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President Iván Duque promulgated a key tax reform on 28 December known as the ‘Ley de Financiamiento’. It was a Pyrrhic victory. Congress had insisted upon watering down the original bill before swallowing it nine days earlier, with the upshot that it will not plug a Col$14tn (US$4.37bn) budget deficit in 2019 as planned. Such was the strength of opposition to the extension of value added tax (VAT), before it was dropped from the bill, that Duque’s popularity plummeted. Even Duque supporters protested, prompting his party, the right-wing Centro Democrático (CD), to publish a statement, brimming with suppressed discontent, expressing its confidence that he would show the sagacity to change tack.

President Duque presented the ‘Ley de Financiamiento’ to congress in late October as an essential tax reform to balance the 2019 budget. Its tortuous passage was secured on 19 December in the lower chamber of congress by 97-51, after obtaining approval in the senate late on the previous day by 62-13. “The law retains the original spirit of protecting the most vulnerable and seeking a more equitable tax system, encouraging entrepreneurship, strengthening the tax agency [Dian], and obtaining a larger contribution from high earners,” the finance ministry said in a statement.

The spirit of the law might have survived but the substance did not. The expansion of VAT to 80% of products in the basic basket of goods was conceived to generate additional tax revenue of Col$11tn (US$3.5bn), but the government was compelled to abandon this core component of the tax reform amid popular protests and widespread political rejection, including being left high and dry by the ruling party.

The climb down was politically damaging: Duque is the least popular Colombian president of the last 20 years so early in his mandate (he has been in office for just five months) with an approval rating of between just 22% and 38%, according to national pollsters. It could also be economically harmful: even with some additional taxes, the government could not make up the shortfall from dropping the VAT adjustments. The modified law will raise only Col$7.5tn (US$2.3bn). This could result in a credit downgrade.

The revised tax reform, which took effect on 1 January, includes a higher tax for those earning more than Col$33m (US$10,250) a month; a 2% tax on sale of property valued at more than Col$918m (US$290,000), to bring in Col$1.7tn; a 1% tax on liquid assets exceeding Col$5bn for the next three years, which the government hopes will raise Col$800bn; a surcharge on financial sector profits (also for three years) to net Col$1tn; a 15% tax on those earning share dividends over Col$10.8m; and a multi-phase tax on beer and fizzy drinks. The new law also approved prison sentences of between four and nine years for tax evasion of more than Col$8.6bn.

The president of BBVA Colombia, Óscar Cabrera, reacted to the new law by saying it was “bad news for banks [as] a paralysed financial system cannot support the country’s development in the same way” in reference to the surcharge on financial sector profits. But the government’s biggest concern is that the tax reform is not seen as going far enough. Unless potentially unpopular cuts to subsidies and other public spending are made, Colombia could lose its investment grade rating, which would make servicing the public debt more expensive. The finance minister, Alberto Carrasquilla, is confidently predicting GDP growth of between 3.5% and 4.5% this year but this will be complicated by declines in the price of oil and coffee.

• Beneficiaries

The ‘Ley de Financiamiento’ includes tax exemptions for new companies investing more than Col$150m over three years in the ‘orange economy’ of talent and knowledge, favoured by President Duque, and creating at least three jobs. There are also incentives for the tourism and agricultural sectors, the latter a stronghold of support for Duque upset by his (aborted) decision to increase VAT on food staples.

There are various possible scenarios for Argentina’s immediate economic future. Some of them could be benign. One good outcome would be a clear mandate emerging from the 14 November midterm elections, followed by an agreement with the International Monetary Fund which resolves the foreign debt crisis and sets the scene for falling inflation and sustainable growth into 2022 and beyond.

The problem with building an optimistic forecast for Argentina is that the business community does not appear convinced that it is actually going to happen. According to a survey of 250 executives published in late July by consultancy D’Alessio IROL for business think-tank Instituto para el Desarrollo Empresarial de la Argentina (Idea), 64% said they expect the economy to worsen in the second half of 2021, citing high inflation, the absence of a clear government economic plan, uncertainty, a high tax burden, and the ongoing effects of the coronavirus (Covid-19) pandemic. Respondents suggested that the recovery in sales has hit a plateau, with only four out of 10 expecting an improvement in the next 12 months.

As for investment plans, 21% of respondents said they were planning to increase capital expenditure while double that – 43% – said investment would fall. Capital spending was judged to have fallen to only 10% of company revenues this year, down from 15% in 2020. Economist Santiago Bulat, who worked on the survey, said it showed an underlying uncertainty about the nature and strength of the domestic economic recovery. Even if the government forecast for 7% GDP growth this year proves accurate, Argentina’s economy will still remain below pre-pandemic levels of activity, and below the last real-term GDP peak recorded four years ago in 2017. Despite good commodity prices, opinions are divided on the ability of exports to drive growth. Only 21% of the survey’s respondents believe exports will increase, while 25% say that they will fall.

Respondents said Argentina needs to recover economic competitiveness, which will require tax reform, reduced inflation, labour reform, and a comprehensive agreement with the country’s creditors. A total of 38% thought that employment levels would fall at their company, versus 22% who expected to take on more staff.

Buenos Aires province seeks deal with creditors

Argentina’s Buenos Aires province said on 21 July that it had reached an agreement in long-running rescheduling talks over US$7bn worth of provincial public debt. Authorities say they had reached an understanding with bondholders led by GoldenTree Asset Management that would allow the province to move “towards the completion of the debt restructuring process”. Provincial finance minister, Pablo López, said revised terms would save US$4.45bn in debt service charges in 2020-2024, with payment terms extended and coupon payments reduced to 5.6% of face value.

However, there were reports that not all bondholders are in agreement, and that seven funds rejected the terms, some saying they were “non-consensual”. One creditor ready to accept the terms on offer told Reuters news agency “A better deal might have been possible, but not prior to the November midterm elections – that introduce a level of uncertainty that just felt unnecessary.”

López said the deal had been helped by recent signs of economic recovery and progress in the Covid-19 vaccination programme. The minister said the deal was “a key step to recover a sustainable debt profile, according to our ability to pay and the enormous difficulties we must face”. All bondholders have been given until 13 August to formally indicate their acceptance or rejection of the terms.

A 14 September report from the International Monetary Fund (IMF) recommended that the Bolivian government implement “meaningful fiscal adjustment” by constraining public sector wage growth, limiting growth in public investment, and reducing subsidies. True to form, the concerns were met with short shrift from President Luis Arce’s government.

In response, President Arce declared that Bolivia’s economic model was a matter of national sovereignty and that the IMF suggestions would have a negative impact on the population, particularly on the working class. Finance Minister Marcelo Montenegro added that the IMF recommendations were outdated, and that the economic policy of the ruling left-wing Movimiento al Socialismo (MAS) has resulted in low levels of inflation, sustained growth, and a quicker than expected economic recovery from the coronavirus (Covid-19) pandemic. According to finance ministry figures, extreme poverty levels in Bolivia have been reduced to 11.1%, while annual inflation stood at 1.89% in October – among the lowest rates in the region.

However, the IMF has warned that positive indicators for the Bolivian economy may be masking structural weaknesses. For example, higher international prices for natural gas exports have obscured a decline in the production of this commodity that has caused Bolivia to struggle to meet its export quotas [EB-22-06]. There are also particular concerns that fuel subsidies are eating into Bolivia’s international reserves, which declined from US$5.28bn in late 2020 to US$4.3bn in July 2022. The IMF estimates that maintaining fuel subsidies costs approximately 3.7% of GDP annually.

