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El Presidente de Ecuador, Rafael Correa, ha expresado el más abierto apoyo a su par venezolano, Nicolás Maduro, desde el brote de la acrecentada tensión diplomática con EU en semanas recientes. Esta retórica de solidaridad no ha causado sorpresa, dadas las muchas profesadas similitudes ideológicas entre la ‘Revolución Ciudadana’ de Correa y la ‘Revolución Bolivariana’ de Maduro. Pero también hay un subtexto interno. Correa ha expresado en meses recientes su preocupación  acerca de una “restauración conservadora” en Ecuador, y la tradicionalmente difusa oposición política ecuatoriana ha reaccionado ante la represión de prominentes políticos opositores en Venezuela, intentando hacer a un lado sus diferencias para “defender la democracia” y “unirse” para confrontar a Correa en las elecciones presidenciales del 2017.

“Debe ser una broma de mal gusto, que nos recuerda las horas más oscuras de nuestra América, cuando recibíamos invasiones y dictaduras impuestas por el imperialismo, ¿No pueden entender que América Latina ha cambiado?”. La crítica del presidente Correa, ante la categorización hecha por EU acerca de Venezuela como una “extraordinaria amenaza a su seguridad nacional”, fue expresada de manera más vociferante que cualquier otro jefe de estado, y Quito se apresuró a intervenir para sostener una reunión extraordinaria de cancilleres de la Unión de Naciones Suramericanas (Unasur) durante el fin de semana para condenar a EU, después de que Uruguay, actual presidente pro-témpore de la organización, no expresara la inequívoca solidaridad exigida por la Izquierda Latinoamericana.

La respuesta de Correa conlleva una resonancia agregada debido a los acontecimientos políticos en su país. Una triple alianza de la oposición política está tomando forma en Ecuador. Dada la fragmentada naturaleza de la oposición en Ecuador, es aún muy temprano para decir si la misma podría ser capaz incluso de conformar una coalición ineficaz y desunida como la opositora Mesa de la Unidad Democrática (MUD) de Venezuela, pero vale monitorearla debido a que Correa ha confrontado una oposición limitada durante sus ocho años en el poder y debido a que es un resultado directo de la represión a prominentes políticos de la MUD en Venezuela, incluido el arresto de Antonio Ledezma, el alcalde del municipio de Libertador de Caracas en semanas recientes.

Los alcaldes de las principales ciudades de Ecuador, Quito y Guayaquil, Mauricio Rodas, y Jaime Nebot respectivamente, se reunieron recientemente con el prefecto de la provincia de Azuay, Paúl Carrasco, para lanzar “un especio democrático de unidad”, pidiendo a todos los ecuatorianos a que se unan a ellos para defender la democracia en el país. La importancia de la reunión se halla en el hecho de que Nebot es una figura central de la Derecha; Rodas, un centrista; y Carrasco, un izquierdista. Aún así, los tres parecen preparados para dejar de lado sus diferencias ideológicas, coincidiendo en que “solamente la unidad en la diversidad nos traerá mejores días”.

Si los tres hombres estarán preparados para subordinar sus respectivas ambiciones políticas para apoyar a un candidato de la unidad, cuando llegue el momento de las elecciones presidenciales en el 2017 se puede decir que es algo discutible. Pero el gobierno tomó nota de la amenaza. Óscar Bonilla, el secretario de acción política de la gobernante Alianza País (AP), por ejemplo, tuiteó que la reunión fue testigo de “una alianza antinatural entre la pseudo Izquierda y la recalcitrante Derecha”.

La polarización de la política también está causando divisiones dentro del movimiento indígena del país. La administración Correa ha sido hábil en explotar estas divisiones durante años, pero ha elevado sus intentos en meses recientes. Durante la Navidad, un nuevo grupo, la Alianza Indígena por la Revolución Ciudadana, fue forjado para unir al sector indígena detrás del gobierno. Incluye a miembros de varios grupos indígenas, incluida la principal organización indígena Conaie, que ha sido la más crítica de Correa (ver abajo).

• Protestas de Conaie

Cientos de manifestantes y activistas indígenas marcharon por las calles de Quito el 5 de marzo para entregarle a la Asamblea Nacional una propuesta sobre la controversial ‘ley de la tierra’, que los legisladores están debatiendo. La marcha fue organizada por Conaie, que montó una “Cumbre del Pueblo’ para analizar la situación actual y un plan de acción, si el gobierno no presta atención a sus demandas. Conaie alega que el gobierno se está preparando para despojar a los indígenas de sus derechos ancestrales.

*** JAMAICAN PUBLIC SECTOR WORKERS TOLD NO EASING UP. In mid-June, the International Monetary Fund (IMF) announced a successful outcome to its eighth review of Jamaica’s economic performance under the May 2013 Extended Fund Facility (EEF). The successful completion of the review enables the IMF to release a further sum of about US$40m to Jamaica.

The IMF reported that all performance criteria for end-March 2015 had been met with the exception of the central government primary balance criteria, which was narrowly missed.

The IMF reported: “Half-way into the authorities’ four-year reform program, investment and growth prospects are gradually improving. Growth is projected to approach 2% in 2015/16, as the full impact of lower oil import costs and the recovery from last year’s drought materialise, and as the improved business climate and confidence feed economic activity.” It added that inflation is at its lowest point for 50 years.

But the good report did not produce any softening from Finance Minister Peter Phillips on the subject of public-sector pay. On 16 June, he told public-sector workers that their push for a 7% pay increase could not be entertained. Phillips said: “Faced with the choices before us, it might appear to some to be far easier to listen to the voices of political expediency and make commitments to wage increases which the present level of available resources could not support. To proceed on that path, however, would only end up reversing the progress we have made and betray the trust we have built up locally and internationally.”

He added: “Jamaica is still at a fragile point, halfway through the program, and we still have a long way to go. We must maintain the momentum and do nothing to reverse or derail the substantive gains that already have been made.”

*** GUYANA FINDS CARIBBEAN SUPPORT AGAINST VENEZUELA. On 27 May, Venezuela’s President Nicolás Maduro issued a decree purporting to establish four “operational integral defence maritime and insular defence zones”. The imposition of this decree would impinge upon Guyana’s exclusive economic zone, in particular the area where ExxonMobil announced on 20 May that it had discovered a “significant” amount of oil.

Guyana has, of course, rejected this move as illegal and “a flagrant violation of international law”, and it ensured that it was high on the agenda of the Caribbean Community (Caricom) summit held at the end of the first week of July in Barbados. Guyana’s new president, David Granger, was not disappointed. Prime Minister Persad-Bissessar of Trinidad and Tobago was among the first to pledge her support.

The Trinidadian prime minister said: “Trinidad and Tobago fully supports Guyana with respect to the border dispute. We have gone a step further, we have always had discussions with Guyana and we offered to assist in any way that we can by having dialogue at the bilateral or multilateral level.” She called the decree “a violation of the rule of law”.

Maduro, who was scheduled to attend the Caricom summit, pulled out at the last moment and sent his vice president, Jorge Arreza, in his place.

