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Following the historic restoration of diplomatic relations on 20 July, the US government led by President Barack Obama has continued with small but incremental moves - within the available legal parameters - towards the continuing liberalisation of US ties with Cuba.

A couple of days after the two interests sections in Havana and Washington were upgraded to embassy status, Reuters reported that the White House hosted a closed-door meeting with Cuban American notables, academics and business leaders supportive of the re-engagement with Cuba to discuss the state of play. According to the report, White House officials said that the administration and its agencies (led by the US Treasury and Commerce departments) had no plans to announce further measures regarding Cuba and was still refining the various regulations to date announced, including reforms to ease travel rules and financial and banking changes unveiled in January last. “The administration feels they have gone as far as they can right now. They want to broaden the base of stakeholders ... create the space for others, including Republican members of Congress, to take steps”, one attendee told the newswire.

The next day, the Republican-controlled US Senate Appropriations Committee voted 18-12 (with 14 Democrats joined by four Republicans) to back an amendment to the Financial Services and General Government bill for the next fiscal year that would eliminate the general prohibition on travel to Cuba. The Committee also passed another amendment to allow private financing for US agricultural sales and lift restrictions on ships that call at Cuban ports.

Attaching these amendments to the appropriations bill increases the likelihood that they will come up for a vote in the Senate plenary, according to US commentators. To become law, a version of the bill would also have to pass through the House of Representatives. Democratic Senator Patrick Leahy, who represents the agricultural state of Vermont, and who long has argued that US policy towards Cuba is counterproductive, stated: “This is a first step by the Senate to dismantle a failed, discredited and counterproductive policy that in 54 years has failed to achieve any of its objectives”.

While the amendments, first mooted earlier in the year in response to the White House measures, have minimal chance of full approval, they suggest the growing strength on Capitol Hill of the pro-engagement lobby. Consistently lobbing these kinds of bills at Congress may, eventually, generate the kind of momentum needed for a serious discussion of the removal of the half century-old US economic embargo on Cuba, which is codified into law and can only be lifted by an act of congress. And while the leading Republican presidential runners for 2016, including the conservative Cuban-American senator Marco Rubio (FLA), have vowed to roll back all the changes made by Obama and even break off diplomatic relations again, the leading Democratic nominee, Hillary Clinton, has put some clear blue water between her campaign and that of her Republican competitors by coming out with an official call for the end of the embargo.

In a speech made in Miami on 31 July, Clinton, whose husband Bill Clinton took a hardline stance on Cuba whilst in office (1993-2001) - a period that coincided with Cuba’s special period, and the 1995 Cuban shooting down of a Miami-Cuban exile plane, which resulted in the 1996 Helms Burton Act codifying the embargo - said she had changed her mind on US-Cuba policy towards the end of her term as Obama’s secretary of state (2009-2013). “Cuban people have waited long enough for progress to come… The Cuba embargo needs to go, once and for all. We should replace it with a smarter approach that empowers the Cuban private sector, Cuban civil society and the Cuban-American community to spur progress and keep pressure on the regime…They have it backwards: Engagement is not a gift to the Castros – it’s a threat to the Castros. An American embassy in Havana isn’t a concession – it’s a beacon”, she stated.

• “Most Republican candidates running for president would play right into the hardliners’ hands. They would reverse the progress we have made. Fundamentally, most of the Republican candidates still view Cuba, and Latin America more broadly, through an outdated cold war lens. For them ideology trumps evidence, and so they remain incapable of moving us forward.” –Hillary Clinton argues for the removal of the US embargo on Cuba.

The government led by President Tabaré Vázquez faces a challenging start to 2018. Uruguay’s trade union movement staged a partial general strike on 9 January over violence and is planning a mass mobilisation in late February. But it is the threat of protest action by the powerful rural sector that is causing greater concern in government circles, as an agricultural strike would damage economic growth.

Plenario Intersindical de Trabajadores-Convención Nacional de Trabajadores (PIT-CNT), the main trade union movement, organised the strike in the wake of the murder of a transport union leader in the northern department of Rivera. Marcelo Silvera was shot dead on 2 January by a truck driver from his own Sindicato Único del Transporte de Carga y Ramas Afines (Sutcra) union who he had pursued in order to reprimand for defying a strike it had called for that day.

Sutcra staged a 24-hour strike on 9 January. It was also joined by the taxi drivers’ union Sindicato Único de Automóviles con Taxímetro y Telefonistas (SUATT), which protested against the murder of one of its drivers on 3 January. Health services were also disrupted as medical workers in the Federación de Funcionarios de Salud Pública (FFSS) went on strike for 12 hours, and banks closed early.

The PIT-CNT said it would hold talks with social organisations and human rights groups about staging a major mobilisation in late February urging the government to strive to establish “a culture of peace” in Uruguay. The union also condemned domestic violence, in particular the two femicides in the opening days of 2018. There were 30 femicides in Uruguay last year, the fifth highest annual total in Latin America and the Caribbean.

The government is no stranger to protests over violence. The political opposition has repeatedly summoned the interior minister, Eduardo Bonomi, to appear before congress, where he endures a grilling but evades censure thanks to the narrow majority of the ruling left-wing Frente Amplio (FA) coalition. That the PIT-CNT, its hectoring ally, is now taking up the issue will give the government pause for thought, although this could be attributed in part to its success at bringing down inflation, stripping the union of its main cause for protest. The consumer price index fell by 0.31% in December bringing inflation for 2017 to 6.55%, according to the national statistics institute (INE), its lowest level since 2009.

The bigger immediate concern for the government is a standoff with the large rural lobby groups, as agriculture is the country’s principal export sector (see sidebar). The three main agricultural organisations – Federación Rural (FR), Asociación Rural (ARU), and Cooperativas Agrarias Federadas (CAF) – are flexing their muscles. They have been critical of the agriculture & livestock minister Tabaré Aguerre, who has held the position since March 2010, for failing to do enough to protect the sector amid climatic challenges and a squeeze on profits due to falling prices and mounting costs.

• Exports booming

Uruguayan exports increased by 9.2% in 2017, totalling US$9.06bn, according to the foreign trade agency Uruguay XXI. This is the highest volume of exports since 2011, and it follows three years of a stagnation of exports. Export growth was driven by soya, lumber, cellulose, and meat products. Meat exports grew by 5.5% on 2016, and were the country’s principal export in 2017, totalling US$1.52bn. The volume of meat exports increased by 4% and the average price by 1.5%. China was the main destination for Uruguayan exports, absorbing 28% of the total, followed by the European Union (EU) with 16%, Brazil (13%), and the US and Argentina (6% apiece).

In a sign of the government’s concern, President Vázquez fiercely denied media reports that it had postponed a meeting with the three organisations, meant for December, until 23 February. He said a date for the meeting would be agreed next week. Independent agricultural producers are threatening to block roads, affecting tourism and other producers transporting perishable goods, to put pressure on the government. The FR, ARU, and CAF expressed their sympathy with independent producers but opposed the blocking of roads.

With preparations underway ahead of next February’s general election [WR-20-34], on 28 August Ecuador’s President Lenín Moreno made an announcement of considerable significance for his aspiring successors: the completion of a provisional agreement with the International Monetary Fund (IMF) to access some US$6.5bn in credit over the next 27 months, through the multilateral organisation’s Extended Fund Facility (EFF), subject to approval by its executive board. On 2 September, Moreno further announced that his government had secured a US$2bn loan from China.

