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Every year on 20 May, Uruguay holds the ‘Marcha del Silencio’ – now in its 26^th year – during which the victims of the 1973-1985 military dictatorship are remembered. This year, however, a reminder of this dark history resurfaced a few weeks earlier, with the discovery of some documents dating from that period in a military barracks in Montevideo.

Uruguayan daily El País reported on 9 May that defence ministry officials had found documents containing information on intelligence activities and military operations in the years surrounding the 1973 coup d’état at the Artillery Group 5 barracks in the capital, which had served as a detention and torture centre for political prisoners during the dictatorship. Defence Minister Javier García said that President Luis Alberto Lacalle Pou was informed of the findings, and that the documents would be digitalised before being passed on to the attorney general and the national human rights institute (INDDHH), a government body.

This was duly done on 11 May, with García and Lacalle Pou hand-delivering the digitalised documents themselves to attorney general Jorge Díaz and the INDDHH. The 1,650 pages include records, dating between 1972 and 1977, of arrest orders, information on infiltrators, and statements from detainees from two bodies known as the information and defence service (SID) and the coordinator of antisubversive operations (OCOA). The INDDHH notes that the SID and OCOA “were responsible for the application of state terrorism in Uruguay, including the detention, torture, and disappearance of political opponents”.

García said the government is standing by a commitment made by Lacalle Pou when he took office, that of “acting with absolute transparency and giving all the information that is within our reach…to the competent organisations”. The documents have also been made publicly available on government websites and were given to the Madres y Familiares de Uruguayos Detenidos Desaparecidos, an organisation of families of the disappeared. Members of the Desaparecidos NGO accuse the military of deliberately concealing information and have called on the authorities to be transparent and uncover all remaining documents which, the NGO maintains, continue to be hidden in military buildings.

By the government’s own count, 192 Uruguayans were disappeared by the state between 1968 and 1985 (many in neighbouring Argentina), while countless others were detained and tortured. Uruguay set up a truth commission and later prosecuted and convicted two military leaders of the 1973-1985 dictatorship, Juan María Bordaberry and Gregorio Álvarez; an amnesty law, although in theory still in place, has been bypassed to allow for the prosecution of abuses committed during that time. But, as in other countries in the region where transitional justice processes have been more or less successful in addressing the abuses of past authoritarian governments, the legacy of the dictatorship remains an open wound for many in Uruguay. Members of the Desaparecidos NGO continue to denounce “impunity and silence”, and call for “memory, truth, and justice”, a request repeated at this year’s Marcha del Silencio, which was mostly held virtually due to the coronavirus (Covid-19) pandemic.        

The newly uncovered documents could help respond to such calls and shed light on the “serious human rights abuses” which were carried out both before and during the dictatorship, the INDDHH said. The institute also noted that these files indicate the likely existence of similar documents in other military barracks, and that their being made public by the national executive should encourage individuals with information on the disappeared, their possible whereabouts or their fate, to come forward.

COSTA RICA | Gov’t hails fiscal progress but cites room for improvement. On 18 November, Costa Rica’s finance ministry released new figures which show the country’s fiscal deficit to October was ¢1.54trn (US$2.4bn), representing 3.96% of GDP. This compares with ¢2.5trn registered at the same point in 2020, which was equivalent to 6.91% of GDP. As of October 2021, public debt was ¢27.5trn (71.03% of GDP). The finance ministry said that these results were favourable but insufficient to ensure financial stability in the long term, and it called for the approval of initiatives currently under discussion in the legislature (such as the public employment bill introducing a single pay scale and eliminating other salary components). The finance ministry also highlighted that interest payments on debt reached ¢1.65trn (4.26% of GDP) – the highest of the last 15 years. The government has previously said that the fiscal adjustment outlined in the International Monetary Fund (IMF) agreement approved by the legislature in July would be “transcendental” to reducing this. Last year, following the arrival of the coronavirus (Covid-19) pandemic, Costa Rica posted a fiscal deficit of 8.1% of GDP, and a public debt of 67.5% of GDP.

GUATEMALA | Hopeful on tourism sector recovery. New figures from Guatemala’s national tourism institute (Inguat), released on 1 November, show that as of 30 September 402,254 international tourists had visited Guatemala in 2021, generating US$255m in revenue. Inguat’s marketing director Lourdes Maldonado said the figures had exceeded previous expectations and Inguat is forecasting that 598,033 international tourists will visit Guatemala by the end of the year, bringing US$299m in revenue. According to official figures, 593,989 tourists visited Guatemala in 2020, down from 2.56m in 2019. As elsewhere in the region, Guatemala’s tourism sector was badly damaged by the pandemic.

Central America & Caribbean: Inflation Rate
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Perhaps the most definitive evidence of which side of the economic divide President Ollanta Humala stands comes with the announcement that he will seek foreign investment at the annual World Economic Forum in Davos, Switzerland. Ministers from Brazil and Chile have long been Davos habitués while President Hugo Chavez of Venezuela dismisses the annual gathering as representative of a dying world.

The complication is that Humala was happy to be photographed with Chávez on a visit to Caracas in mid-January. The image he seems to want to project is that of a pragmatic moderate who accepts that foreign investment is necessary, but that investment has to be on terms that charge properly for the assets that the country is offering the private sector.

The government has been moving steadily towards the pragmatic centre, shedding its advisers who had left-wing reputations. It is worth noting, however, that the key Conga copper and gold project in northern Peru remains stalled. Manuel Pulgar-Vidal, the environment minister, said that the government would take the final decision on whether the project went ahead or was shelved, “not because it is the referee [between the mining industry and environmental protesters] but because its job is to take decisions”. He said that the government had commissioned a fresh study of the like environmental impact of the project and that the controversial (and critical) assessment by the environment ministry of the original environmental impact assessment would be factored into the decision-making process.

The goal for the Humala government is to keep the economy growing at the 7% annual rates of the past few years while increasing public investments so the product of that economic growth is shared more widely.

Public investment this year is likely to grow by 27% and still leave the budget 1% of GDP in surplus, according to calculations by the country’s biggest bank, Banco de Crédito del Perú (BCP). In 2011 the government had run a fiscal surplus of 2% of GDP.

Inflation is a problem. In 2011 the annual rate was 4.7%, which was beyond the target set by the central bank. Most analysts doubt that the bank will tighten monetary policy until the beginning of the second quarter of 2012 when the outlook for the weather (and food prices) will be clearer.

PERU | Crece el superávit fiscal. El banco central de Perú (BCRP) reveló el 27 de mayo que el país logró un superávit fiscal de 7% del PIB en el primer trimestre de 2012, un punto porcentual más elevado que el superávit registrado en el mismo periodo del año pasado. El BCRP explicó que esto se produce como una consecuencia de los más altos ingresos del gobierno, que se incrementaron en 0,4%  en ese periodo, y menor gasto no financiero del gobierno, que decreció 0,3%. Esto ha impulsado los ahorros públicos del gobierno en 1,1 puntos porcentuales en el primer trimestre.

Aunque los balances fiscales tienden a ser más elevados a comienzos del año, cuando los gobiernos tienen un presupuesto lleno pues la mayor parte de los gastos aún deben ser asignados; Perú ha estado conduciendo un superávit fiscal en años recientes gracias a sus sostenido crecimiento económico. El gobierno liderado por el Presidente Ollanta Humala está intentando continuar esta tendencia, y ha pronosticado un superávit fiscal de 1% del PIB al finalizar el año, comparado con 0,8% registrado en el 2011.

El gobierno planea lograr esto decreciendo gradualmente su nivel de gasto en inversiones en la economía para permitir que la inversión del sector privado tome el relevo. Al parecer, esta estrategia  está dando resultado, pues el BCRP informó que las inversiones netas en el primer trimestre de 2012 fueron del 28% del PIB, o 2,5 puntos porcentuales más alto que en igual periodo del 2011. De acuerdo con el BCRP, “esto es explicado por un incremento en la inversión del sector privado y en la inversión del sector público”. Esto será una buena noticia para el ministerio de economía de Perú que el mes pasado declaró que mientras su pronóstico oficial para el crecimiento económico es de 6% este año, la cifra podría ser aun más alta si hay una “importante aceleración en la inversión privada”.

