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BOLIVIA | Morales returns to old ways.  On 1 May much like he had done, two years ago [WR-10-18], President Evo Morales announced the nationalisation by decree of an important privately owned electricity sector company. During an act to celebrate International Workers’ Day,  President Morales said that the government will now be taking full control of the electricity distributing company, TDE, owned by Spain’s Red Eléctrica Española (REE), which is partly (20%) owned by the Spanish State. The move means that Bolivia’s energy sector is once again entirely in the hands of the State. TDE, which was created in 1997 as a result of a privatisation process, owns and runs 73% of the country’s transmission lines and provides electricity to 85% of the population across six of Bolivia’s nine departments. In 2002 REE through its international arm REI purchased 99.94% of TDE. 

    However, following the lead of his Argentine counterpart, Cristina Fernández, who two weeks ago moved to take control of Spanish company Repsol’s stake in the domestic oil company YPF, Morales said that the Spanish firm had failed to invest adequately in Bolivia. He said the decision was justified because “in 16 years the company has only invested US$5m a year”, and he argued that this was not enough to extend electricity provision to the entire country. Yet Morales also took Fernández’s line in that his government will recognise the investments that were made and was willing to compensate REI: “we are responsible with companies. If it corresponds to return [investments], we will return them,” he said. TDE’s current assets are valued at US$228m and it is estimated that the company has US$69.3m in capital.

    Morales’s TDE decision is another blow for Spanish interests in South America; yet on the same day he attended, along with Repsol president, Antonio Brufau, the inauguration of a new Repsol gas processing plant in Bolivia’s third largest gas field, Margarita. The Spanish may also take a small amount of consolation from the fact that the Bolivian government’s intention in further developing the Margarita gas fields is to increase its exports of gas to Argentina.   

ECUADOR | Brazilian interest in Pacific refinery project. After meeting with his Brazilian counterpart Antonio Patriota, in Brasília on 30 April, Ecuador’s foreign minister, Ricardo Patiño, said that Brazilian companies are interested in participating in the proposed project to build an oil refinery in the province of Manabí. Patiño did not provide specific names but said that the Brazilian companies were particularly interested in the initial stage of the estimated US$13bn project, which the Ecuadorean government hopes will be financed by China. This first stage of the project would involve the setting up of the foundations for the refinery.

    This would point towards Brazilian construction giant, Odebrecht. However, Odebrecht was expelled from Ecuador by President Rafael Correa in 2008 over complaints about the company’s handling of various hydroelectric construction projects. The incident caused a lot of tension between Ecuador and Brazil, which firmly defended Odebrecht, to the point that Brazil suspended a number of loans it had awarded Ecuador for infrastructure development projects. Nevertheless, after the meeting Patriota praised the fact that Ecuador and Brazil have been able to “resume relations” and announced that all Brazilian public financing for Ecuadorean infrastructure projects has been restored since then.

PERU | FTA with Panama goes into effect. On 1 May Peru’s ambassador to Panama, Guillermo Russo Checa, celebrated the fact that the Free Trade Agreement (FTA) between Peru and Panama has formally gone into effect. According to Russo Checa, trade between the two countries until now has stood at US$800m, which is now expected to “double in the next two years”. In addition Russo Checo pointed out that Panama’s Free Trade Zone (FTZ) in the Caribbean port of Colón also represented a good opportunity for Peruvian businesses to use the country as a springboard to access other markets. Russo Checo revealed that the Peruvian-Panamanian chamber of commerce is already looking to encourage Peruvian industries to consider the possibility of setting up shop in the FTZ. This as the FTA has recognised the rules of origin and re-exporting certifications of the FTZ to allow products produced there to be duty free. To this effect, Russo Checo said that a delegation of Panamanian businessmen that operate in the FTZ is due to travel to Lima this week to look for prospective business partners.

• Panama retaliates against Ecuador

On 25 April the Panamanian government announced that it would be retaliating against Ecuador, which has failed to remove Panama from its list of ‘fiscal havens’. Panama’s economy and finance minister, Frank De Lima, said that branding Panama as a tax haven was to discriminate against it by ignoring the fact that it has been removed from the Organisation for Economic Co-operation and Development (OECD)’s grey list. De Lima explained that inclusion on Ecuador’s list has meant that since 2009 no Panamanian company has been able to provide services in Ecuador - and Panama would respond with similar measures. On 1 May Panama’s council of ministers issued a statement declaring that “no natural or legal Ecuadorean persons may participate in any public tender or concession processes in Panama”.

It is not usual for a high-ranking government official to lobby openly for a multi-agency response to a problem. That, though is what retired General Miguel Vásquez, deputy minister of citizen security, has been doing since soon after he took over his post last November. The problem is the proliferation of youth gangs, which Vásquez says are currently responsible for 80% of all crimes committed in the country.

At first he pointed to the fact that they were responsible for most petty crime (delitos de bagatela) but by mid-May he was saying that they ‘drink, consume drugs, kill, strangle, murder’. Vásquez cites a survey conducted last year in the country’s 10 biggest cities by the national police’s special anticrime force, the Fuerza Especial de Lucha Contra el Crimen (FELCC), which revealed the existence of 700 gangs with 20,000 members aged between 12 and 21.

The highest concentrations were found in the departments of La Paz (with 328 gangs), Santa Cruz (180), Cochabamba (77) and Potosí (77). These gangs, says Vásquez, subject new recruits to initiation rites that involve taking part in gang rapes, robberies and murders. ‘There is an imminent risk,’ he says, ‘that they will mutate into maras [the notorious Central American street gangs]. We are not there yet but that is the way we are heading.’

He has linked the growth of the youth gangs and their practices to the fact that Bolivia has the highest rate of reported rapes in the Southern Cone: 24.8 per 100,000 inhabitants, compared with 16.4 in Brazil, 12.4 in Chile, 8.7 in Argentina and 6.3 in Uruguay.

Vásquez admits that little can be done about the gangs unless joint action is taken by the government at a national, departmental and municipal level, in concert with neighbourhood committees, the public prosecution service, the armed forces and the police. He has openly criticised fellow ministers for opposing a plan of his to use military facilities to house convicted gang members until such time as the country’s prison capacity is expanded. After all, he says, that is what the US, Peru and Ecuador have done. This said, he believes the answer does not lie in locking up the gang members but in organising their rehabilitation — for which there is no provision at present.

Overhauling the police

Restoring confidence in the police, he says, is crucial: a survey conducted last year showed that 85% of those who said they had been victims of crimes did not report them for lack of trust in the police and the judiciary. The general commanded the national police for 15 months in 2007-08 and filed for retirement when his efforts to clean up the force earned him death threats and an attempt on his life. President Evo Morales brought him out of retirement to devise new public security policies.

He says that after 40 years of neglect that have left the Bolivian police lagging behind the forces of neighbouring countries, it is time to carry out a major overhaul, which will necessarily involve a purge of ‘bad policemen’. In keeping with his open lobbying for multi-tier, multi-agency involvement in dealing with insecurity, he is soon to launch a book on what is wrong with the police force. Its title: La verdad en la Policía es mentira (‘The Truth in the Police is a Lie’).

CHILE| Punta Alcalde project suspended. On 5 March a Chilean court halted the construction of the Punta Alcalde thermal energy plant, three months after Endesa Chile, the local subsidiary of Spanish energy firm Endesa, had been given the green light to begin construction by the Sebastián Piñera government. The court’s order comes after a local fishing community in the Huasco Valley in Northern Chile, where the plant is to be located, filed a formal complaint claiming that the plant will heavily contaminate the area, affecting their activities. A similar objection was made by local environmental groups back in December but these were dismissed by a council of government ministers in charge of the initial evaluation of the project. Endesa maintains that the US$1.4bn Punta Alcalde project will be one of Chile and Latin America’s most efficient and environmentally friendly electricity producing plants, with a capacity to produce 740 megawatts (MW) of energy, making the project very important for Chile given that in recent years it has suffered from energy shortages. Furthermore, the company believes that plant’s modern design meets “the highest environmental standards as stipulated by the local laws applicable to this kind of project” and that the environmental concerns against it are largely unfounded. Yet in a unanimous decision a Santiago appeals court ordered Endesa to halt all operations on the site until the court reaches a final decision regarding the fishermen’s complaint. In a statement Endesa said that the court’s order will have little effect on the project at this time as “it it is still in the administrative stage and has yet to enter the execution stage”. The statement adds however, that the firm will continue to defend the project in the courts, to which it has already announced that it will present legal and technical arguments in support of the project and against the latest complaint.

