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Tres de las mayores compañías de Brasil son responsables por el 65% del financiamiento de las campañas electorales presidenciales. JBS, la compañía  procesadora de alimentos más grande del mundo; Ambev, la cervecera; y la firma de construcción, Grupo OAS; en conjunto contribuyen con el 65% del financiamiento recibido por los tres principales candidatos presidenciales: la Presidente Dilma Rousseff del gobernante Partido dos Trabalhadores (PT); Aécio Neves del opositor Partido da Social Democracia Brasileira (PSDB); y Eduardo Campos del también opositor Partido Socialista Brasileiro (PSB).

JBS ha donado la mayor parte, R$11m (US$4,8m), y parece estar haciendo apuestas de cobertura. Rousseff y Neves, su rival más cercano, recibieron R$5m cada uno; Campos sólo obtuvo R$1m. En un comunicado de prensa la compañía dijo que “nuestras donaciones están en línea con las relaciones que tenemos con los partidos políticos, tanto nacionalmente como también a nivel estatal. Las donaciones para el PT y el PSDB fueron más grandes debido a la mayor presencia y peso de estos partidos en el país”. Ambev ha gastado un total de R$6,7m en los tres candidatos; OAS, R$2,6m.

De acuerdo con un análisis de la semana pasada del diario, O Estado de São Paulo, el costo de las elecciones en Brasil ha crecido exponencialmente durante los últimos 20 años. En 1994, las primeras elecciones en las que se permitió a las compañías privadas hacer contribuciones financieras, el costo total de la campaña fue de R$190m. Este año, el costo ha sido estimado en R$916m.

Quizá la más útil medición es el costo por voto en comparación con otras democracias. En el 2010, se gastó US$10,93 por cada voto, incluyendo las campañas presidencial, legislativa, y estatal: por comparación, el costo por voto en Francia fue de US$0,45; en el reino Unido, US$0,77; en Alemania, US$2,21; y en México, US$3,42. En EU por contraste, se gastó US$19,89 por voto.

Durante los últimos cuatro años, las mayores compañías de Brasil han invertido R$370m en donaciones a los partidos políticos para asegurar las buenas relaciones con el actual y los futuros gobiernos. Andrade Gutiérrez, la firma constructora y una de las mayores beneficiarias de los contratos de construcción de Copa Mundial de la Fifa, gastó R$120m en ese periodo; otros grandes donantes fueron Queiroz Galvão (construcción, inmuebles, y energía) y Camargo Corrêa (textiles, energía, ingeniería, construcción de buques, y construcción).

De acuerdo con el Kellogg Institute for International Studies, parte de la Universidad de Texas, por cada Real que estas compañías invierten en los partidos políticos, ellas reciben R$8,5 en contratos con el Estado.

Preparándose para la campaña

La ‘guerra del aire’ comienza el 19 de agosto, cuando la publicidad electoral en la televisión y la radio será permitida. Con 50 minutos de material de campaña permitido cada día, un tercio del tiempo es dividido por igual entre todos los candidatos presidenciales. Después de eso el monto de tiempo que cada candidato recibe está basado en el número de diputados que sus partidos y sus aliados tienen en el congreso federal.

Rousseff recibirá 11 minutos y 24 segundos por día; su rival más cercano, Aécio Neves tendrá cuatro minutos y 35 segundos; mientras que el candidato ubicado en tercer lugar, Campos, tendrá dos minutos y tres segundos. Los restantes ocho candidatos tendrán entre un minuto y 10 segundos y 45 segundos.

Mientras tanto, los candidatos han salido de gira, hablando frente a la elite comercial de Brasil. El 6 de agosto, ellos hablaron en la confederación nacional de agricultura del país. Neves recibió la más cálida bienvenida por una promesa de crear un “superministerio de agricultura” y de limitar los reclamos de los pueblos indígenas a la tierra.

• Brasil en 10^mo lugar en el ranking de millonarios

Brasil está en el décimo lugar en la lista de países con el mayor número de multimillonarios, de acuerdo con un estudio de New World Wealth. Hay 10.300 residentes en Brasil con más de US$10m: São Paulo es el hogar de 4.400 de ellos; Rio de Janeiro, 2.200. La lista global está encabezada por EU. Con 183.500 multimillonarios, seguido por China y Alemania.

La huelga de los choferes de camiones en al menos 12 estados durante la semana pasada, ha impactado sobre la producción de alimentos, las exportaciones, y el abastecimiento de combustibles. Las más importantes carreteras en Pará, Ceará, Mato Grosso, Bahía, Goiás, Mato Grosso do Sul, Minas Gerais, Espírito Santo, São Paulo, Paraná, Santa Catarina, y Río Grande do Sul, habían sido bloqueadas por los camioneros, que están exigiendo recortes en los precios del diesel y los peajes carreteros. Los camioneros también desean que la Presidenta Dilma Rousseff aplique el veto a la reciente legislación que permite aplicar patrones de turnos variables para los conductores.

Alrededor del 58% de los productos brasileños son transportados por camiones, de acuerdo con el ministerio de transporte. Ese porcentaje es incluso más alevado para los productos agrícolas. En el 2013, el 65% de la soja del país fue transportada por carretera. Brasil está actualmente en medio de la cosecha de la soja. En Paraná y Santa Catarina, JBS, el mayorista de la carne, ha cerrado ocho unidades de producción, de aves de corral y cerdos, y no puede garantizar el abastecimiento de alimentos para sus animales. En algunos estados, las cortes locales han ordenado a los huelguistas que vuelvan a sus tareas, o recibirán severas penas financieras, pero los choferes aún deben abandonar sus piquetes.

En algún sentido, el gobierno se ha convertido en una víctima de su propio éxito. Mientras la infraestructura brasileña permanece decepcionante para la mayoría de las comparaciones globales, hubo algunas mejoras durante los pocos años pasados. En particular, los tiempos de espera para el acceso a las rutas a los puertos de Santos y Paranaguá han sido reducidos en mucho, gracias en gran medida al nuevo sistema electrónico de reservas que asigna a los camiones una franja particular de tiempo. Como resultado de eso, y las mejoradas facilidades de almacenamiento para productos agrícolas, los costos de los fletes se han reducido. Eso ha atraído a nuevos actores en el negocio de los fletes, reduciendo los costos aún más.

Como un resultado, el negocio ahora se ha vuelto ferozmente competitivo, lo que significa que los márgenes de los camioneros se han visto comprimidos. El reciente incremento en el costo del diesel y los peajes en la carretera, ha agregado incluso más presión. De acuerdo con los datos más recientes disponibles, hay más de 1m de operadores de fletes en Brasil, y 860.000 de ellos operan independientemente. Si la huelga continúa, los camioneros fácilmente podrían atascar las principales arterias del país. El gobierno ha preparado su primera reunión con los camioneros y las firmas de transporte en el palacio presidencial para el 25 de febrero.

Cuentas bancarias de Brasil en Suiza

De acuerdo con el grupo de campaña, Justicia Fiscal, Brasil está en segundo lugar en el ranking mundial de evasión fiscal, detrás solamente de Rusia. Alrededor de US$280mm escapan de las garras de la Receita Federal cada año, un monto que corresponde al 13,4% del PIB de Brasil. Eso es, quizá no sorprendente que los brasileños tengan una presencia prominente entre los individuos ayudados por la sucursal suiza del banco HSBC para eludir impuestos [IL-15-06].

La filtración del International Consortium of Investigative Journalists (ICIJ) muestra que 6.606 cuentas bancarias en HSBC están vinculadas a brasileños, con un monto total de dinero depositado de US$7mm. Entre los pocos nombres citados estaban Edmond Safra, el fallecido magnate bancario; la familia Steinbruch, propietarios de la industria textil Vicunha, y 11 personas vinculadas a la ‘Operação Lava Jato’, la investigación dentro del esquema de corrupción en Petrobrás, incluidos ocho miembros de la familia Queiroz Galvão.

