, y Quequén); Barranqueras (Chaco); Posadas (Misiones) Paso de los Libres (Corrientes); Jesús María (Córdoba); San Juan (San Juan); Mendoza (Mendoza); Comodoro Rivadavia (Chubut) y Río Gallegos (Santa Cruz). Un decreto similar (1305/12) para las fuerzas armadas está pendiente de implementación y en la actualidad algunos oficiales se están demostrando afuera de los cuarteles de la armada, en solidaridad con la PNA y la GNA. Según los informes locales, los miembros de la policía federal (PFA), el ejército y la Policía Bonaerense (de la provincia de Buenos Aires) también se han unido a las protestas (aunque no a nivel institucional)

• Las demandas de la GNA y la PNA

Además de dejar sus salarios intactos, las fuerzas han pedido:

1. Garantías de que no se tomarán sanciones disciplinarias, administrativas o judiciales contra los participantes en la protesta;

2. Una exhaustiva discusión acerca de las escalas de pago y un salario mínimo garantizado de AR$7.000 (US$1.488) después de impuestos;

3. La creación de un comité, que incluya a miembros de bajo rango, para discutir las escalas de pagos para miembros activos y retirados de las fuerzas de seguridad;

4. La inclusión de los agentes en el programa de seguro de riesgo (ART) relacionado con sus tareas;

5. Libertad de elección de proveedores de seguros de salud pre-pagos;

6. Reconocimiento y adhesión del gobierno federal a todas las prescripciones judiciales y fallos en relación a la disputa salarial.

Luis David, the director of the national agency, Invest in Guatemala, hailed figures from the central bank (Banguat) according to which the country registered a record US$770.5m in foreign direct investment (FDI) in the first half of 2012, up 47.2% year-on-year. Banguat has revised its projection for the full year to US$1.5bn, up from a previous US$1.2bn.

Upon taking up his post in January, Economy Minister Sergio de la Torre cited as priorities the need to improve Guatemala’s competitiveness and attract FDI, which came to US$967m in 2011 according to the UN Commission for Latin America and the Caribbean (Eclac/Cepal). While this was up from US$782m in 2010 (and US$574m in 2009), in 2011 Guatemala – which is the biggest economy in Central America – accounted for just 23% of the total FDI invested in the six regional countries.

Among those sectors attracting most investment is mining. Canada’s Tahoe Resources in May announced plans to invest more than US$500m in the Escobal silver deposit, which it bought from Goldcorp in 2010. He also singled out the energy sector. Colombia’s Trecsa is investing US$370m to develop 12 new substations, a project slated for completion by October 2013. David also cited Jaguar Energy, owned by the Houston-based AEI, which is constructing a 300MW solid fuel-fired power generation facility with an investment of US$750m. In August, the government also announced an oil tender for seven areas, spanning 791 hectares (ha). [EB-12-08].

David said the surge in FDI this year reflected investor confidence in Guatemala. In the World Economic Forum (WEF)’s Global Competitiveness Report 2012-2013, released on 5 September, Guatemala was ranked 83^rd of 144 countries, up one place on last year. It sits in the middle of its Central American neighbours: below Panama (ranked 40^th) and Costa Rica (57^th) but above Honduras (90^th), El Salvador (101^st) and Nicaragua (108^th). The report cited as Guatemala’s strengths its flexible labour regulations, efficient financial market development and the intensity of local competition, although the WEF noted that its competitiveness is hampered by weak public institutions, the high costs of crime and violence and low business community trust in politicians.

Corruption still a serious problem

In early October, experts from the Central American Institute for Fiscal Studies (ICEFI) and Acción Ciudadana, the local branch of the international NGO Transparency International, highlighted the losses incurred by public corruption. Representatives from the two organisations estimate that between 15% and 25% of the budget funds assigned for investment in public works have been lost to corruption in the past 15 years. Nineth Montenegro, a legislator for the left-wing Encuentro por Guatemala (EG), who often acts as whistleblower on official corruption, carried out a study last year on the 2008 and 2009 state budgets and concluded that 12.5% of the total was lost to corruption.

