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CHILE | Second transport crisis in as many weeks. Taxi collectives went on strike in Chile on 20 November bringing traffic on many of the major roads in the capital, Santiago, and other cities such as Valparaíso, Viña del Mar, Rancagua, Concepción and Temuco, to a standstill. Just six days earlier the transport network in Santiago was plunged into chaos as the Metro suffered a massive power failure, paralysing three of the five lines for the whole working day [WR-14-46]. On that occasion, the taxi collectives to some extent came to the rescue, picking up stranded commuters; on this occasion, commuters headed for the Metro.

Taxi collective drivers, who collect several passengers and charge a fixed fare instead of running a meter, made a series of demands. They want to be exempt from having to pay a fuel duty; to be able to use the exclusive lanes reserved for buses; to receive a ‘bonus’ from the State to maintain their vehicles; and, in the capital, they want some of the subsidies currently enjoyed by Transantiago, the metropolitan public bus rapid transit system.

The authorities had granted authorisation for the strike but not for collective drivers to abandon their vehicles on the streets, causing huge traffic jams during the morning rush hour. The transport ministry reported that about 30%-40% of taxi collectives took part in the strike nationwide - this was much higher in some cities, such as Valparaíso (90%) - but that only a small minority of drivers had caused the traffic jams by ditching their cars. The ministry said that they would feel the full weight of the law. There were some clashes on the day between taxi drivers and the police, who tried to clear routes, and in the process made at least a dozen arrests.

The transport minister, Andrés Gómez-Lobo, pretty much flew under the radar during his first few months since President Michelle Bachelet took office last March, but he now has one of the highest disapproval ratings of any cabinet minister (up at 54% in a survey by the local pollster Adimark – and that was carried out before the latest strike).

Gómez-Lobo might be prepared to meet some of the demands of the collective drivers but his ministry made it clear that there was absolutely no chance that taxi collectives would be permitted to use lanes reserved for buses as in rush hour a bus carries 100 people compared with four in a taxi collective.

Separately, Gómez-Lobo handed his report into the Metro chaos last week to President Bachelet, revealing that the principal cause of the power failure, which left hundreds of thousands of commuters high and dry, was an accumulation of rubbish on the lines.

• Chile taxi strike

The president of the Confederación Nacional de Taxis Colectivos (CNTC), Héctor Sandoval, said that the national strike carried out by Chile’s taxi collective drivers was a last resort. “This demonstration took place because they [the government] don’t tell the truth; it’s very sad that we had to reach the point of staging a nationwide strike”, Sandoval said.

Quizás para los estándares históricos de Brasil, la actual tasa de inflación del país, una tasa anualizada del 8,13%, no es ridículamente alta. Pero en términos de reciente memoria, es preocupante; desde diciembre del 2003 no ha sido tan alta. Solamente para marzo, la inflación se elevó un 1,32% comparado con un 0,92% durante el mismo periodo del año pasado. La meta del banco central (BCB) es, en teoría, del 4,5% con una banda de “tolerancia” de más o menos 2%. El creciente costo de vida podría haber sido políticamente más aceptable si hubiera estado acompañado de un conmensurable crecimiento económico. Pero no es así: en el 2014, la economía brasilera creció por sólo un 0.1% y, de acuerdo con el último sondeo de 100 economistas del BCB, es probable que se contraiga un 1,01% en el 2015.

Hasta el comienzo del año, la inflación había estado relativamente constante, en alrededor del tope del rango meta del BCB del 6,5%. Desde enero, sin embargo, ha comenzado a dispararse, alimentada principalmente por los recortes a los subsidios de energía, que elevaron los costos de la electricidad. De acuerdo con el instituto de estadísticas del Brasil (Ibge), el promedio de la factura de electricidad de los brasileros se ha elevado un 36% en el primer trimestre del 2015. Los precios de los alimentos también subieron en marzo, así como el impuesto sobre la gasolina y el costo de las tarifas de autobuses.

De acuerdo con el economista, Mauro Rodin, del think-tank Fundação Getulio Vargas, Brasil está pagando por sus errores pasados. “La política de intentar controlar la inflación manejando los precios no fue efectiva”, dijo Rodin. “Las alzas fueron evitadas en el 2014 porque fue un año electoral”, Rodin añadió.

Levy a cargo

La revista, Carta Capital, de esta semana, discutiblemente la única revista semanal de noticias en Brasil de gran tirada ampliamente simpatizante del gobernante Partido dos Trabalhadores (PT), salió con el título de ‘Joaquim [Levy] a cargo’. La revista detalla la extensión a la que Presidenta Dilma Rousseff parece diferir el manejo económico a su nuevo ministro de finanzas. “Levy es extremadamente importante para el Brasil de hoy, tiene mucha fuerza”, dijo Rousseff en una entrevista con Bloomberg la semana pasada. Ella también expresó su total apoyo por el plan de Levy de obtener un superávit fiscal primario del 1,2% del PIB este año.

Mientras que a Levy puede no faltarle fuerza o del apoyo de Rousseff, y al parecer disfruta de la confianza de los inversionistas, Levy ha tenido algunos problemas de comunicación. En una entrevista ligeramente confusa con los periodistas, el 8 de abril, a Levy se le preguntó si pensaba que Brasil iba a terminar el año con una inflación por encima del rango meta del BCB. “Ciertamente”, dijo él, antes de aclarar subsecuentemente que él se refería a que el BCB llevaría la inflación en línea con su meta rango. En una reciente entrevista en inglés con estudiantes de la Universidad de Chicago, Levy hizo algunos comentarios críticos del primer mandato de Rousseff; él también se ha visto forzado a pedir disculpas por llamar a las políticas de exenciones fiscales para ciertas industrias de su predecesor, “una broma”. Coincidentemente o no, su principal oficial de prensa, Fernando Thompson, dejó su cargo el 1 de abril.

Abriendo la Caixa

En la conferencia de prensa en la cual él cometió la gaffe sobre la inflación, Levy planteó la posibilidad de una oferta pública inicial (IPO, siglas en inglés) de acciones en la compañía de seguros controlada por la estatal Caixa Econômica Federal. Actualmente, el gobierno solamente está conduciendo un estudio de viabilidad, pero si es aprobado, la oferta podría ocurrir a finales de año.

Según Levy, obtener nuevo capital a través de la venta de acciones fortalecería a la Caixa y beneficiaría a los compradores de seguros en Brasil. Aún así, la ministra y jefa ejecutiva (CEO) de la Caixa, Miriam Belchoir, fue firme en que la Caixa permanecería “100%” controlada por el público (ver abajo).

• Caixa

El modelo para la movida de la Caixa es una derivación del utilizado en la compañía de pensión y de seguros, BB Seguridade, del estatal Banco do Brasil que, de acuerdo con Levy, “probó ser un gran éxito”. El Banco do Brasil recaudó R$11,5mm con la venta de BB Seguridade en el 2013. El ministro de finanzas Levy, sin embargo, no se explayó sobre cómo la apertura de ventas de acciones en la Caixa podrían impulsar las finanzas del gobierno. Cualquier beneficio sería levemente tangencial, derivado de ganancias mayores lo que a su vez derivaría en mayores dividendos para el principal tendedor de acciones, el gobierno federal.

Renewable energy: On 27 July the executive president of Bolivia’s state-owned national electricity company (Ende), Eduardo Paz, told reporters of plans to implement 11 renewable energy projects in Bolivia by 2020, which will generate an additional 400 MW

With an investment of at least US$600m, these projects will allow Bolivia to increase the proportion of its wind, solar, geothermic and biomass energies from 1% to 4% of total energy production. As such, the Morales government is forecasting that thermoelectric production will drop from 65% of the total to 26% by 2025, while hydroelectric production will double from 35% to 70% in the same period.

Also on 27 July, Energy & Hydrocarbons Minister Luis Alberto Sánchez told reporters that the government plans to have “a surplus of 2,500 MW by 2020 and of 10,000 MW by 2025”.

Tax take up: On 7 August the head of Bolivia’s tax agency (Servicio de Impuestos Nacionales, SIN), Erik Ariñez, said that Bolivia’s tax take was B$32.0bn (US$4.51bn (not including the direct hydrocarbons tax [IDH]) in the first seven months, up by 6.5% on the same period of the previous year. Three days later, (10 August) the SIN, which is on a drive to combat tax evasion, announced plans to intervene in 556 businesses across the country for failing to comply with current tax regulations.

