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El sector privado de Nicaragua está una vez más en alerta. El mes pasado, Antenor Rosales, el presidente del banco central (BCN), renunció por “razones de salud”. Considerado como clave para la percibida independencia del BCN –una de las pocas instituciones creíbles del país– la partida de Rosales fue más tarde atribuida a su resistencia ante el pedido del Presidente Daniel Ortega de transferir algunas de las reservas internacionales de Nicaragua a un banco regional propuesto por la iniciativa regional liderada por Venezuela, Alba, de su cercano aliado, el Presidente Hugo Chávez. Sirviendo como el último ejemplo del menosprecio de Ortega por los procedimientos institucionales y la renuencia a tolerar el disenso, la remoción de Rosales deja nervioso al sector privado. También coincide con el renovado enfoque sobre otra gran queja del sector privado con el gobierno –el respeto por los derechos de propiedad.

La confirmación de la partida de Rosales el 14 de febrero, después de cinco años en el cargo, siguió a su insistencia en que solamente el BCN podría tomar decisiones acerca del uso de las reservas internacionales, que no debían ser usadas al “antojo” de nadie. Esto se produjo en respuesta al anuncio de Ortega de que Nicaragua asignaría US$17m (o 1%) de sus reservas internacionales para ayudar a financiar el lanzamiento del propuesto banco Alba. Así como su percibido distanciamiento de Ortega, pese a sus raíces en el Frente Sandinista de Liberación Nacional (FSLN), (habiendo servido previamente como coronel del ejército Sandinista), Rosales fue considerado clave para el exitoso manejo de la economía por el gobierno. La economía creció un 4,7% en el 2011, segunda sólo detrás de Panamá en la región, mientras que las exportaciones llegaron a un record de US$2,3mm en el 2011, aumentado un 22% desde el 2010. Rosales también cumplió una parte importante en las continuas buenas relaciones con el Fondo Monetario Internacional (FMI), con el cual se ha anunciado que se planea buscar un nuevo acuerdo [IL-12-01].

Rosales ha sido reemplazado por el ministro de finanzas, Alberto Guevara Obregón, un leal aliado de Ortega que fue teniente y parte del aparato de seguridad del estado (DGSE) bajo el primer gobierno del FSLN (1979-1990), mientras que Guevara ha sido sustituido por su segundo, Iván Acosta. Sin embargo, las garantías de continuidad dadas por el gobierno con respecto a los cambios, no han podido calmar las preocupaciones del sector privado, con el que las relaciones positivas fueron una clara prioridad durante el mandato previo de Ortega (2007-2012); mientras que Avil Ramírez, el presidente de la Cámara Americana de Comercio en Nicaragua (Amcham), dijo que toda vez que el BCN mantenga su independencia del ejecutivo (algo improbable dada la lealtad de Guevara a la pareja presidencial), su designación no es un problema, José Adán Aguerri, el presidente del influyente lobby del sector privado, Cosep, se quejó de que el cambio no llegaba en el “mejor momento”.

Con el impacto de los cambios aún por volverse evidentes, una preocupación más apremiante para el sector privado es la aparente indiferencia por la propiedad privada evidenciada por el reelecto gobierno de Ortega, que prestó juramento a principios del año. La confiscación de alto perfil a mediados de febrero, de 20 manzanas de tierra (33,6 acres), equivalentes a unas 13,6 hectáreas, pertenecientes a Walter Bühler, un Suizo-Nicaragüense con doble ciudadanía, que según se informó serian regaladas a Edén Pastora, el controversial ex líder Sandinista (ver más abajo), inevitablemente ha hecho resurgir el espectro de las confiscaciones por las que el primer gobierno de Ortega se volvió notorio, provocando las críticas de Cosep y del instituto nacional de turismo (Intur), ansioso acerca del impacto en la imagen de Nicaragua.

Aunque el gobierno desde entonces ha estado en conversaciones con la familia Bühler sobre la tierra (el sitio de un hotel turístico ecológico, Punta Teonoste) y espera llegar a un acuerdo, la disputa saca a relucir las preocupaciones más generales relacionadas con la carencia de seguridad legal que rodea la propiedad de la tierra, que el think-tank del sector privado, Funides, señaló en un informe de diciembre como el “obstáculo fundamental que impide la promoción de inversión en el país”. En el informe, Funides destaca que 36% de las haciendas en el país, o unas 76.000 unidades productivas, de las cuales el 85% son de menos de 50 manzanas (84 acres - unas 34 hectáreas), están en un “limbo legal” debido a los diferentes esfuerzos de reforma agraria realizados en los años ’60s, ’80s, y ’90s. El think-tank también cita el último informe Facilidades para Hacer Negocios del Banco Mundial del 2012, que ubica a Nicaragua como el peor país de toda Centroamérica con respecto a la facilidad para registrar la propiedad –en el lugar 122 entre 183 países (debajo del promedio regional de 50 para América Latina y El Caribe).

• Se gesta otra disputa por la tierra

    La rápida respuesta del gobierno a la disputa con Bühler está contrasta marcadamente con su inacción respecto a otras disputas diferentes sobre reclamos territoriales. Esta semana, los medios locales informaron que líderes de 22 territorios indígenas en la empobrecida Región Autónoma del Atlántico Norte (Raan) sobre la costa Caribeña están planeando enviar una petición al gobierno exigiendo una acción concreta respecto a la regulación de la tierra. Esto después de la creciente tensión en la región en medio de supuestas invasiones de territorios indígenas por mestizos (personas de mezcla indígena y descendientes de europeos). A inicios del mes, 18 mestizos  fueron secuestrados por grupos indígenas, exigiendo el desalojo de 120 familias que ellos afirman han invadido sus tierras. Advirtiendo que los grupos indígenas Miskitos adoptarían acciones propias si las autoridades no intervienen, Simon McDavis, el presidente del gobierno territorial Twi Waupasa, el área en cuestión, dijo a los periodistas que de las 156.000 hectáreas que componen el Twi Waupasa, 50.000 son ocupadas por las 120 familias.

     Los líderes locales están preocupados porque las tensiones raciales podrían escalar si el gobierno no responde, pero el descontento es también significativo dado que la región previamente ha visto amenazas secesionistas del Consejo Miskito de Ancianos en Bilwi, la capital de la Raan, que al final no se materializaron [IL-09-19]. Brooklyn Rivera, un diputado indígena por el partido Yatama, aliado del FSLN por largo tiempo, que encabeza el comité del congreso de asuntos indígenas, dijo que solamente los títulos de propiedad emitidos antes de 1987, en línea con la ley de autonomía indígena, serían reconocidos. Aunque Yatama es aliado del FSLN en ciertas cuestiones, se ha informado que la tierra es una de las cuales en la que no cambiará de postura y esto podría tener implicaciones antes de las elecciones municipales de noviembre del 2012.

• Finlandia toma acción

Finlandia ha anunciado que está cortando oficialmente la ayuda bilateral a Nicaragua. La ministra para el desarrollo internacional, Heidi Hautala, dijo a la televisión  nacional finlandesa, a mediados de febrero, que la decisión estaba basada en el hecho que “el gobierno en Nicaragua es bastante autoritario y el presupuesto no es transparente”. La decisión se produce inmediatamente después de una decisión similar de Alemania, anunciada en enero, también en relación a las preocupaciones respecto a la democracia luego de la controversial elección general del 6 de noviembre [IL-12-05]. El más reciente informe sobre cooperación extranjera del banco central de Nicaragua publicado en octubre del 2011, muestra que la ayuda bilateral de Finlandia llegó a los US$6,2m en la primera mitad del 2011, de un total de US$79,7m en ayuda bilateral. En el 2010 la cooperación finlandesa alcanzó los US$11,1m.

• Comandante Cero

Un ex guerrillero Sandinista, conocido como Comandante Cero, Edén Pastora rompió con el primer gobierno de Ortega (de 1979-1990) en 1982, luego de diferencias con la dirección, para convertirse en Contra. Habiendo competido como candidato presidencial por la demócrata cristiana Alternativa por el Cambio (AC) en la elección del 2006 (obteniendo 0,29% de los votos), desde entonces Pastora se ha reconciliado con Ortega. Actualmente, él está a cargo del controversial proyecto de dragado del Río San Juan, que en octubre del 2010, provocó la reactivación de la disputa territorial con Costa Rica. El fiscal general, Hernán Estrada explicó la reciente decisión de entregar las 20 manzanas a Pastora, como parte de los esfuerzos del gobierno para regularizar la propiedad de la tierra, que benefició a unas 172.000 personas durante la última administración de Ortega (2007-2012).

The recent re-opening of the Dominican Republic (DR)’s largest gold mine, with the biggest single private investment in the country’s history (US$3.8bn) and renewed interest from foreign mining companies seeking to expand their operations has revived familiar concerns from environmentalists and local communities affected.