También fueron nombrados brasileños vinculados con las compañías que controlan los autobuses de Río de Janeiro. Jacob Barata, de 83 años, el “rey de los buses”, quien posee parte de 16 diferentes compañías de buses en la ciudad. Entre el 2006 y el 2007, Barata, junto con su esposa y su hijo, mantuvieron US$17,6m en una sucursal de Ginebra del banco HSBC. Después de ese periodo el dinero fue transferido a una compañía llamada Baccus Assets Limited, con sede en las Islas Vírgenes (británicas), un bien conocido paraíso fiscal.

• Odebrecht y el HSBC

Los investigadores brasileños creen que la compañía de construcción Odebrecht, una de las que está bajo investigación por su rol en el escándalo de Petrobrás, pagó sobornos a través de cuentas bancarias en la sucursal suiza del banco HSBC. Uno de los testigos del estado en el caso, el ex director de Petrobrás, Pedro Barusco, dijo que él tenía 19 cuentas en bancos suizos para recibir sobornos, totalizando al menos US$6m. Tanto como US$110m pueden haber sido depositados en cuentas de HSBC en Ginebra por 11 personas citadas en la investigación como habiendo recibido sobornos.

GUATEMALA | Expansive budget. On 29 November Guatemala’s congress approved a Q77.31bn (US$10.27bn) budget for 2017, up 9.1% on this year. In an eight-hour debate, 115 deputies, a comfortable majority, voted in favour of the budget presented by the government led by President Jimmy Morales. Failure to approve the budget before the end of November would have meant that by law this year’s budget would have been retained for 2017.

Deputies made a number of amendments to the draft budget which delayed approval. These included adding an additional Q20m (US$2.6m) to the labour ministry budget for pensioners, and an extra Q300m (US$39.8m) for the energy and mines ministry, specifically for the Instituto Nacional de Electrificación. The deputies also stipulated that Q2bn (US$265.7m) assigned for public works projects would be distributed not to community development councils (Consejos Comunitarios de Desarrollo) but rather to municipalities. This modification prompted some mayors to party with mariachis on the streets, although it raises concerns about potential local corruption.

The biggest slice of the pie went to the education ministry (Q13.94bn [US$1.85bn), followed by the health ministry (Q6.90bn [US$916m]), and infrastructure & housing (Q4.10bn [US$545m]).

Attempts to repeat last year’s long teachers’ strike in Peru appear to have failed. On 3 July a minority faction of teachers’ union Sindicato Único de Trabajadores de la Educación del Perú (Sutep) called off a two-week long strike which had been largely ignored by the majority of the union’s members. The decision was a victory for the government led by President Martín Vizcarra.

The strike had started on 18 June. It was led by a minority faction of the Sutep loyal to Pedro Castillo. Castillo heads a group called Comité de Lucha Nacional de las Bases Regionales del Sutep which has been challenging the national committee for control of the union.

The national committee supported last year’s teachers’ strike, which disrupted Peru’s public school system for six months. But the Sutep union leadership now remains focused on negotiating with the authorities the remaining issues left over from the 2017 dispute and does not support any further industrial action.

Castillo’s faction, on the other hand, wanted to radicalise the movement and make additional demands. While last year’s dispute had ended with an agreement to increase teachers’ pay by up to PEN2,000 (US$600) by the end of 2018, the radical faction wanted that doubled to PEN4,000 (US$1,200) over an extended period running up to 2021.

But the strike was only supported by 5%-6% of teachers, according to ministry of education data. This allowed the government to take a much tougher line than it did in 2017. The strike was declared illegal on 20 June, which meant that, unlike last year, teachers who did not come to work were not paid.

In the 2017 dispute, striking teachers ended up receiving full pay on condition that they agreed after the strike to make up lost hours of classroom time, so that pupils would not lose out. Also different this year was that schools were authorised to hire in new teachers to replace those on strike.

Castillo tried to present the outcome of the strike as a victory, arguing that the government had agreed to negotiate with his regional representatives, rather than with the union’s national leadership. But Alfredo Velásquez, the general secretary of the union, said that the stoppage by the minority faction had been a complete failure.

• Sutep talks

Idel Vexler, a former education minister, agreed with Alfredo Velásquez, the general secretary of Sutep, that the strike had been a failure. Vexler noted that the government and Sutep leadership have been consulting on a range of issues since late last year.

Education Minister Daniel Alfaro welcomed the end of the stoppage and said his ministry would continue working in support of “free and high quality public education”. The end of the strike has been a positive outcome for the government although there are still some pending issues. The Sutep leadership says it wants some unresolved issues from last year’s stoppage to go to arbitration.

Worrying poll numbers and a general strike challenge President Mauricio Macri’s re-election bid.

After former president Cristina Fernández (2007-2015) made a surprise announcement on 18 May that she will run as number two on a presidential ticket led by her former minister and cabinet chief Alberto Fernández (the so-called Fernández–Fernández formula) President Macri and his centre-right Cambiemos coalition may have hoped there would be a period of confusion and loss of momentum among her supporters. That does not seem to have happened. An opinion poll by CEOP published on 26 May suggests that the Fernández–Fernández ticket is leading in the opinion polls and may even be close to a first-round victory on 27 October, the day of the elections.

• Poll lead

The CEOP poll gave Fernández 39.3% support, almost 10 percentage points ahead of Macri who came second with 29.7%. Under existing rules, to be elected in the first round, a candidate must have at least 40% of the vote and a 10-percentage point lead over his or her nearest rival. The CEOP poll suggests that the Fernández-Fernández ticket is very close to achieving both those criteria. Attracting some of the 7% of voters who are still undecided could get it across the line.

The numbers also imply that the former president’s gamble – using Alberto Fernández to appeal to more moderate Peronist voters, enlisting them to join her more nationalist and populist faction – may be paying off. Certainly, CEOP analysts said that opting for the vice-presidency had not noticeably eroded support for Cristina Fernández. The poll also revealed that 64.4% of respondents consider the economy to be on a ‘wrong path’ with only 26% backing Macri’s approach.

A 24-hour general strike on 29 May added to Macri’s problems. The strike was called by three factions of the labour movement: the traditionally Peronist Confederación General del Trabajo (CGT); a group of unions loyal to truck drivers’ leader Hugo Moyano; and the Central de Trabajadores de la Argentina (CTA), which largely represents public sector workers. Support for the strike was significant, particularly in Buenos Aires. Its leaders said that the stoppage, coming after a year of recession, high inflation, and a fiscal austerity programme backed by the International Monetary Fund (IMF), was designed to force a change in the government’s economic policies.

It was the fifth general strike called since Macri took office in December 2015. Dante Sica, government minister for production and labour, said the stoppage was politically motivated and not a genuine reflection of discontent.

While the polling numbers are now consistently putting Cristina Fernández ahead of Macri, there are still five months to go before polling day. Macri and his supporters may therefore be hoping that their rival will ‘peak’ at an early stage – round about now – and then begin to lose momentum. This may be wishful thinking, but it is worth asking what might need to happen for Macri to start pushing back and regaining support.

At least three things might be important. First there would need to be some real economic improvement. It is unlikely that the country’s deep recession can be reversed in five months but falling monthly inflation rates could make a difference with some voters. Second, current and upcoming corruption trials faced by Cristina Fernández – which are expected to be given blanket media coverage – could erode her position. And third, internal quarrels within the ever-fractious Peronist movement could surface and alienate voters. This last point may sound as if Macri campaign managers are clutching at straws, but on occasions in the past the Peronists have indeed snatched defeat from the jaws of victory.

* The Secretaria Nacional do Consumidor (Senacon), the consumer protection agency overseen by Brazil’s justice ministry, has announced that it will investigate the Brazilian travel agency 123milhas, which suspended a line of travel promotions on 18 August, resulting in the cancellations of trips from September to December. Senacon has demanded that the travel company clarify the reasons for suspending the promotional packages and the steps that would be taken to compensate customers. The only explanation that 123milhas gave its customers was a “persistence of adverse market conditions”. It offered customers travel vouchers, valid for up to 36 months, to compensate them for their cancelled holidays. According to a statement from Senacon, offering a voucher or coupon as the only means of compensation infringes existing consumer rights laws. The national consumer secretary Wadih Damous stated that “the argument that there had been a change in the economic scenario is not the problem of the consumer”, adding that “business risks belong to the company that offers its services”.

