Monday Memo: AQ’s Top Expected Stories for the Week of May 14

May 14, 2012

Top stories this week are likely to include: Hugo Chávez post-radiation therapy; Michel Martelly begins his second year as president; Dominicans head to the polls; Peru minus two ministers; and Brazil creates a new social program.

Chávez Ends Cancer Treatment: Venezuelan President Hugo Chávez returned from Cuba on Friday claiming that he had ended his radiation therapy session in Havana “in a successful manner.” This appears to be the first full week in the past several weeks where Chávez governs the country while on its soil. Despite his repeated absences, the latest poll by Datanálisis reports that Chávez returns home with a 17 percentage point advantage over opposition candidate Henrique Capriles Radonski ahead of the October presidential election. Now the question is whether Chávez is truly recovered; the recently-formed Council of the State casts some doubt. AQ Editor-in-Chief Christopher Sabatini points out, “Sure Chávez says he is in the clear, and we all hope he is. But President Chávez has said that before. Given the chronic lack of transparency of this regime, it’s impossible to know.”

Martelly in Second Year: Haitian President Michel Martelly was sworn in one year ago last Friday, and this is his first full week of the new presidential year. The Associated Press ranks his first year as one of “modest gains” that many in Haiti view with “guarded surprise.” Despite clashes with parliament, Martelly has overseen successes such as reduced tuition for schools, funded by a tax on international phone calls, as well as a steady recovery after the devastating January 2010 earthquake. But it has not been without challenges. According to AQ Senior Editor Jason Marczak, “A top priority in the next few months will be getting to the UN to devote all the resources necessary to control the cholera outbreak. This cannot be a piecemeal approach; it must be dealt with rapidly and comprehensively before more Haitians die.”

Elections in the Dominican Republic: Dominicans elect a new president on Sunday, May 20; the two leading candidates are Hipólito Mejia of the Partido de la Revolución Dominicana (Dominican Revolution Party—PRD) and Danilo Medina of the ruling Partido de la Liberación Dominicana (Dominican Liberation Party—PLD). President Leonel Fernández of the PLD is not running for re-election. Sabatini notes, “This election, and the Dominican Republic’s future, turns really on the ability of the PLD and the political system’s capacity generally to renew itself. The truth is: without broader leadership change across the parties, the political and economic miracle of the DR may be at risk—not now, but in the future.”

Peru and the Ministerial Gap: After last week’s resignation of the interior and defense ministers, Peruvian Prime Minister Oscar Valdés must quickly restore order to President Ollanta Humala’s cabinet. The ministers resigned after a failed operation against the Shining Path rebels killed at least nine soldiers, and they faced a congressional censure. This is not the first ministerial change; the entire cabinet was dissolved by former Prime Minister Salomón Lerner after Indigenous Peruvians protested against the controversial Conga mine. “Increasingly, we’re seeing a government that is shifting more in favor of investor rightism in large part as a recognition of the need of the state to generate revenue to support its social inclusion agenda,” observes Sabatini.

Brazil Combats Extreme Poverty: Brazilian President Dilma Rousseff announced a new social program to fight extreme childhood poverty yesterday. The program, Brasil Cariñoso (Caring Brazil), will spend $4 billion to create 6,000 new daycare units for children and an increased subsidy of the popular Bolsa Família program—and it will affect the most impoverished areas of Brazil, the north and northeast. Marczak says, “The very poor have yet to join in the Brazil miracle, but this newest program has the right ingredients for their young children to have access to many of the foundations needed for success. Once again, Brazil is an example for the region.”

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Monday Memo: AQ’s Top Expected Stories for the Week of April 30

April 30, 2012

Top stories this week are likely to include: Dilma Rousseff’s possible veto of Forestry legislation; The search ends for Cuban actors who defected; the vote on drug victims compensation law in Mexico; construction resumes on Peru’s Conga mine.

Brazil’s Forestry Laws: Brazilian President Dilma Rousseff is facing extreme pressure from environmentalists, who believe that a new forestry bill, which last week passed both legislatures after fierce lobbying by agroindustry, will speed up deforestation of the Amazon.  Current laws establish that 80 percent of private land in the Amazon region is off limits for development. The new law will allow for the development of vast areas that were previously off limits. According to observers, the changes threaten 270,000 square miles (690,000 square kilometers) and will prevent Brazil from reaching its deforestation reduction goals.  “It’s fitting—if a bit ironic—that this is playing out in the country that will soon host the Rio+20 Conference,” says Chris Sabatini, editor-in-chief of Americas Quarterly.

Cuban Defections: Two young Cuban actors who disappeared last week while making their way to the New York-based Tribeca Film Festival for the U.S. premiere of the film Una Noche have resurfaced and announced their intention to apply for asylum in the United States. The actors, both in their 20s, went missing during a brief stopover in Miami and had not been heard from in nearly a week. “Defections from Cuba are common;” says AQ editor Matthew Aho, “they result from a combination of accommodating U.S. asylum policies for Cubans and the lack of real opportunities for Cuban youth.”

Conga mine construction to resume: The largest-ever mining investment in Peru’s history will be allowed to move forward this year, after months of construction delays caused by local protestors’ fears of environmental damage and water contamination. The Conga protests were the first major crisis of President Ollanta Humala’s administration. His decision to allow the project to proceed will be another major test of his government and could spark a wave of similar protest in the Cajamarca region.  “For many who questioned Humala’s commitment to a market economy and investment, his actions in this case demonstrate that the Peruvian President—at least when it comes to mining—is a pragmatist, says Sabatini.

Drug Crimes Compensation: A bill that would provide victims of drug violence passed Mexico’s Senate last week and is poised to advance through the legislative process this week. The measure, which would provide victims of drug violence with up to $70,000 in financial compensation, along with a variety of specialized social services, is a central demand of a growing piece movement being led by poet Javier Sicilia. The bill’s sponsors, Senators Fernando Baeza and Tomas Torres, are optimistic about its passage, saying it “lays the foundations to reconstruct the social fabric which has been so gravely affected by violence.”

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Chile Most Inclusive Country in Hemisphere, Says AQ Study

April 26, 2012

With today’s release of its Spring 2012 issue, Americas Quarterly has unveiled a new index that measures social inclusion in the Americas. This ranking evaluates 15 different indicators and compares them across 11 countries in the hemisphere. The variables include a country’s economic competitiveness, percent of national GDP spent on social programs, level of political and civil freedoms, and citizen perception of personal empowerment and government responsiveness in that country.

