Yesterday Argentina appealed a ruling by a New York court that could force Argentina to pay holdout bondholders known as vulture funds, reports the Associated Press. Judge Thomas Griesa ruled last week that Argentina must put $1.3 billion into an escrow account by December 15. If Argentina refuses to do so, the court ruling would force Bank of New York Mellon, which distributes payments to those bondholders who did accept a restructuring following the 2001 default, to stop those payments. The ruling is based on the parri passu clause, which the court interpreted as requiring equal treatment to both the bondholders who accepted a restructuring and those that held out. If, as President Kirchner has indicated, Argentina refuses to pay the vulture funds and the appeal is unsuccessful, it could lead Argentina into a technical default. Siding with Argentina in the court case is the US Federal Reserve, commercial banks and holders of restructured bonds. Also, as the AP points out, even critics of Kirchner in Argentina have criticized the judge’s ruling in recent days, as it threatens the successful economic growth that resulted after the default in 2001. For more on the case, click here and here.
Meanwhile, writing in The Guardian, Cambridge economics professor Ha-Joon Chang highlights the need for a sovereign bankruptcy law, similar to what countries offer debt-laden companies. Once a company declares bankruptcy, “the debtor company and its creditors are forced to work together to reorganise the company's affairs, under clear rules.” Unfortunately, as Chang notes, “no mechanism like this exists for countries, which is what has made sovereign debt crises so difficult to manage.” Chang uses the examples of Greece and Argentina, arguing that the effects of their debt problems go far beyond their borders, noting that “In the Argentinian case, we are risking not just an end to Argentina's recovery but a fresh round of turmoil in the global financial market because of one questionable US court ruling.”
A new report from the Economic Commission on Latin America and the Caribbean reports on the reduction of poverty in the region over the last few decades, reports the AP. Overall, despite recording the lowest poverty level in three decades, some 167 million people still remain mired in poverty in the region. This is one million fewer than in 2010 and represents some 29 percent of the population. The report, “Social Panorama of Latin America 2012”, released today, also reports on trends in inequality. The report notes that “on average, the richest 10% of the Latin American population receives 32% of total income, while the poorest 40% receive just 15% of income.” Since 2002, the countries that have shown the largest decrease in inequality are Argentina, Bolivia, Nicaragua and Venezuela. In all of these countries the Gini coefficient fell at an annual rate of more than two percent. To read the entire report, which “examines paid employment in care activities, as well as household spending on care services, and proposes a series of policy recommendations,” click here. For more on the reduction of inequality in Latin America, see here and here.
Mexican president-elect Enrique Peña Nieto is in Washington today to meet with President Obama, reports CNN. In an op-ed printed by the Washington Post last week, Peña Nieto lays out his agenda for the meeting with Obama, noting that “It is a mistake to limit our bilateral relationship to drugs and security concerns. Our mutual interests are too vast and complex to be restricted in this short-sighted way.” As CNN notes, Peña Nieto will focus on economic issues as well as security in his visit. Meanwhile, writing in Huffington Post, John Ackerman a professor at UNAM-Mexico City writes that Obama is losing credibility by cozying up to Peña Nieto. Ackerman notes that the recent election in Mexico was “a far cry from normal democratic politics” and warns that Peña Nieto represents a return to the old guard, which “represents the worst of Mexico's authoritarian past.” Ackerman concludes that by cozying up to Mexico’s new president “Obama sends a clear message that his Latin America policy will be equally as shortsighted in his second term as it was during his first.”
“Will the elections in Honduras be free and fair?”
This was the question asked yesterday by Aljazeera’s Inside Story Americas, in a discussion with professor Dana Frank of the University of California Santa Cruz, and Pam Spees, an attorney with the Center for Constitutional Rights (CCR), which filed evidence last week with the International Criminal Court (ICC) regarding ongoing impunity for crimes against humanity committed by coup leaders Roberto Micheletti, General Romeo Vasquez Velasquez, palm oil magnate Miguel Facusse, and others. (See our previous post here.)
Honduras’ presidential elections are a year away, but if they are anything like the country’s previous elections in 2009, the answer would be no. Those elections were overseen by an un-elected coup regime, which attacked protesters, raided civil society offices and censored media outlets. An Amnesty International spokesperson declared, “Justice seems to have been absent also on Election Day in Honduras," and most Latin American countries refused to recognize the new government of Porfirio Lobo afterward.
Party primary elections were held on Sunday, with the preliminary results showing “Mauricio Villeda ahead as presidential candidate for the Liberal Party while the National Party was favoring Juan Orlando Hernández,” and former first lady Xiomara Castro de Zelaya emerged – running unopposed - as the candidate of the new Liberty and Refoundation (LIBRE) party (which emerged from the National Resistance Front to the coup (FNRP)). Notably, of the three, Zelaya had received the most votes (357,926) as of this writing, with Hernández’s 306,012 second. But, only about two-thirds of the mesas had been examined before technical problems caused a vote count disruption, and Hernández’s National Party challenger Ricardo Álvarez called for a “vote by vote recount.” The Supreme Electoral Tribunal vowed yesterday to issue final results “within 10 days.”
We saw the same types of threats and violence around the elections in November of 2009 after the coup, and it’s continued and expanded, and what we’re seeing is either killings of candidates or would-be candidates. We’re seeing threats and attacks. It’s not an atmosphere in which you can legitimately, realistically expect to have free and fair elections.
As dialogue opens on the second day of the much anticipated peace negotiations between the Colombian government and longstanding rebel group the Revolutionary Armed Forces of Colombia (FARC), citizen inclusion and participation in the process have been sought as part of an expressed commitment from both sides to incorporate input from Colombian civil society, a main tenet of the General Agreement for the Termination of Conflict and the Construction of a Stable and Lasting Peace. The country’s bicameral congressional Peace Commissions, with the support of the Office of the High Commissioner for Peace and technical support from the United Nations, have called for the “extensive participation in the conversations between the Colombian national government and the FARC”, inviting Colombian civil society to present proposals to be included at the negotiating table.
