Latin America News Round-up: Embargo Has Toughened Under Obama



September 15, 2010

Cuba Says U.S.

For the latest news and developments on Haiti, please see CEPR’s new blog, “Haiti: Relief and Reconstruction Watch“.

For archives of past Round-ups, please click here.

Argentina
Argentine Consumption Fuels Growth, de Narvaez Says. Bloomberg
Argentina in `No Hurry’ to Tap International Debt Markets, Cosentino Says. Bloomberg
Argentina elected president of G77 and prepared to act as ‘bridge” with G 20. Merco Press

Bolivia
Critics call Bolivia anti-racism bill media threat. Reuters
Bolivian President Calls For Elimination of Social Discrimination. Inside Costa Rica
Bolivian President To Attend Chile’s Bicentennial Celebrations. Santiago Times

Ecuador
Ecuador passes the hat for Amazon protection plan. Reuters
Ecuador wants you to smell the roses, and eat them. Reuters

Venezuela
Venezuela to Use Drillship to Develop Large Natural Gas Project. EFE

Andean Region
Colombia senator accused of paramilitary links. CNN
36 Colombian Union Leaders Slain in 2010. EFE
Strong Colombian peso debilitating exports and eliminating jobs. Merco Press
Colombia’s Internally Displaced People. Huffington Post
Peru’s Garcia Shuffles Cabinet Before Elections. Reuters
Peru Central Bank Raises Reserve Requirements to Avert Risk of Overheating. Bloomberg
U.S. Praise for Peru’s Economy Misses the Mark. NACLA
SURVEY: Chile Seen Raising Rates Again As Economy, Demand Thrive. Dow Jones
Former Chilean President to Lead New U.N. Agency. New York Times

Southern Cone
China State-Run Banks Plan to Invest in Brazil’s High-Speed Train Project. Bloomberg
Brazil on course to hit child mortality target as living standards improve. Guardian

Mexico, Central America and the Caribbean
Mexican Official Quits. New York Times
Letter from Mexico: In no mood for a fiesta. Washington Post
Funes: We must follow own path. Miami Herald
Cuba says U.S. embargo has toughened under Obama. Reuters
Cuba’s Big Layoffs: What to Do with the Unemployed? Time
Remittances to the Caribbean on the rise again – World Bank. Jamaica Observer

Region: Trade, Security, Economy and Integration
EU trade chief aims for Mercosur deal by mid-2011. Reuters
Study: Commodities can fuel Latin America’s growth. AP
Speakers: Innovative policies key in maintaining growth in the Americas. Miami Herald

Argentina [contents]
Argentine Consumption Fuels Growth, de Narvaez Says.
Eliana Raszewski. Bloomberg. September 13, 2010

South America’s second-biggest economy is growing at the fastest pace since 1992, fueled by a boom in consumption and accelerating inflation, Argentine opposition leader Francisco de Narvaez said.

Gross domestic product is currently expanding at about 11 percent and growth next year will be faster than the 6 percent forecast by the government, de Narvaez, who may run for president in 2011, said in an interview in Buenos Aires.

The central bank has said Argentina’s economy will expand by 9.5 percent this year while the median estimate of eight economists in a survey by Bloomberg put the rate at 8.25 percent. The economy grew 0.9 percent in 2009, the slowest since 2002, the national statistics agency said.

“We are growing at a Chinese rate,” said de Narvaez, 56. “Almost 75 percent of that growth is explained by consumption. There’s a huge push toward consumption that generates strong demand for goods and services.”

The current rate of growth will be stifled by a lack of confidence in the government and the judicial system, which is limiting investment to 19 percent of GDP, de Narvaez said.

Argentina needs to increase the rate to 25 percent over the next 10 years to sustain growth, de Narvaez said. Sooner or later consumption, which is creating inflation that former Economy Minister Orlando Ferreres said is more than double the official estimate of 11.2 percent, will run out of steam, he said.

The Colombian-born lawmaker, a former supermarket magnate, last year beat former President Nestor Kirchner in mid-term congressional elections to represent the province of Buenos Aires. Since then, de Narvaez has said he may stand as candidate for either the presidency or provincial governorship in 2011 elections.

To improve the business climate the next government will need to cut subsidies on energy, lower export taxes on farm goods and reach an accord with the International Monetary Fund and the Paris Club group of creditors, he said.
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Argentina in `No Hurry’ to Tap International Debt Markets, Cosentino Says.
Bloomberg. September 15, 2010

Argentina is in “no hurry” to return to international debt markets for the first time in almost a decade as economic growth accelerates, Finance Undersecretary Adrian Cosentino said.

Standard & Poor’s on Sept. 13 raised Argentina’s foreign and local debt ratings one level to B, five steps below investment grade, saying the country’s “strong” economic expansion is helping it make debt payments. The increase matches a move made by Fitch Ratings in July, one month after President Cristina Fernandez de Kirchner restructured $12.9 billion of bonds tied to the country’s 2001 default.

“The S&P move is good news for Argentina,” Cosentino said in an interview today at the LatinFinance forum in Beijing. “We’re in no hurry. We have a healthy macro position and that gives us the possibility to take a step-by-step strategy.”

The central bank has said South America’s second-biggest economy will expand 9.5 percent this year while the median estimate of eight economists in a survey by Bloomberg puts growth at 8.25 percent. The economy grew 0.9 percent in 2009, the slowest since 2002, the national statistics agency said.

The debt restructuring prompted Economy Minister Amado Boudou to say that Argentina has regained the ability to sell bonds overseas. Juan Pablo Fuentes, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, said lawsuits from some of the remaining defaulted debt holders may still impede the nation from issuing international bonds.

‘Manageable Situation’

“The swap was really successful,” Cosentino said. He said the risk from lawsuits is a “manageable situation.”

Argentine companies and provinces have issued $1.03 billion of bonds in international markets this year. Sales were $3.65 billion in 2007 and $465 million last year, according to data compiled by Bloomberg.

While Argentine issuance is picking up this year, the country’s bond sales are a fraction of the $13.5 billion borrowed in 1999, two years before it defaulted on a record $95 billion of debt, according to data compiled by Bloomberg.

Argentine overseas borrowing this year also lags behind Brazil at $26.6 billion, Mexico with $22.3 billion and Chile at $3.4 billion. That standing is a reversal from 1999, when Argentina raised $13.5 billion, more than each of those countries.

Boudou delayed plans to issue as much as $1 billion in new bonds during the debt restructuring, saying the country would wait until yields fell below 10 percent.

The yield on benchmark 7 percent bond due in 2015 rose 5 basis points to 10.59 percent at 7:25 a.m. New York time, according to Bloomberg data.
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Argentina elected president of G77 and prepared to act as ‘bridge” with G 20.
Merco Press. September 15, 2010

The announcement was done during Tuesday’s meeting of UN Secretary General with Argentina’s Foreign Affairs minister Hector Timerman, ahead of the 65th UN General Assembly. The Argentine official also brought up the issue of the Falklands and South Atlantic islands sovereignty dispute with Britain.

Ban Ki-moon confirmed he would be present at the formal vote at the end of the month when Argentina is officially elected president of the G77 plus China, and which will also be attended by President Cristina Fernandez de Kirchner.

“Argentina is committed to G20 but also to the countries of the political ‘south’, so we are willing to take the voice of these countries to the G20 event”, said Timerman adding that the UN can count with Argentine support in the G20 meeting since “we are wholly committed to multilateralism and the international bodies that make it up”.

According to UN and Argentina sources Ban Ki-moon and Timerman went through the agenda of the coming G20 meeting in Seoul, Korea, which includes issues such as technology transfer, climate change, helping to achieve a world with clean and accessible energy for all.

However Timerman pointed out that the bill for the consequences of climate change can’t be shared with developing countries, which were not involved in causing the problem, but rather by developed countries “that should supply the funds and technology” to address the task.

Timerman congratulated Ban Ki-moon for having named former president Michelle Bachelet as UN Under Secretary for Gender Equality and the Empowerment of Women and praised the Secretary General initiative to have development issues included in the Seoul G20 meeting agenda.

Ban Ki-moon thanked Argentina for its commitment to humanitarian aid, mainly in Haiti but also in other parts of the world, as well as its support for ensuring nuclear security and the use of nuclear energy for peaceful means.

Argentina, following on a suggestion from US President Obama will host next December a meeting of nuclear security experts.

Finally Timerman said Argentina was grateful to Ban Ki-moon standing efforts for the resumption of sovereignty talks with the United Kingdom on the disputed Falklands, South Georgia and South Sandwich islands and adjoining maritime spaces, “which represent one of the most shameless colonial attitudes of the XXI century”.

The minister also said Argentina was much concerned with the “unilateral and illegal hydrocarbons activities” in Falklands’ waters and its possible environmental consequences.

G77 currently includes 132 countries, almost two thirds of UN members, all of them considered developing countries plus China. G77 addresses economic and social development issues but has included other topics such as the financial crisis, climate change, humanitarian aid and migration. It also basically promotes south-south cooperation and trade.

Bolivia [contents]
Critics call Bolivia anti-racism bill media threat.
Reuters. September 15, 2010.

LA PAZ – Bolivia’s leftist president, Evo Morales, vowed yesterday to forge ahead with an anti-racism bill that skeptics say could be used to stifle media criticism of his government.

The bill, which has been approved by the lower house, would allow authorities to close down news outlets if they are deemed to publish racist content. Critics want that article changed, but Morales appears unwilling to compromise.

“Since the new Magna Carta took force … there are no longer first-, second- or third-class citizens in Bolivia — we’re all equals,” Morales, the Andean nation’s first president of native Indian descent, told a news conference.

Morales won comfortable re-election last year, vowing to deepen his efforts to empower the poor country’s indigenous majority. In his first term, he reformed the constitution and promoted people of indigenous descent to high-profile jobs.

In order to become law, the anti-discrimination bill must still be voted on by the Senate, where allies of Morales also hold a majority.

Rightist Senator German Antelo said the controversial article of the law that could punish news outlets was similar to measures pushed by Venezuelan President Hugo Chavez, a close Morales ally who has repeatedly moved against critical media.

“We want a law that’s fair and just for everyone, that doesn’t use the struggle against racism as a pretext to impose a law to gag the press,” he told reporters.

Antelo hails from the eastern region of Santa Cruz, Bolivia’s economic powerhouse and an opposition stronghold. It is also home to leading television channels.

