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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Members of Congress have once again called on the Obama administration to stop funding Honduras’ security forces. Alarmed at the rampant militarization of policing activities throughout the country and a rash of recent reports of human rights abuses involving Honduran security forces, 21 House Democrats sent a letter to Secretary of State Kerry on August 19 expressing their concern and making a series of specific requests, including “the suspension and re-evaluation of further training and support for Honduran police and military units until the Honduran government adequately addresses human rights abuses.” 

For several years now U.S. legislators have been urging the administration to either suspend or overhaul its security assistance programs in Honduras. Back in March of 2012, 94 Democrats asked then Secretary of State Hillary Clinton to suspend military and police assistance, noting “credible allegations of widespread, serious allegations of human rights abuses attributed to [Honduran] security forces” and the impunity surrounding targeted attacks against “human rights defenders, journalists, community leaders and opposition activists.” Two years later, 108 House Democrats sent a letter to Kerry expressing concern over the accelerated militarization of domestic law enforcement under current president Juan Orlando Hernández and calling for the State Department to review its security programs in Honduras. Similar letters have appeared in the U.S. Senate, with, for instance, 21 senators questioning Honduran government compliance with human rights conditions attached to U.S. security assistance.

The Congressional letter of August 19 – led by Representatives Hank Johnson (a leading opponent of militarized law enforcement in the U.S.) and Jan Schakowsky (who has led several previous letters regarding Honduras’ appalling human rights situation) – describes the steady militarization of policing that has taken place in Honduras since 2010: The massive deployment of army units to police Honduran streets, followed by the creation of a 3000-strong military police force under a military line of command and a new “super-ministry” of Security combining civilian and military security institutions under the direction of a recently retired general.

This militarization trend is troubling enough in a country that only emerged from military rule in the 1980s and was subjected to a military coup d’état in June of 2009, but there is also abundant documented evidence of widespread abuses perpetrated by military personnel and militarized police, some of which is described in the letter:

Over the last few months, military police agents have reportedly threatened and harassed journalists, community leaders, and members of the indigenous organization COPINH; forcibly evicted small farmers without a warrant; raided the home of a student leader involved in recent protests; and shot and killed an unarmed woman selling mangos, among other alleged crimes. As reported by Al-Jazeera, Defensores en Linea and Today Media Network, these forces have also allegedly conducted raids against the homes of opposition activists, and participated in the killing of land-rights activists and peaceful demonstrators.

The U.S. government’s response to these alarming developments has been to request more security assistance for Honduras, in particular through an increase in funding for the opaque Central American Regional Security Initiative (CARSI). There’s no indication that the administration is concerned about Honduras’ militarization or that it is seeking to leverage U.S. security assistance to try to reverse the trend. On the contrary, it has been providing direct support to militarization efforts, as the Johnson/Schakowsky letter notes:

We are concerned about Honduran media reports that in mid-May of this year, a team of 300 U.S. military and civilian personnel, including Marines and the FBI, conducted “rapid response” training with 500 [agents from] FUSINA [a militarized security task force combining personnel from police, military, intelligence and judicial agencies], using U.S. helicopters and planes, despite allegations regarding the agency’s repeated involvement in human-rights violations.

Similarly, U.S. green beret special forces have been training a militarized Honduran police unit called the TIGRES [which stands for Intelligence Troop and Special Security Response Groups], “instilling fundamental principles of close quarters battle and knowing how to execute them amidst the chaos that is combat”, according to a U.S. Army article published in March. Though touted as an exemplary, elite force, nearly two dozen TIGRES agents, trained and vetted by the U.S. government, were caught stealing over $1.3 million in drug money following a counter-narcotics operation late last year.

In addition to asking for security assistance to Honduras to be put on hold, the Johnson/Schakowsky letter makes a series of detailed requests which focus on getting the State Department to genuinely implement human rights safeguards required by law and to increase transparency around security aid programs in Honduras.

The letter asks for:

        “The State Department’s strict evaluation of U.S. support and training for the Honduran police and military in accordance with human rights conditions placed in the FY2015 State and Foreign Operations Appropriations Act.” [A Senate Appropriations Committee report that accompanies the FY2015 SFOPS Act specifies that 50% of security assistance allocated to Honduras under International Narcotic Control and Law Enforcement and Foreign Military Funding headings be withheld pending State Department certification of Honduran government compliance with six human rights and rule of law conditions that include the investigation and prosecution of “army and police personnel who are credibly alleged to have violated human rights.” In the past, the State Department has generally certified the Honduran government as compliant with conditions set by the Committee, despite the strong misgivings expressed by 21 U.S. senators (i.e., 1/5th of the Senate). It’s worth noting that the Committee report attached to pending FY2016 appropriations legislation has conditioned 75% of all assistance under State and Foreign Operations appropriations to Honduras, Guatemala and El Salvador, and includes, among its new set of conditions, State Department certification that the governments are taking “effective steps” to “create a professional, accountable civilian police force and end the role of the military in internal policing” and to “prosecute and punish in civilian courts members of security forces who violate human rights.”]

        “Full implementation of the Leahy Law…” [which prohibits the departments of State and Defense from providing support to foreign military units that violate human rights with impunity.]

        “A detailed description of how the Department of State is currently implementing these statutes [i.e., the conditioning of security assistance under Leahy Law and existing appropriations legislation], including what metrics the Department is using to assess whether the Honduran government has adequately addressed human rights abuses.” [The State Department hasn’t revealed the methodology it employs to enforce Leahy Law provisions or SFOPS appropriations human rights conditions on aid.]

        “Urge the Honduran government to implement serious and concrete measures to address military and police abuses, and to halt the continued involvement of the military in domestic law enforcement.” [As mentioned above, these are among the aid conditionalities that the Honduran government would need to meet under the pending FY2016 appropriations legislation. There is little indication that the Honduran government is interested in implementing these measures. In early 2014, the ruling National Party eliminated a widely respected police reform commission and ignored its recommendations for cleaning up the country’s notoriously corrupt police. Under growing pressure from Congress and human rights groups, the government recently announced a series of reforms to the police – designed in tandem with U.S. advisors – that appear to amount to little more than an administrative reorganization. Given that Honduran officials still fail to acknowledge abuses by security forces, there is deep skepticism surrounding the announcement. Not to mention that there is no sign that the government is scaling back its militarization efforts].

        “Finally, we request a full itemized report on the use of funds allocated for U.S. security assistance to Honduras in the State and Foreign Operations Appropriations law for FY2015 and for upcoming FY2106 appropriations legislation.” [Effective independent scrutiny of how U.S. security assistance is used is extremely difficult given the total lack of transparency surrounding the disbursement process. Tens of millions of dollars in security assistance have been funneled to Honduras through the State Department’s notoriously opaque Central America Regional Security Initiative.   As yet there is no public record of where and how the funds have been used, nor are there any clear metrics available on what sort of impact CARSI assistance has had].

Though largely ignored by the U.S. press (with the exception of one article in an inside-the-Beltway outlet and articles in the Spanish-language press), the Johnson/Schakowsky letter has received massive media attention in Honduras. The question is, will Secretary of State John Kerry pay attention to this new appeal from Congress?

Members of Congress have once again called on the Obama administration to stop funding Honduras’ security forces. Alarmed at the rampant militarization of policing activities throughout the country and a rash of recent reports of human rights abuses involving Honduran security forces, 21 House Democrats sent a letter to Secretary of State Kerry on August 19 expressing their concern and making a series of specific requests, including “the suspension and re-evaluation of further training and support for Honduran police and military units until the Honduran government adequately addresses human rights abuses.” 

For several years now U.S. legislators have been urging the administration to either suspend or overhaul its security assistance programs in Honduras. Back in March of 2012, 94 Democrats asked then Secretary of State Hillary Clinton to suspend military and police assistance, noting “credible allegations of widespread, serious allegations of human rights abuses attributed to [Honduran] security forces” and the impunity surrounding targeted attacks against “human rights defenders, journalists, community leaders and opposition activists.” Two years later, 108 House Democrats sent a letter to Kerry expressing concern over the accelerated militarization of domestic law enforcement under current president Juan Orlando Hernández and calling for the State Department to review its security programs in Honduras. Similar letters have appeared in the U.S. Senate, with, for instance, 21 senators questioning Honduran government compliance with human rights conditions attached to U.S. security assistance.

The Congressional letter of August 19 – led by Representatives Hank Johnson (a leading opponent of militarized law enforcement in the U.S.) and Jan Schakowsky (who has led several previous letters regarding Honduras’ appalling human rights situation) – describes the steady militarization of policing that has taken place in Honduras since 2010: The massive deployment of army units to police Honduran streets, followed by the creation of a 3000-strong military police force under a military line of command and a new “super-ministry” of Security combining civilian and military security institutions under the direction of a recently retired general.

This militarization trend is troubling enough in a country that only emerged from military rule in the 1980s and was subjected to a military coup d’état in June of 2009, but there is also abundant documented evidence of widespread abuses perpetrated by military personnel and militarized police, some of which is described in the letter:

Over the last few months, military police agents have reportedly threatened and harassed journalists, community leaders, and members of the indigenous organization COPINH; forcibly evicted small farmers without a warrant; raided the home of a student leader involved in recent protests; and shot and killed an unarmed woman selling mangos, among other alleged crimes. As reported by Al-Jazeera, Defensores en Linea and Today Media Network, these forces have also allegedly conducted raids against the homes of opposition activists, and participated in the killing of land-rights activists and peaceful demonstrators.

The U.S. government’s response to these alarming developments has been to request more security assistance for Honduras, in particular through an increase in funding for the opaque Central American Regional Security Initiative (CARSI). There’s no indication that the administration is concerned about Honduras’ militarization or that it is seeking to leverage U.S. security assistance to try to reverse the trend. On the contrary, it has been providing direct support to militarization efforts, as the Johnson/Schakowsky letter notes:

We are concerned about Honduran media reports that in mid-May of this year, a team of 300 U.S. military and civilian personnel, including Marines and the FBI, conducted “rapid response” training with 500 [agents from] FUSINA [a militarized security task force combining personnel from police, military, intelligence and judicial agencies], using U.S. helicopters and planes, despite allegations regarding the agency’s repeated involvement in human-rights violations.

Similarly, U.S. green beret special forces have been training a militarized Honduran police unit called the TIGRES [which stands for Intelligence Troop and Special Security Response Groups], “instilling fundamental principles of close quarters battle and knowing how to execute them amidst the chaos that is combat”, according to a U.S. Army article published in March. Though touted as an exemplary, elite force, nearly two dozen TIGRES agents, trained and vetted by the U.S. government, were caught stealing over $1.3 million in drug money following a counter-narcotics operation late last year.

In addition to asking for security assistance to Honduras to be put on hold, the Johnson/Schakowsky letter makes a series of detailed requests which focus on getting the State Department to genuinely implement human rights safeguards required by law and to increase transparency around security aid programs in Honduras.

The letter asks for:

        “The State Department’s strict evaluation of U.S. support and training for the Honduran police and military in accordance with human rights conditions placed in the FY2015 State and Foreign Operations Appropriations Act.” [A Senate Appropriations Committee report that accompanies the FY2015 SFOPS Act specifies that 50% of security assistance allocated to Honduras under International Narcotic Control and Law Enforcement and Foreign Military Funding headings be withheld pending State Department certification of Honduran government compliance with six human rights and rule of law conditions that include the investigation and prosecution of “army and police personnel who are credibly alleged to have violated human rights.” In the past, the State Department has generally certified the Honduran government as compliant with conditions set by the Committee, despite the strong misgivings expressed by 21 U.S. senators (i.e., 1/5th of the Senate). It’s worth noting that the Committee report attached to pending FY2016 appropriations legislation has conditioned 75% of all assistance under State and Foreign Operations appropriations to Honduras, Guatemala and El Salvador, and includes, among its new set of conditions, State Department certification that the governments are taking “effective steps” to “create a professional, accountable civilian police force and end the role of the military in internal policing” and to “prosecute and punish in civilian courts members of security forces who violate human rights.”]

        “Full implementation of the Leahy Law…” [which prohibits the departments of State and Defense from providing support to foreign military units that violate human rights with impunity.]

        “A detailed description of how the Department of State is currently implementing these statutes [i.e., the conditioning of security assistance under Leahy Law and existing appropriations legislation], including what metrics the Department is using to assess whether the Honduran government has adequately addressed human rights abuses.” [The State Department hasn’t revealed the methodology it employs to enforce Leahy Law provisions or SFOPS appropriations human rights conditions on aid.]

        “Urge the Honduran government to implement serious and concrete measures to address military and police abuses, and to halt the continued involvement of the military in domestic law enforcement.” [As mentioned above, these are among the aid conditionalities that the Honduran government would need to meet under the pending FY2016 appropriations legislation. There is little indication that the Honduran government is interested in implementing these measures. In early 2014, the ruling National Party eliminated a widely respected police reform commission and ignored its recommendations for cleaning up the country’s notoriously corrupt police. Under growing pressure from Congress and human rights groups, the government recently announced a series of reforms to the police – designed in tandem with U.S. advisors – that appear to amount to little more than an administrative reorganization. Given that Honduran officials still fail to acknowledge abuses by security forces, there is deep skepticism surrounding the announcement. Not to mention that there is no sign that the government is scaling back its militarization efforts].

        “Finally, we request a full itemized report on the use of funds allocated for U.S. security assistance to Honduras in the State and Foreign Operations Appropriations law for FY2015 and for upcoming FY2106 appropriations legislation.” [Effective independent scrutiny of how U.S. security assistance is used is extremely difficult given the total lack of transparency surrounding the disbursement process. Tens of millions of dollars in security assistance have been funneled to Honduras through the State Department’s notoriously opaque Central America Regional Security Initiative.   As yet there is no public record of where and how the funds have been used, nor are there any clear metrics available on what sort of impact CARSI assistance has had].

Though largely ignored by the U.S. press (with the exception of one article in an inside-the-Beltway outlet and articles in the Spanish-language press), the Johnson/Schakowsky letter has received massive media attention in Honduras. The question is, will Secretary of State John Kerry pay attention to this new appeal from Congress?

A pusher cares less for the health of an addict than squeezing every last penny from the customer. Perhaps this is more so when the victim tries to manage the addiction. Likewise, creditors hardly have the best interests of debtors at heart. Thus, we ought to cast a suspicious eye when creditors make suggestions regarding fiscal policy for their debtors.

In 2002, in the face of a nearly four-year depression and increased borrowing to maintain an overvalued peso, Argentina devalued and defaulted on external debt. The economy recovered rapidly. To come out of default Argentina negotiated in 2005 and again in 2010 haircut deals with the majority of foreign creditors, but a small minority of holdouts continue to prevent Argentina from borrowing internationally. Unable to roll over its debts, Argentina has recently drawn down on foreign reserves in order to make principal payments. Ideally, this is neither better nor worse an option than borrowing. However there is a risk that the drawdown of foreign reserves can feed speculation against the peso, thereby contributing to a black market premium and inflation.

