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On 1 February América Móvil, a leading Mexico-based telecoms company, controlled by the world’s richest man, Carlos Slim Helú, became the first Latin American company to tap the so called “dim sum” (Chinese renminbi) bond market. It borrowed RMB 1bn (US$158m) for three years, but paid only 3.5% a year in interest for the money to do so.

The bonds were issued in Hong Kong via the Hong Kong and Shanghai Banking Corporation Limited (HSBC).

América Movil said that it needs renminbi to pay for more Chinese built products, particularly network equipment. Business analysts guess that América Movil will soon switch to supplying its customer with Chinese-made phones which it can source more cheaply by offering renminbi to its suppliers on mainland China.

As América Movil has a capital expenditure programme of US$9bn in 2011 and expects to spend the same in 2012, it may well be back at the “dim sum” table soon.

Belize: On 6 February a US-based ratings agency, Standard & Poor's (S&P), lowered its long-term foreign- and local-currency sovereign credit ratings on Belize to ‘CCC+’ from ‘B-’. S&P said the downgrade “reflects signs of lower political willingness to service Belize's external commercial debt obligations…in addition, Belize faces external imbalances, limited access to external funding, and rising costs of servicing general government debt".

S&P linked the downgrade to the 31 January announcement by Prime Minister Dean Barrow that general elections will take place on 7 March. Barrow’s United Democratic Party (UDP) will compete with the opposition People's United Party (PUP) for 31 seats in the House of Representatives as well as seats on two city and seven town councils.

Barrow appears to be making debt servicing an election issue. He has said that “continued debt service of the government's US$546.8 million bond (known locally as the ‘super bond’) is an election issue”. S&P commented that “the nature of the statement and prominent public office of the speaker signals, from a credit perspective, lower predictability that the government will continue to service its external commercial debt”.

The Honduran economy is getting out of the doldrums, pulled up by stronger US demand for its main exports. Local private sector confidence in the business-friendly government led by President Juan Orlando Hernández is spurring renewed investment, while consumers are benefitting from stronger remittance inflows. The improving security situation is also helping the rebound in economic activity.

On 23 July, the deputy managing director of the International Monetary Fund (IMF), Mitsuhiro Furusawa, gave an upbeat assessment of current prospects for Central America, saying they had become “more favorable”. This assessment was based on the fact that unlike Latin America as a whole, Central American countries are particularly benefitting from cheaper international oil prices, helping to reduce import bills and keep inflation low, thereby boosting domestic purchasing power.

Furusawa noted that the economic recovery in the US, by far the sub-region’s most important trade partner, was also providing countries with the opportunity to strengthen their economies against future volatility. He urged governments to implement policies of “financial sustainability”, and to channel the budgetary gains from lower oil prices and faster US growth into reducing “fiscal vulnerabilities”.

Furusawa went as far as to say that in some countries the positive effects from the favourable external environment “are expected to outweigh the possible loss of subsidised financing from Venezuela under the Petrocaribe program”. But he stressed the importance of taking advantage of this opportunity to implement reforms to boost the low tax take across the sub-region, which he stressed was “vital to support higher public investments and education spending that can help overcome existing supply bottlenecks, enhance human capital, and achieve higher sustainable growth”. “There is no better time to tackle some hard policy challenges”, he emphasised.

In Honduras, first quarter real GDP growth was 4% year on year, according to the central bank (BCH). Domestic investment and consumption have rebounded and like its regional counterparts, Honduras is benefitting also from recovering export demand. First quarter exports rose by a healthy 4.7%, thanks largely to stronger US demand. Import growth was double that pace at 11.8%, reflecting rising domestic investment and export demand, and while fuel import costs have fallen, fuel import volumes have grown in response to strengthening domestic demand. Meanwhile, private consumption rose by 3.1%, with households benefitting from higher remittance and reduced transport costs. Gross fixed investment rebounded by a strong 36% year on year, boosted by one-off large investments in the country’s new solar plants.

On the expenditure side meanwhile, first quarter growth was led by financial services (11.7%); communications, electricity & water (4.2% each); transport (4%); manufacturing (3.7%) and agriculture & fisheries (3.3%). On the back of this improving performance, the BCH has lifted its 2015 GDP growth forecast to 3.5%, up from 3% previously.

To date moreover, the Hernández administration has exceeded its fiscal and structural benchmark targets under its new (December 2014) US$188m stand-by agreement with the IMF, winning strong IMF praise. The fiscal deficit fell to just 0.1% of GDP in the first half, on preliminary estimates, the lowest in eight ears and well in excess of a targeted 1.5% agreed with the IMF.

• Asia tour

President Hernández’s inaugural tour of Asia in mid July took him to South Korea, Japan and Taiwan. Hernández was in search of development cooperation, financing and investment, including for the government’s proposed new Zones for Employment and Economic Development (Zedes), the first of which is slated for development with the help of the Korean International Cooperation Agency (KOICA) at the Pacific Honduran port of Ampala (located on El Tigre Island, in the Gulf of Fonseca). He also touted Honduras as a gateway for Asian trade with the Americas.

***GRENADIAN VOTE ON CONSTITUTIONAL CHANGES. On 15 July, Deputy Prime Minister Elvin Nimrod announced that the country will vote in a referendum on twelve proposed changes to the constitution on 10 February 2015. The announcement came after weeks of consultation and the submission of a report to the cabinet by the Constitution Reform Advisory Committee headed by former attorney general, Francis Alexis. One of the points for consideration is the proposed use of the Caribbean Court of Justice (CCJ) as Grenada’s final court of appeal. Nimrod cited Grenada’s status as an “independent” and “sovereign” nation as reason to use its “own court instead of going to Privy Council in England”. Other proposals include changing the country’s official name from the “State of Grenada” to “Grenada, Carriacou and Petite Martinique”, and changing the oath taken by government officials when taking office from “allegiance to the Queen of England” to “allegiance to Grenada”. A two-thirds majority of votes in the referendum and a two-thirds majority of the 16-member House of Representatives are required to change the constitution.

***US OFFENDS BAHAMIAN GOVERNMENT IN OFFICIAL REPORT. On 26 June, the US Department of State released its most recent (2014) Investment Climate Statement on The Bahamas. It highlighted the Bahamian government’s failure to fulfil many of its “ambitious campaign promises of economic and fiscal reform” as set out by the ruling Progressive Liberal Party (PLP) when it came to power in May 2012. Prime Minister Perry Christie claimed the report was “simply inappropriate” and based on an unfair “snapshot” of the current situation. The report highlighted the unfulfilled creation of 10,000 new “immediate jobs”, failure to employ a national mortgage bailout plan, and the failure to return the majority of shares in the national telecom company to state control.

In response, Christie claimed that the report reflected the opposition’s opinion and did not provide an objective assessment of his government. He also reiterated his government’s intention to fulfil its original plans. Since the row blew up, US Charge d’Affaires Lisa Johnson has sought to restore calm by saying that the ‘negative’ points of the report are in no way reflective of the relationship between The US and The Bahamas. Instead, she said, the media had “grabbed” onto many of the unflattering comments within the report. She added that the relationship between the two countries remains strong.

***CARIBBEAN DROUGHT INTENSIFIES. On 20 July, Jamaica’s Minister of Water, Land, Environment and Climate Change, Robert Pickersgill, issued a statement warning that the Jamaican drought was worsening. The weather pattern El Niño has caused reduced rainfall throughout May and June, and inflow to several of the islands larger reservoirs has been reported well below normal. The summer is globally predicted to be the hottest on record since 1880, and conditions are set to continue through the rainy season from October to November. High temperatures and windy conditions increase the risk of bushfires, which are progressively more difficult to manage given the water shortage, Pickersgill said (see sidebar).