An anti-corruption law has been stuck in the 158-seat unicameral legislature congress since March. The stumbling block is Article 26, which addresses illicit enrichment, influence trafficking and bribery.

In the last TI Corruption Perceptions Index (CPI, released on 1 December 2011), Guatemala scored just 2.7 out of 10 and ranked at 120 of 182 countries. That was a sharp decline on 2010, when it scored 3.2 in the CPI and ranked at 91. In 2009 it scored 3.4 and came in at number 84. Guatemala still ranked average in Central America in 2011, coming below Costa Rica (4.8), El Salvador (3.4) and Panama (3.3), but above Honduras (2.6) and Nicaragua (2.5).

• The cost of violence

A 2011 World Bank report entitled Crime and Violence in Central America: A Development Challenge put the economic cost of crime and violence in Guatemala at 7.7% of GDP, including health costs (4.3%); institutional costs (1.0%), private security costs (1.5%) and material costs (0.8%). This was second only to Costa Rica (3.6%). The respective figures for El Salvador, Honduras and Nicaragua were 10.8%, 9.6% and 10.0% of GDP.

POLITICS | Constitutional court ruling due.

Ecuador’s constitutional court is expected to rule today (31 October) on whether the unicameral national assembly can proceed with a package of constitutional amendments put forward by the ruling Alianza País (AP), among which is a reform to allow for indefinite re‑election in all popularly elected posts. The court is deliberating whether the legislature itself can alter the constitution, or whether a national public referendum is required to do so. The political opposition is adamant that such a reform package must be put to a national referendum and opposition leader Guillermo Lasso is leading a drive to gather signatures in support of a referendum petition. The court, considered sympathetic towards the left-wing government, is expected to rule that the AP–controlled assembly can proceed. Approval of the reform package would allow President Rafael Correa to stand for a fourth consecutive presidential term in 2017. However, protests against such a reform are likely.

BOLIVIA | Moving on lithium

President Evo Morales announced on 1 April that Bolivia’s central bank (BCB) had approved a total of B$4.26bn (US$617m) in loans for the next phase of the lithium industrialisation process after the conclusion of pilot tests in the Salar de Uyuni in Potosí.
Morales said that this investment, which will be spent over the next three years, will include B$1.25bn (US$181m) in an industrial potassium plant and B$601m (US$87m) in the construction of a bicarbonate lithium plant, among  other things.

The Morales government launched its lithium industrialisation strategy in April 2008, with a decree declaring a national priority the development of the Uyuni salt flats, which contain most of Bolivia’s lithium, a vital component in mobile phones and electric car batteries. According to the US Geological Service (USGS)’s 2015 Mineral Commodity report, Bolivia accounts for 9m of the total 13.5m tonnes (t) of global lithium reserves.

In June 2014 Mining Minister César Navarro admitted to international media that there was a “significant delay” in plans for the industrialisation of Bolivia’s lithium resources which he attributed to the lack of “a universal method to exploit the metal”.

On 5 April the head of the department of evaporative resources for the State mining company Corporación Minera de Bolivia (Comibol), Luis Alberto Echazú, told reporters that the contract to construct the lithium plant would be awarded on 5 May.

COLOMBIA | Unemployment down to historic low

Colombia’s unemployment rate broke into single digits in February, the lowest level for 15 years, according to the national statistics institute (Dane). Unemployment closed February on 9.9%, down 0.8 of a percentage point on the same month in 2014. Unemployment fell in 15 of the 23 cities included in Dane’s calculation, and in six of these it was one digit.
“It is good news which shows that our economy is still growing in the middle of international uncertainty,” President Juan Manuel Santos said. While celebrating the fact that 699,000 new jobs had been created compared to February 2014, Santos stressed that “there is still a lot to do”, adding that his government had set the target of creating a further 700,000 jobs by the end of the year.