Absent sufficient reserves, Argentina must find a way to borrow or again reduce its debt service. One obvious way forward is for creditors to once again accept new international borrowing from Argentina. This would allow Argentina to roll over its current debt, although it may face a higher interest rate than implied by its current servicing of debt. However, creditors have made an alternative suggestion. According to Moody’s Investors Service, “For Argentina to regain full access to capital markets, its next government will need to reach an agreement with the holdout creditors that have not accepted a restructuring agreement.”

In other words, by bargaining further with its creditors Argentina must now pay for the mere option of continuing to service its debt. With Argentina’s dwindling capacity to pay out of reserves, Moody’s is insisting that Argentina would be welcomed back into credit markets if only it promised to borrow more. Such is the way of the debt pusher—inflicting pain upon anyone who struggles from addiction in the hopes that the struggle is just too great and the victim relapses with greater intensity.

The only question is how deep into debt Argentina is willing to go. This is particularly important question if access to credit does not stop the need to continue draining reserves.

To see how this might work, consider a stylized example of a country initially accumulating foreign reserves of $5 per year. Then, the country borrows $100 at 10 percent interest for 20 years. After 10 years, it starts paying only 5 percent interest and goes into arrears for the rest. After 20 years, the country would like to tap $100 of reserves to pay off the debt. Though it would remain $80 in arrears, it would be debt free and again accumulating reserves. Still, this path is available only if the country has $100 of reserves to use.

Alternatively, the country might continue to bargain after 20 years. In return for paying off one-quarter of its arrears, the other three-quarters is forgiven and it is permitted to borrow at 7 percent. After another decade, it will have $120 of debt; with $8.40 annual debt service it continues to drain reserves.

It is not clear that concessions will help Argentina better manage its reserves, rather than increase its dependence on foreign creditors.

A pusher cares less for the health of an addict than squeezing every last penny from the customer. Perhaps this is more so when the victim tries to manage the addiction. Likewise, creditors hardly have the best interests of debtors at heart. Thus, we ought to cast a suspicious eye when creditors make suggestions regarding fiscal policy for their debtors.

In 2002, in the face of a nearly four-year depression and increased borrowing to maintain an overvalued peso, Argentina devalued and defaulted on external debt. The economy recovered rapidly. To come out of default Argentina negotiated in 2005 and again in 2010 haircut deals with the majority of foreign creditors, but a small minority of holdouts continue to prevent Argentina from borrowing internationally. Unable to roll over its debts, Argentina has recently drawn down on foreign reserves in order to make principal payments. Ideally, this is neither better nor worse an option than borrowing. However there is a risk that the drawdown of foreign reserves can feed speculation against the peso, thereby contributing to a black market premium and inflation.

Absent sufficient reserves, Argentina must find a way to borrow or again reduce its debt service. One obvious way forward is for creditors to once again accept new international borrowing from Argentina. This would allow Argentina to roll over its current debt, although it may face a higher interest rate than implied by its current servicing of debt. However, creditors have made an alternative suggestion. According to Moody’s Investors Service, “For Argentina to regain full access to capital markets, its next government will need to reach an agreement with the holdout creditors that have not accepted a restructuring agreement.”

In other words, by bargaining further with its creditors Argentina must now pay for the mere option of continuing to service its debt. With Argentina’s dwindling capacity to pay out of reserves, Moody’s is insisting that Argentina would be welcomed back into credit markets if only it promised to borrow more. Such is the way of the debt pusher—inflicting pain upon anyone who struggles from addiction in the hopes that the struggle is just too great and the victim relapses with greater intensity.

The only question is how deep into debt Argentina is willing to go. This is particularly important question if access to credit does not stop the need to continue draining reserves.

To see how this might work, consider a stylized example of a country initially accumulating foreign reserves of $5 per year. Then, the country borrows $100 at 10 percent interest for 20 years. After 10 years, it starts paying only 5 percent interest and goes into arrears for the rest. After 20 years, the country would like to tap $100 of reserves to pay off the debt. Though it would remain $80 in arrears, it would be debt free and again accumulating reserves. Still, this path is available only if the country has $100 of reserves to use.

Alternatively, the country might continue to bargain after 20 years. In return for paying off one-quarter of its arrears, the other three-quarters is forgiven and it is permitted to borrow at 7 percent. After another decade, it will have $120 of debt; with $8.40 annual debt service it continues to drain reserves.

It is not clear that concessions will help Argentina better manage its reserves, rather than increase its dependence on foreign creditors.

On October 20, 2010, just a few days before Dilma Rousseff was reelected to serve a second term as president of Brazil, newscasts focused on reports that opposing candidate José Serra had interrupted his campaign to undergo medical examination after supposedly being attacked by members of Rousseff’s Workers’ Party (PT) during a rally in Rio de Janeiro. In much of the major media and on social networks, it was claimed that the Brazilian Social Democracy Party (PSDB) candidate had been hit by a heavy object. In fact, as documented by at least five TV cameras, Serra had been hit by a harmless ball of crumpled paper.

Earlier this year, on July 30, an attack at the Lula Institute in Sao Paulo (named for former president Luiz Inácio Lula da Silva, also from the PT) involving a homemade explosive was reported as an “incident” of no major consequence. Merval Pereira, a columnist for O Globo, denounced the attempt by petistas (members or supporters of the PT) and Lula’s supporters to transform the event into a “terrorist act,” pointing out that “it only made a small hole in the door.” Ricardo Noblat, also a columnist at O Globo, raised the question of whether the throwing of the explosive wasn’t a “setup to allow Lula to pose as a victim.” Reinaldo Azevedo, in turn, on his blog for Veja magazine – one of Brazil’s most influential publications — accused petistas of wanting to exploit the bomb attack in order to crack down on opposition demonstrations scheduled for August 16 (no crackdown of any kind occurred).

Unfortunately, these are not isolated examples of bias in the Brazilian news media. Brazil’s large media outlets present themselves as bulwarks of democracy when in reality they work to guarantee that a society of exclusion and elitism remains in place. O Globo, for example, was one of the earliest supporters of the military coup d’état in Brazil, and it was only in August 2013 that a public retraction from the newspaper= recognized that “the editorial support for the 1964 coup was an error.”

Until the PT won the presidency, the historic social exclusion of certain sectors of the population had never been countered with efficient public policies. Years of per capita income stagnation, neoliberal economic policies and high income concentration exacerbated a large social gap, as shown by high levels of poverty and illiteracy. The result was that a significant portion of the population had no access to social rights guaranteed under the Constitution (healthcare, education, and complete political participation). The PT’s national project was based on social inclusion and the redistribution of income for millions of people who previously had not had the opportunity to fully exercise their citizenship. From the moment the PT began to gain national relevance in Brazilian politics in the 1980s, the country’s traditional media, led by a few families, made one of its main objectives preventing that project from fully developing.

The popularity of the Lula government, and the eventual failure of the opposition to present an acceptable alternative for the majority of the population, opened the way for the media to become one of the political actors with the greatest relevance on the national scene. Recently, Dilma Rousseff’s narrow victory in the 2014 presidential elections rekindled the hopes of Brazil’s big media outlets.

There is an ongoing political crisis in Brazil, and the media has been playing a central role both in the consolidation and the deepening of this crisis. Exacerbating political tensions, the traditional press seeks to consolidate a narrative in public opinion where the country is going through a deep institutional and economic crisis that would justify, in the end, the premature end of Dilma Rousseff’s mandate, the impossibility of a petista succession, and the annihilation of the current social project.

Corruption scandals and economic deceleration are the most exploited topics, yet personal attacks against President Dilma, former President Lula and other party leaders are easily found in editorials and op-ed sections. A breakdown of the coalition political model adopted during the PT years, the increasing hostility of the main allied party of the government—PMDB—and the subversive impulse of the PSDB, the main opposition party, ignite passions, and feed further media distortions.

The coverage given to Operation Carwash (Operação Lava Jato), the name given to the investigation conducted by the Federal Police and the Federal Public Ministry that uncovered a large money laundering and funneling scheme involving the state oil company, Petrobras, and various enterprises and politicians, is perhaps one of the best examples of Brazilian media bias. Starting in March 2014, daily newscasts around the country focused on investigations into alleged involvement of PT politicians in the scandal – at the same time minimizing or even omitting involvement of politicians from the PSDB, the Brazilian Democratic Movement Party (PMDB), the Progressive Party (PP) and other parties.

O Estado de S. Paulo, a prominent newspaper, went so far as to change a headline on its site to shift focus from the national president of the PSDB, Aécio Neves’s, involvement in the siphoning off of resources from the Furnas Hydroelectric Project, as uncovered in the Carwash investigation. The headline accompanying the article read: “In Carwash, [Albert Youssef, a money changer and one of the principal operators of the scheme] says Aécio received money funneled away from Furnas,” but was later transformed into “[Chief prosecutor Rodrigo] Janot asks to table [that is, remove from consideration] the investigation against Aécio, cited by Youssef.” A February 6, 2015 editorial from the same newspaper assures that the “assault on Petrobras” results from “the effects of a cold and boldly elaborated strategy of consolidation of the political hegemony” of the Workers’ Party.

Despite whistleblowers having stated a day earlier that the siphoning off of money from the oil company went back to at least 1997—that is, when Fernando Henrique Cardoso (PSDB) was still president—O Estado de S. Paulo never retracted the accusation in its editorial, and repeatedly distorted the facts to convince its readers that the PT is responsible for the “invention” of corruption in Brazil.

O Globo’s editorial line follows a similar approach. A piece published on March 12, 2015 describes “the corruption scheme created in the country’s largest state company with the blessing of lulopetismo, in conjunction with allies from the PMDB and the PP,” allegedly revealed through the deposition of a former manager of the oil company, Pedro Barroso before a congressional investigating commission on Petrobras in the Chamber of Deputies. Even though the newspaper recognizes that there was embezzlement at the state company during various governments, including the tucano (PSDB) governments, the editorial proclaims that this will not “detract from lulopetismo being the first in making a wide and well-organized assault upon the state company” – despite the fact that among the approximately 50 politicians subpoenaed so far, only eight are petistas, while 31 are cadres of the PP (the PP’s involvement was described in Youseff’s depositions).

The arrest of José Dirceu added fuel to the fire. A historic cadre of the PT, Dirceu was arrested based on declarations from others arrested under Operation Carwash who cut deals with authorities to provide information in exchange for reduced sentences. Proof of his involvement is yet to be presented. His arrest occurred the morning of August 3, 2015, and was widely covered on the front pages of newspapers, with special mentions during newscasts, and on news sites, and they were unanimous in their judgment: The Federal Police had finally gotten to the heart of corruption in Petrobras. More importantly, they will eventually get Lula, the stories insinuated.

O Globo’s front page on August 4, 2015 highlighted a cartoon by Chico Caruso in which José Dirceu is seen behind bars whispering into a smartphone, with a picture of Lula stamped on it, the title of a famous Brazilian song by Rita Lee, “Now, only you are missing.” Merval Pereira, a columnist at O Globoasked, the same day, if the money funneling scheme’s “chain of command stopped with Dirceu.” While recalling that the political scenario today differs from that in which previous scandals took place, Merval affirmed that “it is already possible to ask and discuss whether Lula will be arrested.”

Igor Gielow, who writes for Folha de S. Paulo, makes it very clear that José Dirceu’s arrest once again puts the PT under the spotlight of the investigation (and of the media), exactly at a moment when the focus of the Petrobras scandal seemed to be moving toward the involvement of leaders of the PMDB, like Eduardo Cunha and Renan Calheiros, the presidents of the Senate and of the Chamber of Deputies, respectively.

During the little more than 500 days that Operation Carwash has been going on, there has not been one day in which newspapers have not been filled with stories related to the case. The most careful reader should question why other investigations receive little or no attention from the major media. Take for example, the so-called “mensalão tucano.” Considered the embryo of the “mensalão petista” (a bribe scheme for buying political support in Congress for which José Dirceu and José Genoíno, another important petista cadre, were jailed in 2012), it consisted of channeling more than US$ 3.9 million from the coffers of public companies in Minas Gerais in order to finance the failed campaign of then state governor Eduardo Azeredo, in 1998.

Despite investigations into the case having begun more than ten years ago, and the judicial process more than five years ago, the mensalão tucano has not led to anyone being sentenced, and some of the accused, such as Aécio Neves and Antonio Anastasia (both occupying seats in the Senate), still await judgment while retaining their high-level positions —far from the media’s scrutiny.

The media war on the government and on the petista national plan has been bearing fruit. A poll taken by Ibope in May of this year shows that 48 percent of those interviewed are pessimistic about the country’s future. Yet the poll also revealed information that went widely unreported: 41 percent of those interviewed said they believe the media’s portrayal of the country’s economic situation is overly negative. Only 28 percent disagreed with that sentiment.

Perhaps this is a sign that the Brazilian public is wising up to the systematic bias found in their country’s major media.

Aline Cristiane Piva is a political analyst at the Brazil-based communications group Entrelinhas, and a specialist in international relations at the University of Brasília and in international law at the University of Londrina.

On October 20, 2010, just a few days before Dilma Rousseff was reelected to serve a second term as president of Brazil, newscasts focused on reports that opposing candidate José Serra had interrupted his campaign to undergo medical examination after supposedly being attacked by members of Rousseff’s Workers’ Party (PT) during a rally in Rio de Janeiro. In much of the major media and on social networks, it was claimed that the Brazilian Social Democracy Party (PSDB) candidate had been hit by a heavy object. In fact, as documented by at least five TV cameras, Serra had been hit by a harmless ball of crumpled paper.

Earlier this year, on July 30, an attack at the Lula Institute in Sao Paulo (named for former president Luiz Inácio Lula da Silva, also from the PT) involving a homemade explosive was reported as an “incident” of no major consequence. Merval Pereira, a columnist for O Globo, denounced the attempt by petistas (members or supporters of the PT) and Lula’s supporters to transform the event into a “terrorist act,” pointing out that “it only made a small hole in the door.” Ricardo Noblat, also a columnist at O Globo, raised the question of whether the throwing of the explosive wasn’t a “setup to allow Lula to pose as a victim.” Reinaldo Azevedo, in turn, on his blog for Veja magazine – one of Brazil’s most influential publications — accused petistas of wanting to exploit the bomb attack in order to crack down on opposition demonstrations scheduled for August 16 (no crackdown of any kind occurred).

Unfortunately, these are not isolated examples of bias in the Brazilian news media. Brazil’s large media outlets present themselves as bulwarks of democracy when in reality they work to guarantee that a society of exclusion and elitism remains in place. O Globo, for example, was one of the earliest supporters of the military coup d’état in Brazil, and it was only in August 2013 that a public retraction from the newspaper= recognized that “the editorial support for the 1964 coup was an error.”

Until the PT won the presidency, the historic social exclusion of certain sectors of the population had never been countered with efficient public policies. Years of per capita income stagnation, neoliberal economic policies and high income concentration exacerbated a large social gap, as shown by high levels of poverty and illiteracy. The result was that a significant portion of the population had no access to social rights guaranteed under the Constitution (healthcare, education, and complete political participation). The PT’s national project was based on social inclusion and the redistribution of income for millions of people who previously had not had the opportunity to fully exercise their citizenship. From the moment the PT began to gain national relevance in Brazilian politics in the 1980s, the country’s traditional media, led by a few families, made one of its main objectives preventing that project from fully developing.