To facilitate this process, various platforms have been provided for citizen engagement in proposing solutions to the conflict based on the five-point agenda of the peace process, including regional meetings and a forthcoming online forum for submitting proposals. The regional roundtable meetings were designed to “guarantee the extensive participation of different regional social sectors, including organizations of farmers, indigenous peoples, afro-Colombians, women, union workers, students, human rights defenders, youth, environmentalists, LGBTQ communities, peace initiatives, churches, guilds, businesses, academics, social researchers and victims of the conflict.”
These regional meetings have been held throughout the country, offering a space for civil society leaders to present their organizations’ proposals on the first three agenda items to be discussed at the talks: agrarian development policy, illicit crop substitution, and political participation (future roundtable meetings to be held in 2013 are set to include issues related to victims, a fourth subject area of the peace agenda). Similarly, an electronic forum is said to be in the works as a mechanism to receive additional citizen input, the technical finalization of which delayed negotiations four days from their initially planned start date of November 15. With these participatory mechanisms in place, the stage now seems to be set for the desired inclusion of Colombian civil society in the peace talks as part of the larger process seeking an end to half a century of civil conflict.
In previous blog posts we’ve commented on the rampant political violence in Honduras since the country’s 2009 military coup, as well as the alleged involvement of Honduran security forces in extrajudicial killings and other human rights violations. Sadly, recent reports from Honduras suggest that the situation continues to deteriorate. Today we’ll provide an update on some of the troubling recent events in Honduras - the recent killing of an unarmed boy allegedly carried out by U.S.- vetted military troops; the targeted killings of opposition politicians – as well as efforts by non-governmental groups to hold Honduran authorities accountable for the ongoing attacks and the country’s pervasive climate of impunity.
U.S.-vetted soldiers allegedly murder unarmed boy
Breaking news this week reveals that soldiers vetted by the U.S. chased after, shot and killed a 15-year-old boy, Ebed Yanes, who supposedly ran through a check point on a motorcycle in Tegucigalpa on the night of May 26. The Associated Press’ Alberto Arce and Martha Mendoza reported that, according to a soldier involved in the incident who came forward:
The boy, he said, did not stop at the checkpoint, but raced through it. They followed him in the Ford pickup, chasing him through the dark alleys for at least five minutes. The boy turned into an alley too narrow for the truck, so the driver stopped. The lieutenant sitting in the front passenger seat ordered the unit to open fire as he jumped out of the truck and started shooting. Two other soldiers got out and fired from 30 meters away, with soldier Eleazar Abimael Rodriguez dropping to his knee in the firing position, said the soldier, who is now a protected witness. The motorcyclist was shot.
AP notes that the soldier alleged to have fired first, Josue Sierra, was trained last year at the Western Hemisphere Institute for Security Cooperation (WHINSEC), formerly known as the School of the Americas (SOA), at Fort Benning, Georgia, and has been charged with attempting to cover up a crime and violating official duties. Lt. Col. Reynel Funes, who allegedly oversaw a cover-up of the murder (in part by having the soldiers switch out their weapons) also attended the SOA in 1984, and went to the Naval Postgraduate School in Monterey, California, in 2006, AP reports.
The revelations behind Yanes’ murder – only brought to light through the brave investigative work of his father - further demonstrates the rampant impunity and corruption within the Honduran military and police, even by officers “vetted” by the U.S. Despite recent misleading comments by U.S. Ambassador to Honduras Lisa Kubiske in the Honduran press, the U.S. Congress is already withholding funds to the Honduran police over the national police chief’s past ties to death squads, and counternarcotics operations and radar support to the Honduran police and military has been suspended following Honduras’ shooting down of airplanes, and the May 11 shootings of several local villagers in a counter-drugs operation in the Moskitia region. A State Department official cited in AP’s report yesterday says that “the withholding may reach $50 million, including $8.3 million in counter-narcotics aid, and $38 million under the Central America Regional Security Initiative.”
The Mexican senate approved controversial new labor reforms yesterday, the AP reports. The bill, which has faced mounting public protests, would allow greater flexibility on the part of owners to hire and fire workers, among other changes. While supporters claim it will generate thousands of jobs, critics contend that it will erode what little benefits workers do have. Alejandra Barrales, a senator from the Democratic Revolution Party, told Reuters, “What we're doing here is annulling worker's rights.”
Aspects of the bill that unions had advocated for; the right to a secret ballot and increasing transparency of union finances, were stripped in the lower house and not included in the Senate version. Those reforms were seen as key to diminishing the power of the PRI-backed, non-democratic unions and supporting the development of smaller more independent groups. The PRD did manage to get Senate approval for two articles (388 and 390) that allow workers to choose which union they want based on majority vote and require unions to submit proposed contracts to union members. Ultimately, these were left out of the labor reform bill and sent back to the lower house for discussion and approval.
These reforms would have been especially important in the Mexican context because often collective bargaining agreements are signed by ‘unions’ that are company-backed. Without independence, these frequently fail to represent the interests of workers, many of whom are unaware that their labor group is essentially an extension of the company they work for.
Senator Manuel Bartlett told reporters Tuesday night that, “This law is an attack against social justice, and the only ones who will benefit are going to be the business owners.” For example, the law legalizes trial periods and initial training contracts, which allow employers options for offering more tenuous employment and paying lower wages with fewer benefits. With respect to outsourcing, a practice already used but now formally sanctioned, the law allows employers even more ways to combine low wages with little or no health, housing, severance and profit-sharing benefits, according to the AP.
Inequality is falling in Latin America as some 50 million people have risen to the middle class over the past 15 years according to a newly released World Bank report. The Guardian reports on the study, which notes that Latin America remains one of the most unequal parts of the world, “but a combination of favourable economic conditions and interventionist policies by left-leaning governments in Brazil and other countries has brought it more closely in line with international norms.” According to the World Bank report, 30 percent of the population is now part of the middle class, similar to the number who are considered poor. Meanwhile, 38 percent are classified as “vulnerable”, living just above the poverty line, but below middle class. Previous CEPR research has shown that, as the Guardian notes, left-leaning governments have performed especially well in reducing inequality. As CEPR’s researcher Juan Montecino has written, “there is a relationship between moving away from the Washington Consensus and reducing inequality.”
