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  • RASTREANDO TENDENCIAS

    LatinNews 11 June 2012 Hits: 588

    COSTA RICA | Buscando cerrar acuerdo TLC a fin de unirse al nuevo bloque regional. El 5 de junio, la Presidenta Laura Chinchilla anunció que Costa Rica lanzará negociaciones sobre un Tratado de Libre Comercio (TLC) con Colombia el 15 de junio; y que ella espera que el acuerdo esté completado antes de finales de año. Al hacer el anuncio, Chinchilla explicó que las negociaciones se han convertido en una prioridad para Costa Rica dado que éste es el último paso que el país necesita dar a fin de poder solicitar ser miembro pleno del naciente bloque económico, Alianza del Pacífico. Chinchilla dijo que ella comenzaría las negociaciones con su par colombiano, Juan Manuel Santos, cuando él visite Costa Rica en estos días.

    La Alianza del Pacífico, que actualmente está formada por México, Chile, Colombia y Perú, es la más reciente iniciativa de integración económica en la región, que tiene como su objetivo principal la promoción del libre flujo de bienes, servicios, capital, y personas. Como resultado, uno de los principales requerimientos para que un nuevo país se una al bloque es que debe tener vigentes Tratados de Libre Comercio con todos los miembros del grupo. Costa Rica, que ha sido parte de las reuniones preparatorias de la Alianza del Pacífico como observador, ya tiene en vigencia TLC con México y Chile, mientras que está aguardando la aprobación del congreso para el TLC firmado recientemente con Perú. Además, tiene un TLC vigente con su vecino Panamá, que también actuó como observador de la Alianza del Pacífico y ha expresado su deseo de unirse al bloque.

    Al concluir su anuncio, Chinchilla declaró que el 15 de junio “será una fecha muy importante para reafirmar lo que debe quedar en claro: Costa Rica desea ser parte de un bloque de naciones que comparte objetivos comunes de desarrollo como la Alianza del pacífico”.

    NICARAGUA | Irán perdona deuda. El 29 de mayo, durante una visita a Managua, Ali Saeedlu, Vicepresidente de Irán y viceministro para asuntos internacionales, anunció que Irán perdonará la deuda de la Guerra Fría de Nicaragua –que totaliza unos US$164m– y en cambio ofrece a Nicaragua un nuevo préstamo de US$250m. El anuncio de Saeedlu, que siguió a una reunión con el Presidente Daniel Ortega, es una de las pocas promesas que se han materializado siguiendo al establecimiento de lazos diplomáticos en el 2007, una relación que continúa siendo vista con sospecha en EU. Aparte de una inversión en una clínica en Managua, la relación aún falta que se traduzca en cualquier otra cooperación significativa. Por ejemplo, Irán prometió en el 2007 construir una planta hidroeléctrica de US$230m y un puerto de aguas profundas de US$350m en Nicaragua, que aún deben materializarse. Saeedlu también dijo que Irán estaba listo para avanzar con otra promesa para construir una planta de productos lecheros.

  • GRENADA: Last days of NDC government

    LatinNews 22 January 2013 Hits: 1264

    Date: 19 February

    Type: General Election

    Main contenders: The centre-left ruling National Democratic Congress (NDC) of Prime Minister Tillman Thomas is facing a seemingly insurmountable task in the upcoming general election in which it will be pitted against the New National Party (NNP) of former prime minister Keith Mitchell.

    The NNP was formed in the aftermath of the 1983 US-led invasion, and it has held power for most of the time since. It first won power in the post-invasion election of 1984, and although it lost in 1990, it then returned to power in 1995 for three consecutive terms.  Its three-term spell began with its 8-7 seat victory in 1995, which was followed by a 15-0 whitewash in 1999, and then a tight 8-7 victory in 2003.

    The NDC’s turn, after three spells of NNP government, came with a decisive 11-4 seat victory in 2008, but all the evidence suggests that it has squandered its opportunity and that it will return to opposition after the forthcoming general election.  Internal divisions and the lacklustre economy have been the NDC’s undoing.

    The NDC’s internal divisions have seen its parliamentary majority eroded and have forced Thomas to refrain from recalling parliament since July in order to avoid a no-confidence motion he would be bound to lose.  Now time has run out as the constitution demands that parliament sit at least once within six months or face dissolution and a new election – as is now happening.

    On the economic front, 2012 is expected to have produced real annual GDP growth of just 0.2%, which amounts to an even worse -0.2% on a per capita basis and is below the already dismal regional average of 1.1%.  The local economy is expected to underperform in 2013 as well, with forecast annual growth of 1.2%, against a predicted regional average of 2.0%.

    As a consequence of this very weak economic performance and the NDC’s internal splits, it would appear that the NNP just has to turn up to win.  Local analysts are predicting a win for the NNP by 13 seats to two, with the return of Keith Mitchell to the premiership.

    This is an old pattern repeating itself, given the NDC’s poor track record of holding onto power. It was founded in opposition to the NNP after the return to democracy in 1984, and while it won the 1990 general election, it lost power after only one term and then faced three consecutive terms on the opposition benches.

    A by-product of the ruling party’s disunity under Tillman Thomas has been the creation of a new party – the National United Front (NUF) – by three heavyweight NDC dissidents: former environment minister Glynis Roberts, former tourism minister Peter David and former foreign minister Karl Hood.  Roberts, Hood, and David were expelled from the NDC by Thomas in September 2012 for disloyalty.

  • Pointers

    LatinNews 11 April 2013 Hits: 2179

    BRAZIL | Balance of  Santa Catarina riots. It was not until 26 February that the authorities of Santa Catarina state  were able to announce that a full day had passed without a single incident, after the wave of gang-led violence that began on 30 January [SSR-13-02]. By then there had been 113 incidents across 37 cities in the state. The civil police had arrested 103 suspects of involvement in these incidents, and a team of 40 officials of the public prosecution service had filed formal charges against 88 of them — a figure they expected to increase as investigations advanced.

    BRAZIL | Preventive crackdowns in São Paulo. Two major police operations in mid-March may have forestalled a new wave of gang violence in São Paulo. On 14 March a combined 650-strong force of the state’s civil and military police, plus federal police and federal highways police (PRF) units, acting in the first big operation of the Agência de Atuação Integrada (AAI) set up last November, arrested a 10-person ring of drug traffickers and gunrunners, seizing a large cache of firearms, ammunitions, communications equipment and drugs (cocaine paste and hydrochloride as well as cannabis, presumed to have been smuggled in from Paraguay).

    About 120 vehicles from the different forces, plus two helicopters and a boat, were used in a sweep through the port city of Santos and Guarujá in the Baixada Santista. A novelty was the use by the PRF of equipment designed to identify the content of vehicles on the move.

    That same day the state’s élite mobile police unit, the Rondas Ostensivas Tobias Aguiar (Rota), following a lead from the public, discovered in Juquitiba in the Greater São Paulo, 70 kilometres southwest of the state capital, an underground bunker with steel-plated walls 60 centimetres thick, that was being used as a depot for drugs and weapons. The volume of the drugs haul was not disclosed, but the counter-narcotics department, Denarc, said that five vans had been needed to carry it.

    BRAZIL | Rising toll of rural activists. The Comissão Pastoral da Terra (CPT), an organ of the Roman catholic bishops’ conference, reported on 4 March that the number of rural activists killed in 2012 rose by 10% to 32. The main hotspots were Rondônia (with seven cases) and Pará (six) — both of them at the heart of conflicts involving illegal logging, an activity that has risen to the fore of rural violence incidents.

    BRAZIL | Upgrading aerial border surveillance. Saab Defence has announced that the Brazilian air force is spending about US$60m on upgrading the Erieye Airborne Early Warning & Control (AEW&C) system in three new Embraer E-99 aircraft scheduled for delivery between 2014 and 2017. These will strengthen the Sistema de Vigilância da Amazônia (Sivam) which provides aerial and satellite surveillance of sensitive Amazonian borders. Brazil has recently closed cooperation agreements with several of its neighbours which involve the sharing of the data gathered by Sivam, in order to curb drug smuggling and other illegal crossborder activities.

    CHILE | Attack on firefighting helicopter. On 4 March a helicopter carrying firefighters to the site of a forest blaze in Collipulli, in the Temuco province of Araucanía, came under fire as it touched down. Two of the firemen were gravely injured. The blaze was one of 100 arson attacks on an estate owned by Mininco, a logging company that has become one of the main targets of militant Mapuche groups in the area. The government has served notice that it intends to use the antiterrorist law against the attackers. Later in the month the premises of the agricultural development institute, Indap, were briefly occupied by about 100 Mapuche peasants demanding government funds.

  • RASTREANDO TENDENCIAS

    LatinNews 11 June 2013 Hits: 701

    BOLIVIA | Fuerte crecimiento en el primer trimestre. El ministro de economía & finanzas de Bolivia, Luis Arce, reveló el 29 de mayo que el crecimiento económico del país en el primer trimestre del año fue del 6,04% respaldado por el fuerte desempeño del sector de hidrocarburos. La producción de hidrocarburos, la principal fuerza conductora de la economía boliviana, se incrementó un 23% en los primeros cuatro meses del año, según Arce. Además, la mayor parte de los sectores de la economía, incluida la banca (6,7%), el transporte (6,7%), la construcción (6,6%) y el agua y la electricidad (5,5%) registraron fuertes cifras de crecimiento para el trimestre. En contraste, el sector que registró cifras decepcionantes fue la minería, otra actividad económica tradicionalmente importante en Bolivia, que se incrementó solamente por un 0,67%. Sin embargo, Arce señaló que a pesar de la baja cifra está aún era positiva, pues se recuperaba de una fuerte contracción del 8% en el sector en el trimestre anterior.

    Arce dijo que la cifra del crecimiento económico general estaba dentro del rango de las expectativas del gobierno y que, como resultado, la economía aún seguía en curso para alcanzar el pronóstico oficial para fin de año de un crecimiento del 5,5% del PIB. El pronóstico oficial se compara favorablemente con el pronóstico para fin de año de la Comisión Económica de la ONU para América Latina y el Caribe (Cepal) del 5%, así como también el del Fondo Monetario Internacional (FMI) del 4,8% y del Banco Mundial (4,4%).