The popularity of the Lula government, and the eventual failure of the opposition to present an acceptable alternative for the majority of the population, opened the way for the media to become one of the political actors with the greatest relevance on the national scene. Recently, Dilma Rousseff’s narrow victory in the 2014 presidential elections rekindled the hopes of Brazil’s big media outlets.

There is an ongoing political crisis in Brazil, and the media has been playing a central role both in the consolidation and the deepening of this crisis. Exacerbating political tensions, the traditional press seeks to consolidate a narrative in public opinion where the country is going through a deep institutional and economic crisis that would justify, in the end, the premature end of Dilma Rousseff’s mandate, the impossibility of a petista succession, and the annihilation of the current social project.

Corruption scandals and economic deceleration are the most exploited topics, yet personal attacks against President Dilma, former President Lula and other party leaders are easily found in editorials and op-ed sections. A breakdown of the coalition political model adopted during the PT years, the increasing hostility of the main allied party of the government—PMDB—and the subversive impulse of the PSDB, the main opposition party, ignite passions, and feed further media distortions.

The coverage given to Operation Carwash (Operação Lava Jato), the name given to the investigation conducted by the Federal Police and the Federal Public Ministry that uncovered a large money laundering and funneling scheme involving the state oil company, Petrobras, and various enterprises and politicians, is perhaps one of the best examples of Brazilian media bias. Starting in March 2014, daily newscasts around the country focused on investigations into alleged involvement of PT politicians in the scandal – at the same time minimizing or even omitting involvement of politicians from the PSDB, the Brazilian Democratic Movement Party (PMDB), the Progressive Party (PP) and other parties.

O Estado de S. Paulo, a prominent newspaper, went so far as to change a headline on its site to shift focus from the national president of the PSDB, Aécio Neves’s, involvement in the siphoning off of resources from the Furnas Hydroelectric Project, as uncovered in the Carwash investigation. The headline accompanying the article read: “In Carwash, [Albert Youssef, a money changer and one of the principal operators of the scheme] says Aécio received money funneled away from Furnas,” but was later transformed into “[Chief prosecutor Rodrigo] Janot asks to table [that is, remove from consideration] the investigation against Aécio, cited by Youssef.” A February 6, 2015 editorial from the same newspaper assures that the “assault on Petrobras” results from “the effects of a cold and boldly elaborated strategy of consolidation of the political hegemony” of the Workers’ Party.

Despite whistleblowers having stated a day earlier that the siphoning off of money from the oil company went back to at least 1997—that is, when Fernando Henrique Cardoso (PSDB) was still president—O Estado de S. Paulo never retracted the accusation in its editorial, and repeatedly distorted the facts to convince its readers that the PT is responsible for the “invention” of corruption in Brazil.

O Globo’s editorial line follows a similar approach. A piece published on March 12, 2015 describes “the corruption scheme created in the country’s largest state company with the blessing of lulopetismo, in conjunction with allies from the PMDB and the PP,” allegedly revealed through the deposition of a former manager of the oil company, Pedro Barroso before a congressional investigating commission on Petrobras in the Chamber of Deputies. Even though the newspaper recognizes that there was embezzlement at the state company during various governments, including the tucano (PSDB) governments, the editorial proclaims that this will not “detract from lulopetismo being the first in making a wide and well-organized assault upon the state company” – despite the fact that among the approximately 50 politicians subpoenaed so far, only eight are petistas, while 31 are cadres of the PP (the PP’s involvement was described in Youseff’s depositions).

The arrest of José Dirceu added fuel to the fire. A historic cadre of the PT, Dirceu was arrested based on declarations from others arrested under Operation Carwash who cut deals with authorities to provide information in exchange for reduced sentences. Proof of his involvement is yet to be presented. His arrest occurred the morning of August 3, 2015, and was widely covered on the front pages of newspapers, with special mentions during newscasts, and on news sites, and they were unanimous in their judgment: The Federal Police had finally gotten to the heart of corruption in Petrobras. More importantly, they will eventually get Lula, the stories insinuated.

O Globo’s front page on August 4, 2015 highlighted a cartoon by Chico Caruso in which José Dirceu is seen behind bars whispering into a smartphone, with a picture of Lula stamped on it, the title of a famous Brazilian song by Rita Lee, “Now, only you are missing.” Merval Pereira, a columnist at O Globoasked, the same day, if the money funneling scheme’s “chain of command stopped with Dirceu.” While recalling that the political scenario today differs from that in which previous scandals took place, Merval affirmed that “it is already possible to ask and discuss whether Lula will be arrested.”

Igor Gielow, who writes for Folha de S. Paulo, makes it very clear that José Dirceu’s arrest once again puts the PT under the spotlight of the investigation (and of the media), exactly at a moment when the focus of the Petrobras scandal seemed to be moving toward the involvement of leaders of the PMDB, like Eduardo Cunha and Renan Calheiros, the presidents of the Senate and of the Chamber of Deputies, respectively.

During the little more than 500 days that Operation Carwash has been going on, there has not been one day in which newspapers have not been filled with stories related to the case. The most careful reader should question why other investigations receive little or no attention from the major media. Take for example, the so-called “mensalão tucano.” Considered the embryo of the “mensalão petista” (a bribe scheme for buying political support in Congress for which José Dirceu and José Genoíno, another important petista cadre, were jailed in 2012), it consisted of channeling more than US$ 3.9 million from the coffers of public companies in Minas Gerais in order to finance the failed campaign of then state governor Eduardo Azeredo, in 1998.

Despite investigations into the case having begun more than ten years ago, and the judicial process more than five years ago, the mensalão tucano has not led to anyone being sentenced, and some of the accused, such as Aécio Neves and Antonio Anastasia (both occupying seats in the Senate), still await judgment while retaining their high-level positions —far from the media’s scrutiny.

The media war on the government and on the petista national plan has been bearing fruit. A poll taken by Ibope in May of this year shows that 48 percent of those interviewed are pessimistic about the country’s future. Yet the poll also revealed information that went widely unreported: 41 percent of those interviewed said they believe the media’s portrayal of the country’s economic situation is overly negative. Only 28 percent disagreed with that sentiment.

Perhaps this is a sign that the Brazilian public is wising up to the systematic bias found in their country’s major media.

Aline Cristiane Piva is a political analyst at the Brazil-based communications group Entrelinhas, and a specialist in international relations at the University of Brasília and in international law at the University of Londrina.

Newly released emails reaffirm that then Secretary of State Hillary Clinton worked to help Honduras’ 2009 military coup succeed. Lee Fang writes for The Intercept:

The Hillary Clinton emails released last week include some telling exchanges about the June 2009 military coup that toppled democratically elected Honduran president Manuel Zelaya, a leftist who was seen as a threat by the Honduran establishment and U.S. business interests.

One of the most damning new emails, cited by Fang, is penned by veteran diplomat Thomas Shannon, Assistant Secretary of State for Western Hemisphere Affairs at the time (and now Counselor of the Department). Shannon’s email makes clear something also detailed in the scores of State Department cables made available by WikiLeaks that we examined and analyzed for the forthcoming book, “The WikiLeaks Files”: Although the U.S. State Department claims to be a neutral observer of elections around the world, the U.S. government invariably has candidates and parties that it wants to win, often – if not routinely – channeling support to these candidates and parties, whether the support be political, material or otherwise.

Here’s then State Department spokesperson Sean McCormack in 2006, just prior to Nicaragua’s presidential elections, in a cable we cite in the book:

We do not … we are not trying to shade opinion or to try to take a position. This is a democratic election. If you look around the globe, we do not take positions. We do not try to influence these elections.

Here’s then Assistant Secretary Shannon in an email [PDF] to Clinton just after the results of Honduras’ November 2009 election were announced:

The turnout (probably a record) and the clear rejection of the Liberal Party shows our approach was the right one, and puts Brazil and others who would not recognize the election in an impossible position. As we think about what to say, I would strongly recommend that we not be shy. We should congratulate the Honduran people, we should connect today’s vote to the deep democratic vocation of the Honduran people, and we should call on the community of democratic nations (and especially those of the Americas) to recognize, respect, and respond to this accomplishment of the Honduran people.

Finally, this Administration, which worked so hard to manage and resolve this crisis, should be the one who defines the results and perceptions of today’s vote, and not our critics on the Hill (who had no clear pathway to elections) or our adversaries in the region (who never wanted this day to happen).

His statement is all the more blatant considering that by “Brazil and others who would not recognize the election” Shannon may well have meant most of Latin America, since an overwhelming majority of regional heads of state deemed the elections illegitimate.

Of course McCormack’s statement in 2006 was just as false as State official statements ahead of the November 29, 2009 election in Honduras that supported Zelaya’s restitution as president. In the book, we detail various ways in which McCormack’s statement was belied at the time by U.S. activities in Nicaragua supporting candidates running against Sandinista candidate Daniel Ortega:

Encourag[ing] support of democratic candidates by encouraging funds to flow in the right direction; promoting defections of salvageable individuals from the PLC camp; granting [Eduardo Montealegre of the Nicaraguan Liberal Alliance] high-profile meetings in the United States; bringing internationally recognized speakers to discuss successful reform campaigns; and countering direct partisan support to the FSLN from external forces …

… among other methods, including the use of “rap sheets” to depict Ortega and other candidates the U.S. considered unacceptable in an unsavory light. Still, Shannon’s frank suggestions on framing the consolidation of the coup with the victory of the National Party and rejection of the Liberal Party (to which ousted president Manuel Zelaya then belonged) is revelatory in part because of Shannon’s reputation as one of the U.S.’ most effective diplomats in Latin America.

The emails’ release is especially timely, as Shannon is currently traveling to Honduras, El Salvador and Nicaragua. The Obama administration has been conspicuously silent about the corruption scandals rocking Honduras, with tens of thousands of protesters taking to the streets each week calling for President Juan Orlando Hernandez (also of the National Party) to step down. Shannon’s visit to Honduras will send a strong message of support to a president whose party may well have diverted funds from the national health system in order to support his campaign, who oversaw the “technical coup” that removed Supreme Court justices opposed to legislation that Hernandez championed, and who has responded to an ongoing human rights crisis – including routine murders of journalists and the targeting of minoritieswith more military police.

Newly released emails reaffirm that then Secretary of State Hillary Clinton worked to help Honduras’ 2009 military coup succeed. Lee Fang writes for The Intercept:

The Hillary Clinton emails released last week include some telling exchanges about the June 2009 military coup that toppled democratically elected Honduran president Manuel Zelaya, a leftist who was seen as a threat by the Honduran establishment and U.S. business interests.

One of the most damning new emails, cited by Fang, is penned by veteran diplomat Thomas Shannon, Assistant Secretary of State for Western Hemisphere Affairs at the time (and now Counselor of the Department). Shannon’s email makes clear something also detailed in the scores of State Department cables made available by WikiLeaks that we examined and analyzed for the forthcoming book, “The WikiLeaks Files”: Although the U.S. State Department claims to be a neutral observer of elections around the world, the U.S. government invariably has candidates and parties that it wants to win, often – if not routinely – channeling support to these candidates and parties, whether the support be political, material or otherwise.

Here’s then State Department spokesperson Sean McCormack in 2006, just prior to Nicaragua’s presidential elections, in a cable we cite in the book:

We do not … we are not trying to shade opinion or to try to take a position. This is a democratic election. If you look around the globe, we do not take positions. We do not try to influence these elections.

Here’s then Assistant Secretary Shannon in an email [PDF] to Clinton just after the results of Honduras’ November 2009 election were announced:

The turnout (probably a record) and the clear rejection of the Liberal Party shows our approach was the right one, and puts Brazil and others who would not recognize the election in an impossible position. As we think about what to say, I would strongly recommend that we not be shy. We should congratulate the Honduran people, we should connect today’s vote to the deep democratic vocation of the Honduran people, and we should call on the community of democratic nations (and especially those of the Americas) to recognize, respect, and respond to this accomplishment of the Honduran people.

Finally, this Administration, which worked so hard to manage and resolve this crisis, should be the one who defines the results and perceptions of today’s vote, and not our critics on the Hill (who had no clear pathway to elections) or our adversaries in the region (who never wanted this day to happen).

His statement is all the more blatant considering that by “Brazil and others who would not recognize the election” Shannon may well have meant most of Latin America, since an overwhelming majority of regional heads of state deemed the elections illegitimate.

Of course McCormack’s statement in 2006 was just as false as State official statements ahead of the November 29, 2009 election in Honduras that supported Zelaya’s restitution as president. In the book, we detail various ways in which McCormack’s statement was belied at the time by U.S. activities in Nicaragua supporting candidates running against Sandinista candidate Daniel Ortega:

Encourag[ing] support of democratic candidates by encouraging funds to flow in the right direction; promoting defections of salvageable individuals from the PLC camp; granting [Eduardo Montealegre of the Nicaraguan Liberal Alliance] high-profile meetings in the United States; bringing internationally recognized speakers to discuss successful reform campaigns; and countering direct partisan support to the FSLN from external forces …

… among other methods, including the use of “rap sheets” to depict Ortega and other candidates the U.S. considered unacceptable in an unsavory light. Still, Shannon’s frank suggestions on framing the consolidation of the coup with the victory of the National Party and rejection of the Liberal Party (to which ousted president Manuel Zelaya then belonged) is revelatory in part because of Shannon’s reputation as one of the U.S.’ most effective diplomats in Latin America.

The emails’ release is especially timely, as Shannon is currently traveling to Honduras, El Salvador and Nicaragua. The Obama administration has been conspicuously silent about the corruption scandals rocking Honduras, with tens of thousands of protesters taking to the streets each week calling for President Juan Orlando Hernandez (also of the National Party) to step down. Shannon’s visit to Honduras will send a strong message of support to a president whose party may well have diverted funds from the national health system in order to support his campaign, who oversaw the “technical coup” that removed Supreme Court justices opposed to legislation that Hernandez championed, and who has responded to an ongoing human rights crisis – including routine murders of journalists and the targeting of minoritieswith more military police.

On Sunday, October 4, 1998, as international bankers, investors, finance ministers and officials from the leading multilateral development banks met in Washington for the annual World Bank and International Monetary Fund meetings, many eyes were looking south, to Brazil.

Late in the afternoon, when Brazil’s finance minister broke the news that Fernando Henrique Cardoso had narrowly won Brazil’s election in the first round, “the room broke into loud applause,” according to Bob Fernandez reporting for Knight Ridder. “Cardoso is an International Monetary Fund favorite,” Fernandez explained.

Officials had been scrambling for weeks to put together an international bailout package for Brazil in response to the Asian Financial Crisis, which threatened to spread to other emerging markets, including those in South America. But the negotiations were held behind closed doors. With key elections on the horizon in Brazil, Cardoso, the incumbent and leading candidate, went to great lengths to distance himself from the IMF package. The New York Times reported on October 1: “Among ordinary Brazilians, the I.M.F. is associated, if not faulted, for a punishing recession through the 1980’s.”