These deals will paper over Ecuador’s yawning fiscal gap for 2020, with US$6bn of the funds due to arrive by December (US$4bn from the IMF, US$2bn from China). Moreno claimed this money would support “social protection and economic reactivation”, but his economy minister Richard Martínez has suggested that following the government’s successful renegotiation of US$17.4bn of external debt [WR-20-31], the next priority will be meeting internal debts.

US$1.6bn has reportedly been earmarked to cover a backlog of payments to the country’s social security institute (IESS), while US$1.4bn will similarly go to municipal governments (many of which have not received central funding since March), and US$700m to cover unpaid public sector salaries.

Whoever wins February’s election will therefore inherit Moreno’s commitments to fiscal austerity - part of the structural adjustment requirements of EFF financing – but comparatively little of the promised credit. Opposition to Moreno’s austerity measures provoked widespread protests in 2019 and has deepened political divisions during the pandemic [WR-20-20].

With economic analysts noting that austerity would slow the recovery of Ecuador’s economy, thus making the continued servicing of debt almost impossible, it seems increasingly likely that the country’s next administration will have to face the peak of this debt crisis, which has merely been delayed.

Electoral developments

There have been further electoral developments in the past week, including the alliance of two centre-right frontrunners, Movimiento Creo and Partido Social Cristiano (PSC), behind Creo presidential candidate (and two-time presidential runner-up) Guillermo Lasso. The preliminary registration of candidates with the electoral council (CNE) closed on 2 September, bringing further drama, as former president Rafael Correa (2007-2017) was prevented from registering remotely as a vice presidential candidate, despite transferring power of attorney to his sister, Pierina Correa. While Correa will likely challenge this decision, the Unión por la Esperanza (Unes) coalition’s presidential candidate Andrés Arauz is expected to name a new running mate on 3 September, with journalist Carlos Rabascall thought to be the favourite.

Interest rate cuts: On 24 September Mexico’s central bank (Banxico) reduced its benchmark interest rate by 25 basis points to 4.25%. This is the sixth consecutive cut in the interest rate announced by Banxico in as many months as it seeks to ensure there is sufficient liquidity in the domestic market in the context of the coronavirus (Covid-19) pandemic. According to a Banxico statement, the unanimous decision taken by the bank’s board of directors is an attempt to address the challenges stemming from the pandemic for monetary policy, such as the impact on economic activity, the financial shock, and its effects on inflation. According to the statement, annual general inflation increased from 3.62% to 4.10% between July and the first two weeks in September and is expected to close this year above Banxico's 3% target.

Sustainable bond issue: On 14 September Mexico became the first country in the world to issue a United Nations Sustainable Development Goals (SDGs) sovereign bond. According to a United Nations Development Programme (UNDP) press release, the seven-year bonds were worth €750m (US$890m) – resources that will be used to finance SDG-oriented programmes. The letters were issued under the Mexican government's new ‘SDG Sovereign Bond Framework’ developed with French investment bank Natixis. The transaction reached a demand of US$5.7bn, equivalent to 6.4 times the allocated amount while 267 global investment firms participated in the operation. According to Mexico’s finance ministry (SHCP), the bonds have a 1.603% yield to maturity rate and a 1.350% coupon rate, making it the second lowest coupon in the history of euro bonds issued by the Mexican government. “With this issue the SHCP inaugurates the Mexico’s sustainable development financing programme, placing the country at the vanguard of innovation of sustainable financial instruments”, a SHCP statement noted.

Mexico: GDP Growth
Percentage variation (year-on-year)

Mexico: Unemployment Rate
Econimically active population

Mexico: Inflation Rate
Percentage variation (year-on-year)

*** BELIZE-GUATEMALA BORDER TENSIONS REPORTED. In late May there were reports of attempts by the Belize Defence Force (BDF) to evict Guatemalan squatters in the area of Santa Cruz, San Luis municipality. It is not thought that there is any threat of a serious escalation, but it is a reminder of the unresolved nature of the Belize-Guatemala dispute. The dispute is now in front of the International Court of Justice (ICJ), but a definitive ruling is still some years away. Guatemala submitted its ‘memorial’ to the ICJ in December and Belize now has until mid-2022 to submit its response. There will then be another chance for Guatemala to rebut Belize’s counter arguments with a ‘rejoinder’, which in turn will be followed by a further submission from Belize.

It is thought that the best that Guatemala can hope for is compensation for a never-built railway line from the coast that the British promised in the 1850s in return for Guatemalan recognition of British sovereignty over the territory that is now Belize. The treaty was signed in 1859, but in 1940 Guatemala declared the treaty null and void due to the failure of Britain to build the railway line. Guatemala’s 1945 constitution declared Belize to be an inseparable part of Guatemalan territory. Belize became independent in 1981 and was admitted to the United Nations as a member state.

In March 2021, the foreign ministers of Belize and Guatemala (respectively Eamon Courtenay and Pedro Brolo Villa) met in person on the shared border and agreed to reopen the Belize-Guatemala Joint Commission to manage relations between the two countries. They also agreed to abide by the 2005 confidence building measures and to implement the Partial Scope Trade Agreement (PSA) to boost bilateral trade.

On 9 May, the Council for Foreign and Community Relations (Cofcor) of the Caribbean Community (Caricom) issued a statement saying: “The Cofcor urged Belize, Guatemala and the OAS [Organisation of American States] to respect and implement fully the Confidence Building Measures as agreed under their Framework Agreement of 2005, pending a resolution of the case before the ICJ. They further urged both countries and the OAS to reinvigorate their efforts to engage in the design and development of a mechanism of cooperation for the Sarstoon River, which remains outstanding…The Cofcor recognises and supports the OAS’ crucial role in the process aimed at resolving the dispute, arising from Guatemala’s claims on Belize, and called on the international community to continue supporting the OAS Office in the Adjacency Zone.”

In a timely development for Belize, Caricom has appointed Dr Carla Barnett, a Belizean, to be its new secretary-general from August this year. She will serve for five years.

*** GUYANA PROPOSES REGIONAL ENERGY CORRIDOR. On 22 May, Guyana’s President Irfaan Ali told a conference of expatriates that “the strategy of Guyana is to become a major player in the energy corridor of Brazil, Guyana, and Suriname”. Expounding on the idea, Ali said: “Our own demand locally and the spinoff of our own investment that will see more export, would require greater logistics planning. The integration of Suriname and Brazil, creation of that new corridor, making Guyana an important shipping hub for the region, requires careful planning and development of a logistics hub and industry. And that by itself brings a stream of benefits. It’s not only what is happening in Guyana.”

At a press conference on 28 April, Ali had talked about Guyana and Suriname supplying energy to northern Brazil and French Guiana. The concept for such an integration was explored in two Inter-American Development Bank (IDB) studies on the Arco Norte Electrical Interconnection in 2016 and 2017.

The latest Global Peace Index of Australia-headquartered think tank the Institute for Economics and Peace’s (IEP), published in July, highlighted that violent crime has become less of a concern in Argentina. However, this did not appear to translate into public opinion ahead of the country’s presidential primaries (Paso) on 13 August, as the murder of an 11-year-old in a robbery shortly before the vote put security issues high on the agenda – possibly to the benefit of the far-right anti-system candidate Javier Milei who defied the polls to come out on top.

