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Grupo Clarín, the most influential media organisation in Argentina, is to split into six separate businesses in order to comply with the 2009 media law. On 17 February, Martín Sabatella, the head of Argentina’s media regulator, Autoridad Federal de Servicios de Comunicación Audiovisual (AFSCA), approved the plan drawn up by the company to prevent a forced dismantling. Throughout its four-year battle with the government that ended up in the supreme court, Grupo Clarín has argued that the law was drafted in retaliation for critical coverage of the administration of President Cristina Fernández. Grupo Clarín owns the country’s top-selling daily newspaper and offers cable TV and Internet to more than 1m homes and businesses in 10 provinces.

The plan

Following the supreme court’s decision in October to approve the media law, which restricts ownership to no more than 35% of the market, Grupo Clarín proposed dividing its profitable cable-television business into three companies, two of which would contain TV and radio stations. The other three companies would offer a mix of broadcast, cable TV and radio stations around the country. Under the terms of AFSCA’s approval, the group now has 30 days to define the corporate structure of the new businesses, and then a further six months to implement the changes.

Sabatella, an ally of President Fernández, could not resist a note of triumphalism in his comments on the proposal. “All media groups, even the most powerful and damaging to democracy, have had to give in to the law,” he said. “Grupo Clarín finally gave up, because no giant can continue forever stepping on the heads of the rest, affecting society, the State and democracy.” Grupo Clarín responded by accusing the government of intolerance of the media outlets it does not control.

However, the government has not had it all its own way. The cabinet chief, Jorge Capitanich, reacted angrily to a supreme court decision last week which ruled that the government must air official adverts on Canal 13, a private TV station owned by Grupo Clarín. Capitanich accused the court of “protecting private interests” and of “attempting to violate the division of powers” by forcing the executive’s hand on the issue. In a bid to punish Clarín financially since 2009, the government has refused to place official ads with Grupo Clarín’s various media outlets.

Another large media group, Grupo Uno, and other smaller groups, also had their proposals approved on 17 February and they will have to carry them out under similar terms. AFSCA is yet to approve the plans presented by Telefé/Telefónica, Telecentro, and Prisa-Radio Continental.

• Supreme Court appeal

Though private negotiations are still underway, on 18 February the Argentine government filed a second appeal before the US supreme court on the case against the so-called ‘vulture funds’. Argentina is appealing a lower-court ruling that orders the state to pay hold-out bondholders US$1.3bn. Its first appeal was thrown out by the 2nd US circuit court of appeals in New York in November, which set the stage for the country to take its appeal to the highest authority. The supreme court will likely not decide whether to hear the case until later in the year.

While the government has expressed optimism regarding its chances, it continues to negotiate an out-of-court settlement with the hold-outs. If the US supreme court decides to review the case, it could take up to a year to reach a final verdict. However, the supreme court has refused to consider one appeal, against the pay-out ruling, and most observers think it unlikely it will ponder the second, about the manner in which Argentina settles its debts.

• The Uruguayan model

Argentina’s security minister, Sergio Berni, said on 17 February that he supports Uruguay’s approach to decriminalising cannabis. Speaking personally, Berni said he thought the production of marijuana, as well as its consumption, should be legalised. Berni’s comments follow a recent controversial statement made by the defence minister, Agustín Rossi, who said that Argentina has turned into a “drug-producing nation.”

Argentina’s electricity regulator Ente Nacional Regulador de la Eletricidad (Enre) introduced a 9% increase in the electricity tariffs charged in the metropolitan area of Buenos Aires (Amba) effective from 1 May. The increase has sparked a small civil war within the government.

Economy Minister Martín Guzmán made no secret of the fact that, in a country with 40%-plus inflation, he considers the increase insufficient to meet his goal of gradually reducing energy subsidies and narrowing the fiscal deficit. According to press reports, with the support of President Alberto Fernández, Guzmán demanded the resignation of the official responsible for the decision, Federico Basualdo, the deputy secretary for electric energy. But Basualdo, who is supported by Vice President Cristina Fernández and Buenos Aires province governor Axel Kicillof, has remained in place, prompting a new round of political speculation that the real power in Argentina lies with the vice president, rather than with the ‘nominal’ president.

In Buenos Aires electricity is supplied by two privatised companies, Edesur and Edenorte, with the state covering the difference between their real costs and the regulated price of electricity to consumers. The hard-line ‘kirchnerista’ wing of the government coalition is adamant that the utility tariff freeze introduced when it took office in December 2019 must remain largely in place, particularly for electoral reasons, as mid-term congressional polls are due in October. Utility rates were frozen during most of Cristina Fernández’s presidency (2007-2015). During part of that time (2013-2015), Kicillof served as her economy minister. During the subsequent centre-right presidency of Mauricio Macri (2015-2019), the freeze was lifted.

In contrast to the kirchneristas, Guzmán believes a prolonged tariff freeze is counterproductive to his overall aim of pulling Argentina out of its vicious circle of stagflation. He built this year’s federal budget on the assumption that electricity subsidies would be held at 2020 levels in real terms, representing around 1.7% of GDP. However, on some calculations that would require nominal tariffs to increase by as much as 35%. As a compromise Guzmán’s team has suggested that there could be two 9% increases this year, but even then, the real-terms subsidy would increase to around 2.2% of GDP. In any event it looks as if his goal – to reduce the government’s overall primary fiscal deficit from 6.5% of GDP last year to 4.2% in 2021 – is slipping beyond reach. Narrowing the fiscal deficit is a key element of Argentina’s ongoing debt negotiations with the International Monetary Fund (IMF).

The dispute in government on energy tariffs  is likely to impact other sectors, such as telecommunications where regulator, Enacom, has declared a pause after authorising some tariff increases earlier this year. One publication has described the argument over tariffs and subsidies as a one-thousand round boxing match where no-one has yet delivered a knock-out blow.

Guzmán’s argument against energy subsidies

Economy Minister Guzmán also argues that blanket energy subsidies are an inefficient use of public money. He has called them a “pro-rich” transfer of funds, since they benefit wealthy as well as poor households. He says that in a country weakened by three years of recession, the coronavirus (Covid-19) pandemic, and where 42% of the population is now classified as poor, it is essential to “fine tune” public spending to help the most vulnerable. Supporters of Guzmán say Basualdo failed to do enough work on an attempt to achieve this by introducing differential electricity tariffs according to household income levels, known as “segmentation”. Guzmán has also warned his kirchnerista opponents that governments need to display what he calls “macroeconomic consistency”.

Ecuador’s President Guillermo Lasso marked his 100^th day in office on 31 August, meeting his campaign pledge to vaccinate 9m Ecuadoreans against the coronavirus (Covid-19) in that timeframe. In other matters, Lasso has moved to internationalise the country’s economy and improve diplomatic relations with the US. Storm clouds are forming, however, with Ecuador’s indigenous forces increasingly flexing their muscles as they seek to derail elements of Lasso’s free-market and extractivist agenda.

Lasso’s vow to oversee the administration of 9m coronavirus vaccines within 100 days was much repeated on the campaign trail and emphasised as Ecuador’s best route out of a pandemic-induced economic slump, and the rollout is rapidly accelerating. According to Our World In Data, Ecuador is now vaccinating its citizens at the fastest per capita rate in the world. The World Bank credits the close cooperation between the Lasso administration and the private sector as a key driver of this success.

Elsewhere, Lasso is making progress on other campaign promises. Having secured Mexico’s support for Ecuador to join the Pacific Alliance regional trade bloc, he will now need to strike a free trade agreement (FTA) with the Mexican government in order to make that a reality [WR-21-34]. Meanwhile, Lasso’s push for closer relations with the US saw Ecuador offer to host 5,000 Afghan refugees fleeing the Taliban takeover while they await transfer to the US – a proposal that was welcomed by the Joe Biden administration, but ultimately was not taken up.

However, there are signs that Lasso’s honeymoon period may be coming to an end. Ecuador’s umbrella indigenous organisation, the Confederación de Nacionalidades Indígenas del Ecuador (Conaie), has driven the government to the negotiating table demanding the return of fuel subsidies and increases in the price of agricultural goods.

On 31 August, Interior Minister Alexandra Vela expressed confidence that an agreement will be reached. However, Lasso’s plans to strike FTAs – notably with China – could inflame Lasso’s tense relationship with the indigenous movement. The president of Conaie, Leonidas Iza, said on 17 August that Conaie will not support new FTAs unless fuel subsidies are resumed.

The signing of an executive decree on 5 August, outlining an ‘action plan for the mining sector’, sets Lasso up for further clashes with Conaie and its political arm Pachakutik (PK), which holds the presidency of the national assembly and has announced plans for legislation to halt mining developments in environmentally sensitive areas. On 1 September PK held a press conference in which representatives of the indigenous party accused Lasso of seeking to govern by decree rather than negotiating solutions within the national assembly. PK deputy Salvador Quishpe accused Lasso of “governing purely with decrees, in full dictatorship mode”.

Executive-legislative tensions

The Pachakutik press conference followed comments by Interior Minister Alexandra Vela on 31 August in which she said that if the legislature does not facilitate the passage of laws sought by the government, President Lasso “will seriously consider turning to mechanisms of direct democracy”. An overreliance on executive decrees could set the stage for anti-government protests and diminish Lasso’s political capital in the national assembly.

Horacio Rodríguez Larreta, leader of the Buenos Aires city government and a key figure in the centre right Juntos por el Cambio (JxC) opposition coalition, has set out his position on negotiations with the International Monetary Fund (IMF).

Argentine politics are entering a complicated phase, where the government led by President Alberto Fernández is trying to do two urgent things: first, approve a budget for next year, and second, reach agreement on a multi-year IMF programme. It is doing so at a time of relative weakness: after the November mid-term elections, it now lacks a majority in the senate and has also lost seats in the chamber of deputies. Negotiations are proving tricky, with Fernández trying to paper over cracks in his own left-of-centre Frente de Todos (FdT) coalition, while using ‘divide and rule’ tactics to blunt the opposition attack.

