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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The Central de Movimentos Populares (CMP) was founded in 1993, with support from liberation theology sectors of the Catholic Church, as a federation of poor people’s social movements representing the poor and working class, homeless people’s unions, Afro-Brazilian movements, working class women’s groups, housing movements, indigenous people’s organizations and the LGBT movement.  Today, it has hundreds of thousands of members, acts in nearly every state in Brazil, and is an important actor on the Latin American left.

The CMP’s Luís “Gegê” Gonzaga da Silva is a former MR-8 Guerilla who was arrested and tortured during the military dictatorship and helped found the Partido dos Trabalhadores (PT) party in São Paulo in 1982. He has remained affiliated with the party ever since, and is one of the leaders of its internal Socialism or Barbarism Caucus. He never held public office, never benefited financially from his status as one of the party founders and has spent the last 30 years organizing mass occupations of homeless families in abandoned buildings in downtown São Paulo.

In 2005, a corrupt local judge and São Paulo military police framed him for a murder that took place in an occupied building on a day when he was not in town. He eventually spent 54 days behind bars before Landless Peasants’ Movement (MST) lawyers got him out on habeas corpus. Declining an invitation by Hugo Chávez to move to Venezuela, at the age of 64 he decided to go underground and spent two years in hiding, as a group of Brazil’s best human rights lawyers worked pro-bono to clear his name.  When the charges were thrown out, he returned to his public housing apartment in a former abandoned building in downtown São Paulo and picked up where he left off, leading a squatters movement called the Movimento de Moradia do Centro de São Paulo (MMC). I spoke with him by Skype recently to find out what he thinks about this Sunday’s presidential elections.

Gegê
(Photo by Brian Mier)

Why do you support Dilma Rousseff?

Gegê: During the last 12 years the Brazilian working class was able to experiment with better living conditions. It may not be everything that we deserve, but there were 500 years since the European invasion during which we lived off of practically nothing.  During this period capitalism made no concessions. In these past 12 years, even if the concessions were small, we can see that the people out in the Northeastern back country are living another moment, a moment less wretched that what they experienced before 2002 when Lula was elected. For us, members of the social movements who have a name to preserve in saying that we are part of the left, it would be very contradictory in this current social context to not support Dilma’s candidacy.

I support her because there is a huge Northeastern population scattered across the entire country, in places like São Paulo, Brasilia and Rio, who support Dilma Rousseff unconditionally, and it would be a big contradiction if it were otherwise. 

Fernando Henrique Cardoso’s presidency was one of the worst experiences in Brazilian history and he is from the same political party that is running against Dilma this Sunday.  It will be the worst setback in history if Aécio Neves is elected. Even the most radical left parties, like PSOL [the Socialism and Freedom Party] and PSTU [United Socialist Workers Party] are together with the PT now. They are saying “PSDB never again.” They recognize the fact that 8 years of PSDB [Social Democratic Party] government nearly sunk our country.

There are some middle class intellectuals and journalists, especially in the U.S. and Northern Europe, who have argued in recent years that the PT is no longer a left party, that it is neoliberal.

Gegê: Any government in a capitalist country has the task of managing the crisis in capitalism. The only country in the Americas that had a successful revolution is Cuba. But for us, who live in countries that manage the capitalist crisis, elections do not represent a revolution. I don’t have a shadow of a doubt that we could have done much more during this 12 years if we didn’t have one of the most conservative congresses in history, with the evangelical caucus, the “bullet caucus” [a block of extreme-right elected officials who are former military officers and police] and the ruralist [agribusiness] caucus who are all against the workers. So it was very difficult for Lula or Dilma to enact the kind of reforms they wanted to.

When Dilma went on TV last year after the protests began and tried to implement political reform, her own vice president spoke against it. The Vice President (Michel Temer, from the PMDB party) publically positioned himself and his party against the reforms.  Senator Aécio Neves met with the Brazilian ultra-right to set up a strategy to defeat Dilma if she brought her proposal for a referendum on political reform to Congress.  And now, when this next group of congressmen takes office, it will be even more conservative. The changes in Congress and the Senate are for the worse. I agree that the sustainability of a government cannot happen from the top down; it has to happen through dialogue with the working class. This dialogue could have been deeper, but Lula and Dilma never cut off dialogue with the social movements during the last 12 years. How could a rag picker have addressed Congress? During the last 12 years the rag pickers union sat directly with both presidents many different times in Brasilia. They created a National Negritude Ministry [Secretariat for Promotion of Policies for Racial Equality]. For the first time ever, they created a national Ministry of Women’s Rights. So, you can’t say that it has been a revolutionary government, but anyone who says that it has been a totally neoliberal government is being inconsequential because during these 12 years you had prostitutes unions, LGBT movements, rag pickers and indigenous groups in the presidential palace and this level of dialogue shows that it was different from Fernando Henrique Cardoso’s reign.

Lula and Dilma left us lacking in terms of a full social transformation but this is the result of 500 years of history. You can’t change everything in 12 years unless you have a revolution and give back everything the bourgeois has stolen from the poor. Are Lula and Dilma neoliberal? Where is this neoliberalism? If Lula and Dilma are neoliberal what name will you give to Fernando Henrique Cardoso’s government? If you are going to call Lula and Dilma neoliberal then the FHC government must have been ultra-right.

What are some of the groups on the organized, working class left that are supporting Dilma?

Gegê: One-hundred percent of the MST, CMP, CUT (Unified Workers Central labor union federation) and most labor unions are supporting Dilma. There are people in every union in the country supporting Dilma. There are one or two breaks at the top of some organizations, like the case of the Força Sindical (labor union federation) but most rank and file members of the Força Sindical are supporting Dilma.

How has PT changed since 1982 when you helped found the party?

Gegê: I have been involved with the PT since the days during the dictatorship when we talked about the need for a revolutionary workers’ party.  I can’t say that today’s PT is the same party that was created in 1982. All left political parties around the world have changed since their founding.  The Brazilian left parties that radicalized, like the PSTU, have a hard time electing one single alderman or state congressman. PSOL has managed to elect a few people, but most of them are also supporting Dilma in the presidential election because they have a full understanding of the setback that will happen with the election of the ultra-right. Any government of Aécio Neves and Marina Silva [who entered his coalition after losing on October 5] will benefit from the hidden policies of the U.S. government and the CIA.

How would you compare the last 12 years of PT government with so called left governments in the North?

Gegê: I believe that the PT has not sunk to the level of the left parties in France, England and Germany because the working class in those countries has nearly disappeared; you only have small segments that are unable to hold large, coherent protests.

During the protests in 2013, the advance of neo-fascism brought the working class to the streets but we realized that there was another project in mind. Today, I imagine what the working class looks like in England- a minority of people working in the service sector. What is left? During my last visit to Europe I noticed that workers who had a high standard of living are being forced to lower their expectations.

What is going to happen on Sunday?

Gegê: I hope Dilma wins, because her loss won’t just represent a loss for the Brazilian working class; it will be a major loss for the working class in the whole world. Aécio will pull out of the BRICS development bank, which could be a big advance for the working class depending on how it is used.  We are proud that we have eradicated hunger and that we no longer have a shortage of doctors in our public health system, and we are sure that Aécio will do everything he can to send the 15,000 Cuban doctors back home if he is elected.  People in the U.S. have to know who their government’s candidate is. Aécio Neves is the CIA’s candidate. I hope he loses, but even if Dilma is re-elected we will have to fight a lot for political reform during the next four years. The people are not free just because Dilma or Lula wins the presidency. The people have slightly better opportunities but we are still a long way off from having any kind of revolution. You may say that a revolution would be bloody but maybe with this, with deaths on both sides, we could manage to really change all of this shit.

