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The Asociación Rural del Paraguay (ARP), the country’s most powerful agricultural and livestock lobby group, has repeated its call for the government to open diplomatic relations with the Peoples’ Republic of China (PRC), a move that would imply de-recognising the island of Taiwan (which formally describes itself as the Republic of China – ROC). The decision is a struggle between pragmatics and ideology.

The ARP wants to gain access to mainland China’s market for beef. At an event attended by Paraguay’s President Mario Abdo Benítez on 15 January, ARP president Pedro Galli saw an opportunity to hammer home his message. “Despite being one of the world’s top ten beef exporters, here in Paraguay we are the only country that doesn’t have access to the largest beef buyer in the world, which is continental China”, he said. The ARP has been making its case since last year. It says around 70% of Paraguayan beef is exported. Current top destinations are Taiwan, Chile, and Russia. Last year Paraguay’s beef exports surged in volume to 271,000 tonnes, the highest since 2014. But due to the coronavirus (Covid-19) pandemic and other factors, Galli said it was still a “disastrous” year for producers. Margins were under pressure. The “other factors” included a growing oligopoly among domestic meat-packing plants, which the ARP says has pushed prices down. Two big companies now control around 40% of the market.

The argument over whether to recognise the PRC pits pragmatism against ideology. Since 1957 a succession of anti-communist Paraguayan governments have recognised Taiwan in preference to the PRC. Taiwan remains an important trade partner, not least a significant source of health expertise during the pandemic. But it is small, and the Peoples’ Republic offers a much, much larger market. The PRC has become South America’s largest trade partner offering additional benefits including economic aid and ‘Belt and Road’ infrastructure investment. In the last four years the Dominican Republic, El Salvador, and Panama have all flipped away from the ROC to recognise the PRC.

In 2018 Paraguay’s exports totalled US$7.14bn, of which bovine meat represented about 15.5%. Soya exports were 45% of the total – another commodity where the Peoples’ Republic is the world’s largest importer. Selling soya directly to the PRC would be beneficial. On the import side, the PRC is already Paraguay’s top supplier (providing 23.4% of total imports, ahead of 22.8% from Brazil and 9.8% from Argentina). Last year left-wing members of the Paraguayan senate introduced a bill to open diplomatic relations with Beijing, but it was defeated 25 to 16. The economic case for recognition continues to be persuasive, however. Alex Almeida, a farmer in Caaguazú department, told Time magazine of the US: “The cell-phone I am speaking to you now is from China. The shoes and clothes that I buy and wear, they all come from China. So why can’t we export food to China?”.

MEXICO | Gross fixed capital formation increases. On 10 January, Mexico’s national statistics institute (Inegi) released figures showing that gross fixed capital formation (GFCF) in October 2022 was up by 1.4% compared with the previous month. Investment in construction increased by 2% in monthly terms while investment in machinery & equipment was up 0.8%. In year-on-year terms, GFCF was up 6.5%.

MEXICO | Vehicle sales, exports and production up. On 6 January, Inegi released the latest figures for sales of light vehicles, which showed that 1.086m vehicles were sold in Mexico last year, a 7.0% increase on 2021, while 3.308m vehicles were produced in the country in 2022, a yearly increase of 9.2%. A total of 2.865m vehicles were exported from Mexico in 2022, a 5.9% yearly increase.

MEXICO | Yearly job creation up. On 5 January, Mexico’s national social security institute (IMSS) released a new report which showed that as of 31 December 2022, it had registered a total of 21.37m jobs. This means that 345,705 jobs were lost in the formal sector in December, a monthly decrease of 1.6%. However, IMSS announced that in the whole of 2022, 752,748 jobs were created – the third biggest yearly increase ever registered, equivalent to an annual increase of 3.7%.

MEXICO | Remittances to Mexico rise year-on-year. On 2 January, Mexico’s central bank (Banxico) announced that remittances to Mexico totalled US$4.8bn in November 2022, a 3% increase year-on-year. In monthly terms, remittances to Mexico were down 3.9% on October 2022. According to Banxico, a total of US$53.14bn was sent in remittances to Mexico between January and November 2022, a 13.5% increase on the US$46.83bn sent in the same period of 2021. This surpasses the record annual total of US$51.59bn in 2021.

Mexico: GDP growth
Percentage variation (year-on-year)

Mexico: unemployment rate
Economically active population

Mexico: inflation rate
Percentage variation (year-on-year)

Source (all graphs): National Statistics Institute (Inegi)

Date: 26 May

Type: Municipal (335 mayors, including two metropolitan mayors — Alto Apure and Caracas — and 363 municipal councillors).

Main contenders: Partido Socialista Unido de Venezuela (PSUV).

Mesa da la Unidad Democrática (MUD) – an opposition electoral coalition comprising: Acción Democrática (AD), Alianza Bravo Pueblo (ABP), Bandera Roja (BR), Convergencia (CVGC), Comité de Organización Político Electoral Independiente (Copei), Cuentas Claras (CC), Democracia Renovadora (DR), Electores Líbres (EL), Fuerza Liberal (FL), Gente Emergente (GE), La Causa Radical (LCR), Movimiento al Socialismo (MAS), Movimiento de Integridad Nacional Unidad (MIN Unidad), Movimiento Ecológico de Venezuela (MEV), Movimiento Laborista (ML), Por la Democracia Social (Podemos), Patria Para Todos (PPT), Primero Justicia (PJ), Proyecto Carabobo (ProCa), Proyecto Venezuela (Pro-Ve), Unidad Democrática (Udemo), Solidaridad Independiente (SI), Unidos para Venezuela (Unparve), Unión Republicana Democrática (URD), Un Nuevo Tiempo (UNT), Venezuela de Primera (VDP), Vanguardia Popular (VP), Visión Venezuela (VV) and Voluntad Popular (MVP).

Others: Partido Comunista de Venezuela (PCV).

Political organisations can register candidates for the municipals between 15 and 22 February. The campaign will run from 25 April-24 May.

Uncertainty the name of day

The municipal elections were due to be held in tandem with the regional elections in Venezuela’s 23 states on 16 December 2012, however the national electoral council (CNE) separated them, alleging technical reasons. Indeed the 2012 presidential election was also due to be held consecutively with the state and municipal elections in December, but that was brought forward, almost certainly to accommodate the cancer-struck President Hugo Chávez In the event President Chávez won handily, with 55% of the vote and a decent 10 point margin over his opposition rival Henrique Capriles Radonksi of the MUD.

The ruling Partido Unido Socialista de Venezuela (PSUV) later swept the December regional elections, winning 20 of the 23 states, up from 17 in 2008, consolidating its almost total grip on power in Venezuela.

2008

The PSUV swept the last municipal elections (23 November 2008, held consecutively with the state elections), winning 267 (81%) of the 335 municipal governments. This was an improvement on 2004, when parties supporting Chávez won 226 municipalities. In all five states won by opposition candidates the PSUV won control of the majority of the municipalities. The PSUV also won the most important of the five municipalities in the metropolitan district of Caracas - Libertador, the capital city proper - as well as 18 state capitals.

However the opposition won the mayoralty of Greater Caracas, with Antonio Ledezma. In addition, the opposition won four out of the five municipalities in Caracas: previously it controlled only the three wealthiest - Chacao, Baruta, and El Hatillo. In a very symbolic blow to Chávez, it added Sucre. Sucre was a Chavista stronghold: it includes the Petare slum, home to nearly one-third of the capital's residents. Here, Jesse Chacón, a close associate of Chávez, was turfed out of office by a young opposition leader, Carlos Ocariz, who capitalised on Chacón's unpopularity and by promising to reduce violent crime.

Sucre apart, the opposition suffered a reverse in the 2008 municipal elections. It only managed to win 57 municipalities, down from 85 in 2004: Acción Democrática won the most, 19, with Copei taking nine. As expected, Manuel Rosales, who Chávez threatened to have thrown in jail during the electoral campaign, won in Maracaibo, the state capital of Zulia and second most populous city in Venezuela. As expected, Manuel Rosales, who Chávez threatened to have thrown in jail during the electoral campaign, won in Maracaibo, the state capital of Zulia and second most populous city in Venezuela.

