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  • Argentina buys back airline

    22 July 2008 Hits: 234

    Development: On 21 July President Cristina Fernández de Kirchner announced the renationalisation of Aerolineas Argentinas, the country's flagship carrier, and its sister carrier, Austral.

    Significance: The announcement is not a surprise. The airline's largest shareholder, the Spanish travel group Marsans, has been struggling to cope with rising fuel bills and crippling debt levels. The two airlines are thought to be losing US$1m per day and have debts of  US$890m.

    The government said that it was reluctant to buy back the airlines, which were privatised almost 20 years ago. However, the renationalisation is fortunately timed for Fernández following her humiliating defeat at the hands of the rural sector. There was overwhelming support for the government to buy back the airlines, especially among trade unions.

  • Cuban officials request change

    26 August 2008 Hits: 248

    Development: On 25 August the former director of official media in Cuba and militant member of the Cuban Communist Party (PCC), Felix Sautié, confirmed that he is one of the signatories of a proposal by party loyalists calling for radical change on the island.

    Significance: The document is important because it indicates that die-hard revolutionaries are aware that the current social and economic model in Cuba may no longer be sustainable. Their argument is that the country needs a more participatory and democratic form of socialism in order to save the revolution, otherwise, the document warns, the system could collapse entirely and capitalism could be fully restored, which would lead to Cuba's annexation and cultural assimilation by the US.

    The declaration begins with a quote by Carlos Baliño, founder of the PCC, but criticises the regime's model of governance. It opens: “Cuba is experiencing a continued economic, political and social crisis as a result of stagnation_ caused by the total bureaucratic control of the state over society and the means of production_" The text, principally written by former diplomat Pedro Campos, goes on: “For the most part, Cubans feel frustrated, alienated and without hope, and the new - unmotivated - generations do not feel the same commitment as the former ones to this 'poor and futureless socialism'_"

    The document makes a number of practical proposals, particularly in economic terms. It advises that the regime should “respect individual private property and the owner's power over it, and therefore liberate the sale of personal effects including cars and property_ as well as facilitating free employment for retired and handicapped people and liberating all self-employment."

    In addition, the signatories request that the current penal code be amended and brought into line with two UN treaties on human rights recently signed by the government, and that the “excessive sentences" for political dissidents be revised. They also call for “a new law on migration which eliminates absurd measures such as the [need to apply for] permission to leave" the island and to move around within it.

    The document closes with the following uncompromising call to President Raúl Castro: “The directors of this country must understand that we are a cultured people thanks to the Revolution and that its mission is not to impose paradigms [on the people], but to act in its interests and turn them into policies and laws: To lead by obeying. It is only in this way that it will be possible to change what must be changed and to guarantee the progress of socialism. Continuity is change."

  • Farc leader honoured in Venezuela

    26 September 2008 Hits: 264

    Development: On 26 September Latin American leftwing organizations will unveil a monument in Caracas in honour of 'Manuel Marulanda Vélez', the dead leader of the Fuerzas Armadas Revolucionarias de Colombia (Farc).

    Significance: The founding leader of the Farc will have a square in Caracas - 'Plaza Marulanda'. The square, which exhibits a statue of the guerrilla member, is in the '23 de Enero' neighbourhood that has been a traditional bastion of the Left in Venezuela and is now an enclave of radical pro-Chávez groups.

    This event is part of the homage that the Coordinadora Continental Bolivariana (CCB) is paying to mark six months since the death of the guerrilla member, also known as 'Tirofijo'. The CCB bring together 100 or so leftwing organizations and movements from across Latin America, including the Venezuelan and Chilean communist parties. At a press conference, a representative of CCB, Frank León, said that the monument was funded by the organization's resources, and stressed that neither the Venezuelan government nor the Farc was directly involved in the project.

    Nonetheless, Colombia's ambassador to Caracas, Fernando Marín , has asked the Venezuelan government to state its position regarding the event. Colombia's senate foreign committee attributed the monument to President Hugo Chávez and stated that Venezuela's president is a threat to the hemisphere due to his support for the Farc.

