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Brazil's violent crime patterns are shifting

The map of criminal violence in Brazil has been changing over the past three years. Dramatic increases in homicide rates in northeastern Alagoas and southeastern Espí­rito Santo have taken those two states to the top of the country's murder league, overtaking Pernambuco and Rio de Janeiro. At the other extreme, São Paulo, the most publicised success story in crime reduction, has been witnessing a sharp rise in crimes other than homicide.

Three years ago, Pernambuco and Rio de Janeiro headed the homicide ranking table, with rates per 100,000 inhabitants of 48 and 40.5 respectively. In the intervening years, the rate in Alagoas rose by 29 points to 66.2 per 100,000, and that of Espí­rito Santo by almost 19 points to 56.6. The rates of the former top-rankers did not decline; they just increased at a slower pace. Pernambuco's rose by 3.6 points to 51.6, Rio's by one point to 41.5.

In the same period, the rate in São Paulo state, which had fallen from 35.7 per 100,000 in 1999 to 18 in 2005, continued to decline, falling to 11 per 100,000 in 2008. The rate for São Paulo city in the past three years fell from 24 to 13.2 per 100,000.

The state authorities, however, are concerned about the apparent reversal of some major crime trends. Most had been falling until the end of October 2008, after which point they began rising again, and by the end of the first quarter of 2009 had reached significant levels. Murder was only slightly affected by the turnaround: homicide cases recorded in the first quarter were up only 0.7% on the same period of 2008. The increases in other major crimes were far higher: robbery with violence was up 36%, rape 33.5% and theft 19%.

The spokesman for the state government, Túlio Khan, a sociologist, said that the upswing could be attributed to 'a series of circumstances', but he only identified one of these: the economic crisis. This is interesting, as most statistics have failed to find a direct correlation between crime rates and the state of the economy. Indeed, São Paulo's success in reducing violent crime has been partly attributed to the fact that it relied on intensive policing rather than 'attacking the root causes'.

Elsewhere, the authorities have launched a campaign to prevent the rise in violent crime in the cities surrounding Brasí­lia, with a combined population of 3m, from spreading into the capital, which enjoys one of the lowest rates in the country. In the fourth phase of Operação Alvorada, launched in March 2008, about 900 police officers were deployed in April across the federal district and crime hotspots in the neighbouring states of Goiás and Minas Gerais, and captured 200 of a targeted 300 suspected criminals against whom arrest warrants had been issued.

Homicide rates in Brazil
Cases per 100,000 inhabitants

States              2005      2008
Top 4
Alagoas             37.2      66.2
Espí­rito Santo    37.7      56.6
Pernambuco      48.0      51.6
Rio de Janeiro   40.5      41.5
Selected other
São Paulo         18.0      11.0
-São Paulo city  24.0     13.2

Development: President Manuel Zelaya's gamble of stepping back into Honduras on 24 and 25 July failed to catapult him back to power.

Significance: Zelaya's stunt backfired in several directions. First it underlined how little support he has in Honduras; second it antagonised both the US government and President Oscar Arias of Costa Rica, the mediator, who had both advised Zelaya not to play to the international media and cross from Nicaragua into Honduras; and third, these two consequences allowed the de facto government, headed by Roberto Micheletti, to seize the political initiative again.

The clear consequence of Zelaya's failure is that a negotiated solution to the month-long crisis is now likely. Both sides have made timid steps towards accepting Arias's peace plan.

The first move came from the de facto government which allowed the Honduran military to issue a statement on 25 July in which they said that they “unconditionally" supported the Acuerdo San José, which had been drawn up by Arias, and calls for Zelaya to return to a presidency shorn of many of its traditional powers. The army's statement suggests that the Micheletti government now believes that the Arias deal is the best it is likely to get. The Micheletti strategy is to say that it will be guided by what Honduras's institutions think of the Arias peace plan. The key institution, which has yet to deliver its verdict, is the supreme court.   Honduras's congress is the third institution which has to accept the Arias deal.

Presumably, if the supreme court and congress accept the Arias peace plan, Zelaya will have no option but to accept it as well. He accepted the first, looser, Arias peace plan which the Micheletti side did not. Zelaya has not formally accepted the second Arias plan but then neither has the Micheletti mob.

Zelaya has not commented directly on the army's offer, but an unnamed minister who is staying with Zelaya on the Nicaraguan side of the border with Honduras told a Spanish newspaper, El Paí­s, on 26 July that the army's statement was “the first step on the right road." The same minister also told El Paí­s that the Zelaya group still feared a night-time raid by Honduran special forces to kidnap Zelaya.   Zelaya is basing himself at Ocotal, 25km inside Nicaragua.

Zelaya has been taking calls from a range of people: on 25 July he talked to President Lula da Silva from Brazil; President Fernando Lugo from Paraguay and President Felipe Calderón Hinojosa from Mexico. A key member of Zelaya's party is the Venezuelan foreign minister, Nicolas Maduro.

Zelaya is still due to travel to the US today for a series of meetings on 28 July. He grumbled on 26 July that the US was now not supporting him as strongly as it had been, ignoring the fact that he had disregarded the US's advice not to go to the border.

Pointer: Both sides have largely avoided shedding much blood on 24 and 25 July (though one Zelaya supporter was killed and some Micheletti-supporting policemen roughed up) so a peaceful, negotiated solution to the crisis now looks in sight again. Such a result, the restoration of Zelaya, albeit with circumscribed powers, without the use of force, will be a major diplomatic triumph for President Barack Obama and his Secretary of State, Hillary Clinton. A small bomb explosion at a trade union headquarters in Tegucigalpa and the extension of the curfew by the Honduran army show, however, that the risk of a conflagration remains.

Development: On 2 September the central bank's monetary policy committee (Copom) voted unanimously to leave the benchmark Selic interest rate unchanged at its current record low rate of 8.75%, without bias, ending its recent seven-month cycle of monetary easing.

Significance: As the government of President Lula da Silva gears up for continued public spending ahead of a big election year in 2010, the ever prudent bank opted to withdraw its monetary stimulus, which should also help keep the Real from appreciating too much.

With inflation under control, the bank signalled it will likely leave the Selic at its current low for the rest of the year.

As growth recovers (the official budget forecast is for GDP growth of 4.5% year-on-year in 2010), rates will edge back up, but probably not too far. Brazil now looks like having reasonable interest rates, both nominally and in real terms.