The IMF recommends that domestic fuel subsidies be phased out and fuel prices increased, but with the concurrent introduction of targeted cash transfers to poorer Bolivians. Such a policy would likely provoke a fierce backlash; in 2011, then-president Evo Morales (2006-2019) was forced to reverse a plan to cut fuel subsidies – estimated at the time to cost the government US$380m per year – after a week of protests saw violent clashes between police and demonstrators.

The rejection of the IMF suggestions by Arce’s government is hardly surprising, and not only because of his party’s historical stance of opposing recommendations from the lender. The IMF predicts that Bolivia will see growth of 3.8% in 2022, slower than 2021 (when growth of 6.1% followed a contraction of 8.7% in 2020), but still sufficient to restore GDP to its pre-pandemic levels. Meanwhile, currently high commodity prices are expected to boost prices for mining and agricultural exports. As such, despite IMF warnings, there are no clear signs to the Bolivian population that their country’s economic policy is in need of drastic change. Whilst there are some concerns that the conflict in Ukraine could continue to raise energy prices globally, ultimately leading to increased costs for fuel subsidies and higher domestic inflation in Bolivia (the IMF predicts inflation of 4.2% by the end of 2022) this is unlikely to translate into popular support for budget cuts any time soon.

In addition, the MAS has long prided itself on its central focus of reducing poverty and inequality. As the 2011 protests showed, its supporters have also been willing to take to the streets when they felt that the MAS was straying from this mandate. Although there may be some indicators that the current growth in the Bolivian economy may start to falter towards the end of 2022, it is unlikely that anything other than a full-blown crisis will see the government adopt IMF recommendations that contradict existing policies.

One of the first major public opinion polls since President Luiz Inácio Lula da Silva took office in January suggests he is doing relatively well, but that political polarisation remains a major problem.

According to the Ipec poll conducted in early March, 41% of respondents believe Lula is doing a ‘good or excellent’ job, while 24% described his performance as ‘bad or terrible’. Another 30% characterised his performance as ‘fair’ or middling. Comparatively speaking, this is perhaps a reasonable result.

At this early stage in his third presidential term, Lula is doing better than his immediate right-wing predecessor Jair Bolsonaro (2009-2013). In March 2019 only 24% thought Bolsonaro’s record was ‘good or excellent’. However, Lula is doing less well than at the same point in his own first (2003-2007) and second (2007-2011) terms, when the proportions rating him ‘good or excellent’ had been respectively 51% and 49%.   

Some other results of the poll can be read as broadly encouraging for Lula. A total of 57% approve of the way Lula is governing and 53% say they trust him, while 47% agree with the statement that Brazil is “once again respected in the world” (against 44% who disagree).

Lula continues to do well in the north-east of the country, and among Catholics, while he appeals less in the south-east and among evangelicals. There are signs that some people who voted for Bolsonaro last October are now prepared to give Lula the benefit of the doubt. The poll revealed that 36% of those who voted for Bolsonaro believe Lula’s performance up to March is ‘fair’. 

There was also contrary evidence, however, indicating that Brazil has become deeply polarised, sharply limiting Lula’s potential appeal compared with his earlier presidencies. Ipec found that 44% of respondents believe Brazil “runs the risk of becoming a communist country” against 48% who disagree, reflecting the strength of Bolsonaro’s narrative on the subject and the extent of Lula’s difficulties as he tries to position himself not as a partisan left-winger but as the head of a wider, more consensual centre-left coalition.

Polarisation

Another sign of polarisation was that 51% believe former president Bolsonaro was not to blame for the 8 January mob attack on the presidential palace, against 22% who believed he should be put on trial and lose the right to be a presidential candidate in future.

A report released last week by Guatemala’s ministry for agriculture, livestock and food (Maga) revealing that 50% of the 2012 corn and bean crop had been lost to drought has revived familiar concerns for President Otto Pérez Molina who upon taking office last January, declared combating malnutrition a major priority.

With Guatemala suffering the highest rate of child malnutrition in Latin America, Pérez Molina’s centre-left predecessor, Alvaro Colom (2008-2012) was forced to take drastic measures during his mandate. These included declaring a state of national calamity in 2010 after 953 deaths were attributed to chronic malnutrition. According to the latest report by Maga, this year’s drought has affected 911 communities in 46 municipalities, spread across 18 of the country’s 22 departments, and authorities put the value of this year’s losses at some Q$52m (US$6.6m).With an average annual harvest of 1.67m tonnes (t), corn is Guatemala’s leading crop, while nearly 200,000t of beans are produced in a normal year. Acting as further pressure on the government is food price inflation – which reached 6.7% year-on-year in June, well above the general index (2.86% year-on-year).

While Agriculture Minister Efraín Medina has said that the government will provide seeds and food for those affected, with the support of the UN’s Food and Agriculture Organization (FAO), the crisis has once again focused attention on the efforts of Pérez Molina, who previously expressed hopes to reduce malnutrition, which he estimates currently affects 49% of the population, by 10% over his four-year mandate. Last month he admitted delays in implementing government programmes such as ‘Hambre Cero’ (Zero Hunger), a major Q$2bn (US$260m) plan to tackle malnutrition introduced in February [WR-12-29].

A report published on 25 August by the leading daily, el Periódico, raised further question marks over the efficacy of his government; according to the newspaper, the budget report of fiscal execution by the Ministry of Social Development (Mindes) – the entity established by Pérez Molina to institutionalise social programmes begun under Colom – revealed just 3.41% of the budget of Q1.23bn (US$156m) had been spent up to June. President of the congressional food security committee, Hugo Morán, a deputy for the Partido de Avanzada Nacional (PAN), admitted that the process of putting into place ‘Hambre Cero’ had “not been easy” with implementation of the programme at between 20% and 22%. He added that the execution of other social programmes aimed at targeting malnutrition and poverty is at zero. These include the “1,000 Day Window of Opportunity” initiative aimed at supporting mothers from pregnancy up until their child is two, ensuring that they both have access to a healthy diet.  According to el Periódico, the resources assigned to this initiative (Q$104m/US$13m) have gone on paying salaries.

Pérez Molina presents constitutional reform

On 27 August, more than a month after initially scheduled, Otto Pérez Molina presented his constitutional reform package to congress. He first floated the bill in May on the 27th anniversary of the promulgation of Guatemala’s constitution, but its submission to congress had been delayed pending objections to the proposal. The number of proposed amendments has been cut to 39 from more than 50 [WR-12-29].

Changes such as expanding the role of the military to include citizen security and provisions to strengthen the judiciary have remained, along with a proposal to reduce the size of the unicameral 158-member legislature to 140. A key omission however was the proposal to allow the state to own up to 40% of companies that exploit natural resources in the country.

• Uphill battle

President Otto Pérez Molina’s declared aim of getting the congressional reform package approved by congress (for which a two-thirds majority is required) within three months seems a little ambitious: his Partido Popular (PP) has only 61 seats, while the biggest opposition bloc, Libertad Democrática Renovada (Líder) has 25. According to local press reports, while the PP and its ally, Partido Unionista, back the changes, other parties such as the Unión del Cambio Nacional and Partido de Avanzada Nacional (PAN) want more time to study the changes. Líder and the Unidad Nacional de la Esperanza (UNE) of former president Alvaro Colom (2008-2012) openly oppose the bill.