Dissident Chavista parties were annihilated at the 2008 polls. They lost the three states which they held and failed to make an impression in six further states they contested. Podemos, which won 52 municipalities in 2004, and two states - Aragua and Sucre, was left with just two municipalities. Patria para Todos fared little better, winning four municipalities.

In true form, Chávez later undercut the opposition’s gains. First (30 April 2009), the national assembly passed a Capital District Law transferred most functions, funding, and personnel of the metropolitan mayor of Caracas to a new Capital District, headed by Jaqueline Faría, handpicked by Chávez. Ledezma was helpless to contest the decision, given legal sanction by the Chavista-dominant judiciary.  Chavez supporters described the move as an act of justice for Libertador. Manuel Rosales was also run out of town after he was charged with corruption (also in April 2009).  He fled to Peru, where he was granted political asylum and was replaced in his post by his wife, Eveling Trejo de Rosales.

The map in Venezuela is thus almost totally red, but that conceals some real differences at the local level both between the ruling PSUV and its allies and also within the party itself. These differences threatened to rear their ugly heads ahead of the December 2012 state elections. Again, Chávez intervened, directly replacing some weaker official candidates with nominees handpicked by himself and the PSUV leadership, often imposing these over the heads of local party bases. They included former cabinet ministers and several military associates of the president. They all won – testament both to the top down power of the PSUV, which successfully demanded  nothing less than 100% unity in the face of the recurrence of Chávez’s cancer and his return to Cuba for further treatment on 10 December – just days before the regional polls.

Whether the PSUV will repeat this overwhelming success in the May municipals is a moot point. With Chávez rumoured to be in grave condition in Cuba in mid-January, it is very unclear whether the municipals will take place as scheduled at all. If Chávez succumbs to his cancer, the 1999 constitution mandates a new presidential election within consecutive 30 days. In that scenario, the municipals might be held the same day, or delayed again.

On 9 December, in his last public appearance before his departure anew for Cuba, Chávez anointed his vice president and foreign minister Nicolás Maduro as his heir and urged his supporters “with all my heart” to vote for Maduro in the event of fresh presidential elections. No-one in the PSUV will challenge that command. The assumption is that Henrique Capriles Radonski would be the MUD candidate again. If a new election was soon (i.e. in the first half of 2013) Capriles Radonski would likely lose to Maduro as the nation mourns the loss of Chávez and Maduro presents himself as the spiritual heir of the Bolivarian Revolution . If the elections were later in the year then Capriles Radonski potentially might have a better chance, as the rather uncharismatic Maduro is expected to struggle with Chávez’s legacy, which includes soaring violent crime, still-entrenched inflation, shortages of food and other basic goods and a soaring fiscal deficit that may require (yet another) currency devaluation.  For now, however, the odds would favour Maduro.

• Henri Falcón

Henri Falcón, the governor of Lara state, has gained new prominence following his decisive win re-election in his home state in December. A dissident who broke with Chávez in 2011, he has been touted as one of the few figures with sufficient national reach capable of helping along a transition, perhaps mediating between the PSUV and opposition. In early January, he appeared at a press conference alongside Capriles Radonski, fuelling speculation as to his future role.

"The biggest challenge facing the 2017-2018 legislature" is how the Movimiento al Socialismo (MAS) president of the lower chamber of congress, Gabriela Montaño, recently described the need to transform Bolivia's justice system. The issue has long been a priority facing the MAS government led by President Evo Morales which, at the start of this year, sent a package of three bills down to congress aimed at stamping out the notorious inefficiencies in the judiciary. President Morales’ appointment of Héctor Arce, Bolivia’s former attorney general (2014-2017), as the new justice minister in his recent cabinet reshuffle [WR-17-03], is also widely considered indicative of these efforts.

The three legislative bills, which were presented on 3 January, were drawn up in line with the conclusion of a national justice summit, which was held in June 2016 in Sucre, the capital of Chuquisaca department, aimed at addressing the delays and corruption in the justice system. In one sign of this backlog, also on 3 January, the supreme court (TSJ) president Pastor Mamani said that of the 1,232 cases dating back from 2012 to 2016, last year the TSJ plenary had resolved some 500.

Among other things, the bills propose to establish a basic law of public and municipal conciliation; to carry out amendments to the criminal procedure code; and to modify the law of legal practice. The latter initiative in particular is aimed at easing the notorious backlog of cases, stipulating that trials must not be suspended under any circumstances and those responsible for holding up legal proceedings should face sanctions, such as fines or the suspension of professional credentials.

As well as establishing a monitoring committee to oversee the implementation of the conclusions from the 2016 summit (to comprise the presidents of both legislative chambers, the attorney general, the justice and interior ministers, and the TSJ president, among others), the bills call for a re-categorisation of criminal offences. Alternatives to detention are also to be considered as part of efforts to address the problem of prison overcrowding (see box).

In a further indication of efforts being undertaken by the government to improve the justice system, Arce announced “substantial changes” last week to the procedure and mechanisms of pre-selecting candidates for posts in the TSJ, the constitutional court (TCP), the council of magistrates and the environmental court (TA), which are up for election in October this year (and for which the supreme electoral court has earmarked some B$155m [US$22m]).

The election follows the first of its kind held by popular vote in 2011, which the Morales government has since admitted was a failure. On 26 January Vice-President Alvaro García Linera conceded that that the criteria influencing previous pre-selection of candidates included "friendships and pressures or quotas from one or another...social organisation," but, he underlined, this practice had "ended".

Approving more pardons

Bolivia’s bicameral legislature has approved a resolution ratifying a presidential decree which grants pardons to up to 1,700 prisoners. This is the fourth time since 2012 that President Morales has issued the pardons which, on this occasion, apply to women who are 24 weeks or more pregnant, and to prisoners with serious or very serious disabilities, or with terminal illnesses. The amnesty will not apply, however, to those facing charges of homicide, aggravated robbery, contraband, kidnapping, and other serious crimes.

• Prison overcrowding

The head of the prison service, Jorge López, has warned that the prison system is in crisis due to overcrowding, with 16,038 prisoners for 5,013 places. He blamed the crisis on the delays in the justice system, noting that just 38% of prisoners had received sentences.

FDI: On 7 April, Panama’s economy and finance ministry (MEF) issued a report which showed that foreign direct investment (FDI) to the country reached US$5.2bn, up 15.9% compared with the previous year. The MEF attributes this to factors including the dollarized system, and the logistics system led by Canal activities such as ports and Colón free zone, among others.

According to a June 2016 report by the United Nations (UN) Economic Commission for Latin America & the Caribbean (Eclac), in 2015 FDI inflows to Panama were up 17% to reach a record high of US$5.039bn – making the country the leading recipient of FDI in Central America.

Human Development Index: The Panamanian government led by President Juan Carlos Varela has trumpeted the findings of the latest human development report released by the UN Development Program (UNDP) on 29 March. The UNDP report for 2016 showed that Panama has the highest human development index (HDI) in Central America and one of the highest in Latin America. The HDI integrates three basic dimensions of human development - life expectancy at birth; mean years of schooling & expected years of schooling; and gross national income per capita. The UNDP report showed that Panama had an HDI of 0.788 in 2015 up from 0.0785 in 2014, ranking it 60 out of 188 countries. This is the fourth highest HDI in Latin America after Chile, which has an HDI of 0.847, ranking 38; Argentina (0.827, 45); and Uruguay (0.795, 54). As regards the rest of Central America, Panama is followed by Costa Rica (0.776, 66); El Salvador (0.680, 117); Nicaragua (0.645, 124); and Guatemala (0.640, 125). Honduras is ranked lowest at 130 with 0.625.

