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BRASIL | Huelga en Petrobrás. Los trabajadores de la empresa petrolera estatal de Brasil, Petrobrás, fueron a la huelga el 1 de noviembre sobre pagos y el futuro de compañia. La huelga ha provocado una caída del 13% en la producción diaria de petróleo en Brasil. El 10 de noviembre, Petrobrás emitió una nota declarando que su producción había caído por 115.000 barriles por día, debido a la huelga de los trabajadores en la Cuenca Campos, afuera de las costas de la ciudad de Rio de Janeiro, donde está localizado el 80% del petróleo de Brasil.

La compañía petrolera ha buscado asegurar a sus consumidores que la huelga no amenaza a las provisiones de energía del país. Sin embargo, sí advirtió sobre las consecuencias económicas de la huelga. “Con la pérdida de producción, la recolección de impuestos que van hacia la unión federal, los estados y municipalidades […] será afectada directamente”, dijo.

Los trabajadores están exigiendo un aumento de salarios por arriba de la inflación, y han rechazado una oferta de un aumento del 8,1% de Petrobrás. La inflación actualmente es de un poco menos del 10%. Los sindicatos tampoco están contentos ante la negativa de Petrobrás de mantener conversaciones sobre su plan de desinversión y de su práctica de firmar contratos con compañas externas para realizar varias tareas. Además de suspender temporalmente algunas inversiones en refinerías y otras plantas bajo construcción, Petrobrás también está considerando vender activos por un valor de hasta US$15,1mm entre el 2015 y el 2016, en Brasil y en el exterior.

Petrobrás canceló las conversaciones con los líderes del sindicato petrolero Federação Única dos Petroleiros (FUP), que estaban programadas para el 10 de  noviembre, para tratar de poner fin a la huelga. La FUP difundió una combativa declaración el mismo día, diciendo que “este es el momento de intensificar [la huelga]”. La declaración afirma que Petrobrás minimizaba la reducción en la producción de las refinerías causada por la huelga estimando que podría sumar unos 2m de barriles en total hasta ahora, por un valor de R$400m (US$106m).

URUGUAY | Estimulando el comercio exterior. El Presidente Tabaré Vázquez retornó a Uruguay esta semana, de un viaje de 10 días a Francia y Japón, donde él firmó una serie de acuerdos para estimular el comercio y la inversión. Hay un ámbito significativo para incrementar el comercio con Japón en particular. Las exportaciones uruguayas a Japón llegaron a sólo US$8,8m en el 2010, cuando Vázquez completó su primer mandato en el poder, y solamente se han incrementado a US$13m en el 2014. El ministro de economía & finanzas, Danilo Astori, quien formó parte de la delegación visitantes, busca atraer la inversión japonesa a Uruguay, especialmente en el cultivo del arroz, la tecnología, y en el sector de servicios. El congreso de Uruguay está a punto de ratificar un tratado de protección de las inversiones firmado por los dos países a finales de año. Pero Vázquez fue frustrado en su esperanza de concretar un acuerdo con el Primer Ministro de Japón, Shinzo Abe, con quien se reunió el 6 de noviembre, para abrir el mercado del país asiático a las exportaciones de carne de Uruguay. Abe dijo que permanecen algunos pocos “aspectos técnicos” que necesitan ser resueltos, pero sugirió que la apertura solamente era una cuestión de tiempo.

Vázquez, un oncólogo de profesión, comenzó su visita a Japón hablando en una conferencia en la universidad privada jesuíta de investigación en Tokyo, Sofia, donde él dijo que la política y ciencia que podrían “trabajar juntos” para combatir problemas tales como el cáncer y fumar. El describió que el hábito de fumar es “la más brutal pandemia que la humanidad ha sufrido”, alegando que las enfermedades causadas por fumar –cardiovasculares, pulmonares, y el cáncer– “causan 8m de muertes en todo el mundo, cada año, más que el número de personas quienes perecieron en la Segunda Guerra Mundial”. Sin embargo, Vázquez enfatizó que era “muy difícil luchar contra los arraigados intereses económicos de los productores y vendedores de cigarrillos” (ver abajo).

• Fumar

El Presidente Tabaré Vázquez libró una cruzada contra el hábito de fumar durante su primer mandato en el poder, cuando Uruguay se convirtió en el primer país en América Latina en prohibir fumar en lugares públicos cerrados. Su gobierno puso en vigencia la legislación que exige grandes advertencias en los paquetes de cigarrillos y prohibió la venta de aquellos cigarrillos marcados como ‘light’ o ‘ultra light’. Esto condujo a una seria disputa legal con el gigante del tabaco, Philip Morris International (PMI), la cual sostiene que las restricciones impuestas por el gobierno uruguayo dañan su negocio y violaban el acuerdo comercial de Uruguay con Suiza, donde está la sede de PMI.

Last month President Jimmy Morales marked the first six months since his small, conservative Frente de Convergencia Nacional (FCN-Nación) government took office. He cited as one of his biggest achievements, efforts to contain spending, which he claimed had produced over Q$1.2bn (US$158m) in savings which were then reinvested in priority areas of health, education and security. His claims of progress were nonetheless overshadowed by protests by public sector workers as well as more signs of cabinet instability.

In a general address to the nation on 14 July, President Morales cited various achievements by his FCN-Nación government. As regards security, where he recently announced that the military would continue to support the police (PNC) in domestic security tasks, he claimed that the authorities had dismantled 43 criminal gangs and arrested 429 suspected delinquents responsible for assassinations and extortions. While failing to provide absolute figures, he also said that there were 212 less cases of shoplifting and motorcycle theft and 70 less cases of vehicle theft compared with the first half of 2015. In June, President Morales had pointed to a report by the independent human-rights NGO Grupo de Apoyo Mutuo (GAM) which showed that homicides in the first five months of 2016 reached 2,250 – down 5.1% on the same period in 2015.

As regards future security priorities, he highlighted the need for prison reform – an issue which made headlines following a shoot-out in El Pavón prison (see sidebar). Specifically, President Morales announced plans to open three new prisons in the country, which currently has 22 prisons with a total capacity of 6,000 detainees (although the current population exceeds 20,000). The new prisons will be located in Villa Nueva and Amatitlán, with the location of the third to be confirmed.

As regards education, President Morales claimed that his government has invested Q$677.3m in school meals, school supplies, and scholarships, benefitting a total of 5.8m children. In terms of health – which last year the human rights ombudsman declared to be in an unprecedented state of crisis – some Q$11.8m has been spent on paying delayed salaries to resident doctors, medical supplies, and reactivating outpatients’ services in 13 hospitals, which has had a direct impact on six million people. More generally, in his address to the nation, President Morales claimed that while when he took office provision of medical and surgical equipment nationwide was at just 55%, this had now increased to 72.37%. With Health Minister Alfonso Cabrera having since quit (see box) – indicative of the challenges facing the portfolio – President Morales remains under pressure to address these crises in the face of protests from public sector workers (see sidebar).

More resignations

Cabrera announced his resignation on 20 July, less than a month after Rodolfo Zea, a deputy health minister, announced he was quitting, on 30 June. Cabrera cited “personal reasons” but the local press was quick to note that the 158-member unicameral legislature was planning to summon him for questioning in relation to his failure to address the health crisis.

