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Things are not running as smoothly as the Martinelli government likes to portray in ‘Latin America’s Singapore’.

Alberto Alemán Zubieta, the Panama Canal administrator, has raised doubts as to whether the US$5.2bn canal expansion plan will be completed on time.

The project, which began in 2007 under the previous Martín Torrijos government (2004-2009), was due to be completed by October 2014. However last month Alemán admitted to a seven-month delay in pouring cement (which should have begun in January 2011 but didn’t start until July) because the mixture failed to meet the right specifications.

Strikes: In late March the pro-business government led President Ricardo Martinelli also had to deal with a four-day strike by workers at two major ports: Balboa, located in Panama City (Pacific Ocean); and the Port of Cristóbal, in the city of Colón (Atlantic Ocean). Both are run by the Panama Ports Company (PPC), a subsidiary of Hutchison Whampoa. The workers were calling for a 30% wage increase and improved working conditions. The port strikes, the first in 15 years, resulted in some US$30m in losses. The walkout was called off on 2 April, upon a preliminary agreement between the company and workers. The Panama Maritime Chamber (PMC) and other sectors complained about the damage done to Panama’s international reputation.

Some 200 factory workers employed on the Panama City Metro project also staged a week-long strike, beginning on 29 March, in demand of higher wages and better working conditions. The US$1.6bn metro is Martinelli’s flagship project and was a key vote-winner in the 2009 election.  The workers, employed by the Línea Uno consortium (comprising Spain's Fomento de Construcciones y Contratas, Brazil's Odebrecht and France's Alstom) called off the strike after reaching a deal with Línea Uno, details of which were not released to the press. Construction on the new metro began in 2011 and is due to conclude in December 2013.

President Dilma Rousseff is in London until 28 July on an official four-day visit, accompanied by a bevy of senior cabinet officials including Foreign Minister Antonio Patriota; Finance Minister Guido Mantega, Sports Minister Aldo Rebelo; Tourism Minister Gastao Vieira; Education Minister Aloizio Mercadante and Science and Technology Minister, Marco Antonio Raupp. Also in the delegation is central bank president Alexandre Tombini, Marco Maia, the leader of the federal house of deputies and Sérgio Cabral, the government-allied governor of Rio de Janeiro, host state to the 2014 World Cup and the 2016 Olympics.

Outside 10 Downing Street, Cameron said the Olympic connection provided a “great opportunity” for cooperation between Brazil and Britain, adding that the UK wanted to deepen trade ties with the Southern Cone giant. Bilateral trade was worth US$8.6bn in 2011, up 10% over 2010. Britain’s foreign secretary William Hague led a commercial delegation in January to Brazil, where he vowed to double trade by 2015. To much fanfare, Brazil leapfrogged the UK earlier this year to become the world’s sixth largest economy (in nominal GDP terms) and so Rousseff arrives in London as a leader to be reckoned with, not least because of her anti-austerity stance in the face of the global economic crisis.

The contrast between the Brazilian government’s multiple domestic economic stimulus packages, worth upwards of US$50bn since Rousseff took office in January 2010, and the Cameron government’s dogmatic fiscal retrenchment, could hardly be starker. Indeed hours before receiving Rousseff, Cameron’s embattled Chancellor of the Exchequer, George Osborne, came under renewed fire for his conservative policy stance after it emerged that the UK economy had slipped back into recession in the second quarter. And even though Brazil itself is suffering this year, it is well positioned to rebound in 2013 (assuming China does likewise), thanks to a recent currency depreciation and an accommodative monetary policy stance. As we went to press, Cameron admitted that his government needed “to roll up our sleeves and do everything possible to get business going in Britain, to get housing going, to get jobs going.”  He might well consult Rousseff for some tips.

According to a Downing Street statement, Cameron and Rousseff also discussed the Euro zone crisis and the global economy. Cameron may have an ally in Rousseff with regard to the Euro zone; she has made regular calls for the European Central Bank to act as a lender of last resort, as part of a solution to the systemic financial crisis in the peripheral Euro zone states. The UK and Brazil also generally see eye-to-eye in multilateral forums on soft issues like the environment and global warming.

The sticking point, however, is on the Middle East. With the US President Barack Obama preoccupied with his bid for re-election in November, Cameron and Hague have been making the running on Syria. The UK this week again pressed the UN Security Council to approve a UK-penned resolution to impose sanctions on the government led by President Bashar Assad. Fellow Security Council members China and Russia firmly reject that, fearing a pretext for a military intervention. Rousseff said in London that the situation in Syria is worrying and stressed that Brazil condemns the violence. She also admitted that the country is in civil war and for the first time stated that the Assad government “has lost legitimacy”. However, she was also clear that the international community should not adopt the same strategy applied in Iraq and Afghanistan.

Curiously, rather than framing Brazil’s opposition on the usual human rights grounds, she argued that a military intervention in Syria and/or Iran would create a regional and oil price crisis that would undo all the efforts in the US, the UK and Europe to restore economic growth and stability. She insisted that dialogue and international cooperation was the only way to deal with the situations in both countries. “Militarisation does not work”, repeated Foreign Minister Patriota afterwards. Patriota acknowledged, however, that Brazil was “worried” about the lack of consensus in the UN Security Council.

Brazil has repeatedly reaffirmed its full support for the six-point peace plan for Syria jointly put forward in March by the former UN Secretary General Kofi Annan and The Arab League, which called for a cease fire followed by internal talks between the government and the rebels. However, Russia and China’s third veto of the Security Council resolution threatening sanctions on Syria a week ago was the death knell for the Annan plan, according to most diplomats. For all its global power aspirations, Brazil has been found wanting by the US and the UK when it comes to hard politics, such as the Middle East, and Rousseff and Patriota’s latest statements, which in Washington and London will be perceived as continued fence-sitting by Brazil, will not help.

Backslapping in Caracas

President Hugo Chávez and his foreign minister Nicolás Maduro on 26 July received a large delegation from Brazil led by the radical left-wing presidential adviser on foreign affairs, Marco Aurélio Garcia. The Brazilians arrived in their capacity as pro tempore presidents of the Southern Common Market (Mercosur). The mood was celebratory, with no sign of any of the legal doubts raised by Paraguay (and also Uruguay) about the legitimacy of Venezuela’s backdoor entry into Mercosur, which was agreed at a trilateral Mercosur presidential summit on 22 June to which the temporarily suspended fourth member and last remaining opponent of Venezuelan membership, Paraguay, was not invited.

As far as Chávez and the Brazilian government are concerned, it’s a done deal politically, with the economic and technical details to follow later. Not for the first time, critics complain that Mercosur, notionally a free trade and economic integration bloc, is being held hostage to factional regional politics. Alessandro Teixeira, Brazil’s deputy minister of development, industry and trade, declared: “Venezuela’s entry into Mercosur during Brazil’s pro tempore presidency is a cause for celebration, it’s an important strategy for the bloc…I have certainty in the word of President Dilma [Rousseff], who says that the [entry] is strategic to consolidating Latin American integration”.

Chávez said the delegation came to accelerate the formal adhesion procedures. Among other things, these will require Venezuela to adopt within four years the (higher) Mercosur common external tariff, something Caracas was previously cool about, despite its membership petition. Also on the agenda was agricultural development, telecoms and commerce. Chávez declared, “Nicolás Maduro told me that over 230 products could be exported to Brazil soon; it’s a gigantic market”. He specifically cited aluminum, coal and fertilisers, also stressing the need to build on “the complementarity between Petrobras and Pdvsa” (Brazil’s and Venezuela’s state oil companies).

The political rhetoric is one thing, the economic reality quite another. Brazil runs a massive trade surplus with Venezuela (US$3.3bn in 2011) and that will only increase once Venezuelan import tariffs come down under Mercosur.  Ironically, that will suit the heavily import-dependent Chávez government, which struggles to supply the repressed domestic demand in Venezuela. Notably, Venezuela last week moved to partially liberalise its foreign exchange controls by allowing companies partnered with the state to open foreign currency (i.e. US dollar) accounts in local banks. This will facilitate imports and could also be the precursor to a post election currency devaluation that would shore up the government’s stretched fiscal coffers. The Chávez government likely calculates that access to cheaper imports under Mercosur will help mitigate the inflation pressures coming from a devaluation.

