Latin America News Round-up

TEGUCIGALPA, Honduras – Seven foreign ministers from the Americas and a top regional official were in Honduras Monday in a bid to end the crisis set off by the ouster of President Manuel Zelaya almost two months ago.

The polarized Central American nation hit political deadlock after the June 28 military coup backed by the country’s courts and Congress.

The head of the Organization of American States (OAS), Jose Miguel Insulza, arrived with the foreign ministers, including those of Canada, Argentina and Mexico, at an airbase near the capital, Tegucigalpa.

The official aim of the two-day visit was to convince the interim government of Roberto Micheletti to accept a proposal by conflict mediator and Costa Rican President Oscar Arias to reinstall Zelaya as president.

However, the defiant de facto leaders are still seeking support for their position that a constitutional succession, not a coup, took place in Honduras, because Zelaya violated the law by seeking to change the constitution.

The Supreme Court on Saturday rejected the Costa Rica-brokered deal and sternly warned that Zelaya faced arrest if he returned.

The foreign ministers of Argentina, Canada, Costa Rica, Jamaica, Mexico, Panama and the Dominican Republic are taking part in the latest mediation bid.

Foreign governments and observers from Venezuela to the United States have condemned the coup, but international pressure, including frozen aid and withdrawn ambassadors, has so far failed to impact the de facto leaders.

Masked intruders destroyed the transmitters of two pro-Zelaya radio stations — Radio Globo and Canal 36 — late Sunday, their journalists said Monday.

Radio Globo broadcast from an emergency transmitter in parts of the capital on Monday, while Canal 36 was off the air.

Hundreds of taxi drivers blocked streets Monday to demand Zelaya’s return, before being moved on by police and soldiers.

Several thousand protesters were due to take part in further street protests on Monday, a union leader told AFP.

Zelaya was originally elected as a moderate but took a sharp turn to the left while in office, aligning himself with Venezuela’s firebrand leftist President Hugo Chavez.

Commission confirms rights violations in Honduras
AFP. August 23, 2009

TEGUCIGALPA – A delegation of the Inter-American Commission on Human Rights confirmed that coup leaders in Honduras have committed violations of human rights.

The group also said that “only a return to institutional democracy” will allow Honduras to restore individual rights.

Latin American governments have been seeking a reinstatement of Honduran President Manuel Zelaya who was ousted in a June 28 coup.

The Organization of American States has suspended Honduras’s membership in the body over the coup.

Amnesty International said Wednesday that protesters in Honduras were being beaten and arrested by police and the military for opposing the de facto government.

The London-based rights organization said it has collected evidence of mass arrests and violence against protesters by authorities since the interim government came to power in the June 28 bloodless coup.

“Mass arbitrary arrests and ill treatment of protesters are a serious and growing concern in Honduras today,” said Amnesty researcher Esther Major.

“Detention and ill treatment of protestors are being employed as form of punishment for those openly opposing the de facto government and also as a deterrent for those contemplating taking to the streets to peacefully show their discontent with the political turmoil the country is experiencing.”

Major said interviews with protesters including students detailed how police beat them with batons after their arrest at a peaceful demonstration on July 30 in the capital Tegucigalpa.

In a statement, Amnesty said harassment and intimidation of human rights defenders and attacks as well as restrictions imposed on media outlets in Honduras were also concerns.

Honduras’ high court rejects San José plan
EFE. August 23, 2009

Honduras’ Supreme Court has rejected key points of a proposal drafted in Costa Rica that would return ousted Honduran President Manuel Zelaya to power.

The court said Sunday that Zelaya cannot be president nor can he avoid “having to submit to established procedures of the penal process” should he return. Zelaya faces accusations of crimes against the government, treason against the nation and abuse of power, the court said.

The court also affirmed the legitimacy of Roberto Micheletti’s presidency as part of a lawful “constitutional succession.” Detractors call Micheletti a coup leader.

The ruling was a blow to Costa Rican President Oscar Arias’ 11-point plan, drafted after intense talks between representatives from the rival Honduran groups in Arias’ San José residence. Known as the San José Agreement, the draft included the return of Zelaya to power and an amnesty for political crimes among its proposed steps toward reconciliation.

The decision came the day before a planned visit by a delegation from the Organization of American States (OAS), which backs Arias’ plan and has repeatedly called for Zelaya to be reinstated as president.

Coup Protestor Gang-Raped by Honduran Police
Robert Naiman. Huffington Post. August 24, 2009

On Friday, Latin America scholars sent an urgent letter to Human Rights Watch, urging HRW to speak out on violations of human rights under the coup regime in Honduras and to conduct its own investigation. HRW hasn’t made any statement about Honduras since July 8.

One of the things Human Rights Watch should be investigating is allegations by Honduran feminists and human rights groups that Honduran police are using rape and other sexual violence as weapons of intimidation against Hondurans nonviolently protesting the coup regime.

The Spanish news agency EFE reports:

    The group Feministas de Honduras en Resistencia said Thursday that is has documented 19 instances of rape by police officers since the June 28 coup that ousted President Mel Zelaya. There have been many other cases of rape, but the women have not reported them out of fear of reprisals, Gilda Rivera, the executive coordinator of the Honduran Center for Women’s Rights and head of Feministas, told Efe.

    The activists say that women taking part in the resistance to the coup are being targeted. “We’ve obtained testimonials from women who’ve been sexually abused, beaten with cudgels on different parts of their bodies, especially the breasts and buttocks,” adds the report presented Thursday at a press conference in Tegucigalpa.

The Inter-American Commission on Human Rights – part of the Organization of American States – also reported last week it had testimony from Hondurans alleging rape and other sexual violence by the Honduran police. If the IACHR can obtain this testimony, surely Human Rights Watch can obtain it.

One of the victims, Irma Villanueva, told her story to the Jesuit-run Radio Progreso. You can listen to the interview [Spanish] here. Here is an English transcript of the Radio Progreso interview with Irma Villanueva.

    Irma Villanueva: Good afternoon, last Friday we went to the march –

    Host: Friday – you’re talking of the march at Choloma

    Irma: Yes, that’s right. We went to the march, we stayed there a while. All of a sudden we saw like a people stampede coming, – All was confused, they brought tear gas canisters. Lost myself from my group in the confusion, they started grabbing us – other persons and myself, we were forced into a [police] patrol pickup. They said they were going to Choloma, they came out through some part behind, and I heard them ask a police officer: “Chepe Luis, and this here [woman], where is she going?” “She goes to San Pedro,” he answered. – And then – only I remained on the flat part [on the bed] of the pickup [starts sobbing] and … I don’t know where they were bound, because, the cop kept me pinned face down, immobilized with his foot on my back [sobs], and they took me to a very cloddy, gritty place [sobs], then took me down and told me “Now bitch, now you’re gonna see what happens to you for you being where you shouldn’t be (starts weeping) I was raped by four police … . I managed to see the name of two of them, one was Ortiz, another’s name is Lopez, and the other was the one called Chepe Luis, the fourth one I couldn’t – didn’t find out his name.

    After they raped me [themselves], they stuck into me a … … that black thing police strikes you with. They left me lying down in the open [i.e. in the wilderness] – – I begged them “please, don’t hurt me, I have little children, I implore you! And they insulted me and called me names, I only asked God to protect me for my children, because they’re young. They left me all alone there. I was unconscious, I guess, don’t know. Then I got up with with what strength I had [left] and managed to reach the curb of a highway, I walked for around half an hour. I fell and stayed on the ground because I couln’t stand the pain in my private parts [weeping] … and a lady picked me up, I told her please to take me with my mom, don’t know how much time we took, the only thing I could see, we left through the side of Zincon[ph] … and I was taken where my mom was … My mom was already there, and my husband was looking for me. No … Didn’t want to go to the police, how could I if they had been the ones who injured me. Only – [she can’t go on]

    Host: This is so difficult, Irma’s situation, Irma Villanueva, 25 years old, a mother of four kids – and girls? How many [girls] – ?

    Irma: A boy and three girls.

    Host: A boy and three girls. She has come here to Radio Progreso station in order to give her testimony, that we listen to her, that you our friends, women and men who tune in with us, listen to what happened to her, what has not come out to the mainstream media, what everybody keeps silent, in this country, under this de facto government – and you do not remember exactly the place where they took you? and were taken you alone?

    Irma: Me alone, several persons were going, men for the most part, because – I was going in a corner but me they left on the bed of the pickup – and they took only me, I guess me, I was the only woman. I only remember the place full of branches, trees, with mounts, for as long as I walked, the mountain blocked the view, and it – When I managed to get out, I had to walk over some ditches, then like a little lagoon and I knew it was Ticamaya where I got out as I noted that we left on the side of Zincon.

    Host: And who helped you?

    Irma: A lady who was passing by, I stayed lying on the ground as I couldn’t stand the pain in my abdomen [sobs]

    Host: Yes

    Irma: and she saw I was fallen, and got down and helped me, I asked her to help me please, and [she asked] could she take me to a hospital and I said no, that I wanted her to take me with my mom because – what could I get in forensic medicine? that they took me with the police, when they were the ones who did this to me.

    Host: That they mock, make fun!

    Irma: Yes … yes, for they were telling horrible things to me, and I was frightened.

Where is Human Rights Watch?

Robert Naiman is National Coordinator of Just Foreign Policy.

KC women are convinced coup in Honduras was military
Mary Sanchez. The Kansas City Star. August 23, 2009

The bullet holes in the president’s back door belie the docile version of the Honduran coup, the story many have latched to through snippets of news.

Was Manuel Zelaya removed from office because he attempted a power grab, bent on reworking the constitution to allow for more than a single four-year presidential term?

Or was his removal – as two Kansas Citians now firmly believe – a military coup in response to reforms that would help the poor of the Central American country?