Out of a maximum of 100, Chile came out on top with a score of 71.9, while Guatemala ranked lowest at 7.5. The index praises Chile’s “consistently high rankings across almost all indicators” and cites “severe inequalities by race and ethnicity” in the case of Guatemala, adding that “Indigenous and Afro-Guatemalans lag far behind” socioeconomically. Uruguay and Brazil ranked second and third, respectively.

For four variables—enrollment in secondary school, percent of population living on more than $4 per day, access to adequate housing, and percent of population with access to a formal job—Americas Quarterly uses data collected by the World Bank in household surveys and disaggregated by race and gender.

According to the index, social inclusion is defined as “the concept that a citizen has the ability to participate in the basic political, economic and social functioning of his or her society. It includes not just economic empowerment, but also access to basic social services, access to infrastructure (physical and institutional), access to the formal labor market, civil and political participation and voice, and the absence of legally sanctioned discrimination based on race, ethnicity or gender.”

Access the full results of—and methodology behind—AQ’s social inclusion index.

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Monday Memo: AQ’s Top Expected Stories for the Week of April 23

April 23, 2012

Top stories this week are likely to include: continued fallout over YPF expropriation; Leon Panetta to South America; Humala approves controversial mining project; and IMF warns of protectionism in Latin America.

Global Response to YPF Seizure: Repsol has threatened to take legal action against any company that invests in YPF SA, its Argentine subsidiary that was nationalized last week. This will complicate efforts by Argentine Planning Minister Julio de Vido to elicit investments in YPF. Beyond Repsol’s response, Argentine President Cristina Fernández de Kirchner faces continued condemnation from Spain and the European Parliament, which is looking at the possibility of imposing trade sanctions on Argentine imports. Petrobras, Brazil’s state-owned oil corporation, has pledged to expand cooperation with Argentina. Look for further official reaction from Europe this week.

Panetta in South America: U.S. Secretary of Defense Leon Panetta departs today for a five-day tour in South America, where he will visit Colombia, Brazil and Chile. A defense official reports that Panetta will stop in Bogotá to evaluate U.S.-funded Plan Colombia and discuss further measures to combat the Revolutionary Armed Forces of Colombia (FARC). Then, he heads to Brasilia and Rio de Janeiro to discuss potential military deals, including Embraer’s participation in a now-cancelled military aircraft contract for the U.S. effort in Afghanistan. AQ Senior Editor Jason Marczak notes, “Although the Embraer deal was worth less than $400 million, getting it back on track would be a huge plus for U.S.-Brazil relations.” Panetta and his Brazilian and Chilean counterparts will also discuss drug interdiction measures off the coasts of Africa and Central America—two of the world’s worst drug transit points.

Peru Approves Conga Mine: Peruvian President Ollanta Humala gave conditional approval last week to the controversial Conga mining project, constructed by U.S.-owned Newmont Mining Corporation. Previously, it had been stalled due to environmental concerns and protests by local Indigenous peoples in the Cajamarca region. Independent environmental auditors recommended a series of changes including larger artificial reservoirs that would allow for the adequate supply of water to local populations; Humala gave Newmont the green light for construction on the condition that these suggestions be met. Cajamarca President Gregorio Santos remains unconvinced, so watch out for the possibility of further local backlash.

IMF Warns of Protectionism: During its spring meetings over the weekend, the International Monetary Fund predicted 3.75 percent growth for the Latin America and Caribbean region this year. The IMF also warned emerging economies against adopting protectionist measures in response to the “accommodative monetary policy” adopted by the U.S. and other developed countries. The 3.75 percent figure represents a moderation of the region’s 4.5 percent growth in 2011. Given Brazil’s criticism of the United States’ monetary behavior, pay attention to whether Latin American economies heed the IMF’s advice.

*RELATED – Angelina Jolie Visits Refugees in Ecuador: In her capacity as a United Nations High Commissioner for Refugees ambassador, Angelina Jolie visited displaced Colombian refugees in Ecuador over the weekend. Read an Americas Quarterly dispatch on refugees in Ecuador from the Winter 2012 issue.

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AQ Slideshow: La Transformación de Ecosistemas Amazónicos

March 28, 2012

La minería aurífera ilegal nos deja un paisaje lúgubre,  producto de operaciones que degradan y transforman los ecosistemas amazónicos. Así mismo, organizan la sociedad alrededor de puestos de trabajo en condiciones deplorables. Parte de este negocio también corrompe los asentamientos aledaños y da lugar a un ambiente de desgobierno. La realidad de los campamentos mineros ilegales es el típico modelo del negocio furtivo que daña al medio ambiente, se preocupa sólo de los beneficios económicos que este genera y se aprovecha de la necesidad laboral de los peones (gente de bajos recursos y de escaso nivel educativo).

Las consecuencias de la actividad minera se reflejan en la organización de los espacios comunes dificultado el ordenamiento territorial, la conservación de la naturaleza y desestructurando modelos de organización comunal. A consecuencia de esto los bienes comunes no se pueden ubicar dentro de la perspectiva de una buena gobernanza social y la posibilidad de gobernabilidad estatal. Queda como desafío impulsar  propuestas participativas que hagan del concepto de desarrollo sostenible una herramienta indispensable para planificar el futuro, garantizar la continuidad de los ecosistemas y proteger la autonomía de la organización social propia de las comunidades nativas; así como la participación de todos los grupos sociales que conviven en un mismo medio ambiente. (Fotos y pies de foto cortesía de Daniel Valencia.)

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Route for 2013 Dakar Rally Released

March 22, 2012

The Amaury Sports Organization (ASO) announced Wednesday that the 2013 Dakar Rally will be held once again in Latin America. The off-road race first staged from Paris, France to Dakar, Senegal, in 1979 will take place from January 5-20, 2013, starting in Lima, Peru, passing through Argentina (crossing the Andes mountains twice) and finishing in Santiago, Chile.

Peru’s National Chamber of Commerce estimates that the 2013 Dakar Rally will generate around $600 million for the Peruvian economy alone. José Luis Silva, minister of foreign commerce and tourism, stated that all expectations were surpassed during the 2012 race, including 1,200 hours of television exposure and millions of dollars in publicity around the world. “We hope to surpass the number of spectators from 2012 [in 2013],” Silva told Agencia Andina.

The prestigious competition of cars, trucks and motorcycles was moved from Dakar, Senegal, in 2008 to Latin America, because of the dangers encountered along the route in Africa. According to Etienne Lavigne, director of the rally, it is the organization’s intention to return to Africa at some point. But until violence and insecurity in the region subsides, Latin America will remain the host continent.