IMF visit: Last month the International Monetary Fund (IMF) released a concluding statement following a recent mission to Panama. Issued on 17 March, the IMF statement projects that GDP growth will reach 5.1% in 2017 and about 5.5% over the medium term, supported by the expanded Panama Canal and the wide range of investment projects currently in the pipeline. The 5.1% 2017 growth forecast is considerably less than the 5.9% forecast by Eclac, however, which put Panama’s GDP growth in 2016 at 5.2%. In its statement, the IMF also projects that inflation will pick up to about 2% in 2017, from 0.7% in 2016, as fuel prices continue to normalise and economic activity strengthens somewhat.

BRAZIL | Government raises inflation forecast. The economic policy secretariat (SPE) of Brazil’s finance ministry released the latest edition of its bi-monthly Boletim MacroFiscal economic report on 18 July. The report shows an annual inflation forecast of 3.9% for 2024, up from the 3.7% projected in the May edition.

The previous bulletin accounted for the economic impact on inflation of the severe floods which devastated the major agricultural state of Rio Grande do Sul. However, the latest inflation forecasts from private sector analysts surveyed by the central bank (BCB) are higher than the government’s figures. On 22 July the BCB’s survey showed a 4.05% annual inflation forecast.

ARGENTINA| Colombian narco summit in Rosario. This week the Colombian daily El Tiempo reported that members of the US Drug Enforcement Administration (DEA) in Miami are trying to establish how two of Colombia’s most wanted drug-traffickers, ‘Valenciano’ (Maximiliano Bonilla Orozco) and ‘Sebastián’ (Ericson Vargas), managed to hold three meetings in the city of Rosario, Santa Fe, without being detected by the Argentine authorities. According to the paper, the DEA believes the meetings took place during the first week of September with the aim of splitting up the drugs peddling business in Medellín and avoiding an escalation in violence ahead of the 30 October regional elections in Colombia. The men are believed to have travelled on Central American passports; Colombia offers a reward of Col$2bn (US$1.07m) for ‘Sebastián’, while the US offers US$5m for ‘Valenciano’.

ARGENTINA | Moyano to stay in charge of truckers’ union. This week Hugo Moyano, the secretary general of Argentina’s general confederation of labour (CGT), secured his sixth re-election as head of the national federation of truckers. Moyano’s ‘15 December’ list was met with opposition in only three districts in the interior of Buenos Aires province – Junín, Mar del Plata (where Moyano is from) and 9 de Julio – but it still won those races. However, that opposition was only at the local level; no one competed against Moyano’s national leadership, which he secured with a historic 75% of the registered voters (or 105,500 union members). The election was a test of the power of Moyano, whose mandate in the CGT expires in July 2012. Armando Cavallieri, the head of the retail workers union (SEC) who is rumoured to become Moyano’s challenger in the CGT 2012 election, was re-elected secretary general of the SEC in June, comfortably defeating a Moyanista candidate, but with only 15,000 votes.

PARAGUAY| EPP bomb attacks in Horqueta. In the early hours of 19 September, the office of the state prosecution in the city of Horqueta, department of Concepción, was attacked with an explosive device thrown by two men on a motorcycle. The building had been listed in a document seized by Paraguayan authorities in June 2010 as an intended target of the self-proclaimed Ejército del Pueblo Paraguayo (EPP). This was the second bomb attack perpetrated by the EPP in Horqueta, having attacked a police patrol car with an explosive device in January this year. On Thursday the EPP attacked the 10th police station of Horqueta, killing two members of the national police. It is believed that the EPP used grenades in addition to high-powered weapons in the latest attack. Their intelligence was also good: they attacked the only station that had not received police special forces (Fope) reinforcements following Monday’s bomb attack, and which had just six policemen who had only handguns and no patrol car.
This week holds three key symbolic dates for the EPP: 1) Cecilia Cubas Gusinky, its first fatal kidnap victim, was kidnapped on 21 September 2004; 2)’Claudio’ (Carlos Ramón Espínola) will appear at his first court hearing regarding his involvement in the Cubas kidnapping and his alleged training in Colombia by the Fuerzas Armadas Revolucionarias de Colombia (Farc); and 3) Nimio Cardozo was killed on 24 September 2010 (Daily Briefing 27 September 2010).

URUGUAY-ARGENTINA| Argentina accused of hiding environmental results. This week the Uruguayan members of the administrative committee of the Uruguay River (Caru) asked their Argentine counterparts to release the results of the first two environmental tests carried out in the vicinity of the UPM (formerly Botnia) paper mill. Argentina has used its right to “reserve its opinion”, meaning that the results of the tests performed by a Canada lab were not disclosed to the Uruguayan delegation or the media. The controversy resulted in a public Twitter row between Argentina’s foreign minister, Héctor Timerman, and the Uruguayan national deputy, Javier García. Allegedly, the results have not been disclosed because they would indicate that the mill has not had a negative environmental impact on the river.

• Piñera extends “save the school year” plan

This week President Sebastián Piñera of Chile announced that 70,000 high school students (2% of the total) would be held back a year for insufficient attendance and refusal to give up their strike action. “It is very painful seeing how these children will lose the year, but a president has to worry about the other 3.5m students who need to start the second semester”, said Piñera on 19 September. However, two days later the government announced it would extend the “save the school year plan” for another week (1 October). If the students fail to register for the second semester, losing the year will be entirely their fault, the government argues.

*** Support for German far right continuing to increase.  Germany’s Friedrich Ebert Foundation has been tracking anti-democratic attitudes in Germany since 2006 in its bi-annual surveys.  Since its last survey in 2010, support for right-wing extremist attitudes has grown from 8.2% to 9% according to its summer 2012 survey.  Xenophobic attitudes, however, are now admitted to by 25.1% of the population.

Far-right attitudes are most prevalent in the former East Germany, where support for such views has risen from 10.5% of the population to 15.8%.  Xenophobia is also most prevalent in the east, where 39% of the population hold such views.

According to the authors of the survey: “While in the past young people were considered to be less susceptible to these ideas, now it is exactly this group that stands out.”

*** Little let up in Japan-China dispute.  As of 13 November, Chinese maritime surveillance vessels had approached the Japanese-controlled Senkaku Islands (called Diaoyu by China) on 25 consecutive days.  On the 13th, four Chinese surveillance vessels were warned away by the Japanese coastguard.  One of the Chinese vessels responded by radio saying that the Senkaku/Diaoyu were Chinese territory.

A day earlier, China’s foreign ministry issued a fierce statement condemning the Dalai Lama for referring to the disputed islands by their Japanese name during a visit to the Japanese city of Yokohama.

The foreign ministry statement said: “The Dalai Lama...once again shows his true colours of betraying his motherland and engaging in activities to split China under the guise of religion...In order to achieve his goal of splitting China, the Dalai Lama would rather collude with Japanese right-wing forces.  His behaviours are despised by the Chinese people.”

*** Iran’s nuclear progress.  According to The Jerusalem Post, a new International Atomic Energy Agency (IAEA) report, to be published on Friday (16 November), will reveal that Iran has completed the installation of 2,700 centrifuges at its underground Fordow plant, thus enabling it to speed up production of uranium enriched to 20%.

In August the IAEA reported that approximately 700 of 2,000 centrifuges were in operation.

The Frente Sandinista de Liberación Nacional (FSLN) government of President Daniel Ortega has lost patience with its Colombian counterpart which is refusing to apply the November 2012 ruling by the International Court of Justice (ICJ) which awarded Nicaragua disputed Caribbean Sea territory previously held by Colombia [RC-12-12]. Last month it presented the ICJ with a new case against Colombia to determine the “precise course of the boundary of the continental shelf” beyond the 200-nautical-mile limit defined in the 2012 ruling. Just over a week later Costa Rica, which in November 2010 filed a suit against Nicaragua before the ICJ over the San Juan River area, announced a new complaint against Nicaragua for ignoring another ICJ decision.

