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Chile has a had a historically complicated relationship with its indigenous groups, which number nine in total.

The largest group by far, according to the 2017 census, is the Mapuche (1,754,147 people), followed by Aymara (156,754), Diaguita (88,474), Atacameño (31,800), Quechua (27,260), Colla (16,088), Kawésqar (5,298), Rapanui (5,065), and Yámana or Yagán (131). This adds up to a total of 2,158,892 people, or 12.8% of Chile’s total population. However, only 1,585,680 people, or 9% of the population, are recognised as indigenous by statute.

These groups suffer Chile’s highest rates of poverty, illiteracy, and underdevelopment, according to the IWGIA. In 2017 the Araucanía Region, where 25% of the population is Mapuche, had the highest rate of poverty in the country (17.2%). This compares to a national average of 8.6% and highlights the unequal treatment of indigenous groups. A report from Chile’s Ministry of Social Development reveals that in 2017, 30.2% of indigenous people suffered multidimensional poverty, compared with 19.7% of non-indigenous, and indigenous people generally earn less money than non-indigenous people for similar jobs.

Chile may have created the Special Commission of Indigenous People (1993) and the National Corporation for Indigenous Development (1993), as well as adopting the UN Declaration on the Rights of Indigenous Peoples in 2007 and ILO Convention 169 in 2008, but it is the only country in South America not to recognise indigenous peoples in its constitution. This has been a bone of contention for indigenous groups, whose rights are currently governed by a law that doesn’t meet the standards of international law on the rights of indigenous peoples, according to IWGIA.

In 2017 former president Michelle Bachelet launched a consultation process aimed at drawing up a new constitution, and a draft version was sent to the national legislature in March 2018, but the process is now suspended. Bachelet noted that her draft would address “an historic debt – constitutional recognition of indigenous people”, which has been a long-term promise to indigenous groups, but her successor President Sebastián Piñera has done nothing to address their demands. Instead he has antagonised the Mapuche with several moves including plans to revoke Convention 169 and two bills designed to open indigenous lands to business interests.

The Mapuche conflict centres around the demands for the restitution of ancestral lands, known collectively as Wallmapu, which stretch across Patagonia from the Argentine Atlantic to the Chilean Pacific coast. The Mapuche lands have been systematically eroded by intrusive campaigns since the first contact between Spaniards and the Mapuche. Since the return to democracy in 1990, the Chilean state has sold off lands in the region to forestry and other industries, igniting a violent struggle which has been suppressed by a heavy police presence and the controversial use of anti-terrorism laws to prosecute activists.

The November 2018 murder of Mapuche activist Camilo Catrillanca shone a further spotlight on the issue. Violent clashes and social unrest increased after the killing, and an April 2019 protest march calling for peace and the demilitarisation of La Araucanía shone another spotlight on the Mapuche struggle. The political committee of the Temucuicui Mapuche community called on all Chileans, not only Mapuche, to join in the march, with organisers also pushing the government to respect the Mapuche’s right to self-determination.

“We the Mapuche do not need to ask permission to protest, we just want to have a dialogue with the government, but this repression that we have yet again suffered from breaks off all progress of conversation with them,” Marcelo Catrillanca, Camilo’s father and one of the organisers of the march, told local daily El Austral Temuco. President Piñera described the events as a “setback” in relations between the government and the Mapuche, but the reality is that the Chilean state has never worked out how to interact with the Mapuche.

While the Mapuche have organised in community groups, they have been unable to enter electoral politics. There have been attempts to construct a Mapuche political party, but legal requirements have frustrated them. Mapuche activists signalled their intent to take back indigenous lands, defend natural resources, improve cultural cohesion, and revitalise traditional authorities, known as lonkos, under the banner of the Partido Nacional Mapuche Wallmapuwen. They want to make Wallmapu an autonomous region with an assembly and executive elected by the local population and ensure that Mapuche and non-Mapuche people can live under their own culture. This means ensuring the possibility of using the Mapuche language in state institutions and teaching it in schools.

The party filed papers to electoral authorities in 2007. However, to this day it has not been authorised due to rules which state that parties must register in eight of Chile’s 15 regions, or in three contiguous regions, as well as meeting requirements on the number of signatures from supporters. Pedro Mariman Quemenado, a member of the Partido Nacional Mapuche Wallmapuwen, said that the party couldn’t include material on the Mapuche flag, or the idea of Wallmapu, as electoral authorities considered it secessionist. He claims that this is discriminatory because it means the party cannot reflect Mapuche ideology. Mariman also claimed the party struggled for support due to popular disillusionment with party politics in general, and the fact that political parties aren’t a traditional form of Mapuche organisation.

Another issue is that Chile’s regional administrative officials, known as intendants, are appointed by the president. They chair ‘regional cabinets’, which are made up of officials from devolved ministries, and hand down instructions to regional governors, who are also appointed by the president. This means that although Chilean government is decentralised, its democracy isn’t. As a result, the Mapuche have struggled for representation on a regional and national level.

It is also interesting to note that while indigenous political movements are generally associated with ‘progressive’ or left-wing politics, Mapuche political organisation has been linked to right-wing conservatism since the 19^th-century. This may have limited their ability to work with leftist organisations that are stereotypically seen as allies. The Mapuche have struggled to make inroads under governments of differing political stripes, said Rice. “They really don’t have many allies,” she said. “Even when it was a left turn government like Bachelet.”

Rice suggests that the Mapuche would benefit from guaranteed seats in Chile’s national congress, a practice that already exists in Colombia to ensure participation and provide an opportunity for parties to coalesce around them. “It’s a stepping stone to get into the system,” she said. Alternatively, the Mapuche should appeal to international actors for support, according to Rice. “The other strategy is to go transnational when a government is unfriendly, to name and shame them,” she said. This is particularly important with a fragmented, localised indigenous movement. “It’s very regionalised so it’s out of focus, especially from the capital city,” Rice added.

In summary the Mapuche experience of Chilean politics can be characterised as a frustrating one. “The Mapuche are very solid in their political culture” with a clear set of goals, said Dr Natividad Gutierrez Chong, a sociologist at the Universidad Nacional Autónoma de México. However, there is no way they could participate politically because Chile is very backward in terms of indigenous political representation and the Mapuche have no official recognition, she said. The process of forming a party has proven too difficult for the Mapuche and they have given up on that route, said Gutierrez Chong. She believes that the Mapuche were pushed down the path of violent resistance by this closing of political space, and they will not stop making themselves visible. “The more they are denied by the state the more they will try to find another solution,” she said. Future outcomes depend on whether the government continues to criminalise protest or attempts to negotiate and minimise the cost of its current policy, said Gutierrez Chong.

After 11 years and billions of US dollars, Canada’s Barrick Gold mining company has had to accept that its Pascua Lama gold project has hit a red stop sign. On 17 September Chile’s environmental court ordered the “total and definitive” closure of the project.

The Pascua (Chile) and Lama (Argentina) deposits straddle the border between the two countries at an altitude of 4,000 metres above sea level. On the Chilean side they form part of the Atacama region and the Andes mountain range. Efforts to develop them span the last 20 years. The latest mining plan developed by Barrick would have required investment of US$8.5bn in an open pit mine that would affect three small glaciers on the Chilean side of the Andes, along with requiring huge building works and waste dumps. The mine was expected to have a 25-year lifetime, starting out producing 775,000 ounces of gold, 300m ounces of silver and 4,800 tonnes of copper every year. 

Environmental opposition to the project also dates back a number of years. In 2013 indigenous groups filed a complaint and Chile’s environmental regulator (SMA), ordered the suspension of development work because of concerns over environmental permits, a decision which was followed in 2018 by a closure order. But in 2019 Barrick subsidiary, Minera Nevada, initiated an appeals process. Along the way the company had also paid US$140m to resolve a class-action lawsuit in US courts, where it had been accused of distorting facts related to the project.

In addition, Barrick said it was initiating a “drastic revision” of the project, abandoning the idea of an open pit, and planning to dig an underground mine instead. In a US$960m deal in 2017 Barrick sold half of its Veladero mine in Argentina to China’s Shandong Gold, with an understanding that Shandong would help it develop Pascua Lama.

Ultimately, none of these moves proved able to save the project. Chile’s environmental court dismissed Barrick’s appeal and confirmed the 2018 closure order, as well as a US$9m fine. Chilean officials said Pascua Lama had violated 33 environmental regulations and damaged native flora and fauna, as well as discharging acidic water into the Estrecho river used by the local Diaguita community. Environmental lobby group Greenpeace said the court ruling was “a very important victory for the local communities that for years have denounced and taken legal action against the serious effects that mining has had on their lands”. It also called for legislation to protect Chile’s glaciers from the effects of mining.

The closure of the project – on which Barrick says it has spent US$5bn in development costs – can be seen as an indication of how strongly environmental and climate-change concerns have moved up the public policy agenda over the last 20 years. Barrick has said it will not appeal the decision and will transition the Pascua (Chilean side) mining site from “care and maintenance” to “closure”.