COLOMBIA | Aguardando la decisión de la OCDE. El ministro de finanzas, Juan Carlos Echeverry, ha revelado que la Organización para la Cooperación y el Desarrollo Económico (OCDE), está actualmente evaluando el requerimiento formal de Colombia para unirse. Echeverry explicó que el año pasado el Presidente Juan Manuel Santos sometió un requerimiento formal en una carta dirigida al secretario general de la OCDE, José Ángel Gurría, y que ahora la organización está en “e proceso de evaluarlo; y si hay apoyo de otros países”.

De acuerdo con Echeverry, aunque no se ha fijado un calendario claro, Colombia confía que su solicitud  será exitosa. Dijo que el ser miembro de la OCDE, podría proveer a Colombia el “acceso a algunas de las mejores prácticas en el mundo” cuando se trata de monitorear los sistemas fiscales y los gastos del gobierno.

Echeverry también señaló que Colombia podría proveer a la organización  con algunas de sus experiencias positivas en implementar políticas revolucionarias como su ‘ley de semáforos’ que frena a los gobiernos departamentales y municipales para obtener más créditos una vez que han excedido el límite de deuda, o sus reformas para la distribución de los royalties petroleros y de minería en el país. De esta manera, alega Echeverry que al ser miembro de la OCDE podría resultar en un “tipo de proceso fértil cruzado que realmente podría ayudar a Colombia”.

COLOMBIA | Venta de activos de carbón. El 28 de mayo, el gigante minero brasileño, Vale, anunció que había acordado la venta de sus operaciones de carbón termal en Colombia a Recursos Naturales Colombianos (RNC) por US$407m. Colombia es uno de los grandes productores de carbón del mundo, con 85,8 toneladas producidas el año pasado, y en años recientes ha atraído a varios intereses internacionales debido al incremento en la demanda por el combustible fósil en los mercados asiáticos.

RNC es una empresa controlada por el banco de inversiones de EU, Goldman Sachs, y se cree que su oferta excedió a la de otras varias compañías internacionales que estaban interesadas en los activos, como Glencore, Pacific Coal y Drummond. Sin embargo, en una corta declaración a la bolsa de valores de São Paulo, Vale confirmó que había aceptado la oferta de RNC y que el acuerdo ahora será analizado por los reguladores colombianos.

Los activos de Vale en el carbón en Colombia, que produce unas 4,5 toneladas estimadas por año, consiste en tres minas y un sistema ferroviario en el departamento de César; y una compañía de servicios de puerto que opera a lo largo de la costa de Colombia. Vale lo adquirió en el 2009 de una firma local, Cementos Argos, por US$350m. Sin embargo, en su declaración, Vale explicó que la venta era parte de una estrategia para concentrarse en su negocio central del hierro.

ARGENTINA | Aerolíneas’s 2013 losses. On 16 January Mariano Recalde, the president of Argentina’s national airline, Aerolíneas Argentinas, revealed that the firm posted losses of US$247m in 2013. Ever since Aerolíneas and its subsidiary, Austral, were taken over by the government in 2008 the two have posted massive losses year in and year out despite the high level of subsidies they receive from the State. In fact, keeping the two firms up and running has cost the State some US$3.9bn since 2008.

But despite closing the year in the red once again, Aerolíneas losses were actually 44.1% lower than those registered by the firm in 2012. Indeed when presenting the 2013 results, Recalde gave a positive assessment of the firm’s situation stating that: “We have achieved the goals set out in the company’s budget and business plan, with an increase of almost 20% in passenger numbers and a trend towards less and less State assistance”.

The results also show that overall sales for both Aerolíneas and Austral, amounted to US$1.92bn, 21.7% up on the US$1.58bn figure recorded in 2012. The number of flights, flight hours, and number of passengers were also up on the previous year, with increases of 16.3%, 14%, and 19.1%, respectively. According to Recalde, the expectation is that these upward trends will continue into 2014. As a result he said that the government hopes to expand both carriers’ fleets so that these can serve 10m passengers each this year.

Recalde also said that there were plans to increase the number of destinations that the companies serve, announcing that from March Aerolíneas will begin flying from Buenos Aires to the city of Paraná, Entre Ríos province, which would mean that for the first time in 25 years Aerolíneas will once again fly to all 23 of Argentina’s provinces.

There are also plans to open a new route to the Brazilian city of Curitiba, with which Aerolíneas is looking to improve its links with the whole of Brazil just in time for this year’s Fifa World Cup (albeit construction of the stadium in Curitiba is so far behind schedule there is talk of the city being stripped of the right to host matches); and to consolidate its flights to New York City.

However, despite the positive figures posted last year, the financial results highlight just how dependent Aerolíneas is on State subsidies. According to data from the economy ministry, Aerolíneas and Austral had spent their entire fuel subsidy allocation by November, requiring an additional disbursement of US$39.8m in order to carry on operating throughout December. All of this suggests that the State’s bill for Aerolíneas will continue to rise.

• Mercosur-EU trade agreement

On 21 January Uruguay’s foreign minister, Luis Almagro, left open the possibility that one or more of the Southern Common Market (Mercosur) member countries could be excluded from the trade negotiations with the European Union (EU) in a bid to facilitate the long-stalled talks. Mercosur-EU trade negotiations have been dragging on since 2000 with the two sides unable to reach a final deal. But Almagro said that in a bid to expedite the process

Mercosur is now toying with the idea of concluding “a three-country agreement, or the signing of a single-country agreement” with those initially left out to be included down the line. According to Almagro this is to be discussed at the next Mercosur heads of state summit, scheduled to take place by mid-February.

Much has been written about Venezuela’s macroeconomic crisis – with oil prices still low and economic policy chaotic, this year the country will have one of the world’s deepest recessions and one of its highest rates of inflation (-8.0% and 481.5% respectively, as projected by the IMF). What do people do to survive?

The collapse in oil revenues, massive money printing to cover a soaring fiscal deficit and severely market-distorting and bureaucratic exchange rate and price controls have combined to drastically limit essential imports of food and medicines into Venezuela. This has resulted in widespread shortages and triggered hyperinflation. Venezuelans currently are only permitted to shop for basic price-controlled necessities in state controlled supermarkets on certain days of the week (fingerprint recognition is used to enforce this regulation). The upshot is extremely long queues, with people waiting for hours only to be turned away when supplies run out.

Into this tense and troubled environment comes the practice of bachaqueo – black market traders. The Spanish newspaper El País spent some time with Daniela (not her real name), a 27-year-old mother of two and now a full time bachaquera. Her core activity is queuing (or jumping queues) to buy goods at controlled prices, so as to re-sell them at heavily-marked up prices to people who for whatever reason were unable to acquire the items through the correct channels. “It is easy money” Daniela explains, “it is not worth looking for a job now, and no-one has one to offer, anyway. And people need the products”. From very early in the morning, Daniela and her friends check the availability of goods like flour, rice, milk and personal hygiene items like soap; sharing information across mobile apps like WhatsApp. They then acquire the items, often bribing police or supermarket staff to evade controls.

After going home for a mid-morning rest, in the afternoon the traders begin selling their haul. “A bag of rice, which I’ve bought for Bs450, I’ll sell at Bs1,500; milk, which costs Bs800, will go for Bs3,000; nappies, bought for Bs100, will sell for Bs1,500” she says. How many people are involved in bachaqueo is not known. According to pollsters Datanálisis, up to 70% of the people queuing may be bachaqueros. Like all black marketeers, bachaqueros are both loved and hated. They are necessary for survival but intensely resented. According to Miguel Ángel Campos, a sociologist at the Universidad de Zulia, “The fact that half the population is buying basic necessities on a massive scale to sell them to the other half with a mark-up of 100 times the price is not just about the evil of self-interest, it is like an act of genocide”.