The IPCA index of consumer price inflation was 4.5% year-on-year in July, at the centre of the target range, and the lowest rate since December 2007. The IGP-M index of wholesale prices turned negative in July for the first time since 2006.

The Copom pointed out on 2 September that the accumulated impact of its recent Selic reductions, which has come down five percentage points from 13.75% in January, will be felt most keenly in the second half.

This is useful timing, as many of the Lula government's temporary tax breaks, which have stimulated domestic consumer demand, are due to come to an end towards the end of the year.

The average annual rate on bank credit for consumers is now hovering at 45%, down from almost 60% in November 2008.

According to latest central bank figures, total outstanding loans rose 2.6% month-on-month to a record R$1.31 trillion (US$688.2 billion) in July 2009, the fastest monthly expansion since October 2008. Bank lending rose 20.8% year-on-year.

Oscar Luis Castañeda Lossio, Peru

Who is he? Castañeda is the hugely popular mayor of Lima

Why watch him? He may well be the “Stop Humala" candidate in the 2011 presidential election. Ollanta Humala won the first round of the last presidential election and was only prevented from winning the presidency when all his opponents united behind Alan Garcí­a.

Date of Birth:   22 June 1945, in Chiclayo, Lambayeque. He is the youngest of nine children. His father was mayor of Chiclayo.

Education:   He is a law graduate from the Pontificia Universidad Católica del Perú.

Public life: He won a seat as a councillor in Lima in 1981, for Acción Popular. He then combined council work with being part of the management of the Banco Industrial del Perú. From 1990 to 1996 he was president of the Instituto Peruano de Seguridad Social. In 2000 he ran for the presidency, winning 2% of the votes cast and finishing fourth. In 2002 he ran for, and won, the mayorship of Lima, on the Unidad Nacional ticket.  

Time Line:

Late 1970s to early 1980s: worked as a lawyer for the foreign trade ministry.

1981: regidor in Lima, subsequently held a string of jobs in the Lima municipality.

1990 to 1996: president, Instituto Peruano de Seguridad Social (IPSS).

2000: ran for the presidency, coming fourth.

2001: Backed Lourdes Flores for the presidency in an election won by
Alejandro Toledo.

2002: Won election to become mayor of Lima after corruption allegations erupted against Alberto Andrade.

2006: Re-elected mayor of Lima.

Strengths: Castañeda is hugely popular as mayor of Lima, thanks to his success in completing public works projects. His time as president of the IPSS is also fondly remembered by most Peruvians. The latest poll by the Instituto de Opinion Pública de la Pontificia Universidad Católica del Perú (PUCP) gave him a 79% approval rating. This poll also put him ahead of Keiko Fujimori, the daughter of the disgraced president Alberto Fujimori for the 2011 presidential election (23% to 16%).   Keiko is the other likely candidate for the centre-right in 2011.

Weaknesses: Castañeda has little support beyond Lima, where he has spent almost all his career. He also has little party organisation behind him. He is the founder and leader of the Partido Solidaridad Nacional, but the party has almost no other prominent members and little national organisation. Castañeda also has some powerful enemies, notably Rafael Rey, the current defence minister. Rey, who is a prominent rightwinger and member of Opus Dei, provided the dirt to smear Alberto Andrade, the mayor of Lima whom Castañeda beat in the 2002 election. Rey was furious that Castañeda did not prove grateful and back Rey's campaign for a congressional seat.

Castañeda is far from charismatic and some of his former colleagues say that his intellectual gifts are little more than average.

Prospects: If he continues to do well in the opinion polls, the Fujimoristas will start to dig up allegations against him. He could short-circuit that by announcing that he will not contest the presidency in 2011 but instead will run again for mayor of Lima in 2010.

What is not clear is whether President Alan Garcí­a would prefer Castañeda or Keiko Fujimori to succeed him. Castañeda would be a less controversial choice: Barack Obama met him (in August 2008) when he was campaigning for the US presidency, suggesting that Obama's team found nothing embarrassing in Castañeda's background.

Development: On 23 November Fitch, a US credit ratings agency, downgraded Mexico from BBB+ to BBB, two notches above junk.

Significance: The other two main credit rating agencies, Moody's and Standard & Poor's (S&P), are likely to follow suit. None of these downgrades will remove Mexico's investment grade, but that will happen unless there is a major change in the country's economic prospects or policymaking.

The three agencies warned three months ago that they were concerned about the budget for 2010 which has now been passed by congress. The real reason for the downgrade, as Fitch admitted, is the government's overdependence on oil revenues which are now falling, not only because oil prices are down, but because oil production is declining month-on-month.

The current government is in a difficult position. It has been criticised by businessmen and international economists for increasing taxes (income and Vat) in the 2010 budget: they fear that the rises will choke any economic recovery in 2010. Fitch (and most likely Moody's and S&P) argues that the government should have done more to broaden its fiscal base, given the problems with oil revenues. Without more non-oil tax revenues, Fitch argues, Mexico is vulnerable to future economic shocks because the government will not have the resources to counteract the cycle. Non-oil tax revenues come to about 11% of GDP, on a par with Guatemala (which does not export oil) whose government has been trying for years to push up its tax take.

Technically, Fitch has also issued a warning about the level of Mexican government debt. By the end of 2009 this will have hit 37% of GDP, it forecasts. This is well above the level for other BBB rated economies.

Brazil: Following a December monthly result of 0.37%, the IPCA index of consumer price inflation rose an accumulated 4.31% in calendar year 2009, down from 5.9% in 2008.

Brazil: Retail sales rose 8.7% in November from a year ago, according to the national statistics institute. It was the best annual result since October 2008 (9.8%).

Development: On 25 February an Ecuadorean judge ruled that Juan Manuel Santos, a former Colombian defence minister, did not have a case to answer over the Colombian military raid inside the Ecuador border on 1 March 2008 in which at least 26 people were killed.

Significance: The decision to drop, albeit provisionally, the case against Santos, who may well be Colombia's next president if Alvaro Uribe is not allowed to stand, is further evidence of improving relations between Ecuador and Colombia. The judge, Francisco Revelo, has also ended, again provisionally, proceedings against three senior Colombian military officers.

Revelo is the third Ecuadorean judge to have become involved in the case, which was being heard in the Corte Provincial de Justicia de Sucumbí­os. Sucumbí­os is the Ecuadorean department where the Fuerzas Armadas Revolucionarias de Colombia (Farc) base which was the target of the March 2008 raid was located. The three other Colombians against whom proceedings were dropped were: the chief of the Colombian general staff, Freddy Padilla, the chief of the national police, Óscar Naranjo, and the former commander of the army, Mario Montoya.