*** THREAT TO BAHAMAS RATING. On 2 July the ratings agency Standard & Poor’s warned that it could lower its ratings on The Bahamas by one or more ‘notches’ as a result of the Baha Mar resort filing for bankruptcy, which could lead to a prolonged delay in the opening of the US$3.5bn resort. In an unrelated, but equally unwelcome piece of bad news for the government, murders in the Bahamas were up by 16% between 1 January and 22 June, with 72 killings this year compared with 62 in the same period last year.

PERU-CHILE | Friction over new Peruvian border district. On 15 October the Peruvian congress approved the creation of a new district, La Yarada-Los Palos, in Tacna region bordering on Chile. The southwestern boundary of this district is Punto Concordia, on the coast of the Pacific, south of the point that marks the northern limit of Chile’s maritime boundary. This creates what the Peruvians have been calling a ‘terrestrial triangle’ of 37,610 square metres that faces a stretch of Chilean sea.

On 21 October the Chilean foreign relations ministry issued a communiqué stating, ‘For Chile the terrestrial triangle does not exist.’ A protest note followed. Patricio Walker, president of the Chilean senate, said that the Peruvian law creating the new district was ‘absolutely unacceptable’.

This problem had been seen coming ever since the International Court of Justice (ICJ) ruled in January 2014 that the northern limit of Chile’s maritime boundary began at the point where the parallel of the (inland) Hito 1 (‘Boundary Marker 1’) intersects the low-tide line on the coast. That boundary marker was agreed in 1930 in fulfilment of the 1929 bilateral treaty.

The difficulty is that Peru has continued to maintain that its land boundary begins where the low-tide line intersects the Concord Line at the place on the coast known as Punto Concordia and arcs towards the Hito 1, while Chile insists that its northern land boundary runs along the parallel that crosses Hito 1.

The ICJ did not rule on the demarcation of the land boundary between the two countries, as it had been called upon to settle the dispute over the maritime boundary. Its ruling had been interpreted as leaving open the possibility that the two may not coincide along the coast. In its 21 October communiqué the Chilean foreign said that Peru had ‘always maintained that there was continuity between the initial point of the maritime boundary and that of the terrestrial boundary.’

In late October the Chilean government let it be known that its armed forces would be carrying out exercises along the country’s northern border.

PERU | Record coca eradication. Alberto Otálora, executive president of DEVIDA, Peru’s antidrugs agency, announced on 27 October that since the beginning of the year 30,000 hectares of coca plantations had been eradicated, across an area that included the far northeastern Amazonian Trapezium, the central jungle and districts such as Tocache y Uchiza in San Martín, Tingo María in Huánuco, Caballococha in Loreto, Padre Abad in Ucayali y San Gabán in Puno.

In the latter district the eradication drive was the first in 10 years, motivated by the discovery that part of the coca harvest was being diverted towards the drugs trade.

Otálora said that the results achieved so far suggest that the target set for this year as a whole, of 35,000ha, will be met. This would represent a 12% increase on last year’s 31,206ha, a record that was only slightly higher than what was achieved so far this year.

In a separate development the discovery of two large clandestine airstrips next to the Pampas river in Huamanga, Ayacucho, has been interpreted as signalling that tighter controls in the Apurímac-Ene-Mantaro valley (VRAEM) has been driving cocaine traffickers to seek alternative hubs for the airbridge to Bolivia and Brazil. One of the airstrips was two kilometres long, the other 1½km; both were 20 metres wide. The latter one had been booby-trapped, but the explosive was deactivated by the national police, who had been guided to the airstrips by locals.

Despite persistently low international oil prices, take-up for Mexico’s inaugural oil sector concessions tender process under the historic 2013 energy sector reform, which opened up the sector to increased private participation in exploration and production, has been reasonably good. After some initial teething problems, the process has since run smoothly and transparently under the new regulator, the national hydrocarbons commission (CNH).

According to the deputy minister for hydrocarbons, Lourdes Melgar, as of July, a year after the CNH launched its ‘Round One’ of hydrocarbon concessions for private operators in 2015, there were 16 companies operating as producers in Mexico aside from the state-owned oil company Pemex, of which nine were already delivering oil (see sidebar) and the other seven had submitted work plans to the CNH for approval to begin drilling. In the first three auctions of ‘Round One’, the CNH offered 44 exploration and exploitation areas, of which 30 were assigned, or 68%, which was well within the regulator’s expectations. To July, 24 contracts were already signed, Melgar reported.

The nine new producers are already contributing royalties to the state. Luis Miguel Labardini, of a local energy consultancy, Marcos y Asociados, told the local daily El Financiero in mid-July that these companies pay “over 70% of their income, on average, to the national oil fund”, the Fondo Mexicano del Petróleo. Labardini declared the landmark energy reform a success in diversifying oil operations in the country, increasing income for the state and also in bringing in new knowledge and technical capacity to the sector.

A fourth phase of ‘Round One’, scheduled for December, will offer 10 deepwater exploration blocks in the Gulf of Mexico. Four are attached to the Perdido belt, with estimated reserves of over 1.3bn barrels of crude, and six in the Salina del Istmo area, with estimated reserves of upwards of 1.45bn barrels. The reserves are valued at US$10bn overall, and the government hopes that the auction will generate about US$7bn. In all, 21 major oil producers have registered to bid in the ‘Round One’ fourth phase (see sidebar). Some of these companies are already operating on the US side of the maritime border with Mexico in the Gulf and so are knowledgeable about the area. The contracts will run for up to 50 years. Bids will be accepted on 5 December.

Meanwhile the CNH has already scheduled the first ‘Round Two’ auction for March 2017. This tender comprises 15 blocks off the Gulf coastal states of Veracruz, Tabasco and Campeche. These blocks are estimated to hold the equivalent of 650m barrels of proven light crude reserves, plus undiscovered natural gas and heavy oil reserves. The first ‘Round Two’ tender offers production-sharing contracts for 30 years, extendable for a further ten. The government hopes to generate US$11bn from this auction.

The second ‘Round Two’ auction will follow quickly thereafter in April 2017. Announced by the CNH in late August, it will comprise 12 onshore blocks, nine with prospective gas resources in the northern area of Cuenca de Burgos (in the states of Nuevo León and Tamaulipas) and six with natural gas and oil potential located in the Cuenca del Sureste (in the southern states of Chiapas and Tabasco). Total prospective resources are about 643.2m barrels of oil equivalent, on Mexican energy ministry data. The blocks will be offered via 40-year licence contracts. The objective of this round is to increase domestic natural gas production and participation will therefore be limited to companies with proven experience in this. Seven of the 12 blocks already have wells containing dry and wet gas, fanning hopes that output of ethane, propane and butane could be underway by 2018. Meanwhile, two of the blocks in the south appear to have oil, but have no wells yet. Expected investment in developing these concessions is upwards of US$5bn.