TRADE | Costa Rican truckers end blockade. On 6 March some 550 Costa Rican truckers on strike in the border district of Paso Canoas ended their protest. The truckers began their blockade at the main border crossing between the two countries on 28 February alleging the abuse of authority by officials from Panama’s border agency (Senafront). The blockade was lifted following a meeting yesterday between delegations headed up by Costa Rica’s security minister, Manuel Zamora, and Panama’s deputy minister for security, Manuel Moreno. Zamora told reporters that the two sides had reached an agreement to speed up the procedures for checking vehicles on the Panamanian side of the border. Manuel Mora, the president of the Panamanian chamber of heavy goods, said the blockades by the Costa Rican truckers had caused some US$2m in losses.

Development: Adam E. Namm, the US ambassador to Ecuador, said on 22 July that Washington expects to restart bilateral trade talks between the two countries before the end of this year.

Significance: Relations between Ecuador and the US have been strained for some time, but particularly so over the last two months following Ecuador’s initial offer to consider granting asylum to Edward Snowden, the US National Security Agency (NSA) whistleblower, who remains struck in a Moscow airport. On the cards is a quiet move back towards business as usual on the important bilateral trade front. Last year, 45% of Ecuador’s total exports, worth US$10.6bn, were shipped to the US, while imports from the US were US$6.8bn.

Key points:

• Speaking to Radio Quito, Ambassador Namm said that “ties between the two countries are evident, they are strong. We want to restart the bilateral dialogue before the end of this year and we are talking with the Ecuadorean government on that”. His comments to some extent chime with the position taken by the Ecuadorean ambassador in Washington, Nathalie Cely. In a signed article for the US Forbes magazine published on 12 July, she argued that “the people of our two countries have a vested interest in ongoing relations – from trade and investment, to promoting regional security, to joint environmental efforts”.

• The political quarrel between the two countries appears to have done more damage to one out of two key trade agreements. The hardest hit was the Andean Trade Promotion and Drug Eradication Act (Atpdea). In place for over two decades, the Atpdea offers trade preferences to countries that collaborate with the US to reduce drug smuggling. Ambassador Cely described it as “a successful, cost-effective tool to fighting the drug trade in Ecuador”. The Atpdea expires at the end of July and, as Cely put it, when Quito felt its renewal was being used as ‘political leverage’ over the Snowden affair, it decided to draw a line and voluntarily renounce the programme. In theory, this could cost the country some US$23m in lost preferences for products such as shrimp and frozen vegetables. It is unclear, however, that President Rafael Correa’s dramatic Atpdea ‘renouncement’ amounts to anything more than rhetoric.

• Much more important than the Atpdea, however, is the US generalised system of preferences (GSP). Ecuador has an outstanding request for its artichoke and cut flowers exports to the US to benefit under the GSP programme. The GSP is therefore likely to be at the centre of any new Ecuador-US negotiations.

La noche de los saqueos en la provincia de Córdoba el 3 de diciembre, le “compete en forma exclusiva y excluyente a la provincia”, y es “un tema de estricta incumbencia del gobernador de la provincia, José de la Sota,” de acuerdo con el jefe de gabinete del gobierno federal, Jorge Capitanich. Un hombre resultó muerto, 60 heridos, y 52 arrestados, cuando por lo menos nueve supermercados fueron saqueados durante una huelga policial provocada por una disputa de pago de salarios. De la Sota, un Peronista disidente con una larga historia de públicas críticas a la Presidenta Cristina Fernández, contraatacó a través de Twitter, afirmando que sus apelaciones por ayuda federal habían caído en oídos sordos. Como resultado de la hostilidad entre la presidenta y el gobernador, a menudo los fondos federales han sido retrasados, y De la Sota alega que ese ha sido el mayor factor en el malestar político y social en la provincia.

La policía había estado exigiendo un salario de al menos Arg$13.000 (US$2.100). Cuando las negociaciones se rompieron en la tarde del 3 de diciembre, la fuerza policial celebró una reunión para decidir la siguiente movida. Mientras los policías estaban reunidos en asamblea, los saqueadores comenzaron a aparecer en las calles, apuntando a algunos de los principales supermercados de la capital (que lleva el mismo nombre de la provincia: Córdoba). El 4 de diciembre el equipo negociador de la policía aceptó un acuerdo que vería el más elevado salario –para los oficiales de policía en patrulla– recibiendo Arg$11.600; “el más alto salario policial en Argentina,” de acuerdo con De la Sota.

La fuerza de policía de Córdoba llegó a la prominencia nacional en septiembre de este año, cuando Rafael Sosa, el jefe de la división antinarcóticos de la policía de la provincia, fue arrestado bajo cargos de tráfico de drogas. Algunos legisladores locales acusaron al gobierno federal de exagerar los alegatos contra Sosa como una manera de desacreditar a De la Sota.

De la Sota, un cofundador y líder del movimiento ‘renovador’ dentro del gobernante Partido Justicialista (PJ, Peronistas), tiene ambiciones presidenciales propias. Desde hace tiempo un crítico de Fernández, antes de las elecciones legislativas de mitad de periodo de octubre, urgió al público que deposite “votos que hagan reflexionar a la presidenta”. El saqueo, que ocurrió mientras él estaba en un viaje a Panamá, socavará esos planes.

A su regreso De la Sota visitó estaciones locales de TV y radio afirmando que él había pedido

La asistencia de la Gendarmería, una fuerza policial federal de Argentina, pero que no había recibido ninguna respuesta del gobierno. Capitanich negó de plano que el gobierno haya recibido tal llamado telefónico. El jefe de gabinete dijo que la administración nacional “monitorearía la situación” pero enfatizó que la responsabilidad por el conflicto “corresponde estrictamente a De la Sota.”

• Otro cambio de gabinete

María Cecilia Rodríguez juró el 4 de diciembre como la nueva ministra de seguridad del gobierno, reemplazando a Arturo Puricelli. Rodríguez, miembro del movimiento juvenil Kirchnerista ‘La Cámpora’, había trabajado previamente en el ministerio de desarrollo social, liderado por Alicia Kirchner. Este es el quinto cambio de gabinete de la Presidenta Fernández desde que retornó a sus tareas siguiendo a sus 40 días de reposo médico.

Costosas vacaciones de verano

El gobierno anunció el 3 de diciembre un incremento en los costos cargados sobre compras hechas por los argentinos en el exterior a través de tarjetas de débito y de crédito, en un intento por reducir la salida de dólares. Todas las compras con tarjeta “para turismo y compras de viaje” que se hagan fuera de Argentina ahora estarán sujetas a una tarifa de 35%, subiendo de 20%.

El jefe de gabinete, Jorge Capitanich dijo que el incremento era necesario para salvaguardar la economía. “Creemos que hay un drenaje de moneda extranjera a través de operaciones de turismo. Nosotros debemos ser muy cuidadosos en la administración de las reservas.” Las reservas en dólares del banco central han descendido en alrededor del 30% el año pasado.

En un intento por reducir la fuga de capital y retener las reservas internacionales, el gobierno impuso primero controles sobre el cambio de moneda extranjera a fines del 2011, resolviendo que todas las compras de monedas debían ser aprobadas por la Afip, la agencia fiscal federal. Desde entonces se han estado agregando más controles, con lo locales ya no pudiendo comprar dólares con fines de ahorro y un recargo como ‘avance fiscal’ agregado a las compras hechas en el exterior.

Esto ha creado un mercado subterráneo paralelo para el cambio de dólares, conocido como la tasa del dólar ‘blue’. La brecha entre las dos tasas actualmente está en alrededor de 50%, aunque ha llegado tan alto como 80%. El 4 de diciembre, un dólar tenía un valor oficial de Arg$6,16 y se operaba en Arg$9,22 en el mercado negro. Con el impuesto de 35%, el dólar turista que los residentes en Argentina deberán pagar sobre sus tarjetas de crédito cuando viajen al exterior estará en Arg$8,30 por dólar.