On October 2, Reuters reported that Cardoso “has repeatedly denied that he will announce austerity measures immediately after the polls close.” Even after his first-round victory, Cardoso was reluctant to announce any measures before governors and state officials faced critical run-off elections later in the month, worried that an embrace of the IMF plan could hurt their chances.

Cardoso’s main opponent in the presidential race was Luiz Inacio Lula da Silva of the Workers’ Party, who would later go on to win the presidency in 2002, and again in 2006. Lula voiced strong criticism of any potential deal with the IMF, saying that it would “tighten one more knot on the neck around Brazilians.” Lula would go on to end Brazil’s borrowing relationship with the Fund in 2005 when he was president. But the U.S. and other leading players in the global financial system were seen as heavily supportive of Cardoso in ‘98. The New York Times reported in late September (emphasis added):

The proposed package would be openly negotiated only after the presidential election in Brazil next Sunday, and only if — as expected — Mr. Cardoso is re-elected. Nevertheless, a senior Clinton Administration official acknowledged on Friday that active discussions are already in progress with the Brazilians, the I.M.F., other governments and private lenders.

If Lula were elected, the IMF support would never materialize. Peter Fritsch of the Wall Street Journalwrote in early October that it wasn’t so much the money that Brazil needed, but a “stamp of approval.” This is backed up in internal documents obtained through Freedom of Information Act (FOIA) requests. A briefing on an October 3, 1998 meeting with the G-7 finance ministers, just one day before the presidential election, notes that any Brazil package “needs G-7 backing to go in alongside the IMF. Not just a matter of money – also a matter of showing G-7 support and leadership in fighting contagion.” The document also notes that “Brazil has been working with the IMF” for some time on an agreement, despite the fact that Cardoso had yet to formally or publicly request such support.

Indeed, the U.S. wasn’t just interested in saving Brazil for Brazil’s sake. “The financial stability and prosperity of Brazil is of vital importance to the U.S.,” then Treasury Secretary Robert Rubin said. Fernandez explained in his report for Knight Ridder:

U.S. companies and the American economy have a big stake in Cardoso’s success. About 2,000 U.S. companies have operations in Brazil, including 405 of the 500 largest U.S. firms. U.S. banks have about $27 billion at risk in Brazil, some of which could be lost if the country is forced to default or reschedule its debts.

Rubin wasn’t the only official involved in the Brazilian negotiations who would have a role, just over a decade later, in engineering the bailout of U.S. banks. Timothy Geithner was Assistant Secretary for International Affairs in the Treasury Department in 1998 while Lawrence Summers was the Deputy Secretary under Rubin.

In order to get more information about the behind-the-scenes negotiations taking place in the fall of 1998, the Center for Economic and Policy Research filed a FOIA request with the U.S. Department of the Treasury back in 2013. Unfortunately, the documents that were released just this month are subject to much censorship. Of 111 pages, 44 were withheld in full, while 26 were heavily redacted. The few documents released in full contain little of substance. But the exemption used in the redactions is just as interesting as the mysterious text behind the black markings. The vast majority of redactions were made under (b)(1), which “protects information that could reasonably be expected to cause identifiable or describable damage to the national security as it pertains to foreign relations or foreign activities of the United States.”

Whatever was happening behind the scenes in the fall of ’98, the U.S. government still doesn’t want the public – including the Brazilian public – to know about it even 17 years later. 

Brazil IMF FOIA Oct 3 G7 Meeting by Center for Economic and Policy Research

IMF Treasury Brazil 1998_FOIA_1 by Center for Economic and Policy Research

IMF Treasury Brazil 1998_FOIA_2 by Center for Economic and Policy Research

On Sunday, October 4, 1998, as international bankers, investors, finance ministers and officials from the leading multilateral development banks met in Washington for the annual World Bank and International Monetary Fund meetings, many eyes were looking south, to Brazil.

Late in the afternoon, when Brazil’s finance minister broke the news that Fernando Henrique Cardoso had narrowly won Brazil’s election in the first round, “the room broke into loud applause,” according to Bob Fernandez reporting for Knight Ridder. “Cardoso is an International Monetary Fund favorite,” Fernandez explained.

Officials had been scrambling for weeks to put together an international bailout package for Brazil in response to the Asian Financial Crisis, which threatened to spread to other emerging markets, including those in South America. But the negotiations were held behind closed doors. With key elections on the horizon in Brazil, Cardoso, the incumbent and leading candidate, went to great lengths to distance himself from the IMF package. The New York Times reported on October 1: “Among ordinary Brazilians, the I.M.F. is associated, if not faulted, for a punishing recession through the 1980’s.”

On October 2, Reuters reported that Cardoso “has repeatedly denied that he will announce austerity measures immediately after the polls close.” Even after his first-round victory, Cardoso was reluctant to announce any measures before governors and state officials faced critical run-off elections later in the month, worried that an embrace of the IMF plan could hurt their chances.

Cardoso’s main opponent in the presidential race was Luiz Inacio Lula da Silva of the Workers’ Party, who would later go on to win the presidency in 2002, and again in 2006. Lula voiced strong criticism of any potential deal with the IMF, saying that it would “tighten one more knot on the neck around Brazilians.” Lula would go on to end Brazil’s borrowing relationship with the Fund in 2005 when he was president. But the U.S. and other leading players in the global financial system were seen as heavily supportive of Cardoso in ‘98. The New York Times reported in late September (emphasis added):

The proposed package would be openly negotiated only after the presidential election in Brazil next Sunday, and only if — as expected — Mr. Cardoso is re-elected. Nevertheless, a senior Clinton Administration official acknowledged on Friday that active discussions are already in progress with the Brazilians, the I.M.F., other governments and private lenders.

If Lula were elected, the IMF support would never materialize. Peter Fritsch of the Wall Street Journalwrote in early October that it wasn’t so much the money that Brazil needed, but a “stamp of approval.” This is backed up in internal documents obtained through Freedom of Information Act (FOIA) requests. A briefing on an October 3, 1998 meeting with the G-7 finance ministers, just one day before the presidential election, notes that any Brazil package “needs G-7 backing to go in alongside the IMF. Not just a matter of money – also a matter of showing G-7 support and leadership in fighting contagion.” The document also notes that “Brazil has been working with the IMF” for some time on an agreement, despite the fact that Cardoso had yet to formally or publicly request such support.

Indeed, the U.S. wasn’t just interested in saving Brazil for Brazil’s sake. “The financial stability and prosperity of Brazil is of vital importance to the U.S.,” then Treasury Secretary Robert Rubin said. Fernandez explained in his report for Knight Ridder:

U.S. companies and the American economy have a big stake in Cardoso’s success. About 2,000 U.S. companies have operations in Brazil, including 405 of the 500 largest U.S. firms. U.S. banks have about $27 billion at risk in Brazil, some of which could be lost if the country is forced to default or reschedule its debts.

Rubin wasn’t the only official involved in the Brazilian negotiations who would have a role, just over a decade later, in engineering the bailout of U.S. banks. Timothy Geithner was Assistant Secretary for International Affairs in the Treasury Department in 1998 while Lawrence Summers was the Deputy Secretary under Rubin.

In order to get more information about the behind-the-scenes negotiations taking place in the fall of 1998, the Center for Economic and Policy Research filed a FOIA request with the U.S. Department of the Treasury back in 2013. Unfortunately, the documents that were released just this month are subject to much censorship. Of 111 pages, 44 were withheld in full, while 26 were heavily redacted. The few documents released in full contain little of substance. But the exemption used in the redactions is just as interesting as the mysterious text behind the black markings. The vast majority of redactions were made under (b)(1), which “protects information that could reasonably be expected to cause identifiable or describable damage to the national security as it pertains to foreign relations or foreign activities of the United States.”

Whatever was happening behind the scenes in the fall of ’98, the U.S. government still doesn’t want the public – including the Brazilian public – to know about it even 17 years later. 

Brazil IMF FOIA Oct 3 G7 Meeting by Center for Economic and Policy Research

IMF Treasury Brazil 1998_FOIA_1 by Center for Economic and Policy Research

IMF Treasury Brazil 1998_FOIA_2 by Center for Economic and Policy Research

Brazil currently has its most conservative Congress in decades. As violence against social movements increases and the criminalization of Brazilian social movements in the media and judiciary intensifies, it is a good time to take a closer look at who these movements are and what they are doing. How did they start, and what is their position in the current political context? This article is meant to serve as a very brief introduction to two of the largest Brazilian social movements: the MST and the UNMP.

During the 1970s, as Brazil suffered under a U.S.-supported neofascist military dictatorship, liberation theology factions within the Catholic Church created political organizing groups, called ecclesiastic base communities, in poor villages and slums. Using methodological tools developed by philosophers such as Paulo Freire, and influenced by Marxism, the priests and nuns began to develop local leaders and organize exchanges among them at the local, regional and national level. There were other factors at work, but the role that liberation theologians played, from the final years of the dictatorship until their censure by the Church hierarchy in the late 1980s and early 1990s, was fundamental in the formation of the popular (or “poor people’s”) social movements. These movements played an important part in creating one of world’s most progressive constitutions, as well as in the formation of the PT (Workers Party), and the elections and re-elections of Lula Inacio da Silva and Dilma Rousseff.

FNRUPhoto courtesy of the UNMP-São Paulo.

The Movimento dos Trabalhadores Sem Terra, or MST (commonly called the Landless Peasants’ Movement, or Landless Workers’ Movement), was created in 1984 to address historic inequalities in rural areas (caused by 500 years of monoculture) by fighting for agrarian reform, collectively squatting on and farming on unproductive land under the slogan “Occupy, Resist, Produce.” Due mainly to its efforts, this practice is considered legal under the 1988 Constitution (although the Constitution is frequently ignored by local governments and the judiciary in Brazil) and is now regulated, supported and protected by a government agency called the Instituto Nacional de Colonização e Reforma Agrária.

Over the first 16 years of its existence, the MST established small farms for 250,000 of its affiliated families. During the Lula presidency, the MST began to shift its focus, slowing the number of land occupations and consolidating democratic, community control over its hundreds of villages spread across 23 states. Lula increased educational funding for agrarian-reform village residents by over 500 percent, with funding for adult literacy (using a highly effective Cuban methodology) and teacher training programs made in partnership with public universities so that they could staff, manage and develop curriculums for the public schools built in their villages. There are currently thousands of MST members studying at public universities, with many producing high-quality research on the MST and agrarian reform, and many local schools in MST villages staffed entirely by movement members.

Over the past 15 years, the MST strengthened its relationship with the Via Campesina International Peasants’ Movement, engaging in political organizing work in countries around the developing world and coordinating large protests against mining and agribusiness multinationals like Vale and Cargill.  In 2004, over 1,000 MST members built a political organizing school with degree-granting capability called the Escola Florestan Fernandes [PDF]. The school has a working organic farm, where young poor people from around the developing world come on exchange visits to work and study, and receives financial and technical support from the Brazilian government, which supports joint projects with public universities around the country.

Despite the frequent mischaracterization of one of its national leaders, João Pedro Stedile, as the MST’s director in the conservative media, the MST does not have a single leader, but operates according to a democratic structure in which pairs of male and female representatives, chosen at the family cluster, village, regional and state levels, serve two-year terms and can be removed from above or below any time their work is not deemed satisfactory, with the 23 pairs of state-level representatives serving as national directors.

The MST also has close relations with the Central Única dos Trabalhadores (CUT) labor union federation, and the governments of Cuba, Venezuela and Bolivia, among others, and has adopted a policy of critical engagement with the PT. The MST generally supports the PT in elections, as in most recently the re-election of Dilma Rousseff, but protests against various elements of government policy that it disagrees with, especially government support for agribusiness, which has grown particularly egregious under Rousseff’s second administration. 

The União Nacional por Moradia Popular (UNMP, the National Union for Popular Housing) was formed by ecclesiastical base community leaders from Paraná, São Paulo and Minas Gerais states during the national mobilization for people’s amendments to the 1988 Constitution, and currently operates in 19 states. Essentially, it is a federation of dozens of urban housing movements, with some 200,000 members from around the country. The members of the UNMP employ two strategies to achieve their goal of guaranteeing the constitutional right to dignified housing and endorsement of the social function of property. The first strategy is to occupy abandoned buildings in the downtown areas of major cities, resisting eviction and pressuring local governments to rehabilitate the buildings and convert them into public housing. The second strategy is to occupy unproductive, vacant land on urban peripheries and build autonomous, self-managed housing cooperatives.

President Lula incorporated funding for social movements to build such cooperatives on unproductive land into his national development strategy, through the R$2.3 billion National Social Interest Housing Fund, which was then expanded and incorporated into the R$216 billion national housing program, Minha Casa Minha Vida [PDF], which, in addition to funding construction of millions of housing units for the middle class,  subsidizes social movements’ autonomous construction of around 20,000 housing units per year. According to program guidelines, the deeds to these properties are automatically registered in the name of the woman of the household, and the results to date have mainly been condominium complexes located on the urban peripheries. 

The UNMP has historic ties with the PT.  Although, in my opinion, it has a less critical posture with regard to the PT than the MST, the UNMP also engages in protests against the federal government, often pressuring for more funding for autonomous housing construction, and for the prioritizing of projects closer to downtown areas. Last month, it joined the MST, other social movements like the Movimento Nacional de Luta pela Moradia and the Homeless Workers’ Movement (MTST), and the CUT and Central dos Trabalhadores e Trabalhadoras do Brasil labor union federations, in protests against a congressional bill that would greatly increase companies’ ability to outsource, and against the austerity measures proposed by Dilma Rousseff’s new, neoliberal finance minister, Joaquim Levy. The protesters were attacked by police in front of the Federal Congress building and several were hospitalized.

When some middle-class intellectuals make valid criticisms of the PT from the left – and there is plenty to complain about – they occasionally accuse the PT of co-opting social movements. I view this as a gross oversimplification that shows a lack of respect for the base members’ agency and a misunderstanding of the democratic processes by which these movements self-govern. I’ve worked with social movement leadership and rank and file for the past decade in Brazil and see no signs of individual co-optation. The national leaders of the MST receive a living stipend from the movement, equivalent to one minimum salary. The national leadership of the UNMP live in their own public housing along with other movement members. If a social movement receives some of what it has been fighting for and supports a government in an election as a result, has it been co-opted or is it merely voting in its best interests? Although both the MST and the UNMP support socialism, all favor construction of Gramscian counterhegemony over armed revolt as a strategy for achieving this. I believe that the reason they still support the PT is because, although they value the moral criticism raised by further-left parties such as the PSOL (Socialism and Freedom Party) and PSTU (United Socialist Workers’ Party), they don’t see them as capable of gaining electoral power.

On the other hand, how does the movements’ public support for a political party that has been in power for 13 years and been involved in a series of corruption scandals, affect the ability to mobilize naturally rebellious young people in the movements?  Membership in the social movement leadership and rank and file is aging and with the surge of evangelical Christianity among the poor, the weakened ecclesiastical base communities are no longer capable of introducing large numbers of young people into the movements.  One of the biggest challenges that the MST and UNMP face is how to mobilize youth in the struggle for agrarian and urban reform. In the current shifting political climate, it will be interesting to see if and how they meet this challenge.