The views expressed in this article are those of the authors, and do not necessarily reflect those of CEPR.

The Central de Movimentos Populares (CMP) was founded in 1993, with support from liberation theology sectors of the Catholic Church, as a federation of poor people’s social movements representing the poor and working class, homeless people’s unions, Afro-Brazilian movements, working class women’s groups, housing movements, indigenous people’s organizations and the LGBT movement.  Today, it has hundreds of thousands of members, acts in nearly every state in Brazil, and is an important actor on the Latin American left.

The CMP’s Luís “Gegê” Gonzaga da Silva is a former MR-8 Guerilla who was arrested and tortured during the military dictatorship and helped found the Partido dos Trabalhadores (PT) party in São Paulo in 1982. He has remained affiliated with the party ever since, and is one of the leaders of its internal Socialism or Barbarism Caucus. He never held public office, never benefited financially from his status as one of the party founders and has spent the last 30 years organizing mass occupations of homeless families in abandoned buildings in downtown São Paulo.

In 2005, a corrupt local judge and São Paulo military police framed him for a murder that took place in an occupied building on a day when he was not in town. He eventually spent 54 days behind bars before Landless Peasants’ Movement (MST) lawyers got him out on habeas corpus. Declining an invitation by Hugo Chávez to move to Venezuela, at the age of 64 he decided to go underground and spent two years in hiding, as a group of Brazil’s best human rights lawyers worked pro-bono to clear his name.  When the charges were thrown out, he returned to his public housing apartment in a former abandoned building in downtown São Paulo and picked up where he left off, leading a squatters movement called the Movimento de Moradia do Centro de São Paulo (MMC). I spoke with him by Skype recently to find out what he thinks about this Sunday’s presidential elections.

Gegê
(Photo by Brian Mier)

Why do you support Dilma Rousseff?

Gegê: During the last 12 years the Brazilian working class was able to experiment with better living conditions. It may not be everything that we deserve, but there were 500 years since the European invasion during which we lived off of practically nothing.  During this period capitalism made no concessions. In these past 12 years, even if the concessions were small, we can see that the people out in the Northeastern back country are living another moment, a moment less wretched that what they experienced before 2002 when Lula was elected. For us, members of the social movements who have a name to preserve in saying that we are part of the left, it would be very contradictory in this current social context to not support Dilma’s candidacy.

I support her because there is a huge Northeastern population scattered across the entire country, in places like São Paulo, Brasilia and Rio, who support Dilma Rousseff unconditionally, and it would be a big contradiction if it were otherwise. 

Fernando Henrique Cardoso’s presidency was one of the worst experiences in Brazilian history and he is from the same political party that is running against Dilma this Sunday.  It will be the worst setback in history if Aécio Neves is elected. Even the most radical left parties, like PSOL [the Socialism and Freedom Party] and PSTU [United Socialist Workers Party] are together with the PT now. They are saying “PSDB never again.” They recognize the fact that 8 years of PSDB [Social Democratic Party] government nearly sunk our country.

There are some middle class intellectuals and journalists, especially in the U.S. and Northern Europe, who have argued in recent years that the PT is no longer a left party, that it is neoliberal.

Gegê: Any government in a capitalist country has the task of managing the crisis in capitalism. The only country in the Americas that had a successful revolution is Cuba. But for us, who live in countries that manage the capitalist crisis, elections do not represent a revolution. I don’t have a shadow of a doubt that we could have done much more during this 12 years if we didn’t have one of the most conservative congresses in history, with the evangelical caucus, the “bullet caucus” [a block of extreme-right elected officials who are former military officers and police] and the ruralist [agribusiness] caucus who are all against the workers. So it was very difficult for Lula or Dilma to enact the kind of reforms they wanted to.

When Dilma went on TV last year after the protests began and tried to implement political reform, her own vice president spoke against it. The Vice President (Michel Temer, from the PMDB party) publically positioned himself and his party against the reforms.  Senator Aécio Neves met with the Brazilian ultra-right to set up a strategy to defeat Dilma if she brought her proposal for a referendum on political reform to Congress.  And now, when this next group of congressmen takes office, it will be even more conservative. The changes in Congress and the Senate are for the worse. I agree that the sustainability of a government cannot happen from the top down; it has to happen through dialogue with the working class. This dialogue could have been deeper, but Lula and Dilma never cut off dialogue with the social movements during the last 12 years. How could a rag picker have addressed Congress? During the last 12 years the rag pickers union sat directly with both presidents many different times in Brasilia. They created a National Negritude Ministry [Secretariat for Promotion of Policies for Racial Equality]. For the first time ever, they created a national Ministry of Women’s Rights. So, you can’t say that it has been a revolutionary government, but anyone who says that it has been a totally neoliberal government is being inconsequential because during these 12 years you had prostitutes unions, LGBT movements, rag pickers and indigenous groups in the presidential palace and this level of dialogue shows that it was different from Fernando Henrique Cardoso’s reign.

Lula and Dilma left us lacking in terms of a full social transformation but this is the result of 500 years of history. You can’t change everything in 12 years unless you have a revolution and give back everything the bourgeois has stolen from the poor. Are Lula and Dilma neoliberal? Where is this neoliberalism? If Lula and Dilma are neoliberal what name will you give to Fernando Henrique Cardoso’s government? If you are going to call Lula and Dilma neoliberal then the FHC government must have been ultra-right.

What are some of the groups on the organized, working class left that are supporting Dilma?

Gegê: One-hundred percent of the MST, CMP, CUT (Unified Workers Central labor union federation) and most labor unions are supporting Dilma. There are people in every union in the country supporting Dilma. There are one or two breaks at the top of some organizations, like the case of the Força Sindical (labor union federation) but most rank and file members of the Força Sindical are supporting Dilma.

How has PT changed since 1982 when you helped found the party?

Gegê: I have been involved with the PT since the days during the dictatorship when we talked about the need for a revolutionary workers’ party.  I can’t say that today’s PT is the same party that was created in 1982. All left political parties around the world have changed since their founding.  The Brazilian left parties that radicalized, like the PSTU, have a hard time electing one single alderman or state congressman. PSOL has managed to elect a few people, but most of them are also supporting Dilma in the presidential election because they have a full understanding of the setback that will happen with the election of the ultra-right. Any government of Aécio Neves and Marina Silva [who entered his coalition after losing on October 5] will benefit from the hidden policies of the U.S. government and the CIA.

How would you compare the last 12 years of PT government with so called left governments in the North?

Gegê: I believe that the PT has not sunk to the level of the left parties in France, England and Germany because the working class in those countries has nearly disappeared; you only have small segments that are unable to hold large, coherent protests.

During the protests in 2013, the advance of neo-fascism brought the working class to the streets but we realized that there was another project in mind. Today, I imagine what the working class looks like in England- a minority of people working in the service sector. What is left? During my last visit to Europe I noticed that workers who had a high standard of living are being forced to lower their expectations.

What is going to happen on Sunday?

Gegê: I hope Dilma wins, because her loss won’t just represent a loss for the Brazilian working class; it will be a major loss for the working class in the whole world. Aécio will pull out of the BRICS development bank, which could be a big advance for the working class depending on how it is used.  We are proud that we have eradicated hunger and that we no longer have a shortage of doctors in our public health system, and we are sure that Aécio will do everything he can to send the 15,000 Cuban doctors back home if he is elected.  People in the U.S. have to know who their government’s candidate is. Aécio Neves is the CIA’s candidate. I hope he loses, but even if Dilma is re-elected we will have to fight a lot for political reform during the next four years. The people are not free just because Dilma or Lula wins the presidency. The people have slightly better opportunities but we are still a long way off from having any kind of revolution. You may say that a revolution would be bloody but maybe with this, with deaths on both sides, we could manage to really change all of this shit.

