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Esta semana, la Presidenta Dilma Rousseff y sus principales rivales para la presidencia, Aécio Neves del Partido da Social Democracia Brasileira (PSDB) y Eduardo Campos del Partido Socialista Brasileiro (PSB), han estado en el nordeste de Brasil, una región comparativamente pobre que suma 27% del electorado, segunda solamente detrás del sudeste (donde vive el 43%). En el 2010, Rousseff obtuvo el 61,6% de los votos en el nordeste; una encuesta reciente halló que solamente el 52% pretende votar por ella en octubre. Para asegurar la victoria, ella necesita apuntalar su base de apoyo en la región.

Durante los últimos días, la Presidenta Rousseff ha visitado los estados de Ceará, Pernambuco, y Paraíba; el 16 de mayo ella debe retornar a Paraíba y Piauí, donde debe inaugurar un proyecto de vivienda social. Por su lado, Neves y Campos, han estado en Bahia, donde ellos tendrán que compartir el dominio de los medios locales de comunicación con el ex presidente, Lula da Silva (2003-2010), quien está haciendo campaña en nombre de Rousseff. Marina Silva, la popular candidata para la vicepresidencia de Campos, ha estado en Fortaleza, la capital de Ceará.

El problema de Rousseff es que ella es una entidad conocida en la región, y por lo tanto no podría no ganarse a muchos de los votantes indecisos. De hecho, su prioridad parece ser frenar la caída en su apoyo ahí. Un reciente comercial del gobernante Partido dos Trabalhadores (PT) advierte a los votantes de las posibles consecuencias de una victoria electoral de la oposición. “No puede permitirse que el empleo de hoy se vuelva del desempleo de ayer. No debemos oír las falsas promesas. Brasil no quiere volver atrás”, afirma el aviso publicitario.

Campos un ex gobernador de Pernambuco, acusó al gobierno de utilizar el temor en su mensaje electoral. “Bolsa Família [el exitoso programa de beneficios condicionados] no es el logro de ningún partido; es el triunfo del pueblo brasilero, que nadie puede sacarles. Paremos con el terrorismo, con esta falta de respeto que quiere discutir sobre Brasil solamente con amenazas y alarmismo”, Campos dijo. Neves se hizo eco de las críticas de Campos.

Campos aún no es muy conocido fuera de su estado natal, pero él espera presentarse como el verdadero heredero de Lula, en cuyo gobierno él alguna vez sirvió. Lula, como Campos, es de Pernambuco. Aécio Neves, el nieto de Tancredo Neves, el presidente electo que murió justo antes de asumir el poder, es más conocido nacionalmente que Campos, aunque como un mineiro (del estado sureño de Minas Gerais) que ofrece la agenda más derechista de los candidatos, el nordeste no es su hábitat natural.

La mayor parte de los analistas políticos continúan  señalando que aún es muy temprano en el ciclo de la elección para tener una lectura precisa de las encuestas de opinión. Sin embargo, la última encuesta de Datafolha muestra una caída en la intención de votos de Rousseff. Publicada el 9 de mayo, la encuesta ubica a Rousseff con el 37%; Neves con el 20%; y Campos con el 11%.

Investigación del senado sobre Petrobrás está en marcha

El 14 de mayo el senado brasilero inició sus investigaciones oficiales sobre los alegatos de corrupción y mala administración en la compañía petrolera estatal, Petrobrás. Los senadores de la oposición boicotearon la primera sesión de la comisión investigadora, irritados por la decisión de otorgar precedencia a la investigación del senado (controlado por simpatizantes del gobierno), y no a la investigación mixta del Congreso (que estaría dominada por la oposición). La investigación mixta tiene fijado iniciarse en dos semanas.

• Deshacen planes de seguros de salud

El 14 de mayo la agencia nacional de salud de Brasil (ANS) temporalmente suspendió la venta de 161 diferentes planes de salud de 36 compañías diferentes. Actualmente, 1,7m de brasileros utilizan uno de estos esquemas. Las compañías están siendo efectivamente castigadas por la provisión de un mal servicio.

Last month Haiti’s provisional electoral council (CEP) published its final list of candidates approved to take part in the 25 October first round of presidential elections. In May it posted its final list of approved legislative candidates for two-thirds of the 30-member senate and the newly expanded 118-member lower chamber ahead of elections scheduled for 9 August. With civil society groups raising concerns about some of the legislative candidates included, the exclusion of high-profile figures like former prime minister, Laurent Lamothe (2012-2014), who was hoping to make a presidential bid on the ticket of President Michel Martelly’s former party Platfòm Peyizan (formerly Repons Peyizan) has also proven controversial, laying the CEP open to accusations of political manoeuvring.

The final list of legislative candidates gives Verité, the new party launched by former president René Préval (2006-2011) and former prime minister Jean-Max Bellerive (2009-2011), the most candidates (115 in total) while President Martelly’s new party, Parti Haïtien Tèt Kale (PHTK), has 110. Notably, Fanmi Lavalas (FL), the party of the populist former president Jean-Bertrand Aristide (1991; 1994-1996; 2001-2004), which has been barred from taking part in recent elections, was left with a total of 99 legislative candidates.

The approved list of legislative candidates prompted criticism from Haiti’s leading human rights group, Réseau National de Défense des Droits Humain (RNDDH), which pointed out criminal accusations surrounding some of the approved candidates. In a 2 June press release, the RNDDH noted that four senate candidates and 31 deputy candidates are accused of various crimes, ranging from murder and kidnapping to rape and drug trafficking. Those accused of murder include senate candidate, Emmanuel Tinord (Konvansyon Inité Demokratik), and lower chamber candidates, M’zou Naya Belange (Platfom Peyizan) and Henry Sauveur (Adrena). RNDDH also points out that two lower chamber candidates had been deported from the US “because of their involvement in wrongdoing” – Adelin Jules (Plateforme Jistis) who was deported in 2012 for aggression and assault with a dangerous weapon and Lorigene Jean Baptiste (Union Des Patriotes Pour l’Avancement National), deported the same year for corruption and obstruction of justice.

Presidential contest takes shape

The CEP’s final decisions regarding presidential candidacies, announced on 11 June, also made headlines. This, after the national bureau of electoral disputes (BCEN) rejected Lamothe’s candidacy on the grounds that he had failed to provide a key document – known as a décharge – confirming that he did not misuse public funds while in office. Only the national parliament can grant a décharge, which is based on the findings of the superior court of auditors and administrative disputes (CSCCA). However, parliament has been paralysed since the start of the year after the terms of 10 senators expired, making this impossible.

After the CEP announced its preliminary decision on 5 June regarding Lamothe, the latter complained that 90% of presidential candidacies with no décharge were accepted. In response to the CEP’s final decision, Lamothe accused the electoral authorities of “violat[ing] the electoral decree and the amended constitution of the country”.

Those candidates who have been given the all clear include: Maryse Narcisse, a close Aristide ally who is running for FL; Charles Henry Baker (Respè), a prominent industrialist who ran in the 2006 and 2010 presidential elections, taking less than 3% of the vote in 2010; as well as Jude Célestin (Ligue Alternative pour le Progrès et l’Emancipation Haïtienne), the former head of the state-owned construction company, Centre National des Équipements (CNE), who ran in the 2010 contest for Préval’s Inité party before being controversially excluded from the second round.

• Lamothe and Martelly

At the time the international media reported that Martelly and Lamothe (previously considered one of the President’s closest allies) fell out in May 2014 over the arrest of a suspected drug trafficker and kidnapper, Woodly Ethéart, who has close ties to Martelly’s family. In an interview with local daily Le Nouvelliste on 15 June President Martelly denied any problems with Lamothe, stating that the former prime minister was aware that he would not be the PHTK presidential candidate; Martelly’s party is fielding a relative unknown, mechanical engineer Jovenel Moïse. In the interview Martelly said that he had told Lamothe and First Lady Sophie Martelly (whose bid for the senate the CEP rejected on technical grounds) that they could not run because of fears that the other political parties would boycott the elections in response.

