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ECUADOR | Chevron case continues to make waves. On 2 July a judge from a provincial court in Ecuador’s Amazonian Sucumbíos province ordered the seizure of US$96.35m owed by the Ecuadorean State to US oil firm, Chevron, and determined that the amount should be used to pay part of the US$19bn that Chevron has been ordered to pay to local inhabitants in compensation for the environmental damage caused by the firm’s local subsidiary’s operations between 1972 and 1990.

    In 2011 the Permanent Court of Arbitration of the International Court of Justice at The Hague ordered the Ecuadorean State to pay US$96.36m in compensation to Chevron after it found that Ecuadorean courts violated international law by taking too long to rule on a number of commercial disputes that Chevron had with the country.

    However, Judge Wilfrido Erazo has ruled that instead of being paid to the US firm, the amount should be used to pay the still outstanding debt that the firm has with the people of Sucumbíos, who have been awarded compensation by the Ecuadorean courts. Erazo argued that Chevron’s continued refusal to pay the compensation as it continues to challenge the ruling was undermining the plaintiffs’ rights to receive compensation.

    Pablo Fajardo, the lawyer representing the plaintiffs, explained that “given the debt that the State has with Chevron we presented a judicial action calling for these funds to be seized and to have the State pay it to the plaintiffs as part of the debt that is owed to them... the judge has now issued a ruling and we can now say that the debt is no longer owed by the State to Chevron, but by the State to the plaintiffs in the Ecuadorean Amazon”. Fajardo added that he hoped that the State would deliver the payment by the end of the year after the court order is processed by the various State institutions.

    However, commenting on the latest ruling, Chevron’s spokesman for Latin America, James Craig, said that “any payment made by Ecuador... under the latest ruling would be another violation of Ecuador’s obligations under international law. It will also be useless as Ecuador would still be responsible for paying Chevron the US$96m it owes it plus interest”. It remains to be seen how the Ecuadorean government led by President Rafael Correa will react to Erazo’s ruling.

COLOMBIA | Turning to Africa. On 27 June Colombia’s trade & tourism minister, Sergio Díaz-Granados, said that after having overcome some of the obstacles to trade faced by Colombia with its partners in the Americas and Europe, the government would now look to expand Colombia’s trade horizons in Africa.

    In the past couple of years Colombia has signed a series of free trade agreements (FTAs) not just with the European Union and the US but also with a host of countries in the region including Mexico, Chile and Costa Rica. Consequently, Díaz-Granados said that “I would like us to focus our attention on Africa in the second half of this year”. According to Díaz-Granados, although bilateral trade with Africa has been increasing consistently over the past 10 years, the level of trade is still “very precarious”.

    Last year Colombia exported some US$450m to the African continent, primarily products such as meats, chocolates, cookies, plastics and metal works. However, Díaz-Granados said that he believed that trade was bound to increase pointing out that Africa is “one of the areas that in the next couple of decades is going to grow a lot and it will be an important factor in the world’s [economic] development”.

    Currently Colombia has only two embassies in Sub-Saharan Africa, in South Africa and Kenya, but Díaz-Granados pointed out that thanks to the recent decision by the Pacific Alliance members (Colombia, Chile, Mexico and Peru) to share their embassies across the world, Colombia has also now established official representation in Ghana.

    Díaz-Granados then revealed that the Pacific Alliance foreign and trade ministers were to hold a meeting in Villa de Leyva, Colombia, over the 28-30 June weekend to discuss “how to reach out better to the continent of the future, Africa”.     

• EU lifts ban on Conviasa

On 27 June the Venezuelan government announced that it had been informed by the European Union (EU) of its decision to lift the restrictions imposed on Venezuela’s flag carrier airline, Conviasa. In April last year the European Commission decided to put Conviasa on its blacklist of airlines that did not meet the necessary safety requirements to operate in EU territory. Since then Conviasa has not been able to fly its lucrative Caracas-Madrid route. The announcement was made by Foreign Minister Elías Jaua, who said that following the EU’s Aerial Security Committee June meeting, it was decided that the ban should be lifted. Jaua celebrated the decision to lift the “unjust” ban and thanked the “active participation of the Spanish government” in bringing about the change.

*** Iran feeling safe from Israel.  It has been our contention for some time that Iran does not believe that Israel will attack its nuclear facilities despite continuing threats from Prime Minister Binyamin Netanyahu.  Netanyahu says it is important to present Iran with “a credible military option”, but Iran appears not to believe the threat is serious and is not  frightened of saying this in public. 

The latest manifestation of Iranian insouciance about the Israeli military threat was a comment made by Iran’s ambassador to Jordan, Mostafa Moslehzadeh, who was quoted by the Iranian ISNA website on 19 July as saying: “Invading is part of their [Israel’s] nature as they invaded Palestine, Iraq, and Syria [sic], but they do not dare to attack Iran because they fear Iran’s response.” 

Our sources are of the view that this is Iran’s genuine assessment of the threat, not just bravado.

*** Turkey continuing to target journalists.  In last week’s issue we noted that the Turkish Association of Photographers was reporting that 111 photographers had been detained, targeted by violence, or had their photographs erased by police during the demonstrations in Ankara and Istanbul between 31 May and 8 July. 

On 21 July, the Turkish Journalists Union (TGS) said that 22 journalists have been fired from their jobs in connection with the Gezi Park protests, with a further 37 being obliged to resign.  TGS spokesman Gokhan Durmas said: “These dismissals and resignations are mostly related to censorship policies followed by some media outlets in dealing with the Gezi Park resistance.”

Durmas added: “Our colleagues worked hard for the public’s right to be informed, and they paid for it with their jobs.  Some have been censored, some had their TV programmes shut down.  There are even journalists who have been sacked due to their tweets.  A colleague has been dismissed from his job just for saying ‘hi’ to a protester.”

*** Rise in extremist propaganda in Uzbekistan.  Uzbekistan’s State Customs Committee has reported that the amount of Islamist propaganda material coming into Uzbekistan has increased substantially in the first half of 2013.  The committee’s press service said on 22 July: “The amount of illegal literature and materials seized in the first half of 2013 is twice as much as the total amount seized in 2012.”

Development: On 23 September ahead of the United Nations (UN) General Assembly in New York City Colombia’s President Juan Manuel Santos met the UN Secretary General Ban Ki-Moon and formally presented him with a letter of protest denouncing Nicaragua’s “expansionist pretensions” in the Caribbean Sea.

Significance: Colombia’s territorial dispute with Nicaragua has become a national cause in Colombia, with the unpopular Santos government adopting a bold and controversial stance in refusing to apply an International Court of Justice (ICJ) ruling granting Nicaragua sovereignty over Caribbean Sea maritime territory previously considered Colombian. Presenting a formal protest at the UN, a move backed by some of Colombia’s regional neighbours, is part of Colombia’s effort to getting the ICJ ruling reviewed. President Santos is also taking advantage of his trip to drum up international support for the current peace talks in Cuba between his government and the Fuerzas Armadas Revolucionarias de Colombia (Farc).

Key points:

• Shortly after his arrival in NY Santos met Ban privately and presented him with the letter of protest, to be submitted to the UN Commission on the Limits of the Continental Shelf (Unclos). The document was co-signed by Costa Rica’s President Laura Chinchilla and Panama’s President Ricardo Martinelli. Jamaica was expected to sign but appears to have opted out. According to press reports, the two men agreed that the letter would not be made available to the media. However, Santos requested that a copy be made available to other countries via UN diplomatic channels ahead of his appearance at the General Assembly today (24 September). According to a Colombian government press release, Santos also discussed with Ban the progress of the peace talks with the Farc. Retaining international support for the talks is crucial for Santos, who has staked a (presumptive) re-election bid next year on success in Cuba. However, domestic enthusiasm for the talks is waning as they drag on.

