The Americas Blog

El Blog de las Americas

The Americas Blog seeks to present a more accurate perspective on economic and political developments in the Western Hemisphere than is often presented in the United States. It will provide information that is often ignored, buried, and sometimes misreported in the major U.S. media.

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Brazil has a housing shortage of around 5.8 million units, while there are around 6 million vacant units in empty houses and buildings located mainly in the downtown areas of its large cities. Urban social movements have historically tried to resolve this problem by coordinating squatters’ occupations of empty buildings, and they have successfully pressured the government to legalize these activities, resulting in some of the world’s most progressive property rights. Articles 182 and 183 of Brazil’s 1988 Constitution guarantee that the social function of property overrides the profit motive.  After a decade of protests and advocacy, in 2001, these amendments were further defined through the complimentary Statute of the City legislation. According to Brazilian law, buildings that do not fulfill their “social function,” that are left vacant and owing property taxes can, after a certain period of time, be taken over by people who don’t own any property of their own and converted to low income housing at the government’s expense. Unfortunately this law, like many other progressive laws of its kind in Brazil, is ignored by many local governments.

According to Evaniza Rodriques, from the União Nacional de Moradia Popular (National People’s Housing Union, or UNMP) there are around 35,000 people squatting in 60 abandoned buildings in São Paulo’s downtown region, trying to pressure the government for ownership.  Currently, 30 of these buildings are undergoing legal processes to be returned to their former owners. As the violent eviction of hundreds of people from a building on São João Avenue in downtown São Paulo last week shows, military police violence against squatters groups is increasing.

Benedito “Dito” Barbosa is a lawyer and founding member of the Central de Movimentos Populares (People’s Movements Central, or CMP).  Earlier this year, while trying to communicate with his clients during a technically-unconstitutional mass forced eviction in downtown São Paulo, Dito, a man of humble origins in his 50s, was beaten, choked and dragged down the sidewalk by Sâo Paulo military police.  It was not an isolated incident. There have been seven cases of lawyers beaten by police while trying to perform their duties during mass evictions in São Paulo this year.

Benedito "Dito" Barbosa

(Photo: Brian Mier)

Question: There is a wave of forced evictions going on in São Paulo and it looks like the police are using a new strategy of trying to prevent lawyers from defending the tenants during the process. Can you explain what is going on?

Dito Barbosa: I want to make two things clear. Here in São Paulo we are going through a moment of mass evictions but we can’t say that it is an isolated issue. This is a problem in all of the big cities in Brazil at the moment. We have witnessed renewed violence during acts of land reintegration, with more violent forced evictions all over the country, especially in the big cities.

There are two factors that I think are associated with this process. First of all, there has been a big increase in real estate speculation in Brazil during the last few years, associated with large urban infrastructure projects. It’s hard to say which came first, the chicken or the egg. Was it the real estate speculation or the forced evictions? We know that one is a consequence of the other. The other factor is the extremely conservative posture of the judiciary, which associates itself with the real estate industry. It has sided with real estate speculators, slumlords and owners of vacant buildings in a huge number of court cases especially in São Paulo but all over Brazil as well in the past few years. These are empty buildings that don’t fulfill their social function but the judges continually grant favorable decisions to the real estate speculators and when they do, they annex a request for military police action authorizing them to break down doors and physically remove the residents and anyone else who happens to be in there at that moment. So, the military police violence is supported by the state apparatus and the judiciary giving it this, shall I say, legal appearance for the actions which, in my opinion, happen outside of the law, because they disobey the Statute of the City and they disobey the Brazilian Constitution. So military police violence during forced evictions is a common occurrence in São Paulo and you see that the actions are extremely violent and disrespectful to the building residents to the point where we had last September 16, when the police rounded up an enormous number of people, including children, women with babies and people in wheelchairs and took them to the station. This disrespected basic human rights. And these types of actions by the police are accompanied with a systematic persecution of human rights workers. Police choked and beat Dito earlier this year.

(Photo: National Forum on Urban Reform (FNRU), June 29, 2014 newsletter)

It’s not just lawyers who suffer from this violence, it’s everyone involved in the defense or support of these groups of people threatened with eviction. They are threatened and intimidated by the police and by the judiciary repeatedly and many times they are victims of violence and repression from the São Paulo state military police. This was a violent week here in São Paulo. On September 16 a police officer shot and killed an unarmed street vendor in Lapa on the West Side. In other words, while he was trying to prevent street vendors from working he got violent and killed one of them. So these are the facts that show how violent the São Paulo military police are.

Q: Do you think that this new wave of attacks against lawyers and human rights workers in São Paulo, along with the increase in mass forced evictions is serving political objectives because of the gubernatorial elections coming up? Do you think it represents a conflict between the PSDB [Brazilian Social Democratic Party] state government, which controls the police, and the PT [Workers’ Party] Mayor’s Office?

DB: I don’t believe that this is the result of a fight between the mayor and the governor because the mayor told the papers and news crews that the residents should leave peacefully.  He also said that the police should not act violently; in other words he’s sitting on the fence on this issue and he made no effort to defend the residents. To the contrary, his attitude generated a revolt among some of his supporters among the social movements that have been pressuring him to act more on this issue.

What I see is really happening is that there is an alliance between the State and the private sector here in São Paulo that is supported by the judiciary, who many times refuse to speak with human rights lawyers, because we have systematically requested audiences with the Court of Justice. We have filed motions and petitions – the Movimento de Trabalhadores Sem-Teto [Homeless Workers Movement, or MTST] even held a big protest in front of their building. The court president created a commission for crises management to act on land conflict issues, but it hasn’t done anything. The State Security Minister invited the social movements to some meetings at military police headquarters to talk about evictions, but this didn’t solve anything, it was just so they could show they were speaking to us. And the violence continues. On the 16th while I was working to defend the families during the entire violent police action, the 18th Civil Court of São Paulo decided to evict 8,000 people in Vila Maria, which is another community that we support. Based on the way they have been managing evictions, we are very worried about what is going to happen.  The people who were evicted on the 16th moved to another vacant building that was being occupied and when they got there they found out another judge had just issued an order for eviction there too. So, there you have it. There aren’t many options for these families at the moment except to fight, to resist and to confront the government.

I should mention that the situation in São Paulo is serious but there are other cases around the country, like the planned eviction of 12,000 people in Isidoro favela in Belo Horizonte, 20 planned forced mass evictions in Porto Alegre and violent evictions happening in many other cities across Brazil. And this shows that this is a national problem. It shows how serious the confrontations are between the squatters’ movements with the real estate industry which associates itself with the judiciary, the police and the state. I don’t want to leave any actor out of this process here because we have asked everyone to get involved and help mediate these conflicts, but it has been a dialogue of the deaf and mute, because nobody is taking a position and getting involved in the issue and the situation is getting worse and worse. So we don’t know where this is going and when this cycle of violence against poor families and against the homeless will stop.

Brian Mier is a geographer and freelance journalist who lives in Brazil and works as a policy analyst at the Centro de Direitos Econômicos e Sociais.

Brazil has a housing shortage of around 5.8 million units, while there are around 6 million vacant units in empty houses and buildings located mainly in the downtown areas of its large cities. Urban social movements have historically tried to resolve this problem by coordinating squatters’ occupations of empty buildings, and they have successfully pressured the government to legalize these activities, resulting in some of the world’s most progressive property rights. Articles 182 and 183 of Brazil’s 1988 Constitution guarantee that the social function of property overrides the profit motive.  After a decade of protests and advocacy, in 2001, these amendments were further defined through the complimentary Statute of the City legislation. According to Brazilian law, buildings that do not fulfill their “social function,” that are left vacant and owing property taxes can, after a certain period of time, be taken over by people who don’t own any property of their own and converted to low income housing at the government’s expense. Unfortunately this law, like many other progressive laws of its kind in Brazil, is ignored by many local governments.

According to Evaniza Rodriques, from the União Nacional de Moradia Popular (National People’s Housing Union, or UNMP) there are around 35,000 people squatting in 60 abandoned buildings in São Paulo’s downtown region, trying to pressure the government for ownership.  Currently, 30 of these buildings are undergoing legal processes to be returned to their former owners. As the violent eviction of hundreds of people from a building on São João Avenue in downtown São Paulo last week shows, military police violence against squatters groups is increasing.

Benedito “Dito” Barbosa is a lawyer and founding member of the Central de Movimentos Populares (People’s Movements Central, or CMP).  Earlier this year, while trying to communicate with his clients during a technically-unconstitutional mass forced eviction in downtown São Paulo, Dito, a man of humble origins in his 50s, was beaten, choked and dragged down the sidewalk by Sâo Paulo military police.  It was not an isolated incident. There have been seven cases of lawyers beaten by police while trying to perform their duties during mass evictions in São Paulo this year.

Benedito "Dito" Barbosa

(Photo: Brian Mier)

Question: There is a wave of forced evictions going on in São Paulo and it looks like the police are using a new strategy of trying to prevent lawyers from defending the tenants during the process. Can you explain what is going on?

Dito Barbosa: I want to make two things clear. Here in São Paulo we are going through a moment of mass evictions but we can’t say that it is an isolated issue. This is a problem in all of the big cities in Brazil at the moment. We have witnessed renewed violence during acts of land reintegration, with more violent forced evictions all over the country, especially in the big cities.

There are two factors that I think are associated with this process. First of all, there has been a big increase in real estate speculation in Brazil during the last few years, associated with large urban infrastructure projects. It’s hard to say which came first, the chicken or the egg. Was it the real estate speculation or the forced evictions? We know that one is a consequence of the other. The other factor is the extremely conservative posture of the judiciary, which associates itself with the real estate industry. It has sided with real estate speculators, slumlords and owners of vacant buildings in a huge number of court cases especially in São Paulo but all over Brazil as well in the past few years. These are empty buildings that don’t fulfill their social function but the judges continually grant favorable decisions to the real estate speculators and when they do, they annex a request for military police action authorizing them to break down doors and physically remove the residents and anyone else who happens to be in there at that moment. So, the military police violence is supported by the state apparatus and the judiciary giving it this, shall I say, legal appearance for the actions which, in my opinion, happen outside of the law, because they disobey the Statute of the City and they disobey the Brazilian Constitution. So military police violence during forced evictions is a common occurrence in São Paulo and you see that the actions are extremely violent and disrespectful to the building residents to the point where we had last September 16, when the police rounded up an enormous number of people, including children, women with babies and people in wheelchairs and took them to the station. This disrespected basic human rights. And these types of actions by the police are accompanied with a systematic persecution of human rights workers. Police choked and beat Dito earlier this year.

(Photo: National Forum on Urban Reform (FNRU), June 29, 2014 newsletter)

It’s not just lawyers who suffer from this violence, it’s everyone involved in the defense or support of these groups of people threatened with eviction. They are threatened and intimidated by the police and by the judiciary repeatedly and many times they are victims of violence and repression from the São Paulo state military police. This was a violent week here in São Paulo. On September 16 a police officer shot and killed an unarmed street vendor in Lapa on the West Side. In other words, while he was trying to prevent street vendors from working he got violent and killed one of them. So these are the facts that show how violent the São Paulo military police are.

Q: Do you think that this new wave of attacks against lawyers and human rights workers in São Paulo, along with the increase in mass forced evictions is serving political objectives because of the gubernatorial elections coming up? Do you think it represents a conflict between the PSDB [Brazilian Social Democratic Party] state government, which controls the police, and the PT [Workers’ Party] Mayor’s Office?

DB: I don’t believe that this is the result of a fight between the mayor and the governor because the mayor told the papers and news crews that the residents should leave peacefully.  He also said that the police should not act violently; in other words he’s sitting on the fence on this issue and he made no effort to defend the residents. To the contrary, his attitude generated a revolt among some of his supporters among the social movements that have been pressuring him to act more on this issue.