The wage gap between men and women in Latin America is decreasing according to a study by the Inter-American Development Bank, reports Univision. Despite obtaining more education than men, women in Latin America receive 17 percent less than their male counterparts, similar to the 18 percent gap in the United States. This is down from 22 percent in 1992. Chile and Brazil have the largest gaps, while Mexico and Central America have the lowest. Reporting on the World Bank study cited above, Inter-Press Service also notes how the increasing role of women in the economy has had a huge impact on the decrease in inequality and the rise of the middle class. Citing World Bank research, Stephanie Leutert, a research associate at the Council on Foreign Relations, writes “Latin American women have been responsible for 30 percent of the region’s extreme poverty reduction in the past decade, as a result of their increased workforce participation and higher earnings.” Adding, “the global economic downturn hit men’s incomes the hardest. In response, Latin American women picked up the slack, causing more than half of 2009’s poverty reduction.”
For the 21st year in a row, the United Nations General Assembly voted overwhelmingly to condemn the U.S. embargo of Cuba, reports the Associated Press. The United States was joined by Israel and Palau in voting against the measure, which was approved by a vote of 188-3. As the AFP notes, this was a record number of countries voting for the measure. Ian Williams, a senior analyst with Foreign Policy in Focus, comments, “The UN vote on the Cuba embargo reminds us yet again that U.S. foreign policy is concocted in a bubble detached from the real world, where most nations recognize that the boycott is designed to pander to the most reactionary Cuban emigres in Florida. Even dissidents in Cuba think that it is counterproductive, giving the Cuban government an excuse for its inefficiencies, while, like most such sanctions, harming more the population than those in power. Obama, embarking on a second term, and winning Florida despite the Cuban vote, owes them nothing. He should use his influence to call off the embargo and allow free travel to and from Cuba.”
Ecuador’s Rafael Correa announced his decision over the weekend to run for another term in office, reports Reuters. The decision, widely expected for some time, paves the way for Correa’s reelection in February. He currently has the highest approval rating in the hemisphere at around 80 percent. A recent survey showed Correa receiving 55 percent of the vote, over 30 points ahead of his closest rival. As the AP recently pointed out, a major reason for Correa’s popularity is that “Ecuador now devotes a greater share of its economy, 10 percent of gross domestic product, to public investment in infrastructure, education and other purposes than any other nation in Latin America and the Caribbean.” Echoing these points, Elma Lincango, an Ecuadorean nurse, told Reuters, “I want all the public works to continue, and he needs another term in office to do that ... My grandparents say that in their lifetime, he's the only president that has worked exclusively for the poor.”
When Hurricane Sandy ripped through the Caribbean it caused massive damage to the island-nation of Jamaica, but it’s not the reason Jamaica’s economic prospects are so poor right now. A large share of the responsibility for that lies with the International Monetary Fund (IMF), which has been squeezing the country since 2010. The damages caused by Sandy provide just the latest example of the negative effects of the severe austerity policies pushed by the IMF and backed by the Jamaican government. Early estimates are that Sandy has caused over $60 million in damages (some 2 percent of non-interest government expenditure), yet there may be limited action the government can take without cutting important spending elsewhere. That’s because the Jamaican government is trying to reestablish a lending agreement with the IMF, and the lender is demanding an extremely tight fiscal policy. Last week, Finance Minister Dr. Peter Phillips said that despite the massive damage from Sandy, the government will have to keep to “the strict fiscal program.”
It shouldn’t come as much of a surprise. Tropical Storm Nicole hit Jamaica in the fall of 2010, during the time of the previous IMF agreement, causing damages equal to 1.7 percent of GDP. Yet, because the storm “did not have hurricane-force winds, the government was not eligible for relief under the World Bank-administered Caribbean Catastrophe Risk Insurance Facility (CCRIF).” Rather, the IMF agreed to adjust the fiscal target by 0.2 percent of GDP, just a fraction of what was needed to repair and prepare for the next disaster. In the end, Jamaica increased expenditures to cover the damages but it was entirely offset by cuts elsewhere. (The IMF stopped disbursing money to Jamaica in 2011 for their failure to adhere to the program, yet the Jamaican government still hit the required primary budget surplus target nearly right on. More likely the agreement went off-track because the government decided to honor previous commitments to raise wages and pay back-wages to public sector workers, a big no-no for the IMF.)
As Juan Montecino and I have documented, first in May 2011 and then again in May 2012, the Jamaican government responded to the worldwide recession with austerity policies pushed by the IMF. The result, as anticipated, was slower economic growth and a failure to reduce the debt (the ostensible reason for pushing austerity). Meanwhile, what expenditures Jamaica did make went towards paying interest on their crippling debt, which has absorbed over 30 percent of expenditures the past three years. Jamaica has the largest debt burden in the world, greater even than debt-riddled Greece. The result has been an estimated ten-year period of negative per-capita GDP growth.
Recent IMF research has shown that cutting spending during a recession has greater negative effects on GDP than they had previously estimated. Perhaps this is a reason why the economic downturn for Jamaica was so much worse than the IMF anticipated. Unfortunately, neither the Jamaican government nor the IMF seems to be learning from their past mistakes. While Jamaica needs real debt relief and public investment to spur growth, as they once again approach the IMF, the signs are pointing to more of the same – not even a devastating hurricane can get the IMF to relax their conditions.
Tuesday’s elections could bring some changes to U.S.-Latin America policy, but how significant they are remains to be seen. At the administration level, Obama’s second term is likely to continue the 12 years of the “war on drugs,” support for coups d’etat, funding of opposition groups in left-leaning countries, promotion of “free trade” deals and other policies that characterized the Bush administration’s approach to Latin America and which were carried on by Obama. As we have previously noted, the Obama administration has largely left Latin America policy to the State Department – itself a clear sign that it was a low priority compared to the Middle East, Asia, Europe and other regions.
It was other votes that could spell some changes in U.S.-Latin American relations. Some vocal Latin American policy proponents on the right were defeated, but committee leadership changes could result in a more right-leaning policy. Meanwhile, landmark referendums to legalize recreational marijuana use in two states – Colorado and Washington – could have an impact beyond the U.S. borders, depending on how the Federal government reacts to them.