The views expressed in this article are those of the authors, and do not necessarily reflect those of CEPR.

The second round of Brazil’s presidential elections, taking place Sunday, could be close according to polls showing President Dilma Rousseff of the Workers Party (PT) favored by 52 percent over challenger Aécio Neves of the Social Democratic Party (PSDB) with 48 percent. As we noted with Mexico’s 2012 presidential elections, media coverage can have a strong impact on election turnout and voter preferences, and there is compelling research [doc] that Mexico’s TV duopoly was decisive in determining the outcome of Mexico’s 2006 election. While Brazil’s media is mostly opposed to the PT, it hasn’t been able to swing recent presidential elections – but it appears it’s not for a lack of trying.

Manchetômetro (literal translation: “headline meter”), an independent project affiliated with the Instituto de Estudos Sociais e Políticos at the Universidade do Estado do Rio de Janeiro, has analyzed major media coverage of the main candidates and parties in Brazil. Focusing on TV coverage on Brazil’s largest audience TV news program “Jornal Nacional,” and front-page coverage in Brazil’s three largest newspapers (Folha de S. Paulo, O Globo and O Estado de São Paulo), Manchetômetro has documented a pattern of lopsided coverage that has disproportionately put Dilma Rousseff and the PT in a negative light, while opposition candidate Aécio Neves of the PSDB (and first round challenger Marina Silva) have received much more positive treatment and much less negative coverage, proportionately. Manchetômetro’s analysis also reveals that this bias against the PT is not new; coverage favored Fernando Henrique Cardoso (of the PSDB) over Rousseff’s predecessor, Lula da Silva during the 1998 election, and there was also more favorable treatment of the economic situation under Cardoso than the current economic downturn under Dilma, though the former was significantly worse than the latter.

TV Coverage: “Jornal Nacional”

Globo’s decades-old “Jornal Nacional” is considered to be a leading news program on Brazilian television; with around 18 million viewers (in 2013) it has a total audience of about twice the combined viewers of the four leading U.S. Sunday morning news talk shows (“This Week,” “Face the Nation,” “Meet the Press” and “Fox News Sunday”). The program’s influence may not be surprising considering Globo’s dominant position in Brazil’s media landscape. In a 2009 book, Giancarlo Summa (who did communications for Lula’s 2006 campaign) noted that Globo controlled 61.5 percent of UHF television stations, 31.8 percent of VHF TV, 40.7 percent of newspaper distribution, 30.1 percent of AM radio, 28 percent of FM radio and – through an association with Rupert Murdoch – 77 percent of the cable TV market.

Manchetômetro found a strong bias against Dilma Rousseff in “Jornal Nacional” coverage. During the campaign period (beginning July 6, and up to October 22), 21 percent of the coverage of Rousseff was negative, the most of any candidate. The percentage of positive coverage that Rousseff received was just 1 percent, much less than any other candidate. (Rousseff also had 78 percent “neutral” treatment.)

By comparison, coverage of Aécio Neves was 5 percent favorable, 4 percent negative and 91 percent neutral. Marina Silva had 6 percent positive coverage and no negative treatment at all. Her predecessor who had been her running mate, the late Eduardo Campos, received 18 percent favorable coverage and 15 percent negative treatment. Each of the opposition candidates received more than twice as much positive treatment on the show as Rousseff.

Manchetômetro also found disproportionately negative coverage of the PT during the campaign period, with 28 percent negative treatment on “Jornal Nacional” and no favorable coverage. While the PSDB also received more negative coverage than positive, it did receive some favorable coverage (1 percent) and much less negative treatment proportionately (5 percent) than the PT. The PT received far more negative coverage on the program than any of the other parties examined (the Democratic Movement Party, PMDB; the Socialist Party, PSB; and the PSDB). Manchetômetro found a similar pattern in 2014 coverage prior to the campaign period, but even worse, with just 0.4 percent positive coverage and 85 percent negative coverage of the PT — more than twice as much negative total air time than for any of the other parties.

Newspapers: Front Page Coverage

Analysis by Manchetômetro shows that media bias against the PT and Dilma Rousseff is not restricted to TV. The media monitoring project examined front page coverage in the three leading newspapers Folha de S. Paulo, O Globo and O Estado de São Paulo, and explained its decision to focus on A1 treatment this way (our translation):

Newspaper covers have much greater communicative power than do mere fragments of news publications.

The headlines and cover photos are the most communicative elements in the publication, seen either by subscribers and their families, the people who buy newspapers at newsstands or even by the people who pass the newsstands every day, where the newspaper covers are exposed to public scrutiny.

The headlines and the cover pages are considered most relevant by the editors of the newspaper because they best summarize the contents of the entire publication, and supposedly attract more readers.

Manchetômetro coordinator João Feres Júnior also explained in an email: “A previous study done by us on the 2010 presidential election shows that the proportions of positive, negative and neutral valences on the cover are similar to the ones on the newspaper taken as a whole.”

Manchetômetro found that during the campaign period in 2014, the total number of positive, negative, and neutral headlines for each candidate, respectively, broke down like this (as of October 20):

  • Coverage for Neves was 14 percent positive (38 headlines), 14 percent negative (37 headlines) and 73 percent neutral.
  • For Rousseff, it was 1 percent positive (just five headlines), 43 percent negative (188 headlines), and 56 percent neutral.
  • For Campos (the PSB candidate who died in mid-August), it was 14 percent positive (14 headlines), 16 percent negative (17 headlines), and 71 percent neutral.
  • For Marina Silva, coverage was 7 percent positive (24 headlines), 19 percent negative (59 headlines), and 74 percent neutral.

Proportionately, each of the opposition candidates had a minimum of seven times as much positive coverage as Rousseff, and usually 14 times as much. Rousseff meanwhile saw more than twice as much negative treatment as any of the opposition candidates both in terms of a percent of total coverage and by number of headlines.

Front page treatment of political parties during the campaign period showed a similarly disproportionately negative tone toward the PT:

  • PT: 2 percent positive (four headlines), 69 percent negative (121 headlines), and 30 percent neutral.
  • PSDB: 11 percent positive (seven headlines), 40 percent negative (26 headlines), and 48 percent neutral.
  • PMDB: 2 percent positive (one headline), 47 percent negative (26 headlines) and 51 percent neutral.
  • PSB:  0 percent positive (zero headlines), 28 negative (19 headlines) and 72 percent neutral.

Among all the leading parties, the PT had the highest percentage of negative treatment by far.

A History of Bias in the Brazilian Media: Cardoso vs. Lula and Dilma

According to Manchetômetro, disproportionately negative media treatment of the PT and PT presidential candidates extends to ex-president Lula da Silva. Looking at ongoing coverage, the project has found that former president Fernando Henrique Cardoso of the PSDB has received proportionately more favorable coverage than Lula. As of October 22, coverage for Cardoso was 38 percent positive (10 mentions), 23 percent negative (six mentions) and 38 percent neutral (10 mentions); while treatment of Lula was 4 percent positive (6 mentions), 38 percent negative (53 mentions) and 58 percent neutral (81 mentions). This is consistent with media coverage of the 1998 elections, in which Manchetômetro noted that 23 percent of Cardoso’s coverage in the three leading newspapers was favorable and 12 percent negative, versus 3 percent favorable and 36 percent negative for Lula.

It is also interesting to see how Brazil’s major media has covered the economic issues surrounding presidential elections. As we have noted in a recent paper, Brazil’s economy has slowed down over the last three years, but since it took power in 2003, the Workers Party administrations have made significant gains in economic growth and social progress. From 2003 to 2014, GDP per capita (adjusted for inflation) grew at a rate of 2.5 percent, compared to 0.8 percent annual per capita growth during the Cardoso government (1995-2002). Nevertheless, even though many key economic indicators in 1998 were far less favorable than in 2014, there has been much more negative media coverage of the economy during the 2014 campaign period than in 1998.