• After meeting Ban, Santos met his Uruguayan counterpart, José Mujica, a former leftist guerrilla who has been very supportive of the Farc talks. Afterwards Mujica and Santos once again urged the Farc to strike a peace deal and put an end to the fifty-year old conflict. “This is not a problem only for Colombia, but for all of Latin America, and the time has come to overcome it”, Mujica declared. Santos reiterated that time “is running out” for a deal.

• Mujica also formalised his offer to host in Uruguay a peace dialogue between the Santos government and Colombia’s second largest guerrilla group, Ejército de Liberación Nacional (ELN). Santos thanked Mujica for the offer but noted that “the issue must be prudently discussed with the counterparty in order to reach common agreement”. Brazil, Venezuela and Costa Rica have also offered to host any talks with the ELN. While Santos has repeatedly said that he is “prepared” to hold such talks, there has been little apparent progress to date on this front.

BRAZIL | André Vargas stripped of office. On 10 December, André Vargas, a former congressional deputy from the ruling Partido dos Trabalhadores (PT) was stripped of his parliamentary status over his links with Alberto Yousseff, the black market money dealer at the centre of ‘Operation Car Wash’, the investigation into the corruption scandal at the state-dominated oil giant Petrobras.

Vargas was voted out of office by 359 votes to one (with six abstentions). As he was not re-elected in October, Vargas was due to leave congress at the end of this term. If the ‘Clean Slate’ law is applied to his case, Vargas may be barred from running for office for the next eight years.

URUGUAY | Negative third quarter growth. On 15 December Uruguay’s central bank (BCU) released its latest economic growth figures, which showed that seasonally adjusted GDP growth contracted by 0.4% in the third quarter of 2014 compared with the previous quarter.

Although year-on-year growth in the third quarter was a positive 3.7%, the latest BCU figures serve as a warning for President-elect Tabaré Vázquez and his incoming new Frente Amplio (FA) administration, which is due to take office on 1 March 2015.
The yearly growth figure may still be above the projected regional growth average for the year, but negative growth in the third quarter suggests that Uruguay’s economy is also starting to suffer the effects of the fall in commodity prices and rapid appreciation of the US dollar that is affecting the region’s larger economies. It will be up to Vázquez’s new cabinet to come up with policies that will help ensure domestic economic growth in this more challenging international economic scenario.

According to the BCU, the third quarter contraction was the result of “negative performance” in the majority of economic sectors during the period, driven by year-on-year quarterly falls in the levels of domestic consumption (-0.2%) and exports (-3.4%). While the drop in exports was more pronounced, consumption has been steadily falling for the past four consecutive quarters.

The BCU pointed out that the overall slowdown in economic activity in the third quarter was “partially compensated for” by the strong performance of the industrial sector (10.1%). But local analysts point out that the industrial sector’s performance is mostly explained by the one-off boost produced by the coming on stream in June of the Montes del Plata pulp processing plant (the second and largest of its kind in the country) and that no such boon is expected in the short to medium term.

Gabriela Mordecki, the director of the economic institute at the Universidad de la República (Udelar), predicts that the ‘Montes del Plata effect’ will gradually wear off throughout 2015, resulting in a deeper slowdown. Indeed Mordecki said that the lower levels of economic activity observed in some key sectors, such as exports, construction and investment, will be exacerbated and its impact “more strongly felt in 2015”.

In particular, Mordecki pointed out that lower international prices for some of the country’s main agricultural exports (such as soy and wheat), and the “more adverse” economic scenario faced by some of Uruguay’s largest trading partners such as Brazil, Argentina and Russia, provide a more gloomy outlook for the Uruguayan economy. Other local analysts such as Pablo Rosselli of consulting firm Deloitte have already cut their 2015 growth forecast from 3% to around 2.5%.

The release of the BCU’s latest figures came a day after Vázquez and his cabinet team held the first transition meeting with the cabinet led by President José Mujica. Reportedly, they discussed the continuation of “general policy lines”, particularly in the nine ministries (out of 13) where Vázquez opted to bring in new faces, including the ministries of economy & finance, which will be taken over by Vice-President Danilo Astori (who held this cabinet position during Vázquez’s first administration); social development, to be taken over by Marina Arismendi; and labour, where Ernesto Murro will be in charge. All three of these incoming ministers hail from the FA’s more moderate and economically conservative wing.

• Chile cuts growth forecast

On 15 December Chile’s central bank (BCCH) presented its quarterly report on monetary policy (IPoM) in which it forecast 1.7% growth for 2014, down from its September forecast of 1.75%-2.25%. It also cut the September forecast of 3%-4% growth for 2015 to 2.5%-3.5%. The BCCH’s economic activity indicator index (Imacec), a GDP proxy released on 5 December, showed that economic activity rose by just 1.5% year-on-year in October, resulting in a rolling 12-month rate of 1.4%. Chile posted real GDP growth of 4.1% in 2013, down from the 5.4% posted the previous year.

ARGENTINA | Sindicatos del transporte amenazan con ir a la huelga el 31 de marzo. El jefe de gabinete, Aníbal Fernández, y el ministro de trabajo, Carlos Tomada, se reunieron el 11 de marzo con líderes de los principales sindicatos del transporte de Argentina, quienes están demandando exenciones en el impuesto a los ingresos y un incremento en los fondos usados para financiar los programas sociales administrados por los sindicatos. El diálogo terminó sin acuerdos, allanando el camino para la huelga del 31 de marzo. “La paciencia tiene un límite, y nuestro límite es el 30 de marzo”, dijo Omar Maturano el líder de la organización sindical, La Fraternidad.

Según Maturano, la reunión había sido amigable, pero los ministros habían sido muy claros en que cualquier decisión para aceptar las demandas de los sindicatos depende enteramente de la Presidenta Cristina Fernández. Los sindicatos del transporte han arreglado una reunión con los más grandes sindicatos de oposición, los liderados por Hugo Moyano, Luis Barrionuevo, y Pablo Micheli, para el 25 de marzo, a fin de ampliar el impacto de cualquier acción de huelga.

Las buenas relaciones entre el gobierno y los sindicatos no fueron ayudadas por el hecho que el ministro de economía, Axel Kicillof, no asistió a una reunión por separado con Antonio Caló, el titular de la facción de la Confederación General del Trabajo (CGT) aliada al gobierno, programada también para el 11 de marzo. Un delegado de la CGT le dijo a, El Cronista, de su irritación ante la actitud del gobierno. “Ellos quieren que mantengamos  nuestras demandas salariales por debajo del 30%, pero no ofrecen nada a cambio; ni exenciones al impuesto a los ingresos o dinero para los proyectos sociales”, dijo.

ARGENTINA | Citigroup: entre la espada y la pared. El 17 de marzo el ministro de economía de Argentina, Axel Kicillof, advirtió al Citibank que violar la ley argentina “tendrá consecuencias”. El banco está tratando de abandonar su custodia de los bonos argentinos tan pronto como sea posible, siguiendo a la negativa del juez federal de EU, Thomas Griesa, a ceder en su prohibición de que los bancos procesen el pago de intereses sobre los bonos argentinos emitidos bajo legislación de Buenos Aires. El gobierno había amenazado previamente con suspender la licencia del banco para operar en Argentina si no procesa los pagos.