The U.S. has been tepid in its response to the late June coup and subsequent protests. Barack Obama has termed the coup “illegal” but not military. A military coup would trigger cutting off of U.S. aid, except for humanitarian purposes.

Judy Ancel and Alice Kitchen traveled along the best example of how those U.S. dollars are being spent – a nearly completed major road between San Pedro Sula and the Honduran capital of Tegucigalpa that they saw on an eight-day trip.

It was a journey that garnered them remarkable access, like having Honduran first lady Xiomara Castro de Zelaya show them her home – and the bullet holes. The first lady says her husband was grabbed in the night, forcibly removed.

Ancel says that was the backlash to Zelaya bringing reforms such as raising the minimum wage and making primary school feasible for more people by eliminating fees.

The other version insists the Honduran Supreme Court ruled against Zelaya, forcing his exile.

Ancel, a longtime labor rights leader, was shocked at some of the places she found herself in. Not only did she visit with the first lady, but also with U.S. Ambassador Hugo Llorens, labor leaders and human rights workers.

This was her first trip to Honduras. Global Exchange, a San Francisco-based human rights organization, arranged it, but Ancel and Kitchen, a social worker, paid their own costs.

Honduras’ greatest public relations’ problems come in the form of Venezuela’s Hugo Chavez and the U.S. public’s general lack of knowledge about the nation. That makes it difficult for many in the U.S. to build a sound opinion.

Mention Chavez’s support for Zelaya and the Honduran is tainted by the image of the bellicose but often oversimplified Chavez.

Unfortunately, unrest in Honduras doesn’t receive the media coverage other nations benefit from receiving.

So for now, the calls to action that Ancel and Kitchen are advocating include one that is especially sound. They want more video cameras sent to Honduras to record police tear gas attacks they witnessed on protesters as well as other violations of human rights, but mostly to record the views of Hondurans caught in the struggle for their country’s future.

Argentina [contents]

Argentina warming up to resume dialogue and links with IMF
Mercopress. August 21, 2009

Argentina’s Economy Minister Amado Boudou has opened the door to re-establishing links with the International Monetary Fund, as he seeks to restore Argentina’s access to international credit markets.

“We are heading towards a meeting point with the IMF, although we won’t discuss the government’s economic policy” Boudou said, quoted on Thursday by the La Nacion newspaper. Argentina virtually cut relations with the IMF over two years ago.

The announcement had a positive echo from Washington where IMF officials said that “naturally we are interested in a more intense dialogue with Argentina. We are working with all country members in the context of the global crisis”.

“Obviously there are high expectations” by the fact that for the first time the IMF Director of the Western Hemisphere will be officially talking with Argentina’s Economy minister, said sources in Buenos Aires.

“We hold technical discussions” with IMF staff quite normally and frequently, but so far it has not included any formal request for loans or support, or “for that matter, advances in the regular statistical reviews undertaken by the IMF in all country members

Boudou spoke to reporters on a trip back from Brazil. From the comments, it’s still unclear whether the Argentine government will allow the IMF to conduct an Article IV assessment of the Argentine economy, as it does regularly with most of IMF members. In part, that’s problematic due to questions about the validity of inflation and growth data from the national statistics institute, or Indec.
Iran summons Argentina envoy in row over minister
Reuters. August 24, 2009

TEHRAN (Reuters) – Iran’s Foreign Ministry summoned an Argentinian diplomat on Monday, after Buenos Aires condemned the nomination of Ahmad Vahidi as Iranian defence minister as “an affront to the victims” of an attack on a Jewish centre.

Argentina’s statement was a clear interference in Iran’s internal affairs and is strongly condemned, Iranian media quoted the head of the Foreign Ministry’s South America department as telling Argentina’s charge d’affaires in Tehran.

Argentina accuses Vahidi and other senior Iranian officials of involvement in a 1994 attack on a Jewish centre in Buenos Aires in which 85 people died. Iran has repeatedly denied this.

“Unfortunately some people and groups in Argentina, particularly in its judicial system, are defending the rights of zionists instead of defending the people of Argentina,” the Iranian Foreign Ministry official, who was not named, said.

Argentina’s Foreign Ministry last week condemned Vahidi’s nomination by President Mahmoud Ahmadinejad, saying it was “an affront to the victims” of the bombing 15 years ago.

Argentina has formally accused Iran of masterminding the attack, in which a truck laden with explosives levelled the seven-story Argentine Israeli Mutual Association building, and is seeking the arrest of high-ranking government officials.

Vahidi, who is deputy defence minister in Iran’s outgoing government, was nominated as new defence minister when Ahmadinejad unveiled his proposed 21-member cabinet to parliament last week after June’s disputed presidential poll.

Fernández, Manzur will travel to Paraguay, Bolivia for health meetings
Buenos Aires Herald. August 23, 2009

Cabinet Chief Aníbal Fernández and Health Minister Juan Manzur will visit Paraguay and Bolivia to meet with Presidents Fernando Lugo and Evo Morales, with the goal of outlining a series of methods for the prevention of dengue and yellow fever, based on regional strategies.

Both men will leave for Asunción and meet with governors Gildo Insfrán of Formosa, Maurice Closs of Misiones, and Jorge Capitanich of Chaco province, who will all be accompanied by the health ministers from each of the provinces.

After meeting with the head of Paraguay’s sanitary chamber, Esmeralda Martínez, the representatives from Argentina will meet with President Fernando Lugo.

In addition, health officials and sanitary agents from the three Argentine provinces will attend a meeting to discuss efforts and methods for containing possible dengue outbreaks on both sides of the border.

Afterwards, Fernández and Manzur will leave for La Paz, where they will meet with the country’s Health Minister, Ramiro Tapia, accompanied by the governor of Jujuy, Walter Barrionuevo and the governor of Salta, Juan Manuel Urtubey.

Here, together with Evo Morales, they will work towards an agreement that will allow the countries to confront a dengue outbreak, in concordance with previously discussed methods.

At the previous meeting of the Federal Health Council (COFESA), Argentina’s health ministers voted in favour of a National Prevention Plan for dengue and yellow fever, a strategy designed to reduce risk factors and to guarantee early detection methods in all cases.

The initiative also counts on help from different science specialists, private and public universities and different state sectors.

Argentine primary surplus falls 80 pct in July
Reuters. August 21, 2009

BUENOS AIRES, Aug 21 (Reuters) – Argentina’s primary budget surplus shrank by some 80 percent in July from a year earlier, marking the eighth straight month of worsening budget results, the government said on Friday.

July’s surplus came in at 765.5 million pesos ($197 million), down from 4.02 billion pesos in July 2008 when government tax revenue was soaring. Tax income growth has slowed considerably during the last year.

The figure is used to gauge a country’s ability to service its debt and is especially important for Latin America’s No. 3 economy, which has been virtually shut out of global credit markets since it defaulted on some $100 billion in 2002.

After debt payments, the country registered a fiscal deficit of 571 million pesos in July, Treasury Secretary Juan Carlos Pezoa told a news conference.

“We’ve again recorded a primary budget surplus and that shows that despite the international crisis … we’re looking after the state’s finances,” Economy Minister Amado Boudou told local television.

Boudou, who took office last month, has said he expects the country to close 2009 with a primary budget surplus.

In June, Argentina’s primary budget surplus shrank by 65 percent.

In the first seven months of the year, the primary budget surplus totaled 7.9 billion pesos. ($1 = 3.8825 Argentine pesos) (Reporting by Helen Popper and Guido Nejamkis; editing by Carol Bishopric)

Bolivia [contents]

Brazil reaffirms influence in Bolivia and support for Evo Morales
Mercopress. August 24, 2009

President Lula da Silva reaffirmed Brazil’s influence during his visit to Bolivia where he announced the opening of the Brazilian market to Bolivian textiles and extended a loan to build a leg of the bi-oceanic corridor which will eventually join Santos in the Atlantic with Iquique on the Pacific.

He also underlined that integration is the only tool that “will help us solve our problems; we must understand that we must help each other, build alliances and work together”.

Otherwise “we are condemned to another century with no development for our impoverished peoples” underlined the Brazilian leader.

The access of Bolivian textiles, zero tariffs to Brazil is limited to 21 million US dollars which is equivalent to the amount lost when Bolivian president Evo Morales refused to renew the US accord to combat drug trafficking under the US DEA instructions.

“What Bolivia is asking for is not a privilege but rather a chance to show the capacity of its people”, said Lula da Silva in his speech on making the announcement in the province of Cochabamba.

“That is why Brazil has decided to open its market to Bolivian textiles and compensate the ATPDEA loss”, added Lula da Silva.

The two presidents also signed agreements to finance the building of a 320 kilometres road that will cross Bolivia and which is part of the bi-oceanic corridor; funds for researching the energy potential of the Uyuni open salt mines and the creation of a centre for trades’ formation and civil defence with humanitarian purposes.

“I was telling my companion Evo that we have until the end of the year to organize a presentation of Bolivian goods in Brazil so that people realize the high quality products of this country, and that Bolivia is not behind other countries in the world”, said Lula da Silva.

President Morales said he was most grateful to Brazil for helping promote Bolivian textiles and because the loan “was not of the ATPDEA type, since it has no strings ties to it”.

On a more political aspect, Lula da Silva specifically praised and supported Evo Morales leadership, “who everyday faces new challenges because he’s only trying to revert a long history of social exclusion and unsustainable inequality in the XXI century”.

“That is why I had to be here and see the hope you represent for your people and the way you rule wholeheartedly, with an open soul, with no hatred, discussing in legitimate dialogue with the opposition and defeating them in the ballots, as true democracy commands”.

Because of the radical changes on both sides of the border “we are facing the wrath of the powerful who are not pleased with having to abandon power and realizing to their irritation how a metal worker and an union leader are doing more for their peoples than they did in a whole century”.

Evo Morales also talked about the controversial Colombia/US military accord saying that whoever signs that kind of agreement is committing an “act of treason”.