However, this may still not be the final word. Marcelo Álvarez, Barrick executive director for Chile and Argentina, said Pascua Lama remained “an important project” and work had begun to “re-evaluate its potential”. The implication was that some form of revised project might emerge in the future. Álvarez said the company remained committed to further investment in both Chile and Argentina. He added that Barrick is now “a very different company” since its 2019 merger with Randgold Resources and that it has “a strong focus on establishing good relations the communities and authorities”.

The International Monetary Fund (IMF) has praised President Xiomara Castro’s government for its “decisive policies” and handling of the economy, but a recent survey showed that voters believe economic issues are the biggest problem facing the country.

On 13 June, the IMF published its third review under Honduras’ Extended Fund Facility (EFF) and Extended Credit Facility (ECF) arrangements with the Fund, in which it highlighted economic resilience, contained inflation, strengthening international reserves, and improving foreign exchange market conditions. Honduras’s GDP growth was 3.6% in 2024, which the IMF attributes to remittance-supported consumption and some increases in private investment, while public investment stabilised. 

The Honduran economy has performed well in terms of the expectations of the IMF programme, said the Fund. In fact, all of the targets to end-March 2025 were met, apart from a floor on priority social spending, which remains lower than expected due to challenges to execution, said the IMF. This has helped to catalyse external financing, it said, including from private lenders, and in April Fund staff agreed to disburse a further US$155m to Honduras, pending approval by the IMF’s executive board.

While the government has implemented policies stipulated by the IMF, the Fund recognises that external risks to the economy have increased, although it claims that its programme is “an important economic anchor” that “provides a policy framework amid significant external and domestic uncertainties”. 

These uncertainties include US tariffs amid President Donald Trump’s trade war with China, as well as a proposed US tax on remittances (yet to be approved at the time of writing), which would have a significant impact on the Honduran economy as remittances contributed 28% of GDP in 2023, according to research from the Inter-American Dialogue, a Washington DC-based thinktank which tracks the flow of remittances.

Domestic uncertainties include elections scheduled for November 2025. Castro herself is not running for reelection, and former defence minister (2024-2025) Rixi Moncada will be the Libre party candidate. Moncada appears to have a shot at winning which would likely make for policy continuity, but polling is limited and there are serious concerns around the legitimacy of the electoral process. This means that turnout could be low, as well as increasing the risk of political violence, meaning that the next president will inherit a more complicated situation.

The potential for a difficult start to the new presidential term is exacerbated by a disconnect between the IMF assessment of Honduras’s economic performance and public perceptions. A recent survey of 1,590 respondents, carried out from 17-28 March and published at the end of May by the Equipo de Reflexión, Investigación y Comunicación de la Compañía de Jesús (Eric-SJ), a local thinktank that focuses on social justice, found that unemployment and economic issues were named as the biggest problem facing the country by 48.9% of respondents. In addition, 53.1% of respondents said that resolving the economic crisis should be the top priority for Castro in her final few months in office.

Although the IMF does acknowledge that social spending remains below levels expected under its programme, the contrast between the Fund’s assessment of Honduras’s economic situation and that of voters reveals differing priorities: while economic fundamentals may have improved, a stronger buffer of foreign reserves, for example, doesn’t put food on the table for ordinary Hondurans. And while the IMF has praised Castro for a commitment to “prudent fiscal policies”, those struggling to eat might prefer the government to increase public spending on social programmes. 

Looking ahead, the Fund believes that growth will slow to 3.2-3.4% of GDP in 2026-2027, down from 3.5% this year. It blames tighter credit conditions and slower credit activity which will mean slower growth in consumption. These calculations include an assumption that remittances will contribute a declining share of GDP, but the IMF acknowledges that “exceptional uncertainty around the outlook remains”.

Although economic growth of over 3% is relatively good, the results of the survey discussed above show that these benefits are not being equally distributed, as many Hondurans perceive themselves to be living through an economic crisis rather than a period of growth. Although the IMF might be pleased with recent developments, the fact that so many ordinary Hondurans aren’t means there is great potential for protests and social unrest unless the government can find ways to more equitably distribute economic gains.

Energy tender

In June, Honduras’s state electricity company Empresa Nacional de Energía Eléctrica (ENEE) launched an international public tender to procure 1,500 megawatts (MW) of energy to guarantee the country’s energy supply until 2030. According to a finance ministry (Sefin) press release, the plan aims to add an additional 800MW by 2027, 300MW in 2028, and 400MW by 2030, as well as providing a 10% reserve margin to guarantee stability and availability of electricity supply in the national grid (SIN). According to the Sefin press release, payments will be backed by a sovereign guarantee issued by the Honduran state in addition to a credit offered by a multilateral finance institution: Sefin notes that advanced talks are underway with the Central American development bank (BCIE) with regard to this objective.

*** Russian elite show little appetite for reform.  The Moscow-based Institute of Contemporary Development (INSOR) says that it has had very little “buy-in” for its hard-hitting report on Russia’s need for reform: Acquiring a Future.  The report provides an insighful and hardhitting analysis of Russia’s ills and what the next president needs to do to secure Russia’s future.  Unfortunately, according to those close to the think tank, the INSOR report has not found “any real buyers among the country’s leadership”.

Boris Makarenko, head of the Institute’s Directorate of Sociopolitical Problems of Development says that the real problem is that even those leaders who are in favour of modernization do not trust the people and want everything to be done top-down.  He says: “In a modern state modernization can only be successful if citizens become full players in the orchestra and the authorities are satisfied with the role of conductor, with a baton that will not be used to beat musicians.”

The report sees the 2012 election as key, saying: “In one year we will choose not just between programmes and personalities, but between the beginning of change and the end of hope, between the future and a new stagnation.”  The report’s final warning is that delays in bringing about renewal destroyed the Russian Empire and then the Soviet Union.  It points to worse-case scenarios including economic collapse, an irreversible technological gap, the growth of centrifugal tendencies, and catastrophic depopulation.

One eye-catching statistic: in 2011 the country will have 648,000 18-year olds.  This will have dropped by nearly 10% by 2015, to 590,000.

***  Preparing for a third intifada.  Some 52% of Israelis believe a third intifada will break out if the Palestinians continue with their plans for a unilateral declaration of statehood in September.  In the survey conducted by Dahaf, only 30% of Israelis said they were in favour of negotiating with a Palestinian unity government including Hamas.

*** Shia security chief for Lebanon.  On 18 July, it was confirmed that Lebanon’s Shia community would retain the key post of head of General Security with the appointment of Brigadier-General Abbas Ibrahim. 
Ibrahim, whose previous position was deputy head of Lebanese Army intelligence, is known to maintain close relations with Hezbollah.

here had been hopes among the Christian community that the post would be given to a Maronite.  The security post has been filled by a Muslim since 1998 but before that it had traditionally been held by Christians.

BRASIL | Sube la producción de vehículos en abril. EL 7 de mayo la asociación brasilera de fabricantes de vehículos automotores (Anfavea) informó que se produjeron 340.865 unidades en abril, un incremento del 30,7% año en año y un incremento del 6,8% mes en mes.

La industria automotriz de Brasil es componente más importante del sector de manufacturas de país y las cifras alentarán al gobierno de la Presidente Dilma Rousseff, que ha estado tratando de estimular el crecimiento económico en el país proveyendo una serie de incentivos fiscales y de otras clases al sector de las manufacturas en los últimos dos años.

De hecho, las cifras de Anfavea sugieren que el resultado de abril es parte de una tendencia más amplia, pues el resultado significa que la producción acumulada de vehículos para el año en Brasil ahora está en 1,17m de unidades, o un 17% más que en el periodo de enero-abril del 2012.

Comentando sobre el resultado de abril, el presidente de Anfavea, Luiz Moan, dijo que “nunca hemos vendido tantos vehículos en abril”. Él entonces atribuyó el fuerte resultado al “lanzamiento de nuevos modelos y los estímulos para la producción”. En particular, Moan señaló que el sector estaba comenzando a ver los beneficios del programa de sustentación de la inversión (PSI) implementado por el gobierno bajo el cual los miembros del sector miembros pueden obtener préstamos a una tasa de interés del 3%, casi la mitad de la tasa referencial de interés del 7,5%. Según Moan, esto permitió al sector invertir en el desarrollo de su capacidad de producción lo que llevó a un incremento del 29,4% en la producción de vehículos livianos en el primer trimestre del año; un 56,5% de incremento en la producción de vehículos pesados; y un 42,2% de incremento en la producción de autobuses.