URUGUAY | Astori propone medios para revivir el Mercosur. No estamos disfrutando de un buen momento, estamos pasando por un momento muy malo; en lo que [al Mercado Común del Sur] Mercosur se refiere, el peor desde que fue creado [en 1991],” dijo el ministro de economía & finanzas de Uruguay, Danilo Astori, durante una conferencia celebrada en Montevideo el 18 de marzo.

Durante la conferencia, titulada ‘¿Qué más debería hacer Uruguay para atraer la inversión?’ Astori expresó que era imperativo que el Mercosur muestre “sinceridad interna” para lo cual recomendó un nuevo acuerdo extra-regional que permita al bloque confrontar sus problemas con “resultados positivos”. Astori propuso un “regionalismo abierto”, diciendo que el “horizonte [del Mercosur] debería ser no solamente regional sino mundial”. Y abogó por avanzar en las negociaciones comerciales con la Unión Europea (UE).

No es la primera vez que un político del Mercosur, especialmente un uruguayo, ha afirmado que el Mercosur ha llegado a su punto más bajo, y proponer un acuerdo comercial con la UE para sacar al bloque fuera de la depresión parece equivalente a azotar a un caballo muerto: las conversaciones con la UE han estado en marcha virtualmente desde la creación del Mercosur. Brasil difícilmente pueda considerarse un campeón del “regionalismo abierto” y Argentina ha abrazado el proteccionismo comercial por casi una década, aunque podría perseguir una levemente diferente táctica económica después de que un nuevo jefe de estado asuma el poder en diciembre.

Sin embargo, Uruguay continuará presionando por todo lo que pueda obtener del Mercosur, incluyendo una relajación de las restricciones sobre la negociación de acuerdos comerciales bilaterales en vez de tener que negociar como bloque. “Mercosur no debería ser la estación terminal para la integración del país”, dijo Astori, “sino una plataforma para el lanzamiento de proyectos más ambiciosos”.

El nuevo gobierno liderado por el Presidente Tabaré Vázquez tiene una oportunidad para dejar su huella en la política de relaciones exteriores después de ocupar posiciones clave en cuerpos hemisféricos. El ex canciller de Uruguay, Luis Almagro (2010-2015), fue electo como el nuevo secretario general de la Organización de estados Americanos (OEA) el 18 de marzo. El actual titular, José Miguel Insulza, cederá el paso a Almagro el 25 de mayo después de casi una década en el puesto.

Sin embargo, Uruguay ha tenido un comienzo poco auspicioso de su presidencia pro-témpore de la Unión de Naciones Suramericanas (Unasur), después de una riña diplomática con Venezuela sobre sus afirmaciones de “interferencia externa” por parte de EU. El nuevo canciller de Uruguay, Rodolfo Nin Novoa, dijo que la nueva política exterior del país sería gobernada por la “discreción y la reserva”, aunque la indiscreción y la falta de reserva parecen atraer más a los países que se ha comprobado que son la fuerza conducente detrás de la Unasur.

• Ferrocarriles Argentinos
  

El 18 de marzo el ministro del interior & de transporte de Argentina, Florencio Randazzo, anunció que el ejecutivo había enviado un proyecto de ley al congreso de la nación para nacionalizar los ferrocarriles de Argentina.

“El objetivo es recuperar todo el sistema ferroviario nacional”, dijo Randazzo. Ferrocarriles Argentinos, una nueva compañía estatal, tendrá la total autoridad sobre trenes de pasajeros y de carga. El gobierno alega que la nacionalización del sistema ferroviario ahorrará al país Ar$1mm (US$115m) anuales.

BOLIVIA | Alternative energy plants

On 27 July the Bolivian government through the national electricity company (Ende) committed to implement 11 renewable energy projects in the country by 2020, which will generate approximately 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.

The government predicts that thermoelectric production will decrease from 65% to 26% and hydroelectric production will double from 35% to 70% by 2025. “We plan to have a surplus of 2,500 MW by 2020 and of 10,000 MW by 2025,” the minister of energy and hydrocarbons, Luis Alberto Sánchez, said on 27 July.

The Movimiento al Socialismo (MAS) government announced that the electricity produced from alternative sources will satisfy internal demand, while the electricity produced by gas or water will be primarily used for export.

VENEZUELA | Price of basic goods soars

The price of the basic basket of goods increased by 163.6% between June 2014 and June 2015 in Venezuela, according to a report published by the centre for documentation and social analysis for workers (Cendas) on 20 July.

This increase is far faster than the rise in salaries, meaning that the purchasing power of Venezuelans is being seriously eroded, Cendas concluded. Cendas said that an average family now requires almost eight minimum wages in order to cover its needs.

The basic basket of goods cost Bs.54.204,69 (US$8,604 at the official exchange rate of Bs.6.30/US$1) in June, an increase of Bs.11.357,78 (26.5%) on the previous month. This is hyperinflation in action and goes some way to explain why the central bank has stopped releasing monthly economic data, as required by law.

PERU | Agrarian exports

Agrarian exports for the first five months of the year reached US$1.78bn, a 0.1% increase compared to the same period in 2014, Peru’s minister of agriculture and irrigation, Juan Manuel Benites, reported. According to the data presented by Benites, non-traditional exports made up 95% of total agrarian exports, with bananas accounting for 30%, frozen mangos (29%) and fresh mangos (26%).

Peru registered an agrarian trade surplus in the five first months of the year (US$132m). The main recipients of Peruvian products were the US (25% of the total), the Netherlands (14%), Ecuador (6%), Spain and China (both with 5%).

COLOMBIA | Plan to boost non-metallic exports

President Juan Manuel Santos boldly stated this week that Colombia would double its non-metallic exports by 2018 when he leaves office. He set the “ambitious goal” of US$30bn, during a council of ministers in Barranquilla on 24 July.

Santos presented an employment and productivity plan as part of his government’s strategy to “invigorate the economy and mitigate the impact of the global economy slowdown,” in particular the fall in oil prices which has adversely affected Colombia’s trade balance: for each dollar that the price per barrel of oil falls, the Colombian treasury is deprived of an estimated Col$420bn (US$154m).

Santos said his government had set aside Col$16.8 trillion (US$6.2bn) to implement the plan and hoped to generate an additional 320,000 jobs. According to a report by the ministry of commerce, industry and tourism, non-metallic exports grew by 19% in the 2010-2014 period, from US$11.8bn to US$14.1bn.

Colombia posted a trade deficit of US$5.9bn in the first five months of the year, according to a report published by the national statistics agency (Dane). From January to May this year, exports totalled US$16.01bn, while imports amounted to US$21.94bn. The trade deficit with China jumped by US$1.53bn to US$3.13bn due to a sharp fall in the value of oil exports.

• Tax reform in Colombia

On 24 July the national business association (Andi) held a general assembly. The president of Andi, Bruce Mac Master, expressed his concern at what he called “persistent uncertainty” for the industrial sector, as its exports decreased by 16.4% in the first five months of 2015. Mac Master, while praising the measures taken by President Santos to respond to the challenging economic scenario confronting Colombia, called for the government to carry out a deep, structural fiscal reform that would  “achieve a more equal and efficient system” to attack tax evasion and ensure “long-term stability for local and foreign investors”.

Development: On 12 November, Paraguay’s President Horacio Cartes attended the closing electoral campaign rally staged in the capital, Asunción, by his close ally Arnaldo Samaniego, who is seeking re-election as the Asunción mayoral candidate for the nationally ruling Asociación Nacional Republicana- Partido Colorado (ANR-PC) in the 15 November municipal elections. Cartes called on the party to unite behind all its candidates ahead of the vote.