“How is it possible that some presidents can allow US forces to come to South America; I sincerely believe that US forces, uniformed and armed be it Latinamerican or South America can only be seen as an act of treason against the liberation of our peoples”.

Morales, a former union leader of coca planters recalled when US forces, operating from Bolivian territory conducted the fight against drug organizations in Bolivia.

“They ignored our people’s dignity and acted just like local police”, he criticized.

President Morales is running for re-election next December. Opinion polls indicate he is leading in vote intention.
Sarkozy to visit Bolivia in Sept
AFP. August 23, 2009

VILLA TUNARI (Bolivia) – FRENCH President Nicolas Sarkozy will visit Bolivia in September for the launch of a public administration school during a regional tour, his Bolivian counterpart said on Saturday.

Bolivian President Evo Morales said Mr Sarkozy, who is to visit neighbouring Brazil for its Independence Day celebrations on September 7, would follow that trip with a stop in the central Bolivian city of Cochabamba to launch a joint French-Bolivian school for civil servants.

Mr Morales, who was speaking in Villa Tunari in central Bolivia after a meeting with Brazilian President Luiz Inacio Lula da Silva, did not give any further details on Mr Sarkozy’s visit.

France agreed to provide support for the school during a visit Morales made to Paris in February. Bolivia has also shown interest in purchasing helicopters to boost its counternarcotics efforts.

The two presidents had cited industrial partnerships in hydrocarbons (with the French oil company Total) and lithium, a soft metal used in electric car batteries.

France’s Bollore, along with Mitsubishi and Sumitomo of Japan, as well as South Korea’s LG are seeking to bid for a contract to exploit lithium at Salar de Uyuni.

The salt desert, which stretches across 11,000 square kilometres, is believed to hold at least half of the world’s lithium reserves.

Brazil, Mr Morales said, would be involved in industrialising the lithium reserves in the salt desert.

Meanwhile, Mr Morales and Lula signed a US$230-million (S$331-million) credit agreement to build a 306-kilometre road from Villa Tunari to the northern Amazonian town San Ignacio de Moxos. — AFP

Bolivia’s Morales Slams as “Traitors” Those Who Allow Foreign Military Presence
Latin American Herald Tribune. August 22, 2009

VILLA TUNARI, Bolivia – Bolivian President Evo Morales said Saturday that any governments or heads of state that allow a foreign military presence in the region “are traitors to the liberation of the nations of Latin America.”

“I say it sincerely: the president or government that allows uniformed military forces to come armed into their country, in South America or Latin America, I believe are traitors to the liberation of the nations of Latin America,” Morales said.

The Bolivian president made that statement in the presence of his Brazilian colleague, Luis Inacio Lula da Silva, who Saturday visited the coca-growing region of Chapare to sign a number of cooperation agreements with this country.

Lula, in a speech preceding Morales’ address, mentioned the summit that the countries of the Union of South American Nations, or Unasur, intend to hold on Aug. 28 in Bariloche, Argentina, to analyze the military pacts being negotiated between the United States and Colombia.

“This is a great opportunity that we have to show that South America is building its democracy and prosperity, and that we are working so that peace reigns in South America,” Lula said, without expressly mentioning the military pact by which the United States plans to use as many as seven Colombian bases.

Nonetheless, Morales was more explicit in insisting on the rejection of a U.S. military presence in the region and recalled the repression that he himself suffered as a leader of the coca-growers’ union by U.S. troops operating in Chapare.

“We have been victims of the U.S. presence in this region,” the Bolivian president said, adding that this rejection “does not come from thinking but from suffering.”

He therefore urged Latin America’s leaders to defend the “sovereignty” of the region.

Morales Annuls Forest Exploitation Concessions, Turns Land Over to Indians
Latin American Herald Tribune. August 23, 2009

LA PAZ – The government of Evo Morales on Sunday annulled the concessions to exploit forest areas in a portion of eastern Bolivia and handed over more than 200,000 hectares (500,000 acres) of those lands to the Guaraya Indians.

Morales attended the ceremony to turn over the lands and forests in the town of Ascension de Guarayos, in Santa Cruz province, which borders on Brazil.

In his speech at the event, Morales emphasized that his agrarian reform plan is part of his effort to provide “equality” to Bolivians, and he asked the Indians to organize themselves to defend their lands.

Land Vice Minister Alejandro Almaraz said that the lands that were turned over to the Guarayas had been in other hands for some time despite the fact that Bolivian law protects the community property of the country’s ethnic groups.

Almaraz said that “there can be no private companies” in the region, no matter how much they might be practicing sustainable exploitation of the forests, because the Indians’ right to the land overrides that consideration.

“Those forests have to serve to ensure the future of the Guaraya people and should be exploited but at the same time be conserved,” said Almaraz, who justified the government’s decisions within the framework of Morales’ “agrarian revolution.”

However, he also announced that the titles to more than 30,000 hectares (75,000 acres) would be given to agri-businessmen in the same region because they were adhering to and helping carry out the agrarian law.

Ecuador [contents]

Healthy looking Fidel Castro meets Ecuador leader
AP. August 23, 2009

HAVANA — Cuba’s Communist Youth newspaper is showing a photo of a healthier-looking Fidel Castro talking with the visiting Ecuadorean president.

Sunday’s photo in Juventud Rebelde shows the 83-year-old Castro wearing a white shirt instead of the sports apparel he has worn in recent photos. The meeting with Rafael Correa occurred Friday.

Castro ceded power to his brother Raul after falling ill three years ago and he has not been seen in public since. He stepped down as president in February 2008.

Cuba’s state-run press occasionally publishes photographs of Castro with visitors, but news of his health is considered a state secret. Castro also often publishes essays on global affairs.

Correa’s visit includes medical checkups.
Ecuador: Private Oil Companies Await New Contract Model
Mercedes Alvaro. Dow Jones Newswires. August 21, 2009

QUITO (Dow Jones)–The head of the private sector association representing companies in Ecuador’s hydrocarbons sector said Thursday that companies are waiting for the official draft of a new government services contract before deciding on their investment plans.

Jose Luis Ziritt, head of the AIHE, told journalists that during 2009 investments from private oil companies have been mainly limited to oil fields maintenance.

He said this was due to uncertainty over the long-term regulatory structure in the hydrocarbons sector in Ecuador.

According to official data, Ecuador’s average oil output was 495,000 barrels a day in the first half of 2009. Private sector companies produced 211,442 B/D.

The Mines and Oil Ministry approved investments from private companies worth $989 million for 2008. In 2007 the amount approved was $1.34 billion.

For 2009 the private oil companies are expected to carry out investments worth $1.15 billion, although so far private-sector companies have invested much less.

In October 2007, President Rafael Correa increased the state’s share of windfall taxes on oil to 99% from 50%. He then lowered the state’s share to 70% for private oil companies that agreed to sign temporary, one-year participation contracts that are expected to be changed to services contracts.

Ecuador wants to switch all current agreements with private companies to service contracts and to take more control over its natural resources.

Under the current transitory participation-sharing contracts, the government receives a percentage of profits from oil production, but under the new service-provider contracts, companies would be paid a production fee and reimbursed for investment costs, although all of the recovered crude oil will belong to the state.

Also under the new contracts, foreign companies will be required to seek relief from Ecuadorian or Latin American courts to settle any disputes, losing the current option of seeking arbitration at the World Bank International Center for Settlement of Investment Disputes.

Venezuela [contents]

Former ally of Venezuela’s Chavez seeks asylum in Peru to avoid corruption charges at home
AP. August 21, 2009,0,830702.story

LIMA, Peru (AP) – A former ally of Venezuelan President Hugo Chavez is in Peru seeking political asylum to avoid corruption charges at home that he contends are politically motivated, his lawyer said Friday.

Didalco Bolivar is a former governor who split with Chavez in 2007 when he refused to join the president’s newly formed ruling party. Last month, Bolivar was summoned for arraignment on charges alleging he sidestepped open bidding rules to handpick a contractor in 2004 while serving as governor of Venezuela’s Aragua state.

Bolivar’s lawyer in Peru, Walter Gutierrez, called the charges political persecution and said he filed an asylum petition in Lima on Friday.

Bolivar “is being politically persecuted because they are charging him with certain crimes without formally opening penal proceedings,” Gutierrez told Lima’s RPP radio.

Peruvian Foreign Minister Jose Antonio Garcia Belaunde confirmed Bolivar is in Peru but told The Associated Press that he had not yet received the asylum petition.

Gutierrez said he expected Peruvian officials to respond to the request within 12 days.

Peru has become a hub for asylum-seeking people on the outs with the region’s left-wing governments. Venezuelan opposition leader Manuel Rosales and three former Cabinet ministers from Bolivia have already received asylum from Peru’s conservative government.

Relations between Peru and Bolivian President Evo Morales, a Chavez ally, have been tense since the former ministers were given asylum. The men are being tried in absentia on charges of genocide for their alleged role in the deaths of anti-government protesters during a military crackdown in 2003, before Morales took office.

Rosales, who was a presidential candidate against Chavez in Venezuela’s 2006 election, received Peruvian asylum in April after being accused by Venezuelan prosecutors of illegal enrichment while he was governor of western Zulia state.

Venezuelan prosecutors have filed corruption charges in recent months against several prominent government opponents, including Rosales, former defense minister Raul Baduel and another former governor, Eduardo Manuitt.

Like Bolivar, they argue the charges are politically motivated.
Venezuela sees economy skirting recession
Reuters. August 23, 2009–12-12–.html

CARACAS, Venezuela (Reuters) — Venezuela’s economy, which shrank for the first time in five years in the second quarter, will likely avoid recession and could grow modestly this year, the finance minister said in an interview published on Sunday.

Finance Minister Ali Rodriguez said the government was working to stimulate growth and an expansion of 1 percent was not out of the question, according to an interview with local newspaper Ultimas Noticias.