Revelo's decision was on procedural grounds: he ruled that the prosecution had not allowed the defendants time and information to answer the charges of homicide laid against the four Colombians. The Colombians were accused of organising the raid, which was codenamed, "Operación Fénix".

Separately on 25 February, President Rafael Correa warned the Farc not to “play with the lives of Ecuadoreans", in allusion to the murder, on 24 February, of nine Ecuadoreans (and one Colombian) by an armed group close to the border with Colombia.

Development: On 8 April both the ruling Movimiento al Socialismo (MAS) and opposition accused each other of fraud in the 4 April regional and municipal elections.

Significance:  The opposition specifically has taken issue with the outcome in the gubernatorial vote in the eastern region of Pando, previously in opposition hands. On 9 April the Corte Nacional Electoral (CNE) announced after a recount that the MAS had won by 49.7% to 48.4%. On top of this the MAS also won control of the state capital, Cobija, for the first time. The MAS now has six departmental governors: Oruro, Potosí­, Chuquisaca, La Paz, Cochabamba and now Pando.

The MAS itself is protesting against the results in the three Media Luna regions which remained in opposition hands: Santa Cruz, Tarija and Beni (where a recount is already underway). Overall, support for the MAS dropped nationally from the 64% registered in the December presidential and congressional elections vote to an average of 50%, with an overall decline in all regions except for Pando and Beni. The MAS also only won three out of 10 departmental capitals (although this is still an improvement on the last 2004 municipal elections, where it failed to win any).

Development: On 19 May congress failed to pass a new port law, preferring to send the legislation back to committees for further review.

Significance: The strike by stevedores at Callao, Peru's biggest port, has lasted for over a week. Both employers and strikers are annoyed at the government's inability to sort out a solution. The government has sent in army officers and marines to unload some ships and yesterday (19 May) declared a 60-day 'state of emergency'. That move may actually be counterproductive, because under a state of emergency the port workers cannot call a mass meeting to consider any offer which might end the strike.

Wilmer Estévez, the general secretary of the stevedores' union at Callao, declared yesterday that it was clear that the government does not want to end the strike, because it failed to push congress to approve reforms to the port workers law. The workers are pushing for amendments to facilitate better pension rights, unionisation and training.

Mario Arbulú, the president of the Empresa Nacional de Puertos (Enapu), reckons that every hour of the strike is costing US$3m.  Enapu runs the north wharf at Callao. Dubai Ports World the south wharf. Juan Varilias, the president of the exporters association, Adex, said that it was considering direct talks with the union to sort out a solution, in the absence of a government-brokered solution.

Callao port, which handles 70% of Peru's trade, had been brought to a virtual standstill by the 1,100 striking stevedores. Shipping companies are diverting south to Valparaí­so in Chile and north to Guayaquil in Ecuador. A few ships are putting in at Peru's smaller harbours in Pisco and Matarini.

In 2007, a 10-day strike at Callao was only ended by the direct intervention of President Alan Garcí­a.

Development: On 27 June the main opposition Partido da Social Democracia Brasileira (PSDB) held crisis talks with its main ally, Democratas (DEM), over the selection of a vice presidential candidate to run alongside the PSDB's José Serra in the October election.

Significance: The DEM is threatening to withhold its support for Serra after the leader of the small PSDB-allied Partido Trabalhista Brasileiro on Friday announced - via Twitter - that the PSDB leadership had opted for a 'pure blood' PSDB electoral slate and had invited the senate opposition leader, Alvaro Dias (Paraná) to take the vice presidential slot. The DEM, which had fully expected the number two slot, was furious with both the surprise decision and its ill-advised announcement. 

Dias confirmed the invitation and said he would accept. Yet there is mass confusion - it's still not clear whether the decision is final, or whether there might be a last minute reversal. The move appears to have been engineered by the PSDB president and Serra's campaign manager, Sérgio Guerra.  State level politics in Paraná partly motivated the decision - the PSDB is keen to shore up its existing alliances in the state in order to respond to a strong challenge by the ruling Partido dos Trabalhadores (PT) and its main ally the Partido do Movimento Democrático Brasileiro (PMDB). Guerra may also be trying to promote stronger party unity, amid signs that the PSDB base is still not united behind Serra, who was controversially chosen by the leadership over the popular former PSDB state governor of Minas Gerais, Aécio Neves. 

The DEM party convention is on Wednesday (30 June) and it insists it will put forward its own VP nominee by way of a final ultimatum. The small rightwing party, not a natural bedfellow for the centre-left PSDB, has suffered badly from a recent high profile corruption scandal, which cost the party its only state governor (in the federal district of Brasí­lia). Arguably then, it brings little to the table politically. Yet without DEM support the PSDB would lose almost three minutes of crucial TV advertising time during the 45 days of free political campaign slots in August/September.

It's unclear what, if any, input Serra himself had in the latest decision. The general consensus all last week was that he was weighing up several other nominees from both the DEM and the PSDB. A DEM deputy, José Carlos Aleluia (Bahia), and several female candidates were said to be in the running, with no mention whatsoever of Dias.

Serra's campaign appears to be veering dangerously off course, with mounting criticism of the seeming ineptitude of his team following latest polls results, which put the government candidate, Dilma Rousseff, five points clear of Serra in the first round and seven points clear in a run-off. Conservative commentators were yesterday openly scathing - contrasting the “professionalism" of the PT/PMDB campaign with the “amateur, improvised" Serra team.

Development: On 5 August four candidates for the presidency held their first TV debate.

Significance: There was no clear winner and no clear loser, analysts and opinion pollsters judged. This is disappointing for José Serra from the Partido da Social Democracia Brasileira (PSDB), the centrist candidate, who is beginning to lag badly behind the Partido dos Trabalhadores (PT) candidate, Dilma Rousseff, in the opinion polls. Rousseff, who was obviously nervous at the start of the debate, since she has never campaigned for office before, failed to make any major mistakes.

