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At the end of August last year, the Banco Central de la República Dominicana (BCRD – the central bank) chose to hike its key policy rate by 200 basis points to 6.25%, in response to currency volatility. It had previously reduced the rate by 75 basis points in late May 2013 in order to counter the general softness of economic activity.

As of mid-June 2014, the latest commentary and data indicate that neither the slippage in the Dominican peso nor the BCRD's response, have had a lasting and adverse impact. In the commentary following its latest monetary policy meeting in late May, when the rate was held constant at 6.25%, the BCRD noted that inflation remains under control. Year-on-year inflation in April was 3.49%, or at the lower end of the central bank's target band of 3.50%-5.50%.

In addition, the latest readings from the BCRD's Monthly Economic Activity Indictor suggest that domestic demand could grow faster than the central bank anticipates. As of the end of May, broader monetary aggregates had been rising at a year-on-year rate of 10% or so, while credit to the private sector was up by 13%. Public sector investment has been broadly in line with the government's budget, and at a time that tax collections have greater than anticipated. During the first three months of 2014, the Dominican Republic ran a current account surplus.

The International Monetary Fund (IMF) was similarly upbeat in mid-2014, following the conclusion of its regular Article IV consultation. 'The large increase in the fiscal deficit in 2012 was partially reversed in 2013. The deficit of the consolidated public sector declined by almost 3 percentage points of GDP, to 5%, owing the lower investment expenditure, the yield of the 2012 tax reform and the negotiation of new payment terms [with Canada's Barrick Gold].

The IMF noted that the public-debt to GDP ratio had risen from 35% in 2008 to nearly 48% as at the end of 2013. “The government's fiscal targets for 2014 envisage a further decline in the overall public sector deficit to 4.2% of GDP, but this may not be sufficient to place the public debt ratio on a downward trajectory”. The challenge of funding the deficit, at a time that the global economy is still growing fairly slowly, is seen as a major source of downside risk for the Dominican Republic over the medium term.

Chart 1 highlights a number of key aspects of the economy, as the IMF sees them. The gap between government revenue and expenses is the main imbalance in an economy that should achieve stable growth with low inflation, and unemployment that is, by many standards, quite low. Investment is expected to run at around 16% of GDP over the coming years. This is consistently in excess of overall savings: however, at 4%-5% of GDP over the next three years or so, the current account deficit is manageable. What the table does not show is that poverty and extreme poverty affected 41% and 11% of the population, respectively, in 2012. Job creation and boosting household incomes should be a priority for the government.

For its part, the IMF advocated the acceleration of structural reforms. These include “the authorities' plans to invest in electricity generation provided they do not undermine public finances”. The IMF also advocates flexibility in power tariffs (so that they can move in line with energy costs): this should encourage private investment into the Dominican Republic's energy sector.

Over recent weeks, a number of announcements from the government have been consistent with greater private sector participation in utilities and infrastructure. In early May 2014, for instance, water agency Inapa launched a tender for the installation of water metering systems, as part of a project being financed by the Inter-American Development Bank (IDB) and the Fondo Español de Cooperación para Agua y Saneamiento en América Latina y el Caribe (FECASALC). Inapa separately announced a tender for waterworks consultancy services at the end of May.

The latest (2013-14) World Economic Forum (WEF)’s Global Competiveness Report indicates that the move towards privatisation should deliver positive results. As chart 2 shows, businesses perceive corruption and inefficient government bureaucracy to be among the most problematic factors for doing business in the Dominican Republic. While the Dominican Republic is assessed by the WEF as being the 105th most competitive economy overall (out of 148), it ranks 124th in terms of its institutions. The country receives particularly low ratings for favouritism in government officials' decisions (145/148), reliability of police services (143/148), and wastefulness of government spending (138/148). Conversely, the Dominican Republic is the 71st ranked country in terms of overall business sophistication and 66th in terms of the protection of minority shareholders' interests.

Looking forward, we would agree with the broadly optimistic view of the IMF and the BCRD, especially as the Dominican Republic is an obvious beneficiary of the steady recovery of the US economy. It is possible that the US achieves real growth in 2014 that exceeds the 2.8% envisaged by the IMF: not all the risks to the Dominican Republic are on the downside. We would see further announcements by the government in relation to the liberalisation of utility tariffs and use of private sector solutions over the coming months as also being good news.

COSTA RICA | Poniendo al país en movimiento. El Presidente Luis Guillermo Solís, firmó una ley el 23 de febrero aprobando los fondos  para la expansión de la autopista nacional San José-San Ramón. El 5 de febrero, la legislatura había aprobado una cuenta fiduciaria para proveer los fondos necesarios (US$473m) para el esquema de la autopista, un proyecto clave bajo el plan de desarrollo del nuevo gobierno. Otros proyectos de infraestructura también están siendo preparados. Esto debería estimular la posición del gobierno de centro-izquierda del Partido Acción Ciudadana (PAC), en momentos cuando el sector privado plantea preocupaciones acerca de la pérdida de empleos, continuados por los altos costos de la electricidad y el arraigado déficit fiscal, que fue de 5,6% del PIB en el 2014.

El proyecto San José-San Ramón se espera que lleve cuatro años. Un contrato de US$524m para las obras había sido otorgado a OAS de Brasil, pero en el 2013 fue cancelado sobre irregularidades alegadas por el gobierno liderado por Laura Chinchilla (2010-2014). En marzo del 2014, OAS acordó US$35m en compensación.

La legislatura también aprobó un préstamo de US$395m de China Harbour Engineering Company (CEHC)  para financiar la expansión de US$465m de la Ruta 32 de Costa Rica, la principal autopista que conecta San José y la provincia del Caribe de Limón, con los restantes US$70m deberán ser financiados por el gobierno.

Finalmente, un contrato de US$1mm para una nueva terminal en el complejo del Puerto Limón/Moín otorgado en el 2011 a la firma holandesa, APM Terminals, también sigue adelante después de aclarar todos los obstáculos legales. El 18 de febrero, el consejo nacional para las concesiones (CNC) confirmó que la compañía tenía todos los permisos necesarios para iniciar las obras.

EL SALVADOR | Vuelven las remesas. Los 2,5m de salvadoreños estimados que viven en EU, tanto legal como ilegalmente, enviaron al país más de US$4mm en remesas, por primera vez en el 2014. La tendencia creciente continuó en enero del 2015, con flujos de hasta 2,7% más año en año, de acuerdo con el banco central de El Salvador, que señaló que el desempleo entre los latinos en EU cayó a 6,5% a fines del 2014, cayendo de 8,3% a finales del 2013.

Los flujos de remesas son una fuente clave de liquidez para el dolarizado El Salvador.

• Remesas regionales

El rebote en las remesas es regional. El año pasado las remesas a Guatemala subieron 8,6%, mientras que los flujos a Honduras crecieron en 11%. Mientras tanto, las transferencias a México, que tiene el mayor número de migrantes trabajando en EU, subieron en 7,8%.

Four recent opinion polls in Argentina have shown how difficult it currently is to predict whether the presidential election on 25 October will go to a second round. Three predict a run-off between Daniel Scioli, the candidate from the ruling Frente para la Victoria (FPV) faction of the Partido Justicialista (PJ, Peronists), and Mauricio Macri, the candidate from the centre-right opposition Propuesta Republicana (PRO); while one forecasts outright victory for Scioli in the first round. A few fractions of a percentage point either way could make the difference, meaning that there is now renewed scrutiny over the electoral process, particularly following the recount of the vote in the province of Tucumán.

Rounded out, the polls show Scioli on 40% of voter intentions, Macri on 30% and Sergio Massa, of the dissident Peronist Frente Renovador (FR), on 20%. To win in the first round, a candidate needs 45% of the vote or 40% with a 10-percentage point advantage over his nearest rival. Scioli is on the cusp of breaching the 40% threshold with a 10-point advantage over Macri. Should he fail to do so, the second round could present a much sterner challenge, as many – though by no means all – of the votes of Massa and the nano-candidates are likely to transfer to the opposition candidate.