Normal politics appears to have been temporarily suspended in Peru, as heavy rains and mudslides (known as huaicos) sweep through the country. By early this week the toll had grown to 98 dead, with some 125,000 being left homeless in 12 of the country’s 25 regions. The national emergency has triggered improved ratings for President Pedro Pablo Kuczynski and his administration.

National emergencies are a double-edged sword for sitting governments: one misstep can generate real public anger; an efficient and humane response on the other hand can build support. In Peru’s case, there has already been a misstep, but it seems that it has not been bad enough to turn the public mood against the eight-month-old government.

As emergency teams struggled to rescue thousands trapped in mud and water in the centre and north of the country, a local TV channel, Panamericana Televisión, produced photographs of the deputy agriculture minister, Eufrosina Santa María, sunning herself in a bikini by a swimming pool at a private club in Lima. There were also photographs of her cycling and roller-skating – taken during office hours.

Santa María later announced she had presented her resignation, as she did not want to harm the reputation of the agriculture ministry (Minagri) at a time of national emergency. In her defence, she argued that ministers are permanently on call, so it is reasonable for them to grab a few moments of recreation when they can. President Kuczynski, nevertheless, took a hard line, saying, “You have to work, if you are in government you have to work. She has been sacked.” Minagri later filed a suit against Santa María, accusing her of embezzlement of public funds and misrepresentation.

The big headline from the first opinion poll carried out since the floods began, by GfK for the national daily La República, is that the government as a whole has gained popularity for its response to the emergency. The approval rating for the council of ministers in particular rose by seven percentage points to 30%, with Prime Minister Fernando Zavala experiencing a four-point gain to 34%.

Kuczynski, meanwhile, benefited from a smaller two-point gain, edging up his approval rating to 31% from 29% the preceding month. In Kuczynski’s case the important point may be that the almost inevitable slump in the popularity curve that follows the inauguration of most new presidents – and which has been quite acute since he took office in Peru in late July 2016 – might now be bottoming out.

On the other hand, not all politicians did well. Luis Castañeda, the mayor of Lima, saw his approval rating plummet by 13 points, down to 34%, in no small part because of the collapse of the Talavera bridge, which was built during his first term in office. Public comments Castañeda made refusing to accept responsibility for any design faults did not help his standing in the eyes of the voters. While there is no specific data on other mayors, analysts think some may also have suffered falling ratings because of inadequate responses to the natural disaster.

Respite for Kuczynski

In the short term the floods may have rescued Kuczynski from a tight spot. His transport minister, Martín Vizcarra, had been summoned to congress and faced a possible vote of censure over his role in writing an addendum to the concession contract for the new Chinchero airport in Cusco, which is to be built and operated by the private Kuntur Wasi consortium. The Fuerza Popular (FP, Fujimoristas) opposition majority in congress has been suggesting impropriety. It says some of the clauses in the addendum are prejudicial to the public interest. FP has already demonstrated its power by censuring and forcing the replacement of Kuczynski’s education minister in December. However, in the light of the floods, this time FP deputies stayed away from congress, leaving it without the necessary quorum to cross-examine Vizcarra.

With this threat lifted, for the moment at least, Kuczynski was able to concentrate on travelling to some of the worst-affected areas in the northern regions of Piura and La Libertad. The government announced special emergency measures, including PEN$4bn (US$1.23bn) in financial aid, on top of the PEN$5.5bn (US$1.69bn) in extra public works funding already announced for local and regional governments. It then declared a state of emergency in Piura, where eight people have died, 20,000 been left homeless and more than 200,000 affected in order to free up even more funds. On 30 March Columnist Mirko Lauer in La República noted “From one day to the next a previously invisible government suddenly became highly visible.”

After wondering in public whether Peru needed a special emergency coordinator or “czar”, Kuczynski accepted that the role belonged naturally to Prime Minister Zavala. The response to the floods therefore appears to have ended up giving the government something of a breathing space. However, when normal politics resume, there remain a number of question marks for the future. The most significant is whether the Kuczynski administration and the Fujimorista majority in congress will be able to hammer out some kind of medium-term working relationship.

• Emergency response

The prime minister, Fernando Zavala, said the second stage of the emergency response was underway, which includes restoring drinking water to the cities of Piura, Trujillo and Huarmey; relocating some 31,000 affected homes; and ensuring all hospitals and medical posts are well-equipped and fully functioning. He also said school classes could resume on 17 April.

ARGENTINA | Russian investment. On 17 October, Russian locomotives and rail equipment manufacturer Transmashholding (TMH) announced plans to invest €170m (US$200m) in the development of a new locomotive construction, repair, and maintenance plant in Argentina.

According to a TMH statement the investment plan was presented to Argentina’s President Mauricio Macri during a visit by TMH executives led by the firm’s president, magnate Andrei Bokarev. The firm’s statement noted that “We come to Argentina for three reasons: the economy is recovering, there are good investment projects, and Argentina’s railway industry is in need of modernising, which means that there is a lot of scope for growth”.

Last year the Macri government announced the launch of an eight-year US$14.18bn railway development plan aimed at overhauling and extending the country’s outdated freight and passenger railway system.

Pointedly, TMH also said that once it is installed in Argentina, it plans to actively participate in public tender processes for railway development concessions.

PARAGUAY | Gaining access to US beef market. On 12 October, Paraguay’s agriculture & livestock ministry (MAG) announced that the country had secured “key approval” by the US sanitary authorities for Paraguayan beef exports to be allowed into the US market.

A MAG statement said that it had been informed by the US Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) that its request for Paraguayan abattoirs to be subjected to an inspection process in order to secure certification to export to the US had been approved. The MAG statement noted that the approval of the request was a significant step towards securing access for the US market, as it implies that “APHIS approves Paraguay’s animal health system”.

The ministry noted that securing access to the US market would represent a major boon for the country, the world’s sixth largest beef producer and exporter, given that the US is the world’s main beef importer.

Last year Paraguay exported 240,384 tonnes (t) of beef worth US$953m, a 1% year-on-year increase. But according to the latest figures from Paraguay’s national food safety and animal health authority (Senacsa), the country’s beef exports to August this year totalled 170,837t and were valued at US$727.27m, a 3.2% increase in volume and a 15.51% increase in value compared with the same period last year.

If Paraguay’s beef industry secures certification to export to the US, the level of beef exports should continue to increase steadily in the coming years.

The president of Brazil’s central bank (BCB), Roberto Campos Neto, had to address Economy Minister Paulo Guedes an open letter last week explaining why the 2021 inflation rate came in well over the target range. Brazil is not alone in having to deal with the global phenomenon of surging inflation (a point Campos Neto made in his letter), but it represents a specific challenge for the authorities within the context of the upcoming general election, due in October.

Consumer prices rose 10.06% in Brazil last year, the highest figure since 2015. This was way out of the BCB’s target range for inflation, which had been set at 3.75% +/- 1.5. The national statistics institute (Ibge), which is responsible for releasing the consumer price index (IPCA) figures, noted that inflation was primarily driven by rising prices in the transport sector, a result of higher fuel prices – petrol prices increased 47.49% last year.

In his 11 January letter to Guedes, Campos Neto explained high inflation levels by citing the rising prices of imports, driven in particular by high commodity prices; a spike in energy prices due to a drought; and global supply bottlenecks. The depreciation of the real, reflecting concerns with fiscal sustainability, also contributed to pushing up inflation. Campos Neto stressed that over-target inflation is a “global phenomenon”.

Although inflation is expected to slow this year, it remains a threat. Campos Neto noted that the BCB expects inflation to come in over target in 2022, but within the tolerance range: the BCB forecast 4.7% inflation for 2022 in its December 2021 inflation report. Private sector economists surveyed weekly by the BCB currently expect 5.09% inflation for this year and have raised their projections from a week earlier. The omicron variant of the coronavirus (Covid-19) is igniting concerns globally about an inflationary surge. 