    PERÚ | Declina la actividad industrial. En el primer trimestre del año, la actividad industrial en Perú cayó un 1,2% comparado con el mismo periodo del año anterior, el presidente de la Sociedad Nacional Industrial (SNI), Luis Salazar, dijo el 3 de junio, citando datos de la SNI. Hablando durante una entrevista con la estación de radio local, Radio Programas del Perú (RPP), Salazar dijo que el bajo resultado era primariamente una consecuencia de los actuales regímenes laborales y fiscales. En particular, Salazar pidió al gobierno del Presidente Ollanta Humala que reduzca la tasa fiscal al ingreso industrial del 30% al 20%, señalando que esta tasa es cercana "al promedio de la tasa aplicada por países con sectores industriales de más rápido crecimiento", en la región.

    En un intento por justificar tal medida, Salazar dijo que los costos laborales y fiscales eran uno de los aspectos principales que los potenciales inversionistas consideran cuando deciden en qué país invertir. Salazar agregó que promover aún más el desarrollo del sector industrial del Perú debería ser uno de los objetivos de cualquier gobierno, dado que la "industria es el sector que crea el empleo de mejor calidad y más duradero".

    Los comentarios de Salazar vinieron un día antes de que él tomara parte en una reunión programada entre empresarios y líderes empresariales locales y el Presidente Humala para discutir y analizar potenciales medidas para incrementar el nivel de inversión privada en el país (que, de acuerdo a datos oficiales está actualmente en alrededor del 10% del PIB). La reunión siguió a la publicación el 28 de mayo del informe Marco Macroeconómico Multi-anual (MMM) del ministerio de economía & finanzas (MEF) para el periodo 2014-2016, que halló que Perú podría sostener una tasa de crecimiento promedio del 6% en los próximos tres años si "se hacen importantes esfuerzos para promover y facilitar la inversión privada, así como también incrementar la productividad y la competitividad del país".

    ECUADOR-VENEZUELA | Luchando contra la escasez. La totalidad de los sectores productivos de Ecuador están al servicio del gobierno venezolano para asistir en la estabilización de la actual situación de escasez de productos esenciales en el país. El canciller de Ecuador, Ricardo Patiño, dijo durante una visita oficial a Caracas el 3 de junio.

    La falta de algunos productos básicos en años recientes se ha vuelto crónica en Venezuela, pero en semanas recientes la situación ha empeorado, a tal punto que el 'índice de escasez' del propio banco central ha encontrado: la disponibilidad de productos alimenticios básicos y productos de higiene personal continúa siendo muy baja.

    El ofrecimiento de Patiño fue hecho durante una reunión con su contraparte venezolano Elías Jaua, en Caracas, donde ambos discutieron la agenda bilateral. "Estamos aquí para acompañarlos en momentos en que es necesario abastecer a la economía venezolana y trabajar juntos para reforzar vuestra capacidad productiva", Patiño dijo. Él agregó que por orden del Presidente Rafael Correa, el sector productivo de Ecuador y su pueblo estaban listos para ayudar y trabajar con el gobierno venezolano.

    Después de la reunión el ministro de comercio de Venezuela, Alejandro Fleming, reveló que Venezuela pronto estaría recibiendo alimentos y vehículos de Ecuador después de la firma de dos nuevos acuerdos comerciales. Fleming proveyó pocos detalles pero dijo que, a cambio, Venezuela tomará las medidas para incrementar el nivel de sus exportaciones de urea a Ecuador, que Fleming explicó que es un fertilizador esencial que Ecuador no produce y que proveerlo sería "fundamental para asegurar la provisión de alimentos de ambos países".

    • Colombia y Panamá finalizan TLC

    El 4 de junio el ministerio de comercio, industria & turismo de Colombia reveló que las negociaciones del Tratado de Libre Comercio (TLC) con Panamá habían concluido exitosamente. Una declaración del ministerio expresa que ambas partes habían acordado sobre un programa para completamente liberalizar el comercio bilateral en los próximos cinco a 12 años. De acuerdo con el ministerio, el acuerdo, que será oficialmente presentado más tarde en la semana, incluye condiciones que salvaguardan "los intereses más sensibles de la economía  colombiana". Panamá es el segundo más importante destino de las exportaciones colombianas en América Latina, y representa el 5% de todas sus exportaciones. Comentando sobre el acuerdo el ministro de comercio de Colombia, Sergio Díaz-Granados, dijo que él estaba "satisfecho" con el nuevo acuerdo, que era un "paso natural en la consolidación de las relaciones comerciales con Centroamérica, y completa nuestra estrategia de integración con esa región".

  • CUBA: Las conversaciones sobre compensación se ponen en marcha

    LatinNews 11 December 2015 Hits: 214

    Funcionarios de EU y de Cuba han celebrado una ronda inicial de conversaciones sobre el conflictivo tema de los reclamos de compensación por las pérdidas económicas sufridas por ambos lados desde la Revolución Cubana y la imposición del embargo comercial de EU sobre Cuba. Estas negociaciones serán un elemento crítico en los esfuerzos bilaterales para restablecer las relaciones diplomáticas plenas entre ambos países. El proceso tomará años, extendiéndose mucho más allá del final del mandato del de EU, Presidente Barack Obama, en enero del 2017, y se espera que requiera cambios legales y reglamentarios en ambos países. A pesar de los años de emotiva retórica de los cubanos-estadounidenses, el gobierno de EU ha sido bastante claro en que este tema es en su esencia una cuestión técnico-jurídica y no obstaculizara el proceso de acercamiento diplomático, sino que lo complementará.

    Hablando anónimamente, un funcionario del Departamento de Estado de EU, informó a los periodistas en una conferencia convocada después de la sesión del 8 de diciembre, que las conversaciones fueron “respetuosas y profesionales”, diciendo que ambas partes habían presentado sus respectivos reclamos y sus argumentos pertinentes. El funcionario insistió en que la reunión fue meramente un paso preliminar en lo que será un largo y complejo proceso. Dijo que ambas partes se reunirían  de nuevo en la primavera. El Departamento de Estado cree que los reclamos certificados serán fácilmente abordados, ya sea a través de la compensación u otras maneras de establecer valores, enfatizó el funcionario.

    Del lado de EU, hay 5.913 individuos y compañías de EU cuyos reclamos contra el gobierno de Cuba por propiedades confiscadas después de la Revolución que habían sido certificados por la US Foreign Claims Settlement Commission. Los reclamos, originalmente valuados en US$1,9mm, ahora están estimados en US$7mm – US$8mm, con los intereses, y están disponibles públicamente en el sitio Departamento de Justicia de EU en:

    http://www.justice.gov/sites/default/files/fcsc/pages/attachments/2014/12/18/cuban_basic_claimant_info_value.pdf. Los reclamos corporativos incluyen a empresas como Coca-Cola, Colgate-Palmolive, ExxonMobil, y Texaco. El mayor, según informes, es retenido por Office Depot, y se estima que es de US$1mm. Algunas de las compañías incautadas por el gobierno cubano ya no existen, y en otros casos, los reclamos han sido pasados de generación en generación.

    Del lado cubano, el gobierno de La Habana dice tener contra-reclamos por un valor de US$121mm por daños relacionados con el embargo de EU. Ambas partes también reclaman daños por las muertes de ciudadanos cubanos y de EU en actos de violencia en las décadas que siguieron a la Revolución Cubana.

    Pese a la historia, y a las considerables sumas involucradas, una vez que ambos gobiernos acuerden sobre el mecanismo de trabajo marco aceptable mutuamente, las compensaciones serán discutidas por abogados hasta llegar a un acuerdo. Existe un precedente –Nicaragua y EU recientemente han finalizado un proceso similar que duró varios años. La US Foreign Claims Settlement Commission previamente había trabajado con reclamos relacionados con el Holocausto, Vietnam, Albania, y Guam.

    En un nuevo informe (de diciembre del 2015) de la US Brookings Institution, Richard Feinberg, un ex funcionario del Consejo Nacional de Seguridad de EU y del Tesoro de EU, sugirió un enfoque de dos niveles, con los alrededor de 5.000 reclamos individuales despejados a través de la compensación financiera directa en un nivel. Y en un segundo nivel, los restantes reclamos corporativos, valuados originalmente en US$1,7mm, que podrían ser resueltos a través de “un menú de opciones”, incluyendo derechos para desarrollar negocios, que podrían contemplar el retorno de algunas de las compañías a Cuba con capital que puede ser acordado e inversiones en tecnología, plantea Feinberg, sugiriendo que “el trauma de las incautaciones del siglo 20 podría transformarse en una oportunidad económica ahora”.

    • El acuerdo pendiente con el Club de París

    Cuba y 15 miembros del Club de París esperan firmar de dentro de poco un acuerdo de reestructuración/perdón de US$16mm en deudas pendientes desde que el gobierno de La Habana cayó en default sobre sus obligaciones en 1986. Fuentes diplomáticas dijeron que Cuba había acordado pagar el capital principal de alrededor de US$5mm a cambio del perdón de US$11mm en cargos de servicio de la deuda, intereses y penalidades. “Las negociaciones ahora se refieren más al tiempo que necesitan para pagarlo y cuánto dinero será reinvertido en Cuba”, una fuente le dijo a Reuters.

  • ARGENTINA: Macri tries to outflank opposition with amnesty

    LatinNews 02 June 2016 Hits: 2400

    President Mauricio Macri is seeking to advance legislation that could simultaneously buttress his approval rating, at a time when there is criticism of fuel and energy price increases, inflation and public sector dismissals; keep his allies on side; and push the political opposition on to the back foot. Macri sent a bumper bill to the federal lower chamber of congress this week, containing a tax amnesty to encourage Argentines to repatriate billions of dollars of undeclared savings held in overseas accounts to fund a major boost to pensions. The bill also includes an incentive that is sure to appeal to governors representing the main opposition Partido Justicialista (PJ, Peronists) and, as such, help secure its passage, especially through the federal senate.

    “Argentines have billions of dollars abroad – money they sent away because they did not trust in the state,” President Macri said on 27 May, inviting the public to be “part of this new era that’s beginning in Argentina”. The government led by former president Cristina Fernández (2007-2015) launched an amnesty plan in 2013 but, just two years after the imposition of strict currency controls, it met with minimal success.