Manchetômetro looked at coverage of the economy in O Estado de S. Paulo in both the 1998 and 2014 campaign periods and found that in 1998 there were 50 positive news stories about the economy, 76 negative stories, and 17 neutral ones. Since the campaign period began this year, there have been 9 positive stories on the economy, 127 negative stories, and 23 neutral stories. This means that in 1998 about 52 percent of cover stories on the economy were negative and 35 percent were positive, while this year 80 percent of cover stories on the economy have been negative and only about 6 percent positive. Manchetômetro finds that despite the fact that most economic indicators are better this year than they were in 1998, O Estado de S. Paulo coverage makes the Brazilian economy appear to be in worse shape than it was in 1998, when a significant part of the presidential campaign took place amidst a financial crisis.

Professor of Economics at the Federal University of Rio de Janeiro Carlos Pinkusfeld comments in a Manchetômetro post:

The old adage says that truth is the first casualty of war. In “electoral battle,” discussion does not escape this maxim. Not so much by presenting misleading data, but by deliberately confusing interpretation and doomsday predictions. 

The second round of Brazil’s presidential elections, taking place Sunday, could be close according to polls showing President Dilma Rousseff of the Workers Party (PT) favored by 52 percent over challenger Aécio Neves of the Social Democratic Party (PSDB) with 48 percent. As we noted with Mexico’s 2012 presidential elections, media coverage can have a strong impact on election turnout and voter preferences, and there is compelling research [doc] that Mexico’s TV duopoly was decisive in determining the outcome of Mexico’s 2006 election. While Brazil’s media is mostly opposed to the PT, it hasn’t been able to swing recent presidential elections – but it appears it’s not for a lack of trying.

Manchetômetro (literal translation: “headline meter”), an independent project affiliated with the Instituto de Estudos Sociais e Políticos at the Universidade do Estado do Rio de Janeiro, has analyzed major media coverage of the main candidates and parties in Brazil. Focusing on TV coverage on Brazil’s largest audience TV news program “Jornal Nacional,” and front-page coverage in Brazil’s three largest newspapers (Folha de S. Paulo, O Globo and O Estado de São Paulo), Manchetômetro has documented a pattern of lopsided coverage that has disproportionately put Dilma Rousseff and the PT in a negative light, while opposition candidate Aécio Neves of the PSDB (and first round challenger Marina Silva) have received much more positive treatment and much less negative coverage, proportionately. Manchetômetro’s analysis also reveals that this bias against the PT is not new; coverage favored Fernando Henrique Cardoso (of the PSDB) over Rousseff’s predecessor, Lula da Silva during the 1998 election, and there was also more favorable treatment of the economic situation under Cardoso than the current economic downturn under Dilma, though the former was significantly worse than the latter.

TV Coverage: “Jornal Nacional”

Globo’s decades-old “Jornal Nacional” is considered to be a leading news program on Brazilian television; with around 18 million viewers (in 2013) it has a total audience of about twice the combined viewers of the four leading U.S. Sunday morning news talk shows (“This Week,” “Face the Nation,” “Meet the Press” and “Fox News Sunday”). The program’s influence may not be surprising considering Globo’s dominant position in Brazil’s media landscape. In a 2009 book, Giancarlo Summa (who did communications for Lula’s 2006 campaign) noted that Globo controlled 61.5 percent of UHF television stations, 31.8 percent of VHF TV, 40.7 percent of newspaper distribution, 30.1 percent of AM radio, 28 percent of FM radio and – through an association with Rupert Murdoch – 77 percent of the cable TV market.

Manchetômetro found a strong bias against Dilma Rousseff in “Jornal Nacional” coverage. During the campaign period (beginning July 6, and up to October 22), 21 percent of the coverage of Rousseff was negative, the most of any candidate. The percentage of positive coverage that Rousseff received was just 1 percent, much less than any other candidate. (Rousseff also had 78 percent “neutral” treatment.)

By comparison, coverage of Aécio Neves was 5 percent favorable, 4 percent negative and 91 percent neutral. Marina Silva had 6 percent positive coverage and no negative treatment at all. Her predecessor who had been her running mate, the late Eduardo Campos, received 18 percent favorable coverage and 15 percent negative treatment. Each of the opposition candidates received more than twice as much positive treatment on the show as Rousseff.

Manchetômetro also found disproportionately negative coverage of the PT during the campaign period, with 28 percent negative treatment on “Jornal Nacional” and no favorable coverage. While the PSDB also received more negative coverage than positive, it did receive some favorable coverage (1 percent) and much less negative treatment proportionately (5 percent) than the PT. The PT received far more negative coverage on the program than any of the other parties examined (the Democratic Movement Party, PMDB; the Socialist Party, PSB; and the PSDB). Manchetômetro found a similar pattern in 2014 coverage prior to the campaign period, but even worse, with just 0.4 percent positive coverage and 85 percent negative coverage of the PT — more than twice as much negative total air time than for any of the other parties.

Newspapers: Front Page Coverage

Analysis by Manchetômetro shows that media bias against the PT and Dilma Rousseff is not restricted to TV. The media monitoring project examined front page coverage in the three leading newspapers Folha de S. Paulo, O Globo and O Estado de São Paulo, and explained its decision to focus on A1 treatment this way (our translation):

Newspaper covers have much greater communicative power than do mere fragments of news publications.

The headlines and cover photos are the most communicative elements in the publication, seen either by subscribers and their families, the people who buy newspapers at newsstands or even by the people who pass the newsstands every day, where the newspaper covers are exposed to public scrutiny.

The headlines and the cover pages are considered most relevant by the editors of the newspaper because they best summarize the contents of the entire publication, and supposedly attract more readers.

Manchetômetro coordinator João Feres Júnior also explained in an email: “A previous study done by us on the 2010 presidential election shows that the proportions of positive, negative and neutral valences on the cover are similar to the ones on the newspaper taken as a whole.”

Manchetômetro found that during the campaign period in 2014, the total number of positive, negative, and neutral headlines for each candidate, respectively, broke down like this (as of October 20):

  • Coverage for Neves was 14 percent positive (38 headlines), 14 percent negative (37 headlines) and 73 percent neutral.
  • For Rousseff, it was 1 percent positive (just five headlines), 43 percent negative (188 headlines), and 56 percent neutral.
  • For Campos (the PSB candidate who died in mid-August), it was 14 percent positive (14 headlines), 16 percent negative (17 headlines), and 71 percent neutral.
  • For Marina Silva, coverage was 7 percent positive (24 headlines), 19 percent negative (59 headlines), and 74 percent neutral.

Proportionately, each of the opposition candidates had a minimum of seven times as much positive coverage as Rousseff, and usually 14 times as much. Rousseff meanwhile saw more than twice as much negative treatment as any of the opposition candidates both in terms of a percent of total coverage and by number of headlines.

Front page treatment of political parties during the campaign period showed a similarly disproportionately negative tone toward the PT:

  • PT: 2 percent positive (four headlines), 69 percent negative (121 headlines), and 30 percent neutral.
  • PSDB: 11 percent positive (seven headlines), 40 percent negative (26 headlines), and 48 percent neutral.
  • PMDB: 2 percent positive (one headline), 47 percent negative (26 headlines) and 51 percent neutral.
  • PSB:  0 percent positive (zero headlines), 28 negative (19 headlines) and 72 percent neutral.

Among all the leading parties, the PT had the highest percentage of negative treatment by far.