Data from the Instituto de Pesquisa Econômica Aplicada (Ipea), a government-linked institution, shows that inflation in Brazil hit the lower-earning segments of society harder – at the higher end, middle-to-low-income earners suffered 10.40% inflation last year, compared with 9.54% for high earners at the lowest end (the gap is, however, less significant than it was in 2020, when inflation hit 6.22% for very-low-income earners and just 2.74% for high earners – national inflation rose 4.52% that year).

Addressing voter concerns with the economy will be key for presidential hopefuls. The presidential line-up remains uncertain, and comments from economists known to be close to presumptive pre-candidates are to be taken with a pinch of salt – but positions recently adopted by some of these economists show an overarching concern with addressing social inequality. President Jair Bolsonaro, who is expected to seek re-election, is betting on ‘Auxílio Brasil’, a new benefits programme of his creation, to try and regain support amongst poorer Brazilians.

Economic deceleration

Slow-to-stagnant GDP growth will present the government with a further challenge this year. The government’s latest official projections, from last November, predict 2.1% growth in 2022, but this is a generous estimate compared with the sub-1% forecasts of many financial institutions. The economists surveyed by the BCB currently expect GDP growth of just 0.29% this year.

Voter concerns

A number of opinion surveys show that issues related to the economic situation are at the top of voter concerns. In a Datafolha poll from December 2021, ‘health’ was cited as the main concern, by 24% of respondents; this was followed by unemployment (14%), the economy (12%), hunger (8%), inflation (7%), education (7%), and corruption (4%). Together, concerns related to the economic situation (including hunger, a problem which has surged during the pandemic) accounted for 41% of the responses. 

On 20 May, trade representatives from Mexico and the United Kingdom launched negotiations to set up a Free Trade Agreement (FTA) between both countries. Mexico’s Economy Minister Tatiana Clouthier stated that the FTA with the UK would not only address the trade of goods and services, but also digital trade, data flows, e-commerce, regulatory cooperation, and innovation. The FTA with the UK is part of the continuing focus of the administration of Mexico’s President Andrés Manuel López Obrador on international trade, which accounted for 77% of Mexico’s GDP in 2021. Mexico’s foreign trade is conducted through 13 bilateral and multilateral FTAs, as well as other agreements and commercial alliances.

The first official round of talks on the Mexico-UK FTA will be held in Mexico City (CDMX) in July, with a second round following in the autumn. The aim is to have the agreement ready to come into force within two years, as stipulated in the Trade Continuity Agreement that was signed between Mexico and the UK when the UK left the European Union (EU) in January 2020. Mexico also holds an FTA with the EU, which was modernised in April 2020, but is yet to be ratified. The UK is Mexico’s 16th trade partner, with trade valued at US$5.1bn in 2021, as well as being the 8th largest foreign investor in Mexico, with more than 2,000 British firms established in the country.

Mexico is also seeking to negotiate FTAs with Ecuador and South Korea. Mexico’s deputy minister for foreign trade, Luz María de la Mora, has said the government wants to finalise negotiations with Ecuador, which started during the current administration, during the first half of 2022. The 9th round of FTA negotiation talks with Ecuador took place during the week of 23 May in the country’s capital, Quito. De la Mora also said that the government is seeking to widen the existing agreements with other countries, such as the economic complementation agreement (ACE) 53 with Brazil and ACE 55 with Argentina. All these efforts fall within the government’s efforts to forge closer ties with Latin America.

With regards to South Korea, which is Mexico’s third largest trade partner, the fifth main destination of its exports and 14th largest investor, the government has agreed to negotiate on several fronts simultaneously. As a result, South Korea may join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Pacific Alliance, an outward-looking regional free trade bloc, which each count Mexico as a founding member, as well as a bilateral trade agreement. This is the first time that Mexico would be negotiating three trade agreements with another country at the same time.

Importantly, however, there are sectors that are opposed to the bilateral agreement, such as Mexico’s national iron and steel chamber (Canacero) and the national auto parts industry association (INA), because of subsidies to the industry and the presence of Korean companies already supplying the car assembly plants in Mexico, respectively. Their opposition, however, is unlikely to derail talks given the progress already made. In addition, there are other sectors that are lobbying strongly to establish conditions that allow free exports of products or lower tariffs, such as the national agriculture and livestock council (CAN), which is keen to reach an agreement as products that Mexico exports such as beef and avocados currently face tariffs of 40% and 30%, respectively, in South Korea.

Korea tariffs

According to De la Mora, 80% of goods exported from South Korea to Mexico enter the county free of tariffs, either because they are duty-free or because they enter under a programme such as the Assembly Industry and Exports Service (IMMEX) programme, which allows foreign manufacturers to import raw materials and components into Mexico, tax and duty free, under the condition that all finished goods are exported within a certain timeframe. In contrast, Mexican industrial products exported to South Korea face an average tariff of 8%, while agricultural products may fetch tariffs of up to 800%. Only 20% of Mexican exports to Korea are free from tariffs.

BRAZIL | Inflation rises in August. On 12 September Brazil’s national statistics institute (Ibge) released its latest inflation figures showing a monthly inflation rate of 0.23% for August. Annualised inflation for the 12 months until August came to 4.61%, still within the target range of 3.25% +/-1.5% of the central bank (BCB).

However, in the BCB’s weekly Focus bulletin, including the forecasts of private sector economists and analysts, which was last published on 11 September, the experts’ latest projection for annual inflation in 2023 was 4.93%, up on the previous week’s bulletin (4.92%) and from the figure predicted one month earlier (4.84%).

According to the Ibge, six of the nine categories of products and services measured for the IPCA consumer price index saw a rise in prices in August. The category which saw the highest inflation was housing (1.11%), in contrast with July, when the housing category saw -1.01% deflation.

BRAZIL | Gig economy regulation bill. The government led by President Luiz Inácio Lula da Silva presented a draft bill on 5 March which aims to boost labour rights protections for drivers working for ride-hailing and delivery apps such as Uber. This marks the first major legislative proposal from the Brazilian government since Lula and US President Joe Biden announced a bilateral partnership for workers’ rights in September 2023. One of the main points of the Lula administration’s draft bill is defining a minimum wage for drivers working on digital platforms; the current proposal is R$32.09 (US$6.50) per hour. Other provisions of the bill include setting a maximum 12-hour working day for a driver to work on one platform.

*** More Russian criticism of Nato.  We highlighted last week the degree to which Russia has been put out by Nato’s actions in Libya, which it sees as a “gross violation” of UN Security Council Resolution 1973.  Russia’s Nato envoy Dmitriy Rogozin is continuing with his warnings about Nato and its policy of “placing itself on the same level” as the UN when it comes to deciding “when to start a war and when to end it”.

Discussing some quite forceful anti-Nato comments made at a conference held in Prague on 29 August, Rogozin said that Nato is facing “the most serious risk of undermining its unshakable authority as an honest broker on matters of war and peace”.  Rogozin’s expressed sympathy for civilian casualties of Nato bombing may seem synthetic, given Russia’s own record on humanitarian issues, but his anger at Nato’s expansive interpretation of Resolution 1973 is genuine.

*** Pakistan still struggling to reassure China.  A month after China blamed a terrorist attack in its restless Muslim province of Xinjiang on militants trained in Pakistan, Islamabad is struggling to reassure Beijing of its innocence.  On 30 August, Pakistan’s President Asif Ali Zardari met with the Communist Party chief for Xinjiang, Zhang Chunxian, and promised to work closely with China in the fight against terrorism.

In addition to its repeated apologies and assurances of future assistance in the fight against terrorism, Pakistan has tried to convince China that the real culprit is India.  Islamabad says that there is a large Uighur exile presence in northern Afghanistan and that this has enabled India, which is allied to the Northern Alliance in Afghanistan, to exercise influence over the Uighur activists. According to this theory, the Uighur-separatist Eastern Turkestan Islamic Movement (Etim) is being funded and trained by Indian intelligence.  The Pakistanis also say that it is India that is spreading the false rumours about a Pakistan connection with Etim.