Morena Domínguez was on her way to school in the Buenos Aires suburb of Lanús on 9 August when two youths attacked her as they tried to steal her phone and backpack. The 11-year-old died in hospital later, a case that shocked the country, led to the suspension of campaigning, and put crime firmly at the centre of a primary election campaign that had otherwise focused on Argentina’s economic travails. The onus on public security was only reinforced by the murder one day later of a surgeon, Juan Carlos Cruz, who was killed by three assailants in broad daylight outside his home in Morón, Buenos Aires province.

Argentina has one of the lowest homicide rates in the region, recording 4.2 deaths per 100,000 people in 2022 according to government figures, down 7.2% on the previous year (although this varies across the country with a double-digit homicide rate in Santa Fe province). At the same time other crimes, notably all kinds of theft, have risen, contributing to a general concern with insecurity – particularly in the province of Buenos Aires, home to over a third of the electorate and where authorities investigate a couple of hundred thefts per day.   

Concern with violence and insecurity is yet another issue on which the right-wing opposition has been able to seize to attack the incumbent centre-left Unión por la Patria (UP) coalition, which will be fielding economy minister Sergio Massa as its presidential candidate in October (he took 21.4% of the total vote in the Paso, with UP coming third with a combined 27.27%). Massa has put forward few concrete proposals and is broadly considered to be somewhat soft on crime; at campaign events he has spoken of better training and paying security forces to improve crime prevention.

In the right-wing Juntos por el Cambio (JxC) coalition, hardliner Patricia Bullrich – a former security minister (2015-2019) known for being tough on law and order – beat the more moderate mayor of Buenos Aires, Horacio Rodríguez Larreta, to win the nomination (together JxC took 28.27% of the vote to come second in the Paso). She has spoken of lowering the age of criminal responsibility to 14, sending the army to fight drug-fuelled violence in Rosario, capital of Santa Fe province, and ending roadblocks as a form of protest.

Javier Milei, who defied opinion polls to come first in the Paso with his La Libertad Avanza (LLA) party receiving 30.04% of the vote, has the most radical security agenda. According to fact-checking website chequeado, the ‘national security and judicial reform’ section of his electoral platform is the most extensive, with 47 proposals. These include a prison reform to create a public-private system, the immediate deportation of migrants who commit a crime, and the deregulation of gun controls. It is hard to gauge how much the violence in the lead-up to the primaries influenced the electorate in a scenario of rampant inflation and looming devaluation, but Milei’s showing suggests his radical outsider image successfully captured undecided voters. His hard line on crime – an approach proven popular with voters in other countries – probably helped.   

Global Peace Index

The IEP’s 2023 Global Peace Index ranks Argentina 54^th in the world and second in South America, noting that it saw the biggest improvement in peacefulness in the region last year. The report highlights the success of the Mauricio Macri government (2015-2019) in reducing violent crime, notably homicides – something for which Bullrich can claim at least some credit.    

BRAZIL | Unemployment down. The national statistics institute (Ibge) released its latest figures for unemployment on 31 January, which showed an unemployment rate of 7.4% for the final quarter of 2023. This brings the average unemployment rate for the year to 7.8%, which marks a decrease of 1.8 percentage points compared with the 2022 average.

The number of formally employed people closed the year at a record 101m people, marking a yearly increase of 1.6%. The number of formally employed people in the private sector (excluding domestic workers) totalled a record 37.97m people, while 13.5m people were registered as informally employed in the private sector and 25.6m people were listed as self-employed workers. The total number of informal workers stood at 39.5m people, showing little variation compared with the third quarter of 2023 but was up 38.8% year-on-year.

The jobless rate decreased every quarter in 2023. The unemployment figure for the final quarter of last year decreased by 0.3 percentage points from the previous quarter and by 0.5 percentage points compared with the final quarter of 2022. The sectors which saw the greatest quarterly increase in employed persons were transport, storage, and postal services (+4.3%) and other services (+5.8%). However, the agriculture, livestock, forestry, fishing, and aquaculture category registered a quarterly decrease of 4.8%. 

BRAZIL | Government registers primary deficit. The national treasury reported on 29 January that Brazil’s central government’s primary deficit in 2023 totalled R$230.54bn (US$46.50bn), equivalent to 2.12% of GDP. Officials from the finance ministry presented the figures in a press conference, in which they said that the deficit saw a significant increase towards the end of the year due to “extraordinary” factors, such as the payment of debts totalling R$92.4bn in December.

The officials stated that had it not been for these debt payments, the annual deficit would only have been around 1.3% of GDP. Despite its high levels of spending on social programmes, the officials expressed optimism that the government could reach its zero-deficit target for 2024.

On 17 October President Claudia Sheinbaum announced the creation of a ministry of anti-corruption and good governance, which will be headed up by Raquel Buenrostro, the federal comptroller. The Movimiento Regeneración Nacional (Morena) government claims the new ministry, which is effectively a rebrand of the ministry of public administration (SFP), will end corruption and impunity. However, serious challenges lie ahead.

The new ministry represents a refocusing of the SFP, which acted as the federal oversight body. It will have a greater emphasis on preventing corruption, rather than merely correcting and punishing corrupt acts. Buenrostro, a veteran of Mexico’s public sector, will head up the rebranded ministry. As head of the SFP, she was the obvious choice, while her reputation for honesty, experience cracking down on tax evasion as head of the tax authority (SAT) from 2020-2022, and loyalty to Morena made her an even more attractive candidate.

Buenrostro explained the ministry will have transversal scope, meaning it will have access to all government agencies, where actions will be implemented to fight corruption. Such actions include those aiming to create an anti-corruption culture through “integrity training” of public sector workers; encouraging and protecting whistle-blowers; and promoting “proactive transparency”. Others include more technical changes such as the modernisation and digitalisation of the federal public administration, with the help of the newly created digital transformation agency.

The ministry for anti-corruption will also seek to make the public procurement process more transparent by reducing the need for intermediaries; focus internal control organs in areas of greatest need and impact; conduct investigations aimed at preventing corruption; and combat impunity by making penalties for corruption more severe.

One of the ministry’s first tasks will be to oversee priority projects including the Tren Maya tourist railway and programmes related to the health sector and food security. The idea is that the ministry will help to root out corruption in these areas, which have been vulnerable to corruption in the past. When new priority programmes are created, the ministry will be involved from the beginning to prevent graft from taking hold.

Under Sheinbaum’s predecessor, Andrés Manuel López Obrador (2018-2024), Mexico’s federal audit office, the Auditoría Superior de la Federación (ASF), detected irregularities in the Tren Maya project of some M$785m (US$39.4m), according to a report released in February. The healthcare sector has also come under scrutiny following chronic medicine shortages under López Obrador and scandals involving medicine procurement processes in certain states.

However, the most enduring corruption scandal of recent years involves Segalmex, the government’s flagship food security body [SSR-05-23]. Several former employees of Segalmex and companies it worked with have been arrested by the federal attorney general’s office (FGR) on charges ranging from embezzlement to organised crime. The FGR requested four more arrest warrants for former Segalmex employees and associates in October regarding a fraudulent purchase of fertilisers, according to Spanish newspaper El País. Managing the legacy of this scandal and restoring faith in the food security sector will likely be the biggest first task of the new anti-corruption ministry.

Sentence in key corruption case

The creation of the new ministry of anti-corruption and good governance came the day after the sentencing in the US of Genaro García Luna, Mexico’s former public security minister (2006-2012). The Morena government often uses this case, in which García Luna was convicted of accepting millions of dollars in bribes from the Sinaloa drug trafficking organisation (DTO), as an example of the corruption that was allowed to take hold under previous administrations. García Luna, who served under former president Felipe Calderón, received a prison sentence of over 38 years and a US$2m fine.