A History of Bias in the Brazilian Media: Cardoso vs. Lula and Dilma

According to Manchetômetro, disproportionately negative media treatment of the PT and PT presidential candidates extends to ex-president Lula da Silva. Looking at ongoing coverage, the project has found that former president Fernando Henrique Cardoso of the PSDB has received proportionately more favorable coverage than Lula. As of October 22, coverage for Cardoso was 38 percent positive (10 mentions), 23 percent negative (six mentions) and 38 percent neutral (10 mentions); while treatment of Lula was 4 percent positive (6 mentions), 38 percent negative (53 mentions) and 58 percent neutral (81 mentions). This is consistent with media coverage of the 1998 elections, in which Manchetômetro noted that 23 percent of Cardoso’s coverage in the three leading newspapers was favorable and 12 percent negative, versus 3 percent favorable and 36 percent negative for Lula.

It is also interesting to see how Brazil’s major media has covered the economic issues surrounding presidential elections. As we have noted in a recent paper, Brazil’s economy has slowed down over the last three years, but since it took power in 2003, the Workers Party administrations have made significant gains in economic growth and social progress. From 2003 to 2014, GDP per capita (adjusted for inflation) grew at a rate of 2.5 percent, compared to 0.8 percent annual per capita growth during the Cardoso government (1995-2002). Nevertheless, even though many key economic indicators in 1998 were far less favorable than in 2014, there has been much more negative media coverage of the economy during the 2014 campaign period than in 1998.

Manchetômetro looked at coverage of the economy in O Estado de S. Paulo in both the 1998 and 2014 campaign periods and found that in 1998 there were 50 positive news stories about the economy, 76 negative stories, and 17 neutral ones. Since the campaign period began this year, there have been 9 positive stories on the economy, 127 negative stories, and 23 neutral stories. This means that in 1998 about 52 percent of cover stories on the economy were negative and 35 percent were positive, while this year 80 percent of cover stories on the economy have been negative and only about 6 percent positive. Manchetômetro finds that despite the fact that most economic indicators are better this year than they were in 1998, O Estado de S. Paulo coverage makes the Brazilian economy appear to be in worse shape than it was in 1998, when a significant part of the presidential campaign took place amidst a financial crisis.

Professor of Economics at the Federal University of Rio de Janeiro Carlos Pinkusfeld comments in a Manchetômetro post:

The old adage says that truth is the first casualty of war. In “electoral battle,” discussion does not escape this maxim. Not so much by presenting misleading data, but by deliberately confusing interpretation and doomsday predictions. 

Campaigning for the Bolivia’s presidential election officially ended on Wednesday, ahead of voting on Sunday. The election, which includes 272,058 voters living abroad in 33 countries, will be observed by a mission from the Organization of American States. While the final outcome is likely to be a first-round victory for the incumbent, Evo Morales, the most interesting results will come from the four departments of the media luna region. In the past, the Morales administration has faced significant opposition there, including a sometimes violent secessionist movement.  This year, the president has a chance to win majority support in all four of the departments, which would mark a major turning point in Bolivian politics.

Earlier this week, Morales expressed confidence that he will surpass his 2009 record of support, and that as much as 70 percent of the electorate will vote for him this year. Morales won previous elections handily, with 54 percent of the vote in 2005, and 64 percent in 2009. When his party, the Movement Toward Socialism (MAS), celebrated the end of its campaign in what has been an opposition stronghold, Santa Cruz, on Tuesday, thousands of people came together to show their support, demonstrating changing dynamics in the relationship between the MAS and Santa Cruz. Then on Wednesday, Morales brought his campaign to an end in El Alto, where he claimed that he will win in all nine of Bolivia’s departments, saying:

Bolivia is united, the “half-moon” is over, now it is a full moon. We have all united at the top the social forces and the youth, who have joined for two reasons: because of the patriotic agenda and stability and because of the economic growth that guarantees hope for future generations.

The “half moon,” or “media luna,” is located in the eastern lowlands of Bolivia and is comprised of the departments of Santa Cruz, Beni, Pando, and Tarija. According to an IPSOS poll the MAS could win in Santa Cruz with 50 percent of the votes. In the 2009 presidential elections, Morales lost in Santa Cruz, Beni, and Pando. Things have been changing, however, and Morales has been strategic in building and maintaining alliances in the media luna departments. Not only do polls show that Morales might win in Santa Cruz, but he might also win in Beni (44 percent), Pando (54 percent), and Tarija (43 percent).

Winning in Santa Cruz would mark an important victory. Illustrating the changing support for Morales, Nick Miroff reported for the Washington Post that even businessmen have come around to his presidency. For example, even Luis Barbery, the president of Bolivia’s leading business and trade association, CAINCO, said that “This is a great moment for Bolivia,” and “We have a new understanding with the government.” Morales’ success can be attributed to the fact that, besides increasing investment in social programs and public works, he “also practiced fiscal discipline – running a budget surplus every year – and quietly accommodated private-sector interests, delivering 7 percent economic growth last year.” CEPR recently examined in a blog post the economic and social changes in Bolivia since Evo’s election in 2005.

The main opposition figure is Samuel Doria Medina of the from National Unity Front (UN) party, a cement magnate and one of Bolivia’s wealthiest people. Doria Medina has also predicted that he will win in the departments of Beni, Pando, and Santa Cruz.

The assured presidential victory of Morales, some argue, can be in part attributed to the pact reached between Doria Medina and Rubén Costas of the Social Democrat Movement (MDS), whose parties are now grouped under the banner of the Democratic-Union (UD). Costas is Santa Cruz’s governor and is also a former secessionist leader. UN dissidents claim Doria Medina is himself a “dissident” of the Frente Amplio, a bloc comprised of political organizations, civil society groups and intellectuals in order to bring about an alternative to the Morales administration. José Antonio Quiroga of the Forum of Democratic Citizenship, said the following of the Doria Medina-Costas (UD) alliance as he explained his decision to leave the Frente Amplio, in a conference:

The UN accepted the exclusion of the Frente Amplio and its allies imposed by the MDS and formed another electoral alliance, the Democratic-Union (UD). Such a circumstantial alliance is not the programmatic, institutional, and lasting option we sought to build (…) we do not feel represented by the agreement.

 In addition, as Emily Achtenberg notes in a blog post for NACLA:

At the same time, 600 militants from the conservative Democratic National Action Party (ADN) of Santa Cruz, formed by ex-military dictator Hugo Banzer, have been welcomed by the MAS leadership after renouncing their party affiliations. More than a few conservative opposition leaders from the old neoliberal parties have reinvented themselves as MAS legislative candidates, much to the chagrin of long-time progressive constituents who feel unrepresented by them.

The real challenge to the Morales administration comes from indigenous and environmental groups, many of which were part of the coalition that brought him to power. Criticisms from these groups focus on matters such as the administration’s failure to structurally change the extractivist economy and its attempt to build a highway through the TIPNIS (Territorio Indígena y Parque Nacional Isiboro-Secure) in the Amazon. In 2011, MAS lost the two-thirds majority it had in the legislature after five indigenous deputies abandoned the party over the TIPNIS conflict.

Another example of this dilemma is a law passed on October 2012, the “Law of Mother Earth and Integral Development for Living Well,” which far from calming indigenous and environmental groups sparked significant criticisms. Indigenous groups like CONAMAQ (the National Council of Ayllus and Markas of Qullasuyu) claimed that instead of promoting alternative and sustainable development, the law reinforced the government’s extractivist and developmentalist agenda. As of May 2014, the government was not able to properly implement the law. Moreover, Natalie Alem from the Andean Center of Communication and Development points to “bad examples” of decisions taken in the context of the law, like the hydro-metallurgical project in Corocoro, the activities of the transnational mining company San Cristóbal, petroleum exploration in northern La Paz, and construction of mega dams on the Madeira River.