  • UN slams US embargo on Cuba

    30 October 2008 Hits: 199

    Development: On 29 October the UN General Assembly voted in record numbers against the US economic, commercial and financial embargo on Cuba.

    Significance: This was the 17th year running that the 192-strong General Assembly has urged the US to end what Cuba calls the “blockade" that has been strangling its economy since 1962. However, this year UN delegates voted in record numbers to lift the embargo. The increase in official condemnation of the embargo, though small, is symbolically significant and indicates not only the US's isolation within the UN and internationally on this issue, but also highlights the recent rapprochement between Cuba and a number of other foreign powers including Spain, the European Union, Mexico, and Brazil.

    The motion was passed by 185 votes in favour, three against (the US, Israel and the Pacific island state of Palau) and two abstentions (Micronesia and the Marshall Islands). Iraq and El Salvador did not vote. One more country voted in favour than last year (Albania), and Cuba managed to turn the Marshall Island's traditional vote against into an abstention.

    Cuban foreign minister, Felipe Pérez Roque, pointed out that the “blockade" is older than Democrat presidential candidate Barack Obama, adding that seven out of every ten Cubans have spent their entire lives living under this “irrational and useless policy". He told US delegate, Ron Goddard: “You should be ashamed. You are alone here. The world is on the side of our little Caribbean island".

    Goddard said that the embargo is a bilateral issue and claimed that it was totally inappropriate to debate it in the General Assembly. The Mexican ambassador, Claude Heller, argued however that the embargo does affect third-party countries, due to “the impossibility of interacting with Cuba in many economic and social activities". The policy received further condemnations from Iran, Venezuela, Russia, and the EU, which supported the resolution while criticising Cuba's record on human rights.

  • Peru commander decides to go

    03 December 2008 Hits: 236
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    Development: On 2 December General Edwin Donayre, the commander of the Peruvian army, appeared to accept that he would go into retirement on 5 December.

    Significance: The will-he-won't-he saga, which was triggered by Donayre's drunken insults about Chileans in a video which appeared on YouTube on 25 November, has weakened the government of President Alan Garcí­a. Arguably, Garcí­a overreacted to Donayre's comments by telephoning President Michelle Bachelet of Chile to apologise. Bachelet was clearly pleased by this, but her government was aghast when Garcí­a and his government appeared to back away from his commitment, made in the telephone call, that Donayre would be retiring on 5 December.

    A former Peruvian foreign minister, Manuel Rodrí­guez Cuadros, argued that the row could have been defused if the issue had been handled at deputy minister level. At that level the whole issue of when and whether Donayre would go would have been left to one side and the focus would have been on the Peruvian government's disowning of what Donayre had said. After all, as Rodrí­guez said, Donayre made the comments two years ago at a private party when he was clearly drunk. Rodrí­guez argued, more controversially, that Peru did not need to apologise for the comments because they were not made in Donayre's official capacity.

    The row only became serious, and damaging to bilateral relations, when Garcí­a and his government started to dither about whether Donayre should go. When Chile noted publicly, on 28 November, that Garcí­a had promised Bachelet that Donayre would retire, Peru blustered. On 29 December Garcí­a himself said, when commenting on whether Donayre would go, that his government “did not take orders from anyone."

    This apparent backsliding prompted the hardmen of the Chilean right to claim that Garcí­a and his government actually endorsed what Donayre had said. In the video Donayre was shown saying that he had given orders for any Chilean who arrived in Peru to be sent home in a coffin and if there were not enough coffins, plastic bags would do and that the women at the party should become ladybombers and help the Peruvian army by seducing Chileans.

    The mishandling of the Donayre saga points to serious weaknesses in the Peruvian government. Garcí­a is unwilling to delegate. The new prime minister, Yehude Simón, has been almost uninvolved in the Donayre saga perhaps because there are now whispers in Lima about his involvement in a corruption scandal which led to the sacking of his predecessor. The official investigation into this scandal which involved the award of five promising exploration licences to a tiny Norwegian oil company, Discover Petroleum, seems to be half-hearted.