However, despite rapid progress in deploying renewable projects and adding to renewable generating capacity thanks to an uptick in investment, fossil fuels were not displaced from the overall energy mix at a comparable rate due to a number of structural constraints.

Overall investment has fallen short of what is required, with the World Economic Forum estimating that the region needs to secure USD$150bn in clean energy investment per year by 2030, more than double the 2025 total of US$70bn. And an Eclac analysis of GSSS bonds issued by Brazil, Chile, Colombia, Mexico, and Peru found that dedicated sustainable finance had no discernible effect on the share of renewables in total energy consumption in these countries, underlining the fact that clean energy projects have added to overall generating capacity without replacing fossil fuels in the energy mix. 

A major reason for this is that investment in fossil fuels remains higher than in renewables, at US$90bn compared to US$70bn in 2025, although fossil fuel investment was 20% lower than in 2015. As shown in Chart 1 (below), investment in fossil fuels declined from 2015 and almost converged with renewables in 2020 but then rebounded.

Chart 1: Annual Investment in Clean Energy and Fossil Fuels (2015–2025)

Source: International Energy Agency (IEA), World Energy Investment 2025.

Continued investment in fossil fuels is driven in part by concerns over the sovereignty cost of winding down extraction in producing countries, with Brazil’s President Luiz Inacio Lula da Silva one of various regional leaders staking out the position that nations have a right to use their natural resources to drive development (see Case Study). Even when political leaders are committed to phasing out fossil fuels, such as Colombia’s President Gustavo Petro (see Case Study), the economic cost is difficult to countenance: fossil fuels represent 10% of the country’s fiscal revenues and 35% of exports, according to the International Monetary Fund. In addition, energy security and political concerns remain powerful. This is illustrated by Mexico’s President Claudia Sheinbaum, herself a climate scientist, reversing the country’s ban on fracking in order to reduce reliance on natural gas imports from the US.

Another contributing factor is that the incomplete energy transition means that even those nations with near-total renewable energy generation are still highly dependent on oil and gas in some sectors. This is due in large part to the fact that generating capacity can be deployed more quickly than the systems needed to make use of the power that they produce. For example, there are serious shortfalls in electricity transmission and distribution infrastructure, constituting a major grid bottleneck that means energy losses via curtailment have increased significantly.

Transmission investment in fact fell by around 40% from 2015-2021, a period of significant expansion in generating capacity, and total energy losses have averaged 17% per year over the past three decades, according to the IADB. This is around three times the level seen in developed countries, it adds. At the same time, electricity demand is growing rapidly and increased 87% from 2020-2025, meaning that new generating capacity is partly fulfilling growing demand rather than waiting ready to displace fossil fuels. Another factor is rapid urbanisation, which is placing extra strain on the existing grid infrastructure: LAC has an urbanisation rate of 79%, higher than Europe and North America, but much of this was unplanned and lacks electricity infrastructure.

Electrifying transport has also proven difficult and slow. Chile provides a striking example: despite important progress in replacing diesel buses with electric alternatives in Santiago, only around 2% of private vehicles are electric. Consequently, the country has access to cheap electricity from renewables but remains highly dependent on imported oil, meaning it is highly exposed to price movements on the global market.

Finally, the region’s significant investments in hydropower have been impacted by changing weather patterns due to climate change. In Ecuador, where hydroelectric dams provide more than 90% of electricity, prolonged periods of drought have reduced operating capacity and led to blackouts, with the government falling back on emergency thermoelectric generation in an attempt to keep the lights on. Brazil is another example of fossil fuel plants being brought back online when climate stress exposes dependence on hydropower.

President Hugo Chávez scarcely paused for breath after his electoral triumph on 7 October before gearing up for the next electoral hurdle – regional elections on 16 December. Chávez reshuffled his cabinet to fill the positions vacated by ministers charged with winning state governorships for the ruling Partido Socialista Unido de Venezuela (PSUV).

There are seven governors seeking re-election for the opposition coalition Mesa de la Unidad Democrática (MUD). Foremost among them is, of course, Henrique Capriles Radonski who has already dusted himself down after his defeat to President Chávez to prepare for a showdown with the outgoing Vice-President Elías Jaua in the state of Miranda. The others are Pablo Pérez (Zulia), César Pérez (Táchira), Liborio Guarulla (Amazonas), Enrique Salas Feo (Carabobo), Henry Falcón (Lara) and Morel Rodríguez (Nueva Esparta). José Gregorio Briceño, the governor of Monagas, is also standing for re-election as an independent, having abandoned the Chavista ranks.

The campaign does not officially begin until 1 November but the deadline for the formal registration of candidacies ended on 12 October and to all intents and purposes the campaign is now underway. “Capriles will not have the governorship of Miranda as a consolation prize,” Jaua told supporters while registering his candidacy in Los Teques, the state capital. A defeat for either Capriles or Pérez in the two most populous Venezuelan states would be devastating for the MUD; a defeat for both of them would sound the death knell for the coalition.

Four of the six cabinet changes made by Chávez this week were to replace ministers sent into the electoral fray. Juan Carlos Loyo, who was replaced by Jaua at the agriculture ministry last January for failing to make enough progress in increasing domestic production, steps back into the role. The interior and justice minister, Tarek El Aissami, who is running for governor of Aragua, was replaced by National Guard (GN) General Néstor Reverol. Reverol had served as Venezuela’s drug czar. His appointment anywhere else in the region would excite serious controversy as it puts the top civilian law enforcement job into the hands of a military man (the GN is one of the five branches of the Bolivarian armed forces - and widely perceived to be the most corrupt).

Elsewhere, Nicia Maldonado (Amazonas) was replaced by her deputy at the ministry for indigenous peoples, Aloha Núñez, and Erika Farías (Cojedes) vacates the minister of the presidency. Admiral Carmen Meléndez, the first woman to reach that rank in Venezuela (and indeed Latin America) last July, takes over a new beefed up brief - ministry of the presidency and government oversight. Meléndez said her ministry would function “24 hours a day”. It will need to. Chávez’s new watchword is “efficiency”. It has cropped up time and again in everything he has said and written since his electoral triumph on 7 October. Meléndez will be at the forefront of this efficiency drive as Chávez calls for “revision and self-criticism” - terms increasingly common in Cuba since Raúl Castro has taken over the reins of power.

Meléndez will have to coax this increased efficiency out of much the same team. Chávez kept the same personnel at all the heavyweight ministries. The only changes unforced by the elections were to the communications and environment ministries. Ernesto Villegas, a journalist, takes over from Andrés Izarra at the communications ministry and Cristóbal Francisco replaces Alejandro Hitcher as environment minister.

• Capriles

“They have a brutal structure, honestly. On Sunday we saw it all, in terms of the structure and power of the government,” the defeated presidential candidate, Henrique Capriles, said in an interview with local daily El Universal on 14 October. “They threw the house out of the window (spared no expense) and they obtained 55% of the vote.” Capriles argued, for instance, that the recently launched Misión Vivienda was less about building homes than compiling a database to get out the vote. This alleged abuse of power extended to spying on Capriles by Venezuela’s intelligence agency Sebin, according to Argentine journalist Jorge Lanata. Lanata said he was interrogated for two hours at Caracas airport last week by agents who deleted allegedly compromising documents from his team’s computers, and erased camera and mobile phone data.