BRAZIL| Still growing but for how long and at what cost? On 27 February the World Bank (WB) published a report entitled ‘The Brazilian Competitiveness Cliff’, exposing some of Brazil’s fundamental economic weaknesses, which goes against the current generally positive international perception of the country. Brazil, with a population of 196.6m people, is the region’s largest economy with a GDP of approximately US$2.5trn. In recent years this has allowed it to favourably position itself in the international realm, as investors have recognised the country’s potential to become an even more thriving economy. However the report, which analysed Brazil’s trade data, found that “its export performance depends mostly on favourable geographical and sector composition effects...[there is] a clear decline in the share of [exports] with higher technological content”. The report found for example that in recent years the proportion of commodities in Brazil’s total exports increased from 47.5% to 62.9% at the expense of other exports, notably manufactured goods, pointing to a possible ‘Dutch disease’ effect.  As a result of this the report argues that Brazil’s comparative advantages in the exploitation of its natural resources will continue to erode the development of its industrialised economy, increasingly moving this sector towards a ‘competitiveness cliff’ from which the country could fall off unless its government increases its efforts to further promote the development of the industrial sector. Put differently, the report suggests that Brazil’s growth in exports is still largely made up of commodities thus making a large amount of its total exports dependent on natural resources, allowing for the neglect of the manufacturing sector, the development of which tends to have a longer positive economic cycle. For a country that is aiming to become an increasingly important economic player in the global arena, the development of a highly developed industrial sector is paramount for long-term success. The report points out that in this respect Brazil is falling behind its fellow BRICS emerging economies of Russia, India, China, and South Africa. In the last decade, Brazil’s total exports grew by 262%, a high figure when compared to, for example, the UK’s export growth between 1998-2008 (99.8%); but this is lower than the BRICS average of 439%, suggesting that other emerging economies have been able to better balance the composition of their exports.  Nevertheless the report acknowledges that Brazil has still been very successful in the last years, increasing its global market share by about 5.6 percentage points in 2005-2011, second only to China. All in all it points out, Brazil has the potential to become a true global player, but it must be wary of its current dependency on commodities and must pursue secondary and tertiary means of production to assure its future success.

URUGUAY| Promoting itself overseas. On 5 March Uruguay’s national director of tourism, Benjamín Liberoff, for the first time presented Uruguay as a tourist destination at a tourism fair in Madrid, Spain. Tourism is Uruguay’s most important economic activity despite the fact that it faces stiff competition from its larger neighbours, Argentina and Brazil. However, Liberoff said that Uruguay can offer some significant advantages by acting as gateway to other Latin American destinations. Following the collapse of Uruguay’s flag carrier airline, Pluna, there have been fears in the country that it may become isolated due to a lack of air transport links, however, the government is still working to try to attract investors to the sector. Liberoff’s presentation coincided with Spanish airline Air Europa’s launch of a new Madrid-Montevideo route which is scheduled to come into effect in June. Initially the flight will operate thrice a week and is expected to operate on a daily basis in the near future. Every year Uruguay receives about 170,000 European visitors and 48,000 of them are Spanish citizens.

Paraguay minister calls out misperception

During a working breakfast of the Paraguay-Germany chamber of commerce, the head of Paraguay’s trade & industry ministry, Diego Zavala, said that Paraguayan’s tend to consider their country’s economy as not being competitive. However, basing himself on data from the World Economic Forum (WEF), Zavala made it clear that only half of these opinions are based on “hard facts”, while the rest stems from negative perceptions that fail to reflect the actual state of the Paraguayan economy. According to Zavala, in recent years Paraguay has been able to establish a much more positive image of itself internationally, giving rise to increased investment; and the goal now is to transfer this perception to domestic investors.

While President Nicolás Maduro patiently waits for the elusive 99^th deputy in the national assembly to win approval for an enabling act allowing him to rule by decree to combat corruption, he has been getting into practice by issuing a decree creating a new deputy ministry for the supreme social happiness of the people in the Bolivarian Revolution. Its remit will be coordinating the social missions steadily introduced under Maduro’s predecessor Hugo Chávez (1999-2013) since 2003.

The new deputy ministry sounds distinctly Orwellian and in terms of accountability it is likely to bear comparison with the Ministry of Love in ‘1984’, but it is not fair to take the comparison any further because the social missions, by and large, are very popular in Venezuela. Indeed, it is perfectly possible that without some of them - especially Barrio Adentro, which provides state-funded healthcare for the poor and marginalised communities, and Robinson, which seeks to provide education for illiterate adults - the Bolivarian Revolution might not have survived until now, even with Chávez at the helm. It was not the concept of a new geometry of powers and associated communal councils which secured Chávez’s re-election but these social welfare programmes, designed to improve the quality of life of the country’s poor majority.

Social justice is the outstanding positive legacy of Chávez and the missions have provided the opposition with its principal problem. While it is not difficult to attack the government on its economic mismanagement, food and energy shortages, and its public security record, the missions are sacrosanct. The opposition presidential candidate, Henrique Capriles Radonski, conceded as much and was careful to pledge to maintain (and enhance) them in his electoral manifesto for last October’s contest with Chávez. Capriles’ criticism then was that the missions were inefficient and that there was a lack of transparency and accountability surrounding them: they are off-budget and are not subject to congressional oversight.

The deputy ministry for the supreme social happiness of the people will endeavour to address the first of these criticisms, by coordinating the myriad missions, if not the second. Like the ‘street governments’ which Maduro introduced shortly after assuming power, its primary aim will be to bring the government closer to the people. In this regard, the timing of its creation could be entwined with the municipal elections on 8 December.

It is easy to forget that when Chávez first came to power he opted for a streamlined government, stressing that a small team would be more efficient, as well as providing greater cohesion and being easier to manage. This morphed over the years into a huge cabinet as Chávez created ministries in response to individual problems confronting his government, such as a prisons ministry and an electricity ministry. The same was also true to some extent of the missions, with the Gran Misión Vivienda Venezuela and Gran Misión AgroVenezuela set up specifically in response to housing and food shortages.

The man charged with leading the new deputy ministry for the supreme social happiness of the people, and “raising the missions to the skies” in homage to Chávez, is Rafael Ángel Ríos Bolívar (an auspicious surname). Ríos Bolívar served as a national deputy for the ruling Partido Socialista Unido de Venezuela (PSUV) between 2005 and 2010 for the south-eastern state of Bolívar. Before taking up his new post, he was treasurer for the social security system.

Shootdowns begin… or do they?

Venezuela is very keen to be seen to be cracking down on drug-trafficking. This message was conveyed by President Nicolás Maduro on 2 October when he announced that a long-delayed shootdown law had won approval. At the tail end of September, Venezuela was again blacklisted by the White House for having “failed demonstrably during the previous 12 months to make substantial efforts to adhere to their obligations under international counter-narcotics agreements”. This infuriated the Maduro administration, although a revelation two days later lent some credence to the US designation: 1,382 kilos of cocaine with a market value of US$270m were discovered in 31 suitcases in the hold of an Air France plane at Charles de Gaulle airport in Paris, from Venezuela’s Maiquetía international airport. This find seriously compromised Venezuela’s national guard.

Since the approval of the shootdown law, a series of confusing tweets have appeared on Twitter from Vladimir Padrino Lόpez, the head of the strategic operational command of the armed forces (Ceofanb), and Alejandro Keleris, the president of Venezuela’s national anti-drug office (ONA). Padrino Lόpez tweeted on 13 October that two planes “associated with drug trafficking” had been “detected and immobilised” in the south of Apure state, near the border with Colombia. A day later he put up a photo showing some smoking fuselage, which he claimed was one of these planes “immobilised by combat formation F-16” of Bolivarian military aviation (AMB).

On 20 October Keleris reported that another aircraft had been “immobilised” by the army on an “unauthorised airstrip” in the south of Apure. This was again presented erroneously by the media as a shootdown. The following day Padrino announced “the first plane shot mid-air” since the approval of the new law. The AMB, he said, had disabled an aircraft flying over Puerto Ayacucho, capital of Amazonas state, at midnight on 19 October, and a second one in the same area two days later, both apparently coming from Central America. On 24 October Padrino tweeted a picture of a huge dust cloud apparently hanging over 19 clandestine airstrips destroyed in Apure. What is not clear with either the disabled or the immobilised planes is what happened to any crew members or cargoes.

• Militias

President Maduro announced the ambitious goal of having 1m militiamen by 2019 to strengthen the defence of the Bolivarian Revolution, and to get halfway to this figure by 2015. Maduro described the militias as “a tremendous moral force”. He said the volunteer forces needed to be standardised nationally with “the correct uniform, equipment, weapons and training”. He even urged cabinet ministers to sign up. Maduro recently announced that the militias would be deployed to supermarkets to reduce queues (and presumably to keep order given that there are restrictions imposed on how many individual items can be bought).