The government of Trinidad & Tobago will rely heavily on revenues from one-off sources to maintain spending in the fiscal years to September 2016 and September 2017. Thereafter, the budget should benefit from changed spending priorities and, perhaps, from diversification of the economy.

The economic environment has been even worse than feared by the authorities in Trinidad & Tobago. As recently as October 2015, the government assumed that the average price of oil in the current (September 2016) fiscal year would be US$45 per barrel (/b) and that the average gas price would be US$2.75 per mmbtu. As noted in the [box below], the government has revised its assumptions downwards sharply in relation to the second half of the fiscal year.

Even allowing for around TT$15bn (US$2.25bn) in one-off revenue items, the government expects the fiscal deficit this year to run to around TT$6.7bn, or 4% of GDP. Given that the economy is – for the second year in a row – expected to contract, the implication is that debt will rise in absolute terms and relative to GDP.

Asset sales – such as the 42% stake in Republic Bank held by various elements of Clico, the insurance-based conglomerate which the government rescued in the wake of the Global Financial Crisis – and other one-off items (such as a further drawdown from the country’s sovereign wealth fund, the Heritage and Stabilisation Fund (HSF) – will also feature in the fiscal year to September 2017. The government has asked the Central Bank of Trinidad & Tobago (CBTT) to transfer to the government in specie stakes held by Clico in Angostura, Home Construction and CL World Brands. These businesses are estimated to have a value of around TT$3bn.

In a press release in mid-March, following the end of its latest Article IV consultations with the government, the International Monetary Fund (IMF) noted that Trinidad & Tobago had under-saved and under-invested for the future during the energy price boom. Nevertheless, asset sales and access to the HSF mean that the government has the flexibility to maintain spending at a much higher level than would otherwise be the case. In essence, it can run a counter-cyclical fiscal policy for two years.

In the meantime, the government recognises that tough measures are needed to ensure a sustainable budget position. It has already reduced the VAT rate, but substantially broadened its base; required all ministries and departments to cut operating expenses; and looked to streamline the government bureaucracy. The 2016 Mid-Year Budget Review, presented on 8 April 2016 by Finance Minister Colm Imbert, highlighted several new taxes and a commitment to greater efficiency in collection of VAT. The government is also looking to introduce a comprehensive property tax. In addition, it will negotiate a new tax regime with oil and gas companies, who currently pay little or no corporation income taxes.

Moves to reduce spending are even more politically contentious than the various measures to boost tax. The government has ended the subsidies on super gasoline, and has reduced the subsidy on diesel. The proposed mass transit project has been assessed by the Inter-American Development Bank (IDB) as being not feasible, given the government’s budgetary position at current energy prices: it has been shelved.

There are also major changes to the Unemployment Relief Programme (URP) and the Community-Based Environmental Protection and Enhancement Programme (CEPEP), the combined costs of which had soared from TT$400m or so in 2004/05 to TT$1.3bn. Minister Imbert noted in the Mid-Year Budget Review that these projects had distorted the labour market of Trinidad & Tobago, in that ‘some people prefer to remain in these relatively low productivity programmes rather than take up more demanding but higher paid jobs in the private sector.’ The focus of the URP will shift from ‘maintenance activities of questionable value to substantive community construction projects and other infrastructure projects with clearly defined outputs,’ which, in rural areas, will include agricultural production. Starting in 2017, direct support from the government to CEPEP contractors will be reduced over time: the aim – as per the original concept of the programme – is to encourage entrepreneurship among the CEPEP contractors. A committee that is looking at reform of the government Assisted Tertiary Education (GATE – essentially the provision of free tertiary education to citizens of Trinidad & Tobago) will report by the end of July. Spending on GATE currently amounts to around TT$600m annually.

The Mid-Year Budget Review also pointed to diversification of the economy, with a focus on international financial services, tourism and some related maritime activities. Specific projects include a new hotel and convention centre at Invaders Bay in Port of Spain and a new shipbuilding/ industrial complex on the eastern side of the city, south of the Beetham Highway. The government envisages that at least one major Chinese bank that is looking to lend into Latin America and the Caribbean could serve as an anchor tenant in the International Finance Centre. The government is also making arrangements for US dollar credit lines to be available to exporters through the TT Exim Bank. In addition, the finance minister is talking to the commercial banks a about ‘guidelines for the distribution of foreign exchange that will see priority being given to trade, inputs into manufacturing, medical expenses, tuition fees and the like, as well as greater availability of foreign exchange for small and medium-sized businesses.

If all these initiatives come to fruition, then the country will be far better placed for sustainable economic growth from 2018, by which point the government will no longer be able to rely on one-off revenue items to plug (much of) the gap between its revenues and expenses. In the meantime, the 2016 Mid-Year Budget Review has provided a long list of specific details to watch for.

The 2016 Mid-Year Budget Review at a glance

Finance Minister Imbert presented the 2016 Mid-Year Budget Review on 8 April 2016. Key features included the following:

• GDP is estimated by the Central Bank of Trinidad & Tobago (CBTT) to have fallen by 2% in 2015. It is expected to contract by a similar amount this year. GDP is expected to grow again in 2017, thanks to higher public sector investment, improved private sector sentiment and investment and increased gas production.

• Revenue collection in the five months to the end of February 2016 was TT$2.96bn lower than anticipated. This was due mainly to lower receipts from oil and gas companies (of around TT$2bn) and lower receipts from the non-oil sector (of about TT$1bn)

• Government spending in the five months to the end of February was $7.75bn less than originally anticipated. This was partly due to the December 2015 decision that all ministries and departments would cut spending by 7%. It was also partly due to deferral of payment of arrears of salary to public servants due to the lack of cash.

• Budgeting is now based on an oil price of US$35 per barrel and a gas price of US$2.00 per mmbtu for the next six months.

• Total revenues for the current (September 2016) fiscal year are now expected to be TT$53bn. The budget deficit should be about TT$6.7bn, or 4% of GDP.

• One-off revenue items in this fiscal year are expected to amount to about TT$15bn and include: TT$500m in profits from the CBTT; TT$3,600m in loan repayments from Trinidad Generation Unlimited; around TT$3,000m from sale of a stake in Methanol International Holdings Limited (MIHL – TT$2,000mn) and traditional life insurance policies (TT$1,000m) owned by Clico; the proceeds of the Phoenix Park IPO; dividends from the National Gas Company (NGC) and draw-downs from the Heritage and Stabilisation Fund (HSF).

• The CBTT has been asked to prepare for the orderly disposal of Clico’s holding in Republic Bank in 2017.

• New revenue measures to be introduced include: a 7% tax on purchases through the Internet from retail companies that are resident overseas; a 50% hike in customs duty and motor vehicle tax on cars with engine size exceeding 1999cc; better collection of taxes from the gaming industry; and higher taxes on alcohol and tobacco.

• Total spending in the current fiscal year is expected to be TT$59bn.

• New spending reduction measures include the end of the subsidy on super gasoline and the reduction in the subsidy on diesel. (The government will, however, remove taxes on CNG, electric and hybrid cars with engines up to 1999cc.

• The proposed mass transit project has been scrapped. Instead, the government will focus on road improvements, some of which are already underway.

• Reforms will be made to the Unemployment Relief Programme (URP), the Community-Based Environmental Protection and Enhancement Programme (CEPEP) and the Government Assisted Tertiary Education (GATE) programme.