Significance: After the bitterly contested ANR-PC internal party elections in July – won by Cartes’s own Honor Colorado faction – exposed some deep divisions within the ruling party, Cartes had promised that he and the new party leadership would lead the ANR-PC to a resounding victory in the municipal elections so as to shore up party unity. Cartes has campaigned intensively across the country in a bid to deliver on his promise to “paint the entire country Colorado red” in the municipals. But with the Cartes government becoming increasingly unpopular in recent months and facing rolling protests from various civil-society organisations unhappy with its policies, the municipal elections are seen by many as a referendum on the Cartes administration. As a result, support for ANR-PC candidates among ANR-PC affiliates has been low, with polls suggesting that the ANR-PC could lose in some key contests including in Asunción.

• The final voting intentions polls show Samaniego trailing some 16-18 percentage points behind Mario Ferreiro, the candidate of the Juntos Podemos opposition coalition. As many as 44% of ANR-PC party affiliates have said that they would vote for Ferreiro rather than for Samaniego, who is widely seen as failing to deliver on the many electoral promises he made in the 2010 municipal elections during his five-year tenure as mayor.

• Samaniego and the ANR-PC leadership, including Cartes, have dismissed the polls as inaccurate and insisted that the ANR-PC and its supporters would close ranks around all its candidates come polling day. Samaniego’s final campaign rally was clearly designed to evoke such unity. It was not only attended by Cartes but also by Senator Mario Abdo Benítez, the leader of the dissident anti-Cartista party faction. Both of them took to the stage after Samaniego and called for party unity. Cartes closed his speech by stating “we have seen many polls but Sunday’s is the only one that matters… let the entire ANR-PC family be united so that it can be felt in the exit polls”.

• In his closing campaign rally, Ferreiro appealed to disaffected ANR-PC voters to vote for him as a way of expressing their dissatisfaction with that party’s leadership. Ferreiro said that should he win the election, his administration will be inclusive, promising that he would not launch a “witch hunt” of ANR-PC municipal government officials but rather guarantee that jobs will also be available for them.

Looking Ahead: Should the polls prove to be correct and the ANR-PC loses many seats on 15 November, and in particular Asunción, this would represent a major blow for Cartes and the ruling party’s unity.

Investment promotion agreement with China approved. On 29 March,Costa Rica’s 57-member unicameral legislature approved an agreement to promote and protect investment with Chile.

According to a press release by President Luis Guillermo Solís’s Partido Acción Ciudadana (PAC), the agreement includes a legal framework for bilateral investment which covers areas like promotion and protection of investment; expropriation; compensation for damages and losses; and resolution of differences between parties, among other things.

According to the most recent figures from Costa Rica’s foreign trade ministry, bilateral trade reached US$2.05bn in 2014 (out of Costa Rica’s total trade of US$28.49bn that year). Of the US$2.05bn, which was up 4.1% on 2013, imports accounted for US$1.7bn.

The two countries signed a Free Trade Agreement (FTA) in 2011 after establishing diplomatic relations in June 2007. Costa Rica remains the only country in Central America to have diplomatic relations with mainland China rather than with Taiwan.

The same figures from Costa Rica’s foreign trade ministry show that Chinese foreign direct investment (FDI) in Costa Rica reached US$9.8m in 2014 (out of the total US$2.18bn FDI received by Costa Rica). Chinese FDI in Costa Rica amounted to US$6.1m in 2013 and US$4.8m in 2012.

• FDI

On 31 March,Costa Rica’s central bank (BCCR) published foreign direct investment (FDI) figures for 2015 which showed FDI inflows reached US$2.85bn in 2015, up 3.7% from 2014. However, the figures incorporate a new methodology which revise up the amounts previously registered. For example, the new 2014 figure was US$2.75bn instead of US$2.18bn while the revised 2013 figure was US$3.09bn, up from US$2.68bn.

On 13 October Panama’s President Laurentino Cortizo sanctioned a law approved at the end of August by the 71-member unicameral legislature, regulating the use of medicinal cannabis. Panama has thus become the first country in Central America to take the step, following in the footsteps of at least seven other countries in Latin America (Argentina, Chile, Colombia, Mexico, Paraguay, Peru, and Uruguay).

The initiative, which had been in congress for the past five years, was approved by 44 of the 71 votes with none against. It was championed by president of the national assembly Crispiano Adames and legislator Marcos Castillero (both of the ruling centre-left Partido Revolucionario Democrático (PRD) as a way of providing relief to individuals who suffer from a number of medical conditions, including epilepsy, multiple sclerosis, nausea caused by chemotherapy, and chronic pain.

The new law prohibits commercial use of homegrown cannabis and requires officials to import cannabis in pill or liquid drop form. It also stipulates that the health ministry (Minsa) will be responsible for distributing the medication to licensed pharmacies, which will have to apply for a permit and pass a site inspection in order to receive their licenses. Only pharmaceutical companies or those specialising in therapeutic services will be allowed to buy and sell cannabis. It also calls for the establishment of a technical council on cannabis and authorises Minsa to create a national programme for the study and medicinal use of cannabis and its derivatives, to promote research and educational initiatives with regard to the proper use of the drug.

The bill was borne out of increasing demand for access to medicinal cannabis across the country amid reports of its benefits for a growing number of conditions. Marie Millard, executive director of the NGO Luces Panamá, which supports people with epilepsy, said that the passing of the bill would improve the quality of life of patients, in particular those currently taking medication which does not work for them. She believes it will also help children with refractory epilepsy and their carers. Many legislators were swayed by the initiative’s motto, “for a day without pain”.

Controversy

Amid the discussions regarding the new legislative bill in Panama, the national authority for transparency and access to information (Antai), a government office, announced in August that it had launched an investigation into a possible conflict of interest with regard to the sector. This followed reports that Canna Med Panama SA, a firm which began operations in 2019 (incorporated in 2020) with the intent of becoming a vertically integrated medical cannabis company headquartered in Panama, had sponsored a June trip to the US by Minsa’s director of pharmacology and drugs, Elvia Lau, and four other health ministry officials.

Costa Rica to follow suit?

On 19 October Costa Rica’s 57-member unicameral legislature approved the legalisation of cannabis for medicinal purposes and the production of hemp in a first debate. However, it awaits a second debate and on 22 October was sent by a group of ten national legislators to the constitutional chamber (SC) of the supreme court for legal review.

Meanwhile the health ministry and President Carlos Alvarado have expressed concerns about the initiative, which is promoted by independent legislator Zoila Rosa Volio, an agronomist.

The centre-left Partido Acción Ciudadana (PAC) government has said it supports hemp production, but has expressed reservations with cannabis; Health Minister Daniel Salas has acknowledged there is “a growing body” of research that proves the benefits of medicinal cannabis. However, he was also cited by the local press as saying that its production can only occur “when the country has all the conditions to guarantee that there will be no vulnerability in security,” in reference to recreational use.

On the campaign trail ahead of last year’s election, Ecuador’s President Guillermo Lasso regularly touted the progressive approach to law and order that he intended to implement if elected. A year later, a serious surge in violent crime is prompting him to reach for tougher, militarised solutions. In the latest sign of this change of tack, on 29 April Lasso declared a 60-day state of exception in the coastal provinces of Guayas, Manabí, and Esmeraldas, which will see the deployment of 5,000 troops and the imposition of a nighttime curfew in some neighbourhoods.

This was the second time President Lasso had declared a wide-ranging state of exception in response to mounting crime. His first decree, issued in October 2021, authorised the deployment of troops across the country. That decree was subsequently watered down by the constitutional court (CC), which halved it in duration to 30 days and restricted the deployment of troops to nine provinces with particularly high crime rates. That brush with the CC appears to have informed Lasso’s latest, more concentrated state of exception, which will see 5,000 troops deployed to Guayas, Manabí, and Esmeraldas. Together, those provinces encompass the port city of Guayaquil, the epicentre of Ecuadorean drug trafficking and gang violence, as well as most of the coastline from Guayaquil up to the Colombian border.