President Ortega’s 16 September decision to present a new case against Colombia was in response to the previous week’s announcement by Colombia’s President Juan Manuel Santos that his government would not apply the ICJ ruling considering it to violate Colombia’s constitution. Santos, who also announced that he would file a demand of constitutionality against the 1948 Pact of Bogotá, which recognised the ICJ’s jurisdiction, argues that Colombia’s borders are defined by its constitution, which stipulates that these can only be changed by congress. The 2012 ICJ ruling awarded Nicaragua 75,000km² of disputed territory (although the Ortega government maintains it is more like 90,000km²). The area in question, an important fishing ground, is also believed to contain oil. Nicaragua’s latest case is in line with a petition submitted back in June to the United Nations Commission on the Limits of the Continental Shelf (CLCS), requesting the expansion of Nicaragua’s continental platform in the Caribbean Sea from the designated 200 nautical miles off its coast to 350 nautical miles.

While legal experts in both Nicaragua and Colombia question Santos’s argument, suggesting it is in breach of international law, Costa Rica has since called into question the Ortega government’s respect for the ICJ. On 24 September, the government of President Laura Chinchilla presented the ICJ with a request for new provisional measures against Nicaragua in relation to the San Juan River dispute. Previously on 17 September Chinchilla and her foreign minister, Enrique Castillo, presented two satellite photographs that they said showed two canals being constructed in the north of Calero Island – which lies in the disputed area. This would be in breach of a provisional March 2011 ICJ ruling [RC-11-03], which outlawed the presence of all civilians, military and police officials in the disputed area, bar Costa Rican environmental officials. Costa Rican officials told reporters that after “unusual movement and activity” was detected on the island earlier this year, a satellite image was taken on 5 September that appeared to show the construction of the canals, which were not discernible in a previous photo taken on 30 June.

Costa Rica’s new request to the ICJ calls for Nicaragua to “suspend all dredging or any other activity and specifically in the two artificial canals; for Nicaragua to immediately withdraw all personnel, infrastructure…and equipment …from the territory…and to allow Costa Rica to carry out environmental remediation in the territory to prevent irreparable damage to the disputed territory”. With the Nicaraguan government denying the claims regarding the canals, dismissing them as an invention by Chinchilla, the Costa Rican government has announced other measures in response, suggesting relations are further set to deteriorate. These include the deployment of environmental officers to assess the damage caused by the construction of the two canals – a move which has been communicated to both the ICJ and the secretariat of the 1971 Ramsar Convention on Wetlands (an inter-governmental convention to which both Nicaragua and Costa Rica are signatories).

• Deal with Panama

On 25 September Panama and Nicaragua announced that a preliminary deal had been reached on their maritime boundaries. This followed a meeting between the Panamanian and Nicaraguan foreign ministers, Fernando Núñez Fábrega and Samuel Santos, respectively, which took place on the sidelines of the United Nations (UN) General Assembly in New York City. The meeting was in response to Panama’s decision along with Costa Rica to co-sign a letter presented by Colombia’s President Juan Manuel Santos to the UN denouncing Nicaragua’s “expansionist” ambitions in the Caribbean Sea. The deal came after Foreign Minister Santos provided assurances that Nicaragua’s latest request to the UN Commission on the Limits of the Continental Shelf (CLCS) to expand its continental platform beyond 200 nautical miles would not affect Panamanian territory.

In recent months Jamaica’s government has made considerable progress, with a broadly based program of fiscal (and other) reforms. This success has been recognised by the International Monetary Fund (IMF). Nevertheless, significant risks remain.

In mid-October, the IMF held a high level conference, ‘Unlocking Growth in the Caribbean’, in partnership with the government of Jamaica, at Montego Bay on 23-24 October. This follows a similar conference held in the Bahamas last year, involving regional prime ministers, finance ministers and central bank governors, as well as officials from the IMF, the World Bank, the Inter American Development Bank (IADB) and the Caribbean Development Bank. The latest conference follows a number of statements from the IMF praising the government of Jamaica for its progress with a broad economic reform program. On 24 September, the IMF announced a further disbursement under Jamaica’s Extended Fund Facility (EFF) of around US$69bn. The Fund noted that the program was progressing as it should. “Jamaica’s economic performance under the [government’s and the central bank’s] economic program supported by the EFF has remained strong. All quantitative performance criteria for end-June 2014, as well as the continuous quantitative program targets and benchmarks, were met”.

The chart, which summarises the projections for Jamaica included in the IMF’s latest (October 2014) World Economic Outlook, shows how the economy is perceived. Traditionally, the principal problem has been a high level of government debt. At about US$21bn, this is equivalent to around 140% of GDP. Having increased revenues and cut spending, the government is now running a primary (i.e. before debt service) surplus of around 7% of GDP. The overall budget is in balance. Debt is expected to fall to just over 100% of GDP by 2019.

Benefiting from (very) low yields on US Treasuries and other developed world government bonds, the reasonably strong appetite for emerging markets debt, and widespread recognition of the achievements made, the government raised US$800m from international markets in July 2014. The coupon interest rate was just 7.625%. As the IMF emphasised in its fifth review under the EFF (published on 10 September), the bond issue boosted gross foreign exchange reserves to US$2.7bn. This is more than enough to cover the maturities falling due on government bonds over the next year or so.

Thanks to a recovery in tourism receipts, an increase in production of fruit and vegetables (which had been hit by drought) and growth in mining production, growth in exports is expected to accelerate from 9% in 2013 to 12% or so this year and 15% in 2015. This should underpin gradual growth (of 1%-2% per annum) in the economy. Meanwhile, inflation is expected to fall below 9% and to continue trending down. This is important, because inflation has long been higher in Jamaica than in its major trading partners, eroding competitiveness. Looking forward, the current account deficit is expected to fall from 11% of GDP in 2013 to about 8% this year and a little over 4% in 2019. Domestic demand has, however, remained fairly weak. Credit to the private sector rose by 6.3% over the year to June - a slow rate in the context of an economy that has been expanding by around 10% in nominal terms. Inter-bank interest rates have been 3-4% - or negative in real terms: this is another indication that there has not been strong demand for funds from households and businesses.

The reform program is multi-faceted. In June 2014, Jamaica's parliament passed the Banking Services Act, which strengthens the ability of the Bank of Jamaica to operate as prudential regulator of the financial system. The tax base is being broadened through changes to the General Consumption Tax (GCT) and through the reduction in sector- and firm- specific tax incentives. The Tax Collection and Tax Penalty Acts have been changed in order to promote revenue collection. Pilot schemes for new automated customs and tax systems have been put in place. Administrative measures have been adopted to tighten control of government expenditures.

A modernisation of the public sector should reduce the wage bill from about 10% of GDP in 2014/15 to 9% in 2015/16. Since mid-2013, the government has ceased providing financial support to Clarendon Alumina Production (CAP), the vehicle through which it holds its 50% in the JAMALCO alumina joint venture (with Alcoa): previously, financial support from the government to CAP had amounted to over 0.5% of GDP in some years. Measures are underway to boost liquidity in the government bond market.

Nevertheless, risks and challenges remain. Most obviously, the IMF does not foresee a reduction in the unemployment rate. At about 15%, this is high by virtually all standards. The rate is even higher among young people and women.

Although it is falling, the current account deficit is of sufficient size that any legal/administrative changes that can be made to promote inwards investment will be useful. In its latest Global Competitiveness Report 2014-2015, published in September, the World Economic Forum noted that inefficient government bureaucracy is, by a small margin, second only to crime/theft as the issue that the business sector sees as the biggest problem in Jamaica currently.

For its part, the IMF flags a number of more specific potential problems, such as revenue shortfalls, the inability of the government to cut its wages bill as much at it plans, deteriorating performance by state-owned enterprises or a disruption to Jamaica's access to external finance (including funds from Venezuela through the PetroCaribe system). “Furthermore, investor confidence remains frail and reform fatigue could set in if ongoing painful reforms and real wage compression do not result in more rapid job creation and income growth”, it ends.

The People's National Party (PNP) government led by Prime Minister Portia Simpson Miller has been applauded by the IMF for its establishment of an Economic Program Oversight Committee (EPOC). EPOC is an 'inclusive', if private sector business dominated, body that observes the government's progress with the reform program from the outside. As recently as 7 October, the EPOC reiterated its support for the achievements made to now.

Of course, the EPOC's views are not the only views that matter. The PNP government is now at the mid-point of its five-year term. Success on the reform front relies on further cuts to a bloated public sector payroll. Many Jamaican voters are unlikely to see any benefit from the government's financial reform program for some time.