After 13 years of inactivity, the Pueblo Viejo gold mine, located near the town of Cotuí in the central province of Sánchez Ramírez, achieved its first gold production on 14 August, with ore now being processed. Last in production between 1975 and 1999, when it was operated by the state-owned mining company, Rosario Dominicana, the mine closed due to high processing costs, later achieving notoriety for its environmental damages. In 2006 the mine’s exploitation rights were acquired by leading Canadian gold mining firms, Barrick Gold and Goldcorp, which believe that it holds as much as 25.3m ounces of gold, making it one of the world’s largest deposits. Barrick, the majority owner with a 60% stake, promised to conduct an extensive clean-up of the mine before resuming operations using new mining techniques that would make it environmentally safe.

As with other large-scale mining projects, Pueblo Viejo has been very controversial. Following its closure, environmental groups highlighted that its mineral wastes had seeped underground, contaminating not only the soil but also the local water resources. This had a devastating effect on the nearby mountain villages which were (and still are) almost exclusively dependent on agriculture. Environmentalists have expressed considerable concern about the fact that Barrick’s operation involves gold extraction methods that use cyanide, which would have even more devastating effects if it were to enter the local water system. Yet, these warnings have, by and large, been dismissed by the government and Sánchez Ramírez residents, won over by Barrick’s claims that the mine will boost the local economy and create thousands of jobs. A January 2012 study by Barrick estimates that the project will account for 2.4%-2.9% of the country’s GDP in the first ten years (assuming a long-term gold price of US$1,400 an ounce).

Mining concerns are not limited to the Pueblo Viejo project. On 16 August, hundreds of demonstrators marched to the presidential palace in Santo Domingo calling on the new government of President Danilo Medina to ban any further mining activity in the country’s central mountain range, the Cordillera Central (see sidebar). The march was organised by various civil society groups, including the national environmental assembly and the national committee against mega mining, which pointed out that there are currently some 200 mining concession in the Cordillera Central and warned that exploitation of these concessions would amount to “ecocide”. Organisers said that the march was triggered by plans unveiled by local subsidiary of mining giant Xstrata, Falcondo XStrata Nickel, to open a large ferronickel mine at Loma Miranda, La Vega province just west of Sánchez Ramírez.

The demonstrators were received by the deputy minister of the presidency, Henry Molina, who promised to pass on their concerns to Medina. The demonstration also received the backing of Senator Félix Nova, the head of the senate’s environmental commission, who has urged Medina to heed their call. The Santo Domingo march was followed by another staged in Cotuí on 27 September, where participants demanded more job opportunities at Pueblo Viejo. The protesters complained that many of the 2,000 jobs created so far have gone either to people from other provinces or foreigners. The demonstrators were confronted by the police as they attempted to enter the mine resulting in violent clashes which left 40 people wounded. Such unrest will only up the pressure on the Medina government to address these concerns.

• The ‘Dominican Alps’

The Cordillera Central, commonly referred to as the ‘Dominican Alps’ due to its cool temperature and scenic vistas, is the highest mountain range in the West Indies and home to the highest peaks in the Caribbean: Pico Duarte (3,098 metres), La Pelona (3,094m), La Rucilla (3,049m) and Pico Yaque (2,760m). The range stretches from Haiti’s Massif du Nord across western Dominican Republic, gradually bending southwards towards the Caribbean coastal plains in San Cristóbal province. It is the source of the majority of country’s rivers including the Yaque del Norte and the Yuna which irrigate the fertile Cibao valley in the northern DR, the country’s most productive agricultural area.

POLITICS | Uncertainty in Turks & Caicos.  The 8:7 seat victory of the Progressive National Party (PNP) in the 9 November Turks and Caicos Islands (TCI) general election is under threat because of a legal challenge to the result in Electoral District 7, ostensibly won by the PNP candidate, Amanda Missick.  The People’s Democratic Movement (PDM)’s challenge for a re-run of the election in Electoral District 7 is based on the alleged ineligibility of the Peoples’ Progressive Party (PPP) candidate, Edward Smith, on the grounds of his US citizenship.  Smith gained 58 votes in a contest that was won by the PNP candidate by just 30 votes. A similar situation arose in 2003, when a successful challenge to the outcome in one constituency by the PNP led to a by-election, which it won, thereby enabling the PNP to form the government.

El resultado fue cerrado, y aún más agonizante por el tiempo que llevó producir el conteo final, pero al final Ricardo Colombi, el gobernador de la Unión Cívica Radical (UCR) de la norteña provincia de Corrientes ganó la reelección en la votación celebrada el 15 de septiembre. A pesar del continuado éxito de larga data en la provincia, la UCR fue empujada al límite por Carlos ‘Camau’ Espínola, el candidato del gobernante nacional Frente para la Victoria (FPV), que llegó a cinco puntos porcentuales de la victoria. Dado que ningún partido Peronista ha ganado en la provincia en los últimos 40 años, el desempeño del FPV muestra que retiene un significativo apoyo popular antes de las elecciones legislativas de octubre.

Con todos los votos contados, Colombi ganó el 50,87%, unos 286.597 votos, contra Espínola, con el 45,81%, o 258.070 votos. Un tercer candidato, Nito Artaza de Cambio Popular, obtuvo sólo el 2,98% de los votos. Dado que la UCR había superado al FPV por nueve puntos porcentuales en las elecciones primarias de agosto, el resultado representa una especia de retorno para el partido Peronista.

Corrientes

La provincia de Corrientes, en el lejano nordeste de Argentina, con fronteras con Paraguay y Brasil, es una de las más pobres provincias del país. El 31% de la fuerza de trabajo del distrito es empleada por el gobierno, y tres de cada 10 niños no satisfacen sus necesidades básicas, de acuerdo con el censo del 2010. Colombi, electo por primera vez como gobernador en el 2001 ha sido comparado por sus críticos con la Presidenta Cristina Fernández en términos de su obstinado enfoque sobre los legisladores de la oposición y la prensa. Artaza, un actor cómico y miembro de la UCR, decidió competir contra Colombi debido a su enfoque autoritario de la política.

Aunque un miembro de la izquierdista UCR, que se posiciona a sí misma como una alternativa centrista al Peronismo, Colombi ha formado una alianza de amplia base para competir por la gobernación. La coalición Encuentro por Corrientes (ECO) que él encabeza incluye a representantes de 19 partidos diferentes, incluyendo organizaciones de Derecha tales como Propuesta republicana (PRO) del alcalde de la ciudad de Buenos Aires, Mauricio Macri, y el partido Unión por Córdoba (UPC) liderado por el gobernador de Córdoba, José Manuel De la Sota.

Colombi reconoció la naturaleza dura de la competencia en su discurso de aceptación. “Fue una campaña dura, con muchas acusaciones y alegatos. Esta victoria no nos da derechos, sino mayores obligaciones. Y en esta nueva fase que debe comenzar en Corrientes, esperamos una nueva relación con el gobierno nacional”, dijo, agregando que el pueblo de la provincia no quiere estar políticamente aislado por el hecho de haber elegido a la oposición. Incapaz de resistir ser algo presumido, señaló que 16 gobernadores Peronistas habían viajado a la provincia, junto con una gran parte del gobierno nacional, para apoyar a su rival.

Perspectivas de la UCR

Colombi fue más pragmático que el presidente de su partido, Mario Barletti, quien afirmó que el resultado mostraba que la UCR estaba bien encaminada para convertirse en la alternativa definitiva al Kirchnerismo en las elecciones presidenciales del 2015. Actualmente, la UCR retiene 43 bancas en la cámara de diputados, el segundo bloque más grande después del FPV, con 116. Ya se han presentado tres posibles candidatos presidenciales por el partido: Ricardo Alfonsín, quien perdió en el 2011, llegando tercero con el 11% de los votos; el ex vicepresidente, Julio Cobos; y Ernesto Sanz, un senador de la UCR, quien ha sido el más atrevido en expresar su deseo de asegurar la nominación del partido.

• Fuerzas Armadas

En su primera entrevista transmitida en cuatro años, la Presidenta Cristina Fernández pidió a los argentinos que pongan fin a la división entre la sociedad civil y las fuerzas armadas que ha existido desde el periodo de gobierno militar. Hablando antes de la apertura de un hospital conjunto cívico-militar en Río Gallegos, Fernández alegó que su gobierno estaba excepcionalmente bien ubicado para facilitar este proceso, dado su récord en derechos humanos. Ella también señaló que el 85% de aquellos que sirven en las fuerzas armadas recibieron su comisión después del fin del gobierno militar.

Development: On 19 November Paraguay’s President Horacio Cartes denied having ordered the senate to vote against stripping Senator Víctor Bogado of his immunity so that he may be investigated for corruption allegations, insisting instead that he would have preferred for Bogado to be investigated.

Significance: A former president of the chamber of deputies, Bogado is an influential member of the ruling Asociación Nacional Republicana- Partido Colorado (ANR-PC). While elected on an ANR-PC ticket, Cartes is not a member of the party leadership and is very much a political outsider within the ANR-PC. Since assuming office in August, Cartes has taken pains to show that he remains his own man and will not be influenced by the ANR-PC’s internal politics. This has caused tensions between Cartes and the dominant ANR-PC benches in congress, with the latter threatening to block some of the executive’s legislative proposals. While a clear attempt to distance himself from the public uproar over the Bogado scandal, Cartes’ latest stance is unlikely to improve relations with the ANR-PC in congress.