EL SALVADOR | Balancing the budget. The finance minister, Jerson Posada, presented a budget of US$9.66bn for 2025 to the legislative assembly on 30 September. Posada said that starting from next year the budget would be entirely self-funded as “El Salvador will no longer spend more than it brings in annually”. Posada said that a total of 37.4% of the budget would go on education (US$1.54bn), health (US$1.17bn), and security and defence (US$903m).

Posada said that when President Nayib Bukele took office in 2019 the budget contained a deficit of US$1.2bn, which the government had reduced every year since. After a budget deficit of US$338m in 2024, the government would now deliver a balanced budget “for the first time in decades”. Posada said it marked “a turning point” for El Salvador, which had become “financially independent”, although the 2024 budget was bolstered by US$1bn in July so the 2025 budget may not end up being balanced in practice.

Bukele promised to deliver a zero deficit budget last month in a bid to follow his government’s security “miracle” with an economic one [WR-24-37]. The budget will sail through the legislative assembly where his ruling Nuevas Ideas (NI) has a large majority.

The lower chamber of congress has rejected a controversial bill that proposed authorising the Paraguayan air force to shoot down planes suspected of trafficking drugs or other contraband. The initiative was tabled as a measure to strengthen authorities in the fight against organised crime, but critics of the bill have raised legal and human rights concerns.

The bill, which was rejected on 8 July, sought to revise Law 6980/2022, which determines the protocols by which air force jets should deal with suspicious aircraft. Under the current rules, the procedures involve two phases. The first phase is based on detection and making contact. If an unknown aircraft, not following a pre-programmed route by any air traffic control or civil aviation authority, enters Paraguayan airspace, the air force is authorised to send jets to trail the suspicious plane and attempt to contact the pilot by radio or with visual signals.

If the contact is ignored, the air force jet pilot would be authorised to advance to the second phase, which is to order the unknown plane to land. In this phase, warning shots are authorised, but the air force jet cannot use lethal force against the suspicious aircraft unless the plane opens fire first and presents clear armed resistance.

An opposition deputy, Rubén Rubin (Independent), submitted a bill that proposed adding a third phase to the air force’s protocols – to shoot down the plane if it ignores the warning shots and refuses to land. This ‘shoot-down’ proposal was reportedly inspired by legislation in other Latin American countries, such as Brazil, which passed a law in 1998 that authorised the Brazilian air force to shoot down suspicious planes infringing upon the national airspace. Brazil’s 1998 ‘shoot-down’ law has been updated over the years, with more requirements and procedures regulating the process to authorise shooting down a plane, such as clauses that allow a plane to be shot down only if it is flying through an area which is known to be a route for drug trafficking. 

The debates in Paraguay about the rules of engagement for air force jets came amid the acquisition of new military aircraft. On 30 June four of the six A-29 ‘Super Tucano’ fighter jets that the Paraguayan air force had ordered from Brazilian aircraft manufacturer Embraer were delivered. The two remaining Super Tucanos are expected to be delivered by the end of 2025. The A-29 model is a light attack aircraft which has been hailed by Paraguayan lawmakers affiliated with the ruling Asociación Nacional Republicana-Partido Colorado (ANR-PC) as a boost for the country’s capabilities to protect its airspace from drug trafficking groups. However, supporters of Rubin’s bill have suggested that, without legislation to allow the Super Tucanos to fire at the aircraft of criminals, they would essentially be scarecrows or guard dogs with no teeth, to be used mainly for military parades rather than for fighting crime.

Critics of the bill, such as the head of the lower chamber’s standing committee for national defence, security, intelligence, and internal order, Pedro Ortíz (ANR-PC), have argued that under the constitution the core mission of the air force is to preserve Paraguay’s territorial integrity, so a suspicious aircraft should only be shot down if it poses a threat to national security. Another ANR-PC deputy, Santiago Benítez, warned that giving the order to shoot down a plane would be tantamount to pronouncing a death sentence. Since Paraguay’s constitution establishes a right to life, with an explicit ban on the death penalty, and a presumption of innocence unless proven guilty, Benítez argued that condemning the pilot and crew of an unknown plane to death would be a breach of due process and a violation of the constitution.

On 8 July the president of the lower house, Raúl Latorre (ANR-PC), posted on social media to celebrate the acquisition of the Super Tucano jets and new radar systems and affirmed Paraguay’s commitment to upholding the “standards of international law, in accordance with what is established in the current legislation”, likely an indirect criticism of Rubin’s bill. Deputies from the ruling party have largely rejected the bill, arguing that the current protocols are enough and highlighting that Paraguay is a signatory of accords such as the Convention on International Civil Aviation, also known as the Chicago Convention, which was first signed in 1944 and established rules such as a ban on the use of weapons against civil aircraft in flight.

The six Super Tucano jets were acquired in a deal worth over US$100m, which was closed in November 2024. The Paraguayan delegation that accompanied President Santiago Peña to the 2024 G20 summit in Rio de Janeiro signed an agreement with Brazil’s state-owned development bank (BNDES) which financed the export of the Embraer jets. According to Paraguayan newspaper Última Hora, the US$100m that was spent on the six planes was part of the Peña administration’s aim to invest US$500m in defence spending. In an article published on 9 July Última Hora cited Rubin as criticising the high cost of the fighter jets which he says should be used to their full potential or should not have been acquired at all.

The rejected bill is unlikely to be the end of the matter. Another opposition lawmaker, Senator Eduardo Nakayama (Independent), has been cited in the press as saying that he will not give up on the initiative. He plans to table new legislation in the upper chamber to allow for suspicious planes to be shot down.

Government U-turn

In July last year, Paraguayan news outlet La Política Online reported that the government of President Santiago Peña had been supportive of legislation to authorise air force jets to open fire on suspicious planes, but the news site suggested that the previous US government under former president Joe Biden (2021-2025) strongly opposed the initiative and the US embassy in Paraguay reportedly pressured the Paraguayan government against the idea. On 8 July 2025 the US embassy in Paraguay shared the post of Paraguay’s lower house president Raúl Latorre which affirmed that the current legislation was sufficient. 

Trinidad & Tobago’s finance minister, Davendranath Tancoo, part of the new United National Congress (UNC) government that took office in May, unveiled the fiscal 2026 budget in October, amid some criticism that revenue targets are over-optimistic.

Total government spending in 2026 is set to be TT$59.23bn (US$8.74bn). With revenues projected at TT$55.37bn, there will be a deficit of TT$3.86bn, equivalent to around 2% of GDP, within what Tancoo described as “the international benchmark of three percent”.

An initial criticism from opposition and independent economists is that the new budget has been built on the optimistic assumption that international oil and gas prices will average US$73.25 per barrel and US$4.35 per million British thermal units (mmBTU) during 2026. Since both are currently priced respectively at US$63.50 and US$3.09, the suggestion is that the new government may experience a revenue squeeze.

The administration has highlighted various budget measures intended to strengthen household incomes. There has been an immediate TT$1 per litre reduction in the price of super gasoline, along with the removal of VAT on various basic food items. From January private pensions will be tax-exempt. Import restrictions on used cars and vans are being eased.

The previous Peoples’ National Movement (PNM) administration (2015-2025) had offered public sector workers a 4% wage improvement. The new UNC administration of Kamla Persad-Bissessar has gone one step further, announcing a 10% increase, including back pay. Tancoo echoed the party’s electoral rhetoric saying, “Promise made, promise kept because when UNC wins, public servants win.” There is also help for farmers with VAT removed on agricultural machinery and other items. A further feature of the 2026 budget is that the smaller island of Tobago will benefit from a larger-than usual share of national spending.

Tancoo announced several tax increases to part-fund his government’s largesse. Employers’ National Insurance System (NIS) contributions will rise 3% in January, with a further 3% due in January 2027. A landlord business surcharge of 2.5%-3.5% of rental income will come into force in January. There will also be an electricity surcharge on commercial and industrial customers, an asset levy on commercial banks and insurance companies, and higher duties on alcohol and cigarettes. Among other measures the government is also introducing a 5% import duty on single use plastics, and a TT$5m Women’s Health Fund to address period poverty and offer free menstrual kits in schools.