With less than a month to go until the start of the Fifa World Cup, strikes and industrial actions are convulsing many of Brazil’s host cities. In Rio de Janeiro, a 48-hour strike by bus drivers and fare collectors resulted in less than 18% of the bus fleet operating. The lack of public transport is merely the most visible face of the unrest currently gripping the city: teachers, municipal engineers, architects, geologists and public museum staff have also been on strike, as have banks’ private security guards.

Teachers are currently on strike in São Paulo and Manaus. Workers at the Manaus factory of Ambev, the brewery, are threatening industrial action ahead of the World Cup. Rubbish collectors in Belo Horizonte have downed brooms. Students from the Movimento Passe Livre, the free bus pass movement which kicked off last year’s major protests, organised a significant demonstration outside the city hall in Porto Alegre. On 13 May military police and the fire service protested in Recife; on 14 May they went on strike, forcing the local government to call in the army. In Cuiabá the military police are threatening to go on strike during the tournament. Airline staff from the Latam Group (which combines LAN and TAM) have also threatened to walk out during the World Cup.

Outside of the country, staff in 13 Brazilian embassies and consulates, including those in New York, Atlanta, Los Angeles, London, Montreal, Brussels and Paris are also on strike, just as many would-be World Cup tourists are seeking visas. Brazil’s Berlin embassy was also attacked earlier in the week by a small group of activists who daubed the building with the slogan: “Nao vai ter Copa” [sic] (“There’s not going to be a World Cup”). The vandalism prompted some Brazilian commentators to wonder whether the World Cup would attract international anti-capitalist protesters, who might swell the number of the local ‘black blocs’.

A key test of the strength of the anti-World Cup movement will come this Thursday, 15 May: “the International Day of Struggles against the World Cup”. Events are being planned in 50 Brazilian cities, though the focus is likely to be São Paulo. All host cities have their own “People’s World Cup Committees”, but São Paulo’s is the largest and best-organised. According to the group’s press release, 90 different outfits have committed to attend the protest, among them the MPL and the Movimento dos Trabalhadores Sem Teto (MTST).

The MTST is currently occupying a stretch of land around 4km from the Itaquerão stadium, which is due to host the opening match of the World Cup. Last week the group briefly occupied the offices of a number of the major construction conglomerates that won lucrative contracts for the World Cup, including Odebrecht, OAS and Andrade Gutierrez.

In host cities across Brazil the branch of the military police tasked with handling public order, the Batalhão de Polícia de Choque, is currently carrying out very public demonstrations, approved by the US Federal Bureau of Investigation (FBI), of how they intend to contain protests during the tournament. In Rio, the latest demonstration is planned for 15 May, a few hours ahead of the anti-World Cup protests.

Tourism ministry predicts World Cup windfall

Figures from the ministry of tourism published on 14 May predict visitors to Brazil will spend a total of R$6.7bn (US$3bn) during the period of the World Cup, from 12 June until 13 July. Rio de Janeiro is expected to receive the most: R$1bn (US$450m), followed by Brasília, R$888m (US$402m); and Fortaleza, R$782m (US$354m). Curitiba is at the bottom of the list of the 12 host cities, with a projection of R$297m (US$134m). The 300,000 foreign tourists expected to visit, based on ticket sales from early April, are projected to spend an average of R$5,500 (US$2,500) excluding air fares.

• “Don’t react”

The civil police in São Paulo will circulate a booklet in English, Spanish and French to World Cup visitors arriving in the city on how to react in case of an assault. The basic message is “Don’t react. Don’t shout. Don’t argue”. The head of the city’s World Cup organising committee, Mario Leite, argued that many of the foreign visitors to Brazil will not be as accustomed to dealing with street crime as Brazilian tourists.

La Almirante Carmen Meléndez, la ministra de defensa desde julio del 2013, cuando se convirtió en la primera mujer venezolana en ocupar el cargo, fue designada como  ministra del interior & justicia, después de que el Presidente de Venezuela, Nicolás Maduro, removió al General del Ejército Miguel Rodríguez Torres, el 23 de octubre. Meléndez, una poderosa figura de quien se cree que es el ‘pulso’ de los militares en el gobierno de Maduro, ha sido reemplazada en el ministerio de defensa por el General Vladimiro Padrino López, el poderoso jefe del comando estratégico de las fuerzas armadas. En los últimos 18 meses, los militares venezolanos han consolidado un control sin precedentes sobre el gobierno nacional, mientras que también están en firme control de gobernaciones de estados clave en el país desde las elecciones regionales de hace un año.

Hay algunas sugerencias de que las últimas movidas de Maduro –que también involucran la remoción de todo el al alto comando en el Cuerpo de Investigaciones Científicas Penales y Criminales (CICPC), el brazo investigativo de la policía nacional– fueron un esfuerzo por aplacar a los grupos armados de milicias pro-gobierno, conocidos como ‘colectivos’ después del turbio incidente del 7 de octubre en el cual un bien conocido líder de un colectivo de Caracas, José Odreman, fue muerto en un tiroteo con oficiales del CICPC.

En un video grabado durante la confrontación de ocho horas con los oficiales del CICPC, Odreman dijo que él hacia responsable a Rodríguez de lo que pudiera pasarle. Después de su muerte, el colectivo ‘5 de marzo’ de Odreman, exigió la renuncia de Rodríguez para el 23 de octubre, advirtiendo que de otra manera habría consecuencias negativas. Hubo sugerencias de vínculos entre el incidente Odreman/CICPC y el asesinato, no mucho antes, de Robert Serra, un prominente diputado joven por el gobernante Partido Socialista Unido de Venezuela (PSUV) –el rumor era que Serra, un criminalista, estaba investigando la corrupción en la policía. Sin embargo, ambos casos permanecen tan envueltos en secreto, que es imposible saber nada.

El colectivo ‘5 de marzo’ había planeado una marcha hasta la oficina del fiscal general el 23 de octubre para presionar por la remoción de Rodríguez. La marcha fue desconvocada ante el anuncio hecho por Maduro, lo que sugiere que el gobierno habría llegado a un arreglo con el colectivo. Extrañamente, Maduro no dijo que Rodríguez había sido destituido, sino que él se estaba tomando dos semanas de vacaciones de su cargo, antes de mudarse a otras obligaciones.

Los observadores están divididos sobre si los colectivos –que se ven a sí mismos como los legítimos defensores civiles de la Revolución Bolivariana, pero que son criticados por la oposición como una pandilla de matones armados a quienes se les otorga completa impunidad– ganaron esta particular batalla contra el CICPC y los esfuerzos encabezados por Rodríguez para refrenarlos, o si el problema reside con el mismo CICPC (como Odreman y otros de la base del PSUV, incluido notablemente el periodista José Vicente Rangel, han insinuado). Cualquiera sea la verdad, los militares venezolanos están moviendo los hilos en la situación, y podrían buscar reafirmar, en nombre del Estado civil, su monopolio sobre el uso de la fuerza en el país.

¿Reforma de la policía?

Como ministra del interior & de justicia, la Almirante Meléndez se automáticamente convirtió en la presidenta del Consejo General de la Policía (Congepol), establecido en el 2008 bajo la ley orgánica de la policía, que fue vista como el lanzamiento de una reforma total de la policía en Venezuela pero que ha producido pocos resultados en el terreno. Congepol tiene la tarea de “ayudar a definir, planear, y coordinar las políticas públicas en la labor policial” (ver abajo).