Brian Mier is an American social scientist, activist and writer who has lived in Brazil for nearly 20 years.

Brazil currently has its most conservative Congress in decades. As violence against social movements increases and the criminalization of Brazilian social movements in the media and judiciary intensifies, it is a good time to take a closer look at who these movements are and what they are doing. How did they start, and what is their position in the current political context? This article is meant to serve as a very brief introduction to two of the largest Brazilian social movements: the MST and the UNMP.

During the 1970s, as Brazil suffered under a U.S.-supported neofascist military dictatorship, liberation theology factions within the Catholic Church created political organizing groups, called ecclesiastic base communities, in poor villages and slums. Using methodological tools developed by philosophers such as Paulo Freire, and influenced by Marxism, the priests and nuns began to develop local leaders and organize exchanges among them at the local, regional and national level. There were other factors at work, but the role that liberation theologians played, from the final years of the dictatorship until their censure by the Church hierarchy in the late 1980s and early 1990s, was fundamental in the formation of the popular (or “poor people’s”) social movements. These movements played an important part in creating one of world’s most progressive constitutions, as well as in the formation of the PT (Workers Party), and the elections and re-elections of Lula Inacio da Silva and Dilma Rousseff.

FNRUPhoto courtesy of the UNMP-São Paulo.

The Movimento dos Trabalhadores Sem Terra, or MST (commonly called the Landless Peasants’ Movement, or Landless Workers’ Movement), was created in 1984 to address historic inequalities in rural areas (caused by 500 years of monoculture) by fighting for agrarian reform, collectively squatting on and farming on unproductive land under the slogan “Occupy, Resist, Produce.” Due mainly to its efforts, this practice is considered legal under the 1988 Constitution (although the Constitution is frequently ignored by local governments and the judiciary in Brazil) and is now regulated, supported and protected by a government agency called the Instituto Nacional de Colonização e Reforma Agrária.

Over the first 16 years of its existence, the MST established small farms for 250,000 of its affiliated families. During the Lula presidency, the MST began to shift its focus, slowing the number of land occupations and consolidating democratic, community control over its hundreds of villages spread across 23 states. Lula increased educational funding for agrarian-reform village residents by over 500 percent, with funding for adult literacy (using a highly effective Cuban methodology) and teacher training programs made in partnership with public universities so that they could staff, manage and develop curriculums for the public schools built in their villages. There are currently thousands of MST members studying at public universities, with many producing high-quality research on the MST and agrarian reform, and many local schools in MST villages staffed entirely by movement members.

Over the past 15 years, the MST strengthened its relationship with the Via Campesina International Peasants’ Movement, engaging in political organizing work in countries around the developing world and coordinating large protests against mining and agribusiness multinationals like Vale and Cargill.  In 2004, over 1,000 MST members built a political organizing school with degree-granting capability called the Escola Florestan Fernandes [PDF]. The school has a working organic farm, where young poor people from around the developing world come on exchange visits to work and study, and receives financial and technical support from the Brazilian government, which supports joint projects with public universities around the country.

Despite the frequent mischaracterization of one of its national leaders, João Pedro Stedile, as the MST’s director in the conservative media, the MST does not have a single leader, but operates according to a democratic structure in which pairs of male and female representatives, chosen at the family cluster, village, regional and state levels, serve two-year terms and can be removed from above or below any time their work is not deemed satisfactory, with the 23 pairs of state-level representatives serving as national directors.

The MST also has close relations with the Central Única dos Trabalhadores (CUT) labor union federation, and the governments of Cuba, Venezuela and Bolivia, among others, and has adopted a policy of critical engagement with the PT. The MST generally supports the PT in elections, as in most recently the re-election of Dilma Rousseff, but protests against various elements of government policy that it disagrees with, especially government support for agribusiness, which has grown particularly egregious under Rousseff’s second administration. 

The União Nacional por Moradia Popular (UNMP, the National Union for Popular Housing) was formed by ecclesiastical base community leaders from Paraná, São Paulo and Minas Gerais states during the national mobilization for people’s amendments to the 1988 Constitution, and currently operates in 19 states. Essentially, it is a federation of dozens of urban housing movements, with some 200,000 members from around the country. The members of the UNMP employ two strategies to achieve their goal of guaranteeing the constitutional right to dignified housing and endorsement of the social function of property. The first strategy is to occupy abandoned buildings in the downtown areas of major cities, resisting eviction and pressuring local governments to rehabilitate the buildings and convert them into public housing. The second strategy is to occupy unproductive, vacant land on urban peripheries and build autonomous, self-managed housing cooperatives.

President Lula incorporated funding for social movements to build such cooperatives on unproductive land into his national development strategy, through the R$2.3 billion National Social Interest Housing Fund, which was then expanded and incorporated into the R$216 billion national housing program, Minha Casa Minha Vida [PDF], which, in addition to funding construction of millions of housing units for the middle class,  subsidizes social movements’ autonomous construction of around 20,000 housing units per year. According to program guidelines, the deeds to these properties are automatically registered in the name of the woman of the household, and the results to date have mainly been condominium complexes located on the urban peripheries. 

The UNMP has historic ties with the PT.  Although, in my opinion, it has a less critical posture with regard to the PT than the MST, the UNMP also engages in protests against the federal government, often pressuring for more funding for autonomous housing construction, and for the prioritizing of projects closer to downtown areas. Last month, it joined the MST, other social movements like the Movimento Nacional de Luta pela Moradia and the Homeless Workers’ Movement (MTST), and the CUT and Central dos Trabalhadores e Trabalhadoras do Brasil labor union federations, in protests against a congressional bill that would greatly increase companies’ ability to outsource, and against the austerity measures proposed by Dilma Rousseff’s new, neoliberal finance minister, Joaquim Levy. The protesters were attacked by police in front of the Federal Congress building and several were hospitalized.

When some middle-class intellectuals make valid criticisms of the PT from the left – and there is plenty to complain about – they occasionally accuse the PT of co-opting social movements. I view this as a gross oversimplification that shows a lack of respect for the base members’ agency and a misunderstanding of the democratic processes by which these movements self-govern. I’ve worked with social movement leadership and rank and file for the past decade in Brazil and see no signs of individual co-optation. The national leaders of the MST receive a living stipend from the movement, equivalent to one minimum salary. The national leadership of the UNMP live in their own public housing along with other movement members. If a social movement receives some of what it has been fighting for and supports a government in an election as a result, has it been co-opted or is it merely voting in its best interests? Although both the MST and the UNMP support socialism, all favor construction of Gramscian counterhegemony over armed revolt as a strategy for achieving this. I believe that the reason they still support the PT is because, although they value the moral criticism raised by further-left parties such as the PSOL (Socialism and Freedom Party) and PSTU (United Socialist Workers’ Party), they don’t see them as capable of gaining electoral power.

On the other hand, how does the movements’ public support for a political party that has been in power for 13 years and been involved in a series of corruption scandals, affect the ability to mobilize naturally rebellious young people in the movements?  Membership in the social movement leadership and rank and file is aging and with the surge of evangelical Christianity among the poor, the weakened ecclesiastical base communities are no longer capable of introducing large numbers of young people into the movements.  One of the biggest challenges that the MST and UNMP face is how to mobilize youth in the struggle for agrarian and urban reform. In the current shifting political climate, it will be interesting to see if and how they meet this challenge.


Brian Mier is an American social scientist, activist and writer who has lived in Brazil for nearly 20 years.

While the maquiladora export industry is sometimes touted as a symbol of progress and development in underdeveloped countries, the reality for many workers implies otherwise. In Central America, maquilas act as multinational levers to gain profit, but are not a guarantee of a sufficient income for workers.

According to a 2014 report [PDF] published by labor and social organizations, in El Salvador, Guatemala and Honduras – the Northern Triangle countries of Central America – approximately 350,000 [PDF] workers are employed in the maquiladora industry: 80,000 in El Salvador, 150,729 in Guatemala and 120,000 in Honduras.  As Table 1 illustrates, on average, 54 percent [PDF] of these countries’ total exports to the U.S. are produced in the maquiladora industry (42 percent for El Salvador, 55 percent for Guatemala and 65 percent for Honduras).

Table 1

Data from the U.S. Office of Textiles and Apparel shows that Central America and the Dominican Republic produce around 10 percent of all apparel goods purchased in the U.S., of which 70 percent is produced in Guatemala, El Salvador and Honduras. This means that Central America is behind only China (which produces 36 percent) and Vietnam (which produces 11 percent) in clothing exports to the U.S. Among the largest sectors that Central America exports to the U.S. are cotton knitted T-shirts (23.1 percent of these U.S. imports in dollars) and cotton underwear (24.7 percent of these U.S. imports in dollars).

The apparel export industry in Central America is concentrated in the hands of a few multinationals. Fruit of the Loom, Hanes, and Gildan Activewear are three of the biggest North American corporations operating in Honduras, employing around 25 percent of maquiladora workers in the country. Fruit of the Loom alone employs approximately 24,000 workers in Honduras and El Salvador. Nike and Adidas also subcontract production to maquiladoras; together they have about 30 outsourcing companies in Honduras alone.

As the following graph shows, the daily minimum wage for workers in maquilas in the Northern Triangle countries represents, on average, 13 percent of the federal minimum wage in the U.S.

Minimum Wage Comparison
Source: Guatemala (www.mintrabajo.gob.gt), Honduras (http://www.trabajo.gob.hn/), El Salvador (http://www.mtps.gob.sv/), U.S. ( http://www.dol.gov).

Minimum wage levels in the maquiladora industry of the Northern Triangle countries are especially low considering the cost of a basket of basic consumer goods. A report [PDF] published by the Maquila Solidarity Network demonstrates the low purchasing power of the minimum wages earned by workers in maquiladoras. On average, these wages are equivalent to only 37 percent of the cost of the basic basket of consumer goods (including services).  

Cost of Monthly Basket of Basic Consumer Goods -Including Services (MBCG) vs. Maquiladora Minimum Wages, 2014 (USD)

MBCG vs Minimum Wage
Source: Maquila Solidarity Network report [PDF], elaborated with data from Central Banks, Ministries of Labor, Statistic National Institutes (Honduras and Guatemala) and DIGESTYC (El Salvador)

Despite the shocking disparity between the minimum wages and the cost of basic necessities, manufacturers and governments in the Northern Triangle have sought greater flexibility from workers in response to rising competition from China and falling demand in the decelerated U.S. economy.  

One of the most important changes that has taken place in the maquiladora industry since the economic crash of 2008 is the fall in minimum wages below those of the non-maquiladora industrial and service sectors. As the following graphs show, the gap between minimum wages in the maquiladora sector and in the non-maquila manufacturing sector, has been widening in the three Central American countries of the Northern Triangle.

Honduras Daily Minimum Wage
Source: www.trabajo.gob.hn

El Salvador Daily Minimum Wage
Source: www.mtps.gob.sv

Guatemala Daily Minimum Wage
Source: http://www.mintrabajo.gob.gt/

Of the three countries, Honduras shows the greatest difference between maquiladora and non-maquiladora minimum wages. In 2008, the Honduran government approved a 60 percent wage increase for all workers except those in the maquila industry. Since then, the minimum wage in the Honduran maquiladora industry has fallen well below the minimum wages for non-maquila industries.

In El Salvador, the difference between maquila and non-maquila minimum wages has deepened, from a 10 percent difference in 2007, to a 16.3 percent difference in 2014. If this trend continues — with an average yearly growth rate of 4.2 percent for non-maquila workers and 3.1 percent for maquila workers — the latter will be more than 21 percent lower in 2020.  

In Guatemala, there was actually no difference between the minimum wage for EPZ maquila workers and for those in other jobs, but as new wage policies were applied in 2008, this relationship changed; minimum wages in the maquiladora sector are now below the minimum wages in the non-maquila manufacturing sector. The Guatemalan case is the least dramatic, but if the average growth rate of minimum wages in different sectors does not change, minimum wages in maquilas will be 16.5 percent lower than in non-maquila and service sectors.

This suggests that cheap labor may be the greatest competitive advantage for Northern Triangle economies. Such an advantage comes at a cost. The lowering of workers’ wages in the maquiladora industry has become a useful tool by which multinationals can respond to a more sluggish U.S. economy.

There have been various demands for higher minimum wages in the maquiladoras in Central America; even the United Nations has expressed concern. However, governments in Central America have insisted on limiting wage growth in response to demands from manufacturers such as Fruit of the Loom, Gildan, Hanes, Adidas, Nike, and others, despite the costs to workers.

Recently, the U.S. and Central American governments have proposed tackling the migration crisis through the “Plan of the Alliance for Prosperity”; however as we have described in previous posts, “the plan makes no reference to greater bargaining power for workers, higher wages or increased benefits, let alone labor unions – all of which would indeed help to reduce inequality and poverty.” Instead, the governments insist on pushing down wages further, while largely addressing the issue of migration as a security problem. Instead of raising pay and ensuring good working conditions, the region is being militarized to contain outward migration. How about calling this the “pressure cooker model”?

While the maquiladora export industry is sometimes touted as a symbol of progress and development in underdeveloped countries, the reality for many workers implies otherwise. In Central America, maquilas act as multinational levers to gain profit, but are not a guarantee of a sufficient income for workers.

According to a 2014 report [PDF] published by labor and social organizations, in El Salvador, Guatemala and Honduras – the Northern Triangle countries of Central America – approximately 350,000 [PDF] workers are employed in the maquiladora industry: 80,000 in El Salvador, 150,729 in Guatemala and 120,000 in Honduras.  As Table 1 illustrates, on average, 54 percent [PDF] of these countries’ total exports to the U.S. are produced in the maquiladora industry (42 percent for El Salvador, 55 percent for Guatemala and 65 percent for Honduras).

Table 1

Data from the U.S. Office of Textiles and Apparel shows that Central America and the Dominican Republic produce around 10 percent of all apparel goods purchased in the U.S., of which 70 percent is produced in Guatemala, El Salvador and Honduras. This means that Central America is behind only China (which produces 36 percent) and Vietnam (which produces 11 percent) in clothing exports to the U.S. Among the largest sectors that Central America exports to the U.S. are cotton knitted T-shirts (23.1 percent of these U.S. imports in dollars) and cotton underwear (24.7 percent of these U.S. imports in dollars).

The apparel export industry in Central America is concentrated in the hands of a few multinationals. Fruit of the Loom, Hanes, and Gildan Activewear are three of the biggest North American corporations operating in Honduras, employing around 25 percent of maquiladora workers in the country. Fruit of the Loom alone employs approximately 24,000 workers in Honduras and El Salvador. Nike and Adidas also subcontract production to maquiladoras; together they have about 30 outsourcing companies in Honduras alone.

As the following graph shows, the daily minimum wage for workers in maquilas in the Northern Triangle countries represents, on average, 13 percent of the federal minimum wage in the U.S.