Cabrera becomes Morales’ third minister to step down since his government took office. In January, Communications and Infrastructure minister Sherry Ordóñez quit after just 11 days in the job over an alleged conflict of interest [RC-16-02]. Four months later, Energy and Mining (MEM) minister Juan Pelayo Castañón, stepped down – a move linked by the local media to a dispute over the ‘El Tambor’ gold mine.

Morales has since named Lucrecia Hernández Mack as Cabrera’s replacement, an appointment which has been very well received: she is the daughter of Myrna Mack, a local anthropologist murdered by the military in 1990 for her exposure of atrocities committed during the 1960-1996 civil war. A trained doctor, Hernández served as a consultant for the Pan American Health Organisation (PAHO) in Guatemala; she teaches at the private Universidad Rafael Landívar (URL) and has been active in the anti-corruption protests that have taken place in the past few months. These were in response to the massive government corruption scandals uncovered by the United Nations-backed International Commission against Impunity in Guatemala (Cicig) and the attorney general’s office (AG) which ultimately forced former president Otto Pérez Molina (Partido Patriota [PP], 2012-2015) and his vice-president, Roxana Baldetti, to stand down.

Líder loses legal status

On 25 July, Guatemala’s supreme electoral court (TSE) canceled the status of opposition party, Libertad Democrática Renovada (Líder), which had fielded its founder, populist businessman Manuel Baldizón in the 2015 general elections. (Baldizón has since quit politics after coming a narrow third.) By way of explanation, TSE president Mario Valenzuela said that Líder had exceeded the Q$58.2m campaign spending limit by more than Q$1.5m. The TSE’s decision came 11 days after Mirador Electoral, a group of civil-society organisations, presented the TSE with its report on the election.

The legislative presence of Líder – which was set up in 2010 by Baldizón, who split from the Unidad Nacional de la Esperanza (UNE) party of former president Alvaro Colom (2008-2012) – has shrunk considerably since President Morales assumed power, once again indicative of the widespread practice of ‘transfugismo’ (legislators switching parties). At the time of Valenzuela’s announcement, the party had just four seats in congress – down from the 20 it won in the 2015 general elections. Meanwhile Morales’ FCN-Nación won ten seats in the elections but now has 37, ahead of the UNE which has 31 (down from 47).

As well as highlighting local parties’ perennial lack of respect for electoral legislation, the TSE’s ruling against Líder comes as the issue of campaign finance has remained firmly in the spotlight following reports of the “macro-criminal structure that had co-opted power” revealed in June which was allegedly headed up by Pérez Molina and Baldetti [RC-16-06].

• Shootout in El Pavón

On 18 July, a fight broke out in El Pavón prison, which resulted in 14 deaths – including that of (Ret) General Byron Lima Oliva, widely considered one of the country’s most powerful imprisoned figures. Lima was convicted in 2001 for the 1998 death of Bishop Juan Gerardi, the head of the local Roman Catholic Church’s human rights office (Odhag), murdered two days after the release of a report accusing the military of atrocities committed during the 1960-1996 civil war. While the interior ministry initially attributed the incident to a power struggle between rival groups of prisoners for control of the prison, investigative daily El Periódico cited Lima’s brother, Luis Alberto Lima Oliva, as describing it as a “state crime”, claiming that “sources from the executive” had informed him ten days earlier of a plan to assassinate his brother.

• Protests

On 14 July, several thousand demonstrators took to the streets in Guatemala City in protests called by the powerful teachers’ union, Sindicato de Trabajadores de la Educación de Guatemala (Steg) and other unions like Asamblea Nacional del Magisterio (ANM) and the umbrella Frente Nacional de Lucha (FNL), over demands for more spending on education and better public services. The previous day, health care workers, led by the Sindicato Nacional de Trabajadores de Salud de Guatemala (SNTSG), similarly held protests both in the capital and across the country, including the departments of El Progreso, Retalhuleu, San Marcos, Petén, Zacapa, and Jutiapa, calling for the government to address the health sector crisis.

*** NEW BAHAMAS GOVERNMENT SAYS “CUPBOARD LEFT BARE”. The new Bahamas Free National Movement (FNM) government has made some unwelcome discoveries about the nation’s finances since its landslide victory over the Progressive Liberal Party (PLP) in the 10 May general election.

Speaking in the House of Assembly on 31 May, Minister of Finance Peter Turnquest said: “Our predecessor’s literally left us with a cupboard that is bare.” He said that while the previous government had forecast a fiscal deficit of $100m (the Bahamian dollar is pegged to the US dollar on a one-to-one basis), the outcome for the current fiscal year was going to be more like $500m. As Turnquest put it: “That is an astonishing five times the budget forecast of only 12 months ago.” The Bahamas fiscal year runs from 1 July to 30 June.

Turnquest was only exaggerating slightly, and it appears that projected revenue is likely to be down on budget by $216m, recurrent expenditure up by $137m, and capital expenditure up by $68m. The government has been forced to borrow $400m to finance the 2016/17 shortfall, and it has borrowed a further $322.4m for the 2017/18 fiscal year. Total government debt for the end of 2016/17 is expected to be $6.5bn, which is 71.5% of GDP. To add insult to injury, Turnquest says that the PLP government left behind more than $300m of unpaid bills.

No doubt the FNM is right to point to incompetence, but bad luck also played its part in the PLP’s dismal record. In 2012, it inherited an economy growing at 3.1% annually, but this dropped to zero in 2013 and there then followed two years of recession (-0.5% in 2014, and -0.7% in 2015). The marginal return to growth in 2016 was then hit by the effects of Hurricane Matthew, which struck in October 2016 and curtailed economic activity. With an election due in May 2017, it would have taken singular determination on behalf of the PLP government to maintain fiscal discipline during its last year in office.

Not surprisingly, the new government has gone silent on its campaign pledge to reduce or remove VAT on necessities.

*** ST LUCIA SEES PROGRESS ON UNEMPLOYMENT. The United Workers’ Party (UWP) government led by Prime Minister Allan Chastanet has now been in power for almost exactly a year. Over the past decade unemployment has become the biggest economic and social issue for St Lucia, climbing from 14% in 2007 to over 20%. The UWP government has set itself the relatively modest goal of getting unemployment down to 15% by 2021, and on the evidence of the first quarter of 2017 it is making a little progress.

According to the latest figures from the Department of Statistics, unemployment has dropped from 22.1% in the first quarter of 2016 to 20.1% in the same period this year. But given how serious youth unemployment, particularly male youth unemployment remains, there is little cause for celebration.

The prime minister said: “The government is equally concerned about the latest figures as it relates to young men with the youth unemployment rate rising among males in the first quarter from 35.3% in 2016 to 41.6% in 2017.” The position for young women is slightly better, with the rate decreasing from 39.2% in Q1 2016 to 35.6% in Q1 2017.

Chastanet promised: “We are currently working on a comprehensive incentives package which will create employment within the private sector and provide much needed support to businesses within St Lucia.”

The United Nations Office on Drugs and Crime (Unodc) last week released its latest Coca Crop Monitoring Survey on Bolivia which showed that, after five years of continuous reduction (2011-2015), last year coca bush cultivation was up by 14%. The figures are a setback for President Evo Morales, whose government pursues a drugs policy of ‘Coca Sí, Cocaína No’ (distinguishing between the raw coca leaf, an important symbol of indigenous culture, and cocaine, the illegal narcotic).