Ali Rodriguez. AFP PHOTO
“There is no recession. By convention, a recession exists when there are two consecutive quarters of negative growth. We are not in that situation,” Rodriguez said.

The economy shrank 2.4 percent in the second quarter as the government reduced spending to compensate for lower oil revenue while the nationalization of swathes of the economy dampened the private sector’s appetite for investment.

Venezuela’s oil-dependent economy has been hit by the sharp fall in global crude prices since last summer. Galloping inflation and an increasingly distorted foreign exchange system have further complicated the outlook for the economy.

The government of President Hugo Chavez was expected to adopt measures to bolster growth in the coming weeks but Rodriguez did not elaborate on what the steps could be.

“(The situation) is not extremely serious but neither is it something to downplay,” Rodriguez said.

The government has ruled out any adjustment to its exchange-rate policy, which has fixed the bolivar at 2.15 to the dollar since 2005, and forces importers to obtain a permit to purchase foreign currency, Rodriguez said.

The greenback trades at more than three times the official exchange rate on an illegal parallel market, which has helped to push inflation up to one of the highest levels in the world due to Venezuela’s heavy reliance on imported goods.

Venezuela Considers Creating Four Exchange Rates, BBO Says
Matthew Walter. Bloomberg. August 24, 2009

Aug. 24 (Bloomberg) — Venezuela may modify its foreign exchange controls to create four different exchange rates to help the government deal with a drop in oil revenue, BBO Financial Services Inc. said.

President Hugo Chavez is considering a proposal to maintain the current official exchange rate of 2.15 bolivars per dollar for food and medicine, and implementing a tax on currency transactions that are done to import other, nonessential items, said Russ Dallen, head trader at Caracas Capital Markets at BBO, in a research note published today.

Separately, the government would also begin regular auctions of dollar-denominated securities on the Caracas stock exchange, which could be bought with bolivars, Dallen said. The existing, unofficial currency market, dominated by swaps of dollar securities for local-currency assets, would also remain in place.

“This complicated system, if implemented, would satisfy the requirements of the government of pretending not to have a formal devaluation of the exchange rate,” Dallen said.

Chavez is expected to make an announcement “soon” about a new set of economy policies designed to boost growth, Dallen said. The central bank reported last week that the economy shrank 2.4 percent in the second quarter, the first contraction since 2003.

To contact the reporters on this story: Matthew Walter in Caracas at

Police disperse opposition marchers as Venezuelans protest for and against education law
Rachel Jones. AP. August 22, 2009,0,623713.story

CARACAS, Venezuela (AP) – Police dispersed opponents of President Hugo Chavez’s government on Saturday as thousands demonstrated both for and against an education law that critics fear will lead to political indoctrination in schools.

Officers fired tear gas, a water cannon and rubber bullets to scatter opposition marchers as they tried to break through a police barrier. Protesters including Miguel Rivero, a 43-year-old lawyer, said they requested but did not receive permission to march to the National Assembly.

“It’s totally unjust,” Rivero said, wiping tear gas from his eyes. “This repression is totally unnecessary.”

Justice Minister Tareck El Aissami accused the protesters of “inciting violence” by throwing rocks and other objects at police.

Health authorities said they treated dozens of people for tear gas inhalation and at least 14 who were hit by rubber bullets or displayed other minor injuries. Interior Vice Minister Juan Francisco Romero said at least a dozen police were mildly injured.

The law approved by the largely pro-Chavez National Assembly last week orders schools to base curricula on “the Bolivarian Doctrine” – a reference to ideals espoused by 19th-century independence hero Simon Bolivar, such as national self-determination and Latin American unity.

Critics are quick to note that Chavez uses the term “Bolivarian” to describe his political movement, and some believe his socialist government intends to win over hearts and minds through classroom indoctrination.

Chavez says the law is necessary to change Venezuela’s “bourgeois” educational system.

“This is political, nothing more,” said Nancy Gonzalez, a 54-year-old retired education professor, adding that the law’s vague language leaves many articles open to interpretation.

Pro-government legislators deny the law aims at political indoctrination.

Government supporter Adriana Lombardi – one of thousands who marched peacefully across town in favor of the measure – said she believes the law will mean her 3-year-old son will gain an improved understanding of Venezuelan history.

“This is our identity, where we come from,” she said. “It’s important, it’s fundamental.”

Mitsubishi closes Venezuela plant
BBC. August 24, 2009

Mitsubishi Motors has closed its Venezuelan car assembly plant, blaming a number of labour disputes that have led to reduced production levels.

The Japanese firm said the decision came in response to “indiscipline, anarchy and violence”.

The facility in the east of the country has seen numerous violent strikes over the past year, including one that resulted in two deaths in January.

Mitsubishi said the plant may reopen if “peace and discipline” return.

Government backdrop

The factory in the eastern city of Barcelona employs about 1,400 people, and is run by MMC Automotriz, a joint venture between Japanese firm Sojitz and a Venezuelan company. It also produces cars for Korea’s Hyundai.

The two workers died following clashes between striking workers and police.

Venezuela has experienced increased levels of worker militancy in recent years.

This has come against the backdrop of a number of forced nationalisations of foreign-owned firms by President Hugo Chavez’s left-wing government.

Andean Region [contents]

US-Colombia base deal could include others: Uribe
AFP. August 23, 2009

BOGOTA – A controversial deal that lets the US military use Colombian bases could be extended to other countries, President Alvaro Uribe said in remarks broadcast Saturday.

“For this agreement to combat drug trafficking and terrorism, we are prepared to act with the United States and all other countries that will join us,” Uribe, a conservative and a close US ally, said earlier in the week at a public event. The remarks were re-broadcast on Saturday.

Bogota has previously expressed its willingness to negotiate military cooperation agreements with Brazil and Peru.

The deal negotiated earlier this month, which grants the United States access to seven Colombian bases, has riled other Latin American nations, especially neighboring Venezuela and Ecuador, which have expressed fears the bases may be used to stage an invasion of their countries.

A preliminary accord was struck last week and US Secretary of State Hillary Clinton has said she expected the bases agreement to be signed shortly.

An extraordinary summit of Unasur — the South America forum grouping Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guayana, Paraguay, Peru, Suriname, Uruguay and Venezuela — is to take place on Friday in Argentina to specifically address the region’s concern over the bases.

Last March, Colombian Defense Minister Juan Manuel Santos refined the terms of cooperation agreements with Brazil and Peru on border security issues linked to guerillas and drug traffickers.

Those deals provided for the purchase of warplanes and other arms from Brazil, which has become a major military supplier to Colombia.

Colombia to Protest Chavez ‘Intervention’ at OAS, W Radio Says
Helen Murphy. Bloomberg. August 24, 2009

Aug. 24 (Bloomberg) — Colombia will seek an Organization of American States’ motion rejecting “blatant intervention” by Venezuela’s President Hugo Chavez in Colombian affairs, W Radio reported, citing the country’s envoy to the multilateral body.

Colombian Ambassador Luis Alfonso Hoyos said he will ask the OAS to condemn comments made by Chavez yesterday on his weekly “Alo Presidente” radio program urging members of his party to strengthen ties with socialists in Colombia, W Radio reported.

Inspector General to investigate alleged pressure to approve referendum
Adriaan Alsema. Colombia Reports. August 24, 2009

Colombia’s Inspector General’s Office will investigate accusations the government is pressuring and bribing Congressmen to assure the approval of the referendum needed for the re-election of President Alvaro Uribe.

Inspector General Alejandro Ordoñez told Caracol Radio it is his constitutional obligation to investigate the accusations by German Vargas Lleras, presidential candidate for Cambio Radical, and Rafael Pardo, presidential candidate for the Liberal Party, the Government.

According to Vargas Lleras, the government is pressuring lawmakers to approve the bill when it is voted for in the House Tuesday. Pardo denounced funds for public security are used for projects that can benefit Representatives in their districts when the 2010 Congressional elections come around.

The approval of the referendum in the last congressional vote in the House Tuesday is said to become tight. Many of the coalition’s Representatives who voted in favor of the bill before are under investigation by the Supreme Court for allegedly illegally approving the referendum.

Peru’s Amazon Indians warn of renewed protests
Andrew Whalen. August 22, 2009

LIMA, Peru – Peruvian Amazon Indian leaders are warning of renewed protests, alleging Friday that the government has not honored promises made in the aftermath of June violence that left at least 23 police and 10 Indians dead.

Indian leader Salomon Awananch accused the government of blocking the formation of an independent truth commission to investigate the June violence. The government agreed to the comission more than two months ago but has not appointed its representative to the proposed seven person comittee, he said.

Calls to President Alan Garcia’s Cabinet chief, who is leading negotiations, were unsuccessful.

Talks “haven’t advanced at all. It seems they lack the good will” to resolve the conflict, said Awananch, a member of confederation’s national council.

Awananch is a leader of the Awajun people, who suffered 10 deaths during the June 5 government crackdown at an Amazon highway blockade manned by Indians protesting development on their ancestral lands. Twenty-three police were killed in the ensuing violence.

Indians say police opened fire with assault rifles on some 800 protesters bearing spears and rocks, but Garcia’s government says Indians with firearms initiated the violence.

More than 100 Indians are charged with murder and rebellion and 17 police have been charged with homicide. Three Indian leaders have taken asylum in Nicaragua. The confederation demands that the government drop the charges.

Awananch said Indian leaders will decide Saturday whether to resume blockades on highways, waterways and oil pumping stations.

Since last year, Indians have opposed 11 pro-investment decrees issued by Garcia under special legislative powers granted by Congress. Congress appealed four of the decrees.

In Peru, the government owns the rights to all subsoil resources. Some 75 percent of the Peruvian Amazon is carved into oil concessions that overlap Indian lands.

The government has pushed back a new round of bidding on oil concessions from July to the end of the year.