El nuevo fiscal general del Perú, Carlos Ramos Heredia, asumió el cargo el 12 de mayo en medio de una ola de sospechas del público, avivadas por los medios de comunicación. Las sospechas surgen en parte por sus lazos familiares (él es primo de la Primera Dama Nadine Heredia) pero en mayor parte por el hecho de que él es el sujeto de una queja constitucional en el Congreso por la manera en la cual él manejó los alegatos de corrupción, soborno, e incluso orquestación de asesinato contra el presidente regional de Áncash, César Álvarez Aguilar [IL-14-14]. Ramos asumió sus funciones en medio de un choque de poderes entre el Tribunal Constitucional (TC) y el Consejo Nacional de la Magistratura (CNM), que ha dañado la credibilidad judicial de Perú.

Ramos fue electo el mes pasado para el puesto de fiscal general por tres años, por cuatro votos a uno de sus colegas en la junta suprema de fiscales. Su nombramiento es controversial debido a que los recientes acontecimientos en Áncash han expuesto su toma de decisiones con relación a Áncash durante los dos últimos años como, que en el mejor de los casos lucen erróneas. Ezequiel Nolasco, un candidato para presidente regional en Áncash en las elecciones de octubre próximo, predijo su propio asesinato a mediados de marzo, después de esforzarse por exponer el régimen corrupto que, él alegaba, estaba siendo conducido por Álvarez. Ramos no solamente está siendo investigado por el Congreso, sino también por el CNM por su decisión de remover a cuatro fiscales regionales en el 2012 que estaban investigando ‘La Centralita’, un comercio en Chimbote, la capital de la provincia de Santa en el departamento de Áncash, del que se cree que era una pantalla para operaciones de grabaciones ilegales contra políticos, fiscales, y periodistas críticos de Álvarez. Ramos también se rehusó a investigar a Hugo Dante Farro Murillo, el presidente de la junta de fiscales públicos de Santa, por colusión con Álvarez.

Ramos hizo una serie de apariciones en los medios esta semana, para tratar de limpiar su nombre. En una entrevista publicada por el diario nacional, La República, el 12 de mayo, Ramos prometió “transparencia, imparcialidad, y objetividad”, y que luchara contra la corrupción, el narcotráfico, el lavado de dinero, y el crimen organizado. Durante su ceremonia de juramento para asumir el cargo, él dijo que trabajaría con la oficina del contralor general y el defensor del pueblo para frenar la corrupción, y fortalecer los lazos con otras instituciones, pues “la oficina del fiscal general no puede ser una isla”. Ramos negó cualquier vínculo con el gobierno del Presidente Ollanta Humala (ver más abajo) o Álvarez. Él también agregó, de manera extraña, que “Lo que está ocurriendo en Áncash está siendo repetido en Tumbes, Trujillo, y Chiclayo. El norte del país es una bomba de tiempo muy perturbadora y necesitamos trabajar duro antes de que explote”.

Choque de poderes inter-judiciales

Ramos también expresó su esperanza de que el choque de poder entre el CNM y el TC será resuelto rápidamente para restaurar la “estabilidad jurídica” en Perú. Los dos cuerpos han estado en un curso de colisión por varios años, desde que el TC comenzó a considerar un caso traído en el 2011 por Mateo Castañeda Segovia, quien afirmó que él había sido injustamente obviado por el CNM en la elección de nuevos fiscales supremos. El 30 de abril tres magistrados del TC firmaron una resolución anulando las designaciones del CNM de Nora Miraval y Zoraida Ávalos como fiscales supremas y designó a Castañeda en esa posición. El CNM denunció a los magistrados del TC ante el Congreso por usurpar sus poderes y pidió que ellos fueran suspendidos.

El 8 de mayo, el TC anuló su resolución, confirmando a Miraval y Ávalos en sus posiciones y removiendo a Castañeda “en interés de la paz”, según dijo el magistrado del TC, Gerardo Eto Cruz, uno de los tres que emitieron la resolución. Pero uno de sus colegas, Carlos Mesía, está llevando el conflicto más allá. El 11 de mayo, Mesía denunció al Estado peruano ante la Corte Interamericana de Derechos Humanos (CorteIDH) por el cargo constitucional presentado contra él; Eto y Ernesto Álvarez por el presidente del Congreso, Daniel Abugattás, por emitir la resolución. Mesía dijo que no estaba dentro de la competencia del Congreso objetar las resoluciones judiciales pues esto interfiere con la “independencia y autonomía” del TC.

• Ramos Heredia y la Primera Dama

El nuevo fiscal general, Carlos Ramos Heredia, dijo que su familia nunca ha tenido nada que ver con la familia de Nadine Heredia, y que él ni siquiera sabía que eran primos lejanos hasta que el Presidente Ollanta Humala asumió el poder. Hubo especulaciones en la prensa local de que Humala concretó un acuerdo con el Consejo Nacional de la Magistratura en el 2011 para allanar el camino para que Ramos sea designado como fiscal supremo, y eventualmente como fiscal general. Aunque la decisión del CNM de no tener en cuenta a ciertos candidatos para supremo fiscal luce como interferencia política, Ramos fue designado fiscal supremo en enero del 2011 –seis meses antes que Humala llegue al poder.

In spite of the fall in energy and mineral prices, Colombia continues to manage sustainable growth and tolerably low inflation. This augurs well for further progress in poverty reduction.

In its preliminary overview of regional economies at the end of last year, the United Nation’s Economic Commission for Latin America & the Caribbean (ECLAC) was positive about Colombia’s performance. It noted that thanks to rising investment, domestic demand had been soaring. ECLAC noted that the re-election of President Juan Manuel Santos had been good for the continuity of policy, especially with regards to investment projects. Foreign Direct Investment (FDI) inflows the first half of 2014 rose by 10% year-on-year, from an already elevated base. In late 2014, ECLAC was looking for Colombia to achieve real GDP growth of 4.8% in 2014 and 4.3% in 2015.

ECLAC also highlighted generally favourable trends in the country’s public finances - in spite of an increase in the consolidated public sector deficit from 1.1% of GDP in 2013 to an estimated 1.6% in 2014. The deterioration was mainly due to an 8.8% rise in government spending to 19.5% of GDP. However, ECLAC noted that a tax reform proposed by the Santos administration in October 2014 should eventually yield additional revenues. Proposed reforms included a wealth tax, a surcharge to boost the income tax for equality (CREE) and a possible incentive for taxpayers to comply with tax regulations by paying a fee equal to one tenth of the assets not declared on previous returns: the fee being considerably lower than the current fine.

Meanwhile, the government continues to push ahead with structural reforms, some of which are being implemented as part of Colombia’s planned accession to the Organisation for Economic Cooperation and Development (OECD), while others relate to the current peace process with the country’s main left-wing guerrilla group, Fuerzas Armadas Revolucionarias de Colombia (Farc). The potential ‘peace dividend’ is calculated to be significant, not least because social peace and the various economic, social and political reforms in support of an eventual peace agreement should support a virtuous circle of reform and growth in household incomes. A sustained reduction in poverty and income inequality is considered essential, not least because these factors contributed to the conflict in the past.

In a September 2014 overview of policy notes, the World Bank (WB) suggested that the three objectives of peace, lower poverty and a reduction in inequality were “within reach”. It added that sustainable peace was essential for human rights to flourish in Colombia.

In mid-March 2015, an International Monetary Fund (IMF) delegation visited Colombia to assess the economy as a part of a regular Article IV mission. The IMF highlighted the strong appetite in recent months for Colombian government debt, thanks in part to upgrades in the country’s sovereign credit rating and a recent lift in Colombia’s weighting in global bond indices. This improvement came in the context of an increase in foreign reserves held at the central bank, as well as the government’s access to a Flexible Credit Line from the IMF. This improved market sentiment on Colombia allowed the Bogotá government to take advantage of historically low bond yields to issue new debt and extend the average maturities of existing borrowings. In the meantime, the capital requirements of what was already a strong and well-regulated financial system have been improved further.

The IMF is now looking for slower real GDP growth in 2015, albeit it forecasts a respectable outcome by regional standards, of 3.5% year on year. Although Colombian exporters have received a boost from the depreciation of the Peso against the US$ over the course of the last year or so, the continued slump in oil prices is a major challenge for the country. Consumption is expected to decelerate. The IMF also noted that investment (particularly in the energy sector) would slow. And indeed, FDI inflows were down by 10% in Q1 2015 to US$3.3bn, driven by a large 12% fall in inflows to the key oil sector to US$2.7bn (which nevertheless accounted for 82% of the first quarter inflow). Inflows to other sectors fell by 1.9% to US$608.7m, the central bank reported. The net FDI result was US$4.48bn in the first quarter, down by 25% year-on-year, on preliminary figures. Nevertheless, the IMF expects real economic growth to accelerate back to almost 4.5% by 2019, thanks significantly to the benefits of infrastructure investment.

The IMF emphasised that further fiscal reforms could be helpful in a scenario of low oil prices, slower investment and weaker growth. Potential options include increasing the rate of VAT, replacing traditional corporate taxation with the simplified exemption structure of the CREE (income tax for equality) and further changes to the personal income tax regime. “Enormous gains in revenue could [also] be achieved through improving tax administration, including by imposing criminal penalties for tax evasion, increasing the number of officials and strengthening the information technology of the tax administration authority”, it noted.