Tucumán

On 8 September the provincial administrative court in Tucumán ordered the results of the gubernatorial election to be withheld, pending a ruling on whether to nullify the 23 August election. Juan Manzur, the FPV candidate, had claimed victory by 14 points over José Cano, from the opposition Alianza para el Bicentenario (APB), but widespread allegations of fraud, including claims of burnt ballot boxes and insufficient supplies of voting sheets, prompted a demand for a recount. According to the latest reports, with around 50% of the votes recounted, Cano is now leading Manzur. However, the court ruling means a winner may not be declared until after the general election.

Responding to the concerns raised by the controversy in Tucumán, the government has proposed to the national electoral court (CNE) a series of technical measures to ensure the transparency of the vote on 25 October. Among them are the equipping of the army trucks carrying ballot boxes back to vote-counting centres with GPS tracking devices, as well as ensuring better availability of ballot papers and CCTV monitoring of vote-counting.

The opposition, however, is demanding more radical measures, such as enforcing a single ballot sheet system or even electronic voting (which has been used in the capital, Buenos Aires). Alejandro Tulio, the government’s electoral coordinator, has said he is working with the CNE to implement all “reasonable and viable” proposals to ensure electoral fairness in October.

• More doubts over Nisman suicide

Three separate laboratory analyses on the weapon that supposedly killed Alberto Nisman – a Bersa Thunder .22 calibre handgun – tested positive for gunpowder residue. The finding has led to renewed doubts as to whether the special prosecutor in the case related to the bombing of the Jewish mutual centre (Amia) in Buenos Aires, took his own life, as no traces of gunpowder were found on his hands. Forensic experts, however, have advised caution, stressing that the results were dependent on highly specific environmental conditions and that further tests could lead to different results. Nisman was discovered dead with a bullet wound to the head in his apartment on 18 January this year.

Viviana Fein, the prosecutor leading the investigation into Nisman’s death played down the laboratory results. “We cannot say that he committed suicide nor that he was murdered,” Fein said in a radio interview, adding that her investigation was unlikely to conclude before the election on 25 October. In her comments, Fein also expressed her resentment at comments by Sandra Arroyo Salgado, a federal judge and Nisman’s ex-wife, who described the investigation into his death in highly pejorative terms.

• Deforestation

A report by the United Nations Food and Agriculture Organization (FAO) published in early September ranked Argentina as one of the top 10 countries in the world in terms of its rate of deforestation. Ranked ninth globally, Argentina loses around 297,000 hectares of forest every year. Brazil and Paraguay were also in the top 10.

Peru’s congress is refusing to accept a resolution issued by the Inter-American Court of Human Rights (Corte-IDH) over a legacy human rights case. The issue looks like the prelude to a major institutional clash that may see Peru ignore the Corte-IDH’s authority in a bid to protect a suspected political agreement that allowed President Pedro Pablo Kuczynski to avoid impeachment in December last year. Such a move could help to maintain political stability in the short-term by ensuring that Kuczynski completes his term. But it would have a negative effect on Peru’s image and standing in the international community in the long-term.

On 9 February, the Corte-IDH issued a series of precautionary measures over the so-called ‘El Frontón’ human rights violation case that dates back to 1986. The case revolves around the allegations that Peru’s armed forces carried out extrajudicial executions as they attempted to regain control of prisons in Lima following a series of riots that took place that year. In 2000 the Corte-IDH ruled that human rights abuses were committed during the operations and ordered Peru to clear up the case. Peru’s judiciary has been trying to do this since. However, the Corte-IDH decided to issue new precautionary measures in relation to the case after formal abuse of authority complaints were presented by national legislators against four of the seven constitutional court (TC) justices, who last year ordered a new investigation into the actions of naval officers in the El Frontón case.

Legislators have accused justices Manuel Miranda, Marianella Ledesma, Carlos Ramos, and Eloy Espinosa-Saldaña of inappropriately changing a previous TC resolution from 2013 that found that no human rights abuses were committed by naval officers in the El Frontón case. But the Corte-IDH ordered the complaints and potential impeachment process against the justices in congress to be archived on the grounds that they could affect the processing of the El Frontón case. The Corte-IDH argues that the precautionary measures are necessary to ensure that the moves against the justices do not produce “unnecessary pressures” on the TC or on Peru’s penal system to close the case.

The precautionary measures ordered by the Corte-IDH have been questioned by Peru’s congress. Luis Galarreta, the president of congress from the main right-wing opposition Fuerza Popular (FP, Fujimoristas), said that the Corte-IDH order was “inapplicable” as it runs counter to Peru’s constitution. Galarreta explained that the constitution gives congress the power to investigate public officials and to sanction them and impeach them if they are found guilty of committing administrative irregularities. He added that the constitution is also clear that congress is sovereign and cannot be told how to handle internal affairs by any foreign institution. Galarreta said that the he would be writing to the Corte-IDH to ask it to clarify what its competencies are and in what circumstances it can intervene. He also said that he would discuss the issue with the presidents of congress in other Latin American countries to gather their opinions.

Suspicions

The strong stance adopted by Galarreta against the Corte-IDH measures has aroused suspicion in Peru that this is part of a strategy to undermine the court and withdraw Peru from its jurisdiction ahead of the hearing that it is due to hold on the recent presidential pardon granted to former president Alberto Fujimori (1990-2000). It is widely speculated that the pardon granted to Fujimori by President Kuczynski formed part of a backroom deal to avert his impeachment in the FP-dominated congress. Such suspicions acquired added weight after the actions of the Corte-IDH were also criticised by Kuczynski’s Peruanos por el Kambio (PPK).

Deputy Juan Sheput, the spokesperson of the PPK congressional bench, has said that as a signatory of the Organization of American States (OAS) American Convention on Human Rights, which established the Corte-IDH, Peru must abide by the court’s rulings. But Sheput went on to question the Corte-IDH’s impartiality and suggested that the court was in need of reform. Sheput said that the Corte-IDH currently has a clear political bias towards the Left and that its actions are questionable. “If one analyses the trajectory of these [Corte-IDH] judges, indisputably all of them are biased towards the Left…the way in which the court acts is too biased towards an ideological sector,” Sheput said in a 12 February interview with Peruvian media.

Sheput went on to say that, in light of this, the Peruvian government could promote a major overhaul of the Corte-IDH to restore its impartiality. “Peru could lead a Latin American consensus to demand that the OAS restructures the Corte-IDH, as it is now losing prestige over such rulings,” Sheput said. Latching on to Sheput’s comments, FP Deputy Carlos Tubino has been even more blunt, declaring that “hopefully the president will withdraw us from the Corte-IDH because it has not helped us at all”. The TC’s response to all of this has been to call on congress and the government to abide by the Corte-IDH orders and honour its commitment to uphold the American Convention on Human Rights.

Landmark supreme court ruling

On 13 February, Peru’s supreme court (CSJR) confirmed the conviction for human rights violations against one Peruvian army officer and one army intelligence agent for the kidnapping, torture, and rape of a university student detained in 1992, at the height of Peru’s internal armed conflict (1980-2000), when the security forces were actively engaged in a ‘dirty war’ against leftist insurgent guerrillas and their supporters.

This is the first time that the CSJR has deemed that the abduction and rape of an individual by the security forces constitutes a crime against humanity, which carries longer prison sentences. It comes four days after the CSJR broke new ground in deciding to review the case, the first involving allegations of rape by the security forces in the context of the internal armed conflict. This sets a significant precedent given that Peru’s truth & reconciliation commission has identified 534 cases of women who may have been raped by the security forces during the armed conflict.

