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With less than a month until the 20 May presidential election, the campaign continues to be dominated by mud-slinging, corruption allegations and rumoured plots and conspiracies [RC-12-04].  However despite the fact that the management of the economy will be one of the biggest challenges to face the incoming government, neither of the two leading candidates have clearly presented their economic plans or addressed a major economic priority – the financial crisis afflicting the energy sector.

The Dominican energy sector has long been the Achilles heel of an otherwise solid economy. While the country mostly (86%) relies on electricity generated in plants that operate on hydrocarbon fuels, it is not a hydrocarbons producer and must import these fuels at high prices. As a result it is difficult to energy companies to make a profit without passing costs on to the consumer. In the 1990s, the World Bank proposed adopting a public-private system featuring the use of Independent Power Producer (IPP) contracts as a solution. Under the system, the state-run Corporación Dominicana de Empresas Eléctricas (CDEEE) purchases energy from private energy producing companies via IPPs and distributes it to consumers at low prices. IPPs are designed to guarantee certain levels of profits to offset high fuel prices. Through the CDEEE, the government thus directly and indirectly subsidises energy prices by absorbing most of the costs in the energy sector. The scheme was instrumental in attracting private investment to the energy sector, but it has also burdened the State with an increasingly large financial burden as international oil prices surged.

On 25 April, economists from the Dominican central bank presented the latest figures (2011) pertaining to the electricity sector, where there was a fiscal deficit of US$1.04bn, roughly 50.7% more than in 2010. The economists highlighted that this figure represents 60% of the public sector’s non-financial debt and is the main contributor to the central government’s RD$54.40bn (US$1.37bn) deficit. This led them to conclude that the country cannot afford to keep the current levels of subsidies in the long run. Back in February the International Monetary Fund (IMF) recommended in its seventh review of the country’s standby agreement that, among other things, the government increase electricity tariffs by 18% in order to address the energy sector deficit. However, in an electoral year, the Partido de la Liberación Dominicana (PLD) government led by President Leonel Fernández flatly refused and decided to terminate the agreement instead.

The private sector also recently expressed its concerns regarding the energy sector’s financial crisis; president of the country’s main business association (Conep), Manuel Díez Cabral, met CDEEE executive vice-president, Celso Marranzini on 14 March after which Díez Cabral declared that in order to solve CDEEE’s financial problems, the company must be privatised in order to remove the burden it represents on the State. Marranzini however insisted that the problems could be overcome and that privatisation would be difficult as long as the company remains financially unviable.

Neither the PLD presidential candidate, Danilo Medina nor his main rival, former president Hipólito Mejía (2000-2004) of the opposition Partido Revolucionario Dominicano (PRD) have effectively addressed the issue during the campaign. Medina, whose campaign slogan is “to continue doing what is good, correct what has been done wrong, and do what has never been done”, largely intends to continue implementing the policies pursued by Fernández; and has only made a fleeting promise to purchase electricity from Colombia to increase supply (see sidebar). Meanwhile Mejía - under whose administration some energy-producing companies were re-nationalised - has been too busy criticising the current government for racking up the public sector deficit and increasing debts to provide a viable solution.  

• Energy from Colombia

On 27 April Danilo Medina, the presidential candidate for the ruling Partido de la Liberación Dominicana (PLD) promised that if he were to be elected he would set up a scheme to buy electricity from Colombia as part of efforts to address the financial crisis in the energy sector. According to Medina, Colombian President Juan Manuel Santos has proposed supplying Colombian energy to the Dominican Republic and Puerto Rico via an underwater transmission line across the Caribbean Sea.

With the 30 June anniversary of his assumption of power approaching, Egypt’s President Muhammad Mursi appears to be using the dispute with Ethiopia over a dam project on the River Nile as a means of whipping up nationalist support.  Speaking on 10 June, Mursi told supporters: “We are not calling for war, but we will not allow, at all, threats against our water security…all options are open.”

Mursi was attending a “Popular Conference for Preserving Egypt’s Rights in the Nile Waters”.  One speech, by Safwat Abd-al-Ghani, argued that the Ethiopian dam project was part of a conspiracy against Egypt,  He said: “No one can debate that there are several conspiracies which face Egypt in this period as it attempts to cooperate with Nile Basin Countries.”  He then added, without specifically naming a country, that “new regional players” were involved, which led to chants by the crowd against Israel and the US.  Among Abd-al-Ghani’s calls for action was “monitoring the movement of Israel in Nile Basin countries”. 

A point that was missed out, however, was the increasing role that China is playing in the development of Nile Basin countries, particularly Sudan and Ethiopia.  A full discussion of China’s role in the development of upstream projects on the Nile was included in the May issue of Courcy’s Future Threats: Riparian states squeezing Egypt, with help from China.

The following day, on 11 June, Ethiopia’s Foreign Minister Tewodros Adhanom expressed his alarm to European Union officials about the tone of Egypt’s opposition to the Grand Ethiopian Renaissance Dam.

El Presidente Horacio Cartes enfatizó en su discurso inaugural el 15 de agosto que él no permitiría que el grupo guerrillero, el Ejército del Pueblo Paraguayo (EPP), “dicte la agenda” del gobierno. Una semana más tarde su primera acción significativa como jefe de estado fue una respuesta directa al EPP que había lanzado el guante invadiendo una estancia y matando a cinco guardias de seguridad [IL-13-33]. Cartes firmó un decreto que le otorga el poder para desplegar a las fuerzas armadas para hacer frente a las amenazas a la seguridad interna como el crea que sea necesario. El decreto pasó por el congreso sin dificultades a pesar de las protestas de la oposición de izquierda. Cartes también elevó a cerca de US$1m las recompensas por información que conduzca a la captura de miembros del EPP.

El decreto modifica la ley de defensa nacional y seguridad interna para otorgar poderes especiales al jefe de estado para que pueda desplegar a las fuerzas armadas “para confrontar cualquier agresión externa o interna que ponga en peligro la soberanía, independencia, y la integridad territorial del país”. En cuestión de 24 horas fue aprobado por la cámara de diputados y por el senado, siendo promulgada por Cartes entrando en vigencia. El senador Fernando Lugo debió haber pensado que su presidencia (2008-2012) hubiera terminado de una manera diferente si él pudiera comandar tal apoyo en el congreso.

Once senadores de la coalición Frente Guasú (FG) de Lugo y de otros partidos de izquierda, se opusieron a la reforma, alegando que era “un serio paso atrás para un gobierno democrático”, que podría ser usado para “legalizar la represión”, levantando el espectro de un retorno a los métodos empleados por la dictadura de Stroessner (1954-1989). Específicamente, ellos alegaron que la modificación de la ley provee considerable espacio al jefe de estado para abusar de los poderes especiales, y usar a los militares, por ejemplo, para reprimir a los disidentes internos.

La senadora Mirtha Gusinky, de la gobernante Asociación Nacional Republicana-Partido Colorado (ANR-PC), alegó apasionadamente que no había comparación posible con la dictadura que quedó firmemente en el pasado. “Ahora lo más urgente es eliminar al EPP”, ella dijo. El EPP obtuvo notoriedad por el secuestro y el brutal asesinato de Cecilia Cubas, la hija de la senadora Gusinky y del ex presidente Raúl Cubas Grau (1998-1999), en el 2005. El opositor Partido Liberal Radical Auténtico (PLRA) y la Unión Nacional de Ciudadanos Éticos (Unace) también votaron a favor del decreto en el congreso, que conserva un elemento de control sobre el poder ejecutivo mediante la introducción de una cláusula que otorga al congreso el poder de  poner fin a cualquier intervención militar declarada en seguridad interna.

Cartes también firmó otro decreto el 24 de agosto, que permite a las fuerzas armadas iniciar las operaciones contra el EPP en los departamentos de Concepción, San Pedro, y Amambay. Unos 400 soldados, incluidos 60 miembros de las fuerzas especiales, han sido desplegados. Sin embargo, durante una visita a Concepción, Cartes buscó, indirectamente, calmar los temores de que él abusaría de sus poderes especiales o que la incrementada militarización de la seguridad interna conduciría a la represión. Él insistió en que estaba “en guerra contra la ausencia del Estado”. Dijo que incumbía a su gobierno proveer “salud, desarrollo, y trabajo”, y, luego de reunirse con los alcaldes locales él se describió a sí mismo como “su herramienta”.

La inclusión de Amambay entre los departamentos donde los militares pueden operar se debe a la creciente sospecha de vínculos entre el EPP y los grupos de tráfico de drogas (ver abajo). Pedro Juan Caballero, la capital del departamento de Amambay, está ubicada justo en la frontera con la ciudad brasilera de Ponta Porá en el estado de Mato grosso do Sul. Y se ha convertido en el centro del trasbordo de drogas conducido por brasileros, el contrabando de armas de fuego brasileras exportadas (junto con otras armas) de vuelta a Brasil, y el lavado de dinero.