Another long-standing survival strategy has been to resort to smuggling across the Venezuelan border with Colombia. This, after all, is where the name bachaqueo originally came from: the bachaco is a large ant, native to the border area, which carries its food on its back. The long land border between the two countries was reopened on 13 August after a yearlong closure imposed by Venezuelan on security grounds. According to Colombian authorities, some 57,000 Venezuelans crossed the border that day to buy basic necessities. Sources say that despite the closure of formal border crossings, contraband activity has nonetheless remained high: traditionally, cheap Venezuelan petrol is sold in Colombia in exchange for basic necessities. At the San Antonio del Táchira-Cúcuta border crossing, Angel Enrique Borrego told the Spanish news agency Efe, “I am a diabetic and I can’t get the medicines I need in Venezuela so I am crossing into Colombia to support myself”. A 17 year-old engineering student told Reuters that she had travelled 800kms to the frontier to buy food “because we can’t get anything where we live”. Taxi drivers also said they had to buy spare parts for their vehicles in Colombia. There were also some reports of Venezuelans using their annual holidays to take a 36-hour trip to bulk-buy rice and flour (available at some 45% below bachaqueo prices) in Pacaraima, a Brazilian border town.

Urban agriculture is another option. The government has been encouraging city residents to grow vegetables on the balconies of high-rise apartment blocks, in urban gardens, and on the roofs of residential and office buildings. Officials claim that in the past three months 135,000 people have grown 272 tons of fruit, vegetables and aromatic herbs. The official target for urban agriculture is to take production up to 3,500 tons per annum, but critics note that this would meet the food needs of only some 1,000 people. To set an example, President Nicolás Maduro has claimed that he and his wife raise chickens and grow pumpkins. But some critics suggests that it would be better to boost long-neglected rural agriculture in traditionally fertile areas, where output fell after many commercial farms were expropriated by the Socialist government in power since 1999.

Perhaps ironically, given Venezuela’s long-standing over-reliance on oil revenues, another response to the crisis has been a form of homemade do-it-yourself diversification. According to Alexis Blanco, writing for the blog Caracas Chronicles, in the town of Catia street sellers now offer home-made corn flour, locally fished sardines, and handmade soaps. Some have begun manufacturing home-made deodorants: “For a mere Bs400 you can get a small jar of a paste whose main ingredient is sodium bicarbonate – baking soda – plus some kind of oil to give it some aroma and moisturising properties” Blanco says, noting there is also a multitude of second hand household goods on sale: “It’s easy to see what’s going on here: this is the next stage in the decapitalisation of Catia’s fast-pauperising middle class.”

The government led by President Juan Carlos Varela and local business groups reacted angrily to a decision by the European Union (EU) in early December 2017 to list the country as one of 17 jurisdictions considered to be tax havens.

Ever since the Panama Papers scandal (April 2016, when over 11m confidential documents were leaked from the offices of Panama-based offshore law firm Mossack Fonseca), the Varela government has been struggling to reverse perceptions of Panama as a centre for money laundering and tax evasion. The official line is that the country’s large on- and offshore financial sector is now much more transparent and well-regulated than in the past.

Roughly two years before the Panama Papers revealed widespread use of locally registered paper companies to manage funds of dubious origin, the Financial Action Task Force (FATF) had placed Panama on its ‘grey list’ of jurisdictions not doing enough to meet international anti-money laundering and combating the finance of terrorism (AML/CFT) standards. Panama says that in response it passed ten new laws and was taken off that particular grey list in 2016. The government also highlights that in June 2017 the Organisation for Economic Co-operation and Development’s (OECD) Global Forum declared that Panama was now “largely compliant” with international tax transparency standards.

But that did not stop the EU from listing the country as a tax haven. President Varela responded by recalling Panama’s ambassador to the EU from Brussels. Finance minister Dulcidio de la Guardia said the EU decision had been arbitrary and discriminatory. Business lobby Cámara de Comercio, Industria y Agricultura de Panama (CCIAP) suggested any further steps to meet international transparency standards should be put on hold until the EU took Panama off the list. But despite a degree of bluster, Panama’s only real option appears to be to respond constructively to EU concerns. Officials said they were now hoping that a meeting of EU economy ministers on 21 and 22 January might reconsider and take Panama off the tax-haven list.

Focus on supreme court appointments

Confirmation hearings on the appointment of two new supreme court (CSJ) justices, due to be completed by 31 December, dragged on into early January.

President Varela is being closely scrutinised over his plans for the CSJ. Since taking office in 2014 he has accused his predecessor, former president Ricardo Martinelli (2009-2014), of involvement in corruption and of appointing his handpicked supporters to the CSJ. Martinelli is currently in prison in Miami pending completion of extradition proceedings.

Yet the Varela administration faces its own allegations of corruption (the president himself has been implicated in bribery claims involving Brazilian construction company Odebrecht). Opposition parties believe Varela, like his predecessor before him, may be seeking to pack the CSJ (which has the ultimate say on corruption investigations) with ‘yes men’ or, in this case, with ‘yes women’.

In December the president announced his choice for two new CSJ justices (justices have 10-year terms; there are nine in total). The nominees are Ana Lucrecia Tovar de Zarak and Zuleyka Moore Gouldbourne. Both have strong professional credentials. Tovar however is married to Iván Zarak, a member of the ruling Partido Panameñista and deputy economy minister (he resigned on her nomination to avoid a conflict of interest). Moore has attracted particular opposition criticism for her allegedly ‘selective’ handling of Odebrecht-related cases in her role as anti-corruption prosecutor.

The government initially hoped to get the appointments approved in an extraordinary session of the national assembly (Asamblea Nacional, AN) concluding on 31 December. But the hearings have dragged on into early January. Ratification requires a simple majority – 36 out of a total of 71 votes in the assembly. PP deputy Luis Eduardo Quirós said the outlook for getting the necessary votes, which requires the PP to form cross-party alliances, was “favourable”.

• EU steps

In its statement announcing its list of 17 jurisdictions considered to be tax havens, the European Union (EU) notes that the listing process is a dynamic one, which will continue into 2018. It states that as a first step a letter will be sent to all jurisdictions on the EU list explaining the decision and what they can do to be de-listed with a first interim progress report due to be published by mid-2018. According to the same statement, the EU list will be updated at least once a year.

“Stop suffering!” Brazilians of all religious denominations are familiar with part of this sermon, the slogan of the most powerful and well-known evangelical pastor in the country, Edir Macedo, who is also the owner of a national TV station. His continuously expanding mega-church, the Universal Church of the Kingdom of God, promises blue skies and an easy way out of trouble, especially to financially vulnerable people who have lost their jobs and are in debt and despair.  

A new study reveals a direct link between economic downturns and the expansion of more fundamentalist religious groups, such as Pentecostal Evangelicalism in Brazil. It focuses specifically on the consequences of Brazil’s economic policies introduced back in the 1990s, when the country, fighting a recession and hyperinflation, opened its doors to the world commercially and reduced its high trade tariffs by an average of 60%. These beginnings of trade liberalisation, associated with a reduction in government spending, caused profound shocks in Brazil’s labour market, particularly in the country’s industrialised regions. These shocks have in turn been linked to worsening living conditions and increasing unemployment, inequality, and crime.

Researchers concluded that those most affected by economic hardship were more susceptible to the influence of religious rhetoric that promises a cure through faith. The healing process is a centrepiece of both doctrine and practice of these more fundamentalist churches. In just the first decade of the trade liberalisation policies, the number of Pentecostals soared from 5% to 9% of the population. Research institutes in Brazil forecast that Evangelicals will account for almost 30% of the population in the next census, to be conducted this year.

The authors of the study, economists Rudi Rocha, Francisco Costa, and Angelo Marcantonio, calculated that for every 1% in decrease of income in the regions hardest-hit by the tariff-related labour shocks, there was a 0.8% increase in evangelical affiliation. Most of them were converts from the Catholic Church, which has been losing parishioners over the last half-century. The study further found that economic downturns have had persistent effects over time on evangelical affiliation. According to a 2016 survey by Brazilian pollster Datafolha, Brazil now has one of the largest Pentecostal communities in the world, second only to the US.   