The latest figures are of particular concern given that in March Morales promulgated a new law raising the amount of coca permitted to be grown legally to 22,000 hectares (ha) (up from 12,000ha designated by the previous 1988 law). This had already raised eyebrows among institutions like the European Union (EU) (which has stepped up anti-drugs cooperation with Bolivia since the US Drug Enforcement Administration was ejected in 2008) as a 2013 EU-funded study on the legal uses of coca in Bolivia found 14,705ha should be sufficient to meet traditional demand.

Presented on 19 July, the Unodc’s latest report showed the surface area under coca cultivation increased from 20,200ha to 23,100ha. Two main areas of cultivation, concentrated in Los Yungas (La Paz department) and the Chapare (Cochabamba department), accounted for 68% and 31% of the areas under cultivation in the country respectively while the Norte de La Paz provinces accounted for 1%. While the survey detected a net increase of 2,900ha of coca bush cultivation in 2016, the Bolivian government also reported a 40% reduction in eradication of illegal coca crops from 11,020ha to 6,577ha.

The findings led the Unodc representative in Bolivia, Antonino De Leo, to express concern, particularly given the volume of coca leaves traded in Bolivia’s two authorised coca markets, Villa Fatima and Sacaba, was around 22,000 tonnes (t) in 2016. This is equivalent to 58% of the estimated total production, with the remaining 42% believed to be destined for cocaine production. This is a decline from 2015 when 35% was believed to be destined for narco-trafficking.

The Unodc report has left the Movimiento al Socialismo (MAS) government on the defensive, particularly given earlier efforts to provide assurances regarding the approval of the March law. As part of these efforts, also in March, the MAS-controlled bicameral legislature had approved a new law against illicit trafficking of controlled substances, permitting the seizure, confiscation and forfeiture of assets related to drug trafficking crimes and illicit enrichment. It also aims to strengthen the authorities’ ability to combat these crimes by allowing them to use tools such as wiretapping and payment of informants, among other things, to investigate these cases.

Alternatives to coca

Weeks before the Unodc released its latest report, on 23 June Erlan Oropeza, the director of the national alternative development fund (Fonadal), announced that this year the government will invest B$125m (US$18m) in 100 productive and infrastructure projects to benefit 30,000 families in providing alternative livelihoods to growing coca.

Oropeza said that these projects would be carried out in agricultural sub-sectors such as bananas, pineapple, coffee, and beekeeping, with funds also going on infrastructure projects such as the construction of bridges, schools, and potable water connections. Oropoeza said that of these 100 projects, 40 are earmarked for Cochabamba, 40 for the Yungas and 20 in departments of Cochabamba, Potosí, La Paz, Oruro and Chuquisaca.

• Seizures

The latest Coca Crop Monitoring Survey on Bolivia released by the Unodc showed that while coca leaf and cocaine paste seizures fell by 2% and 4%, respectively, from 362t to 353t and from around 12.7t to 12.2t, seizures of cocaine hydrochloride increased by 107%, from around 8.6t to 17.7t.

The Honduran national electoral council (CNE) and the foreign minister, Lisandro Rosales, made an “urgent appeal” on 29 January to all political parties to “strictly comply” with biosecurity measures. The admonition followed the formal launch of the country’s primary election campaign on 23 January when several events were held in which precandidates and party activists were seen without wearing facemasks. Primary elections are scheduled to take place on 14 March, with presidential and congressional elections not due to be held until 28 November.

The CNE required the parties holding primary elections to submit a programme of events and gatherings to the body for approval in a bid to avert a surge in cases of coronavirus (Covid-19) during the electoral campaign. Indoor events will be limited to no more than 50 people and 30% capacity of the venue to try and reduce the risk of transmission of infections.

Three political parties are holding primary elections: the ruling right-wing Partido Nacional (PN), the PN’s traditional rival, the centrist Partido Liberal (PL), and the left-wing Libertad y Refundación (Libre), an offshoot from the PL formed by former president Manuel Zelaya (2005-2009). The last time the PL won the presidency was through Zelaya but the party divided acrimoniously when he lurched leftwards and was removed in a coup after the political and judicial elite, and the military, closed ranks.

The PL primary contest features Luis Zelaya, the party’s presidential candidate in 2017, Darío Banegas, a congressional deputy, and Yani Rosenthal, a former cabinet minister who only returned to Honduras in August 2020 after having served three years in prison in the US for money laundering and links to drug trafficking. The PL is a weakened force. Zelaya mustered just 15% of the vote in 2017. The PL’s division with Libre has allowed the PN to consolidate itself in power, winning three straight terms since 2009, the last two through President Juan Orlando Hernández. The Hernández administration has been dogged by corruption allegations and the president himself has faced allegations of links to drug-trafficking groups, which have tarnished his reputation and could damage the PN’s prospects even though he will not be standing. The PN party primaries pit the mayor of Tegucigalpa, Nasry Asfura, against the president of congress, Mauricio Oliva.

The PN does stand to gain, however, from the fact that the opposition is divided. In 2017 Hernández only just won re-election, amid allegations of electoral fraud, against an opposition alliance with anti-corruption candidate Salvador Nasralla and Zelaya’s wife Xiomara Castro on a joint ticket. This time around, Nasralla, a TV presenter, is standing for his own party, Partido Salvador de Honduras (PSH), which he registered last September, and Castro for Libre assuming she wins the party’s primary elections in which she faces, among others, Carlos Eduardo Reina (see sidebar), the nephew of the late (PL) president Carlos Roberto Reina (1994-1998).

As things stand, the three-way split between the PL, the PSH, and Libre plays into the PN’s hands, particularly as there is no second round and the winner only needs a simple majority. There is a strong chance, however, that at least two of the three main opposition parties will forge an electoral alliance after the party primaries. Given the historic differences between the PL and Libre, a tripartite alliance would require some deft negotiation, but their shared enmity towards the PN could trump their mutual suspicion.

Primary elections

Libre’s presidential pre-candidate Carlos Eduardo Reina called upon all of his rivals to heed the CNE’s appeal to abide by biosecurity measures during the primary election campaign. Reina said he was content to reduce the number of indoor and outdoor events he stages and use traditional and social media more instead. The CNE also adjured parties to adhere to spending limits. It said that staging the primary elections would cost the state between L$800m and L$850m (US$33m-US$35m), which has prompted some criticism given the serious economic fallout of the pandemic.

Uruguay’s President Luis Alberto Lacalle Pou conducted his first trip to Europe since taking office in March 2020 just after the coronavirus (Covid-19) pandemic began. During his visit to London, Lacalle Pou presented Uruguay as a beacon of “confidence and hope” in Latin America for investors in troubled times. He also talked up the prospect of a free trade deal with post-Brexit Britain, any move towards which would antagonise Argentina and cause ructions within the Southern Common Market (Mercosur).

It was only the second official visit of a Uruguayan head of state to the UK after Lacalle Pou’s father, former president Luis Alberto Lacalle (1990-1995), visited in 1993 to drum up foreign investment, presenting Uruguay as the gateway to Mercosur. Lacalle Pou sounded a similar note during a 40-minute meeting with British Prime Minister Boris Johnson on 23 May, and while delivering the Canning Lecture, entitled ‘Uruguay, a Reliable Gateway to South America – Opportunities in Green Finance’, for Canning House on 23 May.