Todo esto ha permitido más ventas de vehículos  en general tanto en Brasil, donde se incrementaron un 8,2% año en año en el primer trimestre y todavía más importante, en el exterior con exportaciones creciendo un 2,8%. Esto será particularmente bienvenido por el gobierno de Rousseff, dado que las últimas cifras oficiales muestran que la balanza comercial de Brasil en abril registró un déficit de US$994m, su peor resultado para el mes desde 1959. Esto a medida que las exportaciones de Brasil totalizaron US$20,63mm, un 4,1% menor que en el mismo mes del 2012. Mientras tanto, las importaciones de Brasil en el mismo mes se elevaron un 5,2%, a US$21,62mm.

CHILE | Nuevo ministro de economía. El 7 de mayo el presidente de Chile, Sebastián Piñera, designó a Félix de Vicente, el presidente de la agencia de promoción de la exportación del ministerio de relaciones exteriores, ProChile, como su nuevo ministro de economía. De Vicente reemplaza a Pablo Longueira que renunció el 29 de abril para poder competir en las primarias presidenciales del 30 de junio por la Unión Demócrata Independiente (UDI), el socio principal en la gobernante Coalición por el Cambio. La partida de Longueira fue inesperada, pues ocurrió sólo después de que el primer pre-candidato de la UDI, el ex ministro de minas y obras públicas, Laurence Golborne (2010-2012), decidió retirarse en medio de un emergente escándalo que lo involucraba.

Incluso aunque él no estará a cargo de la economía por mucho tiempo, pues el mandato de Piñera finaliza en el 2014, de Vicente tendrá un gran reto por delante, pues la economía ha sido una de las áreas de mejor desempeño bajo el gobierno de Piñera, y la mayor parte del tiempo, Longueira estuvo al timón del ministerio de economía.

Chile ha tenido un crecimiento promedio del PIB de más del 5% desde que asumió Piñera en el 2010, y el pronóstico del banco central para el año está entre el 4,5% y el 5,5%. Sin embargo, los esfuerzos de de Vicente para mantener activa la economía de Chile pueden ser ayudados por el hecho de que el país continúa atrayendo altos niveles de inversión extranjera directa (IED). De acuerdo con las últimas cifras del banco central, difundidas el mismo día, los flujos de IED hacia Chile se incrementaron un 87,1% a US$9,11mm en el primer trimestre del año. Esto significa que esta año Chile está bien ubicado para romper el récord de flujo de las IED de US$60,3mm establecido apenas el año pasado.

PARAGUAY | Alianza del Pacífico. El 8 de mayo vicecanciller de Paraguay, Antonio Rivas, reveló que el país había presentado formalmente una solicitud para unirse al bloque comercial de la Alianza del Pacífico como Estado observador, el primer paso para unirse formalmente al bloque. Rivas explicó que la decisión era parte de la política del país de “fortalecimiento” de sus relaciones comerciales con socios fuera del Mercado Común del Sur (Mercosur). Paraguay, un miembro fundador del mercosur, fue suspendido del bloque después del juicio político al ex presidente, Fernando Lugo (2008-2012); pero la realización de elecciones generales el 21 de abril abrió la puertas para que el país busque reintegrarse en el bloque. De todos modos, esto involucraría delicadas negociaciones entre Paraguay y sus socios del Mercosur que han llevado a preocupaciones en Paraguay de que el retorno del país al grupo podría no estar asegurado.

BOLIVIA | Se eleva la producción de gas natural e hidrocarburos. La producción de gas natural e hidrocarburos líquidos (petróleo, crudo y gasolina natural) en el primer trimestre del año se incrementó un 7,54% y un 9,76%, respectivamente, sobre el mismo periodo del año pasado, reveló en su boletín trimestral la firma estatal de energía de Bolivia, YPFB. El promedio diario de producción de gas natural entre enero y marzo del 2014 fue de 61,38m de metros cúbicos (mcm), mientras que el promedio de producción de hidrocarburos líquidos durante el mismo periodo llegó a 63.650 barriles por día (bpd). El promedio mensual de producción más alto para ambos productos fue registrado en febrero, con 62,87mcm de gas natural y 65.310bpd de hidrocarburos líquidos producidos. Las plantas de gas más productivas fueron las de Sábalo y Margarita-Huacaya, que sumaron el 31,1% y el 23,4% de la producción total. Los yacimientos de gas de Sábalo, Margarita-Huacaya, y San Alberto, también generaron la mayor parte de la producción de hidrocarburos líquidos durante el primer trimestre, llegando representar el 72,4% del total.

COLOMBIA | La mina Cerrejón se reabre después de seis días de piquetes. El 26 de junio la firma minera multinacional, Cerrejón, la principal productora de carbón de Colombia, anunció que había negociado exitosamente el levantamiento de los piquetes establecidos en las vías férreas que conducen a su mina de carbón del mismo nombre, por parte de empleados de seguridad privada. Desde el 20 de junio, los empleados de la firma de seguridad privada local, Sepecol, habían estado protestando contra la terminación del contrato de la firma con Cerrejón bloqueando las vías férreas que unen a la mina con Puerto Bolívar, impidiendo los embarques de carbón.

El contrato de Sepecol expira a finales de mes, y Cerrejón ya ha dicho que no lo renovara, poniendo en riesgo 700 empleos. La mayoría de los trabajadores de Sepecol pertenecen al grupo indígena Wayúu, lo que hizo la cuestión mucho más sensible. Sin embargo, en un comunicado oficial, Cerrejón dijo que gracias a la mediación del ministerio de trabajo, el ministerio de minas, y el gobierno regional de La Guajira, se había alcanzado un acuerdo con los trabajadores por el cual el 80% de ellos retendrían sus puestos pero bajo nuevos contratistas. Cerrejón, que el año pasado se vio afectada por más de un mes de huelgas por parte sus trabajadores lo que resultó en una caída del 4,6% en la producción ese año, agregó que la vía férrea ahora había sido despejada y que los envíos de carbón fueron reanudados de inmediato.

PERÚ | Otorgan concesión para el Gasoducto del Sur. El 30 de junio la agencia de promoción de la inversión de Perú, ProInversión, anunció que Gasoducto Sur Peruano (GSP), un consorcio compuesto por el gigante brasilero de la construcción Oderbrecht y la firma española Enagás, había sido otorgado con la concesión para construir el mega-proyecto ‘Gasoducto del Sur’.

El proyecto Gasoducto del Sur, que contempla la construcción de un gasoducto de 1.080kms para transportar gas desde los yacimientos de gas natural del centro de Perú al sur del país, fue planteado por primera vez en el 2007 pero ha enfrentado varios reveses que impidieron su desarrollo. El proyecto fue revivido por el gobierno del Presidente Ollanta Humala en el 2012, como parte de sus esfuerzos por masificar el uso del gas natural como el combustible en el país y para promover el desarrollo económico de las regiones sureñas del Perú. El gasoducto está proyectado que pase a través de las regiones de Cusco, Puno, Arequipa, Moquegua, y Tacna, proveyendo al país con la segunda mayor red de distribución de gas natural, lo que ayudará a reducir significativamente los costos de la energía en el sur del Perú, lo que se estima que beneficiará a unos 600.000 hogares.

Una declaración de ProInversión expresó que GSP se aseguró la concesión de construir y operar por 34 años el proyecto en un proceso de licitación pública con una oferta de US$7,33mm y después de que el otro principal contendiente por el contrato, el consorcio Gasoducto Peruano del Sur (GPdS, compuesto de GDF Suez, Sempra, Techint, y TGI) fuera descalificado debido a irregularidades en su oferta. Esto hizo que GPdS se queje de que había sido dejado fuera del proceso injustamente y anunció que buscaría que el proceso sea anulado. Pero Edgard Ramírez, el presidente del comité de seguridad energética de ProInversión, dijo que las autoridades habían hallado discrepancias en la información presentada por GPdS en apoyo de su oferta relacionadas con el nivel de participación de cada una de las firmas en el consorcio. Según Ramírez, GPdS no tiene el recurso de apelar la decisión.

El ministro de energía & minas, Eleodoro Mayorga, salió en defensa de la decisión de ProInversión, afirmando que el consorcio se había “auto-descalificado”. De acuerdo con Mayorga, “cuando GPdS tenía que haber presentado la propuesta económica y técnica, presentó una carta en la cual había modificado la composición [del consorcio]”, violando los términos de la competencia.

El proyecto, que también incluye la construcción de dos nuevas plantas de ciclo combinado alimentadas a gas en Matarani (Arequipa) e Ilo (Moquegua) por una inversión total de US$15mm, está fijado para completarse en el 2018.

• Las familias colombianas gastan más

De acuerdo con los datos publicados el 29 de junio, por la compañía de estudios de mercado, Raddar, la tasa de crecimiento anual del consumo de hogares en Colombia alcanzó un 11,7% el pasado mayo, y se podría expandir hasta un 13% en los próximos tres meses. Raddar atribuye el incremento en los niveles de consumo al creciente empleo (8,8% en mayo, cayendo 2,3 puntos porcentuales desde enero), a la mejorada estabilidad laboral y el mayor ingreso familiar. El entretenimiento es el área de gastos de hogares que más ha crecido, elevándose un 15,5% durante el periodo citado. El incremento en el gasto en los hogares también ha sido acompañado por una caída en los préstamos personales, de una tasa anual de crecimiento del 20,56% en diciembre del 2011, al 8,7% en abril del 2014.