Growth: On 10 August Economy & Finance Minister Luis Arce told reporters that Bolivia’s GDP had grown by 4.6% year on year in the first half of 2015, with 5% growth projected overall for the year. The United Nations Economic Commission for Latin America and the Caribbean (Eclac) forecasts real annual GDP growth of 4.5% growth for Bolivia in 2015, down from 5.4% in 2014.

• Inflation

Inflation in the month of July was 0.61%, according to the national statistics institute (INE), bringing the accumulated year-to-date rate to 1.7%. The annual rate was 3.06%. Inflation in 2014 was 5.2%.

Bolivia’s foreign minister, Fernando Huanacuni, has travelled to Geneva, Switzerland to make a formal complaint against Chile before the Office of the United Nations High Commissioner for Human Rights (OHCHR) over the detention by Chilean authorities of nine Bolivian nationals. The incident is serving as the latest source of tension between the two governments which have a case before the International Court of Justice (ICJ) with regard to Bolivia’s historic claim of access to the Pacific, which it lost in the 1879-1883 War of the Pacific.

The latest spat erupted after the Bolivians (two members of the military and seven customs officials) were arrested by Chile’s militarised police, Carabineros, on 19 March. The Chilean government led by President Michelle Bachelet claims that the Bolivians – who are currently being held on a preventative basis in Chile’s Alto Hospicio prison in the Tarapacá Region – were on Chilean territory, 400m from the border, and accuses them of attempting to steal a truck carrying contraband. The Bolivian government led by President Evo Morales, however, maintains that while the officials were close to the border, they had seized the truck carrying contraband in Bolivian territory. The Morales government has consequently accused the Carabineros of illegally entering Bolivian national territory bearing arms to ‘kidnap’ the Bolivian officials.

The Morales government has been quick to ratchet up the rhetoric. As well as Huanacuni’s intervention, on 22 March Bolivia’s defence minister, Reimy Ferreira, announced that the Movimiento al Socialismo (MAS) government would fight the cause of the Bolivian nationals via three channels – legal, diplomatic, and international. As part of this Ferreira, who has also called for a boycott of Chilean products, said that the government intended to present a formal complaint against Chile before the Inter-American Commission on Human Rights (IACHR) on the basis that the Bolivians were mistreated and abused by Carabineros.

The timing of the flare-up is not a surprise. It comes as the Morales government presented its case against Chile before the ICJ on 21 March. The case rests on the argument that Chile has an obligation to grant Bolivia access to the Pacific. Bolivia claims that Chile has failed to fulfil certain pledges made in the 1904 peace treaty that ended the War of the Pacific, maintaining that “the sole subject-matter of the dispute is the existence of an obligation incumbent upon Chile to negotiate in good faith Bolivia’s sovereign access to the Pacific Ocean, and the breach of that obligation”. Bolivia argues that this obligation derives from “agreements, diplomatic practice and…declarations attributable to [Chile] extending over more than a century, [that] exist independently of the 1904 peace treaty”. Chile has until 21 September to file its response.

Chilebol

Against this backdrop of renewed animosity, it is worth pointing out that channels of cooperation do persist. Following the ninth meeting of the binational mixed commission on drugs which took place on 26 January in Santa Cruz city, the capital of Bolivia’s eponymous eastern department [WR-17-04], on 27 March business groups from both countries established the Chilean-Bolivian chamber of trade, industry, services and tourism (Chilebol) which seeks to promote business links, trade and investment for companies operating in the respective countries.

A report released on 30 January by a Bolivian private sector lobby, IBCE, notes that Bolivia’s exports to Chile reached just US$88m in 2016, out of a total of US$7.2bn. This is down from US$91m in 2015 (out of a total of US$8.9bn). Imports from Chile to Bolivia reached US$348m in 2016 (out of Bolivia’s total of US$8.4bn) – down from US$446m in 2015 (out of US$9.8bn).

• Visa

Further stoking tensions, Bolivia’s defence minister, Reymi Ferreira, has complained that the Chilean authorities have denied him a visa to enter Chile in order to visit the Bolivian nationals. This led his Chilean counterpart, José Antonio Gómez, to issue a statement on 27 March claiming that the Bolivian government had not informed Chilean officials of Ferreira’s proposed visit, via official channels. In his statement Gómez said that “when there is a visit of this kind” it is “normal” that the “ministers communicate with each other” but this “had not been the case with Ferreira’s proposed visit”. The Bachelet government announced last year that visas would be a requirement following a bilateral spat over Chile’s initial refusal to allow a Bolivian delegation to inspect the northern port of Arica [WR-16-24].

US Vice President Mike Pence last week paid a visit to Guatemala. He had announced the stopover mid-June in the wake of the 3 June eruption of the Volcán de Fuego [WR-18-13], to offer “support to the people of Guatemala as they recover and rebuild”. Yet the focus ended up being on migration, and a meeting which took place between Pence, Guatemala’s President Jimmy Morales, and his Honduran and Salvadorean peers, Juan Orlando Hernández, and Salvador Sánchez Cerén respectively. The encounter once again exposed the policy differences between the current US administration led by President Donald Trump and its predecessor (led by Barack Obama [2009-2017]) with regard to addressing the migrant crisis.

Pence’s 28 June meeting with the leaders from the so-called ‘Northern Triangle’ (Guatemala, El Salvador, and Honduras) attracted particular attention in the wake of criticism of the zero-tolerance policy pursued by the Trump administration, which criminally prosecutes any migrant or asylum seeker who crosses the border outside of designated ports of entry. Announced back in April 2018, the policy has attracted censure in recent weeks due to the fact that when adults accompanying children are held for prosecution they are separated from their children. The US-based think tank Washington Office on Latin America (Wola) cited figures which show that 1,995 children had been separated from 1,940 adult guardians from 19 April to 31 May.

Such was the outrage that President Trump was ultimately forced to back down on 20 June and reverse the family separation policy. However, the US media reported ahead of the meeting with the Northern Triangle leaders that Pence appeared to defend the zero-tolerance approach. In the meeting itself, he called for the Central American leaders to do more to stem the “exodus” of people trying to come to the US illegally; tighten control of their borders; and crack down on smugglers. In a series of tweets, he told them to “tell your people that coming to the US illegally will only result in a hard journey and a harder life”, urging them to “take down public advertisements for human traffickers…Renew the fight against corruption, criminal groups, & gang violence…”

Pence’s remarks, and more generally Trump’s zero-tolerance policy, have again attracted criticism from human rights groups and think tanks such as Wola for failing to address the root causes of migration in the first place: the lack of economic opportunity and endemic levels of violence, corruption, impunity, and weak institutions in the Northern Triangle countries.

• Homicide rates

The US-based think tank Washington Office on Latin America (Wola) notes that despite “important reductions in the overall murder rates in El Salvador, Honduras, and Guatemala in the last several years, they rank among the most violent countries in the world”. In 2017, El Salvador registered a homicide rate of 60 per 100,000 people, or 3,947 murders. Neighbouring Guatemala and Honduras reported rates of 26.1 and 42.8 respectively. In comparison, the US had a homicide rate of 4.8 that same year.

It bears marked contrast to the more comprehensive approach to addressing the root causes favoured by the previous Obama administration, like the US-backed Plan of the Alliance for Prosperity (PAP). This was a US$1bn aid package launched in 2014 in support of poverty reduction and economic development. Funding for this initiative has reportedly been cut to about US$600m.

Guatemala requests TPS

During Pence’s visit President Morales reiterated a request made on 25 June by Guatemala’s foreign minister Sandra Jovel to the US government for Temporary Protected Status (TPS) which temporarily allows those fleeing countries afflicted by war or natural disasters to live and work legally in the US. Jovel gave as the reason the devastation caused by the eruption of Volcán de Fuego on 3 June which has left 113 people dead and more than 1.7m affected.

In recent months however the US administration has cancelled TPS for Nicaragua, Haiti, El Salvador, and Honduras, suggesting that the Morales government stands little chance of success.

Opposition groups such as Alianza Cívica por la Justicia y la Democracia (ACJD), civil-society organisations, and the international community have all expressed concern about two new legislative bills tabled by President Daniel Ortega’s Frente Sandinista de Liberación Nacional (FSLN) - a new cyber-security bill and the so-called ‘foreign agents’ bill. ACJD is among those accusing the Ortega government, which since April 2018 has been carrying out a crackdown on its opponents whom it accuses of seeking to carry out a coup, of enacting a new wave of repression, with just over a year until the November 2021 general elections.