    Finance Minister Alfonso Prat-Gay insisted that it would be different now due to the Macri administration’s economic reforms and because Argentina had recently signed a host of information-sharing agreements with other countries “so it’s going to be very hard for Argentines…to hide money that they haven’t declared”. Prat-Gay, a fierce critic of the previous amnesty on the grounds that it would lead to an influx of funds from drug-trafficking and illicit activities, said the government’s proposal met the guidelines of the Financial Action Task Force (FATF), the inter-governmental body that develops and promotes policies to combat money-laundering.

    Prat-Gay said he anticipated it being “a big deal”, but would not put a figure on how much undeclared cash, and property assets, would be repatriated. They would be taxed at rates between zero and 15% with revenue raised used to fund an increase of 40% in pension benefits. The government also wants to create a universal allowance for senior citizens, as well as fund the payment of hundreds of thousands of lawsuits related to unpaid or undervalued pensions. It claims that 2.5m people will benefit from the proposed pension reform, which it expects to cost around Ar$130bn (US$9.3bn).

    After allies in the ruling Cambiemos coalition expressed reservations about the bill (Elisa Carrió, the leader of Coalición Cívica, was emphatic that her party would not tolerate “impunity” for public servants), the government struck out a clause from the bill that would have permitted public-sector officials to participate in the “whitewash”. This will ensure the support of allies and remove what would have been one of the main bones of contention with the opposition.

    The leader of the PJ faction Frente para la Victoria (FPV, Kirchneristas) in the federal senate, Miguel Pichetto, has already come out and said that “it would be inconsistent and incoherent to oppose [the bill]”. Pichetto’s support, however, owes to the government’s adroit inclusion within the bill of an initiative to reimburse the 15% of revenue-sharing funds withheld from the provinces by the social security fund (Anses) since 1992 to help pay federal pensions. A ruling by the supreme court last year had declared this to be unconstitutional. Provincial governors signed an accord with the interior minister, Rogelio Frigerio, on 18 May agreeing to the reimbursement of these so-called ‘co-participation funds’ over the course of the next five years.

    Macri and Fernández

    Macri sought to set an example to encourage Argentines to repatriate undeclared assets by announcing that he would bring back Ar$18m (US$1.25m) that he has in an offshore account in The Bahamas. Although the government insisted that these funds were all fully declared, and would therefore not have to benefit from the tax amnesty, Macri is clearly keen to nip in the bud anything that smacks of an illegitimate fortune, especially after his name recently appeared in the ‘Panama Papers’ (see sidebar).

    Macri said he might use the money to buy Argentine treasury notes. By investing the money in the state he would silence criticism from the opposition and allies such as Carrió. But not Fernández. The former president lashed out at her successor this week. “Can anyone imagine what would have happened in congress if the Panama Papers had occurred on my watch and the protagonists had been my government, my family and my friends?” she asked rhetorically. “What is happening to Dilma Rousseff in Brazil would by comparison have been a “kids’ film”.

    Fernández, the subject of a legal investigation into large-scale international money-laundering, claimed this week that she was facing “the most ferocious campaign of judicial, media and political persecution in recent memory”. In a letter published on the Internet she said it was “only comparable with other presidents committed to the wellbeing of the people and the country’s interests, who unfortunately were very few in number.”

    Macri’s military makeover

    President Macri made a major gesture to Argentina’s armed forces while hinting at a reform of the institution during a speech celebrating national army day on 30 May. Speaking alongside the military top brass at the national military college in El Palomar, in the province of Buenos Aires, Macri announced that after 12 years in the wilderness “ignored and abandoned…causing budget, equipment and infrastructure problems”, members of the armed forces would get a salary increase in line with the rest of public-sector employees (31%) in three stages, and 55% for retired members of the military. Macri said a new era had begun, “leaving behind confrontations and divisions”.

    Macri also called on the armed forces “to adapt to the challenges of the 21st century”, such as environmental emergencies, United Nations peacekeeping and the fight against international terrorism. They already have considerable experience in the first two of these but the third would break new ground and could conflict with post-dictatorship legislation prohibiting the armed forces from involvement in internal security. This suggests Macri could be planning a reform of the military.

    • The Bahamas

    President Mauricio Macri said the US$1.25m he is going to repatriate from The Bahamas had been deposited in Merrill Lynch accounts in Switzerland and the US and only ended up in The Bahamas after the Bank of America sold the Merrill Lynch international wealth management business to the Swiss bank Julius Baer Group. Macri’s name appeared in the ‘Panama Papers’ in connection with a company, Fleg Trading, also registered in The Bahamas.

  • PANAMA: Odebrecht scandal spreads to Panama

    LatinNews 02 February 2017 Hits: 1973

    ‘An open secret’ is how Panama’s Vice President Isabel de Saint Malo de Alvarado described bribes paid by the Brazilian engineering company Odebrecht to corrupt officials in Panama under the previous Cambio Democrático (CD) administration led by Ricardo Martinelli (2009-2014). The case – in which, according to the US Department of Justice, more than US$59m was paid in bribes to secure public works and infrastructure contracts valued at US$175m – is serving as the latest source of public anger about corruption in Panama, upping the pressure on the government led by President Juan Carlos Varela to show that it is seeking to address what remains a key public concern.

    On 25 January hundreds of people took to the streets in Panama City in anti-corruption protests organised by civil-society groups as well as private-sector lobbies such as the Panamanian association of business executives (Apede). The protests were in response to the latest revelations involving the Brazilian company, accused of taking part in major bribery schemes in its home market and in other countries [WR-17-03].

    The previous day President Varela announced plans to sue Odebrecht, which has been active in Panama since 2006. This comes on top of other measures he has announced in relation to the scandal-hit company (see sidebar). Also on 24 January, Panama’s attorney general Kenia Porcell revealed that 17 people have now been charged in relation to the case. While Porcell did not give names, she did say that those charged include three former government officials and 13 businessmen – eight Panamanians, five foreigners, and an official from a private bank. The list is widely expected to include Martinelli’s sons, Ricardo and Luis Enrique, amid reports earlier in the week that Swiss prosecutors had formally accused them of bribery in relation to the case, and frozen US$22m in their bank accounts.

    Panama fell 15 places in the annual Corruption Perceptions Index (CPI) published by the Berlin-based NGO Transparency International (TI) to finish in 87th place. This was still the second-best placing in the sub-region behind Costa Rica (58th).

    • Contracts cancelled

    In December the Panamanian government announced that it was barring Odebrecht from bidding for future public tenders – including a new line of Panama City’s metro system and a fourth bridge over the Panama Canal. On 27 January Economy & Finance Minister Dulcidio De La Guardia also confirmed the cancellation of the US$1bn contract to construct the 213.6MW hydroelectric plant Changuinola II, to be located in the Bocas del Toro province. Odebrecht has been active in Panama since 2006, when it won the contract for the Remigio Rojas irrigation system in Chiriquí province. It has since completed 15 other projects in the country, according to its website.

  • VENEZUELA: Working to stay afloat

    LatinNews 21 September 2017 Hits: 486

    The National Office of Public Credit, overseen by the finance ministry, said on 20 September that the Venezuelan government had transferred funds for a payment due on its 2027 sovereign bond. “The payment of the coupon VENZ2027 (9.25%) was made on the value date to the corresponding financial institutions. We call on our investors to maintain confidence in the Republic. Venezuela honours its commitments”, it tweeted.

    The payment is the first since the US in August imposed new economic sanctions on Venezuela, banning US trading in any new debt issued by the sovereign or the state oil company Pdvsa. The sanctions do not impede Venezuelan payments on existing debt such as the 2027 bond. However, the effect of the sanctions has been to dissuade US financial institutions from any dealings with Venezuela, with Pdvsa’s commercial partners in the US among those said it be having difficulties in obtaining letters of credit from US institutions, for example. Notably, the US Financial Crimes Enforcement Network (FinCen) on 20 September issued a statement warning of “widespread public corruption in Venezuela” and urging financial institutions to “continue their vigilance” to combat this. That statement will add to the nervousness in the US about dealing with Venezuela. Quite simply, the reputational - and legal - risks are becoming too high. With US$3.8bn of bond payments due in October-November, Venezuela is having to engage in some circuitous routes through the global financial system to move around its increasingly scarce funds. This includes Maduro’s pledge to stop trading in the dollar, substituting it for alternative currencies including the euro, the yuan, the rouble and the rupee. The main effect of that, however, will be to raise costs for the government.

    Meanwhile, Brazil’s daily Folha reported on 21 September that Brazilian finance ministry and central bank officials were heading to Venezuela for emergency talks after Venezuela fell into arrears on payments for infrastructure contracts worth some US$5bn - including projects awarded to the disgraced Brazilian construction giant Odebrecht, as well as Andrade Gutierrez and Camargo Correa. Venezuela reportedly missed a US$262m payment due in September. Folha noted that the projects were financed by Brazil’s development bank, BNDES.

    And in another sign of Venezuela’s financing dire straits, Chile’s central bank (BCC) has also announced that it had revoked a reciprocal credit line with Venezuela’s central bank (BCV), citing Venezuela’s failure to repay debt. In a statement, the BCC said that the BCV had made “intensive use” of the credit line in the past few years. It noted that it had been working to mitigate its exposure to Venezuela since 2014, and was currently owed US$2.1m by the BCV. “The progressive deterioration of Venezuela’s financial indicators and the [BCVs] behaviour in prior years under this arrangement had already motivated us to adapt measures to safeguard BCC wealth”, the BCC observed.

    Kuczynski calls for the Lima Group to reconvene

    Peru’s President Pedro Pablo Kuczynski used his UN address to call for another meeting of the so-called Lima Group, in reference of the 17 Latin American representatives who met on 8 August in Lima to discuss Venezuela. After that meeting, 12 of the 17 attendees signed a declaration refusing to recognise Maduro’s new national constituent assembly (ANC). The objective of the second meeting, to be held on the margins of the UN assembly, was to “evaluate and adopt new measures to confront the crisis in Venezuela”.

