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Despite the government’s best efforts, latest forecasts are for real GDP growth of just 1.6% year-on-year in 2012.  Barring the 2009 recession (-0.6%), that would be the worst result since the left leaning Partido dos Trabalhadores (PT) first came to power under Lula da Silva in 2003 , when annual growth was a paltry 1.2%.

The executive delivered the 2013 budget to congress on schedule ahead of the 31 August deadline. The plan is set at R$2.14trn (US$1.07trn), up 7% in annual terms, and is based on projected real GDP growth of 4.5% year-on-year in 2013, revised down from a previous 5.5%, with annual inflation of 4.5% and an exchange rate of R$2.0/US$. The minimum wage will rise an inflation-busting 7% annually to R$670.95/month (US$335/mth).

The bill proposes federal government expenditure of R$943.4bn (US$460bn), with a reserve of R$15.2bn available for tax incentives, explained Finance Minister Guido Mantega. The primary surplus is set at 3.1% of GDP. Planning Minister Miriam Belchior identified four main spending and investment priorities for 2013: education, health, anti-poverty social programs and infrastructure. Some US$54bn (R$110.6bn) will be invested in state companies, including US$43.6bn (R$89.3bn) in the state oil firm, Petrobras, and US$5bn (R$10.1bn) in the state electricity company, Eletrobras.

Federal workers abandon the picket lines

On 28 August the secretary for labour relations at the planning ministry, Sérgio Mendonça, announced that the National Confederation of Public Sector Workers (Condsef) had agreed to accept the government’s final pay deal ahead of the 31 August deadline to amend the 2013 draft budget. Mendonça noted that an overwhelming majority (90%) of federal public sector workers, grouped in 30 of the 35 sectors on strike, had accepted the proposed 15.8% increase, which will be staggered in three increments over 2012-2015.

The Condsef said it was a victory for federal workers, who began striking in May, though given the fact that the Condsef had been looking for a 45% pay increase at the outset, it appears as though President Rousseff was the one that got her way.

The agreed increase will add at least R$20bn (US$9.8bn) to the cost of the federal wage bill to 2015 and comes on top of an earlier deal with university staff worth R$11bn (US$5.4bn). The total federal wage bill already comes to a steep R$150bn (US$74bn) a year and the Rousseff government is struggling to hold it down so as to free up scarce resources for capital expenditure.

Federal police officers, tax revenue officers and workers from the national institute of colonisation and agrarian reform (Incra) continue to reject the deal, meaning continued delays to border trade and travel in and out of the country. The national guard is on alert to fill some of the gaps. The national federation of federal police (Fenapef) convened an assembly for 30 August to agree a new strike timetable. The Fenapef wants not just an above inflation pay increase but also a reform of police careers.

Postal workers from the state run Empresa Brasileira de Correios e Telégrafos (ECT) affiliated to four dissident unions were threatening to go on an indefinite national strike as we went to press in mid September. The workers, grouped under the national federation of postal workers (Fentect, which groups 120,000 workers in 31 of the 35 postal unions in the country) want a 43.7% pay increase, among other demands including a base salary rate of R$2,500/month (US$1,200/mth), meal tickets worth R$35/day (US$17/day)  and an end to contract labour. The ECT has offered a pay increase of just 3.0%.

The four unions represent some 40,000 workers based in the states of São Paulo and Rio de Janeiro, Tocantins and Bauru (a micro region in São Paulo). The president of the ECT Wagner Pinheiro de Oliveira and the communications minister Paulo Bernardo (of the ruling Partido dos Trabalhadores) met with union leaders on 3 September to avert a strike. The unions agreed to delay but complained that they had had 12 unfruitful meetings with the ECT since July.

• Brazil joins ‘50 most competitive’

Brazil has (finally) joined the World Economic Forum (WEF)’s list of the top 50 most competitive nations in the world for the first time. It rose to 48th position (of 144 countries) in the WEFs latest (2012) Global Competitiveness Report, up from 53^rd in 2011. It was the only one of the BRICS group of emerging markets (Brazil, Russia, India, China & South Africa) to improve its position this year, thanks to a jump in its macroeconomic conditions sub ranking to 62, from 115 previously (on better banking spreads, increased mobile phone and internet penetration/usage and private business sector confidence that the Brazilian government is working to solve structural problems).

Foreign Minister Antonio Patriota said in testimony to the federal senate on 10 July that Brazil might seek to interview the fugitive US whistleblower Edward J. Snowden as part of investigations into the latest allegations about US intelligence gathering operations in Brazil.

Patriota, along with his ministerial colleagues Celso Amorim (defence), Paulo Bernardo (communications) and José Elito (institutional security) were ‘invited’ by the senate to explain the allegations made by the daily O Globo to the effect that the US had collected data on “billions” of Brazilian telephone calls and emails.

Also ‘invited’ were the US ambassador Thomas Shannon, the Brazilian presidents of Google and Facebook, Fábio Coelho and Alexandre Hohagen respectively, and the Rio de Janeiro-based journalist for the UK’s Guardian newspaper Glenn Greenwald, who first broke the Snowden story and who collaborated with O Globo on the Latin American side of the scandal. Shannon, who under international diplomatic convention is under no obligation to appear before the Brazilian senate reportedly denied to Patriota in a private meeting the allegation that the US ran a central command station out of Brasília that collated information from some 16 international satellites around the world and said the US government would send a ‘technical team of specialists’ to Brasília to investigate.

Meanwhile, President Dilma Rousseff said that the government was awaiting the results of investigations by the federal police and Brazil’s telecommunications regulator Anatel to determine what steps to take next. Rousseff had been clear that any involvement of other countries in Brazil was “a violation of sovereignty…just like it’s a violation of human rights”. She repeated that Brazil would raise the matter at UN forums including the International Telecommunications Union and the Commission on Human Rights. On 7 July, the day after O Globo ran its story, Patriota had expressed “deep concern” and said Brazil would ask the UN for a debate on the need for measures to “impede abuses and protect the privacy” of internet users, calling for new international rules for governments to “guarantee cybernetic security that protects the rights of citizens and preserves the sovereignty of all countries”.

The previous week, Rousseff and Patriota were quick to come out in strong defence of Bolivia’s President Evo Morales, who was temporarily prevented from flying across European airspace, apparently on suspicion that he was harbouring Snowden on his presidential jet. Patriota has been clear from the outset that there is no question of Brazil even entertaining Snowden’s request for asylum; it will happily leave that kind of politically provocative move to the likes of Venezuela (which now looks the most probable host country for Snowden), but now that the Snowden scandal has spread across the region, with key US allies like Mexico and Colombia also up in arms about it, Brazil’s strong stance on the matter looks rather prescient.

Brazil, which is always looking to assert its global leadership at the UN and other international forums on these kinds of ‘soft’ issues, may be able to gain some political capital out of this by upping the international pressure on the US for a response, but without overtly damaging the improving bilateral relationship, which has progressed since 2011 thanks to the efforts of President Rousseff. Having received President Barack Obama in March 2011, Rousseff is set to go on an official visit to Washington in October - the first by a Brazilian president in 20 years.

• Seeking Snowden

“Mr. Snowden’s participation in an investigation is absolutely relevant and pertinent,” Foreign Minister Antonio Patriota told the Brazilian senate. “I don’t rule out the hypothesis of seeking out contact with Mr. Snowden, something that doesn’t need to be carried out on Brazilian territory. It can be done another way.”

Faced with damaging corruption scandals before even reaching the 100-day mark, President Pablo Kuczynski has sought to distinguish himself from his predecessors by reacting quickly and proactively.

On 17 October Kuczynski announced a new package of anti-corruption measures in response to the first corruption scandal to affect his new centre-right government. Having run on a strongly anti-corruption platform in this year’s election, only for one of his own presidential advisors to be implicated in wrongdoing, Kuczynski had to been seen to act fast. His approval ratings dropped eight percentage points (to 55% from 63%) after news of the case broke.

Promising a “full frontal battle” against corruption, which he described as a “structural problem”, the president announced new measures including a bill introducing ‘civic death’ for offenders. “Corruption is a structural, historic problem in our country…but those days are over”, Kuczynski declared in a televised address in which he directly referred to the scandal implicating the presidential advisor on the health sector, Carlos Moreno, who was uncovered seeking to gain from public-private contracts. Kuczynski said he was “immensely upset” over the case. “That person betrayed my confidence; I want you to know that the case, as it should be, is in the hands of justice” he stressed. “The corrupt elements will resist, I know, but we will win. My pledge to you is to lead this fight, I need you with me in his fight”, Kuczynski emphasised. “Corruption is fought from the top”, he continued, announcing “immediate action”.

This includes the fast track introduction of ‘civic death’ for those found guilty of corruption (including collusion, embezzlement, influence trafficking, international bribery, misappropriation or wrongful receipt of payment, among other crimes), which will permanently bar them from working in the public sector. This was one of Kuczynski’s election campaign proposals; now expedited.

Secondly, the executive will convene the state council, comprising the president along with the leaders of congress and the judiciary, to coordinate actions to combat corruption. Third, Kuczynski said that he had ordered “a revision and reorganisation” of the office of the presidency, to be led by Prime Minister Fernando Zavala, including an overhaul of the process by which government advisors are selected and appointed. Each cabinet minister must do likewise, closely evaluating their departmental advisors. Finally, a new presidential integrity commission led by Eduardo Vega Luna (a lawyer and former ombudsman) was given 45 days to propose concrete new legislative and administrative measures to tackle corruption in the public sector.