On the other hand, all but 5% of the value of Venezuela’s exports are made up of crude oil and, just like Chávez’s big scheme to build a joint heavy crude oil refinery with Brazil (the Abreu e Lima refinery in the northern Brazilian state of Pernambuco), his plans to export minerals and fertilisers to Brazil will also likely need inward Brazilian investment to get up and running. It’s all potentially a big win for Brazil’s private sector, which ironically is no fan of its Socialist neighbour.

• No added sugar

Syria’s state-owned sugar importer, the General Organization for sugar, on 25 July said it wanted to buy 25,000 tonnes of raw Brazilian sugar from the US-headquartered trader Bunge but that financing problems could stymie the deal. A Geneva-based spokesperson for Bunge stated, “While we don’t comment on or confirm commercial contracts, Bunge exports agricultural commodities to Syria in accordance with all applicable economic sanctions laws, which authorize the sale of food to these countries for humanitarian reasons.”

• Cabral puts his foot in it again

Rio’s state governor Sérgio Cabral again made headlines for all the wrong reasons in London when he made an overtly political call at a dinner with UK and Brazilian business leaders for the re-election of Rio’s mayor Eduardo Paes (a fellow party colleague) in October’s municipal elections. The opposition in Rio immediately said it would file a complaint with the electoral authority. The normally effusive Cabral has recently kept a very low profile in an effort to duck a string of corruption allegations, centred mainly on irregular public works contracts, but which also included allegations about his lavish tax-payer funded trips abroad, accompanied by friends and business associates, as part of Rio’s Olympic bid. Cabral, along with Rousseff, will be a guest of honour as the next hosts at London’s Olympic opening ceremony.

PERU-COLOMBIA | Leading venture capital investment growth prospects. The Latin American private equity and venture capital association of venture capital (Lavca) released a study this week which showed that Mexico, Peru and Colombia are expected to exhibit the most favourable environment for venture capital investments in the next couple of years.

    Lavca’s research director Juan Savino said that after conducting a survey of 105 investors with interests in Latin America 56% of them said that they were optimistic about the level of returns on their investments that they expected to get. According to Savino, “domestic and foreign investors expect to get average net annual returns of 16% or more” for their investments in the region. Savino said this positive outlook was largely the result of almost three-quarters of surveyed investors expecting yearly returns of over 16% for their assets in Mexico, Peru and Colombia.

    Meanwhile half of those surveyed said that they expected a similar level of returns for their assets in Brazil and Chile. The study highlights that the results suggest that Latin America’s sustained economic growth compared to other regions continues to present attractive conditions for investing; and that investors now believe that the risk-return ratio for private investments in Latin America is improving despite the difficult global economic conditions.

PERU-BOLIVIA | Amaszonas makes maiden flight. On 23 September the Bolivian airline, Amaszonas, conducted its first ever flight between La Paz and the city of Arequipa in southern Peru. Amaszonas’s marketing manager, Luis Vera, said that Arequipa has now become the second destination serviced by the airline in Peru after Cuzco, to which the airline currently flies six times a week. According to Vera, Amaszonas will fly to Arequipa three times a week to start with, providing an alternative destination to the Chilean beach resort destinations of Arica and Iquique where Bolivian tourists traditionally go on holiday. Peru’s ambassador to Bolivia, Silvia Alfaro, has said that the new route could also help promote trade between the two Andean neighbours.

After domestic and international admonition, El Salvador’s main political parties finally managed to agree on 10 November on a fiscal pact which has averted a default, at least in the short-term. The ruling left-wing Frente Farabundo Martí para la Liberación Nacional (FMLN) and the main opposition party, the right-wing Alianza Republicana Nacionalista (Arena) had been widely criticised for fiddling while Rome burnt. Crisis talks dragged on for a full six weeks before Arena eventually agreed to approve a US$550m bond emission, less than half the amount sought by the government (US$1.2bn) but enough to tide it over for now.

Arena has 35 deputies in the 84-seat legislative assembly, rendering its approval necessary for bond emissions, which require a two-thirds majority of 56. Arena conditioned its legislative backing for the bonds upon the approval of a fiscal responsibility law.

Of the US$550m total, US$307m is to be converted into local short-term debt (Letes) eurobonds with longer maturity; US$82m is assigned to pay the economic and social development fund (Fondes) owed to El Salvador’s mayoralties since September; US$65m to pay public sector salaries; US$50m to repay government suppliers; and US$46m for energy subsidies.

URUGUAY | Bond issue. Against a backdrop of uncertainty over regional and global economic performance, Uruguay announced its return to the international market on 24 September with the issue of new bonds in the international market and the repurchasing of others in an operation worth a total US$1.055bn. The operation involved the reopening of global bonds offers maturing in 2031 and in 2055; and the offer to repurchase US dollar-denominated bonds maturing in 2022, 2024, and 2027. This comes at a time when there is concern over Uruguay’s public finances given the country currently has a fiscal deficit of 4.9% of GDP, the highest fiscal deficit in over 30 years.

The bond repurchase operation, in which US$554m worth of debt was repurchased, represents a significant reduction in Uruguay’s short-term and medium-term debt obligations. Meanwhile the new 2031 bonds offered a yield of 3.14% and raised US$217m; the 2055 bond offered a yield of 4.1% and raised US$838m. The operation not only marks Uruguay’s return to the international market but also demonstrates the country’s debt strategy of taking advantage of the favourable external economic climate in order to obtain resources at a low cost.

Herman Kamil, head of sovereign debt management at the economy & finance ministry (MEF), said that the operation’s objective was to extend the maturation of central government debt and to take advantage of the historically low interest rates. Kamil said that although the financing deal was not as high as in previous instances, it was “robust” and allows Uruguay to achieve its set objectives, anchoring the country in a state of stability through both securing low interest rates and extending debt maturities. The Uruguayan government has focused its objectives on looking for new opportunities within the international market since the country’s previous global scale debt operation in January 2019 which featured a US$850m bond with a maturity date of 2031.

BOLIVIA | Loans politicised? The interim government led by Jeanine Áñez has accused the MAS-controlled legislature of blocking US$1.7bn in loans needed to finance Bolivia’s response to the health crisis, including US$327m from the International Monetary Fund (IMF).

Last week the MAS rejected a bill seeking approval of the IMF emergency financial assistance on the grounds it lacked the necessary documentation. The interim productive development minister, Óscar Ortiz, and minister of the presidency, Yerko Núñez, accused the MAS of blocking the loans for “political electoral calculations”. Núñez rejected the accusation that the interim government was seeking “to sell the country”, insisting the loan was on favourable terms.

Former president Evo Morales (2006-2019) backed his party with a rhetorical question on Twitter: “the IMF conditions its loans on privatisations and currency devaluation, how does the de facto government expect the legislative assembly to approve a loan without a contract, without knowing the conditions or financing guarantees demanded? Its duty is to defend the interests of the country”.

*** LOOKING TO AFRICA. From 1-3 September, Barbados played host to the inaugural Africa-Caribbean Trade and Investment Forum (ACTIF2022) aimed at fostering strategic partnerships between the business communities in Africa and the Caribbean. The forum attracted over 1,000 delegates.

Trade between the Caribbean and Africa is still small, at around US$1.5bn. Africa accounts for only 4.4% (US$800m) of the Caribbean’s total exports to the world. Imports from Africa (US$603m) represent just 1.8% of the Caribbean’s total annual imports. In her speech to the forum, Prime Minister Mia Mottley of Barbados said: “It is not anticipated that we can reverse centuries in a few years, but it is anticipated that there are some who must claim the courage to jump off the ship and make it happen.”

Among the concrete announcements accompanying the forum, the African Export-Import Bank (Afreximbank) announced that it would be taking more interns from the Caribbean as part of its plans to build ties, and it would set up a Caribbean Exim Bank subsidiary with an investment of US$700m. Separately, the bank has allocated US$250m to support African-Caribbean trade and investment.

Seven Caribbean countries have agreed to join a partnership with Afreximbank for the purpose of “ushering in investments to concretise the commercial relations between the two regions, with an immediate focus on establishing an air bridge, and business-to-business match-making through the newly established African-Caribbean Business Council”.

The International Trade Centre (ITC) has estimated that Africa could boost its goods exports to the Caribbean by more than 50% within five years, with the Caribbean expanding its goods exports to Africa by around one-third.

*** OIL MONEY FLOWING FOR GUYANA. On 5 September, Guyana’s central bank said that it expects the country to earn more than US$1bn this year from its share of offshore oil exports, expected to reach 13m barrels of oil. Finance Minister Ashni Singh has forecast GDP growth of 56% for this year.