• Congepol

El Consejo General de la Policía (Congepol) de ocho miembros, recibió el estatus de permanente en enero del 2012; se reúne cada 15 días y el ministro del interior puede convocar a sesiones de emergencia. Congepol está conformado con el ministro del interior como presidente, junto con representantes de los gobernadores de estados, alcaldes, el defensor público y la oficina del fiscal general, más tres expertos en asuntos policiales.

COLOMBIA | Facing up to the inevitable, budget cuts ordered. Colombia will delay expenditures worth US$2.44bn, roughly 3% of the approved US$88bn 2015 national budget, because of the sharp fall in forecast oil revenues this year. The cuts fall mostly on the investment side, with a reduction of US$1.95bn in planned outlays, including much-needed infrastructure improvements, taking total planned investment down to US$18bn in 2015. Another US$488m will be shaved off administrative costs.
In a statement, the government said the decision was based on “new macroeconomic and fiscal conditions, associated primarily with the fall in international oil prices”. It stressed that spending on the most vulnerable citizens, including those displaced by the country’s internal conflict, would be ringfenced. Colombia’s fiscal income (including taxes and royalty revenues) has been hit hard by the 60% fall in global crude prices since June 2014. Oil is the country’s biggest export and source of foreign exchange.

VENEZUELA | Venezuela and Trinidad ink new energy deals. Venezuela’s President Nicolás Maduro inked new deals on 24 February with Trinidad & Tobago’s Energy Minister Kevin Ramnarine and Prime Minister Kamla Persad-Bissessar for the joint production and development of oil and gas in the Manakin-Cocuina field, which spans the maritime border between the two countries. It is the second such gas-development agreement between the two Caribbean Sea neighbours. In September 2013, after 10 long years of negotiations, the two signed a preliminary agreement to exploit the offshore Loran-Manatee Field.

Under the latest deal Venezuela will also resume crude oil shipments to Trinidad & Tobago for refining, and will also export asphalt and jet fuel to its neighbour. Trinidad & Tobago in return will supply Venezuela with needed inputs including cement, gasoline and air conditioners, as well as consumer goods. Maduro, accompanied by seven cabinet ministers (and his wife) for the one-day trip, said the deal was a “win win” for both countries. The deals underline Venezuela’s urgent need to boost its stagnant oil sector, with domestic refineries plagued by technical difficulties.

BRAZIL | Police ‘extermination units’. Julio Cesar Fernandes Neves, ombudsman of the São Paulo military police (PM), said on 15 September that video images taken a week earlier of PM officers shooting dead two suspected robbers in the Butantã district of the state capital, and the recent chacinas (‘slaughters’) that claimed 19 lives in the Osasco and Barueri districts of the Greater São Paulo were evidence of the existence of ‘extermination groups’ within the force.

Further evidence, he said, emerges from the high number of civilians killed in ‘confrontations’ with the police in recent years: 440 in 2013, 801 in 2014 and 421 since the beginning of 2015. According to Neves these ‘extermination groups’ are still active because they enjoy a high level of impunity. Last year, he said, 129 officers were discharged from the PM and 177 were dismissed; so far this year 63 were discharged and 94 were dismissed.

The police, he said, ‘live in a war culture; they go out into the streets as if they were a battlefield [...] These are situations that have been around for a long time, but as the official organs fail to acknowledge them, they persist.’

Both governor Geraldo Alckmin and state security secretary Alexandre de Moraes deny the existence of any such groups. According to Alckmin there are only ‘bad police’ who will be weeded out by due process.

ARGENTINA | Army weapons ‘missing’. The third disappearance of army weaponry since the beginning of the year has caused concern about the security of military installations.

On 16 September nine pistols were reported missing from the stores of army engineering Battalion 601 in Campo de Mayo, Buenos Aires (the country’s largest concentration of military barracks). In this case the army said that thieves had broken into the premises and made away with the guns. As in the case of the anti-tank missile, the authorities said that the weapons were ‘out of service’.

The other two incidents occurred earlier in the year. On 12 January the army reported the discovery that 26,000 rounds of 9mm pistol bullets had gone missing from the arsenal of the 603rd Battalion in Fray Luis Beltrán, Santa Fe. The defence ministry suspended from duty two officers and five NCOs in charge of guarding the arsenal. Four days later the disappearance of an anti-tank TOW-2 missile from the stores of an armoured cavalry squadron in La Plata, Buenos Aires, was reported. The army said the missile was ‘not operational’.

The last time Campo de Mayo had recorded a similar case was back in 2009 when a group of hooded men wearing military uniforms robbed three rifles from sentries.

URUGUAY | Aerial anti-crime surveillance. On 3 September interior minister Eduardo Bonomi announced that three helicopters would be purchased to equip an aerial anti-crime surveillance unit. This came after a series of armed robberies in Montevideo that had claimed several lives and prompted calls for more police presence in the streets.

Bonomi said that Uruguay already has ‘one of the highest ratios of police in the streets anywhere in the world’. Congressman Jaime Trobo of the opposition Partido Nacional criticised the purchase of helicopters on the grounds that the current situation called for ‘optimising investment, and that in any case the acquisition of aircraft should be left to the defence ministry, since they know how to put them to good use. Bonomi’s response was that ‘aerial surveillance by police is completely different to military aerial surveillance.’

Varela sets Canal expansion completion date: In his state-of-the-nation address last month, President Juan Carlos Varela put the expected completion date for the US$5.3bn Panama Canal expansion project (which is 96% finished) at “around May 2016”. This has been pushed back from October 2014 amid a dispute over cost overruns with the multinational consortium Grupo Unidos por el Canal [GUPC]). The latest date has still been subject to doubt amid continued legal wrangling between Panama Canal Authority (ACP) and GUPC which, comprising Spain’s Sacyr Vallehermoso, Italy’s Impreglio, Belgium’s Jan de Nul and Panama’s Constructora Urbana S.A [Cusa], is in charge of constructing the third set of locks – the expansion plan’s biggest project. While a deal was reached in 2014 over the cost dispute (which briefly led GUPC to suspend work on the expansion plan early that year [RC-14-01]), the timeframe again was cast in doubt last year after localised seepage was found in the concrete sill between the lower and middle chamber of the Canal’s expanded Pacific Locks. After issuing a statement on 1 December 2015 that “work to reinforce the sills in the new locks will be completed in January 2016”, on 18 December the ACP said the inauguration is expected to take place in the second quarter of 2016, with the commercial opening soon thereafter. However, the following day GUPC issued a statement warning that “the time to reach that date depends on the willingness and availability of the ACP”, which it accused of continuing to “delay any payment awarded under the contract, limiting the progress of the Project”.

The legal battle between the two sides is ongoing. On 31 December 2015, an independent arbitration panel, the Dispute Adjudication Board (DAB) (which a year earlier had awarded the GUPC US$233m of the US$463m it was seeking from the ACP in relation to the dispute), again found in favour of the consortium in relation to two further complaints relating to extra labour costs and a workers’ strike, for which it awarded the GUPC US$17m (out of US$45m initially demanded). The ACP, however, maintains that while this is the fifth such case in which the DAB has found in favour of GUPC (which received a total of US$283m – albeit less than the US$803m it was demanding for the five cases), the discrepancy between the GUPC’s demands and the amount awarded raise question marks over the methods used by the consortium for calculating costs – a point which has led one lawyer to file a criminal case.

• More DAB decisions

On 31 January, the Dispute Adjudication Board (DAB) issued two further decisions in relation to claims put forward by the multinational consortium Grupo Unidos por el Canal (GUPC) against the Panama Canal Authority (ACP). In one ruling, related to costs incurred by a labour dispute, the DAB rejected outright GUPC’s demand for US$7.5m. In another, related to an increase in labour costs associated with the delay caused by a construction workers’ strike and previous legal complaints, the DAB awarded US$24.6m of the US$42.2m which GUPC was demanding.