• New operators and bidders

The nine new producers, most of which took over existing wells formerly operated by Pemex, are: Canamex Energy, Consorcio Manufacturero Mexicano, Consorcio Petrolero 5M del Golfo, Diavaz, Dunas Exploración y Producción, Grupo Mareógrafo, Renaissance Oil, Lifting de México and Strata. Among the 21 major oil producers that have registered to bid in the ‘Round One’ fourth phase are Chevron and ExxonMobil of the US, Royal Dutch Shell and British Petroleum of the United Kingdom (UK), Total of France, Spain’s Repsol, and Norway’s Statoil.

• Pemex output still sliding

Crude oil output at Mexico’s state-owned oil firm, Pemex, was 2.157m barrels per day (bpd) in July, the company reported. This figure is down from an average of 2.178m bpd in June. Pemex’s oil exports, however, rose by 4.37% in the month, to 1.146m bpd. 

The government led by President Pedro Pablo Kuczynski is using the powers conferred by congress last September to legislate by decree in the public security sphere. On 6 January it published several decrees declaring a state of emergency in the prison system for two years and paving the way for the construction of new prisons, as well as toughening penalties for those guilty of violence against women, an issue which has been granted unusual prominence by the Kuczynski administration.

The principal focus of the announced prison reforms is to address overcrowding through the use of ‘foot shackles’ and the construction of new prisons and cell blocks in existing jails. At present there are 81,000 prisoners in Peru’s 69 jails; 50,000 more than capacity. The justice minister, Marisol Pérez Tello, said that some 27,000 prisoners could be fitted with an electronic tagging device to reduce overcrowding. Those charged with or found guilty of murder, kidnapping, rape, extortion, drug trafficking, illegal mining, embezzlement, bribery, influence trafficking or illicit enrichment, inter alia, would not be eligible for foot shackles. Priority will be given to the elderly, pregnant women, the sick, disabled and women with children under the age of three. Only inmates serving sentences of under eight years, or those being held in preventive detention accused of crimes that would receive a conviction of no longer than this, will be considered.

Another decree instructs the superintendence of national assets (SBN) and the commission for the official registration of informal property (Cofopri) to transfer land to the national prison authority (Inpe) to build new prisons. Inpe will also construct new blocks in any existing prisons with sufficient space and install more security cameras and mobile phone signal jammers, and improve electronic access systems for people and goods entering and leaving prisons.

Finally, the government issued a decree to crack down on femicide, and domestic and gender violence. Stiffer sentences will range from between two and five years in prison for those who cause minor physical or psychological injuries to women; between four and eight years for serious injuries; six and 12 years if the victim is a public official injured while carrying out her job; 10-15 years for sexual exploitation (15-20 if the victim is under the care of the offender); and a minimum of 25 years for the murder of young, elderly or pregnant women or victims of rape.

Two key votes, in the federal senate and in a commission of the lower chamber, indicate that Brazil’s political establishment is closing ranks against a multitude of corruption probes. The votes also increase the likelihood that President Michel Temer, despite having historically low popularity ratings, will soldier on and complete the remaining 14 months of his term in office.

On 17 October, the senate voted 44-26 in favour of reinstating Aécio Neves, a leading member of the Partido da Social Democracia Brasileira (PSDB); Neves had been suspended back in May on the orders of a supreme court justice. The very next day, on 18 October, the constitution and justice commission (CCJ) of the chamber of deputies voted 39-26 to shelve the latest corruption charges against President Temer and two of his cabinet ministers. Temer is a member of the Partido do Movimento Democrático Brasileiro (PMDB).

The full chamber will vote on the matter on 25 October and is not necessarily bound by the commission’s earlier recommendation. However, the most probable outcome is that a majority will opt not to lift Temer’s immunity from prosecution.

The two votes are related. The PMDB and the PSDB are the two key allies in the multi-party coalition that supports Temer’s government. While not explicitly stated, it is clear that PSDB support for Temer was given partly in exchange for PMDB support for Neves (see sidebar).

With up to one-third of the current members of congress facing allegations of improprieties, the legislature also has a vested interest in putting the brakes on corruption investigations. Many deputies and senators are eager to get re-elected next year, not least because that would prolong their (relative) immunity from prosecution.

It looks as if Neves, having died a political death, may enjoy a degree of resuscitation. He had been accused of accepting bribes, including a R$630,000 (US$197,000) payment from the now-notorious meat-packing company JBS. Neves did not deny he received the money but insisted it was not a bribe – only a personal loan.

Neves was indicted by the public prosecutor and in May a supreme court justice ruled that he be suspended from the senate and placed under a limited form of house arrest. The move, however, led to a legal dispute about the correct relationship between the judiciary and the legislature. The senate ultimately won the argument, asserting that only it could decide on the fate of its members. To reach a binding decision a majority of at least 41 votes was needed: in the end Neves was reinstated with a total of 44 – a margin of three. As a result, he regains his immunity.

Hot on the heels of this decision came the CCJ vote. Deputies on the commission voted to shelve the charges against Temer and his ministers Eliseu Padilha (chief of the civil household) and Moreira Franco (secretary-general of the presidency). The charges, based on testimony from JBS executive Joesley Batista and financier Lúcio Funaro, were that the three men had received bribes totalling R$587m (US$184m) from a range of state enterprises, including oil company Petrobras and bank Caixa Econômica.

Temer also faced a separate charge of obstruction of justice, for alleged complicity in buying the silence of disgraced (and now imprisoned) former speaker of the lower chamber, Eduardo Cunha. In his report CCJ chair Bonifácio de Andrade said the charges against Temer and his two ministers lacked “elements” of proof (see sidebar).

This was the second CCJ vote on corruption charges laid against Temer. In July charges against the president had been dismissed in a 41-24 vote. This week’s 44-26 vote suggests the president may have gained marginally more backing. However, it is difficult to draw hard and fast conclusions as the political parties tend to chop and change their CCJ members at the last moment, so as to manipulate the result.

An analysis by newspaper O Estado de S. Paulo suggests that the coalition of centrist parties – the so-called centrão – remained 100% lined up behind Temer. Despite being Brazil’s most unpopular president (a 3% approval rating, according to one recent poll), it looks as if Temer has enough congressional support to soldier on.

• Temer and Neves

Both President Temer and the PSDB’s Aécio Neves represent the Brazilian political establishment, schooled in a long history of negotiation and deal making, and, in the eyes of their critics, practitioners of pork barrel politics and corruption.

• Weak evidence?

Lawyers for President Temer and two of his cabinet ministers argued that the charges (made by the office of the public prosecutor – Procuradoria-Geral da República or PGR) were “arbitrary” and part of a political agenda. They have also cited legal problems with Joesley Batista’s plea bargaining evidence.

Despite the announcement of a US$50bn financial support package from the IMF, Argentina’s financial markets remain turbulent. The Buenos Aires stock market suffered a ‘black Wednesday’ on 27 June when the Merval index fell 8.9%, one of the biggest single one-day drops since the 1990s. By the following Friday, 29 June, there had been another steep fall in the value of the peso, which touched 30 to the US dollar.