Costa Rica and China celebrated the tenth anniversary of the establishment of bilateral diplomatic relations on 30 June with the release of a commemorative stamp and postmark. But this symbol of closer cooperation was far less significant to Costa Rica than the substantial progress registered two days earlier when the country’s first shipment of pineapples arrived in China.

Costa Rica’s foreign minister, Manuel González, and China’s ambassador to Costa Rica, Tang Heng, together with post office officials, presented the stamp, which depicts the Great Wall of China and Costa Rica’s national flower, the Guaria Morada (Cattleya skinnier), a purple orchid. González said that the stamp, worth ₡1,400 (US$2.40), was a sign that bilateral relations went beyond trade and investment to cultural, academic, and sporting exchange. Heng said that it symbolised strength and beauty, a sign of increasingly “robust, durable, vigorous and enriching relations” between the two countries.

Two days before González unveiled the new stamp in San José, 15,000 12kg cases of fresh pineapple arrived in the port of Shanghai after 25 days at sea. Four companies – Upala Agrícola, Grupo Acón, Productos Agropecuarios Visa and Agromonte – provided the produce for the first shipment after China authorised the import of Costa Rican pineapples in March.

“The arrival of our first fruit to China is a source of pride for the pineapple sector…and will help drive Costa Rica’s social and economic development by opening the doors to one of the most important markets in the world,” the president of the national chamber of pineapple producers and exporters (Canapep), Abel Chaves, said.

China has increased its imports of pineapple by as much as 42% annually over the course of the last four years. China has authorised a total of 20 Costa Rican companies to export pineapples. There are 550 producers in Costa Rica and 43,000 hectares under cultivation, generating 30,000 jobs.

Pineapples are one of Costa Rica’s principal exports, above bananas and coffee, amounting to US$873m in 2016 (10% of total exports), according to Canapep. Of this figure, 53% goes to the US and 44% to the European Union (EU). Access to the Chinese market will soon shake these percentages up.

• Wasp swallowing

The nonchalant manner with which Costa Rica’s President Luis Guillermo Solís laughed off swallowing a wasp in a live news conference on 19 June gave him an unexpected social media boost for his fortitude. A video of the incident, which became by far the most widely disseminated news item on Costa Rica worldwide in June, shows Solís swallowing the wasp while responding to a reporter’s question, before insouciantly swigging some water and saying “I ate a wasp, it’s all protein”, and proceeding with the news conference in Paso Real in the north-western province of Puntarenas.

The value of remittances sent to Central America has increased massively in recent years, with the most dramatic spike in Nicaragua, according to a report from the Inter-American Dialogue, a Washington-headquartered think tank published 1 November.

In El Salvador, the value of remittances increased from US$5.4bn in 2018 to US$8.2bn so far in 2023, while in Guatemala it increased from US$9.5bn to US$20.3bn for the period. Honduras saw an increase from US$4.8bn to US$9.4bn for the period, while Nicaragua recorded an increase from US$1.5bn to US$4.7bn, the largest increase in percentage terms. Both Costa Rica and Panama receive comparatively fewer remittances, and the amount has remained relatively stable over the period.

This pattern is repeated in terms of year-on-year rises from 2022-2023. El Salvador saw an increase of 4%, Guatemala 10%, and Honduras 11%, whereas remittances to Nicaragua grew by a massive 40% year-on-year, following an even larger 50% increase from 2021-2022. This means that remittances now represent 29% of GDP, the highest figure of any country in the Western Hemisphere, said Manuel Orozco, director of the Migration, Remittances, and Development programme at the Inter-American Dialogue, in an interview with the LatinNews podcast released 24 October. This has been driven by a surge in Nicaraguans emigrating, particularly to the US, which saw an increase in the number of people sending remittances to Nicaragua from 259,942 in 2018 to 797,449 in 2023. There were also significant increases in transfers from Spain, up from 45,246 to 73,333 for the period, and Costa Rica, which saw an increase from 271,169 to 370,175. In total, the number of people sending remittances to Nicaragua almost doubled from 699,274 in 2018 to 1.373m in 2023.

Remittances benefit the government of President Daniel Ortega at a time of deepening isolation from the US and its allies due to its increasing authoritarianism in recent years. While sanctions imposed by Washington have attempted to target Ortega, his wife and vice-president Rosario Murillo, and their inner circle, many Nicaraguans have left the country in the face of mounting political persecution and limited economic opportunities.

Costa Rica

In previous years neighbouring Costa Rica was a popular choice, but tighter asylum rules imposed by President Rodrigo Chaves in December 2022 encouraged many Nicaraguans to make the longer journey north to the US.

Renewed energy demands: Last month some 20,000 protesters took to the streets across Guatemala calling for the government of President Otto Pérez Molina to reduce energy costs and re-nationalise the sector (which was privatised in 1997). The protests, which also included more longstanding demands such as an end to mining concessions and the ratification of a rural development law, took place on 21 August in half of Guatemala’s 22 departments. In October last year a deadly military crackdown on protesters making the same demands caused an international outcry [RC-12-11]. High energy costs remain as a major public complaint, despite the fact that renewable energy now accounts for 65.1% of energy generation, up from 50.6% in 2007- with bunker, the most expensive fuel, now accounting for 24.31%, down from 36% in 2007- on figures from the 2013-2027 energy policy, released by the energy & mining ministry (MEM) in February. One energy expert, Roberto Barrera, cited in national daily, Prensa Libre, on 27 August said that the five-year plan approved by the Comisión Nacional de Energia Eléctrica (CNEE), the national electricity regulator, for distribution company, Empresa Eléctrica de Guatemala (EEGSA), fixed the price of energy for industry at Q$1.41 (US$0.17) per kilowatt hour, up 44% on the tariff established in the previous five-year plan. EEGSA is the biggest of Guatemala’s main distributors (along with Energuate, formerly Distribuidora de Electricidad de Occidente [DEOCSA], and Distribuidora de Electricidad de Oriente, S.A.[DEORSA]), serving the capital and surrounding areas in the departments of Guatemala, Sacatepéquez and Escuintla. As well as hopes that energy costs will be brought down once the Central American interconnection system (the planned link-up of the six Central American nations’ power grids as well as Mexico’s and Colombia’s) becomes fully operational, the Pérez Molina government is also seeking to increase energy generation from renewable sources to 80% by 2027. The other main task facing the government vis-à-vis energy is the need to increase coverage. According to the 2013-2027 MEM plan, national coverage currently stands at 85.7%, barely shifting from the 85.1% registered in 2006. This varies widely from 97% in the mostly urban department of Guatemala to 35.4% in Alta Verapaz in the north. The government is aiming to increase national coverage to 95%, although failed to specify a time frame.

GUATEMALA | Lynchings. Last month the local human rights organisation Grupo de Apoyo Mutuo (GAM) released a report showing that at least 323 people have died due to lynchings in 1,490 reported cases between 2008 and May 2017. The report cites GAM director Mario Polanco as arguing that the organisation’s findings highlight the inefficiency of the Guatemalan authorities in preventing lynchings. He states that: “The lynchings in Guatemala represent a culture of violence, pain and death. This phenomenon has so far not successfully been controlled by the authorities, meaning the violence increases on a daily basis…which instead of resolving a problem, intensifies the conflict.” According to the report, the legacy of Guatemala’s civil war (1960-1996) is “a country with a culture of violence without justice”, which is reflected in the high rate of lynchings. It explains that a motive behind the killings is civilians’ ‘despair’ at the State’s inaction in bringing criminals to justice.