Unveiled on 22 September the foreign agents bill, which would require organisations and individuals that receive money from international governments and institutions to register as ‘foreign agents’ with the interior ministry (Mingob), has been justified by the FSLN (which controls the 92-member unicameral legislature) as necessary for state security in the face of foreign interference. Claiming that similar bills have been implemented in other countries, including the US and Brazil, congress president Gustavo Porras (FSLN) said that those who do not receive funds to conspire against the state “have nothing to worry about”. He clarified that the bill “has nothing to do” with remittances, investments, financial activities, and existing trade agreements.

The bill, however, has sparked widespread concerns. A 24 September statement by local human rights group Centro Nicaragüense de Derechos Humanos (Cenidh) warned that it violates at least 10 articles on civil and political rights enshrined in the constitution and international treaties. Fears were also raised by the US (US Assistant Secretary of State for Western Hemisphere Affairs Michael Kozak described it as a “dangerous affront to democracy in Nicaragua”), members of the European Parliament, the Inter-American Commission on Human Rights (IACHR), and press freedom groups such as the US-based Committee to Protect Journalists (CPJ). The latter singles out the stipulation that ‘foreign agents’ must “refrain, under penalty of legal sanctions, from intervening in questions, activities or matters of internal politics” - which could exclude opposition members from participating in the 2021 elections.

Less than a week later, on 28 September, the FSLN presented a cyber-security bill which similarly met with alarm from the opposition. With the declared objective of “providing a legal framework for the prevention, investigation, prosecution and sanctioning of crimes committed through information and communication technologies”, the bill sanctions crimes such as fraud or cyber-espionage or use of the internet to corrupt minors or for child pornography with prison sentences of two to 10 years.

The provision which has attracted particular concern, however, is that making “the publication or dissemination of false (or) distorted information which produces alarm, fear or distress among the public” punishable by up to four years in prison. With press freedom concerns already rife following the seizure last month of the assets of Canal 12, one of the two independent TV channels currently operating in Nicaragua [WR-20-37], the mention of “false or distorted information” attracted attention given doubts over the official narrative which most recently emerged in relation to the coronavirus (Covid-19) pandemic.

According to a 31 August report by US-based think tank Inter-American Dialogue (IAD), President Ortega accused the press of spreading false news regarding the government’s “cover-up of Covid-19 cases, characterising the reporting as ‘disinformative terrorism’.” At the end of June, the United Nations High Commissioner for Human Rights, Michelle Bachelet, singled out Nicaragua (alongside Brazil and the US) as countries where official communications “deny the reality of viral contagion”.

Life sentences

A further proposed legal reform to have sparked opposition concerns would allow life sentences in prison. In a speech on the 199^th anniversary of Nicaragua’s independence, on 15 September, President Ortega acknowledged plans to amend the law in order to address “hate crimes”, accusing government opponents and those active in the protests which began in April 2018 of being “children of the devil…and full of hatred”. The idea of life sentences had been floated the previous day by First Lady and Vice President Rosario Murillo in response to the rape and murder of two girls which took place on 12 September in Mulukukú municipality in the North Atlantic Autonomous Region (Raan).

PERU | Mining. The government announced on 21 September that it will conduct a prior consultation process with indigenous communities living near the Antapaccay copper mine project operated by the Anglo-Swiss mining company Glencore. The announcement came the day after a government delegation met the leaders of indigenous communities in the province of Espinar, in the southern region of Cusco, who had blocked the key access route, known as the ‘Corredor Minero Sur’, or southern mining corridor, for a week to demand a consultation process over the Coroccohuayco expansion project.

The energy and mines ministry will lead the prior consultation process with meetings to discuss issues related to education, territory, and sustainable development. The prime minister, Aníbal Torres, agreed to coordinate with each of the communities over the course of the next three months to draw up a plan of action, as well as a compensation plan identifying and evaluating the damages they claim to have suffered.

Glencore said on 16 September that the Coroccohuayco expansion of the Antapaccay mining project was “under review”. The Anglo-Swiss mining company said this review had been in the pipeline for months and had nothing to do with the protests.

The government moved quickly to nip these protests in the bud after being accused of a very slow response earlier in the year when the same mining corridor was blocked amid protests by six local indigenous communities against the massive Las Bambas open-pit copper mine, in the region of Apurímac, run by China’s MMG. Production at Las Bambas was paralysed between April and June when it resumed after indigenous protesters agreed to sit down at the negotiating table.

On 14 September MMG and representatives of the indigenous communities struck 83 accords, including employment opportunities and training programmes for those seeking to work in the mining sector and equipment to help modernise the local agricultural sector. On 17 September the government signed a resolution extending the working group comprising MMG, indigenous communities, and the government until the end of December to accompany and evaluate the fulfilment of these accords. 

Paraguay’s interior minister, Enrique Riera, announced a series of measures on 8 February designed to enhance the traceability of firearms. The planned overhaul of the firearms law by the government led by President Santiago Peña comes against the backdrop of a major security operation conducted alongside Brazilian and US authorities to dismantle an illegal arms-trafficking network that exposed institutional corruption in Paraguay.

Riera was speaking at a joint press conference with Rear Admiral Cíbar Benítez, the permanent secretary of the national defence council (Codena), and General Melanio Salomón Servín, the head of the Dirección de Material Bélico (Dimabel), the entity in charge of the import, export, and licensing of firearms. Riera said the proposed provisions and revisions to the firearms law would allow the Paraguayan state to recover control over the import of weapons and explosives, determining exactly how many weapons are imported, who imports them, how they are paid for, and whether or not they comply with the requirements of the law.

Riera added that the key measures were not just imposing limits on the quantity of arms and munitions that can be legally imported annually but also fixing parameters for their sale, taking into account the calibre of the firearms, and their components and characteristics. However, it is not clear that ensuring that legally imported firearms are better tracked and registered will address the problem in the future. Combating official corruption will be the key. Salomón Servín said that between 2022 and 2023 some 60,000 imported weapons had entered the country legally but admitted that it had lost track of 17,300 of them.

President Peña appointed Salomón Servín to head Dimabel on 4 December, replacing General José María Balbuena Samudio amid signs of corruption at Dimabel uncovered during ‘Operation Dakovo’, a joint investigation involving Paraguay’s anti-drugs agency (Senad), Brazil’s federal police (PF), and personnel from the US government’s Homeland Security Investigations (HSI). Peña suspended firearms imports in October last year, amid suspicions about Dimabel; revisions to the firearms law could pave the way for his lifting the suspension.

Several senior military officials at Dimabel, including a former director, Jorge Antonio Orué; head of the firearms registry (Renar), Bienvenido Santiago Fretes González; and former chief of the imports division, Josefina Cuevas, as well as a former commander of the air force, Arturo Gon­zález, replaced last November by Peña, were among 13 arrests made on 5 December in connection with the operation.

The officials had suspicious links to Diego Hernán Dirisio, an Argentine who ran International Auto Supply, a company based in Asunción, that imported around 43,000 illegal firearms manufactured in Croatia, Turkey, the Czech Republic, and Slovenia over the past three years. The serial numbers were then scraped off along with the manufacturer’s logo before they were sold to intermediaries and then sold on to the Brazilian criminal gangs Primer Comando Capital (PCC) and Comando Vermelho (CV).

On 31 January Senad head, Jalil Rachid, said the operation showed that Paraguay had become “a logistics centre for international arms trafficking”, in a press conference with Brazil’s then-justice & public security minister, Flávio Dino.

Dirisio arrested

The arms dealer Diego Hernán Dirisio and his Paraguayan wife, Julieta Nardi, were arrested by Interpol on 2 February in the Argentine city of Córdoba after a month on the run.

After lengthy negotiations, Brazil and Paraguay have reached an agreement on the price and distribution of electricity generated by the binational Itaipú hydroelectric complex. The move will generate more income for Paraguay and paves the way for a broader renegotiation of the so-called Annex C of the original accord of 1973, which regulates how much energy each side can sell to whom.