Political shift

The study also finds that regions more exposed to economic distress experienced a persistent rise not only in Pentecostal affiliation but also in the vote share of candidates connected to these churches in national and local legislative elections. Pentecostal denominations have leveraged their political power, reaching 195 out of 513 seats in the federal chamber of deputies following the 2018 elections, a jump from 74 in the 2014 elections. In the 1994 elections, there were no Pentecostal candidates. President Jair Bolsonaro, a conservative Christian, played a big role in this wave of newly elected politicians. He is Catholic but often goes to services at an evangelical church with his wife and knows that one in every four in Brazil – still a Catholic majority country – consider themselves evangelicals.

“The profile of the newly converted to evangelicalism in Brazil is very similar to those who voted for Bolsonaro – mainly working class men, from urban industrial centres, who suffered directly from the latest economic crisis [the 2015-2016 recession]”, says Rocha, an associate professor at the Fundação Getúlio Vargas (FGV) higher education institute in São Paulo.

The evangelical message

People converted from other religions are considered to be ‘born again’, a process of spiritual rebirth that evangelical churches claim helps new believers get rid of the afflictions of the old life. This is a very attractive message for those seeking to move away from poverty, alcohol, drugs and crime, and resonates well with those without a job and in deep emotional distress. Pentecostal denominations have seized their opportunity in a time of crisis in Brazil, but the FGV’s Rocha says it is very important to note that they have done so by offering a valuable emotional service and career support that their members had failed to find in the government or the Catholic Church.

President Jair Bolsonaro’s government does not seem to have a clear economic agenda. Economy Minister Paulo Guedes, who preaches fiscal austerity and economic liberalism, appears to be an increasingly isolated voice as others in government have discovered the political benefits of loosening the purse strings and dishing out social benefits to the Brazilian population. The result is a contradictory and muddled discourse on economic and fiscal measures, as the government seeks, but fails, to reconcile assurances of fiscal responsibility with promises of social benefits – as observed this week when the announcement of plans to fund a new social programme, dubbed ‘Renda Cidadã’, spooked investors. 

Renda Cidadã alone exposes the lack of consensus in Brazil’s governing circles. It is ostensibly to substitute Renda Brasil, a mooted social programme born from a desire to replace both the Bolsa Família conditional cash transfer programme (CCT) [WR-20-23], which has close associations with previous leftist governments, and the emergency basic income that the government has been handing out to around a third of the population since the start of the coronavirus (Covid-19) pandemic, and which has played an important role in bolstering the economy and President Bolsonaro’s support levels. But amid internal disagreements on how to finance Renda Brasil (Guedes favoured extinguishing existing benefits deemed inefficient), Bolsonaro shut down talk of Renda Brasil earlier in September.

A fortnight later, Renda Cidadã was announced in a press conference in which Bolsonaro appeared flanked by cabinet ministers, including Guedes, and lawmakers, including the government leader in the federal chamber of deputies, Ricardo Barros. Although details on this new version of a social programme remain scarce – it is understood that it will be more generous and wide-reaching than Bolsa Família, which it will replace – the government announced how it plans to finance it: by using funds from the ‘precatórios’ (court-issued government debt reparation payments), and reallocating resources from the basic public education fund (Fundeb), which congress voted to maintain in August.

This means that Renda Cidadã will involve extra expenditures which will not be balanced out by cuts elsewhere, or by the raising of new taxes (the government has still not reached an agreement with congress on the details of its much-talked about tax reform). The negative reaction in the markets was instant on 28 September, with the index for the São Paulo stock exchange falling 2.41% to its lowest point since late June, while the real sank 1.42% to its lowest point against the US dollar since May. Criticism also rained down from the legislature and experts in the legal and economic spheres. The measure has been slammed as populist and inviting creative accounting – using funds from the precatórios would essentially mean delaying the repayment of these debts, while dipping into the Fundeb could constitute an attempt to conceal a breach of the constitutional spending cap (which does not include the cost of the Fundeb).

The government is in a dither over this negative backlash. On 29 September, the national treasury secretary, Bruno Funchal, said the government would take investors’ “clear signals” into account. Bolsonaro himself took to Twitter to reaffirm his commitment to fiscal responsibility and the spending cap, and say that the emergency handout, “unfortunately for demagogues and communists, cannot be forever”. A day later, Guedes said that precatórios would not be used to finance Renda Cidadã. Such backpedalling and confusion merely reinforces the impression that the government is disorganised and divided over its economic policy – an issue which also makes the markets jittery.  

Another spat with congress

Economy Minister Paulo Guedes’ notoriously fractious relationship with the legislature had led to him taking a backseat in discussions between the executive and congress. But this week saw another exchange of barbs between Guedes and the president of the chamber of deputies, Rodrigo Maia. After Maia publicly questioned why Guedes was blocking discussions on a tax reform on 29 September, Guedes accused congress of deliberately blocking the government’s efforts to privatise state companies. “Paulo Guedes is unbalanced,” was Maia’s reaction to this.

Caribbean countries have been called on to “accelerate and consolidate” their efforts to improve food security and reduce import dependence.

The call came in the context of Caribbean Agriculture Week, held in the Bahamas in October, and hosted by the Costa Rica-based Inter-American Institute for Cooperation on Agriculture (IICA). IICA experts say that Caribbean countries should strengthen their domestic agricultural sectors, which are particularly vulnerable to extreme weather caused by climate change. There has already been some significant progress on this front. The region is now roughly halfway towards meeting its “25 by 25” goal, first set in 2018. This calls for a 25% reduction in food imports, to be achieved by 2025.

The Bahamas’ Prime Minister Philip Davis said this represented an “enormous step forward”. He added that his government was making “unprecedented investments” in food security, improving research and infrastructure, and focusing on boosting output of local eggs and poultry. Caricom (Caribbean Community) secretary-general Carla Barnett also called for the empowerment of women and youth in agriculture. Guyana’s President Irfaan Ali said his government was investing in a food distribution hub to be located in Brazil’s northern state of Roraima.

Making sustained progress will be challenging, however. Caricom research suggests 52% of the English-speaking Caribbean currently faces food-security issues. Rising temperatures remain a substantial threat. Didacus Jules, the director general of the Organisation of Eastern Caribbean States (OECS), has warned that “Global warming is creating hell on earth for small island states – a rapid onslaught apocalypse”. There were record temperatures in the region in May-August 2023, with the heat wave expected to extend into 2024, causing aridity and increased pests and diseases. In Barbados and Jamaica 88% of all crops depend on rainwater. Dry weather may again push up Caribbean food-price inflation rates.

Inflation

In April this year annual food-price inflation stood at 66.7% in Suriname, 17.0% in Trinidad & Tobago, 10.3% in Jamaica, and 6.9% in Guyana.

On 19 September the Mexican government said it would seek to strike down an arbitration award to US firm Odyssey Marine Exploration in a dispute over a seabed mining project in waters off Baja California Sur state.

The decision was handed down by the International Centre for Settlement of Investment Disputes (Icsid) on 17 September. Icsid awarded Odyssey US$37.1m after arbitrators agreed with the company’s accusation that the Mexican government’s decision to refuse the company permission to extract phosphate from the seabed between 2016-2018 was politically motivated. In contrast, Mexican officials argued that they had demonstrated that the project, which sought permission to extract 7m tonnes of phosphates over 50 years by dredging the seabed, would have damaged marine ecosystems.

In a statement, Mexican officials said that the project would have affected an “ecologically sensitive area” that is home to turtles, whales, and sea lions, and that the environment ministry (Semarnat) had objected to it on these grounds. The statement also highlighted the fact that Odyssey, which was set up as a shipwreck-hunting company, had no experience in mining, and that the techniques it was proposing to use had never been used before in any part of the world. The Mexican government has promised to try and annul the arbitration decision “using every possible form of defence,” it said in the statement. 

For its part, Odyssey celebrated the decision in a statement published on 17 September. It specified that the dispute, filed under Chapter 11 of the North American Free Trade Agreement (Nafta), also involves its subsidiary Exploraciones Oceánicas S de RL de CV (ExO). “Odyssey initiated the Nafta arbitration after the manifestly arbitrary and discriminatory denial by Semarnat of an environmental permit for ExO based not on Mexico’s regulations or on scientific support, but on a politician’s directive,” reads the statement.