El 4 de marzo un dólar de EU por un breve periodo de tiempo llegó a valer R$3, llevando a la moneda brasilera a su nivel más débil en 10 años. La caída en el valor del Real fue atribuida a la decisión del presidente del senado federal, Renan Calheiros, de bloquear el intento del gobierno de aprobar un proyecto de ley para elevar la toma de impuesto (ver artículo anterior). Hablando con el diario, O Globo, el economista Rodolfo Oliveira dijo: “El gobierno tendrá dificultades para hacer su ajuste fiscal y habrá barreras políticas en el camino”. Mientras que el Real ya estaba debilitándose ante el dólar por la deteriorada situación económica, la incertidumbre política ahora lo está socavando aún más.

Desde enero el Real ha perdido casi el 15% de su valor contra el dólar. Aunque el  nuevo equipo económico, liderado por el ministro de finanzas, Joaquim Levy, está intentando un proceso de reajuste fiscal, la tarea está siendo complicada por el lento crecimiento económico de Brasil, un creciente desempleo, y una inflación que ronda el 7%. Como parte del paquete de austeridad diseñado por Levy, el gobierno emitió un decreto provisional, para su rápida aprobación por el congreso federal, eliminando un número de beneficios fiscales. La propuesta, que ayudaría al gobierno a recaudar R$25mm (US$8,5mm) al año, es uno de las varias diseñadas para reducir el déficit del presupuesto que casi se ha triplicado durante el primer mandato de la Presidenta Dilma Rousseff (2011-2015).

El gobierno ahora está buscando otros medios para lograr su objetivo. Aunque el congreso puede causarle al ejecutivo un severo dolor de cabeza, el gobierno aún puede pasar significativas medidas para recortar costos y elevar los ingresos sin el aval del congreso. De acuerdo con el periódico financiero local, Valor, de los R$111mm en ahorros anunciados por el equipo económico, solamente el 22%, o R$24mm, requiere la aprobación explícita del congreso. Aun así otros factores afectarán la capacidad del ejecutivo de aplicar su programa, no menos el desempeño económico general y la posibilidad de significativo malestar social.

Suben las tasas de interés

El comité de política monetaria (Copom) del banco central de Brasil, elevó de nuevo la tasa de interés de referencia (Selic) por 50 puntos básicos al 12,75% el 5 de marzo. La decisión fue unánime y significa que el Selic está ahora en su punto más alto desde enero del 2009. La nota que acompañó la decisión no da más información acerca del pensamiento del comité. Una mayoría de analistas cree que habrá más aumentos en la tasas, en abril. La inflación llegó a una tasa anualizada del 7,14%, muy por encima del rango de la meta del banco central del 4,5% más o menos un 2%.

De acuerdo con un sondeo del banco central, difundido el 2 de marzo, una mayoría de economistas  cree que la economía se contraerá por un 0,58% en el 2015. Los analistas calculan que las cifras revisadas del 2014 mostrarán que la economía tuvo un crecimiento nulo en el 2014, aunque muchos son optimistas de que habrá un retorno al crecimiento, en un promedio del 1,5%, en el 2016. El sondeo también muestra que los economistas creen que la inflación se elevará al 7,47% este año. Si esto se confirma, será la más alta desde el 2004, cuando llegó al 7,6%.

Los datos difundidos por el instituto nacional de estadísticas (IBGE) el 4 de marzo, muestran que la producción industrial se contrajo un 5,2% en el primer mes del 2015, comparado con el mismo periodo del 2014. De los 79 sectores sondeados, 60 registraron una caída en la producción. Entre los sectores de peor desempeño estaba la industria automotriz, con una caída del 18,2%.

La confianza del consumidor también cayó a su más bajo nivel desde que se tiene registro (2005) a fines de febrero, de acuerdo con estadísticas de la Fundação Getulio Vargas. El índice de confianza del consumidor entrevista a 2.000 familias en las siete ciudades más grandes de Brasil. Mide la voluntad de realizar compras de varios tipos bienes de consumo y calibra las expectativas acerca del desempleo, los ingresos, y las oportunidades económicas.

Aunque el nivel de empleo se ha mantenido alto a pesar de la vacilante economía, se espera que esta tendencia termine pronto. Con severos retrasos en los pagos a las compañías que implementan el programa de infraestructura del gobierno, el Programa de Aceleração do Crescimento (PAC), se espera que las cifras del empleo de febrero sean sombrías.

• Petrobrás

La firma petrolera estatal, Petrobrás, anunció un programa de desinversión de US$13,7mm para el 2015-2016. El último plan llega además de los compromisos previos de la compañía de reducir el gasto entre US$5mm y US$11mm en 2014-2018. Los últimos recortes se aplicaran entre la división de exploración y producción de la compañía (30%), su unidad de abastecimiento (30%), y su unidad de energía & gas (40%). En una nota que acompaña la decisión, Petrobrás dijo que el recorte en el gasto era parte de su estrategia para “reducir el apalancamiento, mantener sus reservas de dinero efectivo, y concentrarse en sus prioridades de inversión”.

President Juan Carlos Varela last month named Francisco Escobar Pedreschi as Panama’s first ambassador to China following the establishment of diplomatic relations in June [RC-17-07]. This follows other signs of burgeoning ties, such as a visit by a high level government delegation to China, also last month, to discuss trade and security.

Named to the post on 22 August, Escobar Pedreschi had previously served as Panama’s ambassador to Canada from 2009-2014, and to Cuba from 2014-2017. A statement by Panama’s foreign ministry regarding Escobar Pedreschi’s appointment underlined his credentials in finance and trade. This is likely to be a priority for the Varela government in this emerging partnership as it seeks to build on an already flourishing economic relationship with China, currently Panama’s fourth largest export market and third largest source of imports. Escobar Pedreschi has a degree in finance, specialising in international markets and trade, and has worked for a US trade logistics company based in the Colón Free Zone.

The announcement regarding Escobar Pedreschi’s appointment came weeks after a high-level Panamanian government delegation began a five-day visit to China on 8 August. Headed up by Public Security Minister Alexis Bethancourt and the director of the national security council, Rolando López, the delegation included officials from the ministries of foreign affairs; economy & finance; and trade & industry, as well as Panama’s maritime authority and the tourism authority. As regards trade and investment, the delegation met representatives from China’s trade ministry and the Council of China for the Promotion of International Trade (CCPIT) (the most important institution for the promotion of foreign trade in China) and discussed efforts to promote Panama as a regional headquarters for Chinese public and private banks, enterprises, and organisations. These discussions also follow a trade forum which took place in July organised by Panama’s chamber of commerce, industries & agriculture (CCIAP), alongside the CCPIT and the Chinese embassy in Panama aimed at exploring mutual trade opportunities.

Another issue flagged up by the Varela government as being of “extreme priority” was security: the two sides reportedly discussed plans to “work together in the fight against illegal migration, to ensure the legitimate interests and rights of our nationals, cooperation and exchange of information in order to pursue criminals and illicit money and exchange and cooperation in training of officials”.

Sanctions against Venezuela

On 22 August, President Varela announced that as of 1 October Venezuelans travelling to Panama would require a stamped visa to enter national territory. The move follows a meeting that President Varela held with US Vice President Mike Pence during the latter’s visit to Panama that month as part of a tour of Latin America. During the meeting President Varela gave his backing to regional efforts to pressure Venezuela into restoring democratic order following the installation of a constituent assembly last month by the government led by President Nicolás Maduro (see sidebar). President Varela, who also said that he would grant immigration status to the 25,000 Venezuelans registered before 30 June, said that the sanctions would be maintained “until the democratic order is restored, the constitution is restored and human rights are respected in Venezuela”. His decision regarding the visas follows his announcement at the end of May, in response to security concerns (mainly due to increased coca production in neighbouring Colombia), of new immigration measures for foreign nationals from Colombia, Nicaragua, and Venezuela, reducing the amount of time that they are permitted to stay as tourists in Panama from 180 days to 90.

Other moves against Venezuela

President Varela’s announcement regarding the imposition of visas follows other moves in the region against Venezuela such as the Lima Declaration, signed on 8 August by 12 Latin American countries, which “condemns the rupture of Venezuela’s democratic order” and refuses to recognise the “illegitimate constituent assembly”, and the 5 August decision by the Southern Common Market (Mercosur) to suspend Venezuela because of its breaches of the bloc’s democracy clause.

The United Nations (UN) high commissioner for human rights, Michelle Bachelet, issued a statement on 15 December condemning the problem of “persistent violence across the country” in Colombia, and calling on the government led by President Iván Duque to “take stronger and much more effective action to protect the population from this appalling and pervasive violence”. “It is the state’s duty to be present throughout the country,” Bachelet said, “not only to clamp down on those responsible for the violence, but also to provide basic services and safeguard the fundamental rights of the population”.