Occasionally, however, Pakistani sympathy for the Uighurs shows through.  For instance, on 25 August the Pakistani newspaper The News, which has been assiduous in propagating theories of Indian involvement, called on China to “address ethnic grievances to end Xinjiang unrest”.  As the commentary put it, no Pakistani media coverage has “looked at the issue beyond the element of friendship” between Pakistan and China.  The commentary accurately described how Beijing has used mass migration to subdue Xinjiang, reducing the Uighur percentage of the province’s population to 45%.  The paper called for “the social empowerment of Uighurs and other indigenous ethnic groups in the territory”.

This was not the message that President Zardari was seeking to convey in Urumqi this week.  He was still in full apology/denial mode.

New Central Bank (BCN) president: On 14 February Ortega confirmed that Finance Minister Alberto Guevara Obregón would replace Antenor Rosales as BCN President after five years in the job. While Rosales stepped down for “health reasons”, his departure was later attributed to his resistance to Ortega’s announcement that Nicaragua would assign US$17m (or 1%) of its international reserves to help finance the start-up regional bank proposed by the Venezuela-led regional initiative, Alba, of his close ally, President Hugo Chávez. Rosales reportedly refused, insistent that only the BCN could authorise the use of reserves which were not to be used at the “whim” of just anyone. His departure met with unease from the private sector; despite his FSLN roots, (having previously served as a colonel in the Sandinista army), Rosales was considered key to the government’s successful management of the economy (which grew by 4.7% in 2011, second only to Panama in the region) and Nicaragua’s continued good relations with the IMF, with which plans to seek a new agreement have been announced. Guevara, a loyal Ortega ally who was a lieutenant and part of the state security apparatus (DGSE) under the first FSLN government, has been replaced by his deputy, Iván Acosta.

Paraguayans unhappy with their politicians and are making their feelings known ahead of scheduled general elections in 2013. Conscious of this, the political class has become more sensitive to the demands of civil society and has been spurred into action all of a sudden. While there is still a long way to go before the changes demanded by the public become reality, the very fact that voters have realised that they hold sway over their political representatives is encouraging. Furthermore, citizens are showing a new determination to see their demands through, whatever the resistance from the political class.

It all started on 24 May when, in a highly controversial decision, the congress approved a proposal to increase this year’s budget for the supreme electoral tribunal (TSJE) by US$50m, so that it could hire up to 8,000 new staff, purportedly to register Paraguayan expatriates ahead of the 2013 elections, in which expats will be able to vote for the first time. The congressional move was strongly opposed by the executive. Finance Minister Dionisio Borda pointed out that in times of austerity the congress should prioritise investment spending, rather than inflating the already bloated state payroll. The government vetoed the measure, but the lower house immediately voted against the veto, with the senate expected to follow suit, allowing it to be overturned.

However Borda’s comments struck a chord with the public, not least because the TSJE, like many other state institutions, has a reputation of being used by political parties to distribute political favours, typically by hiring party affiliates to work as political operators on their behalf. These operators are known locally as ‘planilleros’– employees that appear on official state payrolls (planillas) but don’t actually do any work. Civil society groups described the move to increase the TSJE budget as a blatant attempt to extend political clientelism. Some groups organise an impromptu demonstration outside congress in protest and the demonstration proved such a success, drawing hundreds of people, that another mass demo outside the congress was scheduled on 29 May.

To much surprise, this call to action got results. In the face of public pressure, the senate convened an extraordinary session for 29 May to address the government’s veto, and in the end voted to uphold it. However if the senate thought that that would be enough it was mistaken. Although the civil society groups welcomed the senate decision, they went ahead with the demo as planned, and used the protest to call upon congress to address some of the other pending political issues, such as a resolution of a lengthy crisis in the judiciary over the refusal of seven supreme court judges whose mandates have expired to step down [RBS-12-04] and a call to do away with the so-called blanket lists currently used in congressional elections. Over a thousand people took part in the second protest and in subsequent days the demos spread to other cities, including Encarnación, Ciudad del Este and Pilar. The upshot was that on 31 May representatives from the chamber of deputies introduced a formal libel accusation against seven CSJ judges, the first step in their impeachment process.

The protestors vowed to continue with their mobilisations until congress barred the use of blanket lists in the 2013 elections. However on that point congress refused to buckle, and on 5 June voted to it postpone the discussion of blanket lists until 2015. This was to be expected; after all congressional would not want any change that might affect their prospects of re-election in 2013. This setback prompted an angry and violent reaction by some of the demonstrators, who attacked and vandalised the headquarters of the two main parties, Partido Liberal Radical Auténtico and Asociación Nacional Republicana- Partido Colorado. Congress said that it would not be intimidated. Civic leaders said they did not condone the violence and pledged to continue with peaceful demonstrations.

• Lugo conspicuously absent

President Fernando Lugo, as often seems to be the case in times of crisis, was out of the country, this time on an 18-day tour of Asia. On 24 May Lugo became the first Paraguayan president to officially visit India. It was left to Vice-President Federico Franco to deal with the domestic protests. On 31 May, commenting on the decision by the senate to uphold the government veto, Franco recognised that it had been “a triumph of the people”. Franco added that in a true representative democracy “[political] parties and congress must listen to the people”.

The World Economic Forum (WEF)’s Global Competitiveness Report 2012-2013, released on 5 September, ranked Panama 40^th (of 144 countries), nine positions up since last year, continuing “its steady progress and consolidating its position as the most competitive economy in Central America”, said the WEF.

The report notes that “Panama leverages its traditional strengths with its very good transport infrastructure (ranked 33^rd overall), especially for ports (4^th); its macroeconomic stability (53^rd), despite the worrying inflation rate of nearly 6 percent [see sidebar]; its efficient financial markets (9^th); and its relatively high levels of competition (31^st) and openness to FDI (9^th).”

The report noted that the country had made progress in addressing some of the most pressing weaknesses that have traditionally hindered its competitiveness potential, singling out in particular “the quality of its educational system, which nonetheless remains an important challenge (112^th).  Corporate R&D investments (34^th) appear now to contribute more to improving the country’s innovative capacity (94^th), which remains one of the biggest challenges to diversifying the national economy”.

The WEF highlighted as a concern the fact “little progress is observed in Panama’s institutional set-up, where public trust in politicians (101^st) is low, security (96^th) remains a general concern, and judicial independence is deemed one of the lowest in the region (132^nd).”

Panama’s deputy finance minister, Mahesh Khemlani, recently told attendees at a national economic forum organised by the Panamanian association of business executives (APEDE) that 108,469 people would move out of poverty this year. He said that, in 2006 17.6% of the population was indigent – meaning that people had insufficient income to cover their basic food costs, but in 2011 this figure dropped to 11.5% and is further projected to reach 10.4% by year end 2012. He also said that the proportion of people considered in conditions of poverty had dropped to 25.8% in March 2012, down from 27.6% in 2011.

• Inflation

At a recent meeting of investors, representatives from Panama’s economy and finance (MEF) ministry said that inflation could reach 6% by end 2012, up on the 5.9% registered last year and the highest registered since 2008, when inflation reached 8.7%. The MEF also projected economic growth of 10% in 2012.

Upon taking office in June President Federico Franco vowed that his new administration would clear up the violent Curuguaty incident [RBS-12-07], which led to the impeachment of his predecessor Fernando Lugo (2008-2012). There appeared to be little progress until September, when the authorities announced the arrest of a key suspect. Ahead of the scheduled general elections in April 2013, the Franco government is keen to distinguish itself by showing that it can more effectively deal with the country’s long running land conflicts involving the self-proclaimed landless farmers (Carperos). However, the official Curuguaty investigation has been called into question by one social organisation, which maintains that in the haste to resolve the case the authorities are conducting a very narrow investigation that skips over key issues and threatens to worsen tensions between the Carperos and the security forces.