The Moreno scandal broke just a matter of weeks after Kuczynski had secured special powers from congress, for 90 days, to legislate in five areas, including corruption. Among his priority proposals for this period, Kuczynski had already proposed the creation of a national transparency body to ensure access to public information and an autonomous attorney general’s office to help in the fight against corruption. As noted by our sister Latin American Weekly Report, while Zavala was attempting to persuade congress to confer these special powers on the Kuczynski administration, he argued that “We must end corruption and our job starts now; if we don’t forge a common front against corruption it will be very difficult to defeat it.” For his part, during his swearing-in ceremony on 28 July, Kuczynski described his vision for “a modern country, which means honest not corrupt”, where those found guilty of corruption face justice before a judiciary, which, he stressed, “must undergo a profound reform”.

Other kinks

Aside from Moreno, two other presidential advisers, Jorge Villacorta (social conflict) and Jose Labán (regional affairs), also stepped down in mid October over alleged irregularities. They were accused of selling places on the election lists of Kuczynski’s ruling Peruanos por el Kambio (PPK). Both denied the charges and said they had stepped down so as not to damage the government and also to be free to clear their names.

And on 24 October, prosecutors asked a court to sentence the government’s deputy agriculture minister, Juan Carlos Gonzales, to a hefty nine-year prison sentence on corruption charges. In a statement, the attorney general’s office said that Gonzales had been charged with colluding with a businesswoman, identified as Esther Consuelo Véliz Alcántara, to award her supply contracts for local nutrition programmes when he was an official in the city of Tumbes.

Gonzales denies any misdemeanour and claims that Kuczynski’s agriculture minister, José Manuel Hernández, was aware of the investigation at the time of Gonzales’ appointment in late July. It is not clear whether Kuczynski would have known. Gonzales hails from the Alianza para el Progreso (APP), the political outfit of one of the 2016 disqualified presidential aspirants, César Acuña, who gave his support to Kuczynski in his tight run-off race against Keiko Fujimori on 5 June. As we went to press, Gonzales was still refusing to step aside, but his departure seemed inevitable.

While the right-wing opposition Fuerza Popular (FP) was quick to jump on the Moreno scandal as evidence of the Kuczynski administration’s alleged ‘cosy’ ties with the private sector, and unscrupulous advisors and lobbyists, the head of Transparency International, the respected Peruvian judge José Ugaz, has applauded the Kuczynski administration’s rapid response to the Moreno scandal, stating that “this is how the state should react when these kind of people are found out”.

Kuczynski’s efforts to tackle corruption, and his new government’s economic and structural reform proposals, are closely linked to his ambition to improve the image of the country and attract more foreign investment. The government’s reformist strategy is also closely aligned with Peru’s efforts to secure membership of the Organisation for Economic Co-operation and Development (OECD).

Kuczynski is very keen on OECD membership, not only for the investment potential, but also because the OECD countries (currently numbering 35) are expected to meet and uphold international model good governance and business operating standards. In a media interview in October to mark the 2016 OECD-Peru Forum, Kuczynski noted that the OECD “is an organisation that promotes good standards on economic policy, governance, the environment and institutional transparency”. “It’s like being in a neighbourhood football league and going up to the national league”, he continued. “Peru will get there, I think we will make it in the next three years”, he declared.

Kuczynski argues, for example, that excessive red tape fosters graft. “The more complicated the state becomes the more possibilities there are for corruption”, he notes. A former prime minister, Ana Jara (2014-2015), estimated that public corruption amounted to 2% of Peru’s GDP.

Certainly, the OECD is supportive of Peru’s entry (in Latin America, Chile and Mexico are already in the Organisation; Colombia likewise is seeking membership). The OECD secretary general, Angel Gurría, opened the recent Peru Forum noting that “the OECD and Peru engaged in a fruitful dialogue on the direction and design of public policies, and we are extremely encouraged by the results to date”. “Our objectives in the Peru Country Programme are in line with those of President Kuczynski and his government, and have the main goal of improving public policies for more inclusive growth. We are pleased to report today on new areas of policy analysis, including economic diversification, territorial development, public governance and skills and vocational training. We are encouraged by the commitment of the Peruvian government to collaborate with the OECD, and expect this fruitful relationship to continue and expand in the coming years.”

Nonetheless, the OECD also notes that while economic and social reforms in the past 20 years have driven Peruvian efforts to achieve sustainable economic growth and important reductions in poverty, against a new context of weak global growth Peru will need to diversify its economy, boost skills, reinforce productivity across the labour force and unleash the potential of all of its regions in order to spur more inclusive national growth.

Notably, the OECD in mid October also published a new Public Governance Review of Peru, which analyses key areas of public governance and identifies opportunities for improving the performance of the state. Among other things, the report assesses the management of the civil service, legal and regulatory frameworks and open-government and transparency policies. It also examines co-ordination from the centre of government, evidence-based strategic planning, and the decentralisation process.

OECD Peru

The OECD Country Programme with Peru was launched in December 2014. It includes 19 projects in a broad range of policy areas, with policy reviews analysing challenges in areas such as the effectiveness and integrity of the public sector, vocational training, skills, youth employment, health, statistics and environmental policy.

While Peru’s solid growth prospects continue to attract keen investor interest (see box), there is a long way to go. In the World Bank’s new 2017 Doing Business Report, Peru slipped four places to 54, from 50 in the last report, with an overall country ranking of 70.25 points, from 71.33 in 2015-2016. Peru has been falling in this Doing Business ranking since 2011, although it is worth noting that the WB has amended its methodology this year, meaning that the latest results are not strictly comparable across all indices.

At the regional level, Peru is in third place in the latest ranking, behind Mexico (38) and Colombia (53). Chile, for its part, was below Peru at 58. At the global level, New Zealand, Singapore and Denmark took the top three spots (New Zealand knocking Singapore off the top into second).

Looking at Peru’s result in detail, the country posted a weaker score in eight sub indices, including ‘ease of starting a new business’, ‘construction permits’, ‘electricity supply’, ‘property registration’, ‘access to credit’, ‘protection of minority shareholders’, ‘fulfilment of contracts’ and ‘insolvency resolution’. While Peru still ranks well in several of those indicators (construction permits, property registration and access to credit), it only improved in two indices overall, notably including ‘ease of paying taxes’. Indeed the World Bank specifically noted recent tax reform efforts in Peru, and highlighted that income tax had come down in recent years, thereby helping business dynamism.

Also positively, Peru remains a regional leader for things like the process of opening a new business (which takes 6 procedures and 26 days in Peru vs. a regional average of 8.3 procedures and 31.6 days), while the cost of that process is significantly lower than the regional average, at 9.9% of income per capita vs. 31.5%.

Recovery continues

Economic output rose by 5.5% year-on-year in August, according to the national statistics institute (Inei), the strongest result in six months. While growth continues to be led by surging copper output, in line with the start of large new mines including Las Bambas, all 14 economic sectors registered positive results, indicating a spreading economic recovery in the country after a couple of weaker years. Manufacturing was particularly dynamic in August, amid a rebound in fishmeal production. Indicative of still-subdued domestic sentiment, however, construction activity was still weaker, with year-on-year growth of just 1.3%, well off the sector’s peaks in the boom times. The government is aiming to kick-start the sector in 2017 with new legislation to unblock stalled large infrastructure schemes. The IMF expects real GDP growth of 4.1% next year, up from 3.7% this year.

*** GROWTH TO PICK UP FOR SVG. The International Monetary Fund (IMF) concluded an Article IV consultation with St Vincent & the Grenadines in mid-December. The conclusion was that while growth will prove to have been relatively flat in 2017, at around 1.0%, it should pick up to 2.1% in 2018. This will be a relief after four years of flat growth, starting with 0.3% in 2014, 0.9% in 2015, and 0.8% in 2016. In the medium term, the IMF projects that “strong spillovers from the new airport, the construction of a modern port, and launching the geothermal project could support growth”.

On the fiscal front, the IMF is calling for “additional fiscal measures” in 2018 and over the medium-term “to pay arrears and put public debt on a clear downward path”. Due to some bilateral debt relief, public sector debt is expected to have declined in 2017, from 82.9% in 2016, but “to remain elevated at 77.5% of GDP”.

Another area of concern is the country’s resilience in the face of natural disasters. The IMF calls for the SVG government to “increase resources for the contingencies fund and implement initiatives to build resilience against natural disasters”. It added: “The authorities have earmarked revenue for the contingencies fund, but the resources are insufficient.”

*** NEW CARICOM CHAIRMAN TARGETS CLIMATE CHANGE. At the beginning of January, the incoming chairman of the Caribbean Community (Caricom), Haiti’s President Jovenel Moïse, said that it was the aim of the organisation to make the region “the first climate-resistant region in the world”.

The new chairman may have been shy on the details, but he was strong on vision. He said: “The absolute necessity to create a climate-smart region is clear given the effects of climate change, which have brought us droughts, mega hurricanes, heavy floods, and unusual weather patterns, all of which adversely affect our development.”

Moïse made the point that while the Caribbean suffers disproportionately from the consequences of climate change, as a region its production of greenhouse gasses “is practically nil”. That is why, he believes, outside support is not just essential but a moral imperative. He praised the goodwill and pledges from the international community at two recent global conferences in New York and Paris, and he said these pledges “give us hope that the necessary support to achieve our objective will be forthcoming”.

*** INCREASED WORKLOAD FOR CCJ. The Caribbean Court of Justice (CCJ), based in Trinidad, has reported a 20% increase in filings in the 2016/2017 judicial year, up to 25 from 20 in the previous year.