For its part, the OECD, in a January 2015 review of the Colombian economy, also identified additional reforms that could be undertaken. The OECD suggests that the tax system could be made greener through the introduction of a carbon tax. It also argues for wholesale reform of the pensions system, in order to reduce old age poverty and inequality. Some two-thirds of older Colombians have no form of pension. The minimum old-age income support is below the national poverty line. The OECD supports an expansion of eligibility for the Beneficios Económicos Periódicos programme, alongside increased coverage and benefit levels under the minimum old-age income support and the Colombia Mayor programme. In an April 2015 report entitled, ‘Colombia’s social security system: advances and challenges’, ECLAC highlighted the need for welfare reform to address the low levels of social protection afforded to women in particular and the rural population in general.

As the IMF forecasts indicate [see chart], the general prospects for Colombia’s economy remain favourable. Overall economic growth and per capita income levels should rise again from 2016. Investment appears set to remain substantial, at around 22% of GDP, even if it is likely to grow more slowly than the economy as a whole moving forward. For now, the IMF is not expecting tax reform to result in higher government revenues as a percentage of GDP. Nevertheless, the current government appears set to maintain fiscal discipline.

Finally, a current account deficit of US$20bn or so is manageable in the context of a US$333bn economy. The deficit was the equivalent of 5.2% of GDP last year. The IMF expects this to rise to 5.8% this year, before falling back to 4.9% in 2015, as oil prices, and therefore export earnings, begin to recover.

PERÚ | Destacándose en Sahic. Perú actualmente está entre los cuatro países más atractivos para la inversión en el sector del turismo, junto con Brasil, Colombia, y México, afirmó el presidente de la South American Hotel & Tourism Investment Conference (Sahic), Arturo García Rosa, el 28 de septiembre. Los comentarios de García fueron hechos durante la apertura de la VIII conferencia anual de dos días de Sahic, que este año se celebró en Lima.

García dijo que Perú tiene “importantes [destinos] turísticos” y “una economía estable” [y] que estos son dos factores clave cuando se trata de tomar decisiones [de inversión]”. Esto fue respaldado por la viceministra de turismo de Perú, María del Carmen de Reparaz, quien también asistió a la conferencia de Sahic. De Reparaz dijo que todo esto era el resultado del trabajo técnico que el gobierno peruano ha estado llevando adelante por muchos años ahora, para promover el país como un gran destino turístico, “avanzando junto con la seguridad pública y la política económica […] acá trabajamos con una visión macro”.

De Reparaz continuó para presentar a los más de 350 representantes de la industria hotelera de 30 países diferentes, una cartera de 33 propuestas de proyectos para el desarrollo de hoteles, con un valor de US$241m, que el gobierno está intentando desarrollar con inversión del sector privado. De Reparaz dijo que estos proyectos complementarán los proyectos de desarrollo de infraestructuras del gobierno (ver abajo).

El pedido de inversión privada de De Reparaz vino después de la publicación de un nuevo informe del ministerio de comercio exterior & turismo de Perú, el 21 de septiembre, que decía que el país había recibido 3,21m de turistas extranjeros en el 2014, un 2,5% más que en el 2013 y un nuevo récord. De acuerdo con el informe, el 58% de estos turistas llegaron de otros países de América Latina, mientras que el 42% provino de EU y Canadá y, más lejos, de Europa, Asia, y Oceanía. Y que esto ha generado US$3,83mm para el país.

COLOMBIA | Estrategia de inversión en el sector petrolero. El 29 de septiembre el gobierno Colombiano liderado por el Presidente Juan Manuel Santos presentó un nuevo plan diseñado para mantener los actuales niveles internos de inversión y actividad petrolera, en medio de la aguda caída en los precios internacionales del petróleo.

Una declaración del ministerio de minas & energía expresa que el objetivo central de la nueva estrategia es promover mayor exploración petrolera al hacer que tales proyectos sean más atractivos económicamente y que el proceso de aprobación sea más efectivo. El ministro de minas & energía, Tomás González, explicó que el plan era mejorar los esfuerzos de exploración de petróleo llevando a cabo nuevos estudios de valuación, clasificación, y priorización de los depósitos de hidrocarburos.

González agregó que la estrategia también incluye el fortalecimiento de la Agencia Nacional de Hidrocarburos (ANH), la agencia que supervisa el sector, a la que se le otorgarán más poderes para que así pueda adoptar procedimientos  más flexibles y dinámicos para otorgar las concesiones petroleras a fin de asegurar de que Colombia permanezca “atractiva para los inversionistas”.

• Proyectos de desarrollo de infraestructura

Los proyectos de desarrollo de infraestructura planeados por el gobierno peruano, incluyen la construcción de un teleférico que mejorará el acceso al sitio arqueológico de Kuélap (que ha estado en la lista de la Organización Educacional Científica y Cultural de las Naciones Unidas [Unesco] de sitios tentativos como patrimonio de la humanidad desde el 2011), localizado en la región norteña de Amazonas, y el desarrollo de instalaciones turísticas en el Lago Yarinacocha, también localizado en Amazonas.

ST VINCENT AND THE GRENADINES | Elections. Prime Minister Dr Ralph Gonsalves and the ruling Unity Labour Party (ULP) won a fourth straight term in general elections in St Vincent and the Grenadines on 9 December. The ULP secured victory by the tightest possible margin, 8 seats to 7, the same as in the previous elections in 2010. Arnhim Eustace, the leader of the main opposition New Democratic Party (NDP), refused to accept defeat. Eustace said his party had “unmistakable proof” of irregularities. Demanding a recount, the NDP filed election petitions in the High Court on 15 December.

The electoral observer mission of the Organization of American States (OAS) made no reference to any irregularities, highlighting “the civic spirit of the population shown in peaceful and successful elections”. Eustace’s response was that “the OAS can say it was free and fair; we…say it was not free and it was not fair”. NDP protests could be heard as Gonsalves swore in his new cabinet on 14 December. Promising no triumphalism Gonsalves offered “unsolicited but honest advice to the NDP leadership that if you continue like this, it will only result in your accelerated political demise, a veritable political oblivion”.

PARAGUAY | Subsidies for workers on Argentine border. Paraguay’s finance minister, Óscar Llamosas, said on 7 April that a fund worth between US$9m and US$10m would be made available to subsidise workers in 16 towns on the frontier with Argentina affected by border closures imposed to contain the spread of the coronavirus (Covid-19) pandemic. Llamosas said that some 43,000 people working in the formal and informal sectors would be eligible for the financial assistance. It will amount to four payments, each one equivalent to half of the minimum wage or G$1.096m (US$170), for formal workers, and two payments of G$500,000 apiece for informal workers.

Bolivia’s President Luis Arce has repealed three decrees introduced by his predecessor, interim president Jeanine Áñez (2019-2020), which had liberalised the use of genetic modification (GM) techniques in agriculture. Heralded by the government as a sign of its commitment to environmentalism, the move was met with anger by Bolivian agricultural associations. However, within days the government was also facing a backlash from environmental groups after announcing that it is working on a legal framework to regulate, and thereby reauthorise, GM farming.

Announcing the repeal of decrees from the Áñez administration that had slashed regulations on transgenic farming, President Arce condemned his predecessor on 22 April for “unashamedly” opening up the country to transgenic agricultural inputs. Describing her actions as an “illegal” attack on “food sovereignty, Bolivia’s genetic patrimony, biodiversity, life systems and the health of the Bolivian people,” Arce passed a decree to reinstate a 2011 law prohibiting the import of GM seeds from plant species that are native to Bolivia or which are genetically diverse in the country. Under the Áñez administration, GM techniques were permitted for the production of maize, wheat, cotton, sugar cane, and soya.

Arce’s decree was met with anger by agricultural associations. The Association of Oilseed and Wheat Producers (Anapo) called it a “great step backwards”, arguing that it “prevents thousands of Bolivian farmers from accessing technology to improve their productivity and mitigate declining production due to climate change”. Anapo expressed its concern that the country’s agricultural sector would now face far greater risks from droughts and pests, and it argued that GM farming is key to boosting exports and accelerating Bolivia’s recovery from the coronavirus (Covid-19) pandemic.

A U-turn was swiftly executed. On 24 April, Bolivia’s new rural development and land minister, Remmy Gonzales, met representatives from the agricultural sector in Santa Cruz department to discuss the use of innovative technology in farming. Gonzales said that the reason for the repeal of Áñez’s decree permitting the use of transgenics was that it “lacked a technical and economic basis,” and he noted that the constitution requires GM inputs to be regulated by law, rather than by decree.