Minimum Wage Comparison
Source: Guatemala (www.mintrabajo.gob.gt), Honduras (http://www.trabajo.gob.hn/), El Salvador (http://www.mtps.gob.sv/), U.S. ( http://www.dol.gov).

Minimum wage levels in the maquiladora industry of the Northern Triangle countries are especially low considering the cost of a basket of basic consumer goods. A report [PDF] published by the Maquila Solidarity Network demonstrates the low purchasing power of the minimum wages earned by workers in maquiladoras. On average, these wages are equivalent to only 37 percent of the cost of the basic basket of consumer goods (including services).  

Cost of Monthly Basket of Basic Consumer Goods -Including Services (MBCG) vs. Maquiladora Minimum Wages, 2014 (USD)

MBCG vs Minimum Wage
Source: Maquila Solidarity Network report [PDF], elaborated with data from Central Banks, Ministries of Labor, Statistic National Institutes (Honduras and Guatemala) and DIGESTYC (El Salvador)

Despite the shocking disparity between the minimum wages and the cost of basic necessities, manufacturers and governments in the Northern Triangle have sought greater flexibility from workers in response to rising competition from China and falling demand in the decelerated U.S. economy.  

One of the most important changes that has taken place in the maquiladora industry since the economic crash of 2008 is the fall in minimum wages below those of the non-maquiladora industrial and service sectors. As the following graphs show, the gap between minimum wages in the maquiladora sector and in the non-maquila manufacturing sector, has been widening in the three Central American countries of the Northern Triangle.

Honduras Daily Minimum Wage
Source: www.trabajo.gob.hn

El Salvador Daily Minimum Wage
Source: www.mtps.gob.sv

Guatemala Daily Minimum Wage
Source: http://www.mintrabajo.gob.gt/

Of the three countries, Honduras shows the greatest difference between maquiladora and non-maquiladora minimum wages. In 2008, the Honduran government approved a 60 percent wage increase for all workers except those in the maquila industry. Since then, the minimum wage in the Honduran maquiladora industry has fallen well below the minimum wages for non-maquila industries.

In El Salvador, the difference between maquila and non-maquila minimum wages has deepened, from a 10 percent difference in 2007, to a 16.3 percent difference in 2014. If this trend continues — with an average yearly growth rate of 4.2 percent for non-maquila workers and 3.1 percent for maquila workers — the latter will be more than 21 percent lower in 2020.  

In Guatemala, there was actually no difference between the minimum wage for EPZ maquila workers and for those in other jobs, but as new wage policies were applied in 2008, this relationship changed; minimum wages in the maquiladora sector are now below the minimum wages in the non-maquila manufacturing sector. The Guatemalan case is the least dramatic, but if the average growth rate of minimum wages in different sectors does not change, minimum wages in maquilas will be 16.5 percent lower than in non-maquila and service sectors.

This suggests that cheap labor may be the greatest competitive advantage for Northern Triangle economies. Such an advantage comes at a cost. The lowering of workers’ wages in the maquiladora industry has become a useful tool by which multinationals can respond to a more sluggish U.S. economy.

There have been various demands for higher minimum wages in the maquiladoras in Central America; even the United Nations has expressed concern. However, governments in Central America have insisted on limiting wage growth in response to demands from manufacturers such as Fruit of the Loom, Gildan, Hanes, Adidas, Nike, and others, despite the costs to workers.

Recently, the U.S. and Central American governments have proposed tackling the migration crisis through the “Plan of the Alliance for Prosperity”; however as we have described in previous posts, “the plan makes no reference to greater bargaining power for workers, higher wages or increased benefits, let alone labor unions – all of which would indeed help to reduce inequality and poverty.” Instead, the governments insist on pushing down wages further, while largely addressing the issue of migration as a security problem. Instead of raising pay and ensuring good working conditions, the region is being militarized to contain outward migration. How about calling this the “pressure cooker model”?

On January 21, Mexican President Enrique Peña Nieto announced the beginning of a national program called “Mexico with Decent Work” (México con Trabajo Digno), with the stated mission to “promote the respect, protection and guarantee of human rights for workers in Mexico, as well as to ensure decent work is fully in force.” However, only two months later, as Secretary of Labor Alfonso Navarrete boasted that the program was rescuing people working practically in slave conditions, thousands of farmworkers in the San Quintín Valley in the Northeastern state of Baja California went on strike, demanding higher wages and better working conditions from the government and multinational corporations.

Negotiations have yet to move forward. The Mexican government seems unable to respond, perhaps because the organized farmworkers are challenging an alliance between multinational corporations, public officials who also have business in the valley, and corporate unionism– a system that protects the interests of employers.

San Quintín Valley is one of Mexico’s largest export regions, employing tens of thousands of farmworkers, many of them first or second generation indigenous migrants [PDF] originally from Southern Mexico. Each year the region generates more than six billion pesos (about $410 million) worth of agricultural products. It is estimated that there are 80 thousand farmworkers in the San Quintín Valley, and yet in the municipality of Ensenada, which encompasses all of San Quintín, there are less than 24 thousand farm workers registered with the Mexican Institute of Social Security (IMSS). The most important good produced is strawberries, but only a small portion of these are consumed in Mexico. Most are exported to the U.S. market to be sold by fast food chains, or in supermarkets like Wal-Mart, Safeway, or Whole Foods. Around 84 percent of U.S. imports of fresh strawberries come from Mexico, and Baja California leads Mexico’s production and export of strawberries.

Luis Hernández Navarro, Mexican journalist and coordinator of the opinion section of La Jornada, referred to the working conditions this way:

San Quintín’s day farmworkers labour in humiliating conditions on farms that grow produce for export: tomatoes, strawberries, blackberries. In exchange for starvation wages, they work up to 14- hour days without a weekly day of rest, let alone holidays or social security. Foremen sexually abuse the women, and they are forced to take their children to the premises to perform work.

… Many [workers] are indigenous migrants from Oaxaca (Mixtec and Triqui), Guerrero, Puebla and Veracruz, who have made San Quintín into another of their communities. Three generations of Oaxacalifornianos live there. They suffer constant police harassment. They rely on a single hospital [run by the] Mexican Social Security Institute [IMSS].

The strike launched by the Alliance of National, State and Municipal Organizations for Social Justice (AONEMJS) seeks a wage increase from $8.00 to $13.50 per day. The workers also demand their employers follow both their obligations to pay into Mexico’s social security and health insurance system, and the labor laws. The workers’ alliance also demands an end to sexual harassment in the fields and revocation of contracts with unions affiliated with the Institutional Revolutionary Party (PRI).

As of today, the Mexican government has shown no willingness to engage in any sort of dialogue. First the Baja California government responded with violence, but this failed to break the strike. Then there was a brief period of negotiations with local government representatives that also failed when the officials offered only a 15 percent pay increase, far short of meeting the demands presented by workers.

Although this conflict has received some coverage in the U.S. due to the efforts of the AFL-CIO and the Indigenous Front of Binational Organizations (FIOB), too little has been said about the responsibility of BerryMex, “one of Driscoll’s largest suppliers in the region” according to Rachel Luban from In These Times.[1]  Since the conflict began, BerryMex has published six press releases evading responsibility and insisting that they provide good working conditions for their workers. For example:

BerryMex has a long and established history of listening to worker concerns and taking action to provide them with the most comprehensive benefits, attractive earning capacity, and a healthy, safe and productive working environment.

And:

BerryMex provides comprehensive harvest employment opportunities including:

-Offering an average earning opportunity of between $5.00 – $9.00 (USD) per hour, ($75.00 mxp – $135,00 mxp) -and up to $10.00 (USD) ($150.00 mxp) per hour for high performers, resulting in the average weekly earnings of $3 600.00 pesos or $240.00 (USD) to 7,200.00 pesos or $480.00 (USD).

-This is approximately 8x the minimum federal wage and as much as 16x for high performers.

The Los Angeles Times has closely followed this conflict, and the Times’ Richard Marosi reported that BerryMex workers say they do not earn anywhere near the wage announced by the company:

Driscoll’s, in a statement last week, said BerryMex workers can earn $5 to $9 an hour.

That amount is inaccurate, farmworker leaders and several current and former BerryMex workers said. They say that under optimal conditions workers earn no more than $3 an hour, and that after peak harvest periods, pay drops to about half that amount.

One grower from the region, DeWayne Hafen, also questioned the BerryMex wage figures. Most pickers fill about 30 boxes a day during peak harvest periods, earning about $3.50 an hour, he said. The $9 figure, he said, isn’t possible.

On April 4, the Mixteco/Indigena Community Organizing Project and FIOB gathered outside Driscoll’s facilities in Oxnard, California in order to show the responsibility that this multinational has in the conflict in San Quintín. FIOB spokesperson Gaspar Rivera told a reporter for La Jornada that BerryMex was one of the companies that had negotiated a wage increase of 15 percent with the corporate unions, ignoring petitions made by the Alliance:

[Rivera] said that the “Revolutionary Confederation of Workers and Peasants (CROC), signed a “security contract” with the agro-businesses of San Quintín, including Driscoll’s company, accepting a wage increase of 15 percent, “on the backs of 80,000 workers and the Alliance,” which represented the workers in the negotiations.

BerryMex not only appears to be dishonest in saying that their employees get paid between $5 and $8 per hour, it also—along with other companies—takes advantage of the corporate union structure known as “sindicatos charros” in Mexico, in order to evade responsibility. Historically linked to the PRI, the CROC, the Confederation of Mexican Workers, and the Regional Confederation of Mexican Workers, who are all involved in the recruitment of farmworkers in San Quintín and  function as tools for employers to prevent the free association of workers, and are now being used by companies like Driscoll’s and BerryMex against the AONEMJS.

On Friday, May 9, federal authorities broke the agreement they had made to continue participating in negotiations. The undersecretary of the Mexican government, Luis Miranda, was expected to travel to San Quintín to meet with members of the AONEMJS, but he did not appear. The next day, during a “Global Action for San Quintín,” police violently broke up a protest of the AONEMJS outside the Rancho Seco company. As documented in La Jornada de Baja California, workers report being attacked:

Once he realized the situation, the owner of the farm called the police, who arrived at around 5:00 in the morning and charged at the day laborers who advocated for continuing the strike. Some of them ran towards their homes and were pursued by the police, who entered the homes and hit women and children even as they slept.

When BerryMex issued their first press release on the labor dispute, on March 21, it read, in part: “we strongly condemn the violence and looting from outside third parties which has negatively impacted families and small businesses across the region.” Why doesn’t BerryMex now condemn this police violence against farm workers which has resulted in 70 people injured, seven of them seriously? Why doesn’t BerryMex call for dialogue between the government and the AONEMJS?

This is not the first time that Driscoll’s has tried to evade its responsibilities to the workers who harvest its products; “its carefully crafted image obscures a record of unfair labor practices,” as Marosi reports. Even today, as San Quintín workers strike, farmworkers at the Sakuma Berry Farm in Burlington, Washington—an important supplier of Driscoll’s—have called for a boycott in order to pressure the firm to ensure that farmworkers get better wages, housing and working conditions. The farmworkers’ union, Familias Unidas por la Justicia (FUJ), said, “Almost every year, there has been a labor dispute, some end in firing and evictions, while others have been full on work stoppages with only one in 2004, resulting in minor temporary concessions.” Farmworkers at Sakuma Brothers Farms are calling for an end to what they describe “as wage theft, unfair piece rate agreements and verbal abuse during working hours,” as Leon Kaye wrote in Triple Pundit.

In San Quintín, the Alliance demonstrated its willingness to negotiate by lowering its request for a salary increase from $20 to $13 per day. However, the Mexican government has not reciprocated, proving that it is responsive only to the immediate interests of businesses. If Driscoll’s does not change its attitude toward the conflict in San Quintín, it will be showing that its growth is based on the insecurity and impoverishment of its workers. It would be proof that the company does not respect labor rights, and it would be a demonstration that it finds the corporate structure of Mexican unions extremely useful for its interests. Driscoll’s should take negotiations with the Alliance more seriously.

[1] The Los Angeles Times notes: “About one-quarter of the berries Driscoll’s gets from Baja come from growers other than BerryMex. Driscoll’s declined to provide the names of the other suppliers, which were described as small, locally owned farms.”


Mateo Crossa is an International Program Intern with the Center for Economic and Policy Research.

On January 21, Mexican President Enrique Peña Nieto announced the beginning of a national program called “Mexico with Decent Work” (México con Trabajo Digno), with the stated mission to “promote the respect, protection and guarantee of human rights for workers in Mexico, as well as to ensure decent work is fully in force.” However, only two months later, as Secretary of Labor Alfonso Navarrete boasted that the program was rescuing people working practically in slave conditions, thousands of farmworkers in the San Quintín Valley in the Northeastern state of Baja California went on strike, demanding higher wages and better working conditions from the government and multinational corporations.

Negotiations have yet to move forward. The Mexican government seems unable to respond, perhaps because the organized farmworkers are challenging an alliance between multinational corporations, public officials who also have business in the valley, and corporate unionism– a system that protects the interests of employers.

San Quintín Valley is one of Mexico’s largest export regions, employing tens of thousands of farmworkers, many of them first or second generation indigenous migrants [PDF] originally from Southern Mexico. Each year the region generates more than six billion pesos (about $410 million) worth of agricultural products. It is estimated that there are 80 thousand farmworkers in the San Quintín Valley, and yet in the municipality of Ensenada, which encompasses all of San Quintín, there are less than 24 thousand farm workers registered with the Mexican Institute of Social Security (IMSS). The most important good produced is strawberries, but only a small portion of these are consumed in Mexico. Most are exported to the U.S. market to be sold by fast food chains, or in supermarkets like Wal-Mart, Safeway, or Whole Foods. Around 84 percent of U.S. imports of fresh strawberries come from Mexico, and Baja California leads Mexico’s production and export of strawberries.

Luis Hernández Navarro, Mexican journalist and coordinator of the opinion section of La Jornada, referred to the working conditions this way:

San Quintín’s day farmworkers labour in humiliating conditions on farms that grow produce for export: tomatoes, strawberries, blackberries. In exchange for starvation wages, they work up to 14- hour days without a weekly day of rest, let alone holidays or social security. Foremen sexually abuse the women, and they are forced to take their children to the premises to perform work.

… Many [workers] are indigenous migrants from Oaxaca (Mixtec and Triqui), Guerrero, Puebla and Veracruz, who have made San Quintín into another of their communities. Three generations of Oaxacalifornianos live there. They suffer constant police harassment. They rely on a single hospital [run by the] Mexican Social Security Institute [IMSS].

The strike launched by the Alliance of National, State and Municipal Organizations for Social Justice (AONEMJS) seeks a wage increase from $8.00 to $13.50 per day. The workers also demand their employers follow both their obligations to pay into Mexico’s social security and health insurance system, and the labor laws. The workers’ alliance also demands an end to sexual harassment in the fields and revocation of contracts with unions affiliated with the Institutional Revolutionary Party (PRI).

As of today, the Mexican government has shown no willingness to engage in any sort of dialogue. First the Baja California government responded with violence, but this failed to break the strike. Then there was a brief period of negotiations with local government representatives that also failed when the officials offered only a 15 percent pay increase, far short of meeting the demands presented by workers.