*** DUTCH PM VISITS SURINAME. On 12 September Prime Minister of the Netherlands Mark Rutte began a two-day official visit to Suriname. It was the first visit to the Dutch-speaking country by a Dutch head of government since 2008 and signals the return to international respectability of Suriname since President Chandrikapersad Santokhi replaced convicted drug-trafficker Desi Bouterse as president in July 2020.

*** QUEEN’S DEATH ACCELERATES CARIBBEAN MOVE TOWARDS REPUBLICANISM. Following the death of Britain’s Queen Elizabeth II on 8 September, at least six Caribbean countries have indicated a desire to follow the recent example of Barbados in November 2021 to remove the British monarch as head of state and to replace him with a homegrown president, namely Antigua & Barbuda, The Bahamas, Belize, Grenada, Jamaica, and St Kitts & Nevis. St Vincent & the Grenadines also indicated a similar intention in July.

A related cause is the demand for reparations from the UK for its role in the slave trade. A reparations commission was established by Caricom in 2013 with the aim of developing the “moral, ethical, and legal case” for compensation to be paid by the former colonial power to Caricom nations. It is thought that the Queen’s death could give further impetus to these demands.

On 6 May Nicaraguan investigative media outlet Confidencial published the findings of an investigation into how President Daniel Ortega has secured the support of the military, which is essential to the continuance of his authoritarian government.

According to Confidencial, which now operates from Costa Rica, where its director, Carlos Chamorro, is in exile, President Ortega has handed out a total of 435 plots of land since taking office in 2007, of which 42% went to the military. According to Confidencial, the 184 plots donated to the army comprise some 97 properties, totaling over 41m sq² or 4,127 hectares. It notes that donations have been constant for 16 years and in 2018, the year in which social unrest erupted which led the Ortega government to begin its crackdown on dissent, 100% of the donated land went to the armed forces.

Confidencial highlights other ways in which Ortega has ensured the military’s support. It claims that since 2007, the Ortega government has massively inflated the military budget, from C717m (US$19.6m) to over C3.46bn in 2023. According to Confidencial, the largest budget increases began in 2010, a year after Ortega appointed General Julio César Avilés as general commander of Nicaragua’s armed forces, who remains in the post today. Confidencial also underlines the significant growth in military personnel with the number of troops expanding from 10,553 in 2006, the year Ortega won the presidency, to 15,705 by 2023.

Aside from these efforts to keep the military on board, an earlier report by the Inter-American Commission on Human Rights (IACHR) published in October 2021, analysing the concentration of power in Nicaragua, traced the transformation of the military under Ortega - from a professional and independent institution to one subordinated to the executive branch. As well as a 2007 presidential initiative, which sought to co-opt the military, the IACHR report lists various reforms to the military institution’s normative framework implemented in 2010, which significantly increased the role of the military in administering the State and provided for more direct coordination with the executive. Examples of these reforms included the national defence act, the borders legal regime act, and the democratic security act. These were followed by further reforms implemented in 2014 and 2015 such as a sovereign security law approved in December 2015, which created a “national system of sovereign security” to be coordinated by the president, with the military to serve as its executive secretary, and at the time fanned concerns about the military’s growing influence over state institutions.

2007 presidential initiative

The IACHR identifies as key to the transformation of the military, a 2007 presidential initiative (290) which aimed to subordinate the army to the executive branch, through a “co-optation strategy (...) based on: reiteration of the government rhetoric that constantly reminded the army and police of their political origins and former party ties; the expansion of military autonomy, enabling it to create companies and perform different types of economic activities; and the designation of officers, active or retired, to key public offices, such as social security, construction and diplomacy”.

Sanctions

Avilés and other military officials have featured among those sanctioned by the US government as part of efforts to pressure the Ortega government to improve the democracy and human rights situation in the country, particularly following the crackdown on its opponents which began in April 2018. In May 2020 Avilés was sanctioned on the grounds that the army has provided “support to the police and paramilitary gangs that carried out crimes against the Nicaraguan people, including attacks on protesters during the unrest that began in April 2018”. In January 2022 Major General Bayardo Ramón Rodríguez Ruiz, the chief of the general staff of the Nicaraguan army, was sanctioned. As of March 2023, the US Department of the Treasury had imposed asset blocking sanctions on 43 individuals and 11 entities, according to an April 2023 report by the US Congressional Research Service (CRS). The same report notes that additionally, the US State Department had imposed visa restrictions on over 800 Nicaraguan individuals and their family members.

As we went to press Haiti’s security situation had reached a new low amid a series of attacks coordinated by the country’s top gang leader Jimmy ‘Barbecue’ Chérizier, with the stated aim of bringing down the government. These took place in the absence of Prime Minister Ariel Henry who had left the country for a regional summit before travelling on to Kenya. He remains stranded in Puerto Rico, unable to return as Haiti's main international airport was shuttered amid the gang attacks. For more details on this rapidly developing story please consult our sister publications LatinNews Daily and Latin American Weekly Report.

Haiti’s caretaker prime minister, Ariel Henry, has pledged to his Caribbean Community (Caricom) counterparts that elections will take place in Haiti by 31 August 2025, nine years after the last elections were held. In the meantime, however, the security situation remains dire while efforts continue to secure the deployment of the multinational security support (MSS) mission to be led by Kenya. It remains highly uncertain whether the MSS mission will go ahead following an intervention from a Kenyan high court. If it does go ahead, the challenges it faces are considerable.

Haiti was a major centre of attention during the 25-28 February Caricom summit in Guyana’s capital Georgetown, and the commitment from Henry to hold elections was a success, albeit one that has proven ephemeral in the past. In December 2022, Henry agreed with the opposition to hold elections before 7 February 2024. That deadline has now passed and been shifted forward by 18 months.

A report published in February by the Geneva-headquartered NGO Global Initiative Against Transnational Organised Crime (GITOC) highlights how urgent progress on security now is, and how the task faced by the MSS is much more complicated than the one that confronted the 2004-2017 United Nations (UN) Stabilisation Mission in Haiti (MINUSTAH). As the GITOC report points out, there has been “a substantial change in gangs’ power, structure and capacity for territorial governance since the MINUSTAH era”. The report adds that these entities “are nowadays far more economically autonomous and territorially powerful, making them less controllable”.

Gangs in Haiti are nothing new. Gang culture is a phenomenon that dates back to the formation of the Tonton Macoutes militia under former president François ‘Papa Doc’ Duvalier (1957-1971). But the nature of the gangs has changed. GITOC states that: “The framing of weak, disarticulated gangs is no longer accurate…the major ones – those which control substantial territory and are responsible for most current instability – are well-structured, well-armed, and operationally competent entities”.

There are thought to be around 200 gangs now operating in Haiti, mostly in the metropolitan area of Port-au-Prince, which includes the communes of Port-au-Prince, Delmas, Cité Soleil, Tabarre, Carrefour, and Pétion-Ville. The report adds: “Some gangs that had 50 or 100 active members during the MINUSTAH era now stretch to 1,500 to 2,500 members”. Collectively, the gangs exert “control or substantial influence” over 80% of the city.

However, gangs are now expanding their areas of influence to include rural and semi-rural areas, particularly in central Artibonite department where violence has developed along key roads, thus making travel between major Haitian towns increasingly risky.

The wider availability of weapons is another change between the situation that the MSS force will face and that which MINUSTAH had to deal with. The GITOC report warns that “over the past decade firearms have completely transformed the ecosystem of violence”. Ten years ago it was rare to find semi-automatic weapons, now “large gangs are readily able to acquire AK-47, AR-15 or IMI Galil assault rifles”. There is even evidence of gangs stockpiling these weapons. The training of gangs in weapons usage by ex-soldiers and policemen has also increased gangs’ capabilities.

As a result of their greater firepower and better training, gangs are increasingly willing to confront the police. “The armed gangs,” the GITOC report says, “can confront the police (and will be able to confront MSS forces) in a way that they did not during the MINUSTAH era.”

The report does say that “several sources close to gang leaders” have said that the gangs are not ready to go into battle against the MSS mission (if it is ever deployed), seeing it as too powerful. They would prefer to negotiate with it. However, warns GITOC, “while this evaluation is also fairly prevalent within international civil society, caution should abound, especially given the determination shown by gangs in their battles against the [Haitian national police]”.

Another challenge for the MSS is the way in which gangs now control territory, with hundreds of bosses acting “like local sovereigns”. Gangs have built trenches and high walls to protect their areas of influence against police operations and, potentially, MSS forces. The report warns: “The intensifying fragmentation of territory, proliferation of trenches and semi-permanent barriers, and the difficulty of moving freely in the metropolitan area represent clear operational constraints for the proposed international force to the point where it risks being unable to traverse the capital”.