• Meetings

President Lacalle Pou met Prince Charles to discuss environmental issues and green energy during his visit. With Prime Minister Johnson he discussed steps to reduce bilateral trade barriers, and to deepen trade and investment in industries such as pharmaceuticals, information and communications technology (ICT), and green finance and green energy.

Lacalle Pou showcased Uruguay as a stable partner, respectful of democratic values, the separation of powers, and the rule of law, and with the world’s oldest political parties after the ‘Tories’ [later Conservative Party] in Britain. He was also candid about Uruguay’s preparedness to negotiate free trade agreements bilaterally despite the constraints imposed by membership of Mercosur. This has caused some tensions in recent months, most notably with Argentina, which will also have been decidedly unimpressed by his suggestion that Uruguay could follow bilateral free trade talks started with Turkey and China with the UK. One of the reasons for the lack of official visits by Uruguayan heads of state to the UK is because of the fear of offending Argentina given the political sensitivity surrounding the Falkland Islands (Malvinas).

Lacalle Pou was flanked by senior cabinet ministers Azucena Arbeleche, the economy and finance minister; Omar Paganini, the industry, energy, and mining minister; and Francisco Bustillo, the foreign affairs minister, during the Canning Lecture, and it was Arbeleche who went into detail about integrating financial instruments with environmental targets.

Contending that positive financial incentives were needed to deliver transformative change and sustainable development, Arbeleche discussed the sovereign ‘green’ bond launched by Uruguay last December, with the interest rate linked to climate targets. Paganini, for his part, stressed that the current surge in fuel prices, exacerbated by the war in Ukraine, highlighted the need to diversify the energy matrix, with Uruguay a pioneer in the field of renewable energies and currently planning on becoming an exporter of green hydrogen and its derivatives.

ECUADOR | Poverty decreases. On 24 July, Ecuador’s national statistics institute (Inec) released new figures on poverty, which show that 25.0% of Ecuadoreans were living in poverty as of June 2022, a reduction of 7.2 percentage points on June 2021, and down from 25.5% in June 2019. According to the same figures, 10.7% were living in extreme poverty in June 2022, down from 14.7% in June 2021 but up from 9.5% in June 2019. The report shows that poverty remains significantly higher in rural areas (49.2%) in comparison with urban areas (16.7%). Inec also reported an improvement in the Gini coefficient (a measure of inequality in which 0 indicates perfect equality and 1 equals maximal inequality), noting that Ecuador’s Gini co-efficient was 0.453 in June 2022, down from 0.493 in June 2021.

A government decree closing off Mexico City (CDMX)’s Benito Juárez International Airport (AICM) to cargo flights came into effect on 2 February.  Cargo operations will instead move to the controversial Felipe Ángeles International Airport (AIFA), which was inaugurated in March 2022.

Cargo flight providers will have up to 108 working days from 3 February to move their operations to the AIFA, which is located in Zumpango, Estado de México (Edomex), or to any other airport that allows freight. However, given that the AIFA is the closest alternative to the capital, it is the most likely choice. Currently, the AICM handles some 12,000 cargo flights every year.

President Andrés Manuel López Obrador claims that the move will ease congestion at the AICM. However, air freight accounts for only 3% of flights in the capital’s airport. In addition, cargo flights do not take place at saturated time slots at the AICM, so it is unlikely that the decision will have any significant impact in reducing congestion. Importantly, mixed cargo and passenger flights will continue to use the AICM.

In particular, the aviation industry has criticised the timeframe for the move. According to Mexico’s national chamber of air transport (Canaero), which represents more than 60 national and international airlines, the industry needs at least 360 days for the transfer given the technical and operative conditions currently in place at AIFA. Similarly, the International Air Transport Association (IATA), which represents some 290 airlines worldwide, has argued that it would be necessary to have 180 working days. Despite these warnings, López Obrador confirmed on 23 January that German logistics company DHL would be the first company to transfer its cargo flights to the AIFA, saying the first flight will land at the end of February.  

The decision is the government’s latest attempt to encourage - or force according to some critics - the use of AIFA, which is currently used by only a handful of airlines and offers very few international flights. Importantly, IATA maintains that the AIFA lacks the technical requirements needed to allow the migration of cargo operations from the AICM, such as the ACC3-RA3 certification that is necessary for handling cargo that goes into the European Union. The IATA says the airport also lacks equipment for warehouses authorised by Mexico’s civil aviation agency (AFAC), as well as operating customs systems and enough customs agents to dispatch imported cargo.

Supporters of the decision highlight that existing and planned overland transport infrastructure is compatible with cargo operations. In addition, while moving cargo operations to AIFA will indeed require installation of the necessary customs, warehousing, and logistics infrastructure, this will be more economical in Zumpango than in CDMX.

According to the national regulatory commission (Conamer), the move would cost more than M$9.7m (US$504,868) and would affect all current 16 concessionaries that only handle cargo at AICM. However, airlines claim the impact of the move would be much greater. Colombian-headquartered Avianca airline said that the cost of the move would be equivalent to 16% of their cargo revenue. Similarly, Air France-KLM said that migrating cargo operations to AIFA would undermine investments made in recent years, including having hired dozens of employees in 2022 to work in cargo operations at the AICM, which represent 50% of their total revenue in Mexico. Local courier Estafeta argues that the cost for the company would be more than M$100m given the necessary investments it would have to make in infrastructure, new equipment, and changes to their operations.

According to the federal competition commission (Cofece), migrating cargo operations to the AIFA could lead to an increase in prices for consumers as a result of the higher costs operators will face. It could also cause shortages of products that can only be imported into the AICM’s customs. However, it pointed out that these problems would only be temporary.

AICM director, retired Vice-Admiral Carlos Velázquez Tiscareño, has denied the move will have a detrimental financial impact. He added that the impact of the coronavirus (Covid-19) pandemic saw online commerce surge in the country, which led to an increase of more than 100% in cargo arriving at the AICM. He also said that he expects mixed cargo will continue growing, thus minimising any negative effects that could derive from cargo flights moving to the AIFA.

Air safety rating

The decision to move cargo flights to AIFA comes as Mexico’s aviation industry has still not recovered its Category 1 rating after the US Federal Aviation Administration (FAA) downgraded it to Category 2 in May 2021. This prevents Mexican airlines from adding new services and routes to and from the US, compounding the challenges for companies having to move their operations to AIFA. 

PERU | Government stimulus package. Economy Minister Alex Contreras admitted on 20 October that Peru had entered a recession but promised it would be limited and mitigated by fiscal stimulus. The central bank is predicting that economic growth this year will fall to 0.9% as a result of adverse weather effects from the climate phenomenon El Niño, lower private investment, and lingering social conflicts.

The economy entered a technical recession in the second quarter of this year. In August economic activity fell 0.63% on year-ago levels. Contreras said he was working on various fiscal stimulus measures. At his request congress approved a supplementary expenditure budget worth up to PEN4.98bn (US$1.28bn).

Colombia’s foreign minister, Álvaro Leyva, was handed a three-month suspension on 24 January by the inspector general’s office, which is responsible for overseeing the conduct of public officials. Leyva’s suspension owes to alleged irregularities in a tender for a contract to print passports, which he declared void after just one company – the multinational Thomas Greg & Sons, which was already producing Colombian passports – submitted a bid.