The most recent poll, from Sensus, published on 5 August, put Rousseff 10 percentage points ahead of Serra, who had been leading in the polls until three months ago. The first election round is on 3 October. If Rousseff continues to extend her lead there may be a chance that she could win in the first round: to do this she needs to get 50% of the votes cast plus one vote. Currently Rousseff is on 41.6% and Serra is on 31.6%. The third placed candidate is Marina Silva, a Green, who is on 8.5%. The opinion polls all show her winning easily in a run-off against Serra (48.3% to 36.6%, according to Sensus). Any run-off will be on 31 October.

Serra's other big problem is that he is not attracting campaign funds. Although this will not handicap him when campaign TV advertising starts on 17 August because TV adverts are free for registered candidates, it will curb his campaign in other ways such as telephone and internet campaigns which target particular voters. What is alarming Serra's supporters is that, despite his claim to be the pro-business candidate, his campaign war-chest is actually lighter than Silva's.

According to official figures for campaign funds raised by the end of July, Serra had raised R$3.6m (US$2.1m), while Silva had R$4.6m and Rousseff R$11.6m. Serra admitted to the Folha de São Paulo that he was disappointed by the figures but said that sometimes campaign contributors were slow to stump up. Despite the sluggishness of contributions to Serra, his party, the PSDB, is flush with money. The PSDB expects to spend R$180m on this year's elections, while the PT expects to spend R$157m.

Four candidates took part in the TV debate: Rousseff, Serra, Silva and Plinio de Arruda Sampaio, from the Partido Socialismo e Liberdade (PSOL). Arguably, Plinio, 80, and a no-hoper according to the polls, scoring less than one percent support, did best in the debate because he was witty and crisp. According to Twitter, he stole the show, largely because he focused on the fact that the three main candidates shared the same approach to the main issues in the debate which were social policy and tax reform.

In the debate, none of the main candidates strayed very far away from their previous statements. Plinio was able to get in some digs at Silva, whom he called an “eco-capitalist" because she contended that the environment could be protected with capitalist methods. Plinio also promised to cap land ownership at 1,000 hectares and claimed that the current government of President Lula da Silva, in which Rousseff served, had done nothing for the landless. Plinio was one of the founders of the PT with Lula in 1980 but resigned in 2005 and has since been a major critic of the government from the Left.

Pointer: There are another three scheduled TV debates (on 12, 28 and 30 September) and one internet debate on 18 August which will just be between the three main candidates. The form of the debate was unusual: a panel of journalists fired questions at the candidates. The first question was: which of the following three issues should be the priority for the next government: health, education or law and order? Only Silva answered the question directly, plumping for education.

Mexico: Mexico's industrial activity increased 5.4% in July compared to the same period the previous year although declined 0.27% compared to the previous month, according to the national statistics institute (Inegi). Most of the increase owed to the manufacturing sector which grew 8.8%; mining (5.3%) and electricity, water and gas supplies (5.5%).

Development: Brazil's two presidential candidates, Dilma Rousseff and José Serra, began an all out campaign blitz yesterday (24 October) ahead of the closely contested second round runoff vote on Sunday (31 October).

Significance: There will be a new poll every day this week, adding to the tension. Although last week's surveys suggested that the government candidate Rousseff was regaining her margin over Serra, no-one is taking any chances. Both camps are concerned about voter abstention and are working desperately to chivvy their supporters to turn out on the day.

Rousseff and her mentor, President Lula da Silva, today begin a marathon round of rallies concentrating on the North and North East. Support for Rousseff is strongest (and Lula is most popular) there, but the risk of abstention is also high among those low income regional voters that already turned out en masse for Rousseff and the ruling left-wing Partido dos Trabalhadores (PT) in the first round on 3 October.

Tomorrow, Rousseff will unveil a slimmed down, PR-friendly 13-point plan of government focusing on vote-winning positives such as job creation, poverty elimination and education and health promises. These directly appeal to the so-called 'bolsistas' - the loyal 30% of the electorate that votes exclusively for Rousseff as the direct continuation of Lula. The booklet was put together by Lula's close advisor, Marco Aurelio Garcí­a. There is no mention of the sensitive topics like abortion or same sex marriage that damaged Rousseff in the first round.

The Serra camp is concentrating its final week on the opposition Partido da Social Democracia Brasileira (PSDB)'s electoral homelands in the South and South East - targeting cites like São Paulo, Rio de Janeiro and Belo Horizonte. Serra will have the support of newly elected party notables like Geraldo Alckmin in São Paulo and the popular Aécio Neves in Minas Gerais. Ironically, Neves, Serra's former rival for the PSDB presidential nomination, is now at his side constantly.

There are two final TV debates - one tonight (25 October) and another on Thursday (28 October). The Serra camp is hoping that a good live performance will help him pull off a miracle on Sunday. Since the return to democracy in 1985, no second placed presidential candidate has ever come from behind to win the run-off vote.

Development: On 7 December Haiti's provisional electoral council (CEP) released preliminary results from the 28 November presidential and legislative elections indicating that Mirlande Manigat, of the opposition Rassemblement des Démocrates Nationaux Progressistes (RNDP,) and Jude Celéstin, the candidate for President René Préval's ruling Inite coalition, will compete in a presidential run-off, having won 31.37% and 22.48% respectively of the first round vote.

Significance: The result, which won't be confirmed until 20 December, will subject what has already been a highly discredited electoral process to further scrutiny. It will also fuel the claims of vote-rigging and fraud by the Préval government. Unofficial polls had pointed to a second round between Manigat and Michael Martelly (a pop-star), who according to the CEP lost the second place to Celéstin by only 6,845 votes, or just 0.64% of the vote. A presumed Manigat-Martelly run-off was also in line with observations released by the national electoral watchdog, Conseil National D'observation (CNO), which had suggested based on exit polls that Manigat took 30% in the first round, followed by Martelly on 25% and Celéstin on 20%.  The CNO, which is financed by the European Union, dispatched over 5,500 observers to the 1,500 voting stations across the country.

Amid concerns that yesterday's announcement will spark more violence by Martelly supporters (the singer himself, who has long accused Préval of vote-rigging, has yet to make a statement), the US has notably raised serious questions over the results, noting the discrepancy between the findings of the CNO, which had dubbed the process “a disaster", and the CEP, which is handpicked by Préval and has long been accused of bias. In a statement yesterday, the US embassy in Port-au-Prince said it was “concerned by the Provisional Electoral Council's announcement of preliminary results from the November 28 national elections that are inconsistent with the published results of the National Election Observation Council (CNO)". It added that it “stands ready to support efforts to thoroughly review irregularities in support of electoral results that are consistent with the will of the Haitian people expressed in their votes". Candidates have 72 hours to contest the result.