In last month’s issue we looked in detail at the widespread assertions from some analysts that Jamaica is on its way to being a failed state.  Our conclusion was that while Jamaica is undoubtedly struggling, there is no good reason to suppose that it is failing.  During the past month Finance Minister Peter Phillips has gone further and argued that while there is still pain to come, the country could now be past the worst, and it does indeed seem that progress is being made on both the economic and security fronts.

On 27 August, the programme director for the Planning Institute of Jamaica’s Plan Development Unit, Richard Lumsden, said that the numbers for murders and other serious violent crimes were down by 11% in the first six months of 2013.  For the first six months of 2013, the murder rate was 19.9 per 100,000 inhabitants, down 3.4% from 20.6 per 100,000 in the same period of 2012.  The figure for serious and violent crimes in the first six months was 172 per 100,000, down by 10.6% from 192 in the same period of 2012.  The figures reflect the continuation of a downward trend that began in June 2010.

On the economic front, Phillips said on 4 September that he believed Jamaica would do better than envisaged in the International Monetary Fund (IMF) agreement because “the targets in the programme are defined conservatively [and] they don’t take account of major projects [such as] the ports being established, integrated resort development, some additional hotel construction…”

The finance minister was in part anticipating the 11 August announcement of a major Chinese investment of US$1.5bn in Jamaica’s main port.  Making the announcement, Works Minister Omar Davies said: “That investment will change the employment picture across the entire Kingston Metropolitan Region.”  Davies said that the Chinese company involved intended to make Jamaica its central location for the Western hemisphere and that “the range of possibilities is mind-blowing”.

For its part, the IMF published a relatively upbeat statement on 22 August at the conclusion of a staff mission to Jamaica.  It admitted that recent economic developments “mostly confirm the challenges to the Jamaican economy”.  These included an economic contraction estimated to have been 0.7% in FY2012/13 and an unemployment rate as high as 16.3% at the end of April.  Inflation in July had reached 9.7% year-on-year.

However, on a more positive note, Jamaica’s fiscal performance for 2012/13 outperformed projections, returning a primary surplus of 5.4% of GDP.  The IMF statement then went on to say: “Overall policy implementation thus far under the programme has been strong and structural reforms are progressing.  All quantitative performance targets and indicative targets for end-June were met.”

For FY2013/14, the government is targeting a primary surplus of 7.5% of GDP, and a budget to meet this target has been adopted and is being implemented.  The next important milestone will be the tabling before parliament by end-September of an Omnibus Incentive Tax Act.  The tax reform is intended to broaden the tax base, simplify the system, reduce rates, and support growth.

The IMF statement concluded that “Provided that performance remains strong, Board consideration of the first review of Jamaica’s IMF-supported program under the EFF could take place late September. Upon approval, SDR 19.97 million (about US$30 million) would be made available to Jamaica.”

• “On 27 August, the programme director for the Planning Institute of Jamaica’s Plan Development Unit, Richard Lumsden, said that the numbers for murders and other serious violent crimes were down by 11% in the first six months of 2013.  For the first six months of 2013, the murder rate was 19.9 per 100,000 inhabitants, down 3.4% from 20.6 per 100,000 in the same period of 2012.  The figure for serious and violent crimes in the first six months was 172 per 100,000, down by 10.6% from 192 in the same period of 2012.  The figures reflect the continuation of a downward trend that began in June 2010.”

COLOMBIA | IMF calls for fiscal reform. On 13 March a mission from the International Monetary Fund (IMF) concluded its annual Article IV Consultation with Colombia and said that while the country’s medium-term outlook is favourable, the authorities should now seek to promote a fiscal reform that would help Colombia reduce its fiscal deficit and public debt in the next few years.

Valerie Cerra, the head of the IMF mission that analysed the state of the Colombian economy during a 10-day visit, said that Colombia had “A strong and competently-managed policy framework – anchored by an inflation-targeting regime, a flexible exchange rate, effective financial supervision and regulation, and a prudent medium-term fiscal framework – [that] has allowed the authorities to respond adequately to shocks, using their policy tools to stabilise growth”. Cerra added that this had allowed Colombia to maintain a sound macroeconomic performance in recent years “weathering well the bouts of global economic and financial stress”. She said that Colombia’s economic prospects for 2014 were favourable with her team forecasting growth of about 4.3% and inflation to remain within the central bank’s target range of 2%-4%.

However, Cerra pointed out that her team also expected that public sector debt, which according to the latest figures from Colombia’s central bank (November 2013) now stands at US$51.235bn or 13.6% of GDP (a 13.3% year-on-year increase from 2012), will remain broadly unchanged. This despite the express commitment by the government led by President Juan Manuel Santos to reduce the country’s structural fiscal deficit and public debt levels while at the same time continuing to roll out social development programmes and invest in developing the country’s infrastructure.

According to Cerra, “To achieve this desirable goal, while also providing fiscal space for outlays to reduce poverty and overcome Colombia’s infrastructure deficit the authorities will need strong efforts to expand non-oil fiscal revenues”.

ARGENTINA | Fernández refinancia las deudas de las provincias.

El 28 de abril la Presidenta de Argentina, Cristina Fernández, anunció una reprogramación de la deuda de Ar$45mm adeudados al gobierno central por las autoridades provinciales en los últimos cuatro años. A cambio, Fernández está exigiendo a las provincias que apliquen localmente el acuerdo de congelamiento de precios de productos básicos, ‘Precios Cuidados’, y que fijen el precio de los servicios básicos, particularmente la electricidad.

El gobierno había hecho una oferta similar en diciembre, pero las finanzas de las provincias continuaron deteriorándose luego de la presión causada por los aumentos de salarios, en particular los de la fuerza policial, provocando que algunos gobernadores consideren emitir bonos antes del anuncio del anuncio del 28 de abril. Las provincias que no le deben dinero al gobierno federal, tales como San Luis y Santa Fe (ambas en manos de la oposición), se han quejado de que elloas están siendo discriminadas, y están buscando alguna forma de ayuda financiera equivalente.

ARGENTINA-BRASIL | Nuevo acuerdo automotriz. Funcionarios del gobierno argentino rebelaron el 29 de abril que los gobiernos de Argentina y Brasil han llegado a un nuevo acuerdo cubriendo el comercio bilateral de automóviles, el cual es clave para los sectores industriales tanto de Brasil como de Argentina.

En un intento por superar las asimetrías de mercado que han separado a los dos socios del Mercado Común del Sur (Mercosur) y evitar mayores disputas comerciales, a fines del 2012 Argentina y Brasil firmaron un Pacto automotriz Común (PAC) para regular la balanza comercial de modo a que esta no sea completamente desfavorable para Argentina. El PAC expira en junio, con el comercio bilateral una vez más volviéndose irrestricto después, algo que Argentina, en particular, querría evitar.

A pesar de las restricciones, la balanza comercial bilateral en el sector automotriz continúa siendo masivamente favorable para Brasil. El año pasado la balanza comercial en el sector automotriz fue de US$3,1mm a favor de Brasil, a medida que Argentina exportó 13.300 unidades menos a su vecino que en el año anterior. Esta caída sustancial en las exportaciones de automóviles al mayor mercado de exportación del sector para la Argentina ha afectado severamente a los fabricantes locales, que en meses recientes se han visto forzados a frenar la producción e incluso anunciar planes para temporalmente despedir a sus trabajadores.