First, Congressman Cornelius Harvey McGillicuddy IV, aka Connie Mack, lost his Senate bid to incumbent Bill Nelson (D – FL). Since Mack gave up his House seat in order to run for Senate, this means that Mack will no longer chair the Western Hemisphere Subcommittee of the House Foreign Affairs Committee, and therefore will have to abandon his dream of having Venezuela declared a state sponsor of terrorism. He will be gone from Congress, but not forgotten – his entertaining conspiracy theories will still be available online for anyone that likes a good story, as will video of his classic dust-up with former Minnesota Governor Jesse Ventura on Larry King Live. Mack’s chairmanship of the subcommittee will likely go to Rep. Michael McCaul (R – TX), currently the vice-chair.
Speaking of conspiracy theorists, Mack’s like-minded Florida neighbor, Allen West (a Republican from the 22nd District who has said there’s 81 communists in the House of Representatives) may also be on his way out, pending final election results.
An Argentine judge ordered Chevron’s assets embargoed in an effort to enforce an Ecuadorean court ruling, reports the Associated Press. Plaintiffs, who have waged a decades long legal battle against Chevron, have taken their fight outside the country to wherever Chevron has assets. Enrique Bruchou, the Argentina lawyer on the case, told reporters, “This is a ruling that sets an example. What we're telling the world is that in Latin America we want to demand that whoever comes to exploit does it following the same health an environmental standards as they do in their countries of origin.” Other than Argentina, the plaintiffs have filed suit in Canada, Brazil and Colombia.
State legislation legalizing recreational marijuana use in Washington and Colorado may impact Latin American countries drug war policies, reports McClatchy. The legislation, which the Mexican Institute for Competitiveness found would significantly reduce drug cartel profits, is a “game-changer”, according to Kasia Malinowska-Sempruch, the director of the global drug-policy program of the Open Society Foundation. Alejandro Hope, who co-authored the study, noted that, “Politically and symbolically, this is really powerful. My guess is that this will accelerate some countries’ efforts to have a legal marijuana regime.” The head of incoming president Enrique Pena-Nieto’s transition team told the AP: "Obviously we can't handle a product that is illegal in Mexico, trying to stop its transfer to the United States, when in the United States, at least in part of the United States, it now has a different status…These important modifications change somewhat the rules of the game in the relationship with the United States…I think that we have to carry out a review of our joint policies in regards to drug trafficking and security in general."
Three laborers were killed in Honduras this past week over a land conflict in the Bajo Aguan region, reports EFE. A 2011 report by the International Federation for Human Rights noted that the “The government has converted the area of these agrarian conflicts in Bajo Aguán into a war zone.” EFE points out that some 70 peasants have been killed in the past few years in fights with security personnel and guards from wealthy landowners. Last year an agreement was reached to give some 4,000 hectares of land to the landless families in the region, yet the agreement has yet to be implemented. MUCA, an organization representing the rural workers, released a statement: “MUCA repudiates ... these cowardly acts of intimidation against the peasants and calls on the regime of (President Porfirio) Lobo to stop this violence against the laborers of Bajo Aguan.” Professor Dana Frank has written extensively about the conflict previously.
President Obama won reelection largely because of an economic populist appeal, especially to crucial white working-class voters in battleground states, as I described here. The message got through: an MSNBC exit poll showed that 53 percent of voters thought that Romney favored the rich (as opposed to the middle class or poor) and only 10 percent thought that of Obama.
U.S. politics are getting a bit more like South America’s in other ways, as the right-wing media creates and maintains a bubble world for Republicans. A big difference though is that the “bubble media” in South America, in most countries, is much bigger and more influential in countries like Argentina, Bolivia, Ecuador, and even Brazil. Paul Krugman and others have commented on the expansion of right-wing bubble influence here, e.g. how the right-wing media questioned the aggregation of polling data (e.g. by Nate Silver), which turned out to be extremely accurate; and also attacked the U.S. Bureau of Labor Statistics for its September unemployment report.
But the economic populism of Obama’s successful campaign was really the big story that most of the pundits seem to have missed (other than right-wingers accusing him of class warfare). Most pundits didn’t notice how unprecedented this is for the U.S. : no prior presidential nominee in at least the past half-century had anywhere near as much an economic populist campaign as Obama’s. It was also vastly different from his own general election campaign in 2008. Part of this is because the country has changed in recent years: the long-term failure of our own neoliberalism finally provoked a turning point in the 2006 and 2008 elections. This is another similarity to South America, which moved left after its longest period of economic failure in more than a century (1980 – 2003). Our economic failure was different, in that it was not so much a collapse of economic growth as in South America, but a massive upward redistribution of income. But it was a colossal setback for the majority of Americans, who joined their counterparts from the South in a revolt at the ballot box. And then the Occupy movement put the issue of income and wealth inequality on the political agenda as it has not been since the Great Depression.
A guest post by former CEPR intern Tara Ruttenberg.
Ecuador made international headlines this week, first for plaintiffs taking their fight to Argentina and Colombia to hold Chevron accountable for decades of toxic pollution, and secondly as a result of the government’s recent decision to tax bank profits as a way to increase state revenue for social spending on poverty alleviation. As Ecuador celebrated the fourth anniversary of its relatively new citizen’s constitution last month, news agencies and policy analysts have made note of the successes of the many changes taking place under President Correa, particularly related to social policies targeting poverty reduction through increased public social expenditure and cash transfers to the poor. These and other reforms embody Correa’s proclaimed commitment to 21st century socialism and an inverted juxtaposition of traditional power relations, placing people and the environment above the market economy and the formerly unbridled reign of the private sector. Ecuador’s social and economic policy platform and successful poverty reduction experience are a strong reflection of wider regional trends in countries governed by left-of-center leaders now nearly a decade into Latin America’s post-neoliberal era.
While analysts continue to draw due attention to Ecuador’s success in reducing poverty and improving socioeconomic indicators by balancing strong economic growth with policies geared toward greater income redistribution (see CEPR publication on Ecuador’s economy since 2007), many have neglected the wider paradigmatic framework within which Ecuador’s new constitution thrives; that is, the indigenous-born and politically articulated concept of ‘buen vivir’ (living well). Buen vivir as a social paradigm incorporated into Ecuador’s constitution seeks to “better the quality of life of the population, develop their capacities and potential; rely on an economic system that promotes equality through social and territorial redistribution of the benefits of development; ….establish a harmonious coexistence with nature… promote Latin American integration; and protect and promote cultural diversity” (Article 276 of the Constitution of the Republic of Ecuador). Refreshingly, we see Ecuadoran policies living up to these ambitious constitutional aims based on buen vivir, with Correa continuing to focus on income redistribution, as demonstrated by the most recent tax on banks.