Franco’s interior minister, Carmelo Caballero, on 27 September announced that the police had arrested Rubén Villalba, a Carpero leader identified by the authorities as one of the main instigators of the violence in Curuguaty. Caballero declared Villalba “fundamental” to the investigation, citing “strong evidence” that he may have fired the first shots killing some of the police officers tasked with evicting the Carperos from the lands of the native Campos Morumbí tribe, on which they were squatting (see sidebar). Highlighting the fact that Villalba was safely captured by the police, Caballero said that the authorities would now be able to conduct a full judicial investigation. President Franco, at the time was in New York for United Nation’s 67^th General Assembly, tweeted: “Good job by the national police capturing Rubén Villalba. Let justice do its work. This case is a priority”.

A couple of days later (2 October), the prosecutor in charge of the case, Jalil Amir Rachid, presented the evidence against Villalba, which includes eyewitness statements and pictures of Villalba holding a gun and aiming it at the police. Rachid stated that there also is a recording of a conversation between Villalba and the local police chief days before the eviction, in which the latter asks the Carpero leader to tell his colleagues not to resist the police operation and to peacefully evacuate the area. However, according to Rachid, a video recording of the operation, filmed by the police on the day, “clearly shows that the Carperos were strategically placed to ambush the police”. Rachid said that the first line of police that came in contact with the Carperos was unarmed and that the video shows that they were fired upon by shooters positioned on either side of road. Villalba has denied responsibility for orchestrating an ambush or for attacking the police, claiming he had no firearm. He claims that another Carpero leader, Avelino Espínola, who was killed in the incident, was the one in command.

There are number of conspiracy theories surrounding the Curuguaty incident, with some believing that it was part of an elaborate plot to oust Lugo. The most credible of these maintains that the Carperos had been infiltrated by agent provocateurs intent on inciting violence. Yet according to Rachid the prosecution has no evidence of this; although he conceded that the prosecution would investigate whether Villalba had “any links to any insurgent armed group”, a clear allusion the self-proclaimed Ejército del Pueblo Paraguayo (EPP).

Prosecution’s investigation questioned

Hours after Rachid presented the prosecution’s evidence, the Plataforma de Estudios e Investigación de Conflictos Campesinos (PEICP), a local advocacy group, held a conference in which it presented its own analysis of the prosecution’s evidence. The PEICP said that its own “technical investigation”, led by a Spanish lawyer, Aitor Martínez Jiménez, arrived at very different conclusions. In particular, Martínez Jiménez’s findings contradict the claims that the Carperos had staged an ambush, pointing out that the police video shows that they were largely taken by surprise at the arrival of the police contingent, and were far outnumbered. More importantly, Martínez Jiménez claims that an audio analysis of the official police video, conducted with the help of the Spanish police, suggested that the first shots fired against the police came from assault rifles and not the kind of outdated shotguns that the Carperos are seen holding and were later found in their camp. This led Martínez Jiménez to conclude that these shots were fired by “sharpshooters”; not necessarily Carperos.

Martínez Jiménez also says that according to some witnesses, after the initial attack the police indiscriminately shot against the Carpero camp, meaning that some peasants had been “extra judicially executed”. (Eleven peasants and six police officers died in all). According to Martínez Jiménez there are some indications that the police may have hidden the bodies of some “tortured and murdered” peasants.

Martínez Jiménez said that the purpose of his investigation was not to challenge the prosecution or to defend the Carperos, but rather to collaborate with the official investigation in order to find the truth of what happened. Yet he accused the prosecution of ignoring relevant pieces of evidence. He added that only by conducting a thorough investigation into all of this could due process and other guarantees be ensured in any trial of the suspects. Martínez Jiménez said that he was willing to provide his assistance to the prosecution.

Strong Reactions

The controversial PEICP report produced predictably strong reactions. The former president Lugo (conveniently) agreed with the findings and said that here had been “dark forces” behind the violence. “There is a lot more to investigate in Curuguaty. It was not a simple clash between peasants and police that triggered the so called impeachment”, he stated. He also accused the Franco government of “not having the will or the desire” to find out what really happened in Curuguaty.

The authorities were quick to reject the PEICP’s conclusions. Rachid said that the conclusions of the “irresponsible parallel investigation” were “farfetched”. He added that the PEICP’s intentions were to lie to the people and question the validity of the official investigation. President Franco described the PEICP’s report as an “anthology of nonsense”. He added that that the authorities had already detained one of the “murderers” and that the official investigation would deliver justice. Rachid also questioned how the PEICP was able to obtain the prosecution’s evidence, given that the PEICP does not represent any of the defendants in the case. Indeed, Rachid revealed that he had refused to provide a copy of the case file to the PEICP director, Domingo Laíno, when he requested one. Intriguingly, Laíno is the founder and historical leader of the now ruling Partido Liberal Radical Auténtico (PLRA).

In response to Rachid’s questions, Laíno revealed that the PEICP’s lawyers were offering legal assistance to a number of the Carperos implicated in the incident. He added that in the wake of President Franco’s comments about the PEICP’s report the organisation would lodge a formal complaint against the government for violating due process by attempting to “delegitimize the defence” and for labelling Villalba a murderer, denying him the presumption of innocence. The fact that such a prominent political figure such as Laíno appears to be so involved in the Carperos’ defence has produced all kinds of speculation as to the possible political motives operating in the background.

Much like Franco, in 2008 Laíno backed Lugo’s candidacy. Franco may have turned on Lugo after he was elected, but Laíno never really removed his support for the former bishop. The speculation only intensified on 10 October after Laíno, 77, formally registered as a PLRA presidential pre-candidate ahead of party primaries scheduled for 16 December, thus emerging as the only challenger to the consensus PLRA presidential pre-candidate, Efraín Alegre, who served as public works minister under Lugo before also turning against him.

• Campos Morumbí

Campos Morumí is a 50,000 hectares (ha) estate in Canindeyú department which belongs to a prominent member of the traditional Asociación Nacional Republicana- Partido Colorado (ANR-PC), Blas N. Riquelme, who was a senator during the Alfredo Stroessner dictatorship (1954-1989). Paraguay’s truth and justice commission (CVJ) has found that at least 1,800ha on the estate are made up of State lands that had been “irregularly” appropriated by Riquelme. As a result, for years various landless farmers groups have pushed ANR-PC governments to redistribute these lands, but the politically-powerful Riquelme quashed these efforts. More recently, the Lugo administration entered into talks with Riquelme to try to buy back the lands. These were set to continue under Franco, but have been suspended following Riquelme’s death on 2 September.

• The Carperos’ candidate

After registering as a presidential pre-candidate for the Partido Liberal Radical Auténtico (PLRA) on 10 October, Domingo Laíno declared, “I am the candidate of the Carperos”. Laíno, who has been a PLRA presidential candidate three times previously, explained that in the last couple of years he has toured the country’s interior, listening to the plight of the sintierras (landless farmers) and the sintechos (homeless). He concluded that “the main problem is hunger and if this is eradicated there will be no more violent conflicts”. According to Laíno these people urged him to launch his candidacy. Laíno argued that he was “elected” while others had been “handpicked”.

On 14 April, President Barack Obama notified the US Congress of his intention to remove Cuba from the State Department’s list of state sponsors of terrorism (SSOT).

The government of Cuba welcomed the news that the country is to be removed from the SSOT list (also comprising Syria, Sudan and Iran), as an important step towards the restoration of normal diplomatic relations between the US and Cuba. In theory, the US congress has 45 days to respond. In practice, President Obama could veto any objections. While the de-listing will facilitate banking and financial relations between the two countries (including allowing the Cuban interests section in Washington and the Cuban Mission to the United Nations in New York renewed access to banking services), and certainly spur the nascent US interest in doing business with Cuba, the considerable legal and technical hurdles to doing so under the congressionally-codified embargo remain firmly intact, without much hope of removal any time soon.

Implications

In a report outlining the main implications of Cuba’s SSOT de-listing, a multinational law firm, Hogan Lovells, identified the following: (Cuba’s) eligibility for a wider range of (US) exports of dual-use items (for example software, communications technology and other items with potential military use); eligibility for US foreign assistance and humanitarian aid; elimination of Private Right Action (meaning that the statutory authorisation for individual US citizens to pursue private claims against Cuba in US courts would be eliminated, thereby facilitating trade without the potential fear of asset seizures); the elimination of a rule requiring publically-traded companies to disclose to the US Securities and Exchange Commission (SEC) their dealings with Cuba; and finally, the elimination of State divestment laws (some US states have laws or policies prohibiting investments in companies doing business with blacklisted countries).