    Chile refused to back down over Garcí­a's unnecessary promise over Donayre and has clearly kept the pressure up in the past couple of days. Garcí­a and his government have buckled. On 2 December Donayre said, at a military parade in his honour at Arequipa, that he would go into retirement “with his head held high." A local TV channel, Canal N, said that the General would retire on 5 December. On 30 November Donayre had claimed that he could remain head of the Peruvian army for another three or four years.

    Almost simultaneously, the Peruvian foreign minister, José Antonio Garcí­a Belaunde, said from Argentina that Donayre would retire but had not been sacked and that this would take effect, as had been previously agreed, on 5 December. The Peruvian government had been embarrassed by Donayre even before the video: he was implicated in a scandal in which military officers sold off fuel bought for the armed forces. 

     

  • The Week Ahead

    16 January 2009 Hits: 69

    FRIDAY 16 JANUARY

    Brazil/Venezuela: Brazil ´s president Inacio Lula Da Silva will meet President Hugo Chávez of Venezuela in Caracas.

    Region: The presidents of Colombia, México, Panamá and Guatemala will attend the Regional Summit on Security where they will discuss measures to coordinate the fight against organised crime in the region.

    Cuba: Miguel Ángel Moratinos and Felipe Pérez Roque, foreign ministers of Spain and Cuba, respectively, will meet in Cuba for the third round of talks on human rights.

    SUNDAY 18 JANUARY

    Argentina/Cuba: Argentina's President Cristina Fernández begins an official visit to Cuba during which she will sign a series of bilateral agreements. She is the first head of the Argentine government to visit the country in 22 years.

    El Salvador: 4.2 million Salvadoreans will vote for national legislators, Central American parliament legislators, mayors and municipal councillors. Nicaragua: Elections will take place in the seven municipalities that make up the North Atlantic Autonomous Region (RAAN).

    TUESDAY 20 JANUARY

    Argentina/Venezuela: President Cristina Fernández will commence a two day visit to Venezuela where she will meet President Hugo Chávez to discuss economic and energy cooperation.

    THURSDAY 23 JANUARY

    Santa Lucia/St Kitts: The Prime Minister of Santa Lucí­a Stephenson King will travel to St Kitts to attend a special meeting of the Organization of Eastern Caribbean States and of the Monetary Council of the Eastern Caribbean Central Bank to discuss possible solutions to challenges resulting from the international financial crisis.

  • Security Update: Brazil

    25 February 2009 Hits: 151

    Police raid fatalities in Rio revive debate over policy

    Police action in Rio de Janeiro claimed 10 fatalities in a single day in early February, as governor Sérgio Cabral pressed ahead with his strong-arm anticrime drive which has brought down Rio state's murder rate by about 10% — but has also prompted renewed criticism of the Rio police for its trigger happy inclination. Almost simultaneously in São Paulo, the killing of a suspected robber by police led to violent protest riots, quelled by large-scale police repression that left many — mostly police officers — injured by gunfire.

    The shootings in Rio took place on 4 February, when 300 police officers — a combined force of the military and civil police backed up by helicopters and an armoured vehicle — raided four favelas in the west of the city (Coréia, Taquaral, Rebu and Vila Aliança) to execute arrest warrants issued against suspected drug traffickers.

    Five of those killed had, according to the police, opened fire on the officers as they prepared to raid a house. They were identified as gunmen in the pay of a drug-trafficking gang. Another two, also identified as criminals, were killed in gunfire exchanges elsewhere. Three more, also identified as narco gunmen, were killed as they were returning to the area and ran into a departing group of policemen.

    Seven of those killed were between 18 and 24 years old; one was 16, another 15, and the only older victim was 37. The police managed to make seven arrests and seized seven pistols, one revolver, two grenades, two radio transmitters and an unspecified amount of cocaine.

