U.S. media coverage of the passing of President Hugo Chávez has focused a great deal on the tributes and condolences of leaders of so-called “axis of evil” countries like Iran and Belarus. It has mostly ignored the eulogies coming from the governments of nearly every country of the Western Hemisphere, with the notable exceptions of the U.S. and Canada that didn’t even bother offering condolences. And there’s been hardly any mention of Western European governments’ reactions to Chavez’s death, though they’ve tended to be warmer than those of their North American partners. For instance, Spain’s rightwing government offered “sincere condolences” to Chávez’s family, noted that the Venezuelan leader had had “a great influence in IberoAmerica” and sent the country’s crown prince to the funeral in Caracas last Friday.
French president François Hollande went a step further in his statement on March 6th, offering his “saddest condolences to the Venezuelan people” on the passing of a leader who “profoundly marked the history of his country.”
The statement went on to say that “the late President expressed, beyond his temperament and orientations that not everyone shared, an undeniable will to struggle for justice and development.”
The French government sent its Minister of Overseas France (Outre-mers), Victorin Lurel, to Caracas for the funeral. Following the funeral, Lurel, who is from the French Caribbean island Guadeloupe, made a powerful statement to the press:
the people [of Venezuela] are proud of what's been accomplished during the 14 years of [Chávez’s] presidency. All things being equal, Chávez is de Gaulle plus Léon Blum. De Gaulle because he fundamentally changed the institutions and Léon Blum, that is the (1930s) Popular Front, because he struggled against injustices.
The funeral for Venezuelan president, Hugo Rafaél Chávez Frías, was held the morning of Friday March 8th, at the Military Academy in Caracas, Venezuela. 55 countries sent delegations to the funeral. 33 of them were headed by presidents or heads of government. In a strong show of unity and support, every single one of Latin America’s presidents, and most of the Caribbean’s heads of state were present at Chávez’s funeral (though the presidents of Brazil and Argentina left early).
This is a turnout with few precedents. The death of U.S. President John F. Kennedy in 1963 brought together a total of 19 heads of state. The funeral of President Ronald Reagan in 2004 gathered 36 former and current heads of state. The death of Hugo Chávez brought together at least 38 former and current heads of state.
The governments of Spain, France, Portugal, Lebanon, Finland, Sri Lanka, Vietnam, Australia, Syria, Greece, Ukraine, Croatia, Jordan, Slovenia, Turkey, Gambia, China, and Russia sent fairly high level delegations to represent their governments at the funeral. Spain’s royal heir, the prince of Asturias, attended, as did the General Secretary of the Organization of American States José Miguel Insulza, the Reverend Jesse Jackson –who spoke at the funeral, actor Sean Penn, and the much celebrated Venezuelan orchestra director Gustavo Dudamel, who missed one of his shows at the Los Angeles Philharmonic to direct the Simón Bolívar Symphonic Orchestra at the funeral.
Though much of the major media has ignored this international show of recognition for the government of Hugo Chávez, these responses to his death are a clear affirmation of respect and acknowledgement for his legacy, from Latin America and around the world.
In an article by William Neuman, the New York Times reports that “Venezuela had one of the lowest rates of economic growth in the region during the 14 years that Mr. Chávez held office, according to World Bank data.”
According to the latest IMF data, which is the same as World Bank data but includes 2012, Venezuela ranks 15th out of 33 countries in Latin America and Caribbean in GDP growth for 1999-2012. Countries that grew slower than Venezuela during this period include Brazil, Mexico, El Salvador, Guatemala, Jamaica, Nicaragua, Paraguay, Uruguay and 10 other countries.
On February 27, the office of the Compliance Advisor/Ombudsman (CAO) for the World Bank’s International Finance Corporation (IFC) launched an audit of the lending arm’s $30 million investment in Tegucigalpa-based Corporación Dinant, which produces palm oil and food products. The audit comes in response to widespread claims of violence, intimidation, and illegal evictions carried out by Dinant’s private security guards in Honduras’ Bajo Aguán valley, the center of the country's ongoing land struggle. In offering its resources and reputation to the company, the World Bank and its member countries are complicit in the deaths of countless innocent farmers.
The COA’s review began just two days after the United Nations Working Group on the use of mercenaries urged the Honduran government “to properly investigate and prosecute crimes committed by private security guards and to ensure that victims receive effective remedies.” A delegation from the Working Group was in the country from February 18 to 22, when it met with government officials and representatives of civil society and the private sector, including security firms. The delegates voiced their particular concern about the “alleged involvement of private security companies hired by landowners in widespread human rights violations including killings, disappearances, forced evictions and sexual violence against representatives of peasant associations in the Bajo Aguán region.” Dinant is the largest single landholder in the region.