Extreme violence has become the norm, and sexual violence against women and girls “works as a central practice of gang control”. Mass rapes, some conducted in public to intimidate further, have been used as an instrument of terror. All this, the report adds, underlines “the challenge that lies ahead for rebuilding social fabric, supporting victims and pacifying the city”. It warns that “all these aspects must feed into any appraisal of the prospective MSS mission’s capacity to operate meaningfully on the ground, in terms of its ability to provide effective security and protection to the population”.

The proposed MSS mission will be particularly carefully watched – not just because of the extreme difficulty of the mission, but also because it is ground-breaking in the sense that it is a non-UN mission the target of which is organised crime and the violence associated with it.

One of the mission’s key objectives is to strengthen the capacity of the national police (PNd’H), and the GITOC report warns that “there needs to be a strategic approach to buttressing… and addressing high-level corruption within the police”. Without this, the mission “risks lacking a meaningful domestic security partner”. There is also the issue that efforts to strengthen the PNd’H won’t be effective without strengthening the whole criminal justice chain, that is to say the judiciary and the prison service.

Corruption within the MSS itself is a potential worry as well. This has been a problem with many UN peacekeeping missions, and there are concerns that the deployment of Kenyan police in this instance will bring with it an entrenched culture of bribe taking – a major worry given that Haitian criminal gangs have a long history of corrupting law enforcement officers. The GITOC report calls for “the deployment of an empowered internal affairs policing unit as part of the MSS mission with the capacity to initiate investigations of officers from any contributing country”.

A further risk is that the Haitian criminal gangs respond to the deployment of the MSS mission by further enhancing their arsenals and by uniting to form a common front against the intervention. This risk is exacerbated by the likelihood that the mission will be deployed with insufficient personnel. The UN is talking about a deployment of 2,500 while some experts argue that such an environment requires a deployment of between 3,500 and 4,500. The path towards achieving the just-announced ambition of holding elections by August 2025 is nothing if not long, difficult, and uncertain.

Food insecurity

The GITOC report also notes an alarming effect of the expansion of gangs into rural areas on food security. It says that the expansion has “driven substantial rural displacement, and impacted agricultural production in Artibonite, with land under cultivation falling from 5,800 hectares in 2018 to 2,400 in 2022.” This is likely to have been a further deterioration in 2023.

Moïse’s widow and others charged with his murder

In an indictment leaked on 19 February, Haitian judge Walther Wesser Voltaire, who is investigating the July 2021 assassination of former president Jovenel Moïse (2017-2021), announced charges against his widow, Martine Moïse, and former prime minister Claude Joseph (2021), among some 50 individuals. According to the document Martine Moïse, who was wounded in the deadly assault, and Joseph, who briefly led the country following Moïse’s murder before Henry took over, are both charged with complicity and criminal association.

BRAZIL | Petrobras posts rise in oil and gas production. The state-controlled oil company Petrobras released a report on 24 October with its production figures for the third quarter this year, showing a total of 3.14m barrels of oil equivalent per day (boepd) of oil and natural gas. This marks a 7.6% increase on the previous quarter and a 16.9% increase on the same quarter last year.

In a press release, Petrobras partially attributed the higher production figures in the third quarter this year to a rise in the production capacity of its processing facilities in major pre-salt oil fields of the Santos Basin, near the country’s south-eastern coasts, such as the Almirante Tamandaré floating production, storage, and offloading (FPSO) unit, located in the Búzios field, and the Marechal Duque de Caxias FPSO, in the Mero field.

BRAZIL | Mid-month inflation slows in October. The national statistics institute (Ibge) released the latest figures for its mid-month consumer price index (Ipca-15) on 24 October, which showed a monthly inflation rate of 0.18% for mid-October and an annual rate of 4.94%. This marks a deceleration from the 0.48% monthly inflation and the annual inflation of 5.32% registered for mid-September.

Of the nine categories of products and services measured for the Ipca-15, three saw monthly deflation in mid-October. These were household items (-0.64%), communications (-0.09%), and food and drinks (-0.02%).  

COLOMBIA | Difunden nuevos datos sobre la pobreza. El departamento nacional de estadísticas de Colombia, Dane, difundió el 17 de mayo un nuevo informe que halló que las taza de probreza del país el año pasado se ubico en 34,1%, comparado con 37,4% en el 2010. Según Dane, mientras que aún se está avanzando en reducir la pobreza en el país, las últimas cifras significan que 19,98m de personas (más de un tercio de la población del país, de unos 46m) son consideras como pobres y indigentes.

De estos, 46,1% vive en áreas rurales y 30,3% en áreas urbanas. El director de Dane, Jorge Bustamante, explicó que el último informe del departamento fue desarrollado con una nueva metodología que utiliza un índice multidimensional de la pobreza que tiene cinco dimensiones, usando 15 indicadores diferentes, desarrollado por la Universidad de Oxford del Reino Unido.

Este fue entonces adaptado a Colombia por el departamento nacional de planeamiento (DNP). Usando esta nueva metodología, el DNP halló que durante el periodo 2002-2010, el número de personas que viven debajo de la línea de la pobreza ha disminuido de 56% a 37,2%. El último informe de Dane halló que el año pasado 1,21m de personas fueron sacados de la pobreza en el 2011; aunque quizá no sea una sorpresa que 857.000  de ellas fueron en áreas urbanas.

Concentrándose en las cifras de ingreso per cápita, Dane también encontró que hay una marcada diferencia entre lo que gana la gente en áreas urbanas y en áreas rurales. El ingreso general per cápita de Colombia fue puesto en US$266,85. Sin embargo el ingreso per cápita en áreas rurales fue de US$315,67, comparado con US$109,65 en áreas rurales.

La desigualdad en la distribución de la pobreza en el país es probablemente uno de los principales factores que llevaron al Banco Mundial el pasado marzo a identificar a Colombia como el segundo país más desigual en la región, detrás de Haití.

PERU | Perú al tope de la clasificación de clima de negocios. De acuerdo con el último (abril) informe de clima de negocios (ICE), desarrollado por la Fundação Getúlio Vargas de Brasil, y el instituto de investigaciones económicas de la Universidad de Munich, de Alemania, Perú  ahora ha sobrepasado a Colombia como el país con el mejor clima de negocios en la región.

El ICE otorgó a Perú una calificación de 7,2, subiendo de 6,4 que recibió en el trimestre previo, lo que le permitió sobrepasar a Colombia, cuya calificación permanece estable en 6,7. Los dos países al tope del ranking fueron seguidos por Ecuador que elevó su posición de 6,0 a 6,7 y Uruguay que incrementó su posición marginalmente de 6,3 a 6,4. Sin embargo el salto más alto fue el de Chile, que pasó de 4,9 a 6,2.

Es interesante señalar que el informe ICE encontró que mientras Perú como su vecino Chile están siendo frenados por carecer de fuerza laboral calificada, la debilidad de Colombia es su carencia de competitividad, comparado con otros países en la región.

ECUADOR | Financiamiento asegurado para el metro de Quito. El 23 de mayo, la oficina del alcalde de Quito anuncio que, con la ayuda de organizaciones multilaterales, estaba próxima a asegurar el financiamiento para la construcción de su propuesto sistema de metro por un valor de US$1,4mm.

Según la oficina del alcalde, el Banco Europeo de Inversiones (BEI); el Banco de Desarrollo de América Latina (CAF); y el Banco Interamericano de Desarrollo (BID), han acordado proveer unos US$700m en fondos para el proyecto, mientras que el resto será proveído por la municipalidad, por el banco ecuatoriano de seguridad social (Biess) y por proveedores de servicios.

La municipalidad explicó que Biess ha acordado contribuir US$250m para el proyecto; y que planea usar US$120m que tiene disponibles, así como también recaudar unos US$150m más en los mercados de bonos. Para cubrir los restantes US$200m, la municipalidad espera obtener un número de préstamos directamente de los proveedores de materiales.