Key points:

• Over the last couple of weeks, the local press has uncovered a series of scandals affecting various members of congress. These include alleged cases of influence-trafficking and nepotism. Perhaps the most prominent involves the hiring of Bogado’s children’s nanny as the senator’s personal advisor and as a representative at the Itaipú Hydroelectric dam for which she was said to receive annual salaries of US$3,500 and US$1,500. She clearly wasn’t receiving these salaries, however, as she continued to work for the Bogado family.

• Local prosecutors launched an investigation and called on Bogado to renounce his immunity and collaborate with them. After Bogado refused, prosecutors asked the senate to strip the senator of his immunity so the investigation could continue. On 14 November the senate narrowly voted (by 23-22) not to remove Bogado’s immunity. This produced an immediate public uproar, triggering mass demonstrations and calls for all those that voted in favour of Bogado to be impeached.

• Unexpectedly over 100 local businesses including restaurants, retailers and even gas station chains have joined the protest campaign, declaring that from now on, they would refuse to provide service to any of the 23 senarratas (rat-senators). The offending senators and their relatives have since been chased out of local restaurants and shops by the public and staff.

• The public reaction has been such that the ANR-PC party leadership has announced it will review Bogado’s case in order to adopt a definitive party stance on the issue. Asked about the situation yesterday, Cartes emphatically rejected that he had asked the ANR-PC to protect Bogado as had been suggested by some, adding: “I won’t say what he [Bogado] should have done… but I would have renounced my immunity… when we make mistakes we need to assume responsibility”.

El caso de los 252kgs de cocaína que se perdieron de una estación de policía en Pedro Juan Caballero (PJC), capital del departamento fronterizo de Amambay en el nordeste de Paraguay, de nuevo han planteado preguntas acerca de la extensión con la que las organizaciones de tráfico de drogas (OTDs) se han infiltrado en las instituciones locales. El año pasado, la muerte del periodista Pablo Medina [IL-14-45] había provocado serias preocupaciones acerca de la prevalencia de la ‘narcopolítica’ –los aparentemente cercanos lazos que los traficantes de drogas han logrado forjar con políticos locales, incluidos legisladores nacionales. El último caso expone los serios riesgos que estos lazos representan para el Paraguay y para sus vecinos.

El caso comenzó cuando el 10 de enero la policía antinarcóticos incautó en Amambay una cantidad considerable de cocaína en una operación llevada a cabo en el distrito de Zanja Pytá de PJC. La policía dijo que luego de rastrear a un sospechado grupo de traficantes de drogas, habían descubierto que estos utilizaban avionetas ligeras para volar sobre el área y lanzar cargas de cocaína (que se presume que provenía de Bolivia) en un claro ubicado a 30kms de la carretera principal para que sea recogida por sus asociados. Aunque la operación no produjo arrestos, las autoridades señalaron que era la más grande cantidad de cocaína incautada hasta ahora en el 2015 y que el valor estimado del embarque era de US$1m.

La droga fue llevada a una estación de policía de PJC, pero no permaneció ahí por mucho tiempo. Para el 18 de enero, las autoridades descubrieron que la cocaína se había desvanecido. El fiscal actuante en el caso original, Juan Carlos Blanco, inmediatamente sospechó que se trataba un trabajo desde adentro. Blanco llamó para que sean interrogados a los 17 oficiales de policía que participaron en la guardia de la estación de policía  durante el fin de semana del 16 al 18 de enero. Para el 23 de enero, Blanco presentó acusaciones contra tres de ellos por el robo de la cocaína, después de que un cuarto confesó que sus colegas habían llevado la droga y la habían entregado a un grupo de hombres. El testigo dijo que él había tratado de detener a sus camaradas, pero que ellos le pusieron un arma a la cabeza y lo amenazaron con matarlo si él los delataba. El testigo también reveló que él creía que las drogas fueron entregadas a un jefe local de la droga, Clemencio ‘Gringo’ González Giménez, a cambio de dinero en efectivo. Se sospecha que, en realidad, González Giménez era el destinatario original del embarque de cocaína. En otras palabras, González Giménez lo que hizo fue ‘rescatar’ su carga.

Blanco reveló entonces que él también estaba investigando el potencial involucramiento de dos legisladores departamentales en el caso, José Bogado, de la nacionalmente gobernante Asociación Nacional Republicana-Partido Colorado (ANR-PC) y César Quevedo, del principal partido de la oposición, el Partido Liberal Radical Auténtico (PLRA). De acuerdo con Blanco los dos tienen lazos cercanos con González Giménez, quien a pesar de enfrentar varios cargos de tráfico de drogas en repetidas ocasiones ha logrado evitar ser procesado gracias al “apoyo político” del que disfruta en Amambay. Ambos hombres negaron cualquier vinculación, pero ambos fueron puestos bajo detención preventiva.

Recriminaciones políticas

Las acusaciones lanzadas contra Bogado y Quevedo han conducido a recriminaciones mutuas entre políticos de los dos partidos principales, acerca de la participación en el tráfico de drogas del otro. Esto hizo que el ministro del interior, Francisco de Vargas, señalara que en su opinión el incidente era parte de una “contraofensiva” lanzada por políticos con vínculos con el tráfico de drogas (narcopolíticos) que operan en las áreas de la frontera con Brasil, en respuesta a las investigaciones sobre los alegatos de narcopolítica. De Vargas dijo que el objetivo era desacreditar y socavar a las autoridades departamentales y nacionales, incluida la policía.

El senador del PLRA, Robert Acevedo, descartó la visión de De Vargas en una entrevista del 25 de enero. Acevedo, un ex gobernador de Amambay y actual presidente de la comisión antidroga del senado, dijo que el incidente solamente confirmaba el nivel de influencia que han obtenido en Amambay los traficantes de drogas. Acevedo culpó esto a la incapacidad de las autoridades locales y nacionales de frenar la propagación del crimen organizado. Él acusó al actual gobernador de Amambay, Pedro González Ramírez, del PLRA, de estar involucrado él mismo en el tráfico de drogas. González Ramírez es un cercano aliado de Quevedo. El Gobernador González Ramírez respondió acusando a Acevedo de tener vínculos con González Giménez.

Por otro lado, la prensa local vinculó a González Giménez con una prominente miembro de la ANR-PC, Zuni Castiñeira, quien admitió haberse reunido con González Giménez, luego de que circularan fotografías de ambos en la prensa local. Pero Castiñeira negó estar involucrada en cualquier actividad de negocios con González Giménez. Esto no ha frenado la especulación de que, dada la posición de Castiñeira dentro de la ANR-PC, González Giménez podría tener influyentes amigos dentro del partido.

Más allá de las variadas acusaciones que circulan de boca en boca, lo que queda claro es que la influencia de los traficantes de drogas se está extendiendo a través de las áreas de frontera de Paraguay, un país ya considerado como un gran conducto regional del tráfico de drogas (ver más abajo). Con las elecciones municipales de noviembre acercándose, la preocupación existente es que más narcopolíticos ahora podrían ser electos, haciendo de las fronteras de Paraguay incluso más porosas para el tráfico de drogas. La amenaza que esto representa fue destacada por el caso de Virgilio Portillo, el alcalde del PLRA de Yby Pytã, en el también fronterizo departamento de Canindeyú. Después de que el hermano de Portillo, Enrique, fuera arrestado en posesión de 156kgs de marihuana el 16 de enero, la prensa local recordó que Virgilio también había sido arrestado  por la policía en posesión de ocho toneladas de marihuana en el 2008. Sin embargo, esto no fue obstáculo para que él se presente a la elección de la recientemente creada municipalidad  en el 2013. Después de que la prensa le pidiera una copia del caso de Virgilio de la oficina del fiscal general, se descubrió que las copias se habían perdido. La oficina del fiscal general ha lanzado una investigación completa y suspendió a tres fiscales que manejaban el caso de Virgilio por “serios malos manejos administrativos”. Virgilio, mientras tanto, permanece en libertad y en su cargo.

• Una ruta segura para el tráfico de drogas

El 15 de enero el titular de la agencia antidrogas de Paraguay (Senad), Luis Rojas, dijo que en años recientes la Senad ha visto incrementarse significativamente la actividad del tráfico de drogas en Paraguay, hasta el punto que ahora el país es reconocido como la principal ruta del tráfico de drogas en el Cono Sur. Rojas explicó que esto era debido al hecho de que Paraguay carece de un efectivo control del tráfico aéreo y controles de fronteras, y a el “terrible problema de la corrupción” en la justicia local y en los sistemas de aplicación de la ley, que hicieron de Paraguay “la más segura y barata ruta para el tráfico de drogas”. Rojas continuó diciendo que el más reciente fenómeno del crecimiento de la narcopolítica solamente hace que la lucha contra los traficantes de drogas en Paraguay sea más difícil.