President Mauricio Macri’s determination to wipe out Argentina’s fiscal deficit in 2019 could exact an electoral toll. There are under 10 months to go before Macri is expected to stand for re-election. It is at this stage of their mandates that heads of state often indulge in some judiciously selected public works and spending increases to boost their electoral prospects. Macri, by contrast, is set on a course of reducing subsidies and raising energy and public transport fares, spurring inflation, to erase the fiscal deficit fast, restore investor confidence, and recover growth. It might make economic sense but it could be political hara-kiri.

The energy secretary, Javier Iguacel, resigned on 28 December, the day after revealing that electricity tariffs would be increased by an average of 55% between February and August 2019 and gas by around 35%. This followed the announcement on 26 December that public transport fares on buses, trains, and the metro would be increased by 38% from January. No explanation was given for Iguacel’s departure but his relationship with the economy minister, Nicolás Dujovne, was widely rumoured to have soured badly after his ministry was downgraded to a secretary and subsumed by the economy ministry last September in a major streamlining exercise. A presidential adviser, Gustavo Lopetegui, was appointed to replace Iguacel and took up the post on 7 January.

The tariff increases will reduce the drain on state coffers of energy subsidies but they will push up inflation. On 3 January experts consulted on a monthly basis by the Argentine central bank (BCRA) forecast inflation of 28.7% in 2019, up by 1.2 percentage points on their predictions a month earlier. The two factions of the country’s second largest trade union movement Central de Trabajadores de la Argentina (CTA) were joined by the trucker’s union on 3 January in announcing candle and torchlit protests on every Thursday of January, and promised to take legal action against the increases.

The economy contracted heavily for the seventh month in a row in October, declining by 4% year-on-year, the national statistics institute (Indec) revealed on 27 December. Economic activity grew by 0.9% month-on-month in October, according to Indec’s monthly economic activity index but against a low base of comparison. On 3 January, Indec reported that the construction sector contracted by 15.9% year-on-year in November, while industrial activity declined by 13.3% over the same period. By sector, the textile industry suffered the heaviest fall, down by 32.2% year-on-year in November, while the automobile industry contracted by 14.8%. The economists polled by the BCRA predicted that GDP would contract by 2.4% in 2018 and by 1% in 2019.

The one positive piece of news for Macri on the economic front was a surge in the tax take in 2018. On the political front, the continued splits within the main opposition Partido Justicialista (PJ, Peronists), which is no closer to agreeing upon a unified presidential candidate, and the country’s main trade union movement Confederación General del Trabajo (CGT), are providing welcome respite for Macri.

• Tax collection up

The tax take in Argentina in 2018 increased by 31.2% on the previous year to Ar$3.38tn (US$87.63bn at the current exchange rate), according to a report released by the federal tax agency (Afip) on 2 January, which described it as “the best result obtained after the record set in October”.

CUBA | Díaz-Canel calls for decentralised economy. Cuba’s President Miguel Díaz-Canel announced this week that from 2020 state workers would be at the forefront of their companies’ economic development. Speaking at the closing ceremony of the 8^th congress of Cuba’s association of economists and accountants, Díaz-Canel called for the “active participation” of those in attendance to apply this decision. Díaz-Canel, who took office in April 2018, said that the economic plans “will not come from above,” in a measure which he calls “bold and revolutionary and which demands objectivity, realism, and conscience.”

In his speech, Díaz-Canel stressed the need “to identify and untangle obstacles some call internal blockade”. He highlighted the country’s main economic problems as corruption and crime, limited savings, continued borrowing, insufficient earnings from exports, unpaid debts, and a reliance on imports. As solutions, he posited a productive supply chain, strengthening the state sector, developing foreign investments and creating mixed companies, as well as organising the private sector, the official mouthpiece of the Partido Comunista de Cuba (PCC) reported.

PANAMA | GDP growth disappoints. Panama, which has boasted the fastest economic growth in the region in recent years, reaching double-digit figures, posted a 3.1% GDP expansion in the first quarter of 2019, compared with the same quarter of 2018, the national statistics institute (INE) reported on 18 June. According to the press release, the transportation and communications, and financial intermediation sectors drove economic growth, expanding by 4.3% and 4.7% respectively. The Panama Canal and related port services grew by 6.3%, mainly due to a 4.6% increase in port revenues from tolls, INE reported.

Amid calls for the new leftist Libertad y Refundación (Libre) government led by President Xiomara Castro to make good its vote-winning pledge to combat corruption, all eyes are on the selection of the new 15-member supreme justice court (CSJ) which is due to be finalised in early 2023. The CSJ has long faced criticism amid concerns over its independence and transparency and the process of picking its successor, which is due officially be kicked off this month, is set to draw particular scrutiny.

The 128-member unicameral legislature appoints CSJ members for a seven-year term by a two-thirds majority from a list of at least 45 candidates proposed by a seven-member nominating committee. This is comprised of the ombudsman, representatives from the outgoing CSJ, the bar association, private sector lobby, law professors, civil society, and workers’ unions. With legislative president Luis Redondo due to officially convene the committee this month, various local and international rights groups as well as government members like transparency minister Edmundo Orellana are urging new rules to govern the process.

Most recently on 8 July the Office of the United Nations High Commissioner for Human Rights (OHCHR) in Honduras issued a statement urging the adoption of a new legal framework for the nominating committee that would guarantee a transparent election. A 30 June letter to President Castro by US-based NGO Human Rights Watch (HRW) acting Americas director Tamara Taraciuk Broner echoed these demands. Warning that the CSJ is vulnerable to “manipulation”, Taraciuk Broner underlined familiar concerns such as the fact that in practice, political parties split the 15 vacancies among themselves according to the proportion of seats they hold. Other criticisms include a lack of transparency and clear criteria plaguing the selection of lower-court judges. She urges Castro to create a new bill setting out clear criteria to ensure independence and fairness and to create a new system for the appointment and vetting of CSJ nominees.

These calls for safeguards to protect CSJ’s judicial independence and better rules and vetting procedures have been echoed by other civil-society groups such as Costa Rica-based NGO, Centre for Justice and International Law (CEJIL) and US-based NGO Due Process of Law Foundation (DPLF). The latter highlighted that in recent months three legislative initiatives have been proposed aimed at strengthening the selection procedure, but the legislature has yet to confirm whether any will be adopted.

As well as the CSJ election, the attorney general (AG) is also up for re-appointment. Congress will appoint the new AG, by a two-thirds majority, from a list of five candidates prepared by a nominating committee. Its current head, Oscar Chinchilla, was re-elected for a five-year term in 2018 and notably was not on the list of five candidates that the nominating committee prepared, in breach of a constitutional provision that mandates that they be selected from that list. Along with the CSJ president Rolando Argueta, Chinchilla has come under pressure to face legal action over his handling of extradition cases. On 12 May at an international forum, Gabriela Castellanos, executive director of local civil-society group, the national anti-corruption council (CNA), dubbed the two the “duo of impunity” in Honduras. Chinchilla’s name featured in the US trial last year of former drug trafficker Geovanny Fuentes, which implicated then-president Juan Orlando Hernández (2014-2022), who was extradited to the US in April to face drug and weapons related charges [SSR-22-05]. A US Department of Justice (DoJ) statement dated 22 March 2021 announcing the guilty verdict regarding Fuentes cites Hernández as allegedly saying that Chinchilla would “help protect” Fuentes’ drug trafficking activities.