ECUADOR | Underwhelming growth

Ecuador’s economy grew by 3.8% in 2014, President Rafael Correa announced last week. “Despite petrol prices starting to plummet in September, we are among the four countries that grew most in Latin America,” Correa said.
This is the positive gloss. Real GDP growth slowed from 4.6% in 2013, however, and fell short of the 4.5%-5.1% growth for 2014 projected by the government. Growth in the fourth quarter of the year was 3.5% year-on-year and just 0.5% quarter-on-quarter. The oil sector expanded by 2.2% compared to 3.2% in 2013, while the non-oil sector grew by 4.3%.
The government is forecasting year-end growth of 4.1% in 2015, although local analysts are predicting that this is wildly optimistic and some that Ecuador’s economy could even contract on the back of the lower oil price. They argue that the 2015 budget is based on a projected oil price of US$79.7 per barrel (/b), and that there is little to suggest that the current oil price will converge with that predicted in the budget soon.
According to the latest central bank data, Ecuador’s oil exports in January totalled US$619m, a 43% fall by value compared to the same month last year. Oil prices have reached a nine-year low, with West Texas Intermediate - the reference for Ecuadorean oil - trading at an average of US$40/b. Correa insisted that his government was prepared for “extreme cases”, including an average oil price of just US$20/b.

Still, under the national budget the Correa administration plans to invest US$8.1bn in social development and infrastructure projects this year. In a sign of how it intends to cover any budgetary shortfall, on 23 March, Finance Minister Fausto Herrera announced that the government had secured a new US$2bn credit line from China; and a US$800m loan from the Inter-American Development Bank (IDB). According to Herrera, these funds will be used to finance several public infrastructure projects.

• Colombia’s growth forecast cut

On 7 April Colombia’s President Juan Manuel Santos cut the government’s GDP growth forecast for 2015 from a range between 4% and 4.5% set at the start of the year to a range between 3.5% and 4%. “We are going to keep growing more than any other country in Latin America,” Santos said, adding that “in the present context this is strong growth”.

Chile – new foreign investment law

President Michelle Bachelet passed into law on 16 June a new regulatory regime for foreign investment in Chile. The new law, which replaces the 1974 Foreign Investment Act, will provide “a more modern legal framework” allowing the country to adopt a proactive role in attracting investors, Bachelet said during a ceremony to mark the law’s passage at the La Moneda presidential palace. “It is a law that not only establishes the conditions for foreign investors but that also involves the creation of a national strategy to promote foreign direct investment (FDI)…For the first time in history, Chile will have a national investment policy that is able to fit in with the rest of our economic policy and to provide sustainable development,” Bachelet said.

The law entails the creation of a committee of ministers for the promotion of foreign investment, which will advise the president on foreign investment policy. It also involves the setting up of a foreign investment promotion agency that will implement the policy of attracting foreign investment and also coordinate the efforts of the country’s regional governments to do so, following advice laid out by the Organisation for Economic Co-operation and Development (OECD).

The new law, which will come into force in 2016, guarantees foreign investors’ access to foreign exchange markets and to the free remittance of capital and earnings. But current foreign investors in Chile will have the option to maintain contracts signed under the terms of the 1974 legislation, which will also be available to new investors for a maximum period of four years with a fixed tax rate of 44.45%.

“This new legal and institutional framework is a true opportunity for Chile, to attract better projects which bring greater productivity, greater innovation, greater diversification, more sustainability and better cooperation between the State, the communities and businesses,” Bachelet said. She emphasised “the position of Chile as a serious economy, open to the world, that is managed responsibly and that serves as a link between the Pacific and Latin America”, as a feature that was attractive to foreign companies looking to invest. “We are a country whose economy has its doors open and that warmly receives foreign businesses that contribute their knowledge, technology and ideas to the development of our nation”, she said.