• Otro caso

Patricio Estigarribia, un concejal del Partido Liberal Radical Auténtico (PLRA) de la ciudad de Villa Ygatymí en el departamento de Canindeyú, fue arrestado el 10 de enero en posesión de una tonelada de marihuana. Una declaración de la agencia nacional antidrogas de Paraguay (Senad) expresa que agentes arrestaron a Estigarribia durante un allanamiento en su casa ubicada en el área de Tacuatí, distrito de Yby Pytã.

Ecuador’s President Rafael Correa has been the most vocal supporter of his Venezuelan peer Nicolás Maduro since the outbreak of heightened diplomatic tension with the US in recent weeks. This rhetorical solidarity comes as no surprise given many of the professed ideological similarities between Correa’s Citizens’ Revolution and Maduro’s Bolivarian Revolution. But there is a domestic subtext too. Correa has expressed his concern in recent months about a “conservative restoration” in Ecuador and the traditionally diffuse political opposition has reacted to the repression of prominent opposition politicians in Venezuela by attempting to set aside its differences to “defend democracy” and “unite” to confront Correa in the 2017 presidential elections.

“It ought to be a joke in bad taste that reminds us of the darkest hours of our America, when we received invasions and dictatorships imposed by the imperialists: Can’t they understand that Latin America has changed?” President Correa’s criticism of the categorisation of Venezuela as an “extraordinary threat to the national security” of the US was expressed more vociferously than by any other head of state, and Quito was quick to step in to hold an extraordinary meeting of foreign ministers of the Union of South American Nations (Unasur) at the weekend condemning the US after Uruguay, the pro tempore president of the organisation, fell short of the unequivocal solidarity demanded by the Latin American Left (see our latest edition of the Brazil & Southern Cone report for a detailed evaluation of Uruguay’s diplomatic spat with Venezuela).

Correa’s response carried added resonance because of domestic political developments. A triple alliance of the political opposition is taking shape in Ecuador. Given the fragmented nature of the opposition in Ecuador it is far too early to say whether it will even be capable of forging a coalition as ineffective and disunited as Venezuela’s opposition Mesa de la Unidad Democrática (MUD), but it is worth monitoring because Correa has faced limited opposition during his eight years in power and because it is a direct result of the repression of prominent MUD politicians in Venezuela, including the arrest of Antonio Ledezma, the mayor of Caracas, in recent weeks.

The mayors of Ecuador’s principal cities, Quito and Guayaquil, Mauricio Rodas and Jaime Nebot respectively, recently met the prefect of the province of Azuay, Paúl Carrasco, to launch “a democratic space of unity”, calling on all Ecuadoreans to join them to defend democracy in the country. The significance of the meeting lies in the fact that Nebot is an opposition figurehead on the Right; Rodas, a centrist; and Carrasco a leftist. Yet all three were prepared to set aside their ideological differences, concurring that “only unity in diversity will bring us to better days”.

Whether the three men will be prepared to subordinate their respective political ambitions to back a unity candidate when presidential elections come around in 2017 is a moot point. But the government took note of the threat. Óscar Bonilla, the secretary of political action for the ruling Alianza País (AP), for instance, tweeted that the meeting bore witness to “an unnatural alliance between the pseudo Left and the recalcitrant Right”.

The polarisation of politics is also causing divisions within the indigenous movement. The Correa administration has been adept at exploiting these over the years but it has stepped up its intent in recent months. Over Christmas a new group, the Alianza Indígena por la Revolución Ciudadana, was forged to unite the indigenous sector behind the government. It includes members of several indigenous groups including the country’s main indigenous organisation Conaie, which has been most critical of Correa (see sidebar).

• Conaie protests

Hundreds of indigenous protesters and activists marched through the streets of Quito on 5 March to hand the national assembly a proposal on the controversial ‘land law’, which legislators are debating. The march was organised by Conaie, which staged a ‘Summit of the People’ to analyse the current situation and plan action if the government fails to heed its demands. Conaie argues that the government is preparing to strip the indigenous of their ancestral rights.

PERU | Poverty reduction

According to a report released by Peru’s national statistics institute (Inei) on 23 April, over 2.7m Peruvians were lifted out of poverty between 2009-2014, a 10.8% increase on the preceding five years. Inei’s report on the evolution of poverty in the country found that last year 6.9m Peruvians, 27% of the population, were considered poor; while five years ago the figure was 9.7m, or 33.5% of the population. As regards extreme poverty, the report found this has been reduced by 5.2 percentage points to 4.3% of the population (1.3m people) in the last five years. Inei director, Alejandro Vílchez, who presented the report along with Social Development Minister Paola Bustamante and Finance & Economy Minister Alonso Segura, said that in 2014 alone, 289,000 people were lifted out poverty, which led to a 1.2 percentage point drop in the poverty rate compared with 2013. Meanwhile extreme poverty dropped by 0.4% in 2014 compared with 2013, meaning that 107,000 people, mostly in rural areas, are now no longer considered to be in this condition.

These figures provide a boost for the government led by President Ollanta Humala, particularly given that Peru’s economy has been suffering from a marked slowdown since 2013. Minister Segura expressed satisfaction with the figures, stating that these “demonstrate that the government’s social policy on poverty alleviation is on the right track”. Segura highlighted the growing role that government conditional cash transfer programmes have played in this progress, noting that these initiatives enabled those living in extreme poverty to boost their income per capita by 2.2% in 2010-2014. Bustamante was quick to point out that despite the less favourable economic conditions in recent years, social spending in areas such as healthcare and education has increased, helping to protect the poorest sectors of society.

Humala hailed the poverty reduction figures, noting that “since 2013, on average, Latin America has not been able to reduce poverty as a consequence of the slowdown of the big economies and the fall in commodity, mineral and oil prices; but Peru is among the few countries that continue to reduce poverty particularly in rural areas”. However, the local press has criticised the report, saying that it is neither clear enough how it identifies poverty by regions nor how the changes have taken place.

ECUADOR| GSTC compliant

On 27 April Ecuador’s tourism ministry announced that Ecuador has fully adopted all of the standards set by the Global Sustainable Tourism Council (GSTC), the international body set up to establish regulations for sustainable tourism that “drives natural conservation and poverty alleviation”. Ecuador is the first South American country to formally adopt the standards. The announcement was made during an event in Quito, where Tourism Minister Sandra Naranjo received a plaque from the GSTC confirming that Ecuador’s tourism industry meets standards vis-à-vis conserving natural heritage and fostering conditions to make the tourism sector more competitive. The plaque was presented to Naranjo by Randy Durban, GSTC’s executive director, who said that while “this does not mean that sustainability has been achieved, it acknowledges that standards for measuring progress made towards sustainability included in the GSTC criteria have been met”.

Speaking via video-link, Taleb Rifai, the director of the World Tourism Organisation (UNWTO), praised the Ecuadorean government led by President Rafael Correa, for taking the lead in promoting sustainable tourism in South America. Naranjo said that the GSTC’s recognition was an important step forward in Ecuador’s consolidation as a key travel destination and a pioneer of sustainable tourism in South America. “We feel proud because we are on the right path”, Naranjo said.  Ecuador signed up to the GSTC as part of its plans to become a leading tourism destination in the region after receiving the World Travel award for the Leading Green Destination last year. The Correa government, which has declared 2015 as “the year of quality tourism”, has said that its objective is to retain the award this year.

• Organic quinoa - a registered trade mark

On 26 April the president of the Andean Parliament, Peru’s Javier Reátegui, announced that the body had begun the process to register ‘Organic Andean Quinoa’ as a registered trademark. Reátegui said the aim is to protect and promote the production of the Andean grain, classed as a ‘superfood’ with high nutritional value by the Food and Agriculture Organisation of the United Nations (FAO), in the Andean region. He said that obtaining the registration will bring economic benefits to Andean quinoa producers, who would be able to demand a higher price. As Reátegui explained, “Many years ago we missed an opportunity when we failed to register potatoes… we gave the world a source of food that have saved it from [good] crises… we cannot miss this opportunity with quinoa”.

On 29 July Federal Judge Ricardo Augusto Soares Leite ruled that former president Lula da Silva (2003-2011) should face charges for obstruction of justice, on the grounds that he sought to interfere in the massive federal investigation into corruption at the state-run oil firm, Petrobras, which since its launch two years ago has spread like wildfire to implicate several other of Brazil’s major companies; and most of the country’s main political parties. The investigation has turned up an apparently entrenched practice of bribery and political kickbacks at some of Brazil’s biggest firms.

This judicial decision could put a major hurdle in the way of Lula’s apparent ambitions to run for president again in 2018; he is ‘honorary president’ of the left-wing Partido dos Trabalhadores (PT) and remains very popular with the PT’s core working class and labour union base. Lula claims a broad right-wing conspiracy to orchestrate a political coup in Brazil against the PT, which has been in power now since 2003.

Despite his continued support within the PT, Lula’s reputation has taken a battering. He has already fought off a separate case in which prosecutors in the state of São Paulo sought to allege that he had links to construction companies implicated in corruption. Ahead of the latest ruling, Lula filed a complaint with the United Nations Commission on Human Rights, supported by a London-based human rights defender, barrister Geoffrey Robertson, arguing that the federal judge overseeing the Petrobras investigations, Sérgio Moro, had unfairly targeted him by releasing recordings of his private telephone conversations.