    Deaths at the hands of Rio police averaged just under four a day in 2008, and totalled about 6% more than in 2007. Last October, Philip Alston, the UN special rapporteur on arbitrary, summary or extrajudicial executions, issued a report strongly criticising the frequent recourse by the Rio police to 'summary executions', often classified as 'resistance followed by death', which often remain unpunished. Amnesty International also criticised the force for its 'indiscriminate killing' of civilians.

    Governor Cabral, however, has defended his strong-arm policy by pointing out that it has reduced Rio de Janeiro's murder rate to the lowest level since statistics began to be compiled in 1991. He has promised not to relent, saying, 'Those who believe that with discourses alone they can confront bandits strongly armed with rifles and grenades are mistaken.'

    A day before the Rio police operation, 160 police officers backed up by 60 patrol cars and motorcycle units descended upon the Paraisópolis favela in the Morumbí­ district of São Paulo (which also has some of the wealthiest quarters of the city) to repress violent riots that had been raging for almost a day. The riots were a response to the killing by police of a suspected robber: neighbours took to the streets, barricaded access routes with flaming tyres, held up passing drivers and torched cars. Three police officers were injured by gunfire, as was an onlooker. Another policeman was badly hurt by a stone.

    The police arrested nine persons, who were later released, and said that a hunt was on for the instigators of the rioting, which they said were probably local criminals. The state's public security secretariat announced that the police contingent would remain in Paraisópolis 'for as long as necessary'; they were withdrawn a day later.

  • DR's Fernández seeks end to protests

    02 April 2009 Hits: 308
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    Development: On 1 April President Leonel Fernández convened a cabinet meeting to put an end to violent protests that have broken out across the Dominican Republic in recent weeks.

    Significance: Fernández is facing mounting unrest as the country's economic climate deteriorates. Protesters are demanding major infrastructure works, including the re-surfacing of roads, and improvements to the country's water and electricity supplies.

    In recent weeks, more than ten people have been injured in sporadic clashes between protesters and the police in various provinces across the north of the country. Local press reported that protesters pelted police with stones and home-made explosives, burned tyres and forced businesses to close.      

    Fernández yesterday (1 April) announced a plan to carry out major road-improvements and to target “priority" infrastructure works in the country's provinces. He said that the government will also launch measures to combat sharp rises in unemployment. He made no mention of protesters' demands for salary increases and a reduction in food prices.

    The meeting of ministers, trade union leaders, business representatives and other advisers was held in the northern city of Santiago.   The Santiago province has been at the heart of protests in recent weeks.

  • Brazil & Mexico

    13 May 2009 Hits: 143

    Brazil: The state oil firm, Petrobras, reported that profits fell 20% annually in the first quarter, the first drop in five quarters, on sharply reduced world oil prices. Consolidated net income was R$5.82bn (US$2.8bn), compared to R$7.24bn (US$3.5bn) in the first quarter of 2008, based on an average oil price of US$43.3/barrel, compared to US$97.8/barrel a year earlier.

    Mexico: The ratings agency Standard & Poor's (S&P) cut Mexico's sovereign credit rating outlook to negative from stable, putting the country's BBB+ rating (the third lowest investment grade rating) on notice for a potential downgrade. S&P last cut Mexico's rating 17 years ago in February 1995, following the peso crisis.

  • Another blow to Mexico's anti-gang squad

    18 June 2009 Hits: 241

    Development: On 17 June three officers from the gang-busting Subprocuradurí­a de la Investigación Especializada en Delincuencia Organizada (Siedo) were arrested.

    Significance: These arrests follow those of nine army officers, on 12 June, and suggests that the gangs are still corrupting the elite anti-gang busters. The Siedo, which reports to the Procuradurí­a General de la República, was supposed to have been purged last year by Operación Limpieza, which led to the arrest of several senior figures whose careers had been sponsored by Genaro Garcí­a Luna, the public security minister.