What I see is really happening is that there is an alliance between the State and the private sector here in São Paulo that is supported by the judiciary, who many times refuse to speak with human rights lawyers, because we have systematically requested audiences with the Court of Justice. We have filed motions and petitions – the Movimento de Trabalhadores Sem-Teto [Homeless Workers Movement, or MTST] even held a big protest in front of their building. The court president created a commission for crises management to act on land conflict issues, but it hasn’t done anything. The State Security Minister invited the social movements to some meetings at military police headquarters to talk about evictions, but this didn’t solve anything, it was just so they could show they were speaking to us. And the violence continues. On the 16th while I was working to defend the families during the entire violent police action, the 18th Civil Court of São Paulo decided to evict 8,000 people in Vila Maria, which is another community that we support. Based on the way they have been managing evictions, we are very worried about what is going to happen.  The people who were evicted on the 16th moved to another vacant building that was being occupied and when they got there they found out another judge had just issued an order for eviction there too. So, there you have it. There aren’t many options for these families at the moment except to fight, to resist and to confront the government.

I should mention that the situation in São Paulo is serious but there are other cases around the country, like the planned eviction of 12,000 people in Isidoro favela in Belo Horizonte, 20 planned forced mass evictions in Porto Alegre and violent evictions happening in many other cities across Brazil. And this shows that this is a national problem. It shows how serious the confrontations are between the squatters’ movements with the real estate industry which associates itself with the judiciary, the police and the state. I don’t want to leave any actor out of this process here because we have asked everyone to get involved and help mediate these conflicts, but it has been a dialogue of the deaf and mute, because nobody is taking a position and getting involved in the issue and the situation is getting worse and worse. So we don’t know where this is going and when this cycle of violence against poor families and against the homeless will stop.

Brian Mier is a geographer and freelance journalist who lives in Brazil and works as a policy analyst at the Centro de Direitos Econômicos e Sociais.

The government of Bolivia has built a cable car that connects the cities of La Paz and El Alto, giving commuters a much better alternative to the long and congested path they would otherwise have to take in buses and road transportation. Together, these neighboring cities are home to about 2 million people. The cable car, which cost $234 million, was built by the Austrian company Doppelmayr and will have considerable benefits for workers and the environment, and will reduce poverty, if we can judge from precedents with cable car projects in Colombia, Venezuela, and Brazil.

The World Bank notes that:

Urban poverty may be reduced through the contribution which transport makes to the efficiency of the urban economy and so to the overall growth of incomes.  Urban transport policies can also be focused more specifically on meeting the needs of the poor.  Inability to access jobs and services is an important element of the social exclusion which defines urban poverty.  Accessibility is important not only for its role in facilitating regular and stable income-earning employment, but also as a part of the social capital which maintains the social relations forming the safety net of poor people in many societies.

This is very important in a country where the national poverty rate is still 43.4 percent and extreme poverty is 21.6 percent (2012). Traffic congestion for commuters traveling between these two cities has been a real obstacle. As the World Bank asserts, “Inadequate and congested urban transport is damaging to the city economy and harms both rich and poor.”  The relationship between lacking transport and poverty has also been demonstrated and explored in academic research.

In addition, as the Bolivian Agency for Information (ABI) points out, Bolivia’s new cable car will conserve energy and time as well as reduce car accidents.  Some critics in Bolivia, like Rolando Carvajal, point out that the cable car will make only a small difference because it will serve (together with other new transportation initiatives) less than 20 percent of commuters.  Carvajal also claims that the government has been using the cable car as a palliative in an election year, even moving the inauguration of the red line closer to the elections.  But President Evo Morales has no serious challenge to his re-election, and did not need to build a $234 million cable car to assure that he would win. Polls have shown that Morales enjoys considerable support; according to a recent poll carried out by the company Equipos-Mori, Morales is leading with 54 percent and his opponent, Samuel Doria Medina, follows with only 14 percent.

The cable car is only a first step that hopefully will be followed by additional sustainable and modern modes of transportation. Clearly it is superior to the alternative of more roads, which imply displacement of people and deforestation. But let’s take a look at some of the benefits that the cable car is already bringing. It’s a long list: There is no wait time; it is faster; it allows easy access to people with disabilities; it is secure and comfortable; it costs 3 Bolivianos; it substitutes for a significant part of car traffic; it transports 180,000 passengers a day;  it is noise-free; it is environmentally friendly (reducing pollution); it reduces spending in fuel; the trip between the two cities is reduced to 15 minutes, from what would otherwise take between one hour and 90 minutes; it will connect 90 different neighborhoods; when the three lines operate, it will transport 18,000 people per hour.

The Bolivian government announced that it will introduce five additional cable car lanes with an estimated investment of $450 million. Once built, the cable car system will be the largest in the world. This past Monday, September 16, President Evo Morales inaugurated the yellow line, which has four stations and 169 cars. People from across the political spectrum and various socioeconomic backgrounds celebrated the event.

A similar example can be found in Medellín, Colombia. The construction of a cable car in 2004 brought many positive social and economic effects to the city. More jobs were created and tourists began to arrive in larger numbers. Medellín was a town with widespread violence, and still is, but violence has been reduced (the city’s mayor, Aníbal Gaviria, says the murder rate last year was 10 times lower than in the 1990s) and this decrease can in part be attributed to the new transportation system. In particular, connection to the rest of the country allows otherwise isolated towns to get increased state services and enjoy the same rights and responsibilities that other towns enjoy, which is essential to create safer societies. Medellín’s “cable car of the poor,” is also used as a tool to promote education and culture, with public libraries available to commuters at the stations.  Alejandro Echeverría, the former director of urban projects under Mayor Sergio Fajardo, has explained that the surrounding areas began to become “entrepreneurial development centers…where people can get a cheap loan if they want to start up a small café or shop.”

Cable cars have also been built in Rio de Janeiro, Brazil and Caracas, Venezuela. The benefits of this type of transportation infrastructure are relatively clear, which is why many countries have adopted it. However, it is very important to allocate the necessary resources to establish a systematic monitoring mechanism that can effectively measure the outcomes of this “urban acupuncture.”  Enrique Peñalosa, the former Mayor of Bogotá noted that “An advanced city is not one where even the poor use cars, but rather one where even the rich use public transport.” This is what is happening in Bolivia.

This post was corrected on September 25, 2014 to refer to the cable car system in Rio de Janeiro, instead of Curitiba, Brazil.

The government of Bolivia has built a cable car that connects the cities of La Paz and El Alto, giving commuters a much better alternative to the long and congested path they would otherwise have to take in buses and road transportation. Together, these neighboring cities are home to about 2 million people. The cable car, which cost $234 million, was built by the Austrian company Doppelmayr and will have considerable benefits for workers and the environment, and will reduce poverty, if we can judge from precedents with cable car projects in Colombia, Venezuela, and Brazil.

The World Bank notes that:

Urban poverty may be reduced through the contribution which transport makes to the efficiency of the urban economy and so to the overall growth of incomes.  Urban transport policies can also be focused more specifically on meeting the needs of the poor.  Inability to access jobs and services is an important element of the social exclusion which defines urban poverty.  Accessibility is important not only for its role in facilitating regular and stable income-earning employment, but also as a part of the social capital which maintains the social relations forming the safety net of poor people in many societies.

This is very important in a country where the national poverty rate is still 43.4 percent and extreme poverty is 21.6 percent (2012). Traffic congestion for commuters traveling between these two cities has been a real obstacle. As the World Bank asserts, “Inadequate and congested urban transport is damaging to the city economy and harms both rich and poor.”  The relationship between lacking transport and poverty has also been demonstrated and explored in academic research.

In addition, as the Bolivian Agency for Information (ABI) points out, Bolivia’s new cable car will conserve energy and time as well as reduce car accidents.  Some critics in Bolivia, like Rolando Carvajal, point out that the cable car will make only a small difference because it will serve (together with other new transportation initiatives) less than 20 percent of commuters.  Carvajal also claims that the government has been using the cable car as a palliative in an election year, even moving the inauguration of the red line closer to the elections.  But President Evo Morales has no serious challenge to his re-election, and did not need to build a $234 million cable car to assure that he would win. Polls have shown that Morales enjoys considerable support; according to a recent poll carried out by the company Equipos-Mori, Morales is leading with 54 percent and his opponent, Samuel Doria Medina, follows with only 14 percent.

The cable car is only a first step that hopefully will be followed by additional sustainable and modern modes of transportation. Clearly it is superior to the alternative of more roads, which imply displacement of people and deforestation. But let’s take a look at some of the benefits that the cable car is already bringing. It’s a long list: There is no wait time; it is faster; it allows easy access to people with disabilities; it is secure and comfortable; it costs 3 Bolivianos; it substitutes for a significant part of car traffic; it transports 180,000 passengers a day;  it is noise-free; it is environmentally friendly (reducing pollution); it reduces spending in fuel; the trip between the two cities is reduced to 15 minutes, from what would otherwise take between one hour and 90 minutes; it will connect 90 different neighborhoods; when the three lines operate, it will transport 18,000 people per hour.

The Bolivian government announced that it will introduce five additional cable car lanes with an estimated investment of $450 million. Once built, the cable car system will be the largest in the world. This past Monday, September 16, President Evo Morales inaugurated the yellow line, which has four stations and 169 cars. People from across the political spectrum and various socioeconomic backgrounds celebrated the event.

A similar example can be found in Medellín, Colombia. The construction of a cable car in 2004 brought many positive social and economic effects to the city. More jobs were created and tourists began to arrive in larger numbers. Medellín was a town with widespread violence, and still is, but violence has been reduced (the city’s mayor, Aníbal Gaviria, says the murder rate last year was 10 times lower than in the 1990s) and this decrease can in part be attributed to the new transportation system. In particular, connection to the rest of the country allows otherwise isolated towns to get increased state services and enjoy the same rights and responsibilities that other towns enjoy, which is essential to create safer societies. Medellín’s “cable car of the poor,” is also used as a tool to promote education and culture, with public libraries available to commuters at the stations.  Alejandro Echeverría, the former director of urban projects under Mayor Sergio Fajardo, has explained that the surrounding areas began to become “entrepreneurial development centers…where people can get a cheap loan if they want to start up a small café or shop.”

Cable cars have also been built in Rio de Janeiro, Brazil and Caracas, Venezuela. The benefits of this type of transportation infrastructure are relatively clear, which is why many countries have adopted it. However, it is very important to allocate the necessary resources to establish a systematic monitoring mechanism that can effectively measure the outcomes of this “urban acupuncture.”  Enrique Peñalosa, the former Mayor of Bogotá noted that “An advanced city is not one where even the poor use cars, but rather one where even the rich use public transport.” This is what is happening in Bolivia.

This post was corrected on September 25, 2014 to refer to the cable car system in Rio de Janeiro, instead of Curitiba, Brazil.

The New York Times ran an investigative article over the weekend examining foreign government funding of U.S. think tanks. The article found that

More than a dozen prominent Washington research groups have received tens of millions of dollars from foreign governments in recent years while pushing United States government officials to adopt policies that often reflect the donors’ priorities, an investigation by The New York Times has found.

The money is increasingly transforming the once-staid think-tank world into a muscular arm of foreign governments’ lobbying in Washington. And it has set off troubling questions about intellectual freedom: Some scholars say they have been pressured to reach conclusions friendly to the government financing the research.

The article was a good example of investigative journalism. However, it did miss one point that is perhaps most important for majority of U.S. citizens and residents, who are generally opposed to much of our government’s foreign policy, especially e.g., wars of choice. This is that the foreign governments funding the think tanks in question are all allies of the United States, and often share U.S. foreign policy goals. In that sense they may reinforce the U.S. government’s influence over media and ideas.  This paid influence in “the marketplace of ideas” help perpetuate the process by which the media that reaches most Americans does not recognize an independent civil society on foreign policy issues. Practically all of the experts that Americans see on major TV on foreign policy issues are either government officials, former government officials, or are getting money from the government – or from its foreign allies.  