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La Minería Informal en la Amazonía

March 19, 2012

En el Perú, las aguas de la Amazonía que viajan en forma de ríos, que bañan las riberas de los bosques, que traen la vida desde las nubes hasta las sombras de un árbol, que aseguran un hogar a las especies animales o que se deslizan cuenco adentro en las manos de una niña a orillas de una comunidad nativa son las venas de este mundo; el eje de comunicación de muchas poblaciones y la fuente de sustento para pescadores, transportistas, albergues turísticos y operarios de algunas actividades extractivas.

En la Amazonía Peruana, las áreas naturales protegidas buscan salvaguardar que los ríos, bosques, hábitats de especies animales y de comunidades nativas; puedan perpetuarse en el perfecto equilibrio de los ecosistemas amazónicos. Las actividades económicas, sin embargo, que se desarrollan dentro del espacio amazónico no viven, ni dependen del equilibrio amazónico, aparentemente. Es decir, madereros que depredan el bosque sin respetar planes de manejo o mineros artesanales que contaminan las aguas con una visión de corto plazo no asumen que si el ecosistema se rompe, no habrá donde realizar las actividades que los sustentan.

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Peru’s Development Minister Wraps Up Washington Visit

February 24, 2012

Peruvian Minister of Development and Social Inclusion Carolina Trivelli yesterday concluded a three-day visit to Washington DC during which she met with Under Secretary of State for Civilian Security, Democracy, and Human Rights Maria Otero, as well as other senior officials from the Departments of State, Education, Agriculture, and Health and Human Services. The purpose of Trivelli’s trip was to deepen the U.S.–Peru relationship on economic and social development issues. 

According to State Department sources, Trivelli’s delegation discussed a range of topics including early childhood education, nutrition, women’s empowerment, and boosting social inclusion for Indigenous and other marginalized groups.

An early outcome of Trivelli’s U.S. visit was the announcement of a $1 million commitment by the Inter-American Development Bank (IDB) for a three-year pilot program on early childhood education. Since taking power in 2011, President Ollanta Humala’s government has stressed the need to accelerate and improve assistance to those still living in conditions of extreme poverty. As head of the government ministry charged with achieving poverty-reduction goals, Trivelli hopes to attract increased development assistance from bilateral aid agencies and multilateral donors alike.

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Peru Announces New Initiative to Combat Narcotrafficking

January 19, 2012

Yesterday Peru’s government shared plans to increase investment in social programs and infrastructure in the country’s impoverished center—a region with the world’s highest coca-leaf production. These investments will complement a renewed military offensive against narcotrafficking.

Speaking at a press conference, Peruvian Minister of Defense Alberto Otárola admitted that the government had previously neglected the area. “The state has had its head turned the other direction,” he told reporters, but now recognizes that one solution to narcotrafficking is in increasing social spending in zones heavily influenced by coca production. According to private reports, the area with the highest concentration of coca cultivation in Peru is the Apurimac and Ene River Valley (known as VRAE), a high jungle region in the south-central part of the country.

Otárola’s announcement followed one made last month by Peru’s new cabinet chief Oscar Valdés, who said that the government would tackle drug trafficking by increasing development and state presence in the VRAE region. This would include building new roads and bringing in the Agriculture Ministry and other organizations to promote crop substitution.

After Colombia, Peru is the world’s second largest producer of cocaine, though analysts predict it could soon surpass its northern neighbor if it doesn’t take steps to combat the drug trade. Though Otárola insisted that the solution to the problem in the VRAE region “is not a military but a political one,” Peru’s armed forces are likely to continue playing a role in the fight against narcotrafficking. This will include seeking the capture of former Shining Path members who now play an armed role in the drug trade, as well as the mass eradication of coca-growing fields. Last week President Ollanta Humala replaced drug czar Roberto Soberon—who had previously suspended manual coca plant eradication, arguing it hurt poor growers—with Carmen Masias, who said in an interview that Peru had “let down its guard” on eradication last year.

Otárola also confirmed yesterday that two U.S. surveillance planes will assist Peru in combating drug trafficking and hunting down former Shining Path guerrillas, flying over the coca-growing regions in the VRAE and Upper Huallaga Valley.

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Peruvian VP Resigns But Survives Congressional Vote

January 18, 2012

Omar Chehade, Peru’s second vice president, resigned from his post on Monday evening in the midst of questions over his role in an influence-peddling scheme. The move, coming the night before a congressional vote on whether to suspend him from political office for five years, may have been a calculated attempt to keep his congressional seat, according to Peru21. If so, it appears to have worked. On Tuesday evening, after four hours of debate, the Permanent Comission of the Peruvian Congress rejected a motion (by only one vote) that would have removed him from Congress and temporarily banned him from political office.

The prime minister, Óscar Valdés, said that Chehade’s resignation earlier this week was a strictly personal move.

The vote last night came after opposition members like Congressman Mauricio Mulder said the move to push aside Chehade was actually an effort by the ruling parties to preserve their power in Congress. “It is a fabricated scene, so that this Tuesday the public opinion does not turn against the decision of Gana Peru and Peru Posible to protect him.”

In December, Chehade was suspended for 120 days over allegations that him, his brother Miguel Chehade, three police generals, and a businessman attempted to help another agricultural company gain control of the Andahuasi sugar plantation. This is a particular embarrassment for President Ollanta Humala who has vowed to fight corruption but yet has watched numerous cabinet officials face corruption allegations in recent months.

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Peru Declares State of Emergency after Anti-Mining Protests

December 5, 2011

Peruvian President Ollanta Humala today declared a state of emergency in the northern Peruvian department of Cajamarca in the wake of protests last week that led to the suspension of the multi-billion-dollar Conga gold-mining project. Humala’s press office tweeted last night that the measure would take effect at midnight today and last for 60 days. This decree will affect the provinces of Cajamarca, Celendín, Contumazá, and Hualgayoc.

Last week’s clashes were biggest challenge to date of Humala’s nascent presidency and saw the resignation of his vice-minister of the environment, José de Echave. Humala has blamed the impasse on local Indigenous leaders, stating, “Every possible means has been exhausted to establish dialogue and resolve the conflict democratically, but the intransigence of local and regional leaders has been exposed.”

According to government statements, the emergency declaration is designed to mitigate violence and allow the restoration of basic public services. Police will now have the authority to issue arrests without warrants as well as to limit the right of assembly. Cajamarca’s governor and protest leader, Gregorio Santos, referred to Humala’s pronouncement as an unnecessary provocation and pledged to “continue with our fight.”