The Colombian authorities have come under repeated criticism for the escalation of violence in recent years, and in particular since the start of the coronavirus (Covid-19) pandemic. President Duque’s human rights advisor, Nancy Patricia Gutiérrez, responded to Bachelet’s comments by insisting that “the protection of the population is the priority of the government’s security strategy”, and emphasising that this violence is fundamentally “derived from illicit economies”. Duque’s highly militarised security strategy has drawn criticism from peace campaigners in Colombia, who contend that this crackdown on illicit economies has caused the surge in violence.

The border region with Venezuela has been particularly badly affected, as the breakdown in relations between the two governments has increased the control of armed groups along the 2,219km border. A recent report by NGO Fundación Paz y Reconciliación highlighted that at least 472 people have been murdered so far this year in the 24 Colombian municipalities that lie along the shared border, and that at least 1,365 people have been forcibly displaced. Many of the country’s indigenous communities live in this border region and have been disproportionately affected by the escalating violence.

Indigenous violence

Michelle Bachelet’s statement also highlighted the disproportionate victimisation of indigenous communities, echoing a complaint made on 10 December by the national commission on the human rights of indigenous peoples, denouncing that they face “systemic violations of human rights”, and requesting “concrete action” from President Duque’s government to address this growing threat.

Petro took office on 7 August, having appointed a 17-strong ministerial team. Although there will likely be future cabinet reshuffles down the road, the political and personal nature of this opening team will have a direct bearing on prospects for peace. Turning to Petro himself, the new president is something of an outsider – in other words, not a member of political parties that form the traditional Colombian political elite – but also an experienced politician. Aged 62 on taking office, Petro has been politically active for over four decades. At an early age (17, according to some accounts) he joined the April 19^th (M-19) guerrilla movement, an armed group that had been formed following allegations of fraud in the 1970 elections. In 1985 he was arrested by the army and accused of illegal possession of firearms, for which he served an 18-month prison sentence. During his time in prison, he is believed to have moved away from the idea of armed struggle towards favouring peaceful political engagement as a pathway for change. In the late 1980s the M-19 took part in peace talks with the government and eventually disbanded. Petro was subsequently active in a number of left-wing parties, including the M-19 Democratic Alliance (an early political successor to the guerrilla movement), Via Alterna, and Polo Democrático Alternativo (PDA). He was an active member of congress, becoming a senator in 2006 and taking part in various polemics, including those concerning the ‘parapolitics’ affair, which focused on the alleged paramilitary links of establishment politicians including then-president Alvaro Uribe.

Petro ran for the presidency in the 2010 elections, representing the PDA, and coming fourth with 9.1% of the first-round vote. He subsequently left the PDA to create another party, Movimiento Progresistas, which was later to be renamed Colombia Humana.  At the head of this party, he was elected mayor of Bogotá in 2011, winning with 32.2% of the votes. In his new role he introduced a ban on carrying arms, which was credited for a reduction in homicides (although critics said other forms of crime such as robberies and muggings went up). Other initiatives included expanding water supply and community food packages for the poor as well as a range of environmental, health, and urban transport policies.

However, the new mayor ran into trouble over a contract which gave responsibility for all waste collection in the city to a private company, Aguas de Bogotá. The company misjudged the predicted workload and in late 2012 over 10,000 tons of waste piled up on the streets of the capital, forcing the mayor to import new waste-collecting trucks to be operated directly by the city. Various legal cases were initiated for related losses and damages, and the mayor and other officials faced fines for mismanagement. In 2013 the alleged mismanagement of the waste contract was cited by Petro’s political opponents to initiate a recall referendum. The prosecutor general ruled in favour of the mayor’s dismissal, banning him from holding public office for 15 years. He was replaced as mayor in March 2014, even though higher court decisions reversed the earlier rulings, cleared him of wrong-doing, and ordered that he be paid his salary for the full mayoral term, as compensation for unfair dismissal.

Petro was a candidate in the 2018 elections where he attracted the concentrated fire of the country’s right-wing parties, being described by the successful candidate, Iván Duque, as an agent of ‘castro-chavismo’ after Fidel Castro and Hugo Chávez, two of the most prominent bête noires of the Colombian right. But he did well compared to 2010, coming second in the first round with 25.1% of the vote, and losing in the second-round run-off with 41.8% (which meant he was 12.2 percentage points behind Duque, the winner).

With such a long political career, Petro naturally attracts both ardent fans and bitter detractors. Supporters highlight his consistent, multi-decade campaigning for social justice and reform. Many of his detractors have been ideologically motivated, going as far as claiming he will bring communism to Colombia or follow a Venezuelan path to economic ruin. Some say he can be argumentative and stubborn and harbour personal grudges. From this point of view, he may be portrayed as a divisive figure, who splits opinion rather than builds consensus. However, there is also evidence that Petro can be a consensus builder, and, as we shall see below, that his plan is to appeal across a wide spectrum of the country.

The 2022 elections, in which Petro was victorious, highlighted several important trends. In the first round Petro was ahead with 40.3% of the vote, going on to win the second round with 50.4%, defeating Rodolfo Hernández, a right-wing populist, by a margin of 3.1% percentage points. One of the stand-out features of these elections is that Colombia’s traditional centre-right establishment took what can only be described as an electoral beating. The violent repression of widespread street protests in 2019, 2020, and 2021, the government’s apparent disdain for peace talks, and the privations and job losses associated with Covid-19 pandemic lockdowns all contributed to rising disapproval and even anger among voters.

On the right, the candidate of the once-powerful Centro Democrático (CD) could not muster more than low single-digit percentage point support, and eventually stood down before election day. Significantly it was not someone from the traditional elite but another outsider, the populist anti-corruption campaigner Rodolfo Hernández who provided some kind of home for disoriented conservative voters. There was a similar implosion among parties of the centre which, despite fielding multiple candidates, proved unable to find a charismatic leader. The paradox is that while surveys show a large proportion of Colombians describe themselves as political centrists, they found it particularly difficult in 2022 to find any centrist candidates they actually liked. Tellingly, perhaps, Sergio Fajardo, a prominent centrist, gained only 4.2% of the popular vote in the first round in 2022, massively down from the 23.8% he achieved in the first round four years earlier.

BRAZIL | Petrobras new pricing policy. Brazil’s state-controlled oil company Petrobras unveiled a new pricing policy for gasoline and diesel on 16 May, which would end its “obligatory subordination to import parity pricing,” which had obliged Petrobras to fix its domestic fuel pricing in accordance with prices determined by international markets and exchange rates.

Critics of the alignment with import parity pricing, including President Luiz Inácio Lula da Silva, hope that abandoning the old pricing model, in place since 2016, will protect Brazilian consumers from any volatility in international fuel prices, especially apparent last year after the global energy crisis caused by Russia’s invasion of Ukraine.

This new pricing policy would allow the company more freedom to decide fuel prices based not only on international prices as reference, but also on domestic factors, such as the prices of fuel alternatives or the cost of domestic production. Petrobras CEO Jean Paul Prates stated that this new strategy would capitalise on the oil giant’s “competitive advantage of being a company with huge production capacity and with nationwide structures of pipelines and transportation.”

BRAZIL | Lula meets Paraguay’s president-elect Peña. Brazil’s President Luiz Inácio Lula da Silva met the winner of Paraguay’s recent presidential election, Santiago Peña, in Brasília on 16 May. At the top of their meeting agenda were bilateral issues such as the agreement on the jointly owned Itaipú hydroelectric dam, as well as the ratification of the trade deal between the European Union (EU) and the Southern Common Market (Mercosur), of which Brazil and Paraguay are member states.

After Peña’s inauguration on 15 August, his government will be tasked with renegotiating the terms of the 50-year-old Itaipú Treaty, with discussions expected on points such as the amount of royalties each country should receive and the price at which Paraguay sells its share of the generated electricity to Brazil.

At a press conference after the meeting, Peña told reporters that Paraguay had “the same vision” as Brazil regarding the EU-Mercosur trade agreement, hoping the deal would push through but also expressing concerns over “restrictions on the environmental question”, in reference to the EU’s anti-deforestation rules which could limit Paraguayan and Brazilian agricultural exports.

Amid uncertainty as to whether Bernardo Arévalo, who convincingly won the 20 August presidential run-off election on an anti-corruption pledge, would assume office on 14 January (for more discussion of this see our sister Weekly Report), late last year Guatemala’s legislature acted on a constitutional court (CC) order to pick the new supreme court (CSJ) by mid-December. The appointments had been pending since 2019, held up initially by appeals filed against the process, and then by revelations of interference in the justice system by illicit groups. The CSJ and legislature are both aligned with the so-called ‘pacto de corruptos’, an allusion to corruption in Guatemala’s institutions, which Arévalo has pledged to take on. The latest CSJ appointments are unlikely to assuage impunity concerns.

