Top Latin America Stories, February 27, 2015

COMPETING FOR INFLUENCE

After a decade where many Latin American countries have experienced economic growth and social gains, the region has now entered a period of transition with the end of the commodities boom and uncertain economic futures.  Several reports explore how China, the U.S. and others are modulating their spheres of influence in the region.

A new report from the China-Latin America Finance Database (a collaboration between 

Inter-American Dialogue and Boston University) shows that China's loans to Latin America rose 71% in 2014 to $22 billion, a sum that exceeds last years' loans from the World Bank and the Inter-American Development Bank, according to the BBC (2/27). The top three recipients in 2014 were Brazil ($8.6 billion), Argentina ($7bn) and Venezuela ($5.7bn). These loans "come with few strings attached" and avoid "meddling in domestic policy, according to the authors of the report in an oped in the Financial Times (2/27).  There are risks for China as they "remain heavily focused on industries that are endemic to environmental and social conflict. Tensions are rising in Ecuador and Peru as new Chinese finance pushes exploration into the indigenous and biodiverse Amazon." Still, the authors suggest that 2015 may be the biggest year for China in Latin America yet. (See their take in 2012.)

Coletta Youngers and Adam Schaffer report that Washington's hegemony over drug policy is being challenged across Latin America creating "an unprecedented international drug policy debate," according to an essay in NACLA's Winter issue and posted online yesterday (2/26). Unlike China, the U.S. has to deal with "waning political influence" and a "long-simmering resentment" in the region. Youngers and Schaffer write about the paradox between U.S. domestic and foreign policy. Where the Obama administration has two significant domestic initiatives in drug policy in favor of public health (expanded access to drug treatment through the Affordable Care Act) and civil and human rights (rethink harsh sentencing policies), this has yet to be fully reflected in the U.S. drug policy towards Latin America. "Drugs are still seen as a scourge" and they "provide a convenient means for maintaining relations and influence with military and police forces across the region." Youngers and Schaffer wonder, for example, if a peace accord is signed in Colombia, the fundamental question to be put to the U.S. government is whether or not it will fund the peace, as it did the war. 

Daniel Zovatto writes that the end of Latin America's 'golden decade' (2003-2013) demands a renewed agenda in his essay on IDEA's website (2/27). "In a few short years, the region moved from euphoria to the moderate and even cautious optimism prevailing today." Zovatto warns that "this will be a very difficult year for ... Venezuela, Argentina, and Brazil", coincidentally or not the same three countries that received the most Chinese investment last year (see above).  Repeating themes from The Washington Consensus, he suggests that Latin America needs to "urgently set in motion an agenda of profound structural reforms aimed at modernizing its development model and strategically adapting to this new global context." (His essay is based in part on IDEA's  Third International Forum of Santo Domingo held in January.) Separately, Simon Whistler (Control Risks) argues that while Latin America shifts to the center, Hugo Chávez’s legacy has not been wholly discredited, as "government support for the poorest members of society has increased across the region," according to his oped in Forbes (2/26)

Another less influential group, MIKTA, is preparing for their first meeting of foreign ministers in May, according to an article in Global Post (2/26). This set of "middle powers" includes Mexico (as well as South Korea, Indonesia, Australia and Turkey) and was formed in 2013 "to enhance coordination on global issues of common interest."  

In January, China hosted the first ministerial-level meeting of their Community of Latin American and Caribbean States (CELAC) which produced the Beijing Declaration and a Cooperation Plan for 2015-2019.  According to Xinhua, the 33-member CELAC was founded in 2011 and includes all South American countries. The January meetings included the participation of ECLAC, IDB, and CAF.  

Still, the U.S. military sphere of influence seems beyond dispute.  Even though Chinese naval ships occasionally reach the region, "at any given moment, 4,000 U.S. troops are deployed in Latin America," according to the Associated Press in 2013. This includes at least four U.S. Navy ships, U.S. pilots "clock[ing] more than 46,400 hours in 2011 flying anti-drug missions, and U.S. agents from at least 10 law enforcement agencies spread across the continent."


NEWS BRIEFS

• Former Colombian President Uribe expressed willingness to meet with current President Santos to review the peace talks, according to Colombia Reports (2/26) that Earlier this week, during his visit to Bogota, Kofi Anan encouraged the two political rivals to dialogue, according to Colombia's Caracol (2/25).

• Venezuelan opposition leader Henrique Capriles responded to outgoing Uruguay President José Mujica's fear of a military coup in Caracas, according to La Patilla (2/26).  Capriles wrote a strong 2-page letter to Mujica appealing to UNASUR to help strengthen democracy in Venezuela. Mujica is also President Pro Tempore of UNASUR.