An appointed panel of unnamed experts is currently convened in Washington, D.C., to review both the IFC’s adherence to its social and environmental policies and the role Dinant has played in the abuses. Many human rights observers consider the company’s owner, Miguel Facussé, to be one of the country’s most powerful men and hold him responsible for the killings of dozens of campesinos.
The audit had been a long time coming. On November 19, 2010, the human rights organization Rights Action wrote a letter to the World Bank’s then-president Robert Zoellick demanding that the financial institution suspend its funding to Honduras. The group cited the “context of grave human rights abuses and lack of independence of the justice system” as grounds to withhold funding, and characterized support for Dinant as “a case of gross negligence of the World Bank's human rights and due diligence obligations.” In the letter, Rights Action also noted that “at least 19 farmers in this region have been killed in the context of conflicts with biofuel industry interests.” (In a new report released two weeks ago, the same group declared that 88 farmers and their supporters have been killed in Bajo Aguán since January 2010, most of them in targeted assassinations.)
On Tuesday, Venezuelan president Hugo Chávez passed away after 14 years in office. Below is a series of graphs that illustrate the economic and social changes that have taken place in Venezuela during this time period.
1. Growth (Average Annual Percent)
Source: Banco Central de Venezuela
This graph shows overall GDP growth as well as per-capita growth in the pre-Chávez (1986-1999) era and the Chávez presidency.
From 1999-2003, the government did not control the state oil company; in fact, it was controlled by his opponents, who used it to try to overthrow the government, including the devastating oil strike of 2002--2003. For that reason, a better measure of economic growth under the Chávez government would start after it got control over the state oil company, and therefore the economy.
Above you can see this growth both measured from 2004, and for the 1999-2012 period. We use 2004 because to start with 2003, a depressed year due to the oil strike, would exaggerate GDP growth during this period; by 2004, the economy had caught up with its pre-strike level of output. Growth after the government got control of the state oil company was much faster.
2. Public vs. Private Growth – 1999-2012 (Average Annual Percent)
Source: Banco Central de Venezuela
This graph shows the growth of the private sector versus the public sector during the Chávez years.
3. Inflation: Pre-Chávez vs. Chávez Years
Source: Banco Central de Venezuela
Inflation in Venezuela, consumer price index.
4. Unemployment Rate: Before and After Oil Strike
Source: Banco Central de Venezuela, INEC
After the oil strike (and the deep recession that it caused) ended in 2003, unemployment dropped drastically, following many years of increases before Chávez was elected. In 1999, when Chávez took office, unemployment was 14.5 percent; for 2011 it was 7.8 percent.
Yesterday afternoon Venezuelan President Hugo Chávez passed away, after a long battle with cancer. The announcement by Vice President Nicolás Maduro came just minutes after Chávez’s death and elicited an immediate wave of obituary pieces by pundits who described Chávez as “divisive”, “authoritarian”, “antagonistic” and “anti-American”, many of them eager to rush the “transition” in the hopes that Chávez’s political project would soon fall apart.
In stark contrast with these predictable characterizations and demonization of Chávez in the major media is the response that Chávez’s death has elicited from his peers, fellow presidents from throughout the Americas. Tributes, messages of solidarity and heartfelt condolences came in from Central and South America, reaffirming support for the ideals of regional unity and independence promoted by Hugo Chávez during his 14 years as president of Venezuela. Very few media outlets noted the outpouring of sympathy from Latin American leaders.
“He is more alive than ever, and will keep being the inspiration for all people fighting for liberation,” were the words of president of Bolivia, Evo Morales. With his voice cracking and struggling to speak, Morales said that he was “hurt, devastated,” by the death of his “compañero and brother.” And repeatedly referred to the liberation of South America forged by Chávez saying that, “the best way to remember him is with unity, unity.”
José Mujica, President of Uruguay, expressed the profound pain that Chávez’s death caused him:
“Death is always felt, but when it is the death of a great fighter, one that I once defined as the most generous governor that I have ever met, the pain is on another dimension… Its magnitude is bigger than the loss.”
Venezuelan Vice President Nicolas Maduro’s announced today that President Hugo Chávez had died at 4:25pm. According to Venezuela’s constitution [PDF], new presidential elections are supposed to be held within 30 days.
The news could present an opportunity for an improvement in U.S.-Venezuelan relations, but that is unlikely. Earlier in the day, Maduro announced that the Venezuelan government would expel the U.S. military attaché for unsanctioned meetings with certain Venezuelan military officers. While this is of course a significant development in U.S.-Venezuela relations that marks yet further deterioration, unfortunately it seems safe to say that most U.S. media outlets will not provide the crucial context necessary in order to understand current relations and why they are so tense.