The controversial article also drew criticism from Bolivia’s National Press Association, which represents newspaper owners. It urged senators to scrap the controversial article, calling it “flagrant press censorship.”

It is not the first time Morales has been at odds with the media since he took office in 2006.

He frequently criticizes local newspapers and broadcasters and has lambasted reporters for being the puppets of media bosses he says are aligned with the opposition.

Hoping to strike back, he launched a state-run daily newspaper called Cambio (Change) last year under the slogan “The truth will liberate us.”
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Bolivian President Calls For Elimination of Social Discrimination.
Inside Costa Rica. September 15, 2010

LA PAZ – Bolivian President Evo Morales called on the Bolivian people Tuesday to eliminate racism and social discrimination in the country.

“I am sure that racism and social discrimination could be replaced by solidarity and complementary attitudes,” Morales told a press conference.

Morales pointed out that the best way to end discrimination is to restore the sense of identity and social values, as well as to correct biased attitudes in some sectors.

He also urged the promotion of the Bolivian Constitution, which is aimed at ensuring equality of all citizens.

On Friday night, the Deputies Chamber, or the lower house of parliament, approved an anti-racism bill, which was boycotted by the opposition.

“Since the new Magna Carta took effect in the Constitutional Referendum, there are no longer first-, second- or third-class citizens in Bolivia, (and) we’re all equals,” Morales said, comparing the new constitution to the historic Magna Carta, an English charter ensuring civilians’ rights.
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Bolivian President To Attend Chile’s Bicentennial Celebrations.
Kayla Ruble. Santiago Times. September 15, 2010

Piñera asks Morales to also attend service at San Jose mine.

Bolivian President Evo Morales confirmed Tuesday that he would travel to Chile for its bicentennial celebrations this coming weekend. Chilean President Sebastián Piñera is also pushing for Morales to visit the San José mine in northern Chile, where 33 miners, one of whom is Bolivian, have been trapped underground since Aug. 5.

After the bicentennial, Morales plans to go to New York City on Sunday to visit the United Nations’ General Assembly. However, Piñera has tried persistently to persuade Morales to stay in Chile to visit the mine.

Piñera plans to travel to the mine Sunday to attend a small bicentennial celebration. Chilean writer Isabel Allende, who recently won the National Literature Prize, is also expected to attend the ceremony. After the ceremony, Piñera plans to return to Santiago for a military parade in Parque O’Higgins.

Piñera’s efforts to persuade Peruvian President Alan Garcia to attend the celebrations do not appear to be successful. Garcia had declined an invitation last week, but the Chilean Foreign Ministry persisted. But the newspaper El Mercurio quoted sources as saying the Peruvian leader would definitely not travel to Santiago this weekend.

Garcia will instead announce changes to his Cabinet over the weekend. Peruvian Ambassador to Chile Carlos Pareja told the Chilean officials that the president of Congress, Cesar Zumaeta, would lead Peru’s envoy to Chile for the bicentennial.

Among other foreign government officials traveling to Chile is Mexican Foreign Minister Patricia Espinosa, who confirmed that she would be in Santiago to represent her country’s president, Felipe Calderon. Arturo Valenzuela, assistant secretary of state for western hemisphere affairs, will lead the delegation from the United States and will be accompanied by Alejandro Wolff, the newly appointed U.S. ambassador to Chile. Other international leaders expected to attend include Paraguayan President Fernando Lugo and Argentine Vice President Julio Cobos.

The weekend’s official activities will begin Friday with the raising of a giant Chilean flag at 11:30 a.m. and a bicentennial gala at the Municipal Theater at 6:30 p.m.

On Saturday, events planned in Santiago include a morning photo shoot with Piñera and his administration at the presidential palace La Moneda; the singing of the national anthem at noon in the main square, Plaza de Armas, which will be broadcast throughout Chile; and a light show projected on La Moneda at 8:30 p.m., which the president will watch in the company of other national leaders.

On Sunday, the military parade will run from 3 to 7 p.m. The main event Monday will be the naval review on the coast near the city of Valparaíso.

Ecuador [contents]
Ecuador passes the hat for Amazon protection plan.
Hugh Bronstein. Reuters. September 15, 2010

YASUNI, Ecuador (Reuters) – Ecuador is launching a one-of-a-kind initiative to protect a jungle reserve that contains not only a huge variety of plants and animals but 20 percent of the country’s crude oil.

In exchange for not drilling for crude in a 200,000-hectare area of Yasuni national park, the government is asking rich nations, foundations and individuals to give it $3.6 billion.

That’s about half of what President Rafael Correa says Ecuador would get from drilling in this part of Yasuni, where the Andes mountains intersect with the Amazon rain forest.

It is a new approach to conservation and officials recognize that they might not find enough support for the initiative. But if it works, Ecuador says 407 million tonnes of carbon dioxide would be kept from entering the atmosphere.

Ecuadorean officials are flying around the world this month — including trips to Japan, Germany and the United Nations — meeting with prospective contributors to drum up support.

Yasuni as a whole covers an area of 982,000 hectares and is home to a huge array of birds, monkeys and other wildlife including jaguars, giant armadillos and pink-colored dolphins.

The initiative applies to three oil fields called Ishpingo, Tambococha and Tiputini, and collectively known as the ITT section.

Other parts of the park are already being drilled for petroleum, but many residents support the government’s push.

“We don’t want more oil because of the contamination,” said 19-year-old Fani Imene, who is from the local Waorani tribe and lives just outside the ITT section.

Many in her 2,500-member indigenous group are afraid to drink from rivers if oil wells have been drilled nearby.

A $27 billion environmental damages suit is being heard in a neighboring province, where residents say that U.S. oil giant Chevron is responsible for polluting the jungle with faulty drilling practices.

This and BP’s recent Gulf of Mexico oil spill disaster could bolster Ecuador’s pitch for the ITT initiative.

FIRST CONTRIBUTIONS

Ecuador will issue certificates to contributors promising their money back, without interest, should the country ever decide to exploit the oil.

Officials say the first wave of contributions is likely to come from countries such as Germany and Spain. Chile is expected to contribute $100,000 this week, making it the first official donor to the initiative.

Other prospective contributors are expected to pay close attention to the certificates’ fine print given that Ecuador has a long history of political instability and defaulted on its international bonds in 1999 and 2008.

“You need a substantial legal framework that can give you the necessary assurances,” said Peter Linder, Germany’s ambassador in Quito. “We will start talking details this month. One of the main questions will be the guarantee that the project will be sustainable.”

Ecuador, a member of OPEC, has given itself until the end of 2011 to raise $100 million in seed money that the government says is needed to make the initiative viable.

“If we don’t have $100 million in the fund by the end of next year we go to Plan B, which would be to refund whatever money we have collected and proceed with exploiting the oil in the ITT section,” said Tarsicio Granizo, a senior official at Ecuador’s heritage ministry.

The fund is to be administered by the United Nations Development Program, which is encouraging oil-rich countries to refrain from drilling in environmentally-sensitive areas.

Ecuador wants to collect the full $3.6 billion by 2024.

MAGIC GARDEN

“There are more species of trees in Yasuni than in all of North America,” said Pablo Jarrin, director of the Yasuni Research Station, which is part of Ecuador’s Catholic University and monitors the region’s biodiversity.

The park is located on the equator and enjoys consistent sunshine and rain while the region’s complex network of rivers creates natural barriers that separate groups of plants and animals, encouraging them to break off into separate species.

The nearby Andean mountain chain makes for steep terrain that also promotes the differentiation of species.

“These three factors interact to give us a region that is probably the richest in biodiversity in the world,” Jarrin said. “The park can be seen as a kind of magic garden that contains plants that cannot be found anywhere else.”

The government says contributions to the ITT initiative would be used for conservation and reforestation efforts and to fund poverty reduction efforts in the Amazon, which is Ecuador’s poorest region despite the area’s vast oil wealth.

Money donated will also go toward fuel efficiency initiatives and developing alternative energy sources.

But these programs are not foremost in the mind of Imene, who says she just wants to bring up her six-month-old daughter the way she was, surrounded by the sounds and fresh air of the forest and with her Waorani culture intact.

“For us,” she said, “that’s what the initiative is about.”
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Ecuador wants you to smell the roses, and eat them.
Hugh Bronstein. Reuters. September 13, 2010

PUJILI, Ecuador (Reuters) – Ecuador has long been a major exporter of big bulbed, colorful flowers that please the eye and the nose. Now its farmers are exploring a new idea — roses that you can eat.

Restaurants from New York to Barcelona, looking to attract customers with novelty dishes, have started to serve food containing organic rose petals grown on farms like Roberto Nevado’s in Ecuador’s central highlands.

Nevado is a spritely septuagenarian who moved here from his native Spain to start a plantation in the perfect rose-growing conditions offered by this part of the country, and his Nevado Ecuador farm now has three million bushes under cultivation.

Only 100,000 of them are grown without pesticides and meant for eating.

“But we believe the market will grow,” he said over lunch at his plantation featuring starters, main dishes and desserts containing red, pink and white rose petals that left a bitter-sweet sensation on the palate

“It’s new, it’s interesting, and that’s what everyone wants,” Nevado said, his green eyes flashing as he rolled a dollop of passion fruit mousse over his tongue, crushed rose petals adding a tangy juxtaposition to the sweetness.

A mechanical engineer by training, the energetic Nevado works standing up in his office, even while at his computer or talking on the phone. He started growing organic roses four years ago as part of the “going green” trend in business.

“They are the same species as non-edible roses, but the fertilizers have to be organic and no chemicals can be sprayed on them, which means they need more human care,” Nevado said.

Many bugs that can damage roses do not like garlic, he explained, so workers spray garlic solution onto the organic bushes and plant garlic around his edible rose greenhouses.

A long-time rose trader in Europe, Nevado came here 12 years ago, attracted to the South American country’s high altitudes and position on the equator, conditions that provide the intense sunlight needed to grow the best roses.

His farms stand about 2,800 meters above sea level. He has 500 employees and ships 20 million stems a year. Edible petals are a tiny part of his business, for now.

Restaurants such as Per Se in New York, Zazu in Quito and El Bulli near Barcelona have started experimenting with rose petal dishes and desserts such as “Rose Souffle”.

“The waiters sometimes have to explain that we did not just pull these roses out of the flower vase, that they are grown especially for eating,” said Zazu assistant chef Daniel Pillon, a Brazilian with a reassuring smile.