Over the nine years that GAM has monitored lynchings in Guatemala, it noted cycles of increased and decreased rates of violence, in which levels rose roughly every three years, diminished, and then in the fifth year increased again. According to the report, the decrease in rates indicated that the lynchings were continuing to take place but were not being reported because by that time the practise had become relatively normalised. GAM also found that lynchings were most common in areas where homicides were statistically most likely to go unreported, and where the armed conflict had historically been most intense. The report cited the forcible repression of civilians during the internal conflict (where thousands were massacred by the army) as a factor for why ultraviolence remains commonplace in these areas.

In the report GAM appeals to the government led by President Jimmy Morales to take affirmative action such as implementing an early warning system in high risk areas and establish police stations nearby so that incidences of lynchings can be accurately recorded by the police. It also suggests workshops for community leaders to raise awareness of the self-perpetuating culture of violence in these communities and calls for lynchings to be thoroughly investigated in order that perpetrators can be brought to justice which may deter others from resorting to violence.

EL SALVADOR | Murders of security officials. In a speech given by Vice-President Oscar Ortiz as part of a ceremony held on 13 August to mark the 25^th anniversary of the establishment of El Salvador’s national police (PNC), Ortiz said that between April 2016 and April 2017, 24 police agents and eight members of the military had died in the line of duty. There has been a wave of attacks in recent weeks. Most recently, on 12 August the PNC announced that a police agent, Víctor Hugo Fuentes Retana, and a deputy sergeant of the armed forces (FAES), José Antonio Martínez Vega, were killed in separate incidents that day by suspected gang members while on leave.

• Mass crackdown on gangs

On 26 July, the Salvadorean public prosecutor (FGR) and national police (PNC) ordered the arrest of 593 criminals in eight different areas of the country. The FGR reported that 60% of the people were arrested on homicide and extortion charges but other crimes were highlighted including fraud, rape, drug possession and theft. Furthermore, the FGR and the PNC seized military uniforms, ammunition for different firearms, drugs, and cash during the operations.

GUATEMALA | State of emergency lifted. On 7 August Guatemala’s President Jimmy Morales announced that he was ending the state of emergency that he had decreed back in May in the municipalities of Tajumulco and Ixchiguán, in San Marcos department. The move was first announced by the conservative Frente de Convergencia Nacional (FCN-Nación) government following incidents of violence and extended again in June and July. The violence was linked to a turf war in the area, which is widely used to cultivate opium poppy, between rival Mexican drug trafficking organisations (DTOs) as well as a dispute which has existed for decades between the two municipalities over access to land and water. Announcing the end of the state of emergency, President Morales said that a legislative bill had been sent to congress confirming the new demarcation limits in the area. This followed a consultation process involving the local authorities as well as the land registry office, the national geographic institute (IGN) and human rights ombudsman (PDH). The latest progress (8 August) report by the security ministry (Minseg) revealed that a total of 368.9m opium poppy plants and 301,886 marihuana plants had been destroyed with a combined value of Q9.08bn (US$1.25bn).

Two parallel stories are unfolding in Brazil. Story one is a political soap opera, full of twists, turns and surprises, as the campaign for next October’s general election gathers pace. Story two is that Latin America’s largest economy is chugging along with an unspectacular but steady economic recovery. For the moment the two stories appear relatively decoupled from each other: but that could change.

A lot has been happening in Brazilian politics. A compressed summary would have to lead with the arrest of former President Luiz Inácio Lula da Silva (2003-2011) on 8 April, after scenes of high drama in São Paulo. Lula’s imprisonment – he must serve a 12-year sentence on corruption charges – sharply reduces, but because of legal uncertainties, does not entirely eliminate, his chances of running in this year’s election. The race for this election remains wide open. Another related headline is that Henrique Meirelles joined the exodus of ministers and officials, stepping down from the finance ministry on 6 April (those who want to stand for elections must resign from public office six months before the polls). Meirelles, who has in effect been Brazil’s economic policy-maker-in-chief for nearly two years, joins the crowded, but at present not very popular, field of would-be centrist candidates for the presidency. Also jostling for position in that narrow space are current President Michel Temer (who has said he may after all be a candidate), Geraldo Alckmin (who has just stepped down as governor or São Paulo), and various other party leaders.

At this stage none of the centrists has more than single-digit percentage approval rates. For the moment the opinion polls suggest that the electorate, deeply troubled and polarised by corruption, crime, and the failings of Brazil’s political system, is more attracted by politicians of the left or of the far right. Lula on the left, and populist Jair Bolsonaro on the extreme right, are among the few candidates who have registered double-digit support. If Lula is excluded, it is still not entirely clear how the votes of his supporters will be reallocated among the other candidates.

Some investors are untroubled by the latest developments and see the current situation as benign. From that point of view the big story remains the economic recovery, with the current level of political noise considered to be more of a side-show. They take the view that there is still time for the presidential race to settle down, for the political centre (or moderate left/moderate right) to come up with a viable presidential and vice-presidential ticket, and for support for the more extreme candidates to begin to burn itself out. Indeed, one outsider not from the political extremes, former Supreme Court Justice Joaquim Barbosa, was considering joining the race, and there may be others. The investors’ ideal scenario would be for the next government, taking office in January 2019, to be pragmatic and market friendly, and to have the political expertise needed to tackle the type of structural economic reforms that will be required to make the recovery sustainable.

There are indeed indications that the benign scenario, while not guaranteed, is at least a possibility. Roughly half of the 29-strong ministerial team has now stepped down to join the election campaign. Their replacements have been drawn from the second division of Brazilian political leaders, but there will at least be continuity in economic policy: Meirelles is being replaced by his former number two at the finance ministry, Eduardo Guardia, widely seen as a very competent figure (before joining the ministry in 2016 Guardia had for three years been executive director of the Bovespa, the São Paulo stock exchange.)

With six months to go before the elections, and eight to go before the new government takes office, the economic recovery is widely expected to keep on ticking over. Industrial production data for February was weaker than expected, but the sector has nevertheless grown in nine of the past 12 months and is expanding at a reasonable 2.8% year-on-year rate. Inflation has come down sharply – although it may drift upwards over the next few months (perhaps influenced by food prices) it is still expected to end the year at 3.5%-4.0%. This has supported consumer purchasing power and allowed pro-growth cuts in interest rates. After growth of 1.1% in 2017, the IMF expects Brazilian GDP to grow by 1.9% this year and by 2.6% in 2019.

There is of course a less-than-benign scenario in which the narratives of economic recovery and political uncertainty crash into each other, rather than coexist. Investors might simply get spooked by the uncertainty over the elections, triggering financial market turbulence. There was a small hint of that on Monday 9 April (the first trading day after Lula’s weekend arrest) with the Ibovespa stock exchange index falling by 1.8%. “Both Henrique Meirelles and Geraldo Alckmin did not show big gains from this Lula exit. The first surveys show this, and the market should wait for those numbers,” said Regis Chinchila of brokers Terra Investimentos. Other analysts said news of a possible presidential bid by former Justice Barbosa were taken by the markets as likely to weaken the appeal of existing centrist candidates.

Also on the downside, the corruption allegations that have bedevilled Brazilian politics and business could persist over the next few months. Police have arrested two of President Temer’s close associates (José Yunes and João Batista Lima) who are accused of bribe-taking in connection with the extension of operating concessions at Santos, Brazil (and Latin America’s) largest port. The president could be implicated, which would destabilise the last remaining months of his time in office. The decision, in the last round of ministerial changes, to appoint Wellington Moreira Franco as the new minister for mines and energy, could also have negative consequences. Moreira Franco, already serving as a minister, has been accused of corruption and his appointment to yet another ministry is being seen as a ploy to maintain his partial immunity from prosecution (ministers can only be tried by the supreme court, which has a big backlog of cases). His predecessor had been committed to privatising power company Eletrobras. The markets were worried that Moreira Franco’s appointment would negatively affect the privatisation programme, and wiped US$1bn off the equity value of the state-controlled company.