Under the agreement the new tariff will be raised from US$17.66 to US$19.28 per kilowatt-month for 2024-26. Paraguay will also be allowed to sell its surplus energy directly to Brazilian distributors on the spot market, which commands higher prices. Previously Paraguay had to sell through the ‘regulated market’ at a contractually agreed fixed rate.

To some extent Paraguay got the better deal, at least for now, because it got Brazil to agree to a price increase even though the cost of power generation actually fell. In exchange Asunción agreed to lower rates further down the line, and the tariff will fall to around US$10-12 from 2027.

Itaipú last year paid off all the debt it had incurred during its construction half a century earlier and therefore no longer incurs any financial costs. That means that it has started producing electricity cheaper than it used to. As a result, Brazil had argued for keeping the rates unchanged for 2024 and 2025, while Paraguay wanted a rate of US$22.70, according to O Globo newspaper.

A higher price for Paraguay means a net increase in income because it uses far less than the 50% of the electricity that it is entitled to. The extra income will allow Paraguay to finance a host of infrastructure and social welfare projects. Between royalties, energy compensation, and other sources, income will total US$1.25bn per year.

For many years Paraguayans had been increasingly discontent with the Itaipú agreement because they felt Brazil had used its diplomatic and economic muscle to impose a deal that favoured its bigger neighbour disproportionately. Indeed, while both countries paid for the dam equally, Brazil consumed the lion’s share of the electricity generated by Itaipú – around 80% in 2019 – at rates far below market prices. According to Paraguay, the dam across the Paraná River, at the time the largest in the world, cost US$63.5bn. Brazil, which guaranteed much of the funding, says it was US$17.6bn.

Leniency

Brazil’s President Luiz Inácio Lula da Silva has often argued for more lenient terms in trade and economic ties with the South American giant’s smaller neighbours. He has been an ardent defender of regional integration and maintaining alive the trade bloc Mercosur, of which both Paraguay and Brazil are a part, along with Uruguay, Argentina, and Bolivia.

Brazil will offset the increased operational cost from Itaipú with the lower financial costs it incurs after the company’s debt was paid off last year, thus being able to maintain rates for end-users unchanged. “Paraguay obtained a certain increase but this increase will be financed through Itaipú’s cash flow,” said Brazilian Itaipú director Enio Verri. “The Brazilian population won’t have to pay for this tariff [increase].”

The two countries now hope to conclude the renegotiation of Annex C by the end of the year.

Brazilian authorities as well as public security experts have expressed concern over the connections between organised crime and gun owners with CAC licences (a certification for hunters, sport shooters, and gun collectors). Police in São Paulo state highlighted these suspected links during an investigation in September into armed robberies carried out by criminal gangs. The guns for these attacks were mainly supplied by CAC licence holders, while footage has also emerged which suggests that licenced gun owners have been giving shooting lessons to gang members.

On 10 September the São Paulo state prosecutors’ office (MPSP) announced that it had launched a new phase of Operation ‘Baal’, a joint investigation between the MPSP’s special unit against organised crime (Gaeco) and the federal police (PF) which was first launched in May this year. Gaeco and PF personnel are seeking to uncover the perpetrators of a coordinated series of attacks last year in which suspected gang members attempted to rob vehicles transporting large sums of money. The attacks took place in Mato Grosso state, but the suspected masterminds, suppliers, and financiers of the plan are believed to be in other states such as São Paulo.

In May, Gaeco and the PF noted that the weapons used in the failed robbery were mainly supplied by CAC licence holders and arrested some CACs, including a man named Otávio de Magalhães. In September, police arrested more suspects, some of whom are believed to be members of the powerful Brazilian drug trafficking group Primeiro Comando da Capital (PCC). During this police raid, investigators even found video footage appearing to show De Magalhães giving shooting lessons to PCC members.

The case arising from the attempted robbery in Mato Grosso last year has reinforced the PF’s previous suspicions about the links between CACs, drug trafficking organisations (DTOs), and armed robberies. In addition to Operation Baal, the PF in Bahia state launched another investigation into CACs, dubbed Operation ‘Fogo Amigo’ (‘friendly fire’), which also began in May this year. Fogo Amigo is an investigation into CACs and owners of gun shops in Bahia, Alagoas, and Pernambuco states, who are believed to be arms suppliers for criminal gangs in north-eastern Brazil.

Brazilian public security NGO and think tank Instituto Sou da Paz (ISP) has also warned of the blurred boundaries between the legal and illegal firearms markets and called for better regulations on gun ownership. Data collected by ISP showed that an increasing number of organised crime cases involved crimes committed using weapons supplied by CACs. The rise in cases occurred during the presidency of far-right former president Jair Bolsonaro (2019-2023), and ISP has explicitly blamed Bolsonaro for passing legislation which made it easier for civilians to access high-calibre weapons. In 2018, before Bolsonaro took office, the country only registered three criminal cases which involved gang members using CAC-licenced weapons, but in 2022, the number of cases rose to 11, and in 2023 a record 12 cases were registered, according to ISP.

ISP noted that it is not only major transnational DTOs such as the PCC which benefited from Bolsonaro’s loosening of gun control regulations, but also gangs that run regional drug trafficking routes and other local criminal enterprises, such as the Primeiro Grupo Catarinense in the southern state of Santa Catarina, Okaida in the north-eastern state of Paraíba, and Amigos do Estado in the central state of Goiás.

Shooting range rules

In July last year, President Luiz Inácio Lula da Silva issued a decree which redressed Bolsonaro’s pro-gun legacy and tightened restrictions on gun ownership, setting new regulations for CACs, among other measures. The decree also imposed restrictions on shooting ranges, such as a rule which prohibits them from operating within 1km of a school. In early September this year, right-wing lawmakers advanced legislation proposing changes to Lula’s decree, but the legislation was withdrawn after government-aligned legislators reportedly promised that Lula would issue a new gun control decree with more lenient rules for shooting ranges. At the time of writing, Lula had not yet signed this new decree.

In January, the government of Peru’s then president José Jerí (2025-2026) issued a decree allowing for the restructuring of state oil company Petroperú, permitting private investment in its key assets, which could be separated into blocks. Peru’s investment promotion agency (Proinversión) has been tasked with evaluating 60 key assets belonging to Petroperú, which include the company’s main headquarters in Lima.

Petroperú has been in a state of crisis since modernisation works at its Talara refinery in the Piura region went heavily over budget in 2022. The final cost was US$6.5bn, double the original estimate, and resulted in Petroperú losing its investment grade rating that year. According to the mining and energy ministry, the company accumulated losses of US$479m between January and October 2025, and debts to suppliers of US$764m between January and December 2025.

Under Jerí’s predecessor, Dina Boluarte (2022-2025), the government committed to bailing out the company. In February 2024 it authorised an emergency loan of US$800m from state-owned bank Banco Unión, and a further credit line of up to US$500m. The mining and energy minister at the time, Rómulo Mucho Mamani, declared that Petroperú was bankrupt, but that the financial bailout would alleviate cashflow pressures and thus be beneficial in the long term.

However, just over six months later, in September 2024, the entire executive board of Petroperú resigned, with CEO Oliver Stark accusing Boluarte of refusing to make difficult decisions regarding the company’s future. The board declared that it would be “immoral” for Petroperú to continue receiving bailouts from the Peruvian government, particularly given widespread poverty and social inequality in Peru, and called for the company to either be allowed to go bankrupt or for it to be restructured and partially privatised. However, Boluarte rejected both of these options, describing Petroperú as “the country’s only strategic company” and blaming its precarious financial situation on many years of corruption and inefficiency.

Jerí’s restructuring announcement failed to assuage concern at Moody’s, the credit ratings agency, which announced on 28 January that it had lowered Petroperú’s rating from B3 to Caa1, and changed the company’s outlook from ‘stable’ to ‘negative’. Moody’s expressed concern that support from the Peruvian state has tended to be reactive rather than proactive. The change in rating suggests an increased vulnerability to adverse conditions that could impact Petroperú’s capacity to meet its financial obligations. Moody’s said that “further downward pressure could arise if liquidity deteriorates further, restructuring or asset transfer actions weaken creditor protections, or the company engages in transactions that we deem to be distressed exchanges”.

The restructuring announcement also triggered protests in Talara, where residents and workers blocked the main highway. Their main objection was to a potential ‘covert privatisation’ of Petroperú and its key assets, including the refinery.