• Tal Cual, the opposition Venezuela newspaper started six months ago by Teodoro Petkoff, a former guerrilla as a forum to criticize the socialist revolution started by the late President Hugo Chavez is going from daily to weekly publication "amid a shortage of newsprint and what it says is a pattern of government harassment," according to the Associated Press (2/26).  Daily information will continue online. The Spanish daily El Pais (2/26) says that the shift is in part due to Petkoff's health.

• Novo, a new market-oriented political party in Brazil, is profiled in the new issue of The Economist. Led by banker João Amoêdo, the group calls for privatization of Petrobras and has submitted the 492,000 notarised signatures needed to register with the electoral authority. They are set for the Brazilian elections in 2030, according to the Spanish daily El Pais (2/18).

• An Argentine judge has dismissed an accusation by prosecutors that President Cristina Fernández conspired to hide Iran’s alleged role in a deadly 1994 bombing. According to the Financial Times (2/26), "the decision provides a needed fillip for the embattled leader but also raises more questions about the credibility of Argentina’s judicial system." President Fernández, her foreign minister and other senior officials had been accused of impeding a probe into the 1994 bombing of a Jewish community centre in order to put through a grains-for-oil deal with Tehran.

• 15 years ago PAN broke the PRI's lock on Mexican elections, but now it seems Mexicans exchanged one set of corrupt politicians for another, according to an essay in Open Society (2/26) that calls for "enhancing civil society" as a solution.

Top Latin America Stories, Feb. 26, 2015

BRAVE NEW WORLD STILL DEBATING ECONOMIC DEVELOPMENT

New ECLAC statistical data showing that the number of poor in Latin America has risen "for the first time in a decade" and, according to ECLAC's Executive Secretary "the current rates of economic growth in Latin America are insufficient to beat poverty and guarantee equal rights." These and other data have evoked a myriad of solutions with no consensus.  

Jessica Faieta, the UNDP Director for Latin America and the Caribbean, is on the "economic growth is not enough" side where "more economic growth is not enough to build 'resilience',” in her essay in Inter Press Service (2/23). Governments should realize that "exclusion, discrimination and historical inequalities that are not explained by income alone." Outgoing Uruguayan President Mujica's wide-ranging exit interview last Sunday with the Mexican daily La Jornada (2/22) suggested that capitalism “seems to have already given everything it had,” and that it is likely to be replaced by “democratic socialism.”  Mujica sounds fairly orthodox in his Marxism interpretations but may raise some eyebrows when he says, "the great distributor of wealth is the salary" and that "life is the primary value and society takes second place."

Andres Oppenheimer's Miami Herald column (2/25) also refers to the ECLAC data but takes a different tack suggesting that Latin America just needs more R&D: "A fundamental problem is that Latin America invests only 0.8% of their GDP in R&D of new products, compared with the world average of 2.1%." He compares Latin economics to the new economy including Apple's ("just one capitalist company" whose market value of $710 billion is larger than any Latin American country save for Brazil) as well as Uber and WhatsApp, companies that have yet to show profits. 

Hernando de Soto pegs his critique of "developing world statistics" on a critique of Thomas Piketty's Capital in the 21st Century, in an oped in the Huffington Post (2/25).  De Soto pits "third worlders" (himself) against "westerners" (Piketty), and declares the latter's conclusions "irrelevant" because "worldwide labor statistics are Eurocentric and do not have a category that relates the poor to their entrepreneurial activities, nor to their aspiration to be part of the global market. According to the Peruvian economist, the Arab Spring were not revolts of the poor against capital, but of the poor for capital and that the common denominator of those self-immolators who sparked the Arab Spring was that they were entrepreneurs. (For more, see de Soto's 'Unlikely Heroes' video.)

President Obama says that Peru's economic growth and poverty reduction "is the envy of the world" according to headlines in most of Peru's dailies (see El Comercio, La Republica, government news agency Andina, etc) as Lima's new Ambassador in Washington (and former Min of Economy in Peru) presented his credentials and met with the USA President. (The quote was not found in any State Department or White House press release.)

None of these news reports cite corruption as an issue though it is a highlight in the demise of Brazil's state-owned but capitalist-oriented Petrobras, according to the Financial Times (2/25). In a recent speech, former president Lula came out swinging in defense of Petrobras and its' 86,000 employees saying that it "represents democracy," according to the Folha do Sao Paulo (2/24) and O Estadao (2/24). Lula says that Petrobras' failure came from a coterie of 50 people and opposition media.

NEWS BRIEFS

• Senate Democrats in the USA balk at $1-billion aid plan for Central America, according to the LA Times (2/24). Skepticism comes from Sen. Leahy (D-Vt) who says that "any U.S. aid program would need to overcome entrenched corruption in the region," and Sen. Cardin (D-Md.) who told Sec. Kerry, "we've had many programs in Central America and the results have been less than consequential."