• Enapu ruling

In another ruling against the Peruvian state, last month the Corte-IDH ordered it to pay compensation to 28 workers from the state-run ports management firm (Enapu) who had been arbitrarily dismissed by the government led by Alberto Fujimori (1990-2000) in 1996. The Corte-IDH agreed that the workers had been dismissed with no justification and it rejected the Peruvian government’s argument that they had been properly compensated after they were offered new contracts in 2003, on the grounds that these did not take into consideration their previous years of service to calculate things like salary levels and future pensions. Consequently, the Corte-IDH has ordered the Peruvian state to pay US$55,000 in compensation to each Enapu worker.

• Pafta

On 12 February Peru’s foreign trade & tourism minister, Eduardo Ferreyros Küppers, and his Australian counterpart, Steven Ciobo, signed the Peru-Australia Free Trade Agreement (Pafta) during a ceremony in Canberra, Australia. The two countries began negotiating a new trade agreement back in May 2017 as part of efforts to shore up bilateral trade relations. Noting that Pafta will eliminate almost all tariffs on goods traded by Peru and Australia after it comes into full effect in five years, Ferreyros said that the two countries believe that the liberalisation of bilateral trade will help to “reduce poverty and promote economic development”. Two-way Peru-Australia trade reached US$443m in 2016, a 51.2% year-on-year increase. But it is expected that this could increase further after Pafta is ratified by the two countries’ respective legislatures and comes into full effect.

Upon assuming office in August, President Mario Abdo Benítez said that his administration would follow the general policy of fiscal responsibility that has underpinned Paraguay’s macroeconomic stability in recent decades rather than continuing the more recent trend of growing government spending and indebtedness followed by his predecessor Horacio Cartes (2013-2018). However, the first draft budget presented by the Abdo Benítez executive to the national congress has been criticised by the political opposition and local business groups for its lack of transparency and for its profligacy. At the same time there are growing pressures within the government itself to ramp up spending in order to deliver on all the pledges made during the election campaign.

During the electoral campaign, Abdo Benítez criticised the spending drive carried out by the Cartes administration and the high level of debt that was taken on in order to fuel this. Since taking office, Abdo Benítez said that his administration would strictly adhere to the 2013 fiscal responsibility law (LRF) which was approved to help ensure that the fiscal deficit and public debt remain at manageable levels.

In line with this, the Abdo Benítez executive presented a 2019 draft budget to the national congress that respects the maximum 1.5% of GDP fiscal deficit limit stipulated in the LRF. The government’s draft budget is for G$80.2trn (US$13.95bn), 7.6% higher than the current budget, and it proposes an overall public debt of US$1.45bn (US$850m in the form of loans and US$600 in sovereign bonds).

However, during the ongoing debate over the budget in congress, many of Abdo Benítez’s cabinet ministers have asked legislators to increase the budget allocation for their portfolios warning that they would otherwise be underfunded. Among these were the head of the social development, labour, industry & trade, and public works & communications (MOPC) ministries. These calls came despite the warnings issued by Finance Minister Benigno López that there was no scope for increasing budget allocations in any sector without proportional cuts elsewhere, or the raising of new taxes.

In response to this, the political opposition in congress called for greater transparency in the budget, particularly of the discretionary funds available to the executive. The opposition has also pointed out that the executive can currently use any surplus funds from Paraguay’s binational hydroelectric dams at its discretion and called for the use of these funds to become more transparent. Indeed, legislators from the main opposition Partido Liberal Radical Auténtico (PLRA) have tabled a bill calling for these funds to be assigned for education and health spending exclusively.

While the opposition has criticised the lack of budget transparency, the business sector has complained that the proposed spending plan is unnecessarily high and inefficient. On 28 September the national chamber of commerce and services (CNCSP) released a new report which found that the government’s current spending has consistently increased in the last decade. In particular, the CNCSP report highlights that current spending by congress has increased by 46% on average since 2003 to G$2.9bn (US$491m) last year, but that this has not helped to improve government efficiency.

The CNCSP report was released just five days after the Inter-American Development Bank (IDB) released a report of its own on the quality of government spending in Latin America. The IDB report found that the level of inefficient government expenditure (identified as spending on officials’ salaries and on inefficient state subsidies) in Paraguay is equivalent to 3.9% of GDP, or US$1.8bn, with the central government’s payroll accounting for approximately 40% of all spending in comparison with a regional average of 29%.

Pointedly, the CNCSP called on the new administration to conduct a thorough review of government spending and its proposed budget to improve efficiency before entertaining any changes to the tax regime. Since then other business sector groups such as Paraguay’s rural association (ARP), have echoed the CNCSP’s call.

New BCP president

José Cantero Sienra formally assumed his new post as the president of Paraguay’s central bank (BCP) on 1 October. Cantero, who until his new appointment had served on the BCP board, was designated as the new head of the BCP by Mario Abdo Benítez back in July to replace Carlos Fernández Valdovinos, whose five-year term expired in August. But Cantero’s appointment was only ratified by congress last month. 

• Cuevas under investigation

On 2 October Miguel Cuevas, the president of Paraguay’s chamber of deputies, said that he would ask his fellow deputies to lift his immunity from prosecution so that he can be investigated for the illicit enrichment allegations levelled against him. Cuevas’s comments came after the specialised economic crimes and anti-corruption unit at Paraguay’s attorney general’s office announced on 27 September that it was opening formal investigations against various legislators from the ruling Asociación Nacional Republicana-Partido Colorado (ANR-PC), including Cuevas. The allegations against Cuevas, a close ally of President Abdo Benítez, date back to his time as governor of Paraguarí department (2013-2018). However, Cuevas insists that he has “nothing to hide” and that he is prepared to face investigation.

• Central bank

MEXICO | Fiscal discipline. The international credit ratings agency Fitch Ratings released a research report on 4 April noting that the ‘Pre-Criterios 2020’ preliminary budget spending planning document sent by Mexico’s finance ministry (SHCP) to the federal congress confirms the government’s intention to maintain the focus on fiscal discipline despite the current domestic economic slowdown.

The delivery of the ‘Pre-Criterios 2020’ document forms part of the preparations for the 2020 national budget, the first to be submitted to congress by the government led by President Andrés Manuel López Obrador, in line with the fiscal responsibility law. The Fitch report points out that the document reduces this year’s official GDP growth forecast to 1.6%-2%. As a result, the SHCP document proposes a 0.5% of GDP reduction in government spending this year to fulfil the target of a 1% primary fiscal surplus. It also proposes a 3% reduction in spending in 2020 to deliver a primary surplus of 1.1% and an overall fiscal deficit of 2.1%. However, according to Fitch, it is unclear exactly how the government will cut spending to reach its objective. Fitch adds that the López Obrador’s administration’s commitment to maintaining fiscal discipline “could be tested” once these cuts come up for debate in congress.

MEXICO | Mobile data costs. According to a global study carried out by British company Cable using source data from 2018, at US$7.38 Mexico has the highest average cost for 1GB of mobile internet data in Central America and the second-highest for Latin America, surpassed only by Bolivia at US$8.51. Cable’s findings seem to contradict a 2017 report from the international telecommunications union (ITU) which placed Mexico among the 10 cheapest countries in Latin America for a 500MB handset-based mobile broadband basket.

Comparing the findings, Mexico’s federal telecommunications institute (IFT), the sector regulator, posits the inclusion of texts and minutes in Cable’s survey as the cause of the varying statistics. Despite the introduction of the 2013-2014 telecommunications reform, which among other things was designed to increase competition in the telephony sector, Mexico’s mobile telecoms market is still dominated by Amérca Movil. According to data from the Global System for Mobile Communications (GSMA) international trade body, América Móvil had a 67% share of the market in 2016 just three percentage points lower than before the introduction of the reform.