It seemed clear at the beginning of July that the major package of IMF financial support, confirmed the previous month, had not been enough to prevent ongoing waves of speculation against the peso and Argentine assets in general. Argentine sovereign bond prices have plummeted. Nor, apparently, did the government’s appointment of Luis Caputo, previously the finance minister, as a new hawkish president of the central bank (Banco Central de la República Argentina – BCRA) on 14 June, halt the panic. Caputo replaced Federico Sturzeneger. On 26 June the new BCRA team had said it was holding the benchmark interest rate at the eye-wateringly high level of 40%, where it had been since May, and where it would continue until there were signs that domestic inflation was beginning to fall to the adjusted target range (26% by the end of this year and 17% by the end of 2019).

Analysts have been seeking to explain why there have been repeated runs on the peso despite the government’s stabilisation efforts. Economist Germán Fermo argued that notwithstanding the IMF deal the twin current account and fiscal deficits have continued to make Argentina particularly vulnerable, and international currency traders have sensed there is money to be made by betting against the peso. “I imagine the market is testing Caputo to see how he will react,” he said, adding, “The reality is that our economy has a pile of problems and the IMF’s US$50bn is being seen as a blank cheque and nothing more.” Fermo’s recommendation was bleak and politically difficult to deliver: he thought Argentina needed “five years of sacrifice” to eliminate the fiscal deficit, and that until that was done there could be no sustainable economic recovery.

Analyst Jimena Blanco of Verisk Maplecroft highlighted the heavy debt loads that have been incurred during the Macri government. She commented, “After two years of unpalatable government measures focused on the removal of utility tariffs and other long-standing subsidies, the fiscal deficit is still structurally too high, and public debt has risen exponentially, both external bond debt and internal debt including central bank deficit financing.”

Certainly all the latest economic statistics suggest that the economy is turning for the worse, showing the accumulated impact of continued turbulence over the last three months (April-June). Things have not been helped by a drought which has cost the country an estimated US$5.9bn in lost agricultural exports, according to the grain producers’ association, Bolsa de Cereales de Buenos Aires. Retail sales by small and medium-sized companies, a sector particularly hard-hit by the crisis, fell 2.8% in the first half of the year. Large retailers were also in trouble: Carsa and Santiago Saenz, citing falling sales, filed for protective bankruptcy while kitchenware retailer Longvie had its credit rating cut. Industrial output was down by 1.2% year-on-year in May. Construction activity in the same month fell by 5.8% on last year. Overall economic activity fell by 0.9% year-on-year in April, the steepest decline since President Mauricio Macri took office in December 2015. It was also the first contraction in 14 months. On a month-on-month basis the fall was 2.7%. “It is almost certain that Argentina will fall into recession. We won’t see the recovery until the end of the year,” said Fausto Spotorno of consultancy Orlando J. Ferreres & Asociados. The government itself has cut the official GDP growth forecast for this year from the original 3% to “around 1%”.

A potential consolation for the government was that, at least up until the end of June, the consensus among economists appeared to be that the coming recession would be relatively short. The BCRA spoke of a “temporary deceleration” of growth in 2018. Its latest survey of independent economists showed GDP contractions are now expected for the second and third quarters, which were previously predicted to be either flat or in positive territory. Daniel Artana at think tank FIEL said “It will be a mild recession,” although he added it could get worse if there is a global financial tightening and an exodus from emerging market assets: “It depends on what happens in the rest of the world in the months ahead, not just in Argentina.”

• Upgrade amid the bad news

On 21 June MSCI, the global financial data company said its Argentina Index would be reclassified to Emerging Market status, up from the previous Frontier Market status. The change would take effect from May 2019, when the MSCI Argentina Index would represent around 0.4% of the global MSCI Emerging Markets Index. The upgrade is significant because many global asset funds can only invest in stocks and shares with Emerging Market status, and are prevented by internal rules from investing in Frontier Markets, which are seen as riskier and more volatile. In a statement, MSCI said, “While Argentina’s most recent economic woes demonstrate its prospective challenges, international consensus remains sufficiently confident in Argentina’s long-term commitments to boosting market access and facilitating international investment.” Argentina had previously enjoyed Emerging Market status, but had been downgraded to Frontier Market in 2009. MSCI said that this time the restored Emerging Markets status will apply only to foreign listings of Argentine companies, since these enjoyed better liquidity.

President-elect Nayib Bukele chose to give his first official speech since his landslide victory last month at the US conservative think tank Heritage Foundation. Once again signalling a distance from his left-wing Frente Farabundo Martí para la Liberación Nacional (FMLN) roots (having broken with the party in 2017) Bukele made his remarks during a tour of the country which also included meetings with top US officials. The trip points to a new chapter in US-El Salvador relations when Bukele takes up the presidency in June. These had come under strain under the current FMLN government led by President Salvador Sánchez Cerén.

Bukele’s decision to appear on 13 March before the Heritage Foundation, which states that its mission is to “formulate and promote conservative public policies based on the principles of free enterprise, limited government [and] individual freedom”, among other things, serves as the latest reminder of his seeming lack of ideological orientation. Having served as FMLN mayor of San Salvador (2015-2018) and Cuscutlán (2012-2015), before being elected on the ticket of the right-of-centre Gran Alianza por la Unidad Nacional (Gana) last month, Bukele had notably remarked in December 2016 that he would “never be seen in the ranks of Gana or Arena…my heart is to the Left”. His speech at the Heritage Foundation and subsequent meetings with top US officials including National Security Advisor John Bolton; Under Secretary of State for Political Affairs David Hale; and Assistant Secretary of State for Western Hemisphere Affairs Kimberly Breier underlines this change of tack and efforts to endear himself with the US administration led by President Donald Trump.

One sign of this was Bukele’s questioning of relations with China with which the Sánchez Cerén government established ties last August after severing relations with Taiwan – a move frowned upon at the time by the US. In remarks likely to be well received by the US government, Bukele said that he had not decided whether to maintain relations with China. At the Heritage Foundation he accused China of failing to respect the rules of trade, manipulating its currency and interfering in other countries’ democracies (without providing specific details as to his criticism). Bolton also tweeted that he and Bukele reaffirmed strong friendship between their countries: “We are eager to identify new opportunities for foreign investment, improve security, counter Chinese predatory practices, & increase support for Interim Venezuelan President [Juan] Guaido”.

As well as his show of support for the US administration, Bukele also claimed that El Salvador’s economic boom was “on the way”. Highlighting his interest in attracting private investment, he tweeted that the US government’s development finance institution, the Overseas Private Investment Corporation (Opic) was prepared to finance “more than US$1bn in private projects” in El Salvador.

Bukele meets Mexican counterpart

Ahead of his visit to the US on 12 March President-elect Bukele met Mexico’s President Andrés Manuel López Obrador. The meeting produced pledges to deepen bilateral cooperation on issues such as trade, migration, and the economic and social development of southern Mexico and Central America’s ‘Northern Triangle’ (comprising El Salvador, Guatemala, and Honduras).

The issue of migration in particular had made headlines late last year, after thousands of Central Americans had formed caravans, travelling to the US to escape the violence and lack of economic opportunities in their home countries.