The CCJ was established in 2001 with the intention of replacing the Privy council in London as the final court of appeal for the English-speaking Caribbean. So far only Dominica, Barbados, Belize, and Guyana use the CCJ as their final court of appeal. However, the 15-member Caricom uses the CCJ to govern its Revised Treaty of Chaguaramas.

In early December, there was tension between Barbados and the CCJ over the latter’s criticism of delays in the Barbados judicial system. Prime Minister Freundel Stuart responded by saying: “Sometimes I think that Barbados is being unnecessarily slandered by some of the reports which I see.” He accused the CCJ of treating Barbados “salaciously”. Stuart recognised that there were problems, but he said that the country’s criminal justice system “is not going to function efficiently if whenever there is evidence that there is a delay…[the] country is held up to ridicule and the impression is given that the system is not working”.

Until January 2018, Fleet Admiral Eduardo Bacellar Leal Ferreira commanded the Brazilian Navy. Now he’s overseeing the board of the state oil giant, Petrobras. Ferreira will be the chairman of a new-look 10-member board that will be entrusted with securing Petrobras’ steady recovery from its notoriously central role in the long-running corruption investigation, Operation Car Wash. Roberto Castello Branco, grandson of the eponymous liberal economist who served as the first planning minister during the military dictatorship, is the chief executive.

In his first few weeks in office, Castello Branco has been ruthless about removing the last vestiges of the Workers’ Party from senior positions in Petrobras management. In truth, the state oil giant has been following a much more pro-market agenda since 2016, but the final exit of those appointed under former president’s Luiz Inacio Lula da Silva and Dilma Rousseff marks a symbolic shift for a company often divided between its private and state stakeholders.

Half of the executive board has been promoted by President Jair Bolsonaro’s government, including Castello Branco. The others were replaced in 2018 by the administration of then-President Michel Temer. “A new era begins with a long-term strategic vision and goal of generating value for shareholders and for Brazil,” Castello Branco said in the filing. “Changes in Petrobras management reflect the new orientation.”

The top executives are now aligned with a liberal, pro-investor policy set by Bolsonaro’s right-wing government. In an internal company video interview sent to workers in early January, Castello Branco stressed that he would like to end the company’s virtual monopoly in oil refining and make Petrobras a world leader in oil production. The CEO also dismissed the idea of a full privatisation.

US Investigation

Petrobras plans to continue trading oil and products in the US, despite firing one of its key traders and suspending business with major oil trading firms on bribery allegations. The oil giant said it has fired Houston-based trader Rodrigo Berkowitz and opened a widespread internal investigation after the Brazilian Federal Police said he and others demanded kickbacks in trading contracts. A Brazil judge issued an arrest warrant for Berkowitz on 3 December.

Other Petrobras employees have also been charged as part of the Carwash probe for allegedly negotiating bribes with trading firms including Trafigura Ltd., Glencore Plc., and Vitol Group in contracts with the state-controlled producer. Business with those companies has been temporarily suspended, Petrobras said on 20 December. An LPG trader has been also been dismissed by Petrobras.

Reality-show trading

Rio de Janeiro-based brokerage house Ativa is trying to increase interest in stocks among Brazilians, creating a reality TV show in a country obsessed with the genre. ‘Money Master’ is due to air on the brokerage’s website during first week of February. The idea is fairly simple: Six teams of traders have 50,000 reais ($14,000) each to invest in stocks, with the day’s worst performer eliminated from the competition until the two-team runoff on Friday, 8 February. The winner gets a free trip to New York; the runner-up gets a top-of-the-range chair.

Over 150 people applied to be a contestant on the first two days of signups, according to Rebeca Nevares, a partner at the brokerage who came up with the idea, having been on a similar show herself in 2008 (she came in second). The show may get an extra boost from the Sao Paulo stock index’s record rally this year, and Nevares hopes it helps make ordinary Brazilians more comfortable with the idea of trading equities and, ideally, opening an Ativa account.

• Selling off assets

Petrobras is preparing to sell its system of gas pipelines, refineries and fertiliser plants. The sale of the gas pipeline network (TAG) in the Northeast and North is most advanced and should yield some US$ 9 billion. Some 60% of refineries in the South and Northeast will be sold in auctions to be organised shortly. Between 2019 and 2023, Petrobras hopes to receive some US$26.9 billion for the sale of certain assets.

URUGUAY | Desaceleración. Después de un periodo sin precedentes de elevado crecimiento sostenido, las estadísticas sugieren que la economía uruguaya finalmente está empezando a desacelerarse. Según el banco central, la economía aún creció a un impresionante 5,7% año en año en el 2011, pero eso fue menos que lo pronosticado, después de un crecimiento de 8,9% en el 2010. El crecimiento del PIB en el 2011 fue conducido por los sectores minorista, turismo, transporte y comunicaciones, pero el PIB creció solamente un 3,5% año en año en el trimestre final, el crecimiento más lento para este periodo desde el 2006, y se contrajo un 1,9% en comparación con el trimestre anterior.

     Sin embargo, el equipo económico del gobierno expresó satisfacción por el ritmo de crecimiento, señalando que estaba por encima del promedio regional por séptimo año consecutivo, y que esto ocurrió a pesar del adverso contexto económico global. La declinación en el trimestre final también fue fuertemente influenciada  por la sequía que impacto la generación de electricidad hidroeléctrica y la inactividad en la refinería de petróleo de La Teja que estaba recibiendo mantenimiento así como también un conflicto laboral desde agosto del año pasado hasta enero de este año. El sector industrial se contrajo un 7,9% y el sector de la electricidad, gas y agua se contrajo un 41,4% año en año, en el trimestre final.

BOLIVIA | BOA anuncia más rutas. El 15 de enero la aerolínea estatal, Boliviana de Aviación (BOA), anunció que desde el próximo mes comenzaría a operar vuelos conectando ciudades de Bolivia con los destinos en EU de Washington y Miami. El anuncio fue hecho por el ministro de obras públicas, Vladimir Sánchez, quien explicó que los vuelos operados por aviones con capacidad para 300 pasajeros despegarán de La Paz, Santa Cruz de la Sierra, y Cochabamba hacia EU. Después del colapso de la aerolínea insignia boliviana, AeroSur, el año pasado, BOA se convirtió en la única aerolínea de Bolivia, tomando a su cargo las rentables rutas de AeroSur a Europa. Según Sánchez la compañía, que el año pasado transportó alrededor de 1m de pasajeros, también está considerando expandir su flota este año con la compra de 12 nuevos aeroplanos a fin de satisfacer un esperado incremento en la demanda.

ECUADOR | Firmas de EU ganan contratos de provisión de combustibles. El 16 de enero, la petrolera estatal de Ecuador, Petroecuador, anunció que las firmas de EU, Citizens Resources LLC, y Lukoil Panamericas, han obtenido los contratos para proveer a Ecuador con diesel y gasolina de alto octanaje. Una declaración de Petroecuador expresó que las firmas habían presentado las mejores ofertas durante el proceso de licitación internacional lanzado el año pasado. Citizens fue contratada para proveer unos 2,16m de barriles de diesel por mes, comenzando en febrero por un precio no revelado. Por su lado, Lukoil proveerá 6m de gasolina de alto octanaje. Petroecuador reveló además que otra firma de EU, Arkham, ha ganado un contrato para exportar 540.000 barriles de bajo octanaje producidos en las refinerías de Petroecuador.

Los acuerdos llegan en medio de una batalla legal en curso entre Ecuador y el gigante petrolero de EU, Chevron, a la que una corte ecuatoriana ordenó pagar US$18,2mm por daños, como resultado de la contaminación producida por  sus operaciones en la región amazónica del país. Chevron cuestiona la decisión de la corte, la cual considera “ilegítima”.

PERÚ | Destacado por Black Rock. Perú es ahora el segundo destino más seguro para las inversiones en América Latina, detrás de su vecino sureño, Chile, de acuerdo con el último informe del índice de riesgo soberano difundido por la corporación multinacional de administración de inversiones, Black Rock, la compañía más grande del mundo en administración de activos.

El ‘Índice Black Rock de Riesgo Soberano’ (BSRI), que determina la posición de los países de acuerdo con una serie de parámetros financieros, fiscales, e institucionales, destaca que en años recientes Perú ha exhibido una óptima posición fiscal gracias a su prudente manejo macroeconómico. Esto le ha permitido al país estar ubicado en el puesto 19^no en el índice global, por encima de algunos países desarrollados como Francia (27) y el Reino Unido (23).

Comentando sobre esto, el director ejecutivo de Black Rock para América del Sur, Axel Christensen, declaró que “merece la pena señalar que Perú ahora tomó el segundo lugar en América Latina, sobrepasando a países desarrollados. En las categorías variables medidas, Perú se destaca por la alta valoración de su posición fiscal”. Esto elevará aún más el perfil de Perú entre los inversionistas internacionales, quienes usan el BSRI como una importante herramienta para desarrollar sus estrategias de inversiones.

VENEZUELA | Persiste escasez de alimentos pese a multimillonarias importaciones. La inflación en el precio al consumidor fue del 19,9% en el 2012, cayendo del 27,6% en el 2011, de acuerdo con el banco central. Parte de la explicación puede encontrarse en las masivas compras en el exterior del sector público en un año de elecciones presidenciales. Las importaciones han trepado a una nueva cifra histórica de US$56,34mm en el 2012, según cifras preliminares del banco central., subiendo un 20,4% de US$46,8mm en el 2011 y superando el récord previo de US$51,5mm establecido en el 2008 (otro año electoral).