• Morales recomienda el modelo económico de Bolivia

El 17 de mayo, el Presidente de Bolivia, Evo Morales recomendó “a todo el mundo y en especial a África” la estrategia de su gobierno de nacionalizar las compañías extranjeras para asegurar que el estado recobre el control de los recursos naturales del país. Hablando en la apertura de una conferencia sobre gas y petróleo en Santa Cruz, Morales dijo que desde el 2006, cuando Bolivia nacionalizó el sector de los hidrocarburos, ha experimentado un “periodo de profundo cambio” permitiendo a la petrolera estatal YPFB incrementar sus ganancias de US$300m en el 2005, a un estimado de US$3mm este año. De acuerdo con Morales, las “compañías transnacionales toman control de todo y la pobreza se incrementa” pues los gobiernos son dejados “sin recursos económicos para invertir en programas sociales”.

URUGUAY: Proyecto de puerto en aguas profundas suscita interés. El 17 de septiembre, el asesor económico del Presidente José Mujica, Pedro Buonomo, reveló que unas 40 firmas de América Latina, Europa y Asia, han expresado su interés en participar en la construcción de un puerto de aguas profundas en el departamento de Rocha en Uruguay, fronterizo con Brasil. El proyecto ha estado en preparación por años, y ha sido promocionado como el mayor proyecto de infraestructura en el país en la última década. Buonomo, quien fue puesto a cargo de una comisión interministerial que busca promover el proyecto, dijo que la comisión (compuesta por los ministerios de transporte & obras públicas, economía & finanzas, vivienda, medioambiente, industria , energía & minas, y defensa) había organizado una reunión de intercambio de información con las partes interesadas en la cual han participado compañías de Argentina, Bélgica, Brasil, Chile, China, España, Estados Unidos, Francia, Grecia, Holanda, Italia, Venezuela y Uruguay.

Según Buonomo, el número de firmas que ha expresado interés es una clara indicación del nivel de “receptividad” del proyecto; y de la visión positiva que disfruta internacionalmente Uruguay en la actualidad. Destacó el hecho de que el proyecto tiene “importancia geopolítica para el desarrollo de la región” señalando que disfruta del apoyo político de Brasil. La semana pasada, después de anunciar que Brasil consideraría a la industria naval uruguaya como “nacional” en Brasil, el ministro de industria y comercio exterior de Brasil, Fernando Pimental, dijo que el gobierno brasilero “colaboraría en todo lo que pueda” con los planes de Uruguay para construir un nuevo puerto en el Atlántico, considerándolo como un “proyecto estratégico”. Pimentel agregó que aún  no estaba claro cómo Brasil haría esto, pero que su gobierno “invitaría” a compañías brasileras a participar en el proyecto. Probablemente, esto podría involucrar al banco de desarrollo de Brasil, el Bndes, proveyendo financiamiento para el proyecto de US$1mm.

Puntualmente, Buonomo dijo que aunque el proyecto ha sido el “sueño de Uruguay” por décadas, recién ahora se daban “las condiciones geopolíticas, sociales, y económicas” para convertirlo en realidad. El viceministro de economía y finanzas, Luis Porto, explicó que el Estado participaría en el proyecto que será “desarrollado, financiado, construido y operado” por firmas privadas. El gobierno uruguayo espera celebrar otra reunión con las partes interesadas el 31 de octubre, a fin de discutir el proceso de asunción de riesgo y de licitación.

ARGENTINA | ¿Repsol está aislando a YPF? El viceministro de economía de Argentina, Axel Kicillof, se quejó el 18 de septiembre acerca de la “presión” ejercida por la firma española Repsol sobre otras firmas del sector petrolero para que se abstengan de asociarse con la re-nacionalizada firma petrolera Argentina, YPF. Durante la presentación del “Informe Mosconi”, que exponía las razones por las que el gobierno argentino decidió recobrar una participación mayoritaria en YPF a expensas de Repsol, Kicillof dijo que la compañía ha podido “revertir la declinación en la producción y las reservas”. Sin embargo, según Kicillof, YPF, que está buscando nuevos socios de negocios para ayudar a desarrollar sus reservas de hidrocarburos no-convencionales, ha tenido dificultades para atraer a nuevos inversionistas debido a las amenazas de Repsol de iniciar acciones legales contra potenciales socios de YPF.

Repsol, que aún conserva una participación del 12% en YPF, ha presentado demandas en contra de YPF en las cortes internacionales, exigiendo una compensación de US$10mm y reservándose el derecho de tomar acción legal contra cualquiera de las firmas que pretendan asociarse con YPF en el futuro. Kicillof rechazó las demandas de Repsol, diciendo que el gobierno “no tenía opción” sino expropiar la porción de Repsol en YPF, a fin de cambiar la dirección de la compañía después de que fue descubierto que Repsol pretendía adoptar una política de de-inversión, antes de venderla.

CHILE| Explotación de litio. El 16 de septiembre, el gobierno de Chile reveló que seis firmas de Chile, Japón y Corea del Sur ya han presentado sus ofertas en el proceso de licitación lanzado por el gobierno en julio, a fin de promover el desarrollo del sector de la minería del litio. El gobierno adoptó la medida en un intento por asegurar de que Chile permanezca como uno de los grandes productores mundiales del metal en creciente demanda. Chile es el segundo mayor productor de litio del mundo y se cree que posee un cuarto de las reservas globales. El viceministro de minería, Pablo Wagner, dijo que tres de las ofertas ya han sido aceptadas por el gobierno y que probablemente se anuncie al ganador después del 24 de septiembre.

• Paraguay entre los 10 más innovadores

De acuerdo con el Índice Global de Innovación 2012, de la Organización Mundial de la propiedad Intelectual (WIPO, siglas en inglés), Paraguay está ubicado en el sexto lugar cuando se trata de eficiencia en el desarrollo de tecnología innovadora, el país latinoamericano de mejor ranking. El índice mide la cantidad de innovaciones tecnológicas que se producen en un país en relación a la cantidad de inversión que este sector recibe. De acuerdo con WIPO, aunque el ranking general de innovación de Paraguay es bajo, 84^to entre 141 países, ha logrado presentar unos 25 proyectos de innovadores al año, incluso aunque el Estado paraguayo invierte aproximadamente sólo el 0,6% del PIB (unos US$15m) en el sector de ciencia y tecnología. WIPO señala que esto hace de Paraguay  uno de los más productivos innovadores, considerando su bajo nivel de recursos, detrás de China, India, Moldavia, Malta y Suiza.

Desde el retorno del país a la democracia en 1979, ningún partido político ha conseguido obtener la mayoría en el congreso en Ecuador. El peso de la historia está contra el Presidente Rafael Correa, al aproximarse las elecciones del 17 de febrero del 2013. Pero, si alguien puede revertir esta tendencia y asegurarse la codiciada pero elusiva mayoría, ese es Correa.

Correa es el abrumador favorito para ganar la reelección presidencial. Al hacerlo él se asegurará 10 años al timón del país, habiendo asumido el poder en enero del 2007, tanto como sus seis predecesores juntos. Y él está totalmente concentrado en asegurarse una mayoría en la asamblea nacional para su gobernante Alianza País (AP), que no lo logró por poco en las últimas elecciones del 2009, con 59 de las 124 bancas.

Correa condujo la semana pasada una mini reorganización del gabinete para reemplazar a ministros que competirán en las elecciones legislativas por su AP (ver más abajo). Él les ha dado el desafío de ganar una mayoría en la asamblea nacional, que él sostiene que se ha convertido en un refugio para “traidores, vende-patrias, banqueros corruptos y políticos al servicio del comercio extranjero”, quienes él dice están decididos “a bloquear los cambios que están en marcha.”

La asamblea nacional, aunque dominada por la AP, aún refleja la fragmentación política que siempre ha caracterizado la política ecuatoriana. El Partido de la Sociedad Patriótica (PSP) del ex presidente Lucio Gutiérrez, quien compite por la presidencia contra Correa, controla 19 bancas; el Partido Renovador Institucional de Acción Nacional (Prian) de Álvaro Noboa, el poderoso magnate de las bananas que nunca se cansa de competir para presidente (este será su quinto intento), tiene siete bancas; el Movimiento Cívico Madera de Guerrero (MG), el partido creado en el 2009 por el conservador alcalde de Guayaquil, Jaime Nebot, también tiene siete bancas. Los partidos tradicionales, Partido Social Cristiano (PSC) y el Partido Roldosista Ecuatoriano (PRE) tienen un puñado de bancas así como lo tienen varios otros grupos.

Juan Carlos Casinelli, el actual vicepresidente de la asamblea nacional quien está buscando la reelección en la provincia de Guayas, urgió al público esta semana a que vote una legislatura más a tono con Correa a fin de “conducir hacia adelante los cambios necesarios para el país más rápidamente”.