True to Trinidad and Tobago’s tradition of adversarial politics, the PNM was cited by daily newspaper Trinidad and Tobago Newsday as describing the government’s budget as “fake and fraudulent”.

The same report, published on 14 October, cites former finance minister Colm Imbert (2015-2025) as saying that the government was aiming to use a loophole to access money from the Heritage and Stabilisation Fund (SSF). He noted that if actual international oil and gas prices fall below budgeted levels, governments can withdraw 60% of the difference from the HSF. Prime Minister Persad-Bissessar denied trying to exploit the loophole, saying her government will not use the “PNM tricks” of the past.

Jobs

A potentially far-reaching change announced by Tancoo is the elimination of the Cepep-URP job programmes, which are to be replaced with “full time better jobs” through a TT$475m employment fund. Cepep (community based environmental protection and enhancement programme) and URP (unemployment relief programme) have been in existence for decades and are widely seen as low productivity “make work” programmes subject to political manipulation and featherbedding. The government will likely be scrutinised on its ability to use the new funding to create more sustainable and productive employment.

The country’s GDP grew by 4.2% in the first nine months of the year compared with the same period of 2010.

The figures come from the governor of the central bank, Héctor Valdez Albizu. He claimed that the performance was “satisfactory” given the unsettled international outlook.

In the first nine months of 2011 the inflation rate was 7.5%, thanks to a surge he said 81%, in the prices of the goods linked to oil. Transport, fuel, electricity and food and drink prices have all increased substantially.

At the end of 2010 the government had forecast that the economy would grow by 5% in 2011 and inflation would be between 8% and 8.5%.

Albizú said that almost three quarters (72%) of the country’s economic sectors increased output in the first nine months of this year. Mining was the clear star, increasing output by 74%. Freezone activity was up by 14% (reflecting a stronger US economy). Agriculture grew nicely (up 6.9%); manufacturing was up 5.7%; while the health and education sectors were both up by over 5%. The laggards were financial services (3.9%); commerce (3.7%) and, somewhat surprisingly, tourism (3.7%).

Albizú said although that the country had entertained 111,469 more foreign visitors in the first nine months of 2011 than it did in the same period of 2010, bringing the total up to 3.3m, there had been no significant increase in the average spend.

Exports were up by 24%, compared with the same period of 2010, thanks to a strong performance from mining and freezones. Imports were up by 16.7%, well down on the 27% rate of increase recorded at this point of 2010. This is extraordinary given the increase in oil prices which means that a third of the country’s import bill (or US$3.44bn in the first nine months of 2011) goes on oil. In the first nine months of 2011, the country’s oil bill was up 34% on the same period of 2010.

Remittance revenues were up by 7.2% in the first nine months, but foreign direct investment was strong, at US$1.835bn, in the first nine months, putting the country on course for a total of at least US$2bn in 2011. This will be the third consecutive year in which FDI will have been above US$2bn.

WTO: On 20 October the World Trade Organization gave a preliminary ruling against the Dominican Republic in its dispute with Central America over its decision to impose 38% duties on Central American exports on plastic bags mostly used to pack food and agricultural products.

The ruling came from a special group set up by the WTO to resolve the dispute which involved Costa Rica, Guatemala, Honduras and El Salvador.

The Dominican Republic imposed the tariff as an anti-dumping measure.  The Central Americans argued that their exports of the packaging materials had not reached a level at which Dominican producers were threatened with bankruptcy.

Third parties such as China, Colombia, the EU, Nicaragua, Panama, Turkey and the US all filed an interest in the case on the side of the Central Americans. Some of these countries (notably Colombia, Mexico and Panama) also saw increase in DR tariffs on their exports of packaging but the increase was lower than that imposed on the Central Americans.

The decision will now go for ratification by the disputes settlement organisation of the WTO. It is expected to rule at the end of this year. By April 2012 all the packaging items originating from Central America will be free of tariffs anyway under the Cafta-DR free trade agreement.

• Albizú said that the financial system was well capitalised with an average solvency ratio of 17%, well above the 10% stipulated by law.

The Movimiento al Socialismo (MAS) government of President Evo Morales is facing one of its worst corruption scandals since the drug-smuggling case implicating the former head of the counter-narcotics force (Felcn), René Sanabria, in March 2011 [WR-11-12]. As well as threatening a new source of tension in US-Bolivia relations (the case involves a US businessman Jacob Ostreicher), it is providing the first real test for Bolivia’s new attorney general, Ramiro Guerrero, whose initial moves as part of his declared crackdown on corruption have done little to inspire confidence among the political opposition.

On 27 November Fernando Rivera Tardío, the former director of legal affairs at the interior ministry, and José Manuel Antezana Pinaya, a senior official in the ministry of the presidency and a member of the directorate of the state-run cardboard company (Cartonbol), were arrested. The two are accused of heading up an extortion ring which, according to Interior Minister Carlos Romero, included a string of officials such as Hugo Franklin Pedraza Suárez, a former inspector from the state agency in charge of seized assets (Dircabi) and Boris Villegas, a former legal director at the interior ministry.

The alleged “mafia” came to light after Ostreicher, who was jailed over a money-laundering investigation 18 months ago (see sidebar), claimed that his incarceration had allowed corrupt officials to extort money from him. According to reports in the international media, Rivera demanded US$50,000 to arrange the release of Ostreicher, who was being held without charge - the Bolivian justice system allows an individual to be held for 18 months without charges. As well as highlighting the congested state of Bolivia’s justice and prison system – where just 16% of prisoners have been convicted and where, at 233%, only El Salvador has a higher rate of overcrowding in the region – the scandal has once again focused attention on anti-corruption efforts.

Since taking office at the end of October [WR-12-44], Guerrero has been clear that stamping out official corruption is a top priority. While there has been mixed progress under the Morales government with regards to this (see sidebar), the continued room for improvement was most recently highlighted in the latest (2012) Corruption Perceptions Index (CPI) compiled by the NGO Transparency International and released on 5 December which ranked Bolivia down at number 105 of a total of 174 countries. It scored just 34 of 100 overall on the CPI index (newly revised this year), but in the region it was still above Mexico, Guatemala, the Dominican Republic, Ecuador, Nicaragua, Honduras, Paraguay, Haiti and Venezuela.

However, Guerrero has done little to assuage doubts raised by the opposition regarding his appointment, given his links to the ruling party [WR-12-44]. One of his initial moves was to replace all nine regional attorneys on an interim basis as part of efforts to purge the institution. But, his appointment of José Angel Ponce as regional attorney for La Paz proved controversial: the opposition accuses Ponce of delaying investigations into the notorious police crackdown in September 2011 against indigenous protesters opposed to the controversial government plan to route a national highway through an indigenous territory (Tioc) and national park, Isiboro Sécure (Tipnis). They also say that the attorney general moved to exclude the former interior minister, Sacha Llorenti, a close Morales ally, from the investigation.

As well as facing the inevitable opposition calls to resign over the interior ministry scandal, Romero, a core member of Morales’ inner circle, is also under pressure vis-à-vis another issue related to the government’s anti-corruption efforts – a bill on confiscation and asset recovery, with which he is closely associated. Ratified by the lower chamber of congress on 1 October and awaiting approval by the senate, the bill, which would permit the confiscation of goods suspected of belonging to those involved in criminal activities such as contraband and narco trafficking, has triggered major protests from Bolivia’s large informal sector, threatening a new source of unrest for the Morales government. Protesters complain that they are being grouped together with more serious criminals, like narco traffickers, and that the initiative violates the presumption of innocence until proven guilty. They also object to the fact that the bill establishes a five-day deadline to prove the legal origin of property or vehicles of those accused of contraband or narco trafficking.