Writing about the investigation, the Non-Profit Quarterly noted that sometimes think tanks are not overly transparent regarding their foreign funding:

There are several very disturbing elements to this story that should be a concern for all nonprofits.

First, because these think tanks are 501(c) organizations, the public disclosure of their funding relationships with foreign governments may be difficult to spot in formal documents such as Form 990s. For example, on the CSIS website, there is a list of foreign governments that have provided funding to the organization, but without funding amounts, dates, or the specific projects or initiatives they may have supported. There is nothing in the latest CSIS Form 990 posted on the GuideStar website identifying or describing any foreign government funding of the organization. One would think that funding from other sovereign nations might be something that should be a matter of public disclosure.

There are some clear examples of where foreign government funding represents a conflict of interest in regards to policy positions adopted by Washington think tanks. As the NYT noted, the Government of Japan has funded the Center for Strategic and International Studies (CSIS) as Japan works to promote the Trans-Pacific Partnership (TPP) “free trade” deal with the U.S. and a dozen other countries:

The center will not say how much money the [Japanese] government has given — or for what exactly — but an examination of its relationship with a state-funded entity called the Japan External Trade Organization provides a glimpse.

In the past four years, the organization has given the center at least $1.1 million for “research and consulting” to promote trade and direct investment between Japan and the United States. The center also houses visiting scholars from within the Japanese government, including Hiroshi Waguri, an executive in the Ministry of Defense, as well as Shinichi Isobe, an executive from the trade organization.

In an interview with Democracy Now, Brooke Williams, one of the authors of the NYT investigation, described how a CSIS expert had testified before Congress in favor of the TPP:

…there’s an organization called the Japan External Trade Organization. And we found, in filings with the Department of Justice, that they had been paying the Center for Strategic and International Studies, as well as other think tanks, for research and consulting. And then we also documented that the product of these seminars and groups that they held was to promote the Trans-Pacific Partnership. Now, a member, a scholar there, ended up testifying before Congress, promoting the Trans-Pacific Partnership. And what this comes down to is: Do lawmakers know? When someone from a research organization approaches them with a policy recommendation, do they know that a foreign government has funded that organization or, in some cases, even the policy paper itself?

But CSIS is not alone; the Peterson Institute for International Economics (PIIE) also receives support from the Japanese government, for example. PIIE has also strongly promoted trade deals like the TPP and NAFTA (see our critique of PIIE’s misleading claims regarding Latin American countries’ growth and NAFTA).

Among the think tanks with significant foreign funding examined in an accompanying NYT graphic is the Inter-American Dialogue, the most-cited think tank on Latin America in the U.S. media, and the key foreign policy establishment think tank on Latin America and the Caribbean in Washington. Among the governments that the NYT notes have donated to the Dialogue are those of Colombia, Guatemala, Mexico and Panama. According to the Dialogue’s own site, Canada is another. Each, it is worth noting, have “free trade” agreements with the United States. Yet, as The Intercept and Fairness and Accuracy in Reporting have noted, the press does not see any possible conflict of interest or need to notify its readers of funding sources.

Writing at the Washington Post, scholar and Brookings fellow Daniel Drezner noted that “think tanks have to get their funding from somewhere,” and funds from foreign governments are not the only ones that can have strings attached. Funding from “the U.S. government, foundations, large corporations, or really wealthy individuals” can also be problematic.

Drezner is right – and the U.S. government and corporate funding going to groups such as CSIS, PIIE and the Dialogue is perhaps even more troubling. With support from USAID, and a revolving door between its leadership and the U.S. government (and related groups such as the congressionally-funded National Endowment for Democracy), it should perhaps be little surprise that the Dialogue’s policy positions are so often closely aligned with the U.S. State Department’s, or with their many corporate donors.

PIIE’s list of supporters consists mostly of large corporations, some based in the U.S., some not. Among these are Elliott Management, a principle vulture fund seeking to get top dollar for their holdings of Argentine debt. They also include corporate heavyweights such as Caterpillar, Cargill and major automobile manufacturers – all of which have supported FTA’s with various Latin American countries.

The Boston Globe has previously reported on the hawkish CSIS’ significant funding from weapons manufacturers:

CSIS is building a new 15,000-square foot, $100 million headquarters in Washington with money raised by a high-powered collection of former senior government officials and titans of industry representing defense giants Lockheed Martin, Boeing, and Raytheon, along with pharmaceutical conglomerate Procter & Gamble, oil giant Chevron, and a top adviser to the Sultan of Oman, according to CSIS officers and documents.

Much of the response to the NYT article has been in defense of the think tanks’ funding, suggesting that these experts can remain above the influence of their funders’ various agendas. But support from these donors is inherently problematic — as are revolving doors between organizations and governments — if we are to have an independent civil society.

Disclosure: CEPR receives no funding from corporations or governments, with one exception of a grant from Washington State several years ago. More information about our funding is available here, and through Guidestar here.

The New York Times ran an investigative article over the weekend examining foreign government funding of U.S. think tanks. The article found that

More than a dozen prominent Washington research groups have received tens of millions of dollars from foreign governments in recent years while pushing United States government officials to adopt policies that often reflect the donors’ priorities, an investigation by The New York Times has found.

The money is increasingly transforming the once-staid think-tank world into a muscular arm of foreign governments’ lobbying in Washington. And it has set off troubling questions about intellectual freedom: Some scholars say they have been pressured to reach conclusions friendly to the government financing the research.

The article was a good example of investigative journalism. However, it did miss one point that is perhaps most important for majority of U.S. citizens and residents, who are generally opposed to much of our government’s foreign policy, especially e.g., wars of choice. This is that the foreign governments funding the think tanks in question are all allies of the United States, and often share U.S. foreign policy goals. In that sense they may reinforce the U.S. government’s influence over media and ideas.  This paid influence in “the marketplace of ideas” help perpetuate the process by which the media that reaches most Americans does not recognize an independent civil society on foreign policy issues. Practically all of the experts that Americans see on major TV on foreign policy issues are either government officials, former government officials, or are getting money from the government – or from its foreign allies.  

Writing about the investigation, the Non-Profit Quarterly noted that sometimes think tanks are not overly transparent regarding their foreign funding:

There are several very disturbing elements to this story that should be a concern for all nonprofits.

First, because these think tanks are 501(c) organizations, the public disclosure of their funding relationships with foreign governments may be difficult to spot in formal documents such as Form 990s. For example, on the CSIS website, there is a list of foreign governments that have provided funding to the organization, but without funding amounts, dates, or the specific projects or initiatives they may have supported. There is nothing in the latest CSIS Form 990 posted on the GuideStar website identifying or describing any foreign government funding of the organization. One would think that funding from other sovereign nations might be something that should be a matter of public disclosure.

There are some clear examples of where foreign government funding represents a conflict of interest in regards to policy positions adopted by Washington think tanks. As the NYT noted, the Government of Japan has funded the Center for Strategic and International Studies (CSIS) as Japan works to promote the Trans-Pacific Partnership (TPP) “free trade” deal with the U.S. and a dozen other countries:

The center will not say how much money the [Japanese] government has given — or for what exactly — but an examination of its relationship with a state-funded entity called the Japan External Trade Organization provides a glimpse.

In the past four years, the organization has given the center at least $1.1 million for “research and consulting” to promote trade and direct investment between Japan and the United States. The center also houses visiting scholars from within the Japanese government, including Hiroshi Waguri, an executive in the Ministry of Defense, as well as Shinichi Isobe, an executive from the trade organization.

In an interview with Democracy Now, Brooke Williams, one of the authors of the NYT investigation, described how a CSIS expert had testified before Congress in favor of the TPP:

…there’s an organization called the Japan External Trade Organization. And we found, in filings with the Department of Justice, that they had been paying the Center for Strategic and International Studies, as well as other think tanks, for research and consulting. And then we also documented that the product of these seminars and groups that they held was to promote the Trans-Pacific Partnership. Now, a member, a scholar there, ended up testifying before Congress, promoting the Trans-Pacific Partnership. And what this comes down to is: Do lawmakers know? When someone from a research organization approaches them with a policy recommendation, do they know that a foreign government has funded that organization or, in some cases, even the policy paper itself?

But CSIS is not alone; the Peterson Institute for International Economics (PIIE) also receives support from the Japanese government, for example. PIIE has also strongly promoted trade deals like the TPP and NAFTA (see our critique of PIIE’s misleading claims regarding Latin American countries’ growth and NAFTA).

Among the think tanks with significant foreign funding examined in an accompanying NYT graphic is the Inter-American Dialogue, the most-cited think tank on Latin America in the U.S. media, and the key foreign policy establishment think tank on Latin America and the Caribbean in Washington. Among the governments that the NYT notes have donated to the Dialogue are those of Colombia, Guatemala, Mexico and Panama. According to the Dialogue’s own site, Canada is another. Each, it is worth noting, have “free trade” agreements with the United States. Yet, as The Intercept and Fairness and Accuracy in Reporting have noted, the press does not see any possible conflict of interest or need to notify its readers of funding sources.

Writing at the Washington Post, scholar and Brookings fellow Daniel Drezner noted that “think tanks have to get their funding from somewhere,” and funds from foreign governments are not the only ones that can have strings attached. Funding from “the U.S. government, foundations, large corporations, or really wealthy individuals” can also be problematic.

Drezner is right – and the U.S. government and corporate funding going to groups such as CSIS, PIIE and the Dialogue is perhaps even more troubling. With support from USAID, and a revolving door between its leadership and the U.S. government (and related groups such as the congressionally-funded National Endowment for Democracy), it should perhaps be little surprise that the Dialogue’s policy positions are so often closely aligned with the U.S. State Department’s, or with their many corporate donors.

PIIE’s list of supporters consists mostly of large corporations, some based in the U.S., some not. Among these are Elliott Management, a principle vulture fund seeking to get top dollar for their holdings of Argentine debt. They also include corporate heavyweights such as Caterpillar, Cargill and major automobile manufacturers – all of which have supported FTA’s with various Latin American countries.

The Boston Globe has previously reported on the hawkish CSIS’ significant funding from weapons manufacturers:

CSIS is building a new 15,000-square foot, $100 million headquarters in Washington with money raised by a high-powered collection of former senior government officials and titans of industry representing defense giants Lockheed Martin, Boeing, and Raytheon, along with pharmaceutical conglomerate Procter & Gamble, oil giant Chevron, and a top adviser to the Sultan of Oman, according to CSIS officers and documents.

Much of the response to the NYT article has been in defense of the think tanks’ funding, suggesting that these experts can remain above the influence of their funders’ various agendas. But support from these donors is inherently problematic — as are revolving doors between organizations and governments — if we are to have an independent civil society.

Disclosure: CEPR receives no funding from corporations or governments, with one exception of a grant from Washington State several years ago. More information about our funding is available here, and through Guidestar here.

The American Task Force Argentina (ATFA) is Elliott Management’s main public relations and lobbying arm supporting its long-running legal fight against Argentina in U.S. courts to collect on debt purchased in the aftermath of the country’s 2001 default. Although it markets itself as a coalition, ATFA has in the past had to remove several groups from its list of supporters after the Wall Street Journal found that they had never heard of the organization, much less supported it. Over the years, ATFA has gone to creative lengths both to lobby the hedge funds’ case and to generally defame Argentina, by alleging nefarious ties with Iran, for example.

One of ATFA’s main goals has been to divert attention away from the fact that the fight over Argentina’s debt fundamentally hinges on the heavy-handed tactics of large hedge fund owners, like Elliott’s Paul Singer, to collect a lot of money on distressed sovereign debt. These tactics are not pretty, and these hedge funds rightly earned the name “vulture funds” long before the Argentina case, as CEPR Co-Director Dean Baker has pointed out. So one of ATFA’s strategies has been to highlight how Argentina’s actions have supposedly hurt the “little guys” and how the vulture funds’ case somehow represents a fight for these underdogs.