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Environmentalism and Rural Amazonian Communities

November 30, 2011

Please find the original text below, submitted in Spanish.

Two years ago the global community gathered in Copenhagen for the United Nations Climate Change Conference. Expectations of significant climate progress are still high, but various challenges remain before achieving the extension of the Kyoto Protocol in 2012—and Indigenous communities in Peru are caught in the middle. The United Nations hopes a legally-binding agreement can be signed next year that would cap carbon emissions of developed countries and create a fund to finance these reforms.

The creation of a market to regulate carbon credits also is necessary, and here’s where Peru’s Indigenous community comes in. The world’s forests—areas inhabited in Peru by the Indigenous—play critical roles in the planet’s climate water cycles and whoever protects these forests has a huge responsibility. This is why the United Nations Collaborative initiative on Reducing Emissions from Deforestation and forest Degradation (UN-REDD) proposes initiatives that will reduce carbon emissions.

Peru was accepted to the Fondo Cooperativo de Carbono de los Bosques (Forest Carbon Partnership Facility—FCPF) that designs and implements the UN-REDD schemes in developing countries. As a contingent of its membership, Peru must map out a Readiness Plan Idea Note (R-PIN, see example) that outlines the feasibility of how the state will implement UN-REDD initiatives.

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Peruvian Environment Ministry Official Resigns, Protests Continue

November 29, 2011

Salomón Lerner, President of the Council of Ministers, announced today that the government had accepted the resignation of Viceminister of Environment José de Echave, who left his position over differences on the handling of protests around the Conga mine project. Echave—an expert in environmental conflict management and the  leader of environmental group CooperAccion—offered his resignation yesterday in noting that President Humala’s government “lacks an adequate strategy for dealing with social conflict.”

The viceminister leaves his post on the sixth day of strikes in the city of Cajamarca, which has seen blocked roads, food shortages, and cancelled flights.

Echave’s decision—which follows the removal of special presidential advisor Carlos Tapia, a left-wing activist who supported the protests against the mining project—comes in response to the government’s strategy toward the protests. The viceminister said publicly he disagrees with President Humala’s plans to create a special authority within the Council of Ministers in charge of studies on environmental impact and environmental audits. “I believe that won’t help build a strong environmental authority, even more in a country where environmental concerns are the main source of social conflict,” Echave added.

Local communities in Cajamarca raised attention to the environmental impacts of the Conga mine project a month ago. The Conga project—a $4.8 billion gold and copper mine in northern Peru that is part of the larger Yanacocha mine—is largely controlled by U.S.-based Newmont Mininc Corp. The protestors are concerned about plans to dry up four lakes in order to extract the gold under the water in a zone where economy depends on agriculture and livestock.

The project shows the challenges that Humala faces in trying to promote economic growth while maintaining social inclusion, with inclusion being the foundation of his campaign and a key component of his government.

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Chinese Labor Record in Peruvian Mines Questioned

November 9, 2011

An article in the fall issue of Americas Quarterly, released today, explores the record of Chinese state-owned mining corporations on labor and the environment. In “Do Chinese Mining Companies Exploit More?” three researchers from the Peterson Institute for International Economics (PIIE) explore the impact of China’s foreign direct investment in natural resource extraction in Peru—underlining China’s increasing economic footprint in emerging regions like Latin America.

The article highlights an issue that is of growing concern. Just this month, Human Rights Watch (HRW) released a 122-page report outlining labor abuses by Chinese firms operating in copper mines in Zambia. The HRW paper states that the Chinese firms clamp down on union activity, promote low pay compared to the international average of copper mines, enforce 18-hour workdays, and operate mines with workplace safety concerns. The Chinese embassy in the Zambian capital of Lusaka has flatly denied HRW’s charges.

In comparing the practices of two OECD-owned companies to those of two Chinese companies, the PIIE scholars note some alarming differences in adherence to international labor and environmental standards. For example, the Shougang Corporation, which purchased the Hierro Perú mine in 1992, “angered the local population by cutting the Peruvian workforce in half and bringing in Chinese laborers. It reduced the quantity and quality of workers’ housing, while leaving blocks of homes once occupied by workers vacant in a town with an acute housing shortage.”

Nonetheless, Chinese firms may be treading a different path since the days of their earliest investments. According to the PIIE research, the Aluminum Corporation of China “appears to be working to avoid the behavior of Shougang.” It has not imported labor from China, has conducted public hearings with members of the local community, and has invested in infrastructure and community development.

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Peru Seeks to Mediate Mining Conflict

November 3, 2011

The Peruvian Minister of Mines and Energy Carlos Herrera told Congress on Wednesday that the $4.8 billion Minas Conga mine project would not continue without the approval of the local community. “Projects should be approved by the people who will be affected by them," said Minister Herrera. Accompanied by the ministers of agriculture and the environment, Minister Herrera traveled to the project site in the northern Cajamarca region late Wednesday to negotiate an accord between the American mining company Newmont Mining and the local community.

Minas Conga is being developed in collaboration with Peruvian mining company Buenaventura and is expected to produce between 580,000 and 680,000 ounces of gold per year, starting in 2015. But local residents are concerned that the mine’s proximity to a water basin will cause pollution and sap vital water supplies. Responding to protests by local communities, some of which turned violent, Minister Herrera told Congress that "the position of the government is that it wants investment, but not at any price."

While it is unlikely that the project will be abandoned, Prime Minister Salomón Lerner Ghitis said on Wednesday that the government will carry out a "strict" evaluation of the mine’s environmental impact. On the other hand, the National Mining, Oil and Energy Society (SNMPE) said the government “cannot allow small, violent groups to impede inclusive development and private investment." An Americas Quarterly article to be released in the Fall issue on November 9 ("Do Chinese Mining Companies Exploit More?") looks at the labor rights and environmental records of Chinese mines in Peru.

As the world’s sixth largest gold producer, mines like Conga have fueled Peru’s stunning 7 percent annual growth rate. At the same time, President Ollanta Humala has made social inclusion a priority for his administration, promising to resolve the countless social and environmental conflicts plaguing Peru—many of them over mining and oil projects. President Humala will address the issue of responsible investment and social inclusion at the Americas Society and Council of the Americas Latin American Cities Conference in Lima tomorrow.