Lawyers for the former president rejected the ruling by Judge Soares, insisting that Lula had never interfered in the course of any investigation. This particular case rests on testimony from a former PT senator, Delcídio do Amaral, arrested in November 2015, who has since become a lynchpin of the Moro-led investigations, having turned state witness as part of a plea bargain. Amaral has alleged that Lula was involved in plans to bribe a senior Petrobras executive caught up in the scandal, Nestor Cerveró, to keep quiet about the full extent of the illicit goings on at the company.

Among five other defendants named by the judge on 29 July was André Esteves, a high-profile wealthy Brazilian banker (founder of the investment bank BTG Pactual), who, apparently, was prepared to put up the hush money and even help spirit Cerveró out of the country on a private plane. On a wiretap, Amaral was heard trying to convince Cerveró’s son to get his father to cooperate with this deal. Lawyers for Esteves (who has not commented) denied the accusations and insisted that he had not committed any irregularities.

Also accused by Judge Soares were: Diogo Ferreira, Amaral’s former cabinet chief and known as his ‘fixer’ when Amaral was a federal senator (Ferreira is already in jail, along with his former boss); a businessman, José Carlos Bumlai; his son, Maurício Bumlai; and a lawyer, Edson Ribeiro.

‘Resta Um’

On 2 August federal police began the 33^rd phase of ‘Operation Car Wash’, as the Petrobras corruption investigation is formally known. This phase, nicknamed ‘One Left’ (‘Resta Um’), is focused on the construction giant Queiroz Galvão, which is accused, along with other companies, of forming a cartel that paid bribes to Petrobras in return for lucrative contracts. Some of these bribes were apparently transferred to politicians associated with the company. A former company executive, Ildefonso Colares Filho, and a serving director, Othon Zanoide de Moraes Filho, were arrested on 2 August on charges of the “systematic practice of illicit payments to directors and officials at Petrobras”. Former company president, Dario de Queiroz Galvão Filho, was jailed in 2015.

• Queiroz Galvão and Lula

Brazilian authorities are investigating whether Queiroz Galvão funnelled R$2.4m (US$784m) to Lula’s re-election campaign in 2006, according to Federal Prosecutor Carlos Fernando Lima. Investigators also claim to have video evidence implicating the company in the payment of R$10m (US$3m) in bribes to avoid a federal congressional enquiry into corruption at Petrobras back in 2009, when Lula was on his second term as president.

January saw fresh political developments in Brazil, all with significant economic consequences. The net effect, however, is that President Michel Temer is still on track to push through further economic reforms in the first half of this year.

At one stage in early 2017, it looked as though the long-running Lava Jato (‘Car Wash’) corruption investigations might suffer a major delay. This was prompted by the death of Supreme Court justice Teori Zavascki in a light aeroplane crash. Zavascki was in charge of those Lava Jato cases reaching supreme court jurisdiction. He was overseeing the plea-bargaining agreements negotiated between prosecutors and 77 executives from the construction company Odebrecht who had admitted to paying bribes. It was his job to review these cases, confirm or reject the plea bargains, and where necessary authorise legal action against politicians and officials implicated in wrong-doing by the witness statements. At least 200 politicians, including President Temer, some of his ministers, and leading members of Brazil’s federal Congress, are said to be named in the files, which remain confidential but have been widely leaked. Because of the explosive nature of the allegations, it has even been speculated that Zavascki’s death may not have been an accident (the Air Force continues to investigate the crash).

Initial fears that Zavascki’s death would lead to a 5-6 month delay in legal proceedings proved incorrect, however. Supreme Court President Justice Carmen Lucía Antunes ratified the plea-bargains and has named Justice Edson Fachin to take over the Lava Jato cases previously being handled by Zavascki. As if to confirm that there will be no let-up in the anti-corruption drive, on 30 January the one-time billionaire business tycoon Eike Batista was arrested. He faces charges of paying around US$16.6bn in bribes to the former government of Rio de Janeiro, Sérgio Cabral (2007-2014). The impact of corruption investigations on the business environment remains double-edged. Strengthening the rule of law is a long term positive, but continuing uncertainty over the investigations is a short term negative.

In separate developments, pro-government figures were elected to lead both the Chamber of Deputies and the Senate. In the Chamber of Deputies, Rodrigo Maia of the small centre-right Demócratas (DEM, a member of the governing coalition) was re-elected with 293 of 513 votes. In the Senate, Eunicio Oliveira, of Temer’s Partido do Movimento Democrático Brasileiro (PMDB), was elected by 61 votes to 10. The elections have been taken as sign that the governing centre-right coalition remains strong in Congress. While President Temer – like most prominent Brazilian politicians – remains exposed to potential corruption charges, his government appears to have the necessary political strength to push through some further economic reforms. A small ministerial reshuffle, which saw expanded powers for the justice ministry, the creation of a new human rights ministry, and a promotion to ministerial status for Wellington Moreira Franco (the president’s key adviser on infrastructure investment projects), suggested that the government is growing in confidence.

What does this mean for the economy? The most important implication is that, having passed legislation late last year capping the growth in public sector expenditure (which henceforth cannot expand faster than the rate of inflation), the administration is now likely to tackle labour and pension reform, most probably before the middle of this year. Some analysts suggest that the government has a six-month window of opportunity for structural reforms. After the middle of this year, with attention focusing on next year’s presidential elections, legislators may not want to take unpopular decisions. Labour reform will aim to make hiring and firing easier for employers, seeking to reduce costs and introduced greater flexibility.

Pension reform is likely to be the most controversial. The government is expected to cut retirement benefits and set a minimum retirement age, to start reducing the large unfunded deficit in the state pension system. The changes will face opposition from the trade unions. However, on present trends it looks as if the government will be able to muster the Congressional majority it needs to push them though.

Finance Minister Henrique Meirelles now expects the economy to return to positive growth in the first quarter of 2017, accelerating to 2% year-on-year expansion by Q417. This is more optimistic than the IMF’s projection of 0.2% GDP growth this year. Luiz Carlos Trabuco, chief executive of Banco Bradesco, says consumer confidence and activity indicators signal “the worst is behind” after a recession lasting nearly three years. A slightly more nuanced view came from a senior member of the economic team speaking off the record to the Reuters news agency. This source said that if Congress approves a pension reform, Brazil could grow by more than 1% this year; but if there are no further reforms, there could be more recession. “The pension reform will be the real test. It either works or it does not. If it doesn’t work, then we will have negative growth” the official said.

The government led by President Mauricio Macri has once again agreed to adjust its economic stabilisation plans to ease the social discontent they have been producing. After coming under mounting public and political pressure, the government has announced that it will modify its schedule for the elimination of the generous energy subsidies introduced under successive Kirchnerista administrations (2003-2015). But while Macri has said that the move is designed to alleviate the financial pressure that the sharp increase in utility tariffs resulting from the gradual removal of subsidies has placed on the Argentine people, he was clear that his government will not abandon its plans to eliminate all energy subsidies, convinced that this is in the country’s long-term economic benefit.

Following a string of recent protests and strikes organised by local unions and civil-society groups to reject the high cost of living in Argentina resulting from the successive sharp increase in utility tariffs (of between 400% and 1600%) implemented since the Macri administration assumed office in 2015 [WR-18-15], the political opposition and even some prominent members of the ruling centre-right Cambiemos coalition began calling for a tariff freeze. Proponents of the freeze argued that the tariff increases were not only helping to stoke the still-high national inflation rate but also eroding salaries and the profits of small and medium-sized businesses to the general detriment of the domestic economy. Some even accused the Macri government of pandering to the interests of energy firms, which have seen their profits rise with the tariff increases.

The government has faced down the protests and dismissed the calls for a freeze arguing that, while painful, the elimination of energy subsidies and the gradual increase in utility tariffs is necessary to stabilise the domestic economy and return it to the path of sustainable economic growth. But after the centre-left Unión Cívica Radical (UCR), the senior partner in the Cambiemos coalition, threatened to vote in line with the opposition in favour of a tariff freeze in congress, the government opted to offer concessions to avoid a painful political defeat. Government representatives met UCR leaders on 19 April to hear their concerns that the social discontent over the tariffs would undermine public support for the coalition ahead of next year’s general elections. The government announced afterwards that it would be modifying its schedule for eliminating subsidies.

The government announced that it would limit tariff increases (and temporarily pay more subsidies) starting from May and offer consumers the option to spread payments in order to ease financial pressures. But this was not all. In a video message released on 23 April, Macri called on all municipal and provincial governments to eliminate the taxes that they charge for the delivery of public services such as electricity and water as another way to help ease the economic pressure on the public. In the message, recorded at an oil-producing plant in the Vaca Muera shale oil and gas deposit in south-western Argentina, Macri defended the need to keep reducing energy subsidies: “It is a lie that subsidies on gas and electricity are not paid by anyone, we all pay for it with higher inflation and [public] debt because to pay for our energy we need to borrow money”.