Meanwhile, the mainstream media continues to highlight how a number of leading US companies in the broadly defined technology, media and telecommunications (TMT) sector are looking to expand into Cuba. In February, for instance, the online movie provider Netflix said that it would extend its service to Cuba, as a part of a longer term plan to expand its geographical footprint from around 50 countries to 200 over the next two years. At the VII Summit of the Americas, Mark Zuckerberg, the founder and Chief Executive Officer of Facebook, said that it was looking to expand its internet.org initiative, which brings Wi-Fi services to countries and areas that are lacking in Internet access, to Cuba. Internet.org is already active in the region in Colombia, Guatemala and Panama. Apple has indicated that it may provide some of its products to Cuba. Other reports indicate that Amazon may be looking to provide its clients with the opportunity to ship to Cuba.

Online commerce in Cuba is and will remain hampered by the lack of Internet access. According to the International Telecommunications Union (ITU), Internet penetration in 2013 was 25.7%. Although the state-owned telecommunications company Etecsa reduced the cost of an hour of Internet use from the equivalent of US$5 to US$2.50 for a two month period to mid-April, that lower price is still way too expensive for most Cubans. Alternatively, Cubans may pay Etecsa the equivalent of US$10 per month for 20 hours of Internet access, US$15 for 50 hours or 220 hours for US$60. The charges must be paid in convertible pesos (CUC), which are fixed at (near) parity to the US dollar. In a country with over 11m people, there are only 155 public access points where connection to broadband Internet is possible.

Less attention has been paid to the logistics of online payments to Technology, Media and Telecoms (TMT) companies by Cubans buying goods and/or services. Credit cards and debit cards, typically used by customers in other countries, are not yet available. In theory, TMT companies could sell vouchers for national pesos (CUP) or (more likely) CUC – the two currencies in Cuba’s dual currency system, which then could be redeemed by customers online. In practice, though, no details have been made public.

Details of how TMT companies might be paid likely will remain scant until the Cuban authorities resolve a much more fundamental problem. As we have regularly noted in our reviews of the Cuban economy, neither the CUC nor the CUP adequately perform the basic functions of money. Neither really serves as a unit of account, a means of payment or a store of value. Unless and until the current dual currency system is replaced with a new system that is clearly sustainable (such as a properly constructed new currency peg to the US dollar, for instance), e-commerce is very unlikely to flourish in Cuba.

This is not to say that recent weeks have not seen significant and positive announcements involving foreign companies. In late March, for example, Canadian company Sherritt International said that it should benefit from a reduction in tax rates applied by the Cuban authorities to its local operations. The new foreign investment rule cuts the tax rate on oil & gas operations from 30% to 22.5%. The equivalent reductions for power generation and mining, two other areas in which Sherritt International has significant interests in Cuba, are from 30% to 15% and from 45% to 22.5% respectively. The halving in the tax on mining comes at a time that there is the potential for a substantial increase in volumes of nickel production. Nickel prices have been boosted in the recent past by a global shortage. In part because of the mothballing of plants, output of nickel from Cuba’s mines in the last year or so has been about half of the normal level of the last decade.

Press reports in early March indicated that Brazilian construction group Odebrecht is starting work on a US$200m project to modernise and expand Havana’s José Marti International Airport. This is Odebrecht’s third major infrastructure project in Cuba. Three quarters of the funding will come from Brazil’s state-owned development bank, Banco Nacional de Desenvolvimento Econômico e Social (BNDES), which will disburse the money directly to the Cuban government through a bilateral export credit facility set up in 2014.

The projects being operated by Sherritt International and Odebrecht have a number of features in common. First, the government of Cuba (and/or its various agencies) is the main client. Sherritt International and Odebrecht are providing physical infrastructure that the country badly needs. Both companies have ample access to the funding that they need from global capital markets (and, in Odebrecht’s case, indirectly from the government of Brazil). In short, the absence of payments systems and the shortcomings of the dual currency system do not affect the activities of either on a daily basis in the way that they would hamper the normal operations of TMT companies seeking to engage with large numbers of Cuban consumers.

Taking a one-year view, a number of trends are foreseeable. The US and Cuban governments will move further towards a normalisation of relations, focused initially on re-establishing embassies. These improving diplomatic relations will provide a favourable backdrop for multinational construction and mining companies. High profile consumer businesses from the US (and large TMT companies in particular) will continue to make clear their desire to extend their geographical footprints to Cuba. In practice, however, little will happen until the Cuban authorities have undertaken wholesale currency reform.

PERU | Inflation exceeds target. Peru’s national consumer price index (CPI) increased by 0.34% in February, according to the national statistics institute (Inei), bringing the cumulative rolling 12-month national inflation rate to 3.34%, which is above the official 1%-3% target range set by the central bank (BCRP) in 2007. Since 2007, Peru’s average annual inflation rate has remained below the top end of the BCRP target at 2.9%. However, with the February inflation rate results, Peru’s CPI has now been above the BCRP’s target range for six consecutive months, sparking concerns that it is losing its tight grip on inflation.

The items that registered the main price increases at a national level in February, according to Inei, were alcoholic beverages and tobacco, which increased by 1.75%, food stuffs and non-alcoholic beverages (0.86%), and recreation and culture (0.41%). By contrast, some of the main items that registered a fall in prices included housing, water, electricity, gas and other fuels, which fell by -0.62%; transport (-0.11%); and communications (-0.03%).

While for the moment Peru’s inflation rate remains acceptable, the risk is that it could start rising rapidly should domestic economic activity start to pick up pace, as expected by the government. Inei’s latest economic growth figures showed that Peru’s GDP increased by 3.9% in 2016. But Economy & Finance Minister Alfredo Thorne has said that he expects GDP growth to accelerate to 5% this year. This will very much depend, however, on the performance of Peru’s key mining sector. While according to the association of mining, oil, and energy producers (SNMPE) mining sector activity increased by 21.2% last year, it is estimated that sector activity will not be as dynamic this year, with a growth projection of 7.5%. According to the SNMPE, the main reason for the slowdown in mining sector activity is due to a lack of new investments, after investment levels fell by 46% in 2015-2016.

An armed clash between rival criminal gangs in Uruguay’s capital, Montevideo, has laid bare the lack of effective firearms control and the authorities’ failure to combat growing levels of criminality. All of this has sparked a public debate about these issues, which has led many to revaluate their vision of Uruguay as being a peaceful and safe country, to one that has a growing criminality problem.

The armed clash took place on 25 September in the northern Montevideo neighbourhood of Casavalle. According to local press reports, the police were alerted about gunshots being fired in the area by local residents. When police units arrived at the scene they found two groups of males engaged in a gun battle. One of them, a 14-year old boy, was shot dead as the police arrived, while two older men were shot in the legs. Meanwhile two other individuals fled the scene in a white pick-up truck that they later abandoned on the side of the road. Upon inspecting the pick-up truck, which had been reported as stolen, the police found an arsenal of military-grade weapons, including a .762 calibre Steyr assault rifle, a .30 calibre M1 carbine, and a Glock 17 pistol, along with ammunition for all those firearms and two bullet proof vests.

Eyewitnesses said that the incident began when the white pick-up truck drove in front of a group of four men standing by the side of the road. The pick-truck opened fire on the four men standing outside, who return fire. A police report later noted that a unit of the national police’s Guardia Republicana elite force was in the area tracking down the members of a local criminal gang led by Anthony Martín ‘Pato Feo’ (‘ugly duckling’) Rodríguez Silvera, suspected of being responsible for a series of armed robberies of local bank branches and shops. The police said that the firearms found in the pick-up truck fit the description of the weapons used by the Pato Feo gang (which were believed to have been stolen from an armed forces armoury- the Steyr rifle is the main support weapon of the Uruguayan armed forces, while the Glock is the standard issue pistol of both the armed forces and the national police).