• Incautación de cocaína

La policía incautó de 1,8 toneladas de cocaína el 22 de agosto, en una operación en los departamentos de Concepción y Presidente Hayes. También fueron arrestados cinco sospechosos, se confiscaron “una gran cantidad” de armas, y se descubrieron pistas clandestinas de aterrizaje. Las autoridades están especulando que el EPP proveyó protección para el grupo de tráfico de drogas a cambio de armas. Poco después el ministro del interior, Francisco de Vargas, anunció una  purga en el comando de la policía en Concepción. De Vargas dijo que la policía debía ser irreprochable, y que había inquietante evidencia de complicidad con los traficantes de drogas.

The Colombian bishops’ conference (CEC) has underlined its determination to play a pivotal role in an eventual peace accord between the government and the Fuerzas Armadas Revolucionarias de Colombia (Farc) being negotiated in Cuba. The CEC elected Luis Augusto Castro, the archbishop of Tunja, the capital of the department of Boyacá, as its new president last week. The appointment is significant because Castro has considerable experience in negotiating with both the Farc and Colombia’s second guerrilla group, the Ejército de Liberación Nacional (ELN), to free kidnapped soldiers.

Castro warned against “cheap and false reconciliation”, and while he was supportive of the progress being made by the government and Farc negotiating teams in Havana he said “they are only handling concepts at the moment; now they have to use their hearts”.

Castro, 72, has previously served as bishop of San Vicente del Caguán, a Farc stronghold in the southern department of Caquetá. This was at the centre of a demilitarised zone, or ‘depeje’, declared between 1998 and 2002 during previous failed peace talks. Castro also held the position between 2005 and 2008, but his election now suggests that the CEC is readying itself for the denouement of the armed conflict.

The bishops’ conference is involved in the four peace forums for victims being organised in Colombia by the United Nations (UN) and the Universidad Nacional in July and August. One of these was concluded in Barrancabermeja, a city in the department of Santander hit hard by the conflict, on 11 July. The negotiating teams in Cuba recommenced talks on compensation for victims of the conflict, on 15 July.

• No deadline

“We have learned that setting deadlines is counter-productive,” President Santos said on 14 July in reference to an end date for talks with the Farc in Cuba. Santos was speaking at an investor conference on Colombia in Miami. Santos was accompanied, among others, by his finance minister, Mauricio Cárdenas, and the president of the national infrastructure agency, Luis Fernando Andrade. Cárdenas said economic policy during Santos’ second term, which begins on 7 August, would have a “social emphasis” and seek to include the poorest Colombians in economic development.

-Chile’s central bank (BCCH) puts 2014 GDP growth at 1.8%, the lowest rate since 2009.

Alienated in their different ways from both the European Union (EU) and the US over the past year Argentina and Russia have strengthened their relationship with a flurry of diplomatic agreements. Almost 100 bilateral accords have been signed between Buenos Aires and Moscow in the past year, in the areas of energy, defence, technology and agriculture. Similarly, President Cristina Fernández has initiated a frenzy of diplomatic activity with China, to the extent that the Chinese ambassador has expressed a hope that the two countries will develop a “healthier” bilateral relationship in future. However, there are questions as to how durable these deals may be, given all of her likely successors have indicated they want to improve relations with the EU and the US (see next page)

In Russia

On a two-day visit to Russia, Fernández met Russia business leaders in an attempt to persuade them to invest in Argentina, and she also held a breakfast meeting with President Vladimir Putin, after which the two signed agreements to boost trade relations via payment in their respective countries’ own currencies, in a symbolic attempt to shore up confidence in the rouble and the Argentine peso, both of which are under severe pressure at present. Arguably the most important result of the trip was an agreement between Argentina’s Nucleoeléctrica Argentina SA and Rosatom Overseas to build a sixth nuclear reactor in Argentina.

Russian sources state that Argentina currently uses Russian equipment to generate 20% of its energy, from turbines to entire hydroelectric plants. The new 1200MW nuclear reactor will be built at the Atucha nuclear power plant in Argentina’s Buenos Aires province, and supplied with enriched uranium from Russia. The deal follows an agreement in February this year with the China National Nuclear Corporation, which will build Argentina’s fourth and fifth nuclear power plants.

Argentina’s defence minister, Agustin Rossi, also held a meeting with his Russian counterpart, Sergei Shoigu, to discuss the purchase of three new MI-17E helicopters. According to Argentina’s State news agency, Telam, only the financing of the deal remains to be decided. Other cooperation, between the two countries’ navies, was also discussed during the one-and-a-half hour meeting.

Vaca Muerta

Among the Russian business leaders present for the meeting with the Argentine president were the heads of the Russian state energy company, Gazprom, and five of its subsidiaries, as well as representatives from Lukoil, Rosatom and Power Machines. All were interested in hearing about the possibility of working with the Argentine state oil firm, YPF, to exploit the massive oil and gas shale reserves in the Vaca Muerta deposit in the province of Neuquén. According to the anonymous sources quoted by the Argentine daily La Nación, the president’s message to these companies was “everything is negotiable”, with the deal between Chevron and YPF cited as an example.

Politics

Clearly, there was a strongly political element to the meeting. Fernández took time out from her official business to visit an exhibition dedicated to Eva Perón, as well as a museum celebrating the Soviet defeat of the Nazis. Both leaders declared themselves in agreement over the necessity of other nations to respect the “multilateralism” embodied by the United Nations. In effect, this boils down to Argentina’s gratitude for Russian support both over its Malvinas/Falkland Islands claim, and over its battle with the so-called “vulture funds”; and Putin’s appreciation of Fernández’s stance on Russia’s annexation of the Crimea. Both presidents, Fernández, said, “agreed on the need to declare the firmest condemnation of any kind of intervention by third parties in countries’ domestic affairs”.

• Argentine-Bolivian nuclear cooperation

In late March, Argentina’s planning minister, Julio Miguel de Vido, signed an agreement with the Bolivia hydrocarbons minister, Luis Alberto Sánchez, to expand cooperation to accelerate the development of Bolivia’s national nuclear energy programme. Argentina will help train Bolivian personnel at Argentina’s Balsiero Institute in Bariloche, and work with Bolivia on joint research projects related to nuclear technology.

Siguiendo a los recientes alegatos de corrupción que involucraron al principal partido de oposición de Guatemala, Libertad Democrática Renovada (Líder) [IL15-31], el partido está afrontando más problemas antes de las elecciones generales del 6 de septiembre. La semana pasada, el Tribunal Supremo electoral (TSE) castigó a Líder con una multa de Q$760.000 (US$94.000) y le prohibió que haga más campaña electoral por haber excedido el límite de gasto de campaña. El contendiente presidencial que se prepara para capitalizar esto parece ser Jimmy Morales del pequeño y conservador Frente de Convergencia Nacional (FCN), cuyo crecimiento en las encuestas pre-electorales al segundo lugar, detrás de Manuel Baldizón de Líder, ha sido un importante tema de conversación.

El TSE anunció el 7 de agosto que había multado a Líder después de haber excedido el límite de gastos de campaña de Q$52,4m (US$6,9m) por Q$1,79m (US$234.000). El TSE fue claro en que cualquier “actividad de campaña” debe ser suspendida, pero el vocero de Líder, Fridel de León, le dijo a los periodistas que el partido continuaría realizando actos políticos, pues el castigo –el cual el partido considera “injusto [y] arbitrario”– se aplica solamente a la actividad mediática, no a los actos políticos de campaña.

Por otra parte, el segundo sondeo preelectoral difundido el 10 de agosto por el importante diario nacional, Prensa Libre, halló que Baldizón estaba perdiendo terreno, recibiendo el 24,9% de las intenciones de votos. Cayendo del 30,1% en el sondeo de mayo, y bastante por debajo del 50% más un voto necesario para evitar una segunda ronda. En segundo lugar con  el 16,2%, se encuentra Morales, un actor y comediante de la TV, quien se ha posicionado como el candidato ‘anti-sistema político tradicional’ y quien no figuraba en los sondeos previos de Prensa Libre. Tercera, con el 14% (virtualmente sin cambios desde mayo) está la ex primera dama, Sandra Torres, de la Unidad Nacional de la Esperanza (UNE). Morales y Torres están dentro del margen de error de 2,8%.

El sondeo de Prensa Libre explícitamente atribuye la caída de Baldizón en las encuestas a los escándalos de corrupción que implican a varias figuras clave de su partido –no menos, su compañero de fórmula, Édgar Barquín, un ex presidente del banco central (2010-2014) cuyo futuro permanece dudoso luego que la corte suprema (CSJ) designara a un juez para que determine si se lo despoja de su inmunidad a fin de enfrentar una investigación por supuesta corrupción [IL-15-31]. Así como Barquín, cinco diputados nacionales de Líder están enfrentando la amenaza de acción legal por supuestos delitos incluyendo tráfico de influencia, enriquecimiento ilícito y abuso de autoridad.