PANAMA | Q-Flex barge. On 15 May the Panama Canal Authority (ACP) announced that three years after the inauguration of the expanded Panama Canal, the waterway has welcomed its first Q-Flex barge, the second-largest liquefied natural gas (LNG) barge in the world. Measuring 315m in length and 50m in width with a total capacity for 210,000 cubic metres of LNG, the Al Safliya barge belongs to Qatari LNG company Qatargas. ACP administrator Jorge Quijano praised the event stating: “Today’s transit reaffirms the expanded canal’s capacity to transform global trade and offer clients the benefits of economies of scale”. As of June 2018, the Canal’s width was expanded from 49m to 51.25m.

CUBA | Tourism. Cuba’s tourism ministry is hoping it will generate US$3bn this year for the first time. Tourism is the second main source of foreign exchange for Cuba after the provision of professional services. Hitting this target will be a huge challenge, however, given the tighter travel restrictions on US visitors, and ever-expanding sanctions, being imposed by the US government led by President Donald Trump.

The Cuban tourism minister, Manuel Marrero, celebrated reaching the figure of 2m foreign tourists by 6 May, 12 days earlier than in 2018, which he said kept Cuba on target to meet the ministry’s target of 5.1m tourists in 2019. Canada supplied the highest number of tourists with 624,530 in the high season November-April, up 3% on the same period a year earlier.

The US was second with 257,500 visitors, up by 93.5% year-on-year despite the restrictions imposed by the government. Some 55% of US tourists visited Cuba from cruise ships, while the remaining 45% came via flights by means of one of the 11 authorised categories of visitor established by the US government. These categories, however, might be tightened.

Cuba received 4.75m visitors in 2018, up by 1.3% on 2017, although tourism revenues fell by 4.6% in 2018, Marrero revealed. Cuba is the second most popular tourism destination in the Caribbean, but remains a long way short of the Dominican Republic, which wears the tourism crown for the sub-region coveted by Cuba. The Dominican Republic received 6.5m visitors in 2018, up 6.2% on the previous year.

• Dominican visit

The foreign minister of the Dominican Republic, Miguel Vargas Maldonado, visited Cuba on the same day that the country released its latest tourism figures. Vargas signed a series of cooperation accords in health, education, agriculture, environment, commercial promotion, tourism, and sport. Vargas said that strengthening bilateral relations with Caribbean countries was “a priority” and particularly with Cuba, with which diplomatic relations were re-established in 1998.

The Brazilian government is trying to restart the tourism industry, which is still crippled by the effects of the coronavirus (Covid-19) pandemic. The government launched a package of measures to that effect on 10 November. But opinions are divided over how quickly this revival might happen. 

Tourism Minister Marcelo Álvaro Antônio said the measures are based on four pillars: support for companies and employment; structural and quality improvements at tourist destinations; introduction of bio-security protocols; and travel promotion and incentives. The programme will run until July 2021. There are, however, few details on its overall value or how funding will be distributed. The government has committed to make R$5bn (US$975m) available in credit lines for tourism companies. Examples of other types of assistance on offer is support for bio-security training and infrastructure investment. The minister said one of the aims is to encourage domestic tourism, through a programme called ‘Rediscover Brazil’ and a ‘Responsible Tourism’ quality seal.

Brazil’s tourism sector is estimated to account for 8.1% of GDP and to directly and indirectly support 7m jobs. The industry performed well in 2019, with 2.6% growth (double the average for the economy as a whole). That performance was cut brutally short in early 2020 by the pandemic, which forced Brazil to close its borders, and led to state-level governments imposing lockdowns. According to government estimates, tourism revenues dropped by 37.2% in the first half of 2020, with job losses amounting to 364,044.

Later data from the national statistics institute (Ibge) shows the tourism activity index gaining 11.5% month-on-month in September, the fifth successive month of expansion. But a report by industry association, FecomércioSP, put things in a less positive light, calculating that between March and September tourism revenues fell by 44% or R$41.6bn. Of particular significance, FecomércioSP said, was the reduction in airline capacity, as airline companies operated reduced flight schedules. 

Opinions on the speed and strength of the likely recovery in Brazilian tourism differ. International media coverage of the continuing spread of Covid-19 in Brazil, and of President Jair Bolsonaro’s rejection of scientific advice on the pandemic, cannot be positive for the country’s image. International tourists might think twice before visiting a country with the world’s second highest coronavirus death count (over 170,000 at the end of November). Brazil is certainly easy to visit – since borders reopened foreign visitors are not required to self-isolate or prove they have tested negative for the virus – but that very ease of access might give pause for concern for the more health-conscious tourists. A question mark also hangs over Carnival 2021.

• Carnival uncertainties

Carnival attracts millions of visitors to Rio de Janeiro and other Brazilian cities every year. But in September Rio’s independent league of samba schools (Liesa) announced that the traditional samba schools’ parade, due to be held in February 2021, would be postponed. It has now been pencilled in for July 2021, but even that is contingent on a vaccine having been rolled out. It is not clear if the associated street parties will take place regardless. The authorities in nearby São Paulo, meanwhile, have said they are postponing the samba processions there from February to October 2021. 

Despite that, a survey of global tour operators conducted in September by Travel Consul, an international tourism marketing alliance, shows Brazilian operators are optimistic about the industry’s immediate future. Most global operators believe the industry is recovering but at a time when the coronavirus continues to spread. They believe tourism will return to normal in 2022. Brazilian operators on the other hand believe the industry is recovering at a time when the pandemic is receding. They expect an earlier return to normal, in 2021.

Mexico’s national statistics institute (Inegi) released its latest unemployment figures on 22 April, which show that this reached 3.89% in March, the lowest level so far in the year. This followed unemployment rates of 4.37% and 4.73% in February and January, respectively. By sector, agricultural and livestock activities recorded the most significant reduction of unemployment, followed by hospitality.  

Inegi’s figures also show that that the number of people employed in the informal sector reached 30.6m, while the labour informality rate reached 56.8%, 1.3 percentage points below the rate of February. Regarding the impact of the economic crisis produced by the coronavirus (Covid-19) pandemic on Mexico’s labour market, the Inegi data shows that 87.8% of the 12m people that exited the economically active population (EAP) due to the impact of the pandemic have now re-joined the market, as shown by the national survey of occupation and employment (Enoen). Nevertheless, this is still 1.5m people below the EAP level observed in April 2020.

Mexico’s social security institute (IMSS) reported on 12 May that 51,190 new formal jobs were created during the month of April, while 6,416 positions were lost, which produced a total of 44,774 formal jobs recovered during the month of April. This was the lowest monthly figure recorded so far this year, even though it followed the reopening of economic activities in most of the country’s states.  This contrasts significantly with the 555,247 formal jobs that were lost in April 2020 as a result of the restrictions imposed to try to limit the spread of Covid-19. The new formal jobs created in April account for only 8% of those that were lost in the same month of 2020.   

The main increase in jobs recovered took place in the construction sector, which saw employment grow by 10.8%. This was followed by industry with a 3.5% increase; transport & communications with a 2.1% increase; and the extractive sector with a marginal 0.5% increase. In contrast, the main losses were recorded in the service sector, where the was a reduction of 4.1%; and in agriculture, where there was a reduction of 1%.

Back in April 2020, during the presentation of his government’s plan to address the coronavirus pandemic and its effects on the economy, President Andrés Manuel López Obrador promised that within nine months (by January 2021) his administration would have created 2m formal jobs through the expanding his government’s social programmes and its infrastructure development projects. The latest employment data confirms that this was an ambitious and ultimately unattainable goal, as the 296,751 formal jobs created so far this year are but a fraction of the 647,710 jobs lost in 2020 because of the coronavirus crisis.  Eleven months to the day after he made that promise, on 5 March, López Obrador again said that the formal jobs lost because of the pandemic would be recovered by June. However, this also remains unlikely as it would mean creating more than 457,000 jobs in May alone to reach that goal. Importantly, the total number of jobs created during the first four months of the year is lower than the number of jobs that were created during the first four months of 2019, when they added up to 299,562.