Maduro mentioned the April 2002 coup d’etat in his press conference today. Declassified C.I.A. and other government documents reveal the U.S. role in that coup against Hugo Chávez. As Scott Wilson, former foreign editor at the Washington Post has explained:
Yes, the United States was hosting people involved in the coup before it happened. There was involvement of U.S.-sponsored NGOs in training some of the people that were involved in the coup. And in the immediate aftermath of the coup, the United States government said that it was a resignation, not a coup, effectively recognizing the government that took office very briefly until President Chavez returned.
I think that there was U.S. involvement, yes.
(Video clip here. This information has however never been reported this fully in the pages of the Washington Post itself.)
The L.A. Times ran a very nice and uncommon report by correspondent Vincent Bevins about media bias in Brazil on Sunday. The article notes that most of the major media is still controlled by the same handful of rich families who supported the military coup against the left government of João Goulart in 1964. These publications and TV outlets:
have been critical of the [Workers] party, despite a public approval rating for President Dilma Rousseff as high as 78%. Not a single major news outlet supports her, with some newspapers and magazines particularly harsh in their criticism.
“It's an extremely unique situation now in Brazil to have such a popular government and no major media outlet that supports it or presents a left-of-center viewpoint," says Laurindo Leal Filho, a media specialist at the University of Sao Paulo...
“Brazilian society was based on slavery for over 300 years, and has almost always been run by the same social strata," Leal Filho says. "Some parts of the upper class have learned to live with other parts of society that were previously excluded … but the media still reflect the values of the old-school elite, with very, very few exceptions."
Of course the same could be said – more strongly – about the media in all of the countries that now have left governments in South America: certainly Bolivia (perhaps the worst media), Ecuador, Argentina, and Venezuela. We can also include Paraguay, where the major media helped depose the social democratic President Fernando Lugo last year. All of these governments have had their battles with the media, and all (except Paraguay) have increased government media as a counter-weight, with varying degrees of success. Venezuela has created a number of state TV stations, but they only have about 5.4 percent of the TV audience, so the opposition still has a media advantage there too.
Jonathan Schwarz, editor of MichaelMoore.com, wrote a brilliant takedown last week of Sean Wilentz, historian and friend of Hillary Clinton who was angered by Oliver Stone and Peter Kuznick’s Untold History of the United States. Wilentz’s long diatribe against Stone and Kuznick’s book (also a 10-part film series on Showtime) in the New York Review of Books isn’t much worth reading. He never really challenges the main thesis of Stone and Kunzick that, with his generally unprovable and superficial objections, he is trying to undermine: that the United States is really an empire, and that empire has been, and remains today, the driving force of U.S. foreign policy; and that actual “national security” concerns have only rarely had anything substantial to do with our wars and assaults on other peoples, including involvement in dictatorships, the overthrow of democratically elected governments, and even genocide. (Stone and Kuznick’s response is here.)
But Schwarz’s response is a very nice read. He nails it when he says that if Cold War liberals like Wilentz were right,
“U.S. cold war policies should have ended with the cold war itself. If the leftists were right, U.S. policies would have continued almost completely unchanged – except for the pretexts provided to Americans.”
A couple of billion people or so throughout the world understand how that turned out. But Schwarz hammers it home because it is apparently not so clear among some intellectuals and journalists here in the heart of the “free world.”
Cold War liberalism was a curse during the Cold War, and remains so today. It is the dominant framework in discussions about Latin America today, and not just on the right – which conjures up fantasies about left-leaning Latin American countries supporting terrorist camps with Iran – but also among the liberal foreign policy establishment that occupies most of the media space. In 2009 almost all of these liberals, including journalists, editors, and prominent human rights groups, looked the other way when Washington helped the coup-installed government of Honduras legitimize itself. Most of them even pretended that the Obama administration was trying to help restore democracy, when there was a mountain of evidence to the contrary. The deposed, democratically-elected president Mel Zelaya eventually told the world that the Obama administration was actually behind the coup, and there is every reason to believe him, given all the circumstantial evidence. But don’t expect any investigations or even investigative reporting to shed more light on what the Obama administration actually did to support the coup.
The good news is that Washington today is mostly limited to preying upon weakest, poorest countries in this region, like Honduras and Haiti. Most of the rest of the region, for the past 15 years, has finally been free to elect their own governments without a U.S. veto. But we can’t thank Cold War liberals like Sean Wilentz – who felt compelled to raise questions about Obama’s relations with Jeremiah Wright and Bill Ayers during the 2008 presidential campaign – for that progress. This positive change is due to the fact that their friends have lost power in the hemisphere and the world.