Estos cambios han sido previstos dentro del modelo de desarrollo y crecimiento endógeno de Correa. Este apunta a consolidar a Ecuador como un cohesionado estado plurinacional a través de grandes gastos en infraestructura, y incrementando aun más el gasto social para combatir la pobreza y mejorar los servicios de salud y educación. Correa estará corriendo contra el tiempo si, como él dice, no tiene planeado buscar un tercer mandato en el 2017.

La oposición a menudo acusa a la administración Correa de hipotecar al país con deudas para incrementar el gasto social, principalmente a través de un dramático incremento en el endeudamiento con China, pero es importante señalar que la inversión social también ha sido posible por un agudo incremento en la toma fiscal.

La toma fiscal se ha elevado a más del doble durante los últimos cinco años, de US$4,67mm en el 2006, a US$9,56mm en el 2011, según Carlos Marx Carrasco, el director de la agencia fiscal (SRI), y está en camino de alcanzar los US$11mm este año. La mayor parte de esto se ha logrado reprimiendo la evasión fiscal más que elevando los impuestos, aunque puede darse casi por cierto que Correa tiene planes para elevar los impuestos (que solamente llegan al 13% del PIB), si él gana la reelección, a fin de hacer su revolución ciudadana más auto-sustentable.

Nueva ministra de defensa

El aspecto más interesante de la última mini reorganización del gabinete fue la designación de María Fernanda Espinosa como ministra de defensa en reemplazo de Miguel Carvajal, quien competirá por una banca en el congreso por la gobernante AP el próximo febrero.

Este es un cambio de misión bastante dramático para Espinosa que había servido como ministra del patrimonio natural y cultural. Que, por otro lado no era un ministerio de menor importancia: construir la identidad cultural de Ecuador es una parte clave de la revolución ciudadana de Correa. Espinosa coordinó las actividades del centenario de la muerte del reformador Liberal de Ecuador, Eloy Alfaro, el pasado enero, trazando paralelos directos entre Correa y el más emblemático ex presidente de mayor tiempo de servicio, cuyo legado él reclama.

Espinosa, la tercera mujer que ocupa el puesto de ministra de defensa, sirvió previamente como canciller y embajadora ante la ONU. Correa, al igual que muchos de sus pares en América Latina, ha presidido sobre una constante militarización de la seguridad pública, aunque esta es una cuestión particularmente sensible en Ecuador, dado el rol crucial de los militares en apoyo de Correa durante el motín policial de septiembre del 2010.

Lorena Escudero, una de las dos  mujeres ministras de defensa anteriores, tomó las riendas del ministerio de la migración (Senami), una posición que ella había ocupado previamente. Betty Tola pasa a ocupar una vez más el ministerio de coordinación política, una posición de la cual renunció inesperadamente por razones personales en agosto. Ella reemplaza a Soledad Buendía, quien está buscando una banca en el congreso por la AP. Lorena Tapia asume la cartera del medioambiente en reemplazo de Marcela Aguinaga, mientras que Rafael Poveda se convirtió en el nuevo ministro de sectores estratégicos.

Poveda reemplaza a Jorge Glas, quien fue seleccionado el mes pasado por la AP para competir por la Vicepresidencia junto a Correa, en vez del Vicepresidente actual Lenín Moreno.

• Impuestos

Desde el 30 de noviembre, todas las transferencias de dinero dentro de Ecuador tienen que pasar a través del banco central del país (BCE) antes de llegar a su destino final. El objetivo de la medida es controlar las remesas y reprimir la evasión fiscal.

• Premio para Correa

El Presidente Rafael Correa produjo cierta controversia durante una visita a Buenos Aires esta semana para recibir el premio Rodolfo Walsh por defender la libertad de expresión en Ecuador. Correa es uno de los más acérrimos críticos de los medios de comunicación privados en América Latina, a quienes él describe como una mayor amenaza a la libertad de expresión que los medios controlados por el estado. Sin embargo, su comentario más controversial durante la visita no estuvo relacionado con los medios. Cuando se le preguntó acerca del atentado de 1994 a la AMIA, el Centro Judío en Buenos Aires, en el cual 85 personas perdieron la vida, Correa replicó: “Conozco ese caso. Es muy doloroso para la historia argentina, pero vea cuántos murieron en el bombardeo de la OTAN en Libia. Si comparamos estos dos eventos podemos ver donde están los verdaderos peligros; no debemos manipular”.

*** Greece and Turkey at odds again over Aegean.  Reports that Greece is preparing to unilaterally declare the limits of its exclusive economic zone (EEZ) in the complex and contentious Aegean Sea , as a prelude to oil exploration, has prompted a warning from Turkey.  On 6 January, a Turkish official said: “Turkey is closely following any unilateral attempt by Greece, or by other countries, to extend the economic zone or conduct oil explorations [in the Aegean].”

In the 1990s, when Greece signed up to the UN Convention on the Law of the Sea (Unclos) and Turkey didn’t, Ankara warned strongly about any Greek move to extend its territorial waters from six to 12 nautical miles.  Turkey’s parliament said such a move would be considered a “casus belli”.

Sources in Athens say that Greece’s Prime Minister Antonis Samaras may feel the time is right to press Greece’s claims given that Turkey is currently so absorbed with the Syrian crisis, Iraq, and Kurdish issues.  But starting oil explorations in an extended EEZ that is disputed by Turkey would be unlikely to pass unchallenged by Ankara.

*** Turkey’s growing interest in West Africa.  The first overseas visit of 2013 by Turkey’s Prime Minister Recep Tayyip Erdogan was to the three Francophone West African countries of Gabon, Niger, and Senegal.  He was accompanied by 250 businessmen.  Gabon has oil resources, while Niger is an important source of uranium.  Turkey has begun building its first nuclear reactor and plans to build two more by 2023.

According to Ali Engin Oba, a former Turkish ambassador in Africa: "Certain groups in Africa are already showing efforts to break away from the influence of the big colonizing powers.  Those groups are aware of France's economic problems and could guess that France would not continue its former level of interest in Africa because of those problems.  So, they are trying to develop relations with powers that may want to develop economic, social and cultural solidarity with them, including Turkey."

*** Iran admits to doubts about Assad.  On 3 January, former Iranian president Akbar Hashemi Rafsanjani said he thought there was “little chance of survival” for the Assad regime in Syria.

Rafsanjani seems to be particularly concerned about losing the connection with Lebanon and he is urging efforts to establish links with the Syrian opposition through Iraqi intermediaries.  He said: “Syria should not be a barrier...If the thread from Lebanon to [Iran] is torn, bad things will happen.  This is what I am worried about and think about so much.”

The 2012 general election that returned the Turks & Caicos Islands (TCI) to home rule after three years of direct rule from London was marked by ineptitude. The second election since the restoration of home rule has got off to an equally inauspicious start. The original date of 5 December, notified by Premier Rufus Ewing of the ruling Progressive National Party (PNP), has had to be pushed back to 15 December on the instructions of the governor, John Freeman, who said that the original date would “not give officials sufficient time to prepare for the election, as envisaged by section 26 of the Elections Ordinance”. Local media said that the confusion arose over the calculation for the number of working days required between the dissolution of the House of Assembly and election day.

Sharlene Cartwright-Robinson, leader of the opposition People’s Democratic Movement (PDM), accused Ewing of “gross incompetence”. She said: “Rufus Ewing is the first leader in our country’s history to ever get an election date wrong! Only a few months ago during my Budget Address, I told this country that the Rufus Ewing-led government has been marred with incompetence. It appears that once again Rufus Ewing and his government have shown this country that he and his colleagues are not capable or fit to govern.”

This seems to be a fair criticism, at least with regard to the election-date gaffe. Less valid, however, has been the criticism the government has had to take from former premier Michael Misick.

Misick was chief minister of TCI from 2003-2006 and the country’s first premier from 2006-2009 until allegations of corruption against him and his government led the UK to impose direct rule for three years. He fled to Brazil, where he sought political asylum, but he was arrested in December 2012 and extradited back to the TCI in October 2013. Misick is implicated in the allegedly corrupt sale of Crown land, and his opponents cite his lavish lifestyle after his election in 2003 and his flight to Brazil in 2009 as prima facie evidence of his guilt.

Misick, even though he is currently on trial in the TCI, originally sought to stand in the election as one of the PNP’s “at large” candidates (the Assembly has 10 constituency members, five “at large” members, and four who are appointed – two to represent the governor and one each for the two main parties). Misick’s attempt to stand for the PNP was blocked by the party and so he has decided to stand as an independent “at large” candidate. And as he is no longer in the PNP camp, he has tried to make political capital out of the election delay. He said: “The announcements from the offices of the premier and the governor fail to describe any emergency which might justify the delay of a general election…They are on a path to holding an ultra vires general election.”