The political challenges to further reforms are a lot higher than they have been over the last two years or so. For instance, we would be concerned about clear resistance from public servants to the payroll cuts (in the form of industrial disputes). We would also be concerned any clear deterioration in the law and order situation. For now, though, we share the IMF's optimism that the government’s financial position, and the economy in general, are moving in the right direction.

Perspectives on Brazil’s long battle to emerge from recession and to reform its lopsided economy are changing. Amid signs of growing levels of activity, analysts are worrying a lot less about the economy for most of 2018 – particularly the period running up to the October elections – but, on the other hand, they are beginning to worry a lot more about what happens in, and after October.

Everything suggests that the outgoing and unloved government of President Michel Temer will preside over a reasonably good year for the Brazilian economy in 2018. The recovery is underway. After two disastrous years in 2015 and 2016 (when GDP dropped by 3.8% and 3.4% respectively) the economy is estimated to have grown by 1.1% in 2017; the government is forecasting 3.0% for 2018. While this may be on the optimistic side, most forecasts for Brazilian growth this year are hovering around the 2%-3% range.

Business and consumer confidence indicators are pointing upwards. Inflation has plunged to an annual rate of 2.9% in December, boosting domestic purchasing power and clearing the way for significant cuts in interest rates. The steep fall in investment is beginning to bottom out. Car sales grew by 9.2% last year, helping the wider industrial sector to grow by 2.5%, the first positive result after three consecutive years of contraction. Although much more needs to be done the government has had some success trying to bring the fiscal deficit under control. The primary public sector deficit (excluding interest payments) last year was BRL110.6bn (US$35.1bn) or 1.69% of GDP. This was a reduction of almost one third in dollar terms, relative to the 2016 deficit of US$49.5bn.

The Temer administration will probably struggle to deliver another big bit of fiscal restructuring – pension reform. Most analysts agree that without pension reform the fiscal accounts are unsustainable. The latest, watered down version of the reform is likely to be voted in congress in February. As it stands it will cut the large public pensions deficit by only around 25%, or maybe by even less. If it is approved, the next government will most probably have to come up with further, deeper changes. If it is not approved, the next government will have to start out again with a new and comprehensive approach to the problem. Either way, it is being seen as less of a short-term issue: many believe the Temer administration has pretty much done what it can as far as structural reforms are concerned.

Instead, most analysts are now focusing on the big uncertainty: who will win the October elections and what kind of economic policies will they follow? Predicting the election outcome remains highly difficult, given the volatility of the electorate and the uncertainty over whether former president Luis Inacio Lula da Silva will or will not be formally banned from standing because he has been sentenced on charges of corruption. Many fear the elections could be won by right-wing or left-wing populists who might turn away from reform. Sergio Rial, president of Spanish bank Santander’s Brazilian operation, expressed the concern of many when he said at the end of January that he was worried that the next government might not be committed to what he called “an agenda of fiscal balance”.

In a continent-sized country, foreign affairs do not often figure prominently in the daily news. So it was all the more intriguing when President Jair Bolsonaro appeared in the first campaign interview on television network TV Globo with the words Argentina, Colombia, and Nicaragua written in blue ink on the palm of his hand. He never really got to explain the importance of each during the debate but he did on several other occasions before and after. All three countries are part of what Bolsonaro considers the ‘axil of evil’ in Latin America, the nations that have chosen left-wing governments and whose people and economies, in his mind, are suffering as a result of it.

Over the past two weeks, President Bolsonaro has directed his notoriously fiery rhetoric at the growing ‘pink tide’ in the region in an effort to rekindle the same fear of “radical socialism” that had helped him in 2018 to defeat the Partido dos Trabalhadores (PT), co-founded by his biggest rival in this year’s election race, former president Luiz Inácio Lula da Silva (2003-2011). Nicaragua’s Daniel Ortega was blasted for religious intolerance. Just like Ortega, Lula too could ban processions and close Catholic radios and churches in Brazil went the argument. Argentina’s President Alberto Fernández was on the hook for running his country’s economy into the ground and introducing inclusive language, the use of which the Bolsonaro government specifically prohibited in government-financed cultural projects.

Needless to say, Venezuela has been part of the repertoire for some time and is frequently cited as the ultimate basket case that Brazil could turn into. But newcomer Chile also got a big dosage of wrath over the past fortnight. In nationwide televised comments on 28 August, Bolsonaro accused Lula of supporting Chile’s leftist President Gabriel Boric, who he said had carried out arson against the Santiago metro during protests in Chile’s capital in 2019. In fact, Boric, a federal legislator at that time, was a mediator and did not participate in those acts.

In response, Chile’s foreign minister, Antonia Urrejola, slammed Bolsonaro’s statements: “Obviously, they are absolutely false and we regret that in an electoral context bilateral relations are taken advantage of,” Urrejola said. Far from backing down, Bolsonaro two days later again blasted Boric and the country’s constituent assembly, convened to redraft a new constitution, deepening a diplomatic row between the two countries.

“The president of Chile has just called in our ambassador, which is a way of showing his discontent with me. Whether I exaggerated or not, I did not fail to speak the truth. The constituent assembly of Chile goes against what any democratic country wants,” Bolsonaro told a business gathering in Brasília without explaining himself further. “It’s their problem. But the citizen there had the support of a guy here in Brazil,” he said in reference to Boric and Lula.

In 2018 scare-mongering worked in part because, to many Brazilians, the memories of the massive corruption scandal Lava Jato were still fresh and the last PT president, Dilma Rousseff (2011-2016), was not particularly popular. With Lula things are different. The economy rallied, poverty fell, and most of the wealthy were happy too. He left office as the most popular leader in the history of the country. So, making nightmare scenario stick is all the more difficult.

The risk of Bolsonaro’s strategy is that, should he remain in power, he will have soured relations with much of the region. While that probably does not matter to Bolsonaro, it does further damage the image of the country. And that is where Lula has picked up. In speeches and ads he paints a rather grim picture of Brazil as the pariah of the world that is not respected by anybody, focusing on the environment and human rights.

And yet, where Bolsonaro may have fallen short of Lula in terms of Brazil’s political insertion in the world, he arguably achieved a greater commercial integration of the country into the global economy. Trade in 2021 accounted for 39% of GDP, compared with 23% in 2010, the last year Lula was in office.

At stake in the October election, is nothing less than a complete reversal of Brazil’s foreign policy, with Lula intent on restoring the country’s historic neutrality, meaning the country would not take sides between any of the major powers such as the US, China, or Russia, and resuming the focus on ties with other developing nations (South-South).

Compare and contrast

In one televised advertisement launched last week the PT reminded Brazilians of brighter days, when Lula was on the front page of Time magazine and called “the most popular politician on Earth” by former US president Barack Obama (2009-2017). Pictures of him surrounded by then world leaders like Germany’s former chancellor Angela Merkel (2005-2021) are designed to contrast with international summits where President Bolsonaro is often shunned by other world leaders.

BRAZIL | Sugar cane harvest forecast reduced. On 20 August, the Companhia Nacional de Abastecimento (Conab), the logistics arm of Brazil’s agrarian development ministry, released a new forecast for the 2026/2027 sugar cane harvest, showing a total of 705.2m tonnes (t). Although this would mark a 4.7% rise compared to the 2025/2026 cycle, it is lower than Conab’s previous forecast of 709.1m t released in April. Brazil’s southeast, the main sugar cane region, is expected to produce 451.4m t, which would be up 5.0% on the previous harvest, while the second largest producer region, the centre-west, is projected to produce 157.0m t in 2026/2027, which would be up 4.6% compared to 2025/2026.

BRAZIL | Air travel up in July. The national civil aviation agency (Anac) released new figures on 20 August which showed that a total of 11.9m passengers travelled on domestic and international flights in July. Domestic travel stood at 9.2m passengers, up 1.9% on July 2025, while international passengers totalled 2.7m, up 4.2% year-on-year. Anac also released figures on air freight, which showed a total of 123,900 tonnes (t) of cargo transported in July this year, up 7.3% compared with July 2025. Domestic air transport registered 41,200 t, which is up 5.2% year-on-year, while cargo transported on international flights totalled 82,700 t, up 8.4% compared to the same month in 2025.