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Higher Education in Peru

October 20, 2011

Of the top universities in Latin America, five countries dominate the top 30 schools: Brazil, Chile, Mexico, Argentina, and Colombia. Further, according to the recent survey by the University of Queensland in Australia, Peru’s Pontificia Universidad Catolica de Peru came in 34^th place. What are these five countries doing right that other countries in Latin America are not when it comes to higher education? Specifically, what is Peru doing wrong?

Looking at certain economic and education indicators, there is not a clear trend or relationship between the numbers of schools in the top 30 and the indicators. However, there does seem to be some relationship between the percentage of GDP allocated toward education and the top five countries. Each country in the top-30 spends 4 to 5 percent of its GDP on education; in Peru, it is only 2.7 percent. Brazil spends the most on education as a percentage of GDP and has the most number of schools (nine) in the top 30 ranking. Brazil’s Universidade de São Paulo also holds the number one spot.

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Humala’s Imprisoned Brother Requests Pardon

August 11, 2011

Peruvian President Ollanta Humala’s brother, Antauro Humala, yesterday requested a presidential pardon that would cut short a 25-year prison sentence. He is currently serving time for his role in a 2005 attack on a remote Andean police station that left four officers dead.

Although President Humala has not publicly acknowledged that he is considering a pardon, speculation has grown following statements by Defense Minister Daniel Mora and Vice President Omar Chehade that downplayed Antauro Humala’s involvement in the attack. In a Monday interview with Peruvian daily El Comercio Mora said Antauro was "not directly involved.” Mr. Chehade on Tuesday supported this view, saying "from what I've been able to determine, Antauro Humala never grabbed and shot the gun, nor was he the person who issued an order to shoot the police.”

President Humala’s relationship with his brother Antauro has long been strained and a move to alter his sentence would carry political costs—as did a trip his older sibling Alexis recently made to Russia. This sensitive political environment is looked at in further detail in the Summer issue of Americas Quarterly, with an article written from the perspective on a remote jungle town on the levels of political frustration that the Peruvian President now must face in office.

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Latin American Markets React to Global Uncertainty

August 9, 2011

Latin American stock markets plunged on Monday registering the worst numbers since February 2010.  The Morgan Stanley Capital International (MSCI) Latin America—an index to measure equity market performance in emerging markets in the region—dropped 5.52 percent partly over concerns of the financial situation in the United States and Europe.

The downgrade from AAA to AA+ announced by Standard & Poor’s on Friday after the close of trading impacted the markets in Brazil, Chile, Colombia, Mexico, and Peru—the countries covered by the MSCI Latin America. Brazil’s Bovespa, the most dynamic market, lost 8.08 percent, the lowest since October 2008, amid international concern as well as domestic uncertainty over inflation and interest rates and a possible slowdown in consumer credit. Companies such as Petrobras (oil) and Vale (iron ore), two Brazilian giants, lost market value for up to 42 billion real ($26.5 billion).

Replying to suggestions that Brazil’s dominance as an emerging market is at stake, President Dilma Rousseff has said the country’s “fundamentals justified confidence in its prospects. Brazil’s foreign exchange reserves today are nearly $350 billion, up 80 percent since the global financial crisis in 2008.”

The Bolsa de Valores de Lima (BVL) dropped 7.09 percent, followed by Chile’s IPSA with 6.92 percent and Mexico’s Bolsa Mexicana de Valores (MBV), which fell 5.88 percent. While Colombia’s Bolsa de Valores (BVC) registered a decrease of 4.11 percent—and the 35 largest companies faced a market value decrease of 19.5 billion pesos ($10.7 million)—Argentina’s Merval suffered the most, plummeting 10.73 percent.

According to Nick Chamie, from RBC Capital Markets in Toronto, “Friday’s downgrade, along with recent weakness in the U.S. economic data and the ongoing European sovereign debt crisis, highlight the external risks currently facing emerging markets.”

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Afro-Peruvians Gain Federal Representation

August 3, 2011

Although Ollanta Humala became Peru’s president just last week, he has already achieved a landmark accomplishment by appointing the first black minister in the history of the republic. Renowned Afro-Peruvian singer, Susana Baca, 67, will lead Peru’s culture ministry.

Baca, whose name and work is synonymous with Afro-Peruvian tradition, mixes Andean and African beats in her music. Her work won her a Latin Grammy award in 2002 for “Best Folk Album,” referring to Lamento Negro which had been recorded in Cuba two decades prior. Over the years, Ms. Baca has become an ambassador of sorts for Peru’s black community; she is building a cultural center for Afro-Peruvians in the Peruvian town of Santa Barbara and has toured frequently around the world.

Ms. Baca’s nomination came as a welcome surprise to many who had become accustomed to the absence of black representatives in Peruvian politics. In 2009, Peru under Alan García became the first Latin American country to formally apologize to its citizens of African descent. The government apologized for the “abuse, exclusion and discrimination perpetrated against [Afro-Peruvians], from the colonial era until the present.” So while discrimination of Afro-Peruvians is not state-sanctioned, many believe that there remains a high degree of “underground” racism.

President Humala's new culture ministry is a welcome step in reversing such racism.

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Peru to Ration Electricity in Northern Cities

August 3, 2011

Peru’s new Minister of Mines and Energy, Carlos Herrera, announced yesterday that authorities from the country’s Comité de Operación Económica del Sistema—the national agency responsible for energy oversight—would begin rationing energy in Peru’s major northern cities Trujillo and Cajamarca.

Although the likely need for electricity rationing in 2011 was predicted last year by former Mines and Energy Minister Pedro Sánchez, the implementation of cuts highlights Peru’s infrastructural shortcomings in the energy sector. According to the government statement, hydroelectric facilities in Peru’s central regions produce sufficient energy to fulfill demand, but the country “does not have the capacity to transport sufficient electricity to the north.”

Power will initially be cut only during nighttime hours in the affected areas and the government has voiced support for plans to import electricity from Ecuador, Colombia and Chile in the near future.

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Humala Takes Office as President of Peru

July 28, 2011

Promising continued economic growth but reiterating a commitment to greater social inclusion, Ollanta Humala takes office today as president of the Republic of Peru. Fifteen heads of state are to attend, including all the presidents of South America except for Hugo Chávez, who remains in poor health.