ATFA has not been great at coalition building, however. To date, perhaps their most successful lobbying push was their attempt to portray Argentina as cheating retired educators. Before 2010’s bond restructuring, one of the holdout creditors was TIAA-CREF, which had a relatively small stake in the defaulted bonds. Jumping on this fact, ATFA alleged that Argentina seriously harmed the pensions of retired academics, hosting an event [PDF] on the default’s effect on teachers, coordinating [PDF] letters [PDF] to members of Congress, and launching an ad campaign  [PDF]. ATFA’s ad lists the members of the “American Task Force Argentina Educator Coalition” who support the vulture fund’s case: the Alabama, Georgia, and Colorado conferences of the American Association of University Professors (AAUP), the Nebraska Community College Association, and lastly, the Nebraska Retired Teacher Association. That’s it. There was no participation from the national AAUP or TIAA-CREF in this campaign; in the case of the Georgia conference of the AAUP, it’s unclear if the collaboration with ATFA involved the participation of anyone but the group’s then-executive secretary. When Congressman Eric Massa later pushed ATFA-backed legislation to punish Argentina over the debt issue, ATFA’s efforts may have helped the bill to garner some extra co-sponsors. But Massa’s ATFA legislation died, just like all of its later versions.

In 2010, TIAA-CREF exchanged their defaulted bonds for restructured bonds, and ATFA has since mostly dropped the campaign. ATFA did a poor job of building the impression that college educators share interests with vulture funds or that their case had any real support among the people they claimed were affected. Now that the vultures have won court decisions that have actually blocked Argentina’s payments to restructured bondholders, ATFA will have an even harder time maintaining the illusion that the vulture funds actually care about their fellow creditors’ rights or about the livelihoods of people affected by this case. 

This brings us to another of Elliott’s tactics to create the “underdog” image—the 13 Argentine bondholders that are co-plaintiffs on the NML case against Argentina. Often referred to as the “Grupo Varela,” the presence of these plaintiffs has been used throughout to challenge the characterization that the case is led by vulture funds who bought up distressed debt after Argentina’s 2001 default. In their own brief [PDF] to the Supreme Court, the “Varela respondents” urge the Supreme Court to oppose Argentina’s and the restructured bondholders’ requests to review the case, and they characterize Argentina as a rogue state. They bristle at the suggestion that holdouts are vultures, pointing out that they themselves are holders of the bonds from before 2001, in some cases dating back to 1998.

But despite the respondents’ claims, the concern that the case is run by the big hedge funds who bought the debt after the default is valid, because it’s true. In their brief, the Varela respondents describe themselves as 13 “middle class investors,” with bond holdings originally ranging between 25,000 USD and 90,000 USD each. If this is accurate, then you don’t need to doubt the conviction of these plaintiffs to understand why people would question their presence, as it means that more than 99.9 percent of the value of the bonds held by plaintiffs in this case isn’t theirs. The overwhelming majority of the defaulted bonds belong to the other plaintiffs—Elliott’s NML owned by Paul Singer, Bracebridge’s Olifant, and Aurelius, ACP Masters and Blue Angel, entities owned by Mark Brodsky, a former employee of Elliott. These hedge funds, and others that are not part of the case like FH International Asset Management and funds controlled by Kenneth Dart, bought the vast majority of the bonds they own after the 2001 default at drastically-reduced prices and are litigating until they can collect the full value plus exorbitant interest. It’s not really a point of controversy.

The American Task Force Argentina (ATFA) is Elliott Management’s main public relations and lobbying arm supporting its long-running legal fight against Argentina in U.S. courts to collect on debt purchased in the aftermath of the country’s 2001 default. Although it markets itself as a coalition, ATFA has in the past had to remove several groups from its list of supporters after the Wall Street Journal found that they had never heard of the organization, much less supported it. Over the years, ATFA has gone to creative lengths both to lobby the hedge funds’ case and to generally defame Argentina, by alleging nefarious ties with Iran, for example.

One of ATFA’s main goals has been to divert attention away from the fact that the fight over Argentina’s debt fundamentally hinges on the heavy-handed tactics of large hedge fund owners, like Elliott’s Paul Singer, to collect a lot of money on distressed sovereign debt. These tactics are not pretty, and these hedge funds rightly earned the name “vulture funds” long before the Argentina case, as CEPR Co-Director Dean Baker has pointed out. So one of ATFA’s strategies has been to highlight how Argentina’s actions have supposedly hurt the “little guys” and how the vulture funds’ case somehow represents a fight for these underdogs.

ATFA has not been great at coalition building, however. To date, perhaps their most successful lobbying push was their attempt to portray Argentina as cheating retired educators. Before 2010’s bond restructuring, one of the holdout creditors was TIAA-CREF, which had a relatively small stake in the defaulted bonds. Jumping on this fact, ATFA alleged that Argentina seriously harmed the pensions of retired academics, hosting an event [PDF] on the default’s effect on teachers, coordinating [PDF] letters [PDF] to members of Congress, and launching an ad campaign  [PDF]. ATFA’s ad lists the members of the “American Task Force Argentina Educator Coalition” who support the vulture fund’s case: the Alabama, Georgia, and Colorado conferences of the American Association of University Professors (AAUP), the Nebraska Community College Association, and lastly, the Nebraska Retired Teacher Association. That’s it. There was no participation from the national AAUP or TIAA-CREF in this campaign; in the case of the Georgia conference of the AAUP, it’s unclear if the collaboration with ATFA involved the participation of anyone but the group’s then-executive secretary. When Congressman Eric Massa later pushed ATFA-backed legislation to punish Argentina over the debt issue, ATFA’s efforts may have helped the bill to garner some extra co-sponsors. But Massa’s ATFA legislation died, just like all of its later versions.

In 2010, TIAA-CREF exchanged their defaulted bonds for restructured bonds, and ATFA has since mostly dropped the campaign. ATFA did a poor job of building the impression that college educators share interests with vulture funds or that their case had any real support among the people they claimed were affected. Now that the vultures have won court decisions that have actually blocked Argentina’s payments to restructured bondholders, ATFA will have an even harder time maintaining the illusion that the vulture funds actually care about their fellow creditors’ rights or about the livelihoods of people affected by this case. 

This brings us to another of Elliott’s tactics to create the “underdog” image—the 13 Argentine bondholders that are co-plaintiffs on the NML case against Argentina. Often referred to as the “Grupo Varela,” the presence of these plaintiffs has been used throughout to challenge the characterization that the case is led by vulture funds who bought up distressed debt after Argentina’s 2001 default. In their own brief [PDF] to the Supreme Court, the “Varela respondents” urge the Supreme Court to oppose Argentina’s and the restructured bondholders’ requests to review the case, and they characterize Argentina as a rogue state. They bristle at the suggestion that holdouts are vultures, pointing out that they themselves are holders of the bonds from before 2001, in some cases dating back to 1998.

But despite the respondents’ claims, the concern that the case is run by the big hedge funds who bought the debt after the default is valid, because it’s true. In their brief, the Varela respondents describe themselves as 13 “middle class investors,” with bond holdings originally ranging between 25,000 USD and 90,000 USD each. If this is accurate, then you don’t need to doubt the conviction of these plaintiffs to understand why people would question their presence, as it means that more than 99.9 percent of the value of the bonds held by plaintiffs in this case isn’t theirs. The overwhelming majority of the defaulted bonds belong to the other plaintiffs—Elliott’s NML owned by Paul Singer, Bracebridge’s Olifant, and Aurelius, ACP Masters and Blue Angel, entities owned by Mark Brodsky, a former employee of Elliott. These hedge funds, and others that are not part of the case like FH International Asset Management and funds controlled by Kenneth Dart, bought the vast majority of the bonds they own after the 2001 default at drastically-reduced prices and are litigating until they can collect the full value plus exorbitant interest. It’s not really a point of controversy.

The International Swaps and Derivatives Association (ISDA), the body that governs credit derivatives, recently declared a “failure to pay” credit event that triggers payment of credit default swaps (CDS) on Argentina’s debt. Bloomberg and others have raised the question of whether Paul Singer’s Elliott Associates or other hedge funds involved in the case against Argentina hold any of these CDS—and may be forcing a default and profiting from their CDS positions.

Elliott’s lawyers have denied that the firm owns CDS on Argentina’s debt, and a December, 2012 Reuters report cites an anonymous source saying the firm did have some, but no longer does. When asked by Judge Rosemary Pooler in a February 27th hearing in the Second Circuit Court of Appeals if Elliott’s NML owned any of the CDS, Elliott’s lawyer, Ted Olson, gave an evasive answer:

“I don’t know that that’s true,” Olson said. “I’m informed it isn’t true. But if it was true, it would be utterly irrelevant.”

Bloomberg pointed out that it was unclear if the denial applied to just NML Capital the Elliott subsidiary represented in the case, or to all of Paul Singer’s firms.

ISDA Decision

On June 20th, the law firm Schulte Roth & Zaber (SRZ) sent a memo on behalf of an anonymous holder of Argentine CDS to the ISDA Credit Derivatives Determination Committee (DC) asking them to decide whether Argentina had defaulted on its debt, and also arguing that Argentina’s public statements were tantamount to a repudiation of its restructured bond payments, urging them to rule that Argentina had triggered a “repudiation/moratorium” credit event.

SRZ wrote that their client’s CDS were set to expire on the 20th of June, and that if the ISDA DC ruled that “repudiation/moratorium” had occurred, this would extend the life of the CDS.

The ISDA DC did rule that Argentina had defaulted through a “failure to pay” credit event, which is different than a “repudiation/moratorium” credit event in that it apparently doesn’t extend the life of expired CDS, though it does trigger payment of non-expired CDS. ISDA DC later confirmed that Argentina’s public statements did not constitute a “repudiation” credit event. The ‘no’ vote was unanimous among the DC’s 15 members, including Elliott Management, which is a non-dealer voting member.

Does Elliott Own Argentine CDS? Circumstantial Evidence

First, we know that Elliott has a lot of CDS, including sovereign CDS. To be an ISDA non-dealer voting member of the Determining Committee, a firm must have over $1 billion in exposure to CDS. An ISDA spokesperson indicated that Elliott has no obligation to recuse itself because of its role in Argentina’s debt case, nor do any of the dealer institutions who sell the CDS of Argentine bonds, or the non-dealer buyers. So there is nothing stopping Elliott from purchasing these CDS, and it would make a lot of sense if they owned a lot of them. Elliott Management, by virtue of being on the committee, owns a significant amount of CDS, but they also have profited off of sovereign CDS in the past— as in the case of Ecuador, which in 2008 became ISDA’s first sovereign credit event. Elliott also held CDS [PDF] for Lehman Brothers.

SRZ, the firm that made the request on behalf of an anonymous holder, has Elliott as a client. This is a large firm that specializes in both derivatives and advising hedge funds, and especially in investor activism.  Elliott Associates is one of SRZ’s most important clients. On the other hand, SRZ represents a lot of hedge funds. Whoever the “anonymous holder” of the CDS was whom SRZ wrote on behalf of, may have been left holding the bag if their CDS expired and the DC ruled against extension. 

Owning CDS on Argentine bonds is the only way to call for a technical default. Under ISDA DC rules, an entity must be a holder of affected CDS in order to ask the Determining Committee to consider a credit event. This means that Elliott has a huge incentive to either own the CDS, or to coordinate with an ally who does.  Singer has two reasons to hold the CDS: First, to make money, and it would be an easy way to make money by collecting on a credit event that he has the power to influence; Second: to call for the default in order to increase pressure on Argentina. On the other hand, anybody who owns affected CDS would want to collect, not necessarily with the coordination of the interested hedge funds.