The OAS and the Caribbean Community (Caricom), which sent a 120-strong joint electoral observer mission (JEOM) and endorsed the first round vote despite acknowledging “serious irregularities", has yet to comment on the results. Prior to the CEP's announcement, the UN secretary-general, Ban Ki-Moon, had admitted that the problems were worse than originally reported. According to the UN, these included: “the late opening of polling stations; the inability of many voters to find the correct voting centre and/or polling station; the saturation of call-centres overwhelmed by callers seeking where to vote; instances of incorrect application of voting procedures; [and] instances of voter manipulation - repeat voting of some voters facilitated by complicit poll workers and unidentified party agents".

The CNO had also previously highlighted the discrepancy between the CEP's electoral register, which comprised 4,694,961 voters, and the 4,565,000 registered voters reported by the national identification office (ONI). It has also raised questions over the participation rate, which was reported yesterday by the CEP at 22.87%. The CNO observation mission had reported a 42% participation rate in 1,400 of the 1,500 voting centres.
 
Pointer: With the legislative results yet to be posted on the CEP's website, the local press is reporting that two of the 11 senate seats up for grabs (in the 30-seat upper house) were won in the first round, with one won by the Inite. In the chamber of deputies, where all 99 seats were up for election, there have been 18 winners outright. Of these, 8 have reportedly been won by the ruling coalition. The run-off for the presidential and legislative elections is scheduled for 16 January 2010, although the CEP has yet to confirm this date.

*Brazil’s national federation of automobile dealers (Fenabrave) has released the annual vehicle sales for 2025, which showed a total of 5.13m units sold. This marks an 8.02% increase compared to 2024. Of all the vehicle categories, motorcycles registered the highest year-on-year rise in sales, with a total of 2.2m units sold, up 17.13%. Passenger car sales totalled 2.0m units, up 2.49%, while light commercial vehicles totalled 552,931 units, up 2.91% on the previous year. The product categories that registered yearly decreases were trucks, with 110,873 units, down 8.65%, and vehicle implements such as trailers, with 71,030 units, down 19.88%.

Development: On 27 January, President Juan Manuel Santos announced that Switzerland will become the first developed nation to implement the free trade agreement (FTA) it signed with Colombia as part of the European Free Trade Association (EFTA), which comprises Switzerland, Iceland, Lichtenstein and Norway.

Significance: According to official preliminary figures compiled by Colombia's ministry of foreign trade, trade between Colombia and Switzerland reached US$1.2bn in 2010. The implementation of the FTA will allow Colombia to increase its exports to this market which could serve as an additional pressure for the US and the European Union to ratify the FTAs they have signed with Colombia; Norway is the only EFTA member who still hasn't ratified the FTA with Colombia.

Key points:

Colombia's exports to Switzerland accounted for US$739.2m of the US$1.2bn total, an increase of 21.2% on 299 sales. The main products sold to that market were minerals, flowers, emeralds and chemicals.

Switzerland's exports to Colombia reached US$330.6m, and consisted mainly of machinery and other industrial inputs.

Yesterday (27 January), President Santos also met former US President Bill Clinton (1993-2001), who once again backed the ratification of the US-Colombia FTA, which has been stuck in the US Congress since 2006.

Development: On 17 March the UN Stabilization Mission in Haiti (Minustah) called for “mass voter turnout" ahead of the 20 March presidential run-off between Mirlande Manigat (Rassemblement des Démocrates Nationaux Progressistes), and Michel Martelly (Repons Peyizan).

Significance: The international community is worried that high abstention will further undermine the electoral process. The UN's concern is compounded by today's expected return from South Africa of exiled former president Jean-Bertrand Aristide (1991, 1994-1996, 2001-2004). Aristide's return ahead of the vote, which has been openly opposed by the US, could well result in a lower turnout. His party, Fanmi Lavalas, is probably the most popular party in Haiti but was excluded from the elections by the provisional electoral council (CEP), as it was in 2009 senate elections. Then, its calls for a boycott had a tangible impact.

Key point:

The 28 November first round saw a low turn-out (22.8%), a result no doubt of the huge logistical problems resulting from the 12 January 2010 earthquake. This compares to 60% participation in the first round of the February 2006 presidential election.

Defying diplomatic pressure from the US, Aristide is due to return today (18 March), after President René Préval issued him with a passport last month. Aristide's attorney, Ira Kurzban, maintains that Aristide has no interest in meddling in the election but rather is concerned that a change in the Haitian government may result in his remaining in South Africa given that both Manigat and Martelly have opposed Aristide in the past.

The two have however made efforts to neutralise this past opposition - indicative of Aristide's enduring support. Martelly will struggle to convince given his close links to former Lieutenant Colonel Michel François, who helped orchestrate the 1991 coup which ousted Aristide. One former Fanmi Lavalas senator, Rudy Hériveaux, has backed Manigat, calling on Lavalas supporters to vote for her en masse.

The other imponderable is whether electoral authorities can prevent a repeat of the chaos which disrupted the first round. Some measures have been implemented, such as improving training for officials at the 1,500 voting centres, and strengthening the Joint Organisation of American States/CARICOM [Caribbean Community] observer mission to 200 observers.   A further cause for concern is the prospect of violence; the UN yesterday (17 March) also expressed concern at the “many acts of violence" during the second round, with three Manigat supporters reported murdered.

Development: Today (10 May), the London-based International Institute for Strategic Studies (IISS) publishes the contents of the so-called 'Reyes computers', the Fuerzas Armadas Revolucionarias de Colombia (Farc) digital storage devices retrieved by the Colombian security forces during the 1 March 2008 raid on a Farc camp in the Ecuadorean province of Sucumbí­os.

Significance: The release of all email communications between the Farc's international relations chief, 'Raúl Reyes' (Luis Deví­a Silva), and his contacts in both Ecuador and Venezuela, comes at a sensitive moment for the Colombian government led by President Juan Manuel Santos. The publication could weaken the ongoing efforts to restore mutual trust between the Andean neighbours. Although news of the imminent release emerged two weeks ago, the Santos administration has refrained from comment and appears intent on addressing any Ecuadorean or Venezuelan objection to the materials privately. However, President Santos cannot claim ignorance since the materials were given to the IISS by the Alvaro Uribe (2002-2010) administration, in which Santos served as defence minister.