    Opinion polls claim that Mexican voters are doubtful about whether the government's anti-gang offensives are working. A poll by Mitofsky, for México Unido contra la Delincuencia, found that 73% of Mexicans believed that the crime situation was either the same or worse than it was a year ago. According to the poll, more Mexicans now feared kidnapping (72%) than a year ago, when only 68% did.

    The arrests and poll evidence suggest that the government's anti-crime drive will not be a vote winner in the forthcoming 5 July mid-term congressional elections. A vociferous anti-crime NGO, México Unido contra la Delincuencia, claimed that the government had implemented fewer than a quarter (10 of 44) of the initiatives it had launched under the Acuerdo Nacional por la Seguridad, la Justicia y la Legalidad which it signed on 21 August 2008, along with state governors, mayors and congressmen.

    Mitofsky said that the most encouraging finding from the poll was that 48% of Mexicans still supported the government's use of the army against the gangs. This was up from 43% in February but down from 54% in November 2008.

    Two of the Siedo officers arrested on 17 June were accused of working for the Beltrán Leyva brothers. The brothers control a faction of the Sinaloa gang which is battling against another faction of the same gang controlled by Joaquí­n “El Chapo" Guzmán.   The other Siedo officer was accused, like the army officers arrested last week, of working for a third faction of the Sinaloa gang headed by Ismael “El Mayo" Zambada.

    What is also worrying the authorities is that the body count is starting to rise again. On 17 June the bodies of nine people (three of them dismembered) were found in Uruapán, Michoacán. The mayor of Uruapán was arrested in May, accused of working for another gang, La Familia. The day before, seven bodies were dumped in Gómez Palacio, Durango. In the week to 12 June 133 people were killed by gangs, bringing the total for the year so far to 2,677. This is barely an improvement on 2008.

    Pointer: Another problem for the government is the growing enthusiasm among voters for the void-vote campaign. According to a poll published on 17 June in Reforma, a Mexico City daily newspaper, 15% of voters are now ready to vote void on 5 July. In Reforma's preceding poll only 10% of respondents said that they would vote void. In the 2006 congressional elections, void votes came to 2.4% of total votes cast.

  • Re-election floundering in Colombia

    27 July 2009 Hits: 184

    Development: On 25 July a national news magazine, Semana, ran an editorial arguing that the referendum to allow for President Alvaro Uribe's re-election in 2010 is “dead".

    Significance:The feeling in Colombia is that the government will fail to gain final approval of the referendum bill. Semana, which is well-respected and widely read, reports that “there is not a single Urbista who believes privately that this corpse [the referendum bill] can be revived".

    The final straw for the bill, the magazine argues, was the government's failure to secure backing for its preferred candidates in elections for the presidencies of congress on Monday (20 July). The re-election project had already been knocked by the decision by the supreme court to launch an investigation into the 86 lower house deputies who voted in favour of the referendum last December.

    The final text of the referendum bill has yet to be approved by a bicameral reconciliation committee, and must then be given final approval by both houses of congress.

  • Fresh calls for end to Cuban embargo

    03 September 2009 Hits: 188

    Development: On 2 September the state governor of New Mexico, Bill Richardson (D), who recently spent five days in Havana on a trade mission, said that the time was ripe to discuss an end to the Cuban embargo, in place since 1962.

    Significance: Richardson's comments come ahead of a 14 September date for the annual extension of the Trading with the Enemy Act (TWTEA). Anti embargo lobbyists are using the date to put fresh pressure on President Barack Obama to review US Cuba policy. A new poll this week also shows falling support for the embargo among Cuban Americans based in Miami, Florida.

    On 1 September the international human rights organisation, Amnesty International, urged Obama to let the TWTEA expire, as a political gesture. (Technically, it wouldn't mean much beyond that, as the Cuban embargo was effectively codified into US law though the 1996 Helms Burton Act, which can only be amended by congress).