In this context, Rodríguez Larreta has sought to lay down some ground rules. Speaking on 14 December he said that negotiations with the IMF were the clear responsibility of the executive, that he expected the government to present a long-term economic plan, and that the debate should happen within the national congress.

The JxC leader fears that the government might try and sidestep the legislature, opening direct negotiations with the parties in the coalition, thereby seeking to play one off against another. He is also under some pressure within his own coalition where he has been seen as too ‘soft’ on the government. Perhaps to reassure his coalition’s hardliners, the mayor of Buenos Aires said the government needed to conclude its talks with the IMF urgently, bringing any deal to congress for ratification, as well as producing the much-promised multi-year economic plan. Such a plan, he insisted, should clearly establish “how we are going to grow the economy and create jobs”.

Rodríguez Larreta’s advisers say he does not intend to be directly involved in the discussion of the IMF deal, which will be left to the different congressional caucuses or bloques that form the JxC coalition. But they warned that he will not accept the draft 2022 budget as a starting point for the multi-year plan. The 2022 budget debate may in fact be the point at which the government confronts the post-election reality that it no longer commands a majority in either chamber. The congressional opposition is highly critical of budget assumptions, which it says are completely unrealistic.

Opposition deputies have seized on Economy Minister Martín Guzmán’s budget forecast that inflation will fall from its current level of 51.2% (in the 12 months to November) down to 33% in 2022. They note that in the original budget for this year Guzmán had wrongly predicted a fall to 29%, which simply did not materialise. They also note that his prediction for next year assumes, also unrealistically, that public utility tariffs will be frozen, something that neither the IMF nor Guzmán himself has advocated.

• Inflation falls slightly

Inflation for November came in at 2.5%, compared with 3.5% in October, according to figures released by the national statistics institute (Indec) on 14 December. This brought the 12-monthly rate down to 51.2%, from 52.1% in October. Economy ministry officials argue that the decline in inflation owes in part to the imposition of a price freeze on 1,400 products of basic necessity in October under the Precios Ciudados price control programme, which runs until January 2022. The government has also reached an agreement with beef producers to cut prices for a series of popular meat cuts by 35%-40% in the period before Christmas and New Year.

Guzmán was also optimistic about economic recovery. He said GDP had contacted by 9.9% in the pandemic-dominated 2020 but was set to recover by an above-expectations 10% this year, with the draft budget forecasting 4% growth in 2022. The budget also contains the reasonable assumption that heavy IMF debt repayments will be rescheduled, alongside the much less reasonable assumption that multilateral financial institutions such as the Inter-American Development Bank (IDB) and the Andean Development Bank (CAF) will provide US$12bn in funding. Challenged over that number, Guzmán said it was a mistake, and that the expected inflow was US$6bn. Economists say that the annual average is much closer to US$2bn.

As this issue went to press, there were growing doubts over the government’s ability to get next year’s budget approved. On 15 December the most optimistic calculations suggested that the ruling coalition could muster only 124 votes in the lower chamber, short of the 129 needed for a simple majority. It looked as if the ‘federal’ block of eight deputies, linked to the governor of Córdoba, Juan Schiaretti, was ready to vote against the government.

If the 2022 budget is not approved before the end of the year, Fernández is allowed to issue a decree ‘rolling over’ this year’s budget to 2022. But if that were to happen, it would send a very negative signal to the IMF and to the financial markets. The IMF has insisted that to be successful any long-term stabilisation programme needs significant cross-party support.

IMF negotiations

Economy Minister Guzmán said negotiations with the IMF on an economic stabilisation plan were ongoing and remained confidential. However, the draft budget contains an element of fiscal tightening which is both required by the Fund and politically controversial at home. The primary budget deficit (excluding interest payments) was 6.4% of GDP in 2020, set to fall to an estimated 3.5% this year and down to 3.3% in 2022.

The authoritarian government of Venezuela’s President Nicolás Maduro very briefly allowed hopes to flicker that its crackdown on the opposition might be easing after a particularly fierce period of repression since the disputed July 2024 presidential election. The government agreed to release 80 political prisoners on 18 July as part of an exchange which saw 252 detained Venezuelans returned from El Salvador, and ten US citizens released from Venezuela. Days later, however, another wave of arrests showed that it was back to business as usual for the Maduro administration.

The prisoner exchange saw the repatriation of 252 Venezuelans who in March were deported from the US to El Salvador’s notorious mega-prison, Centro de Confinamiento del Terrorismo (Cecot) [SSR-25-04]. Whilst the specifics of the deal are murky, President Maduro’s government apparently agreed to release 80 political prisoners as well as ten Americans who Washington said had been wrongfully detained in Venezuela. Not all of the identities of the US citizens were made public, but they included a former NAVY Seal, Wilbert Joseph Castañeda Gómez, and a backpacker who according to his family was arrested after accidentally straying over the border during a trip to Colombia. Venezuela’s Interior Minister Diosdado Cabello also claimed on 23 July that a “convicted murderer” had been repatriated to the US, although he did not provide a name.

The Venezuelan authorities did initially appear to be following through on their pledge to release domestic prisoners as part of the deal, with 59 released as of 21 July according to the local human rights organisation Comité por la Libertad de los Presos Políticos (Clipp). Those released include former finance minister Rodrigo Cabezas, (2007-2008), who had been arrested on 12 June, and Williams Dávila, a former legislator and governor of Miranda state (1996-2000), who was arrested in August 2024. Both had spoken out against the dramatic rise in repression that followed last year’s election.

The other prisoners released were mostly little-known critics of the government, while the most high-profile dissidents remained in custody, such as Rafael Tudares, the son-in-law of 2024 presidential candidate Edmundo González, arrested in January; leading opposition figure Juan Pablo Guanipa, arrested in May; and Javier Tarazona, director of human rights NGO Fundaredes, who was arrested in 2021.

Just four days after the prisoner exchange, the opposition campaign group Comando Con Venezuela released a statement saying that the authorities had arrested a further 20 activists over the previous 72 hours – meaning that the latest round-up began just one day after the government agreed to release the 80 political prisoners. Comando Con Venezuela said that this is part of “the ‘revolving door’ policy of selectively releasing some to incarcerate others,” warning that “repression does not cease, it is just redistributed”. The opposition’s leader, María Corina Machado, who is on the run, accused the government of unleashing a “brutal wave of repression”.

Those targeted in the latest arrests included Ángel Rivas, the husband of the president of the nursing college in Bolívar state, Maritza Moreno, who has repeatedly denounced the poor state of public hospitals; Enrique Ferreira, a coordinator for Comando Con Venezuela in Lara state; Fernando Serrano, a union leader at state aluminium company CVG Bauxilum; and Simón Bolívar Obregón, a student activist.

Former spy chief pleads guilty to drug trafficking

Venezuela’s former military intelligence chief, Hugo ‘El Pollo’ Carvajal (2004-2011, 2013-2014) pleaded guilty to drug trafficking charges in the US on 25 June. Carvajal, who was extradited from Spain to the US in 2023, is accused of being a member of the Cártel de los Soles – a drug trafficking ring allegedly comprising President Maduro and members of his inner circle. Prosecutors allege that Carvajal also collaborated with the Colombian guerrilla group Fuerzas Armadas Revolucionarias de Colombia (Farc) to traffic cocaine into the US. He is due to be sentenced on 29 October.

On 2 October the Central America Tourism Agency (Cata), a non-profit international organisation that brings together tourism authorities from Belize, Guatemala, El Salvador, Honduras, Nicaragua, Panamá and the Dominican Republic, launched a new marketing strategy that aims to boost visitor numbers by presenting the seven countries that it promotes as a single, connected destination.

Cata launched its new “Centroamérica Your Gateway” strategy at an event in Madrid, Spain. The initiative is built around promoting multi-destination travel in the region by emphasising sustainability, connectivity and competitiveness. “Central America is more than a destination: it's a gateway to transformative experiences, where every kilometre travelled offers a new way of understanding time and connecting with the world,” said Boris Iraheta, Cata’s secretary general, in Madrid.

The campaign draws on elements such as cacao, rum, and the region’s biodiversity, from dense jungle to active volcanoes, as well as historic sites such as Mayan ruins in Guatemala’s northern Petén department and in Honduras’ western department of Copán. It aims to further boost visitor numbers, which reached more than 28.9m in 2024, and tourism revenues, which have surpassed US$30bn per year, according to Cata figures cited by the international media. Iraheta said that the campaign is expected to boost visitor numbers by 6% by the end of 2025, primarily by targeting travellers from European markets such as Germany, Spain, France, Italy, the UK, and the Netherlands. “We are trying to drive visitor numbers in the region, reducing distances with direct flights,” said Iraheta at the launch event in Madrid, adding that airlines such as Air France, Spain’s Iberia and Air Europa, and Colombia’s Avianca will facilitate connections. “At the moment we receive tourists from the US, Canada, the regional market and Europe, primarily Spain, but we hope that flows increase,” he said.

Cata has also been working with the Secretaría de Integración Turística Centroamericana (Sitca) tourism integration authority, the Managua-based permanent office of the Consejo Centroamericano de Turismo (CCT) regional tourism council, which is made up of the tourism ministers of the aforementioned seven countries, as well as Costa Rica, on a joint plan to promote the Sistema Integrado Centroamericano de Calidad y Sostenibilidad (Siccs), a quality and sustainability certification system that aims to improve the competitiveness of tourism businesses.

However, while these efforts are welcome, myriad challenges remain. First of all, a lack of true political coordination, as suggested by the existence of multiple organisations all ostensibly working towards the same goal, will likely hold back integration efforts, risking duplication and the poor allocation of limited resources. Regional fora are generally weak, and relations are strained between governments of different ideological stripes, hamstringing high level discussions.