The “repudiation/moratorium” arguments in SRZ’s memo on behalf of an anonymous client closely mirror the arguments that the NML legal team and Elliott-run American Task Force Argentina (ATFA) have been making for a long time, including through an official campaign trying to argue that Argentina is repudiating its debt by intentionally ignoring court orders. It’s not inconceivable that SRZ’s memo was sent with the coordination of Elliott, particularly given that Elliott is a major client of SRZ, and given that SRZ markets itself as the “go-to” law firm for “investor activism” (though “hedge fund hardball” may be a more accurate term). A key point is that SRZ probably knew that their position had little chance of success. Argentina’s CDS have special rules with the ISDA, allowing the CDS to only apply to restructured bonds. To make their case, however, SRZ cited Argentine government statements referring to litigation with hedge funds which hold a completely different set of bonds, over which the ISDA Determining Committee has no jurisdiction. It is willfully misleading to argue, as SRZ did, that Argentina has repudiated or declared a moratorium on payments on its restructured bonds, particularly given that Argentina already made a coupon payment on these bonds. Argentina’s “default” was solely due to unprecedented injunctions on the intermediary banks that stopped the processing of this payment, and SRZ is arguing that Argentina’s public objection to these injunctions is somehow a repudiation of its restructured bond payment obligations.

Lastly, another major holder of the defaulted bonds with ties to the case, FH Asset Management International (which is still a member of the American Task Force Argentina) has bought CDS on Argentine bonds in the past. FH Asset Management and Montreux Partners, a party to the litigation against Argentina, are both run by Eric Hermann. Montreux filed these recent [PDF] amicus briefs in support of NML [PDF]. According to their newsletter [PDF], as of 2011 they were still litigating against Argentina along with Elliott. An investor newsletter [PDF] from May 31, 2005, shows that they purchased an index of sovereign emerging market bonds, the CDX EM; CDS on Argentine bonds were added to this index later that year [PDF]. Besides the question of whether FH still holds these CDS, this is an indication of something obvious—major dealers in distressed debt regularly deal in sovereign CDS, including the parties in the Argentina debt case—FH, Elliott, Bracebridge, and Aurelius. It would actually be surprising if these entities didn’t own CDS on Argentine debt, at least at some point over the last decade plus of litigation. Still, if these companies do own the CDS, it’s difficult to see how it would be “utterly irrelevant,” as Elliott’s legal team claims. Furthermore, Argentine Republic CDS prices have seen significant movement at different points, especially when compared to most other sovereign CDS—if these firms did own the CDS but no longer do, they may have also made considerable amounts of money buying and selling them before the credit event took place. For instance, if the anonymous source in the December, 2012 Reuters report is correct in claiming that Elliott had sold their Argentine CDS, they could have made a lot of money if they unloaded them during the dramatic CDS spread increase that happened just weeks prior (and that they played the central role in instigating), directly before and after the Second Circuit Court of New York ruled against Argentina in favor of the hedge funds.

Argentina’s government recently submitted a formal request to the SEC to find out if any of the holdout hedge funds that are parties to the case against Argentina hold CDS on Argentine debt. The CDS business rightly garners a lot of mistrust from people unfamiliar with the world of finance, who wonder how it’s possible to buy insurance for someone else’s bonds. But even if these instruments served an important purpose, one thing is for certain: the CDS market does not have adequate regulation and disclosure—it’s pretty difficult to figure out what’s going on in this surprisingly self-regulated area of international finance. Given the prevalence of speculation in these markets and the potential damage this can cause, this is an extremely important question.

The International Swaps and Derivatives Association (ISDA), the body that governs credit derivatives, recently declared a “failure to pay” credit event that triggers payment of credit default swaps (CDS) on Argentina’s debt. Bloomberg and others have raised the question of whether Paul Singer’s Elliott Associates or other hedge funds involved in the case against Argentina hold any of these CDS—and may be forcing a default and profiting from their CDS positions.

Elliott’s lawyers have denied that the firm owns CDS on Argentina’s debt, and a December, 2012 Reuters report cites an anonymous source saying the firm did have some, but no longer does. When asked by Judge Rosemary Pooler in a February 27th hearing in the Second Circuit Court of Appeals if Elliott’s NML owned any of the CDS, Elliott’s lawyer, Ted Olson, gave an evasive answer:

“I don’t know that that’s true,” Olson said. “I’m informed it isn’t true. But if it was true, it would be utterly irrelevant.”

Bloomberg pointed out that it was unclear if the denial applied to just NML Capital the Elliott subsidiary represented in the case, or to all of Paul Singer’s firms.

ISDA Decision

On June 20th, the law firm Schulte Roth & Zaber (SRZ) sent a memo on behalf of an anonymous holder of Argentine CDS to the ISDA Credit Derivatives Determination Committee (DC) asking them to decide whether Argentina had defaulted on its debt, and also arguing that Argentina’s public statements were tantamount to a repudiation of its restructured bond payments, urging them to rule that Argentina had triggered a “repudiation/moratorium” credit event.

SRZ wrote that their client’s CDS were set to expire on the 20th of June, and that if the ISDA DC ruled that “repudiation/moratorium” had occurred, this would extend the life of the CDS.

The ISDA DC did rule that Argentina had defaulted through a “failure to pay” credit event, which is different than a “repudiation/moratorium” credit event in that it apparently doesn’t extend the life of expired CDS, though it does trigger payment of non-expired CDS. ISDA DC later confirmed that Argentina’s public statements did not constitute a “repudiation” credit event. The ‘no’ vote was unanimous among the DC’s 15 members, including Elliott Management, which is a non-dealer voting member.

Does Elliott Own Argentine CDS? Circumstantial Evidence

First, we know that Elliott has a lot of CDS, including sovereign CDS. To be an ISDA non-dealer voting member of the Determining Committee, a firm must have over $1 billion in exposure to CDS. An ISDA spokesperson indicated that Elliott has no obligation to recuse itself because of its role in Argentina’s debt case, nor do any of the dealer institutions who sell the CDS of Argentine bonds, or the non-dealer buyers. So there is nothing stopping Elliott from purchasing these CDS, and it would make a lot of sense if they owned a lot of them. Elliott Management, by virtue of being on the committee, owns a significant amount of CDS, but they also have profited off of sovereign CDS in the past— as in the case of Ecuador, which in 2008 became ISDA’s first sovereign credit event. Elliott also held CDS [PDF] for Lehman Brothers.

SRZ, the firm that made the request on behalf of an anonymous holder, has Elliott as a client. This is a large firm that specializes in both derivatives and advising hedge funds, and especially in investor activism.  Elliott Associates is one of SRZ’s most important clients. On the other hand, SRZ represents a lot of hedge funds. Whoever the “anonymous holder” of the CDS was whom SRZ wrote on behalf of, may have been left holding the bag if their CDS expired and the DC ruled against extension. 

Owning CDS on Argentine bonds is the only way to call for a technical default. Under ISDA DC rules, an entity must be a holder of affected CDS in order to ask the Determining Committee to consider a credit event. This means that Elliott has a huge incentive to either own the CDS, or to coordinate with an ally who does.  Singer has two reasons to hold the CDS: First, to make money, and it would be an easy way to make money by collecting on a credit event that he has the power to influence; Second: to call for the default in order to increase pressure on Argentina. On the other hand, anybody who owns affected CDS would want to collect, not necessarily with the coordination of the interested hedge funds.

The “repudiation/moratorium” arguments in SRZ’s memo on behalf of an anonymous client closely mirror the arguments that the NML legal team and Elliott-run American Task Force Argentina (ATFA) have been making for a long time, including through an official campaign trying to argue that Argentina is repudiating its debt by intentionally ignoring court orders. It’s not inconceivable that SRZ’s memo was sent with the coordination of Elliott, particularly given that Elliott is a major client of SRZ, and given that SRZ markets itself as the “go-to” law firm for “investor activism” (though “hedge fund hardball” may be a more accurate term). A key point is that SRZ probably knew that their position had little chance of success. Argentina’s CDS have special rules with the ISDA, allowing the CDS to only apply to restructured bonds. To make their case, however, SRZ cited Argentine government statements referring to litigation with hedge funds which hold a completely different set of bonds, over which the ISDA Determining Committee has no jurisdiction. It is willfully misleading to argue, as SRZ did, that Argentina has repudiated or declared a moratorium on payments on its restructured bonds, particularly given that Argentina already made a coupon payment on these bonds. Argentina’s “default” was solely due to unprecedented injunctions on the intermediary banks that stopped the processing of this payment, and SRZ is arguing that Argentina’s public objection to these injunctions is somehow a repudiation of its restructured bond payment obligations.

Lastly, another major holder of the defaulted bonds with ties to the case, FH Asset Management International (which is still a member of the American Task Force Argentina) has bought CDS on Argentine bonds in the past. FH Asset Management and Montreux Partners, a party to the litigation against Argentina, are both run by Eric Hermann. Montreux filed these recent [PDF] amicus briefs in support of NML [PDF]. According to their newsletter [PDF], as of 2011 they were still litigating against Argentina along with Elliott. An investor newsletter [PDF] from May 31, 2005, shows that they purchased an index of sovereign emerging market bonds, the CDX EM; CDS on Argentine bonds were added to this index later that year [PDF]. Besides the question of whether FH still holds these CDS, this is an indication of something obvious—major dealers in distressed debt regularly deal in sovereign CDS, including the parties in the Argentina debt case—FH, Elliott, Bracebridge, and Aurelius. It would actually be surprising if these entities didn’t own CDS on Argentine debt, at least at some point over the last decade plus of litigation. Still, if these companies do own the CDS, it’s difficult to see how it would be “utterly irrelevant,” as Elliott’s legal team claims. Furthermore, Argentine Republic CDS prices have seen significant movement at different points, especially when compared to most other sovereign CDS—if these firms did own the CDS but no longer do, they may have also made considerable amounts of money buying and selling them before the credit event took place. For instance, if the anonymous source in the December, 2012 Reuters report is correct in claiming that Elliott had sold their Argentine CDS, they could have made a lot of money if they unloaded them during the dramatic CDS spread increase that happened just weeks prior (and that they played the central role in instigating), directly before and after the Second Circuit Court of New York ruled against Argentina in favor of the hedge funds.

Argentina’s government recently submitted a formal request to the SEC to find out if any of the holdout hedge funds that are parties to the case against Argentina hold CDS on Argentine debt. The CDS business rightly garners a lot of mistrust from people unfamiliar with the world of finance, who wonder how it’s possible to buy insurance for someone else’s bonds. But even if these instruments served an important purpose, one thing is for certain: the CDS market does not have adequate regulation and disclosure—it’s pretty difficult to figure out what’s going on in this surprisingly self-regulated area of international finance. Given the prevalence of speculation in these markets and the potential damage this can cause, this is an extremely important question.

After penning an op-ed which blames the U.S. backed cold war and drug war for leading to the recent surge in migration from Central America, the Guatemalan President has hired a cold warrior to lobby the U.S. for increasing drug war cooperation. Confused yet? Okay, let’s start over.

Last week, Guatemalan President Otto Perez Molina wrote an op-ed in the Guardian arguing that the U.S. shared responsibility for a legacy that has spurred the current migration crisis involving the surge of unaccompanied Central American children arriving at U.S. borders:

…the so-called cold war had one of its hot spots in Guatemala…Communist and anti-communist ideologies created in Guatemala one of the bloodiest conflicts in Latin America, with weapons and money mostly from countries outside the region. More damaging was that for decades governments diverted resources from social and economic programs to security and defense.

Nonetheless, after the curse of the cold war, we faced another war: the war on drugs. Again based on ideological motivations, this new war diverted scarce funding from policies to foster education, health and employment to programs to block the flow of drugs from producer countries in South America to the consumer countries in the north. The failure of the war on drugs is widely recognized today, both for its limited capacity to stop drug flow, and its terrible consequences, expanding violence, corrupting institutions and weakening the rule of law.