• Former Guatemalan President Alfonso Portillo returned to his home country on Wednesday following his release from a U.S. prison, nearly six-years after his arrest on money laundering charges, according to Reuters.  Current president Otto Pérez Molina seemed to welcome Portillo back with open arms, according to Spanish news agency EFE (2/25).

•  Ecuador launches their own digital currency, according to The Guardian. It will work much like mobile phone bank payments in other countries but with one fundamental difference: a national government will have full control. Bitcoin and other digital currencies have also been banned. It's a long way from success: only 8,000 people created accounts, in a nation of 15 million. 

• Mexico's instability continues as someone is killed in a teacher's protest, according to the Los Angeles Times (2/25). Perhaps more ominous for the Pena Nieto government: an unusual full-page ad in Mexico's national newspapers by 20 powerful business groups and think tanks scolding the government for not providing security, according to the Associated Press.

• Venezuela's turmoil includes a death at recent student protests, according to the Wall Street Journal (2/25) which leads the newspaper to editorialize: Meltdown in Venezuela (2/26). Former LA reporter Mac Margolis suggests that Venezuela's upcoming legislative elections may carve out a place for the country's growing discontent but "the bigger problem is not winning, but what to do once in power," according to his oped in Bloomberg. 

Top Latin America Stories, Feb. 25, 2015

Drug reform across Latin America

Drug laws and international regulation are a topic of hot debate in Latin America, and U.S. led "War on Drugs" policies are being challenged across the region.

"Drugs: New paradigms and old inertias" is the cover of the most recent issue of Nueva Sociedad, with several articles that explore the situation across the region in-depth. The "War on Drugs" dates back to Nixon, writes Magnus Linton, but often had little to do with actual anti-drug policies. After the fall of the Berlin wall, drugs replaced communism as a political bogeyman, he says in a piece that focuses especially on how the U.S. impacted Colombian policies.

But across the region change is apparent write Coletta A. Youngers and Adam Schaffer in a piece for NACLA. Uruguay is the first country in the world to create a legal cannabis market. Bolivia successfully obtained an exception for domestic coca leaf cultivation for licit uses under the UN Single Convention on Narcotic Drugs. And Ecuador has reformed its penal code, allowing over a thousand low-level offenders to be released from prison,  The also note that Brazil, Chile and Colombia and CARICOM are all analyzing medical marijuana policies.

Yesterday the Jamaican legislative lower chamber passed a law yesterday that decriminalizes small amounts of marijuana and creates an agency to regulate medical marijuana.

Sebastián Valdomir analyzes the Uruguayan initiative in NUSO, wondering whether it has the potential to be an alternative regional model to repression of drug trafficking, as outgoing President José Mujica has presented it. 

It's the kind of policy that could really be a "blow to organized crime," according to Ilonha Szabó, executive coordinator of the Global Commission on Drug Policy and a founder of the Igarapé Institute in Brazil. In an interview with O Globo she makes the case that drug trafficking enforcement must focus on violent crime, not cannabis growers as has been occurring recently in Brazil. 

If Uruguay is the new model, Brazil's policy is the anti-model, according to Luciana Boiteux also writing for NUSO. Current policies ignore social and economic drivers of the drug trade, she writes. Unsatisfactory results include the increase of drug consumption and an ample market of illicit substances, albeit with increasingly poor quality (crack), and the criminalization of poor, Black and mulatto populations.

The current paradigm is done, argues Aram Barra: repressive policies have not succeeded in stemming production or consumption of illicit drugs. Yet obstacles in changing decades of policy remain, he says. Legalization is too broad a category, instead lawmakers in Latin America are exploring a variety of options on the spectrum between total prohibition of drugs and their sale on a completely free market. World-wide most initiatives aim to control the sale of psychoactive substances through several measures: medical prescription or supervised spaces of consumption; sale in pharmacies; authorized sales points; establishments with licenses to sell and consume; and sales by non-authorized providers in some exceptional cases. 

The NACLA piece focuses on the disconnect between U.S. domestic policy -- increasingly focused on health and human rights -- and international policy, which tends towards militarization of a fight to stem drug flow towards the U.S.

But new approaches to drug policy must learn from the successes of drug traffickers, argues Eduardo Vergara in NUSO. Crime organizations have shown themselves to be dynamic and adaptable, unlike insufficient and static government efforts to shut them down. "In scenarios that are in constant flux and dependent on highly dynamic consumption realities, centralized responses have been shown to be insufficient and even regressive," he writes.