En el 2008, el 75% de las importaciones fueron realizadas por el sector privado; pero en el 2012 la porción del sector privado en las importaciones fue bastante menor, un 61,4%, mientras que la porción del sector público se elevó al 38,6% en el 2012, subiendo del 25% en el 2008. En total, el sector público gastó US$21,8mm en importaciones en el 2012, subiendo un 28,3% de US$17mm en el 2011, mientras que las importaciones del sector privado llegó a US$34,6mm, subiendo un 15% año en año.

El banco central también informó que las dos agencias de tasa de cambio oficiales, la Comisión de Administración de Divisas (Cadivi), y el Sistema de Transacciones de Títulos en Moneda Extranjera (Sitme), entre ambas autorizaron US$34mm en moneda extranjera (en su mayor parte dólares de EU) para las importaciones del sector privado en el 2012.

• Inflación en el precio de alimentos

La inflación en el precio de alimentos en Venezuela fue tercamente alta, un 24,8% en el 2012, cayendo del 33,6% en el 2011, y persiste la escasez de alimentos básicos. El Vicepresidente Nicolás Maduro acusó a los comerciantes de acaparamiento y ha enviado a Karlin Granadillo, el director de la Superintendencia de Precios Justos (Sundecop) para que aplique medidas drásticas.

BRASIL| Industriales exigen reforma fiscal. La Confederação Nacional da Indústria de Brasil (CNI) presentó un documento titulado ‘Propuestas de la industria para las elecciones del 2014’, que contiene una serie de propuestas y recomendaciones “esenciales” para fomentar el crecimiento y la competitividad del país. El 30 de julio, durante una reunión patrocinada por la CNI, se entregaron copias del documento a los principales candidatos que tomaran parte en las elecciones generales del 5 de octubre –la Presidenta Dilma Rousseff, del Partido dos Trabalhadores (PT); Aécio Neves, del centrista Partido da Social Democracia Brasileira (PSDB); y Eduardo Campos, del Partido Socialista Brasileiro (PSB). La principal demanda de la CNI es una reducción en el oneroso peso fiscal, del que se queja que actualmente limita la tasa de crecimiento del país (tasa que la CNI pronostica que rondará el 1,0% en el 2014). La CNI, que también se queja de que el peso fiscal significativamente incrementa el costo de la apertura de nuevas fábricas (estima que por un 10,6%), dice que esta reducción fiscal debería ir idealmente acompañada de una simplificación del mismo código fiscal y exenciones tributarias para las exportaciones y las inversiones. El documento también pide que el gobierno incremente el gasto en infraestructura que actualmente es de R$73mm (US$32,5mm) al año. De acuerdo con la CNI, esta cifra debería llevarse a al menos el 5% del PIB, o R$175mm (US$77,9mm). “Las bases de la visión de la CNI para los próximos cuatro años es que hay numerosas oportunidades de crecimiento para el país y su industria, pero necesitamos superar algunos desafíos, siendo el principal la competitividad”, dijo José Augusto Fernandes, director de política y estrategia, quien presentó el documento. “Brasil se ha convertido en un país costoso y no competitivo”, agregó Fernandes.

• Volkswagen reduce sus operaciones en Argentina

El 24 de julio el fabricante de vehículos alemán, Volkswagen, anunció que suspenderá sus operaciones por dos periodos de cinco días (28 de julio-1 de agosto, y 1 a 5 de agosto) en su planta en la provincia de Córdoba, Argentina. De acuerdo con la firma, la suspensión –durante la cual 1.100 trabajadores recibirán el 75% de sus salarios– se debe a la caída de sus exportaciones a Brasil. El anuncio sigue a la decisión del 18 de julio de Volkswagen de cerrar la planta en General Pacheco, en la provincia de Buenos Aires, por un periodo de diez días también debido a la caída en la demanda regional. El sector de manufactura de automóviles de Argentina ha venido experimentando una aguda caída en la actividad desde junio, como resultado de la baja demanda en Argentina y también en Brasil, ya que las dos economías sudamericana lideres continúan experimentado una marcada desaceleración económica.

Two of Nicaragua’s most senior police officers retired on 27 October, to be replaced by two officials considered to be close allies of the administration of President Daniel Ortega. Juan Ramón Grádiz, the inspector general of Nicaragua’s national police (PNN) and Javier Maynard, the deputy director will stand down. Two chief commissioners will take their places.

Pablo Emilio Avalos Sandoval, who will take over as inspector-general, was in charge when the police turned a blind eye to attacks by a group of government-sympathising thugs on the Occupy #INSS movement in June 2013, a protest in support of pensioners’ rights. Elizabeth Rodríguez, the new deputy director, participated in Ortega’s illegal re-election campaign in 2009. Gonzalo Carrión, an advisor to the Centro Nicaragüense de Derechos Humanos (Cenidh), questioned how Avalos could be given the job, given his track record of allowing innocent protesters to be attacked.

Independence under scrutiny

PNN chief Aminta Granera has been conducting a shake-up of the police force since the beginning of October when 32 police commissioners resigned, just a few months after Ortega increased the number of senior police officers. Among those who benefited from the changes were Ortega’s former personal physician, Julio Paladino, who was made a commissioner general. The chief of the presidential bodyguard unit, Mark Acuña, was also promoted.

Given the mounting protests over Nicaragua’s ‘Gran Canal’ project (see sidebar), the handling of public demonstrations will be a key test of the PNN’s capabilities. Police independence most recently came under scrutiny over the PNN’s alleged failure to respect human right in the investigations conducted into the July armed attacks on two buses carrying supporters of the ruling Frente Sandinista de Liberación Nacional (FSLN) [RC-14-09].

Opposition groups have accused the government of using the investigation into the attackers as an excuse for a witch-hunt against political opponents. Among those who have questioned the police’s impartiality in the wake of the investigation are Nicaragua’s episcopal conference (CEN); the main parliamentary opposition party, Partido Liberal Independiente (PLI); as well as prominent human rights groups like the Comisión Permanente de Derechos Humanos (CPDH) and Cenidh.

• Protests against ‘Gran Canal’ continue

Since last month there have been nine demonstrations against the ‘Gran Canal’ inter-oceanic project awarded to Hong Kong-based HKND Group, which local residents fear will result in evictions and expropriations, affect their water supply and damage the environment. The most recent protests took place on 24 October on Ometepe island.

ARGENTINA | Construction starts to pick up

On 31 August Argentina’s national statistics institute (Indec) released the latest instalment of its construction sector activity indicator (Isac), which shows that activity in the sector increased by 13.3% in July. The July Isac figure is a new four-year high, and suggests that the sector may finally be emerging from the slump into which it has fallen in recent years, as sector spending has significantly increased in this electoral year. According to the Indec report, the Isac reached 206.4 points in July, its highest monthly measurement since May 2011, on the back of increased government spending on infrastructure projects such as roads and housing.

Indeed, Indec has pointed out that the seasonally adjusted Isac figure was 12.7% higher. All of this has contributed to the sector posting a cumulative 8.5% year-on-year increase in the first half of the year, a new record. Encouragingly, this is producing optimism in the sector, with sector businessmen polled by Indec expressing confidence that this greater dynamism is set to continue in the short-term. According to Indec, 27.1% of construction entrepreneurs polled said that they expected this increase in activity to continue in the foreseeable future, compared to 16.7% who expected a fall.

However, this optimism has not yet translated into more dynamism in the sector’s labour market. According to the Indec poll, only 3.8% of respondents expected an increase in the size of their payroll in coming months compared to 15.4% who expected a reduction. Among those entrepreneurs who work in the public sector, 20.8% expected to increase the size of their payrolls and 18.8% expected to reduce it. These contrasting responses show that the construction sector’s performance appears to still be very much dictated by Argentina’s fluid political environment with its short-term prospects largely dependent on the outcome of 25 October general elections. In the meantime the government has moved to ensure that it will have sufficient resources available in the run-up to the elections by approving, on 1 September, a Ar$1.1bn (US$118m) increase to the national budget to cover all of its expenses this year.

• Deficit

Brazil’s federal government posted a fiscal deficit of R$7.22bn (US$2bn) in July, the worst monthly result since records begun in 1997. The figure brought the accumulated deficit in the 12-month period to July to 0.77% of GDP, well below the government’s reduced target of a 0.15% surplus (it was 1.1% of GDP previously).

Press reports in late July indicated that the state-owned oil company Petróleos de Venezuela SA (Pdvsa) was in negotiations to roll over the US$4.38bn in debt coming due in the second half of 2016, of which US$4.2bn matures in the fourth quarter. Together with other developments, this confirms our view that the Venezuelan government sees maintenance of Pdvsa’s liquidity and solvency as its paramount policy objective. However, both the government, and Pdvsa, face the additional challenge of falling production volumes at the oil company.

Venezuela’s well-documented financial, economic and social crisis has come about largely because of the heterodox economic policies followed by the administrations of President Nicolás Maduro and his predecessor, the late Hugo Chávez (1999-2013). In essence, an extraordinarily high inflation rate has resulted from the monetisation of a persistently large deficit. Government spending on politicised social programs has soared, and has operated in conditions of opacity and without accountability. This has resulted in persistent over-valuation of the currency, which the authorities regularly devalue when pinched for cash. Price and other controls have contributed to a business environment that has become one of the world’s most challenging. Oil and gas, of which Pdvsa is essentially a monopoly producer (although it does operate joint ventures with foreign companies) is now almost the sole source of export revenues and cash for the government.