While Perez Molina makes some fine points in his op-ed, he also completely leaves out his own role in the exact policies he’s criticizing. During the Cold War, Molina was a Guatemalan military officer involved in a “scorched earth” campaign that resulted in hundreds of thousands of deaths and he has even been personally linked to serious human rights violations from this time period. Pot, meet kettle.

The situation took a turn for the ironic this week when O’Dwyers reported that Guatemala had hired notorious and far-right cold-warrior Otto Reich to lobby on the government’s behalf in Washington. Reich, who’s also been pretty much at the center of every lousy U.S. policy in the region since the Cold War, will be paid over $100,000 to, among other things:

Design a strategy to move forward on the change of narrative from Guatemala to Washington, D.C., allowing representatives in the North American political parties that are willing to abandon the reference to Guatemala of the 1970’s and 1980’s, as well as the last century, and are eager to talk about the present and future of Guatemala of the 21st century.

Yeah, let’s forget that whole time period where the current president of Guatemala was out there (allegedly) committing human rights abuses. It’s all about the future, where Guatemala cares more about economic and social programs, right?

But then there’s this: according to the lobbying disclosure document, Reich will help, “[d]evelop a strategy that can advance military cooperation between the United States of America and Guatemala…” In other words, Reich will help bolster support for increasing military support for those failed drug war policies that, according to Molina, “diverted scarce funding from policies to foster education, health and employment…”

The lobbying contract between Guatemala and Reich was signed in mid-July, so when Molina wrote that Op-ed, Reich was already his lobbyist. Here’s the disclosure document so you can go see what other lovely things Reich will be doing on behalf of Guatemala.

After penning an op-ed which blames the U.S. backed cold war and drug war for leading to the recent surge in migration from Central America, the Guatemalan President has hired a cold warrior to lobby the U.S. for increasing drug war cooperation. Confused yet? Okay, let’s start over.

Last week, Guatemalan President Otto Perez Molina wrote an op-ed in the Guardian arguing that the U.S. shared responsibility for a legacy that has spurred the current migration crisis involving the surge of unaccompanied Central American children arriving at U.S. borders:

…the so-called cold war had one of its hot spots in Guatemala…Communist and anti-communist ideologies created in Guatemala one of the bloodiest conflicts in Latin America, with weapons and money mostly from countries outside the region. More damaging was that for decades governments diverted resources from social and economic programs to security and defense.

Nonetheless, after the curse of the cold war, we faced another war: the war on drugs. Again based on ideological motivations, this new war diverted scarce funding from policies to foster education, health and employment to programs to block the flow of drugs from producer countries in South America to the consumer countries in the north. The failure of the war on drugs is widely recognized today, both for its limited capacity to stop drug flow, and its terrible consequences, expanding violence, corrupting institutions and weakening the rule of law.

While Perez Molina makes some fine points in his op-ed, he also completely leaves out his own role in the exact policies he’s criticizing. During the Cold War, Molina was a Guatemalan military officer involved in a “scorched earth” campaign that resulted in hundreds of thousands of deaths and he has even been personally linked to serious human rights violations from this time period. Pot, meet kettle.

The situation took a turn for the ironic this week when O’Dwyers reported that Guatemala had hired notorious and far-right cold-warrior Otto Reich to lobby on the government’s behalf in Washington. Reich, who’s also been pretty much at the center of every lousy U.S. policy in the region since the Cold War, will be paid over $100,000 to, among other things:

Design a strategy to move forward on the change of narrative from Guatemala to Washington, D.C., allowing representatives in the North American political parties that are willing to abandon the reference to Guatemala of the 1970’s and 1980’s, as well as the last century, and are eager to talk about the present and future of Guatemala of the 21st century.

Yeah, let’s forget that whole time period where the current president of Guatemala was out there (allegedly) committing human rights abuses. It’s all about the future, where Guatemala cares more about economic and social programs, right?

But then there’s this: according to the lobbying disclosure document, Reich will help, “[d]evelop a strategy that can advance military cooperation between the United States of America and Guatemala…” In other words, Reich will help bolster support for increasing military support for those failed drug war policies that, according to Molina, “diverted scarce funding from policies to foster education, health and employment…”

The lobbying contract between Guatemala and Reich was signed in mid-July, so when Molina wrote that Op-ed, Reich was already his lobbyist. Here’s the disclosure document so you can go see what other lovely things Reich will be doing on behalf of Guatemala.

Last week the Wall Street Journal had a front page article on the net worth of Argentina’s first family since 2003, the year Néstor Kirchner was elected president. Based on financial disclosures with Argentina’s Anti-Corruption Office, the Wall Street Journal reported that, “the couple’s net worth rose from $2.5 million to $17.7 million” between 2003 and 2010. Implying that such returns must involve some sort of corruption, the Journal writes, a “lot of people in Argentina want to know where that money came from.”

But there is a serious problem with the way the data are presented here. The Journal is reporting the Kirchners’ net worth in dollars, without adjusting for local inflation. This makes the increase look much bigger than it is, since Argentina had cumulative inflation of nearly 200 percent during these years, according to private estimates.

WSJ Kirchner wealth

If the Wall Street Journal had taken inflation into account then the Kirchner’s net worth would have looked quite different. From $2.5 million in 2003, the Kirchners’ real net worth increased to around $6.1 million in 2010.

Simply adjusting for inflation takes away more than three-quarters of the Kirchners’ gain. Should the Journal have known this and adjusted for inflation? The question answers itself. We won’t speculate about anyone’s motives.

But inflation is not the only thing to take into account. The Argentine economy also grew very fast during this period, and was coming out of a depression in which asset prices were severely depressed. So when readers see this kind of an increase in nominal dollars, they are also not thinking about how much nominal asset prices in general increased in the Argentine economy during this time. A fair comparison for the increase in the Kirchners’ wealth would be to ask, how did they do as compared to someone who just put their money in the Argentine stock market in 2003 and left it there during these years?

In nominal pesos, using the Wall Street Journal analysis, the Kirchners’ net worth increased from 7.4 million pesos to nearly 70 million pesos between 2003 and 2010, an average annual increase of 37.7 percent in nominal (not inflation-adjusted) terms. The Argentine stock market, known as the Merval, increased at an average annual rate of 31.1 percent – in nominal terms — between 2003 and 2010. So, the Kirchners beat the market, but not by all that much. Where is the news here?

The importance of this kind of misrepresentation should not be underestimated. Many people will see the numbers at the top of the page, and in the graph accompanying the article, and assume that the Kirchners must have done something illegal in order to accumulate these gains. They will not have the inclination or time to do the research necessary to discover what is wrong with these numbers. The Journal, considered a credible news source, will be used by the opposition media – which is most of the media in Argentina – to accuse the president of corruption. Many people are cynical, and they will believe the accusations.  

Last week the Wall Street Journal had a front page article on the net worth of Argentina’s first family since 2003, the year Néstor Kirchner was elected president. Based on financial disclosures with Argentina’s Anti-Corruption Office, the Wall Street Journal reported that, “the couple’s net worth rose from $2.5 million to $17.7 million” between 2003 and 2010. Implying that such returns must involve some sort of corruption, the Journal writes, a “lot of people in Argentina want to know where that money came from.”

But there is a serious problem with the way the data are presented here. The Journal is reporting the Kirchners’ net worth in dollars, without adjusting for local inflation. This makes the increase look much bigger than it is, since Argentina had cumulative inflation of nearly 200 percent during these years, according to private estimates.

WSJ Kirchner wealth

If the Wall Street Journal had taken inflation into account then the Kirchner’s net worth would have looked quite different. From $2.5 million in 2003, the Kirchners’ real net worth increased to around $6.1 million in 2010.

Simply adjusting for inflation takes away more than three-quarters of the Kirchners’ gain. Should the Journal have known this and adjusted for inflation? The question answers itself. We won’t speculate about anyone’s motives.

But inflation is not the only thing to take into account. The Argentine economy also grew very fast during this period, and was coming out of a depression in which asset prices were severely depressed. So when readers see this kind of an increase in nominal dollars, they are also not thinking about how much nominal asset prices in general increased in the Argentine economy during this time. A fair comparison for the increase in the Kirchners’ wealth would be to ask, how did they do as compared to someone who just put their money in the Argentine stock market in 2003 and left it there during these years?

In nominal pesos, using the Wall Street Journal analysis, the Kirchners’ net worth increased from 7.4 million pesos to nearly 70 million pesos between 2003 and 2010, an average annual increase of 37.7 percent in nominal (not inflation-adjusted) terms. The Argentine stock market, known as the Merval, increased at an average annual rate of 31.1 percent – in nominal terms — between 2003 and 2010. So, the Kirchners beat the market, but not by all that much. Where is the news here?

The importance of this kind of misrepresentation should not be underestimated. Many people will see the numbers at the top of the page, and in the graph accompanying the article, and assume that the Kirchners must have done something illegal in order to accumulate these gains. They will not have the inclination or time to do the research necessary to discover what is wrong with these numbers. The Journal, considered a credible news source, will be used by the opposition media – which is most of the media in Argentina – to accuse the president of corruption. Many people are cynical, and they will believe the accusations.  

Election season officially kicked off in Brazil on July 1st. For the past 7 months, amid wide-scale attacks on her competency — and against the Brazilian economy — coming from all sides of the political spectrum in the Anglophone media, President Dilma Rousseff’s poll numbers have remained stable, placing her far ahead of her closest competitor, Senator Aécio Neves of Fernando Henrique Cardoso’s PSDB party.  IBOPE, Brazil’s most widely-respected polling agency, released numbers last week showing that 38 percent of the Brazilian public intends to vote for Dilma. According to IBOPE this is the same percentage who intended to vote for her in the last poll that was taken immediately before the World Cup, and roughly the same percentage that have supported her all year.  Brazil has a multi-party system and she is currently far enough ahead of the remaining candidates that if the election were held tomorrow, she would win in the first round.

According to another recent poll by Datafolha [PDF], Dilma is leading in every region in Brazil. The numbers are close in the wealthy Southeast and South, but her lead climbs in the poorer North and Northeast. In the Northeast, Brazil’s poorest and second most populous region, the percentage of people saying they will vote for her climbs to 55 percent.

João Pedro Stedile, one of the national leaders of the Landless Peasants’ Movement (MST), breaks down the choices that voters have this October in the following manner: “Dilma Rousseff and (third-most-popular candidate) Eduardo Campos represent neo-developmentalism, and Aécio Neves represents neoliberalism.” Neo-developmentalism is a term that people on the Brazilian left use to describe the PT’s modern version of developmentalism. Developmentalism is a Keynesian-influenced economic strategy first developed in the 1940s in the Third World by economists like Raúl Prebisch and Celso Furtado  based on income redistribution through social welfare initiatives, government stimulus for national industrial production and consumption, maintaining key sectors of the economy under control of state companies, and a high minimum wage, that was employed at varying levels by Brazilian president João (Jango) Goulart before the U.S.-supported military coup of 1964. Many people on the Brazilian left apply the “neo” prefix to the 12 years of PT government due to the neoliberal policies initiated in the Fernando Henrique Cardoso administration, such as an independent and monetarist Central Bank , that the PT has done little to revert and that blend with traditional developmentalist policies such as large minimum wage hikes, high social spending on welfare programs, maintaining state control over the petroleum industry and mortgage market and subsidizing  the construction and manufacturing industries.

Despite valid criticism of the PT from many people on the more radical left, including key players in the Goulart administration such as Chico Oliveira, the results of 12 years of these policies are impressive: employment boomed as 19.5 million new jobs were generated, and 36 million people moved above the poverty line. These numbers show why Dilma still has a large lead in the polls despite last year’s huge June/July protests, which were either misunderstood or deliberately misinterpreted by many voices in the Anglophone media and academia as being primarily “anti-federal government” or “anti-World Cup.”