Humala, a nationalist former Army officer, won a runoff election on June 5 after campaigning on promises of more fairly redistributing wealth and taxing the windfall profits of mining companies—promises that particularly appealed to residents of rural Indigenous communities. Since then, he has taken noticeable steps to reassure members of the business community, who had feared that his election may dampen the country’s growth and stifle investment. He has said he would not replicate the actions of Hugo Chávez, for example by nationalizing key industries. And in a spate of key cabinet appointments announced last week and earlier this week, including Luis Miguel Castilla—deputy finance minister under outgoing president Alan García—to the post of finance minister, Humala has demonstrated his intention to maintain continuity with at least some of the previous administration’s economic policies.

Even as Humala signals a desire to maintain Peru’s current rate of economic growth (nearly 9 percent in 2010), analysts believe he will reiterate his commitment to income redistribution and social inclusion today. The rate of overall poverty in Peru is more than 30 percent, and stark inequalities between urban and rural areas persist. During his campaign Humala promised to increase the monthly minimum wage from 600 soles ($220) to 750 soles ($272); create pensions for the indigent; and increase spending on social services for the poor through a windfall tax on gold and copper producers. Nonetheless, as Carlos Monge, a researcher at the Centro de Estudios y Promoción del Desarrollo (Center for the Study and Promotion of Development), points out, members of the economic team the president-elect has assembled have not historically shown themselves to be enthusiasts of taxing mine companies.

Humala will face pressure to continue following through on promises to boost spending for the poor. Renee Ramirez, general secretary of Peru’s Education Workers Union, said, “The new government has built up such great hopes that if it doesn’t follow through there’ll be a big divorce…We threw our weight behind Humala but we didn’t write him a blank check.”

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Weekly Roundup from Across the Americas

July 28, 2011

New President to Take the Reins in Peru

Peruvian President Alan García thanked his cabinet for its work at their last meeting today, as the country prepares for the July 28 presidential inauguration of Ollanta Humala. The former leftwing firebrand finished revealing a cabinet that Reuters characterizes as more conservative than that of former president of Brazil, Luiz Inácio "Lula” da Silva, to whom the media often compare Humala. The cabinet is anchored by Central Bank head Julio Velarde and Finance Minister Luis Miguel Castilla, both U.S.-trained economists who Humala will carry over from the outgoing García administration. (Velarde will remain at his position, while Castilla moves up from the position of deputy finance minister.) The 12-country South American regional bloc UNASUR will also meet tomorrow in Lima, where they will discuss ways to advance regional integration and poverty reduction. All 12 heads of state plan to attend Humala’s inauguration and the UNASUR meeting, except for Hugo Chávez of Venezuela, who is undergoing cancer treatment.

Read an AS/COA Online News Analysis about Humala’s cabinet picks.

Humala Appoints First Afro-Peruvian Minister in Country’s History

President-elect Ollanta Humala announced that singer Susana Baca will serve as culture minister in his cabinet. A 2002 winner of a Latin Grammy, the singer will be the first Afro-Peruvian to hold a cabinet post in the Andean country.

Puerto Maldonado Shows Another Side of Peru’s Economic Development

In a dispatch for the Summer 2011 issue of Americas Quarterly, Caroline Stauffer profiles the town of Puerto Maldonado in the Peruvian Amazon—an impoverished area where the rapid economic growth of recent years has yet to trickle down. Puerto Maldonado is one of the many places where the local population's perception that development had passed them by contributed to the rise of center-left Ollanta Humala in this year’s presidential elections.

The next issue of Americas Quarterly, focusing on sports in the Western Hemisphere, hits newsstands August 10. 

Colombia’s Congress Tasked with Debating Gay Marriage

Colombia’s Constitutional Court told Congress last night to take up the issue of gay marriage in order to resolve a legal vacuum surrounding same-sex partnerships. The issue remains controversial in Colombia, whre the Constitution specifies that marriage can only exist between a man and a woman. Congress has declined to change the law, despite considering proposals to legalize gay unions six times in recent years.

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Humala Announces More Cabinet Appointments

July 25, 2011

In a television interview yesterday evening, Peruvian President-elect Ollanta Humala—set to take office on Thursday (July 28)—unveiled eight additional appointments to his administration’s cabinet. He named engineer René Cornejo to head the Ministry of Housing, Construction and Sanitation. He also tapped Peruvian doctor Alberto Tejada to lead the Ministry of Health. Humala designated constitutional lawyer Fernando Eguiguren to direct the Ministry of Justice, while choosing former president of the Association of Exporters, José Luis Silva, to be foreign trade and tourism minister.

An earlier round of appointments was made last week, as Humala selected centrist politicians Daniel Mora and Kurt Burneo to respectively head the defense and production ministries. Both leaders served during former President Alejandro Toledo’s administration from 2001 to 2006. Humala also reappointed incumbent President Alan García’s popular choice of Central Bank Governor, Julio Velarde, to another five-year term. International markets responded favorably. 

Other portfolios named yesterday included the ministries of labor, interior, transportation and communications, and agriculture. The president-elect has not yet named ministers of culture or education. View more of Humala’s appointments. 

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Ollanta Humala’s Approval Rating Plummets

July 18, 2011

Only 10 days prior to his inauguration on July 28, Peruvian President-elect Ollanta Humala’s approval rating has dropped to 41 percent. The latest figure comes from a survey released yesterday by Peruvian firm Ipsos Apoyo—the same organization that polled support of Humala at 70 percent less than one month ago.  

Ipsos Apoyo director Alfredo Torres attributes the 29-point slide to the fallout from a trip that Ollanta Humala’s brother, Alexis Humala, took to Russia earlier this month. While there, he held a series of meetings with high-level public- and private-sector officials, including Russian minister of foreign affairs Sergey Lavrov. Both sides report that they discussed oil and gas issues and improving bilateral ties, but the Peruvian media is also reporting that Alexis Humala met with Russian arms manufacturers, the defense minister and representatives from Gazprom, Russia’s state-owned gas corporation.

While the President-elect maintains that he did not send his brother to Russia as an envoy of the incoming administration, the Russian foreign ministry averred that Alexis was sent as a “special representative” of the Peruvian government. Alexis Humala lived in Russia for nearly 10 years and has close ties to the country. According to the poll, 77 percent of Ipsos Apoyo respondents believe that Alexis Humala tried to use his ties to his brother for personal benefit and 82 percent of respondents disapprove of the trip.

In the face of growing consternation, President-elect Humala on July 8 suspended Alexis from the Partido Nacionalista Peruano—a party the brothers co-founded together—which also forms part of the Gana Perú coalition that carried President-elect Humala to victory earlier this year.