•  HRW recommendations

In her letter Taraciuk Broner suggests introducing a bill to improve the independence of the judiciary in accordance with international standards including by: creating a judicial governance system that includes a fair, transparent and independent mechanism for disciplinary actions for judges, administered by a body separate from the CSJ and independent of external pressures; and establishing clear rules for the appointment, transfer, and promotion of judges, based on their qualifications and integrity. She also calls for legal changes, including through introduction of legislative proposals, to modify procedures for appointing CSJ justices, the attorney general, and other high officials to ensure their selection is transparent and based on clear criteria.

From oil to minerals and trees, Brazil has been blessed with plenty of natural resources that have fuelled numerous economic boom and bust cycles throughout its history. Now, Latin America’s largest economy may embark on another resource-based boom, only this time a much cleaner and sustainable one.

Thanks mostly to large hydropower plants such as Itaipu, renewable sources have long made up the bulk of the country’s energy matrix. But with cheap wind and solar farms having mushroomed in recent years, renewables now make up nearly 90% of the country’s electricity. That means that Brazil will soon have excess capacities of renewable energies that it can use to produce green hydrogen, which is made by splitting water with the use of electrolysers powered by solar or wind energy.

In order to help develop the nascent industry, the government on 24 August launched a 2023-25 hydrogen roadmap laying out its policies, incentives, and targets. The outlined objectives include access to financing from development banks, a certification process that ensures the hydrogen really is green, as well as increased investment in research and development.

The plan to make Brazil the largest and most competitive producer of green hydrogen in Latin America by 2035 may sound far-fetched, but it is actually entirely feasible, based on comparative advantages and the existing pipeline of investments. According to the mines and energy ministry, green hydrogen projects worth US$30bn are already underway.

Industry media Hydrogen Insight counted 42 such projects. The biggest are situated around three maritime ports: Porto de Suape in Pernambuco state, Complexo Industrial Portuário de Pecém (CIPP) in Ceará state, and Porto do Açu in Rio de Janeiro state. Australia’s Fortescue is looking to invest US$6bn into a hydrogen plant at CIPP that would produce 837 tonnes of green hydrogen per day. France’s Qair is to invest US$6.9bn in a hydrogen plant at Suape and an offshore wind farm at CIPP.

There are reasons the three ports are emerging as hydrogen hubs, beyond the obvious transportation infrastructure they offer. The southeast, specifically Rio de Janeiro state, harbours the bulk of the country’s heavy industry, which is to be decarbonized by hydrogen. Meanwhile, large parts of the semi-arid northeast have steady winds, lots of sunshine and are relatively close to Europe, which is shaping up to be one of the biggest clients for green hydrogen from South America.

EU investments

The European Union (EU) has promised investments of €2bn (US$2.16bn) in green hydrogen in Brazil, following a landmark meeting between European Commission president Ursula von der Leyen and Brazil’s President Luiz Inácio Lula da Silva in Brasília in June. The Lula administration is currently working on a framework law for the hydrogen industry.

According to Bloomberg New Energy Finance (BNEF), Brazil last year had the lowest levelized cost of hydrogen among 28 leading producers, using onshore wind and western alkaline electrolysers. By 2030 that cost is projected to fall to US$1.47 per kilogram from US$4.50 currently. BNEF estimates that shipping costs to Rotterdam would also be cheaper from Brazil than from major producers such as Australia, Chile, or the United Arab Emirates, with the exception of Canada and Colombia.

Rotterdam

The Port of Rotterdam, which hopes to become the gateway to Europe for the global hydrogen market, is heavily invested in Brazil with a stake in CIPP and the hydrogen projects in and around its port. 

The recent closure of two prestigious higher academic institutions – the Nicaraguan campus of the Instituto Centroamericano de Administración de Empresas (Incae) business school and the Jesuit-run Universidad Centroamericana (UCA) – has sparked international outrage regarding President Daniel Ortega’s continued efforts to silence dissent and independent thinking. With the assets of these institutions seized by the government, regional think tank Centro de Estudios Transdisciplinarios de Centroamérica (Cetcam) has warned of a strategy of “converting universities into indoctrination centres”, with “implications for the country’s development”.

On 25 September the Ortega government announced that it had closed down Incae’s Nicaraguan campus for failing to meet regulatory requirements such as preparing and submitting annual financial accounts in 2020, 2021, and 2022, as well as inconsistencies detected in its financial accounts from 2015-2019.

Sometimes referred to as ‘Harvard South’, Incae (which also has a campus in Costa Rica), was created in 1963, following a visit to Costa Rica that year by former US president John F. Kennedy (1961-1963), and was set up with the initial assistance of professors from Harvard Business School. It ranks second in Latin America MBA rankings in the latest World University Rankings compiled by global higher education analyst Quacquarelli Symonds (QS). Its closure drew major condemnation, from 25 former leaders from Latin America and Spain who comprise the Iniciativa Democrática de España y las Américas (IDEA), a non-governmental forum, as well as from Ecuador’s President Guillermo Lasso.

The shuttering of Incae’s Nicaraguan campus took place weeks after the closure of the UCA, also considered one of the sub-region’s top private universities, which, on 16 August, was shut down on charges including terrorism. A hub for anti-government protests in 2018, UCA’s closure was condemned in a 21 August statement by Cetcam and a string of academics, teachers, and university workers from Latin America as well as the US, Europe and Canada. The statement highlights that “in its 63 years of existence, UCA has become one of Nicaragua’s leading [universities]…even the leading university [italics our own]”, describing it “as a model of the kind of university that should be established in poor countries with poor education systems, weak democracies and development models based on extractivism and the supply of cheap labour”.

The 21 August statement notes that in 2010, the World University Ranking, published annually by the Spanish national research council (CSIC), a Spanish government agency, ranked UCA first among the 52 institutions and higher education centres operating in Nicaragua and “among the top ten on the long list of universities in Central America”. The statement adds that UCA achieved another important academic recognition in 2012, when it was included by the QS ranking in the list of 250 institutions considered the most prestigious centres of higher education in Latin America, where over 7,000 higher education institutions operate, of which nearly 2,000 are universities. According to the statement, UCA is the only Nicaraguan university to be included in this list.

The 21 August statement also goes on to warn more generally of a “new escalation of the offensive” that the Ortega administration “has launched against Nicaraguan universities”. A separate bulletin published in August by Cetcam notes that in December 2021, the government ordered the closure of Universidad Hispanoamericana (UHISPAN), a private university, and since then, up until August 2023, had closed 27 universities in various parts of the country, affecting nearly 43,000 students. It highlights as among the most important universities now under control by the government, Universidad Politécnica (UPOLI), Universidad Católica Agropecuaria del Trópico Seco (UCATSE), linked to the Catholic Church, Universidad Nicaragüense de Estudios Humanísticos (UNEH), Universidad Paulo Freire (UPF), and Universidad Popular de Nicaragua (UPONIC).

The crackdown on independent academic institutions was also flagged up in a 12 September update by a three-member panel of human rights experts on Nicaragua (GHREN) appointed by the United Nations (UN), which noted that a “new wave of human rights violations in Nicaragua over the past six months” had “seriously stifled dissenting voices and increased persecution”. The panel highlights that the government “has intensified its targeting of universities as spaces for critical and independent thinking”. It said that this has been done “invoking supposed breaches of regulations, reflecting the instrumentalisation of the State apparatus to suppress academic freedom and diversity”. The statement cites GHREN chair Jan-Michael Simon as saying that “Nicaragua is being stripped of its intellectual capital and critical voices, leaving the country’s prospects and development on hold”.