10-Year Jail Sentence Sought for Chile Cop Who Killed Indian
Latin American Herald Tribune. August 23, 2009

SANTIAGO – Prosecutors are seeking 10 years in jail for the Chilean police officer suspected of killing the Mapuche Indian university student Matias Catrileo in 2008, whose death renewed the conflict between Indians and forestry companies in the southern part of the country, local media said.

According to radio Bio Bio, military prosecutor Jose Pinto Aparicio, who closed investigations into this case nine days ago, asked for 10 years in prison for the Carabineros (militarized police) officer Walter Ramirez Inostroza.

The incident occurred on Jan. 3, 2008 on the Santa Margarita estate, located outside the town of Vilcun in the La Araucania region and some 670 kilometers (416 miles) south of Santiago.

The death of 22-year-old Catrileo stirred up the conflict anew in La Araucania, where on Aug. 12 another young Mapuche, Jaime Mendoza Collio, 24, died after being shot in the back by a cop.

The military tribunal decided this Thursday to retain in custody the police officer arrested for that incident, Patricio Jara Muñoz, and said that he would be tried for the crime of “unnecessary violence resulting in death.”

Collio died when Carabineros officers carrying out a court order dislodged a group of Indians who had occupied a ranch in Angol, at 600 kilometers (373 miles) from Santiago, and who considered that the land belonged to them.

In a similar clash young Alex Lemun, 17, died in November 2002 after being shot in the town of Ercilla, supposedly by a Carabineros officer, but a military tribunal dropped charges against him after his trial.

Southern Chile has been the scene of long-running land disputes between Mapuche communities and farmers and lumber firms, with the conflicts often turning violent.

The Mapuches, Chile’s largest indigenous group with slightly more than 600,000 members, demand the constitutional recognition of their tribal identity, rights and culture, as well as ownership of the lands that belonged to their ancestors.

The government has mapped out a plan to purchase land and deliver it to communal landholders, but the process has gotten bogged down and more radical Indian protesters have resorted to violence as a pressure tactic.

Authorities have prosecuted violent Indian protesters under the country’s dictatorship-era Anti-Terrorism Law, which expands police and judicial powers, while the Chilean right claims – though thus far without concrete evidence – that foreign groups are behind the most violent Mapuche protests.

Pinochet’s lost millions: the UK connection
Hugh O’Shaughnessy. The Independent. August 23, 2009

Two-and-a-half years after the death of General Augusto Pinochet, a report by the Chilean police task force charged with investigating money-laundering has claimed that British authorities and the financial sector were complicit in hiding his massive ill-gotten fortune.

Though the Pinochet family protects the details of its wealth with the help of bankers and advisers from Britain and other countries, the pile of assets in cash, gold, government bonds and shares controlled by the family of the late dictator is now believed to amount to as much as £1bn.

The report by Brilac, the Chilean police task force, says that the freeze on the dictator’s funds issued in 1998 by the Spanish investigating magistrate Baltasar Garzon, who was seeking the ex-dictator’s extradition to Spain on charges of torture and murder, was in effect ignored by the financial sector in Britain, despite the fact that Britain was under an obligation to enforce it.

Professor David Sugarman, the director of the Centre for Law and Society at Lancaster University and author of a forthcoming book on Pinochet’s arrest and imprisonment, said yesterday: “It looks like some of the banks holding Pinochet’s funds did not comply with the letter and spirit of their duties of disclosure, due diligence and the legal requirement to report suspicious circumstances.”

The sustained cover-up of the Pinochet fortune – largely amassed through drugs and arms dealing, and Pinochet’s making over of newly privatised state concerns to family members – took place in British colonies which were ultimately controlled by Whitehall. They range from Gibraltar, the Caribbean tax havens of the Cayman Islands and the British Virgin Islands (BVI), to former colonies such as the Bahamas and Hong Kong. With help from within the British finance industry, offshore bank accounts were set up at the same time as companies with names such as Abanda Finance, Althorp Investment Trust, Ashburton, Belview International, Sociedad de Inversiones Belview, Cornwall Overseas, Eastview Finance, GLP, and Tasker Investments. The corrupt and chaotic state of some offshore tax havens was illustrated this month by Whitehall’s decision to dismiss the local authorities and resume direct rule in the Turks and Caicos Islands.

In Hong Kong, Pinochet was reported in 2006 to have lodged $160m in gold bars with an international bank, though the bank has denied this. British banks and other institutions also acted on Pinochet’s behalf not just in colonial tax havens but also in independent Commonwealth states such as the Bahamas, and in the US.

The Brilac report shows that Riggs, the Washington bank that did much of Pinochet’s business, ran a London branch near St James’s Palace, which – asset freeze or no asset freeze – was used as a moneybox by the detained ex-dictator. Riggs was taken over by a bank in Pittsburgh in 2005 after its activities for the world’s tyrants and tax-dodgers were denounced by the US Senate. The Brilac report says that when Pinochet closed his account at the branch (held under the name of Althorp Investments, one of his BVI companies) in May 2002 it contained $219,285.74.

While he was under arrest at Virginia Water, Surrey, between 1998 and 2000, the elderly detainee still managed to access his funds held at Riggs bank. Pinochet’s grandson, Rodrigo Garcia Pinochet, told the magistrate in Santiago investigating money-laundering in 2004 how he bought a rucksack to carry the £50,000 in cash which his grandfather had sent him to collect from St James’s and bring to the small house by the Wentworth golf course where the ex-dictator was confined.

The Chilean police report states that, for instance, the Miami branch of another international bank was concerned in the establishment in May 1991 of Belview International, a front company at Wickhams Cay in the BVI. Belview was the formal owner of, and trader in, much of Pinochet’s property, which stretched from flats in the northern Chilean port of Iquique to others in the Santiago districts of Vitacura and Ñuñoa and to the smart seaside resort of Viña del Mar. Belview went on to be run by the Miami branch of another international bank, and was overseen by Pinochet’s Chilean bagman, Oscar Aitken.

Then there was Abanda Finance, set up as a tax dodge wholly or partly owned by the Pinochet family and also domiciled in the BVI. In Gibraltar, Britain’s only surviving colony in Europe, the Banco Atlantico was another of Pinochet’s favourite banks, where he had an account to which he sent $2,658,604.84 on 19 October 1989, an amount which he said he had “forgotten” to include in a list of assets he had produced two days previously. He and his son, Marco Antonio, continued to keep the Banco Atlantico account well topped up. Banco Atlantico was set up in Cuba a century ago and its owners included the Continental Illinois Bank and Rumasa, run by the Opus Dei éminence grise Jose Maria Ruiz Mateos. It was nationalised by the Spaniards in 1983 and later sold to private business.

Simple ruses were used to hide the fact that the banks were dealing with the Pinochet family fortune. Accounts were opened which were designated by any combination of his Christian names or initials – Augusto Jose Ramon – and the surnames of his father, Pinochet, or his mother, Ugarte, and those of his wife, Lucia Hiriart Rodriguez. Some bankers preferred to call him Joe (from Jose), or APU (Augusto Pinochet Ugarte). The practice made the tracing of information about him as difficult as, say, looking for Griff Rhys Jones under “Jones” or Iain Duncan Smith under “Smith”. Various accounts were labelled merely “L Hiriart and/or AP Ugarte”.

A one-time representative of Deloitte & Touche, Richard Evans, is alleged by the Brilac report to have acted in connection with Ashburton Trust, which was created by Riggs and whose beneficiaries included Pinochet’s five children, who each had a 20 per cent share. Mr Evans was also listed by Brilac as a director of Althorp Investment Trust, another repository for Pinochet family funds. It said he w as active in promoting businesses in Argentina and was being investigated for money-laundering.

Deloitte spokesman Ignacio Tena said: “Deloitte & Touche Corporate Services was contracted by Riggs Bank and Trust Company (Bahamas) to render administrative services for Riggs and some of its clients. Riggs did the due diligence, and gave all the information related to its clients, in accordance with the usual commercial practice and the Bahamas’ law.”

Judicial investigations in Santiago this month have revealed details of the connections between Pinochet’s last financial fling while he had a position in the army – the purchase of 200 German-built Leopard tanks from a Dutch company, RDM Technology, and dummy companies set up in the Bahamas. On this deal, he received a “commission” of $1.6m through Cornwall Overseas.

The magistrate investigating the sources of Pinochet’s wealth, Manuel Valderrama, ordered the arrest this month of two retired officers formerly in the army’s supply branch, General Luis Iracabal, once a member of the Dina, Pinochet’s secret police, and Brigadier Gustavo Latorre Vasquez, on suspicion of being involved in the corruption. Meanwhile, Mr Aitken is seeking a supposed debt of more than $1m for unpaid fees that he claims were owed to him when Pinochet died in December 2006.

New details have also emerged of how Pinochet used Cema-Chile, a body supposedly dedicated to supporting 34,000 women affiliated to more than 2,000 mother-care centres with funds from the national lottery, as a money-laundering operation and cash machine. According to an application to the Chilean appeal court from Alejandro Navarro, a left-wing contender in the forthcoming Chilean presidential elections, Cema-Chile – fed with Pinochet’s illicit funds from the former dictator’s dummy companies in the Commonwealth Caribbean and not legally obliged to submit accounts – regularly provided the family with cash for mountainous “expenses” with no questions asked.

The Brilac report recounts how the minutes of a Cema-Chile board meeting on 13 November 1998 recorded the remittance of $50,000 to Pinochet’s wife to cover costs incurred when he was under arrest, adding that $10,000 of this sum went into the account of Julia Hormazabal, Cema-Chile’s director.

Plunder – A family business: Much of General Pinochet’s fortune was generated by his drugs and arms dealing and from privatisations encouraged by the International Monetary Fund and right-wing economists after he seized power in 1973.