Manifiestos

Con la negativa de Líder de acatar las sanciones del TSE sirviendo como el último recordatorio de la debilidad de la corte para hacer cumplir las reglas electorales, la semana pasada el Mirador Electoral, que reúne a nueve organizaciones de la sociedad civil incluyendo al think-tank local, el Instituto Centroamericano de Estudios Políticos (Incep), y la ONG Acción Ciudadana (AC), difundieron un informe que sirve para exponer aún más los límites del proceso electoral. Este estudio muestra que de los 14 partidos que presentaron candidatos presidenciales, solamente Líder, UNE, y el pequeño partido de izquierda, Encuentro por Guatemala (EG), y una coalición compuesta por Unidad Revolucionaria nacional Guatemalteca [URNG-MAIZ] y el Movimiento Político Winaq de la líder indígena  y ganadora del Premio Nobel de la Paz, Rigoberta Menchú, se han preocupado en presentar manifiestos estructurados.

El mismo estudio halló que aquellos manifiestos presentados por FCN, Compromiso Renovación y Orden (Creo)-Unionista, Movimiento Nueva República (MNR), y el Partido Republicano Institucional (PRI) carecen de sustancia, mientras que aquellos partidos que no han publicado ningún manifiesto, incluyen al Partido Patriota (PP) del Presidente Otto Pérez Molina; Unión del Cambio Nacional (UCN); Visión con Valores (Viva) y el Partido de Avanzada Nacional (PAN).

• Financiamiento de campaña

Un informe difundido el mes pasado por la Comisión Internacional Contra la Impunidad en Guatemala (Cicig)-apoyada por la ONU- sobre el financiamiento de campañas electorales, halló que de acuerdo con los datos sometidos por las autoridades electorales (TE) en las elecciones generales del 2011, más de Q$300m (US$39m) de financiamiento de campaña no fueron explicados. El informe también encontró que en las últimas elecciones el gobernante Partido Patriota (PP), excedió el límite legal de gastos de campaña por Q$101m (US$13m); Libertad Democrática Renovada (Líder) por Q$68m (US$9m); y la Unidad Nacional de la Esperanza (UNE) por Q$56m (US$7m). Cicig también cita a la organización local, Acción Ciudadana, que ubica estas cifras en Q$189m; Q$114m, y Q$84m, respectivamente.

The Bahamas Petroleum Company (BPC) began drilling an exploratory well on 20 December 2020 amid a swirl of conflicting emotions. There were some who saw the hope of a major oil discovery as a potential boon for an economy that has been amongst the world’s hardest-hit by the coronavirus (Covid-19) pandemic, and there were some who saw the prospect as a threat to The Bahamas very special environment and thus to tourism, its most important (and currently struggling) industry. For now, at least, the controversy has been resolved: on 8 February, BPC announced that the exploratory well had not found commercial quantities of oil and would be abandoned.

The Bahamas economy has taken a terrible battering in recent times. In its Article IV report of 22 January, the International Monetary Fund (IMF) noted: “The archipelago was just starting to recover from the severe damage caused by Hurricane Dorian in fall 2019, when the global outbreak of Covid-19 led to a sudden stop in tourism, the main source of its income and employment”.

According to the IMF, GDP will have contracted by 16.2% in 2020. It is hoping for a modest rebound of 2% growth in 2021, but the economy will not “converge back to its pre-pandemic level” until 2024.

Furthermore, on debt, the IMF says: “Public debt is expected to jump to almost 90% of GDP by 2021 and to remain more than 22 percentage points above its pre-pandemic level over the medium-term”.

One of the principal legacies of Hurricane Dorian is that it left the authorities with limited fiscal space to deal with the effects of the pandemic. And the pandemic itself has narrowed that space even further. In the second quarter of 2020, year-on-year revenues halved. Yet the collapse of tourism, accounting for 50% of GDP and 70% of employment, is having large-scale socioeconomic effects that must be addressed.

Faced with this impossible situation, the government turned to the IMF in June 2020, which duly made available around 40% of the additional financing needed for FY2019-2020, with the balance made up by other international financial institutions such as the Inter-American Development Bank and the Caribbean Development Bank.

As to the economic recovery, there is an interesting divergence between the IMF and the Bahamian authorities. The IMF sees risks as being “large and skewed to the downside”. It is concerned about the resurgence of the pandemic “necessitating further lockdowns” and possible delays in reaching widespread immunisation. As the IMF says, “In such a scenario, growth, the current account, and fiscal position would all deteriorate, with implications for debt sustainability”.

The Bahamian authorities, on the other hand, although they have a deeper contraction estimate for 2020 than the IMF (-19%), are expecting growth of 3% in 2021 and “they see risks as tilted to the upside”. They point to the tourism sector’s attractiveness given its close proximity to the US and the fact that the pick-up could be rapid with reopening.

• IMF policy advice

Following its Article VI Consultation, the IMF has summarised its policy advice as follows:

“The Bahamas would benefit from a comprehensive package of policies to limit the damage from the pandemic, set the stage for a resilient recovery, and achieve durable and inclusive medium-term growth:

• Fiscal Policy. In the near-term, focus on protecting lives and livelihoods, ensure rigorous appraisal and selection processes of the announced capital projects and enhance the efficiency of social spending; develop detailed contingency plans. Announce credible medium-term tax policy, revenue administration and spending measures to finance investment in infrastructure and education, strengthen resilience to climate change, and lower public debt.
• Monetary and Financial Sector Policies. Focus on reserve adequacy; gradually remove capital flow management measures once the economy is on a stronger footing. Closely monitor financial stability risks. Ensure effective implementation of crisis management reforms and strengthen central bank data collection and capacity. Continue enhancing the country’s regime to counter money laundering and terrorist financing and cybersecurity preparedness.
• Structural Reforms. Steadfastly implement reforms to enhance diversification and productivity, including streamlining administrative processes, modernising the insolvency regime, and reducing frictions in the job-matching process. END BOX

The oil disappointment

In what was a piece of potentially good news from an economic perspective (although seriously controversial from an environmental perspective), on 20 December 2020 BPC announced the start of drilling for an exploratory well 90 miles west of Andros. The company said that it was targeting oil resources of up to 1.44bn barrels. In optimistic mode, BPC Chief Executive Simon Potter raised hopes of a significant find by saying: “Our third seismic survey revealed structures that have the potential to contain a world-class barrel oil resource that, if present in the way we hope, could prove to be transformative, not just for our company, but for the nation and people of The Bahamas as a whole”.

It was not to be. On 8 February, the company admitted that “whilst the well encountered oil…commercial volumes of oil have not been proven at this well location”. The company added: “Drilling has now ceased, the well having reached a depth of approximately 3,900 metres without incident, and the well will now be permanently plugged and abandoned”.

The company added that over the coming weeks, BPC will undertake a detailed evaluation of all technical information gathered during drilling and “will review the appropriate way forward for future monetisation of its business in The Bahamas, in particular with a view to the renewal of a farm-in process”. In truth, however, it seems likely that the company will now focus on its efforts to find oil in Trinidad & Tobago and Suriname.

This news might not do much for economic optimism, but it will please the environmentalists, who have been scathing about the oil exploration. As ocean-protection activist, Alexandra Cousteau, put it: “It sounds so absurd because it is. The government of a country whose name is practically synonymous for paradise is giving the green light to an oil company to drill in its blue, pristine waters”. Simon Carey, executive director of the Bahamas National Trust (BNT) has added his voice to the opposition by pointing out that it is “duplicitous” for the country to – on the one hand – go to the United Nations with complaints about global warming and rising sea levels while – on the other – entering the fossil fuel market “as a contributor”.

In a move described as “historic” by Peru’s former housing, construction & sanitation minister, Solangel Fernández (2020-2021), on 14 July the government approved the national housing and urbanism policy, designed to tackle the Andean country’s longstanding shortage of adequate homes. The plan outlines a housing roadmap to 2030 that promotes the construction of neighbourhoods with greater access to public services and a more sustainable urban environment. In doing so, it takes “great steps forward in helping the most vulnerable families to access high quality, dignified accommodation”, according to an official press release, which stated that new homes will suit climactic, social and territorial conditions, and that those in informal housing will be offered technical support to meet planning regulations.