The restaurant’s rose martini, made with petals soaked for a week in vodka, is becoming a favorite at Zazu’s bar.

BLOSSOMING TRADE

Ecuador’s flower industry has bloomed since the signing of the 1991 Andean Trade Preferences Act, which lowers trade barriers for countries in the region that help Washington fight drug trafficking. Most of the world’s coca, the main ingredient to make cocaine, is grown in neighboring Colombia and Peru.

Ecuador’s flower exports were worth $600 million last year. The industry has been growing by about 13 percent annually and now accounts for 2 percent of gross domestic product.

About 100,000 people are employed directly and indirectly by the flower industry, a substantial number for a nation with a population of only 14 million.

Edible roses account for only about 1 percent of flower exports, but growers say the market needs to be encouraged as the country pulls out of the economic doldrums of 2009.

“Every type of new market, even small boutique markets such as this one, can help promote Ecuadorean flowers in general and help the industry grow,” said Ignacio Perez, head of the Expoflores growers’ association.

He and other experts here say they know of no other country exporting edible roses, which offer nutritional benefits such as calcium and vitamin C.

The petals are certified by European Union authorities and the U.S. Department of Agriculture for import. Nevado is pushing the idea of edible roses at food shows. He says one challenge is to convince potential buyers that they are safe.

“It’s basically lettuce in rose form,” Nevado, a short and courtly man given to dressing in black, said during the recent lunch at his farm.

When a reporter noticed Nevado had not finished all the petals that wrapped a delicious tuna-stuffed tomato appetizer, he admitted, “I’m about up to here with rose petals,” drawing an imaginary line across his forehead with his finger.

“But finish yours,” he said, “please.”

Venezuela [contents]
Venezuela to Use Drillship to Develop Large Natural Gas Project.
EFE. September 10, 2010

CARACAS – Venezuelan state oil company Petroleos de Venezuela S.A. said a platform that sank earlier this year while being used to develop a huge offshore natural gas field will be replaced by a drillship, a move intended to give “continuity” to the project.

The company Petrosaudi Oil Services Ltd. reported Thursday that the Songa Saturn drillship had already left the port of Malta en route to Venezuela, PDVSA said in a press release Thursday, without indicating when it would arrive on the coast of the South American country.

The drillship will “give continuity to the Gran Mariscal Sucre project” and accelerate development of the “productive gas wells located in the Dragon, Patao, Mejillones and Rio Caribe fields, which will supply the gas needed by Venezuela’s domestic market,” PDVSA said.

“Petrosaudi Oil Services Ltd. submitted the best technical offer and was chosen in a bidding process held … after the sinking of the Aban Pearl platform in May,” the press release said.

The Aban Pearl, a semi-submersible platform built by India’s Aban Offshore Limited, sank on May 13 without causing fatalities or environmental damage.

That platform, the first offshore gas rig completely operated by PDVSA, had been incorporated in 2009 into the drilling plans for the Mariscal Sucre project, located off the coast of the northeastern state of Sucre.

Andean Region [contents]
Colombia senator accused of paramilitary links.
CNN. September 15, 2010

Colombian Sen. Javier Caceres, a former president of Congress, was arrested Tuesday for alleged links to right-wing paramilitary groups.

The country’s Supreme Court of Justice issued the arrest warrant.

According to local reports, Caceres was allegedly involved with the paramilitary chief Uber Banquez, known as “Juancho Dique.”

Banquez claims that Caceres asked him for money to finance his campaign.

In an interview with Caracol Radio after his arrest, Caceres denied that any meetings with paramilitaries were for the purposes of wrongdoing.

He did admit that in 2000 he met with Carlos Castano, then-head of the now demobilized United Self-Defense Forces of Colombia (AUC) paramilitary organization, but did not divulge any details about it.

“I have never met with any illegal group, in any part of the country, to do wrongdoing,” he told the radio station.

Caceres is the latest politician to be investigated for what is known in Colombia as “parapolitics.”

Other members of Congress and officials have also appeared before the court to face charges of links to the paramilitary groups.

Right-wing paramilitary organizations were formed in reaction to a longstanding insurgency against the government by the Marxist Revolutionary Armed Forces of Colombia, known as FARC, and the National Liberation Army, commonly called ELN. Each paramilitary group fought to protect local areas against the guerrillas. The AUC came into being in 1997 as the paramilitary groups’ national umbrella organization.

Colombia’s National Police said the AUC was responsible for more than 1,000 assassinations and hundreds of kidnappings and incidences of torture. The AUC said most of the victims were guerrillas or their supporters.

The United States classified the paramilitary group as a foreign terrorist organization in 2001.

Colombia started a program to disband the paramilitary groups in 2003, offering legal and financial concessions to members who quit.
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36 Colombian Union Leaders Slain in 2010.
EFE. September 14, 2010

BOGOTA – Thirty-six union leaders have been murdered in Colombia so far this year, compared with 26 during the first eight months of 2009, an official of the CUT labor federation said Tuesday.

Five of the 36 slain leaders were from a single organization, the Adida union representing teachers in the northwestern province of Antioquia, CUT human rights director Luis Alberto Vanegas said.

Paramilitary groups involved in drug trafficking routinely distribute flyers threatening union activists, he said.

“A high percentage of those who threaten and pursue unionists are the private armies of paramilitaries financed by landholding business-owners,” Vanegas said.

More than 2,700 unionists have been killed in Colombia since 1986, including 40 slain last year, making the Andean nation the world’s most dangerous country for organized labor, the CUT says.

Those statistics have prompted U.S. lawmakers to oppose ratification of the trade accord the Bush administration negotiated with Colombia, a pact that remains on hold.
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Strong Colombian peso debilitating exports and eliminating jobs.
Merco Press. September 15, 2010

Unemployment in Colombia stands at 12.6% but another 34.2% figure as under employed or partially employed. President Juan Manuel Santos in his inauguration speed in August promised to create 2.5 million jobs in four years.

“The strong appreciation of the currency impacts on labour intensive activities such as flower farming, and so far there are no compensatory measures” says Francisco Chaves, a stock exchange analyst.

According to the national Association of Flower Cultivators this year the sector has lost 5.000 jobs which must be added to the 18.000 gone in the last three years.

The budget deficit 4% of GDP and foreign credit to finance it is seen as one of the main causes behind the revaluation of the peso together with a considerable inflow of foreign investment.

Foreign investment in the first half of this year increased 20% compared to the same period a year ago, jumping from 5.3 billion USD to 6.4 billion.

Economist Roberto Steiner from a Bogotá think-tank points to the challenges the current inflow of investment represents for employment and jobs creation.

“The main attraction for foreign investors are mining and energy, which means Colombia is competitive in sectors which are not great generators of jobs, but punishing others that are such as the flower industry”, underlines Steiner.

Another economist, Carlos Ronderos also warns that agriculture and industrial exports are debilitating fast and the “fiscal budget is something which can’t be addressed immediately”.

Besides the “cheap” dollar has helped reconvert industry, with greater productivity and cost reduction which is good for the economy but not for jobs.

To tackle the problem Colombian economists suggest monetary measures and export incentives on a long term strategy.

“The problem is serious because the appreciation of the Colombian peso against the US dollar begun five years ago, and so far there has been no official reaction”, said Chavez.
However local brokers believe the Colombian central bank will buy dollars on the spot market to ease the pressure on the peso.

Two weeks ago central bank president Jose Dario Uribe said the institution would buy dollars in the spot market when it deems it “appropriate”.

Colombian central bank director Carlos Gustavo Cano said in an interview with La Republica newspaper that policy makers are considering capital controls in a bid to stem the appreciation of the peso. Cano said that the strengthening peso is a concern and the result of short-term capital inflows, according to La Republica.
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Colombia’s Internally Displaced People.
Michael Solis. Huffington Post. September 13, 2010

According to the Internal Displacement Monitoring Centre, approximately 26 million people worldwide have had to flee their homes for different locations within their countries as a result of conflicts, government policies, or human rights violations. In Colombia, the number of internally displaced people is approximately 4.9 million – nearly the population of Colorado. This makes Colombia the second largest internal displacement country in the world next to Sudan.

Internally displaced people in Colombia account for 11 percent of the nation’s population and 19 percent of all internally displaced people globally. Once displaced, they are exposed to violence, rights abuses, and limited access to food, education, and health care.

The driving cause of displacement in Colombia is the ongoing civil war, which began in 1964 when the leftist Revolutionary Armed Forces of Colombia (FARC) and National Liberation Army (ELN) guerrillas rose up in arms. Government-backed paramilitary groups emerged in the 1980s to combat the insurgents. Paramilitary forces remain active despite failed demobilization tactics between 2002 and 2006, and they continue to commit rights abuses.

Such abuses do not stop with the State-sponsored expulsion of people from their land. Human Rights Watch’s 2010 report on Colombian paramilitaries documents the widespread abuses of successor military groups to the paramilitary coalition that regularly commit massacres, killings, forced displacement, rape, and extortion. They often target human rights defenders, trade unionists, victims seeking justice, and community members who do not follow paramilitary orders.

According to women’s rights activist Ana Teresa Lozada, at the core of the Colombian conflict is deep social inequality. Half of the country’s population of 45 million people live in poverty. The territorial dispute has caused the dispossession and displacement of the poor and marginalized to the benefit of the powerful – the State and multinational corporations – who gain minerals, oil, and other natural wealth as a result of exploitation.

Forced displacement continues in countryside towns and cities, with indigenous and Afro-Colombians being the main target groups. Nearly half of the displacements that occurred in 2009 took place in Nariño, where paramilitary forces have assassinated indigenous peoples. An estimated 300,000 people were displaced in Colombia in 2009 alone.

Paramilitary organizations have helped facilitate the entry of multinational corporations in Colombia by doing the “dirty work” of removing farmers and their families from their land. Internally displaced people are excluded from the enjoyment of their economic and social rights, including the right to work. Approximately 11 percent of internally displaced people earned Colombia’s minimum wage of $260 per month, while the rest rely on informal work such as rummaging and selling things like cell phone minutes or tamales.

Recently, a delegation of Christian Peacemaker Teams (CPT) visited Colombia to meet with Colombian officials and activists about the internal displacement issue. The group visited the people of Las Pavas who have been displaced from their land by a former drug lord.