BRAZIL | Government raises grain harvest forecast. The Companhia Nacional de Abastecimento (Conab), the logistics arm of Brazil’s agrarian development ministry, updated its annual grain harvest forecast on 13 August. The latest forecast projects a total of 360.8m tonnes (t) for the 2025/2026 harvest cycle, up 2.4% compared to 2024/2025. This marks an increase from Conab’s previous forecast of 360.1m t in mid-July. Regarding Brazil’s main export crops, soybean production during this harvest cycle is expected to total 180.5m t, up 5.2% compared to 2024/2025, while maize production is projected to reach 143m t, up 1.3% on the previous harvest. 

Mexico’s last president opened up the oil and gas industry to foreign investment in a bid to boost production, with mixed results. The current president has changed tack back to a path of resource nationalism. He, too, wants increased production, but is looking for state oil company Pemex to lead the way. What are the chances of success?

Former president Enrique Peña Nieto (2012-2018) introduced a landmark energy reform, ending the state monopoly on hydrocarbons and power generation, and awarding concessions to international oil companies (IOCs). The policy had mixed results. Major investment did flow in but was focused on long-term upstream projects incapable by their nature of turning around the short- and medium-term slump in production, which is mainly caused by dwindling output from maturing oil fields. Politically, the energy reform was oversold, with many Mexicans believing they were promised lower fuel and electricity costs, which did not materialise. Nor was a revived energy sector able to double Mexico’s sluggish economic growth rate as was hoped, from around 2.0% per annum to around 4%-5%.

Andrés Manuel López Obrador, who took office as president six months ago in December 2018, signalled a sharp change in energy policy direction. He has not repealed the energy reform but has ordered that the concessions granted under the previous government be paused pending review, and has stopped all new licensing rounds, including those for renewable energy. López Obrador is an old-fashioned resource nationalist, who believes that the nationalisation of the oil industry by President Lázaro Cárdenas in 1938 was a defining moment in Mexican history. He wants Pemex, the child of that nationalisation, to lead the way once more, by ramping up Mexico-based production and refining, boosting exports, and reducing the country’s dependence on refined imports from the US. López Obrador’s vision of the Mexican economy is hydrocarbons-centric and not particularly ‘green’ or sensitive to environmental concerns. The new president has cracked down on fuel theft and announced an overhaul of the country’s six existing refineries and the construction of a seventh, a new US$8bn facility at Dos Bocas in Tabasco, his home state.

Government awards refinery project to Pemex

The refinery programme illustrates some of the risks of the new approach. Despite having invited international contractors to bid to build the refinery, this month López Obrador announced that they were “overcharging” and that Pemex would instead do the job on its own.

The move has been criticised as being emblematic of López Ogbrador’s inconsistent approach towards the foreign investor community. But the president defended the decision, stating that the bids that had been received for the controversial refinery project had been both too expensive and slow. There had been four interested parties who had been invited to bid: Houston-based KBR, France’s Technip, and two consortia comprised of US firm Bechtel with Italy’s Techint, and US firm Jacobs Engineering with Australia’s WorleyParsons. One of the four, the Bechtel-Techint consortium, in the end chose not to do so, and the other three submitted bids well in excess of the price tag López Obrador had in mind. Bids were reportedly in the range of US$10-12bn over a time frame of 4-6 years; López Obrador by contrast is keen to complete the project within a budget of US$8bn and over just three years. The president said Pemex would build the facility alone, with work due to start next month and be completed by May 2022.

Aside from frustration within the investor community about López Obrador ‘s volte face, there remains significant scepticism about Pemex’s ability to fulfil the president’s ambitious plans. The firm has little experience in large-scale refinery construction, while previous efforts to upgrade existing refineries have not gone smoothly, being prone to both cost overruns and significant time delays.

While the Dos Bocas decision is popular – particularly with Tabasco voters – the project has attracted a wave of criticism from energy industry experts. The decision to proceed now effectively short-cuts the government’s own permitting process, including the need for an environmental impact assessment (EIA). While Mexico does have a deficit in its refining capacity, with the existing six refineries working at only one-third of their installed capacity, the economic rationale for a seventh refinery is open to question. Energy analyst Ramses Pech says a seventh refinery would make sense if it added around 100,000 barrels per day (bpd) of capacity, not the 340,000 bpd that is planned for Dos Bocas. Pablo Medina of oil consultancy Welligence says Pemex has not built a refinery in four decades, and consequently the execution risk is “huge”. Many are convinced that both the time scale (three years) and the US$8bn budget is unrealistic, and predict major overruns.

A central problem affecting López Obrador’s approach is that Pemex may not be strong enough able to play the starring role he has scripted for it. Notoriously, the company has struggled with problems of corruption, inefficiency and debt. The new president made an early start fighting fuel theft, known as ‘huachicoleo’. His policy of shutting down pipelines and using trucks for deliveries chalked up some initial successes. Pemex says fuel theft fell by over 90% to an average of 168,000 gallons/day in April, down from 3.4m gallons day in December, and saving some US$600m. But crime experts say the huachicoleo gangs are just biding their time. One senior executive, exploration and production head Miguel Angel Lozada, was dismissed and is being investigated for corruption. Over 600 people were arrested in the crackdown, but most have been released for lack of firm evidence. It is thought that Pemex staff complicit with fuel theft may still be in place.

Pemex’s financial debt levels stand at around US$106.5bn, making it the most heavily-indebted state oil firm in the world, and it originally budgeted that it needed US$9.35bn in fresh debt issuance this year. In mid-May however, López Obrador stated that Pemex would not need to take on any debt this year, which is likely to refer to previous pledges of capital injections into the firm. However, these calculations will have been made before the award of the refinery project. López Obrador has not detailed how Pemex will finance the costly construction, but it is likely to prove impossible for Pemex to oversee the project without taking on extra debt, particularly at a time when the firm is also coming under pressure to reverse flagging oil production and invest in exploration.

López Obrador has taken a series of steps to try to ease its Pemex’s financial squeeze. In February, the finance ministry said it had agreed to incremental tax reductions that would save the company US$4.7bn over six years. In May, Pemex CEO Octavio Romero said additional tax breaks were being finalised, as an alternative to a plan to draw down US$7bn from Mexico’s sovereign oil fund (known as the Fondo de Estabilización de los Ingresos Petroleros – FEIP). Also in May, Pemex announced a US$8bn loan from a consortium of banks. Of the total, US$2.5bn will pay off existing debt and the remaining US$5.5bn will replace existing credit lines. Pemex, meanwhile, says it is about to sign production contracts in 20 blocks that should offset output falls at its most productive field, Ku Maloob Zaap. Production fell to 1.66m barrels per day (bpd) in the first quarter: the government is targeting 2.48m bpd by 2024. To get there, Pemex is aiming to focus on shallow water fields that are less costly to develop.

Credit ratings agencies have been unimpressed. Fitch Ratings downgraded Pemex debt to one notch above ‘junk’ status in January. In May Moody’s said the Dos Bocas refinery would take longer to build and cost more, commenting, “The consequences for Mexico’s credit profile will depend in part on whether it continues to undermine market confidence, further dampening already depressed investment and weighing on Mexico’s economic prospects.”

Several ratings agencies have raised the possibility of downgrading Pemex’s rating even further as a result of the decision to have it construct the Dos Bocas refinery, which in most cases, not just Fitch, only stands one notch above junk status. If this occurs, it would be both more expensive and more difficult to issue fresh debt, raising questions about financing. The dilemma for the government is that helping improve Pemex finances is likely to put pressure on its wider fiscal accounts. 

Guatemala’s environment ministry is moving to shut down a gold mine as part of a wider re-evaluation of the sector, the latest move signalling uncertainty for miners in the region.