Odyssey put together a proposal for the project to remove phosphates from the seabed for use in agricultural fertilisers. It was refused permission in 2016 and then in 2018, before starting arbitration proceedings in March 2020. There has never been a seabed phosphate mining project in operation anywhere in the world. New Zealand refused permission for a similar project, and another in Namibia also ground to a halt due to heavy opposition. This appears to support Mexico’s reasoning for rejecting Odyssey’s project due to worries over environmental damage. 

The case is part of a wider debate around the proliferation of investor-state dispute settlement (ISDS) cases such as those handled by Icsid. For proponents, these legal tools protect companies from expropriation and other policies that can damage their business, encouraging firms to invest in developing countries by providing greater legal certainty. But for critics, they allow companies to bypass national authorities and instead rely on a ruling from a panel of three adjudicators reached entirely behind closed doors, undermining a country’s efforts to protect the environment and the human rights of local communities.

Other cases

Mexico is facing a number of arbitration cases, all of which are linked to mining projects. One involves another US firm named Vulcan Materials, which owns a deepwater port and limestone quarry in Quintana Roo state [EB-24-06]. In September, Mexico’s then-president, Andrés Manuel López Obrador (2018-2024), declared that the port and quarry were inside a natural protected area, preventing Vulcan from extracting any more limestone.

“The expropriation of our company owned land and port is yet another escalation and is a new violation of Mexico’s commitments under North American trade agreements,” Vulcan said in a statement. “This unlawful measure will have a chilling and long-term effect on US-Mexico trade and investment relations.”

This is the latest stage in a dispute that has been rumbling for years: Vulcan started Icsid proceedings in 2018, and the two sides have continued sparring since in the absence of an agreement for the Mexican state to purchase the site. The quarry was shut down in May 2022 amid allegations of environmental damage, and Vulcan has alleged that the government is attempting to force it to sell its assets. The case has become politicised, with US politicians such as Secretary of State Antony Blinken weighing in and claiming that “such instances very much negatively impact Mexico’s efforts to attract investment from the US and elsewhere”. 

In July 2020, the Nafta trade deal cited by Odyssey was replaced by the US-Mexico-Canada Agreement (USMCA). Canada negotiated to remove its ISDS clause with the US as part of the updated deal, which the country’s then-foreign minister Chrystia Freeland said was one of her biggest successes as “ISDS elevates the rights of corporations over those of sovereign governments”. However, Mexico still has ISDS provisions with the US, albeit covering a more limited set of cases, as well as Canada. It is also subject to ISDS provisions as part of trade deals signed with other countries, and another case was filed in June this year by Chinese firm Ganfeng Lithium [EB-24-07].

The firm is fighting to recover the rights to develop nine lithium concessions in Bacadéhuachi, Sonora state, for which it paid US$260m in 2021. Issues arose in April 2022 when the government declared lithium a strategic resource and ruled that the state had exclusive rights to explore, produce and commercialise the mineral. The government then cancelled the concessions in August 2023 because the company had not met minimum investment requirements. The company argues that concessions granted prior to the changes to the mining law should not be affected, and that it has in fact met minimum investment requirements. Ganfeng is asking for economic compensation, interest payments, and costs related to the arbitration process after negotiations with the government failed. 

Where these cases differ is that the Mexican government would like to exploit the limestone found at the Vulcan Materials facility and the lithium concessions owned by Ganfeng, whereas there are no plans to extract phosphate from the seabed. This demonstrates a considerable issue with the current arbitration system, which treats well-established operations such as Vulcan’s limestone quarry in the same way as Odyssey’s more speculative plans for a pioneering form of seabed mining. 

These mechanisms have become increasingly controversial as the number of claims has skyrocketed, and the average claim has increased in size. A number of countries in Latin America and other world regions have started to extricate themselves from ISDS provisions, including Bolivia, which became the first country in the world to withdraw from Icsid in 2007. Ecuador also withdrew in 2009 but then rejoined in 2021, while Honduras announced its own withdrawal in February this year.

While there has been no suggestion that Mexico is considering a similar course of action, increasing recognition of the negative impacts of ISDS provisions, including by US President Joe Biden, who has said that they will not form part of future trade or investment deals, could bolster the government’s case in existing and potential future disputes. The 2026 USMCA review could also provide an opportunity to revise ISDS provisions contained in the current agreement.

Odyssey

Odyssey CEO Mark Gordon said that the Icsid’s ruling “validates our position that Mexico’s environmental agency Semarnat wrongfully denied our environmental permit, which received extensive input from external advisers and industry experts to determine an economically feasible and environmentally responsible development plan.”

Peruvian media reported on 20 July that public prosecutors have opened yet another criminal investigation into President Dina Boluarte, adding allegations of illegal campaign financing to a long list that has seen investigations into the embattled head of state opened for alleged offences ranging from bribery to genocide.

The illegal financing investigation revolves around an off-the-books donation of PEN$150,000 (US$42,200) that was allegedly provided by the businessman Eduvigis Beltrán to the 2021 election campaign of former president Pedro Castillo, under whom Boluarte served as vice president until his impeachment in December 2022. According to a document from the attorney general’s office that has been cited in the local media, Beltrán met with representatives of the Castillo campaign in May 2021 and pledged financial support in the election’s second round against Keiko Fujimori, of the right-wing Fuerza Popular (FP).

Boluarte enjoys immunity from prosecution until she leaves office following the April 2026 elections, in which she is unable to seek a second term. In the meantime the only threat from the investigation is the risk that it animates impeachment proceedings in congress.

So far, efforts to impeach Boluarte based on other investigations have been swiftly shut down by the right-wing parties that control congress – a mutually beneficial arrangement that has seen Boluarte remain in power while right-wing legislation has sailed through congress with little opposition. That relationship could nevertheless break down as the election approaches and conservatives move to cut ties with the immensely unpopular government.

Finance minister rejects corruption claims

Peru’s Economy and Finance Minister Raúl Pérez Reyes filed a defamation claim on 23 July after being implicated in possible corruption relating to the Olmos irrigation project in Lambayeque region.

The defamation claim targets Ranjiro Nakano, president of the board of the Olmos project, and Saúl Yabar, director of the Peruvian engineering firm Ingeniería, Asesoría y Gestión SAC (Iagesa). The complaint comes after a 20 July report by television news programme Panorama which featured recordings of a conversation between Nakano and Yabar, in which they discussed having held two meetings with Pérez Reyes to discuss the direct adjudication of a contract to build a waterway.

MEXICO | Inflation picks up. On 9 September Mexico’s national statistics institute (Inegi) released new figures for its consumer price index, showing a monthly inflation rate of 0.20% in August, while annual inflation stood at 3.26%, within the target of 3% ± 1.0 percentage point set by the central bank (Banxico). The monthly rate was up from 0.03% in July and deflation of 0.27% in June. The rise in annual inflation from 3.12% in July to 3.26% in August was the first acceleration in five months, although it remained below June’s 3.37%. Core inflation, which excludes volatile items such as food and energy, stood at 0.16% month-on-month and 3.88% year-on-year, down from 0.23% and 3.95%, respectively, in July. This comes after Banxico held its benchmark interest rate at 6.50% on 6 August.

MEXICO | Monthly vehicle sales and exports up, production down. On 7 September Inegi reported that sales and exports of light vehicles increased year-on-year in August, while production decreased. Sales rose 2.23% year-on-year in August to 129,362 vehicles, while exports increased by 1.26% to 300,475. Production dropped by 1.43% with 344,940 units produced. From January to August 2026, sales were up by 4.68% compared with the same period in 2025, with 1.01m vehicles sold. However, production and exports both saw slight declines, falling 0.72% to 2.65m units and 0.06% to 2.25m units respectively.

MEXICO | Remittances rise. On 1 September Mexico’s central bank (Banxico) announced that remittances to the country in July totalled US$5.57bn, up 3.0% year-on-year and 1.8% from US$5.47bn in June. On a seasonally adjusted basis, remittance income increased by 0.5% month-on-month. The average remittance amount in July was US$426, up 3.0% from July 2025, while the number of remittances was broadly unchanged. Over the first seven months of 2026, remittances totalled US$36.35bn, up 3.1% year-on-year. 