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) released a report in May of this year showing that Chile remains the third most popular Latin American country for foreign investors, behind Brazil and Mexico. According to figures published by the Chilean central bank, Chile received US$111.27bn in FDI between 2010 and 2014. FDI in 2014 was US$23.30bn, 15% above that of the year before, but below the US$28.54bn invested in 2012. FDI is concentrated in the mining sector, which absorbed 44.9% of the total between 2009 and 2013; over the same period the US was the biggest investor, with 16.7% of total FDI.

Bolivia – first oil find for quarter-century

The government led by President Evo Morales announced on 18 June the discovery by the state-owned oil company, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), of new oil reserves. This is the first such find for 23 years and at a stroke nearly triples Bolivia’s current oil reserves from 16m barrels to 44m barrels.

YPFB expects that exploitation of the oil reserves in the Boquerón Norte field in the municipality of Yapacaní in the eastern department of Santa Cruz will begin in 2017. The minister of hydrocarbons and energy, Luis Alberto Sánchez, said the discovery would permit Bolivia to reduce its diesel imports by around 20%, as some 6,500 barrels of oil per day would come on-stream from this well from 2019 onwards. The State subsidises fuel, and the biggest cost behind this subsidy is diesel imports.

Separately President Morales said on 20 June at an event in Cochabamba that Bolivia hoped to be exporting some 8,000MW of electricity by 2025, when the country will celebrate its bicentenary of independence. Morales said that much of this would be generated by a bi-national hydroelectric dam being planned with Brazil on the shared Madeira river for launch by 2022. This would generate 3,000MW, with Bolivia exporting the surplus electricity back to Brazil and using the proceeds to cover its portion of the financing cost, much as Paraguay currently does to Brazil with the Itaipú hydroelectric dam, albeit Bolivia would be looking for more generous terms as this has been a festering sore between Asunción and Brasília. Bolivia’s current production is 1,500MW, which satisfies the average domestic demand of 1,300 MW.

On 11 June Bolivia’s hydrocarbons & energy ministry announced that French oil firm Total S.A. has pledged to invest US$980m in the second stage of natural gas prospecting in the Incahuasi field located in the eastern department of Santa Cruz. A ministry statement said that the firm’s pledge came after a meeting that Hydrocarbon & Energy Minister Luis Alberto Sánchez held with Total’s CEO, Patrick Pouyanné, in Belgium.

The statement adds that Total’s investment will guarantee the coming on stream of the Incahuasi field in 2016, which will help to increase national natural gas production by 6.5m cubic metres per day. Bolivia currently produces 60.3m cubic metres of natural gas a day. Pouyanné and Sánchez also evaluated the possibility of Total working in a solar energy generation project in the south-eastern department of Potosí.

Colombia approves anti-contraband law

“Enormous satisfaction” was how the finance minister, Mauricio Cárdenas, reacted to the approval in mid June of a new anti-contraband law that had been mired in congress for over a year. “Contraband is the main problem which our productive apparatus faces,” Cárdenas said. “We must declare total war on contraband. Contraband destroys jobs, destroys businesses,” he added. According to the commerce, industry and tourism ministry, contraband generates the equivalent of 2% of Colombia’s GDP and 10% of imports.

Under the new law prison sentences will range from four to eight years for contraband dealers and fines will amount to up to 300% of the customs value of the contraband products imported, sold and transported. Those involved in transporting or selling contraband goods will be subject to the law from now on too.

Cárdenas also said that public officials would be punished much more severely for complicity in contraband. “Before they could get away with a fine but now they will go to prison,” he said. For those facilitating large-scale contraband operations, involving merchandise of over Col$120bn (US$47,000) prison sentences will be up to 16 years.