Key points:

Critics in Colombia have pointed out that the release is in violation of the 2006 Intelligence Law, which forbids the release or leak of confidential intelligence material. However, the government can determine when information should no longer be held as confidential and the Uribe administration's decision to hand over the materials to the IISS erased that confidentiality.

Santos and his Venezuelan counterpart, Hugo Chávez , have not only held regular bilateral meetings since Santos took power on 7 August 2010, but they have also made significant bilateral gestures in an effort to underline that the rapprochement is not temporary and that Venezuela is committed to cooperating with Colombia in its fight against guerrilla groups. Most recently, Chávez promptly extradited a Farc operative 'Alberto Martí­nez' (Joaquí­n Pérez Becerra) to Colombia, and Colombia acceded to Venezuela's extradition request for an alleged narco-trafficker Walid Makled, a Venezuelan national, also sought by the US.

Entitled “The FARC Files: Venezuela, Ecuador and the Secret Archive of 'Raúl Reyes'", the dossier analyses the evolution of the Farc's relationship with politicians, NGOs and civil society groups in the three countries, and also contains an accompanying CD with all archive material, totalling some 1.6m words and making it the foremost source of internal Farc communications released to date. “People will be shocked by the amount of detail contained in the correspondence and this is only the most politically relevant release; only when the archive of Farc activities in dozens of other nations across the globe is also released, will the extent of the Farc's international activities be understood by the wider public", said a member of the IISS research team, who worked on the project, to Latin American Newsletters.

One of the advantages Latin America should have over Asia is that it is closer to both the US and Europe and therefore should be able to ship manufactured goods into these markets more quickly than the Chinese can. This is not happening, however, for a variety of reasons ranging for the use of containerisation to the sorts of goods the two regions are exporting. 

About half of the world's trade is between countries that are less than 3,000km apart. Economists have even come up with a formula that shows that in normal circumstances, doubling a distance between a producer and a market halves trade. The big exception to this tendency is China's booming trade with the US: Guangdong is 11,700km from Los Angeles on the US west coast. This distance is considerably further than between Miami, the main entry point for Latin America goods that travel to the US by sea, and the southernmost tip of Tierra del Fuego. These two points are 8,800km apart.

Latin America's problem is that its comparative proximity to the US has not protected it against competition from China. Although its takes on average 6.4 days to ship goods from Central America and the Caribbean to US, there is little time difference between shipping goods from South America or China to the US. Shipping goods from South America takes 21 days, on average, while shipping them from China takes 24 days. 

The reason why it takes almost as long to ship goods from South America to the US as it does to move them across the Pacific is that the South-North trade is smaller. This means that ships going north tend to stop off at intermediate points on their journey to load and unload cargoes. This is the only way that the shipping companies can make the route profitable. The trans-pacific trade on the other hand is non-stop.

Time is important for some goods, particularly textiles. Zara, the Spanish textile chain, has built its whole business model on the speed with which it can exploit changes in consumer taste. Unlike its rivals it does not place big bets on what the fashion will be in a particular season, but gets its store managers to report back to its designers regularly about what people are buying. The designers and manufacturers use this information to produce short runs of popular garments: the idea is to get goods from an idea to the rail in about three weeks. The company reckons that this model means that it ends up having less unsellable stock to mark down than other retailers. Zara's expansion has mostly been in Europe but it is about to move into the US. The decision on where it chooses to do its manufacturing will be watched closely. 

Academic studies, notably Evans and Harrigan who produced a paper Distance Time and Specialization for the US Federal Reserve Board in May 2003 suggest that clothing retailers in the US, so perhaps Zara, which have a high replenishment rate strategy, tend to use apparel manufacturers in Latin America rather than in China. This looks obvious. Economists reckon that for every day goods have to travel by sea from a country to a market, the probability of that country producing manufactured goods for that market falls by 1%. 

The question for Latin America is why these advantages have not proved decisive in warding off the competitive threat from China. Despite the advantages, US protectionists became steamed up about the threat posed by Chinese, not Latin American textiles, forcing China to announce voluntary quotas on exports to the US. 

There are several technical reasons why Central America has not been able to exploit its proximity to the US. The most important is containerisation. The Inter American Development Bank, which has just (March 2005) published a study entitled The Emergence of China: Opportunities and Challenges for Latin America and the Caribbean, points out that in 2001, 95% of China's seaborne exports to the US (in terms of value) were containerised. Containerisation speeds up both the loading and unloading of ships. In 1991 only 51% of China's seaborne exports to the US were containerised.

Containerisation is important for textiles. Retailers like to be able to take goods, priced and sized, from the delivery truck to the rail without having to muck about with them in the stock-room. By having virtually all the stock on display, managers can see very easily what is selling and what is not. 

Latin America's seaborne exports to the US are becoming more containerised but in 2001 only 48% of Central America's and 39% of South Americas were. To be fair, this is partly a function of what Latin America ships to the US. Although bananas can be containerised they are mostly shipped in specialist refrigerated boats. Coffee could be containerised but generally is not. Only the relatively higher value items such as textiles and electronic goods, of which China is the predominant exporter, lend themselves readily to containerisation. 

This brings out another anomaly: as China is shipping higher-value added goods and invariably lighter goods to the US, shipping costs are much less of a factor in the final selling price of those goods. Shipping costs are calculated per tonne. This encourages US retailers, such as Wal-mart, to source their products from China. 

What should be worrying for Latin America is that as China moves to producing higher-quality (and higher-priced) goods the cost of shipping becomes even less of a factor. As the IDB points out, if the cost of shipping a bottle of wine is US$8, it makes more business sense to ship US$160 bottles of wine than US$16 ones. 