In this context, the government simply cannot allow Pdvsa to default on its borrowings. The government has no other source of revenues. Through its CITGO refining and distribution business in the US, Pdvsa has very significant foreign assets that could be seized by creditors. Those assets are integral to the overall operation of Pdvsa’s business. The scale of Pdvsa’s massive reserves of oil and gas mean that the company is at little risk of insolvency. However, maturities of long-term borrowings, at a time of depressed oil, mean that actual and perceived liquidity crises are frequent.

Although a default by the sovereign itself would be less cataclysmic than a default by Pdvsa, it is still an outcome that the government will want to avoid at all costs, given the sacrifices (such as dramatically reduced real incomes and shortages of basic goods) that have been demanded of the Venezuelan people: such a default would involve an enormous loss of face.

Last month we argued that, in extremis, Pdvsa could borrow money from the Chinese government (and its state-owned enterprises) to cover payments on bonds maturing in coming months. We presumed that, in line with well-established arrangements, Pdvsa would service the new debt to the Chinese with shipments of oil.

There were two other developments in late July and early August. One was an agreement between the Caracas government and the Fondo Latinoamericano de Reservas (FLAR, a multinational reserve fund) for the FLAR to lend US$482.5m to the Banco Central de Venezuela (BCV) for a period of three years.

The other was confirmation by Energy Minister and Pdvsa president Eulogio del Pino that he was in discussions to roll over Pdvsa bonds due to mature later this year. This is the classic ‘kick the can down the road’ approach. Nonetheless, a rally in Venezuelan government and Pdvsa bond prices indicated some market optimism about the talks.

In short, there are ways in which the Venezuelan government can keep cash within Pdvsa, change the debt maturity profile and/or find cash from unorthodox sources. But notably, a roll over arrangement has the advantage of not requiring the commitment of any more oil production to debt servicing obligations, as with China.

In part because of underinvestment in production capacity in the past, output has been falling. This represents a potentially serious threat to Pdvsa cashflows. In August, Del Pino indicated that average production of crude oil and liquids in July was 2.64bn barrels per day (b/d). This represents a significant reduction to average output levels in 2012 and 2013 (reported at 3.0bn b/d), 2014 (2.89bn b/d) or 2015 (2.86bn b/d). Deliveries to Chinese parties for debt repayment amounted to 579,000 b/d in 2015, Del Pino said.

Following on from a series of setbacks in congress [WR-19-19] and large-scale nationwide protests on 15 May, President Jair Bolsonaro’s government is weakened. Bolsonaro might have been betting upon pro-government demonstrations, called for 26 May, to give him a boost. But he has been forced to distance himself from these planned displays of support, as they have so far served to divide his supporters and once again expose the lack of unity within the ruling Partido Social Liberal (PSL).

Last week’s protests, which saw hundreds of thousands of students and teachers take to the streets to protest cuts to universities, were the first mass demonstrations against this government. Student unions are already planning another nationwide protest for the end of the month. President Bolsonaro’s first reaction to this important show of discontent was to dismiss the protestors as “imbeciles” being used by the militant Left, while members of his government downplayed the demonstrations as a normal part of democracy.

Two days after these protests, calls began to emerge from right-wing accounts on social media for counterdemonstrations in support of Bolsonaro to take place on 26 May. Bolsonaro initially entertained the idea of joining these demonstrations, but after a ministerial meeting on 21 May the presidential spokesperson Otávio Rêgo Barros announced that neither the president nor any of his cabinet would be taking part, as it would not be “appropriate” to do so. The government’s moderate pragmatists appear to have prevailed over the ideologues in this decision, following concerns that the demonstrations will reflect poorly on the government if there is a low turnout or incidents of violence.

Online calls for the pro-Bolsonaro demonstrations were quickly picked up by members of the president’s PSL, who make up the government base in congress, with high-profile federal deputies such as Eduardo Bolsonaro and ‘Bia Kicis’ Torrents de Sordi publicly backing the demonstrations. However, the PSL appears divided. Janaina Paschoal, a popular São Paulo state deputy who had at one point been tipped to be Bolsonaro’s running mate last year, has fallen out with fellow PSL members over her disapproval of these planned demonstrations, and her criticism of those in the party and in government whose actions have caused infighting and confusion. The PSL party president, federal deputy Luciano Bivar, has said that a pro-government demonstration “makes no sense.”

Outside of congress, Bolsonaro’s supporters are also divided. The Brasil 200 group of pro-Bolsonaro business leaders is not backing the 26 May demonstrations, but business tycoon Luciano Hang is, out of support for the pension reform, according to national daily Folha de São Paulo. The conservative right-wing movement Movimento Brasil Libre (MBL), which largely backed Bolsonaro and was a leading force behind the 2016 protests calling for the impeachment of then-president Dilma Rousseff, has become the object of attacks from die-hard ‘bolsonaristas’ after MBL leaders refused to endorse the 26 May demonstrations because of their lack of a clear agenda.

A sign of this lack of clarity and cohesion, some bolsonaristas have called for the demonstrations to be protests against the federal congress and the supreme court (STF). The anti-democratic and disruptive undertones of such calls have caused alarm not only amongst Bolsonaro’s critics but also amongst the government’s more moderate supporters. After months of tensions between the three branches of government, a public display of support for the executive which simultaneously attacks the legislative and the judiciary would only do more harm to the Bolsonaro government.

• Congressional clashes

The president of the chamber of deputies, Rodrigo Maia from the Democratas (Dem) party, has reportedly broken off relations with the leader of government in the chamber, ‘Major Vitor Hugo’ de Araújo Almeida from the ruling PSL, after a quarrel during a meeting of congressional party leaders on 21 May. Maia later said that he and Major Vitor Hugo had not personally communicated since March, but that this would not undermine the congressional agenda. “We’re not preoccupied with the government leader, nor with the government. We’re preoccupied with the Brazilian people,” Maia reportedly said, reaffirming his commitment to get the chamber to vote on the pension reform in June.

Brazil stands out as one of the world’s major epicentres of the Covid-19 pandemic, as well as a country where the political and policy response to the virus has been notoriously poor. By early March 2021 over 10m cases and over a quarter of a million deaths had been recorded as a result of the virus. Both numbers are almost certainly underestimates. Experts say the real number of infections could be two to three times higher. Brazil has the second largest number of reported deaths in the world after the United States.

Right wing populist President Jair Bolsonaro consistently downplayed the danger from Covid-19, notoriously describing it in March 2020 as no more than “a little flu”. The president has repeatedly broken social distancing guidelines and failed to use or encourage others to use a face mask. Throughout much of 2020 he made a point of attending political rallies without a mask and embracing his supporters at close quarters. He consistently argued against lockdown and quarantine measures, which he said would be bad for the economy. This remained the case even after the president tested positive for the virus in July. No restrictions were placed on international travel. The only quarantine measures imposed in the country were as a result of interventions by state governors, often against the advice and urgings of the federal government.

The government’s popular minister of health at the outset of the pandemic, orthopaedist Luis Henrique Mandetta, was forced to resign in April 2020 after he insisted on the need for social distancing. He was replaced by oncologist Nelson Teich, who lasted only 28 days in the job, and who resigned after refusing presidential pressure to recommend an unproven drug, chloroquine, for Covid treatment. He was replaced by an army general, Eduardo Pazzuelo, with no previous medical experience. Pazzuelo is currently under investigation by state prosecutors who accuse him of failing to fulfil his duties to save lives during the second wave of infections in Manaus, the capital of Amazonas state, where patients have died because of a lack of oxygen supplies in overcrowded hospitals. He too was replaced in March 2021, with Marcelo Queiroga becoming the fourth health minister appointed during the crisis. He took office amid a new surge of contagion and deaths.

In addition to the failure to promote consistent social distancing or quarantine measures, the government also brought a highly politicised approach to vaccination programmes, which began in early 2021. João Doria, the governor of São Paulo state, and a potential adversary to Bolsonaro in the 2022 presidential elections, signed an agreement to secure supplies of CoronaVac, an anti-Covid vaccine manufactured by Sinovac of China. The deal was severely criticised by the president who, despite himself being ambiguous on immunisation, chose to throw his support behind the AstraZeneca vaccine (Covishield) being acquired by Rio de Janeiro state as part of what appeared to be a fundamentally electoral calculation.

Medical experts have been extremely critical of Brazilian government policies. Alexandre Naime, head of infectious disease at São Paulo university (Unesp) said the government had chosen a “populist model” promoting medicines “not recognised as effective” by the international community. He also accused the administration of using an “anti-vaccination discourse”, noting that the president had said he would not himself take the vaccine and warned of the impact of unspecified side effects.

As a result of the failure to take properly coordinated prevention or containment measures, the spread of the virus has been rapid, with the country experiencing two big infection waves, the first peaking in July-August 2020 and the second developing from November 2020 onwards and rising into the early months of 2021. By March 2021 the public health system was again nearing collapse with ICU occupancy rates close to 100%. Of particular concern was the emergence and spread of new coronavirus variants, including a strain known as P1. Health officials said that, according to their initial findings, the P1 strain was three times more contagious than earlier types of the virus.

One positive aspect of Brazil’s approach to the pandemic, however, was the adoption of a generous programme of emergency payments to the poor. The so-called ‘Coronavirus voucher’ programme involved monthly payments to poor households and informal workers initially set at BRL600 (US$110). The programme was in place for nine months in 2020. The payments were tapered down and ceased at the end of the year. However, in early 2021 the government was seeking to restart a version of the programme expected to pay the equivalent of around US$45 a month. At its peak, the payments reached 60bn poor Brazilians (out of a total population of 212m). They totalled around US$56.5bn or 4.5% of GDP.