“Contraband is the other side of the story of narco-trafficking,” Colombia’s finance minister, Mauricio Cárdenas, said. “Drugs leave the country and these drugs return converted into cheap merchandise, merchandise that doesn’t pay tax,” he added. Contraband denies the State some Col$2.9 trillion (US$1.14bn) a year in taxes, according to Colombia’s customs and excise agency (Dian).

Peru

Peru’s GDP increased by 4.25% year on year in April, the national statistics institute (Inei) reported on 15 June. This was the highest monthly growth rate to date this year, suggesting that domestic economic activity is starting to pick up after suffering a marked slowdown since mid-2013. Peru has now posted 69 consecutive months of economic growth, with a cumulative 12-month growth rate for the of 1.74% and year to date growth of 2.39%. Inei highlighted a recovery in mining, fishing and manufacturing. Metallic mining activity increased by 18.3%, the highest rate since 2008. Activity in the manufacturing sector posted an increase of 6.1% after 11 months of negative growth. On the downside, the construction sector contracted by 8.6%. Peru’s central bank has retained a conservative 2015 growth forecast of 2.36%.

Brazil

Brazil’s national unemployment rate was 8.0% in the period February to April, the highest rate since the 7.98% posted in the first quarter of 2013. In the same period in 2014, the rate was 7.1%. This result was lower than the 8.2% consensus forecast compiled by Bloomberg News. Average wages were down to R$1,855 (US$594) for the quarter ending in April 2015, from R$1,862 (US$596) in the same period in 2014.

MÉXICO | Cooperación Veracruz-São Paulo en la producción de etanol. El ministerio de agricultura del estado mexicano de Veracruz, ha extendido su acuerdo de cooperación tecnológica con el estado brasilero de São Paulo, que cubre la producción de etanol derivado de la caña de azúcar.

En una declaración el ministerio de agricultura de Veracruz dijo que el acuerdo de transferencia tecnológica es “fundamental para el desarrollo de la producción de caña de azúcar [en Veracruz] y queremos aplicar las investigaciones desarrolladas en São Paulo para promover nuestro cultivo y estimular la matriz energética de nuestro país”.

Osiel Castro de la Rosa, el director del Instituto Veracruzano de Bioenergéticos del Gobierno de Veracruz, explicó que el objetivo es aprovechar las ventajas de la tecnología brasilera, que durante las últimas tres décadas ha estado a la vanguardia de la producción de etanol derivado de la caña de azúcar y su uso como combustible de vehículos, para promover la producción de caña de azúcar en México a fin de desarrollar un constante aprovisionamiento de biocombustibles y así reducir la contaminación.

Esta cooperación ya resultado en el desarrollo de cinco variedades de caña de azúcar especialmente diseñadas para el clima caribeño de Veracruz, que ha ayudado a incrementar la producción de caña de azúcar un 50% en años recientes. De acuerdo con el ministerio de agricultura de Veracruz, el próximo paso será incrementar la cooperación creando un instituto de investigación bilateral y ofreciendo cursos de postgrado en universidades de los dos estados.

MÉXICO | Nueva adquisición de Bimbo. La panadera multinacional de México, el Grupo Bimbo, ha confirmado que ha llegado a un acuerdo por €190m (US$210m) con la firma de administración de activos, Oaktree Capital Management, para la compra de la panadera española, el Grupo Panrico. Una declaración de Bimbo expresa que el acuerdo le permitiría la compra del 100% de las acciones de Panrico y todos sus activos en España y Portugal.

Señalando que el acuerdo ha sido sometido a la Comisión Nacional de los Mercados y la Competencia (CNMC) de España para su aprobación, la declaración de Bimbo agrega que “con esta transacción, el Grupo Bimbo refuerza su presencia en España y Portugal, complementando su cartera de productos, su capacidad de producción y su red de distribución”. Panrico es la panadera líder en la península Ibérica, con nueve plantas de producción y 2.000 empleados; y las ventas de la firma el año pasado llegaron a €280m (US$310m).