Pinochet decreed these privatisations before any regulation was put in place over the new private monopolies. Consequently they were wildly profitable. In chemicals and iodine the state-owned Soquimich company, with annual profits of $67m, was made over to Julio Ponce, then Pinochet’s son-in-law. The state insurance agency, ISE, was handed to Jorge Aravena, another son-in-law. Paper mills, telephone companies and energy concerns were also given out to family members and hangers-on.

The rise and fall of a dictator

1973 General Augusto Pinochet sweeps to power in Chile on 11 September after leading an armed coup that puts him at the helm of a military dictatorship that will last 17 years. The junta shells the presidential palace; President Salvador Allende is killed.

1970s Before appointing himself president in 1974, Pinochet orders the slaughter of more than 3,000 Allende supporters; tens of thousands more are tortured or exiled. He shuts parliament and bans all political and union activity. He enjoys support as economy recovers, but always faces opposition.

1986 Survives assassination bid.

1988 Pinochet’s government holds referendum on his rule – he loses. 1990 Steps down as president, but stays as army commander in chief.

1998 Relinquishes his rank, months before he is arrested and detained in London.

2000 Is allowed to return to Chile where he avoids trial for human rights abuses on ill-health grounds.

2006 Pinochet dies, aged 91.

Southern Cone [contents]

Brazil’s Lula Talks Regional Concerns with Obama
EFE. August 22, 2009

BRASILIA – Luiz Inacio Lula da Silva telephoned President Barack Obama on Friday to discuss regional issues such as the possible stationing of U.S. troops in Colombia and the recent coup in Honduras, the Brazilian foreign minister said.

Lula asked Obama to meet with the leaders of the Union of South American Nations, or Unasur, to address their concerns about Washington’s prospective basing agreement with Bogota, Celso Amorim told reporters in Brasilia.

The U.S. president told his Brazilian counterpart that he would consider the idea, Amorim said.

He said Lula tried to convey to Obama that “there is a sensitivity in the region” about the possibility of an expanded U.S. military presence, news of which has brought angry reactions from leftist-governed Venezuela, Ecuador and Bolivia.

Amorim also noted Brazil’s own concerns about the proposed accord that would allow the U.S. military to operate from up to seven bases in Colombia.

Lula, according to the minister, told Obama of the need for “formal, legally valid guarantees that the (U.S.) equipment and personnel won’t be used outside the strict declared purpose, which is the fight against drug trafficking, the FARC (Colombia’s main rebel group) and terrorism.”

Unasur heads of state are due to meet next Friday in Bariloche, Argentina, for a special summit focusing entirely on the issue of U.S. basing rights in Colombia.

Venezuela’s socialist president, Hugo Chavez, who was briefly ousted in a 2002 coup that appeared to have tacit support from Washington, says the base deal represents a threat to his country.

Also raising loud objections to the potential pact is Ecuador’s Rafael Correa, who broke diplomatic relations with Colombia after Bogota’s March 2008 airstrike on a clandestine FARC camp on Ecuadorian soil.

Colombia, however, says its neighbors have nothing to fear and maintains the pact will bolster the fight against drug trafficking and terrorist activity and is necessary after Correa declined to renew a treaty allowing U.S. access to a base in Ecuador.

Obama, for his part, says that Washington – which provides Colombia with $500 million a year in military aid – and Bogota are simply updating their existing bilateral security agreement.

Another topic addressed in Lula’s 30-minute phone call to Obama was the situation in Honduras, Amorim said

He said Lula urged the U.S. president to increase pressure on the coup regime in Tegucigalpa to accept the return of ousted head of state Mel Zelaya, something the Brazilian leader views as “indispensable” for democracy in Honduras and the wider region.

Honduran soldiers dragged Zelaya from the presidential palace on June 28 and put him on a plane to Costa Rica.

Despite near-universal condemnation from the international community, the “interim” Honduran regime led by Roberto Micheletti has refused to discuss the reinstatement of the elected president.

The United States and the Organization of American States have endorsed the San Jose Accord, a formula devised by Costa Rican President Oscar Arias to resolve the crisis.

The Arias plan calls for Zelaya to return and serve out his term, which ends in January 2010, and for a political amnesty that would protect both the coup plotters and the ousted head of state, accused of various offenses by the Micheletti regime.

Zelaya would head a national unity government and the general elections now scheduled for Nov. 29 would be moved up to October.

No nation has recognized the coup regime, the OAS has suspended Honduras and Washington has revoked the U.S. visas of Micheletti and several of his associates.

But the Obama administration has signaled that it doesn’t plan any sanctions to force the coup regime to step down. EFE
Brazil to build five submarines with France help
EFE. August 24, 2009

Sao Paulo, Aug 24 (EFE) Brazil will build five submarines in collaboration with France to protect its vast off shore oil reserves in the Amazon region, a media report said Sunday.
The Folha de Sao Paulo newspaper said President Luiz Inacio Lula da Silva has already approved the submarine project prepared by the defence ministry.

Brazil will also build a nuclear submarine as part of the project, it said.

The ministry also plans to set up of a joint general staff comprising personnel from the army, navy and the air force to protect the region. The proposal, which is already cleared by the president, will now be submitted to the Congress.

The government has invested nearly $30 billion to boost its defence industry.

México, Central America and the Caribbean [contents]

Mexico’s Leftist PRD Wants to Shift Economic Policy Direction
Latin American Herald Tribune. August 23, 2009

MEXICO CITY – The Party of the Democratic Revolution, or PRD, the largest leftist party in Mexico, plans during the 61st Congress, which begins on Sept. 1, to give a turn to “the steering wheel of the country’s (economy),” Sen. Carlos Navarrete said Sunday.

With the country immersed in a serious recession, the current economic policy pushed by President Felipe Calderon has created “a gap” of 300 billion pesos ($23.44 billion) in the country’s public finances, Navarrete said in a statement.

“Because we’re not fully satisfied, we’re going for more reforms in the 61st Congress,” the senator, whose party has 71 of the 500 seats in the lower house of Congress, said.

In the lower house, the Institutional Revolutionary Party, or PRI, holds 237 seats, to which must be added the 21 held by the PVEM green party, a coalition which thus controls the body.

The country’s second most-powerful party is Calderon’s conservative National Action Party, or PAN, with 143 seats, and the rest are divided among three other parties: the Labor Party, with 13, the New Alliance, with 9, and the Convergence, with 6.

Navarrete said the PRD was preparing a comprehensive and thorough proposal to reorient the policies governing the country’s economic management, a project that will affect the Revenue Law regarding government spending, the deficit and the budget.

The PRD believes that the economic management required by Mexico makes necessary a common front among businessmen, the public sector and the citizenry, something the party intends to try to bring about.

On July 23, the Finance Secretariat cut the budget by 85 billion pesos (some $6.4 billion), or about 3.6 percent of the total.

Mexico’s gross domestic product fell 10.3 percent in the second quarter, after a drop of 8.2 percent in the first three months of the year.

The central bank projects that the economy will contract between 6.5 percent and 7.5 percent in 2009.

Court: Stolen Mexican oil sold to large company
Martha Mendoza. AP. August 23, 2009

MEXICO CITY — A Texas oil executive says his small company was one of several that bought millions of dollars worth of stolen Mexican petroleum and then sold the illicit products to larger companies in the U.S. including chemical giant BASF.

Houston-based Trammo Petroleum president Donald Schroeder, the first to be convicted as part of a cross-border investigation, testified he was contacted by two fuel company representatives who “told me they had some Mexican condensate that they would like to sell,” according to U.S. federal court transcripts obtained Friday by The Associated Press.

His contact at one of those companies, Josh Crescenzi of Continental Fuels Inc., said that “the condensate was stolen,” Schroeder testified during a May court appearance.

“And, so what did you do about it?” Judge Ewing Werlein said.

“I bought it and sold it,” answered Schroeder, pleading guilty to buying and reselling stolen condensate, a liquid hydrocarbon that refiners can blend with crude oil as they produce fuel and other products.

Schroeder’s arrest came in a joint U.S.-Mexican investigation that is trying to ferret out criminals – mostly violent drug gangs – tapping remote pipelines in Mexico, and sometimes building pipelines of their own, to siphon off millons of gallons of oil each year, robbing Mexico’s government of a major source of revenue.

Schroeder and his attorneys have repeatedly declined to comment. Crescenzi could not immediately be contacted.

Joel Androphy, lawyer for Murphy Energy Corp., the other fuel company named in the court records, said Murphy didn’t commit any crimes and the company had been cooperating with U.S. investigators for “two or three” months.

He said authorities haven’t seized any of Murphy’s property or assets as part of the investigation.

“We’re happy to assist the government,” he said. “We want to make sure whoever’s involved in this thing is punished.”

Then, reading a prepared statement, he added: “Murphy Energy had no knowledge of any scheme to do anything illegal. Murphy Energy paid market value for a product that someone now says was stolen. If that is the case, then all of the people involved in the scheme on both sides of the border should be punished.”

BASF spokesman Daniel Pepitone says his company received a U.S. Justice Department subpoena related to the case and it is cooperating with authorities. He confirmed that Germany-based BASF did business with Trammo Petroleum and said that “we have no reason to believe that BASF had any involvement in the alleged wrongdoing.”

Schroeder is the first to be convicted as part of the cross-border investigation that began when Mexican state oil company Petroleos Mexicanos, or Pemex, contacted U.S. Immigration and Customs Enforcement in 2007 to report their suspicions that their products were being smuggled into the U.S.

Pemex, which is the only legal owner and exporter of Mexican oil to the U.S., has been struggling for years to quell a seemingly endless series of taps on its pipelines by thieves. U.S. investigators found some U.S. brokers were involved in illicit sales, according to the transcripts in Schroeder’s case. No one knows how much stolen oil crosses the border.

While Mexican authorities try to patch the leaks, U.S. officials are tracking various Texas bank accounts and taking a close look at several Texas companies. To date, the companies identified are small fuel distributors, not major U.S. refiners.