On Friday, February 22, Canadian Broadcasting Company (CBC) Radio’s The Current aired a nearly half-hour story about the Honduras government’s plans to create private, so-called “charter cities.” The show’s featured guest was Honduras president Pepe Lobo’s chief of staff, Octavio Sánchez. For some background, just days after the 2009 coup, Sánchez penned an opinion piece for the Christian Science Monitor in which he argued that democratically elected president Manuel Zelaya’s exile at gunpoint was constitutional. More recently, Sánchez has worked feverishly to make the same case for charter cities.
Sánchez’s pitch was briefly contested with a sound bite from Keane Bhatt, creator of the blog Manufacturing Contempt. Bhatt called the plan “social engineering at the behest of an international group of investors,” a point on which he elaborated in an article in the current print edition of the NACLA Report on the Americas. Also, later in the show Rights Action’s co-director Grahame Russell debated the merits of the proposed private cities with Carlo Dade, a professor at the University of Ottawa who endorses the concept.
As has been examined elsewhere, the charter cities concept is attributed to NYU economics professor Paul Romer, who envisions it as a path toward a rules-based, law-abiding society. In practice, though, the idea would take advantage of Honduras’ institutional breakdown to invite private corporations to build new cities on already-inhabited land, and to establish lax legal systems and tax codes to further attract foreign capital for low-cost production. Critics, such as economics professor and former Executive Director of the Institute for Fraud Prevention William K. Black, say the charter cities would lead to greater inequality. “Oligarchs . . . see this as yet another way to increase their wealth at the expense of other folks,” Black explained on Al Jazeera’s Inside Story Americas earlier this month.
Last September, Romer unexpectedly removed himself from the project after the Honduras government signed its first agreement with a group of private investors, a process which Romer claims should have first been approved by the transparency commission of which he was an appointed member (though the body was never formalized due to challenges in the Supreme Court). The NYU professor considered this an unforgivable affront and divorced himself from his nearly realized utopia.
A new op-ed in the Guardian by Ricardo Hausmann portrays a dystopian fictional Venezuela, one in which the Venezuelan government has run the economy into the ground despite abundant oil wealth, but yet its charismatic president continues to be re-elected through some sort of sinister trickery.
Sound familiar? It should: it’s the same tired story repeated in the U.S. and U.K. media almost every day, but in this case Hausmann was apparently given free rein to present his own set of “facts.” It isn’t surprising that Hausmann would write something so divorced from reality; he went to elaborate lengths to invent a conspiracy theory about supposed fraud in Venezuela’s 2004 recall referendum by relying on fake exit polls. An independent panel of statisticians selected by the Carter Center determined that Hausmann and his colleague Roberto Rigobón had in fact found no evidence of fraud. [PDF]
But let’s get back to Hausmann’s latest Guardian piece, starting with the economy. Hausmann writes, "Since 1999, the year [Chávez] took over the presidency, Venezuela has had the lowest average GDP growth rate and the highest inflation of any Latin American country except Haiti."
The source for this “lowest average GDP growth rate” to which Hausmann links is a highly opinionated BBC article which in turn quotes a colleague of Hausmann’s from the Center for International Development at Harvard University who has a Bachelor of Arts degree in economics. Had Hausmann consulted official government data, or growth numbers for the region from the IMF, he would have found a very different set of facts.
A few days ago two more land rights activists were murdered in the Bajo Aguán, a region of Honduras where dozens of campesinos have been killed over the last three years. On February 16, Jacobo Cartagena, member of the Unified Campesino Movement of the Aguán (or MUCA, by its Spanish initials), was shot and killed as he waited for a bus. Hours later, José Trejo Cabrera, was shot down while driving a motorcycle near the town of Tocoa. Trejo was the brother of Antonio Trejo Cabrera, a lawyer who had defended small farmers’ land claims who himself was shot to death last September as he was leaving a wedding. Amnesty International has called on the Honduran government to “urgently investigate” José Trejo’s killing and noted that “the day before he was shot dead [he] had been in the Honduran capital Tegucigalpa, to meet with officials in an effort to ensure justice for his brother’s murder and visiting media outlets to keep the spotlight on the case.”
In an interview with the Associated Press, José Trejo had said “if they killed my brother, what will they not do to me?” He and others blamed the powerful businessman Miguel Facussé for his brother’s murder. Facussé and a handful of other wealthy landowners in the region have hundreds of armed security guards who are believed to be responsible for many of the numerous killings and other attacks targeting campesino activists. Honduran authorities have failed to bring those responsible for the killings to justice or to take effective measures to protect the activists. As the AP notes, “no one is serving time in prison for any of the 89 assassinations of campesinos committed in the Aguán Valley since December of 2009 when land occupations began…”
Since August of 2011, hundreds of Honduran soldiers have been stationed in the Bajo Aguán as part of the so-called Xatruch Intervention Force, ostensibly to mitigate the ongoing violence taking place there. But targeted killings of campesinos have continued unabated and representatives of land rights movements have accused military personnel of being involved in attacks on their members. A new report authored by Annie Bird of Rights Action adds significant weight to these allegations. It documents 34 cases of abuses directly involving members of Honduras’ 15th Battalion, a special forces unit of the Honduran army that has been present in the region for decades and has played a central role in the Xatruch Force.