Stacey Carmichael, one of CPTs delegates, expressed her concerns with what the Colombian corporation Daabon that now resides in Las Pavas has done to the 123 local families and their land. “This corporation has disrupted a native burial ground and bulldozed the Las Pavas community’s crops to plant palm. The palm oil being harvested is mainly being sold to…get this…the Body Shop.”

The revelation is telling. The Body Shop is a corporation that claims to commit itself to defending human rights and campaigning against social injustice. According to its website, the Body Shop commits itself to “respect local, cultural, and political differences” and insists that their business activities adhere to basic human rights standards. Yet the corporation is profiting directly from policies that displace Colombians, extract resources, and deprive locals.

Unlike refugees, internally displaced people are not afforded the same protections as refugees under international law such as the 1951 Refugee Convention and the 1967 protocol. Instead, the government is chiefly responsible for addressing their rights. This is problematic when the Colombian State is largely responsible for the infringement of its people’s rights.

Hope for change exists, as a recent Constitutional Court ruling has deemed the government’s response to internally displaced people as unconstitutional. The Colombian government has begun a discussion process to address the dispossession of land. While the government of the former president Alvaro Uribe increased funding for programs to benefit displaced people, the initiatives did not result in improvements in their quality of life, nor did they seek to right the wrongs of the past by holding people accountable for rights abuses. It remains to be seen what the newly elected president, Juan Manuel Santos, will do to address this humanitarian concern.

Until then, it would not hurt to contact multinational corporations like the Body Shop to question them about the implications their business agreements have on Colombian people and native lands.
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Peru’s Garcia Shuffles Cabinet Before Elections.
Reuters. September 14, 2010

LIMA – Peruvian President Alan Garcia chose a new prime minister and economic chief on Tuesday in a widely expected cabinet shuffle to pave the way for his party to launch a candidate in next year’s presidential election.

He picked one of his longtime aides, Education Minister Jose Chang, to replace Prime Minister Javier Velasquez, who wants to become the ruling APRA party’s nominee for president ahead of a nationwide vote slated for April.

Ismael Benavides, a well-respected banker, was chosen to replace Mercedes Araoz as finance minister.

Araoz was recently criticized by the central bank for allowing public spending to rise too quickly in Peru, where the economy is forecast to surge 7 percent this year, one of the fastest paces in the world.

Garcia praised Chang for improving the quality of public education and said he “would guarantee continued economic stability and be neutral in the run up to elections.”

The cabinet changes had little impact on financial markets as Garcia’s centre-right government is not expected to abandon policies emphasizing free trade and foreign investment. Peru’s sol hovered near a two-year high of 2.79 against the U.S. dollar on Tuesday.

“This is a transitional cabinet. I don’t think there will be any major changes in economic policy, though Chang must guarantee that Garcia leaves office looking good and is well remembered,” said political scientist Alberto Adrianzen.

In August, three sources in APRA or the government had told Reuters that Araoz would leave in the cabinet shuffle and that Benavides would replace her, prompting Garcia to strenuously criticise the report and call it “false”.

PLANNING FOR ELECTIONS

Chang has worked for Garcia for years and, like Velasquez, is a core member of Garcia’s APRA party. The cabinet shakeup had been repeatedly postponed, as members of APRA jockeyed over who should be on its presidential ticket.

By law, Garcia, whose disapproval rating is a lofty 60 percent despite swift economic growth, cannot run for a second straight term. Many Peruvians feel left behind by the country’s economic boom and the poverty rate is around 35 percent.

Opinion polls have shown any APRA candidate will likely be trounced in the next presidential election by one of two conservative frontrunners: Lima’s mayor Luis Castaneda or Keiko Fujimori, a popular lawmaker and the daughter of former president Alberto Fujimori.

Earlier on Tuesday, a government source said Velasquez had asked the telegenic Araoz to be his vice presidential running mate in a bid to strengthen his chances of victory.

By choosing his old friend Chang to lead his cabinet, critics will likely accuse Garcia of manoeuvring to boost public spending so that APRA picks up seat in Congress during next year’s general election.

With a strong base in Congress, Garcia would have a better chance of winning the presidential race in 2016, the next time he will be eligible to run, said political analyst Fernando Rospigliosi. Garcia, whose first term was in the 1980s, has said that he would like to be president for a third time.

The lead up to elections in April has already provoked controversies about how to manage lingering social conflicts over natural resources and how to try people for human rights crimes committed during a 1980-2000 civil war.

The rights controversy contributed to the firing of Defence Minister Rafael Rey on Tuesday.
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Peru Central Bank Raises Reserve Requirements to Avert Risk of Overheating.
John Quigley. Bloomberg. September 13, 2010

Peru’s central bank increased the reserve requirement for short-term overseas loans as it seeks to prevent credit growth from fueling inflation in the South American country.

Banks must hold funds equivalent to 75 percent of borrowings abroad maturing in less than two years, up from 65 percent previously, the central bank said yesterday in an e- mailed statement.

The higher reserve requirement “reduces the possibility of short-term external capital inflows and other sources of transitory liquidity creating unsustainable growth in credit,” the statement said.

Rising private investment spurred Peru’s economy to grow 11.9 percent in June, the fastest since 2008, and led the central bank to increase its reference rate for a fifth straight month last week. Policy makers have also raised reserve requirements four times since June as they seek to avert inflationary pressures and prevent foreign inflows from destabilizing the local currency.

The bank increased its benchmark lending rate to 3 percent from 2.5 percent Sept. 9, citing robust domestic demand and “rapid” economic growth. Company and household borrowings may rise 20 percent this year, central bank President Julio Velarde said Sept. 9.

The sol has gained 3.5 percent this year, the second- biggest gain among seven major Latin American currencies tracked by Bloomberg. The Colombian peso has gained 13.6 percent over the same period.

The central bank this month increased the marginal reserve mandate to 120 percent of foreign banks’ short-term sol deposits, from 65 percent, to slow capital inflows.
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U.S. Praise for Peru’s Economy Misses the Mark.
Lisa Skeen. NACLA. September 13, 2010

The Peruvian economy has been enjoying something of a heyday lately, basking in the glow of the mainstream media. Currently being hailed as something of a Latin American wonder child, the Andean country has received increasing press coverage for its near decade of strong growth, which has continued despite the global economic downturn. But extensive coverage of fawning comments by President Obama have overshadowed the parallel narrative of a country potentially on the brink of disaster, with widespread voter discontent, sharp income disparity, and explosively divergent claims to land and resources.

After Peruvian president Alan García visited the White House early this summer, Obama praised the country during a press conference, stating “We’ve seen not only the solidification of a thriving democracy but also an extraordinary economic success story. Even over the last year in the midst of a very tough global recession, we saw that Peru was able to remain resilient.”

Meanwhile, outside the White House, a small group of activists protested the meeting. A Peruvian woman and her daughter were later charged with defacing government property after the daughter chained herself to a White House fence and the mother poured an oily substance on her.

The incident, which was meant to highlight the environmental destruction wrought by mining companies, was mentioned only in passing on an ABC news blog. Obama’s “economic success story” line, however, has reverberated through the mainstream media.

His comments, however, are as much a statement of faith in neoliberal trade policies as they are a statement of faith in Peru itself.

Certainly, the Peruvian economy has expanded. In May, the International Monetary Fund estimated that Peru’s economy would expand by 6.3% in 2010 – the largest increase in the western hemisphere – due mostly to foreign direct investment (FDI) in mining and energy and the soaring price of gold, Peru’s second-biggest export. Bank of America estimated that investment in the country would nearly double in 2011, to $8.4 billion, from $4.4 billion in 2009.

And yet, García’s approval ratings hover at around 31%, up slightly from an abysmal low of 26% in May. His ratings reflect the reality that there is often little, if any, immediate correlation between GDP growth and quality of life for ordinary citizens.

Former president Alejandro Toledo described an alternate reality in an interview with PBS Newshour: “[There are] millions of Amazonians, Afro-Peruvians, who don’t have the chance to have access to potable water and sanitation, to quality health care . . . ,[and] access to energy. And that’s a population that’s very discontented, and today getting together.”

A June report by Oxfam America paints a bleak picture of Peru. Throughout the 1990s, reports Oxfam, the country underwent a dramatic restructuring, with heavy emphasis on decentralization. As a result, local governments are now given 50% of royalties and taxes paid by extractive industries (called the canon minero), which in theory, should have been a boon to local communities, given the rapid growth of FDI. FDI inflows have nearly tripled in the last decade, from $1 billion during 1990-1999 to $2.7 billion during 2000-2009. As in the rest of Latin America, the exploitation of natural resources, particularly minerals and gas, is responsible for the majority of this investment.

Poverty indices, however, indicate that foreign investment and the current system of royalty distribution – hobbled by lack of institutional support and corruption – is highly ineffective at spreading wealth equitably. The García administration claimed the national poverty rate fell from 48.7% in 2005 to 34.8% in 2009, but Farid Matuk, a former head of the National Institute of Statistics and Informatics (INEI) – the organization responsible for these statistics – was highly critical of García’s conclusions, which have been widely reprinted in the media. According to Matuk, “The poverty figures are not a product of scientific measurements but an artistic creation . . . there is no math on earth that backs up INEI’s statistics.”

A closer look at INEI statistics indicates that poverty levels have actually increased in rural areas, particularly in rural areas associated with mining, agriculture exports, and the Amazon. They range from an astounding 70.3% in Apurimac to 56% in Cajamarca (Peru’s leading gold mining region) to a low of 13.7% in the Pacific coast region of Ica. Food poverty levels, considered a more accurate indicator of day-to-day hardship, have increased in rural areas, from 40.7% in 2005 to 45.8% in 2010.

Mining and gas concessions cover a staggering 70% of the Peruvian Amazon, many of which overlap with indigenous lands. Though many of the concessions are not being actively utilized, forecasts about environmental degradation are grim One recently released study offered a worse-case prediction that 91% of the Amazon would be deforested/degraded by 2041.

Rural discontent over land use, which has been simmering for years, boiled over in June 2009 with indigenous protests against the granting of exploration concessions to oil and gas companies in Bagua. Thus far, the protests have had little effect on García’s policies.

The potential for such deadly explosiveness has investors concerned that there is a “sizable danger” that Peru will elect a populist president in April 2011. The possibility is considered likely enough to warrant the suspension of anticipated credit ratings upgrades until after the elections.