Although this conflict has received some coverage in the U.S. due to the efforts of the AFL-CIO and the Indigenous Front of Binational Organizations (FIOB), too little has been said about the responsibility of BerryMex, “one of Driscoll’s largest suppliers in the region” according to Rachel Luban from In These Times.[1]  Since the conflict began, BerryMex has published six press releases evading responsibility and insisting that they provide good working conditions for their workers. For example:

BerryMex has a long and established history of listening to worker concerns and taking action to provide them with the most comprehensive benefits, attractive earning capacity, and a healthy, safe and productive working environment.

And:

BerryMex provides comprehensive harvest employment opportunities including:

-Offering an average earning opportunity of between $5.00 – $9.00 (USD) per hour, ($75.00 mxp – $135,00 mxp) -and up to $10.00 (USD) ($150.00 mxp) per hour for high performers, resulting in the average weekly earnings of $3 600.00 pesos or $240.00 (USD) to 7,200.00 pesos or $480.00 (USD).

-This is approximately 8x the minimum federal wage and as much as 16x for high performers.

The Los Angeles Times has closely followed this conflict, and the Times’ Richard Marosi reported that BerryMex workers say they do not earn anywhere near the wage announced by the company:

Driscoll’s, in a statement last week, said BerryMex workers can earn $5 to $9 an hour.

That amount is inaccurate, farmworker leaders and several current and former BerryMex workers said. They say that under optimal conditions workers earn no more than $3 an hour, and that after peak harvest periods, pay drops to about half that amount.

One grower from the region, DeWayne Hafen, also questioned the BerryMex wage figures. Most pickers fill about 30 boxes a day during peak harvest periods, earning about $3.50 an hour, he said. The $9 figure, he said, isn’t possible.

On April 4, the Mixteco/Indigena Community Organizing Project and FIOB gathered outside Driscoll’s facilities in Oxnard, California in order to show the responsibility that this multinational has in the conflict in San Quintín. FIOB spokesperson Gaspar Rivera told a reporter for La Jornada that BerryMex was one of the companies that had negotiated a wage increase of 15 percent with the corporate unions, ignoring petitions made by the Alliance:

[Rivera] said that the “Revolutionary Confederation of Workers and Peasants (CROC), signed a “security contract” with the agro-businesses of San Quintín, including Driscoll’s company, accepting a wage increase of 15 percent, “on the backs of 80,000 workers and the Alliance,” which represented the workers in the negotiations.

BerryMex not only appears to be dishonest in saying that their employees get paid between $5 and $8 per hour, it also—along with other companies—takes advantage of the corporate union structure known as “sindicatos charros” in Mexico, in order to evade responsibility. Historically linked to the PRI, the CROC, the Confederation of Mexican Workers, and the Regional Confederation of Mexican Workers, who are all involved in the recruitment of farmworkers in San Quintín and  function as tools for employers to prevent the free association of workers, and are now being used by companies like Driscoll’s and BerryMex against the AONEMJS.

On Friday, May 9, federal authorities broke the agreement they had made to continue participating in negotiations. The undersecretary of the Mexican government, Luis Miranda, was expected to travel to San Quintín to meet with members of the AONEMJS, but he did not appear. The next day, during a “Global Action for San Quintín,” police violently broke up a protest of the AONEMJS outside the Rancho Seco company. As documented in La Jornada de Baja California, workers report being attacked:

Once he realized the situation, the owner of the farm called the police, who arrived at around 5:00 in the morning and charged at the day laborers who advocated for continuing the strike. Some of them ran towards their homes and were pursued by the police, who entered the homes and hit women and children even as they slept.

When BerryMex issued their first press release on the labor dispute, on March 21, it read, in part: “we strongly condemn the violence and looting from outside third parties which has negatively impacted families and small businesses across the region.” Why doesn’t BerryMex now condemn this police violence against farm workers which has resulted in 70 people injured, seven of them seriously? Why doesn’t BerryMex call for dialogue between the government and the AONEMJS?

This is not the first time that Driscoll’s has tried to evade its responsibilities to the workers who harvest its products; “its carefully crafted image obscures a record of unfair labor practices,” as Marosi reports. Even today, as San Quintín workers strike, farmworkers at the Sakuma Berry Farm in Burlington, Washington—an important supplier of Driscoll’s—have called for a boycott in order to pressure the firm to ensure that farmworkers get better wages, housing and working conditions. The farmworkers’ union, Familias Unidas por la Justicia (FUJ), said, “Almost every year, there has been a labor dispute, some end in firing and evictions, while others have been full on work stoppages with only one in 2004, resulting in minor temporary concessions.” Farmworkers at Sakuma Brothers Farms are calling for an end to what they describe “as wage theft, unfair piece rate agreements and verbal abuse during working hours,” as Leon Kaye wrote in Triple Pundit.

In San Quintín, the Alliance demonstrated its willingness to negotiate by lowering its request for a salary increase from $20 to $13 per day. However, the Mexican government has not reciprocated, proving that it is responsive only to the immediate interests of businesses. If Driscoll’s does not change its attitude toward the conflict in San Quintín, it will be showing that its growth is based on the insecurity and impoverishment of its workers. It would be proof that the company does not respect labor rights, and it would be a demonstration that it finds the corporate structure of Mexican unions extremely useful for its interests. Driscoll’s should take negotiations with the Alliance more seriously.

[1] The Los Angeles Times notes: “About one-quarter of the berries Driscoll’s gets from Baja come from growers other than BerryMex. Driscoll’s declined to provide the names of the other suppliers, which were described as small, locally owned farms.”


Mateo Crossa is an International Program Intern with the Center for Economic and Policy Research.

The Americas Blog’s friend for the week is none other than Senator Robert Menendez, the Democrat from New Jersey! Currently under federal indictment on bribery and corruption charges, Senator Menendez recently took a break from trashing Venezuela and fighting the administration over its attempts to normalize relations with Cuba and reach a deal with Iran in order to add his voice to the overwhelming majority of Democrats in Congress who criticize “Fast Track,” also known as Trade Promotion Authority.

Late last night, Senators Orrin Hatch (R-Utah) and Ron Wyden (D-Ore.) announced a Senate Finance Committee hearing with just 12 hours notice. The hearing started off this morning with three Cabinet level officials giving testimony, despite the fact that the “Fast Track” bill had not been published. All three said they had not seen the final text of the bill, which in any event was introduced several hours later, at around 2:30 PM this afternoon.

This rushed timeline and lack of transparency was the focus of a statement published by Menendez and signed by half of the Democrats in the Senate Finance Committee:

With millions of jobs on the line, American workers and manufacturers deserve more than a hastily scheduled hearing without an underlying bill. Congress should undergo a thorough and deliberative committee process for debating trade agreements that account for 40 percent of our world’s GDP. And we should be debating a bill that has seen the light of day and contains strong provisions to protect American workers against illegal trade practices like currency manipulation.

During his time for questions, Senator Menendez rightly pressed the U.S. Trade Representative, Ambassador Michael Froman, on his estimate of the net jobs effect of the proposed Trans-Pacific Partnership (TPP). Here is the exchange, taken from a transcript prepared by CQ Congressional Transcripts:

MENENDEZ:

[…] Ambassador Froman, I asked you at our last hearing on the broad question of trade, how many jobs do you expect to be created — net jobs, I would say, because in every process of trade, there are winners and losers — net jobs to be created in TPP within the first year, the first five years, the first 10 years?

You didn’t give me any figures, and I’m wondering if, at this point, you’re in the position to describe what that would be.

FROMAN:

So when the — the agreement is complete, there’ll be a full economic analysis done.

I think the most authoritative analysis right now is probably the one that comes from the Peterson report — the Peterson Institute that talks about expanding exports when fully implemented by $123 billion a year, adding $77 billion to U.S. GDP and contributing to many more high-paying jobs.

It depends a bit on where you are on the spectrum of full employment. If you’re not at full employment, then it adds jobs. If you are at full employment, then it adds better jobs. And so it’ll bend a little bit…

MENENDEZ:

So — so we don’t have a number on the jobs? You’re talking about just gross?

FROMAN:

What we know is that every billion dollars of exports, additional exports, somewhere between 5,000 and 7,000 jobs and that those jobs pay on average 18 percent more than non-export-related jobs in the same sector.

MENENDEZ:

And the net — and the loss of jobs?

FROMAN:

Well, we’ve been looking, and we’ve been doing some — some studies state by state or — or in various districts to see, because we have so few tariffs ourselves, so few import-sensitive sectors ourselves, where there — where there might be job loss.

And, you know, with our average tariff of 1.4 percent and with no — no — we don’t use non-tariff measures as a…

MENENDEZ:

So we don’t have an answer on that, exactly?

FROMAN:

We don’t — we don’t — we don’t have have (inaudible).

Of course, this is not the first time an Obama administration official has cited the Peterson Institute’s report. In an earlier instance when Secretary of Agriculture Tom Vilsack did try to provide a jobs gain number, the Washington Post Fact Checker gave the administration “Four Pinocchios for their fishy math.” In this case, it seems like Froman wanted to use the same study to answer the same question, but could not actually give a straight answer without overtly repeating the inappropriate calculation.

In any event, the gains from the proposed TPP cited by Froman are completely out of context. When compared to the size of the U.S. economy these gains are very small and, due to the in-equalizing effect of trade on wages, the gains would only go to a small group of people. In fact, a large majority of workers would lose as a result of an agreement like the TPP.

The Americas Blog’s friend for the week is none other than Senator Robert Menendez, the Democrat from New Jersey! Currently under federal indictment on bribery and corruption charges, Senator Menendez recently took a break from trashing Venezuela and fighting the administration over its attempts to normalize relations with Cuba and reach a deal with Iran in order to add his voice to the overwhelming majority of Democrats in Congress who criticize “Fast Track,” also known as Trade Promotion Authority.

Late last night, Senators Orrin Hatch (R-Utah) and Ron Wyden (D-Ore.) announced a Senate Finance Committee hearing with just 12 hours notice. The hearing started off this morning with three Cabinet level officials giving testimony, despite the fact that the “Fast Track” bill had not been published. All three said they had not seen the final text of the bill, which in any event was introduced several hours later, at around 2:30 PM this afternoon.

This rushed timeline and lack of transparency was the focus of a statement published by Menendez and signed by half of the Democrats in the Senate Finance Committee:

With millions of jobs on the line, American workers and manufacturers deserve more than a hastily scheduled hearing without an underlying bill. Congress should undergo a thorough and deliberative committee process for debating trade agreements that account for 40 percent of our world’s GDP. And we should be debating a bill that has seen the light of day and contains strong provisions to protect American workers against illegal trade practices like currency manipulation.

During his time for questions, Senator Menendez rightly pressed the U.S. Trade Representative, Ambassador Michael Froman, on his estimate of the net jobs effect of the proposed Trans-Pacific Partnership (TPP). Here is the exchange, taken from a transcript prepared by CQ Congressional Transcripts:

MENENDEZ:

[…] Ambassador Froman, I asked you at our last hearing on the broad question of trade, how many jobs do you expect to be created — net jobs, I would say, because in every process of trade, there are winners and losers — net jobs to be created in TPP within the first year, the first five years, the first 10 years?

You didn’t give me any figures, and I’m wondering if, at this point, you’re in the position to describe what that would be.

FROMAN:

So when the — the agreement is complete, there’ll be a full economic analysis done.

I think the most authoritative analysis right now is probably the one that comes from the Peterson report — the Peterson Institute that talks about expanding exports when fully implemented by $123 billion a year, adding $77 billion to U.S. GDP and contributing to many more high-paying jobs.

It depends a bit on where you are on the spectrum of full employment. If you’re not at full employment, then it adds jobs. If you are at full employment, then it adds better jobs. And so it’ll bend a little bit…

MENENDEZ:

So — so we don’t have a number on the jobs? You’re talking about just gross?

FROMAN:

What we know is that every billion dollars of exports, additional exports, somewhere between 5,000 and 7,000 jobs and that those jobs pay on average 18 percent more than non-export-related jobs in the same sector.

MENENDEZ:

And the net — and the loss of jobs?

FROMAN:

Well, we’ve been looking, and we’ve been doing some — some studies state by state or — or in various districts to see, because we have so few tariffs ourselves, so few import-sensitive sectors ourselves, where there — where there might be job loss.

And, you know, with our average tariff of 1.4 percent and with no — no — we don’t use non-tariff measures as a…

MENENDEZ:

So we don’t have an answer on that, exactly?

FROMAN:

We don’t — we don’t — we don’t have have (inaudible).

Of course, this is not the first time an Obama administration official has cited the Peterson Institute’s report. In an earlier instance when Secretary of Agriculture Tom Vilsack did try to provide a jobs gain number, the Washington Post Fact Checker gave the administration “Four Pinocchios for their fishy math.” In this case, it seems like Froman wanted to use the same study to answer the same question, but could not actually give a straight answer without overtly repeating the inappropriate calculation.

In any event, the gains from the proposed TPP cited by Froman are completely out of context. When compared to the size of the U.S. economy these gains are very small and, due to the in-equalizing effect of trade on wages, the gains would only go to a small group of people. In fact, a large majority of workers would lose as a result of an agreement like the TPP.

From April 8-11, President Obama will make his first trip south of the U.S. border since February of 2014.  On April 9, he will be in Kingston, Jamaica for meetings with Prime Minister Portia Simpson-Miller and the leaders of the Caribbean Community (CARICOM), an organization made up of 15 Caribbean governments.  Then on April 10 and 11, he will be in Panama City where he’ll participate in the seventh Summit of the Americas alongside the leaders of every independent government in the hemisphere including – for the first time – the Republic of Cuba.   

As we had predicted, the last Summit of the Americas that took place in Cartagena, Colombia in April of 2012 was a stormy affair for Obama, with many Latin American leaders objecting to the U.S.’ refusal to allow Cuba’s participation in the summit and criticizing the U.S. “War on Drugs” (not to mention that little scandal involving Secret Service agents and local prostitutes).  Following Obama’s efforts to begin the normalization of relations with Cuba and the lifting of his veto on Raul Castro’s participation in the Panama summit, many expect the U.S. president to receive a warmer welcome this time around.  But dark clouds have gathered again following the White House’s executive order declaring Venezuela an “extraordinary national security threat” and slapping senior Venezuelan officials with sanctions. 

On April 7, two senior White House officials, Ricardo Zúñiga – National Security Council Senior Director for Western Hemisphere Affairs – and Ben Rhodes – Deputy National Security Advisor for Strategic Communications – provided the press with a briefing on Obama’s trip to Kingston and Panama City.  As a service to our readers, CEPR has the pleasure of offering its own background briefing on some of the key issues that are sure to come up during Obama’s trip, with a few choice contributions from the aforementioned White House briefing.

Let’s start with Jamaica.  On April 9, President Obama will, in the words of Zúñiga, “have an opportunity to speak to Prime Minister Miller about (…) our strong support for Jamaica’s work to deal with a debt crisis, with a fiscal crisis, and its strong performance in the last two years in working with the IMF and World Bank and others to address that, in support of the prosperity and security of her citizens.”