Upon taking office in December 2018, López Obrador inked a deal with his peers from Guatemala and Honduras (Jimmy Morales and Juan Orlando Hernández respectively) along with El Salvador’s vice president Óscar Ortiz to develop a comprehensive development plan for Central America, aimed at tackling the root causes of migration.

• Taiwan

On 13 March the constitutional chamber (SC) of El Salvador’s supreme court (CSJ) temporarily suspended the cancellation of El Salvador’s free trade agreement (FTA) with Taiwan, accepting an injunction from El Salvador’s sugar association which argued that the move jeopardised the industry’s property rights and legal security, among other things. Following its establishment of ties with China, the Salvadorean government in December 2018 ordered that the FTA with Taiwan, under which El Salvador exports 80,000 tonnes (t) of sugar, should cease to be in effect from 15 March 2019. The SC agreed with El Salvador’s sugar association that the decision regarding the FTA was unconstitutional because it had not been upheld by the legislature.

MEXICO | Remittances soar. Remittances surged by 20.9% year-on-year in the first two months of 2021 to US$5.35bn, the central bank Banco de México (Banxico) reported on 5 April. This suggests that Mexican expatriates, predominantly the 38m living in the US, have increased the amount of money sent back to relatives at home to mitigate the economic impact of the coronavirus (Covid-19) pandemic. The total of remittances in 2020 was an annual record, hitting US$40.61bn, an increase of 11.4% on the figure for 2019.

Remittances are Mexico’s second largest source of foreign exchange after automobile exports. President Andrés Manuel López Obrador has described the Mexicans sending the remittances as “heroes” for benefitting some 10m poor families in Mexico. His government is also hopeful that this record figure will help to drive domestic consumption and the economic recovery after a GDP contraction of 8.2% in 2020, according to the national statistics institute (Inegi).

The monthly survey of Mexican private sector experts, produced by Banxico on 5 April, lifted its growth forecast for Mexico in 2021 to 4.53% from 3.89% in February’s report. This brings its forecast more in line with the finance ministry, which is predicting growth of 5.3% this year, within a range of 4.3%-6.3%.

A protest staged by public health sector workers in Argentina’s southern province of Neuquén over salaries is having repercussions across the border in Chile. The protest comes amid a surge in cases of coronavirus (Covid-19) in Argentina, which has prompted President Alberto Fernández to impose tougher restrictions to try and reduce transmission and the risk that the public health system could be overwhelmed. The ruling Partido Justicialista (PJ) and main opposition coalition Juntos por el Cambio (JxC) even managed to set aside their differences to agree to postpone the simultaneous and mandatory open primaries (Paso) from 9 August to 12 September, and mid-term legislative elections from 24 October to 14 November this year.

As part of their protest campaign, which began in February, healthcare workers have blocked roads across Neuquén. Not only has this virtually paralysed oil production in Argentina’s main oil-producing province but it has also left Chilean lorry drivers trapped in Neuquén.

In a show of solidarity with their fellow drivers and in rejection of the petrol shortages that the Neuquén protests have produced, Chilean lorry drivers decided to block the international road in southern Chile that crosses the Strait of Magellan and links Argentina’s southernmost Tierra del Fuego province to mainland Argentina.

This blockade of the international road isolating Tierra del Fuego is starting to produce fuel and food shortages in the province. The situation is of such concern that the provincial governor of Tierra del Fuego, Gustavo Melella, has called upon Argentina’s ambassador to Chile, Rafael Bielsa, to intervene in the matter, and the governor of Neuquén, Omar Gutiérrez, offered to mediate in the salary conflict.

Brazil’s public sector workers, known for having comfortable working conditions, are unhappy. President Jair Bolsonaro backtracked on a promise made earlier last year to give a pay rise to all federal civil servants, instead guaranteeing a salary increase for federal police officers only. This has triggered discontent amongst other categories, with civil servants taking to the streets of Brasília on 18 January. Their mobilisation has not yet had strong repercussions, but the situation could threaten wider problems and force the government to reconsider.

The protest movement began with tax auditors from the Receita Federal tax authority. After congress approved the 2022 budget on 21 December 2021 without salary readjustments for most categories of federal workers, Receita Federal employees in managerial positions began to step down, leaving management-level posts vacant. According to Sindifisco, a union representing Receita Federal workers, around 1,300 tax auditors have abandoned managerial positions since then. Tax officials have also been on a work-to-rule strike since late December.

In a statement then, Sindifisco said the Bolsonaro government had failed to honour an agreement regarding the implementation of an efficiency bonus for tax auditors, agreed in principle five years ago but never regulated. Sindifisco also claimed that cuts had been made to the tax authority so as to fund the pay rise promised to the federal police (PF), federal highway police (PRF), and the national prison department (Depen).

Central bank (BCB) workers, represented by the Sinal union, were also amongst the first to mobilise in protest after the budget’s approval and seek negotiations for a salary increase. This week’s protest was called by the Fórum Nacional Permanente de Carreiras Típicas de Estado (Fonacate), an umbrella organisation which represents dozens of public sector categories, including federal judicial workers and employees at the securities commission (CVM), as well as BCB and Receita Federal workers. Fonacate is calling for an average 27.2% salary increase for federal civil servants, to compensate for the inflationary losses of the last few years. A majority of civil servants have had their salaries frozen for the past five years.

The government has not been receptive to these demands. Negotiations earlier in January between Sinal and the BCB president, Roberto Campos Neto, or Sindifisco and Economy Minister Paulo Guedes, failed to resolve the deadlock. The government’s line is that its hands are tied: it simply does not have the financial resources available (Guedes’ team has reportedly calculated that each percentage point of salary increase for all categories of federal civil servants would cost R$3bn [US$547m]).

While President Bolsonaro frequently spoke of giving the public sector a pay rise at the end of last year – a clear electoral calculation ahead of the general election in October this year – Guedes made no secret of the fact that he opposes the measure, even though he bowed to the president’s wishes to request the inclusion of the pay rise for the federal police in the 2022 budget. Police officers represent a core part of Bolsonaro’s support base.     

Guedes’ position is reportedly irritating the head of state, but a growing number of government representatives now seem to share the economy minister’s view, and there is even talk of going back on the promised salary increase for police officers. In recent days, both Ricardo Barros, the government leader in the federal chamber of deputies, and Vice-President Hamilton Mourão have indicated that this might happen. Bolsonaro has until 21 January – the end of this week – to sanction the 2022 budget, which currently includes R$1.7bn for salary adjustments for the police.  

The civil servants who feel slighted show no sign of giving up their fight. The 18 January protests outside the central bank and the economy ministry in Brasília were sparsely attended, with a turnout of a few hundred, but organisers say they expected as much given the current levels of coronavirus (Covid-19) infections. Further mobilisations are planned for the end of January, and there is talk of a general strike taking place in February if demands have not been met. “This mobilisation begins now, and there is no date for it to end,” Fonacate’s president Rudinei Marques said, adding that he hopes the government will now agree to consider the sector’s demands.