The “committee of notables” appointed by President Ricardo Martinelli last year to suggest changes to the 1972 constitution has finally ended nine months of speculation. Contrary to widespread expectations, the new proposal, which comprises 590 articles, up from the 328 of the current constitution, does not include a provision on consecutive presidential re-election. This was widely considered a key motive in Martinelli’s initial push for constitutional reform. However, current efforts by the President to change the judiciary are fuelling speculation that he could well be seeking to achieve the same objective through alternative means.

The main changes introduced by the draft document, which was submitted to the President on 30 January, include: creating a constitutional court, apart from the supreme court (CSJ), to rule on constitutional questions; enlarging the nine-member CSJ to 12 magistrates; banning immediate re-election for deputies; and reducing some of the executive’s powers, such as the ability to call special legislative sessions. The draft bill, which must be approved in one of three different ways (see sidebar), does not, however, introduce the possibility of consecutive presidential re-election, leaving the amount of time a president has to wait before standing again as two consecutive periods (a total of ten years). It also does not introduce a second round in the presidential contest – the issue proved the final nail in the coffin for the ruling alliance between Martinelli’s Cambio Democrático (CD) and the opposition Partido Panameñista (PP) of Vice-President Juan Carlos Varela [RC-11-10]. The proposed changes also introduce a new prohibition – outlawing the possibility of a president being succeeded by his/her spouse, an issue recently in the regional limelight amid the failed attempts of Guatemala’s former First Lady, Sandra Torres, to sidestep a similar constitutional ban and succeed her then husband, Alvaro Colom.

Yet, with a recent survey by Unimer, published in the leading opposition daily La Prensa, revealing that more than half (50.5%) of respondents believe that Martinelli will not leave power in 2014, when his term ends, the President’s recent efforts to reform the judiciary are fuelling speculation that he is manoeuvring to change the constitution via other channels. Last month, a member of his CD (which has 36 seats in the 71-member unicameral legislature) proposed a bill reviving a three-member fifth chamber in the current CSJ, which would handle all issues relating to constitutional rights. The move was slammed by the opposition as an attempt by the president to strengthen his grip over the court (in which he has so far made four appointments [RC-12-01]). Specifically, the bill (No. 402) aimed to repeal a law (49) passed in 1999 under the PP government of Mireya Moscoso (1999-2004). Law 49 had revoked another law (32) passed the same year under the previous Partido Revolucionario Democratico (PRD) administration of Ernesto Pérez Balladares (1994-1999), which first established the fifth chamber.

Following overheated congressional sessions and outrage on the part of opposition deputies, the CD retracted the bill. However, the legal wrangling is set to ensue as Martinelli is threatening to appoint the three additional judges regardless, invoking a January 2011 CSJ ruling which found law 49 unconstitutional and called on the president to make the appointments. The legal merit of the CSJ ruling is subject to doubt given that, according to the country’s Civil Code (Art. 37), repealing a law does not implicitly revive the legislation it abolished. The controversy has also triggered a spat between the legislature and judiciary; the CSJ’s new president, Alejandro Moncada, a Martinelli appointee, issued a statement in which he declared bill 402 unnecessary, accused the legislature of interfering in the court’s prerogatives, and “exceeding its limits”, thereby jeopardising the independence of powers. In response to Moncada’s statement, which also argued that the bill should have been proposed by the judiciary, some PP deputies threatened to file formal complaints against the CSJ president for abuse of authority by seeking to interfere in legislative matters.

• Signs of independence?

Despite renewed concerns regarding the independence of the judiciary, the top court has recently handed down some verdicts which point to continued distance from the executive. One example was a 24 January ruling, which found that Panama’s exit from the Central American Parliament (Parlacen) was unconstitutional. The decision ends a saga dating back to August 2009 when Martinelli first submitted a formal request to leave the regional forum and is a blow for the President, for whom leaving the Parlacen was a campaign pledge. Martinelli had dressed up his proposal as part of a declared anti-corruption offensive (Parlacen has long been criticised for serving as a haven for corrupt politicians given the immunity conferred on its deputies). However, the future prospect of being able to prosecute PRD members was also no doubt a motive.

 Another ruling, which raised some eyebrows, was the 6 January decision to dismiss the case against Balladares and 14 others, accused of money laundering under his PRD government. The charges against the former president – one of a handful of PRD figures targeted in Martinelli’s anti-corruption drive - specifically involved allegations of  laundering money from kickbacks arising from a 1997 no-bid gambling concession Balladares awarded to Lucky Games SA. According to the allegations, part of that business had gone to a company he controlled, Shelf Holdings SA, for which he had received payment from Lucky Games. A separate case against Balladares in relation to the kick-back allegations had already been dropped in September 2010.

• Changing the constitution

Under current law, there are three different ways that the constitution can be amended: two successive legislatures may ratify the same specific reforms; the legislature and president may submit one or more specific amendments to the electorate in a referendum; or a constituent assembly may be convened to draft a new constitution, which is then submitted to the electorate.

• Vallarino goes

Bosco Vallarino, Panama City’s controversial mayor, resigned last month citing health reasons. His exit has, however, been on the cards since the unravelling of the alliance between President Ricardo Martinelli’s Cambio Democrático (CD) and the opposition Partido Panameñista (PP) - of which Vallarino is a member - last August. A poll by Dichter & Neira showed that 70.3% of the 1,200 respondents attributed the decision directly to pressure from the President while opposition politicians suggested that Martinelli threatened and possibly even blackmailed Vallarino into stepping down. The replacement of Vallarino with Deputy Mayor Roxana Méndez, a close ally of Martinelli and prominent member of his CD, now gives Martinelli control of the second most important political position in the country.

The Organization of American States (OAS) has attempted to help find a negotiated solution to the current migration dispute between the Dominican Republic (DR) and Haiti. But its efforts to mediate in the sensitive dispute have failed to make much headway, serving instead to provoke the DR.

Bilateral diplomatic tensions intensified early last month after representatives from both countries staged a heated debate over the DR’s strict new immigration policies during an OAS Permanent Council meeting. Since the close of the DR’s national immigrant regularisation programme in June, the Haitian government led by President Michel Martelly has accused its DR counterpart of leaving thousand of individuals of Haitian descent born in the DR ‘stateless’ and of carrying out mass deportations of Haitian migrants and their descendants. The Martelly government warns that this could lead to a “humanitarian catastrophe” on Haitian territory as it is ill-prepared to receive a sudden influx of migrants. Based on this argument, Haiti called on the international community to intervene.

But the DR government led by President Danilo Medina rejects these arguments and maintains that any foreign intervention would represent an affront to its sovereignty. The issue was addressed during an 8 July OAS Permanent Council meeting. That day Haiti’s foreign minister, Lener Renauld, complained that the DR’s immigration regularisation programme had been too short and discriminated against Haitian migrants and their descendants; and that this would produce a crisis in Haiti, with thousands of migrants starting to head towards that country. Renauld added this could “destabilise” Haiti ahead of its long overdue national legislative elections. Renauld concluded that Haiti simply cannot receive “de-nationalised Dominicans” and he called on the OAS to intervene and “force the Dominican Republic to listen to reason”.