The local press quickly noted that Rodríguez, who was convicted for murder in 2011, was the criminal that had been rescued in a commando style operation carried out by three heavily armed individuals while he was being transferred from the La Libertad prison in San José department to the national orthopaedics and traumatology institute (Inot) in Montevideo, where Rodríguez was due to receive medical treatment. The police had been hunting for Rodríguez since without much success. However, the police said that it believed that the Casavalle shootout was a ‘settling of scores’ between the Pato Feo gang and a rival criminal and drug trafficking gang based in the area.

Pointedly, following the shootout, a 50-strong Guardia Republicana contingent was deployed to Casavalle on 26 September to reinforce security in the neighbourhood and effectively lockdown the area -all bus services were suspended, and schools closed on 25 September-28 September- amid concerns about new clashes between the rival criminal groups and to try to recapture Rodríguez. During a series of raids in those days the Guardia Republicana, arrested five individuals after seizing more firearms and drugs. But the Guardia Republicana failed to find Rodríguez. More problematically, Rodríguez and his gang struck again. On 12 October a group of eight armed men broke into a shop in Casavalle, shot the owner dead and then stole cash, alcohol, and cigarettes. The crime was attributed to the Pato Feo gang.

Then on 13 October eight armed individuals broke into a branch of the Banco de la República Oriental del Uruguay (Brou) state-owned bank in the town of Sauce, Canelones department. After disarming the guards, they made off with a substantial amount of cash. CCTV footage showed that one of those involved in the Brou robbery was Rodríguez. This eventually led the police to track down Rodríguez, who was re-arrested on 13 October after a car in which he and his accomplices were hiding was stopped at a police checkpoint set up as part of a major operation to capture Rodríguez, who managed to evade capture for a total of 41 days in which his gang was suspected of being involved in three major robberies. With Rodríguez back in custody, public attention turned to the numerous weaknesses exposed by his case.

These weaknesses range from a lack of effective control over inmates, to questions about the police’s capability to deal with increasingly violent criminal gangs, to the ease with which criminals appear to be able to get hold of military-grade weapons. The final point in particular has become a focus of debate after the authorities said that the high-calibre weapons seized in Casavalle were not those that have recently gone missing from military barracks, as had been previously suspected. Instead the authorities said that the seized weapons had been purchased in either the legal or black market in Uruguay or in neighbouring countries.

In fact, the local press has noted that Uruguay currently has the eight largest number of registered firearms in the world. Perhaps unsurprisingly, the local press also noted that there are now on average more deaths by firearm in Uruguay than in the US. The number of deaths by firearm in the US currently stands at 10.5 per 100,000 inhabitants, while in Uruguay it stands at 13.9 per 100,000. Meanwhile the Small Arms Survey compiled by the Graduate Institute of International and Development Studies in Geneva, Switzerland, found that in 2011 there were 89 firearms (legally registered plus estimated illegally owned) for every 100 people in the US and 32 firearms for every 100 people in Uruguay. These are worrying statistics, particularly when considering that Uruguay tighten its gun control laws last year. However, there are now calls in some quarters for these to once again be reviewed.

• Banda del gas

Although the exploits of the Pato Feo gang alarmed Uruguay, the director of the national police, Mario Layera, warned that there is another even more powerful and dangerous criminal gang currently operating in Montevideo. Speaking about the arrest of the Pato Feo gang during an 18 October press conference, Layera said that “we always considered it to be a dangerous and violent group”. However, Layera added that “We can say that there is another group that acts in a similar fashion but is even more powerful”. Layera did not provide details but he may have been referring to the so-called ‘banda del gas’ gang that in recent weeks has blown up five ATMs around Montevideo using liquid petroleum gas (LPG) cylinders.

BRAZIL | Record homicides. Brazil registered a record number of deaths for lesbian, gay, bisexual or transgender (LGBT) people last year. In 2017, 445 LGBT people died, of which 387 were murdered and the remaining 58 committed suicide. This is the highest figure recorded since the survey began 38 years ago and marks a 30% increase on 2016 when 343 deaths were registered. The majority of these were the victims of homophobic crimes, which could be linked to the recent rise of far-right political movements.

The study is carried out by tallying the number of deaths reported in local media, but the phenomenon could be even bigger given that many cases do not receive any media coverage.

BRAZIL | Job loss. Brazil lost over 328,000 jobs in December 2017, according to data from the national employment register Cadastro Geral de Empregados e Desempregados (Caged). Net employment for the whole of 2017 was also negative, frustrating expectations that the labour reform of the government led by President Michel Temer would open up more vacancies.

Currently, around 12.2% of Brazilians are unemployed, leaving 12.7m without work according to 2017 third-quarter figures from the national statistics institute (Ibge). But a report by the International Labour Organization (ILO) published on 23 January suggests unemployment levels should decrease to 11.9% by the end of 2018. Researchers from ILO expect the jobs market to pick up now the economy is growing again following the recession of more than two years. Less encouragingly, the report found that the number of poor quality vacancies would also increase, leaving many workers without long-term job security.

The first deputy minister for Economy & Planning, Alejandro Gil, described the economy’s performance as “acceptable” in the first half of 2018 in a presentation to the Council of Ministers in mid-June. This came despite significant external and domestic headwinds, including the impact of import restrictions, a sharp drop in the sugarcane harvest and – although he did not mention it specifically – ongoing reductions in cheap oil import from Venezuela.

There were fewer concrete statistics made available by the authorities following the presentation to the Council of Ministers. The government has usually, in the past, provided an estimate of first-half GDP growth at the time of the official discussion, but this time the economy minister gave little indication of the likely pace of GDP growth. This is possibly explained by the fact that in recent years, growth has tended to be stronger in the first half of the year, raising expectations for the trajectory during the following six months, with full-year results subsequently disappointing. In June 2016, the economy minister stated that GDP growth came in at an estimated 1.1% during the first half, with full-year results subsequently revealing growth of just 0.5%. In June 2017, the authorities announced that first-half growth was in line with the official 2% target, with full-year growth then disappointing, at 1.6%.

Sugar harvest likely to register a century’s low

The government has retained the 2% growth target for 2018, but Minister Gil’s imprecise comments about an “acceptable” rate of growth imply that the economy is expanding at a more moderate (although not disastrous) pace. This is likely to be a reasonable result given the range of domestic and external headwinds facing the economy. Domestically, reports emerged in mid-June that the impact of Hurricane Irma in September 2017 and subsequent erratic weather (unseasonably wet weather in early 2018, followed by severe flooding in May) has devastated the sugar harvest. The crop season runs from November-May, but hurricane damage forced mills to close in November-December, which has meant that the unusually heavy rains experienced in early 2018 had a severe impact on this crop year’s results. After producing 1.8m tonnes of sugarcane in the 2016/2017 crop year, Azcuba (the state sugar company) was targeting output of 1.6m tonnes, on the basis that drought last year affected growing conditions. However, recent reports indicated that the 2017/018 harvest is reported to have fallen to 1.1m – the lowest in over a century. Planting is also reported to have been delayed for the 2018/2019 season owing to recent heavy rain. Meanwhile, an ongoing lack of investment continues to contribute to high levels of inefficiency, with processing facilities in particular hit by power cuts.

Sugar accounts for a relatively small share of GDP. The data are not disaggregated into such detail, but sugar accounts for the lion’s share of overall agricultural production, which in turn accounts for under 5% of GDP. As such, the impact on GDP growth will not be as catastrophic as the headline sugar production data indicate. That said, the industry is still a significant rural employer and export earnings provide an important source of foreign exchange. Although around 600,000-700,000 tonnes of total sugar production is retained for domestic consumption, the remainder is exported, mainly to China.