But Macri recognised that the rising utility tariffs were hurting consumers and said that the government must be sensitive to this. He invited local governments to heed his calls to eliminate all local taxes on public services. He justified the demand by noting that, following the signing of a new federal-tax sharing agreement last year, local governments are now receiving more federal funds than ever before and that these benefits should be passed on to taxpayers. The problem for Macri is that so far only one provincial governor has heeded his call.

• Vidal rides to Macri’s rescue

Hours after the release of President Macri’s video message, María Eugenia Vidal, the Cambiemos governor of Buenos Aires province, announced that her government would reduce its taxes on public services. “Today we have decided to adhere to the president’s call…This is our way of helping families that are struggling,” Vidal said, while signing a decree reducing the taxes on public services by between 6.2% and 15.7% and noting that a bill implementing a further reduction would be presented to the provincial legislature. Buenos Aires is Argentina’s most populous province. This should help to boost public support for Cambiemos in Buenos Aires province and puts pressure on other provincial governments to follow suit or face questions by the public.

PERU | Lithium discovery. On 16 July local news sources cited Ulises Solís, the managing director of Macusani Yellowcake SAC, the Peruvian subsidiary of Canadian mining firm Plateau Energy Metals (PLU), as saying that the company had discovered 2.5m tonnes of “high grade” lithium in the Falchani deposit, in Peru’s Puno region. Solís said Macusani Yellowcake was looking for partners to invest some US$800m in mining the lithium and would carry out a feasibility study to be finished by the end of 2019. If constructed, the mine could become the largest in the world. Two days later PLU announced final results from preliminary metallurgical tests regarding lithium reserves in the Falchani deposit. In a press release, PLU’s interim CEO Ian Stalker is cited as saying that the results were “excellent” and tests confirmed that “battery grade quality Lithium Carbonate can be produced from our Falchani ‘high-grade’ lithium feed material”. South America’s lithium reserves had been thought to have been concentrated in the so-called ‘lithium triangle’, with Bolivia leading in quantity of reserves but trailing Chile and Argentina in terms of exploitation. As well as the lithium discovery, Solís also told reporters that exploration in the Falchini area had revealed 124m pounds of uranium deposit. However, currently no legislation exists regarding the mining of uranium in Peru and so Solís reportedly said the company would work to obtain legal permission to mine the radioactive material and would request that the government legislate on the issue.

BOLIVIA | Trade. Bolivia’s Instituto Boliviano de Comercio Exterior (IBCE), a private sector lobby, has released new figures which show that Bolivia’s exports in the first five months of 2018 reached US$3.7bn, up 23% on the same period in 2017. Meanwhile imports were up 4% over the same period to reach US$3.84bn, leaving a trade deficit of US$105m. Bolivia’s main export markets were Brazil and Argentina (which accounted for 17% a piece of exports) and South Korea (8%) while the main sources of imports were China (20%), Brazil (17%), and Argentina (12%).

PERU | Mining conflicts. In its July 2018 report, Observatorio de Conflictos Mineros (OCM), an umbrella grouping of Peruvian NGOs working on mining conflicts, has revealed that various mining concessions granted by the government overlap with nature reserves and areas of natural beauty. Controversy over a concession covering a tourist attraction known as the ‘Rainbow Mountain’ has drawn attention to the issue, and areas such as the Cordillera Huayhuash in the central Andes, home to one of the largest glacial areas in Peru, the Nor Yauyos Cochas reserve near Lima, and the Tabaconas Namballe reserve in the northern Cajamarca region, are also reportedly under threat. An April report from the Instituto del Bien Comun (IBC), a Peruvian NGO that works with rural communities on resource management, shows that 18m hectares of land have been given over to mining concessions, spanning 35% of communal lands worked by peasant farmer communities.

• Social conflicts

The OCM report reveals that 198 social conflicts were reported in Peru in May, up from 176 in January, with 65.6% of socio-environmental conflicts attributed to mining concessions.

*** IMF RUNS SLIDE RULE OVER DOMINICA. The International Monetary Fund (IMF) has just completed its latest Article IV Consultation with Dominica, the first since Hurricane Maria hit the island in September 2017, compounding the damage from tropical storm Erika. The estimated damage from Maria was US$1.3bn, the equivalent of 226% of GDP.

According to the IMF, output in 2018 is expected to be down by 14%, and it could take five years for output to recover to pre-hurricane levels. The fall in output, and hence government revenue, along with the increased costs of reconstruction, will (says the IMF) “lead to a substantial worsening of fiscal and external deficits”.

The fall in tax revenue after the hurricane (down 23%) and increase in expenditure (up 18%) were partially offset by a surge in grants and buoyant Citizenship by Investment (CBI) revenues. Nevertheless, excluding CBI revenue, the FY2016/17 deficit was 17.7% of GDP. As a consequence, public debt is expected to rise near 90% of GDP, up from 71.7% in 2016. The fiscal deficit is expected to peak at 8.4% of GDP in 2020 and to improve gradually thereafter.

*** BELIZE RECOVERY STRENGTHENING. According to the IMF, Belize’s economic recovery is strengthening. GDP grew by 1.4% in 2017, but by the second quarter of 2018 it had accelerated to 5.4% and is on target for a 2.2% advance for this year in total. Tourism arrivals were up 17.1% in January-June 2018 compared with the same period in 2017.

The other good news is that the country recorded a primary fiscal balance of 1.3% of GDP in FY2017/18, implying a 3.2% of GDP turnaround from the FY2016/17 level. For 2018/19, the budget is targeting a primary surplus of 2% of GDP.

However, the IMF warns that there are still risks. It says: “A fiscal stance that is stronger than projected in the baseline scenario, which assumes no fiscal adjustment beyond FY2018/19, would be needed to reduce public debt from its end-2017 level [of 94% of GDP] to prudent levels over the medium to long term…”

*** GUYANA GOVERNMENT TARGETS INDIGENOUS COMMUNITY. Guyana’s Amerindian community makes up just over 10% of the population, in a society divided more or less evenly between Guyanese of East Indian origins and Guyanese of African origins and this is an important segment of the electorate for the main political parties. The incumbent government has an advantage in that it can channel government spending towards the Amerindian community, but often this is a last-minute play as elections loom. President David Granger seems determined to court the Amerindians well ahead of the 2020 election, and in August he launched a five-year development programme with the main goals of: improving quality of life, promoting inclusion, reducing the cost of living, reducing dependency, fostering self-sufficient development, preservation of cultural identity, ensuring access to education, and closing the gap between the coastal and hinterland conditions for the Amerindian communities.

The Amerindian vote in 2020 could well prove to be decisive. In 2015, the-then incumbent People’s Progressive Party/Civic (PPP/C) won a healthy majority in the four interior regions of 16,899 to 12,816. The ruling coalition, led by Granger’s People’s National Congress Reform (PNCR) party, is hoping to flip this in 2020. 

“On Sunday we are going to win.” It was not presidential frontrunner Jair Bolsonaro, but his opponent Fernando Haddad who tweeted this with less than a week to go before the second round of Brazil’s presidential election, on 28 October. While the election was initially described as the most uncertain in Brazil’s recent history, the result of the run-off has seemed set in stone from the moment the first-round results were revealed. And it is not expected to be in Haddad’s favour.

Haddad’s show of sanguine optimism appears to have been prompted by the release of Ibope’s latest poll, which registered a slight decline in support for Bolsonaro. Haddad, who represents the oft-hated Partido dos Trabalhadores (PT), saw his high rejection rates drop six percentage points to 41%, while Bolsonaro’s rose to 40% (from 35%). The percentage of the electorate that is certain that it will cast its vote for Bolsonaro, candidate for the Partido Social Liberal (PSL), has dropped slightly to 37%, from 41%. The change in voting intentions is minimal however and remains within the poll’s margin of error, with Bolsonaro expected to receive 57% of the valid vote and Haddad, 43% (Ibope’s last poll predicted 59%-41%).

Demonstrations which took place last weekend show that popular support for Bolsonaro remains strong. Anti-Bolsonaro protests on 21 October were less widespread and smaller than the pro-Bolsonaro rallies the next day. In what has become his signature campaign move, Bolsonaro joined his supporters on the Avenida Paulista in São Paulo virtually via video link shared on social media. He spoke of re-building Brazil and of purging the country of left-wing “outlaws” by expelling them or sending them to prison, in an inflammatory speech which was met with cheers from his green-and-yellow clad supporters. Recent revelations around an allegedly illegally-funded ‘fake news’ campaign and controversial comments about the judiciary made by one of Bolsonaro’s sons may have caused outrage amongst Brazil’s media and political elite, but their impact on his voters appears to have been minimal.

Bolsonaro’s speech has however prompted renewed calls for the Brazilian electorate to side with democracy in the face of authoritarianism. These have come from many sides, including former president Fernando Henrique Cardoso (1995-2002), whose Partido da Social Democracia Brasileira (PSDB) has traditionally represented the opposition to the PT. Another former PSDB leader, Alberto Goldman, has publicly announced that he will vote for Haddad (rather than spoil his ballot) following Bolsonaro’s speech. Defeated presidential candidate Marina Silva also announced her “critical vote” for Haddad this week, despite having previously said she would remain neutral.