Despite this fallout between Misick and the PNP, the Misick family remains deeply embedded within the party. PNP candidates for the upcoming election include Michael Misick’s niece, Deputy Premier Akierra Misick; his nephew, Immigration Minister DonHue Gardiner; and his brother, Finance Minister Washington Misick. One of those seeking nomination as an “at large” candidate for the PNP is Samuel Been, who has extracted himself from the Misick prosecution by entering a plea bargain and surrendering valuable real estate. His ex-wife, Lillian Boyce, is on trial with Misick.

Given such a strong continuing Misick-family connection, it is perhaps not surprising that the UK has failed to warm to the Ewing government, or the Ewing government to it. The two sides got off to a bad start with Ewing’s February 2013 address to a Caribbean Community (Caricom) summit calling for independence for the TCI and describing the constitution imposed by the UK just before the return to home rule as a means of continuing direct rule.

The premier’s complaint did have some spurious validity in that the two seats in the House of Assembly reserved for appointees of the governor could alter the balance of political power. The 2012 election was won by the PNP by eight seats to seven. The PNP and the opposition PDM then gained one more seat each from the four reserved for appointees, taking the balance to nine-eight, but the ultimate balance was held by the two appointees representing the governor. Nevertheless, it was the UK government that had to back down over its proposal to introduce Value Added Tax (VAT) to the TCI.

The-then UK foreign secretary, William Hague, responded to Ewing’s Caricom speech in a furious letter in which he described the speech as “substantially misrepresent[ing] both the past and the present situation to both the people of the TCI and to the leaders of the Caribbean”. Hague reminded Ewing that the previous PNP government, led by Michael Misick, had “left behind a chaotic situation including – through incompetence, abuse of power, and corruption – rapidly deteriorating public finances”.

Hague equally reminded Ewing (and Caribbean leaders) that the 2008-2009 Commission of Inquiry in the TCI had concluded that there was “a high probability of systemic corruption among ministers, members of the legislature and public officials in the then TCI government”.

The TCI’s future governance is now back in the hands of the electorate, that is some 7,300 people. A curiosity of the 2012 election, along with at least three legal challenges to its conduct and outcome, was the fact that the PDM attracted more votes than the PNP (3,164 against 2,833) but lost by seven seats to eight. Nevertheless, in terms of seats won, this was much better for the PDM than the 13-2 drubbing it suffered in the 2007 general election. At the April 2003 election, the PDM won by 7-6 in a 13-seat contest but then saw the result reversed as it lost two seats in by-elections just four months later.

The PDM under Sharlene Cartwright-Robison is standing on a platform of supporting the “Four Nos”, which are: “No Income Tax, No Capital Gains Tax, No Property Tax, and No Exchange Controls”. Other pledges include one to create a physical link “from Providenciales to South Caicos by building bridges across our beautiful waters”. This, claims the PDM, “will ultimately light the path to future prosperity”.

The PDM has also put forward a 12-point crime plan at a time when crime and illegal immigration has rocketed up the political agenda, in part due to the mass jailbreak in Haiti on 22 October. After the Haiti jailbreak, Cartwright-Robinson called for additional help from the UK, saying: “Our people are already uneasy with the current state of increased lawlessness and we need to calm the fears of our residents by assuring added help.”

Oswald Skippings, who led the PDM into the 2012 election but failed to get elected to the Assembly and has now broken away to form the Progressive Democratic Alliance (PDA), chimed in by warning: “Government has so far failed to be proactive in its actions and especially considering the level of crime that is now taking place, the amount of illegal immigrants that were already here, and the supposed hundreds that have arrived in the past few days who are most likely from among the recent escapees from the Haiti jail, who are heavily armed and dangerous.”

Skippings added: “We need serious action and we need it fast, because the situation is out of hand and in spite of the escalating crime wave, neither the local government nor the British government is taking it seriously…”

A Peruvian judge has ordered the preventive detention of executives from five local firms partnering the Brazilian engineering company Odebrecht. They are suspected of being implicated in the corruption scheme through which Odebrecht paid bribes to Peruvian government officials in exchange for the award of state construction contracts. Among those detained pending further investigation are the heads of Peru’s largest construction firms. There are now concerns about the negative impact that this will have on the country’s domestic economy as well as the government led by President Pedro Pablo Kuczynski, who still faces questions about his suspected involvement in the case.

After months of investigations into the complex corruption scheme run by Odebrecht in Peru, on 3 December anti-corruption prosecutor Hamilton Castro requested the preventive detention of five new suspects in the case. These were executives José Graña, Hernando Graña, and Gonzalo Ferraro of the Graña y Montero firm; Fernando Camet of JJC Contratistas Generales; and Fernando Castillo of Ingenieros Civiles y Contratistas Generales SA (ICCGSA). Castro explained that he had gathered evidence suggesting that the executives who partnered Odebrecht to bid for projects in Peru were aware that the Brazilian firm was paying bribes to secure these bids. In particular, Castro said that evidence suggests that the Peruvian firms agreed to forgo part of the profits they were due to obtain from the concessions to build the Interoceánica Sur highway to Odebrecht in compensation to the Brazilian firm for its payment of a US$20m bribe to the government led by former president Alejandro Toledo (2001-2006).

Castro said that the evidence consisted of testimony provided by former Odebrecht executive Jorge Barata and records from the companies that confirm that they agreed to forgo some US$15m in profits in favour of Odebrecht. “Forgoing profits is allowed, but doing so to cover up illegal activities is not,” Castro concluded. Judge Richard Concepción Carhuancho approved Castro’s request to place the five suspects under preventive detention for 18 months while they face investigation for money laundering and collusion. Concepción’s decision produced instant shockwaves given the high-profile of the individuals in question, who are among Peru’s most recognised businessmen, and amid concerns about what this could mean for their firms. But there was also speculation that Concepción’s decision had political undertones.

• Economic impact

Following the arrest of the executives, the Peruvian press has reported that the value of the stocks of Graña y Montero, the country’s largest construction firm, have fallen sharply in the local stock market (down by 4.49%) and in the New York Stock Exchange (down by 6.86%). This in turn has led institutional investors to divest from Graña y Montero. Based on data from Peru’s banking and securities superintendence (SBS), the press found that local private pension fund administrators (AFPs) have reduced their holdings in Graña y Montero from 36.72% to 28.23%. All of this has contributed to a fall in the value of Graña y Montero’s stocks by 73% in the past 14 months.

This speculation revolves around the notion that the move against the executives was designed to ease the pressure brought to bear on the attorney general, Pablo Sánchez, by the main centre-right opposition Fuerza Popular (FP) party over the public ministry’s perceived foot dragging in the Odebrecht investigations. The FP majority bench in congress threatened to impeach Sánchez for dereliction of duty shortly after he re-opened investigations into whether its leader, Keiko Fujimori, received illegal campaign financing from Odebrecht [WR-17-46].

Concepción publicly denied that his decision was linked to the moves against Sánchez (who he has backed). However, the FP claimed that the arrests were a direct response to these moves. Some in the FP said they hoped this might motivate President Kuczynski to agree to meet the FP-controlled congressional commission investigating the Odebrecht case to answer questions about his links to the firm. Kuczynski has repeatedly refused to meet with the commission on the grounds that this was nothing more than an attempt by the FP to undermine his office and tarnish his image. Yet there is now a possibility that the arrested executives could provide further incriminating evidence against others implicated in the Odebrecht corruption, potentially including Kuczynski himself.

ECUADOR-PERU | Crude supply contract. Ecuador’s state-owned oil company, Petroecuador, announced on 10 December that it had signed a new contract with its Peruvian counterpart, Petroperú, to supply a total of 3.9m barrels of ‘Oriente’ crude from January to November 2019.

This is the second time that a contract of this nature has been signed by the two companies. In May they signed a deal under which Petroecuador undertook to supply Petroperú with a total volume of 2.88m barrels of Oriente crude in eight shipments of 360,000 barrels. A Petroecuador statement said that by eliminating any middlemen, the contract would allow both countries to secure the best possible price for the crude, which is to be set according to the going price of West Texas Intermediate crude in international markets at the time of the delivery of the crude.