The inspector general’s office said that this intervention by Leyva had breached rules around the granting of public contracts. However, President Petro and other government officials have backed Leyva, arguing that he was seeking to ensure good value for the taxpayer.

Petro claimed that Leyva’s suspension was a sign of Colombia’s institutions pushing back against his reformist government. “They’re not going to let us govern,” he said. “They don’t want there to be a successful example of a people’s government, a democratic government”. No replacement for Leyva has yet been named.

When David Vélez founded neobank Nubank in Brazil just over a decade ago, he was ridiculed for trying to break into a banking sector dominated by a handful of juggernauts, the oldest of which has been around for over 200 years. He repeatedly heard singer Tom Jobim’s emblematic phrase “Brazil is not for beginners” – particularly true for a foreigner trying to navigate the country’s labyrinth of bureaucracy and taxes. Yet today Nubank has surpassed all its competitors to become Brazil’s largest bank by market worth, propelling Colombian-born Vélez to join the top 10 wealthiest people in Latin America.

Even on a global scale the São Paulo-based fintech boasts superlatives. With 100m clients (including those in Colombia and Mexico, where it began operating in 2020), it is the biggest digital-only bank in the world. It went public in 2021 with an IPO valuation of US$41.5bn, and not for the first time in May overtook regional giant Itaú Unibanco as the most valuable financial institution in Latin America as strong Q1 earnings fuelled a rally, pushing its market value to US$58.2bn, just ahead of Itaú’s US$56bn.

Key to success

When Vélez disembarked on Avenida Faria Lima, São Paulo’s banking district, the Stanford-trained entrepreneur was struck by the high cost, red tape, and poor service banks offered as he opened an account for himself. So, he decided to circumvent much of that by betting on an all-digital bank that offered fee-free services, a revolutionary concept at the time.

At the start he offered only credit cards because of the constitutional hurdle that bans foreigners from opening a bank in Brazil. The prospect of a free card with all relevant services, from payments to claims, available on a phone caught on quickly. By contrast the big banks often would charge not only annual fees but hidden extras that added up. According to one estimate, fees accounted for up to 40% of bank revenues as late as 2019.

Big names have dominated Brazil’s banking sector for decades: the two colossal state-owned banks, Banco do Brasil and Caixa Econômica Federal, alongside three private sector banks – Itaú Unibanco, Bradesco, and Santander.

Nubank still trails its rivals in terms of assets and profitability, but judging by its rising share price investors think it is well on its way to challenge them on that front too. Some of its top investors include the likes of Warren Buffett, JP Morgan, and Blackrock.

Already brick-and-mortar financials are responding to pressure from digital banks like Nubank by pushing for more efficiency and lower costs. Itaú, the country’s largest bank by assets, has been overhauling its operations but “we need to further adjust to remain competitive, mainly in relation to digital banks, which are gaining market share in Brazil,” Alfredo Setubal, the bank’s CEO, told reporters earlier this year.

One of Vélez’s next big objectives is to help tackle the region’s gross socio-economic inequalities. In 2023 he sold shares worth nearly US$200m to finance education and leadership initiatives and has pledged to donate the majority of his wealth in life to charity. 

*** India prioritizes its Eastern fleet.  According to local sources, the Indian government has recently issued a directive to India’s east coast ports to give priority to Indian naval ships because of the continuing shift of naval resources from the Western Naval Command to the Eastern Naval Command in response to China’s “increasing footprint”.

China is, for instance, continuing to develop bases in Myanmar and it is building a port at Hambantota in Sri Lanka.  India has reinforced its eastern fleet with 14 additional warships in the past five years, including five Rajput-class missile destroyers that were previously with the western fleet.  The Eastern Naval Command now has 50 major warships, up from 30 in 2005.

*** Turkey Warns Cyprus.  On 5 August, Turkey’s Foreign Minister Ahmet Davutoglu said that Turkey had warned the divided island of Cyprus against drilling for oil and gas in the Mediterranean.  He said: “We will show the appropriate reaction if any further step is taken.”  Turkey’s position is that the Greek Cypriot administration does not have the right to conduct oil and gas exploration until a government representing the whole island, including the breakaway northern Turkish element, is formed.  The Cypriot government has said it will begin drilling for hydrocarbons off the island’s southern coast on 1 October.  Turkey has 35,000 troops stationed in northern Cyprus.

The issue also forms a further bone of contention between Turkey and Israel at a time when relations between the one-time allies have deteriorated sharply.  The exploration is to take place in an 800,000 acre area bordering Israeli waters where large natural-gas finds have been made.  Greek Cyprus signed an accord with Israel last November demarcating the maritime border, but Turkey has called this agreement ‘null and void’ because it has not considered the rights of Turkish Cyprus.

*** Turkey’s military under scrutiny. For the first time in Turkey, the civilian-controlled Court of Accounts has begun an audit of military-run firms.  The new law on the Court of Accounts came into effect in late 2010.  The new law was strongly opposed by the Turkish General Staff and a last-minute modification of the bill did ensure that some military spending remains outside the jurisdiction of the Court of Accounts.  On 29 July the commanders of the army, navy and air force resigned, along with General Isik Kosaner, chief of general staff, over the detention of 250 officers accused of plotting to overthrow the Islam-based AKP government.

*** China’s sex ratio imabalance worsens.  Census data from China shows that the sex-ratio imbalance is continuing to worsen.  In 2010 there were 118.08 males for every 100 females.  In 2000 the ratio was 116.9 males to 100 females, in 1990 there were 111.3 males to 100 females, and in 1982 there were 108.5 males per 100 females.

*** Gulf fears of Muslim Brotherhood.  Following the success of the Muslim Brotherhood in Tunisia and Egypt, Dubai’s police chief Dahi Khalfan has issued a warning about the threat to the other Arab Gulf states.  In remarks reported on 25 March, he told the Kuwaiti daily Al-Qabas: “My sources say the next step is to make Gulf governments [their ruling families] figurehead bodies only without actual ruling.  The start will be in Kuwait in 2013 and in other Gulf states in 2016.”  The states he is referring to are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

Khalfan said that the process will begin in Kuwait because “it is ready more than any other Gulf state...this is a strategy”.  In an election on 2 February, Sunni Islamists won more than 20 seats in Kuwait’s 50-member parliament.  Earlier this month, Khalfan threatened to arrest leading Muslim Brotherhood cleric Yusuf al-Qaradawi after he criticized the UAE for deporting Syrian protesters.

*** Jordan to allow ‘Support Jerusalem’ march.  On 25 March, the Jordanian authorities confirmed that they will permit a planned march to the Jordan Valley on Friday 30 March in support of Jerusalem.  The authorization came after the organizers said that there was no intention to storm the Jordan-West Bank border.  Kathem Ayesh, a Muslim Brotherhood council member and an organizer of the march, said: “This will be a peaceful rally in support of Jerusalem, not a call to storm Jerusalem.”  The rally comes under the umbrella of the Global March to Jerusalem which hopes for demonstrations in as many as 80 countries, with rallies planned on the borders of Israel and the Palestinian territories in Egypt and Lebanon as well as in Jordan.