Within those provinces, which accounted for approximately two thirds of the 2,464 murders recorded in Ecuador last year, up to 4,000 additional police officers will be mobilised alongside the troop deployment. In four cantons within those provinces, a curfew has also been imposed between 11pm and 5am. Lasso also said that checkpoints will be set up within cities, and that the military would increase its special operations during the state of exception. “The streets will feel the weight of our security forces,” Lasso said. “We’re going to take the battle to the criminals in the places where they try to hide.”

Reducing crime has become a political imperative for Lasso, with murders doubling in 2021 and the homicide rate standing at its highest level since 2012, at 13.3 per 100,000. Increasingly frequent drug busts point to Ecuador’s rising status as a key junction in the international cocaine trade, with the authorities having seized a record 210 tonnes of drugs last year. Ecuador’s transition from a bit-player to an increasingly important transit hub in regional drug trafficking has also been evidenced by surging prison violence, which the authorities claim reflects the influence of rival Mexican drug-trafficking organisations, including the Cártel de Sinaloa and the Cártel Jalisco Nueva Generación (CJNG).

Yet whilst Ecuador is in the grip of a security crisis, the timing of Lasso’s state of exception is telling. As with the October decree, it came after the national assembly shot down a core plank of his economic agenda – in this instance, rejecting the government’s flagship investment bill in late March [WR-22-13]. The previous state of exception was announced following the rejection of the government’s tax reform bill, prompting accusations that the government was seeking to distract attention from its political weakness [WR-21-42].

With Lasso looking hamstrung by an obstructive congress set on blocking his economic liberalisation bills, the increasingly tough stance he is taking against organised crime provides him with a counternarrative to shore up public support. The success of this strategy, however, will depend on the government landing concrete and long-lasting blows against drug-trafficking groups. Achieving that within the brief window of a state of exception appears unlikely.  

More ministerial changes

Two more cabinet ministers have resigned from President Lasso’s government, following last week’s resignations of the defence minister, Luis Hernández, and the mining and energy minister, Juan Carlos Bermeo [WR-22-17]. Pedro Álava resigned as agriculture minister on 28 April, having faced criticism over a mounting crisis afflicting the country’s banana sector, which saw producers block roads around the country in mid-April in protest at the low price of bananas. Álava has been replaced by Bernardo Manzano. Also leaving government is the human rights minister, Bernada Ordóñez, who in her resignation letter said that she was standing down due to “a new vision laid out by the national government which is distanced from the initial objective of building a country of opportunities”. Meanwhile, Xavier Vera-Grunauer has been handed the mining and energy brief following Bermeo’s resignation, having previously served as deputy minister in the ministry.

President Dina Boluarte’s government is facing yet another potential scandal in Peru after the inspector general’s office urged prosecutors to investigate her former prime minister, Alberto Otárola (2022-2024), for allegedly ordering illegal surveillance of the comptroller general, Nelson Shack.

Otárola was forced to resign in March after leaked recordings revealed that he had improperly offered a job to a woman with whom he had a relationship [WR-24-09]. In this latest development, he was accused by the inspector general’s office on 6 May of ordering the illegal surveillance of Shack.

In a document outlining Otárola’s alleged wrongdoing, the inspector general’s office cited a report by the national daily La República alleging that members of Peru’s intelligence agency (Dini) had been stationed outside Shack’s home on surveillance duty last October. The attorney general’s office later said that it is assessing the allegations.

Otárola is already under investigation in a separate case. He stands accused of genocide, homicide, and grievous bodily harm in relation to the crackdown on anti-government protesters in the months after President Boluarte took office in December 2022.

Responding to the latest allegations in an interview that he gave to Radio Programas del Perú (RPP), Otárola said that the inspector general’s office “did not present any official document” linking him to the alleged surveillance, and he denied any involvement in this “highly trivial matter”. Claiming that “someone in the government” may be out to get him, Otárola maintained that “the idea that I was following somebody when I was so busy with work in October is ridiculous”.

China’s Xi to visit Lima

Foreign Minister Javier González-Olaechea has announced that China’s President Xi Jinping will visit Peru in November to attend the Asia-Pacific Economic Cooperation (Apec) summit in Lima. Xi last visited Peru in 2016, and his most recent visit to Latin America was in 2019, when he visited Brazil.

Nearly halfway through President Luiz Inácio Lula da Silva’s four-year term, Brazil’s economy is humming along at a better-than-expected 3% pace and unemployment is at its lowest level in about a decade. To sweeten things further, Moody’s ratings agency upgraded Brazil’s credit in early October to within one notch of investment grade status, while maintaining a positive credit outlook. And yet many investors have not been convinced that Latin America’s largest economy is on a sustainable path of recovery.

Specifically, there have been concerns over the country’s financial health.   Despite the Lula administration’s formal commitment to fiscal discipline there have been frequent setbacks, with fiscal targets being eased or exceptions being introduced. In early November the government was being forced to adopt spending cuts so as not to break with the legally binding fiscal framework, although high-level talks on these cuts were still ongoing – and a source of tension between ministers.

The gist of the problem is that the government has been spending far more than it can afford and, as a result, takes on more debt every year. Currently the country’s budget deficit is approximately 7.6% of GDP and is not set to get much better. According to the central bank’s weekly Focus survey, economists forecast the budget deficit won’t fall below 7% of GDP for 2025 and 2026. 

In mid-October the International Monetary Fund (IMF) in its fiscal monitor report projected Brazil’s gross debt to rise 10 percentage points over the next five years, from currently 87.6% of GDP. That is an increase from 83.9% in 2022, the year before Lula took office. It is also much higher than the debt levels of regional peers Mexico (57.7%), Colombia (49.7%), and Chile (41%). 

Some of Brazil’s financial problems are systemic. The government can only alter around 6% of its annual budget. The rest is mandatory expenses on items such as salaries for civil servants, pensions, pork barrel spending for legislators, and minimum outlays on health and education that are mandated by the constitution. As a result, there is little wiggle room for Finance Minister Fernando Haddad to cut spending.

And Lula isn’t a big fan of fiscal discipline – he has used loopholes to circumvent some of the very budget restraints his government helped pass last year as part of the ‘fiscal framework’, which puts caps on spending and debt.

“Since the end of 2022, Brazil has been experiencing a significant fiscal deterioration, with a sharp increase in spending and a persistent rise in public debt. This has been done without adopting measures capable of adequately attenuating the resulting risks,” economists wrote in the October 2024 macroeconomic report by Instituto Brasileiro de Economia (IBRE) of the think tank and university Fundação Getulio Vargas.

The spending cuts that are expected to be proposed by the Lula administration in early November will be seen as a step in the right direction to help ensure its target of a balanced primary budget, which excludes interest payments. Adding pressure, the national treasury informed on 7 November that the central government posted a primary deficit of R$5.3bn in September. And given the government’s track record so far, investors will be closely watching the implementation of any cuts that end up being agreed.  

Weighing on credit and currency

“As long as Brazil has its public finances out of balance, we’ll have astronomical interest rates,” Arminio Fraga, a former central bank chief (1999-2003), has said. “It’s difficult to imagine Brazil developing fully with a real (inflation-adjusted) interest rate above 6%.” The central bank’s prime interest rate, the Selic, was at 7.3% in September, when discounted for annual inflation. And the massive public debt also weighs on the country’s currency. The real lost around 13% against the US dollar over the past year, and that in turn helps fuel inflation as imported goods such as fertilizers or natural gas raise domestic production costs.