There are also longstanding issues with connectivity in the region. This is due in part to infrastructure deficits, which lead to traffic congestion and longer journey times, as well as security issues, which discourage many tourists from embarking on long overland trips.

• Nicaragua

Deepening repression in Nicaragua has dampened interest in visiting the country: according to Sitca figures slightly more than 1m tourists entered Nicaragua in 2024, a 9.7% decrease compared to 2023. As the country sits in the middle of the region and covers the entire width of the isthmus, it constitutes a barrier to those who may have otherwise been interested in traveling overland through the region.

Intraregional air travel is also limited by comparatively high costs, with research from the World Bank (WB) published in April 2024 finding that tickets are up to three times more expensive than equivalent journeys in South America. Researchers cite limited competition, which in turn is partly due to high airport fees on regional tickets, discouraging the entry of new airlines and the creation of new routes. Cutting these fees throughout the region has the potential to greatly improve connectivity, according to the WB, but the prospects of doing so are slim as attempts to reduce these fees have been limited by worries over competition between countries. For example, in February, Costa Rica’s President Rodrigo Chaves vetoed a bill that aimed to promote low-cost flights by cutting taxes, arguing that it would encourage tourists to spend less time in Costa Rica by making it easier for them to visit regional peers.

This self-interest is understandable to a certain extent considering the fact that Costa Rica has succeeded in achieving the highest rate of spending per visitor of any country in the region, according to an analysis from US multinational payment card services firm Mastercard published in late September, consolidating its status as a premium destination favoured by wealthier tourists. However overall visitor numbers are down this year [EB-25-09], and some tourism operators warn they are facing a crisis, sparking renewed debate over the direction of a key economic sector.

It could also be argued that the status quo allows each country to have more control over the kind of tourism it wants to attract. For example, Guatemala has had some success in developing health and wellness tourism, which brought in US$90.6m in revenue in 2024, up 8% from the previous year according to the Asociación Guatemalteca de Exportadores (Agexport) export association. Officials may prefer to target this kind of high-value added sector rather than budget travel, which is increasingly linked to concerns around overtourism. As a result, Cata may succeed in encouraging some wealthier European travellers to visit multiple countries on their trip to Central America, but a 6% increase in visitor numbers seems unlikely given the high cost of intraregional air travel and the various factors limiting longer overland trips.

On 12 June, with the economy in free fall, the Cuban government announced a package of 176 sweeping economic reforms, described as the most significant set of changes since the 1959 revolution. But success is far from guaranteed.

Taken together, the measures are intended to decentralise the economy and encourage private sector activity and investment. About 80% of GDP is in the public sector, on estimates cited by French newspaper Le Monde, so expanding private enterprise is a major undertaking. Launching the measures, President Miguel Díaz-Canel admitted past failings including “slowness, bureaucracy, and rules that impede those who want to produce.” He said Cuba will now seek to follow the successful economic models of Vietnam and China.

Politically, there were signs of a new resolve. The ruling Partido Comunista de Cuba (PCC) and former president Raúl Castro (2008-2018), who is widely considered to have the final say on the island, have backed the changes. The normally slow-moving national assembly approved the package in less than seven days. Breaking with previous form, the government has set up an advisory board to monitor the changes formed by three independent economists and two pro-government officials.

• Scepticism

Independent analysts have also expressed doubts about the government’s ability to make the economic reform package succeed. They note that many of Cuba’s existing foreign investors in mining and tourism are already leaving because of political risk, the economic crisis, and energy shutdowns. They also point to long implementation delays. After years of discussion, for example, the decision to introduce a single exchange rate has yet to be fully executed.

The package is made up of various elements:

• A major expansion of the private sector. Larger private companies employing more than 100 staff to be permitted; entrepreneurs to be allowed to own multiple businesses.
• Transformation of state-owned companies. State-owned companies to be converted into shareholding corporations, with investors able to take equity stakes. Legislation will allow bankruptcy proceedings and restructuring.
• Opening to foreign investment. Conditions to be made more favourable for foreign investors to partner with Cuban entities. Investors to be sought in tourism, energy, infrastructure, and agriculture. Government will actively encourage overseas Cubans to invest.
• Legalisation of private banking. Private banks to be permitted and allowed to offer financial services.
• Creation of a “market-based foreign exchange system”. This will be digital and private sector-driven; there will also be a gradual devaluation of the Cuban peso towards more realistic market values.
• Reduction of universal subsidies. Blanket subsidies to be phased out and replaced by targeted help for the more vulnerable. Utility tariffs to rise closer to actual costs.

Other measures include labour market deregulation, private real estate development, and agricultural reforms. There is a general commitment to downsize the public sector.

To be fully successful the reforms would need the decades-long US trade embargo to be lifted. A US State Department spokesperson was cited by UK newspaper the Financial Times as indicating that there was little chance of that happening in the short-term, describing the reforms as no more than “superficial” and adding “this is part of the dictatorship’s handbook: announce a cycle of supposed reforms to insinuate a desire for change, then quickly roll back any changes the moment the regime’s total control is at all threatened.”

Al Paraguay le costó varios años obtener, en 2005, el estatus de “libre de Aftosa con régimen de vacunación” de la Organización Mundial para la Salud Animal (Oficina Internacional de Epizootias, OIE). Los beneficios de la certificación fueron inmensos, permitiendo al país convertirse en el cuarto más grande exportador de carne del mundo. El año pasado, Paraguay exportó un record de 170.000 toneladas por un valor de US$970m y parecía orientado a romper ese record este año. De acuerdo a fuentes locales no oficiales, (hasta agosto de 2011) el país ha exportado por un valor de unos US$635m. Sin embargo, la certificación y las perspectivas del sector fueron desarticuladas en un solo día.

A tempranas horas del 19 de setiembre, el servicio nacional de calidad y salud animal (Senacsa) anunció oficialmente que había detectado un brote de Aftosa en el departamento de San Pedro. A diferencia de los dos anteriores brotes de Aftosa –en Pozo Hondo, Boquerón, en la región norteña del Chaco, que tiene fronteras con Bolivia, en 2003; y en Corpus Christi, Canindeyú en la frontera este con Brasil en 2002– este último brote tuvo lugar en el medio del país. Las áreas fronterizas de Paraguay son clasificadas como zonas de alta vigilancia (ZAV) para la enfermedad y fueron declaradas libres de Aftosa más tarde que en las áreas de tierra adentro, donde se consideraba en general que la enfermedad había sido erradicada. Las áreas internas tradicionalmente proveen más del 40% de las exportaciones de carne paraguaya.

Sin embargo, de acuerdo con una declaración de Senacsa emitida por su director interino, Carlos Simón Van Humbeeck, trece cabezas de ganado fueron halladas infectadas con el virus en la estancia Santa Helena, localizada en el distrito de Sargento Loma de San Pedro. Van Humbeeck explicó que Senacsa está obligado a notificar a la OIE del hecho y, dado que tuvo lugar en un área no-ZAV, el país perdería su estatus de libre de Aftosa. Además, Van Humbeeck informó que cumpliendo con los procedimientos de la OIE, Senacsa pondrá en cuarentena el área y suspenderá todas las exportaciones de carne por un periodo de dos meses mientras son determinadas las causas y la extensión del brote. Por consiguiente, el Sistema Nacional de Emergencia Sanitaria (Sinaesa) y la Asociación Rural del Paraguay (ARP), pidieron al gobierno que declare la emergencia sanitaria en San Pedro; el Presidente Fernando Lugo emitió el decreto en el mismo día.

Santa Helena es propiedad de una firma dedicada a la cría de ganado, Ganadera La Blanca S.A., y para mayor vergüenza, el administrador de la estancia, Silfrido Baumgarten, es el presidente de la ARP de San Pedro. Baumgarten sostiene que a pesar de que el establecimiento ha cumplido con los requerimientos de vacunación anual, ellos descubrieron animales con síntomas sospechosos y alertaron a Senacsa el 17 de setiembre. Nuestras fuentes locales contradicen a Baumgarten, que es un doctor veterinario, y dijo que algunas vacas mostraban síntomas en la semana que comenzó el 12 de setiembre (un informante local dijo a LatinNews que se hicieron intentos de vender el ganado sospechoso a otros establecimientos). Baumgarten, sin embargo, ha afirmado que él estaba preparado para cumplir con las guías de procedimientos de Senacsa, que incluyen la matanza de 819 cabezas de ganado (con un valor de US$380.000), que estuvieron en contacto con los animales infectados, pero también exigió que sea investigada la fuente de la infección, provocando preocupación en el sentido que las vacunas (controladas y en algunas ocasiones proveídas por Senacsa) podrían haber estado adulteradas, o algo más preocupante, que el virus haya desarrollado una resistencia a las mismas.

La ARP ha estimado que el brote resultará en pérdidas de entre US$300m y US$400m. El banco central anunció que permitirá a las instituciones financieras que transfieran parte de sus requerimientos legales de reserva hacia “nuevos préstamos, refinanciamientos o reestructuración de préstamos existentes” para el sector. Sin embargo, a la compensación se opone firmemente el gobernador del departamento de San Pedro, José ‘Paková’ Ledesma, que acusa a los estancieros de actuar “irresponsablemente”. Ledesma, un aliado cercano al Presidente Fernando Lugo, está fuertemente vinculado al movimiento de campesinos sin tierras de Paraguay y choca constantemente con la ARP, que representa los intereses de los terratenientes.

• Piñera extiende plan “salvar el año escolar”

La semana pasada, el Presidente Sebastián Piñera anunció que 70.000 estudiantes de escuelas superiores (2% del total) perderían un año por asistencia insuficiente y por rehusarse a abandonar su acción de huelga. “Es muy doloroso ver cómo esos alumnos perderán el año, pero un presidente debe preocuparse de los otros 3,5m de estudiantes que necesitan comenzar el segundo semestre”, dijo Piñera el 19 de setiembre. Sin embargo, dos días más tarde el gobierno anunció que extendería el “plan salvar el año escolar” por otra semana (hasta el 1 de octubre). Si los estudiantes no logran registrarse para el segundo semestre, perder el año será enteramente por culpa de ellos, alega el gobierno.