As the countdown to the World Cup moved forward this year, it seemed as if the corporate media was suddenly interested in human rights issues in Brazil (see, for example this AP article). The violent repression of protesters by Brazil’s state governments and their uncontrollable military police – an historic problem in Brazil – along with accusations of fraud during construction of expensive white-elephant stadiums — provided ample fodder for criticism. Although it appears that the widely-quoted predictions of forced evictions to make way for public projects, mainly Bus Rapid Transit corridors, directly related to the World Cup (the People’s Cup Committee initially projected 250,000 were to be displaced) were exaggerated, the fact remains that tens of thousands of people were forced out of their homes and, in many cases, given lousy and technically illegal settlement packages by the city governments who evicted them. As the Financial Times smugly announced that the Brazilian economic strategy had failed, and the New York Times declared that “Grand Visions Fizzle in Brazil,” the more sensationalist voices started predicting that Brazil was going to crash and burn, with huge street protests during the World Cup.

It didn’t happen.  In March, the MST announced that, despite its criticism of the Dilma administration for lack of action on agrarian reform and human rights abuses, it wasn’t going to protest against the World Cup, because it didn’t want to hurt her re-election prospects. The largest urban squatters’ social movements, like the MTST (Movimento de Trabalhadores Sem Teto, or urban homeless workers movement), the UNMP (União Nacional por Moradia Popular, or National Popular Housing Union) and the MNLM (Movimento Nacional de Luta para Moradia, or National Movement for Housing Struggle) staged a series of medium-sized protests across the country in the months leading up to the Cup. After they shut down nine bridges during rush hour in São Paulo with a group of 5,000 people, and put 12,000 on the street in front of Itaquerão stadium, Dilma met with movement leaders and struck a historic deal granting more social control over the huge Minha Casa Minha Vida program, which subsidizes low and lower middle income housing construction, with a guarantee of an additional 3 million new housing units built closer to city centers. At this point, the urban movements decided not to protest during the World Cup. This left small groups of primarily middle-class activists, some affiliated with small radical left political parties like the PSOL (that splintered off from the PT when Lula started isolating members of its “Socialism or Barbarianism” caucus in 2003) and others representing the tiny Black Blocs, some of which were infiltrated by undercover police and elements from the far-right.  Tactically inexperienced, many of these middle-class activists tried to organize protests on social media. Many of them had tens of thousands of people commit online to going, but only a few hundred actually appearing on the streets.

Despite this, old photos and articles of the 2013 riots and protests went viral on social media, presented as if they were happening in the lead-up to and during he World Cup. I witnessed that in some cases media figures who I followed presented them as current events, adding to the confusion.

Rutgers Professor Sean Mitchell wrote a recent article documenting how the image of Brazil has shifted over the last few years from positive, after Brazil avoided going into recession during the Global Recession of 2008-2009, to negative, strengthened by panicky headlines and “violence porn.” He did not offer a theory as to why this is happening, but I believe that the media used valid criticism of human rights violations and corruption related to the World Cup, often coming from voices in the middle-class, intellectual left, to reframe Brazil as a failing nation ripe for regime change. I found myself caught up in this process as critical articles I wrote were given sensationalist edits and headlines as well.  One would have to be naive to imagine that the U.S. government is not interested in privatization of the Brazilian state petroleum company, Petrobras, lowering protective tariffs and flexibilizing labor laws for American companies operating in Brazil, all of which are historic priorities for the opposition PSDB party. It is an old State Department tactic for regime change to foster a sense of political instability through supporting street protests in election years in Latin America. The organized Brazilian left knows that and it is one reason that the vast majority of labor unions and poor people’s social movements did not take to the streets during the World Cup.  

Brian Mier is a geographer and freelance journalist who lives in Brazil and works as a policy analyst at the Centro de Direitos Econômicos e Sociais.

Election season officially kicked off in Brazil on July 1st. For the past 7 months, amid wide-scale attacks on her competency — and against the Brazilian economy — coming from all sides of the political spectrum in the Anglophone media, President Dilma Rousseff’s poll numbers have remained stable, placing her far ahead of her closest competitor, Senator Aécio Neves of Fernando Henrique Cardoso’s PSDB party.  IBOPE, Brazil’s most widely-respected polling agency, released numbers last week showing that 38 percent of the Brazilian public intends to vote for Dilma. According to IBOPE this is the same percentage who intended to vote for her in the last poll that was taken immediately before the World Cup, and roughly the same percentage that have supported her all year.  Brazil has a multi-party system and she is currently far enough ahead of the remaining candidates that if the election were held tomorrow, she would win in the first round.

According to another recent poll by Datafolha [PDF], Dilma is leading in every region in Brazil. The numbers are close in the wealthy Southeast and South, but her lead climbs in the poorer North and Northeast. In the Northeast, Brazil’s poorest and second most populous region, the percentage of people saying they will vote for her climbs to 55 percent.

João Pedro Stedile, one of the national leaders of the Landless Peasants’ Movement (MST), breaks down the choices that voters have this October in the following manner: “Dilma Rousseff and (third-most-popular candidate) Eduardo Campos represent neo-developmentalism, and Aécio Neves represents neoliberalism.” Neo-developmentalism is a term that people on the Brazilian left use to describe the PT’s modern version of developmentalism. Developmentalism is a Keynesian-influenced economic strategy first developed in the 1940s in the Third World by economists like Raúl Prebisch and Celso Furtado  based on income redistribution through social welfare initiatives, government stimulus for national industrial production and consumption, maintaining key sectors of the economy under control of state companies, and a high minimum wage, that was employed at varying levels by Brazilian president João (Jango) Goulart before the U.S.-supported military coup of 1964. Many people on the Brazilian left apply the “neo” prefix to the 12 years of PT government due to the neoliberal policies initiated in the Fernando Henrique Cardoso administration, such as an independent and monetarist Central Bank , that the PT has done little to revert and that blend with traditional developmentalist policies such as large minimum wage hikes, high social spending on welfare programs, maintaining state control over the petroleum industry and mortgage market and subsidizing  the construction and manufacturing industries.

Despite valid criticism of the PT from many people on the more radical left, including key players in the Goulart administration such as Chico Oliveira, the results of 12 years of these policies are impressive: employment boomed as 19.5 million new jobs were generated, and 36 million people moved above the poverty line. These numbers show why Dilma still has a large lead in the polls despite last year’s huge June/July protests, which were either misunderstood or deliberately misinterpreted by many voices in the Anglophone media and academia as being primarily “anti-federal government” or “anti-World Cup.”

As the countdown to the World Cup moved forward this year, it seemed as if the corporate media was suddenly interested in human rights issues in Brazil (see, for example this AP article). The violent repression of protesters by Brazil’s state governments and their uncontrollable military police – an historic problem in Brazil – along with accusations of fraud during construction of expensive white-elephant stadiums — provided ample fodder for criticism. Although it appears that the widely-quoted predictions of forced evictions to make way for public projects, mainly Bus Rapid Transit corridors, directly related to the World Cup (the People’s Cup Committee initially projected 250,000 were to be displaced) were exaggerated, the fact remains that tens of thousands of people were forced out of their homes and, in many cases, given lousy and technically illegal settlement packages by the city governments who evicted them. As the Financial Times smugly announced that the Brazilian economic strategy had failed, and the New York Times declared that “Grand Visions Fizzle in Brazil,” the more sensationalist voices started predicting that Brazil was going to crash and burn, with huge street protests during the World Cup.

It didn’t happen.  In March, the MST announced that, despite its criticism of the Dilma administration for lack of action on agrarian reform and human rights abuses, it wasn’t going to protest against the World Cup, because it didn’t want to hurt her re-election prospects. The largest urban squatters’ social movements, like the MTST (Movimento de Trabalhadores Sem Teto, or urban homeless workers movement), the UNMP (União Nacional por Moradia Popular, or National Popular Housing Union) and the MNLM (Movimento Nacional de Luta para Moradia, or National Movement for Housing Struggle) staged a series of medium-sized protests across the country in the months leading up to the Cup. After they shut down nine bridges during rush hour in São Paulo with a group of 5,000 people, and put 12,000 on the street in front of Itaquerão stadium, Dilma met with movement leaders and struck a historic deal granting more social control over the huge Minha Casa Minha Vida program, which subsidizes low and lower middle income housing construction, with a guarantee of an additional 3 million new housing units built closer to city centers. At this point, the urban movements decided not to protest during the World Cup. This left small groups of primarily middle-class activists, some affiliated with small radical left political parties like the PSOL (that splintered off from the PT when Lula started isolating members of its “Socialism or Barbarianism” caucus in 2003) and others representing the tiny Black Blocs, some of which were infiltrated by undercover police and elements from the far-right.  Tactically inexperienced, many of these middle-class activists tried to organize protests on social media. Many of them had tens of thousands of people commit online to going, but only a few hundred actually appearing on the streets.

Despite this, old photos and articles of the 2013 riots and protests went viral on social media, presented as if they were happening in the lead-up to and during he World Cup. I witnessed that in some cases media figures who I followed presented them as current events, adding to the confusion.

Rutgers Professor Sean Mitchell wrote a recent article documenting how the image of Brazil has shifted over the last few years from positive, after Brazil avoided going into recession during the Global Recession of 2008-2009, to negative, strengthened by panicky headlines and “violence porn.” He did not offer a theory as to why this is happening, but I believe that the media used valid criticism of human rights violations and corruption related to the World Cup, often coming from voices in the middle-class, intellectual left, to reframe Brazil as a failing nation ripe for regime change. I found myself caught up in this process as critical articles I wrote were given sensationalist edits and headlines as well.  One would have to be naive to imagine that the U.S. government is not interested in privatization of the Brazilian state petroleum company, Petrobras, lowering protective tariffs and flexibilizing labor laws for American companies operating in Brazil, all of which are historic priorities for the opposition PSDB party. It is an old State Department tactic for regime change to foster a sense of political instability through supporting street protests in election years in Latin America. The organized Brazilian left knows that and it is one reason that the vast majority of labor unions and poor people’s social movements did not take to the streets during the World Cup.  

Brian Mier is a geographer and freelance journalist who lives in Brazil and works as a policy analyst at the Centro de Direitos Econômicos e Sociais.

[Below is an update to the blog post from July 21 reviewing how Latin America’s political leaders responded to Israel’s siege on Gaza.]

In a coordinated move on Tuesday (July 29), several Latin American countries recalled their ambassadors to Israel, including El Salvador, Chile, and Peru, the latter two of which made a point to say they had consulted with each other before announcing their decision. This means that five countries so far have recalled their ambassadors over Israel’s attack on Gaza which began July 8th, since Brazil and Ecuador had done so earlier. According to reports from Haaretz, Israel’s Foreign Ministry responded by saying that El Salvador, Peru and Chile were encouraging Hamas by recalling their ambassadors. 

El Salvador announced its decision to recall its ambassador over “the serious escalation in violence and the realization of indiscriminate bombing from Israel into the Gaza Strip,” which they say has resulted in many deaths, injuries, an exodus of Palestinians fleeing their homes, and serious material damage. Chile recalled its ambassador the same day (July 29), saying that Israel’s military operations “comprise a collective punishment against the civilian population of Palestine in Gaza.” The same statement from Chile condemns rocket launches by Hamas against civilians in Israel, but argues that Israeli operations in Gaza “violate the principle of proportionality in the use of force, an indispensable requirement for the justification of legitimate defense.” The government of Peru recalled its ambassador and said that Israel’s military operations in Gaza “constitute a new and reiterated violation of the basic norms of international humanitarian law.”

In addition, several countries put out new statements reacting to the conflict.

