ARGENTINA-REGION: Smug Fernández hails economic solidity
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Brazil & Southern Cone
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ARGENTINA: Making the jump from province to nation
In the late 1990s, the advertising agency in charge of campaign ads for former president Carlos Menem (1989-1999) coined a now iconic phrase: “Menem lo hizo” (Menem did it). Though the phrase has been generally, and ironically, used by his critics to point out all the imbalances left behind by his administration, there is one thing that Menem did do for his successors: by becoming the first Argentine president who had previously been a provincial governor, he led the way not only for Néstor Kirchner to use the governorship as a springboard to jump from the provincial to the national scene, but also for former Buenos Aires governor Eduardo Duhalde, San Luis governor Alberto Rodríguez Saá and Santa Fe Governor Hermes Binner to challenge President Cristina Fernández’s re-election bid in the 23 October general election. On 14 August, the provincial barons will all attempt to step up.
Fernández’s problem is not just the former or incumbent governors, even a governor-elect is throwing his political machinery against her Frente para la Victoria (FPV) faction of the Partido Justicialista (PJ, Peronists) in an attempt to prepare the ground for his expected 2015 presidential race. José Manuel de la Sota had barely had time to celebrate his 7 August electoral victory in the provincial race of Córdoba, the third largest electoral district in the country, when he decided to challenge Fernández’s lists for national deputies and senators in the first open, simultaneous and mandatory primaries to be held in the country’s history.
With all votes tallied, De la Sota claimed victory in Córdoba, reaching the governorship for the third time in his career (he served two consecutive terms between 1999 and 2007), with 42.61% of the vote. His main rival before polling day, National Deputy Luis Juez, whose Frente Cívico provincial party is allied at the national level with Binner’s Frente Amplio Progresista (FAP), performed much worse than expected with only 29.49% of the vote; National Deputy Oscar Aguad of the Unión Cívica Radical (UCR) – which backs Ricardo Alfonsín’s presidential bid under the Unión por el Desarrollo Social (Udeso) banner nationally - came in a distant third with 22.94%. The result clearly emboldened De la Sota, whose political protégé, outgoing Governor Juan Schiaretti, barely defeated Juez in the 2007 election – to this day Juez claims there was widespread fraud and that the election was “stolen” from him.
The day before the campaign for the primaries closed (9 August), De la Sota decided to bet his future presidential bid on Sunday’s primaries by confirming that his Unión por Córdoba faction of the PJ will compete against Fernández’s PV in the vote. De la Sota’s list of national deputies and senatorial candidates will not be headed by a presidential nominee, and thus it will directly compete against the provincial list headed by Fernández. Should De la Sota defeat the FPV, his campaign for the presidency in 2015 will be effectively underway and Fernández’s chances of performing well in Córdoba - she has no chance of carrying the most anti-Kirchnerista province in the country in October - will be severely damaged. De la Sota also decided to give Peronists in the province “libertad Justicialista” (Peronist freedom) when casting their vote for a presidential candidate, meaning they are free to back any of the three Peronist presidential candidates in the running: Fernández, Duhalde and Rodríguez Saá. As a result, Fernández now faces strong opposition tickets in the country’s main electoral districts: Buenos Aires province and the capital city; Córdoba; Santa Fe; Mendoza; Entre Ríos; and La Pampa.
Tellingly, Fernández responded by calling to the Casa Rosada the 160 FPV mayors-elect of Córdoba to design a plan that ensures the FPV’s votes from 7 August do not go to De la Sota’s congressional list, or to her presidential rivals, this Sunday. However, according to the daily La Nación, 40 of them did not turn up and one of Fernández’s close advisers reacted by saying “we couldn’t have imagined a worse betrayal and declaration of war from De la Sota”. But De la Sota was not the only leader whose support base overlaps with Fernández who made a threatening, or at least ‘warning’, move this week.
On 6 August Hugo Moyano, the secretary general of the CGT, led an “institutional” meeting between the board of directors of the country’s largest umbrella trade union organisation and Binner. Moyano has never met an opposition leader before, making the meeting not only unprecedented but also strangely timed with the primaries just around the corner. After the meeting, the two sides expressed surprise at their many shared points of view. Binner capitalised on the moment to land a blow on Fernández, stating: “we are happy to have incorporated the CGT into these institutional talks, giving the workers’ movement its rightful place”.
- Polls still point to a Fernández victory
The latest poll by Management & Fit, the only pollster to forecast the results accurately in the City of Buenos Aires and in the province of Santa Fe, projects that President Fernández could win re-election outright in October: she obtained 36.8% backing, which the pollster projects could reach 41% once the 11.4% undecided make their final choice. Her main rival, Ricardo Alfonsín (Udeso), scored 17.5% and the third runner-up, Eduardo Duhalde, received 12.7% backing. The rest of the pack includes: Alberto Rodríguez Saá on 6.2%; Hermes Binner with 6.1%; and Elisa Carrió of the Coalición Cívica (CC) on 4.5%. Fernández will win in the first round provided she gets 40% and her nearest rival is more than 10 percentage points behind her.