Although the government is going through the routine of governing such as setting a budget for 2012, no-one knows whether the country is set for another five years of President Hugo Chávez; a complete change of government; or a bit of Chávez and then a chosen (but as yet unnamed) successor. President Hugo Chávez has now had at least four rounds of chemotherapy and now declares himself free of cancer, though oncology experts and even one of his former doctors wonder if this can really be true.

If Chávez were not to contest, or to lose, the general elections at the end of 2012, all bets on what might happen in Venezuela would be off. The opposition to Chávez claims that his government has squandered the spoils of an unprecedented oil boom. Chávez could reasonably respond that right-wing governments had squandered even more and created the situation which led to first the Caracazo riots in 1989 and then his attempted coup in 1992.

Chávez’s pet projects, notably mass education and mass healthcare, plus a cheap oil policy for Cuba and most of the Caribbean, may prevent another social explosion in Venezuela, and perhaps in Cuba. As President Rafael Correa of Ecuador noted, if Chávez were to die, a lot of people would be affected.

Given this huge uncertainty, the 2012 budget is almost an academic exercise. Nevertheless, the finance minister, Jorge Giordani forecasts real annual GDP growth of 5% in 2012. In nominal terms the 2012 budget is up by 46% on the 2011 budget at BF297.8bn (US$69.3bn).

The key assumption in the budget is an average export price for Venezuelan oil of US$50 a barrel. On 21 October the basket of Venezuelan crude was fetching US$104.8 a barrel. The Chávez government has regularly (just like its predecessors) forecast low oil prices and/or a high Bolívar in its budgets. If the oil price overshoots or the Bolívar devalues, the government gets a nice windfall which it can spend as it wishes without further congressional oversight.

Giordani told congress that U$81.1bn has been put in the off-budget National Development Fund (Fonden), since its creation in 2005. Of this he said that US$47.3bn has already been spent and another US$31.9bn has been allocated for disbursement. The remaining US$6bn is presumably still available.

Besides raiding this piggybank, the government has borrowed heavily. In the 12 months to September 2011 the government and the state oil company Petroleos de Venezuela (Pdvsa) issued a total US$13.4bn in debt. The government already seems to be planning to borrow more in 2012, applying to congress for a debt ceiling of BF81.7bn (US$19bn), in 2012. Of that, BF25.8bn (US$6bn) will be used to service outstanding borrowing. Total external debt is in the region of 47% of GDP, so it’s not yet at a worrying level and the budget deficit, at 3.6% of GDP in 2012, up slightly on 3.4% in 2011, hardly looks like a straw to break the debt camel’s back.

What is clear, much to the chagrin of the opposition, is that inflation is at least stable and even perhaps falling. In the first nine months of 2011 accumulated inflation was 18.7%, and food price inflation, which government policy can do little to influence, was 22.4%. In the 12 months to September the consumer price index rose 26.5%.  Giordani, however, is forecasting inflation at between 20% and 22% in 2012 and said the government was determined to lower inflation.

How it will do so is unclear. On 10 October Venezuela’s agriculture minister, Carlos Osorio, announced “adjustments” (i.e. increases) for 14 basic foods sold at heavily subsidised rates through the state-run Mercados de Alimentos (Mercal), a nationwide chain of some 16,600 stores selling food and essential goods. On 11 October, the vice-president for productive economy, Ricardo Menéndez, cancelled the increases.

The government first introduced price controls on 100 basic foods in 2003. However, according to central bank figures released earlier this year, food prices in Caracas in June 2011 were almost nine times higher than in 2003.  In April this year, the government raised the price caps on several foods – including powdered milk (which jumped 48%), corn oil, sunflower oil and mixed vegetable oil. Bread and pasta price caps were lifted by up to 33%.

The 14 Mercal staples, over whose prices the ministers are publicly rowing are: cooking oil, rice, peas, sugar, black beans, meat, wholemeal flour, dough, powdered milk, lentils, margarine, mortadella, pasta and chicken. Osorio stressed that Mercal’s new prices, which he suggested would take effect in January-February 2012, would remain up to 40% below the level of current regulated prices.

There are no official figures for food imports but Pablo Baraybar, president of Cavidea, the national chamber of food industries, put the cost of food imports at BF13.01bn (US$3bn) in 2010, based on figures from the central bank and the national statistics institute. He suggests this figure will rise to BF16bn (US$3.7bn) this year.

The importance of the government to the state of the economy cannot be underestimated. Household and corporate spending, though picking up, is still running at comparatively modest levels. Latest central bank figures put total imports in the first half at US$21.47bn, up just under 23% year-on-year, with increases in both public and private sector imports. Given that inflation plus growth are rising at a 30% annual rate, private sector demand is weak.

Law of costs and just prices: On 11 October Cecilia Sosa, a former supreme court president, petitioned the constitutional chamber of the supreme court to nullify the controversial new Law of Costs and Just Prices, decreed by President Chávez in August.  The decree states that “flagrant abuses of monopoly power in many sectors of the economy” have led to “constant price rises for no other reason than the exploitation of the people”. Effectively, the law makes inflation illegal. So, the state will thus set “fair prices” across the whole economy (with the exception of the banking sector). It is worth noting that these “fair prices” will be applicable not only to the retail sector but also to the wholesale/producer sector. There is a huge question as to how this will work, but the government insists it will have an operating framework in place by November.

Sosa, who intends to compete in the opposition presidential primaries in February 2012, argues that the law does not comply with Chávez’s 1999 constitution.

• Oil export revenues were valued at just under US$44bn in the first half of 2011, so Venezuela is on course for total oil earnings of US$90bn or thereabouts this year, matching the 2008 peak.

• President Hugo Chávez has enjoyed a 10 point sympathy bounce in public opinion polls due to his illness. His national popularity rating was 58.9% in September, up from 48.6% in July, according to one local pollster. But that does not automatically translate into a desire to see him extend his term in office to 2018. In the same poll, by Datanálisis, 58% of respondents were against the idea of his re-election in 2012.

URUGUAY | Deep water port project arouses interest. On 17 September President José Mujica’s economic adviser, Pedro Buonomo, revealed that some 40 firms from Latin America, Europe and Asia had expressed their interest in participating in the construction of a deep water port in Uruguay’s Rocha department, which borders Brazil. In the pipeline for years, this has been touted as the most important infrastructure project in the country in the last decade. Buonomo, who was put in charge of an inter-ministerial commission looking to promote the project, said that the commission (comprised of the ministries of transport & public works, economy & finance, housing, environment, industry, energy & mining and defence) had organised an information exchange meeting with interested parties in which companies from Argentina, Belgium, Brazil, Chile, China, Spain, the US, France, Greece, Holland, Italy, Venezuela and Uruguay participated.

    According to Buonomo the number of firms that expressed an interest was a clear indication of the level of “receptiveness” for the project; and of the positive view that Uruguay currently enjoys internationally. He highlighted the fact that the project has “geopolitical importance for the region’s development” pointing out that it enjoys political support from Brazil. Last week, after announcing that Brazil would consider Uruguay’s naval industry as being “domestic” in Brazil,  Brazil’s industry & foreign trade minister, Fernando Pimentel, said that the Brazilian government would “collaborate in anything it can” with Uruguay’s plans to build a new port on the Atlantic, considering it a “strategic project”. Pimentel added that it was not yet clear how Brazil would to do this, but that his government would “invite” Brazilian companies to participate in the project. In all likelihood, this may involve Brazil’s development bank, Bndes, providing financing for the US$1bn project.

    Pointedly, Buonomo said that while the project has been Uruguay’s “dream for decades” only now were the “geopolitical, social and economic conditions” in place to make it a reality. Uruguay’s deputy economy & finance minister, Luis Porto, explained that the State would participate in the project to be “developed, financed, built and operated” by private firms. The Uruguayan government expects to hold another meeting with interested parties on 31 October in order to discuss the assumptions of risk and tendering process.

ARGENTINA | Repsol ostracising YPF? Argentina’s deputy economy minister, Axel Kicillof, complained on 18 September about the “pressure” exerted by Spanish firm, Repsol, on other oil sector firms so that they would refrain from partnering with Argentina’s re-nationalised oil firm, YPF. During the presentation of the ‘Mosconi report’, which presented the reasons why the Argentine government decided to regain a majority stake in YPF at the expense of Repsol, Kicillof said that the company has been able to “revert the decline in production and reserves”. However, according to Kicillof, YPF, which is looking for new business partners to help it develop its non-conventional hydrocarbon reserves, has struggled to attract new investors due to Repsol’s threats to bring legal cases against prospective YPF partners.

    Repsol, which still has a 12% stake in YPF, has filed lawsuits against it in international courts demanding US$10bn compensation and reserving the right to take legal action against any firms that may associate themselves in the future with YPF. Kicillof rejected Repsol’s suit, saying that the government had “no option” but to expropriate Repsol’s share in YPF in order to change the direction of the company after it was discovered that Repsol intended to adopt a policy of de-investment, before selling it off.      

CHILE | Lithium exploitation. On 16 September the Chilean government revealed that six firms from Chile, Japan and South Korea have already presented bids in a tender process launched by the government in July in order to promote the development of the lithium mining sector. The government adopted the measure in a bid to ensure that Chile remains as one of the world’s top producers of the increasingly in-demand metal. Chile is the world’s second largest lithium producer and it is believed to have a quarter of global reserves. Deputy mining minister, Pablo Wagner, said that three of the bids have already been accepted by the government and a winner would be announced after 24 September.