The interim government led by former president, Francisco Sagasti (2020-2021), hoped the housing plan would dovetail with the new sustainable urban development law, approved by congress on the same day, that “aims to regulate urban planning, territorial ordinance and the management of land and housing”, according to national deputy Daniel Olivares of the centrist Partido Morado. The double-pronged efforts to improve housing came as the number of homeless hit nearly half a million, according to the housing, construction & sanitation ministry (MVCS), while twice as many live in conditions MVCS describes as “inadequate”.

At the same time, the coronavirus (Covid-19) pandemic continues to drive up poverty and inequality and expose the vulnerability of those employed in Peru’s outsized informal economy. According to a March report by the International Monetary Fund, 27.5% of Peru’s population lived in poverty in 2020 – representing a year-on-year increase of 5.8 percentage points. The middle class shrunk by almost half in the same year to just 24% of the population, according to research published in early July by the Lima chamber of commerce’s institute for the economy and business development (Iedep).

Informality and vulnerability

Informality – in both housing and employment – has long been a defining characteristic of Peru’s economy. According to MVCS estimates, currently 90% of urban housing growth is informal, while 70% of homes are built without technical assistance. The foundations for informal urban sprawl in Peru were laid in the early 20^th century, decades before the highs of rural to urban migration seen in the 1950s and 1960s led to vast unplanned settlements. In El Otro Sendero, Hernando de Soto’s landmark 1986 study of Peru’s informal sector, the economist and defeated 2021 presidential candidate argues that businesses and landowners wilfully failed to comply with building regulations in the 1920s and essentially “urbanised traditional neighbourhoods” around Lima including Lince, San Isidro, Magdalena Vieja, and Jesús María.

De Soto quotes contemporary writer, Carlos Alberto Izaguirre, who in 1943 observed that the absence of contracts transferring ownership of housing stock enabled buyers to build as they saw fit, causing “thousands of houses, some not meeting the most elementary standards of hygiene, to spring up alongside swampland… filled with the detritus of older areas, and without water and sewage systems, sidewalks, or paved areas”. Noting the enduring lack of adequate infrastructure some forty years later, De Soto claimed: “we would think he was describing the beginnings of the informal settlements we know today”.

Until now, members of the lowest socioeconomic strata in the Lima Metropolitan Area have been unable to access housing programmes, Fernández said on 14 July. Outside of Lima, the desperate need for more resilient housing in the southern Puno, Ayacucho, and Madre de Dios regions became painfully clear in late July as heavy rainfall caused homes to collapse or render them uninhabitable. MVCS responded by pledging to work with local governments to deliver over 60 temporary housing units by the end of the year to approximately 300 of the worst-affected residents.

In a country battered by extreme weather and hit harder than most by the pandemic, the lack of suitable housing is but one of a number of interconnected social problems that poor Peruvians face. As well as poverty, unemployment rose 20% year-on-year in 2020, according to the World Bank. Poor Peruvians, however, experienced disproportionately more job losses, with some 75% from the lowest socioeconomic strata becoming unemployed during the pandemic, compared to 6% in the top two strata, according to a July study by local think-tank Asociación Escucha al Perú. The study also reported that 100% of Peruvians from socioeconomic groups D and E had resorted to spending at least part of their savings in the past 18 months, compared to just half of the richest two groups.

The pandemic has seemingly also increased the relative size of Peru’s informal economy. In the past year, some 11m Peruvians – 77% of the economically active population of 15m – worked in informal employment, according to the government’s national statistics institute (Inei). While the figure is down on 2019-2020 levels, it represents a notable increase on yearly averages since 2013, which hovered between 72%-73%. Nearly 8m informal workers operate in the Lima Metropolitan Area alone, representing a 4% rise based on 2013-2019 averages, Inei data showed. In rural areas, the informal employment rate is 96%, and is particularly concentrated in the agriculture, mining, and fishing sectors.

Castillo and private property

Aiming to restore investor confidence in his incoming leftist administration, Peru’s new president, President Pedro Castillo, took office on 28 July pledging to respect private property rights. “We want the economy to maintain order and predictability, which are the basis for investment”, Castillo who won election for the far-left Perú Libre party said at his inauguration ceremony. “People’s property that has been obtained through effort is guaranteed by law”. However, Castillo also claimed that Covid-19 had exposed problems with the country’s economic model: “Criticisms of the model were legitimate and valid… Do changes imply a risk to the gains made in recent decades? No. Is it possible to make these changes responsibly and respecting private property, but putting the nation’s interest first? Yes”.

On 19 July, prior to handing over her ministerial portfolio, Fernández said that the MVCS was leaving 744 projects for Castillo’s incoming team. Fernández highlighted the urban development plan and national housing policy as part of the ministry’s legacy in reactivating Peru’s economy. “On the subject of infrastructure development, when we assumed office in November 2020 there were a large number of projects paralysed across the country. When construction activity reopened, there were many difficulties in taking them on. Unlocking these projects became very important under our administration”, she said.

Fernández added that she had held meetings with Lima’s mayor, Jorge Muñoz Wells, on extending urban social housing programmes to the rest of the country and resolving issues relating to poor Peruvians’ limited access to social housing. She underscored the importance of cooperation with the capital’s municipal government. After an election that left deep scars along Peru’s longstanding rural and urban fault lines, local- and national-level cooperation on the new housing plans will be vital if they are to be successfully implemented.

The national rate of violent deaths – taking into account deaths registered as intentional murders, femicides, robberies resulting in death, and physical injuries resulting in death – has fallen every year since 2021 in Brazil. The federal ministry for justice and public security (MJSP) has updated its latest figures which showed that 2024 was another year in which this trend continued, although the decrease was not uniform throughout the country.

State-owned news agency Agência Brasil reported on 7 February that the MJSP has registered a total of 38,722 violent deaths for 2024, bringing the violent death rate to 18.21 deaths per 100,000 people. This marks a decrease from 40,768 deaths in 2023, when the rate was 19.26 per 100,000 people. The states with the highest violent death rates last year were the northeastern states of Pernambuco and Ceará, both on 35.44 deaths per 100,000 people. Out of Brazil’s five regions, the northeast has ranked as the deadliest region every year since 2020. While most states in Brazil posted an annual drop in violent deaths in 2024, four saw a yearly rise in the death rate. Of these four states, three were in the northeast – Ceará, Paraíba (24.15 per 100,000 people), and Maranhão (29.28 per 100,000).

In January this year, several Brazilian polling firms such as AtlasIntel, Genial/Quaest, and Datafolha, ranked ‘crime’ or ‘violence’ as the top concern expressed by survey respondents. These polls in January also showed that public approval for President Luiz Inácio Lula da Silva continued to drop, even in parts of the country where he has traditionally enjoyed strong support, such as northeastern states. In recent months, the Lula government has suggested that it will ramp up efforts to tame food inflation, which it hopes will help stem the decline in approval. Frustrations over the cost of living are undoubtedly a major contributor to falling approval ratings, but pollsters are still ranking crime and security as issues of greater public concern than economic issues. Aside from pushing for potential reforms to boost coordination between federal and state law enforcement, the Lula administration has not announced any significant security-related legislation that it intends to prioritise in 2025.

The MJSP’s public security secretary, Mário Sarrubbo, was cited by Agência Brasil in the 7 February report as expressing optimism that the annual crime rate will continue to drop in the coming years due to “advances in the use of technology, improvements in management, and investments in intelligence and resources”. Before joining the MJSP last year, Sarrubbo served as the São Paulo state attorney general and has years of experience overseeing cases involving organised crime groups, working with police detectives to investigate organisations such as the Primeiro Comando da Capital (PCC), one of the most powerful drug trafficking organisations (DTOs) in South America. São Paulo also ranks as Brazil’s least deadly state, registering a violent death rate of 6.39 per 100,000 inhabitants in 2024, the state’s second consecutive annual decrease.

However, the relative safety of São Paulo compared to states in the northeast might be due to multiple causes beyond the state’s police intelligence capabilities. Many criminologists and researchers in Brazil have attributed high rates of poverty and unemployment to high rates of violence, which is less of a concern for São Paulo given that it is Brazil’s wealthiest state and consistently registers rates of poverty and unemployment below the national average. Others have highlighted that rates of violence tend to escalate when rival DTOs vie for control over trafficking routes and commercial ports to export cocaine, such as the major ports in the northeast; an issue which is less applicable to São Paulo, since the PCC is not known to have any rivals strong enough to challenge its hold over the drug trade in the state.

Violence against women

According to the latest government figures on violent deaths, Brazil registered a total of 1,438 femicides in 2024, down from 1,449 in 2023. This marks the second consecutive year that Brazil registered an annual drop in femicides, following four consecutive years of increases from 2019-2022. However, it is uncertain whether this is related to the overall drop in violent deaths, as the regions which posted the highest femicide rates last year were the south (0.73 deaths per 100,000 people) and the centre-west (0.94 per 100,000), whereas the regions that registered the highest overall rates of violent deaths last year, the north and northeast, posted femicide rates of 0.58 and 0.72 deaths per 100,000 respectively.