As per Guatemala’s constitution, 13 CSJ and 135 appeals’ court magistrates are replaced every five years. However, the judges who served from 2014-2019 remained in their posts after the process of picking their successors hit various obstacles. Initially appeals were filed against the process of selecting the new justices while in 2020 a case known as the ‘parallel commissions case’, involving interference in the justice system by illicit groups, was presented by the attorney general’s special anti-impunity unit (Feci), at the time helmed by internationally-lauded prosecutor Juan Francisco Sandoval. Sandoval, who has since fled the country, was fired in July 2021 by US-sanctioned attorney general María Consuelo Porras (who Arévalo has accused of co-leading a coup d’état to prevent him from taking office).

The parallel commissions case centred around claims that Gustavo Alejos, the chief of staff to the late former president Álvaro Colom (2008-2012), had set up a scheme to influence the selection process. Alejos was sanctioned in April 2021 by the US Treasury Department’s Office of Foreign Asset Control (Ofac). Along with Colom, he also featured on the US State Department’s so-called ‘Engel List’, published in June 2021 which includes individuals in the Northern Triangle (El Salvador, Guatemala, and Honduras) accused of corruption, obstructing investigations into corruption, or undermining democratic process. Those featuring on the list are generally ineligible for visas and admission to the US.

On 7 November however, the CC set the 160-member unicameral legislature the deadline of 15 December to make the appointments (by that point more than four years overdue) which were duly finalised on 15 November. The composition of the CSJ is particularly crucial given that it often rules on requests to strip public officials of immunity from prosecution so that they can be investigated – a request filed against Arévalo himself in relation to a case widely considered spurious [WR-23-47].

Of the 13 newly appointed justices, three were accused by Feci of having met with Alejos in February 2020: Oscar Ruperto Cruz, Carlos Humberto Rivera, and José Luis de Jesús Samayoa. Another, Manuel Duarte, who was re-elected to the court, also featured on the US’ 2021 ‘Engel List’ for allegedly “abusing his authority to inappropriately influence and manipulate the appointment of judges to high court positions.” The local media reported that others had previously faced criminal investigations. According to a 16 November report by national daily Prensa Libre, these include Claudia Lucrecia Paredes and Gustavo Adolfo Morales Duarte, who have also been linked to Alejos (with Morales having reportedly been named in relation to the ‘parallel commissions’ case), and Héctor Ricardo Echeverría, who was included in a 2012 case entitled ‘judges of impunity’. The 2012 case was unveiled by the now defunct United Nations-backed anti-impunity commission in Guatemala (Cicig) which was shuttered under former president Jimmy Morales (2016-2020).

Exiled justice officials

On 22 November international human rights NGO Amnesty International (AI) released a new report flagging up concerns about the targeting of independent justice officials in Guatemala – a process which has gathered pace under the conservative government led by President Alejandro Giammettei who is an ally of Porras. The AI report cites data from local NGO Unidad de Protección a Defensores de los Derechos Humanos (Udefegua) which shows that in 2022 at least 73 Guatemalan justice officials, journalists, and activists were forced into exile.

The Fourth International Conference of Small Island Developing States (known as SIDS4) was held in Antigua & Barbuda on 26-30 May. At one level it confirmed much of what is already known about the plight of small islands in the Caribbean and elsewhere. But it also voiced ideas that could cause some big future changes in their economies.

World-wide, the United Nations (UN) classifies 57 countries as SIDS, of which 29 are in the Caribbean, made up of 16 member states and 13 territories. In a briefing note, the UN Economic Commission for Latin America and the Caribbean (Eclac) points out that SIDS4 ended only two days before 1 June, the start day for the 2024 Atlantic hurricane season which is “predicted to be the hottest and most active season on record, underscoring the extreme vulnerability of these countries to climate-related impacts.” In 2017 category 5 Hurricanes Irma and María caused a reported US$97bn of damage across the region.

Island economies have been battered not only by extreme weather but also by the coronavirus (Covid-19) pandemic which, through its impact on tourism, “pushed many governments to the brink of insolvency”. High levels of debt are clearly holding back growth. Eclac says that since the financial crisis of 2008-2009 no Caribbean SIDS have experienced robust growth. Six Caribbean SIDS have debt-to-GDP ratios in excess of 100%. Many of these islands do not qualify for “soft” low-interest loans because, in GDP per-capita terms they are judged to be “upper middle” and “high-income” economies.

Some progress was made at the conference. Pledges were made by the US and European Union (EU) to increase financial support – to date for example the SIDS have received only about US$1.5bn out of US$100bn in climate finance pledged by the wealthier countries in 2019 but since then not fully delivered. Donor countries agreed a document known as the Antigua & Barbuda Agenda for SIDS (ABAS) setting out sustainable development goals for the next 10 years and including pledges of concessional finance. There were also pledges of action to support biodiversity, the ocean-based economy, and climate innovation.

In the long term, however, bigger changes may come from the creation of a Multidimensional Vulnerability Index (MVI). This is designed to tackle the problem that many Caribbean islands face: they are deemed too small to tap into the global bond markets, but too rich to qualify for economic aid. Antigua & Barbuda’s Prime Minister Gaston Browne noted that governments hit by extreme climate events have “no income and no savings”. In that context “looking at the per capita income metric in terms of eligibility for funding is vulgar”. The idea of the MVI is that it will give international donors a more accurate way of assessing a country’s needs related to climate change vulnerability.

Mexico is at the forefront of artificial intelligence, or AI, adoption in Latin America, according to a new report. However, companies in the sector have raised issues around regulation and a lack of skilled workers.

There are 362 AI-related companies in Mexico in 2024, a 965% increase compared to 2018, when there were just 34, according to a report from global entrepreneur community Endeavor and Mexico-based bank Santander Mexico titled ‘La era de la IA en México’ (The AI era in Mexico). In 2022 and 2023, these companies received investment over US$500m and generated more than 11,000 jobs, it adds.

Almost a third of AI-related companies work in business intelligence and analytics, with 23% in machine learning and 13% in robotic process automation and robotics. Mexico City, as well as the states of Jalisco and Nuevo León, are home to the highest number of these companies, with financial services, logistics, manufacturing, sales, and digital commerce deriving the greatest benefit of the technology. And there is still room to grow, with three out of five Mexican companies yet to adopt AI, according to the report, which also cites challenges to the sector such as cybersecurity, regulations, and a lack of skilled workers.

Although issues remain, Mexico compares relatively well to regional peers and ranked third in technology in Latin America in the United Nations Educational, Scientific and Cultural Organisation (Unesco)’s 2023 Government AI Readiness Index. Unesco also highlights the fact that Mexico had the highest number of master’s graduates in computer science or related subjects in the region in 2022, as well as having a “solid regulatory framework for privacy, transparency, and access to information rights”. As for improvements, Unesco suggests putting together a national AI strategy linked to the country’s national development plan to position Mexico in AI governance, as well as increasing the inclusion of underrepresented groups, for example by improving the digital representation of the 68 national Indigenous languages.

Industry reponses

Industry figures have also spoken of room for improvement on AI in Mexico. For example Rubén Mugártegui, director of Amazon Web Services (AWS) Mexico, said that 80% of AI companies are struggling to fill vacancies due to a lack of candidates with suitable skills. And concerns around regulation were raised at the Summit Fintech Latam in Mexico City on 14 August, where David Ruiz of Google suggested that any proposed regulation should focus on the uses of AI, rather than restricting the technology itself.

An end to the three-year impasse in US-Bolivia relations is finally within sight. Last week the two governments signed a framework agreement providing for the full restoration of diplomatic ties, which were severed in 2008 following the crisis triggered by spying allegations involving then-US ambassador to La Paz, Philip Goldberg. Uncertainty surrounds the form that this new relationship - which has yet to be sealed with the appointment of new ambassadors - will take, particularly in relation to the issue of anti-drugs cooperation given President Evo Morales’ ‘coca sí, cocaína no’ platform, which has long been a sticking point with Washington.

The agreement’s objectives outlined in the joint statement signed by US Under Secretary for Global Affairs, Maria Otero, and Bolivia’s deputy foreign minister, Juan Carlos Alurralde, on 7 September included “supporting cooperative and effective action against illicit narcotics production and trafficking” and “strengthening the commercial relationships” between the two countries. One notable provision of the agreement is the continuation of assistance by the US Agency for International Development (USAID): Morales has long blamed USAID for anti-government unrest – most recently in relation to protests over the planned road through the indigenous territory and national park, Isiboro Sécure (Tipnis) [WR-11-35]. Yet while USAID will remain in the country (following the 2008 diplomatic crisis, Morales closed all programmes of a “political nature”, allowing only social and productive projects to continue), he has ruled out a return for the US Drug Enforcement Administration (DEA). With Bolivia continuing to cooperate with the US Embassy’s Narcotics Affairs Section, one clue as to the new form these joint anti-drugs efforts could take, came with the announcement which followed the restoration of ties, that Bolivia, the US and Brazil would sign a tripartite deal for a pilot system control project to reduce excess coca cultivation in Bolivia.