• Paraguay among top 10 innovators

According to the World Intellectual Property Organization (WIPO) 2012 Global Innovation Index, Paraguay is ranked sixth when it comes to technological innovation efficiency, the highest ranked Latin American country. The index measures the amount of technological innovations that are produced in a country as a ratio to the amount of investment that this sector receives. According to WIPO, although Paraguay’s overall innovation ranking is low, 84^th out of 141 countries, it manages to present some 25 innovation projects a year even though the Paraguayan State invests approximately only 0.6% of GDP (some US$15m) in its science and technology sector. WIPO points out that this makes Paraguay one of the most productive innovators given its low level of resources, behind China, India, Moldova, Malta and Switzerland.

The central bank reported that inflation was 19.9% in 2012, down from 27.6% in 2011. Food price inflation was 24.8%, down from 33.6% in 2011.

Part of the explanation is found in massive public sector sector purchases from abroad in a presidential election year. Imports soared in 2012 to a new historic high of US$56.34bn, on preliminary central bank figures, up 20.4% from US$46.8bn in 2011 and beating the previous record of US$51.5bn set in 2008 (another election year).

In 2008, a full three quartesrs (75%) of imports were brought in by the private sector; in 2012 the private sector’s share of imports was much lower at 61.4%, while the public sector’s share rose to 38.6% in 2012, up from 25% in 2008.  In total the public sector spent US$21.8bn on imports in 2012, up 28.3% from US$17bn in 2011, while private sector imports came to US$34.6bn, up 15% year-on-year.

The bank also reported that the two official exchange rate agencies, Comisión de Administración de Divisas (Cadivi) and Sistema de Transacciones de Títulos en Moneda Extranjera (Sitme) between them authorised US$34bn in foreign currency (mostly US dollars) for private sector imports in 2012.

On 18 December Venezuela’s national statistics institute (INE) reported that in November food prices increased by 2.69%, higher than the general inflation rate of 2.30%. Despite the fact that the government of President Hugo Chávez has introduced price controls on a range of basic products, including foodstuffs, since 2003 and that in April this year it promulgated a new ‘law on just costs and prices’ that underpinned the price control measures, increases in food prices have not fallen in line with official inflation as intended by the government. This creates a problem for the general population given that, as the INE points out, the price of the 50 items included in the basic food basket currently stands at BF1,989.09 (US$463), while the current minimum wage in Venezuela is BF2,047.00 (US$476).

Seven new agreements with France

Venezuela and France signed seven new “complementarity and integration” agreements during a high-level bilateral meeting held in December in Caracas.

According to an official statement, the meeting was led by Venezuela’s Science and Technology Minister, Ricardo Menéndez, and France’s minister of social economy, Benoit Hamon, who signed “cooperation, research & innovation and exchange agreements in the industrial, social, mining, science and tourism areas”. Following the meeting, Menéndez and Hamon inaugurated a new car mechanic training centre of French car-marker, Renault, in Los Teques, the Miranda state capital. At the inauguration, Menéndez said that the signing of the agreements opens the possibility that Renault “could soon build a new plant in Venezuela to produce parts and assemble some of its models”. He added that this could also open the way for other French firms that have “expressed their intention to come and establish themselves in Venezuela”.

According to the local press, the main of objective of Hamon’s visit was to ensure the continued participation of French railroad firms in the plans to modernise the Caracas metro as well as in other cities. The visit came as a result of a formal invitation made by the government of President Hugo Chávez to the new socialist government of President François Hollande. According to the French foreign ministry, Hamon’s visit to Venezuela is the first official visit made by a representative of the Hollande government since May’s elections in France.

• Bolivia commissions Italy’s Tecnimont for ethylene study

Italy’s Tecnimont will complete engineering studies for planned new ethylene and polyethylene plants in southern Bolivia, according to the state-owned Yacimientos Petrolíferos Fiscales Bolivianos (YPFB). Bolivia will fund the US$3.8m cost of study. Due for delivery in the first half of 2013, the study “will develop the most important technical and economic aspects of the project, allowing YPFB to make strategic decisions to move ahead with the subsequent stages of the project,” according to a company statement. The petrochemical complex will be built in Gran Chaco (Tarija) and is expected to produce 600,000 metric tons of polyethylene annually, consuming around 756,000 tons of ethane annually.

• Gastronomic award for Peru

On 12 December Peru’s foreign trade and tourism minister, Luis Silva, announced that the country had been awarded the first ever World Travel Awards (WTA) ‘World’s best gastronomic destination’ award at a ceremony in New Delhi. Silva celebrated the award as “extremely positive” for the country’s economy given that Peruvian gastronomy is closely linked to the tourism sector, both of which have emerged as important sources of jobs and revenue. Peru’s gastronomic sector is worth an estimated US$1.5bn, employing some 300,000 people in the country.

The battle for the opposition leftist Concertación primaries is underway ahead of the November 2013 general election. In late January the Partido Cristiana (DC), the largest party in the quadripartite coalition, chose Claudio Orrego, the former mayor of the Santiago municipality of Peñalolén, as its candidate ahead of the 30 June primaries. The main source of speculation as regards the primaries is whether former president, Michele Bachelet (2006-2010), Chile’s most popular political figure, will stand for the other main party in the coalition, the Partido Socialista (PS). Bachelet’s term as UN Under-Secretary-General for Gender Equality and the Empowerment of Women, ends this month.

The contest held by the DC on 19 January, which saw Orrego, a housing minister under former president Ricardo Lagos (2000-2006) defeat Senator Ximena Rincón by 59% to 41%, was the first as per the new law of primaries, promulgated by President Sebastián Piñera on 29 November 2012. This was passed as part of efforts to strengthen democracy and increase participation, particularly after the low turnout for the October 2012 municipal elections which saw only 5.5m of the 2012 registered electorate of 13.4m cast their ballots (although electoral roll is artificially high as it includes anomalies such as some 1,000 who were disappeared during the 1970s). Under the 29 November law, parties are free to choose whether the contest is open to all the registered electorate or just party members and DC party president, Senator Ignacio Walker, hailed the participation of more than 56,000 people, both party members and independents as historic. He said the elections would have constituted a success if fewer than half that number of people turned out.

Orrego will compete against José Antonio Gómez, the president of the Partido Radical Socialdemócrata (PRSD) while the PS and the other Concertación member, the Partido por la Democracia (PPD), back Bachelet. Aside from the doubts surrounding Bachelet’s candidacy, another uncertainty is whether the Concertación primaries will include parties from outside the coalition such as the Partido Comunista (PC) and Partido Progresista (PRO) of Marco Enríquez Ominami. The latter’s decision to break with the Concertación in the last presidential vote (which took place in 2009) cost the coalition valuable votes. Most recently, on 26 February, Enríquez Ominami told reporters that he had received no response from the Concertación as regards an invitation to participate in a broad opposition round table, organised by the PRO, to discuss a strategic future programme with the aim of defeating the Right in the election.

Yet, ultimately it is the question of whether Bachelet will run which is dominating the debate given the polls show her by far and away to be the favourite. According to the most recent poll by the Centro de Estudios de la Realidad Contemporánea (CERC), released on 30 January, 42% of respondents said they would “like to see” Bachelet elected president, ahead of Laurence Golborne, the presidential pre-candidate of the right-wing Unión Demócrata Independiente (the senior partner in the ruling Coalición por el Cambio) on 15%. Andrés Allamand, the presidential pre-candidate of the ruling coalition’s centre-right Renovación Nacional (RN) came in third on 5% followed by Enríquez-Ominami on 4%. Cerc surveyed 1,200 people on 10-29 December 2012 with a 3% error margin.

27F back in the limelight

That the Piñera government expects Bachelet to run as the Concertación candidate was suggested in its efforts to once again extract political capital from her handling of the tsunami which followed the devastating 8.8 magnitude earthquake on 27 February 2010. On 6 February, government spokesperson, Cecilia Pérez, called on Bachelet – whom she referred to as the “Concertación candidate” - to publicly apologise and take responsibility for her management of the tsunami which resulted in 156 deaths. Pérez’s call came as the investigative police submitted its second report to the public prosecutor’s office as part of an investigation which centred on the authorities’ failure to alert the population about the tsunami. So far eight people have been charged as a result of the investigation, which formally began in May 2012. These include Bachelet’s former deputy interior minister, Patricio Rosende, and the former director of Chile’s national emergency office (Onemi), Carmen Fernández. Upoon receiving the latest report, Prosecutor Andrés Castellanos said he was not ruling out the possibility of new charges.

While the Piñera government has previously sought to use the investigation politically against Bachelet [RBS-12-05] the latest report, which was leaked by the national daily La Tercera, revealed Bachelet to have changed her stance. Having previously maintained that the interior ministry was exclusively in charge of Chile’s emergency alert system, in her declaration, made on 2 January, Bachelet reportedly acknowledged that as president she exercised the “political mandate” at the time of the emergency. At the same time she noted that although she headed up the committee of emergency operations (CEO), “each authority has its responsibilities”.

Meanwhile Piñera has been accused of manipulating the figures relating to the reconstruction, following the earthquake which left 526 dead, 25 missing and caused damage of US$30bn, equivalent to 18% of GDP. On 27 February, he unveiled the latest progress report in which he boasted that, on average, 87% of reconstruction was complete. This breaks down into 99.9% progress in the area of “connectivity” (infrastructure, roads, telecommunications); 98.5% progress with regards to health (where 118 hospitals were affected); 79% progress in relation to housing (where 370,000 homes were affected); 87% progress for education (4,654 schools were seriously damaged) and 75% progress as regards the restoration of public buildings. Yet these claims have been challenged by civil society groups such as the NGO, National Movement for a Just Reconstruction, which points out a press release on the Housing Ministry’s website states that 65% of houses have been completed. This led opposition politicians such as the vice presidents of the DC, Alberto Undurraga and Laura Albornoz as well as PRSD president Gómez to urge the government not to “play” with reconstruction figures.