Other organizations like the Confederation of Indigenous People of Bolivia (CIDOB) have also rallied against the government. CIDOB represents 34 indigenous communities from the lowlands. Vice President Álvaro García Linera has labeled groups that oppose the development agenda and the extractive industries “environmental fundamentalists,” and Morales has accused these movements of obstructing the government’s “process of change.” Although the government has indeed maintained widespread popularity thanks to economic growth, Morales’ leadership role in the international community in terms of climate change, admirable achievements in poverty and inequality reduction, improvements in access to services like health and education, and promotion of indigenous and cultural rights (for the first time in history indigenous rights are enshrined in the Constitution), it will be interesting to see how the relationship between the government and these indigenous and environmental groups unfolds during Morales’ next term. As Natalie Alem puts it, “the challenge is to live in a Plurinational State, which in turn exists inside a globalized and capitalist world.”

Campaigning for the Bolivia’s presidential election officially ended on Wednesday, ahead of voting on Sunday. The election, which includes 272,058 voters living abroad in 33 countries, will be observed by a mission from the Organization of American States. While the final outcome is likely to be a first-round victory for the incumbent, Evo Morales, the most interesting results will come from the four departments of the media luna region. In the past, the Morales administration has faced significant opposition there, including a sometimes violent secessionist movement.  This year, the president has a chance to win majority support in all four of the departments, which would mark a major turning point in Bolivian politics.

Earlier this week, Morales expressed confidence that he will surpass his 2009 record of support, and that as much as 70 percent of the electorate will vote for him this year. Morales won previous elections handily, with 54 percent of the vote in 2005, and 64 percent in 2009. When his party, the Movement Toward Socialism (MAS), celebrated the end of its campaign in what has been an opposition stronghold, Santa Cruz, on Tuesday, thousands of people came together to show their support, demonstrating changing dynamics in the relationship between the MAS and Santa Cruz. Then on Wednesday, Morales brought his campaign to an end in El Alto, where he claimed that he will win in all nine of Bolivia’s departments, saying:

Bolivia is united, the “half-moon” is over, now it is a full moon. We have all united at the top the social forces and the youth, who have joined for two reasons: because of the patriotic agenda and stability and because of the economic growth that guarantees hope for future generations.

The “half moon,” or “media luna,” is located in the eastern lowlands of Bolivia and is comprised of the departments of Santa Cruz, Beni, Pando, and Tarija. According to an IPSOS poll the MAS could win in Santa Cruz with 50 percent of the votes. In the 2009 presidential elections, Morales lost in Santa Cruz, Beni, and Pando. Things have been changing, however, and Morales has been strategic in building and maintaining alliances in the media luna departments. Not only do polls show that Morales might win in Santa Cruz, but he might also win in Beni (44 percent), Pando (54 percent), and Tarija (43 percent).

Winning in Santa Cruz would mark an important victory. Illustrating the changing support for Morales, Nick Miroff reported for the Washington Post that even businessmen have come around to his presidency. For example, even Luis Barbery, the president of Bolivia’s leading business and trade association, CAINCO, said that “This is a great moment for Bolivia,” and “We have a new understanding with the government.” Morales’ success can be attributed to the fact that, besides increasing investment in social programs and public works, he “also practiced fiscal discipline – running a budget surplus every year – and quietly accommodated private-sector interests, delivering 7 percent economic growth last year.” CEPR recently examined in a blog post the economic and social changes in Bolivia since Evo’s election in 2005.

The main opposition figure is Samuel Doria Medina of the from National Unity Front (UN) party, a cement magnate and one of Bolivia’s wealthiest people. Doria Medina has also predicted that he will win in the departments of Beni, Pando, and Santa Cruz.

The assured presidential victory of Morales, some argue, can be in part attributed to the pact reached between Doria Medina and Rubén Costas of the Social Democrat Movement (MDS), whose parties are now grouped under the banner of the Democratic-Union (UD). Costas is Santa Cruz’s governor and is also a former secessionist leader. UN dissidents claim Doria Medina is himself a “dissident” of the Frente Amplio, a bloc comprised of political organizations, civil society groups and intellectuals in order to bring about an alternative to the Morales administration. José Antonio Quiroga of the Forum of Democratic Citizenship, said the following of the Doria Medina-Costas (UD) alliance as he explained his decision to leave the Frente Amplio, in a conference:

The UN accepted the exclusion of the Frente Amplio and its allies imposed by the MDS and formed another electoral alliance, the Democratic-Union (UD). Such a circumstantial alliance is not the programmatic, institutional, and lasting option we sought to build (…) we do not feel represented by the agreement.

 In addition, as Emily Achtenberg notes in a blog post for NACLA:

At the same time, 600 militants from the conservative Democratic National Action Party (ADN) of Santa Cruz, formed by ex-military dictator Hugo Banzer, have been welcomed by the MAS leadership after renouncing their party affiliations. More than a few conservative opposition leaders from the old neoliberal parties have reinvented themselves as MAS legislative candidates, much to the chagrin of long-time progressive constituents who feel unrepresented by them.

The real challenge to the Morales administration comes from indigenous and environmental groups, many of which were part of the coalition that brought him to power. Criticisms from these groups focus on matters such as the administration’s failure to structurally change the extractivist economy and its attempt to build a highway through the TIPNIS (Territorio Indígena y Parque Nacional Isiboro-Secure) in the Amazon. In 2011, MAS lost the two-thirds majority it had in the legislature after five indigenous deputies abandoned the party over the TIPNIS conflict.

Another example of this dilemma is a law passed on October 2012, the “Law of Mother Earth and Integral Development for Living Well,” which far from calming indigenous and environmental groups sparked significant criticisms. Indigenous groups like CONAMAQ (the National Council of Ayllus and Markas of Qullasuyu) claimed that instead of promoting alternative and sustainable development, the law reinforced the government’s extractivist and developmentalist agenda. As of May 2014, the government was not able to properly implement the law. Moreover, Natalie Alem from the Andean Center of Communication and Development points to “bad examples” of decisions taken in the context of the law, like the hydro-metallurgical project in Corocoro, the activities of the transnational mining company San Cristóbal, petroleum exploration in northern La Paz, and construction of mega dams on the Madeira River.

Other organizations like the Confederation of Indigenous People of Bolivia (CIDOB) have also rallied against the government. CIDOB represents 34 indigenous communities from the lowlands. Vice President Álvaro García Linera has labeled groups that oppose the development agenda and the extractive industries “environmental fundamentalists,” and Morales has accused these movements of obstructing the government’s “process of change.” Although the government has indeed maintained widespread popularity thanks to economic growth, Morales’ leadership role in the international community in terms of climate change, admirable achievements in poverty and inequality reduction, improvements in access to services like health and education, and promotion of indigenous and cultural rights (for the first time in history indigenous rights are enshrined in the Constitution), it will be interesting to see how the relationship between the government and these indigenous and environmental groups unfolds during Morales’ next term. As Natalie Alem puts it, “the challenge is to live in a Plurinational State, which in turn exists inside a globalized and capitalist world.”

On October 12, Bolivians will go to the polls to choose their next president for a five-year term. Recent polling suggests that the incumbent, Evo Morales, will obtain a decisive first-round victory over his closest opponent, Samuel Doria Medina. Below are ten graphs on economic and social developments since Evo’s election in 2005 that help explain the strong support for his re-election.

 

      1. Economic Growth: Bolivia has grown much faster over the last 8 years under President Evo Morales than in any period over the past three-and-a-half decades.

Source: International Monetary Fund.