    Kuczynski’s call came after US President Donald Trump in his inaugural UN speech described the Maduro government as “a socialist dictatorship”. Trump warned that the US could impose further economic sanctions on Venezuela. Ahead of his speech, Trump had met the presidents of Brazil, Colombia and Panama, along with Argentina’s vice-president, to discuss Venezuela. Reportedly, Trump urged his counterparts to support his call for more direct intervention in Venezuela. However, in their UN appearances Kuczynski, Brazil’s President Michel Temer and Colombia’s President Juan Manuel Santos were each very careful to stress the need for a peaceful solution.

    • In response to President Trump’s speech, Venezuela’s foreign minister, Jorge Arreaza, accused the US of trying to force regime change in Venezuela. President Maduro accused Trump of levying a “death threat” against him, and he dubbed the meeting between Trump and his Latin American colleagues “the dinner of the Judases”.
  • COSTA RICA: Raids expose illegal gold mining network

    LatinNews 02 October 2020 Hits: 964

    In late August, Costa Rica’s police carried out 32 raids in different parts of the country as part of a massive operation to dismantle an illegal gold mining network. The raids highlight what remains an ongoing security challenge for successive governments.

    The raids, which were carried out on 20 August, resulted in the arrest of 27 people suspected of mining, environmental, and money laundering crimes. During the raids police seized cash, drugs, and bars of gold. The criminal group is suspected of obtaining gold from miners in the areas of Crucitas, in the northern Alajuela province on the border with Nicaragua; Abangares, in the north-western Guanacaste province; and Corcovado national park in the southwestern Osa conservation area, Puntarenas province. Much of the mineral comes from Crucitas, where the Canadian miner, Infinito Gold, tried to develop a gold extraction project after receiving a concession granted in 2008 under the government led by President Óscar Arias (2006-2010) although this was annulled two years later on the grounds that it contained irregularities (in November 2010 the government passed a new non-retroactive law banning open-pit mining).

    According to a 20 August press release by the attorney general’s office, local miners were processing the gold into gold bars which would then be exported to the US or smuggled into Nicaragua. The same source estimates that between 2018 and 2020, the criminal group exported gold to the US for an amount worth some ¢2bn (US$3.35m) although it notes that the declared export value is lower than the market value. The general director of Costa Rica’s judicial investigation agency (OIJ), Walter Espinoza, said the investigation into the mining ring began in April 2019 after authorities at San José’s Juan Santamaría International Airport noticed an unprecedented amount of gold listed in export documents.

    Concerns about illegal gold mining in Crucitas were also raised in a report by Costa Rica’s energy & environment ministry (Minae) released at the end of January this year. According to the Minae report, the practice began in 2017 and by the end of 2018 some 149,243 troy ounces of gold had been extracted, with a market value of US$197.4m. Minae also identified 35 bodies of water which were affected by gold mining in Crucitas, either by excavations in the riverbed, sediment contamination, or expansion of the waterways. The report also estimated that some bodies of water may be contaminated by mercury residues used to extract gold.

    State officials involved?

    According to Costa Rica’s attorney general’s office, a public official (whose name was not given) employed at the finance ministry is under investigation for allegedly helping to conceal the illegality of the transactions relating to the illegal gold mining from the finance ministry. 

    And across the border…

    Concerns about illegal gold mining have also been raised across the border, in Nicaragua. On 13 May a Nicaraguan conservation NGO Fundación del Río released a statement denouncing the “gold fever” which has occurred in south-eastern Nicaragua, near the border with Costa Rica, since 2016.

    The NGO said that between 2016 and 2019 it had documented over 100 gold extraction mills located in the municipalities of San Carlos and El Castillo (both in Río San Juan department) and Nueva Guinea and Bluefields, in the South Atlantic autonomous region (Raas).

    The statement points out that also in December 2017, the NGO denounced that the Indio Maíz biological reserve, which is situated on Nicaragua’s south-eastern corner, bordering the San Juan river and Costa Rica, had become an area of interest for ‘güireseros’ (artisanal miners). It more generally criticised state negligence over the issue of illegal mining, pointing out that between 26 April and 2 May, the army monitored part of the reserve in the Bluefields municipality and found a mining camp of 35 people but failed to arrest anyone.

  • The continuing threat of cybercrime

    LatinNews 28 January 2021 Hits: 1466

    In early November 2020, Brazil’s supreme court of justice (STJ) – the second-highest court in the country – was the target of a ransomware attack which forced the shutdown of its operations for several days. It rapidly emerged that the same week, the federal health ministry, websites linked to the government of the Federal District, and the national justice council (CNJ) had also been vulnerable to cyberattacks. Days later, the supreme electoral court (TSE) fended off a cyberattack on the day of the municipal elections. Taking place in quick succession, these incidents served as a reminder of Brazil’s persistent weaknesses where cyber security is concerned.

    Cybercrime has long represented an important risk in Brazil. Although efforts have been made to shore up the country’s resistance to this threat – the international sporting events that Brazil hosted in 2014 and 2016 had, in particular, served as a driver for the government to better equip itself to respond to cyber incidents – Brazilian citizens, businesses, and government agencies remain very vulnerable to cybercrime, and institutional and legal structures responding to the issue continue to be lacking.

    In international measures of cyber security efforts, Brazil tends to rank at a middling level globally, and in the top third at a regional level – its performance compared with other major Latin American countries such as Chile, Mexico, or Colombia varies depending on the ranking, but it is consistently outranked by smaller, poorer Paraguay.

    In the United Nations’ (UN) latest Global Cybersecurity Index (GCI), from 2018, Brazil ranked 70th out of 175 countries surveyed (and sixth out of 33 in the Americas), with a score of 0.577 (where 1 indicates a high commitment to the GCI pillars – which include legal and technical measures to fight cybercrime – and 0 indicates no commitment).

    In the more recently published National Cyber Security Index (NCSI), produced by Estonia-based think tank e-Governance Academy, Brazil ranks 61st out of 160 countries, with a score of 46.75 (with 100 being the maximum score). The country performs best in cyber threat analysis & information, and in military cyber-operations, but very poorly in cyber crisis management, protection of essential services, and protection of digital services.

    According to Cyber-Edge, a consultancy which surveyed IT security professionals across 17 countries to produce its 2020 Cyberthreat Defense Report, 77% of respondents in Brazil had suffered at least one successful cyberattack (Mexico topped this vulnerability list, with 94% of respondents affected by a successful cyberattack). Overall, cyber security experts agree that Brazil remains particularly vulnerable to cyberattacks, with a number of factors – including the country’s size, the high level of internet and mobile penetration, and the lack of a national strategy and funding – contributing to the issue.

    The past year has seen some efforts to remedy this, building on the national policy of information security (PNSI) which was published in the final days of former president Michel Temer’s mandate (2016-2018), and which enshrined the need for national policies around information security to include issues of cyber security, cyber defence, and protection against data leaks. In February 2020, President Jair Bolsonaro issued a decree which introduced a national strategy on cyber security, known as E-Ciber, to be led by the cabinet of institutional security (GSI), which is attached to the presidential office. A data protection law came into force last August, and there had been plans to present a cyber security law by end 2020, although the project remained pending at the start of 2021.

    E-Ciber and the efforts behind it – it was the result of a months-long consultation process – were welcomed by cyber security experts, and said to be long overdue. The actual content of the E-Ciber document was, however, largely met with disappointment, criticised for its lack of substance. The E-Ciber document outlines a cyber security strategy for the period 2020-2023, with three main objectives: to make Brazil more safe and successful in the digital environment; to increase Brazilian resistance to cybernetic threats; and to strengthen Brazilian actions in cyber security on the international stage.

    To this effect, the decree lists 10 strategic actions, which include setting up a centralised model of cyber governance at national level; increasing the level of protection to “Critical National Infrastructure”; improving the country’s legal framework on cyber security; and broadening cyber security partnerships between the public and private sectors, civil society, and academia.

    The text’s failure to establish clear actions, timelines, or budgets, is one of the main points of criticism from cyber security experts. An analysis by the International Institute for Strategic Studies (IISS), a London-based research institute, brands the document as “exceptionally vague”, and declares E-Ciber to “lack focus and substance”. There are also worries that its vague wording could lead to content-regulation efforts (such as the fight against fake news [SSR-20-07]) being wrongly amalgamated into cyber security efforts.

    Nevertheless, E-Ciber does outline Brazil’s needs where cyber security and cyber defence are concerned; it lays the first stone for later developing a legal and normative framework and introducing a cyber security bill; and it has opened space for more discussions around the issue in different areas. Alongside expectations that corporate investment into cyber security is picking up (it has tended to lag compared with the rest of the world, leaving Brazilian businesses more exposed), Brazil could be on track to making some important changes to its cyber security landscape.  

    The November 2020 cyberattacks

    The attacks against Brazilian state agencies in November came at a time when ransomware attacks the world over were increasing, most likely as a result of the coronavirus (Covid-19) pandemic and the massive shift online that it has forced across society. Nevertheless, the vulnerabilities of the Brazilian systems raise important questions about the state’s responsibility when personal data is leaked, and also fuel mistrust in their safety and reliability.

    As previously noted, the STJ had to stop all activities and trials – conducted via video due to the pandemic – for several days. The STJ president described it as the “worst-ever” cyberattack suffered by a government institution in Brazil. The ransomware attacks against the CNJ, Federal District websites, and health ministry also left websites down, and prevented civil servants from working.

    In the case of the TSE, the deflected cyberattack on 15 November – the day of the municipal elections – came with other technological issues which contributed to delays in the usually very quick electronic vote-counting system. It took place in a context of rampant misinformation over the supposed unreliability of the country’s electronic voting system – doubts to which President Bolsonaro himself contributed.

    The TSE – which for the first time had centralised all vote-counting efforts, rather than regional electoral courts counting votes at state level and then sending them to the TSE – successfully withstood an attempt to bring down the vote-tallying software through millions of simultaneous connections to the system, but did suffer a data breach. The president of the TSE, Luis Roberto Barroso, condemned the attack as a deliberate attempt to discredit Brazil’s electoral system. A police investigation had, at time of writing, reached no conclusion as to the source of the attack.