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Humala to Visit U.S. in Move to Strengthen Ties

July 5, 2011

Peruvian President-Elect Ollanta Humala will meet with Secretary of State Hillary Clinton, OAS Secretary General José Miguel Insulza and likely President Barack Obama—depending on Obama's schedule—in Washington DC on Wednesday.  The trip marks the first top-level contact between the United States and the president-elect, who will take power on July 28. The meetings will touch on Peru’s recent economic growth, the free-trade agreement with the U.S.—which Humala has publicly opposed—as well as joint efforts to combat drug trafficking.

The visit marks an important step in continuing the strong relationship between the U.S. and Peru. As South America’s sixth-largest economy, Peru is currently leading the region’s economic boom with a projected 6.6 percent growth this year. A former army officer, Humala moderated many of his positions during the presidential campaign and has said that he’ll support sensible investments in the country’s natural resources, but “with respect for the rights and freedoms of the indigenous population and local community.”

Prior to his U.S. trip, Humala completed a tour of South America where he met with the presidents of Argentina, Brazil, Colombia, Ecuador, Paraguay and Uruguay. The president-elect had also scheduled a visit to Venezuela which has been delayed to President Hugo Chávez’ current health conditions. Before arriving in Washington DC, he and his wife, Nadine Heredia, will first pass through Miami.

Tags: Barack Obama, Hila, Ollanta Humala, Peru, Washington DC

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Humala Registers 70 Percent Approval

June 20, 2011

Although he won’t assume Peru’s presidency until July 28, a poll released yesterday by Peruvian firm Ipsos Apoyo reveals that President-elect Ollanta Humala enjoys a 70 percent approval rating with five weeks to go before his inauguration. Sixty-one percent of the electorate also believes he will govern moderately, similar to former Brazilian President Luiz Inácio Lula da Silva. Investors’ fears that he would drift toward Venezuelan President Hugo Chávez’ style of leadership temporarily crashed Peru’s stock exchange two weeks ago today.

Political observers in Peru warn that Humala will have to juggle several demands to satisfy the population. First, he will have to maintain the calm in the business sector to ensure steady commercial growth and foreign direct investment—one of the highest rates in South America. Second, Humala will also have to address the social concerns of the Peruvian people, such as a staunch fight against corruption.

The latter is an issue that Humala advocated for strongly in the presidential campaign, particularly in the runoff against Keiko Fujimori, the daughter of corruption-tainted ex-President Alberto Fujimori. Seventeen percent of the electorate disapproves of Humala while 13 percent remain undecided.

After recently wrapping up a tour to Brazil, Paraguay, Uruguay, Argentina, and Chile, the President-elect is set to embark on a second tour this week to Bolivia, Ecuador, Colombia, and Venezuela.

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Humala: We Wait

June 15, 2011

The election guessing game in Peru has ended and now the Humala guessing game has begun: Will Ollanta Humala be the Peruvian equivalent of Venezuela’s Chávez or Brazil’s Lula? The answer, on which may hang Peru’s torrid rates of economic growth—among the highest in the region—and web of free-trade agreements with everyone from China to the  United States, has become a parlor game for investors and observers, as we all watch whom Humala nominates to his cabinet. More than the people he chooses to populate his first round of appointments, the answer may actually lie in his formation as a military officer.

When he first ran for president in 2006, Humala professed his admiration for Venezuelan President Hugo Chávez; he even campaigned in the trademark-Bolivarian red tee shirt. Only five years later, the one-time lieutenant colonel who led an uprising against former elected autocrat President Alberto Fujimori, claimed he was a moderate leftist in the mold of former Brazilian President Luiz Inácio Lula da Silva, who embraced markets and foreign investors and reduced poverty.   

It’s not hard to understand why he shifted role models. In the intervening five years, President Chávez has gone from the leader of an anti-American bloc of countries during the years of President George W. Bush to the head of the most dysfunctional economy in the region, with rates of inflation this year likely topping 25 percent and an economy that, even with the spike in oil prices, will be one of the last to rise out of the region’s post-recession torpor. In contrast, President Lula, by hewing to a course of fiscal stability, appointing confidence-instilling technocrats and supporting both foreign investors and Brazilian companies, has both kept Brazil on a path of stable economic growth and—combined with innovative social policies—reduced the number of the Brazilian poor by up to 38 million. No mean feat.

The first round of elections in Peru shocked the country and the world. After what appeared to be enviable rates of economic growth and stability, a slim majority of voters rejected the center, aided in part by a three-way split between former Lima Mayor Luis Castañeda Lossio, former President Alejandro Toledo and former Prime Minister Pedro Pablo Kuczynski.  In a vitiated party system, the center lost to two candidates on either side of the spectrum—Keiko Fujimori, the daughter of Alberto Fujimori who governed from 1990 to 2000 and is now jailed for corruption and human rights violations, and Humala.

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Planned Merger of Peru and Colombia Stock Markets Postponed

June 15, 2011

The Colombian stock exchange (BVC) and Lima stock exchange (BVL) announced yesterday in a joint press release that they will delay their ownership merger until Peruvian President-elect Ollanta Humala has an opportunity to revise the agreement. Under the current proposal, announced in January, Colombia’s exchange would own 64 percent of the new company and Peru’s 36 percent.

The announcement does not affect the trading integration of the Colombian, Chilean and Peruvian stock markets that began under the framework of the Integrated Latin American Market (MILA) on May 30.

The statement released yesterday said that the decision referred only to a postponement of the merger and not a modification of any of its terms. Nonetheless, Kurt Buneo, Humala’s economic advisor, said that the integration of stock trading had been done “too quickly,” and the new government would need to renegotiate if “there is asymmetry in the distribution of benefits.”

Following the announcement, the BVL fell 11 percent and and the BVC dropped 2 percent.

In spite of the delay, officials from the two exchanges reiterated their support for the agreement, saying it would contribute to both countries’ economic growth, and a final deal could happen later this year. The merger would continue the process of diversification, expansion and improvement of the Colombian, Peruvian and Chilean exchange markets begun with the launch of MILA—the second-largest stock market in Latin America after Brazil’s—earlier this year. There is also the possibility that Mexico and Panama may join MILA.

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Ollanta Humala Leads Keiko Fujimori in Peru Vote, Declares Victory

June 6, 2011

With 89.2 percent of the ballots counted from yesterday’s presidential runoff election in Peru, first-round winner and Gana Perú candidate Ollanta Humala leads first-round runner-up and Fuerza 2011 candidate Keiko Fujimori by a less than 3 percent margin.