Under pressure, Morales has since said that the initiative would go to the plurinational constitutional court (TCP) for consideration. Yet the controversy over the bill follows other efforts at tackling contraband – particularly related to car theft – indicating what remains a continued problem for the MAS government and to which some consider it may have contributed.

These efforts include the 17 October announcement by Jorge Saravia, the head of Bolivia’s office against car theft, of plans to carry out a “mega-operation” with Argentina, Chile and Brazil to crack down on regional car theft. Morales’ detractors claim that this situation has worsened since the promulgation of a law in June 2011 granting an amnesty to owners of unregistered vehicles (known as chutos, many of them likely stolen), allowing them to pay a moderate fee to obtain legal documents. While Morales argued that the law was necessary to address the problem of chutos and would help poor people improve their status by legally owning a vehicle, the amnesty had an immediate impact in neighbouring countries, with officials in Chile, Brazil and Argentina complaining that the move resulted in a surge in car theft.

Gearing up for the Beni election

The pressure on the MAS over the latest corruption scandal comes as it is gearing up for the gubernatorial election scheduled to take place on 20 January 2012 in Beni – a region traditionally hostile to Morales and the ruling party. The vote was triggered by the resignation of former opposition governor, Ernesto Suárez, who was suspended in December 2011 over corruption allegations which he maintains were politically motivated.  

   The MAS is fielding Jessica Jordan, a former Miss Bolivia who is currently head of the state agency for the development of macro-regions and border areas (Ademaf) in Beni. Jordan, a close ally of Morales and his minister of the presidency, Juan Ramón Quintana, was narrowly defeated in the last regional vote in April 2010 by 40% to 43% for Suárez. She is one of four candidates competing in the regional election. She faces: Pedro Nuni, a dissident MAS national legislator running with the left-wing Movimiento Sin Miedo (MSM) of popular former mayor of La Paz, Juan Del Granado; Ademirzon Algarañaz of the indigenous grouping, Nacer; and Carmelo Lenz Frederiksen, the current deputy governor of Vaca Diez, Beni’s biggest province, who is running for the Frente Único coalition. This comprises Suárez’s Primero Beni, Verdes, which is allied with Santa Cruz governor and Morales’ long-time opponent, Rubén Costas and national parties such as Unidad Nacional (UN), of cement magnate Samuel Doria Medina, Acción Democrática Nacionalista (ADN) and Convergencia Nacional.

   Beni is one of the least populated of Bolivia’s nine regions (accounting for 4.3% of the 8.2m population on the last [2001] census figures) and 2.64% of national GDP in 2011. But, victory for Jordan would give the MAS control of all but one of Bolivia’s nine regions - Santa Cruz.

  As of yet no polls have been released. However, the fragmentation of the opposition and the MAS’s growing presence in the region points to the strength of Jordan’s chances: support has grown from 16.5% in the 2005 presidential election that saw Morales win office for the first time, to 37.7% in the subsequent 2009 presidential election.

• Ostreicher

According to a statement by Jacob Ostreicher’s wife, cited by the US House Committee on Foreign Affairs, Ostreicher went to Bolivia in December 2010 to manage a rice company. After the first harvest under Jacob’s management produced 50 million pounds of rice, “the government proceeded to investigate the properties of the company and realised that one of the properties was previously owned by a man who lived in Bolivia for the past 15 years. This man was wanted in Brazil in the 1990s, but did not have a criminal record in Bolivia… Jacob had nothing to do with this man and was not aware of his prior history. This was the excuse the prosecutors used to gain access to all the assets of the company and to then arrest Jacob on June 3, 2011”. Furthermore “no one in Bolivia knows where the rice is”.

• Mixed results

Last year international anti-corruption NGO Transparency International (TI) gave Bolivia just 2.8 out of 10 (with 10 the best score) – the same as that registered in 2010. This was an improvement on 2.7 recorded in 2009 but a decline on 3.0 in 2008 and 2.9 in 2007. Yet it is worth pointing out that these scores reflect an improvement under the Evo Morales government, which first took office in 2006. That year, the country scored 2.7, up from 2.5 in 2005, 2.2 in 2004, 2.3 in 2003 and 2.2 in 2002.

Upon taking office a year ago (January 2012), President Otto Pérez Molina announced plans to breathe new life into the mining sector. These plans are moving along with the introduction of a new mining law.

Guatemala’s mining sector is dominated by the Marlin gold and silver mine, owned by Canada’s Goldcorp, which remains up and running despite a 2010 ruling by the Inter-American Commission on Human Rights (IACHR) ordering its suspension over environmental concerns [WR-10-25]. In July Pérez Molina lifted the previous administration’s moratorium on the approval of new concessions. This dates back to 2008 when the CC ruled that seven articles in the mining law are unconstitutional, stalling approval of any new licenses until national consensus could be reached on mining reforms.

Then in mid October, Energy & Mining Minister Erick Archila presented a bill to congress contemplating 36 changes to the 1997 mining law, aimed at bringing it up to date and regularising the sector in a bid to attract foreign investment. Among other provisions, the bill increases the amount of royalties paid by mining companies from the current level of just 1% to 2% for ornamental stones; 3% for non-metallic minerals; 3% for basic metals; 5% for precious metals; 3% for semiprecious stones and 5% for precious stones. It provides for the establishment of a state mining company which could own up to 40% of metallic mining companies (although this would require a new law) and a new mining fund to distribute income from royalties. The bill has been slammed by civil society groups for failing to include provisions on community consultations – in line with the International Labour Organization (ILO) Convention 169 on indigenous rights which includes a territory consultation provision. Archila justified the omission saying that it did not fall within the remit of the new law.

With foreign investment in the sector on the up (see sidebar), government efforts to boost the sector (Archila told leading daily el Periódico in September that after two-and-a-half years of not authorising licences, some 100 of 180 pending requests had been resolved since May), have been accompanied by a revival of related unrest. Most recently on 7 December, the police clashed with protesters at the El Tambor gold mine, located between the towns of San Pedro Ayampuc and San José del Golfo, 28km north-east of Guatemala City. Operated by Exploraciones Mineras de Guatemala, S.A, which is owned by US-based Kappes, Cassiday & Associates, the mine received its exploitation licence in November 2011 (despite the moratorium) but operations have been held up since March 2012 by protesters who claim that it will pollute the water supply and  that local communities were not consulted about its potential impact.

Meanwhile, on 19 November, local residents of Mataquescuintla, a town in the south-eastern province of Jalapa, set fire to five vehicles belonging to the Minera San Rafael, a subsidiary of Canada’s Tahoe Resources Inc which is operating the Escobal silver mine. Comprising three exploration concessions granted in 2007, the mine, which also includes gold, lead and zinc deposits, is expected to become one of the world’s top silver producers.

The vandalism followed a community consultation days earlier in which more than 95% of those consulted rejected mining activity in the area. Both cases point to what remains a continued source of social tension in the country: according to a September 2012 report by the social science research group Flacso, between 2005 and 2011 there were more than 4,685 anti-mining protests by local communities who rejected projects in 58 popular consultations in eight departments.

Off the OECD grey list

On 5 December Guatemala’s deputy minister of public finance, Dorval Carías, and Dónal Godfrey, of the Organisation for Economic Co-operation and Development (OECD), signed a Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

This allows Guatemala to be removed from the “grey” list of “countries that have not yet substantially implemented the internationally agreed tax standard”. Guatemala is the second Central American country, after Costa Rica, to sign the agreement since the Convention was opened for signature in June 2011. Carías said this “sends a clear signal to the international community that Guatemala is committed to joining the network of countries that collaborate to fight international tax evasion." Developed jointly by the OECD and the Council of Europe, the Convention provides “a multilateral basis for a wide variety of administrative assistance, including information exchange on request, automatic exchange of information, simultaneous tax examinations and assistance in the collection of tax debts”. end box

Mining

Luis David, the director of the national agency, Invest in Guatemala, recently hailed figures from the central bank (Banguat) according to which the country registered a record US$770.5m in total foreign direct investment (FDI) in the first half of 2012, up 47.2% year-on-year. He singled out mining as one of the sectors attracting most investment. Canada’s Tahoe Resources in May announced plans to invest more than US$500m in the Escobal silver deposit, which it bought from Goldcorp in 2010. According to Banguat figures cited by the social science research group, Flacso, exports of metals and precious stones reached US$941.6m in 2011, up 79.8% on the previous year – the third most important sector after coffee and textiles.