The DR’s ambassador to the OAS, Pedro Vergés, reacted negatively. Vergés denied that the migrant regularisation programme had left “anyone stateless”, and that the Dominican authorities had carried out any mass deportations (he did acknowledge that following the close of the migrant regularisation programme, the Dominican authorities had helped thousands of irregular migrants to voluntarily return to Haiti). Vergés insisted that the DR would not “accept any attempt to limit its sovereignty” and was clear that “No country negotiates with another the terms of its migration policies… no State sitting in this forum would accept that!”. Yet Vergés welcomed the deployment of the OAS mission as long as it “remains completely impartial”.

The OAS Permanent Council agreed to send a special fact-finding mission to Hispaniola, tasked with helping to find a “long-lasting solution” to the dispute. Led by the OAS’s political affairs secretary, Francisco Guerrero, the mission visited the island between 10-14 July and met with government officials, foreign diplomats and local civil society groups to analyse the situation of migrants on the ground. While the mission recognised the Dominican government’s disposition to find a concerted solution to the dispute, in its report, submitted on 29 July, it said that “there are people at risk of being left without any recognised nationality... and that despite the goodwill, guidelines from the [DR] authorities are not being applied in the same way at the local level”.

Consequently, the OAS offered to “facilitate dialogue with the two countries, to find avenues for solving … the current problems”. But this offer was swiftly rejected by the Medina government whose foreign minister, Andrés Navarro, said the DR had “not solicited nor does it require intermediation by the OAS” in its dispute with its closest neighbour. The Medina government remains clear that in the current environment, advancing a bilateral dialogue with Haiti is not viable.

• Haitian ambassador to DR sacked

On 22 July the Haitian government sacked its ambassador to the Dominican Republic (DR), Daniel Supplice, for “failing to adequately defend the country in the midst of the migration dispute with the DR”. The move came after Supplice gave a series of interviews in which he criticised the identification and documentation programme for Haitian immigrants (Pidih) launched by the government led by President Michel Martelly in support of the DR’s immigrant regularisation programme. Supplice told the press that the Pidih, which was intended to expedite the issuance of documentation required by Haitian migrants seeking to enrol in the DR’s immigrant regularisation programme, had been “a failure”. A replacement for Supplice, who was in the post just six months, has yet to be named.

One significant factor in the failure of attempts to phase out fossil fuels is the fact that global conditions have changed markedly since the heady days of the Paris Agreement, making continued investments in hydrocarbons economically and politically rational.

The evolution of the International Energy Agency (IEA)’s position on fossil fuels illustrates this perfectly. In 2023, the agency predicted that oil demand would peak in 2030 and slowly decline, leading director Fatih Birol to claim that "we are witnessing the beginning of the end of the fossil fuel era”. But by late 2025, the IEA was forecasting that oil demand would continue to grow until 2050, and Birol was calling for more investment in oil and gas to support global energy security, leading the Organization of the Petroleum Exporting Countries (Opec) to claim that “the IEA’s bold assertions have had a rendezvous with reality.”

If this shift in the IEA position removed some multilateral impetus towards phasing out fossil fuels, then the Iran war confirmed that the window for exploiting fossil fuels is very much still open. The closure of the Strait of Hormuz following US-Israeli airstrikes on Iran on 28 February led to the “largest supply disruption in the history of the global oil market”. Higher production and exports from the Atlantic Basin, which includes Venezuela and Brazil, where production hit a record high in April, have helped to fill some of the gap, and higher oil prices provided a further boost to revenues.

While global oil demand is forecast to remain higher for longer, under the surface the picture is changing, with Chinese demand falling while India and Southeast Asia grow. And the idea of an incomplete energy transition comes to the fore once more, with aviation, shipping, petrochemicals, and heavy industry still dependent on fossil fuels around the world. Plus the IEA has forecast that demand for liquefied natural gas (LNG) will grow by almost 1.5% per year from 2024-2030, and infrastructure damage to major export hubs in the Gulf states from Iranian air strikes will increase demand for alternative suppliers.

A longer runway for fossil fuel exploitation and an ongoing reordering of global energy markets means that producing nations are facing fundamentally different calculations than they were a year or two ago. There are other global tailwinds too, including a rollback in US climate policy under President Donald Trump and the fact that COP30 failed to produce a roadmap for phasing out fossil fuels (See Section 7). 

The decision is now which reserves to exploit, rather than whether to exploit them, as concerns over developing assets that would need to be decommissioned before the end of their useful life to meet climate commitments have given way to worries over missing out on a chance to harness the economic benefits of fossil fuels. This is true even in those countries that are pursuing decarbonisation goals domestically, such as Brazil, as governments simultaneously invest in renewables while accelerating oil and gas development.

***BAHAMAS STILL BATTLING AGAINST HIGH LEVELS OF CRIME. On 9 September, in response to a two week surge in violence that included 13 murders, National Security Minister Bernard Nottage announced measures to increase the number of police on the front line by up to 350. The total number of murders for the year has now reached 82, and local media reports have talked about people seeking refuge in their homes, “hunkering down and barricading themselves inside”.  Nottage said: “The situation cannot continue like this without a response commensurate with the wanton acts of violence and lawlessness.”

As part of the measures announced by Dr Nottage, 150 Royal Bahamas Defence Force Marines will be deployed to undertake sedentary and other non-frontline duties normally carried out by the Royal Bahamas Police Force.  According to Nottage, “this will have the effect of doubling the number of officers on the frontline”. In addition to this initiative, there will be 12-hour shifts in place for police officers on New Providence.

The government is attributing the high crime levels now being witnessed to the trans-shipment process, which it says has led to guns, firearms, and drugs remaining in the country which in turn has fed the escalation of gang violence and turf wars.

Nottage has also pointed to a disturbing growth in human trafficking, which he says has been "silently festering within our community". According to Nottage “the geography of our islands and our porous borders render The Bahamas ideally suited as a transit point for illicit trafficking activities from the South destined for the North; and trafficking in persons is no exception”.  The government has partnered with the International Organization for Migration for a 36 month project aimed at strengthening The Bahamas’ ability to combat human trafficking.

***BERMUDA BLACKLISTED BY FRANCE. France has identified Bermuda in its list of “uncooperative tax havens”, much to the professed bewilderment of the Bermudan government. The government responded by saying that it was “surprised” that the territory is to be included in France’s list of offshore financial centres with which France has issues.

This development comes as part of French President François Hollande’s endeavour to increase the transparency and regulation of tax in the wake of a run of scandals that have resulted in a significant loss of confidence by the electorate in France’s political class. The most damaging and noteworthy of these was the admittance by Hollande’s ex-budget minister, Jerome Cahuzac, that he had been using a Swiss bank account to hide 600,000 euros. Cahuzac was responsible for tackling the issue of tax noncompliance, and given Hollande’s stated determination to ‘moralize’ French public life the scandal is likely to have been the main driving force behind the blacklisting of Bermuda, the British Virgin Islands, and Jersey.

According to Michel Collet of CMS Francis Lefebvre law firm, “being on the 'blacklist' triggers the application of 75% withholding taxes on French source flows to those territories and the strengthening of anti-abuse mechanisms”. The Bermudan government has been in contact with the French government to gain clarity over the island’s inclusion on the list, and it says that it “envisages any entry on France’s list will be short-lived or never happen if in fact that list is to be effective later than 2013”. Bermuda is expecting to have completed all its internal processes for the automatic exchange of information to be completed by the end of September 2013.

***DINO BOUTERSE ARRESTED AS FATHER HOSTS UNASUR SUMMIT. On 30 August Suriname’s President Desi Bouterse hosted the annual summit of South American Nations (Unasur).  On the same day his son Dino was arraigned in New York following his earlier arrest in Panama in relation to drug and weapons charges which, if convicted, could both carry life sentences.