The Cuban government appears to remain committed to its sweeping market-friendly economic reforms, a total of 176 measures first announced in June. These cover increased private sector participation in the economy, together with incentives for foreign investment and the easing of banking, foreign currency and trade rules. On 2 September the authorities published 34 pages worth of new rules and changes to law in Cuba’s official gazette.

Foreign Trade Minister Oscar Pérez-Oliva said his government is “increasing flexibility, simplifying processes, reducing timeframes and red tape, and above all responding to the demands … of investors to facilitate their business operations in Cuba and make their companies more efficient.” The latest measures notably allow foreign companies, including those in the tourism industry, to hire staff directly, instead of having to go through state employment agencies that tend to favour members of the Partido Comunista de Cuba (PCC). Additionally, foreign companies setting up joint ventures will henceforth be required only to inform the authorities, rather than seek permission to operate.

While many welcome the reforms, there are concerns that they are simply too little and too late. US sanctions and domestic mismanagement are still a powerful disincentive to foreign investors. The economy continues in free-fall, with the University of Havana’s centre for the study of the Cuban economy (CEEC) calculating that GDP fell by 5% in 2025, the third year of contraction. There are now reportedly long daily queues outside banks since there is a shortage of CUP10,000 and CUP20,000 currency notes (worth respectively US$14 and US$28 on the black market). In late September, the black-market dollar reached a record CUP700 according to international newswire Reuters.

• Fiscal deficit

In its latest report presented on 25 September, the University of Havana’s centre for the study of the Cuban economy (CEEC) highlighted some stark indicators. These include the fact that Cuba’s accumulated fiscal deficit in the first half of 2026 reached CUP35.02bn (US$1.46bn on the official rate), compared with CUP7.7bn in the same period in 2025 – a deterioration which CEEC attributes to a shortall of revenues of over CUP26.3bn associated with the contraction in economic activity. CEEC said that the Cuban finance ministry is projecting that 2026 will close with a deficit of CUP132.91bn, nearly double that registered in 2025, and equivalent to approximately 11% of GDP. 

Having faced major criticism over its hydrocarbons policy following the failed attempt at ending fuel subsidies (el gasolinazo) late last year [RA-11-01], the government of President Evo Morales has once again been forced to admit mistakes in relation to the energy sector, this time with regard to electricity. Technical problems and maintenance issues afflicting two of the main generating companies, Guaracachi and Valle Hermoso (both state-run), which left six of the country’s nine regions facing blackouts last month, have exposed the lack of investment in infrastructure, triggered concern from the private sector and raised familiar questions over the government’s handling of the nationalisation process.

Earlier this month, at an event held by the umbrella business chamber of Santa Cruz (Cainco), Morales admitted his government’s electricity sector policy contained “errors” after Santa Cruz – which accounts for 40% of energy consumed - La Paz, Cochabamba, Oruro, Sucre and Potosí faced black-outs the previous month due to a 144MW shortfall. Warning that the problem is likely to worsen in September and October, the national committee for load dispatch (CNDC), the technical body responsible for operating the national interconnected system (SIN), which supplies 90% of total national demand, points out that while Bolivia’s generation capacity stands at some 1,235MW, losses and “unavailability” can reduce it by as much 129MW a month. This, the CNDC warns, raises questions over the SIN’s capacity to meet demand, which is expected to reach 1080MW in September and 1100MW in October.

The government, which strengthened state control over the sector in May 2010 when it took over Guaracachi (which accounts for a third of electricity generated), Valle Hermoso and Corani, bringing 80% of the country’s electricity generation under the control of the state-owned power company, Ende [RA-10-06], is in part blaming the problem on the state in which it found Guaracachi. The government claims Guaracachi was on the verge of bankruptcy, with debts amounting to US$83m. Eduardo Paz, Guaracachi’s manager, is also blaming climate change for the gap between supply and demand. He pointed out that while the average temperature in Santa Cruz between September and January was previously 34°C, it had now risen to between 36-37°C – with each degree translating into an additional 20-30MW demand for air-conditioning - while La Paz has seen its temperatures plummet.  Yet critics more generally accuse the government of failing to plan sufficiently for the increased demand caused by GDP growth which, in a July report on the SIN’s 2011-2022 long term-plan, the CNDC estimates will expand by an average of 4.5% between 2011 and 2016. The same report also forecasts that demand over the same period would increase by 50%, from 6,201GW/h to 9,343GW/h.

Response
As was the case with the gasolinazo [RA-11-01], the government has reacted to the criticism with promises of investment. Bolivia’s central bank (BCB) has granted a US$176.2m loan to the Ende for four generation projects undertaken by Valle Hermoso, which aim to contribute an extra 114MW to the SIN.  Hortensia Jiménez, the deputy minister for electricity, said the government was planning to assign a total of US$841.7m to the sector up to 2015, a 385.3% increase on the amount executed over the 2006-2010 period. As well as the Valle Hermoso turbines and other thermoelectric projects, such as the Tarija-based Termoeléctrica del Sur project which is slated for completion by 2013 and aims to contribute an additional 120MW,  Jiménez highlighted government plans to construct ten hydroelectric projects by 2020. This also addresses another source of criticism: the country’s dependence on thermal energy to produce electricity which, according to the CNDC, accounted for 38% of generation capacity at the end of 2010, with the remainder coming from hydroelectric plants.

• Tipnis.

The stand-off between the government of President Evo Morales and indigenous groups over a proposed road that cuts through an indigenous territory and national park, Isiboro Sécure (Tipnis), has yet to be resolved. Although on 26 August both sides agreed to set up six negotiating tables to address the dispute, talks have since ground to a halt after the government failed to comply with the indigenous groups’ demand of sending half the cabinet (10 ministers) to the negotiating tables.

BELICE | Despenalizando la marihuana. Como el último signo del giro regional sobre las políticas sobre las drogas, el gobierno beliceño del Primer Ministro Dean Barrow anunció esta semana que había designado un comité responsable de elaborar propuestas para despenalizar la posesión de pequeñas cantidades de marihuana. Subrayando que “la propuesta no es para legalizar la infracción [...] sino solamente reducir y regular”, la prensa oficial reveló que el gobierno se propone despenalizar la posesión de hasta 10 gramos de marihuana, así, alguien atrapado con la droga estaría sujeto a multas y una obligatoria educación sobre la droga pero no sufrirá prisión. Bajo la actual legislación, la posesión de menos de 60 gramos de marihuana es tratada como un delito, con penas de multas de hasta B$50.000 (US$25.512) y/o hasta tres años de cárcel. Cualquier cantidad por encima de ese peso es catalogada como tráfico.

De acuerdo con las últimas cifras de la Oficina de las Naciones Unidas sobre Drogas y Delito (UNODC), Belice tiene el más alto predominio del uso de la marihuana como porcentaje de la población de entre 15 a 65 años (8,5%); que Guatemala (4,8%); Panamá (3,6%); Nicaragua (1,1%; Costa Rica (1,0%); Honduras (0,8%); y El Salvador (0,4%). La decisión de designar un comité siguió al anuncio del mes pasado del Presidente de Uruguay, José Mujica, que él estaba proponiendo un plan para legalizar la venta de marihuana por el Estado, aunque desde entonces él ha dicho que sólo seguiría adelante si la propuesta tiene el apoyo del 60% de la población.

CUBA | Brote de cólera. El 14 de julio, el ministerio de salud de Cuba emitió un comunicado de prensa declarando que hubo 158 casos confirmados de cólera y que tres personas han muerto desde que se descubrió por primera vez la enfermedad en Manzanillo, una ciudad en sudeste del país. Las autoridades cubanas primero informaron del brote el 3 de julio, afirmando que hubo 53 casos. Los funcionarios dijeron que creían que aquellos infectados habían bebido agua contaminada después de un periodo de fuertes lluvias y altas temperaturas en el área, y que el número de casos informados ahora estaba cayendo. El ministerio de salud ha dicho que éste es el primer brote de cólera desde poco después de la revolución de 1959. La última epidemia de cólera en Cuba terminó en 1882. Los medios internacionales informan que mientras no se aclare cuál es la fuente del cólera, hay especulaciones que hay un vínculo con Haití, donde fueron enviados profesionales médicos cubanos para asistir en la epidemia de cólera que, desde su irrupción en octubre del 2010, ha cobrado las vidas de más de 7.000 personas.