On 19 April Guatemala’s environment ministry (Marn) announced that it was seeking to cancel the environmental licence for the Cerro Blanco gold mining operation in Jutiapa department in the southeast of the country. Five days before he left office in mid-January, former president Alejandro Giammattei (2020-2024) had authorised Canadian owner Bluestone Resources to turn Cerro Blanco from an underground into an open-pit mine.

Giammattei’s successor, President Bernardo Arévalo, has said he would safeguard natural resources and promised a temporary moratorium on mining as part of efforts to meet the demands of indigenous communities, and wrangling over Cerro Blanco comes after minister for mining and energy Víctor Hugo Ventura said he would revise all recent decisions on mining exploration, exploitation, and export licences, citing corruption in the sector. 

It also follows a December 2023 ruling from the Inter-American Court of Human Rights (Corte-IDH) [EB-24-01], which said that the state of Guatemala had violated indigenous rights by allowing nickel mining on land in El Estor municipality, Izabal department, where members of the Maya Q’eqchi’ community ‘Agua Caliente’ have lived for centuries. The court ordered Guatemala to adopt new laws on indigenous land rights, which are expected to have implications for other mining projects in the country and the region more widely. 

The mining sector in the sub-region was also shaken by Panama’s moratorium on new mining concessions in November 2023, followed by the decision to shut down the massive Cobre Panamá copper mine following nationwide protests [EB-23-12]. Environmental groups celebrated, but the economic costs will be steep: the mine was the single largest private investment in the country, it accounts for some 5% of the country’s GDP, and the shutdown is a major blow to the country’s hitherto investor-friendly image.

However Panama is just the latest Central American nation to impose a mining ban: Costa Rica’s ban has been in place since 2010 and survived a court challenge in 2021; Honduras declared the end of open-pit mining in the country in 2022; and El Salvador made a similar move in 2017.

Nonetheless, it appears El Salvador’s Nayib Bukele, who was re-elected president in February and is due to take office in June, may be angling to revoke the ban, despite fierce opposition from environmental activists. A January 2024 fact-finding mission by the Institute for Policy Studies (IPS), a Washington-based progressive think tank, heard from several organisations that there are strong signs that the Bukele administration wants to restart mining. Sources cited by IPS say that Bukele has asked about the prospects of restarting mining, as well as suggesting that the current secret negotiations of a free trade agreement (FTA) between El Salvador and China includes the possibility of investment in the mining sector. 

IPS adds that in 2021 the economy ministry “included in its strategic goals, the regulation of mining”, and that the Bukele government has joined the Intergovernmental Forum on Mining, a global forum for governments, and requested that it conduct an evaluation of the mining sector in the country. IPS highlights that Bukele has also passed a law to create a new directorate of hydrocarbons, energy and mines that includes metallic mining, despite it being prohibited in the 2017 ban.

IPS also flags up subsequent actions by the government which seem to be “installing administrative capacity for the reintroduction of mining”. It notes that in the 2023 budget the executive allocated US$4.5m to modernise the mining and energy laws, and 2024 budget projections reveal that the government plans to add 140 staff members to the directorate of hydrocarbons, energy and mines.

It adds that land licensed to mining companies prior to the ban was sold last year to Agricola San José, an anonymous company that ostensibly purchased the land for the purposes of farming in an area that is classified as El Salvador’s least arable land. A high-profile case involving five environmentalists that played a key role in the mining ban, who are facing charges that rights groups say have been fabricated by the government, is also adding to suspicion that Bukele is planning to reverse the ban.

While miners are keeping a close eye on the situation in El Salvador, in neighbouring Nicaragua, President Daniel Ortega continues to oversee a massive expansion of the sector.

Most recently, the government authorised two concessions to Chinese firm Thomas Metal SA in Villanueva municipality, Chinandega department, on 25 April. Two days prior, it also authorised a mining concession spanning over 36,600 hectares (ha) to Chinese owned company Nicaragua Xinxin Linze Minería Group SA in the municipalities of Siuna and Mulukukú, in the indigenous North Atlantic autonomous region (Raan). This follows announcements last year of another concession of two lots awarded in the Raan to a Chinese company Zhong Fu. 

This expansion has drawn opposition, with rights groups complaining about environmental and social damage as concessions are being granted in protected indigenous territory. In March a United Nations report concluded that the government had been repressing political opposition in the affected areas in order to further economic control over the autonomous region and expand gold mining, which is a key source of revenue.

Washington has also recognised this, and it applied economic sanctions to the gold sector in October 2022 as part of efforts to pressure the Ortega government over human rights and democracy. Nonetheless, the sector has continued to grow: as of 1 March 2024, mining concessions had been awarded in 23% of Nicaraguan territory. The fact that recent concessions have been granted to Chinese firms is likely linked to deepening relations with Beijing, with links between the two nations strengthening rapidly since they established diplomatic ties in late 2021. 

As mentioned previously, China is also rumoured to be linked to Bukele’s reappraisal of El Salvador’s mining ban, and there is a possibility that Beijing’s hunger for resources could also mean that Honduras comes under pressure to revoke its own ban on new concessions as part of negotiations with China over an FTA, which started in July 2023.

Protests

While both Bukele and Honduras’ President Xiomara Castro would risk igniting protests if they revoked the bans on mining, the promise of more investment or loans from Beijing in return for access to mineral resources could prove attractive to governments struggling with fragile public finances and infrastructure deficits.

BRASIL | Mantega elimina el IOF en apoyo al Real y a la inflación. El ministro de finanzas, Guido Mantega, dijo que el gobierno llevaría a cero la tasa del 6,0% del impuesto a las operaciones financieras (IOF) aplicada a los flujos de carteras extranjeras a inversiones de ingresos fijos, para así precipitar la esperada decisión de la Reserva Federal de EU de poner fin a su política de ‘flexibilización cuantitativa’.

El anuncio de Mantega también podría apuntar a apuntalar al Real contra el dólar y por lo tanto reducir las presiones inflacionarias. Con el Real ahora operando en su punto más bajo en cuatro años en sólo R$2,14/US$1 y la inflación en un 6,5% alcanzando el tope del rango de la meta oficial, Mantega parece querer que algo de este 'dinero caliente' vuelva.

Nicaragua’s supreme electoral court (CSE) has granted legal status to two new political parties, Ciudadanos por la Libertad (CxL) and Partido de Restauración Democrática (PRD), which will be able to compete in the 5 November municipal elections. Like all other state institutions, the CSE is under the thumb of President Daniel Ortega and his ruling Frente Sandinista de Liberación Nacional (FSLN). Some consider the move, which was announced on 3 May, as the Ortega government’s latest attempt to address long-running democracy-related concerns raised by members of the international community including the US. These concerns have intensified since the November 2016 general election, which produced a landslide (72.5%) victory and re-election for Ortega albeit in a highly-questioned process.

Set up as a political movement in September 2016 ahead of the November 2016 elections, CxL includes some members of the now defunct Coalición Nacional por la Democracia (CND) coalition of opposition parties, led by long-time Ortega opponent Eduardo Montealegre. The latter was controversially stripped of his leadership of the main opposition Partido Liberal Independiente (PLI) party by the supreme court (CSJ) in June last year, a move which also set off alarm bells among the international community about the state of democracy in the country [RC-16-07]. The CxL will be headed up by Kitty Monterrey, a Montealegre ally.

Meanwhile the PRD is led by Saturnino Cerrato, an evangelical pastor who ran as presidential candidate for the small opposition Alianza Liberal Nicaragüense (ALN) party in November 2016 and came in fourth with just 4.3% of the presidential vote.

The CSE’s announcement regarding the two parties came six days after US Senator Ted Cruz (R-TX) reintroduced in the US Senate a version of the Nicaraguan Investment Conditionality Act (NICA) of 2017, a companion to the bipartisan measure introduced in the House of Representatives on 5 April [RC-17-04]. The NICA is the latest version of an initiative first debated last year which would prevent the Nicaraguan government from accessing international financing until reforms are implemented that “promote democracy, strengthen the rule of law, respect human rights…until Nicaragua holds free, fair, and transparent elections overseen by electoral observers”.