The potential for the election of a president who appeals to the rural poor rather than the urban business class no doubt looms large in the minds of investors and U.S. officials. Under García, Peru has remained a critical ally of the United States, particularly for its strategic location among other coca-cultivating countries that are, at best, highly wary of U.S. foreign policy. The potential deepening of a military alliance between the two countries was alluded to in comments by U.S. Defense Secretary Robert Gates during an April visit to Lima.

But it is most likely Peru’s friendliness to foreign investors that goes the farthest to explain Washington’s insistent praise for Peru’s “growth” amid such stark evidence of domestic discontent. The United States – Peru Trade Promotion Agreement (TPA) went into effect on February 1, 2009, and according to the U.S. Trade Representative, trade between the two countries grew to $9.1 billion in 2009, up from $3.6 billion in 1999.

The TPA included a requirement that Peru protect labor rights, as well as a pledge of bilateral cooperation on the promotion of environmental protection. Under the agreement, Peru had 18 months from the February 1 implementation date to bring itself into compliance with this pledge. In July of this year, U.S. Ambassador Ron Kirk, expressed concern that Peru would not meet these obligations by the August 1 deadline.

Thus far, the Obama administration has not seriously addressed Peru’s noncompliance with those few parts of the agreement capable of positively impacting local communities. Meanwhile, the praise keeps flowing and foreign investors continue to profit as rural Peruvians sink deeper into poverty – and discontent.

Lisa Skeen is a NACLA Research Associate.

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SURVEY: Chile Seen Raising Rates Again As Economy, Demand Thrive.
Anthony Esposito. Dow Jones. September 14, 2010

TPM Rate History (annual percentage):

 Aug    July   June    May   April  March  2.0%   1.5%   1.0%   0.5%   0.5%   0.5%      

SANTIAGO–Chile’s central bank is expected to continue raising interest rates, lifting its key rate by half a point Thursday, as the economy thrives following last year’s recession and a massive February earthquake.

The bank in June raised the key overnight rate, known locally by the acronym of TPM, for first time in two years to 1% from a record low 0.5%, where it had stood for nine months. The monetary authority had slashed rates in response to the global economic crisis. As the recovery gained traction, it then raised the rate by 50 basis points in July and again in August.

In the midst of the global financial crisis last year, Chile slumped to its first recession in a decade. As the country recovered, an 8.8-magnitude earthquake rocked Chile’s central and southern regions in February, causing an estimated $30 billion in damage, which led the economy to contract in March.

Nonetheless, Chile’s economy has quickly rebounded on significant domestic demand and investments, posting 6.5% growth on the year in the second quarter, its highest rate in five years.

Also, for the first eight months of the year, Chile’s consumer price index gained 2.3%. The monetary authority has an inflation target of 3%, plus or minus one percentage point, in its 24-month policy horizon.

The central bank recently upgraded the Andean nation’s 2010 growth forecast to between 5.0% and 5.5% on the year as post-quake reconstruction kicks into high gear and demand is anticipated to remain firm.

“Domestic demand has grown beyond prior expectations and output gaps continue to be closed. Both have the potential to increase medium-term inflation,” said Diego Figueroa, economist with local investment bank and brokerage Larrain Vial.

Meanwhile, central bank president Jose De Gregorio recently said that “any way you look at it, 2% [TPM] is fairly off from being neutral,” adding that the central bank sees neutral interest rates for the Chilean economy at around 5% to 6%.

Despite the latest the consumer prices index retreating an unexpected 0.1% in August from the previous month, analysts said they believe that the central bank will raise the TPM a half-percentage point to 2.5% at its monthly monetary policy meeting Thursday, in line with the bank’s efforts to bring rates to a more neutral level next year.

“Consistent with the central bank’s language, the policy rate is far away from being neutral…considering strong domestic demand, there’s no need to maintain the extraordinary monetary accommodation,” said Goldman Sachs economist Alberto Ramos.

All 10 of the analysts surveyed by Dow Jones Newswires expect the central bank to increase the benchmark rate by 50 basis points to 2.5%.

However, the strength of the Chilean peso, which has recently traded at 35-week highs compared with the dollar, could play a role in the pace at which the bank withdraws its stimulus.

“The language in the central bank’s post-meeting communique could reveal less concern about short-term inflation as the appreciation of the peso has taken some pressure off of tradable goods and perhaps will moderate the current pace at which rates are being hiked,” said Larrain Vial’s Figueroa.

According to the central bank’s most recent monthly poll of local analysts, in the October meeting the bank will likely raise rates by another half point to 3.0%, and in December, the TPM is expected to be at 3.5%. Twelve months from now, the TPM will likely be at 5%.
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Former Chilean President to Lead New U.N. Agency.
Neil MacFarquhar. New York Times. September 14, 2010

UNITED NATIONS – Michelle Bachelet, famous for breaking gender barriers by becoming the first woman elected president of Chile, will head the new global United Nations agency created to advance women’s rights, Secretary General Ban Ki-moon announced Tuesday.

Mr. Ban said he chose Ms. Bachelet, 58, from 26 candidates for her political skills and ability to create consensus. She had been a front-runner from the start.

“We have to make sure that women’s issues are an essential element on the agendas of all heads of state, all governments,” Ms. Bachelet said in an interview.

The United Nations has been overshadowed on numerous issues by other global organizations in recent years, but Ms. Bachelet said the very fact that it was creating an agency to concentrate on women indicated the priority being given to “putting women’s issues in a higher position.”

New reports had suggested that Ms. Bachelet wanted to stay active in Chilean politics after finishing her term in March, but she said she had never commented publicly on the job. Still, she acknowledged, it was a tough choice to move away from Chile and her three children – her youngest daughter is just finishing high school while the other two are grown.

“I will always care about what happens in Chile, so it was not an easy decision,” she said, noting that she ultimately decided she wanted the challenge.

Ms. Bachelet comes with a “wealth of experience, global leadership, and global stature,” Mr. Ban said, and will bring to the post “a real force to meet the expectations of many women and girls and children around the world.”

It took four years of wrangling among member states to create the agency, which consolidates four smaller agencies whose work on women’s issues often overlapped. It has been given the rather unwieldy title of the United Nations Entity for Gender Equality and the Empowerment of Women, but in diplomatic shorthand it is often called the “Gender Entity.”

In 1995 in Beijing, United Nations member states signed off on a declaration to achieve women’s equality. Among other issues, it called on governments to end discrimination against women and close the gender gap in 12 fields, including education, employment, health, human rights and political participation. That platform will basically become the agenda for U.N. Women when it officially starts work on January 1, 2011.

Even before the General Assembly approved the new agency in July, Mr. Ban was focused on finding a women from the “south” to run it, worried that bringing in a leader from the richer, developed states might cause resentment that Western nations were using the United Nations to foist their values on the rest of the world.

Ms. Bachelet said she was aware that some of the socially groundbreaking policies she put forward in Chile might not have a universal application, that cultural approaches will vary. “In some places women have all the rights they deserve and in others there are big restrictions – in some countries they even mutilate women,” she said, referring to the custom of female circumcision. “In some places it will be faster and others it will take longer. It is not easy and it has a lot of controversial aspects.”

Having a board that represents all areas of the world and lots of women experienced in civil society will help speed the work, she said.

Ms. Bachelet, a pediatrician, has been nothing if not an iconoclast. A professed agnostic and single mother of three in a nation that only recently legalized divorce, Ms. Bachelet shattered the mold of traditional politicians in Chile, a Roman Catholic stronghold.

She initially divided her first center-left cabinet among 20 ministers – 10 men and 10 women – unprecedented gender parity for Chile. Her government legalized alimony payments to divorced women and tripled the number of free early-child-care centers for low-income families. Her popularity dove initially after she was elected in 2006 over some domestic issues, but her deft handling of the Chilean economy during the world financial crisis won her high approval ratings.

She left office facing some criticism that her government was slow to react to a devastating earthquake that hit just as her presidency was ending, but she denied that she had been reluctant to call out the military, which has a bloody past in Chile.

Her father, an air force general, died in prison after being tortured for months under the dictatorship of Gen. Augusto Pinochet. The regime also detained and tortured Ms. Bachelet and her mother in 1975 before they were allowed to seek exile in Australia. Ms. Bachelet returned in 1979.

Southern Cone [contents]
China State-Run Banks Plan to Invest in Brazil’s High-Speed Train Project.
Carla Simoes. Bloomberg. September 14, 2010

China Development Bank Corp. and the Export-Import Bank of China are ready to lend to a group of companies bidding for Brazil’s bullet-train project, according to Asian Trade Link, which is associated with the group.

China Railway Construction Corp. and China Northern Locomotive & Rolling Stock Industry Group Corp. are leading the bid group, said Marco Paulo Moreira Leite, chief executive officer of Asian Trade Link, a Brazilian firm.

“There’s no problem for China in terms of financing,” Leite said in a Sept. 8 telephone interview from Rio de Janeiro. “The Chinese banks are well-capitalized.”

The Chinese group, which has been studying the high-speed train project for a year, is waiting for details on a loan from Brazil’s state development bank, Leite said. The bank, known as BNDES, may finance as much as 60 percent of the project, Bernardo Figueiredo, head of the nation’s Land Transportation Agency, said last year.

The train will link the cities of Rio and Campinas via Sao Paulo and may cost as much as 33.1 billion reais ($19.4 billion), according to Brazil’s federal auditing court, known as TCU.

Officials at the Export-Import Bank of China and China Development Bank couldn’t be reached for comment.
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Brazil on course to hit child mortality target as living standards improve.
Tom Phillips. Guardian. September 14, 2010

Brazil slashed its infant mortality rates by 50% between 1990 and 2006 thanks to rising incomes and better healthcare.

The woman at the door furrows her brow and breaks into a giggle. “What’s broccoli?”

It’s early afternoon in Ipuca, a rural shantytown in one of the most deprived corners of Rio de Janeiro state, and Lucileide Alves Costa, a 25-year-old mother of two, is receiving a visit from members of the Pastoral da Crianca, an outreach group devoted to fighting infant mortality.

Pointing to 1-year-old Francisco, the visitors rattle off a list questions from their notebook: “Is he eating ok?” “Does he eat vegetables?” “Has he been vaccinated?” Costa responds in the affirmative – until broccoli is mentioned. “I use onions and pepper – and stock cubes,” Costa confesses. “But I’ve never cooked broccoli. What is that?”

Welcome to the frontline of a three-decade battle against infant mortality in Brazil, a country that has managed to drastically reduce death rates over the last 30 years, saving tens of thousands of young lives.