Uno de los ejemplos más resaltantes de cooperación política entre partidos en la región  se está desarticulando. La tensión entre el gobierno del Presidente José Mujica y el opositor de derecha Partido Colorado (PC; Colorados), exacerbada por la suspensión de Paraguay del Mercado Común del Sur (Mercosur) y la admisión por la puerta de atrás de Venezuela en el bloque, provocó que miembros del PC renuncien en masa esta semana a posiciones gerenciales en compañías del estado, entidades autónomas, servicios descentralizados y otras instituciones del estado en las que ellos fueron invitados a asumir después de que Mujica llegó al poder en el 2010.

Mujica hizo un esfuerzo concertado para acercarse a la oposición después de asumir el poder ofreciendo posiciones de gerencia en la compañía de telecomunicaciones Antel, la compañía de electricidad, UTE, el Banco República, la comisión reguladora del mercado de las telecomunicaciones y otros. Ocho miembros de la principal facción en el PC, Vamos Uruguay, del líder del partido, el senador Pedro Bordaberry, renunciaron formalmente en protesta al gobierno de Mujica. La Primera Dama, la senadora Lucía Topolansky, más radical que su esposo, había sugerido que ellos debían renunciar a sus puestos debido a las crecientes tensiones con el gobierno en meses recientes, A fines de julio, Mujica dijo irritado a la prensa que no había manera de que ellos renuncien ya que ellos no entrarían de manera voluntaria a las filas de los desempleados.

Mujica recibió aplausos por su decisión de ofrecer unas 60 posiciones de gerencia a la oposición en el 2010 (asegurándose siempre de que el gobernante Frente Amplio mantuviera  la mayoría en los directorios) como un signo de su compromiso de buscar consenso político y su moderación. Es importante señalar que los miembros de la otra facción del PC, Proba, y los partidos de oposición, el Partido Nacional (PN; Blancos) y el Partido Independiente, permanecen en sus posiciones.

“Los muertos no pueden quejarse, pero siguen molestándose igual”. El Presidente de Uruguay, José Mujica, tiene una tendencia de hablar con una mezcla de modismos y acertijos. Sus comentarios sobre la acusación de un periodista argentino de que el sistema bancario de Uruguay era usado para blanquear dinero canalizado de proyectos de obras públicas aprobados por el fallecido ex presidente de Argentina, Néstor Kirchner (2003-2007), no fueron la excepción. Aún así, habiendo llamado a la viuda de Kirchner, la actual Presidenta de Argentina, Cristina Fernández, “vieja terca” hace menos de un mes, el circunloquio quizá fue diseñado para evitar ofensas.

Jorge Lanata, el periodista investigativo argentino, en su programa de investigación, Periodismo Para Todos (PPT), afirmó que Uruguay fue usado para blanquear dinero del empresario Lázaro Báez. Báez, un amigo de Kirchner de Santa Cruz, era un cajero de banco de medios modestos antes de amasar una fortuna como el único contratista de obras públicas en la provincia de Santa Cruz durante la presidencia de Kirchner. Lanata afirma que los sobornos de estos proyectos fueron vía Uruguay, a Panamá, Belice, islas del Caribe, y finalmente a Suiza.

Investigaciones

Después de un pedido de dos legisladores opositores de Argentina, Graciela Ocaña (Confianza Pública) y Manuel Garrido (Unión Cívica Radical), las autoridades uruguayas han lanzado ahora tres investigaciones sobre las afirmaciones. Sus investigaciones se concentraran  en la compra de una granja de parte de Daniel Pérez Godín, un asesor de Báez y el gerente del lujoso hotel Alto Calafate, que es propiedad de Fernández. Él pagó US$14m por una granja de 24 hectáreas, que está valuada en solamente US$4m. Por su lado, funcionarios de la aduana uruguaya tendrán que revisar una serie de vuelos de aviones privados que partían de Argentina hacia Uruguay los cuales, Lanata alega, fueron usados para transportar millones de dólares.

Mujica expresó cierto escepticismo acerca de lo que él llamó la “licencia poética” de Lanata, y enfatizó que el sistema bancario uruguayo tiene más controles de los que el periodista había comentado. “Nadie puede traer US$5m a Uruguay, tomar un café y regresar sin ser preguntado por la suma”, dijo. Sin embargo, él también reconoció la posibilidad de que los vuelos podrían haber sido usados con propósitos perversos. “Hay un tráfico ilegal que podría ser usado para cualquier razón”, dijo. Mujica agregó que los comentarios de Lanata eran parte del acalorado debate interno en Argentina donde “ellos intercambian todo tipo de acusaciones. Pero yo no creo que él tenía la intención de atacar a Uruguay”.

La ONU critica la reforma judicial

Los planes del gobierno para “democratizar” el poder judicial continúan, con alteraciones menores, a pesar de las crecientes críticas internas e internacionales. La última crítica de alto perfil fue la Relatora Especial de la ONU sobre la independencia de los jueces y abogados, Gabriela Knaul. El 30 de abril, Knaul emitió una declaración pidiendo al gobierno de Argentina que “reconsidere” sus propuestas. La causa de la preocupación de Knaul se concentra en los planes para las elecciones del poderoso cuerpo supervisor, el Consejo de la Magistratura.

“Proveer la oportunidad para que los partidos políticos propongan y organicen la elección de los miembros del Consejo de la Magistratura amenaza su independencia,  seriamente poniendo en riesgo los principios de separación de poderes y la independencia de la justicia, que constituyen elementos fundamentales de cualquier democracia y del Estado de derecho”, dijo ella en una declaración.

La propuesta del borrador de la ley de reforma de limitar el periodo de tiempo de las órdenes judiciales contra el Estado también fue criticada. “El uso y el periodo de validez de las medidas precautorias contra el Estado no pueden ser restringidas. De otro modo, el acceso a la justicia no estará totalmente garantizado”. El gobierno respondió con su acostumbrado estilo punzante; la cancillería emitió una declaración afirmando que los comentarios de la funcionaria de la ONU “no solamente se apartan de los estándares profesionales [...] que se esperan de la cabeza de una organización tal como la de relator, sino que también muestra una falta de equilibrio.”

• El dólar ‘blue’ se acerca a diez

La tasa del mercado negro del dólar (llamado dólar ‘blue’) continúo su precipitado ascenso este mes, y está  llegando cerca de romper la marca de los diez pesos. El 30 de abril, el dólar ‘blue’ llegó a Arg$9,37 (para la compra) y Arg$9,40 (para la venta). Por otro lado, la tasa oficial para la moneda estadounidense llegó a Arg$5,14 (para la compra), y Arg$5,195 (para la venta).

On 3 January in Rio de Janeiro, the president of the Partido Democrático Trabalhista (PDT), Carlos Lupi, announced his support for the Partido do Movimento Democrático Brasileiro (PMDB)’s 2014 gubernatorial pre-candidate, Fernando Pezão.

The Rio 2014 contest is heating up fast. Lupi’s support came just a week since Rio’s PMDB state governor, Sérgio Cabral, announced the formal dissolution of a seven-year alliance in the state with the nationally ruling Partido dos Trabalhadores (PT) over the PT’s insistence on fielding its own candidate to the governor’s office this year, Lindbergh Farias. Cabral, who aims to get his deputy Pezão elected as his successor in October, is pulling out all the stops to isolate Farias, who at this (very) early stage is leading in the polls.

Getting the PDT’s backing ensures that Pezão will have double the amount of free political advertising minutes on TV and radio (allotted to election candidates from August). That, and the fact that Pezão is due to replace Cabral in April (Cabral is stepping aside early) means that Pezão will be the highest profile candidate in Rio by far. That may not be enough to get him elected - his association with the discredited and unpopular Cabral may be a handicap – but it should certainly be enough to see him through the first round.

Cabral had already offered some of the state government posts being vacated by the PT (some 400 in all) to the Partido Social Democrático (PSD) and Solidaridade, which confirmed that it’s local deputy Pedro Fernandes will take up the position of state secretary for social welfare and human rights (replacing the PT’s Zaqueu Teixeira).