Asia and containerisation

Most of the growth in containerised shipping in the two years to 2005 is the result of increased exports from East Asia, especially China's to the US. What is interesting is that apart from this trade, the rest of Asia's shipping is about as containerised as Latin America's.  In terms of twenty-foot equivalent container units (TEU), the 12 major economies of North, South, and South-East Asia account for about half of the containerised shipments in the world. The UN Conference on Trade and Development (Unctad) expects an annual increase in TEU of 11% per annum. This figure is entirely the result of the nearly 18% annual growth that is projected for containerised exports from China. Most other developing countries in Asia are likely to achieve between 5% to 7% annual growth in containerised exports. Unctad is not looking for an export-led bonanza in India, whose containerised exports are about one tenth of those of China, predicting annualised growth there of just 4%. Unctad expects that intra-regional containerised trade will rise by 21% from just over 11m TEU in 2003 to around 13.4m TEU in 2005. On aggregate, China appears as the largest, but not an overwhelmingly dominant, trader within the region. Even if its figures are added to those of Hong Kong, China accounts for 38% of intra-regional containerised exports and 32% of intra-regional containerised imports. In Asia, which has 12 economies, there are theoretically 121 (ie 11 x 11) ways in which containerised exports can cross borders. In one sense, trade within the region is quite fragmented. In terms of TEU, the ten largest bilateral links are expected to account for about 46% of total intra-regional trade in 2005. The 10 largest bilateral links are exports from: China to Japan (1.57m TEU) China to Hong Kong (0.87m TEU) Taiwan to China (0.81m TEU) Japan to China (0.69m TEU) South Korea to China (0.62m TEU) China to South Korea (0.54m TEU) Japan to Hong Kong (0.36m TEU) China to Taiwan (0.31m TEU) Japan to South Korea (0.25m TEU) Taiwan to Hong Kong (0.24m TEU) This data shows that China is by far the most important country. The fortunes of carriers of containerised goods within the region depend substantially on China's role as an offshore manufacturing base for Japan, South China's role as an offshore manufacturing base for the rest of the world, and, to a much lesser extent, China's role as an offshore manufacturing base for South Korea and Taiwan.

The big difference
Containerisation is an issue. But the big difference is still in what Latin America exports to the US and the EU. Its trade is heavily weighted towards commodities, both soft and hard, and also energy. Some of the commodities, such as flowers and out of season vegetables, are valuable (and light enough) enough to be flown from Latin America to their markets. 

The bulk of Latin America's seaborne trade, however, is heavy and low value. Grains, iron ore, other metals, meat and a range of semi-processed agricultural commodities from soya and cellulose. Latin America's exports of (increasingly fine) wine are growing in value terms but they are not yet significant in volume terms. This means that shipping costs, relative to the value of the cargo, are comparatively high. As these goods are sometimes perishable or hard to containerise, they often need specialised shipping to handle them. 

Where Latin America could score (in a perfect market)

The big problem for shipping companies is that ships going west from the west coast of the US to China are invariably in ballast. This means that the shipping companies are putting a mark-up on their charges for eastbound voyages to cover the cost of the cargo-less passage west.  Latin America's trade with the US (and the European Union and Asia) is more two way, so if the shipping market was reasonably competitive, Latin American goods should have lower shipping charges than Asian ones. The problem is that, the IDB argues, shipping lines have a tendency towards cartelisation or "liner conferences" as they are known. There is limited competition on routes. What this means is that prices can vary quite sharply according to demand, because there are hidden barriers to entry. Most ports are already working close to capacity, so new entrants find it hard to gain entry. Some economists argue that the way around this problem is to find new ports and then build the infrastructure to connect them to the rest of the supply (or delivery) chain. The problem for Latin America is that China probably has a bigger choice of options. There are schemes to revive Canadian ports that have rail links running east to handle more Chinese ships and thus get around the bottlenecks in Los Angeles and elsewhere. These bottlenecks tend to get worse in the second half of the year as the US gears up for the winter holiday season: in 2004, the bottlenecks in Los Angeles, which at one point had 40 ships waiting for berths, started to ease around Thanksgiving.

Latin-America's trade with Asia
China has become a major importer of Latin America's commodity exports, notably, iron ore and soya. What is interesting is that the index for charter rates for the biggest bulk carriers, the Pacific Capesize, has fallen by 33% since hitting it 2005 high of in mid April. Some economists argue that these charter rates are the best leading indicator for the Chinese economy. They say that the fall in rates (and now in international steel prices) points to a slowdown in the Chinese economy). 

In mid May, shipping costs for bulk commodities such as iron ore and coals fell to their lowest price for almost a year. The fear among ship brokers is that prices will start to fall further. The industry had geared up, by commissioning new ships, to meet the increased demand from China. Shipyards had a record US$51bn in orders for tankers and dry bulk carriers, a London based shipbroker, Clarkson, reported. Big shipping companies such as AP Moeller-Maersk and Nippon Yusen KK are leading the industry's biggest ever peace time expansion. AP Moeller, the world's biggest shipping company, has more than 40 tankers currently on order at shipyards around the world. Yusen expects to increase its fleet by almost 300 vessels in the next six years to 880 container and commodity carriers. 

The Baltic Exchange's Capesize Index, which plots charter rates for vessels with a deadweight capacity of between 120,000 and 140,000 t, hit a two year low in mid June. This was almost entirely a result of lower Chinese demand for iron ore. Iron ore traders said that unless the market recovered soon, the index would lose more ground. They reported that spot orders for iron ore from China had virtually dried up. Some China traders said that Chinese steel mills could be facing financial problems because of the slide in steel prices: this is because of government controls on building which have curtailed the demand from the construction industry for steel. 

Brazil is still the world's biggest exporter of iron ore, ahead of Australia. Brazil's iron exports stood at 209m t and Australia's at 187m t. China imported 148.2m t of iron ore in 2003. China is the world's biggest importer of iron ore, followed by Japan, which imported 132m t in 2003. There are persistent reports that the Chinese are threatening to renegotiate the increases in iron ore prices they agreed for 2005. BHP Billiton, for example, managed to secure a 72% increase in iron ore prices at the beginning of the year. Chinese officials denied that they were seeking to renegotiate prices, now that they have weakened. 

The Chinese did something similar in 2004, when they were wrong footed by the soya market: they bought at the top of the market and tried to renegotiate with Brazilian suppliers before halting Brazilian imports of soyabeans in April, claiming that they had unacceptably high levels of pesticide residues. 

China has a 20% stake in a new major iron ore mine in Brazil. This is the Fabrica Nova mine in Minas Gerais which only started production in April 2005. China already buys some iron ore from Brazil's main iron ore mine, at Carajas, in Pará. Both mines are run by the Companhia Vale do Rio Doce, which is increasing its exports to China. According to the long-term contracts in force, CVRD's iron ore sales, excluding those of Caemi, to the Chinese market should increase from 25.7m t in 2003 to approximately 55m t in 2008. 