     

  • MEXICO: Slow progress for ambitious railway projects

    Patrick de Courcy 20 May 2022 Hits: 2576

    On 28 April, deputy finance minister, Gabriel Yorio, disclosed that the finance ministry (SHCP) was developing a package of tax incentives to boost investment in the Tehuantepec Isthmus region in southern Mexico, where the distance between the Gulf of Mexico and the Pacific Ocean is at its shortest. Investment is particularly encouraged in the Interoceanic Corridor (CIIT), a major logistical and industrial investment project which includes a 300-km long railway that will link the Pacific seaport of Salina Cruz (Oaxaca state) with the port of Coatzacoalcos (Veracruz state) on Mexico’s Caribbean coast.

    The government is seeking to galvanise the opportunities provided by the ongoing nearshoring trend, thus focusing on companies that are leaving Asia and considering settling in Mexico. While Yorio recognised that these companies would naturally gravitate towards Mexico’s more prosperous northern region, the administration of President Andrés Manuel López Obrador is keen to encourage them to settle along the CIIT to generate employment and boost economic activity in the area, which has a population of around 2.2m people, two thirds of whom fall below the extreme poverty line.

    • Tapping into the nearshoring trend

    Importantly, Mexican development banks Bancomext and Nafin are already financing businesses seeking to relocate from Asia to any part of Mexico, while the Inter-American Development Bank (IDB) has similar support packages.

    Indeed, on 22 April, a group of businesspeople from the US and Canada visited the area along with state and federal officials to assess the potential of the project. During the visit, the head of the CIIT, Rafael Marín Mollinedo, stated that the project would provide opportunities particularly for hydrocarbon industries as a gas pipeline is currently under construction, as well as a gas liquefaction plant. Marín Mollinedo added that the train and ports could be operational this year.

    The SHCP’s plan is to offer preferential rates of income and value added taxes to those investing in the region. Yorio specified that while the ministry has limited room for manoeuvre in fiscal matters, the area’s significantly lower levels of economic activity as compared to the rest of the country provided the opportunity to establish incentives for companies. SHCP is also seeking to focus on promoting research activities. Yorio said that the government would provide basic industrial infrastructure for those companies that are willing to relocate to the CIIT, where plans are to establish ten industrial parks in which companies would benefit from lower gas and electricity rates, as well as water for industrial operations and the transport infrastructure network that is currently under construction.

    In addition, the CIIT railway will have connections to the new Dos Bocas oil refinery (Tabasco state) and another major trainline project, the Tren Maya tourist railway in the Yucatán Peninsula, as stated by Finance Minister Rogelio Ramírez de la O on 28 April. Ramírez de la O added that the CIIT will also eventually connect to Guatemala via the municipality of Tapachula (Chiapas state) in order to boost the economic development of Mexico’s broader southern region and of Central America.

    However, according to press reports both railway projects are facing delays. Regarding the CIIT, the construction of the container terminals at Salina Cruz and Coatzacoalcos ports has stalled as a result of the restructuring that occurred when transferring the ports’ administration from Mexico’s federal transport ministry (SCT) to the navy ministry (Semar). Similarly, the progress of the Tren Maya project has slowed down due to successful appeals launched by environmental activists.

    Within the framework of the World Water Day on 22 March, a campaign was launched against Tren Maya by the so-called ‘Save Me from The Train’ collective of activists. The campaign claims that the rerouting of the 120km-long section of the railway lines between the popular tourist destinations of Cancún and Tulum in Quintana Roo state (section 5 of the Maya Train) threatens the local habitat, particularly a system of underground caves and rivers. After a Yucatán state judge on 19 April ordered the temporary suspension of the works until environmental impact studies had been conducted, the case was passed on to a federal court that has yet to rule on the suspension, which the government is seeking to overturn.

    On 20 April, López Obrador said that he would receive the campaign organisers at the presidential palace to establish a dialogue regarding the impact of the works. However, López Obrador cancelled the meeting at the last minute, dismissing the campaign as politically motivated and financed by foreign and business interests. Then, on 29 April, López Obrador said that the government would expropriate the land where the railway will be constructed to “prevent abuses by speculators” in order to have the train inaugurated in December 2023, as planned.

  • COLOMBIA: New scheme to protect social leaders and former guerrillas

    Patrick de Courcy 25 November 2022 Hits: 2320

    The relentless killing of social leaders and human rights defenders has long marked Colombia as one of the most dangerous countries in the world for frontline environmental and social campaigners. Since 2017, targeted assassinations have also threatened the stability of the peace agreement with the Fuerzas Armadas Revolucionarias de Colombia (Farc) guerrilla group, with demobilised Farc guerrillas also being slain in significant numbers as they attempt to reintegrate into civilian life. On 6 September, the government led by President Gustavo Petro unveiled a new scheme aimed at stemming this violence, dubbed Puestos de Mando Unificados por la Vida (PMUVs).

    According to a tally kept by the Colombian NGO Indepaz, as of 21 October 147 social leaders and human rights defenders had been assassinated in 2022. Indigenous and civic activists were the most featured on Indepaz’s list, but those targeted came from a wide range of pressure groups including trade unionists, LGBT and black rights activists, and those campaigning for land redistribution. Over the same period, Indepaz tallied the murders of 35 former Farc guerrillas who had signed the 2016 peace accords. In its latest report, published 27 September, the United Nations Verification Mission in Colombia noted that security threats faced by ex-guerrillas “continue to jeopardise reintegration” and emphasised that “the long-term success of the [peace] process is contingent on former combatants’ security guarantees”.

    The killing of social leaders also hampers the fulfilment of the accords by eliminating activists who have sought to organise the implementation of key components of the peace agreement – for example, the rollout of voluntary coca crop substitution programmes, and maintaining pressure for land redistribution. This sees them challenge powerful vested interests in regions that may have only seen an extremely limited state presence in recent decades. With their assassination, the influence of illegal armed groups, drug traffickers, and businesses or politicians linked to these becomes greater, and communities are intimidated into silence.

    Petro’s government, which took office on 7 August promising to significantly accelerate the implementation of the peace agreement, has moved swiftly to try and address the threats faced by activists and demobilised guerrillas. On 6 September, a joint statement from the defence and interior ministries announced details of the PMUV scheme, describing it as an “inter-institutional mechanism to attend to the public order situation in the regions”. The PMUVs, which are comprised of officials from the municipal, departmental, and national governments, members of the security forces, and congressional representatives, are intended to form a rapid response system to threats received by social leaders, campaigners, and former Farc guerrillas. As of 21 October, 20 PMUVs had been established, according to Interior Minister Alfonso Prada, while a further 45 PMUVs were scheduled to be launched.

    Whilst it is too early to say whether the PMUV rollout will have a decisive impact on assassinations, Indepaz did note that the eight social leaders killed in September was the lowest figure recorded in 2022, compared to the murder of at least 13 per month in the first eight months of the year. Colombia’s peace commissioner, Danilo Rueda, attributed this fall to armed groups’ desire to enter peace talks with the Petro administration. The outcome of those talks, rather than the PMUVs, is likely to have the most decisive impact on the safety of activists and demobilised rebels.

    Petro meets Maduro

    On 1 November, Colombia’s President Gustavo Petro and Venezuela’s President Nicolás Maduro met in Venezuela’s capital, Caracas, where they pledged to end years of bad blood between the two nations. The two presidents signed an 11-point joint statement in which they pledged to “move firmly and with conviction towards unity and peace between our two nations”. They agreed to security cooperation along the length of the shared border; the improvement of binational transport routes; and dialogue aimed at establishing “complementarity” in energy matters, among other, vaguer pledges of cooperation. Venezuela’s opposition leader, Juan Guaidó, had called on Petro not to “normalise a dictatorship” and instead join “demands for free and fair elections in Venezuela”. He tweeted that Petro’s decision “to visit the dictator Maduro and call him ‘president’ is an action that could dangerously normalise human rights violations”.

  • BRAZIL: Crime figures highlight persistent security challenges

    Abbi Dicker 25 July 2024 Hits: 2215

    Homicides in Brazil fell in the first year of President Luiz Inácio Lula da Silva’s current term, according to the latest figures released by public security think thank Fórum Brasileiro de Segurança Pública (FBSP). Despite the encouraging decline in murders nationwide, the FBSP’s annual report highlighted other security challenges, such as police lethality and prison overcrowding.

    Intentional violent killings in 2023 totalled 46,328, down from 47,963 in 2022. The murder rate decreased from 23.6 killings per 100,000 people to 22.8 per 100,000 last year. However, Brazil’s murder rate is still higher than the average in Latin America and the Caribbean, which was 19.2 homicides per 100,000 in 2022. Within Brazil, homicides were also higher in the north of the country compared with the south. The north had a murder rate of 34.0 per 100,000 and the northeast registered 36.5 per 100,000. The region with the lowest murder rate was the southeast, registering 14.0 per 100,000.

    According to the FBSP, the Amazonian smuggling routes in the north and the commercial ports of the north-eastern coast are key territories and logistical networks which are fiercely contested by rival drug gangs. These regions are also known to have high levels of police lethality; police killings are included within the overall tally of ‘intentional violent killings’.

    Last year a total of 6,393 people were killed during interventions by civil or military police personnel. This figure is down from the 6,455 deaths in 2022, but a significant increase from the 2,212 deaths in 2013. In absolute figures, the north-eastern state of Bahia saw the most deaths in police operations last year, with 1,699 killings, while the northern state of Amapá had the highest rate of killings by the police, registering 23.6 per 100,000. The FBSP pointed out that 13.8% of all intentional violent killings in Brazil were victims killed by policemen, but that figure is much higher in Bahia (25.8%) and Amapá (33.7%).

    Bahia and other states in the northeast also have high prison populations and a high proportion of inmates who are being held on pre-trial detention, which security experts have long considered a factor which boosts the recruitment of the organised crime groups controlling many prisons in Brazil. In 2023, the national prison population was 852,010 people, up from 832,295 the previous year. Nearly a quarter of total prisoners last year are being held on pre-trial detention. Of the 14,931 prisoners in Bahia state, 44.1% are awaiting trial, while the north-eastern state of Sergipe has the highest percentage of inmates on pre-trial detention – 56.3% of the state’s 7,370 prisoners are awaiting trial.

    In 2023, the national prison population was 214,819 over capacity. The prison capacity deficit was highest in the southern state of Paraná (49,128), the south-eastern state of São Paulo (36,948), and the north-eastern state of Pernambuco (26,738).