 

     2. High Level of International Reserves: International reserves act as a buffer against external shocks, preventing balance of payments crises. Bolivia’s buildup   of reserves has allowed it to avoid the often harmful conditions that come with IMF borrowing; the country operated under IMF agreements almost continuously for 20 years until Morales took office in 2006. Bolivia’s international reserves are currently more than 48 percent of GDP, higher than even China; there is room for Bolivia to put these resources to greater productive use, for example in public investment.

Source: Banco Central de Bolivia (BCB).

 
3. Nationalization Shifts Hydrocarbon Revenues to the Public Sector: A referendum vote in mid-2004 indicated public support for a greater state role in the hydrocarbons sector, and in May 2006, newly-elected president Evo Morales renationalized Bolivia’s oil and gas industries. The increased tax revenue has allowed Bolivia to vastly increase its macroeconomic policy space. Some of this revenue went into reserves, as noted above, and Bolivia also increased public investment (below).

Source: BCB.

 

4. Highest Foreign Direct Investment in South America: While the business press consider nationalizations to be anathema to attracting international investment, Bolivia actually had the highest level of foreign direct investment, as a percent of GDP, in South America in 2013.

Source: Economic Commission for Latin America and the Caribbean.

  

        5. Public Investment is High and Increasing: Since 2006, Bolivia has made it a priority to increase public investment spending. Over the last 8 years, total public investment doubled as a percentage of GDP.

Source: Viceministerio de Inversión Pública Y Financiamiento Externo.

 

     6. Poverty Reduced by 25 Percent, Extreme Poverty Reduced by 43 Percent: Bolivia is one of the poorest countries in South America, but poverty has been on a downward trend in recent years after stagnating at a very high level for almost a decade.

Source: Instituto de Estadística de Bolivia (INE).

 

     7. Economic Inequality Decreases: Bolivia has been praised by Alicia Barcena, the head of the Economic Commission on Latin America and the Caribbean (ECLAC), as being “one of the few countries that has reduced inequality … the gap between rich and poor has been hugely narrowed.” As shown below (by decile), the income of the poorer sectors of the population has grown much faster since 2006 than that of the higher-income households.

Source: Socio-Economic Database for Latin America and the Caribbean.

    8. Large Increase in the Minimum Wage: One explanation for the decrease in poverty and inequality is that Bolivia has rapidly increased the real (inflation-adjusted) minimum wage. From 2005-2014, the real minimum wage increased by 87.7 percent.Source: INE.

 

  9. Social Spending Increases Over 45 Percent In 7 Years: Public spending on health, education, pensions and poverty alleviation programs experienced a significant increase (of 45 percent) in real terms, but did not fully keep up with overall growth in the economy.

Source: Ministerio de Economía y Finanzas Públicas.

 

     10. Pursuing Alternatives to the Drug War: In 2008, the U.S. added Bolivia to a short list of countries that had “failed demonstrably” to meet international counternarcotics agreements. Bolivia has been on the list ever since, despite having reduced the amount of coca in cultivation. Outside the U.S., President Morales has received praise for his “Coca Yes, Cocaine No” policy that emphasizes protecting human rights, and recognizes traditional, legal uses for the coca plant.

To see a spreadsheet with the underlying data, as well as links to sources, click here.

 

On October 12, Bolivians will go to the polls to choose their next president for a five-year term. Recent polling suggests that the incumbent, Evo Morales, will obtain a decisive first-round victory over his closest opponent, Samuel Doria Medina. Below are ten graphs on economic and social developments since Evo’s election in 2005 that help explain the strong support for his re-election.

 

      1. Economic Growth: Bolivia has grown much faster over the last 8 years under President Evo Morales than in any period over the past three-and-a-half decades.

Source: International Monetary Fund.

 

     2. High Level of International Reserves: International reserves act as a buffer against external shocks, preventing balance of payments crises. Bolivia’s buildup   of reserves has allowed it to avoid the often harmful conditions that come with IMF borrowing; the country operated under IMF agreements almost continuously for 20 years until Morales took office in 2006. Bolivia’s international reserves are currently more than 48 percent of GDP, higher than even China; there is room for Bolivia to put these resources to greater productive use, for example in public investment.

Source: Banco Central de Bolivia (BCB).

 
3. Nationalization Shifts Hydrocarbon Revenues to the Public Sector: A referendum vote in mid-2004 indicated public support for a greater state role in the hydrocarbons sector, and in May 2006, newly-elected president Evo Morales renationalized Bolivia’s oil and gas industries. The increased tax revenue has allowed Bolivia to vastly increase its macroeconomic policy space. Some of this revenue went into reserves, as noted above, and Bolivia also increased public investment (below).

Source: BCB.

 

4. Highest Foreign Direct Investment in South America: While the business press consider nationalizations to be anathema to attracting international investment, Bolivia actually had the highest level of foreign direct investment, as a percent of GDP, in South America in 2013.

Source: Economic Commission for Latin America and the Caribbean.

  

        5. Public Investment is High and Increasing: Since 2006, Bolivia has made it a priority to increase public investment spending. Over the last 8 years, total public investment doubled as a percentage of GDP.

Source: Viceministerio de Inversión Pública Y Financiamiento Externo.

 

     6. Poverty Reduced by 25 Percent, Extreme Poverty Reduced by 43 Percent: Bolivia is one of the poorest countries in South America, but poverty has been on a downward trend in recent years after stagnating at a very high level for almost a decade.

Source: Instituto de Estadística de Bolivia (INE).

 

     7. Economic Inequality Decreases: Bolivia has been praised by Alicia Barcena, the head of the Economic Commission on Latin America and the Caribbean (ECLAC), as being “one of the few countries that has reduced inequality … the gap between rich and poor has been hugely narrowed.” As shown below (by decile), the income of the poorer sectors of the population has grown much faster since 2006 than that of the higher-income households.

Source: Socio-Economic Database for Latin America and the Caribbean.

    8. Large Increase in the Minimum Wage: One explanation for the decrease in poverty and inequality is that Bolivia has rapidly increased the real (inflation-adjusted) minimum wage. From 2005-2014, the real minimum wage increased by 87.7 percent.Source: INE.

 

  9. Social Spending Increases Over 45 Percent In 7 Years: Public spending on health, education, pensions and poverty alleviation programs experienced a significant increase (of 45 percent) in real terms, but did not fully keep up with overall growth in the economy.

Source: Ministerio de Economía y Finanzas Públicas.

 

     10. Pursuing Alternatives to the Drug War: In 2008, the U.S. added Bolivia to a short list of countries that had “failed demonstrably” to meet international counternarcotics agreements. Bolivia has been on the list ever since, despite having reduced the amount of coca in cultivation. Outside the U.S., President Morales has received praise for his “Coca Yes, Cocaine No” policy that emphasizes protecting human rights, and recognizes traditional, legal uses for the coca plant.

To see a spreadsheet with the underlying data, as well as links to sources, click here.

 

Marina Silva unexpectedly became a front-runner in the 2014 Brazilian general election when her presidential running mate, Eduardo Campos, died in a plane crash this August, catapulting her to the head of the Brazilian Socialist Party (PSB) ticket. After this, Silva briefly took the lead in the polls, but in the last few weeks the incumbent, Dilma Rousseff of the Workers’ Party (PT), has recaptured the momentum and the lead in a potential second round match-up with Silva. In an opinion piece written for Al Jazeera, Zeynep Zileli Rabanea explains Silva’s appeal:

With her background being quite different from the regular ruling elite – a woman of African descent from Amazonia – she has been portrayed favourably by the international media both as a disruptive force and as a welcome departure from the usual suspects running Brazil (Rousseff’s workers’ party [sic] has been in power for more than a decade). Silva has even been depicted as a kind of “green” heroine, all of a sudden popping up on the political field to save Brazil from corruption.