Contra este telón de fondo funcionarios argentinos y brasileros comenzaron a analizar la posibilidad de firmar un nuevo acuerdo cuando una delegación encabezada por el ministro de industria, desarrollo y comercio exterior de Brasil, Mauro Borges, visitó Buenos Aires el 22 de abril. Estas negociaciones iniciales fueron positivas y condujeron a que una delegación argentina encabezada por el ministro de economía, Axel Kicillof, y la ministra de industria, Débora Giorgi, viajara a Brasília una semana más tarde para una reunión de seguimiento. Después de esa reunión, los funcionarios del gobierno argentino que acompañaron a los ministros le dijeron a la agencia nacional de noticias de Argentina, Télam, que ambas partes habían llegado a un acuerdo en principio para extender el actual PAC hasta mediados del 2015, así como también para la adopción de medidas adicionales que podrían ayudar a “equilibrar” el desbalance del comercio automotriz bilateral en el largo plazo.

Los funcionarios del gobierno argentino no proveyeron mayores especifícaciones, señalando que los detalles del acuerdo deberán ser resueltos durante otra reunión, programada para tener lugar en Brasília la semana próxima. Sin embargo, ellos revelaron que Brasil había acordado permitir la entrada de más autopartes de Argentina a su mercado interno, a cambio que Argentina permita que ingresen más automóviles brasileros a su mercado. Además, también dijeron que el gobierno brasilero también ofreció una línea de crédito de US$2mm a través del banco controlado por el estado, el Banco do Brasil, para consumidores en ambos lados de la frontera interesados en comprar vehículos en un intento por estimular la demanda.

• Astori intenta atrae a los exportadores brasileros a Uruguay

El 29 de abril el vicepresidente de Uruguay, Danilo Astori, exhortó a los empresarios brasileros a que exploten las ventajas que su país ofrece como una “plataforma” de acceso a otros mercados con los cuales Uruguay tiene Tratados de Libre Comercio (TLC), tales como México. Hablando en una conferencia en São Paulo, Astori dijo que los empresarios brasileros deberían tomar en consideración el hecho que, a diferencia de Brasil, que no logró concluir las negociaciones de un TLC con México lanzadas en el 2000, Uruguay firmó un TLC con México en el 2003. “El TLC con México es de gran importancia para los empresarios brasileros, México es un mercado importante”, Astori dijo antes de invitar a los líderes empresariales brasileros a que “aprovechen la ventajas del favorable y seguro escenario [de inversión y comercio] que Uruguay ha estado tratando de construir en lo últimos años”.

Argentina has become the first Latin American country to build and launch its own geostationary satellite. The Arsat 1, built by the state-run firm Investigaciones Aplicadas (Invap), was launched from the Kourou spaceport in French Guiana on 19 October. Take-off was broadcast live on television and radio across Argentina, with President Cristina Fernández apparently supervising the launch from the Casa Rosada. The satellite cost around US$270m, but should eventually save Argentina US$25m a year in rental fees to foreign states for telecommunication services. As Fernández’s stage management of the event showed, in terms of political capital, the return was immediate.

Seven years in the making, the Arsat 1 was designed and built by Invap in the southern city of Bariloche. According to Héctor Otheguy, the general manager of Invap, the launch went better than expected, and the satellite is due to begin working in a few days’ time. When in operation, the satellite will strengthen Argentina’s internet coverage, mobile phone and digital terrestrial television network, as well as improving audio-visual content distribution from Argentina to the rest of Latin America and the US. It should have a working life of around 15 years. Arsat 2 and Arsat 3 are already in development, with Arsat 2 “70% complete”, according to Fernández.

Argentina invests around 0.57% of GDP in its telecommunications infrastructure, down from the over 1% it invested during the 1990s, but still more than Brazil, Colombia and Mexico. However, Argentina’s investment in research and development, at 0.65% of GDP, is the second highest level in Latin America.

Fernández spoke of her “great pride” that Argentina should join the select club of nations with their own satellite. “It was made entirely from Argentine technology, by Argentine professionals,” she said. (The president of Arsat admitted to the press afterwards that at least half of the components of the satellite were imported.) Fernández said that the investment in the satellite was a question of national sovereignty. “The UK was behind one of the two orbital positions that Argentina could retain for its satellites,” she warned.

• Political capital

The satellite project was initially approved by Fernández’s late predecessor and husband, Néstor Kirchner (2003-2007), and she used the occasion of the launch to take a swipe at her opponents. “They said the space programme was a waste of money and that the scheduled launch for 2014 was a delusion,” she said. “Now they can see it was not”.

Earlier in the week, two opposition candidates who are likely to challenge her chosen successor for the presidency, Mauricio Macri and Sergio Massa, indicated they would revoke a number of Kirchner-era laws were they to win. After the launch Fernández pointedly told Argentines, “I am certain that satellites cannot be revoked.”

• Tough on crime

The government has announced a number of last-minute changes to its proposed penal code bill. Speaking on 21 October, President Cristina Fernández excoriated judges for releasing prisoners. “We do not want criminals who are arrested and then are released. We want them to be remanded in custody and we want the judiciary to take into account the shock to society their crimes caused,” she said.

Courts will now be allowed to keep them in preventive custody if there is a risk of “social commotion”. Another headline-grabbing move is the fast-tracking of the deportation of foreigners convicted of a criminal offence.

With the government’s latest alterations, it appears the more liberal overhaul of the criminal code conducted earlier this year by the recently deceased supreme court judge Enrique Petracchi has now been swept aside in favour of a more populist, tough-on-crime approach.

The opposition claims that one of the new proposals, which places time limits on corruption investigations, is designed to protect officials accused of misdemeanours.

• Cracking down on the ‘blue dollar’

On 21 October police raided 12 money exchange offices to verify their compliance with current regulations on currency swaps. The raid had an immediate effect on the ‘blue dollar’ rate (the black market price for US dollars), which fell by 25 cents. The official exchange rate is Arg$8.5/US$1, while the black market rate is Arg$14.70/US$1.

Trade unions long at odds with President Cristina Fernández are preparing to strike over the government’s refusal to raise the tax allowance on salaries. On 3 December, Hugo Moyano, Pablo Micheli and Luis Barrionuevo met to determine the exact date of the industrial action, which is slated for next week. While these trade union leaders’ calls for a general strike are wearily familiar for the government, the fact its traditional allies in the union movement are considering participating will be a cause for concern.

Income tax threshold

As the law stands, anyone earning over Arg$15,000 a month (US$1,750 at the official exchange rate; US$1,150 at the black market rate) is obliged to pay income tax. That figure was set in November 2013. In his daily press conference, the cabinet chief, Jorge Capitanich, said “there were no protests back then”.

While that may be true, inflation, by most private sector estimates, is running at 40% a year, meaning many more workers have been brought into the income tax net. Ten percent more Argentines are estimated to be paying income tax now than in November 2013. Other comments by government officials have also irritated the unions. In a radio interview earlier this week the economy minister, Axel Kicillof, said, “I don’t know where they get this idea that inflation is running at 40%.”

So far, the government has shown no willingness to give ground, either on the threshold or on another proposal, advocated by government supporters within the trade union movement, that the traditional December bonus salary, known as the ‘aguinaldo’ be exempt from taxation. Reportedly, the government-supporting wing of the trade union movement, Confederación General del Trabajo (CGT), is increasingly disillusioned by its failure to receive an audience with President Fernández over recent days. Antonio Caló, usually a government loyalist, met Omar Vivani, leader of the taxi drivers’ union to discuss what role they might play in next week’s strike.