The protesting workers are amongst the higher earning civil servants, in a professional category which benefits from job security and wide-ranging advantages. Federal employees represent a fraction of the 10.9m Brazilians who are employed in the public sector (most are employed at state or municipal level), and they are the best paid. With unemployment affecting 12.9m Brazilians, a further 38.2m employed in the precarious informal sector, and inflation driving down salaries in real terms, their mobilisation is therefore unlikely to garner much public sympathy.

It still has the potential to be disruptive for the government, however, and force it to the negotiating table. The work-to-rule strike by Receita Federal workers, for example, has slowed down procedures at Brazil’s land borders, causing long lines of lorries, as well as in ports. If it continues, operations in airports might also be affected, for both cargo and passengers. The risk of a general strike worries importers, as the provision of supplies could be threatened.   

Inflation vs growth

Economy minister Guedes has criticised plans to give public sector workers a salary increase, having previously said that this would accelerate inflation and drive up public debt, amongst other things. Those who defend the demands of civil servants for a pay rise, such as some opposition lawmakers who turned out in support of the 18 January protest, argue that increasing the purchasing power of the civil servants will be good for growth.

Omicron

The omicron variant of the coronavirus is ripping through Brazil, which is seeing a spike in new cases. The country recorded over 204,854 new cases of the disease on 19 January, a new record and the first time that daily cases have exceeded 200,000 since the start of the pandemic. The previous record – 150,106 on 18 September 2021 – had been driven up by a lag in data reporting. The civil aviation regulator (Anac) has authorised airlines to fly domestic routes with a reduced crew in response to the staffing difficulties the air travel industry has been facing as a result of the surge in Covid-19 cases.

BRAZIL | Sell the forest? The government led by President Jair Bolsonaro has announced a new annual plan for forest concessions, inviting private companies to apply to deliver “sustainable forest management” in 24 separate areas of the country.

Since 2018 the forest area under private management in Brazil has increased by as much as 154% to reach 4.15m hectares, while timber production in those areas jumped by 40%. In December 2020, forest management and carbon-trading rules for privately held areas were relaxed in an attempt to attract more investors.

Given rising deforestation, the policy has come in for significant criticism. Paulo Blessa, a professor of environmental law at the Universidade Federal do Estado do Rio de Janeiro (Unirio), says “Forest concessions are governments capitulating to land grabbers. It is a testament to the incompetence or unwillingness of governments to take care of public land.”

Separately, a report by environmental lobby MapBiomas has found that the government is ignoring 97% of the deforestation alerts produced by its own monitoring system. According to the report, the alerts are generated on a monthly basis by satellite photography delivered by the Instituto Nacional de Pesquisas Espaciais (Inpe). However, federal environmental prosecutors reportedly only visited 3% of the deforestation hotspots identified by Inpe. Inpe data shows that at over 13,000km², the deforested area in 2021 was the largest in the last 15 years.

President Bolsonaro has meanwhile again become involved in a ‘twitter spat’ with Leonardo Di Caprio, the Hollywood actor and environmental campaigner. Claiming Di Caprio failed to understand Brazil’s key role in world food production, Bolsonaro said the actor should “shut up and stop saying stupidities about environmental protection in Brazil”.   

For the fifth time since 2008, Bolivia’s ruling left-wing Movimiento al Socialismo (MAS) has launched an effort to industrialise coca production. On 29 June President Luis Arce announced the creation of a state-owned company, Kokabol, which he said would “develop an industry around the basic chemistry of the coca leaf, and produce, process, transform, and commercialise products that derive from it”.

The MAS has long dreamt of turning the coca leaf, a sacred symbol of Bolivian identity, into an industrialised and legal money-spinner. Former president Evo Morales (2006-2019) launched the first effort in 2008, creating an industrialised coca processing plant under the supervision of the state coca company Empresa Boliviana Comunitaria de la Coca (Ebococa).

Subsequent initiatives in 2010, 2011, and 2013 saw the Morales administration attempt to launch coca-infused energy drinks, teas, and panettone. None of these projects achieved much success; according to the national daily Página Siete, the Ebococa plant was still operating at 20% of capacity in 2014, six years after its launch.

President Arce has now picked up the mantle, signing an executive decree to invest B$62.38m (US$9.07m) in the establishment of a Kokabol plant in Sacaba municipality, in the central department of Cochabamba. The decree states that the plant will predominantly be centred around the manufacture of coca-derived toothpaste, as part of the government’s import substitution industrialisation policy.

The government has not commented further on the initiative, and it has not said when it expects Kokabol to commence production. However, the announcement may represent an attempt by the Arce administration to absorb excess supply of coca leaf from small-scale farmers and limit leakage from the legal market into the hands of drug trafficking organisations.

According to the recently released 2022 ‘World Drug Report’ by the United Nations Office on Drugs and Crime (UNODC), Bolivian coca cultivation increased by 15.3% in 2020, the most recent figures available. Coca crops covered 29,400 hectares (ha), exceeding the officially authorised maximum of 22,000 ha in authorised coca production areas.

The Arce administration has not given any official indication that it is planning on expanding those official production areas so that Kokabol can legally buy up excess supply from harvesters. However, Morales, who retains the presidency of the MAS as well as the Seis Federaciones del Trópico de Cochabamba coca growers’ union, has previously called for an increase in the legal coca production quota.

Kokabol

Kokabol will fall under the authority of the Servicio de Desarrollo de las Empresas Públicas Productivas (Sedem), the government agency tasked with supporting state companies.

MAS vice president accused of receiving narco funds

The vice president of the MAS, Gerardo García, lodged a criminal complaint against MAS deputy Rolando Cuéllar on 5 July, after Cuéllar accused him of receiving money from a drug trafficker.

Cuéllar had revealed a letter, signed by García, in which he thanks a man named Miguel Ángel Salazar Yavi for a campaign donation. This was one of the false identities used by the Argentine drug trafficker José Miguel Farfán, who in 2019 was sentenced to 15 years in prison by an Argentine court.

García has dismissed Cuéllar’s allegations as slander and is seeking criminal charges. President Arce has ordered the justice ministry to investigate the allegations.  

Mauro Cid, the aide-de-camp of the right-wing former president Jair Bolsonaro (2019-2023), has been held in preventative detention since May for his alleged participation in a scheme to falsify vaccine records, but on 9 September the supreme court (STF) authorised his provisional release. He had reportedly agreed a plea bargain with the federal police (PF), which has been pursuing several investigations involving Bolsonaro’s inner circle.

Cid has already provided the PF with a trove of information, not only through the private messages on his phone which the authorities seized, but also in various depositions. The former presidential aide has testified on investigations such as the allegations that Bolsonaro hired a hacker to tamper with voting machines and the corruption probe into the sale of improperly declared jewellery gifted to Bolsonaro by the government of Saudi Arabia; the police suspected that Cid tried to transfer to Bolsonaro the proceeds from this sale.

Bolsonaro told the press that he was not at all worried about Cid confessing any compromising information. In an interview published by the national daily Folha de São Paulo on 12 September, Bolsonaro described Cid as a “super-secretary” who could be trusted and said that he treated Cid “like a son”.