Tied to the DEA’s ejection in 2008 was the suspension of Bolivia’s trade preferences under the Andean Trade Promotion and Drug Eradication Act (Atpdea), which grants special trade tariffs in exchange for contributing to counter-narcotics operations. Alurralde has already said the Atpdea will not be restored. Instead the new agreement provides for the establishment of a bilateral trade council which would also focus on other areas such as medium and long-term investment possibilities. Arguably this bodes well for the new relationship, suggesting a break from the conditionality which previously characterised US cooperation. In any case, even with the suspension of Atpdea, Bolivian exports to the US (its second biggest market after Brazil) continue to rise. According to figures from the Bolivian ministry of productive development, in the third quarter of 2011, Bolivia’s exports to the US reached US$661m, compared with US$279m in the same period in 2005.

Anti-drugs treaty with Brazil

Brazil is filling the vacuum left by the DEA in 2008 [WR-11-08]. Last month Bolivia’s defence minister Rubén Saavedra, and his Brazilian counterpart, Celso Amorim, signed a memorandum of understanding (MOU) on drug-trafficking and organised crime along their joint border, which included Brazil’s previous offer of border patrol drones (or UAVs) to Bolivia. The two ministers also announced an inaugural bilateral meeting between both countries’ armed forces, in the first half of 2012, aimed at firming up operational plans and coordinating military exercises so as to patrol borders more efficiently.

Meanwhile the most recent report by the United Nations Office on Drugs and Crime (UNODC), released in September 2011, showed mixed results in Bolivia's anti-drug efforts. The report revealed Bolivia’s coca cultivation to be stable (at 31,000 hectares in 2010, slightly up from 30,900ha in 2009) and showed progress both in coca eradication (with 8,200ha of coca plantations eradicated in 2010, 29% more than in 2009) and cocaine base seizures (up by 17% to 25.7 tonnes). Yet it also showed seizures of cocaine fell by 31% to 3.4t (the second consecutive year of declines from the peak of 7.2t recorded in 2008).

• Another sticking point

Also likely to test the new Bolivia-US relationship is Bolivia’s extradition request for former President Gonzalo Sánchez de Lozada (2002-2003), who is accused of genocide in relation to the 2003 army clampdown known as “Black October” in which more than 60 people were killed. Adding weight to the Bolivian government’s case is the recent landmark ruling against seven of Sánchez de Lozada’s top officials [WR-11-35].

COLOMBIA |Ten-year fiscal plan approved. The Colombian government announced on 13 June that its national economic and social policy council (Conpes) had approved a new medium term fiscal framework that is to govern the country’s public finances over the next 10 years. In making the announcement, Finance Minister Mauricio Cárdenas said that by approving the plan Conpes had “reaffirmed the government’s commitment with fiscal sustainability expressed in the gradual reduction of the fiscal deficit, [and] a reduction in the public debt as a percentage of GDP, in a bid to ensure that everyday the country consolidates its finances, which would allow us to improve our credit rating”.

    Cárdenas then went on to explain that Conpes had approved this year and next year’s fiscal deficit to be 1% of GDP, falling to 0.8% in 2015 and then, starting in 2016, the country should start posting fiscal surpluses. The public debt levels are also projected to decline steadily with the current level of 24.7% of GDP falling to 23.5% by next year, 22.4% in 2015, 20.5% in 2016 and so on until it is reduced to “just 5.9% of GDP” by 2024.

    Cárdenas also stressed that for the first time in Colombia’s history, the approved plan fulfils the requirements set out in the 2012 public-private association (APP) law, which establishes that part of the national budget equivalent to 0.4% of GDP must be earmarked for the development of public-private projects. According to Cárdenas, “initially the budgetary allocation will be smaller with 0.05% of GDP assigned for 2015, rising to 0.35% of GDP in 2016, 2017 and 2018. But stabilising at 0.4% of GDP starting from 2019”.

   However well-thought-out the plan may be it largely depends on a series of factors that are not within the government’s control, such as the international economic environment. A clear example of how this could undermine the government’s plans has already started to be seen in recent weeks, as the US dollar has finally begun to appreciate on the back of the apparent consolidation of the US’ economic recovery. This has resulted in a depreciation of the Colombian peso which after months of trading well above the government’s target of Col$1,900/US$1 began trading below this benchmark on 14 June.

    This in turn has had a negative impact in the domestic bonds market and the level of demand for domestic treasury bonds (TES) appears to have dropped as investors have sustained substantial losses due to the peso’s depreciation against the dollar. Last week, for the first time this year, the government was unable to place all the Col$600bn it planned to allocate in the local market, managing to issue only Col$443bn. This led the government to announce that it was considering alternative means to obtain the funds it needs, such as obtaining loans from the local banking sector or even contracting debt from multilaterals. In other words, the government is considering supplanting domestic debt with foreign debt.

PERU | Falling mining exports. Peru’s mining exports in the first four months of the year totalled US$7.43bn, 16.4% less than in the same period last year, the national mining oil and energy society (SNMPE) revealed on 18 June.

   SNMPE said in a statement that the result came as a consequence of falling prices for metals in international markets, as well as lower production levels in the country - trends that have continued since last year. However, the SNMPE pointed out that the first quarter fall in exports was less than the 20.9% quarter-on-quarter decrease in exports registered in the first quarter of 2012.

    According to the SNMPE this could be a sign that the sector’s negative trend is ending. Indeed the SNMPE highlighted that while exports of copper and gold have continued to fall in the period, by 11% and 21.5% respectively, exports of other metals, such as silver and zinc, have actually increased, by 63.7% and 6.6% respectively.

    Yet a recovery of the export levels could be affected by the fact that on 17 June anti-mining protests once again resumed in the north-eastern region of Cajamarca. Since 2010 the local community in Cajamarca, a highly productive mining area, has staged violent protests against the development of the vast Conga copper and gold mine, expressing environmental concerns, which led to the suspension of the project until 2014. The protests have been very disruptive, affecting all commercial activity including mining in the region and their resumption could once again severely affect production levels.          

• New CAN secretary general

On 15 June the Andean community (CAN), the regional integration bloc comprising Bolivia, Colombia, Ecuador and Peru, unanimously elected Bolivia’s former deputy foreign trade and integration minister, Pablo Guzmán Laugier, as its new secretary-general for a five-year term. Guzmán was elected during the XXXVI Andean foreign ministers’ council meeting which took place at the CAN headquarters in Lima, Peru. Guzmán, an economist who had been a member of Bolivia’s foreign ministry since 2006, replaces the interim secretary-general, his fellow countryman Adalid Contreras Baspineiro, in the post. Contreras assumed the post after Ecuador’s Freddy Ehlers, who was elected in 2007, stepped down in order to assume the post of tourism minister back in Ecuador. Guzmán will now be in charge of presenting the bloc’s new strategic plans for the next five years.

ARGENTINA | ¿Más huelgas? El jefe de gabinete de Argentina, Aníbal Fernández, ha dicho que sería una “locura” planear otra huelga de 36 horas, siguiendo a la negativa del gobierno de elevar el umbral del impuesto a las ganancias. Una exitosa huelga nacional liderada por los sindicatos del transporte, paralizaron grandes partes de la Argentina el 31 de marzo.

Los sindicatos están exigiendo que el umbral del impuesto a las ganancias sea elevado, debido a los altos niveles de la inflación en Argentina. “La única razón por la cual existen los acuerdos colectivos de negociación de salarios es debido a este gobierno”, enfatizó Fernández.

BRASIL | Gobernanza corporativa. La bolsa de valores del estado de São Paulo (Bovespa) celebrará audiencias públicas desde el 22 de abril sobre un plan que presentó a comienzos de este mes para fortalecer la gobernanza corporativa de las empresas estatales brasileras, como una respuesta a la masiva mala gestión empresarial en la compañía petrolera estatal, Petrobrás.

Las audiencias públicas ayudarán a elaborar un nuevo marco de trabajo que debería estar listo para el 30 de junio. Estas audiencias  se concentrarán en el incremento de la transparencia, controles más afinados sobre las juntas de directores y los comités de auditores, y la adopción de métodos más transparentes para la selección de gerentes. Sin embargo, vale señalar que la adherencia a estas normas sería voluntaria para las firmas estatales.

BRASIL | Protesta de sindicatos pro-gobierno. El 7 de abril alrededor de 2.500 sindicalistas protestaron en la capital de Brasil, Brasília, contra un proyecto de ley del congreso federal para liberalizar la actual ley sobre contratos de servicios de terceros. En la actualidad, la tercerización es permitida para los llamados “servicios parciales”. Por ejemplo, una universidad privada puede subcontratar sus trabajos de limpieza y seguridad, pero sus maestros deberán estar en la lista oficial del personal.