Moreover, despite the modest recovery regarding unemployment and formal job creation, analysis from local think-tank México ¿Cómo Vamos? shows that the income of employed people remains below pre-pandemic levels. Employed people have also been unable to recover working hours. This is particularly the case in retail, hospitality, and other services, where women are disproportionately employed. Thus, the pandemic has exacerbated gender inequality within the labour market that has yet to be addressed.

TRINIDAD & TOBAGO | Bouncing back. Prime Minister Keith Rowley has stressed the importance of cultivating “a new mindset, new attitudes, new worldviews, searching every prospect, hungrily and courageously, to build businesses” in order to help reactivate the domestic economy after the damage inflicted by the coronavirus (Covid-19) pandemic.

Speaking on the 59^th anniversary of Trinidad & Tobago’s independence from the UK on 31 August, Rowley said it was imperative to “adapt to 21st-century changes, becoming more aware of emerging realities and trends, overcome the disadvantages of complexity, and develop indigenous Trinbago models”. He promised that his government would “provide the necessary support and enabling environment”, highlighting the recent establishment of a ministry of digital transformation to map the country’s transition towards a digital economy.

The leader of the opposition, Kamla Persad-Bissessar, accused the Rowley government of “locking down the country, and hoping the virus goes away”, and lacking “a clear plan to create jobs, generate revenue, and develop the right environment to encourage new business development”.

The pandemic, which has claimed 1,285 lives in Trinidad & Tobago, according to official figures, put paid to the usual independence celebrations.

Trinidad & Tobago has been suffering from years of slow or negative growth which has now been compounded by the effects of the coronavirus (Covid-19) pandemic even though Trinidad is not one of the Caribbean’s severely tourist-dependent countries. In the 12 years from 2009-2020, the country has recorded no less than eight years of negative growth. Only in four out of the last 12 years has it shown growth, and the best of those years was as far back as 2010 when the economy bounced back with a 3.5% expansion after the 2009 contraction of -4.8%. Since 2015, when the economy grew by 1.5%, the results have been consistently dire, with 2016’s contraction of -5.6% followed by -3.0% in 2017, 0.1% in 2018, and -1.2% in 2019. Then the Covid-19 pandemic struck, leading to a contraction of -7.8% in 2020. This was the background against which Finance Minister Colm Imbert presented his 2021/22 budget to parliament on 3 October.

The last Article IV Consultation with the International Monetary Fund (IMF) was in 2018, with the report completed in August, so comfortably before the impact of Covid-19. The IMF reported that the country was slowly recovering from a deep recession and should return to positive growth from 2018. It also reported that “good progress has been made in fiscal consolidation through spending cuts, but public debt continued to rise, approaching the government’s soft target of 65% of GDP”.

The IMF reported: “Gradual recovery in the non-energy sector should help stabilise growth at 1.5% over 2018-2023, with inflation projected to rise along with non-energy sector recovery to 3.8%. The fiscal deficit is projected to narrow to an average 4% of GDP over the medium term as energy revenues rise, non-energy revenues recover, and the efficiency of transfers and subsidies improve.” But then Covid-19 struck, the economy suffered further sharp contractions, and the debt-to-GDP ratio soared to 85%.

The budget presented by Imbert on 3 October reflected this dire setback to the economy. He said the economy’s decline would “decelerate…to 1.4% in 2021 and look forward to a strong recovery in 2022”. In the meantime, though, the TT$55.43bn (US$7.86bn) 2021/2022 budget projects revenue of TT$43.33bn (US$6.50bn) to give a deficit of TT$9.09bn (US$1.36bn), or 5.8% of GDP. The slightly better news, however, was that the budget was based on an oil price of US$65 per barrel and a gas price of US$3.75 per MMBtu whereas on budget day the actual prices were, respectively, US$75 and US$5.80.

The opposition leader, Kamla Persad-Bissessar, responded to the budget by arguing, with some justification, that the country’s economic difficulties could not be laid entirely at the door of the pandemic. She said the main problem was the ruling People’s National Movement (PNM) and Prime Minister Keith Rowley – “Covid did not crash the economy, it is the PNM led by Rowley who crashed the economy” – and she argued that the government had no new ideas other than to reintroduce the “dreaded property tax”. In his budget presentation, Imbert had said that the resumption of the property tax was “long overdue” and could become “a significant revenue item for local government in the years ahead”.

In the face of such difficulties, talk of calling in the IMF is never far away, but the government is adamant that this won’t happen. Imbert pointed out that the country last entered an IMF programme in 1988 and that it had had “a severe adverse impact on the social fabric of Trinidad & Tobago” (see sidebar).

• Imbert on the IMF

Speaking about the IMF, Imbert said “In the classic IMF model…once you enter an IMF programme you must reduce government spending to match government revenue. This inflexible one-size-fits-all policy has led to serious unrest in countries that had no choice…We see no need to seek any…form of assistance [other than surveillance, technical assistance, and capacity advice] from the IMF at this time or in the near future.”

Uruguay’s President Luis Alberto Lacalle Pou visited the UK on 23-24 May to meet Prime Minister Boris Johnson for talks on collaboration and trade. The emphasis was on green energy and finances.

Bilateral trade between the two countries is small. In 2020 Uruguay exported goods worth only US$60.8m or 0.8% of its total shipments to the UK. Imports were worth US$92.1m, or 1.1% of the total. Nevertheless, Lacalle Pou told Johnson he was interested in moving “step by step” to reach “the next level”. The two men discussed reducing trade barriers and increasing investment, particularly in agriculture, pharmaceuticals, IT software, renewable energy, and green finance. Johnson welcomed Uruguay’s strong condemnation of the Russian invasion of Ukraine.

While not directly addressed, a possible Uruguay-UK free trade deal looms somewhere in the future. Having left the European Union, the Johnson government is eager to add to its rather short list of post-Brexit trade deals. Uruguay on the other hand, is impatient with what Lacalle Pou described as its large but slow-moving neighbours in the Southern Common Market (Mercosur), Argentina and Brazil. The Lacalle Pou government would like greater flexibility within Mercosur to sign its own trade deals (it is currently negotiating with China and Turkey, among others).

Lacalle Pou addressed UK business groups at a meeting convened by trade lobby group Canning House. Possibly the single most important business announcement from the trip came from UK-based pharmaceutical group GlaxoSmithKline, which confirmed it will be opening a regional production and distribution centre near Carrasco Airport in Montevideo, which is to serve as a South American hub, sending out over 12m vaccine doses a year. Other business groups interested in investment opportunities in Uruguay included Glenmont Partners (clean energy financing), Next Energy (renewables), the Green Finance Institute, and various banks including HSBC and Standard Chartered.

In his Canning House speech Lacalle Pou stressed Uruguay’s position as “one of the strongest democracies in the world”, offering stability and a pro-business operating environment. He noted its successful response to the Covid-19 pandemic, based on voluntary social distancing and rapid vaccine rollout. He also highlighted tax breaks for inward investment and the programme to offer residence permits to wealthy and skilled individuals (over 14,000 entrepreneurs, mainly from Argentina, have moved to Uruguay since Lacalle Pou took office).    

Economy and Finance Minister Azucena Arbeleche stressed the overriding global need to combat climate change and meet decarbonisation objectives. Uruguay’s contribution was to develop its renewable energies, but also to be at the vanguard of financial initiatives such as last December’s green bond which linked interest rates to a country’s progress in meeting measurable decarbonisation targets. “We are incorporating two climate outcomes into our bonds,” she said, “the reduction of greenhouse gases and the preservation of native forestry. We are looking at embedding in the bonds a mechanism whereby you pay less or more interest according to your climate change policy and commitment.”