• Land trafficking

Remmy Gonzales, the new rural development and land minister, took office on 20 April after his predecessor, Edwin Characayo Villegas, was filmed receiving a US$20,000 bribe. Interior Minister Eduardo del Castillo said that Characayo had been involved in ‘land trafficking’ – using his ministerial position to acquire and clear land for agriculture. This practice is also alleged to have been widespread during Jeanine Áñez’s administration; in November 2020, the Fundación Tierra NGO claimed that Áñez signed a supreme resolution to transfer over 34,000 hectares of land to the family of her economy minister, Branko Marinković. 

Gonzales announced that he had assembled a team to establish a legal framework for the reintroduction of GM farming. He said the government would “begin with soya crops and we hope that as soon as possible we will not just issue a decree but establish a law.” That announcement prompted an angry backlash from the Probioma NGO, which advocates for sustainable agricultural practices. Probioma called the abrogation of the Áñez decrees a “show” and criticised the MAS for its “servile attitude towards agrobusiness”.

Bolivia’s National Coordinator for the Defence of Indigenous Territories, Peasants, and Protected Areas (Contiocap) also released a scathing statement. Lambasting the government’s celebrations on the national ‘Mother Earth Day’ (the same day that Gonzales announced plans for the resumption of GM farming), Contiocap accused the MAS of “putting on a show” to “distract and obscure its extractivist economic policy.”

On that day, Arce had spoken of building an “economy of Mother Earth” – language reminiscent of former MAS president Evo Morales (2006-2019), who at least nominally placed environmentalism at the heart of government policy. Arce must now find a politically acceptable path between the policies of Morales, who introduced many of the current restrictions on transgenics, and Áñez, who provoked anger from environmentalists but relief from farmers when she lifted them.

*** ANTIGUA’S PREMIER EYES EARLY POLL. Prime Minister Gaston Browne, leader of the ruling Antigua and Barbuda Labour Party (ABLP), hinted on his weekly radio programme on 19 February that there could be an early election. He went to the polls a year early in 2018 and it paid off. He is now looking for a third consecutive term.

The ABLP came to power in 2014 when it defeated the then-ruling United Progressive Party (UPP) by 14 seats to three in the 17-seat House of Representatives. The UPP, which held power for two terms from 2004, had the misfortune of having to deal with aftermath of the 2008 financial crisis, and in particular (after a year of resumed growth in 2012) with a dip back into recession in 2013, the year before it would be seeking a third mandate.

In 2018, the ABLP was luckier. There had been good growth in every year since it returned to power in 2014. And although there was a slowdown to 3.0% in 2017, after a robust advance of 5.3% in 2016, the prime minister went into the election promising a double-digit advance on the back of a US$90m port-expansion project together with a huge new hotel development in Barbuda. The electorate believed the prime minister, with the ABLP winning one more seat in March 2018 than it had done in 2014, to give it a 15-2 majority in the House of Representatives.

Now Browne is looking to repeat the trick, and he is even aiming for a clean sweep. Speaking on 19 February, he talked of winning 17 seats, adding: “I could call the elections next month and the Labour Party will win the elections.”

But the economic cycle hasn’t been as kind to him this time around. The rapid 7% expansion in 2018 dropped to 4.7% in 2019 after which came the catastrophe of the coronavirus (Covid-19) pandemic, producing a 20% collapse in GDP in 2020. The recovery in 2021 was a very tepid 1%, although this year should see a further 7% advance. That is probably as good as it’s going to get for now, with the International Monetary Fund (IMF) pencilling in 5.6% GDP growth for 2023, 4.4% in 2024, and 3.5% in 2025.

*** TRINIDAD MURDERS ON THE UP. In January, there were 50 murders in Jamaica, double the previous year’s figure for Trinidad & Tobago. This follows a 12% increase in murders in the country in 2021, taking Trinidad’s murder rate to 32 per 100,000 inhabitants, surpassed only by Honduras (38.6), Venezuela (40.9), and Jamaica (49.4) in the region.

The total number of murders in Trinidad & Tobago in 2021 was 448, up from 399 the previous year, however it was still below the record of 539 murders in 2019. In its review of the crime situation in Trinidad in 2021, specialist website InsightCrime wrote: “The ongoing economic crisis and spike in criminality in Venezuela, just a few nautical miles away, has severely impacted Trinidad and Tobago…”

Local criminologist Ramesh Deosaran, commenting on the January surge in murders, also blamed the economy and (in part) the crisis in Venezuela. He said that economic reasons were behind the surge rather than people “have mental illness or just plain wicked”. Deosaran also blamed the influx of foreigners, and not just from Venezuela. He said: “There are a lot of foreigners in the country, not only from Venezuela. People are forming gangs with their own here…We’re heading into a mafia country in the same way as in other countries. Immigration is a big contributor all over the world and here too.”

• Jamaica’s homicides

InsightCrime quoted Jamaica’s police commissioner, Major General Antony Anderson as saying that nearly three-quarters of Jamaica’s homicides in 2021 were gang-related.

On 19 December, Holland’s Prime Minister Mark Rutte issued a formal apology to former Dutch colonies in the Caribbean - Aruba, Bonaire, Curaçao, Saba, Sint Eustatius, Sint Maarten, and Suriname - for his country’s historical association with slavery and the slave trade. The Dutch central bank, ABN Amro bank, and the cities of Rotterdam, Utrecht, and Amsterdam have also all issued apologies in recent years. The latest apology has been welcomed, but it has not stilled the debate about reparations.

A decade ago, the Caribbean Community (Caricom) set up the Caricom Reparations Committee (CRC) to argue for monetary compensation from European countries that profited from the slave trade. The CRC responded to Rutte’s statement by saying that it was disappointed that the prime minister had not first sought “the organised input and support of the Caribbean”.

In a statement issued in response to the apology, the CRC said: “Historic though it is, the statement is flawed on the basis that the prime minister did not seek the organised input and support of the Caribbean. The unilateralism of the apology and acknowledgements must now move to a multilateral basis. The marginalisation of these victim communities will undoubtedly be experienced as an ongoing approach steeped in the imperial culture we are seeking to replace with a deeper democratic sensibility. The Dutch State was Europe's pioneer of the global slavery enterprise.”

A typical response to the apology was that of a Guyanese organisation called the International Decade for People of African Descent Assembly-Guyana (IDPADA-G). The group’s chairman, Vincent Alexander, said: “We consider this apology a significant step in the acceptance of guilt and the demonstration of penitence for the involvement of the Dutch in the worse crime ever committed against humanity.” However, he also made clear that an apology was not the end of the issue, saying: “We look forward to subsequent initiatives on your government’s part in response to the just and global call for reparations as the ultimate act of recompense.”

The CRC, for its part, has drawn up a 10-point action plan for dealing with the issue of slavery, of which the issuing of a “full and formal apology” is just the first point. The full 10-point list of demands includes:

1) Full and formal apology

2) Indigenous peoples’ development programme

3) Funding for repatriation to Africa

4) The establishment of cultural institutions and the return of cultural heritage

5) Assistance in remedying the public health crisis

6) Education programmes

7) The enhancement of historical and cultural knowledge exchanges

8) Psychological rehabilitation as a result of the transmission of trauma

9) The right to development through the use of technology

10) Debt cancellation and monetary compensation

Liza-1, the first offshore oil and gas production block operated by US oil giant ExxonMobil (45%) and partners US firm Hess (30%) and China’s China National Offshore Oil Corporation (CNOOC) (25%), has already begun transforming Guyana’s economy with the International Monetary Fund (IMF) estimating GDP will grow by a stratospheric 37.2% this year. But an unexpected dispute over catastrophe insurance coverage could put the boom on hold.

At first glance, Exxon has put an impressive array of insurance arrangements in place, covering the risk of an oil spill or other catastrophic event. Any losses would in the first instance be met by its local subsidiary, known as ESSO Exploration and Production Guyana Ltd. It also has cover from a wholly owned UK-based insurance company. Together these provide up to US$600m in oil spill cover on media reports. The parent company has in addition guaranteed it will cover up to US$2bn worth of catastrophic losses.

But environmental campaigners in Guyana are not impressed. They point out that comparatively speaking these numbers are pretty small. The Deepwater Horizon explosion and oil spill suffered by British multinational BP in the Gulf of Mexico in 2010 is estimated to have caused total losses of around US$70bn. An offshore oil spill in Guyana could also potentially impact a dozen Caribbean islands which are highly dependent on tourism and fishing.  Essentially, if there is an oil spill, the bulk of the financial burden could still fall on the government – in other words, ultimately on the Guyanese tax payer.

In a ruling on 3 May High Court Justice Sandil Kissoon upheld a complaint which accused both Exxon and the country’s Environmental Protection Agency (EPA) of failing to put adequate oil-spill insurance in place. Kissoon was scathing. Exxon, he said, had “engaged in a disingenuous attempt which was calculated to deceive when it sought to dilute its liabilities and settled obligations expressed in clear unambiguous terms.”

