Friday, December 16, 2016

Venezuela's currency chaos (Dec. 16, 2016)

The combined withdrawal of the 100 bolivar note in Venezuela, and the brief border closure with Colombia that coincided with the period citizens were given to trade in their bills, has left currency traders in Colombia with piles of now-worthless cash, reports the Wall Street Journal. While Venezuelan President Nicolás Maduro referenced transnational gangs seeking to destabilize the economy as rational for this week's surprise currency switch up, Colombian currency traders say their only crime has been helping Venezuelans obtain goods that are scarce on their side of the border. (See Monday's post and Wednesday's briefs.)
The move left Venezuela largely without cash yesterday, reports Reuters

Higher denomination bills, which will replace the now invalid 100 bolivar note, had not arrived at banks and ATMs yesterdays, leaving people dependent on credit cards and bank transfers. Yesterday some people withdrew money from ATMs, only to receive 100 bolivar notes that they had to queue up to redeposit, reports the BBC.

The measure is particularly harmful for people living in more remote communities which are dependent on cash, reports the Financial Times

And some enterprising Venezuelans are turning to bitcoins, seen as a safer alternative in a country with strict currency controls and now officially in the throws of hyperinflation, reports the Guardian. (See Wednesday's briefs on the issue of hyperinflation.)

News Briefs
  • Outside mediation is the only way out of the political impasse between Venezuela's government and opposition, according to a new report by the International Crisis Group. "If Venezuela is to save its democracy, negotiation over the terms of transition is needed, mediated by outsiders since no domestic institution commands the respect of both sides. An abrupt transfer of power, even if possible, might lead to serious instability and violence." (See Thursday's post on the breakdown of dialogue.)
  • Increasingly unpopular Brazilian President Michel Temer announced a raft of measures yesterday aimed to boost productivity and reduce red tape, reports the Wall Street Journal. Measures could include more credit for small businesses, faster import authorizations, and reducing paperwork for new hires.
  • A new Ibope poll found that Temer's approval rating has sunk to 13 percent, while the number of respondents who considered his government "bad" or "terrible" rose to 46 percent since early October, reports Reuters.
  • Folha de S. Paulo reported that another Odebrecht SA former exec has given testimony that Temer made illegal campaign donation requests of the construction firm, reports Reuters.
  • Temer has already lost seven cabinet members to corruption allegations in the six months he's governed, notes the Financial Times. The allegations, many stemming from plea bargain testimony with Odebrecht executives, combined with his plunging approval ratings, raise questions over his government's ability to survive, according to the piece.
  • Earlier this year there were hopes that the fetal malformations provoked by the Zika virus would push countries in the region towards a broader acceptance of abortion rights. In El Salvador, one of the world's most draconian countries when it comes to punishing pregnancy termination, that has not been the case, reports The Nation. Women are persecuted for natural complications leading to still births, and doctors are afraid to intervene even when the woman's life is at risk for fear of being accused of aborting. Entrenched opposition to abortion means FMLN attempts to soften the prohibition -- for example for cases of rape or risk to the woman's life -- have little chance of passing congress.
  • Four prominent land rights activists in Honduras have received death threats, denounced a monitoring group. The report comes amid growing international criticism of Honduras' failure to protect environmental activists and calls from U.S. Democrats to withhold more than $18 million in security aid to Honduras, reports Reuters.
  • An unwritten rule across the vast web of the Mara Salvatrucha gang in El Salvador prohibits gang members from being gay -- the punishment is death. Revista Factum has an in-depth report based on testimony from a gang member collaborating with authorities.
  • When Orlando Marquéz moved back to El Mozote, years after U.S. trained death squad massacred about a thousand townspeople, he sought to rebuild a home. Digging the foundations he found the skeletal remains of his family and neighbors, a grisly reminder of the ravages of the civil war in El Salvador, reports Sarah Maslin in a "Lives" piece for the New York Times magazine. (See Tuesday's briefs for more on the El Mozote anniversary last weekend.)
  • An assassination attempt against Jorge Machado, an evangelical pastor and advisor in efforts to purge Honduran police, killed a member of his security detail, reports La Prensa.
  • An internal review by the Mexican attorney general's office shows how investigators ran roughshod over suspects' and victims rights while seeking to solve the case of the missing 43 students of Ayotzinapa, reports the New York Times. The government has refused to release the 177 page report, which "depicts a series of violations, including the government’s top investigator’s taking a suspect to identify the supposed crime scene without a defense lawyer present," according to a copy obtained by the NYT.
  • The Mexican government's creation of four vast new nature reserves -- covering large tracts of sea and coast -- are laudable, but are unlikely to be implemented in a meaningful way, argues Adán Echeverría-García in the Conversation. Among the complications are cartels operating in reserve areas and how to include locals displaced by conservation areas. "... in practice, these schemes often simply force locals off their land while limiting traditional economic activities, such as fishing, and compel people to migrate."
  • Brazilian prosecutors filed new corruption charges against former President Luiz Inácio Lula da Silva and his wife, reports the Wall Street Journal. He already faces trial in three criminal cases linked to the Car Wash probe into corruption at state-owned oil company Petrobras.
  • Colombian President Juan Manuel Santos and his political rival, former president Álvaro Uribe, met with the Pope yesterday, reports Reuters. Santos appealed for his support for a peace deal with the FARC, which Uribe has opposed saying it offers insufficient punishment for crimes committed by the guerrilla group. Pope Francis met with each separately and then with both together. The arrangement was unusual, in that it seemed to grant equal status to Uribe and Santos, a current head of state, according to the Wall Street Journal.
  • Ecuador's government sent security forces to Morona Santiago province and declared a 30 day state of emergency after a violent protest against a Chinese mine resulted in the death of a policeman. The government said "illegally armed groups" protested against the copper exploration project, reports Reuters.
  • Cuba's history of support for radical Puerto Rican independence militants deserves renewed scrutiny argues a piece in Foreign Affairs. U.S. President Barack Obama is being asked to to commute the sentence of Oscar Lopez Rivera, the alleged leader of the FALN (a militant Puerto Rican separatist group). Over the years, Cuba has been accused of supporting the actions of violent Puerto Rican separatist groups operating in the U.S. and on the island. 
  • The Cuban government offered to pay off a multimillion dollar debt with the Czech Republic with rum, reports the BBC
  • Populism has a corrosive effect on democracy, writes Carlos de la Torre in a New York Times op-ed that compares U.S. president-elect Donald Trump with Latin American populists such as Juan Perón and Hugo Chávez. He compares the Latin American movements' railing against economic and political elites to Trump's hate mongering towards Mexicans -- a faulty proposition, in my opinion -- but makes the valid point that democracy in Venezuela and Ecuador has been eroded by a steady attack on civil liberties.

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