The arrest in June of Costa Rica’s former security minister (2014-2015) and supreme court (CSJ) justice (2016-2018), Celso Gamboa, who in July was then charged with drug-related crimes in the US, has exposed a major drug scandal which could implicate members of President Rodrigo Chaves’ government. With security a major public concern as Costa Rica is facing record homicides, attributed to the growing presence of international drug trafficking organisations (DTOs) in the country [SSR-25-06], the scandal comes as Chaves himself is facing the threat of impeachment over an unrelated corruption case. This is all taking place as Costa Rica is gearing up for general elections in February 2026, in which Chaves is constitutionally barred from seeking a further presidential term, although he is reportedly mulling a bid for the legislature.

A security minister under former president Luis Guillermo Solís (Partido Acción Ciudadana, PAC, 2014-2018), Gamboa was detained in Costa Rica on 23 June along with his purported associate Edwin López Vega, an alleged international drug trafficker. At the time of his arrest, the head of Costa Rica’s judicial investigations unit Organismo de Investigación Judicial (OIJ), Randall Zúñiga, described Gamboa as being as among the top four narcos in the country.

On 11 July the US Department of Justice announced that Gamboa had been charged with conspiring with and assisting other international drug traffickers to “manufacture, distribute, and transport significant quantities of cocaine, much of which was trafficked through Costa Rica and ultimately into the United States for further distribution”. At the time of writing, both Gamboa and López were awaiting extradition to the US, as per new legislation approved in May which changes the country’s constitution to allow for the extradition of Costa Rican nationals in cases of drug trafficking and terrorism [SSR-06-25].

According to excerpts from US Drug Enforcement Administration (DEA) documents obtained by CR Hoy, a local media outlet, and published on 15 July, the allegations date back to around 2017 at which point Gamboa was serving as a justice. He was dismissed from the supreme court in 2018 over the ‘Cementazo’ corruption case, involving Sinocem Costa Rica, the Costa Rican subsidiary of a Chinese cement exporter, and top public officials [WR-17-41]. According to the same CR Hoy report, the DEA document highlights a meeting between Gamboa and two associates who were secretly DEA informants in the capital, San José, in September 2023 – during the current Chaves administration. Gamboa, who the DEA reportedly identifies as the apparent regional representative of Mexican DTO Cártel del Golfo (CDG), was allegedly recorded as saying that he could guarantee the reception of cocaine entering Costa Rica whether by the Atlantic or Pacific coasts with the Chaves administration’s consent.

Describing the allegations as “what may be the most significant drug scandal” in Costa Rica’s history, specialist website Insight Crime points out that prior to this, other high-level officials in Costa Rica had been linked to drug trafficking. These include former head (2007) of the national police force Fuerza Pública, José Fabio Pizarro Espinoza, who was handed a 10-year prison sentence in 2018 for concealing a lorry containing 237kg of cocaine, according to local press reports, although he was released in 2022. However, Insight Crime notes that Gamboa is the highest-ranking Costa Rican official to be arrested on such charges.

Chaves under pressure

With the possibility that further high-level officials may be implicated, the drug scandal comes as President Chaves, whose mandate which began in May 2022 has been characterised by clashes with the judiciary, the opposition-controlled 57-member unicameral legislature, and independent media [WR-24-25], is already feeling the heat over two investigations, one of which has already led the CSJ to request that the legislature strip him of his immunity from prosecution.

In what the national media reports is a first for the country, on 1 July the CSJ announced its decision after considering a request by the attorney general’s office. The case concerns a contract awarded for communication services for the presidency to RMC La Productora S.A, owned by Christian Bulgarelli, a specialist in audiovisual communication, to provide communication, marketing, and strategic consultancy services for the presidency from 2022-2026.

According to the attorney general’s request to the CSJ, ahead of the contract being awarded in 2022, Bulgarelli attended various meetings with Chaves and his culture minister Jorge Rodríguez Vives, then serving as Chaves’ chief of staff, in which Bulgarelli was instructed to draw up the contract’s terms himself, thereby ensuring RMC’s success. It adds that Chaves and Rodríguez also leant on Bulgarelli to divert US$32,000 in funds from the Central American development bank (BCIE) to a Chaves ally, Federico Cruz Saravanja, to buy a house. In June 2024, BCIE notably blacklisted Bulgarelli and RMC for seven years for having allegedly committed fraudulent activities.

At the time of writing, the legislature, in which Chaves’ Partido Progreso Social Democrático (PPSD) has just eight seats, had yet to make a decision regarding the request by the CSJ which is also considering a further accusation from the attorney general’s office regarding Chaves in relation to another investigation: on 23 June the attorney general’s office formally accused Chaves, along with First Vice President Stephan Brunner, Foreign Minister Arnoldo André, and four PPSD deputies – Pilar Cisneros, Luz Mary Alpízar, Paola Nájera, and Waldo Agüero – of crimes related to illicit campaign finance during the 2022 electoral campaign. The charges are in line with an investigation that began in 2022 into whether the PPSD used two parallel funds to finance its campaign ahead of the 2022 general elections, which would be illegal [SSR-22-06].

• Illicit campaign finance

According to a statement by the attorney general’s office, the parallel financing structures identified were “a trust” – widely considered an allusion to a trust named Costa Rica Próspera, administered by ATA Trust Company SA, whose president at the time was Foreign Minister Arnoldo André – and the “personal bank accounts of a woman with the surname Agüero”. This has been widely understood as a reference to Sofía Agüero, a former administrative assistant, who has previously been accused of receiving funds from businessman Jack Loeb Casanova which were not processed via party channels. According to the same statement, both funding channels operated outside the oversight of the electoral authority and Partido Progreso Social Democrático (PPSD)’s official treasury.

Cocaine seizures up

According to the most recent (7 May) round-up of cocaine seizures by specialist website Insight Crime, Costa Rica seized 27 tonnes (t) of cocaine in 2024, up from 21.4 t in 2003. Insight Crime notes that last year the government launched Operation Caribe, a strategy aimed at reducing crime in the province of Limón, a historically important drug trafficking hub on the Caribbean coast.

More visas revoked

On 9 July the president of Costa Rica’s congress, Rodrigo Arias (PLN), revealed that the US government led by President Donald Trump had revoked his tourist visa, saying that this occurred without explanation or prior warning.

Also targeted that day with similar measures were constitutional court judges Paul Rueda and Jorge Araya. This follows the revocation of visas in February of two deputies from the small opposition Partido Liberal Progresista (PLP), Johana Obando and Cynthia Córdoba, who according to local media had been very critical of the 2023 decision to bar Chinese technology multinational Huawei from bidding to supply 5G telecoms technology in public procurement auctions [SSR-25-03]. This followed a visit in February by US Secretary of State Marco Rubio to Costa Rica and other countries in Central America, where he highlighted the need to counter Chinese influence in the region as a priority for Washington.

Since then, others have faced similar measures including Vanessa Castro, congress vice president and a member of the opposition Partido Unidad Social Cristiana (PUSC), and Arias’ brother, former president Óscar Arias (1986-1990; 2006-2010), whose visas were revoked at the start of April. Óscar Arias also said that he had not been provided with any explanation. While cited by the media as saying it would be conjecture on his part to speculate about the reason, he did point out that “I established diplomatic relations with China” – a decision he took in 2007. The former president has also been critical of Trump, writing on social media in February that the US president behaved “like a Roman emperor, telling the rest of the world what to do”. 

DOMINICAN REPUBLIC | Gov’t hails record tourism. On 18 August the Dominican Republic’s tourism minister, David Collado, reported that the country had received a record 7.2m tourists in the first seven months of 2025.