Moving against the Jesuits

The move against UCA, since re-named Universidad Nacional Casimiro Sotelo Montenegro, after a student activist assassinated in 1967 by the right-wing dictatorship of Anastasio Somoza (1967-1972, 1974-1979), came days after reports that UCA’s bank accounts had been frozen. On 23 August the Ortega government then declared the Jesuit religious order illegal, and closed it down. It justified the closure by alleging the Jesuits had failed to present proper tax returns for 2020, 2021, and 2022, and that its board of directors had not been renewed as required by law.

This is the latest instance of the government targeting the Catholic Church – a prominent critic of the Ortega administration [SSR-22-11]; relations between the two have significantly deteriorated since the conviction of Nicaraguan bishop Rolando Álvarez in February 2023 on charges widely considered trumped up, precipitating a rupture in relations with the Vatican. The latest edition of a research report by Martha Patricia Molina, a local lawyer and rights activist, published on 4 October, found that there had been 667 attacks on the Catholic Church between April 2018 and August 2023.

More US sanctions

On 19 August the US State Department, which has slapped various sanctions on Nicaragua in response to the ongoing crackdown, announced that it was imposing visa restrictions on 100 Nicaraguan municipal officials who “participated in efforts to repress civil society organizations, close civic spaces like that of the [UCA] and unjustly detain courageous individuals who support a free civil society, including Bishop…Álvarez.”

On 21 January, Peru’s President Dina Boluarte, who was attending the annual World Economic Forum (WEF) in Davos, Switzerland, held a cabinet meeting by video conference with her ministers back in Lima and promised a hard-handed response against “dangerous delinquents” who, she promised, would be sent to the remote mountain prison of Challapalca in the southern region of Tacna.

“These gentlemen are killing people and extorting money every day, and they need to be put in prison,” President Boluarte said. Boluarte was exercised by a bomb attack in the early morning of the previous day against the offices of the regional attorney general’s office in the city of Trujillo, the third largest in the country and capital of the northern region of La Libertad. Security cameras captured images of a suspect, dressed as a food delivery motorcyclist who planted a box containing explosives at a side door. The subsequent blast wounded a security guard and a taxi driver and caused serious material damage to the building.

The government, which has often sought to counteract its low popularity ratings by talking up its actions against crime, reacted quickly, declaring a state of emergency. Officials said the armed forces and national police would “take control” of Trujillo in response to what it called “a cowardly act of urban terrorism”.

In concrete terms, that meant sending in 100 police from two elite anti-crime units based in Lima, Grupo Especial Contra el Crímen Organizado (Grecco) and Dirección de Operaciones Especiales (Diroes). The officials said the bombing was a “criminal response” to the authorities’ recent successes in breaking up criminal networks. They also announced extra security for judges and prosecutors.

At local level there was considerable information about the likely perpetrators. The attorney general, Delia Espinoza, said a member of her regional staff, Jennifer Ludeña Meléndez, had been threatened by a gang she was investigating, and which is linked to illegal gold mining and extortion rackets.

Espinoza said that the gang is known as Los Compadres and is led by Jimmy Barzán, a prominent criminal currently serving a prison sentence for extortion and kidnapping in the northern region of Cajamarca. A search of Barzán’s cell found a mobile phone, which was possibly used to set up the bomb attack. The interior ministry said a further five suspects and gang members had been arrested.

The Boluarte administration did not come out of the incident free of criticism. Espinoza maintained that the fight against organised crime “is not delivering results” because in Lima alone cases of extortion and murder are rising. In her opinion, the government has been relying on increasing police numbers and declaring “states of emergency” whereas what is really needed is better intelligence.

Scepticism

Some residents of Peru’s northern city of Trujillo interviewed by the Spanish news agency Efe were also sceptical over the government’s ability to defeat organised crime. One said there would be extra police patrols “for a few days” but after that nothing would change. Another suggested “radical measures” in policing would be needed, including the appointment of a new interior minister.

Sodalicio gets the chop

Pope Francis has ordered the closure of Sodalicio de Vida Cristiana (SCV), an ultra-conservative grouping within the Catholic Church which was founded in Peru in 1971. The movement was led by a charismatic cult-like figure, Fernando Figari, who was inspired by the neo-fascist Spanish Falange.

Investigations by journalists 10 years ago uncovered evidence that Figari had sexually abused at least 67 members of the movement. Sodalicio was also accused of financial mismanagement using tax-free revenue from cemeteries to build up a fortune invested in real estate, manufacturing, and schools, complete with the use of tax-havens in Panama and the Virgin Islands.    

Chile’s presidential election could soon take on a different complexion. Evelyn Matthei, the presidential candidate of the right-of-centre opposition coalition Chile Vamos, launched a fierce attack on the far-right Partido Republicano (PR) of José Antonio Kast, the current frontrunner in the polls, on 28 July, accusing the party of waging a dirty campaign against her on social media. Polls are suggesting that Matthei is slipping out of contention with Kast and Jeannette Jara, a member of the Partido Comunista de Chile (PCCh) elected to represent a broad coalition of leftist parties, consolidating their positions as favourites to progress to a second round run-off.

Matthei began the presidential race as the strong favourite and was out front for many months in the early stages. But she has since been eclipsed by Kast and Jara’s victory in June’s primary election compounds her problems as the race now looks like becoming more polarised. Attacking Jara is not going to get the job done for Matthei. Instead, she is going to need to take on Kast if she is to stand any chance of getting back into contention.

Some members of Chile Vamos woke up to this inevitability several weeks ago. Indeed, Matthei’s campaign chief, Diego Paulsen, ruffled some feathers earlier this month by going as far as to say that “our rival in the first round is Kast because it is idealistic to think we can both make it to the second round” [WR-25-28].

Not all of Chile Vamos is onboard with this strategy, but Matthei appears to have accepted that she has little alternative. Speaking at a press conference this week, Matthei said she was considering presenting a complaint about the disinformation campaign that she claimed Kast’s party was orchestrating against her on social media. “Are we going to accept that a group of bullies carries out politics like this…destroys candidates with lies?” she said in allusion to rumours circulating on social media, for example, that she is suffering from Alzheimer’s disease.

Matthei also went on to suggest that she would not endorse Kast should he progress to the second round as the polls suggest. “It is very difficult to make an alliance with someone who smiles for the photos and then stabs you in the back,” she said.

The latest weekly survey by the national pollster Cadem put Kast on 30% (up three percentage points on the previous poll), Jara on 27%, and Matthei on just 14%, ahead of Franco Parisi of the populist centre-right Partido de la Gente (PDG), up two points on 11%. This leaves Matthei with a mountain to climb before the first round of presidential elections on 16 November, but faced with the tantalising possibility that if she could just catch Kast she would be favourite to defeat Jara in a run-off.

Jara for her part is trying to broaden her appeal by adding more moderate parties to the coalition lined up behind her. In an intense debate of the national leadership of Democracia Cristiana (DC) at the weekend, the centrist party reached the historic decision to support Jara. While the DC has formed part of governments that included the PCCh before, it has openly objected to the possibility of supporting a presidential candidate from the party – until now. Ultimately, the DC leadership was driven to back Jara out of congressional electoral considerations.

• DC backs Jara

In the context of an increasingly polarised presidential contest, the DC feared that it could find its representation in congress shrink to a new nadir unless it joined the coalition behind Jeannette Jara. In 1989, the DC elected as many as 13 senators and 38 deputies, but its dominance has gradually faded and, in 2021, the party only succeeded in returning eight deputies.