Earlier this month, Mexican President Felipe Calderon said drug cartels have extended their operations into the theft of oil, which finances about 40 percent of the national government’s budget.

Mexico’s federal police commissioner, Rodrigo Esparza, cited the Zetas as an example. He said the fierce gang aligned with the Gulf drug cartel used false import documents to smuggle at least $46 million worth of oil to U.S. refineries he didn’t identify.

The Schroeder transcripts gave this description of a smuggling operation: Various unidentified companies drove the stolen Mexican oil in tankers across the U.S. border, delivering illicit loads to the port of Brownsville, Texas. Continental Fuels paid with a series of wire transfers, then stored the oil until there was enough to load on a barge, which then embarked for Port Arthur, Texas, and ultimately was sold to BASF.

Even though they never handled the condensate, Murphy and Trammo bought the stolen oil during this process, the court records say.

Schroeder has been ordered to pay a $2 million fine to the U.S. government while he awaits a December sentencing, and U.S. officials have returned a separate $2.4 million refund check from Trammo to partially compensate Pemex for its losses.

RIGHTS-GUATEMALA:  One Arrest in Gender-Killing Epidemic
Danilo Valladares. Inter-Press Service. August 18, 2009

GUATEMALA CITY, Aug 18 (IPS) – “Femicide,” or gender-based murder, has reached epidemic proportions in Guatemala. But at least for Rosmery González – one of the more than 700 Guatemalan victims of this crime in 2008 – justice is finally being done with the arrest of her alleged killer earlier this month.

On Aug 6, Óscar Romero, the 19-year-old victim’s uncle, who was the leading suspect in her murder since she turned up dead in July of last year, was taken into police custody from his home in a poor district of the capital.

Pressure from human rights organisations and the women’s movement, combined with the unrelenting efforts of the victim’s parents finally led to Romero’s arrest. Just before she went missing, Rosmery had been on her way to meet with her uncle, who had promised to help her get a job at the National School of Agriculture (ENCA). Days after her disappearance, her body was found on the grounds of ENCA.

“On the one hand, I’m nervous and worried because there are a lot of risks involved, but I’m also happy because the authorities are now behind me,” González’s mother, Elizabeth Chajón, told IPS.

Just a few days earlier, she had described to this reporter the impotence she felt at seeing how crimes like her daughter’s murder went unpunished.

“When I went to the police to file the complaint (about Rosmery’s disappearance), they told me she couldn’t have been kidnapped and must have run off with her boyfriend,” Chajón said.

Femicide is a term coined for misogynist or gender-related murders of women, sometimes accompanied by sexual violence.

According to official figures, over the last five years, a total of 3,500 such murders were registered in this Central American nation of roughly 13 million people. In the first seven months of 2009 alone, 351 women died as a result of ‘machista’ or sexist violence, and that only reflects deaths by firearms or knives.

Eleven thousand murders were committed between 2006 and 2008 in the province of Guatemala alone – which has a population of 2.5 million people and includes the capital, Guatemala City – while 98 percent of all crimes perpetrated in the country go unpunished, according to official figures and data from non-governmental organisations.

These staggering figures have led the international community to speak of an epidemic. In a recent interview with IPS, Peruvian lawyer and sociologist Gladys Acosta, Latin American and Caribbean director for the United Nations Development Fund for Women (UNIFEM), said that the international community “must mobilise to act against Guatemala’s epidemic of gender-motivated murders,” which also tend to be marked by extreme cruelty.

The epidemic also places Guatemala farther and farther away from meeting the commitment of substantially reducing violence against women and girls by 2015, as one of the priorities of the Millennium Development Goals (MDGs) agreed on by almost 200 member nations of the United Nations at the turn of the 21st century.

The persistence of violence against women not only undermines the specific MDG of achieving gender equality and empowering women; it is inconsistent with all the MDGs.

In an “In-Depth Study on All Forms of Violence Against Women”, issued in July 2006, the United Nations states that “unless attention to preventing and redressing violence against women is incorporated in programmes to realise each of the Millennium Development Goals, the health, social and economic consequences of such violence can limit the potential benefits of these initiatives.”

Violent crime is rampant in Guatemala, which has one of the highest homicide rates in the world. In its report, the U.N. says impunity is “a key factor” in violence against women.

Which is why Norma Cruz, head of the Fundación Sobrevivientes (Survivors’ Foundation), a local NGO, sees Romero’s arrest as a victory. “Every arrest made for the violent death of a human being is a huge step for us,” she told IPS.

Fundación Sobrevivientes, which provides psychological and legal aid to victims of violence, has been the leading source of support for the González family in their efforts to clarify Rosmery’s murder.

Through their combined efforts they secured authorisation to have Rosmery’s body exhumed last July, to determine the cause of death, as the authorities had reported that the initial autopsy was inconclusive and that she had died of undetermined causes.

They also managed to obtain a warrant for the police and the public prosecutor’s office to search Romero’s workplace at ENCA, as no inspection had been carried out when the body was found on the grounds of the institution 13 months ago.

Rosmery’s father Rafael González, pointing out that his cousin Romero’s house was not searched either, even though he was the chief suspect, said all of the law enforcement authorities “are on the take.”

“During the search of the ENCA facilities, photographs of Rosmery were found in the suspect’s computer,” said Cruz, adding that she was optimistic with the progress made in the investigation.

“I think he (Romero) is not just going to sit back and take it, which is why we’re going to have a written document drawn up holding him responsible for anything that may happen to us,” Chajón said. “All her father and I want is to see justice done for our dead daughter, but we know that means we are putting ourselves in danger.”

Last month in the newspaper Prensa Libre, ENCA director Julio César Catalán denounced that Romero’s job had been protected through “pressure and influences in high places,” which had prevented Catalán from firing him, despite the firm suspicions that pointed to him as the author of the crime that had stunned the institution a year earlier.

For Cruz, the new developments in the Rosmery case prove that if one can overcome their fears and pressure the State to fulfil its law enforcement duty, “impunity can be defeated.

“We’re not going to back down, we’re going to keep on pressuring the authorities to move forward with the investigation and the criminal action in court, until this man (Romero) is convicted,” said Cruz. She also said that “at least one of the many cases of impunity was on its way to being solved.”

Cruz said they will be asking for a prison sentence of 50 years for the defendant, because the crime had several aggravating circumstances, including that the victim was a woman and that the murder was premeditated and involved deceit.

The public prosecutor’s office and the lawyers who are handling the civil suit will ground their case on Guatemala’s new law against gender violence, which went into effect in May 2008.

The law classifies femicide as a specific crime and establishes mandatory damages for the victims’ families. It also stiffens penalties for gender-related killings, which now range from 25 to 50 years imprisonment. But the law has hardly been enforced, as few crimes even make it to court.

According to Hilda Morales, of No to Violence Against Women, an NGO, “there has been some progress in the law’s application, but it has also met with obstacles. While it has led to a strengthening of the support centres available for vulnerable women, and information on the law has been disseminated nationwide, the public prosecutor’s office is still not pursuing these cases as it should, and training is needed to help interpret the law,” she told IPS.

From June 2008 to March of this year, 4,035 criminal actions were filed under the new law. Of these, 31 involved cases of femicide, and in that whole time, only 11 sentences were handed down, according to Morales.

A study conducted this year by the Myrna Mack Foundation, a local human rights group, revealed the lack of action by the prosecutor’s office: 60 percent of the cases it has under investigation have been stagnant for over a year, and of the cases that were brought to court, 87 percent were thrown out or shelved.

When femicide is involved, the lack of action is even worse. According to the study, an autopsy was only ordered in 12 percent of the 2,191 murder cases committed between 2006 and 2008 in the province of Guatemala in which the victims were women. “This reflects the scant importance that prosecutors place on sexual assault committed prior to death,” the report says.

The study on the legal treatment of murders committed in that province from 2006 to 2008 monitored 11,127 cases, 17 percent of which involved women victims, Lázaro Murcia, one of the Foundation’s researchers, told IPS.

But Norma Cruz is convinced that “justice is possible if we leave our fears behind. All the cases we’ve handled have been solved,” she told IPS.

And the results prove her right. In 2008, Fundación Sobrevivientes obtained 10 criminal convictions and won 524 civil actions. This year, it has taken on 1,421 cases and is providing psychological counselling to almost 900 women. “We hope to obtain seven criminal convictions in cases involving violent deaths,” Cruz said.

But the group’s work is anything but easy, because the justice system is “ridden with corruption,” from the police right up to the Supreme Court, she said.

Justice also faces another great enemy: fear. “Ninety-five percent of all victims leave justice up to God, and that translates into impunity,” Cruz said.

“In Guatemala everyone lives in constant fear, and fear paralyses you. These crimes must be made public, the perpetrators must be put behind bars, so that the population can feel safe,” she insisted.

This year, Cruz – whose family has been attacked and threatened because of her work in the NGO – earned the U.S. secretary of state’s International Women of Courage Award, which celebrates exceptional courage and leadership in advocating for women’s rights and advancement. But she says that her motivation comes from the many other women with whom she shares what she calls a “thirst for justice.”

That thirst is aggravated by a particular characteristic of gender-killings in Guatemala: their viciousness. Torture, dismemberment, mutilations, extreme sexual violence and other unimaginable brutalities are the hallmark of the sexist crimes committed against women in this country, in many cases at the hands of boyfriends, husbands or exes, or of relatives or men known to the victim.

“This girl was dismembered, these two, mother and daughter, were stabbed, this woman was brutally murdered by her partner,” Cruz says as she points to the photos of victims whose families are receiving legal support from Fundación Sobrevivientes.

Nicaragua Proclaims Education Anthem
Inside Costa Rica. August 24, 2009

Managua – Nicaraguan President Daniel Ortega issued a decree, establishing that the 1980 National Literacy Teaching Crusade Anthem would become the Nicaraguan Education anthem from now on.