• Bimbo

Bimbo ya se ha convertido en la mayor panadera del mundo, con 166 plantas de producción y 1.600 puntos de venta esparcidos en 22 países en América Latina, Europa, y Asia.

BOLIVIA | Widening Chinese debt

On 16 October Bolivia’s President Evo Morales announced that China had agreed to provide a US$7bn credit line to fund infrastructure, electric power and transport projects. Speaking at the inauguration of a new headquarters for the umbrella workers’ union (COB) in Santa Cruz department, Morales hailed “the good news delivered to us from China by our comrade [Vice-President] Alvaro [García Linera]”.

García Linera made a three-day official visit to China between 14 and 17 October, aimed at boosting bilateral economic ties. According to Morales, the loan will be used to finance the construction of a new road linking the Santa Cruz municipality of Santa Rosa de la Roca and the municipality of Remanso in the adjacent department of Beni; and a new railway line linking the municipalities of Motacusico and Puerto Busch, both in Santa Cruz department.

Morales stressed that this would help to boost Bolivia’s future economic growth. He also noted that the decision to seek the loan did not answer to Bolivia’s inability to fund these projects but rather to the fact that this provided more readily available funds: “It is not a credit problem. If we need money because our economy is growing we have an important financial cushion, US$15bn of international reserves and deposits,” Morales said.

However, the announcement was met with concern in some quarters that Bolivia’s debt with China is growing at a high rate and increasing its overall foreign debt levels. According to figures from Bolivia’s central bank (BCB), the country’s foreign debt currently stands at 17% of GDP. However, local analysts have pointed out that the new Chinese loan will bring this total to some 39% of GDP.

The Andean Community of Nations (CAN) advises all its member countries that their level of external debt should not exceed 50% of GDP. Bolivia’s foreign debt to GDP ratio will not go past this threshold with the new Chinese loan, but it is moving closer to it.

Former finance minister Flavio Machicado Saravia (1983-1984) said that if the loan fails to promote the expected economic growth, it could undermine Bolivia’s capacity to repay it and the country could find itself in a vicious circle: “further in debt and not growing”.

This view is shared by local analyst, Julio Alvarado, who noted that “our economy grew thanks to the high price of raw materials, which have fallen and continue to fall”. Alvarado also noted the country has never taken on such a large debt, adding that Bolivia would also have to be mindful of its internal debt, “the external debt plus the internal debt both come to around US$20bn”.

Such concerns prompted García Linera to declare upon his return to Bolivia on 19 October that the country’s foreign debt levels will remain “manageable” even with the disbursement of the new loan. Pointing out that Bolivia’s current foreign debt level is “one of the lowest in Latin America”, García Linera insisted it was no cause for concern.

García Linera added that in any case the loan would not be paid “in bulk” but rather on a “project by project” basis. Yet he also revealed that China has pledged to offer an additional US$10bn credit once the delivery of the first infrastructure development project is made.

• Swedish support offer

On 20 October Sweden’s infrastructure minister, Anna Johansson, offered Peru Swedish government assistance to help tackle the ‘El Niño’ climatic phenomenon that causes extreme flooding in the north of the Andean country and severe drought in the south. Johansson’s offer came after she met Peru’s defence minister, Jakke Valakivi, and members of the high command of the Peruvian armed forces in Lima as part of a two-day official visit to Peru by Crown Princess Victoria of Sweden, the heir to the Swedish throne. After being briefed by Valakivi on the efforts of the armed forces to prepare for El Niño’s arrival, Johansson said that, “Sweden is an ally of Peru in confronting El Niño... and we are prepared to help the Peruvian authorities with whatever is necessary”.

With campaigning well under way ahead of the 15 May general elections, the main opposition Partido Revolucionario Moderno (PRM) is seeking to exploit President Danilo Medina’s links to a corruption scandal in Brazil as part of efforts to try to undermine his re-election bid for the ruling Partido de la Liberación Dominicana (PLD). While the case against Medina looks rather tenuous, the PRM is determined to milk it for all its worth by seeking to bring a legal case against him in the local courts.