Bolsonaro said that Cid “looked after some things” for the former First Lady, Michelle Bolsonaro, and that Cid was the “guy to sort out my problems”, but Bolsonaro claimed that Cid was not able to confess confidential information about the inner workings of the government because he supposedly did not attend the president’s high-level meetings. On Cid’s phone, police investigators had found messages with other aides and the former first lady’s staff from 2020 which included discussions suggesting that Cid might have managed a network of secret transactions on behalf of the Bolsonaro family outside of the official government financial records.

Other reports by Folha de São Paulo have speculated on who Cid would implicate in his confession. The most likely sacrificial victims would reportedly include officials with a military background who worked in Bolsonaro’s government and have been suspected of involvement in alleged conspiracies to overturn the October election, such as the former presidential security chief Augusto Heleno Ribeiro Pereira and Bolsonaro’s former chief of staff (2020-2021) and defence minister (2021-2022) Walter Braga Netto.

Bolsonaro ally hit by corruption probe  

Former cabinet minister and 2022 vice-presidential candidate Walter Braga Netto has not only been investigated for alleged involvement in anti-democratic plots under former president Bolsonaro, but more recently for alleged corruption as well. On 12 September the federal police launched an investigation into suspected irregularities in the purchase of bulletproof vests by the federal government in 2018 to be used by security forces in Rio de Janeiro state. Braga Netto was the military commander overseeing the 2018 federal security intervention in Rio. Police have not issued warrants to arrest him or raid the properties of the Bolsonaro loyalist. Investigators have so far only been authorised to access his phone records.

President Luiz Inácio Lula da Silva hosted an event in his official residence on 5 March to which he invited leading members of the senate, seeking to gain their favour ahead of upcoming legislative challenges. Tensions have escalated between the executive and congress in recent months over legislation regarding taxes, so this event was viewed as a chance for Lula to mend relations with the senate president, Rodrigo Pacheco.   

According to local media, President Lula invited leading representatives in the senate from the centrist and centre-right parties that dominate the upper chamber, such as Pacheco’s Partido Social Democrático (PSD), Movimento Democrático Brasileiro (MDB), and União Brasil (União). At the event, Lula reportedly confirmed his endorsement of União’s Davi Alcolumbre’s bid to run for president of the upper chamber; senators are due to vote for their next leader in 2025.

Alcolumbre held the senate presidency from 2019-2021 and his re-election bid has the support of his successor Pacheco. News broadcaster CNN Brasil cited lawmakers as describing Alcolumbre as “a political chameleon”, willing to work with both Lula’s left-wing Partido dos Trabalhadores (PT) and the Partido Liberal (PL) of right-wing former president Jair Bolsonaro (2019-2023).  

In addition to supporting Pacheco’s pick for the next senate president, Lula is reportedly thinking of backing the PSD senator’s ambitions to run for governor of Minas Gerais in 2026. As Brazil’s second most populous state, Minas Gerais has been a fiercely contested battleground in recent elections. In the 2024 municipal elections this October and the 2026 general elections, Lula and the PT could benefit from an alliance with Pacheco and the PSD in Minas Gerais.

Since January, Lula and Pacheco have been seeking to ease tensions over the federal government’s efforts to boost tax revenue. In late December 2023, Lula signed a decree to re-introduce taxes on payrolls, reductions on which congress had previously approved. On 27 February, after negotiating with Pacheco and other senators critical of the taxes, Lula revoked parts of the decree which re-imposed these taxes.

On 3 March news website G1 reported that, in the coming months, Pacheco will preside over a series of electoral and constitutional reforms expected to be tabled in the senate, including a proposal to end presidential re-election. According to reports from other outlets, Lula told senators at the 5 March event that he was opposed to the proposed initiative to end re-election, arguing that a four-year term is not long enough to conclude a programme. The issue of re-election could present another point of tension between Lula and Pacheco, as the senate president is reportedly supportive of the proposal.

Proposal to end re-election

The senate’s constitution & justice committee (CCJ), chaired by Davi Alcolumbre (União Brasil), is due to review a constitution amendment proposal which aims to end re-election for mayors, governors, and the president. The current rules, under which the president can run for a second consecutive term, have been in place since 1997, during the presidency of Fernando Henrique Cardoso (1995-2003), although the former president has previously expressed regret at backing the constitutional amendment which allowed him to run for re-election in the 1998 presidential race.

On 30 August, former finance minister Yoshihiko Noda became Japan’s sixth prime minister in five years.  He was met with a lecture from China, published in the official news agency Xinhua, on how he should conduct himself.  Given the prominence we have been giving to the poor state of China-Japan relations in recent months, and given the extraordinary forthrightness of Xinhua’s commentary, it is worth quoting extensively from the official news agency’s ‘welcoming’ message to Noda.

Xinhua began by saying that the new prime minister “should take concrete and substantial steps to promote [Japan's] relations with China and respect China’s core interests”, adding that his predecessors had managed Japan’s relationship with Beijing “without due respect for China’s core interests and legitimate demands for development, trumpeting a ‘China threat’ theory for ulterior motives”.

Referring to the Japanese-controlled Senkaku Islands, which China calls the Diaoyu Islands, the commentary called on Japan “to show enough respect for China’s national sovereignty and territorial integrity, especially when it comes to matters concerning the Diaoyu Islands, which are an integral part of China’s territory”.  It said that that Beijing is willing to enter joint exploration of resources with Japan, but only “on condition that Tokyo recognizes China’s complete sovereignty over the archipelago”.

On the wider question of China’s military modernization, the commentary said that Japan “should acknowledge China’s legitimate requirement for military modernization to defend its growing national interests”.  On the other hand, it said that Japan should “call off its dangerous practice of invoking China’s rise as an excuse to discard the defence-oriented policy after World War II for its own military expansion”.  The agency ended by saying: “Now the keys to better relations are in the hands of Japan as substantial measures are expected from its new government.”

Nothing about this Chinese welcome to the new Japanese prime minister is comforting, but perhaps the most worrying is that Xinhua openly admitted that disputes between the two countries are “threatening the peace and stability of the region”, yet it acknowledged no fault at all on China’s part or duty to help alleviate the tension.  “Japan has to be blamed”, it said, and Noda (it might as well have said) must kowtow.

Development: On 13 November Nicaragua's military spokesman, Colonel Juan Ramón Morales, said that four suspected drug dealers were killed in a shoot-out and that 1.5 tonnes (t) of cocaine had been seized, following a six-hour long boat chase in Caribbean waters south-east of Bilwi, in the North Atlantic Autonomous Region (Raan).

Significance: The deadly clash once again highlights the increasing use of the area as a transit zone for drugs from South America to the US. In 2010, Nicaragua was added for the first time by the US to its list of “Major Drug Producing and Transshipment Countries”.

Key points:

• According to the Nicaraguan authorities, the shoot-out was started by the drug dealers, who opened fire on the marines as they closed in on their boat. As well as the cocaine, the officials also seized two rifles and a submachine gun.