Solidariedade, led by the trade union leader Deputy Paulo ‘Paulinho’ Pereira da Silva, in late January announced his support for the main opposition Partido da Social Democracia Brasileira (PSDB). On 24 January Paulinho threw his weight behind the PSDB’s presumptive 2014 presidential candidate, Senator Aecio Neves, declaring that he would do "everything" to oust the PT from power. Paulinho, whose Força Sindical positions itself as a rival to the main PT-aligned union, Central Única dos Trabalhadores (CUT), has been very critical of the PT administration led by President Dilma Rousseff. Ironically, Rousseff herself started out in the PDT before joining the PT in 2000; Paulinho is also formerly of the PDT.

Lupi, whose PDT remains among the dozen-plus parties in the PT-led federal government coalition (which includes the PMDB as the senior partner), had been gearing up to back Farias, who likewise had offered the PDT the number two slot on the PT slate. However, announcing his change of heart, Lupi said Cabral had played “check mate” by offering the PDT the chance to accompany Pezão on the PMDB slate with a candidate for vice-governor. “We are [already] in government, we have two secretariats, and he gave us the chance of a seat on the majority slate. It’s difficult, after four years in government, to say, ‘Tchau, I’m off now’”, Lupi said, adding that he would consult with his party before finalising the deal.

Part of the PDT’s falling out with the Rousseff administration dates back to 2011, when Lupi was forced to quit as labour minister under suspicion of corruption as part of Rousseff’s ‘faxina’ (houseclean). Rousseff initially put her own man in the ministry, and though she eventually (in March 2013) gave the ministry back to the PDT (under the party secretary general Manoel Dias), the relationship has never fully recovered.

The PT for its part, is said to be in talks in Rio with the likes of the Partido Comunista do Brasil (Pcdob) and the Partido Republicano Brasileiro (PRB), both allies at the federal level, but also with less obvious bedfellows like the Partido Republicano da Ordem Social (Pros) and even the Partido Socialista Brasileiro (PSB), which last year quit the federal coalition to field its party president and Pernambuco state governor Eduardo Campos as its own presidential candidate against Rousseff in October. However, all is fair in love and war and in Brazil, federal state and municipal electoral coalitions regularly take strange and mutant forms.

Nonetheless, even with all the above parties onboard, the PT and Farias would still have three minutes less of precious advertising minutes than Pezão. The other pre-candidates in Rio include the current federal fisheries minister and evangelical leader, Marcelo Crivella (of the PRB); the federal deputy and former Rio governor (1999-2002), Anthony ‘Garotinho’ Matheus de Oliveira (of the Partido da República), who is also linked to the evangelical church; and the thrice former Rio mayor, Cesar Maia (of the conservative Demócratas).

• Pizzolato

Henrique Pizzolato, former marketing director at the state-controlled Banco do Brasil, was arrested in Italy on 5 February. Pizzolato fled Brazil in September 2013 to avoid a prison sentence of 12 years and 7 months for his involvement in the ‘mensalão’ congressional bribery scheme. While Brazil will seek Pizzolato’s extradition, it’s unlikely to be granted: Pizzolato has dual Brazilian and Italian citizenship and under the terms of a 1989 bilateral extradition treaty, Italy is not obliged to extradite its own citizens. Moreover there has been bad blood between the two countries after former president Lula da Silva, before leaving office in late 2010, issued a stay on a supreme court-approved extradition order for an Italian citizen, Cesare Battisti, wanted in Italy for terrorist activities dating to the 1970s. Upon his release Battisti was given residency in Brazil, to outrage in Rome.

As web-based information and communications technology (ICT) grows in economic importance, the degree of connectivity achieved by different countries becomes a proxy for their ability to compete. A recent study by the Inter-American Development Bank (IDB) suggests broadband penetration remains uneven in Latin America and the Caribbean, and despite some efforts to catch up, still lags behind the Organisation for Economic Co-operation and Development (OECD).

“In a modern society, broadband is the key ingredient in the public policy agenda to accelerate growth and reduce inequality” says Antonio García Zaballos, a telecoms researcher at the IDB. If he is right, it seems there is not yet enough of this key ingredient around. The IDB has created a measure of its availability that it calls the IDBA (Índice de Desarrollo de la Banda Ancha), and scored Latin American countries on a scale of 1 to 8 measuring actual broadband penetration. The index is a compilation of 37 variables making up an effective broadband service, grouped into four main clusters relating to public policies, strategic regulation, infrastructure, and knowledge. The results are in some ways predictable. Overall, the 26 countries in the region score an average of 4.37, lagging considerably behind the 34 developed countries in the OECD, which score 6.14 (two Latin American countries, Mexico and Chile, are also OECD members). The gap between the two groups – 1.77 points in 2012 - has narrowed a little, down from 1.79 in 2011 and 1.91 in 2010. If a catch-up process is under way however, it is a painfully slow one.

The IDB makes a powerful case for why all this matters. It notes that the 26 countries in the region have a combined population of 580m people, roughly one quarter – 25% – of which lives in rural areas. Overall, only one of every eight households has access to broadband provision. Around 100m people have no access whatsoever. And those that do seem to have to pay up to 30 times more for their service than in the OECD countries, and get internet access speeds up to three times slower. Broadband supply is growing, at between 16%-18% per annum, but the high cost is a real problem. The economic impact of improving broadband provision on the other hand, is potentially very significant. According to the IDB, a 10% increase in broadband penetration rates can boost a country’s GDP by 3.19% – a very attractive return on investment. It also suggests that bringing isolated municipalities online can cut education and health costs very sharply.

Within the region, the ranking is led by Chile (5.57), followed by Barbados (5.47), Brazil (5.32), Panama (5.05), Uruguay (4.81), Colombia (4.77) and, in seventh place, Mexico (4.62). The implication is that it is among some of these countries, either individually or collectively, that high-tech industries may develop. At the bottom end of the broadband ranking come countries like Haiti (1.71), Belize (3.11) and Suriname (3.12). When grouped by regions, the Southern Cone leads with an average of 4.87, followed by Central America (4.26) and the Andean countries (4.13). The lowest scoring region is the Caribbean (3.72).

Of course, broadband provision on its own is not enough. A recent study by the Instituto Mexicano de la Competitividad (IMCO) suggested that to capture the full potential of ICT, a country – and by implication many of its regional neighbours – needs to be more innovative, diversify financing, promote a culture of entrepreneurship and simplify and reduce bureaucracy. The IMCO found that Mexico had a poor record for innovation. It has half as many researchers as Chile 1.0m inhabitants; Mexican investors are said to receive one-fifth of the royalties of their Chilean counterparts and one half as much as those in Brazil. Cultural factors are also important, the IMCO suggested. In Mexico “it is looked down upon that researchers create businesses, but that leaves them far behind compared to the rest of the world” noted IMCO director Rodrigo Gallegos.

El Presidente de Honduras, Juan Orlando Hernández, informó el 4 de agosto que el número de homicidios en la primera mitad del año cayó a 2.893, una declinación del 17% o 600 menos que en el 2013. Hernández, que asumió el poder el 27 de enero, dijo que era “la obligación de esta generación entregar a nuestros hijos una Honduras pacífica”.

Días antes, el 30 de julio, el presidente Hernández visitó Chamelecón, el distrito más violento de la ciudad más violenta de Honduras, San Pedro Sula, con una tasa de homicidios de 133,3 por 100.000 habitantes en el 2013. Hernández, con un chaleco antibalas no totalmente oculto bajo su camisa, visitó casas que habían sido tomadas por las beligerantes pandillas callejeras (maras), desplazando a docenas de familias, y las plazas públicas. La visita fue diseñada para celebrar el éxito de su gobierno en “cambiar la imagen de Chamelecón". Hernández dijo que no hubo homicidios en el distrito por 43 días, y que los residentes estaban retornando. Agregó que la paz se extendería gradualmente por todo Honduras y que “así es como frenaremos a los niños migrantes que van a EU”.

Hernández ve la ‘pacificación’ de Chamelecón como evidencia del éxito de la política de seguridad militarizada de su gobierno. Una fuerza militar-policial realiza patrullas regulares en el distrito. Sin embargo, es probable que las maras hayan acordado un alto en su guerra por el territorio mientras monitorean las acciones de las fuerzas de seguridad.

Hernández dijo que las patrullas estaban ahí para quedarse, pero la prueba real del éxito de la ‘pacificación’ del área será cuales oportunidades su gobierno podrá ofrecer para un futuro más brillante. Hernández sostiene que esto está al alcance. Él dice que se construirán “campos de césped artificial y mega-parques”, y que los programas sociales, tales como ‘Vida Mejor’, que tiene como objetivo proporcionar a 800.000 familias pobres con un techo seguro sobre sus cabezas, hornos de biomasa, parcelas para vegetales, filtros de agua y medicinas; y las ‘Recreovías’, actividades culturales, artísticas y deportivas, están siendo implementadas.