    The FBSP listed inefficiencies in the justice system in hearing criminal cases among the factors contributing to prison overcrowding. The think tank cited figures from the national judicial watchdog Conselho Nacional da Justiça (CNJ) showing that there were 13,711 judges sitting in state courts in 2023. The CNJ estimates that a judge in a state court could pronounce an average of 7.1 rulings per day, meaning that it would take 2.14 years to clear the country’s backlog of 208,882 cases of suspects held in pre-trial detention. The backlog will take even longer to clear if arrests continue to rise.

    Spending on security

    The think tank Fórum Brasileiro de Segurança Pública noted that 2023 was a record year for government spending on security initiatives. The combined annual expenditure on security by federal, state, and municipal authorities totalled R$137.9bn, up 4.9% from 2022. However, the think tank suggested that spending more on law enforcement does not necessarily lead to major drops in crime, instead highlighting the need for more funding for holistic crime prevention projects. Some state governments, such as that of Rio de Janeiro, have allocated more budget for policing than for healthcare and education

  • Political prisoner’s death renews scrutiny of amnesty process

    Lewis Harrison 25 June 2026 Hits: 200

    Venezuela’s President Delcy Rodríguez announced on 23 April that the amnesty process for political prisoners was drawing to a close, eliciting a chorus of condemnation from the opposition. Although the government later rowed back on Rodríguez’s comments, prisoner releases had already slowed substantially compared with the start of the year. The exception to this came in late May, when dozens of political detainees were released in a short period. This may have been a response to widespread outrage which followed the revelation that a political prisoner had been dead for nearly a year without his family being informed.

    Speaking during the installation of a judicial reform commission, President Rodríguez said that the amnesty process for political prisoners “is coming to an end” and that “for those cases that weren’t covered, or rather, were expressly excluded from the amnesty law, there are other spaces where these can be processed”. Rodríguez implied that there should be a fixed timeframe for the release of political prisoners, claiming that the Venezuelan system compared favourably with the seven-year amnesty process that followed the end of apartheid in South Africa, or the 2024 amnesty law for Catalan separatists in Spain.

    • Judicial reform

      On 23 April President Rodríguez installed a commission tasked with carrying out consultations regarding judicial reform. She said that “there are bad things that persist, that we haven’t been able to overcome, and that’s why we’re holding a national consultation, which isn’t just about consulting academics, specialists, those involved [in the justice system],” adding that “it’s about consulting the people about their views and their hopes regarding what the justice system should be like on a daily basis, above all, in the criminal realm”.

    The amnesty law, which was approved by the national assembly at the end of January, does not have a cut-off date, although it has been criticised on numerous other grounds by the opposition [SSR-26-03]. Responding to Rodríguez’s comments, the opposition party Primero Justicia (PJ) accused her government of “leaving more than 600 innocent political prisoners inside torture centres”. The main opposition coalition Plataforma Unitaria Democrática (PUD) identified a lower number of political prisoners in Venezuela; its most recent update at the time, issued on 31 March, stated that 460 political prisoners remained behind bars, with 758 having been released since Rodríguez took office at the start of the year.

    The ruling Chavista movement subsequently backtracked on Rodríguez’s announcement. Jorge Arreaza, a former foreign minister (2017-2021) and the president of the congressional commission tasked with monitoring the implementation of the amnesty law, said on 24 April that “the amnesty law is not expiring” and that “requests will continue to be received”. He added, however, that “the law has benefitted practically all the people that it could”.

    Adding to the sense that the authorities were winding down the prisoner release process, the PUD noted on 21 May that “releases continue to be sporadic”, with only 35 political prisoners released since its previous update on 27 April. This marked a sharp slowdown from the early phase of the amnesty process, when dozens of political detainees were often released each day.

    Prisoner’s death sparks fury

    Despite this, the release process did briefly pick up again in the days following the PUD’s observation, possibly in response to revelations about the death of a political prisoner which generated widespread public anger.

    The case of Víctor Hugo Quero Navas, who was arrested in January 2025 for alleged terrorism, had gained growing media attention amid a campaign by his elderly mother, Carmen Teresa Navas, to learn why he had not been released as part of the amnesty process. On 7 May the prisons ministry revealed that Quero had in fact died in July 2025 after being taken to hospital for gastrointestinal bleeding. The statement added that, “due to the absence of relatives”, Quero was buried on 30 July – the same day that he died.

    Accusations of a cover-up immediately ensued. Opposition leader María Corina Machado alleged that Quero was “disappeared, tortured, and murdered” in a “crime against humanity”. The PUD accused the authorities of “mocking his family by denying him an amnesty… despite knowing that he died 10 months ago”. Adding to the emotional resonance of the case, Quero’s mother Carmen died on 17 May, just ten days after learning of her son’s fate. Responding to her death, Machado said that the family’s suffering “encapsulates all the cruelty of the regime, the cynicism of the regime, and on the other hand the goodness, the resilience, and the courage that make up a mother’s love”.

    The case, and Carmen’s death in particular, was a lightning rod for anger with the Rodríguez administration. Hundreds of students from the Universidad Central de Venezuela took to the streets in Caracas hours after her death, clashing with police. At Carmen’s funeral on 19 May, a large crowd gathered and chanted: ‘Murderers’. A silent march also took place in Caracas on 20 May to demand justice for political prisoners who have died in custody.

    The swelling of anger in relation to the Quero case seems to have nudged the government into action. Even before the protests that followed Carmen’s death, the attorney general’s office was quick to announce the opening of an investigation on 7 May, and said that Quero’s body would be exhumed. Although the judiciary remains extremely politicised, and there will be doubts regarding the rigour of the investigation, its mere opening marks a shift from how such matters were dealt with under Rodríguez’s more repressive predecessor, Nicolás Maduro (2013-2026).

    Rodríguez’s brother, Jorge Rodríguez, also announced on 18 May that 300 more prisoners would be released by 22 May, in a likely attempt to defuse the mounting outrage. He said that these would consist of people eligible for release under the amnesty law, as well as other categories of prisoner such as minors, the elderly, and pregnant women. However, Venezuelan NGO Foro Penal noted on 26 May that it had only been able to verify the release of 39 political prisoners since 18 May.

    Alex Saab extradited to US

    Alex Saab, the Colombian businessman who allegedly played a central role in sanctions evasion under Maduro, was extradited to the US on 16 May to face money laundering charges. According to a statement from the US Department of Justice, Saab was allegedly involved in “a sprawling international money laundering conspiracy involving the corruption and exploitation of a Venezuelan public welfare program intended to provide food to vulnerable Venezuelans”. He is accused of bribing Venezuelan officials to secure food import contracts under the Comité Local de Abastecimiento y Producción (Clap) scheme, siphoning off hundreds of millions of dollars which were allegedly laundered through US banks. The statement adds that Saab and co-conspirators also allegedly “gained access to billions of dollars’ worth of oil owned by Venezuelan state-owned Petróleos de Venezuela, S.A. (Pdvsa) and sold it under false pretenses”, with these proceeds also laundered through US banks.

          Saab was previously detained in the US from 2021-2023 on money laundering charges but was released as part of a prisoner exchange agreed under former president Joe Biden (2021-2025). His extradition, which followed reports of his arrest in Caracas on 4 February, has highlighted the potential legal perils faced by other current and former Venezuelan officials who are sought by the US. These include the interior minister, Diosdado Cabello, and the agriculture minister and former defence minister (2014-2026), General Vladimir Padrino López, who are both wanted in the US on drug trafficking charges. 

    Dissident returns from exile

    Lester Toledo, a high-profile political dissident who has been living in exile since 2016 when he was charged with terrorism offences, returned to Venezuela on 21 May. Toledo, who was a founding member of the opposition party Voluntad Popular (VP) and was a deputy in the Zulia state legislature from 2012-2016, said he was returning “to seek justice”. His return to Venezuela presents a test for President Rodríguez and will be closely watched by opposition leader María Corina Machado, who has also vowed to return from exile but has reportedly been urged not to do so by the US.

  • Court finds for Correa

    LatinNews 21 July 2011 Hits: 2785

    Development: On 20 July a court in Guayaquil, Ecuador, gave President Rafael Correa a comprehensive win in his criminal libel case against ‘El Universo’, the paper with the highest circulation in the country.

    Significance: Correa’s crushing win embarrassed him but underlined his broader point that the justice system in Ecuador is a lottery. The case is far more about judicial reform than about the freedom of the press. Correa’s first attempt to reform the courts, by introducing a proviso that anyone not convicted within a year of their arrest would be released, caused mayhem and was reversed by referendum in May 2011. Businessmen and the opposition have criticised the harshness of the verdict on El Universo, which is likely to be appealed.  The verdict contrasts with the noisier, but less costly, rows that Presidents Hugo Chávez of Venezuela and Cristina Fernández of Argentina have with the press in their countries.

    Key points:

    • A stand-in judge, Juan Paredes, sentenced the three Pérez brothers, Carlos, César and Nicolás, all directors of ‘El Universo’, and the former comment-editor, Emilio Palacio, to three years in prison. The four were also fined US$30m, with a further US$10m to come from ‘El Universo’ itself (making a total award of US$40m). It is all but certain that those convicted will appeal.

    • The verdict comes as the national assembly is in the process of debating a new media law, which will set up a regulatory body for the sector. Critics claim that the new legislation amounts to censorship.

    • Correa showed his embarrassment (even though he had asked for US$80m in damages and prison sentences of three years) by saying that he would not take any of the money. However he welcomed the judgment which, he said, ended the tyranny of the press. He left for Cuba late on 20 July to visit Venezuela’s President Chávez, who is undergoing chemotherapy there.

    • El Universo made a mess of its defence. First, it ignored Correa’s fury at Palacio’s editorial in February, which accused him of ordering the police to open fire, without warning, on a police hospital, while women and children were visiting. At the time of the alleged incident, 30 September 2010, Correa had been surrounded by mutinous policemen in what he claims was a failed coup. When Correa continued with his legal action, Palacio left the newspaper, the country’s biggest, and then the Pérez brothers offered a grovelling apology, conceding that they had no evidence to back Palacio’s assertions.

  • ARGENTINA: Dollar to remain stable, at all cost?