• Crime down

In January, Chile’s Crime Prevention Undersecretary Cristóbal Lira Lira announced a 9.5% drop in crime over 2012. The biggest falls were in violent robbert (12.7%); homicides (11.8%); damages (13.0%) and rape (9.6%).

• Smoking ban

On 1 March a new law took effect prohibiting smoking in enclosed public areas such as public transport, bars, restaurants and galleries. This follows the final approval of the law by the legislature on 2 January. According to the health ministry, Chile has the highest percentage of adult smokers in the Americas (40.6%) while 16,707 deaths were attributed to smoking in 2010, equivalent to 46 a day.

La campaña para las elecciones primarias el domingo para elegir candidatos para las elecciones legislativas de octubre fue suspendida el 6 de agosto, después de una explosión provocada por un escape de gas en la ciudad de Rosario. Al menos 10 personas murieron y hay otras 60 heridas después de que colapsó un edificio debido a la fuerza de la explosión. La Presidenta Cristina Fernández inmediatamente firmó un decreto declarando dos días de duelo nacional; Martín Insaurralde, el primero en la lista del partido de Fernández, anunció su intención de suspender todos los actos políticos de cierre de campaña. Sergio Massa, el alcalde de Tigre, y la principal amenaza para el Frente para la Victoria (FPV) de Fernández siguió el ejemplo de inmediato.

Antes del accidente, la campaña se había vuelto agresiva. Massa, un ex Kirchnerista que ahora encabeza la fórmula del Frente Renovador (FR), estaba en el proceso de abandonar su moderada retórica al ver que su ventaja en las encuestas se reducía. En una conferencia de prensa antes de la explosión él destacó las voces extremistas en la maquinaria política kirchnerista y enfatizó lo “orgulloso” que estaba de no estar más asociado con el gobierno, y en particular con lo que él describió como la política oficial de demonizar a la clase media. Los simpatizantes del gobierno atribuyeron sus comentarios a la estrecha brecha entre su rating de aprobación y la de Insaurralde. Una diferencia de 11 puntos porcentuales se había reducido a entre 2,5 y cinco puntos porcentuales para el 4 de agosto.

Insaurralde ha sido ayudado en no pequeña medida por la maquinaria política del FPV. Los candidatos de la oposición acusaron al gobierno de violar la ley del 2009, que prohíbe que el gobierno realice acciones que podrían influenciar a los votantes, tales como inaugurar obras públicas o el lanzamiento de programas, en los 15 días previos a la elección. Luego de una queja de la ONG Asociación por los Derechos Civiles, la corte electoral nacional ha ordenado al congreso que clarifique la ley.

En un curioso giro durante los días finales de campaña, Massa reconoció en un informe de prensa que su casa había sido robada. El diario pro-gobierno, Página/12, había contado la historia para enfatizar la desconexión entre la plataforma de campaña de Massa de implantar una exitosa estrategia de seguridad en Tigre, y su silencio sobre el delito cometido en su propia casa. Aún más turbia fue la sugerencia en algunos diarios de la oposición, tácitamente aprobada por Massa, de que el robo había sido alguna clase de trampa política diseñada para desacreditarlo.

Las Primarias, Abiertas, Simultáneas y Obligatorias (PASO) del domingo determinarán qué partidos podrán competir en las elecciones legislativas del 27 de octubre, y la lista de los candidatos que representarán a cada partido. A fin de poder calificar para competir en las elecciones principales, un partido deberá obtener al menos el 1,5% de los votos depositados.

La Supertarjeta llega a los comercios

Esta semana la largamente anunciada ‘Supercard’ empezó a funcionar en comercios a través de Argentina. La idea del secretario de comercio, Guillermo Moreno, la tarjeta cobra un 22% de interés, en comparación con algunos prestadores comerciales que cobran hasta el 60%. Las empresas que aceptan la tarjeta sólo pagarán un 1% por gastos de tramitación, en comparación con el 3% que cobran las tarjetas de crédito de empresas privadas. El límite de compra se ha establecido en Arg$20.000 (US$3.600) y el límite de crédito es de Arg$6.000 (US$1.080). Se espera que otros descuentos y promociones relacionados con la tarjeta sean anunciados oportunamente.

Un amplio rango de firmas nacionales e internacionales han aceptando la tarjeta, incluyendo Coto, Carrefour, Jumbo, Disco, WalMart, y McDonalds. Hasta ahora las industrias y los consumidores han dado la bienvenida la idea: los supermercados objetan las comisiones del 3% que ellos pagan actualmente; los consumidores dan la bienvenida a las tasas de interés comparativamente baratas. Incluso los diarios firmemente opositores se han entusiasmado acerca del concepto, aunque han afirmado que fue idea de los mismos supermercados, más que del gobierno. Sin embargo, el gobierno se beneficia de dos maneras importantes: es una política popular que entra en vigencia poco antes de las primarias del domingo; y los datos recolectados permitirán a los funcionarios tener un entendimiento mucho mayor acerca de la verdadera tasa de inflación.

• Baja el número de turistas

El número de turistas que llegaron a Argentina cayó un 13,5% en los primeros seis meses del año, comparado con el mismo periodo del año pasado, mientras que el número de argentinos que viajaron al exterior se incrementó un 4%, de acuerdo con las recientemente difundidas cifras de la oficina de estadísticas, Indec. Un total de 1.152.170 visitantes extranjeros han llegado a Argentina hasta ahora en este año, mientras que 1.362.553 viajaron al exterior en la primera mitad del 2013. Como resultado, el turismo tiene un déficit de US$302m durante los primeros seis meses del año, pues los visitantes extranjeros en Argentina gastaron US$1,32mm en los primeros seis meses del año, mientras que los argentinos gastaron US$1.62mm en el exterior.

On her new favourite medium, Twitter, President Dilma Rousseff proposed that Brazil should host an international summit in 2014 about the use and regulation of the Internet. Her proposal came just days after the Canadian ambassador in Brasília was hauled in to explain the latest spying allegations against the Brazilian government. Next week, Brazil’s congress will be asked to approve urgently the ‘Internet Constitution’ which Rousseff hopes to use as a platform at the United Nations (UN) to push for her proposed civilian multilateral framework for the governance and use of the Internet.

After a tight-lipped initial response to the latest allegations that the Ottawa-based Communications Security Establishment Canada (CSEC) spied on Brazil’s ministry of mines & energy, Canada’s Prime Minister Stephen Harper finally responded two days later, saying that he was “very concerned about this story and some of the reports around it, very concerned”. Speaking at a closing news conference in Bali, Indonesia, after a summit of the Asia-Pacific Economic Cooperation (Apec), Harper stressed that his government would seek to ascertain whether the CSEC had acted within the law, noting that the Canadian Security Establishment commissioner would do “the appropriate follow up”. He stressed that Canadian officials were “reaching out very proactively” to their counterparts in Brazil.

On 8 October a statement from Brazil’s foreign ministry (Itamaraty) said that Minister Luiz Alberto Figueiredo Machado had expressed to Canada’s Ambassador Jamal Khokhar “the government’s repudiation of this serious and unacceptable violation of national sovereignty and the rights of people and companies”. The previous day Rousseff had tweeted to accuse Canada, one of the main investors in Brazil’s mining sector (with 55 companies on the ground there), of engaging in economic and industrial espionage, and said such practices were “unacceptable among countries that claim to be partners…We reject the cyberwar”, she wrote.

Rousseff proposed that Brazil host the global Internet governance summit after a meeting at the Planalto presidential palace with Fadi Chehadé, the president and director of the US-based Internet Corporation for Assigned Names and Numbers (Icann). Chehadé said he appreciated Rousseff’s “leadership” on the issue and praised her recent speech at the UN General Assembly in which she called for a debate. Her proposed civilian multilateral framework for the governance and use of the Internet and social networks would ensure among other things freedom of expression and individual privacy; open, multilateral and democratic governance; and net neutrality.

An internet bill of rights (‘Marco Civil da Internet’) has been before the Brazilian congress since 2009. The bill of rights is backed by the likes of the software firm, Mozilla, which at a seminar on the bill in Brasília in April 2013 described it as “groundbreaking in its intent.” According to Mozilla: “It secures important rights to Internet users through a civil framework rather than a criminal code. These rights include the right to privacy, freedom of speech, and access to information. It defends communications over the Internet, protects the sanctity of the Internet connection itself, requires comprehensive information in service contracts (particularly with respect to the protection of personal data), and limits third party access to connection logs and Internet applications.”

The latest spying allegations will encourage Brazil in its efforts to push for an international regulatory response at the UN. The issue also plays well for the Rousseff government at the domestic level ahead of the 2014 general election, with broad public support for the president’s stern reaction and her tough stance towards the alleged perpetrators, led by the US but also said to include its allies Canada, the UK, New Zealand and Australia.

Rousseff has instructed Mining & Energy Minister Edison Lobão to reinforce the ministry’s internal data protection systems. The apparent ease with which foreign intelligence agencies can access Brazilian government networks has prompted the Rousseff administration to review how all data is stored and protected in Brazil – the executive will send draft framework legislation to this end to congress this week.

A spokesperson for Prime Minister Harper would neither confirm nor deny the allegations after the report aired on the local Sunday night current affairs program Fantástico, broadcast by TV Globo. According to Fantástico, telephony and email metadata from the ministry was targeted by the CSEC. The report was based on documents leaked by Edward J. Snowden, the former US National Security Agency (NSA) contractor-turned whistleblower, with whom a Rio-based US journalist, Glen Greenwald, is working. Greenwald, who works for the UK’s The Guardian newspaper, has also collaborated with O Globo on its coverage of the NSA’s Brazilian involvement.