- Rodríguez Saá in trouble
In the province of Buenos Aires, Alberto Rodríguez Saá was also dealt a heavy blow this week. The provincial electoral authorities (JE) ruled that Senator Adolfo Rodríguez Saá, Alberto’s brother, cannot run for Buenos Aires governor. The JE’s ruling is based on the fact that he was born and has had his domicile registered in San Luis all his life and does not meet the five-year residency requirement for those who were not born in Buenos Aires and want to govern the province. Adolfo has also registered his senatorial re-election bid in San Luis and the JE found he was guilty of “a double candidacy”.
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BRAZIL: Coalition digs its heels in as Rousseff’s ratings slide
It has been yet another messy week in Brasília, amid fresh ministerial corruption scandals, this time affecting the agriculture and tourism ministries. President Dilma Rousseff is having to concentrate all of her daily energies on crisis management (when it is clear she would much rather be designing policies to cushion Brazil from the looming global economic crisis). Governability in congress is now at risk, and with the public mood shifting away from the new government Rousseff has reached a critical low point in her first year.
On 10 August the main coalition partner, Partido do Movimento Democrático Brasileiro (PMDB) called a ‘go-slow’ strike (‘greve branca’) in the federal lower house in protest at the coalition’s unravelling relationship with the executive. Led by Vice-President Michel Temer and the two PMDB ministers at the centre of the latest corruption scandals (Walter Rossi and Pedro Novais respectively), the party ordered the lower chamber ‘superbloc’ to call a halt to congressional votes until “problems are resolved”.
The PMDB, which threw its full weight behind Rousseff’s presidential bid in 2010, has tactically put up and shut up despite disaffection over its share of the government cake. The party has been very united in congress this year under the careful tutelage of Temer, a veteran politician adept at playing a long game.
From the moment the new parliament sat in February, Temer maneuvered the PMDB into a superior position over the ruling Partido dos Trabalhadores (PT), effectively giving it blocking power. He oversaw the creation of the PMDB-led ‘superbloc’ in the lower chamber with four other coalition parties – the Partido da República, the Partido Progressista, the Partido Trabalhista Brasileiro and the Partido Socialista Cristão – creating an alliance of 202 federal deputies, surpassing the PT’s 88. The PMDB is the largest party in the upper house (with 19 seats) and controls the senate presidency via party baron José Sarney. It commands the so-called ‘majority bloc’, which now comprises 28 senators, after recent defections from the now 24 member PT-led ‘government bloc’.
Thus, while the PT is the ruling party, the PMDB is holding most of the cards and behind the latest ministerial scandals is a vicious power struggle between the two partners, upon which the novice president is cutting her political teeth.
Fully aware that Rousseff is at the mercy of its support, the PMDB has availed of the latest corruption scandals to pressure the executive to give in to congressional demands for the release of frozen budget appropriation funds. Brazil’s politics are nothing if not local – these funds are crucial to the scheduled 2012 municipal elections. As one deputy put it, “the government only wants to talk about the global crisis…but our prefects don’t live in New York”.
Rousseff and her finance minister Guido Mantega are ever more insistent that the deteriorating global economic picture requires the federal government to run a tight ship this year, with no room for superfluous budget spending. Deputies are equally determined to secure the release of about R$1.0bn (US$680m) in budget appropriations by year end, so as to return home flush to their local districts ahead of next year’s polls.
Concerned by the congressional stasis, Rousseff has struck a more conciliatory tone, praising Temer in this week’s political council meeting at the Planalto palace and expressing confidence that Brazil’s “mature politicians” would never behave like their US counterparts (in reference to the recent political impasse on Capitol Hill over the US debt ceiling). Her minister for institutional relations, Ideli Salvatti, has spoken to senior figures in the Partido da República (PR), which recently withdrew from the coalition after a massive rout in the PR-controlled transport ministry, while Cândido Vaccarezza, the government leader in the lower house, is sounding out other coalition allies.
Salvatti termed the PT and the PMDB the “dorsal spine” of the coalition and appeared to hint that the government would tacitly pull back from its ministerial ‘faxina’ (clean-up) in order to pacify the coalition and unblock the legislature. Salvatti is bargaining for the staged release of the appropriation funds in return for congressional support of another round of executive measures to support the Brazilian economy through what the economist Rousseff believes could be a lengthy global crisis.
Rousseff has also consulted her predecessor and mentor Lula da Silva (2003-2010) for advice. He allegedly told her not to tighten the sting any further, so as not to provoke the PMDB. He also advised her to make fresh efforts to meet deputies and senators and to “re-pact” the coalition. Lula has publicly come out in his protégé’s defence, promising that “Dilma’s eight years” will be better than his, yet critics continue to posit that his continued presence in the background is more of a hindrance than a help, as it undermines Rousseff’s fragile authority over the restive PT in particular.