The rest of the piece is dedicated to examining this reputation in light of Silva’s election platform. Silva advocates a rebalancing of foreign policy, bringing the country closer to the United States; she proposes signing trade deals with the U.S., Europe and some of the Asian country trading blocs; and she has embraced big agriculture in a series of policy changes, including dropping her opposition to genetically modified crops. In terms of macroeconomic policy she has focused on lowering the government budget deficit and raising interest rates to curb inflation. Could these policies be the appropriate response to a slowing economy?

In a paper published on Monday, CEPR concludes that much of Brazil’s recent slowdown in economic growth is due to bad and or mis-timed macroeconomic policy decisions, with external conditions contributing to a lesser degree. Contractionary monetary policy has been used in times of slow growth despite having little impact on inflation, and fiscal policy has not only been too little to make up for low demand, sometimes it has even been pro-cyclical.

The Brazilian Central Bank enacted contractionary monetary policy during periods of low growth, and in the context of an economy in which raising interest rates (via the Selic rate) is unlikely to lower inflation. Rousseff’s predecessor and mentor, former President Lula da Silva, speaking to Treasury Secretary Arno Augustin, reportedly said, “One day you will have to explain to me why, if we don’t have demand-driven inflation, why we are curbing credit … Without credit nobody is going anywhere.” If Lula had known then that the country was in recession (GDP data lags several months, and was revised for the first quarter), he might also have asked about why the Central Bank was curbing credit, by raising the Selic rate, during a recession. In fact, it has done so three times this year.

It is encouraging that this debate is happening within the PT, and of course, fixing this policy will go far toward getting the economy back on track. For her part, Marina Silva’s economic advisor has said that Brazil needs to fight inflation by increasing interest rates at the outset of the next government. Silva herself has indicated that her government would target 3 percent inflation (as opposed to the current target of 4.5 percent). This is a little strange since such a directive would presumably be implemented by the Central Bank, an institution which Silva has said needs to be more independent from the executive branch.

On the fiscal policy side, Silva has pledged to reign in public spending, a refrain which those in the U.S. are used to hearing from Republicans, not politicians who call themselves socialists. To improve and expand public services while lowering spending she plans to use concessions and public-private partnerships to cut costs. To be clear, concessions and privatizations are not something that Dilma has taken a firm stance against. Several notable concessions were part of Dilma’s efforts to increase private sector investment (ex. airports, oil fields, roads). Silva’s plans include expanding the current program of infrastructure concessions to include more public services and large parts of the Amazon rainforest.

It is reported that Silva proposes to “limit the percentage increase in public expenditure to the rate of economic growth,” and her economic advisor reportedly supports a “strong one-off adjustment that would cause some pain in the short term.” While sold to the public as the lesser of two evils (one writer for the Wall Street Journal said “economists and investors” are certain Brazil has to “reform or die”), these policies are unlikely to boost the economy. Brazil had a thriving economy before the Great Recession, and nothing has occurred in the last 5 years that would prevent it from achieving such economic growth again. What is needed is supportive macroeconomic policy: increased public investment spending, expanded social programs (to support the poverty reduction effects of job creation and rising average real wages), and accommodative monetary policy.

Marina Silva unexpectedly became a front-runner in the 2014 Brazilian general election when her presidential running mate, Eduardo Campos, died in a plane crash this August, catapulting her to the head of the Brazilian Socialist Party (PSB) ticket. After this, Silva briefly took the lead in the polls, but in the last few weeks the incumbent, Dilma Rousseff of the Workers’ Party (PT), has recaptured the momentum and the lead in a potential second round match-up with Silva. In an opinion piece written for Al Jazeera, Zeynep Zileli Rabanea explains Silva’s appeal:

With her background being quite different from the regular ruling elite – a woman of African descent from Amazonia – she has been portrayed favourably by the international media both as a disruptive force and as a welcome departure from the usual suspects running Brazil (Rousseff’s workers’ party [sic] has been in power for more than a decade). Silva has even been depicted as a kind of “green” heroine, all of a sudden popping up on the political field to save Brazil from corruption.

The rest of the piece is dedicated to examining this reputation in light of Silva’s election platform. Silva advocates a rebalancing of foreign policy, bringing the country closer to the United States; she proposes signing trade deals with the U.S., Europe and some of the Asian country trading blocs; and she has embraced big agriculture in a series of policy changes, including dropping her opposition to genetically modified crops. In terms of macroeconomic policy she has focused on lowering the government budget deficit and raising interest rates to curb inflation. Could these policies be the appropriate response to a slowing economy?

In a paper published on Monday, CEPR concludes that much of Brazil’s recent slowdown in economic growth is due to bad and or mis-timed macroeconomic policy decisions, with external conditions contributing to a lesser degree. Contractionary monetary policy has been used in times of slow growth despite having little impact on inflation, and fiscal policy has not only been too little to make up for low demand, sometimes it has even been pro-cyclical.

The Brazilian Central Bank enacted contractionary monetary policy during periods of low growth, and in the context of an economy in which raising interest rates (via the Selic rate) is unlikely to lower inflation. Rousseff’s predecessor and mentor, former President Lula da Silva, speaking to Treasury Secretary Arno Augustin, reportedly said, “One day you will have to explain to me why, if we don’t have demand-driven inflation, why we are curbing credit … Without credit nobody is going anywhere.” If Lula had known then that the country was in recession (GDP data lags several months, and was revised for the first quarter), he might also have asked about why the Central Bank was curbing credit, by raising the Selic rate, during a recession. In fact, it has done so three times this year.

It is encouraging that this debate is happening within the PT, and of course, fixing this policy will go far toward getting the economy back on track. For her part, Marina Silva’s economic advisor has said that Brazil needs to fight inflation by increasing interest rates at the outset of the next government. Silva herself has indicated that her government would target 3 percent inflation (as opposed to the current target of 4.5 percent). This is a little strange since such a directive would presumably be implemented by the Central Bank, an institution which Silva has said needs to be more independent from the executive branch.

On the fiscal policy side, Silva has pledged to reign in public spending, a refrain which those in the U.S. are used to hearing from Republicans, not politicians who call themselves socialists. To improve and expand public services while lowering spending she plans to use concessions and public-private partnerships to cut costs. To be clear, concessions and privatizations are not something that Dilma has taken a firm stance against. Several notable concessions were part of Dilma’s efforts to increase private sector investment (ex. airports, oil fields, roads). Silva’s plans include expanding the current program of infrastructure concessions to include more public services and large parts of the Amazon rainforest.

It is reported that Silva proposes to “limit the percentage increase in public expenditure to the rate of economic growth,” and her economic advisor reportedly supports a “strong one-off adjustment that would cause some pain in the short term.” While sold to the public as the lesser of two evils (one writer for the Wall Street Journal said “economists and investors” are certain Brazil has to “reform or die”), these policies are unlikely to boost the economy. Brazil had a thriving economy before the Great Recession, and nothing has occurred in the last 5 years that would prevent it from achieving such economic growth again. What is needed is supportive macroeconomic policy: increased public investment spending, expanded social programs (to support the poverty reduction effects of job creation and rising average real wages), and accommodative monetary policy.

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

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

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

Benedito "Dito" Barbosa

(Photo: Brian Mier)

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

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

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

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

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

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

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

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

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

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

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

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

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

Benedito "Dito" Barbosa

(Photo: Brian Mier)

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

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

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

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

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

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

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

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

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

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

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

The World Bank notes that:

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

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

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

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

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

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

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

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

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

The World Bank notes that:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ISDA Decision

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

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

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

Does Elliott Own Argentine CDS? Circumstantial Evidence

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

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

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

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

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

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

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

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

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

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

ISDA Decision

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

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

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

Does Elliott Own Argentine CDS? Circumstantial Evidence

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

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

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

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

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

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

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