Before hitting the U.S.’ east coast last week, Sandy wreaked havoc on Haiti leading many to fear a food security crisis, reports the Miami Herald. Coming just nine weeks after Tropical Storm Isaac devastated agricultural crops throughout the country, Sandy inflicted an estimated $70 million in agricultural damages, mostly in the South department. An analysis done by the Haitian government following Isaac found that changing weather patterns were negatively effecting food security in almost every region of the country. Writing in NACLA, Kevin Edmonds discusses how climate change will affect Caribbean countries. Edmonds speaks with University of the West Indies professor Norman Girvan, “30 years ago, one expected to deal with major disasters of this kind, say, once every ten years. Nowadays, most islands expect at least one, and possibly two or three, every year. In other words this now has to be seen as a permanent, recurring phenomenon or integral feature of Caribbean development.” Edmonds notes that despite climate change presenting a significant threat to the Caribbean, the countries lack the power to address to the problem on a global scale.
Speaking at the G-20 summit in Mexico City, Argentina’s Economy Minister called on advanced countries to place restrictions on vulture funds, reports Bloomberg. The call comes after a U.S. court ruled that Argentina must pay vulture funds with the same priority that they pay holders of their restructured bonds, which some 93 percent of creditors accepted following Argentina’s default in 2001. The court ruling, which has been called a huge win for vulture funds, could impact other sovereign debt restructurings. Economy Minister Lorenzino told his fellow ministers, “We hope that G-20 nations understand that the latest developments could affect any future restructuring process of sovereign debt…All nations should be on alert.” Meanwhile, Argentine and South African officials met to discuss NML Capital’s attempts to detain an Argentina ship docked in South Africa. The move by NML Capital, run by billionaire Republican donor Paul Singer, comes after they successfully detained an Argentina naval vessel in Ghana last month.
The Peruvian government is moving forward with plans to pay back billions of dollars in 40 year-old land bonds, reports Reuters. General Juan Velasco issued the bonds as compensation during a land redistribution program started in the 1970s. In 2001, the Constitutional Court ruled that the government should repay the bonds, yet a string of government’s since then have punted on the issue. Now, the payment is becoming more pressing as the U.S.-Peru Free Trade agreement comes into force. Over the years, many of the bonds have been bought by investors on a secondary market. With the “free trade” agreement, the funds which hold the bonds could sue in U.S. courts to seek payment, a similar strategy as vulture funds have employed in Argentina. Constitutional Court president Ernesto Alvarez told Reuters, “There is a worry among some authorities in the executive branch ... that Peru could find itself hurt if complaints were lodged in courts under clauses in the free-trade pact with the United States.” If Peru pays back the bonds, they could be on the hook for up to $8 billion, or 4 percent of GDP.
Like 80s-style heavy metal, the U.S. “war on drugs” and intervention in Central America just never goes out of fashion. Or does it? Two new reports from journalist Kaelyn Forde for The Real News examine how Operation Anvil, so recently described in New York Times feature articles and CNN puff pieces as an important new offensive in the U.S.’ spreading “war on drugs,” has become highly controversial and – for now, at least – suspended. The reasons, of course, are the May 11 shooting deaths of four local villagers under circumstances that remain cloudy, and the downing of two planes by Honduran forces. Both of these led to outrage from members of the U.S. Congress [PDF] and the suspension of both radar support to the Honduran government and of Operation Anvil. (See our investigative report, co-authored with Rights Action, on the May 11 incident, and our related previous blog posts here, here, and here.)
But while Operation Anvil may be on hold for the time being, Forde’s interviews with experts such as American University professor David Vine, COFADEH’s Berta Oliva and Rights Action’s Annie Bird describe a growing, more permanent U.S. presence in Honduras:
HONDURAN ARMY COLONEL RONALD RIVERA (SUBTITLED TRANSL.): Here we have the Caratasca Naval Base, and they are working in an almost permanent way with the North American navy, engaging in operations and exercises.
FORDE: It’s one of three forward operating bases the U.S. has constructed in la Moskitia since the 2009 military coup.
DAVID VINE, AUTHOR AND PROFESSOR: They have been constructed in a number of places, especially on the Northern coast, especially in la Moskitia, in areas that have become the center of growing conflict, growing drug trafficking and growing interest from business interests as well.
Vine goes on to describe how:
The 2009 Wikileaks cable from the U.S. embassy in Tegucigalpa talked about a large scale project, an unprecedented project, for la Moskitia. A public-private partnership that the United States military was really leading, but in coalition with a range of other U.S. government agencies for la Moskitia, to bring together public--meaning U.S. government and Honduran government--and private entities, mostly for profit companies. Like General Electric, and a large real estate development firm.
(The cable to which Vine refers is available here.)
Forde, it is worth noting, is one of the only journalists to file investigative video reports from the Moskitia region since a joint DEA-Honduran Tactical Response Team operation killed four people, injured several others, and terrorized a village. (See Kaelyn’s earlier report on that incident here.)
President Obama, the 80s called. They want their drug policy back.
Most of the news and opinion pieces about Venezuela that appear in the U.S. press paint an overwhelmingly negative picture of the country’s political landscape. But Venezuela’s October 7 presidential elections have generated a flurry of articles with a different take on the situation there, such as this piece in the Guardian, this one in the Independent, and this previously referenced New York Times/ International Herald Tribune op-ed penned by CEPR co-director Mark Weisbrot. More recently, a few high profile individuals from the U.S., who monitored these and past elections in Venezuela, shared their impressions of Venezuela’s electoral process, and the implications of Chávez’s victory.
On Tuesday, a lengthy piece by Danny Glover, called “Why Chavez Won Again”, appeared in Foreign Policy in Focus. Glover, who worked in community development before becoming an actor, was an electoral monitor on the day of the elections and describes how he was “greatly moved by the extraordinary civility and enthusiasm of voters from across the political spectrum.” But, he says:
the most important moment of my trip was the day after the election when I met with local leaders and activists from the Afro-Venezuelan community of San Jose in Barlovento (…)Youth leaders described the educational missions and government programs that provided them with unprecedented access to higher education. Members of workers' cooperatives discussed new state cacao processing factories co-managed by managers and workers that had helped lift the local economy and offered fair prices and social support to poor farmers. Other representatives of the community explained how new health and education missions were addressing the needs of communities that had had little or no access to basic services.