Export earnings under pressure

During the presentation to the National Assembly, Minister Gil also referenced the loose “non-compliance with (expected) revenues” as a result of weaker export earnings, which is likely to partly reflect lower sugar exports. It is also likely to reflect lower exports of medical services, which are dominated by a doctors-for-oil swap with Venezuela. Lower oil shipments from Venezuela, however, are likely to have prompted a fall in medical services exports from Cuba. In the press releases following the National Assembly meeting, no specific mention was made of Venezuela, but it is little secret that the latter’s severe economic and political problems are having significant reverberations on the Cuban economy. This will be particularly true given the steady increase in global oil prices this year, which will place strain on Cuba’s external accounts given relatively low levels of estimated reserves.

There has been little indication of pressures on Cuba’s public finances, but deteriorating external conditions (higher oil prices, in particular) have in the past lifted the fiscal deficit significantly. During the Council of Ministers meeting, officials discussed the outturn from 2017, with the deficit coming in below official projections as a result of above-budget revenue and below-budget expenditure. Although there was no formal recognition, the authorities will struggle to shrink the deficit further this year. Reflecting these concerns, President Miguel Díaz-Canel reinforced that government oversight of the budget must increase, with more regular discussions at the Council of Ministers about the year-to-date figures. This implies that the government may be willing to make further spending cuts later in the year in order to prevent a sharp widening of the fiscal deficit.

Government pins hopes on tourism

One of the only positive developments outlined at the Council of Ministers meeting was a strong performance by the tourism sector, but even here the actual outturn is likely to be weaker than the rhetoric suggests. Minister Gil highlighted the fact that tourist arrivals exceeded 2m in the first half of 2018, but they have done so for the past two years. Detailed data from the first quarter of the year showed that tourist arrivals actually fell by 7%, so even if arrivals surpassed the 2m mark in the first half, they could still have registered a decline. The government continues to project full-year tourist arrivals of a record 5m, up from 4.7m in 2017. However, even if the island does manage to reach this goal, it is unclear whether this will be sufficient to offset the various other negative economic developments in recent months.

In its annual report, released on 22 August 2019, the United Nations Office on Drugs and Crime (UNODC) found that the overall volume of coca cultivated in Bolivia in 2018 had declined by 6% from 2017 figures. This is a positive indication, particularly when combined with Bolivian government figures suggesting that the amount of coca traded in the two legal markets – in the Villa Fátima district in La Paz, and in Sacaba, a city in the Cochabamba province – increased by 5% in 2018.

However, the figures also reveal an increase of 57% in coca cultivation in the north of the La Paz province, which suggests the increased effectiveness of eradication in other areas is leading coca cultivators to move to new regions.

This was the phenomenon that drove the rapid expansion of coca cultivation in the Tropics of Cochabamba, otherwise known as the Chapare, which now accounts for 7,787 of the 23,100 hectares of coca grown in Bolivia, or 34% of the total. Traditionally, coca growing was restricted to the Yungas area of La Paz province, where farmers are permitted to cultivate up to a quarter of a hectare of coca. It is this coca that is sold at the Villa Fátima market, where 90% of Bolivia’s legally-grown coca is traded.

The 2018 estimates place the extent of the Yungas coca fields at 15,015 hectares, or 64% of the total cultivated area of coca. The remaining 1% largely comes from the north of La Paz, where 346 hectares of coca were cultivated in 2018, up from 220 hectares in 2017. There are also small pockets of production in the Santa Cruz and Beni provinces, although these are omitted from most of the UNODC figures.

The UNODC report also found that accompanying the increase in the amount of coca sold at legal market there was an increase in the price paid for the legal crop of 32%, up from a weighted average of US$9.4/kg in 2017 to US$12.5/kg in 2018. Once again, these figures will be welcomed by the government of President Evo Morales, particularly as he campaigns for re-election for a fourth term in office in 2020. President Morales has consistently argued against the prohibition of coca cultivation and forced eradication of crops, claiming that the Andean countries should be allowed to profit from their coca cultivation.

Indeed, the latest report found that the coca industry in Bolivia generated an estimated US$375m-US$461m in 2018, representing approximately 1% of the country’s GDP, and between 8% and 10% of the GDP of the agricultural sector.

Although the major findings of the UNODC report suggest a tentatively positive direction for coca cultivation in Bolivia (the latest figures claim that production in 2018 exceeded the legally permitted limit of 22,000 hectares by just 1,100 hectares), they were also accompanied by numerous recommendations. These are focused particularly on ensuring that coca cultivation does not expand beyond current coverage, for example by finalising the delimitation of authorised production zones – as decreed by Law 906, the General Law on Coca – and focusing on preventing the spread of cultivation beyond authorised areas.

This is of special relevance in the Tropics of Cochabamba, where 61% of eradication took place in 2018. This is an area that has seen a lot of in-migration in recent years, with many people looking to make a livelihood from coca growing. As such, the final recommendation of the report is for the government to continue focusing on so-called alternative development, to provide other viable options for those currently reliant on the income from coca. 

“In Paraguay we are no longer improvising with security, we are no longer reactive, but proactive,” President Santiago Peña said on 19 September, at an event in which the government gave the national police (PN) new vehicles and equipment. This comes after the government raised the overall budget for security, in line with previously announced plans to invest record funds in the sector in coming years.

Peña hailed the acquisition of 250 police patrol vehicles, 100 motorcycles, and 1,500 bulletproof vests for the PN. The funding for this first batch of police vehicles and equipment was covered by Itaipú Binacional, the energy company jointly owned by the Paraguayan and Brazilian governments which operates the Itaipú hydroelectric dam on the border of the two countries. Itaipú Binacional contributed US$12m for this purchase. In the next four years, the company is expected to provide US$97m to support the government’s security initiatives.

Earlier in September Paraguay’s interior minister, Enrique Riera, highlighted that the government had also boosted the PN’s manpower, especially in the Lince group, a special rapid response unit which often uses motorbikes to carry out patrols and pursuits. When the Peña administration took office in August 2023, the Lince unit only had 600 personnel, but last year the government announced that its ranks would be doubled, and in April this year Peña said that Lince would be expanded to nearly 1,800 members. On 19 September, after the delivery of the new police motorcycles which will mainly be used by Lince, the governor of Caaguazú department, Marcelo Soto, expressed gratitude that the government was not only providing new vehicles and equipment but funding the supply of fuel and maintenance services for the new police trucks and motorcycles.

Caaguazú was the first of Paraguay’s 17 departments (and one capital district) to receive a batch of new police vehicles. The order of the rollout was decided by the council of governors, prioritising the departments that the governors deemed to be in most need of patrols. However, it is striking that Amambay department, which often ranks among the country’s deadliest regions, was the last department to receive new vehicles. According to figures released in July by Paraguay’s public prosecutor’s office, 20% of the country’s 2,565 homicides from 2019 to June 2024 took place in Amambay, the highest proportion of any department. In the past five years, the departments of Central (13% of total murders) and Alto Paraná (11%) ranked as the second and third deadliest departments, while Caaguazú accounted for only 5% of total homicides during this period.

Budget for security

On 30 August the Peña government submitted to congress the legislation for its 2025 budget proposal, of which funding for security is among the main priority areas. The proposed annual budget of ₲132.9trn (US$17.6bn) for next year would represent a 14% increase from the 2024 budget. Congress is reviewing the budget breakdown and has invited government officials to explain their proposed ministerial budgets.

On 23 September Rieira was the first cabinet minister to speak before the congressional budget review committee, to defend a proposed interior ministry budget of around ₲4trn, which would be up 16% compared to 2024. Most of this proposed budget (₲3.89trn) would be allocated for the PN. Riera said that the increase in the proposed budget was in part to cover the salaries of an expanded police force, as 5,000 new officers are expected to join the PN in 2024-2025.

Prison and military budgets

In the 2025 budget proposal, the interior ministry was allocated a much higher budget compared to the ministries of defence (₲2.47trn) and justice (₲518bn). On 23 September the defence minister Óscar González and the justice minister Rodrigo Nicora also explained their budget proposals to congress. González highlighted the need to finance the purchase of more aircraft and ships to conduct patrols, while Nicora argued that the country’s overcrowded prisons were in dire need of more funding.