Resultados

Hernández admitió que a nivel nacional el público aún no percibe los resultados positivos, porque a pesar de la trayectoria hacia abajo, la reducción de la violencia a niveles aceptables tomará años. Hablando en la graduación de nuevos oficiales de policía en la ciudad central de Comayagua, él dijo que “como un animal herido”, el crimen organizado tratará de devolver el golpe, pero que no habrá vuelta atrás para su gobierno y que pronto habrá “más progresos en la lucha contra el delito común y el crimen organizado”.

• Alcalde arrestado

El hecho de que las autoridades hondureñas arrestaran la semana pasada a un alcalde, quien supuestamente lideraba una red criminal dedicada al tráfico de drogas y asesinatos por contrato, muestra la escala de la tarea que tiene por delante el Presidente Juan Orlando Hernández. Arnaldo Urbina Soto era el alcalde de Yoro, la capital del norteño departamento del mismo nombre. Diana Urbina Soto, la hermana del alcalde, es una diputada por el gobernante Partido Nacional (PN) por Yoro.

The Real is trading against the US dollar at a three-month high and stocks in parastatal companies such as the oil firm Petrobras have soared. None of the economic fundamentals of Brazil have changed significantly in the last week. Whatever happens in politics over the next few months, Brazil’s economy looks set to continue its slump. But a series of dramatic events over the past seven days have introduced new levels of volatility into the country’s darkening political scenario.

Amaral’s testimony

On 3 March, the Brazilian news magazine Isto É published leaks from the plea bargaining testimony given by Delcídio do Amaral, the former leader of the ruling left-wing Partido dos Trabalhadores (PT) in the federal senate who was arrested last November. Though the testimony is yet to formally approved by the courts, its content was explosive. Amaral claims that President Dilma Rousseff used her powers to keep Petrobras directors accused of corruption in their posts; that she appointed a judge with the understanding he would vote to release business executives accused of corruption; and that she and the former justice minister, José Eduardo Cardozo, intervened three times in ‘Operation Car Wash’ in an attempt to limit the scope of the inquiry.

Amaral also accused former president Lula da Silva (2003-2011) of full knowledge of the Petrobras corruption scandal, and of ordering payments to silence certain witnesses. In subsequent testimony leaked to the press on 9 March, the PT senator accuses five other members of the senate of complicity in the corruption scandal including Renan Calheiros, the president of the chamber, and Aécio Neves, the failed presidential candidate from the main opposition Partido da Social Democracia Brasileira (PSDB).

On the day of the first leaks, Amaral issued a rather vague statement which did not deny the substance of his accusations. Cardozo gave a lengthy press conference in which he sought to discredit point-by-point Amaral’s testimony. Though his refutation appeared convincing, by then the damage had already been done, and the financial markets were starting to bet that President Rousseff would not survive.

Lula’s “coercive questioning”

Worse was to come. In the latest phase of Operation Car Wash – the 24^th – federal police raided three properties belonging to Lula, and took both the former president and his sons to a police station for “coercive questioning”. In a development unrelated to Amaral’s testimony, police asked Lula about alleged benefits in kind that he received from some of the major construction companies accused in the Petrobras investigation.

Allegedly, Lula and his family had full use of three properties, registered in others’ names, which were refurbished at great expense by these companies. He is also accused of receiving corrupt payments disguised as speaking fees via the Lula Institute, the think-tank which disseminates his ideas.

Scuffles broke out on the street outside Lula’s apartment in São Bernardo do Campo between supporters and opponents of the PT. A crew from Globo, the dominant news organisation in Brazil, widely regarded with great distrust by petistas, was also attacked. Emerging from his temporary captivity four hours later, Lula held a number of emotional press conferences in which he said he felt he was “kidnapped” by the police, and angrily insisted on both his innocence and a media/opposition conspiracy against him. Rui Falcão, the president of the PT, accused the opposition of organising a coup.

On 6 March, Rousseff flew down to São Paulo to show her support to Lula. In comments to the press she expressed her “total incomformity” with the manner in which police apprehended Lula. Indeed, much ink was spilt by legal and constitutional experts over the weekend questioning why the police had opted for “coercive” measures, when Lula had shown himself willing to testify voluntarily. Judge Sérgio Moro, the lead prosecutor in Operation Car Wash, claimed that the measure was necessary to avoid a “media scrum” and to ensure no evidence was destroyed.

Whatever the reason, it failed to prevent a media scrum. The use of such a mechanism may also have galvanised Lula’s supporters, who believe that he is being targeted over his politics rather than his probity. That impression is likely to have been compounded by the news on 9 March that state prosecutors in São Paulo are to charge Lula over concealment of goods, money-laundering and larceny over his alleged possession of a luxury apartment in the beach resort of Guarujá in São Paulo state. A judge still has to decide whether there is a case to answer.

Lula’s wife, Marisa Letícia; their oldest son Fábio Luiz; João Vaccari Neto, the former treasurer of the PT, and the former president of the construction firm OAS, Leo Pinheiros (who is currently negotiating a plea bargain with prosecutors) have also been charged. Prosecutors Cássio Conserino and José Carlos Blat allege that there was a concerted effort to conceal the true owner of the property, an effort which they characterise as money-laundering. Investigators claim the flat was refurbished in 2014 at a cost of R$777,000 (US$211,000).

Further details about the charges are to be presented in a press conference on 10 March, but Lula’s lawyer, Cristiano Zanin, argued that the former president had never concealed the fact that he made payments towards the apartment but had decided against taking control of the property last year. He also questioned whether the lead prosecutor, Conserino, was politically motivated.

Reports in the local media suggest that the government is seriously considering, under pressure from the PT, giving Lula a cabinet position so that in the event he faces trial, he will do so only in the ‘privileged forum’ of the supreme court. Such a move would likely delay any prosecution; it would also heighten the anger of anti-petistas.

The concern now is that political differences will express themselves on the streets rather than via Brazil’s institutions. A long-planned anti-government march on 13 March is likely to receive a boost from the latest police moves against Lula. But now, pro-government demonstrators plan on making their voices heard on the same day. The fear is that the two sides may clash. Supreme Court judge Marco Aurélio de Mello said he was worried that someone could be killed if both sides meet on the streets.

Odebrecht goes down

On 8 March Marcelo Odebrecht, the CEO of the engineering company Odebrecht, was sentenced to 19 years and four months’ prison for corruption, money-laundering and conspiracy. Odebrecht’s importance to the Brazilian economy, and its close links with many of the domestic and foreign policy objectives of the last 14 years of government by the PT cannot be overstated. It is the largest of the six construction companies to be convicted over the corruption scheme targeted by Operation Car Wash.

Until now, Marcelo Odebrecht has not entered into plea bargaining with the authorities. The fear for the government is that he may now feel he has nothing to do lose, and he may have testimony that proves highly damaging to both Lula and Rousseff.

Odebrecht now follows Mendes Junior, OAS, Galvão Engenharia, Engevix and Camargo Corrêa in the list of companies convicted in Operation Car Wash. In jail since June awaiting trial, Marcelo Odebrecht had refused to admit any liability in an attempt to ensure his company could continue to partner its operations around the world with other companies, many of which have strict rules regarding reputation management. Now, however, there is nothing to lose, and Marcelo’s own father, Emílio, is reportedly advising his son to turn whistleblower.

• Senators accused

Delcídio do Amaral, the PT senator imprisoned last November, has accused some of his colleagues of involvement in the Petrobras corruption scheme. According to the leaks of his plea bargaining in the local media, at least five other senators, including Aécio Neves, the 2014 presidential candidate of the main opposition PSDB, and Renan Calheiros, the president of the senate, were involved in corruption.

• Cunha and the ethics committee

On 7 March, Eduardo Cunha, the speaker of the federal lower chamber of congress, received the official notification of the decision by the ethics committee to investigate him. Now that he has received the document, Cunha has 10 days to present a written defence to the council. Also on 7 March, the supreme court accepted a further case against Cunha, relating to corruption and money-laundering. Cunha has said he has no intention of standing down while the investigation is on-going.