The Miami Herald editorial board commented on the recent reelection of Ecuador’s Rafael Correa earlier this week, noting that “opposition candidate Alvaro Noboa, whom Mr. Correa defeated 57 percent to 43 percent, has indicated that he might challenge the results, accusing Mr. Correa of rigging the election.”
Just one problem; Noboa actually received 3.7 percent of the vote, putting him in 5th place overall. In fact, even the second place finisher in the election received just 23 percent of the vote, putting him some 34 percentage points behind Correa. The results cited in the Herald editorial were actually the results of the 2006 presidential election where Noboa did in fact earn 43 percent of the vote.
Perhaps the editorial board should have consulted with their own reporters, who noted after the election that, “President Rafael Correa crushed the opposition Sunday, avoiding a runoff and winning the right to lead this Andean nation through 2017.” The article didn’t even mention Noboa.
The error is particularly striking since it is the opinion of the Herald’s editorial board, and so is presumably read by at least one other person on the board besides the author.
The Herald goes on to say that electoral authorities “have an obligation to hear Mr. Noboa out” because that “is what’s supposed to happen in a democracy.” And The Miami Herald has an obligation to fact check, because that is what’s supposed to happen at a newspaper.
On Friday, February 15, the International Monetary Fund (IMF) announced that it had concluded its most recent Article IV consultation with Honduras. The Fund’s recommendations varied little from those it has offered many other countries in recent years: cut public spending, reduce deficits, reform pensions and depress wages.
The IMF regularly conducts Article IV consultations with almost all of its member countries—with Argentina, which since 2006 has refused to take part in the process, being one notable exception. The official reviews are a way for the Fund to present its analysis of each country’s economic prospects and to advocate for a set of reforms. While it is difficult to precisely assess the influence of the consultations, it has been noted that in many cases the recommended policies have been adopted against popular public opinion. And in countries that end up borrowing from the fund, these policies are often preconditions for receiving future IMF loans.
The Fund’s recommendations on Honduras diverged little from the policies it is pushing in many other countries. Below is a selection from the IMF’s brief (347-word, to be exact) Executive Board Assessment of its most recent consultation with Honduras:
Directors . . . underscored the need to tighten macroeconomic policies and press ahead with structural reforms . . .. [They] welcomed the planned reduction of the budget deficit in 2013, and urged early adoption of the measures needed to ensure this outcome and avoid further central bank borrowing or accumulation of domestic payments arrears. They called for sustained medium-term fiscal consolidation . . . [and] supported plans to restrain the public sector wage bill . . . and emphasized the importance of reducing energy subsidies . . .. Directors concurred that monetary policy should be tightened . . . [and] regarded plans to reform state-owned enterprises as critical to strengthen the fiscal position and support growth, and encouraged timely implementation . . . and welcomed the ongoing reform of public pension funds.
It is difficult to overlook how much this assessment resembles the Fund’s recommendations to European countries struggling to emerge from the global recession. CEPR co-director Mark Weisbrot and Senior Research Associate Helene Jorgensen recently released a paper analyzing 67 Article IV consultations for European member countries between 2008 and 2012, in which the authors found that the lending body was pushing a “one-size-fits-all” approach that often included pro-cyclical policy recommendations. In the paper Weisbrot and Jorgensen summarized their findings, in part, as follows:
This content analysis finds a consistent pattern of policy recommendations, which indicates (1) a macroeconomic policy that focuses on reducing spending and shrinking the size of government, in many cases regardless of whether this is appropriate or necessary, or may even exacerbate an economic downturn; and (2) a focus on other policy issues that would tend to reduce social protections for broad sectors of the population (including public pensions, health care, and employment protections), reduce labor’s share of national income, and possibly increase poverty, social exclusion, and economic and social inequality as a result.
In early February, New York University professor Greg Grandin came across a map on the Washington Post’s web page highlighting in red the 54 countries from around the world that participated in one way or another in the U.S.’s extraordinary rendition program. Grandin, a well-known historian and Latin Americanist, quickly noticed that nations from every region had collaborated in the Bush Administration’s clandestine detention and interrogation program except for… Latin America. The fact that no Latin American country lent support to the program was in itself a remarkable fact that speaks to how much the region has evolved politically over the last two or three decades.