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

Mexico: unemployment rate
Economically active population

Mexico: inflation rate
Percentage variation (year-on-year)

Source (all graphs): National Statistics Institute (Inegi)

Como una última movida para antagonizar a sus vecinos, el gobierno de Argentina ha dado a la aerolínea chilena, LAN, 10 días para desocupar su hangar en el Aeropuerto Metropolitano Jorge Newbery de Buenos Aires. La aerolínea e importantes políticos chilenos han protestado fuertemente contra la decisión; el gobierno chileno ha expresado su preocupación. El canciller de Chile, Alfredo Moreno, planteará la cuestión en una reunión pre-programada con su contraparte de Argentina, Héctor Timerman, en Santiago, el viernes.

Nuevas regulaciones que gobiernan el Aeroparque entraron en vigencia el 1 de agosto. A las aerolíneas que operan aviones con menos de 30 asientos se les ha ordenado ceder el uso de las instalaciones del aeropuerto metropolitano a las aerolíneas de propiedad del Estado, las líneas aéreas regulares y las empresas de servicios de rampa. LAN Argentina había indicado previamente que no se considera un operador de pequeñas aeronaves y que por lo tanto no debería estar obligado a desocupar su hangar. El 21 de agosto, el regulador del aeropuerto nacional (ORSNA) dio a la aerolínea 10 días para desocupar.

El director de asuntos corporativos de LAN Argentina, Agustín Agraz, dijo que la compañía llevaría la cuestión a las cortes. “Quienes nos sacan nuestro hangar nos saca el corazón”, dijo. “LAN tiene 3.000 empleados, con 14 destinos a través de Argentina. […] La operación de LAN no es viable sin el hangar […] Tendremos que detener nuestros vuelos internos”. LAN controla alrededor del 30% del mercado interno del país, transportando 2,5m de pasajeros al año.

El motivo de la decisión parece explícitamente político. Forzando a LAN a abandonar el hangar beneficiaría a la aerolínea del Estado, Aerolíneas Argentinas (AA). El presidente de AA es Mariano Recalde, un miembro del ala juvenil del kirchnerismo, La Cámpora, quien prometió que la compañía volvería a registrar ganancias para el 2013. El año pasado, la compañía tuvo pérdidas de US$980m. El titular de ORSNA, Gustavo Lipovich, es un ex director de Aeropuertos Argentina 2000, una compañía que trabaja muy de cerca con el influyente viceministro de economía, Axel Kicillof. Kicillof ha dicho públicamente que la aerolínea debería tener un monopolio sobre los vuelos hacia y desde el aeropuerto.

El 20 de agosto, Kicillof, Lipovich, y la viceministra de trabajo, Naomi Rial, se reunieron con representantes de los trabajadores de LAN, quienes expresaron su preocupación acerca de la potencial pérdida de empleos, y alegaron que la compañía no había sido notificada en tiempo y manera acerca del desalojo.

La orden de ORSNA sigue a otras presiones contra la compañía. En mayo, LAN Argentina estuvo  envuelta en una disputa con la compañía de servicios del Aeroparque, Intercargo. La compañía, de propiedad del Estado canceló todos sus servicios a LAN, alegando una deuda y exigiendo la revisión de su contrato. La disputa terminó cuando LAN cedió a sus exigencias. En esta ocasión, la compañía al parecer no estar dispuesta a hacer lo mismo. El presidente de LAN, Ignacio Cueto, anunció que él viajará a Argentina para apelar la decisión. “Este será un problema político”, le dijo al diario chileno, La Tercera.

En la reunión en Santiago el 23 de agosto, el canciller Moreno dirigirá las quejas de la aerolínea a Timerman, por pedido específico del Presidente de Chile, Sebastián Piñera, quien fue director de LAN cuando esta ingreso a Argentina por primera vez. Desde entonces, LAN se ha fusionado con la aerolínea brasilera TAM para formar el Grupo Latam, por lo tanto, la orden de ORSNA irritará tanto a Chile como a Brasil. Las acciones del grupo Latam cayeron por más del 6% en sus operaciones en la bolsa de valores de Santiago el 21 de agosto.

• Incertidumbre electoral

Faltando menos de tres semanas para las primarias a fin de decidir los candidatos para las elecciones legislativas de octubre, dos tercios de los votantes no están seguros de cómo votaran, de acuerdo con un sondeo publicado en El Cronista. Entre los votantes entrevistados, el 64% dijo que ellos sabían “poco o nada” acerca de las Primarias Abiertas Simultáneas y Obligatorias (PASO) del 11 de agosto.

BRASIL | Se desploma el pronóstico de crecimiento. El 7 de julio el banco central de Brasil (BCB) difundió la última entrega de su sondeo semanal de economistas locales, el cual halló que el consenso del pronóstico de crecimiento económico para el año ha sido revisado a la baja del 1,10% la semana anterior, al 1,07%, la sexta semana consecutiva que ha sido reducido. El pronóstico de crecimiento de los analistas ahora está bastante por debajo de las  proyecciones oficiales hechas por el BCB (2%) y el gobierno federal (2,5%).

El informe del BCB que acompaña el sondeo explica que la revisión hacia abajo fue primariamente conducida por las perspectivas negativas percibidas para el sector de manufacturas interno, que ha visto sus niveles de producción caer gradualmente a lo largo del año pese a las varias medidas de estímulo que apuntan al sector adoptadas por el gobierno liderado por la Presidenta Dilma Rousseff.

Al comienzo del año, los economistas locales predijeron un leve crecimiento del 0,96% en la actividad del sector de las manufacturas. Sin embargo, ahora ellos están prediciendo que el sector en realidad se contraerá un 0,67%. Esto después de que la asociación nacional de fabricantes de automóviles de Brasil (Anfavea) informó a inicios de este mes que la producción en el sector clave automotor del país había caído un 16,8% a 1,57m de unidades en los primeros seis meses del año, comparado con el mismo periodo del 2013. Anfavea dijo que esto era el resultado de una débil demanda tanto en el exterior (las exportaciones cayeron un 23,1%, debido a una aguda caída de las ventas a Argentina) y en el país (las ventas cayeron un 7,6%) pese al hecho de que el mes pasado el gobierno federal anunció la extensión de la reducción temporal en el impuesto a los productos industrializados (IPI) aplicado a vehículos nuevos hasta el fin de este año.

La reducción impositiva temporal fue introducida en mayo del 2012 por un periodo de tres meses en un intento por estimular las ventas internas de automotores. La misma fue extendida un número de veces desde entonces pero no ha logrado  producir los resultados esperados. De hecho, los malos resultados de mitad de año hicieron que Anfavea revise hacia abajo sus propios pronósticos de producción de +1,04% a -10,0%. Anfavea también se quejó de que el alto número de feriados nacionales decretados por el gobierno para coincidir con los partidos jugados por Brasil en la Copa Mundial de la Fifa había impactado negativamente el nivel de producción (de acuerdo con Anfavea, en junio solamente hubo 13 días de producción plenos). Todo esto representa un serio problema para Rousseff y el gobernante Partido dos Trabalhadores (PT). Si la tendencia económica negativa continúa, es posible que Brasil pueda caer en recesión antes de las elecciones generales de octubre.

Los alegatos de quema de urnas, escasez de papeletas de votos y otras malas prácticas electorales resultaron en la anulación de las elecciones gubernamentales en la provincia Argentina de Tucumán por parte de una corte provincial el 16 de septiembre. Pocos días más tarde, sin embargo, la corte suprema de la provincia invalidó la anulación de las elecciones, declarando que los resultados de la elección del 23 de septiembre eran válidos y, por lo tanto, dándole la victoria a Juan Manzur, el candidato del federalmente gobernante Frente para la Victoria (FPV), una facción del Partido Justicialista (PJ, Peronistas). José Cano, el candidato perdedor, decidió en contra de apelar la decisión en la corte suprema nacional. Pero la disputa sobre los resultados de Tucumán directamente condujo a que la corte electoral nacional esboce nuevas medidas para asegurar la confianza en las elecciones generales del próximo mes.