    Richardson, a veteran diplomat, suggested in a CNN interview that within a year the US could be “in serious negotiations" about lifting the embargo, but stressed that the Cuban government must reciprocate the Obama administration's recent gestures to remove and relax some trade, family travel and remittance restrictions.

    The US congress will shortly take up a proposal to remove the travel ban on all US citizens to Cuba.

  • Mexican police exchange fire with army

    13 October 2009 Hits: 183

    Development: Early this morning, 13 October, state police in Monterrey, Nuevo León, reportedly exchanged shots with the federal army.

    Significance: This is the first time that police and soldiers have shot at each other, apparently deliberately, while on operational duty. The general feeling in Mexico is that the army is less corrupt, and more effective than the state police.

    The shoot-out may be connected to an earlier shoot out in Monterrey between two groups of gangsters. The state police arrived only to find 160 cartridge cases and bloodstains at a house in the Colonia Indeco Naranjo.

    The new state governor of Nuevo León, Rodrigo Medina, from the Partido Revolucionario Institucional (PRI), wants to meld the state and municipal police together to form a single force. This idea is backed by mayors from both the PRI and the Partido Acción Nacional, which controls the federal government. The shape of the new arrangements will become clearer at the end of October when the newly elected mayors in Nuevo León take office.

    Separately, in neighbouring Chihuahua 11 people were killed in separate incidents in Ciudad Juárez. The biggest massacre was of five people whose bodies were found in a workshop. Most alarmingly of all, an official from the federal attorney general's office was dragged out of his house in the state capital Chihuahua, and shot dead in front of his neighbours.

  • Electoral tensions rise in Bolivia

    24 November 2009 Hits: 159

    Development: On 22 November the main opposition presidential candidate, Manfred Reyes Villa, of the right-wing Plan Progreso para Bolivia-Convergencia Nacional (PPB-CN) said his home was attacked by supporters of President Evo Morales's ruling Movimiento al Socialismo (MAS).

    Significance:  While the campaigning period has been largely peaceful, there have been increasing incidents of violence in the run up to the 6 December presidential and legislative elections.

    The accusations by Reyes Villa follow a burglary on 21 November at the PPB-CN campaign headquarters in La Paz. Also on 21 November, Morales supporters were attacked in the eastern opposition town of Tarija by supposed members of the regional opposition 'comité cí­vico'.

    The MAS campaign chief, Jorge Silva, has accused the PPB-CN of carrying out the attacks on Reyes Villa's house and its headquarters itself, as a last ditch attempt to drum up support. The latest polls put Reyes Villa on 18% support, compared to 52% for Morales.

  • Washington Watch

    14 January 2010 Hits: 184

    El Salvador: The US-based Migration Policy Institute recently released a report into the demographics of Salvadorean migration to the US. The report shows that in 2008 there were about 1.1m Salvadorean immigrants in the US, a population which has increased more than 12-fold since 1980. Salvadoreans form the sixth largest immigrant group after Mexican, Filipino, Indian, Chinese, and Vietnamese foreign born. More than half of all Salvadorean immigrants reside in just two states, California and Texas, although they are also concentrated in New York, Maryland, Virginia, and the District of Columbia. There were about 340,000 Salvadorean-born lawful permanent residents (LPRs) in the US in 2008 while the US Department of Homeland Security's Office of Immigration Statistics has estimated that 570,000, or 5% of the approximately 11.6 m unauthorized migrants in January 2008 were born in El Salvador. Salvadoreans were the second largest unauthorized immigrant group in 2008 after the Mexican born immigrants.

  • YPF Repsol promises Falklands drilling

    26 February 2010 Hits: 189
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    Development: On 25 February, Repsol YPF, a Spanish controlled oil company, announced that it would drill for oil in the Falklands Basin.

    Significance: Repsol, a large oil company, said that it will start drilling in the southern hemisphere summer (ie November or December) in Argentine waters. This week, a very small UK-based oil company, Desire, started to drill in waters claimed by the UK dependency of the Falkland Islands. Desire's activities prompted protests from Argentina which claims the Falklands and lost a brief war in 1982 over them.