Comments made by Bolsonaro’s son Eduardo, who was re-elected federal deputy for São Paulo state on 7 October, have been one of the latest causes of concern. In a video dating from July but shared widely online on 21 October, Eduardo makes light of shutting down the country’s supreme court (STF), saying that it would be easy to do so with just two soldiers if the court blocked a Bolsonaro victory. Condemnation of these comments has been widespread, with STF president Justice José Antonio Dias Toffoli saying that a threat to the judiciary is a threat to democracy. Bolsonaro father and son have both made public apologies, highlighting their respect for the STF as a judicial institution committed to upholding the constitution, and said that the comments were taken out of context. There have been calls, including from within the STF, for Eduardo to be investigated for breaching the national security law.

‘Zapgate’

This controversy came on the back of revelations made by national daily Folha de São Paulo which further tainted Bolsonaro’s campaign. According to Folha’s investigation, wealthy pro-Bolsonaro businessmen have been paying for mass fake news campaigns that are damaging to Haddad to be sent out to millions of voters via WhatsApp. As well as bringing into question the legitimacy of the election results, such practices could constitute electoral crimes. The purchase of these mass messaging packages by private companies is essentially corporate campaign financing, a practice which was made illegal in 2015.

Electoral court (TSE) judge Jorge Mussi has accepted requests to investigate Bolsonaro for electoral crimes, including abuse of economic power, that were filed by the PT’s electoral coalition, the left-wing Partido Democrático Trabalhista (PDT), and the PDT’s coalition in the wake of these revelations. At the request of attorney general Raquel Dodge, the federal police (PF) has also launched an investigation into the mass messaging schemes.

Judicial experts say that if Bolsonaro is found guilty, it could go as far as to impede his presidency even if he does get elected on 28 October. However, these types of investigations tend to take months and even years, and it is most likely that ‘Zapgate’, as some Brazilians have dubbed it (after the commonly used abbreviation for WhatsApp), will do little more than cause some noise for the PSL candidate.

With the traditional final presidential debate broadcast by national TV channel Globo cancelled after Bolsonaro refused to participate, Haddad and Bolsonaro will continue their parallel campaigns and online exchanges without meeting in person ahead of the run-off on Sunday. Haddad continues his desperate canvass for votes while Bolsonaro, certain of victory, appears to already be planning his future government and laying the ground for possible alliances.

• Governorship

Pro-Jair Bolsonaro candidate Wilson Witzel looks set to defeat former Rio de Janeiro mayor Eduardo Paes and become the next governor for Rio de Janeiro state with 56% of the valid vote. The race is closer in São Paulo state, where João Doria’s slim advantage on Márcio França could be affected by a recently leaked sex tape, which Doria claims is fake. Although he represents the Partido da Social Democracia Brasileira (PSDB), Doria openly admires and backs Bolsonaro.

• ‘Fake news’ intervention

Facebook and WhatsApp have reaffirmed their commitment to fighting fake news in the wake of revelations that the social media and messaging platforms could have played an important role in influencing voters in Brazil. On 22 October Facebook shut down 68 pages and 43 accounts for violating its authenticity and spam policies. WhatsApp has said that it will block phone numbers associated with bad practices, but that it has no plans to lower the limit on the number of people a message can be forwarded on to.

Venezuela took another step out of its former isolation on 16 April when the International Monetary Fund (IMF) and World Bank ended a seven-year suspension of dealings with the country. This will improve Venezuela’s access to international finance and, coming alongside a glut of other economic reforms, could put the country firmly in phase two of Washington’s three-phase plan – stabilisation, recovery, and democratic transition. Exiled opposition leader María Corina Machado is doing her best to build momentum towards the final phase.

The IMF and World Bank both suspended relations with Venezuela in 2019 amid the constitutional crisis that arose when former opposition leader Juan Guaidó declared himself to be the country’s legitimate leader. Although Guaidó’s effort to unseat former president Nicolás Maduro (2013-2026) ran out of steam, the tightening of international sanctions on Venezuela over the following years meant that the country remained cut off from global credit streams.

That is now set to change. President Delcy Rodríguez announced on 21 April that she had spoken with the IMF’s managing director, Kristalina Georgieva, saying that she told her that “Venezuela needs to access its special drawing rights” to enable US$5bn in spending to repair critical infrastructure. This seemed to contradict Rodríguez’s 17 April assurance that “we don’t have any borrowing programme planned” with the IMF.

There was a similarly swift move to touch base with the World Bank. Venezuela’s ambassador to the US, Félix Plasencia, met with the bank’s vice president for Latin America and the Caribbean, Susana Cordeiro Guerra, on 20 April, with Cordeiro describing the meeting as “productive” and saying that “as engagement resumes, there is a real opportunity to unlock jobs, attract investment, and support growth”. Venezuela last received a loan from the World Bank in 2005 and distanced itself from both institutions under Hugo Chávez (1999-2013).

Some three decades later, international finance will almost certainly be needed to restore Venezuela’s ravaged economy. Despite growing international investor interest in the oil and mining sectors following sweeping reforms, much of the country’s infrastructure is on its knees – not least essential social infrastructure, such as the health and education systems. In economic terms, perhaps the most urgent priority is the blackout-prone electricity grid, which will hamper the growth in oil production that Rodríguez hopes will provide the backbone of the economic recovery. She announced on 19 April that her government has held talks with US and German firms General Electric and Siemens regarding power grid improvements in the western state of Zulia - home to the oilfields of Lake Maracaibo.

Venezuela’s opposition continues to watch these developments from the sidelines and has made no progress in pushing for elections to be held in the near-term. On 18 April Machado addressed a crowd of thousands at a rally in Madrid, where she said that she would return to Venezuela by the end of the year. Machado has backtracked on her original plan to return imminently, reportedly to avoid straining ties with President Donald Trump’s administration which is steering policy under Rodríguez. Machado’s Spain trip was notable for her snub of left-wing Prime Minister Pedro Sánchez, who she has accused of being soft on Rodríguez and who has been a leading European critic of Trump. Machado instead met Isabel Díaz Ayuso, the far-right leader of the Madrid region.

Economic reform commission

In a sign of further economic reform to come, President Rodríguez announced on 22 April that she had formed a commission tasked with “providing agility and modernity to state processes” to “increase the levels of production”. She said that the commission would assess whether some state assets could be partially or fully privatised. The commission includes the economy and finance minister, Anabel Pereira; the vice president for economic affairs, Calixto Ortega; the industry and trade minister, Luis Villegas; and the minister for communes, Ángel Prado.

Costa Rica’s President Laura Fernández celebrated the inauguration of a new mega prison this week as fulfilment of her government’s promise to take uncompromising action against organised crime. All the more awkward for her administration, therefore, that the grand opening took place against the backdrop of a scandal embroiling the ruling Partido Pueblo Soberano (PPSO) linked to a drug trafficker and money launderer, arrested in an operation orchestrated by the US, who seems to have had friends in high political places.

On 14 October the government inaugurated the Centro de Alta Contención contra el Crimen Organizado (CACCO), a mega prison with a capacity of 5,100 inmates, modelled on El Salvador’s President Nayib Bukele’s Centro de Confinamiento del Terrorismo (Cecot). Work began on the ₡16.44bn (US$36m) Cacco during a visit by Bukele in January. It is located next to the maximum-security jail La Reforma in the province of Alajuela, just outside the capital San José.

President Fernández said the prison was the government’s answer to “honest families imprisoned by fear and a people tired of impunity” and a model for a mano dura approach against organised crime. In this light, it was all the more embarrassing that her ruling PPSO has been struggling to explain alleged links with a dual-nationality businessman, Guobin Tam Zhang, who was arrested on 2 October on suspicion of drug trafficking and money laundering on behalf of transnational criminal groups.

Tam Zhang, a Chinese-Costa Rican, was arrested in Curridabat, San José, in an operation involving the US Drug Enforcement Administration (DEA). He is being held in preventive detention pending extradition to the US for his alleged links to drug trafficking organisations, notably Mexico’s Cártel de Sinaloa and Cártel del Golfo, and Colombia’s neo-paramilitary Clan del Golfo.

Fernández is ideologically aligned with US President Donald Trump and her administration has joined the US-sponsored Shield of the Americas initiative to underline its commitment to confronting transnational organised crime. She even dismissed her foreign minister for omitting to inform her of a Shield meeting attended by Trump.

•  New foreign minister

Ana Elena Pinto takes over as Costa Rica’s new foreign minister on 15 October. A career diplomat who has previously served as ambassador to France and Monaco, Pinto replaces Manuel Tovar, who was dismissed on 24 September for failing to inform President Laura Fernández of a meeting of the Shield of the Americas security initiative attended by US President Donald Trump [WR-26-39].