As luck would have it (well, maybe not just luck), CEPR has just published a paper titled “Partners in Austerity: Jamaica, the U.S. and the IMF.”  The paper, authored by CEPR Research Associate Jake Johnston, shows that Jamaica’s recent economic performance has been anything but “strong” and that over two years into an IMF-backed economic program, Jamaica has the world’s most austere budget and is plagued by record-high debt (with a debt-to-GDP ratio of nearly 140 percent) and low economic growth.  Johnston notes:

[Jamaica’s] economy remains smaller today than it was in 2008. With anemic growth and continued austerity, social indicators have drastically worsened, with poverty doubling since 2007. Unemployment, at 14.2 percent, remains higher today than during the height of the global recession. (…) Without hundreds of millions in financial support from Venezuela [through the Petrocaribe energy agreement] and China the impact of IMF-led austerity would likely be far worse and, ultimately, politically untenable.

The paper argues that, if the U.S. really wants to help Jamaica recover economically, it should encourage multilateral development banks “to work with Jamaica and other creditors to provide meaningful debt relief, freeing up needed resources to invest in the future of the country.”

In Obama’s meeting with CARICOM, he is expected to discuss Vice President Joe Biden’s Caribbean Energy Security Initiative which, Zuñiga explains, is “related to energy security and our shared efforts to promote a more — more diverse, cleaner, and more sustainable energy future for the Caribbean.” 

“Clean” energy, i.e., natural gas (though environmentalists generally reject the “clean” moniker).  For some time now, Vice President Joe Biden and Beltway analysts with close ties to the U.S. energy industry have been touting the virtues of natural gas, specifically U.S. exports of liquefied natural gas, for the Caribbean region.  One of the main arguments is that Venezuela’s Petrocaribe cooperation agreement, which provides oil to the region at highly advantageous credit terms, is unsustainable and undesirable due to the political influence that Venezuela has gained in the region.  State Department Cables published by WikiLeaks show that the U.S. aggressively pressured Caribbean and Central American governments not to sign onto Petrocaribe despite the enormous economic benefits of the agreement (as can be seen in countries like Haiti and Jamaica).  Clearly, U.S. efforts to counter Petrocaribe continue to this day. (Look out for the upcoming book The WikiLeaks Files that will include two chapters on these and other Latin America-related cable revelations authored by CEPR staff). 

On to Panama, where Obama will interact with his counterparts from all over Latin America and the Caribbean at the Seventh Summit of the Americas.  According to Zúñiga, Obama will be “focused on moving beyond some of these [sic] past divisiveness within the Americas [and] finding new ways to engage our partners on a basis of mutual interest and mutual respect.”  According to Ben Rhodes, the White House has fully absorbed the lessons from the past: “Having gone through two previous summits, [we] did not think it was constructive for the United States to try to isolate Cuba from the broader community within the Americas.”  Now that Obama has begun normalizing relations with Cuba and stopped barring Cuba’s participation in the Summit of the Americas all that “past divisiveness” (read: past U.S. isolation in the region) will quickly become a distant memory. Right?

Not so fast.  While Obama may be seeking to make peace with Cuba, he has simultaneously taken a much more aggressive stance toward Venezuela. On December 18 of last year, literally one day after announcing his “new course” on Cuba, Obama signed into law a bill mandating targeted sanctions against Venezuelan officials despite the opposition of every Latin American country and Venezuelan human rights defenders.  Obama’s support for the sanctions legislation was useful in placating Cuban-American members of Congress; however, as CEPR policy analyst Alex Main noted in The Hill at the time, “allowing legislators stuck in a Cold War mentality to steer U.S. Venezuela policy is dangerous and risks wrecking the good will that the administration’s Cuba detente is generating throughout the region.”

On March 7, the White House decided to go a significant step further and issued an executive order declaring Venezuela “an extraordinary threat” to “national security” and announcing sanctions against Venezuelan officials that went beyond the mandate of the December sanctions legislation.  What motivated Obama to do this?  As CEPR co-Director Mark Weisbrot noted in a recent U.S. News and World Report op-ed, normalizing “relations with Cuba is generally consistent with the broader strategy of opposition to Venezuela and other left governments that have been elected and re-elected since 1998.” 

Needless to say, Obama’s executive order has caused consternation and outrage throughout the region.  The Community of Latin American and Caribbean States (which includes every government in the region except the U.S. and Canada) rejected “the implementation of coercive, unilateral measures contrary to the international law.”  Obama’s Latin America team now appears to be frantically trying to abate the coming storm in Panama. Ben Rhodes “clarified” the administration’s position, explaining, “The United States does not believe that Venezuela poses some threat to our national security.”   And Thomas Shannon, senior advisor to Secretary of State John Kerry, has just made an unexpected trip to Caracas to try to smooth the waters with the Venezuelan government before the April 10 summit begins. But it is unlikely that any of this will be enough to keep the issue of the Venezuela sanctions off the table in Panama. 

Also while in Panama, President Obama will “meet with the different Presidents of the SICA (Central American Integration System) grouping of nations.  That’s the Central American nations, where we have a very significant $1 billion security and capacity-building initiative…” (Rhodes).  CEPR’s Alex Main has dissected this billion-dollar aid plan focused on Guatemala, Honduras and El Salvador in NACLA and The Hill and noted that it would see assistance to police and military institutions rife with corruption and abuses increase significantly despite impunity around human rights violations perpetrated by state security forces.  Economic development assistance would increase by over 400 percent under the plan, but the fact that the White House has indicated that it will be used to bolster the Inter-American Development Bank’s multi-billion dollar Alliance for Prosperity plan in Central America’s Northern Triangle should set off alarm bells:

the “Alliance” plan appears to be largely focused on attracting forms of foreign investment that have arguably made life worse for many Central Americans and had little positive impact on the overall economic situation. These include investments in “strategic sectors” — textile manufacturing, agro-industry and tourism — which all too frequently offer workers poverty-level jobs and provoke the displacement of small farmers and entire communities whose rights and historic claims to land are rarely supported by state authorities.

Finally, it is worth noting that, although Obama is meeting with the CARICOM (Caribbean) group of governments and with the SICA (Central American) group of governments, he is not planning on meeting with the group that has by far the biggest heft in Latin America in terms of population and economic clout: UNASUR, the Union of South American Nations.  This could well be a symptom of the fact that South America today is largely outside of the orbit of influence of the U.S., with the peoples of the continent having elected governments that largely reject U.S.-backed economic policies and foreign policy goals.  UNASUR has called for Obama to rescind his executive order against Venezuela and engage in constructive dialogue with the Venezuelan government.  We’ll soon find out whether Obama is listening.     

From April 8-11, President Obama will make his first trip south of the U.S. border since February of 2014.  On April 9, he will be in Kingston, Jamaica for meetings with Prime Minister Portia Simpson-Miller and the leaders of the Caribbean Community (CARICOM), an organization made up of 15 Caribbean governments.  Then on April 10 and 11, he will be in Panama City where he’ll participate in the seventh Summit of the Americas alongside the leaders of every independent government in the hemisphere including – for the first time – the Republic of Cuba.   

As we had predicted, the last Summit of the Americas that took place in Cartagena, Colombia in April of 2012 was a stormy affair for Obama, with many Latin American leaders objecting to the U.S.’ refusal to allow Cuba’s participation in the summit and criticizing the U.S. “War on Drugs” (not to mention that little scandal involving Secret Service agents and local prostitutes).  Following Obama’s efforts to begin the normalization of relations with Cuba and the lifting of his veto on Raul Castro’s participation in the Panama summit, many expect the U.S. president to receive a warmer welcome this time around.  But dark clouds have gathered again following the White House’s executive order declaring Venezuela an “extraordinary national security threat” and slapping senior Venezuelan officials with sanctions. 

On April 7, two senior White House officials, Ricardo Zúñiga – National Security Council Senior Director for Western Hemisphere Affairs – and Ben Rhodes – Deputy National Security Advisor for Strategic Communications – provided the press with a briefing on Obama’s trip to Kingston and Panama City.  As a service to our readers, CEPR has the pleasure of offering its own background briefing on some of the key issues that are sure to come up during Obama’s trip, with a few choice contributions from the aforementioned White House briefing.

Let’s start with Jamaica.  On April 9, President Obama will, in the words of Zúñiga, “have an opportunity to speak to Prime Minister Miller about (…) our strong support for Jamaica’s work to deal with a debt crisis, with a fiscal crisis, and its strong performance in the last two years in working with the IMF and World Bank and others to address that, in support of the prosperity and security of her citizens.”

As luck would have it (well, maybe not just luck), CEPR has just published a paper titled “Partners in Austerity: Jamaica, the U.S. and the IMF.”  The paper, authored by CEPR Research Associate Jake Johnston, shows that Jamaica’s recent economic performance has been anything but “strong” and that over two years into an IMF-backed economic program, Jamaica has the world’s most austere budget and is plagued by record-high debt (with a debt-to-GDP ratio of nearly 140 percent) and low economic growth.  Johnston notes:

[Jamaica’s] economy remains smaller today than it was in 2008. With anemic growth and continued austerity, social indicators have drastically worsened, with poverty doubling since 2007. Unemployment, at 14.2 percent, remains higher today than during the height of the global recession. (…) Without hundreds of millions in financial support from Venezuela [through the Petrocaribe energy agreement] and China the impact of IMF-led austerity would likely be far worse and, ultimately, politically untenable.

The paper argues that, if the U.S. really wants to help Jamaica recover economically, it should encourage multilateral development banks “to work with Jamaica and other creditors to provide meaningful debt relief, freeing up needed resources to invest in the future of the country.”

In Obama’s meeting with CARICOM, he is expected to discuss Vice President Joe Biden’s Caribbean Energy Security Initiative which, Zuñiga explains, is “related to energy security and our shared efforts to promote a more — more diverse, cleaner, and more sustainable energy future for the Caribbean.” 

“Clean” energy, i.e., natural gas (though environmentalists generally reject the “clean” moniker).  For some time now, Vice President Joe Biden and Beltway analysts with close ties to the U.S. energy industry have been touting the virtues of natural gas, specifically U.S. exports of liquefied natural gas, for the Caribbean region.  One of the main arguments is that Venezuela’s Petrocaribe cooperation agreement, which provides oil to the region at highly advantageous credit terms, is unsustainable and undesirable due to the political influence that Venezuela has gained in the region.  State Department Cables published by WikiLeaks show that the U.S. aggressively pressured Caribbean and Central American governments not to sign onto Petrocaribe despite the enormous economic benefits of the agreement (as can be seen in countries like Haiti and Jamaica).  Clearly, U.S. efforts to counter Petrocaribe continue to this day. (Look out for the upcoming book The WikiLeaks Files that will include two chapters on these and other Latin America-related cable revelations authored by CEPR staff). 

On to Panama, where Obama will interact with his counterparts from all over Latin America and the Caribbean at the Seventh Summit of the Americas.  According to Zúñiga, Obama will be “focused on moving beyond some of these [sic] past divisiveness within the Americas [and] finding new ways to engage our partners on a basis of mutual interest and mutual respect.”  According to Ben Rhodes, the White House has fully absorbed the lessons from the past: “Having gone through two previous summits, [we] did not think it was constructive for the United States to try to isolate Cuba from the broader community within the Americas.”  Now that Obama has begun normalizing relations with Cuba and stopped barring Cuba’s participation in the Summit of the Americas all that “past divisiveness” (read: past U.S. isolation in the region) will quickly become a distant memory. Right?

Not so fast.  While Obama may be seeking to make peace with Cuba, he has simultaneously taken a much more aggressive stance toward Venezuela. On December 18 of last year, literally one day after announcing his “new course” on Cuba, Obama signed into law a bill mandating targeted sanctions against Venezuelan officials despite the opposition of every Latin American country and Venezuelan human rights defenders.  Obama’s support for the sanctions legislation was useful in placating Cuban-American members of Congress; however, as CEPR policy analyst Alex Main noted in The Hill at the time, “allowing legislators stuck in a Cold War mentality to steer U.S. Venezuela policy is dangerous and risks wrecking the good will that the administration’s Cuba detente is generating throughout the region.”

On March 7, the White House decided to go a significant step further and issued an executive order declaring Venezuela “an extraordinary threat” to “national security” and announcing sanctions against Venezuelan officials that went beyond the mandate of the December sanctions legislation.  What motivated Obama to do this?  As CEPR co-Director Mark Weisbrot noted in a recent U.S. News and World Report op-ed, normalizing “relations with Cuba is generally consistent with the broader strategy of opposition to Venezuela and other left governments that have been elected and re-elected since 1998.” 

Needless to say, Obama’s executive order has caused consternation and outrage throughout the region.  The Community of Latin American and Caribbean States (which includes every government in the region except the U.S. and Canada) rejected “the implementation of coercive, unilateral measures contrary to the international law.”  Obama’s Latin America team now appears to be frantically trying to abate the coming storm in Panama. Ben Rhodes “clarified” the administration’s position, explaining, “The United States does not believe that Venezuela poses some threat to our national security.”   And Thomas Shannon, senior advisor to Secretary of State John Kerry, has just made an unexpected trip to Caracas to try to smooth the waters with the Venezuelan government before the April 10 summit begins. But it is unlikely that any of this will be enough to keep the issue of the Venezuela sanctions off the table in Panama. 

Also while in Panama, President Obama will “meet with the different Presidents of the SICA (Central American Integration System) grouping of nations.  That’s the Central American nations, where we have a very significant $1 billion security and capacity-building initiative…” (Rhodes).  CEPR’s Alex Main has dissected this billion-dollar aid plan focused on Guatemala, Honduras and El Salvador in NACLA and The Hill and noted that it would see assistance to police and military institutions rife with corruption and abuses increase significantly despite impunity around human rights violations perpetrated by state security forces.  Economic development assistance would increase by over 400 percent under the plan, but the fact that the White House has indicated that it will be used to bolster the Inter-American Development Bank’s multi-billion dollar Alliance for Prosperity plan in Central America’s Northern Triangle should set off alarm bells:

the “Alliance” plan appears to be largely focused on attracting forms of foreign investment that have arguably made life worse for many Central Americans and had little positive impact on the overall economic situation. These include investments in “strategic sectors” — textile manufacturing, agro-industry and tourism — which all too frequently offer workers poverty-level jobs and provoke the displacement of small farmers and entire communities whose rights and historic claims to land are rarely supported by state authorities.

Finally, it is worth noting that, although Obama is meeting with the CARICOM (Caribbean) group of governments and with the SICA (Central American) group of governments, he is not planning on meeting with the group that has by far the biggest heft in Latin America in terms of population and economic clout: UNASUR, the Union of South American Nations.  This could well be a symptom of the fact that South America today is largely outside of the orbit of influence of the U.S., with the peoples of the continent having elected governments that largely reject U.S.-backed economic policies and foreign policy goals.  UNASUR has called for Obama to rescind his executive order against Venezuela and engage in constructive dialogue with the Venezuelan government.  We’ll soon find out whether Obama is listening.     

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