Collado said that this was up 3.2% on the same period in 2024, up 14% on the same period in 2023, and up 49% on the first seven months of 2019, the year before the coronavirus (Covid-19) pandemic hit.

Collado said that most tourists came from the US (52%), followed by Canada which accounted for 7% of tourists, Argentina, and Puerto Rico (6% each). Last month he said that he expected that the Dominican Republic would receive 12m visitors this year. The country received a record 11.19m tourists in 2024 – an increase of 9% on 2023.

Sources in Seoul say that Kim Jong-il’s son Jong-un has taken full control of North Korea’s State Security Department. The department’s main duty is to keep track of dissidents. It has 50,000 agents. Separately, Chu Sang-song has been sacked as Minister of People’s Security following an incident in which students attacked founding father Kim Il Sung’s birth home.

The students had been dismissed for watching South Korean soap operas on USB memory sticks, and they felt particularly aggrieved to be singled out when virtually every other student had been doing the same. Since the incident in February, in which the students scrawled “Down with the Kim Dynasty” on the walls of Kim Il Sung’s home, a larger number of State Security Department and Ministry of People’s Security personnel have been assigned to the major universities for surveillance operations.

Other signs of a renewed crackdown in the light of the Mideast unrest include reports that Pyongyang has ordered institutions and households to register how many computers and portable storage devices such as USBs and MP3 players they own.

Mobile phone subscribers in North Korea jumped from 1,600 in 2008 to 300,000 last year according to North Korea’s Egyptian partner Orascom Telecom. South Korean intelligence sources say there are about 450,000 mobile phones in North Korea, although the figure could be higher given the number of people reportedly using Chinese cell phones in the border areas.

Colombia | Second mass hit against Farc. On 26 March President Juan Manuel Santos and Minister of Defence Juan Carlos Pinzón separately announced that in a joint operation codenamed 'sword of honour', the army, navy, air force and national police had killed 36 members of the Fuerzas Armadas Revolucionarias de Colombia (Farc), including the heads of the 10th and 27th fronts, and captured four guerrillas, including the head of the 53rd front. However, the identities of those killed and captured have yet to be confirmed by judicial authorities. The operation took place in the eastern department of Meta and is the second one of its kind this month; the guerrillas are believed to have been taking part in a meeting held at one of the group's training facilities.

Colombia | Restrepo arrest warrant revoked. On 26 March Bogotá's 45th magistrate, Johanna Rodríguez, revoked the local and international arrest warrants issued against former Peace High Commissioner Luis Carlos Restrepo. The judge's decision is intended to send the message that the judiciary is not biased against Restrepo and that all guarantees will be upheld; nonetheless, Mildred Hartmann, Restrepo's defence attorney, has told the local media that her client will not be returning to the country at the moment.

Colombia | Hostage release. On 26 March the Guatemalan indigenous leader Rigoberta Menchú announced she would be participating in the 30 March-1 April release of hostages by the Fuerzas Armadas Revolucionarias de Colombia (Farc). However, the Colombian government immediately released a statement denying Menchú's participation and clarifying that only the government of Brazil and the International Committee of the Red Cross (ICRC) will be involved in the operation. 

POLITICS | Pluna workers strike in demand  of info on new partner. On 3 July the union of aeronautical technical workers of Uruguay-organisation of Pluna workers (OTAU-AFP), which groups all 500 Pluna workers – the 160 pilots have their own union - declared a 48-hour strike in demand of information regarding the government’s plans to find a new partner for the state-controlled airline. The strike will last until 6pm local time on 5 July, resulting in the suspension of 70 flights. On 15 June last, the oriental aeronautical society (SAO), the largest shareholder of Pluna with a 75% stake – through Leadgate (67%) and Jazz (33%) – left the company, which is now solely state-owned while the government of President José Mujica finds a new partner through a trusteeship. The OTAU-AFP wants the government to disclose how it is going about finding a new majority shareholder and to comment on the rumour that if the Argentine businessman Juan Carlos López Mena were to fill in the gap left by SAO, 200 jobs would be lost.

“Lo que nos preocupa a muerte es el narcotráfico, no las drogas”, dijo el Presidente de Uruguay José Mujica, en una entrevista con BBC Mundo publicada el fin de semana pasado. En ella, explica porqué, a pesar de “estar de alguna manera en contra” de la legalización de las drogas, él eventualmente promovió esta la controversial estrategia en la pequeña nación del Cono Sur. Una de sus principales razones, dijo, fue ser testigo del incremento en la violencia en México durante la presidencia de Felipe Calderón –“Lo de México me sacudió el alma”. Y aunque Uruguay aún tiene insignificantes niveles de violencia cuando se compara con sus contrapartes regionales, Mujica estaba asustado con el aumento de delitos que previamente no eran vistos en el país y que estaban relacionados directamente con el comercio de las drogas, como el “ajuste de cuentas”.

Esta semana, la administración Mujica finalmente sometió ante la cámara baja del congreso el ya largamente esperado proyecto de ley proponiendo la legalización de la marihuana en el país –al gobernante Frente Amplio (FA) el 13 de noviembre y a la oposición el 15 de noviembre. El documento propone que el estado controle la producción, distribución, y venta de la marihuana, pero también permite a los consumidores privados cultivar cierta cantidad de plantas para su propio uso. El Presidente Mujica dice que estas medidas son necesarias para evitar que los consumidores de marihuana entren en contacto con vendedores de drogas, quienes podrían ofrecer otras sustancias que crearían un mayor problema de salud. “Esto me hace hervir mi sangre, además me envenena, porque cada vez tengo que gastar más plata en policía, en cárceles y en las consecuencias. Y no tengo plata para atender a los enfermos”, dijo al periodista.

Sin embargo, Mujica también reconoció que vive en un país con una población anticuada que ve su propuesta con creciente desconfianza. “Uruguay es un país pacato, de viejos. La mayoría somos viejos y de tendencia conservadora. Uno le dice a la gente 'regularizar la marihuana' y te empiezan a mirar, ¿no? Como si fuera una cosa del diablo. Es todo una gran exageración. En realidad, la marihuana ha acompañado toda la epopeya del Nuevo Mundo. Merece que la tratemos con más respeto y conocerla mucho más”. Mientras Mujica reconoce que está luchando contra los “prejuicios” y que no debería imponer su voluntad, el FA tiene suficientes votos en el congreso para aprobar el proyecto de ley sin contar con el apoyo de la oposición –que ya se ha expresado en contra la legalización.

Encabezando una tendencia emergente

Durante la elección general del 6 de noviembre en EU, varios estados agregaron votaciones de consulta popular en las presidenciales y las legislativas. Los estados de Washington y Colorado votaron a favor de legalizar la marihuana para uso recreativos, por 55% - 44% en el primero, y 53% - 47% en el último. La decisión legaliza la posesión personal de hasta una onza de marihuana y permite su venta legal y aplicación de impuestos en locales con licencias. Sin duda su implementación se agregará a la complejidad de la seguridad en la frontera México-EU y en las relaciones EU-América Latina en general.

Días después de la votación en EU, Luis Videgaray, el jefe coordinador del equipo de transición del presidente electo de México, Enrique Peña Nieto, expresó su preocupación acerca del resultado. Esto recibió el eco del Presidente Felipe Calderón, quien dijo que exigía un “fundamental repensar de las políticas de las drogas a través del hemisferio”. El ministro del interior de Calderón, Alejandro Poiré, fue más lejos y dijo que los cambios en EU hacían “necesario” un debate global sobre el estatus legal de la marihuana a fin de establecer una “posición coherente”.

Mientras que México podría sentir un impacto por la aprobación de la ley, ya sea por la reducción en las ganancias de las organizaciones de tráfico de la droga, estas mejoras no entrarán en vigencia por cierto tiempo –si es que se llegan a materializar. También, el gobierno federal de EU, que no ha modificado su política de drogas, aún debe responder a las votaciones por la legalización (ver abajo).