The Bouterse family has form.  In 1999 Desi was convicted in absentia in the Netherlands for smuggling cocaine.  Desi is also accused of serious human rights abuses during his 1980-87 military dictatorship.  Dino, for his part, was sentenced in Suriname to eight years in prison in August 2005 after a judge found him guilty of leading a ring that trafficked in cocaine, illegal arms, and stolen luxury cars. However, he was released after just three years for good behavior, and was subsequently appointed director of Suriname’s Counter Terrorist Unit after his father became president in 2010.

The president said on 3 September that the timing of Dino’s latest arrest was deliberately aimed at undermining his hosting of the Unasur summit.  However Desi, who intends to run for a second term in 2015, also seemed to be distancing himself from his son when he said: “When people talk about Dino sometimes it sounds like they are talking to me about a 12-year old. But he is a grown man, with 13 children, who will turn 41. He is responsible for his own actions.”

*** MARGINAL GROWTH FOR OECS.  On 7 September Kenny Anthony, the chairman of the Eastern Caribbean Currency Union (ECCU), said that members of the currency union would record average growth of just 1.5% in 2013 and 2.2% in 2014.  The ECCU links the Organization of Eastern Caribbean States (OECS).  Anthony called for strategies to lift annual growth to at least 3.5% by 2015 and to 8% thereafter.

• “On 30 August Suriname’s President Desi Bouterse hosted the annual summit of South American Nations (Unasur).  On the same day his son Dino was arraigned in New York following his earlier arrest in Panama in relation to drug and weapons charges which, if convicted, could both carry life sentences”.

PARAGUAY | Oil discovery. Seventy years after the first well was drilled in Paraguay, the country’s first major oil discovery was announced in the Pirity basin in the western Chaco region by the British company President Energy on 20 October. The company said its Lapacho well may hold about 200m barrels of conventional light oil, and that it should be able to confirm through testing whether it is commercially viable by the end of November and begin first phase production as soon as next year.

“Whilst we are most satisfied with this discovery, President is now focused on drilling down to the original target [the underlying Devonian Santa Rosa Formation] which still lies in front of us,” the executive chairman of the London-listed company, Peter Levine, said. On the grounds that this discovery supports the presence of liquid hydrocarbons in the deeper sandstone reservoirs in the area, President Energy will also now re-enter its nearby Jacaranda well, which it suspended last August having drilled to a depth of 4,500m. Last January the company revealed that an independent audit of three of its concessions in Pirity had confirmed the existence of potential oil reserves of 1bn barrels.

The government of President Horacio Cartes has made clear that it would construct a refinery to process extracted crude to satisfy local demand of around 27,000 barrels of oil per day. This would help to reduce Paraguay’s US$1.7bn import bill for oil derivatives.

For a brief moment in May, the Caribbean Community (Caricom) was able to congratulate itself on unaccustomed unity, over the Venezuela question. This unity broke down very publicly at the Organisation of American States (OAS) summit in Mexico in June, where Caricom was unable to agree a unified position on Venezuela. There was no sign of a return to unity at the 4-6 July Caricom heads of government summit in Grenada, although on this occasion it was not Venezuela that caused the ructions.

The split at the 20 June OAS foreign ministers’ summit was precipitated by Suriname and St Vincent & the Grenadines, who said they could not support a declaration on Venezuela that suggested interference in a member states’ internal affairs. The agreed statement at the end of the July Caricom summit avoided this transgression by “reaffirming…the guiding principles of adherence to the rule of law, respect for human rights and democracy” at the same time as reiterating adherence to “the fundamental principles of non-intervention and non-interference in the internal affairs of states”. The best that Caricom could offer was a call for renewed dialogue and an offer of “good offices” by the Caricom heads of government “to facilitate this dialogue”.

There was nothing there that would have troubled Caracas, although it would have been less happy with the strong support given to Guyana over its territorial dispute with Venezuela. The final communique said that “Heads of Government reiterated the firm and unequivocal support of the Caribbean Community for the maintenance and preservation of Guyana’s sovereignty and territorial integrity”.

The outgoing Caricom chairman, President David Granger of Guyana, used his valedictory speech to urge further progress on the development of the Caricom Single Market and Economy (CSME). He emphasised his belief that the CSME is the best vehicle to allow the small states of Caricom to compete in the global economy. He said: “Small internal markets consign states to high dependence on external trade. Intraregional trade, therefore, is important. The Caribbean Common Market was established to ensure markets for regional production, inter alia. Intraregional trade provides a basis for increasing national production, augmenting investment, and generating employment.”

The heads of government approved the Implementation Plan for the CSME 2017-19, and they commanded that the Council for Finance and Planning (COFAP), which was defined in the communique “as a critical Organ” in advancing the CSME, “must be more active”.

Where disunity was openly on display was over the regional airline Liat, and over cricket. The new chairman of the grouping, Prime Minister Keith Mitchell of Grenada, was outspokenly critical of Liat, which is owned by the governments of Antigua & Barbuda, Barbados, Dominica, and St Vincent & the Grenadines.

Mitchell said: “I have long held that political presence on the board of airlines, such as Liat, is not helpful to its proper management and efficiency. How could Liat thrive when, for example, a few months ago, literally overnight, Liat cancelled one of its most lucrative routes to and from Grenada, without any consultation with the citizens or leadership of Grenada? It was all based on politics.”

Gaston Browne, the prime minister of Antigua, left the summit early, angry with Mitchell’s criticism of Liat, but also cross over Mitchell’s support for the dissolution of the West Indies Cricket Board (WICB), now known as Cricket West Indies (CWI), as was recommended by the Caricom sub-committee on cricket in late 2015. Trinidad’s Prime Minister Keith Rowley sided with Mitchell and warned that “the subject has become one that threatens our very unity”.

Obviously aiming his remarks at Browne, Rowley said: “The current arrangement in West Indies cricket is not just destroying cricket as a game…what is happening at the level of heads at Caricom should make it clear to the other people that the game is now and the management and the situation is threatening to destroy Caricom itself. Because when one leader who is hosting, the others could walk away because of something he said about what is going on in cricket and…what is happening with a particular country that is apparently benefiting from the current arrangement, all kinds of issues arise.”

Browne’s response was to say Caricom should not interfere “in the internal affairs of institutions and governments”, and he accused Mitchell of having a “flawed opinion” about CWI and nurturing a “compulsive, obsessive desire to dissolve the board”.

Rowley had the final word on the spat, when he warned: “The more of what you saw happening in Grenada this week, where one prime minister offends another prime minister and walks out of the meeting, la la la that is likely to become the future”. He offered to serve as a member of the Caricom subcommittee on cricket, but he added that he was not optimistic about a solution to the West Indies cricket crisis being found during 2017.

BRAZIL | Unemployment on the rise. Brazil’s national statistics institute (Ibge) released employment figures for the rolling quarter to February 2020 on 31 March. These show that the unemployment rate rose to 11.6% in December 2019-February 2020, up from the 11.2% rate recorded in the three months to January 2020. It is, however, a decrease on the 12.4% unemployment rate recorded over the same period last year. The unemployed population now totals 12.3m, up 4% on the previous three months, while the employed population has fallen 0.7% to 93.7m.

Ibge analyst Adriana Beringuy notes that such a dip in employment levels in the three months to February is seasonal and expected. The domestic service and public administration sectors saw a 2.4% and 2.3% fall in employment respectively, not unusual at this time of year. A 4.4% decrease in employment in the construction sector further pushed unemployment levels up. Beringuy made no mention of the impact of the coronavirus pandemic on the unemployment rate, but the labour market will take a hit in the coming weeks and months.