President Evo Morales has claimed recent victories vis-à-vis his coca sí, cocaína no drugs policy (which distinguishes between cocaine and the raw coca leaf – an important symbol of indigenous culture). These include the January 2013 announcement by the UN that Bolivia could rejoin the 1961 Vienna Single Convention on Narcotic Drugs, with a special dispensation recognising coca chewing (acullicu) as legal in Bolivia [WR-13-02]. However, these victories have since been overshadowed by reminders of continued challenges for Morales in securing legitimacy for his policy.

One strategy employed by the government aimed at destigmatising coca has been to promote its non narcotic industrialised uses through the launch of coca-based products like carbonated drinks - Coca Colla and Coca Brynco - which appeared in 2010 and 2011. However, last month, Dionisio Núñez, the deputy minister for coca, admitted that efforts to expand the coca leaf’s legal market were a flop.

Núñez told reporters that a US$2m coca processing factory, built in 2008 with a US$900,000 donation from Venezuela, in Villa Tunari, in the Chapare – one of the country’s two main coca-producing regions along with the Yungas – was largely inoperative. He attributed this to financial problems and poor administration but also a “surprising lack of interest” on the part of Bolivians in coca-based products. According to local press reports, the factory produced 1m bags of “chizitos” (baked coca puffs) in 2011 and 2012 but the only takers were school children who received them for free. Another coca-tea producing factory in La Paz, built with an investment of nearly US$500,000, is also out of action. Javier Valda, director of a government office responsible for supporting indigenous economic organisations, blamed the “surprising lack of interest” on poor publicity and the fact that ecological products are not popular.

The Morales government, which tolerates 20,000 hectares of coca cultivation, is under pressure to curb production given concerns that the crop is being used for the drug trade. The failed efforts to promote the legal industry also coincided with recent reports that farmers are spurning crops like coffee in favour of coca. Early last month, Susana Lima, secretary general of the federation of coffee exporting producers (Fecafeb), told reporters that Bolivia is now exporting 70,000 bags of coffee a year compared with 110,000 in 2005 and the figure is continuing to fall. Attributing this to the lack of government incentives and poor yield, Lima said that farmers were increasingly turning to coca instead (although she failed to provide figures). At the same time it is worth pointing out that despite this, the latest report by the UN Office on Drugs and Crime (UNODC), released in September 2012, revealed production of dry coca leaf fell by 13% between 2010 and 2011 to 48,100 tonnes in 2011, accounting for 15.3% of Bolivia’s agricultural GDP and 1.5% of overall GDP, down from 15.5% and 1.6% respectively in 2010.

Morales has also faced recent challenges to coca eradication efforts. On 28 May clashes took place in Apolo, a municipality in northern La Paz region (one of the smaller coca-growing areas), between coca producers (cocaleros) and members of the joint task force, Fuerza de Tarea Conjunta (FTC) which had been deployed four days earlier to eradicate illegal coca. The clashes, which made national headlines, resulted in 19 people injured, 15 of them peasants. Tensions further escalated when six FTC agents were kidnapped although they have since been released. With the government yet to strike an agreement with the cocaleros, the tensions highlight resistance to another area where Morales has recently claimed success: the UNODC report revealed a 12% year-on-year fall in coca cultivation in Bolivia in 2011 – the first reduction since Morales took office in January 2006. The report revealed coca cultivation in 2011 fell to 27,200 hectares (ha) from 31,000ha in 2010.

• Pressure over coca study

Mechthild Dyckmans, the German anti-drugs commissioner, was the most recent European Union (EU) official to urge the government of President Evo Morales to make public a long-awaited comprehensive study on the legal uses of coca. Work on the EU-funded study began in 2009 and was due for completion the following year. The EU has since urged the Movimento al Socialismo (MAS) government to publish the findings, but this has been delayed on the grounds that further complementary studies are needed.

*** China expands Djibouti security cooperation. As the influence of French and US forces wanes in Djibouti, China is looking to fill the void. Historically, France and the US have been the major players in terms of Djibouti’s military cooperation, but in the last few years that has been changing. In the past, thousands of French and American troops have been stationed in the tiny African country, whose population was only estimated at about 790,000 in 2013. Cooperation has chiefly centred round counter-terrorist and anti-piracy operations. In 2001, after the Djiboutian civil war, the government leased the former French military base Camp Lemonnier to the United States Central Command for operations related to Combined Joint Task Force Horn of Africa (CJTF-HOA). In 2009, Central Command transitioned responsibilities in Africa to AFRICOM. France’s 13th Demi-Brigade of the Foreign Legion is still based in Djibouti, but does not have a presence in the capital, Djibouti City.

Djiboutian President Ismail Omar Guelleh met with Chinese Defence Minister Chang Wanquan who was on an official visit to Djibouti, on 25 February. According to the two officials, Djibouti and China enjoy a close relationship, and their defence departments have generated “abundant fruits in…cooperation in the fields of personnel training, equipment and materials, and naval escorting,” according to Guelleh. “China is ready to support Djibouti to reinforce its military capacities and guarantee its security,” said Chang.

In the past, Chang’s Djiboutian counterpart, Hassan Darar Houffaneh, has appealed “for more military cooperation between his country and China to reinforce the operational capacity of the Djibouti Armed Forces,” in view of Djibouti’s intent to deploy an additional 1,000 soldiers in Somalia, where it already has a contingent of 1,000 troops participating in the African Union Mission to Somalia (AMISOM) to eradicate Al-Shabaab terrorists. “Djibouti is ready to allow Chinese military ships to access its ports,” stated Houffaneh.

ARGENTINA | Unconventional natural gas deposit found in Mendoza. On 2 June Argentina’s state-controlled oil company, Yacimientos Petrolíferos Fiscales (YPF), announced the discovery of a ‘tight gas’ deposit in Paso de las Bardas Norte, a 125km² concession area located in southern Mendoza province.

‘Tight gas’ is usually found trapped in sandstone or limestone, and is conventionally considered distinct from shale gas; however, both resources need hydraulic fracturing (also known as ‘fracking’) to be extracted. YPF put the size of the deposit, found 2.7km deep inside a rock formation, at 70,000m³.

If these estimates are confirmed, they would increase Mendoza’s hydrocarbon reserves by 10%.

In addition, the firm has highlighted that potentially there are also shale oil reserves in the same area. The concession in Paso de las Bardas Norte is exclusively held by YPF, which also owns a complete gas production infrastructure (separation and compression units, along with a gas duct) on the site.

The recently re-nationalised YPF, Argentina’s largest domestic oil and gas producer, is aiming to increase its natural gas output by 14% this year. The company’s main gas extraction site is the Vaca Muerta shale hydrocarbon deposit, in the southern province of Neuquén; but another ‘tight gas’ deposit was recently discovered in the nearby province of Chubut.

Argentina’s attempts to overturn the steady drop in its domestic oil and gas production, caused by years of underinvestment and heavily regulated energy policies, have so far yielded mixed results. An industry report for March, published on 23 May, showed a 0.4% decrease in oil production and a meagre 0.5% increase in natural gas production compared to the same period in 2013. The report also showed that YPF’s success in boosting its oil production by 11% in March was insufficient to reverse the negative trend.

BRAZIL | Growth disappoints. The latest GDP figures, published on 30 May, showed that Brazil’s first quarter growth was just 0.2% quarter-on-quarter (and a mere 0.8% year-on-year). Market economists have sharply downgraded their outlook for Brazilian growth this year to just 1.5% from an already-anaemic 1.63%, according to a weekly survey of about 100 economists conducted by the central bank.

Speaking on 3 June, President Dilma Rousseff was at a loss to explain the slow growth. “You can't explain why Brazil isn’t growing faster. All conditions point to Brazil not only growing, but growing well. There seems to be an ill mood toward Brazil today. I don't know why.”