*** Russia adjusting to Muslim Brotherhood ascendancy.  Mikhail Margelov, the Russian president’s special representative for cooperation with African countries, has said that “increasing Islamist influence” is the main trend that will determine the future of North Africa in the foreseeable future.  Speaking on 22 March, he talked about a “green arc of instability from...Nigeria to the Horn of Africa”.  He believes that the Arab Awakening has destroyed the historical counterbalance to this trend, namely the secular regimes in Tunisia, Libya, and Egypt.  As a result, Margelov says, there is a “situation of general tension [giving] rise to high uncertainty of predicting a specific course of events or unrest in this or that country of this vast region”.

However, Margelov also added: “The fact that political realities show that most of the parliaments in certain North African or Arab countries are getting Islamic parties means to us only one thing – we should establish dialogue with them.”  He pointed out that Islamic parties are now in power in Turkey, Iran, Kuwait, Tunisia, Egypt, Libya, and the Gaza Strip, and he said that “this does not mean that Russia is having hang-ups about it or is afraid...”

SECURITY | Autodefensas Unidas de Colombia (AUC) founder captured. On 26 May the Colombian army announced it had captured Alfonso Rodríguez Ramírez (‘El Novillo’), 47, in the locality of El Monguí de Colombia, department of Huila. Rodríguez Ramírez is considered one of the main promoters of right-wing paramilitarism in Huila and has been sentenced (in absentia) to 38 years in prison for the crimes of: homicide of a protected person; aggravated extortive kidnapping; and conspiracy to commit a crime. He is also wanted in relation to several massacres, theft, extortion and the forced displacement of at least 725 peasants.

POLITICS | ‘Diosdado Presidente’. The appearance in Caracas on 24-25 May of posters emblazoned with the letters of the ruling Partido Unido Socialista de Venezuela (PSUV) and proclaiming ‘Diosdado Presidente’ caused a spat between the PSUV and the opposition Mesa de la Unidad Democrática (MUD). The PSUV accused the MUD of dirty tactics in order to destabilise the government. The MUD denied all knowledge of the posters and suggested a subliminal effort by the PSUV to get government supporters to begin to think about an alternate 2012 presidential candidate to the ailing incumbent Hugo Chávez. Some opposition bloggers also suggested the posters were an effort by Cabello’s rivals within the PSUV to discredit him. Cabello, the vice-president, dismissed the incident as an opposition prank and repeated that “our only candidate is Chávez”. The posters, which went up overnight, were promptly removed, but not before they became a trending topic on Twitter and other social networks and featured on opposition TV news bulletins.

MÉXICO | Construyendo más gasoductos. El 22 de abril la compañía de electricidad de propiedad del Estado mexicano (CFE), anunció que en coordinación con el ministerio de energía lanzará un proceso de licitación para la construcción de cinco nuevos gasoductos a través del país, un proyecto de inversión de US$2,25mm, en los próximos días. El anuncio fue hecho por el director general de la CFE, Sergio Ochoa, durante un foro de energía y gas en la Ciudad de México. Según Ochoa, los gasoductos formarán una nueva red que unirá al estado central de Durango con los estados norteños de Chihuahua y Sonora y con los estados de EU de Texas y Arizona. Ochoa explicó que esto era parte de los esfuerzos del gobierno mexicano por mejorar la integración energética con EU y la confiabilidad en el sistema de transporte de gas natural del país, para así promover el incrementado uso del combustible limpio y barato.

El mes pasado, el gobierno mexicano anunció el inicio de la construcción de un nuevo gasoducto diseñado para permitir que la firma petrolera del Estado, Pemex, importe grandes volúmenes de gas natural de EU y así aprovechar la ventaja de los bajos niveles record del gas natural en el mercado de EU [IL-14-13]. Significativamente, Ochoa también señaló que la participación de la CFE en el proceso de licitación responde al hecho de que como parte de la reforma del sector energético aprobada el año pasado, la CFE no solamente estará a cargo de la generación y distribución de la electricidad sino también, por primera vez, tendrá permitido actuar como proveedor de gas a los consumidores a fin de convertir a la CFE en un negocio más rentable. La nueva red de gasoductos proveerá a la CFE con la infraestructura necesaria para proveer gas natural a un mayor número de consumidores en el centro y norte de México. Esto también podría eventualmente permitir a México y la CFE exportar gas natural. Otro objetivo declarado de la reforma energética es incrementar la producción nacional de gas natural de México de los actuales 5,7mm de pies cúbicos por día hasta 10,4mm de pies cúbicos por día para el 2025, lo que le permitiría a México pasar de ser un importador neto de gas natural a ser un exportador neto.

“¿Qué busca Tom Donohue en Cuba?” fue una de las airadas reacciones a la noticia de que el presidente de la cámara de comercio de EU, probablemente el grupo de presión más poderoso del mundo, se había reunido con el Presidente de Cuba, Raúl Castro, al final de su controversial viaje de tres días a Cuba.

Donohue, cuyo obvio placer en visitar La Habana a veces parecía casi deliberadamente dirigido al furioso lobby anti-Cuba en los EU –antes de irse, él sugirió abiertamente que él podría apoderarse de una propiedad frente al mar– no reveló mucho, pero dijo a los periodistas que “Hemos hablado acerca de los pasos adelante que podrían ser tomados por ambos países para mejorar las relaciones EU-Cuba”.

“Esto fue muy positivo y esperamos hablar de nuevo […] Pienso que él es un hombre esperanzado”, Donohue agregó después de su no programada reunión con Castro y el ministro de comercio exterior & de inversiones, Rodrigo Malmierca, el 29 de mayo, en un agregado de último minuto a su gira de tres días en el país.

Donohue, desde hace ya tiempo un oponente del embargo comercial sobre Cuba y quien fue acompañado por representantes del gigante agrícola de EU, Cargill, entre otros, también dio una conferencia en la Universidad de La Habana en la cual urgió a Cuba a que acelere las reformas económicas amistosas hacia el mercado, diciendo que los inversionistas internacionales responderían y sugirió que esta sería la mejor manera de mejorar las relaciones con EU.

“Creemos profundamente que los países con fuertes sectores privados, libres del excesivo control y la propiedad del Estado, tendrán las economías más exitosas y productivas […] Cuanto más pueda hacer Cuba para demostrar su compromiso con la reforma, y cuanto más pueda hacer para abordar y resolver las disputas en nuestras relaciones, habrá mejores perspectivas para los cambios en la política de EU,” dijo. Él citó a Vietnam y China como indicadores.

Dando la bienvenida a la nueva ley de inversión extranjera de Cuba, Donohue señaló la necesidad específica de una legislación sobre la protección de los derechos de propiedad intelectual y un mecanismo independiente de arbitraje.

• Donohue responde a las críticas

“Aquellos de nosotros quienes se oponen al embargo, a menudo somos acusados de excusar o ignorar el récord del gobierno cubano sobre los derechos humanos y la libertad personal”, Tom Donohue dijo, abordando a sus críticos al volver a su país. “De hecho ellos necesitan ser abordados por nuestros gobiernos en un constructivo diálogo ya en marcha”.

Mauricio Macri, the presidential candidate for the centre-right opposition Propuesta Republicana (PRO), put a brave face on his party’s disappointingly narrow victory in the race for the mayoralty of Buenos Aires, its electoral heartland. But the fact his chosen candidate, Horacio Rodríguez Larreta, only won the run-off by three percentage points spooked his party and his potential coalition allies. An opinion poll published on 26 July, showing Daniel Scioli, the Kirchnerista presidential candidate, with an 11.4-percentage-point lead over Macri, will have done little to calm their nerves.