The looming first round of Ecuador’s general election in February is causing tensions to rise between President Daniel Noboa and the national assembly. Whilst Noboa has generally enjoyed reasonable levels of support from legislators on issues related to organised crime, that is now changing as parties draw their battle lines ahead of the election. This new dynamic was visible in the rejection on 27 November of a government bill that Noboa said would tighten restrictions on money laundering, but which the opposition argued was a tax raid in disguise.

The bill, dubbed the ‘Ley Antipillos’, had sought to strengthen the government’s financial analysis unit (Uafe) and tighten regulations on money laundering. Included in the legislation, however, were articles that would raise taxes on the sale and purchase of used cars.

This was seized upon by parties of all ideological persuasions, which argued that the tax hike was the main goal of the bill and accused President Noboa of misleading the public by describing the legislation as key to the struggle against organised crime groups. A motion to archive the bill was approved with 84 votes in favour in the 137-seat national assembly, with the leftist Revolución Ciudadana (RC), the centrist Construye, and the conservative Partido Social Cristiano (PSC) all uniting against the government.

Noboa’s next step did little to dispel suspicions that the tax increase was the most important aspect of the bill. On 29 November he returned the legislation to congress and categorised it as being of ‘economic urgency’, meaning that it must be approved or rejected within 30 days. This labelling of the bill, and Noboa’s refusal to remove the offending articles on car sales tax, appeared to confirm suspicions that the government was hoping for a revenue boost in the run-up to the election.

With the economy in the doldrums (the International Monetary Fund [IMF] is predicting GDP growth of some 0.3% this year, and has said that its projections for Ecuador are likely to be lowered as a result of the year-long energy crisis that is gripping the country), Noboa’s desire for an injection of cash two months out from the elections is understandable. This is particularly so given that the cracks are starting to become apparent in the government’s central pitch to voters – its claim to have radically improved citizen security by declaring war on criminal gangs.

The massacre of 10 people on 1 December in El Guabo municipality, in the south-western province of El Oro, was the latest indication that criminal groups are resuming business as usual after having opted to lie low for several months at the start of the year. Of the 10 victims of the massacre, nine were of Colombian nationality. They were reportedly targeted due to their affiliation with the Los Lobos gang.

Violence in the prison system is also resurging, despite prisons being partially under military control as part of Noboa’s sweeping security measures. At least 11 people were injured on 3 December after grenades were detonated inside the maximum-security Penitenciaría del Litoral in Guayaquil, the capital of Guayas province.

The following day it was reported that one inmate had been killed and seven injured during rioting at the prison, which was also the site of a massacre that left 15 inmates dead on 12 November, while its director, María Daniela Icaza, was assassinated in September. Icaza’s murder was one of a string of assassinations of prison officials. Most recently, Olger Moreno, the deputy commander of prison guards at Latacunga prison, in the northern province of Cotopaxi, was killed on 29 November. Alex Guevara, the director of a prison in Nueva Loja municipality in the north-eastern province of Sucumbíos, was also murdered on 3 September.

EU security funding

Ecuador’s foreign ministry announced on 4 December that the country will receive €20m (US$21m) in security funding from the European Union (EU). Half of the funding will be targeted at boosting resilience to organised crime, including tackling gang recruitment of minors. The remainder will be focused on “digital security, cybersecurity, and the strengthening of information sharing mechanisms between the Ecuadorean security forces and their European partners,” according to a foreign ministry statement.

The New York federal appeals court overturned on 27 March a lower court ruling that Argentina must pay US$16bn in damages for the way it had handled the 2012 expropriation of oil company YPF. President Javier Milei celebrated the decision, but opposition politicians are claiming some of the glory.

In 2012 the left-wing nationalist government of President Cristina Fernández (2007-2015) assisted by her economy minister, Axel Kicillof, seized a 51% stake in YPF from Spanish oil company Repsol. It took two years for compensation of US$5bn to be agreed. In the process minority shareholders, Spanish energy firm Petersen Energía Inversora and US investment firm Eton Park Capital Management, said their right to equal treatment, enshrined in YPF statutes, had been denied. The UK-based provider of litigation finance Burford Capital had acquired negotiating rights for the minority shareholders and stood to gain a share of any settlement.

A 2023 US court ruling found that the Argentine government had indeed breached YPF statutes in the way it carried out the renationalisation and was liable to pay the US$16bn plus interest, in damages. It was one of the largest penalties ever imposed by a US court. But the appeals court has now taken the contrary view that Argentine law overrides YPF statutes and does not support the payment.

President Milei stands to gain in at least two respects. First, any government that can dodge a US$16bn bullet looks like a winner. Milei dubbed it “the largest achievement in our country’s legal history”, adding that the ruling was “the best possible scenario”. It “clears up doubts and uncertainties that hung over YPF’s future” and will strengthen the energy sector, Milei said. Second, it plays into his narrative that the impulsive interventionism of previous left-leaning governments has put Argentina financially at risk and that only his own administration has acted responsibly. This is particularly relevant since Kicillof, now governor of Buenos Aires province, is one of Milei’s most prominent political adversaries and a potential opposition presidential rival in 2027. Anything that shows Kicillof in a bad light is grist to the Milei mill.

To be fair, however, while Fernández and Kicillof are open to criticism for their original decision to re-nationalise back in 2012, their own and all subsequent Argentine governments have handled the US court case in the same way, and it seems to have paid off. Welcoming the appeals court decision, Kicillof said “It is a 15-year legal story which has nothing to do with the current government or its ideological tendencies.” Sebastián Soler, a former attorney general, took a similar stance saying, “The Court of Appeals rules in favour of our country based on the same arguments under Argentine law that were raised from the very start of the case, when the defence was being handled by the previous government.” In this case a bipartisan approach seems to have worked.

Adorni still under pressure

New allegations of corruption are hanging over the cabinet chief, Manuel Adorni, amid signs that President Milei is continuing to support him – for the moment at least. Adorni was already under fire for taking his wife to New York on the presidential plane (and therefore at public expense), and for flying to Uruguay on a private jet. Subsequently journalists said he had not declared the purchase of a department in Caballito (Buenos Aires) and a weekend house at a private golf course. A federal prosecutor has asked a judge to support evidence-gathering relating to potential charges of illicit enrichment. On 1 April officials said Adorni had met with Milei for over two hours and downplayed any suggestion that he might resign or be dismissed. 

Football scandal spreads

A judge has ruled that the president of the Argentine Football Association (AFA), Claudio ‘Chiqui’ Tapia, and its treasurer Pablo Toviggino will be placed on trial for “undue appropriation” of around US$13m in social security funds. Instead of transferring the funds to the government revenue agency, Agencia de Recaudación y Control Aduanero (Arca), they were diverted for the club’s internal use. Both men are banned from travelling abroad and the AFA must pay nearly US$250,000 in bail.

Further charges against the AFA leadership are expected, including corruption, forged signatures, and money laundering. There is a political context since Tapia is close to the opposition Partido Justicialista (PJ, Peronists) and opposes the “libertarian right” personified in President Javier Milei. Earlier in March, Tapia supporters organised a weekend football strike.

MEXICO | La industria automotriz. El total de vehículos exportados en enero cayó un 4% año en año, en términos de volumen, debido a las flojas ventas a EU. Sin embargo, las exportaciones a América Latina crecieron fuertemente, informó la Asociación Mexicana de la Industria Automotriz (AMIA).