    LatinNews 23 September 2011 Hits: 3136

    Argentina is pulling dollars from every possible source in an attempt to keep the value of the greenback down against the Argentine peso. In the first three weeks of September, the central bank (BCRA), the state-owned Banco Nación and the social security agency (Anses) have sold dollars to the local market, allowing for only a slight depreciation of the local currency (of 1.2%). This, however, has cost the BCRA US$1.13bn, a month-on-month increase of 96.5%. On 19 September, the BCRA sold US$270m bringing its reserves below US$50bn (to US$49.22bn), the government’s ideal reserves target. So far this year, Argentina is the only country in Latin America that has seen its reserves shrink (by 4.7%). In the same period, Brazil’s have grown by 15%, Mexico’s by 20% and Uruguay’s by 35%. Peru could soon overtake Argentina as the country with the third largest reserves in the region.

    Uncertainty about the future of the economy, in an all but certain second mandate of President Cristina Fernández, has investors (of all sizes) and local savers extremely worried, to the point that capital flight has accelerated to extraordinary new heights [RBS-11-08], with some estimates putting the end year figure at US$20bn to US$24bn. If this outlook proves to be true, capital flight would at least double the expected trade surplus, predicted to come in at US$9bn.

    One reason fuelling Argentine demand for dollars has historic and cultural foundations: during an election year local residents want to ‘armour’ their savings against potential drastic changes in the economy after polling day. Secondly, in light of the global crisis and their inability to finance their operations with cheap local sources, multinationals have turned to subsidiary companies generating profits to finance operations at home, adding extra pressure on the exchange market. Finally, no-one expects Fernández, or Economy Minister Amadou Boudou, to address the market’s worries until after the 23 October election, by which point the depreciation of the Brazilian Real (of 14% since July) may have priced Argentine products out of its main regional export market. This, in turn, has started a domestic debate, not about whether Argentina should devalue or not, but rather on how it should go about doing so.

    Economists close to La Cámpora, the Kirchnerista youth movement, advocate  a gradual devaluation of 14% to 15% per year. The problem with this is that the Real has already devalued by a similar rate in just three months and with Argentine domestic inflation running at between 20% and 25% per year (on private estimates, which this week the International Monetary Fund announced are the ones it considers closer to the truth than the single-digit inflation rate reported by the national statistics office, Indec), a devaluation of 15% would still fail to keep Argentine products competitive. Furthermore, some K-economists believe a gradual devaluation could have an inflationary effect because people’s expectations that the dollar would become increasingly more expensive could trigger runs on the banks like those which took place in early September, when, in four days, half of the reserves used in August to keep the peso stable had to be released by the BCRA.

    Other pro-government economists propose a more drastic measure, taking the peso to AR$4.5/US$ by year end and to AR$4.75/US$ by the end of 2012. It is worth noting that the forward foreign exchange market has the peso at Arg$5.1 to the dollar by end September 2012. Regardless of which option it chooses, the government is likely to match a gradual devaluation with lower wage rises (of around 17%), because if salaries continue to rise in dollar terms imports will rise and thus put increasing pressure of the exchange rate. Members of the Asociación Económica para el Desarrollo, a pro-government grouping of young economists, also argues for a 20% devaluation, but it believes this should be matched with a similar decrease in subsidy spending and a return to international markets to stop depleting the BCRA reserves.

    • 2012 budget

    This week, some details of the 2012 budget bill were leaked to the local media. Congress will begin debating the proposal next week. According to the press, the budget proposes increased primary spending of 18.3% with GPD growth estimated at 5.1%, a stable dollar at AR$4.40/US$ and inflation of 9.4%. The bill does not propose a return to capital markets and instead stipulates the payment of US$8.57bn in foreign debt servicing with BCRA reserves.

  • China's blogosphere not fooled

    LatinNews 14 November 2012 Hits: 705

    It has been interesting to note how quickly China sought to capitalize on the BBC’s recent difficulties, and even more so how this has backfired with popular opinion.

    The state-run China Central Television (CCTV) has led the Chinese charge against the BBC, reporting at length that the BBC is “deeply mired in a credibility crisis”.  A joint despatch from the official news agency Xinhua and China National Radio accused the BBC of “covering up mistakes to hide shame” and said that this could only lead the outside world to “question its credibility”.

    The Communist Party-run Guangming Ribao talked about “the dirt hidden under the halo of the BBC’s corporate culture”.  The party-run Shanghai newspaper Liberation Daily added: “After one scandal after another, the halo on the head of the Western media represented by the BBC is fading gradually”.  The Hong Kong tabloid The Sun said that the BBC’s credibility “is on the brink of bankruptcy”.

    By contrast, China’s social media and blogosphere was quick to point out the irony in the officially-sanctioned criticism of the BBC.  One post on Sina Weibo, China’s equivalent of Twitter, summed up the general feeling, saying: “It is really admirable that one piece of unverifiable false news can lead to the resignation of BBC chief Entwhistle [the director-general].”  Another commenting on Entwhistle’s resignation said: “His behaviour makes me feel that this is a responsible media organization.”  Another wrote: “I heard the BBC chief resigned over a wrong report.  Shouldn’t the head of CCTV have resigned a thousand times.”

    Meanwhile, the blogosphere has also been very critical of the performance of China’s leaders at the 18th Party Congress, particularly of the sycophantic speeches.  As an example of the sycophancy, Beijing delegate Ju Xiaolin composed a poem called “Getting New Hope” in praise of President Hu Jintao, which he proceeded to read out in between emotional sobs.  He ended by saying he had finally found new hope in Hu’s 64-page report.

    Another delegate, Li Jian from Ningxia, claimed to have cried five times during Hu’s speech.  The blogosphere reacted with derision to this performance, with one microblog post saying that Li was clearly trying to further her career “one tear at a time”.

  • TRACKING TRENDS

    LatinNews 21 March 2013 Hits: 1154

    BRAZIL-ARGENTINA | Petrobras revises five-year investment plan. On 16 March Brazil’s state oil company, Petrobras, released its revised 2013-2017 business plan. The plan calls for US$236.7bn in investments for the period. This as the firm seeks to increase its crude oil production from 2m barrels per day (bpd) currently to 3m bpd by 2017 and 4.2m bpd by 2020. However, the investment figure is only 0.8% higher than the amount cited in the previous 2012-2016 business plan.
       Petrobras’ financial results last year were disappointing and the company has been forced to revise its investments so as to address this. Petrobras revealed that approximately US$147.5bn, or 62% of the total investment figure, will be destined for exploration and production efforts. Meanwhile US$64.8bn (or 27%) has been earmarked for investment in refineries, transportation and distribution; US$9.9bn (4%) will be spent on gas and other energy sources; and US$2.9bn (1%) will be invested in the production of bio fuels.
        The overall investment in refineries, transport and distribution is lower than the US$77.4bn presented in the previous business plan, which the company explained by pointing out that some of the investment in this area has already taken place. In contrast, the figure for exploration and production investment increased from US$131.6bn in the previous business plan. The majority of this (68%) will be destined for the development of the vast pre-salt oil deposits off the coast of Brazil in a bid to increase oil production in the area from 7% currently to 35% by 2017. Indeed, this appears to represent the main change in the new plan - the concentration of investments in the development of projects in Brazil at the expense of projects elsewhere. Only 2% of the total (US$5.1bn) will be spent on projects abroad.
       Days after the plan was released on 19 March Petrobras CEO, María das Graças Foster, provided some more details on the company’s divestment plans, particularly those affecting assets abroad. Foster explained that the previous business plan called for the sale of Petrobras’ refineries in Japan and Pasadena, California; its exploration and exploitation concessions in the Gulf of Mexico and Tanzania; and its production assets in Argentina - all this in a bid to raise some US$14.8bn. However, Foster said that the new plan has scrapped the offloading of the refinery at Pasadena. Foster added that the company was currently negotiating the sale of its assets in Argentina which she described as “a complicated process”. 
        Petrobras’ assets in Argentina include a refinery in Bahía Blanca, a number of gas pipelines, electricity production assets, and a stake in an oil distribution network it shares with local firm, Refinor. Although various Argentine oil firms such as Oil Combustibles, Tecpetrol and even the now state-controlled, YPF, had previously expressed an interest in acquiring these assets, it is not clear whether Petrobras’ divestment in Argentina has been positively or negatively viewed by the Argentine government, which is already unhappy with the decision by Brazil’s mining giant, Vale, to suspend the Río Colorado potassium project [WR-13-10].   

    CHILE | Government forecasts a bright future. On 14 March the Chilean government of President Sebastián Piñera announced that it expects the country’s economy to experience solid growth, despite the adverse external economic situation perpetuated by the European crisis and generally weak global economic activity levels. In a seminar organised by Chile’s industry promotion society (Sofofa), Finance Minister Felipe Larraín announced that economists are forecasting 5% GDP growth in 2013. Larraín said that the positive forecast rested on the healthy level of inflation in the country, the low unemployment rate and rising real wages all of which provide a solid base for future economic expansion.
        Just days later, on 18 March, Chile’s central bank published the overview of Chile’s economic performance in 2012. Overall GDP grew by a strong 5.6%, driven by a 7.1% increase in domestic consumption. This as the gross national disposable income increased by 4.6%. Meanwhile the bank’s monthly economic activity index (Imacec) reported a 6.7% increase in January 2013 compared to January 2012, highlighting the strength of domestic demand in Chile. However, Larraín has warned that Chilean economic actors must remain aware of the complicated global situation and that it is very probable that the country will not continue to experience such high growth rates throughout the remainder of the year.

    Mercosur eyes Sica

    On 18 March Uruguay’s foreign minister, Luis Almagro, said that “Uruguay and the [Southern Common Market] Mercosur have a special interest in developing closer ties to the [Sistema de la Integración Centroamericana] Sica bloc”. Uruguay currently holds Mercosur’s pro-tempore presidency until July this year when it is scheduled to pass it on to Venezuela. Almagro’s comment came during his visit to El Salvador as part of a Central American tour that started on 14 March in Guatemala and is set to continue next week in Nicaragua. According to Almagro the development of closer economic ties between Mercosur and Sica “can no longer be postponed as it is part of a more general strategy of Latin American integration”. He said he hoped to begin negotiations to this effect this year. 