Tam Zhang was photographed attending an exclusive PPSO celebration after Fernández’s election victory on 1 February. Fernández said she had no idea who Tam Zhang was and had never met him, citing the crowd of some 2,000 people celebrating her victory. However, there were far fewer VIP guests in the hotel salon and a photo emerged of Tam Zhang with former lawmaker and presidential adviser Pilar Cisneros Gallo, who also denied knowing him.

Further photos show Tam Zhang just three rows back from then-president Rodrigo Chaves (2022-2026) and Fernández as minister of the presidency in the closing ceremony of the Semana Nacional del Cooperativismo on 25 April and inauguration of the first Torre Espíritu Santo residential tower. The seating arrangement would have required formal authorisation; ordinary members of the public would not have been permitted to sit there. The PPSO party treasury, meanwhile, insists that Tam Zhang has made no donations or contributions to the party, which the supreme electoral tribunal (TSE) has verified.

This has not satisfied the political opposition, which argues that it by no means excludes under-the-table financing. Describing Tam Zhang as “the biggest money launderer in Costa Rica it seems”, the head of the main opposition Partido Liberación Nacional (PLN) in the legislative assembly, Álvaro Ramírez, said on 6 October, “now it turns out nobody knows him”. Other parties in the legislature – the left-wing Frente Amplio (FA) and the Partido Unidad Social Cristiana (PUSC) – joined the PLN in calling for a special commission to be set up to investigate alleged links between Tam Zhang and the PPSO. Revelling in the government’s discomfiture, Ramírez said a legislative probe was needed in order to “clean up politics from the scourge of drug trafficking and organised crime” and to safeguard democracy.

FA deputy José María Villalta insisted that the Costa Rican people were owed an explanation. However, it is not clear they are going to get one. In a column published on 11 October entitled ‘Tam, tan, tan cerca del poder’, the national daily La Nación argued that in the week since the scandal broke, nobody has explained who Tam Zhang’s contact in political circles – whether in the government or the ruling party – was. The PPSO president, Mayuli Ortega, says the party will conduct an internal investigation. However, the opposition argues that this could result in a cover-up and that the PPSO should support a legislative investigation into the matter in the interest of transparency and accountability.

As Benjamin Franklin famously said, “Well done is better than well said”. The actions of the Venezuelan government and police this week are a clear demonstration of the accuracy of Franklin’s words. President Hugo Chávez has long denied that his administration provides safe haven to Colombian left-wing guerrillas and narco-traffickers, even though the US has blacklisted several high-ranking members of the armed forces and the Venezuelan cabinet for their supposed involvement in drug-trafficking and money-laundering. The capture of the last of Colombia’s longstanding capos still at large, and the subsequent killing in a shootout of a Fuerzas Armadas Revolucionarias de Colombia (Farc) guerrilla wanted in connection to a failed bomb attack in Bogotá [WR-12-19], have been much more convincing of Venezuela’s intention to cooperate with transnational security efforts than any statement Chávez could ever make.

The capture of ‘El Loco’ Barrera (Daniel Barrera Barrera) in Venezuela is not only crucial for President Juan Manuel Santos of Colombia, who had been heavily criticised, particularly by his predecessor Alvaro Uribe (2002-2010), for re-establishing full diplomatic relations with Venezuela immediately after taking office in August 2010. In fact, it is equally (if not more) important for President Chávez. When announcing the capture, President Santos said that in addition to the Venezuelan police, the operation had counted with the participation of “the British intelligence service, the MI6, and also with the very effective cooperation of the intelligence agencies of the US, especially the [Central Intelligence Agency] CIA”.

According to the director of Colombia’s national police (PNC), General José Roberto León, “the last details of the operation were made last week from England and Washington”, and the raid had the “unconditional cooperation” of Venezuela. The MI6 provided general intelligence information; the CIA and the Drug Enforcement Administration (DEA) provided information relating to Barrera’s money-laundering activities and the movement of assets; and the Venezuelan police carried out the work on the ground; locating him, following him, and finally capturing him at a public phone booth in the town of San Cristóbal, in the border state of Táchira. Members of all the organisations met in London last week to finalise details of the operation. In Washington, General León and the DEA headed an ad hoc joint operations office to coordinate the moves of all agencies.

Some Venezuelan and Colombian bloggers jokingly responded by saying that “left-wingers were those of the past”, clearly referring to the incongruity of President Chávez’s strong anti-US rhetoric and his cooperation with that country’s intelligence agency, which has been linked to some of the most nefarious episodes of Latin American political history in the 20^th century. In fact, President Chávez has regularly pointed to this murky past to allege on numerous occasions that the CIA was plotting to remove him from office, particularly after the failed 2002 coup d’état against him.

Santos’s critics argue that the rapprochement with Chávez has effectively weakened security in Colombia. Conversely, Barrera’s capture demonstrates that security cooperation is effective, while at the same time sending out a message to those criminals seeking refuge elsewhere that the Colombian State will pursue them wherever they may be. The capture also shows that while Santos may be seeking a negotiated solution to the internal conflict with the Farc, and possibly also with the Ejército de Liberación Nacional (ELN), he is determined to continue fighting common criminality, particularly narco-traffickers.

• Farc suspected bomb plotter killed

In addition to capturing ‘El Loco’ Barrera, the Venezuelan police this week shot dead ‘El Cojo’ (Luis Freddy Rojas Rincón), a member of the Farc’s 33rd Front wanted in relation to the failed terrorist attack against the Bogotá metropolitan police on 15 May. The Venezuelan authorities tried to arrest Rojas at a hotel in the town of Jesús María Semprún, in the border state of Zulia, but Rojas resisted and was wounded during the subsequent shootout; he died two hours later at a local hospital.

POLITICS| Franco sacks Indert head. On 15 April Paraguay’s President Federico Franco dismissed the head of the national land development institute (Indert), Luis Ortigoza, over  his suspected involvement in the irregular purchase of lands linked to the family of the senate president, Jorge Oviedo Matto. The scandal, which is currently the subject of an official investigation, could risks damaging Franco and the ruling Partido Liberal Radical Auténtico (PLRA) ahead of the 21 April general election, given suspicions that the purchase was part of a last-minute political deal between the PLRA and Oviedo Matto’s Unión Nacional de Ciudadanos Eticos (Unace) securing UNACE backing for the PLRA’s presidential nominee, Efraín Alegre. Ortigoza, who has been charged with “breach of trust”, has been replaced by Juan Carlos Ramírez Montalbetti. The matter is far from over: Ortigoza has yet to give testimony in the case, while Oviedo Matto is also facing the threat of impeachment by the opposition, which is hoping to vote on the issue in the senate today (16 April).

REGION | Containing the coffee fungus. The outbreak of roya, a fungus affecting coffee, Central America’s biggest export, is now under control, according to Víctor Villatoro, the head of the Inter-American Institute for Cooperation on Agriculture (IICA) [WR-13-04]. Villatoro said the outbreak - the worst ever to hit Central America - was now “perfectly manageable with appropriate agricultural practices”. However, he warned that countries would have to continue with efforts to prevent the rust from spreading further, especially when replanting the coffee following harvests in the future.

Villatoro attributed the success in containing the fungus to a coordinated regional effort which involved governments, the IICA, and international organisations such as the UN’s Food and Agriculture Organization (FAO) and the Inter-American Development Bank (IDB). In August the FAO announced a US$500,000 investment over two years for programmes aimed at helping Central American countries strengthen their technical capacity with regard to early detection of future crises in the coffee sector as well as improve its response and prevention.

According to a May 2013 report by the International Coffee Organization (ICO), total damage in the region for the harvest year 2012/13 is estimated at 2.7m bags, costing around US$500m. The report warns that the impact will be even more severe in the next harvest (2013/14).

On average, over 50% of the total coffee growing area in Central America has been affected by the pest. The incidence rates are as follows: El Salvador 74%, Guatemala 70%, Costa Rica 64%, Nicaragua 37% and Honduras 25%. The ICO also highlights that most coffee in Central America is grown by smallholder farmers, who will find it difficult to absorb the expected losses. It is estimated that some 374,000 jobs will be lost in 2012/13 due to the rust, as the labour used to harvest the crop will not be needed.

As regards the world coffee market, Central America (excluding Mexico) produced 15.8m bags in 2011/12, accounting for nearly 12% of world production. The estimated expected losses of 2.7m bags in 2012/13 would represent a decrease of 17.1% on the previous year.

Police in Argentina have arrested a 19-year-old man, dubbed the ‘superhacker’, who is believed to have led a gang of hackers that targeted international money transfer and gambling websites.

According to the Argentine authorities the teen was making £31,500 ($50,000) a month, working from his bedroom in Buenos Aires. Having spent a year closing in on the suspect, during the arrest operation the police shut down the power to the entire neighbourhood to prevent the deletion of sensitive data. In the teenager’s room at the Buenos Aires house belonging to his father, also a computer expert (although not implicated in the crime), officials found high-capacity computers. The hackers allegedly used malware attacks to construct a botnet of thousands of zombie computers, which were then used to illegally divert money from accounts leaving virtually no trace behind. The young man is accused of three crimes, for which he could face more than a decade behind bars if convicted.