Brazilian GDP contracted by 4.1% in 2020, the worst performance in decades, but significantly lower than the contractions experienced in Mexico (8.2%) and Argentina (10%). President Bolsonaro said: “People expected us to fall 10%. What made the economy move, in part, was the emergency aid.”

MEXICO| Investment agreement with Hong Kong.  On 17 June Mexico’s economy ministry (SE) said that an Agreement for Reciprocal Protection and Promotion of Investments (APPRI) between Mexico and Hong Kong has come into effect. The SE said that the promulgation of the APPRI deepens economic relations and “continues to strengthen the important investment relationship” between Mexico and Hong Kong. The administrative region is Mexico’s 26th biggest global investor, having invested US$1.18bn between 1999 and March 2021. In 2019, prior to the coronavirus (Covid-19) pandemic, trade between Mexico and Hong Kong was upwards of US$1.5bn, with Mexico exporting US$592m worth of goods. This is Mexico’s 30th APPRI and is a part of the Mexican government’s plan to commit to foreign trade and foreign investment in order to recover from the pandemic, which caused Mexico’s GDP to contract by 8.2% in 2020.

MEXICO| Falling gross fixed investment. On 7 June Mexico’s national statistics institute (Inegi) released new figures which show that gross fixed capital formation (GFCF) fell by 4.9% in the first quarter of 2021 compared with the same period in 2020. An Inegi report has attributed the fall in GFCF to lower levels of fixed capital investment in the construction sector over the period (-8.6%), which was not offset by a marginal (0.8%) increase in fixed capital investment in the manufacturing sector. However, Inegi highlights that GFCF increased by 1.4% in March compared with the previous month and that this rose to 2.3% in seasonally adjusted terms. March was the third consecutive month with positive monthly GFCF growth, leading Inegi to suggest that a recovery is under way. GFCF in Mexico fell by a sharp 18.2% year-on-year in 2020 due to the effects of the coronavirus (Covid-19) pandemic after it posted negative growth of -4.9% in 2019 amid falling investor confidence.

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

Mexico: Unemployment Rate
Econimically active population

The International Union for the Conservation of Nature (IUCN), an international organisation headquartered in Switzerland, has published economic assessments of proposals to reduce plastics pollution in Antigua and Barbuda, Grenada, and St Lucia. The assessments are part of a wider project called Plastic Waste Free Islands (PWFI).

Plastic waste pollution is a global problem with particularly severe impacts in the Caribbean. Globally some 400m tonnes of plastic waste are produced every year.  About 85% of single-use food and beverage containers end up in landfills and are leaked into the sea. Microplastic fragments have been found throughout island and marine habitats. Single-use plastics and polystyrene account for around 80% of all Caribbean marine litter. The IUCN economic assessments, the summaries of which were made available in late October, found that this pollution has a significant negative effect on a range of economic sectors in the Caribbean, including tourism and fishing, aquaculture, and transport. The IUCN estimated that in Antigua and Barbuda’s fishing sector alone, losses caused by marine pollution amount to around 9.2% of total revenues. 

The IUCN highlights a series of steps that can be taken to try and reduce plastics pollution. The Antigua and Barbuda government has increased taxation on imported plastic cans and bottles and banned the use of plastic shopping bags and Styrofoam.  It is also seeking to encourage a nascent recycling sector. IUCN supports the development of national and regional recycling strategies.

Plastic pollution

In a separate US$42m initiative supported by the United Nations Environment Programme (UNEP) and launched in August 2023, the governments of Colombia, Jamaica, and Panama agreed to collaborate to reduce plastic pollution from coastal and urban environments. This project aims to increase “circularity” the use of recycled materials. It is estimated that the global economy is only 7.2% circular. The UNEP project aims to reduce the use of unnecessary and toxic plastics, end the burning of plastic waste, and investigate “new circular business models”. 

Tan vehementemente como él había denunciado las políticas económicas e industriales de la administración de la Presidenta Cristina Fernández, José Ignacio de Mendiguren, el presidente de la influyente Unión Industrial Argentina (UIA), el más importante grupo industrial de presión en el país, ahora está alabando al gobierno. El rápido cambio de actitud de parte de De Mendiguren, a la luz de lo que parece que será un camino seguro a la reelección, ha sido tan drástico y sorprendente para algunos sectores que los medios incluso han acuñado un nuevo término para describir el proceso por el cual las políticas que solían ser rechazadas, ahora son aplaudidas: la Mendigurización de una posición.

Tal como la decisión de Eduardo Lorenzo Borocotó de formar un bloque ‘independiente’ de sólo un hombre en la cámara baja del congreso para alinearse él mismo con el Kirchnerismo, después de haber sido electo bajo la bandera de Propuesta Republicana (PRO) en 2005, ha resultado en los peyorativos términos “borocotear”, “borocotero” y “borocoteando”, el nuevo término, Mendigurización, promete convertirse en el último término para describir a aquellos que, como lo expresan los argentinos, ‘saltan al autobús para que éste no los deje atrás’. El cambio ha sido tan dramático que siguiendo al discurso de Mendiguren en la cena anual de la UIA el 1 de setiembre, la Presidenta Fernández dijo que “Esta es la primera vez que yo no tengo que refutar nada de las cosas que fueron dichas [por la UIA]”.

Fernández continuó para decir que ella estaba feliz con el mensaje de De Mendiguren –en el cual él pronostica que “si es que se consolida el curso [del modelo económico], Argentina elevará al doble su producto per cápita”– porque “no fue corporativo sino de una concepción nacional y colectiva, y eso me hace sentir muy bien”. Pero Mendiguren ha ido incluso más allá, adoptando la controversial terminología usada por la administración, al no mencionar ni una sola vez la palabra inflación, y en cambio hablar acerca de las “tensiones de crecimiento en el mercado.

El acercamiento es beneficioso para ambas partes: el gobierno necesita refutar la afirmación que el crecimiento de Argentina ha sido posible gracias al llamado ‘viento de cola’ del modelo dependiente de la soja y reorientar la descripción del “modelo” hacia otra nueva que lo describa como siendo industrialmente dirigida por la inversión del capital interno, con una fuerte intervención del estado; la UIA necesita alejarse de posiciones que el gobierno puede describir como ‘antinacionales’ o que apuntan a remover al gobierno del poder. Si es exitoso, al estar en buenos términos con la administración, la UIA también podría recoger varios beneficios, como tener a Fernández de su lado cuando pidan que se ponga un techo sobre los aumentos de salarios durante las negociaciones en 2012.

Algunos analistas locales creen que, en realidad, nada ha cambiado: en su visión, ni de Mendiguren se ha vuelto un converso del “populismo sustentable” como alegan algunos jóvenes economistas Kirchneristas, ni el gobierno se ha vuelto un acérrimo defensor del modelo económico de libre mercado. Sin embargo, el giro público podría indicar que Mendiguren se convertirá en el principal operador entre el gobierno y el sector privado para asegurar que los cambios que los industriales desean, se realicen en realidad, pero sin forzar al gobierno a cambiar de retórica en público.

La prueba más sólida de esa teoría es el súbito interés que varios líderes industriales han mostrado en las propuestas de política económica abogada por miembros de ‘La Makro’, un agrupamiento de jóvenes economistas Kirchneristas liderados por el ministro (y probable futuro vicepresidente) Amado Boudou. De acuerdo con Francisco Olivera, un columnista de opinión del diario La Nación, un miembro del lobby industrial le había dicho a él que asistía a todas las conversaciones con Iván Heyn debido a que “es más fácil y más barato tomar un café con él ahora que hallarlo en un par de meses cuando él sea ministro”. Aparentemente, esa es exactamente la posición asumida por de Mendiguren, que es citado por Joaquín Morales Solá en el mismo diario como diciendo que su rol “no es criticar, sino influir”. De todos modos, si esta luna de miel entre el gobierno y la UIA durará hasta 2015, es aún un punto discutible.

• Objetivos para 2020

“Los objetivos del Plan 2020 son doblar el PIB industrial, crear 4,5m de empleos, reducir aún más el desempleo [y] sustituir importaciones por el equivalente de 45% de las importaciones actuales”, dijo Fernández, cuyo plan económico claramente se extiende más allá del próximo mandato presidencial, que expira en 2015.

• Otra ‘primera vez’ para la comunidad LGBT

El periódico de las fuerzas armadas argentinas, Tiempo Militar, ha anunciado la semana pasada que el ejército había autorizado el casamiento de dos hombres, un teniente coronel y un capitán. Este será el primer enlace del mismo sexo que tendrá lugar dentro de las fuerzas armadas de Argentina desde que el país ha extendido los derechos de matrimonio a todos los ciudadanos sin considerar su orientación sexual en julio de 2010. Desde entonces, Argentina fue testigo de los primeros matrimonios de gay y lesbianas en la región, como también el primer divorcio gay a comienzos de este año. El casamiento de dos oficiales del ejército, sin embargo, marca un hito para la comunidad lesbiana, gay, bisexual y transexuales (LGBT), debido al conservadorismo que ha dominado tradicionalmente la institución.