A 2008 study by Unicef found that Brazil had slashed infant mortality rates, those among children between 0 and 1 year of age, by over 50% between 1990 and 2006. According to the report the national death rate had dropped from 48 deaths per thousand live births to around 19.

Even in Brazil’s indigenous communities, some of the worst-affected areas, the government says things are improving. According to Brazil’s health agency Funasa, there was a 10% drop in infant deaths in indigenous areas between 2007-2009.

In 2000, Funasa claimed that the death rate in such areas was nearly 75 for every 1,000 children under the age of one. In 2009 that figure dropped to around 42 per 1,000.

All of which means that Brazil is on course to meet the fourth millennium development goal, which calls for a two-thirds reduction in the infant mortality rate by 2015. Other countries performing strongly include Bangladesh, Egypt, Indonesia, Mexico, Nepal and the Philippines. But elsewhere results are not so uplifting. In Somalia, Unicef figures show that the mortality rate among under-fives remained stable between 1990-2004, with around 225 deaths per 1,000. While Haiti managed to reduce its rate from 150 per 1,000 to around 117 deaths, it still remains on Unicef’s “off-track” list.

Globally the under-five mortality rate has fallen from 90 deaths per 1,000 live births in 1990 to 65 in 2008, according to a Unicef report published this month (Sept 2010). But the rate of decline means that overall MDG4 will not be attained, with sub-Saharan Africa and South Asia still lagging.

Lucileide, an immigrant from Brazil’s impoverished north-eastern state of Ceara, ranks among Rio’s poorest residents. Her house lacks running water – she uses a neighbour’s well – and the front door of her cramped home opens out onto a black river of raw sewage.

Yet even here a combination of government action and the work of community support groups such as the Pastoral da Crianca has drastically reduced child and infant mortality. Thirty years ago it was common for mothers in slums like these to lose their children during or soon after childbirth. No longer.

“It’s very rare nowadays,” says Leila Maria Rangel Soares Santana, 55, the Pastoral’s local organiser. “We had one death some time ago but it was because of something that happened at the hospital, not bad pre-natal care. Dehydration and diarrhoea – these are very common here and in the rest of Brazil. But here, infant mortality hardly exists any more.”

The plummeting number of child and infant deaths in the Rio favela tells a wider story of a improving living standards in Brazil. According to the Ministry of Health 43.601 Brazilian babies died in 2008 compared to 95,476 in 1990.

“The fall in infant mortality is the result of families having greater access to information, health services and income,” Brazil’s social development and hunger minister, Marcia Carvalho Lopes, says.

Lopes also attributes the continuing fall to recent government projects such as Fome Zero, or Zero Hunger, and Bolsa Familia, an income transfer project which conditions cash transfers to low-income families on the vaccination of children and their presence at school.

“Bolsa Familia mothers are breast-feeding more. Pregnant women are doing more pre-natal,” she says.

While government action has played a major role, the Pastoral da Crianca is widely credited with spearheading the drive to reduce infant mortality rates in Brazil.

The group, which aims to train mothers in basic healthcare and healthy eating, was founded in 1983 by Zilda Arns, a legendary Brazilian medic and aid worker, and now boasts a network of 260,000 volunteers across the country from the Rio favelas to the remote riverside communities of the Amazon jungle and the arid backlands of north-east Brazil, where Costa was born.

Arns was killed in Port-au-Prince earlier this year when the Haitian church she was speaking at was hit by January’s earthquake. Her group’s work, however, goes on – not just in Brazil but in countries such as Angola, Haiti and East Timor. Today the Pastoral says its volunteers care for nearly 2 million Brazilian children, while mortality rates among children within their reach is significantly lower than children who are not.

“Today rates [of infant mortality] among the children we support are under 10 [deaths per 1,000],” says Antonio Chaves, the group’s state coordinator in Rio. “Before in some areas the rate was over 70.”

“The healthcare system is still not of a first-world standard, but it has improved a lot,” he adds.

In Jardim Catarina the Pastoral helps around 550 children, using community “leaders”, usually local mothers themselves, to reach out to expectant mothers through monthly visits and weighing sessions. Each leader is responsible for around 15 children between the ages of 0 and 5 and around five expectant mothers.

Much remains to be done. While infant mortality rates in south-eastern states such as Rio and São Paulo have massively receded, the rate of infant deaths remains high in the poor north and north-east of the country.

Jorge Abrahao de Castro, the director of social policies at Brazil’s Institute for Applied Economic Research, a state-funded think-tank, says Brazil is still characterised by “very high regional differences” in social indicators, including infant mortality.

 “This rate has been falling in Brazil… [but] we still have a very high [overall] rate of around 22.8 deaths per 1,000 [among 0-5 year-olds].”

“The worst areas are improving more quickly,” he says, adding that he is confident Brazil would achieve its millennium goal – which is to reduce its overall under-five death rate to 20 per 1,000 – one year ahead of schedule, in 2014.

Mexico, Central America and the Caribbean [contents]
Mexican Official Quits.
Randal C. Archibold. New York Times. September 14, 2010

MEXICO CITY – Mexico’s immigration minister resigned Tuesday, three weeks after 72 Central and South American migrants were killed in an attack that threw a spotlight on the often harsh treatment people endure while traveling through Mexico toward the United States.

A government announcement on Tuesday evening said that Cecilia Romero Castillo, the commissioner of the National Migration Institute, had resigned after nearly four years in the job, without giving a reason, though speculation had been building for weeks that she would step down.

President Felipe Calderón has met in the past week with the presidents of Guatemala, Honduras and El Salvador, where several of the migrants had begun their journey, to promise greater cooperation in fighting organized crime groups and more vigilance in protecting migrants. Human rights groups have assailed the government, saying it does little to protect migrants, who they say are regularly beaten, robbed and killed, sometimes by the police.

The authorities in Mexico have blamed the massacre on Los Zetas, one of the most feared gangs in Mexico, saying the gang sought to recruit the migrants to work for them, although family members have said the gunmen telephoned them demanding money.

Mr. Calderón said several of the people suspected in the massacre have been killed or captured in a series of confrontations with the police and military.

No replacement for Ms. Romero was announced.
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Letter from Mexico: In no mood for a fiesta.
William Booth. Washington Post. September 15, 2010

IN MEXICO CITY The government is promising “the most spectacular celebration in history” and throwing more than $40 million on the table for parades and fireworks to commemorate the country’s 200th anniversary this week. But on the eve of their bicentennial, many Mexicans confess they’re in no mood for a party.

As the country prepares to follow President Felipe Calderon in the traditional “grito,” or shout-out of “Viva Mexico!” on Wednesday night, the country’s historians, politicians and artists agree that the country is in a deep funk.

“It feels like Mexico is out of gas,” said Hector Reyes, a car dealer who with his wife and kids watched workers erect TV camera scaffolds in the capital’s central plaza to broadcast the events.

These days the news feels like an endless rerun of the same cop show as one midlevel drug capo after another is arrested or killed. Last month it was El Nacho. Then it was La Barbie. This week, El Grande. All of them – beefy thugs with fashionable sports shirts, living in nice big houses, with lots of guns and grenades – are quickly replaced.

“Because when one is captured, the next in line steps up,” said Jorge Romero, a representative in the National Congress.

A popular movie in theaters here to commemorate the bicentennial is called simply “Hell.” Billboards touting the film are a tragicomical tableau of the state of the state: the grinning narco in his cowboy hat and white suit standing alongside a fictional version of the real-life “El Pozolero,” the infamous Stewmaker, who disposed of corpses in a 50-gallon drum of lye.

The movie is gruesome but funny, and audiences laugh and gasp, as corrupt cops, mayors, dopers and even a priest are mowed down by AK-47s and dispatched with the newest symbol of Mexican macho – the chain saw.

“I hate to speak ill of Mexico, especially with those from abroad, but to be honest, Mexico has a number of problems that have become endemic, which have become part of our culture, our idiosyncrasies, and those problems are things such as corruption and impunity and social inequalities,” said Luis Estrada, the film’s director. “It is a sad conclusion, but as a society and country, we have very little to celebrate.”

In a poll published last week in the newspaper Reforma, 67 percent of Mexico City residents said they felt little or no excitement about the bicentennial. Nearly 6 in 10 said the money spent was not worth it.

“Mexicans are stoic, but we know how to rejoice in little things. We are very good at making fiestas, but the mood is very sour now – you could say it is almost sad,” said Enrique Krauze, author of some of the most popular histories of Mexico.

Even the church appears to be experiencing a moment of doubt. “We are a generous and hospitable people, but we are realizing with surprise and shame that we have become a people corrupt and murderous,” the Catholic Archdiocese of Mexico concluded in a recent editorial.

The church was attacking the criminal gangs engaged in human smuggling and the many Mexican officials uninterested in protecting the rights of passers-through. Many here were shocked by the massacre of 72 illegal migrants from Central and South America, including women and teens, whose bodies were found in an abandoned barn in northern Mexico last month. The killings prompted Mexico’s top immigration official to resign Tuesday.

Though many north of the border might assume that Cinco de Mayo is Mexico’s Fourth of July, it is actually the anniversary of the Mexican military’s upset victory over French troops at the Battle of Puebla on May 5, 1862 – an event not much remembered here in Mexico, though Mexico’s Jose Cuervo tequila empire certainly benefits from its sales in the United States on that day.

On Monday, Calderon attended an annual reenactment by hundreds of Mexican troops – dressed in costume – of the glories of Mexico past, the kind of mingling of myth and airbrushed history that every country rolls out to celebrate its anniversaries. Mexico’s bicentennial honors two revolutions, two wars for independence.

The first from Spain, which was sparked by an uprising of peasant farmers in 1810. Led by a priest with big ideas, Miguel Hidalgo, the insurrection was quickly crushed and Hidalgo executed.

The second Mexican revolution began in 1910 and saw Pancho Villa and Emiliano Zapata wage war against the federal forces of velvet-gloved dictator Porfirio Diaz, who decamped to his beloved Paris in 1911 after stealing his last election. But the fighting dragged on for seven more years. Hundreds of thousands died violent deaths or succumbed to plagues of malaria, influenza and typhus.

“This is a moment where we don’t know where we are and we don’t know where we are going,” said historian Lorenzo Meyer, who hosts a popular evening roundtable on television.

Meyer said the holiday has its enthusiasts, “but it’s a bureaucratic enthusiasm, a staged and not very sincere enthusiasm.”