  • COSTA RICA: Araya’s prospects strengthen

    LatinNews 09 October 2013 Hits: 1960

    The chances of former San José mayor, Johnny Araya (1998-2001; 2003-2013), who is running for the ruling Partido Liberación Nacional (PLN) in the 2 February presidential contest are looking increasingly bright. Some last-minute flip-flopping by his main rival, Rodolfo Hernández Gómez of the Partido Unidad Social Cristiana (PUSC), weeks before the 18 October deadline to register candidacies is the latest sign of the continued problems afflicting the opposition. A victory for Araya – which would give the PLN an unprecedented third consecutive term in office – would be particularly remarkable given that the Laura Chinchilla government has the worst approval ratings of the last six governments.

    A well-known figure in Costa Rica, Araya comes from PLN political stock; his uncle was former president, Luis Alberto Monge (1982-1986), while his brother, Rolando Araya Monge, a former public works & transport minister (1982-1984), PLN president (1995-1999) and PLN secretary general (1984-1988), unsuccessfully ran for the presidency in 2002. However, divisions within the PLN between the faction aligned with Araya and supporters of Rodrigo Arias, the brother of former president Oscar Arias (1986-1990, 2006-2010), who also had presidential aspirations, still linger. This was most recently reflected in Rodrigo Arias’s public criticism of Araya for failing to present a clear manifesto. Yet for the time being it would seem that Araya has the upper hand, bolstered by the return to the PLN of ‘exiles’ like his brother, Rolando; Wálter Coto, a former PLN secretary general (1988-1996) and deputy (1994-1998); and Antonio Alvarez Desantí, a former deputy (1994-1998), interior minister (1988-1990) and agriculture minister (1987-1988).

    Araya has also managed to successfully distance himself from the current PLN administration which, despite managing reasonable economic growth and progress vis-à-vis security (see sidebar), remains deeply unpopular. The latest Unimer poll, released on 23 September, put President Chinchilla’s disapproval rating at 67%, while her approval rating was just 5%. This lack of popularity stems from the government’s perceived lack of progress with regard to its legislative agenda (with key initiatives such as its proposed tax reform having stalled); corruption - as reflected most recently in the May scandal involving Chinchilla’s use of a private jet linked to a businessman suspected of drug ties [RC-13-06]- and the mishandling of major infrastructure projects including the US$1.5bn modernisation of Costa Rica’s only oil refinery at the Caribbean port of Moín, which was suspended in June.

    Opposition problems proliferate

    The failure by opposition parties to register any alliances ahead of the 2 August deadline had already strengthened Araya’s chances. Deals had been mooted between the main opposition Partido Acción Ciudadana (PAC) and the smaller outfits, Frente Amplio and Alianza Patriótica; the PAC and the PUSC; and the PUSC and the Movimiento Libertario.

    Araya received a further boost with the 3 October announcement just two weeks ahead of the candidate registration deadline by Hernández, the former director of the national children’s hospital, that he was withdrawing from the race – only to change his mind two days later. The PUSC might have the fourth largest legislative presence but Hernández was second in the polls, with the latest Unimer survey giving him 10.6% of voting intentions, to 27.55% for Araya (still below the 40+% needed for a first-round victory).  

    Hernández’s flip-flopping is unlikely to benefit his candidacy and has exposed major divisions within the PUSC. Having cited as grounds for his initial withdrawal, “backstabbing” within the party (he did not provide names), Hernández conditioned his return on the resignation of the PUSC’s executive committee by 19 October, including party president Gerardo Vargas, the secretary general William Alvarado and the treasurer Emilce Arias. The executive committee is aligned with ‘Renacer Socialcristiano’ faction that emerged in April 2012 in opposition to the ‘Convergencia Calderonista’ group loyal to former president, Rafael Ángel Calderón Fournier (1990-1994). At the time of writing Vargas and Alvarado were refusing to comply. Meanwhile Hernández’s own campaign manager, Humberto Vargas, announced on 7 October that he was quitting, further raising doubts over Hernández’s candidacy. Also indicative of continuing divisions within the party, Hernández called on Calderón -who in 2011 received a three-year prison sentence for corruption, which under Costa Rica law qualifies him for probation- and another former president, Miguel Ángel Rodríguez (1998-2002) - who in 2011 was also convicted of corruption but had his sentence overturned- to refrain from participating either directly or indirectly in the electoral campaign.

    • Voter disaffection

    The opposition’s continued failure to capitalise on the government’s poor approval ratings are also indicative of public disaffection with Costa Rica’s political system which, a May 2013 survey by the US’s Vanderbilt University’s Latin American Opinion Project (Lapop), suggests is at its highest since 1978 (just 56% of Costa Ricans claim to have any faith in the political system). One sign of this frustration with the old parties is the emergence of five new parties ahead of the 2014 vote, bringing the total number of parties registered to compete at a national level to 15.

    These new outfits include: the Partido Avance Nacional (PAN), the Centro Democrático y Social (CDS), the Partido de los Trabajadores (PT), Nueva Generación and Patria Nueva. Four of these feature experienced politicians: the CDS, which has yet to name its candidate, is largely formed of former PUSC members including former education minister Guillermo Vargas (1998-2002). The PAN is fielding current independent deputy, José Manuel Echandi, who belonged to the PUSC and the Partido Unión Nacional (PUN). Patria Nueva has named José Miguel Corrales, who ran for the presidency for the PLN in 1998 but was defeated in its 2002 primary before leaving the party in 2005, as its candidate. Meanwhile the PT, which defines itself as the most radical option on the Left, is fielding union leader, Héctor Monestel, who was close to Vanguardia Popular in the 1970s.

    • Unpopularity

    Over the year top PLN members like former communications minister, Francisco Chacón, have declared themselves baffled at President Laura Chinchilla’s perennial unpopularity given economic stability (GDP growth reached 5% in 2012, above the 4.4% average for Central America) and improved security: earlier in the year, Security Minister Manuel Zamora highlighted that the homicide rate had dropped to 8.9 per 100,000 inhabitants in 2012 from 10.3 in 2011.

    •  Polls

    The latest Unimer survey, released on 23 September, gives Johnny Araya of the ruling Partido Liberación Nacional (PLN), 27.5% of voting intentions, ahead of Rodolfo Hernández Gómez of the Partido Unidad Social Cristiana (PUSC) on 10.6%. Otto Guevara of the Movimiento Libertario (ML) is in third place on 9.7%, while Deputy José María Villalta of the small left-wing Frente Amplio is fourth with 7.8%. Languishing in fifth place, with 4.4% is academic and former diplomat, Luis Guillermo Solís, of the main opposition Partido Acción Ciudadana (PAC), whose poor showing owes to his low profile. According to the Unimer poll, only 17% of respondents knew who Solís was (compared with 98% who knew of Araya).

     

  • Brazil: The presidential inbox (3)

    LatinNews 30 October 2014 Hits: 3488

    Incumbent Dilma Rousseff of the ruling left-wing Partido dos Trabalhadores (PT) won the second round of the Brazilian presidential race on 26 October. Stripping away the claims and counter-claims of a bitterly fought election campaign, how serious are the economic problems she must now face?

    The daunting news for the re-elected president of Latin America’s largest economy is that there will be no quick solutions to Brazil’s economic malaise. Since 2008, the medium term economic growth rate (i.e. the average GDP growth over the preceding five years) has been trending down, from 4.8% to an estimated 2.8% this year. In the four years of Rousseff’s presidency (2011-2014 inclusive), real annual GDP growth has averaged only 1.6% (assuming the IMF’s latest estimate of just 0.3% for this year is correct). A key issue is whether this is a demand-side or a supply-side problem. If it is a demand-side problem, the solution is relatively easy: using some combination of fiscal, monetary and trade measures the new government simply needs to boost demand to get the economy growing again.

    Not so simple, says Neil Shearing of Capital Economics. He argues that the Brazilian problem is almost entirely on the supply side. In earlier years (such as 2003-2011) high, demand-led growth was possible because extra labour could be easily recruited. Now however, Brazil remains a near full-employment economy. The problem, as he puts it, is that “Brazil’s productivity performance has been nothing short of abysmal”. In 2003-2012, output per worker has grown at only 1.5% per year, the lowest of any major emerging market with the exception of Mexico. So it follows that any attempt to boost growth by stimulating domestic demand could backfire, leading to overheating and higher inflation.

    Low productivity is in turn linked to a series of structural problems. The cost of operating in the country - known as the ‘Custo Brasil’ (Brazil cost) - is high for a series or reasons. One is over-regulation of the economy: with a complex tax system it takes the average Brazilian company 2,600 hours a year to file its tax returns (compared to a Latin American average of 367 hours). Investment rates have been too low. In fact, investment has averaged 18% of GDP over the last decade, also the lowest rate among emerging markets. Infrastructure needs are huge, particularly in transport. Shipping a container from Brazil is four times more costly than shipping it from China. Linked to this problem is an insufficient domestic savings rate, which Shearer attributes in part to an over-generous pensions system, which in effect reduces the incentive to save for retirement.

    Get the red line pointing up

    Part of the problem is that it will be difficult to steer the structural reforms that many have long agreed are necessary through the Brazilian political system. Rousseff, elected at the head of an eight-party coalition and facing a stronger opposition in both the federal congress and at the state government level, will have to negotiate deals. Reducing pensions is not popular. There are constitutional constraints limiting the president’s ability to reallocate government-spending budgets. Successful reforms will yield only a medium to long-term political dividend, and on the short term are more likely to be a political liability. Perhaps the real motivator, however, is that the political cost of inertia is likely to be much greater than the cost of change.

    Rousseff won 51.6% of the valid votes; her opponent, Aécio Neves of the centre-right Partido da Social Democracia Brasileira (PSDB), won 48.4%; a difference of 3.4m votes. In her victory speech, Rousseff denied that the closeness of the result showed that Brazil was a divided nation. She also spoke of her desire to fulfil her campaign promise of “change” by instigating political reform via a plebiscite.

    Guido Mantega, Rousseff’s widely distrusted finance minister, will step down at the end of the year. His successor will give a good indication of whether there is likely to be any substantive change in the government’s economic policies, but Rousseff has given no sign that there will be any. One of the names circulating as a possible replacement is Aloízio Mercadante, the current cabinet chief. However, Rousseff was widely believed to have directed economic policy during her first mandate and there seems little reason to believe she will not do the same in her second.