Medina’s suspected links to corruption in Brazil emerged on 22 February when Brazil’s federal police issued an arrest warrant against João Santana, a renowned Brazilian publicist and political campaign strategist, who was advising Medina on his campaign. Santana was behind the campaign that first brought Brazil’s ruling Partido dos Trabalhadores to power under former president Lula da Silva (2003-2010) in 2002, (subsequently re-elected in 2006), and the campaigns which produced victories for President Dilma Rousseff in 2010 and 2014. However, he is now wanted for questioning in connection with ongoing investigations into widespread corruption at Brazil’s state-owned oil firm, Petrobras. Investigators suspect that Santana received US$7bn in payments from Brazilian construction firms under investigation for their involvement in the Petrobras scandal.

Immediately after the arrest warrant for Santana was issued, a local anti-corruption civil-society organisation, Alianza Dominicana Contra la Corrupción (Adocco), called on the authorities to detain and extradite Santana who was believed to still be in the DR. In a press conference, the PLD promptly responded by announcing that Santana had resigned as Medina’s campaign advisor. The PLD’s general campaign coordinator, Francisco Javier García, said that Santana, who has also worked on campaigns in El Salvador, Panama and Venezuela, quit in order to prevent the accusations levelled against him from impacting on Medina’s campaign. All of this was confirmed in a separate statement by Santana who said that he would return to Brazil to clear his name.

However, the PRM, whose presidential candidate, Luis Abinader, has attacked the Medina government for its weak efforts to combat corruption, wasted no time in seizing the opportunity to attack Medina and the PLD over their links to Santana. Jesús Vásquez, the PRM secretary general, publicly called for the PLD and Medina to explain these links and clarify whether the party had received any money through Santana’s contacts. The call was dismissed by the PLD which insisted that Santana was exclusively wanted for alleged crimes committed in Brazil. But the PRM was not convinced. On 2 March, the party presented a formal request before the Dominican Republic’s national district attorney general’s office calling on it to launch an investigation into Santana and his links to the PLD.

The PRM wants the authorities to investigate whether Santana was involved in money laundering and/or received irregular payments from the Dominican government through its contractual link to the PLD. The request also calls for investigators to clarify whether Santana has any contracts with state institutions and notes that Santana’s PR company, Polis Caribe Comunicación y Marketing, is registered as an approved government contractor. While it seems unlikely that a solid case can be built against Medina, the PRM is no doubt hoping that an investigation could tarnish the president’s hitherto unblemished reputation by linking him with the kind of corrupt practices that have increasingly been associated with the PLD since it came to power in 2004.

• Polls

While polls continue to give President Danilo Medina a commanding lead in the presidential race ahead of the election, these surveys also show that support for Luis Abinader, the main opposition challenger from the Partido Revolucionario Moderno (PRM), is steadily growing. A Gallup-Hoy poll released on 4 February gave Medina 51.8% of voting intentions to 35.7% for Abinader, sufficient for Medina to secure a first-round victory (50%+1 of the vote). However, the previous July poll gave Medina 62.6% and Abinader 17.4%. The same 4 February Gallup-Hoy poll also showed that 45.7% of respondents believed that there was more government corruption under Medina than previously (compared with 28% in the previous July survey), while only 19.2% believed that there was less.

Atlantic basin seasonal forecasts warn that warm sea surface temperatures and atypical atmospheric conditions will likely give rise to above-average hurricane activity in the Caribbean in 2020.