Las exportaciones totales en enero del 2012 llegaron a 158.342 vehículos. Las exportaciones a EU (que representan el 62% del total de vehículos exportados) cayeron 14,9%. Las exportaciones a Canadá también descendieron, 19% año en año. Por otro lado, las exportaciones de vehículos a América Latina se elevaron un 23,5% año en año, a 23.693. Más sorprendentemente, las exportaciones a la Unión Europea en enero también se elevaron, en 7%, año en año.

Casi la mitad (11.030) de las exportaciones de vehículos a América Latina en enero fueron a Brasil, por tanto, las actuales y no resueltas discusiones sobre posibles cambios en los términos preferenciales que Brasil ofrece a los vehículos mexicanos tendrán grandes implicancias para la industria automotriz mexicana. Volkswagen y Ford son grandes exportadores de México a Brasil. El siguiente mayor mercado latinoamericano de México es Argentina, que importó 3.226 vehículos de México en enero.

• Producción de vehículos

La producción de vehículos de México, en enero, se elevó un 1,2% año en año, a 202.701 unidades. Las ventas internas treparon fuertemente (9,5%) año en año, a 75.297 unidades. La industria espera que las ventas internas lleguen a 1m en el 2012.

Development: On 13 February President José Mujica called for an emergency meeting of the so-called ‘production cabinet’ to discuss ways to tackle the industrial sector’s dramatic loss of external competitiveness.

Significance: Industrial production (IP) grew just 1.6% year-on-year in 2012, its weakest result since 2009, according to latest figures from the national statistics institute (INE).

The ‘production cabinet’ is comprised of the economy sector ministers and private sector representatives. Uruguay’s industrial sector complains of a steep fall in competitiveness, due to factors like the comparative strength of the peso vs. the country’s partners in the Southern Common Market (Mercosur) and also the persistent difficulties in trading with its main Mercosur partners, Brazil and Argentina. It has repeatedly asked the Mujica government to address the situation, suggesting it either actively manage the value of the peso or provide more domestic fiscal incentives for producers.

Key points:

• The IP figure was much weaker than expected. The consensus was for growth of 2% -3% last year, after a rise of 5.3% in 2011. Pointing out that productivity levels actually increased by 5.22% in 2012, the vice-president of Uruguay’s industrial chamber (CIU), Gabriel Murara, noted, “The numbers reflect the loss of competitiveness we have been warning about”.

• The latest figures were discussed at yesterday’s council of ministers. Afterwards the presidential secretary, Homero Guerrero, announced that Mujica had called an emergency meeting for “coming days”. Guerrero said the government was looking to identify which firms and sectors were experiencing difficulties in order to “study measures to balance this current situation”.

• Last year, CIU members also met with government officials to discuss ways of addressing the issue. Proposals to reduce taxes and other fiscal incentives were discussed but never implemented. Yesterday, Guerrero warned that the planning & budget office (OPP) was considering eliminating certain other fiscal incentives for local businesses, in support of stretched government revenues.

COLOMBIA | Cumpliendo con las demandas del sector rural. El gobierno colombiano anunció la semana pasada que restringiría las importaciones de nueve productos agrícolas a fin de cumplir con los acuerdos alcanzados con el sector agrícola local que pusieron fin a las huelgas nacionales montadas por el sector durante julio y agosto. El anuncio fue hecho por el saliente ministro de comercio, Sergio Díaz-Granados, luego de una reunión ministerial en el palacio presidencial de Casa de Nariño, a la que también asistieron el Ministro de Agricultura Rubén Darío Lizarralde, el Ministro del Interior Aurelio Iragorri, y el director del departamento de prosperidad social, Bruce Mac Master.

Díaz-Granados dijo que el gobierno introduciría restricciones sobre: papas frescas y pre-cocidas; suero de leche; leche en polvo; cebollas; frijoles; arvejas; tomates; peras; y queso fresco; tal y como había sido “acordado” con los productores agrícolas.

Además, Díaz-Granados dijo que el gobierno estaba trabajando para incrementar el nivel de las exportaciones a Venezuela, después de que el gobierno del Presidente Nicolás Maduro expresó su interés en comprar crecientes niveles de productos colombianos [IL-13-37]. Díaz Granados dijo que después de firmar un nuevo acuerdo de comercio con Venezuela, Colombia estaba tratando de determinar “exactamente qué productos, en qué cantidades y valores”, Venezuela estaba buscando adquirir. Él agregó que “nosotros [también] estamos esperando para tener un claro y rápido mecanismo de pago vigente, a fin de expandir nuestras exportaciones para Venezuela”.

Mientras tanto, el recientemente designado Lizarralde anunció que el gobierno también presentaría al congreso un nuevo proyecto de ley para la reestructuración de la deuda agraria, dirigido a ayudar a los productores agrícolas con el pago de sus deudas vencidas para que así puedan terminar de pagar sus deudas. Lizarralde también dijo que el gobierno inyectaría más capital en el fondo financiero del sector agrícola (Finagro) para que “pueda continuar teniendo la capacidad de ofrecer créditos a los productores agrícolas pequeños y medianos”, aunque no proveyó cifras.

Finalmente, Lizarralde reveló que el gobierno también está preparando una propuesta para extender por otro año el impuesto de  ‘4 por mil’ aplicado a las transacciones financieras y redireccionar los fondos recolectados por la medida  al sector agrícola. Se estima que el acuerdo alcanzado con el sector agrícola, que también incluye el congelamiento del precio del combustible diesel y la eliminación de impuestos sobre insumos agrícolas (i.e. pesticidas) le costará al gobierno unos Col$3,3mm (US$1,58m).

El impuesto a las transacciones financieras ha estado vigente en Colombia desde 1998, a pesar del hecho de que ha sido a menudo criticado por el sector privado. En el 2010, el congreso aprobó la propuesta de reforma fiscal de Santos, que entre otras cosas estableció la eliminación gradual del impuesto para el 2018. Proveer un argumento convincente para extender el impuesto a las transacciones financieras, podría resultar más difícil debido al hecho de que el ministro de finanzas, Mauricio Cárdenas, recientemente reveló que los ingresos fiscales para el año están en Col$76,8mm, Col$5mm por encima de las cifras del año pasado y de la meta oficial para el año.

VENEZUELA | Huelga en Sidor. Yunis Hernández, el líder del sindicato de trabajadores de la Siderúrgica del Orinoco (Sidor), la acería más grande de Venezuela, anunció el 8 de octubre que los 14.000 empleados de Sidor retornarían a sus tareas después de la resolución parcial de una disputa por pagos de larga data. Los trabajadores han estado de huelga por más de tres semanas, exigiendo el pago de bonos atrasados de alrededor de BF150.000 (US$23.810 a la tasa de cambio oficial) para cada uno, que el sindicato reclama que es adeudado desde que la firma fue nacionalizada en el 2008. Bajo el acuerdo tentativo, los trabajadores recibirán BF40.000 en dos sumas globales el 31 de octubre y el 16 de diciembre, pero no se llegó a ningún acuerdo sobre el pago final.

El Presidente Nicolás Maduro había adoptado una posición dura contra el sindicato, al que acusa de tratar de mantener al país de rehén. Maduro desplegó al ejército (FANB) y a los batallones de las milicias Bolivarianas a Puerto Ordaz, donde se encuentra Sidor, y amenazó con romper los piquetes de huelguistas establecidos alrededor de la planta si la huelga no era levantada. “Espero una inmediata rectificación o de lo contrario yo, y el pueblo venezolano, la clase obrera recuperará Sidor […] No voy a mostrar debilidad frente a sindicatos de delincuentes y anarquistas”, Maduro había advertido.

Hernández sostuvo que los trabajadores solamente estaban exigiendo que la deuda sea reconocida y que se acuerde un programa de pago. Él agregó que la situación de Sidor era “deplorable tal como otras firmas del Estado, debido a que no hay inversión en su mantenimiento”.