Apostando en grande en los esquemas sociales
Esta semana, Fernández otorgó un aumento de 22,7% en el esquema de transferencia condicionada de dinero para niños en edad escolar, Asignación Universal por Hijo (AUH)). El incremento está en línea con las estimaciones privadas estimadas de 23%-25%. Oficialmente, los precios al consumidor subieron 0,8% mes en mes en julio, llevando la tasa anual de inflación a 9,7% como ha informado el Instituto Nacional de Estadísticas y Censos (Indec). Pese a la negativa del gobierno de una inflación alta, sus acciones son una aceptación implícita de lo que los argentinos comunes ven todos los días en los supermercados.
El AUH, que beneficia a 3,59m de niños, se elevará de los actuales Arg$220/mes (US$52,3) a Arg$270 (US$64,2). El incremento representa un costo anual agregado de Arg$2,18bn (US$520,75m), llevando el costo anual del esquema Arg$11,82bn (US$2,81bn) por año.
Fernández también incrementó el nivel del umbral bajo el cual los trabajadores pueden reclamar la Asignación Familiar (AF) hasta con un salario máximo mensual de Arg$5.200
(US$1.237). Este esquema pretende beneficiar a trabajadores que ingresen al sector formal del empleo. Y tendrá tres niveles de pago: 1) trabajadores que ganan hasta Arg$2.800 (US$666,10) por mes (previamente Arg$2.400) pueden reclamar Arg$270 por niño; 2) trabajadores que ganan hasta Arg$4.000 (US$951,57 –previamente Arg$2.400) pueden reclamar Arg$204 por niño; y 3) trabajadores que ganan hasta ARg$5.200 (previamente Arg$4.800) pueden reclamar Arg$136. El esquema de AF ahora tendrá un costo total de Arg$12.63bn (US$3bn).

Enfrentado con las exigencias que compiten entre sí, tanto del gobierno como de la oposición, acerca de lanzar investigaciones del congreso (CPIs) sobre supuestas irregularidades en la compañía petrolera estatal, Petrobrás, y los metros de São Paulo y el Distrito Federal, Renan Calheiros, el presidente del congreso, decidió ordenar ambas. Las dos CPIs serán ‘mixtas’; con los investigadores formados por miembros de la cámara baja y del senado. Mientras que la oposición espera que la CPI sobre Petrobrás humillará al gobernante Partido dos Trabalhadores (PT) y a la Presidenta Dilma Rousseff en la etapa previa a las elecciones de octubre, el gobierno espera que la investigación sobre los metros de São Paulo y el Distrito Federal socave la confianza en el Partido da Social Democracia Brasileira (PSDB) del aspirante presidencial, Aécio Neves.

El PT ha estado tratando de evitar una investigación parlamentaria mixta. La corte suprema ya había autorizado una investigación conducida por el senado, donde el PT es dominante, y el partido tenía la esperanza de evitar más escrutinios, Ahora una investigación mixta es inevitable, el PT alega que la investigación del senado debe tener precedencia. La idea, por supuesto, es que el reloj marche lentamente antes de las elecciones. La oposición acusa a Calheiros, del partido aliado con el gobierno, el Partido do Movimento Democrático Brasileiro (PMDB), de hacer lento el proceso en un esfuerzo por ayudar a la Presidenta Rousseff; una acusación que él niega.

Sin embargo, otros colegas del PMDB son abiertamente hostiles al gobierno, y algunos de ellos participarán en la investigación mixta sobre Petrobrás. Entre otras cosas, la CPI investigará la compra hecha por Petrobrás de una refinería de petróleo en Pasadena, Texas, en el 2006. Petrobrás sobrepago excesivamente por la instalación, en un momento en que Rousseff estaba en el consejo asesor. Eduardo Cunha, el líder del PMDB en la cámara baja, encabezará la investigación mixta. Cunha encabeza el ‘blocão’ en el congreso, un grupo de rebeldes de partidos que nominalmente apoyan al gobierno, y él ha tenido cierto éxito este año en frenar iniciativas legislativas del gobierno.

Mientras que el PMDB ya ha elegido a tres de sus cuatro miembros del comité investigador, el congreso aún tiene cinco sesiones parlamentarias para elegir a los restantes participantes. La CPI mixta estará formada por 16 diputados del congreso y 16 senadores. Si los partidos no logran decidir sobre los nombres después de cinco sesiones, Calheiros tendrá otras tres para designar a los miembros. Una vez más, el presidente del senado fue criticado por permitir tan largo periodo de tiempo para que los partidos tomen sus decisiones. Calheiros ha predicho que la CPI comenzaría en dos semanas más.

CPI sobre los metros

En paralelo con la discusión sobre la CPI sobre Petrobrás, el PT ha estado trabajando para asegurar que una investigación sobre irregularidades en los metros de São Paulo y el Distrito Federal. El 7 de mayo logró reunir el apoyo de 191 diputados y 32 senadores (el partido necesitaba 171 y 27 firmas) para autorizar una CPI. El líder de la coalición aliada del gobierno en el senado, Eduardo Braga, dijo: “Ahora que la oposición está haciendo capital político con la posible desviación de fondos públicos, ¿por qué no discutimos que ha pasado en el metro de São Paulo?”.

La CPI sobre los contratos del metro está diseñada para incomodar al PSDB, que controlaba los gobiernos locales en São Paulo y el Distrito Federal cuando fueron otorgados. Neves, el candidato presidencial del PSDB, está segundo detrás de Rousseff en las encuestas de opinión. En una inteligente movida, Neves, un senador por Minas Gerais, fue de hecho el único representante del PSDB en votar a favor de la CPI sobre los contratos del metro, sabiendo que es improbable que cualquier revelación lo afecte a él personalmente.

• Abundan las huelgas en Río

El 8 de mayo, los conductores de autobuses de Rio de Janeiro fueron a la huelga en demanda de mejores pagas y beneficios. La Huelga fue observada ampliamente, los conductores de buses y los recaudadores de buses, atacaron a los autobuses que no se plegaron a la huelga. Para mediodía, más de 300 autobuses habían sido dañados. El 7 de mayo, afuera del estadio donde se revelaría el equipo nacional de fútbol para Copa Mundial de la Fifa, la policía federal de Rio montó una protesta, amenazando ir a la huelga durante el torneo. Para el 12 de mayo, los maestros de la ciudad también tienen planeado ir a la huelga.

• Linchamiento

Cinco personas han sido arrestadas ahora por el linchamiento de una ama de casa en Guarujá, una ciudad sobre la costa del estado de São Paulo. Fabiane María de Jesús, de 33 años y madre de dos hijos, fue golpeada hasta la muerte por una multitud la semana pasada después de que fuera confundida con una mujer buscada por la policía para ser interrogada por un intento de secuestro de un niño. El gobernador de São Paulo, Geraldo Alckmin, describió el ataque como un “acto de barbarie”.

The Dominican Republic (DR)’s national bicameral congress has voted in favour of amending the 2010 constitution to lift the ban on consecutive presidential re-election. The initiative was promoted by a faction of the ruling Partido de la Liberación Dominicana (PLD) which has freely admitted that its objective is to allow President Danilo Medina to seek a second presidential term in the May 2016 general elections [RC-15-05]. But not everyone is convinced that the reform is positive, with large sections of the political opposition and even some members of the PLD itself warning that it may represent a major step back for Dominican democracy.

After the PLD agreed to set aside its internal differences and back the proposed constitutional reform, its passage through the PLD-dominated national congress looked practically assured. Still, there was some speculation that this could be slow and produce frictions. These did emerge but nonetheless the reform bill sailed through the legislature and was unanimously approved by the senate on 28 May. This, despite the fact that ten PLD senators allied with former president, Leonel Fernández (1996-2000; 2004-2008; 2008-2012), had said that they would not back it. Fernández, who still harbours presidential ambitions, had said that pursuing such a reform was unnecessary and could represent a major step back for democracy, undermining the principle of the alternation of power. However, prior to the vote in the senate, the PLD issued a statement saying that Fernández had reached a deal with President Medina whereby he would support the bill for the sake of party unity.

Senator Reinaldo Pared Pérez, the PLD party secretary, said that the pro-Fernández and the pro-Medina party factions had reached an “historic” 15-point agreement in support of the reform. The accord provides a series of concessions to Fernández and his supporters. These include the guarantee that Fernández will remain party president until 2020 and legislators would have the chance to seek their own re-election on the PLD ticket in next year’s elections. In addition, Vice-President Margarita Cedeño, Fernández’s wife, will once again be Medina’s running mate in 2016. With this deal in place and another sealed with the main opposition Partido Revolucionario Dominicano (PRD), the reform bill was approved by the chamber of deputies on 2 June.

In order to secure the PRD’s backing, the PLD agreed to introduce a provision limiting re-election to a single consecutive term. However, support for the bill was not unanimous in the lower chamber as some opposition and a few dissident PLD deputies voted against it. This did not prevent the bill from receiving the requisite two-thirds majority in the 190-seat chamber (it received 148 votes in favour with 38 votes against) but it did expose serious political divisions and realignments that the initiative is producing within the PLD and the opposition.

Opponents of the reform made sure that their objections were noted. Deputy Víctor Salazar, one of the few PLD deputies that voted against the bill, immediately quit the ruling party. Meanwhile Deputy Nelson Arroyo of the Partido Revolucionario Moderno (PRM) criticised the fact that the reform did not “come from the will of the people”. This was echoed by PRM presidential candidate, Luis Abinader, who in a televised speech accused the PLD of attempting to “annihilate democracy” with the reform and with the help of the PRD (see sidebar). Nevertheless, Medina wasted no time in sanctioning the bill hours after its approval. The senate president, the PLD’s Cristina Lizardo, then convened a meeting on 6 June of the bicameral congressional constitutional review assembly - in charge of drafting constitutional amendments – to analyse the bill. The review assembly approved the text of the bill in its first debate on 6 June. A second debate has been scheduled for 12 June. Approval of the reform now looks like a mere formality. But the effects that this could have on the DR’s political landscape between now and the elections are much less certain.