    Repsol's president, Antonio Brufau, said that Repsol was currently working on contracting a platform for the exploration programme. He was downbeat about the prospects for the region, saying that it was a tough environment and there was only a low or limited prospect of success.

    Antonio Gomis, Repsol's director for Argentina (where Repsol controls the former state oil company, YPF) stressed that Repsol would only drill in Argentine waters. Argentina claims the Falklands partly because the islands lie on its continental shelf. He added that Repsol's partners in this exploration project are Petroleo Brasileiro (the Brazilian state oil company) and Panamerican Energy.

  • Regional focus - Brazil & Southern Cone

    12 April 2010 Hits: 1618

    Argentina - a better 2009 than Brazil and Chile

    In 2009 the Argentine economy grew 0.9% year-on-year, according to the Instituto Nacional de Estadí­sticas y Censos (Indec). The government barely boasted about this performance, pointing out that over the previous six years the average rate of real GDP growth had been 8% a year.

    In the final quarter of 2009 real GDP rose 2.6% year-on-year. The quarter-on- growth (q-o-q) rate was 1.9%. This was much better than local economists had expected: they had forecast q-o-q growth of 1.3% and a full year GDP figure of 0.5%.

    The main reason for the better-than-expected figures in the final quarter was a surge in public spending: it jumped 7.2% year-on-year. Private sector consumption rose just 0.5%.

    The opposition in Argentina dismissed the Indec figures as spurious: its economists believe that the economy contracted by between 2% and 4% in 2009. If correct, this is significantly worse than the 1.5% and 0.8% contractions registered by Chile and Brazil, respectively. The opposition argues that the economy must have suffered, because of a major drought which cut the harvest by over a third.

    It is very difficult to cross-check the opposition's claims because of the absence of official 2009 data on variables such as electricity generation and electricity consumption.

    The Indec puts the country's total GDP at US$386.7bn at the end of 2009. The Indec is not completely Panglossian about the economy's performance in 2009. It admits, for example, that investment fell 10.2% year-on-year. The government also admits that real GDP contracted in the second and third quarters (0.8% and 0.3% year-on-year respectively).

    In 2010, the government and the central bank (Banco Central de Argentina), reckon that the economy will grow by 2.5%. This looks like an underestimate: in January construction activity was up 6.1% year-on-year. The harvest is also looking good. Goldman Sachs, a US investment bank, is currently forecasting real GDP growth of at least 4% in 2010. Before the eruption of the row between the government and the central bank and opposition over the use of central bank reserves for debt payments, investment banks had forecast 6% real GDP growth in 2010. Our guess is that it will be closer to 5% than 4%.

    External analysts feared that the reserves row would deter foreign investment, because it demonstrated that the government was prepared to act unilaterally to achieve its objectives. These fears were magnified after news of a summit meeting of top Peronists on 20 March was leaked: in this meeting, President Cristina Fernández promised to ignore congress (where she has lost her majority) and rule by decree.

    The counter-argument in the reserves row is that the government did, in fact, stick to the letter of a supreme court ruling. Proponents of this argument also say by using US$6.6bn of idle central bank reserves to repay foreign debts, rather than money from the budget, the government can ramp up spending and thus pep up demand. This should keep the economy growing fast.  

  • Lula to veto 'political' pension rise

    20 May 2010 Hits: 162

    Development: On 19 May the federal senate, with 78 of the 81 senators present, took just five minutes to ratify a controversial recent lower house provisional measure to award a 7.7% annual increase in pension payments for 8.4m beneficiaries.

    Significance: President Lula da Silva has already signaled that he will veto the increase, which was above the government-proposed 6.14%, quipping (on 5 May) that there “is no need for crazy decisions". The government has already cut budget spending twice this year in an effort to withdraw some of its earlier fiscal stimulus and meet a higher primary fiscal surplus target for 2010 of 3.3% of GDP (up from 2.06% in 2009))

    In a blatantly political move ahead of the October presidential and legislative elections, the senate also ratified the lower house move to scrap a formula (the so-called 'fator prevedenciário') that reduces pension payments for workers that decide to retire early.