La semana pasada, tres de los principales candidatos presidenciales de la oposición, Mauricio Macri, Sergio Massa, y Margarita Stolbizer, celebraron una conferencia de prensa conjunta para pedir una reforma electoral. El 23 de septiembre el Consejo Nacional Electoral (CNE) anunció cambios al sistema electoral, incluyendo la provisión de testigos y rastreos a través de GPS para monitorear a los camiones del sistema postal que son usados para transportar las urnas.

El CNE también le pidió a los partidos que participan en la elección que envíen más papeletas de votos a los locales de votación y que controlen regularmente para ver si se han perdido papeletas de votos. El cuerpo también permitió la creación de locales de votación complementarios donde estarán papeles de todos los partidos políticos que estarán a disposición de los votantes.

El FPV triunfa en Chaco

En la provincia  norteña de Chaco, Domingo Peppo, el candidato del Frente para la Victoria (FPV), ganó las elecciones gubernamentales celebradas el 20 de septiembre, por 55% a 42% sobre Aída Ayala, de la opositora Unión Cívica Radical (UCR).

Una de las provincias más pobres de la Argentina, Chaco ha sido desde hace mucho tiempo un bastión del FPV y el resultado sorprendió a pocos. Esta fue la última elección provincial programada antes de las elecciones generales el 25 de octubre.

• Pobreza

Una jueza federal de la Argentina le ha pedido al gobierno que provea un informe que contenga las cifras actuales de la pobreza. La jueza, María José Sarmiento, le ha dado al ministerio de finanzas cinco días para responder a una petición de la oposición política que pide una actualización de la situación de la pobreza en el país, para la cual las cifras más recientes son del 2013. El instituto nacional de estadísticas (Indec) dejó de difundir sus cifras semi-anuales de pobreza en la primera mitad del 2013, cuando informó que el 3,7% de los hogares estaban en estado de pobreza y el 4,7% de la población. Datos del sector privado ubican las cifras de la pobreza mucho más elevadas, en alrededor del 25% de la población.

The internally triggered fall in oil production has been aggravated by the imposition of US economic sanctions. Quantifying the relative importance of these sanctions is important. In a transition scenario, if the US is party to a negotiated political settlement, it can be expected to move quickly to help the new administration by removing the sanctions. How much of an economic boost might that provide? To answer that question, is it is first necessary to fill in some background details.

In 2018 it was estimated Venezuela was exporting about 673,000 bpd of crude oil and petroleum products to the US market, and importing 92,000 bpd, mainly of refined products. Bilateral oil trade with the US is important to Venezuela not only to generate revenue but also because the country has a surplus of heavy crudes and needs the lighter blends required for petrol production.

Different types of US sanctions have been imposed on Venezuela for the last decade. By mid-2020 the Treasury Department had sanctioned 144 Venezuelan individuals, and the State Department had revoked visas for hundreds of other Venezuelans and their families. In the same year the US sanctioned two subsidiaries of Russia’s state-owned Rosneft oil company for facilitating Venezuelan oil exports along with four shipping companies for transporting Venezuelan oil. Rosneft later said it was ending its oil operations in the country.

Anti-terrorism sanctions have been applied to Venezuelan individuals and travel agencies allegedly connected to the Lebanon-based Hezbollah movement. Over 20 Venezuelan individuals have been classified as Specially Designated Narcotics Traffickers. US law also requires sanctions for those held responsible for anti-democratic actions, human rights violations, and corruption. Over 90 individuals, including President Maduro, his wife and family, other government officials, and military and intelligence officers, are all affected, usually by asset freezes and visa restrictions. Official Venezuelan access to US financial markets is blocked.

A major tightening came in January 2019 when the US Treasury declared PDVSA to be subject to sanctions, as a result blocking all of its assets that are subject to US jurisdiction. US citizens are banned by law from engaging in any transactions with PDVSA. Some temporary exceptions were made for long-standing PDVSA subsidiaries operating in the United States such as refining subsidiary CITGO. However, payments for crude oil imports intended for PDVSA are diverted into blocked US accounts. This money has been made available to Juan Guaidó’s parallel government. Sanctions have also been applied to a Russian-Venezuelan financial joint venture company, to Minerven, Venezuela’s state-owned gold company, to Venezuela’s Central Bank, and to companies transporting Venezuelan oil to Cuba. US officials in addition have been considering sanctions against shipping companies that transported Iranian petrol to Venezuela in 2020 in an attempt to relieve chronic domestic shortages.

How effective sanctions have been is open to debate. They have almost entirely closed the US market to Venezuelan crude oil exports, forcing further geographical diversification to other destinations including China, India, Cuba, and some other Caribbean and Central American countries. They have intensified petrol and wider energy shortages across the economy. However, in all these examples domestic mismanagement also remains a big part of the problem. After borrowing heavily from China and facing repayment difficulties, the Venezuelan government agreed to pay part of its debt in crude oil, limiting the cash flow benefit from future crude exports. Following over a year and half of tight oil sanctions, the Maduro government is nevertheless showing some resilience. A significant body of opinion within the US Congress worries that sanctions have largely impacted the poor but failed to cause any real difficulty for the intended target, the ruling elite. After the US presidential and Congressional elections due in November a review of US Venezuela sanctions policy can be expected.

The conclusion therefore is that US sanctions have increased pre-existing weaknesses in the Venezuelan economy but failed to force the Maduro regime to make any significant political concessions. Turning that around, the task facing a post-Maduro Venezuelan government will be lightened by the lifting of US sanctions but measured on its own against the backdrop of the wider economic catastrophe, the lifting will be insufficient to kick-start a recovery. Another way of putting it is that being able to export crude oil once more to an important and geographically proximate market will be a help; yet it will not solve the problem of insufficient export capacity. On all calculations it will take a minimum of 4-5 years of repair and investment to achieve a sustainable recovery in Venezuelan crude oil production and to bring the pipeline and port infrastructure up to a reasonable level of operational efficiency.

A decree issued by Argentina’s President Alberto Fernández introducing a series of new temporary restrictions to slow the transmission of the coronavirus (Covid-19) has exacerbated political tensions, sparking a dispute that has made it all the way to the supreme court (CSJN). The political opposition and civil society groups argue that some of the restrictions are excessive, with the closure of public schools in the Buenos Aires metropolitan area (Amba), in particular, deemed to be unnecessary and unconstitutional. The dispute could prove to be highly damaging for the Fernández administration and its ability to lead the fight against Covid-19.

The urgent and necessary presidential decree (DNU) was issued on 15 April. It establishes new national lockdown measures designed to reduce Covid-19 infections that will be in effect until 30 April. These measures include a new national curfew and the suspension of some non-essential activities.

Notably, the DNU outlines tougher restrictions for the Amba, where it stipulates a longer curfew, which for the first time during the pandemic will be enforced by the military, and the closure of public schools. President Fernández justified the imposition of tougher restrictions on the Amba, which comprises the city of Buenos Aires (Caba) and surrounding areas, by pointing out that as the area with the highest population density in the country it also has the highest virus transmission rate.

The tough Amba restrictions were welcomed by the governor of Buenos Aires province, Axel Kicillof, a member of the federally ruling Partido Justicialista (PJ, Peronists). But they were rejected by the Juntos por el Cambio (JxC) main opposition coalition, as well as by constitutionalists and various local civil society groups. These quarters separately argued that the restrictions impinge on civil liberties; that they represent an unjustified federal intervention in the local governments affected; and that they undermine individual rights. But it was the order for all schools to close that proved the most contentious.

Schools were closed throughout 2020 as Argentina sought to bring its first wave of Covid-19 cases under control. They reopened in February following an intense campaign by parents’ groups concerned that the lack of face-to-face lessons was undermining schoolchildren’s educational and social development.

Significantly, the Fernández government pledged that it would try to keep schools open and would only move to close them as a last resort. Indeed, just hours prior to the release of the DNU, cabinet ministers insisted that schools would remain open. The closure was thus badly received by parents’ groups which staged protests outside the Olivos presidential residence, where Fernández has been staying, in rejection of the closures no sooner than they were announced.