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News Briefs

• A Venezuelan police officer killed a 14-year-old boy in protests yesterday in San Cristóbal. Officials say the officer in question has been arrested, and that he fired with plastic pellets, reports the New York Times. President Nicolás Maduro said the killing had occurred as masked demonstrators confronted a group of police officers. “The police said that they were surrounded, beaten and attacked with rocks, and one of the police officers fired his shotgun and killed this boy,” Mr. Maduro said. “I condemn this murder.” The Wall Street Journalnotes the killing comes a month after a controversial defense ministry resolution allowing soldiers to use deadly force on demonstrators if the soldiers feel their lives are at risk.

• The protests come as the government is moving to strip an opposition lawmaker from the National Assembly, which would strip him of legislative immunity and permit him to be charged with conspiracy against the government, allegations Julio Borges denies. The Wall Street Journal notes that dissent is being increasingly cracked down on by the government. The piece cites a Caracas non-profit that says  177 people have been arrested at protests so far this year, while the Venezuelan Mayors Association says 33 of the 77 opposition mayors elected in 2013 are being investigated by the central government.

• The Venezuelan opposition Mesa de la Unidad Democrática party (MUD) will be holding primaries in May to select candidates for the National Assembly elections later this year. Rodrigo Linares writes on the Caracas Chronicles on the rift this announcement caused between moderates and radicals in the party, in the context of Ledezma's arrest. "We need primaries, because we need a cohesive, legitimate, nation-wide opposition leadership to guide us through whatever craziness may lie ahead in the coming months. If anything, Ledezma’s imprisonment should make that even clearer."

• The Washington Office on Latin America (WOLA) will host a discussion today titled: "Chavismo Under Pressure: Economic Crisis and Political Challenges in Venezuela," featuring David Smilde and Michael McCarthy of the AU Center for Latin American and Latino Studies. It can be streamed via the WOLA website.

• Democrat Senators surprisingly challenged an Obama administration plan to send over $1 billion in aide to Central America, an attempt to stem the flow of migrants -- especially unaccompanied minors -- coming from the region. The LA Times reports that administration officials expect the funds would help improve law enforcement, reduce corruption, strengthen government services and bolster weak economies in the region. However, Democrat and Republican senators questioned this logic in two budget hearings yesterday. "We've spent billions of dollars there over two decades," Sen. Patrick J. Leahy (D-Vt.), ranking member of the Senate Appropriations foreign operations subcommittee, told Secretary of State John F. Kerry. "And we've seen conditions get worse in Honduras, Guatemala, El Salvador."

• The AP has an piece on Colombian oil town Puerto Gaitan, as an example of how plunging oil prices are affecting Latin America. Oil prices fueled an economic bonanza in the past decade, the story reports, and were accompanied by social spending by left-wing governments across the region. Now budgets may have to be slashed and social tensions are rising.

• Argentina's government accused former spymaster and Nisman collaborator Jaime Stiuso of importing contraband into the country, reports the Wall Street Journal. In latest twist in the Nisman suicide-murder mystery, Argentina's current head of the Intelligence Secretariat found that 94 tons of goods were brought into the country using a law that permits the intelligence agency to bypass customs inspections and taxation, reports Argentina's Página 12. Though the exact nature of the goods is unknown, shipping records indicate medical equipment and electronic video game consoles, among others.

• The Brazilian judge in charge of businessman Eike Batista's criminal trial is under investigation for allegedly driving a Porsche he ordered seized earlier this month. Local newspapers published pictures of a man identified as Federal Judge Flávio Roberto de Souza driving the luxury car on the streets of Rio de Janeiro, according to the Wall Street Journal. The car was seized along with other assets to guarantee repayment to investors if Batista is found guilty of insider trading related to the meltdown of his oil company.

• InSight Crime reprints a piece from Agencia Publica exploring Brazil's pretrial detention policy. Human rights organizations have condemned the abuse of preventive detention in Brazil, notes the piece. Human Rights Watch has "highlighted the bottleneck in Brazilian prisons as well as reports of torture, cruel treatment, and poor infrastructure in the country's facilities." 

• Mexico's president proposed a new law yesterday that would allow foreign customs and migration agents to carry guns in previously established zones. An AP piece notes that such a move would be a significant change in a country that has historically refused to allow this saying it would represent an infringement on national sovereignty. Some analysts think the law, if passed, could open the door to eventually allowing other U.S. security agencies, such as the DEA to send armed agents into Mexico.

• Mexico's foreign direct investment dropped drastically last year, reports the Wall Street Journal. Last year the country received $22.6 billion, down from $42.1 billion in 2013.

• The Pope apologized to Mexico yesterday, reports the AP. The Vatican said Wednesday it had sent a note to Mexico's ambassador insisting that Francis "absolutely did not intend to hurt the feelings of the Mexican people" by referring to the "Mexicanization" of his native Argentina from drug trafficking.