A poll released on 10 August by CNI/Ibope showed a fall in the government’s approval ratings since March, when support for the new administration peaked upon the visit of the US President Barack Obama. Respondents expressed concern about the recent ministerial scandals. They were also critical of the government on the economy – amid higher inflation and rising interest rates - and social policies – including health and education. Two thirds (67%) approved of Rousseff, down from 73% in March, while 48% rated the government “optimum/good”, down from 56% previously.
- Tourism
On 8 August federal police arrested 38 officials from the tourism ministry and related agencies, including the deputy minister, Federico Silva da Costa. An investigation began in April after two disgruntled PT ministry employees apparently went to the police after being sacked by the PMDB tourism minister, Pedro Novais. The scandal centres on the embezzlement of funds destined for professional training schemes in the hospitality industry ahead of the 2014 World Cup and the 2016 Olympics. The fraud, it seems, began under the previous minister, Luiz Baretto of the PT, formerly number two in the ministry when it was run by the PT’s Senator Marta Suplicy.
- Agriculture
The number two at the agriculture ministry Milton Ortolan stepped down on 6 August following allegations of influence peddling. President Dilma Rousseff quickly came out in defence of the PMDB minister, Walter Rossi, who is close to the influential Vice-President, Michel Temer.
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URUGUAY: Mujica receives mining setback
It has the potential to be the biggest private investment in Uruguay’s history, but a heated political dispute is threatening to knock it off course. Minera Aratiri, the local subsidiary of the Indian mining company Zamin Ferrous, which was planning to invest US$3bn in developing iron ore deposits in the central departments of Durazno and Treinta y Tres, downgraded the project on its international priority list last week from first to fourth place based on a political and environmental dispute in Uruguay. It has been exploring an area of 120,000 hectares for iron ore for two years.
President José Mujica accepted that there had been excessive political wrangling over the project. He was irked that the opposition Partido Nacional (Blancos) and Partido Colorado (Colorados) summoned three cabinet ministers to congress on 14 July to answer questions about the project, which the presidential secretary, Alberto Breccia, said (after Aratirí’s announcement) had caused juridical uncertainty for investors. The opposition has accused the company of employing dirty tactics to exert pressure on the government with the announcement.
Mujica called upon the opposition to sit down together with the government to analyse the future of mining in the country after the downgrade. He said that no government should arbitrarily make a decision that will have repercussions for 30 to 40 years, but the opposition is reluctant to be tainted by association with a project which is never going to win widespread popular support.
Ire over ore
The reaction from Uruguay’s powerful agriculture and livestock sector has not been positive. Julio Gómez, a spokesman for the agricultural lobby, said the scale of the project was far too big for a country of Uruguay’s size and would “seriously alter the environmental balance (of the area)”. He said it would result in “the substitution of a sustainable productive activity for an extractive activity for a finite resource, iron, that has a life span of 30 years,” and the degradation of the land, while “95% of the wealth” would benefit Chinese and Indian industry, leaving Uruguay with “no iron industry but environmental repercussions”.However, some inhabitants of the local town of Cerro Chato, which has 4,500 inhabitants, look on the project favourably as a source of employment in one of the poorest areas of the country. The mining company maintains that 3,000 local jobs would be created in construction and 1,500 in the operative stage, between the mine and a deep-water port terminal connected by a 200km slurry pipeline, which environmentalists and farmers also oppose. Mujica has made it clear that in an ideal scenario the project would go to a local referendum but that unfortunately there was no provision for this in Uruguay’s constitution in the way that there is in some of the more left-leaning countries in the region which champion more direct democracy.
- Mining
Small-scale mining in Uruguay of limestone, gypsum, semi-precious stones and gold amounts to 12m tonnes a year, equivalent in total, on average over the last 20 years, to 0.27% of GDP. Aratirí has predicted an annual production of 18m tonnes of iron a year, an increase of 150%. Studies have established at least 250m tonnes of iron ore deposits but the final recoverable quantity could be four times that amount.
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TRACKING TRENDS
BRAZIL | Concern about Amazon tribe. The justice ministry has dispatched 16 national security force officers to Acre to provide security to employees of the National Indigenous Foundation (Funai) on the Xinane base, 20km from the border with Peru. Funai has raised the alarm about the fate of an uncontacted Amazon tribe, which it fears has been disturbed or even wiped out by Peruvian drug traffickers. Last week Brazilian police arrested for a second time a Portuguese national, Joaquim Antônio Custódio Fadista, previously charged with drug-trafficking in Brazil and Luxembourg. He was arrested in the same area in March and extradited to Peru. Funai workers found a tribal arrow at a camp site used by the traffickers. Brazil’s remote tribes (estimated at 77, with 30 identified) are increasingly threatened by traffickers, logging and oil companies.