According to Glover, the Venezuelan government’s social development agenda, and its “proactive effort to promote democratic engagement and citizen control over local conditions and possibilities” explain in part why Chávez was re-elected with an 11-point lead over his opponent. He noted that
Venezuela’s Afro-descendents – among the most under-educated, marginalized, and impoverished people in the country – were becoming pro-active citizens under the Chavez government, increasingly participating in political decision-making at the local level and claiming a voice in regional, national, and even international affairs.
Citing social and economic indicators that point to significant progress under the Chávez administration, Glover admonishes the coverage of Venezuela in much of the foreign media, which, he says, “gives the impression that Chavez’s social and economic policies are incoherent, unsustainable, and based on short-term electoral considerations.” Glover adds:
The press also often vilifies Chavez and portrays his supporters—a strong majority of the country—as poor, reverent masses who are blindly manipulated by populist rhetoric and occasional cash handouts. This portrayal is not only false, it is denigrating and injurious to the basic workings of democracy: ordinary people expressing their desires with visions of an improved quality of life, development projects, and a choice of political stewards to achieve their goals. Yet, nearly 14 years after Chávez was first elected, misrepresentations and outright fabrications still prevail in mainstream U.S. papers, television news programs, and in the statements of politicians from both major parties.
On the same day that Glover’s piece appeared, the Boston Globe published an op-ed by former Congressman Bill Delahunt of Massachusetts. Delahunt, who retired from Congress in early 2009, began traveling with congressional delegations to Venezuela in the early 2000s and played a central role in creating the “Boston Group” that brought together U.S. members of Congress and members of the Venezuelan National Assembly from both pro-government and opposition parties. His goal today is to encourage dialogue between opposing political factions in Venezuela and between the U.S. and Venezuelan governments, as his op-ed, entitled “A New Role for the US and Venezuela”, demonstrates.
The Associated Press takes a look at Ecuadorean President Rafael Correa’s plan to tax banks to pay for an increased subsidy to poor families and for other “wealth redistribution activities." The measure, which would increase taxes on bank’s assets abroad among other changes, is estimated to raise $200-$300 million per year. The AP notes that Correa has doubled social spending and that “Ecuador now devotes a greater share of its economy, 10 percent of gross domestic product, to public investment in infrastructure, education and other purposes than any other nation in Latin America and the Caribbean.” Speaking over the weekend at the Economic Commission for Latin America and the Caribbean, Correa said “This is the challenge the world over: beating poverty, which for the first time in history is not the result of scarce resources or natural factors, but of perverse and exclusive systems. For this to happen, changes are required in power relations and political processes".
A U.S. free trade agreement with Panama, negotiated during the Bush administration, went into effect yesterday reports Reuters. The agreement, the third along with Colombia and South Korea, to be finalized in the past year, was praised by business groups and senior lawmakers. Yet others, such as Lori Wallach of Public Citizen, criticized the deal. Wallach told The Hill, “The presidential candidates are sparring over who would best crack down on offshore tax evasion and reduce our budget deficit, so it’s a sorry statement about the power of corporate campaign money that both candidates support a pact with the hemisphere’s leading tax haven.” Wallach has previously pointed out that since the FTAs with South Korea and Colombia, imports from those countries have outpaced exports, implying an estimated loss of 15,000 jobs.
Ecuadorean plaintiffs, who have waged a long legal battle with Chevron over pollution in the Amazon, will sue the company in Argentina and Colombia to try and enforce a $19 billion court ruling, reports Dow Jones. Pablo Fajardo, an Ecuadorean attorney representing the plaintiffs said, “We're going after Chevron wherever in the world it has assets.” The suits in Colombia and Argentina follow similar moves in Brazil and Canada. Last month, the U.S. Supreme Court blocked Chevron’s attempt to prevent the plaintiffs from enforcing the judgment. Luis Yanza, another representative of the Amazonian groups suing Chevron, told Dow Jones that the pollution has directly affected 30,000 people, raising cancer rates and causing other problems. "For us, what Texaco [later acquired by Chevron] did is a crime against nature and against humanity," Yanza said.
Honduras' second-ever openly gay man to run for national political office, Erick Vidal Martinez, was in San Francisco last week as part of a ten-day California tour, reports the San Francisco Reporter. Martinez has worked for the past three years for a Honduran human rights group, recording human rights violations against members of the LGBT community. After the coup in June 2009, violence against the LGBT community has increased. The Reporter notes, “During the first six months of the coup, nine gay men and 12 transsexual women were murdered. Since then five lesbians, 42 gay men, 28 transsexual women, and an unknown number of bisexuals have been murdered.” Martinez is running on the Libre ticket, a political movement borne out of the resistance to the 2009 coup. Martinez was originally on the ticket as a substitute candidate for Erick Martinez Avila, but Avila was killed just two weeks after accepting his nomination.
As Hurricane Sandy approaches the northeastern shore of the United States, Caribbean countries began cleaning up after the storm left over 60 dead throughout the region. The AP reports that 51 of the 65 deaths reported were in Haiti, where the nation’s Prime Minister declared, “This is a disaster of major proportions.” The Southern region was the worst hit, with large scale flooding causing damage to homes as well as crops. Haiti, which has been grappling with a cholera epidemic for two years, could see increased cases over the next few weeks as the rising water levels facilitate the disease’s spread. For more information on cholera in Haiti, see CEPR’s Haiti Relief and Reconstruction Watch blog. Cuba, Jamaica, the Bahamas and Puerto Rico all reported deaths as well.
The governing coalition led by President Sebastian Pinera took a hit at the polls this weekend in Chile, reports the AP. Parties from the left took roughly 43 percent of seats as compared to 37 percent for the governing right-wing alliance. The left’s largest victory was in central Santiago where Carolina Tohá, who has supported student protests for education reform, defeated the incumbent, “ultra-conservative” Pablo Zalaquett. Former president Salvador Allende’s daughter also won her first major political race, whereas Pinochet’s former intelligence director lost his 16-year hold on the mayor’s office in the upper-class district Providencia. As the BBC notes, the election was marked by low turnout. It was the first election where voting was not mandatory, and abstention was over 60 percent. For more analysis, see the Pan-American Post.