• Abinader

Luis Abinader called for a public march to congress on 6 June to protest the constitutional amendment, warning that the PLD was “undermining the credibility and confidence in the nation’s fundamental political institutions by imposing an unnecessary, untimely and anti-democratic reform”. But this failed to prevent the bicameral congressional review assembly from approving the changes. Since then, Abinader has said that the PRM will challenge the reform on constitutional grounds and has alleged that PLD and PRD deputies received bribes (in the form of cash and future government posts) from the Medina government to vote in favour of the reform. Abinader said that in coming weeks the PRM will present evidence of this to the attorney general’s office.

Brazilian police are investigating the murder, dubbed “genocide” by one indigenous leader, of ten indigenous people from the ‘flecheiros’ (‘arrow-slinging’) tribe by illegal gold miners operating the country’s Amazonas state. Such reports have increased pressure on the government not to abandon the country’s indigenous communities at a time when organised criminals are encroaching on their territory.

Police located the corpses of the ‘flecheiros’ near the winding Jandiatuba and Juctaí rivers in the Vale do Javari natural reserve in Amazonas state, close to the border with Peru. Authorities later received a tip-off that the suspected perpetrators had been taped boasting about killing the indigenous community members over drinks at a bar in in the Amazonas municipality of São Paulo de Olivença. The national indigenous foundation (Funai), the federal agency tasked with defending indigenous rights, has since lodged a complaint with the Amazonas prosecutors’ office (MPF-AM) demanding the alleged murderers be brought to justice. Authorities have kept most details about the case secret so as not to jeopardise the progress of ongoing investigations. But they told Brazilian news site G1 that police had detained an unspecified number of suspects in the city of Tabatinga, Amazonas for questioning.

Unfortunately, this is not an isolated incident. The MPF-AM is working on a second suspected murder case involving members of the indigenous Warikama Djamar tribe, who were allegedly killed by a local agricultural producer in May. Indigenous leader Adelson Kora Kanamari told local NGO Amazônia Real that between 18 and 21 indigenous people had been assassinated, including some children. This incident also took place in the Vale do Javari area, which spans 85,444.82 km², approximately the size of Austria, and is home to the largest number of indigenous tribes in Brazil. However, it is becoming difficult to track crimes in the area let alone find out about them. Many of the tribes living there are uncontacted (indigenous groups who have not had contact with modern society), meaning they are difficult to pin down. Moreover, budget cuts have forced the local authorities to wind down surveillance operations.

In the wake of these cases, human rights groups called on the federal government to fulfil its constitutional obligation to protect indigenous peoples and their rights. “If these cases are confirmed, President [Michel] Temer and his government bear a huge responsibility for the genocide,” Kanamari told national weekly Veja. “These territories have been recognised and demarcated [as indigenous lands] for years [since 2001],” Kanamari added.

President Temer’s commitment to protecting both the environment and indigenous rights has come under international scrutiny of late. In August, Temer was forced to stand down over a plan to open up an Amazonian reserve, Renca, inhabited by indigenous people straddling the northern states of Amapá and Pará to mining exploration. Temer approved the plan via presidential decree but was later overruled by a federal court, marking a victory for environmental activists.

In another move which has angered human rights groups, the Temer government has cut Funai’s budget by 44%. In July, former Funai head, Antonio Costa, said this was a sign that the agency was being dismantled. As a result of the cuts, Funai now runs fewer protection stations in areas like Vale do Javari, with fewer staff and scarce resources, according to a statement from the indigenous council (Cimi). In this way, the budget cuts have eroded indigenous rights, argues Stephen Corry, head of NGO Survival International. “This has left dozens of isolated tribes defenceless against thousands of invaders – illegal miners, landowners and loggers,” Corry said.

• Supreme court rules in favour of indigenous rights

On 16 August, Brazil’s supreme court (STF) ruled that indigenous people have a right to occupy their historic territory – which had been disputed by the Mato Grosso state government. STF justices voted unanimously to dismiss a complaint filed by the Mato Grosso state government challenging the historical demarcation of land for indigenous people. The case is of national relevance, strengthening indigenous rights at a time when violence against Brazil’s indigenous peoples is on the rise.

Panama’s President Laurentino Cortizo came to power in July 2019 after campaigning on an anti-corruption platform, but critics say a lack of progress is affecting the business environment.

The role of Panamanian law firms in helping wealthy individuals hide their wealth from tax authorities around the globe has long been criticised by pro-transparency groups. However, in recent years a series of massive data leaks - the Panama Papers in 2016, the Paradise Papers in 2017, and the Pandora Papers in October 2021 - have shone a light on the extent of the practice.

Panama has struggled to repair its reputation in recent years, despite Cortizo’s promises on the campaign trail. The country currently features on the European Union list of non-cooperative jurisdictions for tax purposes, as well as the list of jurisdictions which require monitoring by the Financial Action Task Force (FATF) of the Organisation for Economic Co-operation and Development (OECD) due to having strategic Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) deficiencies.

During the election campaign, Cortizo, of the centre-left Partido Revolucionario Democrático (PRD), proposed that “good honest government” and “a lawful state free of corruption” would be two of the four pillars of his administration. He also spoke of plans to draft a proposal to reform the law of public contracts, in order to guarantee transparency, and to reform the country’s constitution as part of efforts to strengthen the independence of powers and the judiciary. Another pledge was anti-corruption measures such as the launch of a zero-tolerance campaign for corruption in all state institutions. Each of these pledges aims to increase competitivity in attracting investment to the country by improving legal certainty for business.

Things started promisingly enough, with a visit to the US in July 2019 to meet with Michael Corbat, then chief executive of Citibank, and representatives from credit ratings agencies Fitch Ratings, Moody’s Investors Service, Standard & Poor’s, and Capital Markets. This was followed by an announcement on 19 August 2019 that the government had reached a commitment with France to work together to remove Panama from France’s list of tax havens. In August 2020 there were also encouraging discussions with the US about the creation of a bilateral task force to tackle money laundering and corruption, but Cortizo has made little progress at home.

In July 2019 he sent a constitutional reform package to the legislature containing anti-corruption measures, but the version approved by the legislature in October sparked so much opposition that the president withdrew the package altogether. Since then, there has been no more progress made on the key campaign promise, despite calls from civil society actors such as Panama’s leading private-sector lobby, Cámara de Comercio, Industrias y Agricultura de Panamá (CCIAP), which worries about the effect on business. In May 2020, the organisation called for the strengthening of the judicial system in order to improve legal certainty and better attract investment. And in December that year, CCIAP repeated its call for constitutional reform and greater transparency. “A strong democracy with a real separation of powers, a judicial system that is properly independent and a government defined transparency and accountability at all times are indispensable so that Panama can achieve full development,” said CCIAP in a statement.

In June 2021 the Fundación para el Desarrollo de la Libertad Ciudadana (FDLC), the local chapter of anti-corruption NGO Transparency International (TI), said that Cortizo’s government had been characterised by “opacity and…[the] absence of a sustained fight against corruption”. Far from making progress in transparency efforts, the FDLC claims that Panama has moved backwards. Accusations of backsliding are backed up by the latest TI Corruption Perceptions Index (CPI), published in late January, which showed Panama fell to 111 out of 180 countries in 2020, down from 101 in 2019. This means the country is ahead of only Guatemala (149), Honduras (157), and Nicaragua (159) in Central America. The FDLC also cites the results of the TI report on the implementation of United Nations Sustainable Development Goal 16 (SDG16) (peace, justice, and strong institutions). Published in June 2021, the report scores Panama poorly on indicators such as transparency and integrity in public administration, where it received just 0.3 on a 0-1 progress scale.

• TI report

Among other things, the TI report cites a deficient regulatory framework for ensuring transparency and integrity among public sector officials who, for example, are only required to present their declaration of assets at the beginning and end of their mandates as opposed to yearly, as is the case in the judicial branch. The report further highlights that the legislation that exists to promote transparency and integrity is not upheld by officials due to lack of monitoring and enforcement.

And it’s not just international monitors that are noticing Panama’s ongoing issues with transparency. On 28 September, pollster Gallup Panamá released the results of a survey which showed that 40% of respondents consider corruption in government the most important problem facing the country, ahead of the 23% who cited unemployment. Those 40% of survey respondents may have been surprised to hear Daleep Singh, the US deputy national security advisor for international economics, cite Panama as a potential leader in the fight against corruption and financial crime. Speaking at a press conference at the end of September, Singh said the US sees Panama as a strategic regional partner and wants to strengthen its links with the country.

While this may be encouraging for Cortizo, serious challenges lie ahead. In a February 2021 report, the FATF said that Panama has taken steps to strengthen its AML/CFT regime since June 2019, but “all deadlines have now expired and work remains”. The FATF then strengthened its language in a 21 October statement, expressing concern with the pace of progress and Panama’s failure to complete its action plan items. “The FATF strongly urges Panama to swiftly complete its action plan by February 2022,” reads the statement, “otherwise the FATF will decide the next step at that time for insufficient progress”.

In addition to its grey list, the FATF also names high-risk jurisdictions subject to a call for action, commonly known as the blacklist. At the time of writing the blacklist comprised two countries: North Korea and Iran. While there has been no talk so far about Panama moving to the blacklist, the threat of a “next step” from the FATF is the latest piece of bad news for Cortizo’s efforts to improve Panama’s reputation when it comes to transparency and corruption, and it may spook businesses looking to invest in the country.