Primero Justicia (PJ), a member of Venezuela’s principal opposition coalition, has expelled two-time presidential candidate Henrique Capriles Radonski for agreeing to take part in the impending regional and congressional elections due to be held on 25 May, thereby flouting its call for a boycott.

In a statement on 14 April, PJ said it had expelled Capriles and five others for “betraying unity” by agreeing to take part in the elections, ignoring the party’s official position, which is not to take part, as requested by the main anti-government coalition, Plataforma Unitaria Democrática (PUD). The PUD is protesting over what it says was the blatant rigging of last year’s presidential elections which saw President Nicolás Maduro returned to power for a third term.

In a statement, PJ said that by their actions Capriles and his associates had distanced themselves from the pro-democracy path established by the rightful “President-elect” Edmundo González Urrutia and PUD leader María Corina Machado. The PJ said that Capriles had also broken ranks by negotiating with the government-controlled national electoral commission (CNE) to lift earlier individual sanctions preventing them from taking part in the polls.

It quickly became clear that Capriles and his associates had jumped ship from the PJ to an alternative party, Un Nuevo Tiempo (UNT) where they now lead the party list of candidates for election to the national assembly. Capriles, who is a founding member of the PJ and ran for the presidency in 2012 and 2013, accused his former party of failing to lead a necessary debate on the pros and cons of electoral participation. Capriles said he “respected” those who are calling for abstention, but wanted those like him “who are firmly convinced we must fight for every vote whenever it is possible” to be treated with a similar degree of consideration.

The deadline for registration was 12 April. At stake in the May polls are the selection of 285 congressional deputies, 24 state governors, and 260 regional deputies. The ruling Partido Socialista Unido de Venezuela (PSUV) and its allies are fielding most candidates. The PUD is calling for abstention. A handful of smaller opposition parties have registered. Opposition divisions are expected to work to the government’s advantage, but voter turnout will most likely still be extremely low.

IMF: On 21 October the International Monetary Fund (IMF) completed the seventh and final review of Nicaragua’s economic performance under its Extended Credit Facility (ECF) arrangement and the financing assurances review. This allows for the final disbursement to Nicaragua of about US$8.7m. Total disbursements so far had been about US$114.1m. The IMF approved a three-year ECF (formerly known as the Poverty Reduction and Growth Facility) of about US$111m in October 2007, which was increased by about US$10m in September 2008 to enable Nicaragua to cope with the natural disasters of 2007. In November 2010, the IMF approved an extension of the arrangement until 4 December 2011.

Venezuelan cooperation: Nicaragua's central bank (BCN) released a report on foreign cooperation showing that aid from Venezuela – which is omitted from the State budget - reached US$344.6m in the first half of 2011. Of this, US$6.7m was in bilateral cooperation, US$45m in foreign direct investment (FDI) through the mega-refinery, "El Supremo Sueño de Bolívar” while the bulk of it (US$292.9m) was petrol aid, through Albanisa (the bi-national state oil company set up in 2007, 51% of which is owned by Venezuela's Petróleos de Venezuela (Pdvsa) and the remainder by Nicaragua's Petronic). Total aid from Venezuela in 2010 was US$533m, according to the BCN, up from the US$511m reported in April last [RC-11-04]. Overall, the report showed that foreign cooperation totalled US$585m in the first half of 2011, 9.6% less than in the same period in 2010. Of this, US$383.3m went to the private sector, US$93.3m less than the same period the previous year. The amount assigned to the public sector grew by US$31.3m to US$201.7m over the same period.

With several hundred troops deployed in the departments of San Pedro, Concepción and Amambay, the guerrillas of the Ejército del Pueblo Paraguayo (EPP) have continued to strike with ambushes that have targeted the police rather than the military. The government believes that the EPP has established connections with drug traffickers in the country’s main cannabis growing areas.

On 1 October near Tacuatí, San Pedro, the driver in the lead car of a police caravan was shot dead by a sniper, while another attacker fired on the caravan. The car overturned causing injuries to four passengers, all police officers. It also hit another of the cars, causing minor injuries to police human rights director Hugo Samaniego and two of his escorts. The latter were able to recover and return fire, but by then the attackers appeared to have withdrawn. The caravan had been returning to Asunción after Samaniego and two other officers had conducted a training session on human rights observance with troops and police stationed in the Tacuatí area.

On 24 October three police patrol cars responding to an emergency call were ambushed on a rural road near Horqueta, Concepción. Two of the cars were damaged by remotely detonated explosives. In a subsequent exchange of gunfire the police commissar of Horqueta, Manuel Enrique Escurra Acosta, and two police subalterns were injured.

The two incidents plus another that took place on 17 August in the Tacuatí area [SSR-13-08] raised the number of government casualties caused by EPP attacks to seven killed and nine injured. In another incident on 20 September in Concepción EPP fighters exchanged gunfire with a unit of the Fope (police special operations force) but there were no casualties. The police did not pursue the attackers for fear that they might be lured into an ambush.

‘Narco link’

In early October, Interior Minister Francisco de Vargas said that evidence was mounting of links between the EPP and the drugs trade. The first indications came in August, when the antidrugs agency, Senad, discovered an EPP camp next to an airstrip in Concepción used by traffickers to ferry in cocaine from Bolivia. On several nearby farms close to the village of Puentesiño Senad found a total of 1.8 tonnes of cocaine flown in from the neighbouring country. Public prosecutor Alejo Vera said the authorities had started to suspect that the EPP was offering protection to the traffickers.

Minister de Vargas said that another sign was that the EPP’s activities appeared to be converging on areas where cannabis is grown from which the authorities had deduced that the guerrilla group had found a new source of funding in the drugs trade. He connected this with the fact that the EPP had received advice and training from the Colombian Fuerzas Armadas Revolucionarias de Colombia (Farc) guerrillas, whose own connection with the drugs trade is well known. This, he said, strengthened the conclusion that the EPP had established ties to the narcos.

One thing that worries the authorities is the actual strength of the EPP. Several figures below the 100 mark have been bandied about. Horacio Galeano Perrone, a political scientist often consulted by the media as an EPP expert, has said that if the non-combatant supporters and those involved in logistics are taken into consideration, the total could be close to 500. The government has released details of eight recently identified persons suspected of belonging to the EPP, offering rewards of up to US$226,000 for information leading to their capture.

Development: On 18 November the spokesperson for Marcha Patriótica, a leftist Colombian political movement, Roberto Cortés, was shot dead by unknown gunmen in Campoalegre, Huila department.

Significance: Cortés’s murder points to the continued violence against left-wing political and community leaders in Colombia. As part of ongoing peace talks in Havana, Cuba, between the government of President Juan Manuel Santos and the Fuerzas Armadas Revolucionarias de Colombia (Farc) leftist guerrillas, the two sides recently reached a deal on the Farc’s future political participation, which includes the drafting of a ‘political opposition statute’. This will outline a set of rights and guarantees to ensure the political participation of long-ostracised groups in the country. But until the government is able to ensure the safety of all political actors it will be difficult to convince the Farc to give up its weapons - the ultimate goal of the peace process

Key points:

• Marcha Patriótica is a political movement founded last year by civil society groups and political leaders sympathetic to the Farc, including the former senator Piedad Córdoba (1994-2010). Since the start of the peace process in November 2012, Marcha Patriótica has held various public demos in the country in support of some of the Farc’s demands in Havana, such as the creation of new peasant farmer reserve zones.

• The head of the San Isidro community association, Cortés was also a locally known peasant farmer leader. According to local press reports, early on 18 November his car was stopped by unidentified men who shot him five times. He was rushed to hospital by his son, who witnessed the attack, but was pronounced dead hours later. Marcha Patriótica issued a statement confirming Cortés’s death and denouncing the fact that he was the 25^th member of the movement to be murdered this year alone.

• The targeted violence against Marcha Patriótica is reminiscent of that directed at Unión Patriótica (UP), the Farc-aligned political party that emerged in the 1980s, during the failed peace talks between the Farc and the Belisario Bentacur administration (1982-1986). Most of its members (reportedly some 4,000) were systematically murdered by paramilitary groups. Many Marcha Patriótica members are former UP affiliates.

• The UP, which was re-launched this year after regaining party status in July, held a party conference this past weekend (16-17 November) and announced that it would field its  own presidential (Aída Abella) and congressional candidates for next year’s legislative and presidential elections (in March and May respectively). Ensuring the safety of UP candidates may become a key issue for the Santos government in coming months.