• While many of Nicaragua's institutions lack credibility, the navy is an exception and cooperation with the US is strong (despite President Daniel Ortega's anti-US rhetoric). The US State Department’s 2011 International Narcotics Control Strategy Report (INCSR) highlights the interdiction successes of the navy as “a bright spot” in terms of demonstrating the “willingness of some branches of the GON [Government of Nicaragua] to confront DTOs [Drug Trafficking Organizations] and live up to their international commitments”.

• According to the INCSR report, Nicaraguan law enforcement authorities nearly doubled the cocaine seizures in 2010 to 17.5 metric tons (MT) from 9.8MT seized in 2009.

MEXICO | Reshuffle. President Felipe Calderón Hinojosa reshuffled his cabinet this week, perhaps for the final time before elections on 1 July 2012. The changes were the result of two ministers and the president’s private secretary, Roberto Gil, wishing to run for election to the senate in 2012. Both of the outgoing ministers, Javier Lozano, the labour minister, and Salvador Vega, the anti-corruption minister, were replaced by their senior deputies. The new labour minister, Rosalinda Vélez, is the first woman to hold the position.

Under Mexico’s constitution, ministers must stand down six months before seeking election: this provision means that no other cabinet members can now seek an elected position in 2012. Calderón’s new private secretary is José Guadalupe Rodríguez, who was previously in charge of the traditional pork-barrel agency, Caminos y Puentes Federales.

MEXICO | Peru free trade deal. A Mexican senate committee rejected the proposed free trade agreement with Peru this week. The 7:5 vote came as a nasty shock to both the Mexican and Peruvian governments which had signed the deal in April 2011. The Mexican senators said that the agreement as it stood would damage the Mexican fishing industry. The free trade treaty was due to come into force at the beginning of 2012. As Mexico’s congress is due to go into recess on 15 December, meeting this deadline now seems impossible.

EL SALVADOR | Déficit comercial. El déficit comercial de El Salvador se elevó un 20,3% en el 2011, comparado con el año anterior, cerrando en US$4,8mm, de acuerdo a un informe reciente del Banco Central (BCR). Las exportaciones crecieron un 18% a US$5,3mm con los productos tradicionales como el café (US$464m), azúcar (US$132m) y camarones (US$800.000), representando un 11% del total exportado. Las importaciones crecieron un 19%  a US$10,1mm, conducidas en parte por una subida del 26% en las importaciones de petróleo que alcanzaron los US$1,7mm.

The commitment of the recently re-installed government of President Daniel Ortega vis-à-vis property rights is being tested on various fronts: the high profile confiscation of property belonging to a Swiss-Nicaraguan investor to reportedly gift it to Edén Pastora, the controversial former Sandinista leader, has left the private sector and opposition jittery. The latter in particular was quick to invoke the spectre of the Piñata - the massive transfer and titling of confiscated and expropriated property to the Frente Sandinista de Liberación Nacional (FSLN) leadership, which took place at the end of Ortega’s first mandate (1979-1990). These concerns come as the government was recently forced to address another source of tension with regard to property rights, this time involving territorial claims in the impoverished indigenous North Atlantic Autonomous Region (Raan), on the Caribbean Coast.

In mid February, the opposition press gave wide coverage to the seizure of 20 manzanas (33.6 acres) of land worth an estimated US$5m, the site of an ecological hotel resort, Punta Teonoste, belonging to Walter Bühler in order to give it to Pastora. The former FSLN guerrilla known as Comandante Cero, Pastora broke with the first Ortega government amid disillusionment with the leadership to become a Contra, only to return to the fold under Ortega’s second mandate (2007-2012). In a sign of his current standing, he was placed in charge of the controversial project to dredge the San Juan River, which, in October 2010, triggered the revival of a territorial dispute with Costa Rica [RC-10-11]. Attorney General Hernán Estrada explained the ‘gift’ to Pastora as part of the government’s efforts to regularise land ownership, which benefited some 172,000 people during the last Ortega administration.

While the government has been in talks with the Bühler family and appears to be reaching some sort of behind-the-scenes deal, the land grab triggered alarm bells among various sectors. With the private sector think-tank Funides having recently identified the lack of legal security surrounding land ownership as a “fundamental obstacle preventing the promotion of investment in the country” [RC-12-01] and the human rights NGO Centro Nicaragüense de Derechos Humanos (Cenidh), highlighting it as one of the biggest challenges facing the government in its most recent (2010) report, both the leading private sector lobby, Cosep, and the national tourism institute (Intur) expressed anxiety about the impact on Nicaragua’s image. Opposition deputies such as Pedro Joaquín Chamorro, who heads up the congressional tourism committee, were also quick to put it in historical context, drawing parallels with the Piñata that took place during the transition of power from the first FSLN government to the Violeta Chamorro administration (1990-1997).

• Another source of tension

The doubts regarding the Ortega government’s commitment to respecting property rights comes as it recently defused another dispute, also related to territorial claims, in the Raan, which is home to various indigenous groups including the Miskitos, Mayangnas and Afro-Nicaraguans. This week, in response to demands from the leaders of 22 indigenous communities, the National Demarcation and Titling Commission (Conadeti), set up in 2003 to oversee implementation of the 1987 law on indigenous autonomy, respecting indigenous rights to communal land, agreed to conduct an examination of the land situation in the region.

While the Cenidh noted in its last report that the Ortega government has made progress vis-à-vis indigenous land rights, Conadeti’s announcement followed weeks of tension amid the alleged invasion of indigenous territory by mestizos (people of mixed indigenous and European descent), which came to a head last month after 18 mestizos were kidnapped by indigenous groups demanding the eviction of 120 families who, they claim, had invaded their land to carry out illegal logging and other activities. According to Simon McDavis, the president of the territorial government Twi Waupasa, of the 156,000 hectares comprising the Twi Waupasa, 50,000 are occupied by the 120 families.

The government came under pressure from various sources: regional leaders expressed concerns regarding an escalation in racial tensions; McDavis warned that if the authorities did not intervene, the Miskito groups themselves would take action; and Brooklyn Rivera, an indigenous deputy for the Yatama party, a long time FSLN ally, who heads up the congressional indigenous affairs committee, insisted that only property titles issued prior to 1987, would be recognised. The government’s response was likely motivated by the prospect of the November 2012 municipal elections: while the Yatama is allied with the FSLN on certain issues, land is reportedly one topic on which it will not budge. The unrest in the region is also significant given that the Raan has previously seen secessionist threats from the indigenous Miskito Council of Elders in Bilwi, the Raan’s capital, (although these ultimately failed to materialise) [RC-09-05].

• Indigenous titles

In its most recent annual report (2010), a Nicaraguan human rights NGO, Centro Nicaragüense de Derechos Humanos (Cenidh), highlights as evidence of progress vis-à-vis indigenous land rights the fact that, by end 2010, fifteen of the 23 indigenous territories identified by the National Demarcation and Titling Commission (Conadeti) were now demarcated and titled, up from nine as of July 2009. The Cenidh also pointed out, however, that since 1905, only 10% (185,000 hectares) of the land subject to demands from indigenous groups (which account for some 6% of Nicaragua’s population, according to the UN’s Socio-Linguistic Atlas of the Indigenous Peoples, released in March 2010) had been titled.