An outlook report released on 16 April by the Weather Company, a subsidiary of the International Business Machines corporation (IBM), predicts a potentially hyperactive hurricane season. Chief Meteorologist of the Weather Company Todd Crawford anticipates that the 2020 Atlantic hurricane season, which officially begins on 1 June, will experience 18 named storms, eight hurricanes and four major-hurricanes. Hurricanes reaching Category 3 and higher (178km/h or above) on the Saffir-Simpson Wind Scale are classified as major hurricanes due to their potential for inflicting significant loss of life or damage. The predication is significantly above the 30-year normalized average (1981-2010) of 13 named storms, seven hurricanes, and 3 major hurricanes.

An earlier forecast report released on 2 April by Colorado State University (CSU) suggests much the same outlook, predicting 16 named storms, eight hurricanes and four major hurricanes. The forecast is based on a statistical prediction scheme using 38 years of past data as well as a combination of data from both the United Kingdom Met Office and the European Centre for Medium-Range Weather Forecasts. The report concluded that there is a 58% probability of at least one major hurricane tracking into the Caribbean, above the average of 42% for last century.

On 20 April, an official forecast from the National Oceanic and Atmospheric Administration (NOAA), a US federal government scientific agency predicted a 20% chance of El Niño coinciding with the peak of the Atlantic hurricane season. El Niño refers to a 12-18 month period in which anomalously warm sea surface temperatures occur in the eastern half of the equatorial Pacific.

The CSU report highlighted the El Niño forecast by the NOAA as a primary reason for predicting above-normal activity in the upcoming hurricane season. According to the institution, “El Niño tends to increase upper-level westerly winds across the Caribbean into the tropical Atlantic, tearing apart hurricanes as they try to form”.

CSU also pointed to the warmer-than-normal sea surface temperatures in the tropical Atlantic as a reason for its prediction as the conditions provide more fuel for cyclone formation and intensification. The 2020 Atlantic basin average Accumulated Cyclone Energy (ACE), a measure of a storm’s potential for wind damage and destruction, is expected to be approximately 140% of its long-term average.

If the forecasts are correct, the 2020 hurricane season will be the fifth consecutive year of above-normal activity. The 2019 hurricane season was an exceptionally devastating one, bringing 18 named storms and 20 tropical cyclones. Hurricane Dorian, an ultra-intense Category 5 hurricane with winds peaking at 295km/h, gained infamy for becoming the most intense tropical storm on record to strike The Bahamas. Dorian surpassed hurricane Irma in 2017 as the most powerful hurricane ever recorded outside of the Caribbean and Gulf of Mexico. An Inter-American Development Bank (IDB) report published in November 2019 estimated the total cost of the impact of Dorian on The Bahamas at US$3.4bn, over a quarter of the country’s GDP.

For the Caribbean, the ominous forecasts come at a particularly unwelcome time as governments in the subregion are exhausting resources to tackle the fallout from the coronavirus (Covid-19) health crisis. Ronald Jackson, the outgoing head of the Caribbean Disaster Emergency Management Agency (CDEMA) has warned that the region is facing “a perfect storm”.

Commenting on the dire prospects for the region, Jackson said: “You are managing your current debt-to-GDP ratios, you’re managing your fiscal environments, you’re dealing with social challenges, and even if you were making some headway, here comes the Covid crisis.” He then asks: “What resources are now available for traditional preparedness expenses? Your warehousing supplies, your shelter facilities – are some of them being used as isolation facilities? Things like your rainy-day funds that you may have used for Covid, will it be available in a hurricane to provide relief, resources post-hurricane, and recovery-related costs?”

Gaston Browne, the prime minister of Antigua & Barbuda, summed up the despair and fear felt by many of the region’s leaders when he told Jamaica’s Sunday Gleaner: “God forbid, and if any of our [Caribbean Community] member states suffers any devastation from hurricanes, it would be a metaphorical hellfire.” Ralph Gonsalves, prime minister of St Vincent & the Grenadines, echoed this in the same article, which was published on 26 Aprilm by warning of a possible “bloodbath” in the offing.

According to CDEMA, natural disasters in the last three years have cost the region in excess of US$118bn.