On February 18, Grandin published an insightful analysis on Tom Dispatch that provides some historical perspective on this “Latin American Exception.” Starting in the 1950s, the U.S. worked closely with the region’s military dictatorships to render their brutal security forces and intelligence services more efficient in clamping down on – and disappearing – civilians involved in left-wing movements. The U.S. then supported efforts to synchronize and internationalize the work of these repressive regimes. As Grandin writes,
The result was state terror on a nearly continent-wide scale. In the 1970s and 1980s, Chilean dictator Augusto Pinochet’s Operation Condor, which linked together the intelligence services of Argentina, Brazil, Uruguay, Paraguay, and Chile, was the most infamous of Latin America’s transnational terror consortiums, reaching out to commit mayhem as far away as Washington D.C.,Paris, and Rome. The U.S. had earlier helped put in place similar operations elsewhere in the Southern hemisphere, especially in Central America in the 1960s.
By the time the Soviet Union collapsed in 1991, hundreds of thousands of Latin Americans had been tortured, killed, disappeared, or imprisoned without trial, thanks in significant part to U.S. organizational skills and support. Latin America was, by then, Washington’s backyard gulag. Three of the region’s current presidents -- Uruguay’s José Mujica, Brazil’s Dilma Rousseff, and Nicaragua’s Daniel Ortega -- were victims of this reign of terror.
But that was then. By the 1990’s most of these repressive regimes progressively gave way to democratic ones. Today, most of the governments of the region lean left and have adopted both domestic and foreign policy agendas that sharply differ from the U.S. agenda. In many ways, Latin America is today more independent of the United States than Europe is.
International media reporting ahead of Ecuador’s elections today has sounded familiar themes, understating the achievements of the Rafael Correa government and attributing Ecuador’s recent economic and social progress to “luck” or happenstance, and high oil prices. Correa is depicted as an enemy of press freedom, despite the fact that Ecuadorean media is uncensored and the majority of it opposes the government; and despite his granting of political asylum to Julian Assange. He is also depicted as a member of Latin America’s “bad left” who has ambitions of regional leadership should “bad left” leader Hugo Chávez succumb to illness or otherwise be unable to continue in office.
A common theme in press accounts is that the Correa administration’s social programs are “funded by the country's oil proceeds.” While some reporting has gone deeper and noted that “Correa has taken on big business and media groups, imposing new contracts on oil companies and renegotiating the country's debt while touting his poverty reduction efforts,” others have not. “High prices for oil exports resulted in higher revenues which the government invested in social programs and public infrastructure,” the Christian Science Monitor reported in a Friday article. The New York Times’ William Neuman presented a contradictory picture of the economic importance of Ecuador’s petroleum sector, writing that “Ecuador is the smallest oil producer in the Organization of the Petroleum Exporting Countries, yet oil sales account for about half of the country’s income from exports and about a third of all tax revenues, according to the United States Energy Information Administration,” just before stating in the next paragraph that “Mr. Correa has taken advantage of high oil prices to put money into social programs, earning him immense popularity, especially among the country’s poor.”
Petroleum exports have been important to Ecuador’s economy for a long time; this did not suddenly come about with Correa. While Correa was favored by high oil prices during most of his six years in office, the collapse of oil prices in 2008 was a major blow to the economy. Also, an important change during Correa’s first term has been the Ecuadorean government’s relationship with foreign oil companies. Correa notably has driven a much harder bargain than his predecessors, “imposing a windfall profits tax for concessions made to companies for the exploitation of domestic natural resources” that “raised over $500 million for the government in 2010,” as our latest paper notes. A raft of financial and regulatory reforms have also put a considerable amount of revenue in the government’s coffers, contributing to the increase from 27 percent of GDP in 2006 to more than 40 percent in 2012. Stimulus spending – 5 percent of GDP in 2009 – boosted the economy and allowed Ecuador to get through the global recession with minimal damage, losing only about 1.3 percent of GDP during three quarters of recession, despite being one of the hardest hit countries in the hemisphere by external shocks. Non-petroleum sectors such as construction, commerce and services have also been important drivers of growth in recent years, including in 2011, when Ecuador had some of the highest real GDP growth in the region at 7.8 percent, second only to Argentina in South America.
On Sunday Ecuadorians will head to the polls to vote for a president and vice president, members of the National Assembly, mayors, and other elected officials. As we’ve done ahead of other elections in Latin America, CEPR has published a report offering some economic context to help understand the choices that voters are likely to make.
