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Article Artículo

Ecuador

Latin America and the Caribbean

World

Reviewing Rory Carroll's Reporting on Ecuador and Snowden

Rory Carroll has been reporting on Ecuador and the Snowden case for the Guardian, but not without serious criticism.  Most outrageous was the headline on his most recent article, which may have not been the reporter’s doing: Rafael Correa not considering Snowden asylum: helping him was a 'mistake.'

This is of course very misleading; Correa made it clear in his interview that providing travel documents was a “mistake,” since this is not Ecuador’s responsibility; and that he would consider asylum for Snowden if Snowden was in Ecuadorean territory. The headline tells the reader that Correa has abandoned Snowden, but anyone who reads it can see that if Snowden arrived at an Ecuadorean embassy, his application for asylum would be seriously considered, and very likely granted.

The Guardian has since corrected the headline.

Correa himself criticized Carroll’s reporting on the interview, saying:

Translation: “My statements for The Guardian totally decontextualized. Fortunately we have it taped. [We are] to not fall into the same trap of the very same as always!"

CEPR and Stephan Lefebvre / July 05, 2013

Article Artículo

Bolivia

Latin America and the Caribbean

World

UNASUR Statement on Interference with Bolivian Presidential Plane Over Snowden

UNASUR released a statement today in response to the incident where Evo Morales' plane was forced to land in Austria after threats to search the plane for Snowden.  EU officials are scrambling to explain why Bolivian government officials are claiming that the president's plane was blocked from flying over several countries.  These events seem to parallel the incident where U.K. government officials threatened to invade the Ecuadorian Embassy in order to capture wikileaks founder Julian Assange.

Here is our translation of the UNASUR statement:

Statement from the Union of South American Nations

The Union of South American Nations – UNASUR – has taken note, with the greatest concern, of the Statement-Denunciation issued by the Government of the Plurinational State of Bolivia, by which the government states its claim before the international community due to the surprising withdrawal of permissions over airspace and landing for the presidential airplane that carried President Evo Morales Ayma and his party, in return flight, after his participation in the Second Summit of the Gas Exporting Countries Forum, held in the Russian Federation.

The Union of South American Countries – UNASUR – makes public its strong solidarity with the Government of the Plurinational State of Bolivia and in particular with its President Mr. Evo Morales Ayma.  Additionally, it expresses its indignation and profound rejection of these acts which constitute unfriendly and unjustifiable acts that have also put in serious risk the security of the Bolivian head of state and his party.

UNASUR demands a clarification of these acts and an explanation as it were to arise.

This is the original, posted on the website for Peru's foreign ministry.

CEPR and Stephan Lefebvre / July 03, 2013

Article Artículo

Profit and Investment: Does More of One Mean Less of the Other?

One of the simple facts of the economy that troubles many economists is the absence of any relationship between profits and investment. Economists like to tell people that if we make investment more profitable, we will have more investment. It turns out the world doesn't work that way.

Here's one of my favorite graphs of the economy going back to the early years right after World War II. It's about as simple as it gets. It shows the investment share of GDP. Then it shows the profit share of net value added in the corporate sector. The measure of profit here is the broad measure of business operating surplus. Using net takes away the downward bias in recent years that would result from a rising depreciation share of output. The last line is the after-tax profit share.

profit and investment shares 2013-07-02

The first item worth noting here is that investment doesn't fluctuate all that much. It peaks at 13.4 percent of GDP in 1981. The closest it ever comes to this share again is in the looniness of the stock bubble when the ability to raise money on Wall Street for every crazy idea pushed the investment share up to 12.7 percent of GDP. Even this number is overstated by 0.3-0.4 percentage points because of the growth of car leasing in the 1990s. (A leased car is owned by the leasing company and therefore counts as investment. By contrast, when a consumer buys a car it is treated as consumption.)

The takeaway is that anyone who expects a huge uptick in investment to provide a major boost to demand is either smoking something serious or simply has never looked at the data. It hasn't happen in the last 65 years and it's not about to happen now.

CEPR / July 02, 2013

Article Artículo

USAID’s Lack of Expertise, Reliance on Contractors Puts Sustainability of Caracol in Doubt

Despite having “not constructed a port anywhere in the world since the 1970s”, USAID allocated $72 million dollars to build one, according to a Government Accountability Office (GAO) report released last week.  The port is meant to help support the Caracol Industrial Park (CIP) which was constructed with funding from the Inter-American Development Bank (IDB) and $170 million in funding from the U.S. for related infrastructure.  The CIP has been held up as the flagship reconstruction project undertaken by the international community in Haiti. Even after putting aside criticisms of the location, types of jobs and the environmental impact of the CIP, the “success” of the entire project hinges on the new port. A prior study found that, “the CIP will only succeed if expanded, efficient port facilities are developed nearby.”

Despite a lack of experience in building ports, USAID decided to take on this critical project. However, over two years since it began the project is delayed, is over budget and its sustainability has been thrown into doubt. The GAO found that USAID “lacks staff with technical expertise in planning, construction, and oversight of a port,” and a ports engineer and advisor position has been empty for over two years. Additionally, the feasibility study for the port, contracted out by USAID, was delayed and “did not require the contractor to obtain all the information necessary to help select a port site.” As a result, while construction was set to begin in the spring of 2013, USAID “has no current projection for when construction of the port may begin or how long it will take because more studies are needed before the port site can be selected and the port designed,” reports the GAO.

Without any in-house expertise in port construction at USAID, the mission turned to private contractors. HRRW reported in January 2012 that MWH Americas was awarded a “$2.8 million contract to conduct a feasibility study for port infrastructure in northern Haiti.” The expected completion date was May 2012. MWH Americas had previously been criticized for their work in New Orleans, with the Times-Picayune reporting that MWH had “been operating for more than two years under a dubiously awarded contract that has allowed it to overbill the city repeatedly even as the bricks-and-mortar recovery work it oversees has lagged.”

In Haiti, MWH quickly subcontracted out much of the work on the feasibility study. As HRRW reported in February, “[w]ithin two weeks of receiving the $2.8 million contract, MWH Americas turned around and gave out $1.45 million in subcontracts to four different firms, all headquartered in Washington DC or Virginia.” USAID staff told the GAO that the study was completed as required in May 2012, but that “multiple environmental issues not adequately addressed in the initial study needed additional examination.” MWH was awarded another $1 million and the completion date was extended.  Overall, the GAO reports that “the feasibility study was amended six times and extended by 9 months.”

The study was finally completed in February of 2013, after USAID consulted with other government agencies with experience in port construction. In the end, the amount awarded to MWH increased by $1.5 million. Yet even after all of this, the GAO found that “other studies strongly recommended” by other agencies “still need to be performed.” Without any expertise to oversee the contractors, the work done was inadequate, expensive and took far longer than anticipated, revealing the pitfalls of being “more of a contracting agency than an operational agency with the ability to deliver,” as Hillary Clinton described USAID during her Senate confirmation hearing in 2009. 

Jake Johnston / July 02, 2013