The poll, by the Centro de Estudios de Opinión Pública (CEOP), surveyed 1,500 people across the country by telephone. Scioli, the governor of Buenos Aires, and his running mate, Carlos Zannini, the government’s current legal and technical secretary, polled at 38% of voting intentions. Macri, the mayor of Buenos Aires, and his running mate, Senator Gabriela Michetti, came second with 26.6%. Previous polls had shown the gap between Scioli and Macri as much narrower.

Still, there are important caveats to the poll. While Scioli now has the nomination for the ruling Frente para la Victoria (FPV) faction of the Partido Justicialista (PJ, Peronists) sown up; Macri is due to face a primary election on 9 August, running against Ernesto Sanz and Elisa Carrió for the backing of the Cambiemos coalition. Both are polling in the low single figures and do not represent much of a challenge to Macri, but as both style themselves as implacable opponents of Kirchnerismo, their supporters are likely to vote for the candidate most likely to beat the FPV.

Another important factor is Sergio Massa, the third-placed candidate from the Frente Renovador. The CEOP poll put Massa on 12% of voting intentions, well ahead of his primary rival, José Manuel de la Sota, on 5.2%. As a former Kirchnerista-turned-opponent, it is not clear that Massa’s supporters would automatically migrate to Macri. In an attempt to ensure they do, however, Macri has tacked to the centre, while Scioli, long regarded with suspicion by die-hard government sympathisers for his support of conservative Peronist, former president Carlos Menem (1989-1999), has moved left.

Even before the latest poll, Macri had promised to continue with several flagship Kirchnerista policies, such as the re-nationalisation of the state airline, Aerolíneas Argentinas; the oil company, YPF, and the universal child benefit programme. Certainly compared with Sanz and Carrió, Macri has moderated considerably his criticism of the government, declaring that he is not “anti-government, or anti-anything” but seeks pragmatic solutions to the country’s problems. In campaigning this week, he criticised the government’s failure to grow the economy over the past four years and expand the jobs market. “The only ones who have managed to find a job are the boys from La Cámpora,” he said.

La Cámpora is the radical youth wing of the FPV, led by Máximo Kirchner, the son of President Cristina Fernández, which Scioli has been assiduously courting. Since selecting the loyal Kirchnerista Zannini as his running mate, Scioli’s campaign has taken a populist turn. Last week, the Buenos Aires governor travelled to Cuba for a meeting with President Raúl Castro, whom he described as a “positive influence”. On 27 July he proposed creating a people’s economy ministry “to fulfil the dreams of Pope Francis for housing, land and work”. In the same speech he criticised private banks for failing to provide sufficient credit for families.

To heal the divisions caused by the FPV’s candidate selection process, Scioli also indicated he would be willing to invite Florencio Randazzo, the transport and interior minister who had sought the party’s nomination, into his cabinet. Should Scioli win, the key question will be how much influence President Fernández will retain. The CEOP poll found 52% of Argentines had a positive image of her. There would be no constitutional bar on her running for a third term of office, in 2019.

• Argentina seeks clarity over Iranian sanctions lifting

In an open letter published on 29 July, Argentina’s foreign minister, Héctor Timerman, said that he was concerned the recent deal reached between the G5 + 1 and Iran over its nuclear programme could see the former Iranian defence minister, Ahmad Vahidi, removed from its sanctions list. Argentina has long sought Vahidi over his alleged involvement in the bombing of the Amia Jewish community centre in Buenos Aires in 1994.

President Cristina Fernández offered her own take on the matter on Twitter. “This is how nations and interests work,” she wrote. “This is what some in our country seem to ignore or refuse to admit. Or even worse, they are fully aware and keep mum. They are aware but they lie.” Fernández also attacked those who had accused her and her administration of attempting to cover up Iran’s involvement in the Amia bombing case. Argentina’s Jewish community have backed Timerman’s letter.

According to the Wall Street Journal, Vahidi is among a group of Iranian military officers, nuclear scientists and defence institutions set to be removed from the sanctions list as a result of the agreement signed in Vienna. At the time of the Amia attack, Vahidi was the commander of Iran’s elite overseas military unit, the al-Quds force. He subsequently went on to become the deputy minister of defence in 2005, and he was appointed the actual minister four years later, holding the post until August 2013.

In 2006, the Argentine judge Rodolfo Canicobra Corral requested the arrest of Vahidi and other Iranian officials over their suspected involvement in the bombing.

• Welsh community celebrates

Carwyn Jones, the First Minister of Wales travelled to the Patagonian town of Trelew, in the province of Chubut on 26 July to celebrate the 150^th anniversary of the arrival of Welsh settlers in Argentina. While other Welsh expatriate communities in the US and Canada have lost their language and customs, Trelew remains Welsh-speaking. Jones is the first senior British official to visit Argentina for 10 years.

Acosada por largo tiempo por las acusaciones de la oposición sobre la corrupción, la administración de la Presidenta Cristina Fernández parece estar disfrutando de la oportunidad de responder con las mismas armas y cuestionar la probidad de la oposición de la centro-derecha Propuesta Republicana (PRO). El escándalo es una distracción inoportuna para el candidato presidencial del PRO, Mauricio Macri, en su intento por asegurar que reúne los votos suficientes para forzar que la elección por la presidencia vaya a una segunda ronda.

De acuerdo con un informe del diario Tiempo Argentino, La Usina, una compañía de producción propiedad de Fernando Niembro, un comentarista de deportes y candidato del PRO para el congreso federal, recibió más de Arg$21m (US$2,25m) en contratos para “servicios de auditoría” de la administración de la ciudad de Buenos Aires liderada por el PRO. Los Kirchneristas afirman que la compañía, que no tiene empleados registrados, fue creada exclusivamente para ofrecer servicios al gobierno de la ciudad liderado por Macri.

En un acto político el 9 de septiembre, la Presidenta Fernández dijo que Niembro había recibido “el choripán de oro”, en referencia al típico ‘perro caliente’ que se reparte en los eventos de la campaña. Carlos Zannini, el secretario técnico y legal del gobierno que ahora compite por la vicepresidencia, había hecho la misma burla días antes.

En respuesta a las burlas, Niembro dijo que él no tenía la intención de retirarse de su candidatura, afirmando que él era víctima de “persecución política”. Sin embargo para aliviar en algo la presión, señaló que su socio de negocios, Alberto Meza, había retirado su candidatura a diputado.

Pero preocupantemente para el PRO, las críticas de un supuesto trato no se habían limitado al gobierno y sus partidarios. Margarita Stolbizer, la candidata presidencial por el opositor Progresistas, dijo: “Me pregunto a mí misma cuántos otros contratos como el de  Niembro tiene el gobierno de la ciudad. No pienso que el negocio es de solamente 20 millones de pesos. Creo que otros muchos ‘Niembros’ han sido premiados con contratos.” Incluso algunos aliados de Macri ahora se han distanciado de Niembro.

• Deforestación

Un informe de la Organización de las Naciones Unidas para el Alimento y la Agricultura (FAO) publicado a comienzos de septiembre ubicó a Argentina como uno de los 10 países que se encuentran al tope del mundo con relación a su tasa de deforestación. Ubicado en noveno lugar globalmente, Argentina pierde alrededor de 297.000 hectáreas de bosques cada año. Brasil y Paraguay también están entre los 10 primeros por su tasa de deforestación.