The report, entitled Ecuador’s New Deal: Reforming and Regulating the Financial Sector, focuses on the innovative financial reforms that have been implemented since President Rafael Correa took office in 2007. The report explains how these measures helped Ecuador recover from some of the hemisphere’s worst shocks during the world recession. It also shows how the reforms contributed to a substantial increase in government revenue much of which has been channeled toward health, education, housing and other social spending. Given these advances, it is not surprising that the latest polls put Correa at 50 percentage points ahead of his closest opponent.
Earlier today, CEPR issued the following press release outlining the contents of the paper:
A new paper from the Center for Economic and Policy Research (CEPR) examines the financial reforms carried out by the Rafael Correa administration, reforms which the paper concludes are in large part responsible for the economic success Ecuador has experienced over the past several years, including its successful counter-cyclical policies during the global recession after 2008. The paper, “Ecuador’s New Deal: Reforming and Regulating the Financial Sector,” examines the Correa government’s taking control of the Central Bank, implementation of capital controls, increased taxation of the financial sector, and other regulatory reforms. It concludes that these played a major role in bringing about Ecuador’s strong economic growth, increased government revenue, a substantial decline in poverty and unemployment, and other improvements in economic and social indicators.
At the end of January, I blogged about a Congressional letter to Secretary of State John Kerry and Attorney General Eric Holder asking, among other things, for a U.S. investigation into the May 2012 killing of four Honduran indigenous villagers in Ahuas, Honduras during a counternarcotics operation that involved agents from the U.S. Drug Enforcement Administration (DEA). The letter, signed by 58 House representatives, argues that a credible U.S. investigation of the incident is necessary given the “deeply flawed” nature of the investigation carried out by Honduras’ Public Prosecutor and that, according to media reports, Honduran police agents stated that “they took their orders from the D.E.A.”
On February 12, the Washington Times reported that despite “pleas from liberal lawmakers on Capitol Hill, the State and Justice departments have no intention of investigating purported human rights violations and misconduct by Drug Enforcement Administration agents in Honduras.” Times’ correspondent Guy Taylor spoke to an anonymous State Department official who indicated that the Department was satisfied with the Honduran official investigation and stated that “there will be no separate investigation.” Furthermore,
In a statement last month, DEA spokeswoman Dawn Dearden told The Times that the investigation conducted by Honduran authorities “concluded that DEA agents did not fire a single round” and that “the conduct of DEA personnel was consistent with current DEA protocols, policies and procedures.”
The anonymous State Department official reaffirmed this position stating, “as we have confirmed previously, DEA agents were involved in a supporting role, and did not fire their weapons.”
The basis for this determination, as the DEA spokeswoman made clear in her previous comments to the Times, is the report summarizing the conclusions of the Honduran Public Prosecutor’s office. Though cited by the DEA and State Department, this report has not been made public. However, there is abundant evidence that the investigation that generated the prosecutor’s report was indeed “deeply flawed.” Last year’s in-depth report on the May killings, co-authored by CEPR and Rights Action, explained how key forensics tests were performed long after the incident occurred and how the autopsies of the victims took place a month after the incident and, according to numerous eye witnesses, were carried out in a stunningly unprofessional manner. Key participants in the counternarcotics operation – including at least ten DEA agents and several State Department contractors – were never questioned, nor were their weapons submitted to ballistics tests.
Most importantly, the report’s apparent findings – at least as they have been represented by the State Department and the DEA – are directly contradicted by another report produced by the Honduran National Human Rights Ombudsman. This report, which we also discussed in a previous post, is largely based on the testimonies of the Honduran police agents of the “Tactical Response Team” (TRT) that participated in the counternarcotics operation. Whereas, according to State and DEA, the prosecutor’s report confirms that the DEA merely played a “supportive role” during this operation, the Ombudsman’s report concludes that the DEA essentially led the entire operation:
All members of the TRT have stated that they only receive orders from American superiors and that they don't report anything, neither before nor afterwards, to their legal Honduran superiors, given that they ultimately don't deal with orders or logistics of any sort.
Furthermore, though State and DEA adamantly claim that the DEA agents “did not fire their weapons,” the Ombudsman’s report suggests that the DEA was directly responsible for the discharge of one of the helicopter’s high caliber automatic mounted guns against the boat carrying those who were killed in the incident. The report states that:
According to the account of various TRT (Honduran Tactical Response Team) members, as the Barra Patuca pipante was approaching the pipante transporting the drugs, which in that moment was adrift down river, a burst of fire could be heard, supposedly coming from the boat coming from Barra Patuca causing the member from the FAST Team of the DEA to communicate by radio with the foreign pilot on helicopter number four, who proceeded to give the order to the artilleryman from Honduras who was on the same helicopter to support his teammates by opening fire on the boat with the victims that was coming from Barra Patuca.