URUGUAY | Exports on the rise. Uruguay exported US$1.12bn worth of goods and services in May, a 7.8% increase on the same month last year, according to the latest report of the national investment and exports promotion institute, Uruguay XXI, published on 3 June. The May export figure brings the total value of the country’s exports (excluding the ones destined to free trade zones) in the first five months of the year to US$4bn, which represents a 5% increase over the same period of 2013.

Between January and May, Uruguay’s main export commodity was soy, which accounted for 23% of all exports, followed by frozen beef (11%); milk and cream (5.7%); rice (5.4%); and unprocessed wood (4.6%). However, the report attributes the strong export figures registered in the first five months of the year to a significant increase in wheat exports (182%), thanks to a comparatively better harvest than last year.

The primary destinations for Uruguayan exports were Brazil (16.2% of the total); China (14.4%); and the free trade zone of Nueva Palmira, a commercial port located next to the mouth of the Uruguay River (14.2%). Smaller quantities of goods (under 6%) were shipped to Venezuela, Argentina, the US and Germany.

As for imports, the report emphasises that these also increased both in May - 9.9%, for a total of US$845m - and in the January-May period (2.9%, US$3.98bn). So far, Uruguay’s main imports this year are mobile phones (4.4%); electrical generators (4.3%); passenger vehicles (4.3%); car parts (2.7%); and commercial vehicles (2.6%). China, Brazil, Argentina and the US provided the lion’s share of Uruguay’s imports (respectively 21.8%; 17.1%; 14.8%; and 8.9%).

• Uruguay inflation slowing

Uruguay’s inflation for May was 0.32%, according to the national statistics institute (INE). Accumulated inflation over the last 12 months now stands at 9.18%, falling back from the double-digit territory policymakers have been desperately trying to avoid entering, with the economy ministry carrying out a series of measures designed to arrest it, including reductions in value-added tax (VAT) for fruit and vegetables; and reduced electricity tariffs and telephone bills [WR-14-15].

MEXICO | Crime in DF down, highly localised. The public security secretariat of the federal district (Mexico City, DF) reported in early April that crime across the board in the first quarter of this year was down 15.7%, and that police had been able to arrest 35,876 suspects (21% of them charged with high-impact crimes) and disrupt 926 criminal ‘cells’ and 436 criminal bands.

The report notes that five of the city’s 16 delegaciones (districts) accounted for 75% of all crimes, and that the most frequent offences there had been holdups, robbery in public transport and robbery in homes, all of them with violence. The five delegaciones are Coyoacán (accounting for 22% of all crimes), Gustavo A Madero (15%), Iztapalapa (14%), Venustiano Carranza (12%) and Cuauhtémoc (12%). The authorities have announced that they will be boosting police presence in all five, raising the number of officers by 10% in investigations and 15% in prevention.

It is worth noting that in 2014 the DF recorded 749 homicides, which in absolute numbers placed it sixth place countrywide, but with its large population that translates into a rate of 8.5 per 100,000 inhabitants, which ranks it 20th among Mexico’s 32 federal entities. The capital is also among the 16 entities with a homicide rate below the conventional ‘epidemic’ threshold.

MEXICO-US | The threat of OFAC blacklisting. More than 200 Mexican firms and almost 400 persons have been ‘designated’ (blacklisted) by the US Treasury’s Office of Foreign Assets Control (OFAC) for suspected links with criminal activities. The newspaper El Universal reported in 7 April that OFAC has failed to point out that over the past six years 105 Mexican firms have been removed from the ‘designated’ list.

Most of those who took the ‘tortuous and exhausting’ path to clear their names began to work on that in 2005-2006. It wasn’t until 2013-2014 that 64 individuals and 41 firms managed to get their names removed.

El Universal highlights the case of 15 Mexican companies and 24 individuals blacklisted in January 2005 as a cell of the Arellano Félix cartel charged with having ‘laundered more than US$120m in proceeds from drug trafficking.’ All of these names had been erased three years ago.

The newspaper raises the alarm at the prospect that the Mexican government might blacklist companies at home who have been ‘designated’ by OFAC. In April last year Mexican finance minister Luis Videgaray said in Washington that his office would be drawing up a list of its own based on the OFAC blacklist and barring those listed from conducting any business with banks or any financial institutions regulated by the finance ministry.

MEXICO | Narcos ‘infiltrated marines in Michoacán’. The news agency Reforma reported in early April that 15 marines based in Lázaro Cardenas, Michoacán, had been charged last year before a military court with fostering drug trafficking and treason. They were accused of having become informants for Los Caballeros Templarios (LCT), recruited by a marine deserter.

This person, José Luis Murguía Márquez (‘el Lic’) was arrested in April last year when found in possession of an AK-47 rifle and ammunition, and allegedly volunteered information to his captors which he had picked up from his role as a liaison between the LCT and the marine informants.

A federal court, says the report, challenged the charges filed by the military procurator and granted an injunction to six of the accused, one of whom has already been freed.

Peru and Chile will hold their first binational cabinet meeting in July 2017. This was the standout announcement to come out of talks held between Chile’s President Michelle Bachelet and her Peruvian peer Pedro Pablo Kuczynski in Santiago on 29 November. The two heads of state prioritised deepening bilateral cooperation and integration in the face of a global drift towards more protectionist trade policies.

Binational cabinets have become all the rage among Andean nations (Peru, for instance, has held them with Bolivia, Colombia and Ecuador in recent years) and both Presidents Bachelet and Kuczynski were keen to stress that a Chile-Peru meeting would deepen mutual confidence and cooperation, facilitating dialogue and decision making at the highest level. They also signed an accord to enhance interinstitutional cooperation. Bachelet said that “bilateral meetings will be reactivated over the economy, trade, mining, science, technology & innovation, border integration, combating drug-trafficking, culture, security, defence, tourism and natural disasters”. The foreign affairs commissions of Chile’s senate and Peru’s congress will meet in January next year.

Kuczynski said it was imperative that both countries work together to confront the “protectionist challenge” taking shape globally. Both heads of state agreed to work to deepen trade relations through the Pacific Alliance trade bloc, along with Colombia and Mexico, to achieve “the insertion of both economies in the global market, especially the Asia-Pacific area”.

• Deepening integration

Presidents Bachelet and Kuczynski instructed their respective energy ministries to prepare a regulatory model and studies into electricity interconnection between Chile and Peru. This would involve the construction of a 300MW power line stretching 70km between Chile’s northernmost city of Arica and Peru’s southern city of Tacna. They also agreed to discuss the rehabilitation, operation and maintenance of a railway line between Arica and Tacna during the bilateral cabinet meeting next July.

“Marcelo Crivella got there. After three years in office, he has officially become Rio’s most unpopular mayor in recent decades,” columnist Bernardo Mello Franco wrote in the Rio de Janeiro-based Brazilian daily O Globo on 15 December. This crushing assessment was based on the results of a Datafolha poll, published in full the following day, which put Crivella’s disapproval rating at 72%.

Crivella, a former evangelical bishop, was elected mayor of Rio de Janeiro in 2016 on the wave of dissatisfaction and political conservatism that followed the impeachment of Dilma Rousseff (2011-2016). His stint as mayor of Brazil’s most emblematic city has been anything but smooth, and he has already survived several impeachment proceedings. Recently, his standing slid even further following a series of gaffes, including his response to the paralysis of 24 municipal health centres as workers protested a delay in salary payments. 

“There is no crisis – it’s false,” Crivella said in a video published online on 12 December. The municipal health sector workers, who had been protesting since 10 December to demand the payment of salaries delayed by two months, no doubt disagreed. So too, it seemed, did most of the Rio city inhabitants surveyed for the Datafolha poll, which was carried out between 11 and 13 December. As many as 68% cited health as the city’s principal problem, compared with 27% in October 2017 (violence/security was the second biggest concern, for 12%).

Crivella himself approached the federal government in Brasília last week for help, and on 13 December the federal health ministry released R$152m (US$37.3m) in emergency assistance for Rio city’s health sector, specifically for the payment of salaries. The municipality received a first instalment of R$76m immediately, with the balance due in January.