Diosdado Cabello, el presidente de la Asamblea Nacional de Venezuela y número dos del gobernante Partido Socialista Unido de Venezuela (PSUV), declaró el 29 de junio a los ganadores de las primarias internas del PSUV de un día antes, para las elecciones legislativas del 6 de diciembre. Cabello, quien como primer vicepresidente del PSUV efectivamente conduce el partido (el Presidente Nicolás Maduro es el presidente del partido), dijo que las primarias del PSUV fueron “una lección de dignidad” frente a “el desprecio y los sostenidos ataques de la Derecha” y anunció una gran victoria en diciembre. Cabello contrastó la naturaleza democrática de la contienda del PSUV con el internamente conflictivo proceso conducido por la principal coalición opositora, la Mesa de la Unidad Democrática (MUD).

Las primarias del PSUV siguieron a un mes de campaña de unos 1.162 precandidatos elegidos en abril por 13.600 asambleas de base a través del país. Estas asambleas, conocidas como Comités de Lucha Popular y las Unidades de Batalla Bolívar-Chávez (Ubch), son supervisadas de cerca por Cabello. Él puso la participación en 3,16m, de unos estimados 7m de miembros del PSUV, y alardeó que esto era más de cinco veces el número de personas que participaron en  las primarias nacionales abiertas celebradas por la MUD el 17 de mayo, donde la participación fue de sólo poco más de 0,6m (de un electorado nacional de 19m). Algunas figuras de la oposición cuestionaron las afirmaciones de Cabello sobre la participación, con la ex diputada, María Corina Machado, tuiteando fotos de centros de votación que lucían escasos de votantes.

Sin embargo, en contraste con la MUD, que celebró un proceso abierto en sólo 33 de los 87 distritos del país (escogiendo al resto por consenso interno), el PSUV celebró las primarias en todos los 87 distritos para elegir al 100% de sus candidatos legislativos; aunque el liderazgo típicamente ‘finalizó’, en un modo no del todo transparente la lista de los precandidatos que fueron elegidos por las Ubch (lo que ha llevado al disenso de las bases en el pasado). El PSUV ahora deberá negociar con sus 13 o más partidos aliados en el Gran Polo Patriótico Simón Bolívar (GPPSB), la oficialmente gobernante coalición electoral de Izquierda, organizada en el 2011 por el fallecido ex presidente, Hugo Chávez (1999-2013), en apoyo de su intento de reelección en el 2012, para completar las listas. Este año, 168 bancas están en juego para la Asamblea Nacional, subiendo de las actuales 165.

El CNE irrita a la MUD con cuotas de género

La Mesa de la Unidad Democrática (MUD) ha entrado en conflicto con las nuevas regulaciones electorales sobre la paridad de género publicadas por el Consejo Nacional Electoral (CNE) el 25 de junio, las cuales estipulan que mujeres deben conformar el 50% de las listas de candidatos. La MUD ha sugerido que el CNE, habiendo ya manipulado los distritos electorales, está de nuevo moviendo los postes del arco a favor del PSUV, en momentos en que las encuestas sugieren una fuerte preferencia de los votantes por la oposición. El momento de la decisión es sin duda incómodo para la MUD, que sólo recientemente ha logrado completar el complicado proceso de finalizar sus listas de candidatos entre los 29 partidos que la conforman. La díscola coalición aún debe decidir si presenta candidatos en fórmulas individuales de partidos o si tendrá una boleta única de ‘unidad’, como es propuesto por la dirección moderada de la MUD.

Sin embargo, el hecho es que el CNE había advertido acerca de esto en varias ocasiones (en abril y, de nuevo, en mayo), y es el caso que el CNE ha avanzado para implementar las cuotas de género obligatorias en previas elecciones cuando se volvió evidente que los partidos no se adherían a sus directrices recomendadas de que al menos el 40% de los candidatos a las elecciones sean mujeres. De los candidatos en las primarias del Partido Socialista Unido de Venezuela (PSUV), el 50% son menores de 30 años de edad, mientras que el 60% son mujeres, en línea con las recomendaciones del CNE. En el día, sólo el 30% de los candidatos elegidos por el PSUV fueron mujeres, no obstante, esto aún está adelante por lejos de la lista de la MUD. En la lista final de la MUD, sólo el 11% de los candidatos finales son mujeres. Ahora hay sugerencias de que la MUD tendrá que romper sus listas y comenzar de nuevo.

• González promete volver

El ex presidente de España, Felipe González (1982-1996), dice que él tiene el propósito de volver a Venezuela antes de las elecciones de diciembre. “A menos que la Convención de Viena me declare persona non grata, yo tengo el derecho de circular libremente”, afirmó. González quien recortó una planeada visita de una semana a comienzos de junio, después de que las autoridades le negaron el permiso para visitar a políticos de la oposición encarcelados, o de asistir a las sesiones de sus juicios en su condición de consejero legal, y pidió al gobierno de Maduro que permita la “libertad de representación” en las elecciones (para que así los políticos encarcelados y los exiliados puedan competir) y la presencia de observadores internacionales. Hasta la fecha, el CNE ha acreditado solamente a una ‘misión de acompañamiento’ electoral de la Unión de Naciones Suramericanas (Unasur), que la oposición venezolana sugiere que no son observadores neutrales.

Eduardo Cunha, el presidente de la cámara baja del congreso federal de Brasil, del Partido do Movimento Democrático Brasileiro (PMDB), se encuentra crecientemente aislado en su intento por evitar la pérdida de sus derechos políticos. Políticos de una amplia gama de partidos han ocupado el piso del congreso para exigir su remoción. En la actualidad, Cunha tiene suficientes aliados y el ingenio suficiente como para retrasar la tarea del comité de ética de la cámara baja que investiga su caso. Sin embargo, el uso de estas tácticas dilatorias está provocando la ira de muchos colegas y, como efecto contrario, tal vez hagan más probable su destitución.

El 19 de noviembre el relator del comité en el caso de Cunha, Fausto Pinato, del Partido Republicano Brasileiro (PRB), debía presentar sus hallazgos ante el comité de ética. Sin embargo, Cunha logró bloquear esta iniciativa convocando una sesión plenaria de la cámara baja ese mismo día para las 9:00 a.m. De acuerdo con las normas de la cámara, ningún comité tiene permitido reunirse en conflicto con una sesión plenaria. Esto provocó una abierta rebelión  contra Cunha en el piso de la cámara, con gritos de “vergüenza” y “Fuera, Cunha” resonando en el congreso.

Luego, el 24 de noviembre, Pinato logró presentar su informe, pidiendo más investigaciones sobre Cunha. Sin embargo, los aliados de Cunha en el comité de ética pidieron más tiempo para analizar la decisión. El comité ahora se reunirá de nuevo el 1 de diciembre. Dado que el comité tiene 90 días para deliberar, no es probable que haya ninguna decisión final sobre Cunha hasta el 2016.

Teniendo en cuenta que el principal opositor Partido da Social Democracia Brasileira (PSDB) se ha vuelto crecientemente crítico y directo en su deseo de ver a Cunha removido de su cargo, junto con otros partidos más pequeños de Izquierda; y el gobernante Partido dos Trabalhadores (PT) está atrapado en un embrollo. Por un lado, en medio del escándalo en la compañía petrolera estatal, Petrobrás, el PT quiere mostrarse duro sobre la corrupción; por el otro lado, no quiere hacer nada que podría provocar a Cunha a iniciar los procedimientos del juicio político contra la Presidenta Dilma Rousseff.

Al parecer el comité está dividido en partes iguales, entre 10 diputados pro-Cunha, y 10 diputados anti-Cunha. Si ese es el caso, el empate puede ser resuelto por el presidente del comité, José Carlos Araújo. Mientras tanto, los aliados de Cunha ahora están tratando de remover a Pinato como relator del comité debido a que él mismo tiene un caso en su contra en la corte suprema.

Residuos mineros alcanzan el Atlántico

Durante el fin de semana del 21-22 de noviembre, la marea de fango y residuos mineros de la colapsada represa Fundão, cercana a Mariana, en el estado de Minas Gerais, llegaron al Océano Atlántico, después de fluir unos 600kms hacia abajo en el Río Doce. A lo largo del río, la vida de peces, plantas y animales ha sido devastada: la alta turbidez de las aguas ha reducido drásticamente el nivel de oxígeno presente en el río. Un corredor de lodo se ha desplazado unos 9kms a lo largo de la costa del estado de Espírito Santo, poniendo en peligro la reserva natural de Comboios.

Samarco, la joint venture entre el gigante minero Anglo-Australiano, BHP Billiton, y Vale, la firma minera brasilera, hasta ahora insiste en que los niveles de partículas de metal pesado presentes en los sedimentos no son peligrosos. Sin embargo, las pruebas aún están en marcha, con muchos biólogos alegando que el nivel de toxicidad en el agua no será evidente por cierto tiempo más.