According to a detailed 7 October report in The Canadian Press based on the latest revelations: “Snowden provided classified presentation slides from June describing an operation labelled Olympia that apparently involved CSEC capabilities known as ‘Advanced Network Tradecraft.’ The slides map out communications between Brazil, Peru, Ecuador, Venezuela, Britain, Poland and Singapore. They also suggest CSEC was working with the NSA’s exclusive ‘Tailored Access Operations’ division on setting up a ‘Man on the Side’ operation, a kind of fake digital front that would allow the spy services to access valuable details.”

Greenwald told CBC Radio this week that there was “a lot more” to come out about Canada’s spying activities in Brazil and elsewhere. “There’s a lot of other documents about Canadians spying on ordinary citizens, on allied governments, on the world, and their co-operation with the United States government, and the nature of that co-operation that I think most Canadian citizens will find quite surprising, if not shocking, because it’s all done in secret and Canadians are not aware of it,” he said. Asked if Canada – or Canadian companies - benefited from the alleged espionage, Greenwald declined to comment directly. “But obviously Canada is not expending enormous amounts of money to create a spying system that doesn’t produce any valuable secrets. And ... even in this document, they express satisfaction in the results of their efforts and so I think it’s fair to infer even just from this document that they reaped benefits from this,” he said.

• Mining information about Brazil economic policies

Mining accounts for about 4% of Brazil’s GDP and almost 25% of its exports. The Rousseff government is currently in the process of overhauling the country’s antiquated (1966) mining code. The main pillar of the executive’s proposed new mining framework, sent to congress in June with a view to approval by the end of the year, would increase state and local governments’ take from the mining industry, setting a new ceiling on royalties of 4% and extending the pool of taxable revenues.

The aim is to raise fiscal revenues from the sector without discouraging private investment; however, it comes at a time of falling global mineral prices, prompting a nervous reaction in the local mining industry. The actual royalty rate would be set separately for each mineral. But the rate for iron ore, Brazil’s biggest export, would rise to the maximum 4%, from 2% currently. The Brazilian government’s annual revenues from mining royalties are small, in the region of R$1.7bn (US$770m), and would increase to an estimated R$4.2bn (US$1.9bn) under the new framework, still a relatively low amount in comparison to anticipated new oil sector royalties for example.

• Fantástico

Fantástico previously reported that the NSA had eavesdropped on the communications of President Rousseff herself and also targeted Brazil’s state oil giant Petrobras. The fallout over the (alleged) NSA spying led Rousseff to cancel a planned official visit to the US scheduled for October. At the UN General Assembly in September, Rousseff called for international regulations to govern Internet privacy and limit states’ surveillance activities.

• Mining framework

The mining legislation would also change the way future concessions are awarded, with the government holding auctions to sell mineral rights to the highest bidder. The bill sets a maximum limit of 40 years for operating concessions, renewable for 20-year periods. Companies would also have to commit to minimum investment levels. Among the Canadian mining companies on the ground in Brazil are Eldorado Gold, Kinross Gold, Luna Gold and Yamana Gold. Brazil’s Vale do Rio Doce in 2006 paid US$13.3bn to acquire the Canadian nickel company Inco Ltd., the world’s second-largest nickel maker.

*** Ethiopia and Sudan struggle with returnees from Saudi Arabia.  On 4 November a deadline expired in Saudi Arabia for the formalization of the status of migrant workers.  On 13 November, the first group of Ethiopians returned home from Saudi Arabia following clashes with security personnel over the weekend of 9-10 November.

On 14 November, Ethiopia’s opposition Blue Party called for “a nationwide protest against the abuse, torture, and murder” of Ethiopians in Saudi Arabia.

On 15 November, it was reported that 10,000 Sudanese had returned home from Saudi Arabia following the expiration of the 4 November deadline.  Apparently as many as 300,000 Sudanese had failed to formalize their status.

*** China’s lack of charity.  Much has been made of the paltry amount of money donated by China to the Philippines following Typhoon Haiyan.  Its initial response was to donate $200,000, which was then increased to $1.64m in the form of blankets, tents, and other goods.  This, it was pointed out, was still substantially less than the $2.7m donated by the Swedish furniture chain Ikea.

The paucity of China’s response, however, is not just a reflection of government policy, it is also a reflection of popular opinion.  An online survey conducted on 14 November found that 84% of respondents were against providing assistance to the Philippines.  The US and Japan respectively offered immediate aid of $20m and $10m.

*** Israeli opinion on Iran.  According to an opinion poll published on 15 November, over half of Israelis (52.1%) support Prime Minister Binyamin Netanyahu in his disagreements with the US over Iran, and 65% believe that Israel should oppose a deal which would ease sanctions in return for a reduction in its nuclear capabilities.  Only 16.1% support such a move.  Netanyahu’s approval rating stands at 41.5% against opposition leader Shelly Yachimovich’s 10%.

Perry Christie, prime minister and finance minister of The Bahamas, made no bones about his priority in his 12 February mid-year budget statement.  He opened with a catalogue of some 28 new or ongoing projects, and 28 times he proclaimed: “These are jobs, more new jobs Mr Speaker”.  The November Labour Force Survey had recorded unemployment at 15.4%, an improvement on the 16.2% recorded in May 2013, but still a big problem for the government, and one that has to be resolved within the constraints of a necessary fiscal consolidation programme.

Christie’s Progressive Liberal Party (PLP) came to power in May 2012 with a decisive victory over the incumbent Free National Movement (FNM) government headed by Hubert Ingraham, but within six months it was having to cope with the consequences of a ratings downgrade prompted by the country’s burgeoning debt burden.  Debt had grown from below 40% before the 2008 financial crisis to 54%, leading the IMF to warn: “The deficit is much higher than projected.  Once these things start to slip, it can easily get to a point where it becomes a problem.”

The International Monetary Fund (IMF) returned to its warnings on debt and the fiscal deficit in its January Article IV Consultation report, saying that “economic activity remains tepid…[and] the fiscal and external positions have weakened”.  Its first recommendation remains that the government needs “to implement comprehensive policies to curb the central government deficit and reduce debt to comfortable levels”.

The latest IMF survey shows that in fiscal year 2012/13, the fiscal deficit widened to 5.5% of GDP, with GDP growth estimated at 1.9% for 2013.  Central government debt touched 56%, up from 49% in FY2011/12, and it is expected to peak at nearly 60% in 2014/15.

The government is relying upon three factors to be able to move forward. The first, an increase in economic activity in the US and Europe, is beyond its control.  The other two are a fiscal consolidation programme that includes the introduction of VAT later this year, and efforts to boost capacity in the tourism industry.  On the latter, the success of the Baha Mar resort that is due to open on 8 December this year.

This crucial development will include a 100,000 sq foot casino, an 18-hole Jack Nicklaus golf course, a dozen swimming pools, and 200,000 sq feet of state-of-the art conference facilities, including a 2,000 seat performing arts centre.  The developers say that the project has already created more than 2,800 job opportunities for Bahamians and more than US$615m worth of contracts for Bahamian contractors.  The resort will take on more than 4,000 hotel workers this year.

But despite all this, the IMF’s report includes a note of caution.  It notes that the full operation of Baha Mar would entail an increase of almost 10% in total arrivals (with two smaller hotel projects adding another 2.25%), but it warns that the project’s success “critically hinges on effective implementation of [its] strategic positioning”, that is more focus on high-end products and more diversification to Europe, South America, and East Asia.  It adds: “In a tail risk scenario where the project completely fails to raise overall tourism exports, the uptick in growth currently projected for 2015 onward would not materialize, with adverse implications for fiscal revenues and the public debt outlook…If the project did fail to deliver, there could also be significant pressure on reserves.”

• “The latest IMF survey shows that in fiscal year 2012/13, the fiscal deficit widened to 5.5% of GDP, with GDP growth estimated at 1.9% for 2013.  Central government debt touched 56%, up from 49% in FY2011/12, and it is expected to peak at nearly 60% in 2014/15.”

COLOMBIA | A further budget cut. On 9 November Colombia’s council of ministers approved an additional Col$3trn (US$1bn) cut in planned government spending included in this year’s national budget. The sizable cut comes on the back of the deferment of another Col$6trn in spending for this year announced by the government led by President Juan Manuel Santos in March as part of its efforts to rein in spending and exercise fiscal discipline amid lower State revenues resulting from the sharp fall in international oil prices. This means that altogether the Santos government has now cut its original Col$210.6trn 2015 budget by Col$9trn.

With congress having recently approved a moderately austere Col$215.9trn budget for 2016, all of this has sparked concerns that the fiscal adjustment will start to hamper domestic economic growth in the medium term on the back of lower levels of government investment. In a clear bid to allay such concerns, following the announcement Finance Minister Mauricio Cárdenas said that the latest cuts were part of the government’s principle of exercising ‘intelligent austerity’ in response to the less favourable economic scenario and that that these would not affect planned investment projects but would primarily fall on government operating costs. “The 3trn pesos cut will 93% fall on operating costs”, Cárdenas said.

Cárdenas said the savings would primarily come from a reduction in the transfer of State funds to the national pension fund administrator (Colpensiones). According to Cárdenas this is possible due to the fact that Colpensiones’s financial situation has improved in recent years, thanks to affiliates that had previously migrated to privately administered pension funds (AFPs) coming back to Colpensiones. “Today we are able to cut State pension contributions without affecting Colpensiones’s ability to pay out pension to all its affiliates”, Cárdenas said. The minster also pointed out that the latest spending adjustment “shows the government’s firm commitment to adhering to the fiscal responsibility legislation, which stipulates that the fiscal deficit may not exceed 3% of GDP this year”.

Similarly, President Juan Manuel Santos said that the decision to implement further cuts this year is “an additional demonstration of the government’s commitment to fiscal discipline…by making cuts in areas that in which it has been identified that cuts can be made without affecting the normal functioning of the State”. Santos also noted that at 69%, the execution of this year’s budget is one of the highest execution rates in recent years.