The measure was adopted in commemoration of the 29th anniversary of the national literacy teaching campaign carried out in 1980 that was a milestone in national history, as one of the peak expressions of popular participation, the decree said.

With that effort, more than 400,000 Nicaraguans were taught basic literacy, lowering the illiteracy rate from 50.36 to 12.96 percent.

Nicaragua was proclaimed on Saturday a territory free of illiteracy, with a rate below 3.56 percent, according to Education Ministry figures.

The national literacy teaching crusade anthem’s music was written by Nicaraguan singer songwriter Carlos Mejia Godoy.

This is an ode to the heroic feat in 1980 and the national literacy teaching campaign from the times of Marti to thos of Fidel Castro, developed by the government of reconciliation and national unity, during the period from 2007 to 2009, the presidential decree said.

Panama moves to exit extra parliament
Deivis Eliecer Cerrad. La Estrella. August 22, 2009

Panama Star PANAMA. Foreign minister and vice present, Juan Carlos Varela has requested Panama to be taken out of the Central America Parliament (PARLACEN) but a lot of criticism is coming his way.

Legislator Julio Palacios, former president of the PARLACEN said the vice president is putting on a show.

Varela claims a private survey says the public demands Panama to be out out this regional organization. Palacios says a referendum is needed to determine the will of the people.
Tito Mendez, a legislator for the Popular Party said he would propose referendum because this is a whim by President Martinelli.

Panamanian legislators for the PARLACEN will be sworn in on August 27 in the Dominican Republic.

PARLACEN’s president, Gloria Oqueli said it would be necessary to revise the Viena Convention and the Tegucigalpa Protocol.

Article 54 of the Viena Convention says to end the a country’s participation in a suscribed treaty all parts must agree.

This means Panama would need approval from El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic, also PARLACEN members.

U.S. autos enter Dominican Republic tax free next year
Domincan Today. August 21, 2009

Santo Domingo.- The country will enter its 5th year in the U.S.-Central America Free Trade Agreement (Dr-Cafta) in 2010, when American vehicles will cost less with the start of the zero tariff, currently at 5%.

The head of the dealers grouped in Acofave, Enrique Fernandez, said between 10% and 15% of the country’s imports are U.S. vehicles and between 70% and 80% from Asia, but the Dr-Cafta may vary the proportion.

He said the countries which have signed free trade agreements have adapted their tariffs so the tax rate is reasonable and competitive, noting that the average vehicle tariff in Central America and South America is 10% and 6% in Chile.

Dr-Cafta guarantees zero tariffs by the  5th year after the pact’s signature on August, 2004, with a one year  grace period, but took effect in El Salvador in March, 2006, because just one country’s entry is enough to start the countdown.

In the first year motors vehicles of up to 1,500 cc engines entered with zero tariff, although the United States has yet to manufacture them.

IMF to transfer US$275M to Dominican Republic
Dominican Today. August 24, 2009

Santo Domingo.- After open talks between the Dominican government and the International Monetary Fund (IMF), regarding the signing of a possible agreement for  the country to receive disbursements more quickly, the international organization will transfer US$275.3 million later this week.

According to a report from the Central Bank, the IMF will make an additional assignment of US$177.2 million in Special Drawing Rights (SDRs), equal to US$275.3 million and increase the international reserves by that much.

“With the new resources, the gross international reserves will surpass US$2.7 billion and the liquid reserves will be more than US$1.5 billion,” stated the report, which highlighted that the transfer does not increase the foreign debt of the Dominican Republic, “because it is not an international loan, but a contribution of capital”.

Haiti stockpiles hurricane supplies
UPI. August 22, 2009

PORT AU PRINCE, Haiti, Aug. 22 (UPI) — Nearly 142,000 tons of emergency food have been stockpiled throughout Haiti this hurricane season, the United Nations said.

The preparations, by aid agencies working with U.N. programs, would sustain more than a half-million people for at least a month if the worst happens and Haiti is hit by several hurricanes, as it was last year, U.N. officials said at a news conference Friday in Port au Prince.

Nearly 800 people died and 1 million others were affected last year by hurricane damage and rivers of mud that clogged roadways and destroyed much of Haiti’s harvest, U.N. spokesman Kemoral Jadjombaye said in a release.

The World Food Program is putting more than 60 all-terrain vehicles throughout Haiti for the 2009 hurricane season, which runs from mid-August to the end of November. Numerous helicopters also are on standby in case food and emergency supplies must be delivered to isolated areas, Jadjombaye said.

Endless nightmare
The News & Observer. August 21, 2009

One picture, printed in Tuesday’s N&O, spoke to everything, to the starvation, to the despair, to the utter vulnerability of the 2 million Haitians who on every day, do not get enough to eat. Venecia Louis, 3 years old when the picture was taken by the Associated Press in November, was one of them. And she still is, despite the greater interest in helping to stockpile food for the hungry and at the same time, to encourage Haiti’s farmers to grow more for their own people.

Haiti seems for many of its people a place of hopelessness. Often hit by storms that knock out homes and cut off roads to more remote areas, thus making it difficult to deliver aid when it is needed most, the country is locked in a never-ending struggle against poverty and the elements.

Now is the season of storms. Winds and rains are coming. The United Nations is trying to improve the food situation, and there are physicians in the country from Doctors Without Borders (the ones who helped save Venecia).

But there remain problems with getting to where the people in the most danger are. Four tropical storms last year left some communities isolated. Some 800 people were killed. And 26 children died of starvation or malnutrition because they were cut off from civilization.

The U.N. is focused on the country, and so should be private citizens around the world who cannot stand the thought of so many children suffering so deeply. Helping them is an obligation to humankind.

Region: Trade, Security, Economy and Integration [contents]

China’s Latin Economic Gambit
Hugo Restall. The Wall Street Journal. August 23, 2009

Americans tend to see China’s economic rise through the prism of the bilateral trade deficit and competition for manufacturing jobs. But the real story is that Chinese institutions are buying equity stakes and making loans to increase their influence in natural resources. And Latin America is the most important arena for China’s investments.

Some observers portray this as a threat in the U.S. “backyard.” The truth is that the developing trade between China and Latin American countries represents an opportunity-if the U.S. plays its cards right.

There are several reasons to be relatively sanguine about China’s increasing involvement in Latin America. Most obviously, the Chinese interest in the region is pragmatic rather than ideological. The goal is to further economic growth at home by opening new markets and guaranteeing a supply of necessary inputs.

Rocking the boat politically is not on the agenda. Even where Beijing is engaging America’s foes, like Venezuela’s President Hugo Chávez, it is careful not to offer encouragement for their destabilizing activities.

Still, part of the attraction of Chinese money is that it comes with few strings attached. That naturally tends to undermine the leverage the U.S. has enjoyed as the region’s biggest trading partner and investor. China’s arrival, coinciding with the rise of Mr. Chávez and Bolivian President Evo Morales, makes it more difficult to contain the damage from these populist left-wing governments.

Yet the reality is that the U.S. still has plenty of leverage-for now. China still only accounts for less than 10% of the region’s trade. Chinese trade and investment garners more of the attention because that’s where the growth is.

The main tool Beijing is deploying in the region is China Development Bank’s massive pile of U.S. dollar reserves. At a time when capital is in short supply, especially in emerging markets, Chinese institutions can make a critical difference in financing new projects. The Inter-American Development Bank is largely tapped out.

China would seem to be in the driver’s seat-yet it has had to offer loans at preferential rates and 20-year terms in order to secure guaranteed supplies of oil and other commodities at market prices. Though commodity prices are well off their peaks, it seems that producers still have leverage because of China’s seemingly insatiable appetite for minerals and fear that its supply could be disrupted if it relies on the open market.

Indeed, Beijing’s state-directed policy of buying up and securing supplies of commodities may not be so pronounced in a few years time if it turns into a bust. Take iron as an example. Raw ore has been piling up on the docks of Chinese ports this year, as steel companies expand capacity and traders stockpile in anticipation of higher prices. But Beijing’s stimulus package, which threw infrastructure spending and thus steel consumption into overdrive, will wind down over the next two years. Real estate developers are also in a frenzy of construction at the moment, but this may prove to be the result of a bubble. Falling stock prices in Shanghai suggest that China’s recovery is not as robust as first thought.

It wouldn’t be the first time the government’s investments prove to be misguided. China Investment Corp., the $200 billion sovereign wealth fund, lost big investing in Blackstone and Morgan Stanley in 2007. That debacle, plus the past pain inflicted by high oil and ore prices, may have contributed to the current policy favoring investments in commodities.

The more China invests, moreover, the greater the risk of an eventual backlash. Already there are murmurings from vested interests in Latin countries that Beijing is a neocolonial power, buying raw materials and flooding the region with its cheap manufactured goods. Certainly competition from Chinese goods has had a much greater effect in Latin America than in the U.S., hurting the textile industries in Brazil, Argentina and Mexico. This has brought a wave of antidumping suits.

For all the talk of budding South-South relations, the reality is that developing economies directly compete with each other because their comparative advantages are similar. The U.S. may ultimately be able to play the other two sides off against each other in this triangular relationship because its own economy is complementary with both.

The U.S. may yet be able to bind the region together by offering Latin America greater access to its markets and giving its neighbors a leg up in competition with China. After the failure of the Free Trade Area of the Americas negotiations in 2005, the only way forward for opening markets was much more limited agreements.

But as China’s footprint expands in the Americas, it may concentrate minds and bring the negotiators back to the table. That would be a win-win outcome for the whole hemisphere.

-Mr. Restall is the editor of the Far Eastern Economic Review and a member of the editorial board of The Wall Street Journal.

Center for Economic and Policy Research, 1611 Connecticut Ave, NW, Suite 400, Washington, DC 20009
Phone: (202) 293-5380, Fax: (202) 588-1356


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