Argentina’s government put out a statement expressing concern over an Argentine priest working in Gaza to oversee care for 30 disabled children, nine elderly people and a group of six nuns. The message was sent to Israel’s ambassador to Argentina and makes clear that Argentina holds the government of Israel responsible for the priest’s safety, for the safety of his charges and for the resumption of food, electricity and water services to the neighborhood where they are located.

Yesterday (July 30), Bolivia declared Israel a “terrorist state” and cancelled a visa exception agreement that had been in effect since 1972. Brazil recalled its ambassador to Israel on July 23rd, saying “We strongly condemn the disproportionate use of force by Israel in the Gaza Strip, from which large numbers of civilian casualties, including women and children, resulted.” The move drew criticism from the Israeli Foreign Ministry, which said “This is an unfortunate demonstration of why Brazil, an economic and cultural giant, remains a diplomatic dwarf.” Costa Rica put out a statement repudiating Israel’s disproportionate use of force against the civilian population in Gaza, and another deploring Israel’s attack on U.N. personnel and civilians on July 24.

All but one (Paraguay) of the Mercosur countries joined together in a statement (July 29) strongly condemning “the disproportionate use of force on the part of the Israeli army in the Gaza Strip.” The statement calls for Israel to lift its blockade on Gaza so as to “permit the free movement of people, [and] the entry of food, medicine and humanitarian aid.”

The most recent statement from Colombia’s government brought it closer to the position of the vast majority of its neighbors who have condemned Israel’s attack on Gaza. While their press release from July 10th condemned “acts of violence and terrorism against Israel,” without mentioning operations of the Israeli armed forces, the latest statement from Colombia’s foreign ministry (July 22) “rejects the military offensive by Israeli forces in the Gaza Strip” and expresses condolences for “victims of Israel’s retaliatory actions.”

[Below is an update to the blog post from July 21 reviewing how Latin America’s political leaders responded to Israel’s siege on Gaza.]

In a coordinated move on Tuesday (July 29), several Latin American countries recalled their ambassadors to Israel, including El Salvador, Chile, and Peru, the latter two of which made a point to say they had consulted with each other before announcing their decision. This means that five countries so far have recalled their ambassadors over Israel’s attack on Gaza which began July 8th, since Brazil and Ecuador had done so earlier. According to reports from Haaretz, Israel’s Foreign Ministry responded by saying that El Salvador, Peru and Chile were encouraging Hamas by recalling their ambassadors. 

El Salvador announced its decision to recall its ambassador over “the serious escalation in violence and the realization of indiscriminate bombing from Israel into the Gaza Strip,” which they say has resulted in many deaths, injuries, an exodus of Palestinians fleeing their homes, and serious material damage. Chile recalled its ambassador the same day (July 29), saying that Israel’s military operations “comprise a collective punishment against the civilian population of Palestine in Gaza.” The same statement from Chile condemns rocket launches by Hamas against civilians in Israel, but argues that Israeli operations in Gaza “violate the principle of proportionality in the use of force, an indispensable requirement for the justification of legitimate defense.” The government of Peru recalled its ambassador and said that Israel’s military operations in Gaza “constitute a new and reiterated violation of the basic norms of international humanitarian law.”

In addition, several countries put out new statements reacting to the conflict.

Argentina’s government put out a statement expressing concern over an Argentine priest working in Gaza to oversee care for 30 disabled children, nine elderly people and a group of six nuns. The message was sent to Israel’s ambassador to Argentina and makes clear that Argentina holds the government of Israel responsible for the priest’s safety, for the safety of his charges and for the resumption of food, electricity and water services to the neighborhood where they are located.

Yesterday (July 30), Bolivia declared Israel a “terrorist state” and cancelled a visa exception agreement that had been in effect since 1972. Brazil recalled its ambassador to Israel on July 23rd, saying “We strongly condemn the disproportionate use of force by Israel in the Gaza Strip, from which large numbers of civilian casualties, including women and children, resulted.” The move drew criticism from the Israeli Foreign Ministry, which said “This is an unfortunate demonstration of why Brazil, an economic and cultural giant, remains a diplomatic dwarf.” Costa Rica put out a statement repudiating Israel’s disproportionate use of force against the civilian population in Gaza, and another deploring Israel’s attack on U.N. personnel and civilians on July 24.

All but one (Paraguay) of the Mercosur countries joined together in a statement (July 29) strongly condemning “the disproportionate use of force on the part of the Israeli army in the Gaza Strip.” The statement calls for Israel to lift its blockade on Gaza so as to “permit the free movement of people, [and] the entry of food, medicine and humanitarian aid.”

The most recent statement from Colombia’s government brought it closer to the position of the vast majority of its neighbors who have condemned Israel’s attack on Gaza. While their press release from July 10th condemned “acts of violence and terrorism against Israel,” without mentioning operations of the Israeli armed forces, the latest statement from Colombia’s foreign ministry (July 22) “rejects the military offensive by Israeli forces in the Gaza Strip” and expresses condolences for “victims of Israel’s retaliatory actions.”

On Monday, I wrote this article looking at the splits within the Obama administration on policy toward Venezuela and how they were manifested in the case of Venezuela’s former military intelligence chief Hugo Carvajal.  Carvajal was arrested last Wednesday in the Dutch island of Aruba with the help of the DEA, after he arrived to take up a post as Consular-General at the Venezuelan embassy there. Washington’s attempt to extradite him to the U.S., despite his diplomatic immunity, collapsed on Sunday night when the government of the Netherlands acknowledged Carvajal’s protected diplomatic status.

My argument was that the failed extradition was another attempt by the hard right to blow up diplomatic relations with Venezuela. It failed for the same reason that the previous attempt – the proposed economic sanctions against Venezuela that passed the House of Representatives on May 28,  did not become law:  President Obama (or whoever is in charge of U.S. foreign policy in the hemisphere), does not want to break diplomatic relations with Venezuela at this point.

Since yesterday, three more developments have followed the failed extradition attempt:  first, Senator Bob Corker (the ranking Republican on the Senate Foreign Relations Committee) released his hold on the sanctions legislation.  This was what was officially holding up the sanctions bill in the Senate. 

At the same time, a group of senators including Robert Menendez, Bill Nelson, and Marco Rubio, the co-sponsors of the Senate’s version of the proposed Venezuela sanctions bill, released a letter urging Secretary of State John Kerry to “use the existing authorities that the Administration has to levy targeted sanctions against individuals that have been complicit in human rights violations in Venezuela.” This may be a signal from the most militant anti-Venezuela members of the Senate that they have reached some sort of agreement not to push forward with their own sanctions legislation, which the State Department has referred to as “unhelpful,” if the Obama administration utilizes its “existing authorities” to pressure Venezuela.

Then today, the Obama administration threw a bone to the extreme right, with a press release from Secretary of State John Kerry announcing “restrictions on travel to the United States by a number of Venezuelan government officials who have been responsible for or complicit in such human rights abuses.”   This is of course a very hostile gesture that is transparently political, and has nothing to do with human rights.  As I noted previously with regard to the sanctions legislation:

There is no need to comment on the alleged rationale for the legislation, which was to punish human rights violations.  The Egyptian government has killed more than a thousand people since the military coup in July 2013, and sentenced 700 to death. The Israelis have also killed more than a thousand people in Gaza in just the past three weeks – most of them civilians, including more than 200 children. Not only is there no talk of sanctions against Israel or Egypt, there is not even talk of reducing or even conditioning the billions of U.S. taxpayer dollars, including military aid, that flow annually to these two countries. By comparison, 43 Venezuelans died in more than two months of violent protests seeking to topple a democratically-elected government, about half of them at the hands of the protesters themselves.

The number of Gaza residents killed has now passed 1,200, and needless to say there will not be any U.S. visa restrictions on Israelis “responsible for or complicit in such human rights abuses.” 

As for Venezuela, Kerry’s sop to the far right is obnoxious enough to signal that Washington is not in any hurry to move toward full (ambassadorial) diplomatic relations with Venezuela, at least until after the U.S. elections in November (a major influence on U.S. policy toward Latin America).  But it is not quite at the same level as the economic sanctions legislation or certainly the illegal extradition to the U.S. of a Venezuelan diplomat.  So, the administration likely sees it as a compromise with the extreme right that will not force Venezuela to break diplomatic relations, although it is a very hostile gesture and quite obviously done for domestic political reasons.  It sends yet another signal to Latin America that the U.S. is not a reliable diplomatic actor in the hemisphere.

On Monday, I wrote this article looking at the splits within the Obama administration on policy toward Venezuela and how they were manifested in the case of Venezuela’s former military intelligence chief Hugo Carvajal.  Carvajal was arrested last Wednesday in the Dutch island of Aruba with the help of the DEA, after he arrived to take up a post as Consular-General at the Venezuelan embassy there. Washington’s attempt to extradite him to the U.S., despite his diplomatic immunity, collapsed on Sunday night when the government of the Netherlands acknowledged Carvajal’s protected diplomatic status.

My argument was that the failed extradition was another attempt by the hard right to blow up diplomatic relations with Venezuela. It failed for the same reason that the previous attempt – the proposed economic sanctions against Venezuela that passed the House of Representatives on May 28,  did not become law:  President Obama (or whoever is in charge of U.S. foreign policy in the hemisphere), does not want to break diplomatic relations with Venezuela at this point.

Since yesterday, three more developments have followed the failed extradition attempt:  first, Senator Bob Corker (the ranking Republican on the Senate Foreign Relations Committee) released his hold on the sanctions legislation.  This was what was officially holding up the sanctions bill in the Senate. 

At the same time, a group of senators including Robert Menendez, Bill Nelson, and Marco Rubio, the co-sponsors of the Senate’s version of the proposed Venezuela sanctions bill, released a letter urging Secretary of State John Kerry to “use the existing authorities that the Administration has to levy targeted sanctions against individuals that have been complicit in human rights violations in Venezuela.” This may be a signal from the most militant anti-Venezuela members of the Senate that they have reached some sort of agreement not to push forward with their own sanctions legislation, which the State Department has referred to as “unhelpful,” if the Obama administration utilizes its “existing authorities” to pressure Venezuela.

Then today, the Obama administration threw a bone to the extreme right, with a press release from Secretary of State John Kerry announcing “restrictions on travel to the United States by a number of Venezuelan government officials who have been responsible for or complicit in such human rights abuses.”   This is of course a very hostile gesture that is transparently political, and has nothing to do with human rights.  As I noted previously with regard to the sanctions legislation:

There is no need to comment on the alleged rationale for the legislation, which was to punish human rights violations.  The Egyptian government has killed more than a thousand people since the military coup in July 2013, and sentenced 700 to death. The Israelis have also killed more than a thousand people in Gaza in just the past three weeks – most of them civilians, including more than 200 children. Not only is there no talk of sanctions against Israel or Egypt, there is not even talk of reducing or even conditioning the billions of U.S. taxpayer dollars, including military aid, that flow annually to these two countries. By comparison, 43 Venezuelans died in more than two months of violent protests seeking to topple a democratically-elected government, about half of them at the hands of the protesters themselves.

The number of Gaza residents killed has now passed 1,200, and needless to say there will not be any U.S. visa restrictions on Israelis “responsible for or complicit in such human rights abuses.” 

As for Venezuela, Kerry’s sop to the far right is obnoxious enough to signal that Washington is not in any hurry to move toward full (ambassadorial) diplomatic relations with Venezuela, at least until after the U.S. elections in November (a major influence on U.S. policy toward Latin America).  But it is not quite at the same level as the economic sanctions legislation or certainly the illegal extradition to the U.S. of a Venezuelan diplomat.  So, the administration likely sees it as a compromise with the extreme right that will not force Venezuela to break diplomatic relations, although it is a very hostile gesture and quite obviously done for domestic political reasons.  It sends yet another signal to Latin America that the U.S. is not a reliable diplomatic actor in the hemisphere.

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