Yet a few days later, on 16 December, a municipal resolution suspended all the treasury’s activities until further notice. In practice this means that salaries for all municipal public workers, including the second instalment of the so-called ‘13^th salary’ bonus that was due to be disbursed on 17 December, cannot be paid. Even before this setback, health workers had said they would only return to work once their salaries had entered their bank accounts.  

Looking to 2020

Crivella’s high rejection rates and one-digit approval rating (8%) do not bode well for his prospects in next year’s municipal elections, in which he is expected to seek a second term. Notably, his support is low even amongst the demographic he represents: evangelical Christians. Approval of Crivella amongst evangelicals stands at 14%, while rejection remains high at 56%.

Next October’s mayoral election is still a while off. But in all three scenarios proposed by Datafolha, Crivella representing the Republicanos party comes a distant third with 8-9% of voting intentions, trailing his centrist predecessor Eduardo Paes (Democratas, DEM) and leftist federal deputy Marcelo Freixo (Partido Socialismo e Liberdade, Psol).

Crivella is expected to seek help from President Jair Bolsonaro to bolster his image. Unlike Crivella, Bolsonaro still holds the support of the evangelical voters who carried him to the presidency. However, Bolsonaro has not yet given any indication of where he will distribute his political capital next year, and with the municipal elections taken as a measure of support for the federal government, he will likely be cautious when doing so and choose to back strong candidates.  

Jerusalem trade office

On 15 December President Bolsonaro’s government inaugurated a new trade office for its exports and investment promotion agency (Apex) in Jerusalem, Israel. Since becoming president, Bolsonaro has gone back on plans to transfer the Brazilian embassy from Tel Aviv to Jerusalem, faced with the risk of a backlash to Brazil’s trade with Arab countries. But his son Eduardo Bolsonaro, a federal deputy who attended the opening ceremony of the Apex office in Jerusalem, insisted that the transfer of the embassy was still on the cards.

Globo

Marcelo Crivella came under fire for banning journalists from the Grupo Globo media group from the press conference during which federal health sector aid to the municipality of Rio de Janeiro was announced on 13 December. The mayoral office told news site UOL that Globo did not practice “serious journalism” and acted like a “political pamphlet”. Globo’s media outlets had been reporting on bed shortages in hospitals and delayed health sector salaries. The media group condemned Crivella’s “antidemocratic and authoritarian attitude.”

Moves to reopen the Caribbean to tourism are gathering pace. There is no pretence that there will be a return to pre-coronavirus (Covid 19) normality any time soon, but in a desperate situation it is at least fortuitous that the peak Caribbean tourism season runs from October to April.

In last month’s issue [EB-20-05] we reported on forecasts from the Inter-American Development Bank (IDB) about the likely impact of the pandemic on some of the main tourism-dependent countries of the Caribbean. As we noted, of the 25 most tourism-dependent countries in the world, no less than 12 are in the Caribbean.

In order to estimate the possible impact of the crisis, the IDB posited three time horizons for the shutdown, that is through end-June 2020, end-September 2020, and end-December 2020. It also looked at the effect of three levels of shock over these time horizons, namely a 25%, 50%, or 75% loss of tourism activity. In the worst-case scenario, a 75% loss of tourism activity lasting through to end-December, the IDB estimated that The Bahamas would lose 10.5 percentage points of GDP relative to the pre-crisis baseline estimates for 2020. For Barbados, the estimated loss was 6.5 percentage points, and for Jamaica 5.4, reflecting the relative importance of tourism to each country.

A month on from our last report, it is clear that the shutdown will last beyond end-June, but a gradual reopening is just beginning, clearly with the aim of enabling a reasonable level of normality by the time the Caribbean’s high season begins.

Among the early movers have been Antigua & Barbuda and St Lucia, both of which reopened their airports on 4 June. American Airlines indicated that it was restarting flights to Antigua from that day, but it will not begin flights from Miami, Florida, to St Lucia until 7 July. Delta (from Atlanta) and JetBlue (from New York’s JFK) have indicated a similar timescale.

To begin with the reopenings are only partial. St Lucia, for instance, has set strict criteria for hotels to begin accepting guests again, and any arrivals who are not booked into a certified hotel will have to self-isolate for 14 days. Nor, until at least 31 July, will any tourist attractions be open. Restaurants will offer only a takeaway service. It is intended that these restrictions will be slowly eased over three phases, with the second one beginning on 1 August and the third on 1 October.

Barbados and Grenada are being more cautious, with their airports closed until 30 June and no absolute certainty that their borders will reopen then. Jamaica, however, is reopening its borders from 15 June with health screening for visitors and requirements for social distancing and the wearing of face masks in public.

Jamaica has come up with a detailed 100-page rule book on health and safety protocols, with Tourism Minister Edmund Bartlett describing the requirements as “perhaps the most rigorous set available anywhere in the world to protect our workers and the whole country”.

The Bahamas is also looking for a phased reopening of its tourism industry from 15 June, and it too has produced a detailed plan of action – The Bahamas Tourism Readiness and Recovery Plan – which was made public on 2 June. The action plan provides a sobering reminder of both the importance and the complexity of struggle to reopen the tourism industry. As the report highlights, tourism accounts for roughly 50% of the country’s GDP and nearly 70% of employment.

As of 10 May, the report tells us, more than 25,000 Bahamians had been laid off or lost their income as a result of the crisis, with unemployment in the near term estimated to be more than 30%. Measures to counteract these effects were estimated to have cost the government more than US$120m by end-May, and the report estimates that the local economy will shrink by as much as 14% to 20% overall in 2020, which is worse than the IDB’s initial forecasts.

According to the introduction to the action plan, the purpose of the recovery blueprint is to propose “changes to protocols and procedures to facilitate a seamless transition into an augmented, highly sanitary post-Covid-19 travel and tourism industry”.

The plan has two main intentions. The first is to provide instructions for the domestic industry on how to make The Bahamas a safe yet still enjoyable destination. The second is to “provide external markets…with the confidence and understanding that The Bahamas is deploying an approved comprehensive strategy, aligned with international, regional and local standards and best practices, to reopen the destination, in a safe and healthy manner”.

As the report puts it: “As a tourism dependent destination, our ability to propel ourselves to ‘top of mind’ amidst a cacophony of competitors (regional and international), each vying for the same depleted demand market, is essential to the restoration of our tourism industry. Other regional tourism destinations are initiating their own tourism recovery plans; The Bahamas must be a forerunner in this effort”.

The blueprint is a phased one, with a full reopening planned for 1 July. According to Tourism Minister Dionisio D’Aguilar: “This phased approach will begin on June 15 when boaters, yachters and private aviation will once again be invited to experience our destination. We will begin with these smaller special interest groups as they provide a more controlled segment to test our measures. They all will pre-register electronically, allowing health officials to determine their risk level. Also, during this phase, commercial airlines will be allowed to bring in Bahamian citizens, legal residents, homeowners, or their immediate family members. All returning persons will be required to obtain a molecular swab PCR Covid-19 test with a negative result”.

The plan requires the country’s airports to impose enhanced sanitisation and to implement temperature screening for all incoming passengers. Passengers will also be required to wear face masks when transiting the terminals and to travel with medical certificates indicating good health. Passenger travel histories will also be scrutinised. There will be floor markers to keep passengers a safe distance apart from one another, and there will be plexiglass partitions to protect airport officials from passengers. Similar measures will be imposed for seaports. With regard to hotels, staff will be required to wear face masks at all times and gloves for certain operations, such as housekeeping. Only four guests at a time will be allowed into elevators, and floors throughout hotels will be marked to ensure social distancing is maintained.

The effort involved in all this will be immense, and it will certainly change the visitor’s experience. But, realistically, The Bahamas (and much of the rest of the Caribbean) has no option, and not just because of its dependence on the tourism trade but also because the huge majority (82%) of its visitors are from the US which is one of the countries that has experienced the highest numbers of Covid-19 cases and deaths. The measures will be as necessary for protecting the local population as for resurrecting the tourism industry.