In 2004 China produced 258m t of steel. This was equivalent to a third of the world's total output. This year the steel market was expecting China to produce 350m t. In the first five months of 2005, total crude steel production in China was 136m t. This represents a rise of 27.4% on the same period in 2004. China's biggest steelmaker, Shanghai Baosteel Group, was set up in 1978 and now has one of the most modern mills in the world on the banks of the Yangtse. The company is reckoned to provide over half the steel for the domestic car industry and almost 40% of the steel used by white goods manufacturers. It is also a major provider of steel for the oil industry. 

The soya rebound

The US Department of Agriculture is forecasting that China's imports of soya will increase to 27m t for the year beginning 1 October 2005. In the current soya year, the USDA is expecting China to import 22.8m t of soya. Given the current drought in the US, Brazil is likely to be the main beneficiary of increased Chinese demand. The USDA is forecasting that the next Brazilian soya crop will be 62m t up from 53m t this year. Argentina, which exports processed soya products to China, should also benefit. It is already benefiting from the recovery in soya prices. Its growers did not scale back production this year as much as Brazilians, such as the world's biggest soya grower, Blairo Maggi, in Mato Grosso do Sul did.  Brazilian soya is shipped in bulk carriers to processors in China and industrialised countries.

Bulk Ports: The biggest dry bulk port in the world is Qinhuangdao. This is the main coal importing and exporting port for northern China. It handled 154m t of cargo in 2004. Brazil's main iron ore terminals, Tubarao and Itaqui handed 96m t and 79m t of exports. 

Qingdao, China is the largest importing iron ore port in the world: it handled 41m t in 2004. Other major Chinese ports for bulk goods are Dalian and Ningbo. Chinese officials say that the current capacity of Chinese ports is well below current demand. 

Container ports: All six of the world's largest container ports are in Asia. Many of the top port-operating companies are linked to shipping companies. Evergreen (Taiwan), COSCO (China), and Hanjin (South Korea) are the three largest Asian port-operating companies. Hong Kong appears to be losing market share to the three principal ports of the Shenzhen Special Economic Zone: Chiwan, Shekou, and Yantian. However, these ports are, collectively, still much smaller than Hong Kong. 

China's shippers: COSCO and China Shipping (China's top two shipping companies, which are respectively the ninth- and tenth-largest worldwide) presently have a global market share in terms of TEU capacity of around 5.9%. By this measure, if combined they are the same size as Taiwan's Evergreen. Both are among the fastest growing in terms of TEU capacity that they have ordered from shipbuilders relative to existing capacity. Current orders will boost COSCO's capacity by 56% and China Shipping's by 110%.

The world's biggest container ports in 2003
Port  Hong Kong 18.2 Singapore 17.8 Busan 9.8 Shanghai 8.2 Kaoshing 8.1 Shenzhen 7.9 Rotterdam 6.2 Los Angeles 6.0 Hamburg 4.7 Antwerp 4.4	Tonnage handled (TEU) 18.2 17.8 9.8 8.2 8.1 7.9   6.2   6.0 4.7 4.4
Source: Unctad, 2003 Review of Maritime Transport.

ECUADOR: US expresses concern over political situation

EL SALVADOR: Temporary Protected Status extended for immigrants

BUSH ADMINISTRATION: Zoellick becomes deputy Secretary of State

MEDIA: Chávez sets up rival to CNN

VENEZUELA: US senators express hope for future relations

ECUADOR
The US embassy in Ecuador expressed concern earlier this week at the political situation and judicial instability in Ecuador. Glen Warren, the embassy press officer, said that Ambassador Kristie Kenney had spoken with President Lucio Gutiérrez about her concerns over the new supreme court, which was purged by the government on 8 December 2004. Of the supreme court's 31 current magistrates 27 positions were allocated to the government's allies who helped force the vote through congress. Gutiérrez said he was 'depoliticising' the supreme court. “We have expressed our hope that government and civil society come together to resolve this situation so that democratic institutions, like the judiciary, are strengthened," Warren said.

EL SALVADOR
Immigration status President Tony Saca said that the US had promised to extend the Temporary Protected Status (TPS) extended to thousands of Salvadorean illegal immigrants for a further 18 months, until 9 September 2006. The TPS, which allows 290,000 undocumented Salvadorean migrants to work in the country, was originally offered as part of an aid package to El Salvador following the devastating earthquakes that hit the country in early 2001. Saca has been pushing hard for the TPS to become permanent. The Salvadorean government reckons that there are a total of around 2.3m Salvadoreans working in the US. In October 2004, Washington extended the TPS to Honduran and Nicaraguan immigrants until 5 July 2006. Some 82,000 Hondurans and 4,500 Nicaraguans who arrived in the US following the 1998 devastation of Hurricane Mitch in Central America benefited from the extension. The Department of Homeland Security (DHS) recommended against TPS for Haitian immigrants in the US.

BUSH ADMINISTRATION
On 7 January, President George W Bush appointed Robert Zoellick, the US Trade Representative, as the new deputy Secretary of State, reporting to Condoleezza Rice. Zoellick had been tipped to become the president of the World Bank when Jim Wolfensohn retires in June. Zoellick, though not a Spanish speaker, is familiar with Latin America and political commentators in Washington say that his appointment means that Latin America is moving up the administration's foreign policy agenda. Another sign of this is the appointment of Carlos Gutiérrez, a former chief executive of Kellogg's, as Secretary of Commerce. Gutiérrez was born in Cuba and educated, partly, in Mexico. Zoellick also knows the State Department: he served as its undersecretary for economic affairs when George H W Bush was president. The buzz in Washington is that Roger Noriega, the State Department's top Latin American affairs policymaker, will remain in place for at least another six months.

MEDIA
President Hugo Chávez of Venezuela announced on 9 January that he will set up TV Sur, a 24 hour Spanish news channel to compete directly with CNN. TV Sur will use only Latin American content, Chávez said. He said that the channel should start broadcasting in March. Chávez has long been hostile to CNN which he accuses of bias.

VENEZUELA
Three senior US senators, Lincoln Chafee (Republican, Rhode Island), Bill Nelson (Democrat, Florida) and Christopher Dodd (Democrat, Connecticut) visited Caracas for three days, leaving on 10 January. They met politicians, including President Hugo Chávez , and forecast that relations between the US and Venezuela will improve. Nelson said that the senators had discussed the controversial capture of Rodrigo Granda, the so-called foreign minister for the Colombian guerrilla group, Farc. The Venezuelans suspects that he was kidnapped from Caracas before being arrested in Colombia. Nelson said he hoped that the US Peace Corps would be allowed to send teams to help reduce poverty in Venezuela as relations between the two countries improved.