A U.S. appeals court ruled against Argentina in a long running dispute with hold-out bondholders, reports Bloomberg. Argentina appealed a lower court ruling that it must repay the vulture funds before making payments to those bondholders who accepted a restructuring. The ruling comes as a huge victory to NML Capital, a unit of billionaire Paul Singer’s Elliot Management Corp, which has spent millions lobbying against Argentina through the American Task Force Argentina. It was a surprise to many as the United States government had come down on Argentina’s side, having argued to the lower court that their ruling “could enable a single creditor to thwart the implementation of an internationally supported restructuring plan, and thereby undermine the decades of effort the United States has expended to encourage a system of cooperative resolution of sovereign debt crises.” Felix Salmon, writing on the ruling, states, “I've been writing about holdouts, or vultures, or whatever you want to call them, for a good dozen years now, and although they've had victories here and there, there's been nothing remotely as big or precedent-setting as this.”
Ecuadorian president Rafael Correa is pushing a bill that would increase the taxes charged to banks to pay for increased social welfare programs, reports Reuters. The bill, which was submitted to Congress last week, will introduce a 3 percent charge on banks’ income and scrap the exception lowering income taxes for banks to 15 percent, compared to 25 percent for others. The extra revenue would help raise the monthly payments under the government’s Human Development payment from $35 to $50 a month. As Reuters notes, Correa has pushed for significant financial reforms over the last few years, preventing banks from investing in other sectors of the economy, banning some service charges on credit cards, and allowing borrowers to default on loans by giving back the houses or cars to the banks that lent them the money. The government has also mandated that banks repatriate assets that are held abroad so that they can be more productively invested in Ecuador. Correa, who is widely expected to win another term as President in February when elections are held, has greatly increased social spending during his time in office. For more on changes to the Ecuadorian economy and the government’s social policy, see this recent paper by CEPR researchers Rebecca Ray and Sara Kozameh.
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AP published an article yesterday on the recent electoral success of incumbents in Latin America. Though the article focuses on the advantages of incumbency and the concentration of power in the presidency, there is another far more compelling reason for their success. A quick mention of the “decade of economic growth” in the article gives us a clue that something different may, in fact, have been occurring.
As CEPR Co-Director Mark Weisbrot pointed out in the New York Times, the reelection of incumbents and their political parties has more to do with increasing living standards than anything else. Following a twenty-year economic growth failure associated with neoliberalism, a new wave of leaders campaigned against these policies and for a greater distribution of wealth, and have largely backed up those campaign pledges.
At this point, it might prove fruitful to dig a little deeper into the recent economic context of Latin America, and as it just so happens, CEPR has been doing exactly that for many years now.
A few examples indicate that policies leading to significant economic and social advances are likely playing a strong role in countries where the reelection of incumbents has occurred:
Following a week of protests which resulted in the deaths of three people, President Martinelli of Panama said he is willing to cancel plans to sell land in the duty-free zone in Colon. The protests were in response to the passing of a law last Friday which would allow the selling of land to companies which are currently leasing land in Latin America’s largest duty-free zone. Protestors contend that the millions of dollars in leasing fees go to the capital and don’t help provide needed services in Colon. Political Analyst Joe Blandon told the Associated Press, “In Colon, there is an economic system that clearly shows its injustice…On one side is the canal, the duty-free zone, and on the other is the city where half of the population lives in poverty."
Bolivia is breaking the mold in the “war on drugs” in their efforts to contain the cultivation of coca, reports Deutsche Welle. The coca leaf has been used for centuries in Bolivia as a mild stimulant and Bolivia withdrew from a UN convention that labels the coca leaf in its natural state as a narcotic substance. That move, together with expelling the DEA in 2008 angered Washington, which has included Bolivia on a list of countries “failing demonstrably” in the war on drugs. Nevertheless, while previous efforts at crop replacement were failures, a new “social control” policy is proving effective. The program, which began in 2008 with financial support from the European Union, aims to work with the powerful coca growers unions to limit each registered grower to a small plot of coca. Coca planted outside permitted zones is still targeted for destruction, but the unions now support those efforts. These new programs seem to be effective as the UN recently found that coca cultivation in Bolivia fell 12 percent in 2011.
Venezuelan finance minister Jorge Giordani presented the 2013 budget to national assembly this week, reports Reuters. The budget forecasts economic growth of 6 percent in 2013 with inflation falling to a range between 14-16 percent. While many financial analysts have predicted a sharp slowdown in Venezuelan growth after increased spending in the year before the election falls off, CEPR research has shown that Venezuela’s growth is sustainable. Venezuelanalysis, looks at the budget in terms of social spending, noting that it will make up over 37 percent of the budget. Education receives over 11 percent of the budget, while social security and health are set to receive 10 percent and 8 percent, respectively. As Venezuelanalysis notes, the regular budget doesn’t include all social spending as PDVSA and Fonden also contribute to social investment.
The crew from Argentina’s naval vessel returned from Ghana today, as the ship remains detained by the vulture fund NML Capital, reports the AP. Many members of the crew expressed frustration and dismay at returning to Argentina without the flagship vessel. Nevertheless, President Kirchner has refused to negotiate with the vulture fund, “As long as I am president, they can keep the frigate, but no one will take the liberty, sovereignty and dignity of this country - not a vulture fund, not anyone." Meanwhile, another Argentine vessel, which was forced to dock in South Africa for repairs, is being targeted by NML capital, reports Mercopress. The Argentine embassy is ready to respond should legal efforts to detain the ship go forward, however the news report notes some key differences with the situation in Ghana. For one, Elliot Capital, the parent company of NML, tried buying South African company bonds for cents on the dollar and suing for full value plus interest but has yet to win a court case in South Africa. For more on NML and the other vulture funds lobbying against Argentina, see here and here.