La agencia nacional del agua (ANA) inicialmente había prohibido a las ciudades a lo largo del Río Doce que usen el agua para el consumo humano. Esa prohibición ahora fue levantada para la ciudad más grande, Gobernador Valadares (Minas Gerais), pero alrededor de 150.000 residentes en otras partes a lo largo del río aún están sin provisión regular de agua.

• Superávit comercial

En octubre, Brasil informó de un superávit comercial de US$1,99mm y un superávit acumulado de US$12,24mm en el 2015. Las exportaciones sumaron US$16,05mm (cayendo un 4,1% año en año) y las importaciones US$14,05 (cayendo un 21,1% año en año). Por primera vez en dos años, las exportaciones de Brasil a Argentina se incrementaron, principalmente, debido al incremento de las exportaciones de automóviles.

On 5 July Argentina’s national gendarmerie reported that its agents had seized two tonnes (t) of cocaine in the northern province of Santiago de Estero. The seizure was billed as the biggest ever cocaine interdiction in the province.

The narcotic was seized after gendarmes obtained intelligence that a plane carrying illegal drugs was scheduled to land in the locality of Pirpintos, 400km north-east of the provincial capital. As anticipated, a light aircraft was spotted in the area dropping packages containing drugs. Two individuals, who were tasked with picking up the cocaine consignment on the ground, were arrested by the gendarmes. Meanwhile, a helicopter gave chase to the aircraft that had dropped the drugs. But the helicopter could not keep up with the plane and lost sight of it. The Santiago del Estero authorities said that they believed that the plane had made an emergency landing in the Monte Quemado area and that the entire crew had fled.

Nonetheless, the authorities, including the federal security minister, Patricia Bullrich, hailed the seizure. Bullrich said that it represented a major blow to drug traffickers that regularly use light aircraft to fly in cocaine from Bolivia and marijuana from Paraguay, and drop their consignments into Argentine territory.

The Santiago del Estero seizure came on the same day that the United Nations Office on Drugs and Crime (Unodc) presented a new report showing that 90% of all the cocaine seized in the world in 2015 was seized in South America. The World Drug Report 2017, synthesised from cocaine production and seizure data provided by governments, calculates that 1,125t of cocaine were produced in the world in 2015; and that thanks to the “very high” quantities of the narcotic seized in South America, a record 76.8% of all the estimated cocaine produced in the world was confiscated in 2015. The Unodc notes that the estimated percentage of seizures is very high, as the percentage of seizures had historically hovered at around 15%. However, the Unodc report points out that the high percentage of cocaine seizures may answer to the underreporting of estimated cocaine production by the authorities in cocaine producing countries, the most significant of which are all in South America.

• A new record

The latest two-tonne cocaine seizure is the largest ever made in Santiago del Estero, surpassing the previous record of the discovery of one tonne of cocaine inside an abandoned aeroplane near the city of Frías.

Best-known for its starring role in the corruption saga ‘Operation Car Wash,’ the name of Petrobras is never far from the headlines. But over the past two years, the semi-public oil company has made an impressive comeback, showing it is not beyond salvation.

Petrobras posted its best financial results in the first quarter of this year since 2013, just before ‘Operation Car Wash’ began. Between January and March, Petrobras made R$6.96bn (US$1.9bn) in profit, up 56.5% from the same time last year.

External factors like the rise in global oil prices have given Petrobras a boost. But better internal management also played a part. Since 2016, Petrobras has also undergone major restructuring to sell off non-core assets under current CEO Pedro Parente. Other cost-cutting measures to adjust fuel prices in line with inflation, and make more discerning investment decisions, have also helped the company return to profit.

In an interview with local media, Parente said he was “cautiously optimistic” about the company’s financial situation. Appointed in 2016 following the impeachment of former president Dilma Rousseff (2011-2016), he is credited with driving Petrobras’ turnaround (see sidebar) and enforcing a new compliance programme, along with more belt-tightening measures.

• The Pedro Parente effect

The turnaround in Petrobras’ fortunes has been dubbed the ‘Pedro Parente effect’ after the current CEO. Having already helped to turn around agribusiness Bunge in the past, his next project in addition to Petrobras will be helping meatpacking company BRF to recover from its financial troubles following the 2017 tainted meat corruption scandal.

Although recovery is in sight, Petrobras is not yet out of the woods, Parente stressed. It is still the most indebted oil company in the world and had around US$30bn to repay due in 2017 and 2018. Its divestment target is to pay off US$21bn of this by the end of this year.

Petrobras’ story is closely intertwined with that of local government, especially during the 12 years of leftist Partido dos Trabalhadores (PT) rule under former presidents Lula da Silva (2003-2011) and Rousseff. In the boom years, Petrobras was held up as the government’s “golden ticket” to raise money for social reforms following the discovery of huge pre-salt reserves in 2007. But during leaner times, including the two-year recession (2015-2016), Petrobras came to epitomise corruption and waste after ‘Operation Car Wash’ exposed the company had been used as a cash cow for dirty political campaigning.

The Petrobras corruption story is already well known. But the latest financial results show that some green shoots have emerged. Petrobras sunk an estimated US$5bn through a kick-back scheme implicating hundreds of politicians, whereas investment in the pre-salt reserves which Lula and Rousseff fought so hard for is worth a projected US$100bn between 2014 and 2018. All this is a cause for optimism.

What next?

What to do about Petrobras is a key electoral issue. Centre-right candidates such as Geraldo Alckmin from the Partido da Social Democracia Brasileira (PSDB) are pushing for full privatisation to avoid any more political upsets in future. Whereas leftist opponents such as Ciro Gomes from the Partido Democrático Trabalhista (PDT) and Marina Silva from Rede Sustentabilidade (Rede) are vehemently against it, saying Petrobras’ profits belong to the people.

A big question mark is what stance ultra-right candidate Jair Bolsonaro would take. Bolsonaro’s economic advisor Paulo Guedes is broadly pro-privatisation. But Bolsonaro’s tendency towards protectionism suggests he might not follow that advice and may be tempted to keep it public. Even with the corruption scandal, Petrobras is still seen by many as a matter of national pride and seven out of 10 Brazilians want to keep it public, according to a survey by pollster Datafolha.

Environmental organisations have long warned that Central America’s growing reliance on imported fossil fuels comes at the price of rising greenhouse gas emissions, worsening air and water pollution, and significant health and societal costs. Greater investment in renewable energy sources would reduce this growing dependence on fossil fuels, boost national and regional energy security, and reduce the impact of climate change, which scientists predict will have a particularly strong impact on Central American and Caribbean states, argues the Worldwatch Institute, a Washington-based environmental research organisation. However, access to funding in a region hampered by chronic fiscal problems continues to obstruct the development of such projects.

Central America continues to be dangerously dependent on imported fossil fuels. According to a 2013 Worldwatch Institute report titled ‘The way forward for renewable energy in Central America’ (the only regional report on renewable energy published to date), in 2010, the region’s petroleum imports totalled US$13.3bn, just under 8% of the region’s GDP. Imported fossil fuels account for 45% of primary energy use and 70% of secondary energy use in Central America, says the Worldwatch Institute. As well as reducing dependency, replacing fossil fuels with renewables would boost national and regional energy security and help the region to cut down on greenhouse gas emissions.

“Central America is at a crossroads. As the economies of Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama expand, regional use of fossil fuels for transportation and electricity generation is on the rise, while the use of fuelwood, primarily for cooking, continues to be unsustainably high. These developments come at the price of rising greenhouse emissions, worsening air and water pollution, and significant health and societal costs,” warns the Worldwatch Institute. The good news, it says, is that Central America has the potential to meet 100% of its electricity needs with renewable energy “provided that the proper policies, incentives and political support are in place”.

Large hydropower, one of the least expensive sources of electricity when considered over its entire life cycle, has been Central America’s preferred source of renewable energy and represents 48.9% of the energy fed into the region’s energy grid. Central America has installed just below 5,000MW of hydropower, representing 42% of total installed electricity capacity. The region generates an estimated 20,000 gigawatt-hours of hydropower annually and has an estimated hydropower potential of 22,000MW, meaning that some 17,000MW remains to be exploited.

The key advantages of hydropower are that after relatively high upfront costs (primarily for dam and reservoir construction), hydropower has fewer recurring expenses, such as rising fuel costs, than fossil fuel-based energy and that it is a reliable source of baseload power that can be ramped up or down on demand, which means it can complement other energy sources. However, the large-scale damming of rivers can have significant social and environmental impacts including large-scale population displacement, loss of cultural landmarks, biodiversity loss through flooding of land ecosystems and disruption of aquatic ecosystems, as well as greenhouse gas emissions from land use change.