The company’s actions had been “made permissible only by the omissions of a derelict, pliant, and submissive Environmental Protection Agency” the judge said. Kissoon gave Exxon and the EPA 30 days – up to 10 June – to put better insurance coverage in place, or risk formal withdrawal of Liza-1’s environmental operating permit. That would shut down Guyana’s entire oil production, currently running at 380,000 bpd and in effect put the country’s economic boom on hold, as there would be knock-on effects for other offshore drilling projects in the pipeline.

The judge’s interpretation of existing regulations is that the ultimate parent company must provide “unlimited guarantees” to cover all clean-up cost in the event of an oil spill. Exxon described the ruling as “disappointing” and said it failed to appreciate “the financial capabilities of Exxon Mobile Guyana and its co-venturers to meet their obligations, the insurance we already have in place, and the progress toward agreeing to a guarantee that exceeds industry benchmarks”. The Guyanese government said that it would appeal against the ruling since Kissoon “fell into error in his findings”.   

EPA executive director Kemraj Parsram acknowledged the need for the parent company to accept liabilities not covered by local subsidiaries but said his interpretation of the regulations was that it did not require to be “unlimited”.     

Since the ruling, on 16 May Exxon released data showing the value of investments at stake. The company said that along with its partners and contractors it had spent more than US$400m last year, and US$900m since its first oil discovery in Guyana in 2015. It added that by the end of 2022 it was employing over 5,000 local workers which represented 65% of the oil and gas industry workforce. Documents submitted to the court cited by the international media showed that Exxon and its partners had earned US$5.8bn in combined revenues from the Stabroek Block (which includes Lisa-1) last year.

Key protagonists in the dispute are expected to continue attempts to influence the type of insurance cover the industry receives. With Guyana intending to auction a further 14 exploration blocks this year, the government is worried that requiring oil majors to accept “unlimited” oil spill liabilities could scare off new investors. On the other hand environmental campaigners say the oil boom will increase safety risks and distract attention from pressing climate change issues.  Amy Westervelt, an investigative journalist who covers the Guyana oil story, points out that around 90% of the population lives on a thin coastal strip which is not just vulnerable to any eventual oil spill, but also to rising sea levels, with some predictions saying parts of the coast will be underwater by 2030 – in other words, in less than ten years’ time.

Peru’s discredited congress is seeking to expand its power, threatening the independence of the judiciary, and skewing the balance of power even more firmly towards the legislature. The right-leaning parties that dominate congress adopted a motion last week targeting the seven members of the Junta Nacional de Justicia (JNJ), which has responsibility for naming and removing judges and prosecutors, with dismissal. When the United Nations resident coordinator in the country, Igor Garafulic, expressed concern, the right-wing deputy presiding over the commission charged with carrying out the investigation urged the government to expel him from the country for interference.

The motion to carry out a summary investigation of the JNJ “on serious grounds” with a view to removing its seven members from their posts was presented by Patricia Chirinos, a legislator for the right-wing Avanza País (AP). Chirinos accused the JNJ of having become “a political tool serving private interests” and of being guilty of “serious failings, committing crimes, and constitutional infractions” - all criticisms that could be levelled at congress.

The motion carried by 84-22, with seven abstentions. The seven members of the JNJ will be summoned to present their defence to the congressional foreign affairs commission, chaired by Alejandro Aguinaga, a member of the right-wing opposition Fuerza Popular (FP, Fujimoristas), after which a report will be drawn up, requiring approval from a majority of the 24 members of the commission. It would then require a two-thirds vote of 87 in the 130-seat full congress to take effect.

The JNJ responded by saying that the motion “threatens a rupture of the constitutional order”. It accused congress of “false accusations” and argued that there was no cause for the investigation as the JNJ was guilty of no more than “the independent exercise of its constitutional functions”.

The JNJ’s response found echo in the reaction of Garafulic, the UN resident coordinator in Peru. On 7 September Garafulic said that “only by defending and guaranteeing the principles of separation and balance of powers is it possible to aspire to the consolidation of a fair and democratic society for the benefit of all people”.

Aguinaga reacted by demanding that the foreign ministry declare Garafulic persona non grata for “usurping and arrogating responsibilities that are not his”, and to expel him from the country for “interference in internal affairs”. She added that his comments had created “a situation” days before President Dina Boluarte is due to fly to New York for the annual meeting of the United Nations General Assembly (UNGA).

Garafulic’s comments were reiterated by Volker Türk, the UN High Commissioner for Human Rights, on 11 September. Türk expressed his concern that “the investigation [by congress] could impact judicial independence and the separation of powers”, while adjuring congress to “abide by the UN Basic Principles on the Independence of the Judiciary and to respect the balance of State powers”.

Notably, Türk added that since January his office had documented no fewer than “13 bills and five constitutional accusations by congress” that had “raised concerns regarding interference into autonomous constitutional bodies”, 11 of them targeting the electoral authorities, particularly the president of the Jurado Nacional de Elecciones (JNE), Jorge Salas Arenas, and Oficina Nacional de Procesos Electorales (Onpe), Piero Corvetto. Significantly, appointing the heads of the electoral authorities falls within the remit of the JNJ.

Peru’s foreign ministry summoned Garafulic on 12 September to “formally transmit surprise” at the decision to criticise the investigation of the JNJ by congress. In a short statement on social media, the foreign ministry said it had informed Garafulic that it expected him to carry out his duties in “strict compliance with the resolutions of the UNGA”.

The Boluarte administration has demonstrated its submission to congress, upon which she depends for her political survival, on several occasions. Only last week Boluarte dismissed her education minister, Magnet Márquez, after she criticised an education bill approved by congress for conspiring against a meritocratic education system [WR-23-36].

The outcome of the congressional investigation into the JNJ is no foregone conclusion. Even though the right-leaning parties in congress have a commanding majority, they have struggled to muster a two-thirds majority of 87. The motion calling for the investigation, for instance, was approved with 84 votes. The significant media attention and international pressure could make it still harder to achieve the 87 votes. But it is unlikely, whatever happens, that the right-leaning majority in congress will cease its efforts to concentrate power in its own hands.

Echoes of Fujimori

“We seem like a dead country, cadaverous, they are stealing institutions from us in the same way that they did in 1997, 1998, and 2000 [under the authoritarian government of Alberto Fujimori (1990-2000)],” César Hildebrandt, the prominent local journalist and political analyst said on his podcast on 11 September in response to the congressional motion targeting the JNJ. Hildebrandt claimed that congress already had the ombudsman’s office and the constitutional tribunal in its pocket and would shortly be able to say the same for the JNJ.

When Cuba’s President Miguel Díaz-Canel delivered his closing speech to the two-day plenary of the central committee of the Partido Comunista de Cuba (PCC) this week he made it clear that one of the government’s overriding concerns was boosting domestic agricultural production. The acute shortage of food is one of the main reasons why Cubans have opted to leave the country in recent years.

The primary focus of the meeting, which brought together the 110 members of the PCC central committee and 14 members of the politburo, was to discuss ways in which to boost domestic agricultural production. During his closing remarks at the two-day plenary from 5-6 July, President Miguel Díaz-Canel said that “food production and self-sufficiency are crucial endeavours in which the whole population must take part.” He added: “The people demand results and we owe them.”

Díaz-Canel acknowledged that guaranteeing food supplies was “complex”. In March he admitted in a meeting with the ministry of the food industry that an average family spends more than 70% of household income on food, reflecting a surge in prices in recent years due to a fall in national production and currency weakness. Cuba imports 80% of the food it consumes, and the government spends US$2bn on the supply of heavily subsidised basic goods, such as chicken, rice, sugar, grains, and milk, on the ration book, or ‘libreta’, to more than 12,000 bodegas (government-owned supermarkets).

This annual financial burden is unsustainable and is compounded by a decline in domestic agricultural production by some 35% between 2019 and 2023, according to the government’s own figures. Hence the need to come up with solutions to address the problem. There were some frank acknowledgements of the difficulties faced during the central committee meeting, but it was essentially a talking shop with solutions in short supply.

Díaz-Canel spoke about the need for “constant rectification” and the threat of “inertia”. The report from the eighth party congress in April 2021 also highlighted the problems of “bureaucracy and inertia”. And Díaz-Canel’s revolutionary forebear, Fidel Castro, talked about the need for “rectification of mistakes and negative tendencies” during the third party congress in 1986.

It is fair to assume that for as long as the Cuban Revolution endures, “inertia” will remain a threat and “rectification” will be demanded. But these are particularly challenging times for the Cuban government. The PCC central committee meeting took place against a bleak backdrop not just of food shortages but also medicine and fuel shortages, soaring inflation, recurrent blackouts, and the largest mass emigration in the country’s history in the last three years. There is little prospect of improvement. Indeed, with the return of Donald Trump (2017-2021) in the US looking ever-more likely things could get worse next year.