• Uniéndose a BRICS

Aunque ahora puede no ser el momento más auspicioso para unirse al Club, la Presidenta Cristina Fernández, pidió el 9 de septiembre, la ayuda del ex presidente de Brasil, Lula da Silva, (2003-2011) para unirse a BRICS. Con Lula en Argentina para ofrecer su apoyo a Daniel Scioli, el candidato presidencial respaldado por el gobierno, Fernández pidió públicamente su apoyo para convertir a BRICS en BRICSA: “Ese es nuestro lugar y más países emergentes se unirían a Briosa,” dijo ella.

A surge in Cuban migrants seeking to reach the US via Central America is proving the latest bone of contention between Nicaragua and Costa Rica. Relations are already under strain over a territorial dispute before the International Court of Justice (ICJ) at The Hague.

The crisis first made international headlines over the 13-15 November weekend, after Nicaragua closed its border with Costa Rica, leaving hundreds of Cuban migrants stranded. On 14 November, the Costa Rican government led by President Luis Guillermo Solís announced that it was issuing Cuban migrants in Costa Rica with extraordinary transit visas, valid for seven days, in order to allow them to travel across the country and onto other nations. This came the day after Costa Rican authorities briefly closed the border with Panama, leaving over 1,000 Cuban migrants stranded there. This prompted the Nicaraguan government led by President Daniel Ortega – which has close ties with Cuba - to accuse Costa Rica of “violating national territory”, promoting the “entry of thousands of Cuban migrants” into Nicaragua and causing a “humanitarian crisis”.

On 17 November, the Cuban government, led by President Raúl Castro, waded into the debate, explicitly laying the blame for the influx of migrants on the US, describing the migrants as “victims of the politicization of the migration issue on the part of the United States government”. Specifically, it mentioned the “Cuban-American Adjustment Act…and the application of the so-called ‘wet foot-dry foot’ policy, which gives Cubans differential treatment – the only one of its kind in the world – which admits them immediately and automatically, regardless of the route or means used, even if they arrive in an illegal manner to US territory”. The statement blames this policy for encouraging “irregular immigration from Cuba to the United States” which it says “constitutes a violation of the letter and spirit of Migratory Accords currently in effect, in which both countries assume the responsibility to guarantee legal, safe, orderly emigration”.

As regards the cause of the sudden increase in migrants (see sidebar), this has been attributed to the US-Cuba diplomatic rapprochement in December 2014, which has fuelled rumours that the US government could end its current Cuba migration policy despite the latter’s repeated insistence to the contrary.

First regional meeting fails to yield results

On 24 November, the first high-level regional meeting on the issue took place, attended by foreign ministers from Central America, Cuba and Ecuador and deputy foreign ministers from Colombia and Mexico – all nations that form part of the new Cuban migration route. Called by the Central American integration system (Sica), the meeting produced little beyond mutual recriminations. A statement read out by Nicaragua’s First Lady and official government spokesperson, Rosario Murillo, accused the Solís government of “ignoring the causes and US responsibility for the wave of unsafe…illegal migration which affects Cuba and is now affecting the Central American region”. The statement reiterated Nicaragua’s refusal “to give legitimacy to illegal policies which are causing damage, suffering and economic losses to human beings, entire families, governments, and the region”.

With some 3,000 Cuban migrants currently stranded in Costa Rican territory, Costa Rica’s foreign minister, Manuel González, responded by accusing Nicaragua of “repeatedly blocking any proposal to solve the problem, without presenting any solution…” a position, he said, which dealt a “blow to Sica”.While the Solís administration has since said that it will step up bilateral dialogue with the other countries involved, without Nicaragua’s cooperation, the chances of a solution so far remain slim.

• Migration flow

According to figures from the Costa Rican migration authorities, cited in the local and international media, the number of undocumented Cuban arrivals in Costa Rica reached 12,166 in the first nine months of 2015, more than double the 5,114 registered in 2014 and up from 2,549 in 2013.

On 3 December 2018, Costa Rican President Carlos Alvarado’s pivotal tax reform was approved by congress after months of union strikes, protests, and violent confrontation. The passage of the Strengthening Public Finances Law marked the beginning of a long road to recovery from a dire fiscal situation that had made reform essential. Following a second and final congressional debate, legislators voted through the amended bill by 34 votes to 17 with six abstentions.

The country has run a budget deficit of more than 5% nearly every year since 2010 – reaching 6.2% in 2017 – and public debt passed 50% of GDP in 2018 having risen every year since 2008. The Costa Rican central bank (BCCR) predicted that the country’s fiscal deficit would reach 7.2% for 2018. The BCCR’s president, Rodrigo Cubero, said that the economy was forecast to slow in 2018 to post 3.2% growth as consumption has declined; in fact, this came in even lower, at 3%. However, as the bill was signed into law, Alvarado predicted “a period of optimism, hope and certainty” for the country, saying that “Costa Rica has avoided a crisis and takes a step that brings stability and confidence.”

Despite the clear necessity for an improved tax structure to foment government revenue, the reform package itself endured a troubled start to life. After a challenge from lawmakers, the bill was eventually deemed constitutional by Costa Rica’s constitutional court at the end of November; while the legislation was also defeated in congress at the first attempt. The bill was considered to disproportionately burden the lower and middle classes, despite the incumbent centre-left Partido Acción Ciudadana (PAC) government asserting that 80% of revenue collected would come from the top 20% of earners. Nonetheless, a public sector strike was announced on 10 September with violence flaring between demonstrators and police in the capital, San José. President Carlos Alvarado urged unions and workers to dialogue, but the proposal was rejected and talks abandoned before the industrial action was finally brought to an official end on 8 December.

The reforms aim to raise an additional US$660m, equating to 1.5% GDP. They will introduce higher income taxes on salaries and a new capital gains tax, and replace the current sales tax of 13% with a value-added tax (VAT) at the same rate, widening the net of goods captured by the duty. Controversially, it also places a 1% tariff on the products included in the ‘canasta básica’ – a set of essential foodstuffs such as rice and beans subsidised by the government – which the Costa Rican national statistics and census institute (INEC) reported in November had already become 2.3% more expensive than a year previously. Alongside a restructure of tax brackets to share the burden more equitably, the reform also imposes crucial limits on public spending and cuts benefit allowances for public sector employees.

A separate issue that has plagued Costa Rica is tax evasion. The government is seeking an estimated US$1bn in owed tax revenue from large companies that reported losses between 2012 and 2017, thus avoiding payment of corporate taxes, and Minister of Finance Rocío Aguilar presented a list of 96 companies who have allegedly stopped paying taxes over the period studied. Furthermore, on 5 December 2018, Moody’s Investors Service cut Costa Rica’s debt rating to B1 from Ba2 and its outlook to ‘negative’ on account of the government’s poor fiscal management. The decision was made after the reform attempts were deemed “insufficient to quickly and materially reduce [Costas Rica’s] high fiscal deficits”.

Nonetheless, the tax reform represented President Alvarado’s first major legislation since taking office in May 2018 (the second came in January this year, when Alvarado was able to hail a drop in homicide rates [SSR-19-02]). While he will hope that future proposals manage to pass without public demonstrations and strike action, there must be a change in attitude to accompany the reform package to inspire fiscal discipline within the country’s public sector.