• IMF quantifies cost of closing schools

During a 15 April press briefing the Director of the Western Hemisphere Department at the International Monetary Fund (IMF), Alejandro Werner, said that the suspension of classes for extended periods has “significant costs”. Werner explained that missing out on schooling affects individuals’ capacity to attain higher salaries in the future. He noted that a new IMF study estimates that the loss of a year’s of schooling in Latin America can reduce an individual’s future salary by as much as 7% and warned that prolonged school closures are likely to increase social inequality. “The loss [in future salary] is greater among students from poorer families, which exacerbates income inequality,” Werner said.

The campaign for the reopening of schools was backed by the JxC and some accused the Fernández administration of seeking to undermine the efforts by the Caba administration led by Horacio Rodríguez Larreta, a prominent JxC figure, to ensure that schools are safe for in-person learning. Rodríguez Larreta himself criticised the order to close schools as well as the deployment of soldiers to enforce the curfew in the Caba.

Complaining that he had not been consulted about the measures, Rodríguez Larreta argued that they are unnecessary and violate the city’s autonomy. The Caba has province status and, under the federal system outlined in Argentina’s constitution, provinces have political autonomy in various areas including law enforcement and public education provision.

Rodríguez Larreta accused Fernández of overstepping his remit and announced that his administration would present an appeal before the CSJN against the DNU on constitutional grounds. Specifically, Rodríguez Larreta said that the order to close schools infringes on the Caba’s political rights and children’s right to education. Insisting that his administration has put in place sufficient measures to make schools safe and that this is borne out by the epidemiological data (only 0.16% of the student population and 1.03% of teachers have been infected according to federal government figures), Rodríguez Larreta said that his administration would do everything it could to keep schools open.

Separately, Abramos las Escuelas, a parents’ group, filed an appeal at the Caba administrative court demanding that the municipal government guarantee children’s right to education by keeping schools open. The Caba court ruled in favour of the parents on 18 April and Rodríguez Larreta duly announced that schools in the city would remain open until the CSJN gets around to issuing a final ruling.

Fernández’s response to the legal challenges was to dismiss the accusations that he had breached the constitution as “absurd”. Insisting that the sole aim of the decreed restrictions is to reduce transmission of the virus, Fernández said that the closure of schools is a public health measure that the federal government has the prerogative to take and not an education policy measure that affects local governments’ autonomy.

“Suspending classes helps to lower the infection curve…and preserve the lives of the Argentine people,” Fernández said. He went on to announce that his government would lodge a complaint against the Caba court ruling at a federal administrative court. The Fernández administration is supported by teachers’ unions, traditional PJ allies. Teachers’ unions have been staging their own demonstrations in the Amba in support of school closures and have declared themselves on strike.

However, on 19 April the CSJN declared itself competent to rule on the constitutional appeal filed by the Caba government. The court stated that it has jurisdiction over any dispute involving the federal and provincial governments on constitutional matters. The CSJN said that it would resolve the complaint in a “very swift process” given the sensitivity of the case. It gave the Fernández administration just five days to argue its case and present evidence in support of its actions.

The CSJN ruling on the matter could have far-reaching political implications for the Fernández administration and the PJ if it loses its case, including harming its public image ahead of the October midterm legislative elections.

Wrong-footed ministers

Health Minister Carla Vizzoti and Education Minister Nicolás Trotta had both provided assurances that the government was not planning to close schools again. But they were wrong-footed by President Fernández’s decree and there are now questions over their position in the cabinet. In response to demands by the teachers’ unions for in-person classes to be suspended, Trotta had rejected this, stating on 14 April that “we can’t close schools again”. On the same day, Vizzotti said that “schools are not a major source of infections” and that in her opinion, there was no need to close them. 

Tougher restrictions

President Lacalle Pou is starting to face opposition from within his own ranks over the lack of tougher restrictions to combat the spread of Covid-19. One deputy from the Partido Colorado (PC, Colorados), a member of Lacalle Pou’s multi-colour coalition, said this week that “what is now very clear is that the measures are not working”.

Demands for more restrictions in Uruguay

In marked contrast to what is happening in Argentina, across the River Plate in Uruguay the government led by President Luis Alberto Lacalle Pou is facing mounting public pressure to introduce more restrictions to slow the spread of Covid-19 in the country.

Just as in Argentina, the epidemiological situation in Uruguay has sharply deteriorated in recent weeks with the country recording a record number of infections that have put the public health system on the verge of collapse. But President Lacalle Pou has ruled out lockdown measures insisting that he is reluctant to curtail civil liberties and appealing to collective responsibility. However, health sector experts, the political opposition, and even some members of the ‘multi-colour coalition’ that supports his government have publicly called for more measures to be adopted.

For now, Lacalle Pou remains firm in his opposition to more restrictions. Asked during a 19 April press conference whether the rapidly rising Covid-19 death toll warranted a change in strategy, Lacalle Pou insisted that his government’s strategy was appropriate.

“The combination of restrictive measures taken by the government is the right one…these measures plus the vaccination campaign and people’s behaviour are what is going to get us out of this,” Lacalle Pou said. He once again appealed for individuals to act responsibly, adding that “of course some deaths could have been prevented; if people had behaved differently, they could have been avoided”. But with the death toll surpassing 2,000 on 20 April and the infection rate showing no sign of falling, the pressure on Lacalle Pou looks set to increase.

A major concern is that years of intense deforestation are bringing the Amazon region close to, or even past, a major tipping point after which many existing environmental changes will become irreversible. The nature of the tipping point, how it might manifest itself, and what the area currently occupied by rainforest might look like in future are all still being debated by scientists and environmental experts.  

According to an October 2022 report by the Rede Amazónica de Informação Socioambiental Georreferenciada (RAISG), a civil society research group, something like 26% of existing Amazon rainforests have already been destroyed or degraded. It suggested 20% have suffered irreversible loss and 6% should be classed as “highly degraded”. In 2007 academic studies by scientists Thomas E Lovejoy and Carlos Nobre said the tipping point occurs when the combination of deforestation and degradation reaches a 20%-26% range. On some numbers Brazil may therefore in fact be well beyond that point with 25% deforestation and 9% degradation. Of the nine Amazon region countries, Brazil and Bolivia have experienced the greatest destruction. RAISG argued that the rainforest is receding and will be replaced by dry shrublands, a process known as savannisation.

The report warned that the Amazon as we know it today will “not reach 2025”. Over the last 20 years at least 50m hectares of the Amazon basin have been transformed, equivalent to a territory larger than Spain. In Bolivia, rainfall has fallen by 17% and the temperature has increased by over 1ᵒ Celsius. José Gregorio Díaz Mirabal of Coordinadora de las Organizaciones Indígenas de la Cuenca Amazónica (COICA), who was also involved in preparing the RAISG report, said: “We are destroying water, biodiversity, food. Humans, extractive industry companies and governments continue to pursue a fossil fuel economy, destroying both our present and our future.“

There is no detailed consensus on what life beyond the tipping point might be like. However, most analysts say the Amazon will be impaired in its role as one of the world’s most important carbon sinks. Rather than sequestering carbon from the atmosphere, forest fires and the destruction of trees will turn the region into a net carbon emitter, something that has already begun to happen in various areas. Temperatures will be higher, the surviving shrublands will be dryer, and the area will become more vulnerable to extreme weather and periodic droughts

Many scientists say it is still too early to make hard and fast predictions. Their computer models struggle to capture the complexity of the Amazon eco-system. There may be no single tipping point but many smaller changes with cumulative effects. Nobre’s theory about the savannisation of the former rainforests has been questioned. It suggests that the border between the rainforest and the existing savannah known as Brazil’s cerrado region should be moving south, but there is as yet no consistent evidence showing that it is doing so. The full impact of different types of rainforests is also unclear – these include várzeas (dense forests often flooded with nutrient rich waters) and igapós (swamp forests that are flooded with nutrient-poor waters).

What is clear however is that a failure to protect the Amazon from deforestation, from unregulated farming and cattle ranching, and from illegal mining and wider criminal activity will have a highly negative effect on the countries involved and on the wider world. It is not an exaggeration to say the Amazon could suffer an unprecedented environmental catastrophe within the next 10 years. Averting that possibility will require political will. The question then becomes whether political parties and other social and economic groups have the capacity and foresight to unite around an effective climate change/energy transition agenda.