• Reficar refinery comes on stream

On 10 November Colombia’s state-owned oil firm, Ecopetrol, announced that its new US$8bn oil refinery in Cartagena de Indias (Reficar) had delivered its first shipment of refined oil fuels. According to an Ecopetrol statement, Reficar processed 90,000 barrels of crude oil per day this week to produce petrol, diesel, and airplane fuel and liquefied petroleum gas (LPG), following its formal inauguration on 21 October. The statement added that it is now expected that Reficar will increase its production capacity to 165,000 barrels per day by March 2016. The Colombian government has said that the coming on stream of Reficar could help to add an additional one percentage point to GDP growth per year.

PERU | Seeking to become a net electricity exporter. On 10 November Peru’s President Ollanta Humala said that his government’s intention was for the country to begin exporting electricity to some of its neighbours in the next few years. Speaking at the inauguration of a new US$38,000 solar energy power plant in the southern region of Moquegua, that will supply electricity to some 20,000 households, Humala said that “Peru can already claim electricity self-sufficiency… and should now start thinking about supplying electricity to neighbouring countries that have an electricity deficit”.

Humala went on to explain that unlike some of its neighbours, Peru’s natural geography facilitates the generation of clean renewable energy. “In dry areas of the southern coast we have solar energy, in other areas such as Ica, Piura and La Libertad we have wind energy and in high Andean areas we have hydroelectric energy”, he said. In particular, Humala said that the government’s objective was to export electricity to places like Bolivia, Ecuador and Brazil soon. “There is a permanent electricity deficit in Brazil and they need to import it”, Humala said, adding that “Peru can be a good partner to Brazil in this”. He added that his government was already exploring the possibility of establishing a strategic alliance with Brazil to achieve this and was currently analysing Peru’s domestic rules and regulations so as to “adapt them for exportation”.

Following Humala’s comments, Brazil’s construction giant, Odebrecht, announced that it is currently studying the possibility of participating in the Chaglla hydroelectric power plant located in Peru’s central region of Huánuco, which will have a maximum generating capacity of 2.79 gigawatts per year (6% of Peru’s current national electricity production) and which is billed to come on stream by February 2016.

On 26 June, after US$5.4bn worth of investment on a nine-year mega-construction project, the enlarged Panama Canal was opened to shipping. It can now accommodate the passage of larger container ships, with capacity for 13,000 twenty-foot equivalent units (TEUs), up from 5,000 before. Large tankers can also use it for the first time, including those shipping liquid natural gas (LNG).

After three months, first indications are that canal traffic has increased, but the shipping industry remains volatile, so it may be too early to confirm clear trends. The sudden bankruptcy of South Korea’s Hanjin Shipping at the end of August underlines the problem. One of the more dramatic assessments of what this means came from Gerry Wang, chief executive of Hong Kong-based Seaspan Corp, who said that “the fallout of Hanjin Shipping is like Lehman Brothers to the financial markets. It is a huge, huge, nuclear bomb. It shakes up the supply chain, the cornerstone of globalisation”. Officially however, the Panama Canal Authority (Autoridad del Canal del Panamá, ACP) was keeping calm. It noted that Hanjin accounted for only 1.2% of total canal traffic and was ranked as the ACP’s 17^th most important client. It also suggested that some of Hanjin’s routes might be taken over by other shipping lines.

On 21 September, Pacific Treasure, a Royal Dutch Shell oil tanker, became the 200^th vessel to use the enlarged Canal since it opened at the end of June. ACP head Jorge Luis Quijano commented that he was “very optimistic” about toll revenues. The ACP is expecting a US$263.6m increase in toll revenue in fiscal 2017, and says its total contribution to the Panamanian treasury will rise in that year to US$1.6bn, up from US$1bn in fiscal 2016. But it is difficult to isolate the economic impact of enlargement from other factors, such as competition between routes and cyclical movements in world trade. Olmedo Estrada of the Panamanian College of Economists, for example, calculates that the canal’s share of global trade freight will hold steady at 6%, but that the economy will slow and that increased competition from the Suez Canal will also have an impact.

A domestic economic downturn was clearly under way earlier this year, before the enlarged canal came into operation. According to the national statistics institute (INEC), Q2 16 ACP toll revenues were down 8.7% on the same year-earlier period, while revenues from related services to shipping was off by 13.1%, reflecting a slower expansion of global trade. Containers handled in the second quarter were down by 11.8%. It will be interesting to see, when Q3 16 data is published, whether the ‘enlargement effect’ can offset this cyclical downturn.

There are at least two battles in progress for market share. One is the stong competition between West and East coast ports in the US. Shipping Asian exports to the US via the enlarged canal to East Coast ports is now cheaper, but takes longer than the alternative of using the often-congested West Coast ports and onwards rail and road freight to get to the final destination. For fresh produce, the faster West Coast route is probably still best, although the new generation of Panamax ships using the canal have cooling capacity. According to a specialist from Beacon Economics, cited by the Los Angeles Times, “People have been scratching their heads and sharpening their pencils ever since the Panamanians announced they would construct a new canal. After all this time, we still don’t have a definitive sense of what will happen.”

The second battle is between the Panama and Suez Canals for certain global long-haul shipping routes. The Suez Canal can accommodate even large container vessels, the mega-box ships with capacity of up to 22,500 TEUS. On the return leg from the US East Coast to Asia, some shippers are preferring to use the Suez rather than the Panama Canal. In part, this may be because the Suez Canal has been aggressively cutting its toll rates. “When we were about to launch our expansion, Suez began with a 35% discount”, says Quijano. “Later, they raised the discount to 50% and the latest is that they’ve lowered prices by as much as 65%”. He insists that the Panama Canal will hold its current rates and not enter a price war.

While some shippers shifted their routes from Suez to Panama when Panama enlarged, others have moved the other way. Quijano says that for each box ship that shifts to Suez from Panama, the ACP loses around US$600,000. According to industry sources, at present there are 14 regularly weekly services representing 94,250 TEUs of capacity using the Panama Canal, versus 12 weekly services using the Suez Canal and representing 105,892 TEUs.

COSTA RICA | New IMF resilience and sustainability loan announced. On 4 October Costa Rica’s government led by President Rodrigo Chaves and the International Monetary Fund (IMF) announced a staff-level agreement on a US$710m resilience and sustainability facility (RSF). According to an IMF press release, Costa Rica is one of the first countries to request financing from its newly established RSF to support its agenda to build climate resilience and transition to a zero-carbon economy, while helping catalyse climate financing from other official and private partners. The IMF and Costa Rica also announced an agreement on the third review under the extended fund facility (EFF) which was agreed under the previous government for US$1.78bn, which would make available a further US$264m. The IMF also highlights that the authorities are taking important steps to strengthen Costa Rica’s economic reform programme and “the fiscal targets under the programme were comfortably met.

HONDURAS | Trade deficit widens. On 14 October Honduras’s central bank (BCH) released new figures which show that the country’s exports in the first eight months of 2022 totalled US$4.45bn, up 25.2% on the same period in 2022, mainly due to dynamism in agriculture activities. Imports in the first eight months however totalled US$10.11bn, up 21.5% on the same period in 2021. This leaves a trade deficit of US$5.7bn in the year to August 2022, up 18.7% on the same period in 2021. Honduras’s main trading partners are the US, which accounted for US$1.4bn of exports and US$3.4bn of imports, the European Union (US$1.2bn and US$806.7m respectively), and Central America (US$1.0bn and US$2.1bn respectively).

Central America & Caribbean: inflation rate
Percentage variation (year-on-year)

Central America & Caribbean: GDP growth (%)
Quarterly figures are year-on-year growth

On 22 August Mexico’s economy ministry (SE) announced it had received a request from the US government to set up a dispute resolution panel under the US-Mexico-Canada Agreement (USMCA) regarding a labour dispute at the San Martín mine, in Sombrerete municipality, Zacatecas state, which is owned by Industrial Minera México SA de CV, a subsidiary of Grupo México, one of Mexico’s biggest conglomerates.

This came after, on 15 May, US authorities received a complaint from the American Federation of Labour and Congress of Industrial Organisations (AFL-CIO), the US’s largest union organisation, and from Mexico’s mining union (SNTMMSSRM), claiming that the company had violated labour rights by preventing the union from representing its employees. They also accused Grupo México of having hired personnel to replace striking workers, contravening current Mexican legislation.

Although this was the eleventh time that the agreement’s Rapid Response Labour Mechanism (RRLM) was invoked, it is the first time that a labour dispute has reached the stage of an arbitration panel. The Mexican government will now have to demonstrate that, according to the USMCA provisions, there was no violation of labour rights related to unionisation and strike action at the mine. This must also be done within a four-month period.

According to Manuel Fuentes, an academic specialising in labour policy from the Universidad Autónoma Metropolitana (UAM), a public Mexican university, the Mexican government should have carried out an investigation in order to establish a remediation procedure as requested initially by US trade authorities in June. This initial request related to complaints that labour rights had been violated when a strike at the San Martín mine was ended after a new collective contract was established with a different union and the hiring of workers to replace those on strike. Having said that, Fuentes considers that the case is positive as it will allow the government to build criteria over how Annex 23 of USMCA, which sets out obligations with regard to worker representation in collective bargaining, is interpreted.

Mexican authorities replied that they had already carried an analysis of the situation and had concluded that there was no violation to the law. Therefore, they argued that an investigation under USMCA provisions would be an unacceptable parallel procedure. They also said that the USMCA labour provisions did not apply because the strike pre-dated the coming into force of the agreement on 1 July 2020. Strike action had been ongoing at the mine for more than 16 years, first started by the SNTMMSSRM that is still led by Senator Napoleón Gómez Urrutia of the ruling Movimiento Regeneración Nacional (Morena).

Should Mexico lose the panel, sanctions are likely to be imposed on Grupo México that would go beyond the San Martín mine exports. They could affect its exports from other mines and potentially other industries in which it operates. According to import-export specialists such as Oscar de la Vega, the outcome of the panel will set an important precedent for future cases that reach this stage.