Chinese listening station fuels controversy

Cuba’s deputy foreign minister, Carlos Fernández de Cossío, said this week that alleged Chinese military bases on the island “do not exist and no-one has seen them”. He was referring to a report entitled ‘Secret Signals: Decoding China’s Intelligence Activities in Cuba’ published by the US-based bipartisan think tank Centre for Strategic and International Studies (CSIS) published on 1 July. Florida-based Republican Party representative Carlos Gimenez responded to the report that Cuba is building a new electronic surveillance facility, with assistance from China, as “worrisome, but not a surprise” on 4 July. China denied the claims.

The new facility has reportedly been under construction since 2019 and is located close to Santiago de Cuba and capable of spying on the US naval base at Guantánamo.

US domestic politics could raise the temperature in the long-standing dispute over Cuba. In an election year, and with questions concerning incumbent Democratic Party President Joe Biden’s age and fitness to hold office for another four-year term, right-wing Republicans from the Florida-based Hispanic community are keen to portray him as weak in the face of external threat. Gimenez attacked the White House for the diplomatic opening to Cuba undertaken during the presidency of Barack Obama (2009-2017). Another Florida Republican, Deputy Maria Elvira Salazar, said Biden’s “weakness” was allowing the Chinese to “restart this new Cold War right on our doorstep”.

Antenna arrays

The new facility reportedly includes a circular antenna array with a 130m to 200m diameter and the capability to track signals up to 8,000 nautical miles away. Antenna arrays of this type were frequently built both by the US and the Soviet Union during the Cold War but have since been replaced by newer technology. However, China is known to still uses these arrays, some of which have been installed on reefs in the South China sea.

The US$4bn deal that Ecuador reached with the International Monetary Fund (IMF) in May was a financial lifeline for President Daniel Noboa, averting the risk of default and giving more time for the benefits of his government’s tax reform to be felt. However, the deal has faced criticism in Ecuador, not least due to the IMF’s call for fuel subsidies to be reined in as part of a package of cost-cutting measures [WR-24-24]. The agreement is now facing a new threat in the national assembly, after a congressional commission urged legislators to revoke the deal and block further debt repayments to the IMF.

The national assembly’s transparency and citizen participation commission, which is dominated by the left-wing opposition Revolución Ciudadana (RC), issued a statement on 26 July urging legislators to “activate the available constitutional measures” to declare the IMF agreement unconstitutional. It went on to say that legislators should “declare the illegitimacy of the debt contracted by Ecuador via the signing of the agreement” and “ask the government to abstain from paying…the instalments derived from this agreement”. A member of the commission, Franklin Samaniego (RC), said that this is possible due to Article 290 of Ecuador’s constitution which states that public debt can be declared illegitimate.

The commission’s reasoning is that the IMF deal amounts to an international treaty which should have been debated by legislators before being signed. Voting to declare the deal illegitimate would be a radical move from the opposition-dominated congress, not least given that Ecuador has already received a US$1bn disbursement from the IMF. It would also severely destabilise government finances, which were under such strain prior to the signing of the deal that there were fears over an imminent debt default. There is also little chance that the government will revoke its efforts to reduce fuel subsidies even if the deal were killed off by legislators, given that the costly subsidy programme was one of the key drains on government accounts.

Legal experts consulted by the Ecuadorean news outlet Primicias on 31 July said that if a motion to revoke the IMF deal is approved by legislators, it would likely face a challenge in the constitutional court, which would be expected to uphold the IMF arrangement in line with a similar case that the court heard in 2019

Italy provides anti-mafia training

On 31 July Italy’s embassy in Quito announced the launch of a training programme in which Ecuadorean security personnel will receive guidance on tackling organised crime, based on Italy’s experience with mafia organisations. The Italian ambassador in Ecuador, Giovanni Davoli, said that “Italy is offering its experiences and resources in the battle against transnational organised crime”. He said that special emphasis will be placed on tackling kidnapping and extortion by criminal gangs.

The first foreign policy move by the new Egyptian regime has been a swift rapprochement with Sudan.  The fact that this has been praised in pan-Arab circles as a counter to Israel’s incursions into Africa would indicate that the world still rotates on its old axis.  The Arab spring appears not to have changed the essentials.

The view of informed observers is that the constitutional referendum of 19 March, sponsored by the Supreme Council of the Armed Forces, has boosted the Muslim Brotherhood at the expense of the Tahrir Square youthful secularists.  The remnants of the Mubarak regime are now likely to reach an accommodation with the Muslim Brotherhood that will curtail genuine secular-democratic progress.  It is still too early to say for certain, but that does seem to be the direction in which Egyptian domestic affairs are heading.

On the external front, we have already seen an improvement in relations between Cairo and Hamas.  For instance, Egypt allowed a Gaza delegation led by the senior Hamas figure Mahmoud al-Zahar to travel from Gaza on a trip to Khartoum, Damascus, and Ankara.  This would not have been allowed by the Mubarak regime.

Then on 29 March, following a meeting with Egypt’s Foreign Minister Nabil el-Arabi in Cairo, al-Zahar said: "We are going to witness an Egyptian revision on handling the Rafah border crossing [between Egypt and Gaza] and the Palestinian case over the next week or the upcoming days," al-Zahar said.

The Rafah border crossing was closed by Egypt in 2007 after Hamas took control of Gaza from the Palestinian Authority based in the West Bank.

Praising the new regime in Cairo over that of ousted president Hosni Mubarak, al-Zahar said: "The Palestinian people will never forget the position of the former Egyptian government regarding the Israeli violence against the Gaza Strip and the position of the current Egyptian government which warned the Israelis from trying to repeat their aggression against the Strip.”

In a statement posted on the Hamas Government website, Youssef Rizqa, political advisor to Hamas Prime Minister Ismail Haniyeh, said: "For the first time in the history of the relationship, Palestinian and Egyptian ministers are communicating. This is a substantial development that did not take place in Mubarak's era." In a further sign of warming relations, Rizqa added that Hamas intended to re-open the Egyptian Consulate in Gaza, closed in 2007.

The fact that new Egyptian Prime Minister Issam Sharaf chose Khartoum as the first Arab capital to visit is also being seen as a significant change of direction.  The Mubarak regime was noticeably hostile to Sudan, even supporting the rebel movement in the south.  Practical reasons for a rapprochement with Sudan include Egypt’s need for an ally against the African Nile Basin countries’ attempt to amend treaties on the sharing of the Nile’s waters.  They are seeking to reduce Egypt’s share of 54bn cubic metres.  Sudan takes the second largest share with 18bn cubic metres.

It has been equally striking to see Arab praise for Egypt’s move on the grounds that it is a counter to Israeli influence in Africa.  The pan-Arab al-Quds al-Arabi sees the new Sudanese-Egyptian cooperation as providing a strategic boost not only in the fight to prevent a cut in the Egyptian-Sudanese share of the Nile waters but also in opposing “Israeli infiltration into the African continent backed by the US and the West”.  Accoding to the paper: “It is this infiltration that is inciting the Nile source states and is pursuing a scheme aimed at fragmenting both countries, especially Sudan.”

One of the countries Ecuador is most interested in signing a trade deal with is Turkey. Turkey, however, is unwilling to open up fully its agricultural market to Ecuadorean products. The Turks nevertheless want Ecuador to open up its market for industrial goods to Turkish products. The two countries have held two rounds of negotiations, but unless the Turks back down on agricultural protection, the Ecuadoreans say that the talks will go nowhere.
It is also not clear whether China, which has become Ecuador’s major creditor, will agree to Acuerdos de Comercio para el Desarrollo (trade agreements for development). Much like the US, China prefers free trade agreements (FTAs).
On 9 September Ecuador resumed FTA talks with the European Union. The Ecuadorean team is headed by the deputy foreign trade minister, Francisco Rivadeneira. The negotiations were broken off two years ago.
The Ecuadorean government is under pressure from agricultural producers to clinch a deal with the 27 member countries of the EU. Flower exports to the EU, at US$132m in the first eight months of 2011, account for about 20% of Ecuador’s total flower exports. Vegetable growers are even more dependent on the EU: 52% of Ecuador’s broccoli exports go to the EU. Overall, 31% of Ecuador’s non-oil exports go to the EU.

Inflation: In August monthly inflation was 0.49%, bringing the 12 month rate to 4.84%.

El Presidente Otto Pérez Molina está anunciando progresos en la reforma de la policía nacional (PNC). Esto le sigue a la anterior aprobación este mismo año, de otra cuestión con la que sus predecesores tuvieron problemas –la reforma fiscal [IL-12-08]. La reforma de la policía se produce a pesar de las dudas en relación al compromiso de Pérez Molina de llevarla a cabo, dados sus antecedentes militares (él sirvió como jefe de la inteligencia militar [D-2]) durante la guerra civil de 1960-1996 y su previa disposición de involucrar a los militares en temas de seguridad ciudadana –una estrategia que, como los grupos de la sociedad civil advirtieron, socavan los esfuerzos para fortalecer la aplicación de la ley de parte de civiles.