    Lula's cabinet ministers have already advised him to reject the increase, which planning minister Paulo Bernardo called “demagogic". The 7.7% increase would add about R$11bn (about US$5.9bn) to the fiscal deficit this year, Bernardo estimates. The original increase of 6.14% increase was budgeted at R$6.7bn (US$3.56bn).

  • Bolivia's Morales upsets indigenous groups

    28 June 2010 Hits: 276

    Development: On 27 June, influential indigenous organizations such as the Consejo Nacional de Ayllus y Markas del Qullasuyu (Conamaq) and the Confederación de Pueblos Indí­genas del Oriente Boliviano (Cidob) announced marches against the government of President Evo Morales.

    Significance: The indigenous groups, which provide the main support base for the government, are unhappy with Morales on two counts - a recently approved electoral law which falls short of their quota demands and the government's failure to deliver on their autonomy demands.

    This latest threat of protest action echoes recent tensions between Morales and his traditional support base - most notably over the government's minimum wage increase and its extractivist policies. The government refused to bend and Morales managed to exploit weaknesses and divisions within his supporters.

    As regards the electoral law which was approved on 27 June (one of five key pieces of legislation necessary for the new plurinational 2009 constitution to fully take effect), indigenous groups are demanding the quota of indigenous seats in the 158-seat plurinational legislature be increased from seven to 18. Meanwhile the demands over autonomy, which include the right to be consulted on extractivist projects on indigenous territory, are designed to put pressure on the government ahead of the approval of the autonomy framework law, due to be approved before the end of July.

    While seeking to offer some concessions to the indigenous groups (Morales announced the quotas would be reviewed following the publication of the 2011 census), the government has also resorted to its old tactic of blaming the US for internal unrest. The vice president, Álvaro Garcí­a Linera, accused the US Agency for International Development (USAID) of promoting the autonomy protests.

  • The Week Ahead

    06 August 2010 Hits: 50

    Friday 6 August
    Colombia:
    Outgoing President Álvaro Uribe and his successor Juan Manuel Santos will meet president of Unasur, Néstor Kirchner.

    Chile-Ecuador: Chile's President Sebastian Piñera travels to Ecuador's capital, Quito.

    Colombia-Panama: The two countries end discussions on a free trade agreement.

    Saturday 7 August
    Colombia:
    President-elect Juan Manuel Santos will be inaugurated at the presidential palace in Bogotá, the Casa del Nariño.

    Haiti: Closing date for candidates to register for the 28 November presidential and legislative elections.

    Sunday 8 August
    Paraguay: The minor political parties of Patria Querida (PQ); Social Demócrata and other non-parliamentary parties will hold primaries ahead of 7 November's municipal elections.

    Monday 9 August:
    El Salvador-Brazil:
    El Salvador's President, Mauricio Funes, and his Brazilian counterpart Lula de Silva will meet 200 business leaders in São Paulo. 150 of the leaders are from Brazil and 50 from El Salvador.

    Tuesday 10 August:
    Ecuador:
    Ecuador's foreign minister Ricardo Patiño will begin an official visit to China. He is expected to discuss possible Chinese investment in infrastructure projects as well as present the Yasuní­ Ishpingo-Tambococha-Tiputini (ITT) environmental project (which would see Ecuador paid by the international community to keep the oil where it is in the Yasuní­ national park in the northern Ecuadorean Amazon).

    Wednesday 11 August:
    Panama:
    The trial begins of the former attorney general, Ana Matilde Gómez, charged with abuse of authority. She will be tried in Panama's Supreme Court (CSJ). The charges were filed by the prosecutor of La Chorrera, Arquí­medes Saéz Castillo, who claimed to have had his phone tapped by Gómez. Saéz in turn was believed to have extorted money from relatives of prisoners in local jails.