The statement adds that the crude will be delivered in 11 shipments of 360,000 barrels each, and that under the contract, Petroperú has agreed to hire Ecuador’s state-owned hydrocarbons transport firm, Flopec EP, to transport the crude by sea from Ecuador to Peru.

PERU | Trade balance. Peru registered a trade deficit of US$155m in October, according to data released by the country’s central bank (BCRP) on 9 December. This is the first monthly trade deficit posted by Peru since June 2016 and the BCRP attributed the negative result to “temporary factors” such as the fall in global trade as a result of the trade war being waged between the US and China. Nevertheless, the BCRP noted that the cumulative trade balance up to October stands at a US$4.92bn surplus. The BCRP forecast that Peru would close the year with a trade surplus of US$6.94bn.

In recent years Uruguay has managed a floating exchange rate which has offered a reasonable combination of flexibility and stability. However, the double effect of an economic crisis in neighbouring Argentina and elections at home is fuelling uncertainty for the peso.

A lot is happening in the next few months that could produce a bumpy ride for the Uruguayan peso. In neighbouring Argentina, the Peronist candidate, Alberto Fernández, won the 27 October elections. Between now and mid-December, when he is due to take office, attention will focus on how the financial crisis plays out during the transition, on negotiations between the incoming administration and the International Monetary Fund (IMF), and on the inevitable ‘reprofiling’ of Argentina’s large foreign debt (the less euphemistic call it an impending default).

The first round of Uruguay’s own elections was won by the left-wing candidate, Daniel Martínez, but in the second-round run-off due on 24 November the centre-right Luis Alberto Lacalle Pou is the favourite. Lacalle Pou offers a more market-friendly stance but the exact shape of his economic policies will not be known until a new centre-right coalition is formed. The next Uruguayan government will not take office until mid-March. In the meantime, Uruguay’s summer tourist season (mid-December to mid-March) is highly exchange-rate dependent.

On 1 November the peso was trading at UR$37.572 to the US dollar, representing a depreciation of 12.95% during the first 11 months of 2019. For comparison, the 12-month retail inflation rate has been running at around 7.8%.

In regional terms, over the last year the Uruguayan peso depreciated more rapidly than the Chilean peso or the Brazilian real, but less rapidly than the troubled Argentine peso. The depreciation was fairly continuous throughout the year, although there was a wobble associated with the presidential primaries when the currency strengthened in July before slipping quite sharply again in August.

In economic terms, Uruguay is now much less dependent on events in neighbouring Argentina. Trade has been significantly diversified over the last 15 years. But Argentina’s volatile currency markets still have some impact. Following the elections, Argentina’s central bank tightened its currency controls, limiting dollar purchases by its citizens to US$200 a month, sharply down from US$10,000 previously.

The Uruguayan central bank (BCU) responded to election uncertainty in both countries by selling just under US$400m during October, so as to support the value of the peso. Traditionally the BCU has pursued two objectives in its currency market interventions. These are first to smooth out market fluctuations and second, where possible, to avoid a pass-through effect from the exchange rate to domestic inflation.

The BCU cannot of course support the peso in a completely open-ended fashion. The latest figures show that in the year to end-October its freely-disposable foreign currency reserves fell by US$2.002bn to US$5.027bn. Aldo Lema, an economist at Vixion consultancy, believes that once the second round of the Uruguayan elections is over, the BCU will reduce the pace of dollar sales, ease back interest rates, and allow peso depreciation to pick up somewhat.

Rising Argentine demand for US dollars has an effect on Uruguay, but this is limited because only 5% of deposits in the Uruguayan banking system is held by non-residents (most of those by Argentines).

A more serious ‘transmission mechanism’ will come through tourism. If Argentines find it more difficult and costly to buy dollars either officially or on the black market, then fewer of them will visit Uruguay during the upcoming holiday season. It has been calculated that of every US$100 worth of Uruguayan tourism receipts, 66 of them come from the pockets of Argentine visitors.

Bearing some of these factors in mind, consultancy Equipos has built a base-case scenario for the Uruguayan peso. It notes that Argentine and Uruguayan consumer confidence indicators have traditionally tended to move in step. It expects that for the immediate future, Argentina will struggle with a balance of payments crisis, negative or low growth, and high inflation.

However, it expects a ‘reasonable’ debt rescheduling and a gradual normalisation of the Argentine economy. In that scenario, the Uruguayan peso is expected to remain relatively expensive compared to the Argentine currency, with a negative effect on Uruguay’s trade and tourism “but without implying a severe adjustment for Uruguay in either currency or in macroeconomic terms”. Equipos expects Uruguayan exchange rate depreciation to exceed domestic inflation during 2020.

Farmers for a weaker peso?

A former economist for the main farm lobby group Asociación Rural del Uruguay (ARU) has argued that the Uruguayan peso is 25% over-valued. Rafael Gallinal acknowledged that the country had adjusted its exchange rate “but its main commercial partners in Latin America and China also made adjustments. For that reason, today we have a peso that is 20% to 25% over valued,” he said

MEXICO | Economy minister predicts modest GDP growth. On 7 February, Mexico’s Economy Minister Tatiana Clouthier predicted that Mexico’s GDP would grow by up to 2.6% in 2022, slightly above the 2.27% predicted by Mexico’s central bank Banco de México (Banxico) but significantly lower than the 5% predicted by President Andrés Manuel López Obrador.

In an interview with Mexico City-based news outlet Aristegui Noticias, Clouthier said she thought that the president was “betting that positive things will happen” to boost growth. The economy ministry had predicted 4% GDP growth for 2022 before the omicron variant of the coronavirus (Covid-19) arrived in Mexico.

Philip Davis, who serves as both prime minister and minister for finance in The Bahamas, announced a US$3.5bn national budget for the 2023/2024 fiscal year (starting 1 July), while claiming that government finances are on the mend, with a balanced budget in sight for 2024/2025.

Davis said current expenditure in the financial year about to begin will be US$3.5bn with revenue of US$3.3bn and a deficit of US$131.6m. He said that the government’s plan is to increase revenues without introducing new taxes or increasing rates on existing taxes. This would be achieved by improving tax compliance and enforcement. He was confident of achieving a balance on the primary budget by 2024/25. Contributing to this would be the revenue-raising effects of legislative reforms, improved economic conditions, and better tax collection, while expenditure would be kept under control.

In fact, much of the prime minister’s optimism is predicated on a very strong post-coronavirus (Covid-19) recovery which he says is helping deliver “public finances that are much, much healthier than they were”. This, he added in his budget speech, came after “the turbulence and chaos of preceding years” including natural disasters, constitutional “aberrations” and “gross mismanagement of the public finances”.

The prime minister cited data from The Bahamas national statistics institute that showed real GDP surging by 14.4% in 2022 on the back of the end of the Covid-19 lockdown. He claimed the government had helped accelerate the recovery with cuts in value added tax (VAT) and reductions in customs duties and excise taxes. Other reforms such as the digitalisation of government services had played a part.

Big increases in tourist arrivals had helped lift household expenditure last year by 7%, although there were significant variations across the different islands that make up The Bahamas archipelago. New Providence, responsible for 78% of total GDP, saw a 17% surge in output largely due to the very strong return of tourism business. Grand Bahama, on the other hand, responsible for 12% of overall GDP, suffered an economic contraction last year, which the government proposes to address with reforms of the Grand Bahama Port Authority and other changes.

Overall, in the first nine months of fiscal 2022/2023 (the period running up to end-March this year) there were 6.6m tourist arrivals, with the hotel occupancy rate rising to 65.1%, up from 55.2% in the year-earlier period. Foreign direct investment projects in tourism-related sectors were also advancing. Inflation remained controlled, while foreign currency reserves grew to a comfortable US$2.7bn at the end of March.

Based on these statistics the government said it was projecting GDP growth to moderate from double-digit expansion in 2022 down to a more moderate 4.3% growth in 2023. In the first nine months of the current fiscal year (to end-March) the government had registered a fiscal deficit of US$216.2m or 1.6% of GDP, down from 2.7% of GDP in the comparable year-earlier period. The debt-to-GDP ratio has begun to trend downwards, from 87.3% of GDP at the end of June 2022 to 83.5% at the end of March 2023.

Opposition response

Despite Davis’s positive spin on the fiscal balance and the general outlook for The Bahamas’ economy, opposition leader Michael Pintard of the Free National Movement (FNM) was unforgiving in his assessment. He accused the government of failing to deliver on promises to improve the ease of doing business, failing to reorganising state enterprises, and failing to tackle the need for an energy transition to reduce dependence on fossil fuels.