En lo que la comisionada para la reforma policial, Adela Camacho, describe como el “primer paso para profesionalizar la institución [policial]”, el 1 de agosto Pérez Molina inauguró una nueva escuela de entrenamiento de oficiales. Cumpliendo una promesa que hizo al asumir la presidencia en enero del 2012, la nueva academia fue construida con una inversión de US$1,9m y tendrá un ingreso inicial de 80 oficiales de policía. Su inauguración también coincide con la graduación de 1.530 nuevos agentes de policía que habían completado un curso de seis meses, en línea con otra promesa hecha por Pérez Molina luego de asumir el poder: que agregaría unos 10.000 oficiales de policía adicionales a la fuerza durante cuatro años. El declarado compromiso de Pérez Molina de fortalecer la PNC también se vio reflejado en su propuesta de reformas constitucionales [IL-12-29]. Aunque los cambios incrementarían el rol de los militares de “defensa de la soberanía y la integridad territorial” para permitirles “apoyar a las fuerzas civiles de seguridad en la seguridad interna”, ellos también establecerían a la policía como la fuerza de seguridad responsable por la prevención e investigación de delitos y el mantenimiento del orden público.

La necesidad de incrementar el tamaño de la policía y fortalecerla como institución, ya desde hace tiempo es considerada esencial para abordar la crisis de seguridad del país y ha estado en la agenda del gobierno desde el final de la guerra civil. Un informe de julio del 2012 del International Crisis Group (ICG) con base en Bruselas, admite que incrementar la policía y reducir las fuerzas armadas fue una de las pocas áreas en las que los gobiernos de Guatemala cumplieron las obligaciones estipuladas en los acuerdos de paz de 1996, que pusieron fin al conflicto interno: el ICG señala que la policía ha crecido de 12.000 a 25.000 funcionarios, mientras que los militares fueron recortados de 47.000 a alrededor de 17.000. Aún  así, el informe señala que Guatemala continúa rezagada  comparada con sus vecinos en términos de la cantidad de policías respecto a su población: el país tiene 174 policías por cada 100.000 habitantes, mientras que Honduras tiene 180 y El Salvador, 334.

Los problemas se relacionan no sólo con el tamaño sino también con la estructura y el profesionalismo de la policía que es ampliamente considerada como una de las más corruptas e ineficientes instituciones en el país: mientras que en América Latina en conjunto, solamente un tercio (33%) del público siente alguna o mucha confianza en la policía, de acuerdo con el último sondeo de Latinobarómetro difundido en mayo del 2012, esto cae al 15% en Guatemala. Destacando las raíces históricas de esta debilidad institucional, el ICG señala que en el apuro por expandir la policía luego del fin de la guerra civil, “muchos ex miembros de la vieja Policía Nacional fueron incorporados en la nueva PNC con poco entrenamiento adicional o controles de antecedentes” mientras que “los investigadores de derechos humanos recién ahora están ahora escrutando el rol de las escuadras de la muerte de la policía durante el conflicto armado”. El pobre liderazgo –que la nueva academia apunta abordar– también ha sido atribuido a problemas en el tope del ministerio del interior, el cual supervisa a la PNC. Esto fue ilustrado bajo el gobierno previo del Presidente Álvaro Colom (2008-2012), que tuvo cinco ministros del interior y cinco jefes de la PNC.

Una razón para el optimismo con relación a las chances de éxito de Pérez Molina, comparado con las de sus predecesores proviene de los fondos que él teóricamente tiene a su disposición. Vale destacar que Colom también reconoció la necesidad de una reforma policial –la designación de una prominente activista de derechos humanos, Helen Mack, en enero del 2010 para el recientemente creado cargo de comisionado presidencial de la reforma policial había elevado las esperanzas de una transformación de la policía. Aún así estos esfuerzos se estancaron debido a la falta de presupuesto. Un informe de enero del 2012 del think-tank holandés, Clingendael Institute, por ejemplo, dijo que la reforma policial bajo Mack “había sido seriamente socavada por la reubicación de recursos de la PNC y el ministerio del interior hacia otras partes del gobierno. En el 2010, por ejemplo, el presupuesto de la policía fue recortado por unos 207 millones de quetzales [US$26m].”

El éxito de Pérez Molina en superar los obstáculos afrontados por su predecesor a fin de tener aprobada la reforma fiscal –descrita por el ICG como un “prerrequisito para cualquier  significativa actualización de las fuerzas de seguridad”– lo deja en una posición más fuerte; se espera que la reforma fiscal reúna unos US$585m adicionales durante los próximos cuatro años. El ICG, sin embargo, estima que los planes de Pérez Molina para agregar unos 10.000 oficiales de policía adicionales durante el curso de su mandato implicaría un costo adicional de US$337m en salarios más US$45m para entrenamiento de reclutas –lo que representa un 65% de los ingresos agregados proyectados bajo la reforma.

Bases militares

Pérez Molina declaró su compromiso con la reforma de la policía, sin embargo llega en medio de otros signos del continuo uso de los militares para la seguridad ciudadana –una estrategia que ya ha atraído considerables críticas por su declaración (suspendida luego) del estado de sitio en la municipalidad indígena de Santa Cruz Barillas, Huehuetenango [IL-12-19].

El 30 de junio, Pérez Molina inauguró dos nuevas bases militares: una en San Juan Sacatepéquez, en la región de Guatemala; y la otra en la región del Petén, que bordea México. Ambas son controversiales por razones diferentes. Como Santa Cruz Barillas, San Juan Sacatepéquez ha visto tensiones sociales causadas por la oposición a la construcción de una planta procesadora de cemento por una compañía local, Cementos Progreso, que debe comenzar a operar en el 2014. La decisión dejó a Pérez Molina expuesto a acusaciones de inclinarse hacia los militares para defender los intereses de empresas involucradas en la extracción de recursos y proyectos de industrialización impopulares con las comunidades. Por su lado la nueva Brigada Especial de Operaciones de Selva enviada al Petén, que incluye, controversialmente, un contingente de las fuerzas especiales de elite ‘Kaibiles’. Los Kaibiles, creados en 1975, ganaron una notoria reputación durante la guerra civil, y fueron sospechados de algunos de los peores hechos de violencia perpetrados durante ese periodo. Algunos ex miembros de los Kaibiles también han sido vinculados con la banda traficante de droga mexicana Los Zetas, que está establecida en Guatemala. Pérez Molina ha sugerido planes para abrir nueve bases militares más este año.

• La primera para Guatemala

Esta semana, Guatemala está celebrando su primera medalla Olímpica desde que el país tomó parte por primera vez en los Juegos Olímpicos en 1952. El 4 de agosto, Erick Barrondo obtuvo una medalla de plata en la carrera de caminata de 20kms en los Juegos Olímpicos de Londres 2012, justo detrás de Chen Ding, de China. El Presidente Otto Pérez Molina se apresuró para felicitar al joven de 21 años, y el congreso votó unánimemente para convertirlo en Caballero de la Orden del Soberano Congreso. Barrondo también recibirá US$64.000.

Development: On 24 January Interior Minister Miguel Angel Osorio Chong said that the recent wave of murders in the Estado de México was a “reflection” of the ongoing turf wars between drug gangs present in adjoining states.

Significance: The wave of violence that has hit the Estado and Mexico City (DF) since the start of the year has raised concern that organised crime-related violence has shifted towards populous Central Mexico and ever closer to the country’s seat of political power. Osorio Chong’s comments signify the first official admission that this may be the case.

Key points:

• After chairing a meeting of the federal government’s security cabinet with the governors of the northern states that comprise the new north-western security zone (plus Durango), Osorio Chong said that the discovery of “dozens of bodies” in the Estado in recent weeks was a “repercussion” of the struggle between criminal gang’s “shock groups” operating in neighbouring states of Michoacán and Guerrero. His remarks were in response to a press question about the discovery of six unidentified mutilated bodies in the Estado’s capital, Toluca, on 23 January.

• According to Osorio Chong, the interior ministry (Segob), which has been put in charge of public security by President Enrique Peña Nieto, is already acting in the Guerrero and Michoacán border areas to address the problem. He also revealed that a new Estado-wide operation will be launched on 25 January.

• The army has already been deployed to the Estado municipality of Ecatepec, northeast of the DF, where 52 murders have been reported since the start of the year. On 22 January it was announced that a contingent of federal police (PF) officers and attorney general’s office (PGR) staff will also be sent to the area to assist in the murder investigations.

• The launch of the operation in the Estado was confirmed separately by Naucalpan Mayor David Sánchez. After taking part in the inaugural meeting of the local municipal security council, comprising  municipal authorities and representatives from the PGR, the PF, Segob and the defence ministry (Sedena), Sánchez said that the army would also be deployed to all municipalities north-west of the DF, following a 20% increase in crime (led by homicides) in the area.