In other words, according to the testimony of Honduran police agents, the helicopter pilot – identified as non-Honduran – gave instructions to the helicopter gunner to open fire on the “boat with the victims” after being contacted by one of the DEA agents involved in the operation. Given this second “official” version of events, which appears to directly contradict the conclusions of the Public Prosecutor’s report and suggests that the DEA may bear much responsibility for the lethal outcome of the May incident, it is difficult to see how U.S. officials can continue to maintain that there is no need for a separate, U.S. investigation.
Venezuela devalued its currency today, from 4.3 bolivares fuertes to 6.3 at the official exchange rate. As with most economic news from Venezuela, it was not well reported. A Reuters news article stated, as though it were a fact, that the move will “spur galloping inflation.” But the biggest devaluation during the Chávez years, in January 2010, produced no increase in the core rate of inflation, and only a temporary increase in the headline rate; it then fell for more than two years, even as economic growth accelerated to more than 5 percent in 2012. Annual inflation was 19.5 percent in 2012. At the time of the devaluation in January 2010, there were reports in the Washington Post predicting 60 percent inflation as a result of the devaluation.
Of course we would expect some temporary increase in inflation from a devaluation, as there was in 2010 – because the devaluation will increase the price of imports – but how much and how long it lasts depends on other government policies as well.
The devaluation will increase the cost of capital flight, and by making imports more expensive, provide a boost to import-competing industries. For this reason, and because it reduces the black market premium and reduces capital flight, the move will overall be good for the economy.
It is widely reported, as in the Reuters article, that the devaluation will help with government finances because each dollar in oil export earnings will now exchange for more domestic currency; in fact this is often stated as the reason for the devaluation. But government spending in domestic currency is not dependent on the exchange rate.
A front-page article in the print edition of today’s Washington Post details how New Jersey Democratic Senator Robert Menendez twice approached federal health-care officials about Dr. Solomon Melgen’s outstanding $8.9 million debt to the Centers for Medicare and Medicaid, which the doctor claims was the result of being overbilled. Melgen, personally and through his ophthalmology company, has made major contributions to Menendez’s political campaigns.
This is the latest news to follow reports that on Wednesday, January 30, the FBI raided Melgen’s offices, soon after which the senator’s office described the doctor as “a friend and political supporter of Senator Menendez for many years.” Two days later, following John Kerry’s resignation from his seat as chairman of the Senate Foreign Relations Committee to become Secretary of State, Menendez took over the position, one of the most powerful and prestigious in Congress.
Menendez, who is Cuban American, has taken a hard line against easing travel restrictions to Cuba and has been described as “fiercely pro-embargo.” The New Jersey Democrat has also worked closely with lawmakers across the aisle on policy towards Iran, including his co-authorship of sanctions legislation with Republican Senator Mark Kirk last year.
Early reports of the FBI’s search focused on allegations that in 2010 Senator Menendez accepted free flights to the Dominican Republic from Dr. Solomon Melgen and had sex with prostitutes during these trips, a claim he has vehemently denied. It was also noted that Menendez is not married, and that prostitution is legal in the Caribbean nation. The Senate Ethics Committee is investigating the senator, who in January of this year wrote a $58,000 personal check to reimburse Melgen for two trips.
It started in Colombia in 2000, moved on to Mexico in 2008 and now rages in Central America. Since the beginning of the century, the U.S.-backed “war on drugs” has progressively spread throughout the northern part of Latin America, leaving tens of thousands of lost lives in its wake. An in-depth investigative piece published by the Associated Press over the weekend explains how this so-called “war” – which relies on U.S. funding, training, equipment and troops – has grown in recent years to become “the most expensive initiative in Latin America since the Cold War.”
The article, authored by Pulitzer-prize winning reporter Martha Mendoza, describes how the U.S. has “spent more than $20 billion in the past decade” and deployed U.S. army, marine and navy troops to support a heavily militarized campaign to fight drug trafficking throughout the region. The fact that the efforts have been accompanied by soaring violence – with, for example, 70,000 Mexican lives lost in the last six years – doesn’t seem to trouble the U.S. officials in charge of implementing U.S. drug policy internationally. In fact, they seem to consider spikes in violence to be a sign that the “strategy is working.”
William Brownfield who heads the State Department’s Bureau of International Narcotics and Law Enforcement Affairs, told Mendoza that “the bloodshed tends to occur and increase when these trafficking organizations… come under some degree of pressure.”
For others in Washington, the shocking number of lives lost suggests that the strategy is in fact not working. New York Congressman Elliot Engel, a moderate Democrat who is now the ranking minority member on the House Foreign Affairs Committee, told the AP that he supports a congressional review of counternarcotics programs in the Western Hemisphere.