• Exploración de petróleo en el Caribe

El 3 de octubre la firma petrolera del Estado Colombiano, Ecopetrol, anunció que junto con su socio de la India, ONCGC Videsh, había comenzado los esfuerzos de exploración de petróleo en el Mar Caribe fuera de la costa del departamento de La Guajira, en la frontera con Venezuela. Una declaración de Ecopetrol expresó que después de haber llegado al área el barco explorador, Poseidón, ahora dedicará los próximos 10 días a la exploración del bloque RC-9 localizado a 27kms de la costa, buscando un punto ideal para establecer una plataforma de perforación en aguas profundas. Una vez que se instale exitosamente, la nueva plataforma se convertirá en la tercera en operar en aguas colombianas, uniéndose a las plataformas Chuchupa A y Chuchupa B conducidas conjuntamente por Ecopetrol y Chevron, que también están localizadas fuera de la costa de La Guajira.

La Conferencia Episcopal de Colombia (CEC) ha subrayado su determinación de jugar un rol fundamental en un eventual acuerdo de paz entre el gobierno y las guerrillas de las Fuerzas Armadas Revolucionarias de Colombia (Farc), que está siendo negociado en Cuba. La CEC eligió la semana pasada a Luis Augusto Castro, el arzobispo de Tunja, la capital del departamento de Boyacá, como su nuevo presidente. La designación es significativa debido a que Castro tiene considerable experiencia en las negociaciones tanto con las Farc como con el segundo grupo guerrillero de Colombia, el Ejército de Liberación Nacional (ELN), para liberar a soldados secuestrados.

Castro advirtió contra una “barata y falsa reconciliación”, y aunque él ha apoyado el progreso que están haciendo los equipos negociadores del gobierno y de las Farc en La Habana, dijo: “ellos solamente están manejando conceptos por el momento; ahora ellos tienen que usar sus corazones”.

Castro, de 72 años, ha servido previamente como obispo de San Vicente del Caguán, un fuerte bastión de las Farc en el departamento sureño de Caquetá. Este estaba en el centro de la zona desmilitarizada, o ‘despeje’, declarado entre 1998 y el 2002 durante las últimas fallidas conversaciones de paz. Castro también mantuvo la posición entre el 2005 y el 2008, pero su elección ahora sugiere que la CEC se está preparando para el desenlace del conflicto armado.

La conferencia de obispos está involucrada en los cuatro foros de paz para las víctimas que están siendo organizadas en Colombia por la ONU y la Universidad Nacional en julio y agosto. Uno de estos concluyo en Barrancabermeja, una ciudad en el departamento de Santander duramente golpeada por el conflicto, el 11 de julio. Los equipos negociadores en Cuba reanudaron las conversaciones sobre la compensación a las víctimas del conflicto, el 15 de julio.

• Sin fecha límite

“Hemos aprendido que fijar fechas límites es contraproducente”, dijo el Presidente de Colombia, Juan Manuel Santos, el 14 de julio en referencia a una fecha límite para las conversaciones de paz con las Fuerzas Armadas Revolucionarias de Colombia (Farc) en Cuba. Santos estaba hablando en una conferencia de inversionistas en Miami. Santos fue acompañado, entre otros, por su ministro de finanzas, Mauricio Cárdenas, y el presidente de la Agencia Nacional de Infraestructura, Luis Fernando Andrade. Cárdenas dijo que la política económica durante el segundo mandato de Santos, que se inicia el 7 de agosto, tendría un “énfasis social” y buscará incluir a los colombianos más pobres en el desarrollo económico.

The association of victims (Asovic) of Venezuela's 2002 coup d’état has publicly rejected the judicial decision to grant house arrest to the former Caracas police chief, Iván Simonovis, and demanded a full explanation from the government led by President Nicolás Maduro.

Simonovis, who was the chief of police during the coup that temporarily ousted the late former president Hugo Chávez (1999-2013), was identified by the Chávez government as one of the main leaders of the revolt. As such, he is one of the most hated figures among Chavistas. The political opposition has always maintained that Simonovis was used as a scapegoat by the Chávez government, which, it says, presented trumped up charges against him. The opposition considered Simonovis a political prisoner and had long called for his release. After years of rejecting such calls, the judiciary suddenly decided to grant the ailing Simonovis house arrest, in what has been viewed as a gesture to the opposition that could help kick-start the stalled ‘peace dialogue’ between the opposition and the Maduro government. However, the decision was badly received by Asovic, which has called on the Maduro government to review it.

Simonovis was arrested in 2004, accused by the government of being responsible for the deaths of many of the 20 people killed during the 11 April 2002 revolt in Caracas and subsequent coup against Chávez. Simonovis was accused of instigating the violence, after he ordered officers to open fire against pro-government demonstrators. In 2009, local courts found him guilty of inciting violence and of direct responsibility for the deaths of at least two people. He was handed down a 30-year prison sentence, to be served at the Ramo Verde military prison on the outskirts of Caracas.

The political opposition has called for Simonovis to be released on the grounds that his trial was biased. The former police chief, whose health has suffered whilst in prison, has repeatedly requested to be put under house arrest - to no avail. Unexpectedly, on 20 September the supreme court (TSJ) suddenly granted Simonovis his request. Confounding initial expectations that the government would appeal the decision, Interior Minister Miguel Rodríguez swiftly came out and said that the TSJ decision would be “respected” by the government, as it was based on humanitarian grounds. The opposition, which suspended a tentative dialogue with the Maduro government in May over its failure to meet some conditions, including the release of all political prisoners, welcomed the decision.

The decision - which is only temporary as Simonovis must return to prison once his health improves - has not been welcomed in Chavista circles. The first vice-president of the national assembly, Darío Vivas, grumbled Simonovis “has not shown a drop of repentance, or asked for the forgiveness of the Venezuelan people for the pain he caused”. This was echoed in a public statement read out by the Asovic president, Yesenia Fuentes. Describing the decision as a “slap in the face” to all the victims of the 2002 coup, Fuentes complained that the decision was taken without consulting Asovic. Calling on the Maduro government to provide a full explanation, Fuentes also demanded that the government pay full compensation to the Asovic members, as has been promised.

The government's decision not to challenge the TSJ’s decision has led local analysts to speculate that it may be part of efforts to remove some of the obstacles holding up the dialogue with the opposition, at a time of rapidly waning support for Maduro. However, the beleaguered Maduro cannot really afford to lose support among Chavista ranks either.

• On 24 September Jesús (‘Chuo’) Torrealba was elected the new executive secretary of the main opposition coalition, Mesa de la Unidad Democratica (MUD, comprising 27 political groups). Torrealba’s left-wing background and his longtime focus on social issues in local neighbourhoods is clearly designed for maximum appeal to Chavista voters. He said he would stage an outdoor rally on 4 October to start mobilising the public. "We're going to build a better world and take on this regime. We're building a new pact between the political leadership and the poor", he declared. Local opposition press sources suggested that the radical wing of the MUD, led by the imprisoned Leopoldo López, provided the sole vote against Torrealba. The López wing engineered the removal of the MUD’s former executive secretary, Ramón Guillermo Aveledo, a moderate, who resigned in July.

-Standard & Poor’s has cut Venezuela’s long-term rating by one level to CCC, eight notches below investment grade, with a negative outlook, and warned of growing pressure for debt rescheduling.

-Standard & Poor’s has affirmed Ecuador’s rating at B+/B, with a stable outlook; and says that it expects the government to adopt measures to contain the fiscal deficit budgeted at 5% of GDP in 2015.