• Opciones federales

Mientras que el Departamento de Justicia de EU reaccionó a los dos referendos  diciendo que su política sobre las drogas no ha cambiado, el fiscal general, Eric Holder, no se ha expresado tan abiertamente contra las medidas como él estaba contra las medidas con la Propuesta 19 de California en las elecciones de mitad de periodo en el 2010. Por lo tanto, no está claro cómo reaccionarán las autoridades federales. Ellas podrían: tratar de anular las decisiones sobre legalización en la corte; incrementar la presencia policial federal antidrogas y los esfuerzos en los dos estados; o selectivamente procesar a los usuarios, vendedores y distribuidores.

Peru’s transport and communications minister, Carlos Paredes, announced this week that the government had awarded a new 18-year mobile phone concession to Spanish telecoms firm, Telefónica.

In presenting the new deal, Paredes highlighted that after two years of negotiations Telefónica, Peru’s largest telecoms operator, had agreed to expand its coverage to 409 of Peru’s district capitals (out of a total of over 1,600) in order to provide its services to the country’s remote and rural areas during the new contract period. The firm has also agreed to provide free satellite internet services to schools, health posts and police stations in some 661 poorer districts, as well as to offer cheaper ‘social tariffs’ to 1m low-income Peruvians.

Telefónica said that the contract’s terms were “tough to accept” but that it had done so as a sign of its “long-term commitment to investing in Peru”, pointing out that the new measures would benefit 10m Peruvians. However, the local press and some political sectors heavily criticised the agreement, pointing out that Telefónica is still engaged in a legal dispute with the Peruvian government over US$860m in unpaid taxes, a figure that the company disputes. The press argued that instead of taking the opportunity to pressure Telefónica into paying up, the government appeared to be rewarding it with a large new contract.

Local congressman, Yohny Lescano, summed up the feeling when he declared that it was a “shameful and defeatist decision” by the government of President Ollanta Humala. Concerns have also been raised that Telefónica’s much-touted projected investments in Peru will be funded by higher tariffs for its existing customers in the country.

The government has sought to minimise the criticism arguing that it was careful that the contract’s terms should bring large benefits to the population by requiring the company to improve and expand its services across Peru. Whether the government will be successful in convincing the general population that this is the case is uncertain, but it is under pressure to do so.

The day after the announcement, the government said that Paredes would present the details of the new deal to congress on 23 January for scrutiny. Meanwhile, the Humala administration might also come under external pressure to stand by the contract as Spain’s prime minister, Mariano Rajoy, arrived in the country on 24 January for a one-day visit en route to the inaugural European Union (EU)-Community of Latin American & Caribbean States (Celac) summit to be held over the weekend (26-27 January) in neighbouring Chile. According to Spanish government official statements, the aim of Rajoy’s visit to Peru is to promote more Spanish investment.

Durante el fin de semana, el Partido da Social Democracia Brasileira (PSDB) eligió al senador Aécio Neves como presidente del partido para 2013-2015. Su aplastante victoria, abre el camino para su candidatura en la elección presidencial del 2014. Dado que la Presidenta Dilma Rousseff ya está en función de campaña, y permanece altamente popular, el PSDB tiene aún mucho por hacer, pero la anticipada elección de Neves, y el apoyo recibido de prominentes líderes del partido, le dan al partido una buena oportunidad para comunicar su mensaje político con mucho tiempo por delante.

En la convención celebrada en Brasília, Neves recibió el respaldo de 521 de los 535 delegados, incluyendo los principales líderes del partido. El ex presidente, Fernando Henrique Cardoso (1995-2003), partidario de Neves desde hace mucho tiempo, pidió a los miembros que "dejen de lado los intereses personales" y cierren filas detrás del nuevo presidente. Los rivales principales de Neves, tales como José Serra, el ex gobernador de São Paulo y dos veces derrotado candidato presidencial, y Geraldo Alckmin, actual gobernador de São Paulo, quien perdió ante Lula da Silva en el 2006, ofrecieron su apoyo y el de la maquinaria del partido de São Paulo.

Neves fue miembro de la cámara federal de diputados desde 1987 hasta 2002;  fue presidente de la cámara en 2001-2002, y gobernador de Minas Gerais, el segundo mayor distrito electoral en Brasil, desde el 2003 al 2010. Su abuelo, Tancredo Neves, fue electo presidente en 1985, poco después de la dictadura militar, pero falleció antes de asumir el poder.

En su discurso de victoria, Neves criticó a la Presidenta Rousseff y al gobernante Partido dos Trabalhadores (PT). Los acusó de poner al Estado "al servicio de su proyecto de poder" y atacó a la coalición gobernante por sus deficiencias en la educación, salud, ley y orden, y en la economía. "No será fácil: no me engaño a mí mismo, no estamos enfrentando a un partido político, sino más bien a un partido que ha capturado el Estado y que ha invertido la lógica de la democracia, y que ha puesto al Estado al servicio del partido y de su proyecto de poder y dominación", dijo Neves.

Dos partidos de oposición, el alineado con el PSDB, Demócratas (DEM), y el Partido Popular Socialista (PPS) saludaron la elección de Neves como presidente del PSDB. Los respectivos presidentes del DEM y el PPS, José Agripino Maia y Roberto Freire, enviaron notas de felicitaciones enfatizando la necesidad de presentar un frente unido de la oposición en las elecciones del 2014. A diferencia de otros líderes del PSDB, tal como Serra, se cree que Neves es más políticamente pragmático y consideraría alianzas más estrechas con el DEM e incluso con el PPS.

Brasil fortifica sus fronteras

Brasil está despachando 25.000 soldados para patrullar sus fronteras antes de la Copa de las Confederaciones en junio, en sí misma un ensayo para la Copa Mundial del año próximo. En años recientes, Brasil ha elevado su monitoreo de las fronteras bajo un plan llamado Operación Ágata. Esta última operación es la séptima de su tipo, y la más grande, con el doble del número de tropas desplegadas desde el último ejercicio, en julio del 2012.

Logísticamente, asegurar las fronteras de Brasil es desafiante: cinco veces más extensas que la frontera entre EU y México, limita con 10 países –incluidos los tres países mayores productores de droga del mundo– y que serpentea por más de la mitad de sus 16.886kms, a través de una densa selva. En su intento por asegurar las fronteras, el ejército usará aviones y bloqueos de rutas. La armada utilizará lanchas patrulleras de río y helicópteros, mientras que la fuerza aérea tendrá aviones de combate, radar de aviones, UAVs (drones = aviones sin tripulación) de fabricación israelí y helicópteros listos para ser desplegados.

En una declaración emitida por el ministerio de defensa, se describe el propósito de la operación como una lucha contra el tráfico de drogas, el contrabando, el tráfico de armas, delitos ambientales, contrabando de vehículos y la inmigración ilegal.

La semana pasada, la policía federal dijo que había descubierto una banda de tráfico de personas que operaba desde Bangladesh que había introducido personas de contrabando en Brasil para trabajar ilegalmente en la construcción bajo condiciones de trabajo esclavo.

• Se eleva el déficit de cuenta corriente

Una elevada factura por importación de combustible y una caída en los precios de las materias primas, ha llevado a que Brasil acumule un déficit comercial de US$6,15mm en los primeros cuatro meses del 2013, en agudo contraste con el superávit de US$3,299mm registrado en mismo periodo del año pasado. Sumándose al déficit de cuenta corriente, las compañías que operan en Brasil repatriaron US$2,5mm en ganancias y dividendos a su casas centrales en el exterior, un 5,1% más que en abril del 2012. El banco central ha pronosticado un déficit de cuenta corriente de US$67mm en el 2013.