The killing of indigenous protestors by the Guatemalan military has raised fears about the militarization of police duties, reports the New York Times. The killing has also raised questions about U.S. military aid to Guatemala, as U.S. Marines have been stationed there for the last two months assisting in anti-drug trafficking operations. During the country’s civil war, the military was found to be responsible for the vast majority of human rights violations, including the Dos Erres massacre carried out by the Kaibiles special forces. Current President Otto Perez Molina was himself a former Kaibil. The criticisms echo those in Honduras, where the U.S. is reassessing their assistance to the Honduran armed forces after U.S. agents were involved in a series of deadly raids. A number of recent op-ed and articles highlight these issues further.
While the killing of protestors by the military is bringing up fears of the past, the relative success at holding those responsible accountable is giving hope that the history of impunity in Guatemala is ending, reports the Associated Press. Claudia Paz y Paz, the attorney general, has the strong support of the international community, and responded quickly in arresting 8 army privates and a colonel, who could face up to 500 years in prison for “extrajudicial assassination.” Kelsey Alford-Jones, director of the Washington-based nonprofit group Guatemala Human Rights Commission/USA, told the AP, "It is an important departure from Guatemala's long history of impunity for similar crimes…Justice in this case, along with the demilitarization of citizen security, will be a significant step toward ensuring non-violent resolution of social conflict in the future."
Jamaica is pushing forward with a new IMF agreement, reports Go Jamaica. An IMF delegation traveled to Jamaica recently to begin negotiations for a new agreement, and Prime Minister Portia Simpson-Miller said over the weekend that the “government is working as hard as possible to conclude an agreement”. Jamaica returned to the Washington-based lender in 2010, yet the agreement put in place contractionary austerity measures, as documented by CEPR at the time. Jamaica has struggled through years of slow growth and high debt, with some 50 percent of revenues dedicated to debt service. Per-capita GDP is projected to remain below its pre-recession level through 2017. Never the less, indications are that a new IMF agreement would contain many of the same problematic requirements as the previous agreement, despite opposition from within the IMF.
The Ecuadorian government has found new supporters of the Yasuni conservation plan, reports Reuters. The plan, which involves the protection of one of the most bio-diverse places on earth, requires donors to compensate Ecuador for conserving the area and not drilling for oil in the reserve, estimated to hold $7.2 billion worth of oil. Thus far the plan has received some $200 million, mostly from bilateral donors, though corporations are increasingly donating as well.
Argentina is ordering the evacuation of the ARA Libertad, the naval vessel held in Ghana by the vulture fund NML Capital since early October, reports the Associated Press. A judge in Ghana, who denied Argentina’s appeal to have the seizure reversed, also prevented to ship from refueling leaving the 326 crew members without power on board. Foreign Minister Hector Timmerman responded, calling the move “an attack that is nothing more or less than a kidnapping, an extortion and an act of piracy against a sovereign nation." To read more on the vulture fund, their lobbying efforts in DC and their history, see here and here.
Fox Business’ John Stossel knows better than the Honduran constitution and your Economics 101 class, he revealed over the weekend. The pesky Honduran Supreme Court recently ruled 13-2 that proposed libertarian utopia charter or “model cities” – called “free cities” by Stossel – would go against Honduras’ constitution. Remember, this is the same constitution which we have been repeatedly told “socialist,” “Chavez-ally” former president Zelaya was trying to subvert before he was bravely ousted in a coup by the Honduran military, leading to Honduras’ status as a beacon of liberty and human rights today. But sadly for Stossel and model city proponent Michael Strong, apparently the Honduran constitution and Honduras’ post-coup institutions are not as freedom-loving as they seemed during the military coup.
The Supreme Court ruling is a surprising blow to a project that has attracted much interest – and little skepticism – from media outlets such as the New York Times. “Freedom-haters” in Honduras meanwhile, such as Garifuna communities who say their land rights are threatened by a model city plan, were handed a significant victory in a country where the rule of law is weak are institutions are notoriously corrupt.
Previous backers of the “model city” concept – notably idea man Paul Romer – also recently walked away from the project, shocked at the lack of transparency and fair-dealing by the Honduran government.
“Honduran free city founder” Strong (who actually is from the U.S.) knows when he isn’t wanted. He’ll just find someone else who appreciates him and his ideas:
"We hope and expect that another country will choose prosperity over poverty, but for now advocates of poverty have won in Honduras," Strong says.
I wish him luck in finding other places to start a "free city." It has worked before. Hong Kong was once just as poor as Africa -- but thanks to a government that enforced property rights but did almost nothing else, it is now even wealthier than the United States.
Several new op-eds and articles highlight problems with the U.S. government’s support for the post-coup government of Pepe Lobo in Honduras. New U.N. data reveals that the homicide rate in Honduras – already infamous as the “murder capital of the world” -- has gone up even further, to 92 murders per 100,000 people, over 82 a year ago. This makes Honduras far and away the most murderous country in Latin America (despite what some journalists have contended), and well above that of violent neighbors such as El Salvador (69 per 100,000) and Guatemala (38.5 per 100,000).
As scholars such as Dana Frank, in numerous articles in The Nation, The New York Times, and now Foreign Affairs, have pointed out, the increase in killings has resulted from the climate of instability in the wake of the 2009 coup, which was supported by the Obama administration. While coup opponents, journalists, the LGBT community, and women have been targets of post-coup violence across the country, Honduras is also now home to more than one “hot spot” of bloodshed since the coup.
The 2009 coup against democratically elected president Manuel Zelaya cut short a land reform process that sought to resolve conflict in the Aguán Valley region where a few rich landholders have been able to acquire huge swaths of land at the expense of impoverished peasants. “Armed commandos pass[ed] menacingly through defenceless villages during the days after the coup,” as “The government has converted the area of these agrarian conflicts in Bajo Aguán into a war zone” with “low-flying military helicopters and planes" and “the peasants of the region’s organized movement suffer from kidnappings, torture and murders,” a September 2011 report [PDF] by the International Federation for Human Rights noted. The most notorious of these land owners is Miguel Facussé, uncle of former president Carlos Flores Facussé. Miguel Facussé is considered by the U.S. government to be involved in drug trafficking, and is frequently described as the “most powerful man in Honduras.” Facussé also has tourism interests in the Gulf of Fonseca area, on the other side of the country on the Pacific Coast, where forced evictions are also occurring and community radio stations and journalists covering them have been targeted with death threats, shut downs, and arrests.