Unemployment

On 30 March, Brazil’s economy ministry announced that it was unable to release data for the national employment registry (Caged) – which keeps track of the number of formal jobs created across the country – for January and February this year, as businesses had failed to communicate all their data as they struggled to deal with changes to the Caged reporting system on top of the first effects of the Covid-19 emergency.

Former president Tabaré Vázquez (2005-2010) launched his campaign ahead of the second round of presidential elections on 30 November safe in the knowledge that, to cite the national opinion pollster Equipos Mori, “only absolutely extraordinary events” can deny him victory. While Vázquez eased back into campaigning two weeks after the first round on 26 October, with a presentation of his plans in the cultural arena, his opponent in the run-off, Luis Alberto Lacalle Pou, of the centre-right opposition Partido Nacional (PN; Blancos), has overhauled his campaign strategy and begun scampering around the country trying to make something of the contest.

Vázquez launched his second-round campaign on 7 November, surrounded by government officials and important cultural figures, many of whom highlighted the important strides taken in the cultural sphere since the FA came to power nearly 10 years ago, such as the construction of new theatres and the boost for institutions such as Uruguay’s national ballet.

Lacalle Pou, meanwhile, has been placing greater emphasis on youth culture rather than high culture. The big innovation in his second round strategy is the design of a new online campaign. Lacalle Pou has recorded various videos outlining his campaign proposals which he sends via the free instant messaging service WhatsApp to party supporters who then forward them on.

Despite adopting the new slogan ‘United by positivity’ for the second round campaign, Lacalle Pou is clearly more prepared to use scare tactics this time around. In the most populous electoral district of Montevideo (where some four-tenths of voters reside), he is trying to court more moderate voters who backed Vázquez in the first round by arguing that the more radical left-wing parties have wrested control of the FA: congressional results showed they will have more seats than the more moderate wing of the coalition from which Vázquez hails. Lacalle Pou contends that the only way these voters can avoid a radical lurch leftwards is to vote for him as these parties will force Vázquez to pursue their agenda.

Meanwhile, Lacalle Pou has dispatched senior officials in his campaign team around the country to give speeches on public insecurity, the biggest perceived weakness of FA administrations and the principal public concern. Lacalle Pou was given a helping hand in his attempt to pin a rise in insecurity on the FA after thieves broke into the house of the head of police in Montevideo, Mario Layera, overnight on 8 November.

The interior minister, Eduardo Bonomi, gave a surprising response to the burglary: “I am not saying that this was organised by a party but by people who did not like the electoral result [in the first round] and are trying to accentuate the [country’s] security problems by grabbing attention.” Bonomi said the thieves were well aware that it was Layera’s house. Lacalle Pou accused Bonomi of completely unfounded remarks and called for him to back up the “dangerous” and “regrettable” allegations immediately. Bonomi has come under fire on several occasions in recent years but President Mujica has stuck by him, and Vázquez now says he will probably retain him in his position.

Polls point to easy ride for Vázquez

The first opinion poll, published by Equipos Mori on 6 November, put Vázquez on 53% against 38% for Lacalle Pou, with 5% still undecided and 4% set to cast blank or spoilt ballots. This makes particularly painful reading for Lacalle Pou as he trails by 15 percentage points, showing that he has barely closed the gap at all on Vázquez from 17 points in the first round.

• Mujica’s Beetle

An Arab sheikh and a Mexican diplomat have reportedly offered President José Mujica up to US$1m for his Volkswagen Beetle. The 1987 model is only valued at Urg$70,000 (US$2,900) but it has become famous, being associated with the austere lifestyle of Mujica who still lives in a humble dwelling in Montevideo. Mujica told the weekly news magazine Búsqueda that he initially doubted the sincerity of an offer made by a Sheikh during the G77 summit in Bolivia last June but since then Mexico’s ambassador to Uruguay, Felipe Enríquez Hernández, has said he could auction the car in Mexico for a similar sum. Mujica says he would use the money to finance social programmes in Uruguay.

Honduran producers exported coffee worth US$17.8m in October, 270.8% higher than in the same period last year.

The spike in the value of coffee exports is due to both more volume and higher prices on the global market, according to the national coffee institute (Ihcafe). Farmers exported 51,183 quintales (46kg bags) of coffee this October, a 126.7% increase from the 22,580 quintales exported in the same period last year, while the average price per quintal was US$348.26, a 63.5% increase from the figure of US$212.97 recorded last year. The US was the biggest export market, receiving 40.5% of total exports, followed by France (18.7%) and Germany (14.9%). 

Meanwhile in a move welcomed by the Honduran coffee exporters’ association (Adecafeh), on 26 November the European Union (EU) delayed for another year regulations which will add to pressure on the sector – namely the bloc’s Deforestation Regulation (EUDR), which imposes traceability requirements for agricultural imports in a bid to reduce deforestation. Complying with these requirements will be onerous for small Honduran coffee producers, who make up more than 90% of the total number of producers in the sector. Given the importance of coffee to the Honduran economy, with the sector contributing more than 5% of national GDP, according to Ihcafe, the EUDR poses serious risks to economic growth. 

According to recent research from UK-based research and policy group, the Centre for Economic Transition Expertise (CETEx), “the overall risks of exclusion for Honduran producers remain extremely high because of the legality and traceability requirements of the EUDR, putting approximately 20% of the country’s exports and 7% of its foreign exchange at risk.” As things now stand, EUDR will come into force for large- and medium-sized companies from 30 December 2026, with micro and small enterprises to follow on 30 December 2017.

OECD warns on impact of US tariffs

In a 2 December report on Costa Rica, the Organisation for Economic Co-operation and Development (OECD) projects Costa Rica’s GDP growth to remain “broadly stable,” easing from 4.2% in 2025 to 3.5% in 2026 and 3.4% in 2027. It notes that the contribution of external demand is expected to gradually weaken due to increased tariffs on Costa Rican exports to the US, the country’s main trading partner. In July 2025, the tariff applied to Costa Rica’s goods exports to the US rose to 15%. The US accounts for around 16.2% of Costa Rica’s total exports and 47% of goods exports according to OECD. On 14 November however the US removed reciprocal tariffs on several Costa Rican agricultural exports, in line with an executive order from President Donald Trump targeting goods that the US does not produce domestically in sufficient quantities.

BRAZIL | Petrobras sees quarterly rise in oil production. The Brazilian state-controlled oil company Petrobras released a report on production and sales for the third quarter of 2023 on 26 October, which showed an average daily production figure of 2.88m barrels of oil equivalent per day (boed) for oil, liquid natural gas (LNG), and natural gas. This marks a 9.1% increase from the previous quarter.

The company attributed the rise in production to the Santos and Campos offshore basins, both near Brazil’s south-eastern coast. Pre-salt oil made up 78% of production in the third quarter, registering 2.25m boed, up from the 2.06m boed produced in the second quarter.

A new oil processing facility, FPSO Sepetiba, was also set up in the Santos oilfield at the start of September. Petrobras expects the new rig to be operational by the end of the year and projects a production capacity of 180,000 boed and 12m cubic metres per day.

In addition to offshore processing facilities, Petrobras also announced that it would invest US$2.6bn over the next four years to expand its Gabriel Passos oil refinery (Regap) outside of Belo Horizonte, the capital of Minas Gerais state. On 30 October the oil giant declared its aim to increase Regap’s production capacity from 170,000 boed to 240,000 boed.