With local private sector organisations like the American-Nicaraguan Chamber of Commerce (Amcham) urging the FSLN administration to take measures to prevent the US government from approving NICA, the CSE’s decision follows other efforts by the FSLN government aimed at providing reassurances regarding the state of democracy. These include a Memorandum of Understanding (MOU) inked on 28 February by the government and the Organization of American States (OAS) [RC-17-04], a key provision of which was that the OAS would “accompany” the November municipal elections. This was a seemingly significant outcome given that a chief complaint of the international community and local civil-society groups was President Ortega’s refusal to allow any credible international observers to oversee the vote. Whether this will actually take place however has, since been called into question. On 8 May, the CxL presented the CSE with its observations regarding the calendar for the November municipal elections which, among other things, complained of significant omissions – including that there is no mention of international or national observers.

• Approval

The most recent opinion survey published by pollster M&R Consultores on 24 April showed the Frente Sandinista de Liberación Nacional (FSLN) government with 73.9% approval.

ARGENTINA | FTA with US. Argentina’s new foreign minister, Pablo Quirno, travelled to the US this week to advance trade negotiations with the administration led by President Donald Trump. “We’ve been a very closed economy and the best way for Argentina to grow is exporting and importing,”

Quirno said. Should the FTA negotiations progress then Argentina will need to push for a change in the rules of the Southern Common Market (Mercosur), which outlaws bilateral trade deals with third parties.

BRAZIL | Services sector posts higher growth. Brazil’s national statistics institute (Ibge) released new figures on 12 November showing a monthly rise of 0.6% in the volume of services provided in September. This marks an acceleration from the 0.2% monthly increases registered in August and July. The accumulated annual volume of services provided in the 12 months through September 2025 was up 3.1% on the preceding 12-month period.

Of the five categories measured by the Ibge, three saw monthly increases in September: transport and postal services (+1.2%), information and communication services (+1.2%), and other services (+1.6%). The two categories that posted monthly drops were services provided to families (-0.5%) and professional, administrative, and complementary services (-0.6%).

BRAZIL | International tourism rises in October. The national tourism agency (Embratur) released the latest tourism figures on 11 November, which showed that 587,312 international tourists came to Brazil in October. This marks a 15.4% increase compared with October last year.

From January-October, Brazil received a total of 7.69m international tourists, up 42.2% on the same period in 2024. Tourists visiting Brazil were mainly from Argentina and Chile. Around 3m Argentines travelled to Brazil in January-October 2025, up 85.5% compared with January-October 2024. Meanwhile, 661,850 Chilean tourists visited Brazil during this period, up 27.7% compared with the first 10 months of 2024.

BRAZIL | Central bank maintains hawkish monetary policy signals. On 11 November the monetary policy committee of the central bank (Copom) released the minutes from its meeting on 4-5 November, in which it held the country’s benchmark interest rate at 15.0%. The minutes did not hint at the possibility of a rate cut anytime soon, even though inflation has slowed recently.

Also on 11 November, the national statistics institute (Ibge) reported that annual inflation in October stood at 4.68%, down from 5.17% in September, 5.13% in August, and 5.23% in July. Monthly inflation in October came to 0.09%, down from 0.48% in September, 0.11% in August, and 0.26% in July.

Services inflation warnings

In the minutes of its latest interest rate decision meeting, the central bank’s monetary policy committee (Copom) said that, although recent inflation readings point to a “more favourable dynamic compared to what was expected” before, services inflation remains “more resilient”, responding to “a labour market that is still dynamic”. The minutes went on to argue that a “contractionary monetary policy for a very prolonged period” is needed due to this demand-driven inflation.

Coincidentally with the publication of these documents, the Chinese government published its own Latin America and the Caribbean (LAC) strategy paper in December giving a clear signal that it intends to continue expanding its footprint in the Western Hemisphere. It outlines five programmes for building a China-LAC community as follows: they are Solidarity, Development, Civilisation; Peace; and People-to-People Connectivity. The Solidarity programme, for example, covers political and international collaboration, but also requires LAC partner countries to recognise the One China policy which prevents recognition of Taiwan as an independent country.

The Development programme is the longest, covering economic and commercial relations. Under that heading China commits to “share [the] development opportunities of Chinese modernisation”. It sets out an expansive agenda of cooperation in finance, energy, infrastructure, manufacturing, agriculture, food security, science, and technology. Artificial intelligence (AI) and other hi-tech sectors such as aviation, aerospace, and semiconductors are also mentioned as fields for collaboration. US analysts have warned that China intends to expand dual-use infrastructure in the region, combining civilian and commercial use with potential military and strategic applications. China’s LAC partners are being encouraged to join the Beidou Navigation Satellite system and to build an associated development centre. The paper also notes Beijing is looking to partnerships to build logistics supply bases for China’s Antarctic expedition.

The Chinese strategy paper stands on its own merits, but it can also be seen, in part at least, as responding to the earlier US NSS publication. From Beijing’s point of view the most worrying aspect of the NSS is its commitment to build a military capable of denying aggression anywhere in the First Island chain (which includes Okinawa, Taiwan, and northern Philippines). According to think tank CSIS many analysts believe that by stepping up the Chinese presence in LAC, Beijing is highlighting its willingness to push back against the US globally and on matters relating to its core interest – asserting its claim to Taiwan.

A total of seven LAC countries still have diplomatic relations with Taiwan, rather than with the mainland Peoples’ Republic of China (PRC). They are Belize, Guatemala, Haiti, Paraguay, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines. The language of the Chinese LAC strategy paper suggests Beijing will continue its carrot and stick policy to try and flip some on the list, persuading them to break with Taipei and recognise Beijing instead. Since 2016 nine LAC countries have flipped in that way to recognise the PRC. China’s current efforts in this regard are likely to prioritise Guatemala and Paraguay.

The Beijing government was quick off the mark to reject US military action in Venezuela. On 5 January foreign ministry spokesperson Lin Jian told a press conference that the US action “is in clear violation of international law, basic norms in international relations, and the purposes and principles of the UN Charter”. Beijing called on the US to release President Maduro and his wife. Lin called on parties involved in the Venezuelan crisis to “respect Venezuela’s right to independently choose its development path, and work for stability and the return of order”.

BRAZIL | Government announces budget freeze. On 15 July, Finance Minister Fernando Haddad announced a R$15bn (US$2.7bn) budget freeze to ensure the Brazilian government meets its fiscal targets for 2024. The government has established an ambitious zero-deficit target for the year, but its latest forecasts show the projected deficit pushing the 0.25% tolerance range. Of the total budget freeze, R$3.8bn have been blocked due to lower-than-expected revenue and could potentially be reversed later in the year if, for example, the government resolves an impasse over payroll tax exemptions. The details of the budget freeze were outlined later in July; all ministries bar the environment ministry are affected, with the health ministry and the ministry of cities taking the biggest hit, with a R$4.4bn and R$2.1bn freeze respectively, followed by the transport ministry (R$1.5bn) and the education ministry (R$1.2bn).  

CHILE | UAE agreement signed. Chile and the United Arab Emirates (UAE) signed a comprehensive economic partnership agreement (Cepa) on 29 July, marking Chile’s first trade agreement with a country in the Middle East. The agreement, signed by Chile’s President Gabriel Boric and the UAE’s President Mohamed bin Zayed Al Nahyan as part of Boric’s two-day visit to the country, seeks to improve trade and economic ties between the two countries. In a statement, Boric said that the Cepa “establishes the basis for future negotiations in key areas such as bilateral investment agreements, financial services and includes an environmental chapter”. Under the agreement, Chile will receive better access to the UAE market for around 97% of its exportable products, with exports of nuts, salmon, copper cathodes, potassium and sodium nitrates expected to increase. According to the state Emirates News Agency (Wam) in English, the UAE-Chile Cepa is projected to increase non-oil bilateral trade to US$750m by 2030, more than doubling the US$306m recorded in 2023.

Brazil & Southern Cone: inflation rate
Percentage variation (year-on-year)

Brazil & Southern Cone: GDP growth (%)
Quarterly figures are year-on-year growth