Guatemala currently has 30 hydropower plants, of which 19 are involved in conflicts with the surrounding communities, mostly in the departments of Alta Verapaz, Huehuetenango and Petén, according to Madreselva, a local environmental organisation. In Honduras, a conflict between the Lenca indigenous community and a hydropower plant run by Desarrollos Energeticos (DESA) resulted in the murder of prominent environmental activist Berta Cáceres, in March 2016.

The use of geothermal energy in Central America, the cleanest baseload source of renewable energy due to its extremely low greenhouse gas emissions, dates back to the 1970s and currently accounts for 7.5% of the energy fed into the region’s energy grid, according to the Worldwatch Institute. Costa Rica, El Salvador, Guatemala, and Nicaragua have geothermal power plants with a combined capacity of 558.6MW. In El Salvador, geothermal accounts for nearly a quarter of electricity generation, ranking the country second in the world (after Iceland) in geothermal’s share of overall electricity production, while Costa Rica and Nicaragua are sixth and eighth in the world, at 12.4% and 9%, respectively.

Wind, which only represents 1.7% of the region’s energy grid, has been used to produce power in Central America since the 1990s. Major projects in Costa Rica include: La Gloria (49.5MW of capacity), Plantas Eólicas Sociedad de Responsabilidad Limitada (PESRL) and Tilaran (23MW each), Eolico Valle Central and Valle Central (15.3MW each), Tejona (19.8MW), and Coopesantos (13MW). Nicaragua has three major projects: Amayo (63MW), San Martin (39.6MW), and Eolo (40MW). Honduras has the 102MW Cerro de Hula project and in May 2015 Guatemala inaugurated its first wind project: San Antonio El Sitio (48MW).

According to the Solar and Wind Energy Resource Assessment (SWERA), a United Nations Environment Program (UNEP) project, there’s room for growth since Central America has 12,969km² with good-to-excellent wind resource potential, representing 3.3% of the region’s total land area. However, the development of wind power in Central America has been hampered by challenges such as inadequate roads to carry large blades, towers and generators to remote locations where wind is abundant, the need to build costly transmission lines to bring the power to consumers, and the lack of zoning laws and clear land rights. And wind power projects in Mexico’s Isthmus of Tehuantepec have proven to be as great a source of social conflict as hydropower. Residents of Juchitán de Zaragoza, a mainly indigenous Zapotec city, who complain wind power farms have left them with rashes and coughs and depleted groundwater, have blocked plans to build one of Latin America’s biggest wind farms close to the city (see below).

In terms of solar power, the region’s two major projects are Costa Rica’s Parque Solar Miravalles (2012) and Nicaragua’s La Trinidad (February 2013). Biomass such as wood, charcoal, and agricultural residues, accounts for 38% of energy use in Central America. Traditional biomass, used for cooking in the home, represents 82% of the region’s primary energy consumption, compared with 37% in Latin America as a whole. Within Central America, Guatemala has the highest use of biomass, with nearly three-quarters of households relying on fuelwood for cooking. Ethanol dominates Central America’s biofuel industry – El Salvador and Guatemala are the two largest producers – due to the high amount of sugarcane produced in the region. The downside is biofuels have been blamed for rising food prices, increasing deforestation, and establishing monoculture – the planting of a single crop across many hectares. In Honduras, in particular, troops in the heavily militarised Bajo Aguán region have been accused of murdering, disappearing, and intimidating peasant farmers involved in land disputes with local palm oil magnates.

Despite Central America’s potential as a renewable energy producer, efforts to diversify energy sources continue to be hampered by financial constraints. “With renewable energy you have to pay a lot of money upfront but further down the line you don’t have to pay for fuel. This is a challenge for economies with fiscal problems such as the Central American economies, which lack the necessary capital to invest in this type of technology,” says José Lara, an academic at US Berkeley University’s Energy and Resources Group (see sidebar).

• Disruption

José Lara, an academic at US Berkeley University’s Energy and Resources Group, warns wind power projects can be just as disruptive to local communities as more controversial energy sources such as hydropower, if communities are not adequately consulted. “Hydropower is not more likely to cause problems with local communities, it’s perceived as being conflictive because it is the renewable energy source that has been most widely developed in the region. The problem is not the type of technology used but rather the imposition of large-scale projects on communities. Mexico is an example of wind power projects that have been badly managed in terms of the impact on the community and the environment,” says Lara.

Amidst Venezuela’s political and economic crisis there are two questions to be asked about oil production. First, on the way down, how sharply will it continue to fall over the next few months? Second: will it ever go up again, and what will be required for that to happen?

The chavista brand of socialism has not been kind to Venezuela’s oil industry, the country’s main source of foreign currency. Oil production peaked in 1997 at around 3.5m barrels per day (bpd), two years before Hugo Chávez (1999-2013) was elected. Since then it has been on a relentless downward curve. By last December crude production was estimated at 1.25m bpd, having fallen by two-thirds since the 1990s and by half in the preceding three years.

Multiple factors triggered this collapse. From 2002-2003, after an opposition-led oil strike and an attempted coup, almost half of the staff at the state-owned oil company Pdvsa was sacked. Since then the technical quality of management has been disastrously poor. From 2005-2007 the government renegotiated oil contracts with foreign companies imposing tougher terms and expropriating some oil fields. From 2008-2009 a number of oil service companies were also expropriated and transferred to Pdvsa, which proved to be a poor home for them since it was suffering from entrenched corruption and terrible management. In 2013 Chávez died and was replaced by Nicolás Maduro. The successive chavista governments frequently raided Pdvsa’s cash balances to fund general spending.

The US-based Centre for Strategic and International Studies (CSIS) has presented a dramatic visualisation of the fate of oil production and the wider Venezuelan economy (see below). This shows that since 2015 oil output and GDP have been in a kind of lockstep death plunge, both falling by more than half in absolute terms.

Oil production will fall further before it improves. On 23 January the US government announced a new set of sanctions. They ensure that any payments for Venezuelan oil exports to the US must be diverted into blocked accounts held for the benefit of the parallel opposition government of Juan Guaidó which is now recognised by Washington. It is estimated that Venezuelan oil exports to the US have been running at around 515,000bpd, worth approximately US$11.5bn a year. In addition, the new sanctions are preventing US companies from exporting around 120,000bpd worth of light diluents to Venezuela (these are normally mixed with Venezuelan heavy crude from the Orinoco Belt to make it exportable). Inevitably the sanctions will hit production further. Venezuela has begun to cut shipments to the US. It is seeking to source diluents from, and to direct cash-generating crude sales to, other markets (mainly India). The country exports to Asia (around 570,000bpd) and to Europe and the Caribbean (320,000bpd), but a significant portion of these exports does not generate cash as they are payment in kind for earlier financial loans. China could potentially increase its cash imports from Venezuela. But CSIS concludes, “Reduced cash flows as a result of sanctions will gradually have an impact…and will create difficulties for Pdvsa in paying workers, purchasing equipment and diluents, and carrying out maintenance on the few remaining operational upgraders and refineries. These dynamics majorly skew the production outlook further to the downside for the coming year.” Energy research company Rystad believes production could fall from 1.34m bpd at the end of 2018 to as low as 680,000bpd in 2020.

Looking further ahead, would a future post-crisis government be able to get the oil flowing again? Venezuela has the world’s largest proven hydrocarbon reserves, so in principle recovery must be possible. Iraq, which suffered an invasion in 2003 and years of conflict, managed to get its oil moving again. However, it will take time and a lot of money to change things in Venezuela. Guaidó says he intends to name Gustavo Baquero, a former international oil executive, as head of Pdvsa, and will seek to introduce a hydrocarbons law to allow majority private ownership of new projects, with competitive fiscal terms and an independent regulator conducting licensing rounds. Optimists have argued that under a future government with investment flowing back in, a post-crisis Venezuela might be able to raise production by 150,000bpd a year. At that rate it would take over a decade to get production back up to 3m bpd, near where it was in the 1990s.

Even that might err on the side of optimism, however. Pdvsa is in a disastrous state and is saddled with a reported US$34.6bn worth of debt. It will need a root and branch overhaul. Some of the mature fields operated by Pdvsa have been damaged by the way gas or water injection for secondary recovery was closed down. The entire logistics chain including pipelines, ports, and tankers is in disrepair. Starting new production from the Orinoco Belt will require the construction of expensive upgraders to blend the heavy oil it produces with imported light crude. One estimate by oil experts is that to rebuild the oil industry, investment of the order of US$20bn a year will be required for many years. Even that does not dispel some uncertainties. There are doubts over long-term demand for Venezuelan heavy crudes, with the US refinery network increasingly geared to handle lighter crudes. The global growth of renewable energy sources and the shift towards electric vehicles is not going to stop the world needing oil, but it may dampen long-term demand and prices in a way that is unhelpful to the eventual reconstruction of the Venezuelan economy.