For weeks, anonymous e-mails have encouraged citizens not to participate in the government-sponsored celebrations. And the presidential candidate who lost to Calderon in a contested election in 2006, Andres Manuel Lopez Obrador, is hosting an alternative celebration a few blocks away from Calderon’s.

Public events in besieged cities such as Ciudad Juarez on the border have been canceled, others have been scaled back, as extreme security precautions are implemented to confront feared acts of narcoterrorism.

To make matters better – or worse? – alcohol sales ended Tuesday at midnight.
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Funes: We must follow own path.
Jim Wyss and Tim Johnson. Miami Herald. September 15, 2010

Staking out a middle ground in a highly polarized region, El Salvadoran President Mauricio Funes said he was not interested in U.S.-style capitalism or Venezuela-inspired socialism but policies that made his nation “effective and efficient.”

Speaking at the Americas Conference in Coral Gables on Tuesday, Funes brushed off the idea that his government might try to adopt the “21st century socialism” that Venezuela has tried to export to allies such as Nicaragua and Bolivia.

“In El Salvador, it’s not possible to build socialism and much less 21st century socialism, which I really cannot define and is not clear to me,” said Funes, 49. “I don’t think [the model] is clear to many of the political actors in the region.”

With the backing of former leftist guerrillas of the FMLN, Funes broke the stranglehold on power of his country’s political right-wing in elections last year.

While the FMLN has its own ideas, Funes described himself as the president of all El Salvadorans “even those who didn’t vote for me.”

Since taking office, Funes has walked a fine line. He has restored ties with Cuba and was among the first presidents in the region to blast the 2009 coup in Honduras that ousted President Manuel Zelaya, a staunch ally of Venezuela’s Hugo Chávez.

But he has also pushed for Honduras to be readmitted to the Organization of American States, has maintained cordial ties with the United States and been a vocal critic of presidents who push for constitutional changes to extend their terms — a category that includes both Venezuela’s Chávez and former Colombian President Alvaro Uribe.

When Colombia’s Supreme Court earlier this year blocked Uribe from running again it “fortified the democratic process in that country,” Funes said. “It would be healthy for Venezuelans if Chávez did the same. I have no doubt.”

In his luncheon address at the annual conference, Funes also talked about the thorny issue of illegal immigration. He said no matter how many massacres await undocumented migrants from Central America as they cross into Mexico, they will continue to flow northward to the United States.

Funes described migration waves as virtually unstoppable and called on the Obama administration to alter its policies to help bring greater social justice to Central America.

“Our region is without doubt one of the poorest and most unjust on the planet,” said Funes, a former television journalist.

Funes said nearly three million Salvadorans have migrated from their homeland, or about a third of the nation’s population.
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Cuba says U.S. embargo has toughened under Obama.
Nelson Acosta. Reuters. September 15, 2010

HAVANA (Reuters) – The U.S. trade embargo against Cuba has gotten tougher under U.S. President Barack Obama, not more lenient as many had expected when he took office, a top Cuban official said on Wednesday.

Foreign Minister Bruno Rodriguez, in the Cuban government’s annual update on the 48-year-old embargo, said the United States is levying bigger fines, applying sanctions more firmly and pursuing embargo-busting financial transactions more vigorously under Obama.

“The embargo policy in the last two years, which is to say under the government of President Obama, has not changed at all,” Rodriguez said in a press conference. “In some aspects, it has even hardened.”

In terms of U.S. policy toward Cuba, Obama had performed “below expectations that had been created in the international community and American public opinion,” Rodriguez said.

Rodriguez said the embargo has cost Cuba $751 billion over the years, adjusted for inflation and the changing value of the dollar.

“It is, without any doubt, the primary obstacle to the economic development of our country,” he said.

The United Nations is scheduled to hold its annual vote on a resolution condemning the embargo on October 26. Last year, only three countries — the United States, Israel and Palau — voted against the measure.

The embargo, said Rodriguez, “is a museum piece of the Cold War. It is, moreover, a failed policy.”

The embargo was fully imposed in 1962, with the aim of toppling the communist government put in place by Fidel Castro after he took power in a 1959 revolution.

The embargo prohibits most trade with Cuba, with exceptions for agricultural products and medicine.

Obama spoke early on of improving relations with Cuba, but insisted the embargo — which Cuba calls a “blockade” — would stay in place until the Caribbean island improved its human rights and released political prisoners.

He has eased the embargo slightly by removing restrictions on Cuban Americans traveling to the island and the amount of money they can send to their family members in Cuba.

There has been more leniency, too, in granting of licenses for visits by U.S. performers and academics, but progress has stalled since Cuba detained a U.S. contractor in December on suspicion of espionage.

The contractor, Alan Gross, remains behind bars in Cuba, without formal charges. The U.S. says he was not a spy, but was in Cuba installing Internet services for Jewish groups.

Rodriguez was questioned about Gross, but he responded only that the embargo is a unilateral act by the U.S. and must be lifted immediately and without conditions.
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Cuba’s Big Layoffs: What to Do with the Unemployed?
Tim Padgett. Time. September 14, 2010

As a layoff notice, it was more blunt than what even corporate America puts out these days. But it’s hard to sugarcoat letting half a million workers go – which is what Cuba’s communist government, via its official labor union, announced on Monday. “Our state cannot and should not continue maintaining enterprises with inflated payrolls, losses that pull down our economy and make us counterproductive, generate bad habits and distort worker behavior,” said a statement by the Cuban Workers’ Central (CTC), making it known that some 500,000 government jobs will be eliminated by next spring. It also suggested something fairly anathema to socialism’s collectivist dogma: how the unemployed find their way after the mass dismissal “depends in large part on the private management and initiative of the individual.”

Rumors had been swirling all summer that Cuban President Raúl Castro was planning to trim the state’s workforce by as many as 1 million. Still, now that it’s official that half that many jobs will be lost, “it has the potential of being an earthquake,” says Marifeli Pérez-Stable, a sociologist and Cuba expert at Florida International University in Miami. The CTC insisted that the layoffs, which represent almost one-tenth of Cuba’s total labor force, are meant simply to “make the Cuban production model more efficient.” But to most Cuba watchers, it signaled an acknowledgment that “the contract Cubans had with the revolution doesn’t work anymore,” says Pérez-Stable.

If so, what Castro left unanswered is: What will replace it? He insists that socialism is “irrevocable” in Cuba and that the country is not moving toward capitalism. But even he groused over the summer that Cuba seemed to be “the only country in the world where you can live without working.” And it’s clear he’s counting on private enterprise to help dig Cuba out of its economic sinkhole, the result of epic inefficiencies as well as this year’s 35% drop in crucial tourism revenue and the effects of a 48-year-old U.S trade embargo. Former President Fidel Castro, 84, who handed power to his brother Raúl four years ago because of failing health, mused to the Atlantic Monthly recently that the Cuban economic model “doesn’t work for us anymore.” He then said last week that his quote was misinterpreted as an admission of that model’s failure when in fact he meant “exactly the opposite,” that the system simply needs repairs. (See pictures of Fidel Castro’s years in power.)

Either way, Monday’s declaration opens the door to a significant expansion of the Cuban self-employed, from mechanics to hairstylists, which Havana has allowed to varying but always limited degrees since the collapse of the Soviet Union left the revolution without its main economic prop two decades ago. But given that almost 90% of Cuba’s 6 million workers are employed by the state, it will take Horatio Alger on steroids to revive the island’s economic growth anytime soon. About 600,000 Cubans are privately employed today – more than 100,000 of them as cooperative farmers tilling land leased from the government – and Havana hopes to double that number in the next couple of years. (Will the White House fight to end the Cuba travel ban?)

But more important than augmenting Cuba’s entrepreneurial ranks will be broadening the kind of enterprises they can run. Taxi drivers and barbers do not an economy make – and those minor service sectors cannot absorb all the pink-slipped state employees who are about to hit Cuba’s streets. And so the big question is whether Raúl and his government will change Cuban law and allow the self-employed to not only hire workers outside their families but also acquire private investment and credit that can promote small manufacturing. Sources with knowledge of the negotiations tell TIME that European governments and the Roman Catholic Church are in discussions with Havana about establishing microloan projects in Cuba to help seed small enterprises like bodegas and furniture-making shops. (Comment on this story.)

The U.S. can play a role in that effort as well. The Washington-based Cuba Study Group, a nonprofit headed by Cuban-American business leaders, has already proposed, along with Mexico’s Banco Comportamos, a $10 million microloan program for Cuban entrepreneurs. Study Group executive director Tomás Bilbao says the Obama Administration should explore something similar, as well as a change in embargo regulations to let Americans invest in private Cuban businesses. (See visions of Cuba through an artist’s drawings.)

Anti-Castro hard-liners in the U.S. oppose the idea, saying it will only give the communist regime an economic crutch. Bilbao acknowledges that “the Cuban regime is certainly going to weigh any potential reforms from here on out based on what they believe to be the greatest economic benefits with the smallest political costs.” But, he insists, “if we support economic reform in Cuba as a means of empowering the Cuban people, then we have to help create the conditions to realize that objective.”

Up until now, Raúl – long considered more reform-minded than Fidel but criticized internationally for moving too slowly – has adopted only minor changes, like letting Cubans have cell phones. “Raúl is very methodical,” says Pérez-Stable, “and unlike his brother he needs consensus to do something as dramatic” as the layoffs – or as stunning as this summer’s release of 52 political prisoners jailed in 2003 during one of Fidel’s harshest crackdowns on dissidents. If Raúl does indeed have the backing of Havana’s communist hard-liners to move ahead, Pérez-Stable adds, he’s likely to call a Cuban Communist Party Congress for next year, at which Cubans and the outside world might finally see real economic alterations.

One hurdle, says Mark Weisbrot, co-director of the left-leaning Center for Economic and Policy Research in Washington, remains Havana’s fears that too liberal an opening could usher in a U.S. economic takeover of Cuba like the one that helped prompt the Castros’ 1959 revolution in the first place. “You’re still going to see a lot of debate and discussion about what to do next,” says Weisbrot. “They don’t feel like they can just turn around and adopt a China model,” a hybrid of communist governance and capitalist economics, “because they’re [situated] too close to the U.S.”