Bajo la propuesta ley, las circunstancias bajo las cuales la subcontratación puede permitirse será extendida grandemente; el gobernante de Izquierda, Partido dos Trabalhadores (PT), votó contra los cambios pero fue derrotado.

CHILE | Superávit comercial. Chile informó de un superávit comercial de US$3,12mm en el primer trimestre del 2015, anunció la semana pasada el banco central. La cifra se compara favorablemente con los US$2,12mm de superávit comercial registrado durante el mismo periodo del 2014, pero esto no debería ocultar el hecho de que el comercio en general está declinando.

En realidad, las exportaciones cayeron un 7% año en año en el primer trimestre de este año, llegando a un total de US$17,70mm, superando a las importaciones, que cayeron un 13,9% a US$14,58mm durante el mismo periodo.

En marzo, el superávit comercial fue de US$999m gracias a exportaciones de US$6,17mm e importaciones de US$5,17mm, pero las exportaciones cayeron un 15,6% año en año, mientras que las exportaciones cayeron un 6,8%.

La principal causa de la caída en las exportaciones fue la caída en el precio del cobre, la principal exportación de Chile. Las exportaciones de cobre en marzo totalizaron US$2,86mm,  cayendo más del 20% sobre marzo del 2014.

PARAGUAY | Exportando ganado. Paraguay comenzará a enviar a Ecuador un total de 12.000 cabezas de ganado desde mayo en adelante a fin de dar un impulso a la población bovina y mejorar el stock genético en el país andino, reveló esta semana el ministerio de agricultura (MAG) de Paraguay.

Las primeras 1.000 cabezas de ganado bovino se enviarán a Ecuador en cuatro aviones de carga separados. Las restantes 11.000 cabezas de ganado se enviarán periódicamente durante lo que resta del año. Paraguay recibirá US$36m en total por el ganado, anunció el MAG.

El ministerio ecuatoriano de agricultura & ganadería dijo que había optado por el ganado bovino de Paraguay debido a su adaptabilidad de sus razas a los climas tropicales y subtropicales; el hecho de que son criados en campos y alimentados con pasto en la región del Chaco; que no son tratados con antibióticos u hormonas; y que producen carne de alta calidad.

• Exportaciones de carne de Paraguay

Paraguay tiene 14,6m cabezas de ganado y actualmente es el sexto mayor exportador de carne del mundo. El gobierno del Presidente Horacio Cartes se ha establecido el objetivo de incrementar esto a 17,5m para el 2018, y convertirse en el quinto mayor exportador de carne del mundo.

ARGENTINA | Courting foreign investors. President Macri stopped off in Switzerland last week for the annual World Economic Forum gathering at Davos, sandwiched between visits to Russia and France. “Argentina in its time was a very rich country and it has the potential to be so again,” Macri told assembled businessmen and bankers. Macri argued that the country had “left behind its populist experiment”. Questioned about apparent pressure being brought to bear on the president of the Argentine central bank, Federico Sturzenegger, to help spur economic growth, Macri was emphatically clear that the central bank’s independence (crucial for foreign investors) was inviolable.

While Macri receives the plaudits of foreign investors this is yet to translate into much in the way of hard cash. Some could be waiting on the outcome of the labour reform bill he will shortly seek to push through congress, and his government’s efforts to bring down inflation.

After leaving Davos, Macri met his French peer Emmanuel Macron in Paris on 26 January. Macron offered support for Macri’s announcement that Argentina would seek membership of the Organisation for Economic Co-operation and Development (OECD). The two men also broached the never-ending saga of a trade deal between the European Union (EU) and the Southern Common Market (Mercosur).

Macron alluded to certain “red lines” for France. “In the context of Brexit, France is determined to look after its beef industry, and has to ensure it is not destabilised by this accord,” Macron said. Macri ducked the contentious issue of beef, insisting that a trade deal was “a gigantic opportunity for both regions that cannot be squandered”.

URUGUAY | No end in sight to agricultural protests. President Tabaré Vázquez sought to defuse tension with Uruguay’s powerful agricultural sector this week by tabling a series of proposals to mitigate adverse economic impacts on producers.

Vázquez’s principal proposal was to exempt agricultural producers from value added tax (VAT) on diesel purchases for one year from this March, at a cost of an estimated US$4.5m to state coffers. But Vázquez also promised sub-sectoral support: a dairy fund to assist with the debts of some 2,800 milk producers; and a 15% reduction in electricity costs for rice producers for the next three months.

The proposals were roundly rejected by both the large agricultural lobby groups in Uruguay and the self-proclaimed ‘autoconvocados’ of independent producers, who have been staging public demonstrations and tractorcades this month. They both accused Vázquez of failing to appreciate the magnitude of the challenge facing the agricultural sector and urged his government to present “concrete measures” forthwith. They did heed his appeal for them to engage in a dialogue process but they did not rule out further protests.

• Chile recovery

The International Monetary Fund (IMF) raised its economic growth projection for Chile from 2.5% (last October) to 3% in its regional economic outlook for Latin American and the Caribbean published last week. The IMF said that political uncertainty in Chile had disappeared following December’s presidential elections. The IMF’s economic growth figures were encouraging for most of the region, although it produced a separate column for regional growth excluding Venezuela because it was dragging the average down so much.

With a little over a month before his investiture on 15 August, Paraguay’s President-elect Mario Abdo Benítez has made significant strides this week in forming his future government and setting out a political agenda. Abdo Benítez, who has embarked on a series of official foreign visits to meet some of his soon to be peers, has made some key appointments to his future cabinet, which suggest he is determined to hit the ground running and that his government will seek to be pragmatic. Yet Abdo Benítez’s actions have not escaped controversy and have been questioned in some quarters.

Last month Abdo Benítez made his first official trip since becoming president-elect, when he visited Brazil and Argentina on 11-12 June before heading to Russia to attend the 14 June inauguration of the Fifa World Cup and meet President Vladimir Putin. Abdo Benítez was accompanied on that trip by Luis Alberto Castiglioni, who he has named as his future foreign minister. During that visit Castiglioni said that Abdo Benítez discussed bilateral relations and sought Putin’s support for Paraguay, Argentina, and Uruguay’s joint bid to host the 2030 World cup.

After returning from Russia, Abdo Benítez made another key ministerial appointment on 19 June when he named his half-brother, Benigno López, as his future finance minister, before embarking on another mini regional tour on 2-3 July that took in Uruguay and Chile. In Uruguay, Abdo Benítez met President Tabaré Vázquez and discussed bilateral issues as well as the Southern Common Market (Mercosur) as the Vázquez government is currently exercising the pro-tempore presidency of the bloc. Similarly, in Chile Abdo Benítez met President Sebastián Piñera to go over the bilateral agenda, including plans to increase bilateral trade and energy exchanges. Abdo Benítez and Piñera reportedly also discussed strengthening ties between Mercosur and the Pacific Alliance trade bloc comprising Chile, Colombia, Mexico, and Peru.

Abdo Benítez briefly returned to Paraguay, where he named some more key future cabinet members. On 5 July, he named Denis Lichi as his future agriculture & livestock minister, Carla Bacigalupo as his labour minister, and Julio Javier Ríos as his justice minister. On 11 July he named Arnoldo Wiens as his future public works & communications minister. With Wiens’ appointment Abdo Benítez has already filled practically all of the main ministerial portfolios having previously appointed an interior, defence, and health ministers (Juan Ernesto Villamayor, Bernardino Soto Estigarribia, and Julio Daniel Mazzoleni, respectively). As we go to press Abdo Benítez is scheduled to meet Bolivia’s President Evo Morales to discuss strengthening economic ties.

Abdo Benítez’s agenda has faced criticism. While his decision to make his first visits to Paraguay’s main Mercosur partners, Brazil and Argentina, was applauded, the decision to go to Russia was heavily criticised given the current diplomatic tensions between Russia, the US, and Europe. López’s appointment has been denounced by some as potential nepotism, while the appointment of former officials in the outgoing government, such as Soto Estigarribia (who reprises a role he held from 2013-2015) and Bacigalupo (who served as justice minister in 2016), has been slammed as an act of defiance against President Cartes, who had dismissed them both. The fact that all of the appointees so far are linked to the ruling Asociación Nacional Republicana-Partido Colorado (ANR-PC) has also not been lost on the opposition, which has complained that Abdo Benítez is once again trying to fill the government with party loyalists rather than technocrats, as Cartes tried to do.

• Environment & sustainable development ministry

President-elect Mario Abdo Benítez will have to fill a new ministerial post when he assumes office on 15 August. On 5 July, the outgoing president, Horacio Cartes, decided to give the national environment secretariat (Seam) the rank of a ministry and formally turn it into the environment & sustainable development ministry. The new ministry has been tasked, for the first time, with establishing and developing a comprehensive national environmental protection policy. The creation of the ministry has been celebrated by the current Seam head, Rolando de Barros, who said that it will have the power to better “protect and manage Paraguay’s national resources”.