The architects of the action, Moyano, Barrionuevo and Micheli, met on 3 December to decide whether to call the strike for 10 or 11 December. The 10 December is International Human Rights Day, which some in the unions believe could highlight some of the government’s achievements in that area. According to union sources, the strike is expected to attract participation from bank clerks, truck drivers, toll booth operators, bakers and some teachers. Capitanich described the planned action as “politically motivated”.

• Kicillof defends economic model

In a fiery speech to the annual conference of the Unión Industrial Argentina (UIA), the leading industrial employer federation, the economy minister, Axel Kicillof, defended the government’s heterodox economic policies. “There is no developing country that has had a spontaneous process of industrialisation without State intervention,” he said.

Kicillof also argued that social inclusion had to come before growth. “It is a lie that we had to grow in order to distribute the proceeds of growth; we have to distribute first in order to be able to grow,” he said. The minister went on to argue that the UIA played a key role in this as a sector that could create decent jobs, an essential element of social inclusion.

Looking ahead to next year’s general elections, Kicillof said that Argentina would have to choose between two clearly different models of development: one which prioritises social inclusion and one which values only fiscal rectitude.

President Fernández closed the two-day conference of the UIA with a speech on the evening of 3 December in defence of her industrial policies. Tensions between the government and business leaders have been growing over the anti-hoarding act, which allows for State intervention in production, imports/exports and pricing. Argentina’s top business leaders, the so-called G6, have launched a lawsuit to challenge the constitutionality of the act.

• Bonadío escapes impeachment

Claudio Bonadío, the federal judge who recently incurred the government’s wrath due to his investigation of a hotel chain owned by President Cristina Fernández’s family, avoided impeachment at a meeting of the magistrates’ council on 3 December. Kirchnerista judges failed to gather the votes needed to impeach the judge, although he was given a financial penalty of 30% of the value of his salary over his alleged failure to pursue investigations into officials accused of corruption in the government of Carlos Menem (1989-1999).

CMPC and SCA accused of running a cartel: Chile’s economic prosecutions office (Fiscalía Nacional Económica) accused the powerful CMPC group (controlled by the Matte family) and Swedish-owned SCA of operating a price cartel in the country’s paper products market for over 10 years. In a complaint filed with the competition tribunal (Tribunal de Defensa de la Libre Competencia – TDLC), the FNE said the two companies colluded on fixing quotas and prices on toilet paper, paper towels, paper serviettes, facial tissues, and cosmetic tissues. The two companies have combined sales in Chile of around US$400m per annum and control 90% of the market. CMPC owner Eliodoro Matte officially apologised to the public and the company’s consumers for what he described as “these repudiable acts”. President Michelle Bachelet said the matter was “very serious” and that she would submit a bill in congress raising the level of fines for market rigging. Apart from Chile, CMPC, which is also involved in forestry and cellulose, has operations in Argentina, Brazil, Colombia, Mexico, Peru, and Uruguay.

Petrobras announces further losses: State-owned oil company Petrobras announced net third quarter losses of BRL3.76bn (US$1.01bn) as a result of lower international oil prices, the depreciation of the real, and a deep domestic recession. The loss was over three times larger than the market had been expecting, although smaller than in Q314, when the company was in the red by BRL5.34bn. Net revenue fell 6.9% to BRL82.2bn in Q315. But analysts noted that operating results improved, with Ebitda up by 82% to BRL15.5bn. Meanwhile the company was hit in early November by a stoppage by oil workers’ union FUP that reduced output by around 115,000 barrels per day, or 5.5% of the total. On 11 November management offered a 9.5% salary increase, but the union, which is demanding an 18% rise, was reported to have rejected the offer and demanded a meeting with chief executive Aldemir Bendine.

LATAM denies IAG talks: Rumours of discussions on a strategic alliance or even a takeover bid by International Airlines Group (IAG – the alliance between British Airways and Iberia) for LATAM Airlines (the merger formed by LAN of Chile and TAM of Brazil) have been denied. The reports led to a 6% rise in LATAM share prices on 9 November. They were based on a discussion between IAG chief executive Willie Walsh and a group of analysts. According to press reports of the meeting Walsh had said IAG wanted to work more closely with LATAM and might even consider a takeover. However IAG later denied that this had been said, and LATAM issued a formal statement saying the company was “not in conversation with IAG on an ownership stake.” Both companies are members of the Oneworld alliance and have code-sharing agreements.

Pemex further in the red: Mexico’s state oil company Pemex reported net losses of MXN167.57bn (US$9.921bn) in Q315 on the back of lower international oil prices, a fall in crude oil output, and a depreciating peso. The losses were more than double the MXN59.654bn loss in the comparable year-earlier period. Net revenues fell by 22.8% in the quarter to MXN313.77bn. Crude output fell by 5.5% to 2.266m barrels per day (bpd). The price of Mexican mix crude was down by 53.8% to US$41.75 a barrel.

President Jimmy Morales last week sent down a tax reform to the 158-member unicameral congress as part of efforts to boost Guatemala’s notoriously low tax take (which reached just 10.1% of GDP in 2015). President Morales remains under intense pressure to raise revenue in the face of continued unrest from teachers and health-care-sector workers who are calling on the small, conservative Frente de Convergencia Nacional (FCN-Nación) government to increase public sector spending [WR-16-29].

In an 11 August press release, Finance Minister Julio Héctor Estrada said that the proposed reform, which was sent down to the legislature the following day, aimed to boost revenue through measures like increasing the tax on profits from 25% to 29%; raising taxes on cement from Q$1.50 (US$0.20) to Q$5 (US$0.65) per quintal sack; raising mining royalties, from 1% to 10% for gold, silver and platinum and from 1% to 3% for other metals; and increasing taxes on the distribution of crude and petrol derivatives by up to Q$3.00 a gallon. The reform also proposes strengthening and accelerating the electronic tax billing system, and allows for the participation of the tax authorities (SAT) in collecting the single property tax (IUSI) at the behest of municipalities. Estrada said that the aim was to increase the tax take to 12.2%-12.4% of GDP, as established in the 1996 peace accords ending the 36-year civil war.

Yet fiscal reform is a notoriously thorny issue in Guatemala and it remains to be seen how far the new government can succeed where its predecessors have failed. Morales’s disgraced predecessor Otto Pérez Molina (Partido Patriota, 2012-2015) passed a fiscal reform in 2012, but it was stalled amid a string of constitutional appeals. Similarly, Morales’s attempts to raise royalties on mining and cement are likely to encounter firm opposition from private-sector lobbies like the umbrella group Comité de Cámaras Agrícolas, Comerciales, Industriales y Financieras (Cacif). In September 2015 the country’s constitutional court (CC) rejected three tax changes proposed by the Pérez Molina government: a new Q$5(US$0.65) monthly tax on landlines and cell phones along with the same increases in taxes on cement and mining royalties as Morales is proposing.

More protests

Last week Guatemala’s main teachers’ union, the Sindicato de Trabajadores de la Educación en Guatemala (Steg), once again staged protests across the country calling for increased government spending. The unrest, which took place on 11 August, comes despite a deal agreed days earlier with the Morales government to set up a negotiating table with Health Minister Lucrecia Hernández Mack and Education Minister Óscar López together with the Steg and health-sector officials grouped in the Sindicato Nacional de Trabajadores de la Salud de Guatemala (SNTSG) union to discuss their demands.