Which is all the more reason for the U.S. to drop its utterly failed economic embargo against Cuba. It wouldn’t lead to a Yanqui conquest of Cuba – but it could help energize, as Cuba’s communist labor union put it this week, “the initiative of the individual.”
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Remittances to the Caribbean on the rise again – World Bank.
Jamaica Observer. September 14, 2010

WASHINGTON, USA – After what was considered to be a “rough 2009”, the World Bank says remittances are on the rise again in the Caribbean.

A briefing paper by the Washington-based financial institution said remittances “began to bottom out during the last quarter of 2009” and, as a result, “money transfers now appear to be on the rise” in Jamaica, Haiti and other places.

The briefing paper said remittances to Latin America and the Caribbean didn’t fall as sharply as private capital flows to the region, as investors pulled out of emerging markets.

The bank said remittances to Latin American and Caribbean nations sank 12 per cent as the US and global economies “hit the skids” last year.

Overall, World Bank researchers said remittances to the region are expected to increase this year by an estimated 5.7 per cent and would also grow in 2011.

The World Bank said remittances to Haiti are expected to increase this year as relatives abroad seek to assist those at home.

It said the post-earthquake decision by the United States to grant temporary protected status to 200,000 Haitians living in the country illegally could also increase remittances by as much as US$360 million this year.

The bank said the Haitian Diaspora sent an estimated US$1.32 billion in remittances to their homeland last year. In 2008, remittances accounted for a fifth of the Haitian economy.

Region: Trade, Security, Economy and Integration [contents]
UPDATE 2-EU trade chief aims for Mercosur deal by mid-2011.
Raymond Colitt. Reuters. September 14, 2010

BRASILIA, Sept 14 (Reuters) – The European Union hopes to reach an accord with South American trade bloc Mercosur by mid-2011 as negotiators iron out details on tough issues such as farm aid and intellectual property, the EU’s trade chief Karel De Gucht said on Tuesday.

Both sides relaunched in May talks that had been on hold for six years with the aim of creating the world’s largest free-trade zone with 750 million people and goods trade valued at 65 billion euros ($82 billion) a year.

“These were very positive discussions, not neglecting the difficulties there are,” De Gucht said after meeting with Brazilian Foreign Minister Celso Amorim and Industry Minister Miguel Jorge.

Strong opposition from European farmers, particularly in France and Ireland, is one of the main obstacles. They fear cheap imports from their South American competitors.

“We know some member states are critical about this negotiation and they’ve made it known. On the other hand, it’s the EU Commission that negotiates,” De Gucht told reporters.

Another potential stumbling bloc is South American resistance to strict rules on intellectual property.

“We would like to go very far and obviously Mercosur has a somewhat different idea,” he said in reference to intellectual property rights.

Still, the overall climate has improved since talks first faltered in 2004, when all hopes were still pinned on progress in the Doha round of global trade talks.

“There is a readiness to discuss all topics and then we’ll see where we get,” de Gucht said before leaving for Sao Paulo and later Buenos Aires.

Stronger economic growth in Mercosur countries in recent years had made the region more attractive to Europeans, he added.

Mercosur is made up of founding members Brazil, Argentina, Uruguay and Paraguay.

Venezuela, whose application to become a Mercosur member still requires approval by the Paraguayan parliament, is participating in the talks as an observer.

Analysts said the EU would insist on a special chapter on investment safeguards to protect European interests in Venezuela, which has nationalized various industries as part of President Hugo Chavez’s self-proclaimed socialist revolution.
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Study: Commodities can fuel Latin America’s growth.
Christine Armario. AP. September 14, 2010

MIAMI – Commodity wealth, long considered a trap holding back sustainable growth in Latin America and the Caribbean, could be the foundation for future prosperity, a new World Bank study concludes.

Examining the recent growth in commodity exports and the shift in destination markets, the World Bank report states that the increased demand from countries like China could serve as a key driver of regional economic expansion – if the current windfall is properly managed and invested.

“It could leave the region in a more vulnerable situation, but it needs not,” said Augusto de la Torre, chief economist for Latin America and Caribbean at the World Bank.

The study was presented Monday in Miami on the eve of the Americas Conference, an annual event held by the World Bank and The Miami Herald that convenes leading policy makers in Latin America. Those expected to attend include Mauricio Funes, president of El Salvador, and U.S. Assistant Secretary of State Arturo Valenzuela.

De la Torre said the region’s emergence from the global economic crisis can be partly attributed to the growth of commodity exports to emerging Asian countries. From 1990 to 2008, China’s share as a destination market for Latin American natural resources grew tenfold, from 0.8 percent to 10 percent of total commodity exports, while the United States’ share declined from 44 to 37 percent in the same period.

That includes demand for soy products from Argentina, copper from Chile and fish from Peru.

“China offers the opportunity because it’s demanding commodities,” de la Torre said in an interview with The Associated Press. “But the policies in Latin America need to seize that opportunity.”

More specifically, he said, the region needs to ensure that commodity-based integration with China does not result in an undiversified trade structure and weak institutions.

World Bank projections show how significant commodities remain to Latin America: 97 percent of its GDP is produced in net commodity-exporting countries. In 2008, commodity exports reached a high of nearly $400 billion in the seven largest countries in the region. Most Latin Americans live in countries that benefit from high commodity prices.

This dependence has persistently been characterized as a detriment to the region’s economic success, making it vulnerable to booms and busts in the world market.

De la Torre said there are three main concerns policymakers must address: The way in which commodities are produced; maintaining competitiveness; and ensuring commodities don’t negatively affect institutions. He said this can be done, in large part, by not wasting the present bonanza.

The economist said that requires discipline and the ability to save.

“The ability to save requires certain rules, certain institutions, and a political will to do so,” de la Torre said. “Which is not easy because, of course, the moment you start accumulating savings the political system wants to use it today while they are in power. So it requires a sort of implicit contract between the current generation and the future generation. Someone has to speak for the future generation.”

He said the bank sees positive signs this is taking place, giving Chile and its copper mines as one example.
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Speakers: Innovative policies key in maintaining growth in the Americas.
Mimi Whitefield and Frances Robles. Miami Herald. September 15, 2010

The countries of the Americas are at a crucial juncture. With economic institutions in many countries reformed and a commodities boom filling coffers, sustained economic growth is a real possibility.

But speakers at the 14th Annual Americas Conference, organized by The Miami Herald and the World Bank, said Tuesday that a prolonged period of prosperity depends on nations adopting sound government practices and innovative policies.

The conference, which is being held at the Biltmore Hotel in Coral Gables, concludes Wednesday.

Buoyed by high prices for their commodities, which helped them recover sooner than expected from the global economic crisis, the economies of the Americas are poised to grow by as much as 6 percent this year, said Augusto de la Torre, the World Bank’s chief economist for Latin America and the Caribbean.

“The opportunities have presented themselves and the stars have aligned themselves in a way we haven’t seen in 50 years,” de la Torre said.

BETTER SHAPE

Latin America is in better shape economically than many of the rich countries, which are dogged by slow growth and troubled balance sheets, he said.

In the 1990s, Latin America was plagued by heavy debt and economic instability. A “silent revolution” took place: Countries such as Mexico, Colombia and Chile strengthened their fiscal and financial institutions and now boast Central Banks as credible and professional as those of rich nations.

Instead of being a debtor region as it was in the 1980s, Latin America is now an international creditor, de la Torre said. During the 2001-08 commodities boom, countries of the region built up their international reserves and invested them abroad.

But to keep the growth going, the region needs to “save out of the windfall” it has received from its gold, silver, copper, oil, natural gas and agricultural exports, he said.

Regional economies also need to move beyond just relying on the export of commodities to more diversified exports and value-added manufactured products, speakers said.

Ricardo Hausmann, director of the International Development Center at Harvard’s Kennedy School, pointed to Venezuela, where non-oil exports collapsed when the price of oil spikes.

Bucking the regional trend, Venezuela’s economy is expected to decline by 3 percent this year. “It spent its boom,” Hausmann said.

In contrast, he said, is Chile, which kept saving during the boom and managed to parlay its copper wealth into a stimulus for the entire economy. In Chile, both commodity exports and non-commodity exports have boomed and its economy is expected to grow by 4.5-5 percent in 2010.

During a morning panel, former Peruvian President Alejandro Toledo pointed out that 62 percent of the foreign revenue of the region comes from exporting natural resources.

The economic reforms over the past decade have helped, he said, but the countries of the Americas also need to invest commodities wealth in health and education, strengthen their democratic institutions and judicial systems, safeguard the environment and make innovation a priority.

“Latin America is ready to make the jump” to knowledged-based economies, he said.

Still, too few of the nations riding the wave of good economic times have managed to translate those gains to the poor and working class, experts said.

“Is all that growth expressed in changes in the quality of life?” asked Gerardo Morales, an Argentine Senate leader. “Some of our nations have eight straight years of growth and still have 30 percent poverty rates.”

Morales is a member of Argentina’s Radical Civic Union. A former candidate for the vice presidency, he was secretary for Social Development for former President Fernando de la Rúa and has been a member of the Senate for about a decade.

Bolivia’s Finance Minister Luis Alberto Arce credited his country’s socialist economic model — which includes the nationalization of oil, gas, telecommunications and other key sectors — with insulating it from the global downturn. The Andean nation saw economic growth of 3.4 percent last year and had unemployment near 7.9 percent — both strong results in South America.

“There’s not one recipe for all countries and we decided to rethink our own economic model,” Arce said. “This is [policy] made by Bolivians for Bolivia.”

Speaking at the conference luncheon, President Mauricio Funes of El Salvador called on the Obama administration to put greater emphasis on reducing the gap between rich and poor in Central America.

REDUCING POVERTY

Funes hailed the economic policies of outgoing Brazilian President Luiz Inacio “Lula” da Silva, saying Brazil’s sustained economic growth combined with the Brazilian leader’s emphasis on poverty alleviation serve as a new model for the region.

But Brazil hasn’t always been a model, said Larry Rohter, a New York Times reporter and author of the newly released book Brazil: A Rising Power. Even though it has long been touted as the country of the future, “no matter what Brazil did, it always seemed to fall short of the prophecy,” he said.

It is only in the past 16 years that Brazil has been characterized by political and economic stability, Rohter noted.

Jeanine Pires, director of Brazil 2016 — an organization that is helping coordinate preparations for the 2016 Olympic Games in Rio de Janeiro, pointed out that today about 103 million Brazilians fall into the middle class. By 2014, that number is expected to climb to 130 million, or around 56 percent of the population.

She attributed Brazil’s recent economic success to “domestic market dynamism,” public investment and redistribution of income.


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