According to a presidential press release, the blockades – which the Steg said were part of “pressure tactics to ensure that the government complies with its collective pacts” – took place on roads in the departments of San Marcos and Huehuetenango, which border Mexico; Chiquimula and Zacapa (east); Jutiapa (south-east); and Izabal (north). As well as occupying premises at the ‘Mundo Maya’ international airport in the northern department of Petén, the transport police announced that protesters obstructed access at the borders with Honduras and El Salvador and to the country’s main port, Puerto Quetzal, in the southern department of Escuintla. The authorities estimate that the disruption resulted in losses of some Q$43.7m (US$5.8m). The press release also cites Hernández Mack as saying on 10 August that, for unspecified reasons, Steg and SNTSG had abandoned the dialogue table.

• Poverty

In his press release, Finance Minister Julio Héctor Estrada highlighted the need for the tax reform in the face of widening social inequalities. He said that the national poverty rate had increased from 56.4% of the population in 2000 to 59.3% in 2014 (the most recent available figure from the national statistics institute) while extreme poverty had increased from 15.7% to 23.4% over the same period.

COLOMBIA | Solid growth. Colombia’s national statistics agency (Dane) released new figures on 28 February which show that the country’s GDP grew by 2.7% in 2018 compared with the previous year, while fourth-quarter growth was 2.8% compared with the same period in 2017.

The 2018 year-end GDP result represents a considerable improvement on the 1.8% growth recorded in 2017, the lowest yearly growth rate posted by the Colombian economy in eight years. According to a Dane report, GDP growth in 2018 was driven by a 4.1% increase in activity in the public sector and national defence sectors. However, there was also a solid 3.1% increase in activity in the retail sector, and a 2% increase in activity in both the agricultural and manufacturing sectors. In contrast there was a 12.8% fall in activity in the metallic mineral extraction sector, while activity in the hydrocarbons sector increased by a moderate 1.4%.

COLOMBIA | Inflation remains low. Colombia’s national statistics agency (Dane) reported on 5 March that inflation during the month of February stood at 0.57%, representing 0.14 percentage points less than in the same month of 2018. The most significant monthly price variations were observed in the areas of education (up 4.48%), alcoholic beverages and tobacco (1.05%), and transport (0.78%).

The accumulated 12-month rolling inflation rate, which here represented the period between March 2018 and February 2019, stood at 3.01%, and represented a decrease of 0.36 percentage points with respect to the period between March 2017 and February 2018.

• Colombian inflation

The Colombian cities with the highest inflation in February were Bucaramanga (0.97%), Tunja (0.85%), Manizales (0.78%) and Bogotá (0.69%), while those with the lowest variation in the consumer price index (CPI) were Santa Marta (0.14%), Sincelejo (0.20%), and Florencia (0.22%).

COLOMBIA | Coffee sector in trouble. The Fondo de Financiamiento del Sector Agropecuario (Finagro), a financial institution linked to Colombia’s agriculture & rural development ministry and dedicated to promoting the development of the agricultural sector, released the result of a new survey last week that shows the extent of the financial difficulties faced by Colombia’s coffee growers.

According to Finagro’s survey, Colombia’s 550,000 coffee growers currently have a collective debt of Col$1.8trn (US$585.5m). This highlights the problem that coffee growers face in the current scenario when the price of a pound sack of coffee in international markets has now fallen to below US$1, which makes production in Colombia no longer profitable.

Faced with such a sizable debt, and with the trend of falling international coffee prices set to continue, the Colombian federation of coffee growers (FNC) has called on the government to provide its members with assistance and to increase the domestic price of coffee lest the whole sector goes bankrupt. Yet the government pointed out that the falling international price of coffee does not answer to domestic market factors but rather to the fact that there is currently an oversupply of coffee in the international market of some 1.3m sacks, according to the International Coffee Organization.

PERU | One step closer to OECD membership. The Organisation for Economic Cooperation and Development (OECD) published its first review on 5 March of a Peruvian regulatory body put up for evaluation as part of Peru’s broader application process to become an OECD member state. The assessed entity was the supervisory agency for private investment in telecommunications (Osiptel), which is responsible for setting tariffs for public telecommunication services, issuing regulations to communications producers, and dealing with sector complaints.

The OECD evaluation found that Osiptel had a well-defined strategic framework that should be replicated in other regulatory bodies but also identified areas that needed improvement. Among them was improved definition of its functions, to make its decisions legally binding, as well as improving communication mechanisms with the state and operators, especially because Osiptel shares several functions with the transport & communications ministry (MTC).

The next Peruvian regulatory body to undergo a similar evaluation by the OECD will be the supervisory body for investment in energy & mining (Osinergmin), followed by the supervisory body for investment in public transport infrastructure (Ositran).

Venezuela’s President Nicolás Maduro has suffered a major blow in his efforts to gain control of the Venezuelan gold reserves held in the Bank of England (BoE), after a UK court ruling upheld the British government’s recognition of opposition leader Juan Guaidó as Venezuela’s legitimate president.

The Venezuelan gold reserves in the BoE, valued at US$1.9bn, have been frozen since early 2020, when the British government sided with Guaidó in Venezuela’s presidential crisis. The Maduro administration sued the BoE in June 2020, claiming that it needed access to the gold to fund its response to the coronavirus (Covid-19) pandemic. The Venezuelan opposition responded by claiming that Maduro wanted the gold to pay off domestic and international allies, and it says that the funds must be protected in order to help future generations of Venezuelans.

The case has effectively become a litmus test for whether international recognition of Guaidó as president has any legal basis, despite the opposition leader having no de-facto power on the ground. On 29 July, Justice Sara Cockerill, of the UK’s High Court of Justice, rejected Maduro’s claims to the gold. She dismissed his government’s argument that the UK must respect rulings by Venezuela’s supreme court (TSJ) that have rejected Guaidó’s claim to the presidency, stating that “there is no basis for the recognition of the judgements upon which the Maduro board relies”.

It is unclear what will happen next, although Maduro’s hopes of accessing the gold appear to have been quashed. Nor, however, has Guaidó been authorised to access the gold, which appears likely to remain in the care of the BoE until Venezuela’s political crisis is resolved or the UK drops its recognition of Guaidó. Maduro’s legal team has said it expects a further hearing to take place in October to determine which issues remain in litigation.

The verdict prompted a predictably furious response from the Venezuelan authorities. The central bank (BCV) released a statement condemning the “unbelievable ruling from a British court which once again, in subordination to the foreign policy decisions of the British crown, undermines the government’s legitimate claims to Venezuela’s international reserves.” Vice President Delcy Rodríguez appeared to threaten some form of retaliation against the opposition, saying that “politically, there will be justice in Venezuela…for this criminal, extremist, fascist group which is determined to rob the assets of the Venezuelan people.”

Public sector protests

Hundreds of health and education workers took to the streets of Caracas from 2-4 August, demanding salary increases and holiday pay that they say has not been included in their payslips. Pensioners also joined the protests, arguing that their public sector pensions have been eroded by inflation. Protests were continuing as this issue went to press on 4 August, and protest organisers, including the pensioners’ association Frente en Defensa de los Jubilados, have said that the demonstrations will continue until the government acts on their demands.