Shortly after midnight yesterday, Humala declared victory in downtown Lima and delivered a speech to supporters in which he pledged to fulfill his commitments to the Peruvian people. Fujimori has vowed not to concede until Peru’s official electoral body, Oficina Nacional de Procesos Electorales (ONPE), declares a winner. An ONPE interactive map shows Keiko winning in the capital Lima and surrounding areas as well as in northern coastal regions. Humala won by large margins in rural areas and in highland cities. Currently, Humala leads by nearly 375,000 votes out of roughly 14 million ballots counted.         

If Humala’s lead holds, his victory would signify a rebuke of outgoing President Alan García’s economic policies, which are credited with sustaining high growth levels, but also criticized for doing little to combat poverty and economic inequality. A survey last month revealed that only 22 percent of Peruvians believed that the García model should be replicated by his successor.

Analysts say Humala’s success at the polls in some of Peru’s closest-ever elections is due to the excitement his campaign generated as opposed to Fujimori’s candidacy which some say “lacked feeling.” Also, Humala largely avoided talking last week about his controversial economic policies, choosing instead to focus on combatting poverty and corruption.

This morning, the Bolsa de Valores de Lima (Lima Stock Exchange) temporarily suspended operations after its value declined by 8.7 percent mere moments after opening for morning trades.            

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Democracy Defenders, Activists Tentatively Back Humala

June 3, 2011

In the final weeks of a bruising presidential campaign, human rights activists and democracy defenders in Peru have rallied around left-wing nationalist candidate Ollanta Humala—not because they are overly confident in his candidacy, but because they fear a return to the past.

“From Humala we have doubts, but with Keiko we have proof,” they say, referring to the candidacy of Congresswoman Keiko Fujimori, daughter of former president Alberto Fujimori, who is in jail on charges of corruption and human rights abuse.

Keiko has said she will not free her father if she is elected president, and that she suffered as a young woman watching the collapse of his regime—something she does not want her own two daughters to experience.

While most voters accept that Keiko, 36, is not her father—a fact of which she reminded them daily during the four weeks leading up to the run-off vote—they question why the young Fujimori has included many of her father’s advisors in his campaign, and why she has said he was the best president ever. 

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Large-Scale Protests Roil Puno, Peru

May 27, 2011

Thousands of Indigenous protestors have mobilized in the highland city of Puno, Peru, this week over fears that a Canadian-led silver mining operation will contaminate water supplies in the area. The protests, which began on Thursday, have largely cut off the city of 120,000 from the rest of Peru, stranded hundreds of foreign tourists who use the town as a staging point for tours of Lake Titicaca, and shut down a nearby border crossing to Bolivia.

According to local reports, these latest protests, which come less than 10 days before Peru’s scheduled second-round presidential elections on June 5, have been accompanied by sporadic violence. "They've started to loot public and private institutions, banks and shopping centers," police officer William Anda said on local radio. In response, President Alan Garcia has authorized the army to prevent escalation, but it has thus far not acted to put down the protests by force.

In a statement, Andrew Swarthout, CEO of the mining firm Bear Creek, which holds the concessions over the areas in dispute, attributed the protests to pre-election political tension, "which have arisen from communities distant from and unaffected by the Santa Ana Project." Hernán Cauna, a protest leader, declared: "We will defend our land until the very end, even though the state is causing pressure by mobilizing their armed forces and police.”

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Fujimori Leads Humala in Latest Polls

May 16, 2011

Despite Ollanta Humala having won the first round of voting for the Peru presidency, second-place finisher—and runoff opponent—Keiko Fujimori now leads Humala ahead of the June 5 election according to three polls released over the weekend. One poll by the firm Datum predicts that Fujimori, of the Fuerza 2011 ticket, will win 53.4 percent of votes in the runoff, while her Gana Perú counterpart will register 46.6 percent. Peruvian citizens are mandated by law to vote, and the Datum survey notes that 13.8 percent of respondents said they would spoil their ballots or intentionally leave them blank.

Another poll, by Ipsos Apoyo, reveals a statistical tie between the two candidates: Fujimori has 51.1 percent and Humala 48.9 percent. According to this poll, Fujimori was the more preferred candidate on issues of democratic values, freedom of expression and private investment. To boost her security credentials, Fujimori is currently campaigning with former New York City mayor Rudy Giuliani.

The Ipsos Apoyo also shows that Fujimori enjoys a majority support in Lima and areas in northern Peru, while Humala’s electoral base lies in southern, central and eastern areas of the country. The two runoff finalists are scheduled to debate each other in Lima on May 29.

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Peru and Ecuador Agree to Maritime Border

May 4, 2011

South American neighbors Peru and Ecuador signed an historic agreement yesterday, setting the maritime border between both countries after over 120 years in dispute.  This new accord supersedes previous maritime treaties between the two countries signed in 1952 and 1954.  The agreement, approved by President Alan García and foreign minister José Antonio García Belaunde of Peru and their counterparts President Rafael Correa and Ricardo Patiño of Ecuador, now heads to the legislative branches of both countries.  The treaty is expected to be ratified easily. 

The new agreement, which both countries see as a positive step toward future cooperation, establishes the maritime border between the Andean neighbors on a perfectly horizontal line extending into the Pacific from the point where both countries meet on the Pacific Coast at Boca de Capones.  Any islands to the north of the line would belong to Ecuador while Peru retains governance over islands to the south.  In a sign of mutual accord, both countries are sending the agreement to the United Nations for recognition across all UN bodies and organizations. 

The agreement leaves Chile alone in its dispute with Peru over their maritime border.  By setting their bilateral maritime border, Ecuador and Peru relegate the previous treaties—signed by Ecuador, Peru and Chile in the 1950s—to little more than fishing agreements, thus bolstering Peru’s claims as presented to the International Court of Justice (ICJ) in The Hague in January 2008.  While Chile had hoped Ecuador would side to uphold the treaties of 1952 and 1954, and their maritime border implications, the new agreement between Ecuador and Peru effectively removes Ecuador from the dispute altogether leaving Chile to plead its case alone.  The ICJ is not expected to have a ruling on the dispute between Chile and Peru until 2013.

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Pacific Agreement to be Signed This Week

April 25, 2011

The presidents of Chile, Colombia, Mexico, and Peru are expected to sign the Pacific [Ocean] Agreement this Thursday in Lima—deepening multilateral integration between the four Latin American economies. The agreement aims to facilitate the movement of services, capital and goods through the shared Pacific basin. It is not a free-trade agreement.

Peruvian President Alan García praised the alliance, adding that these four countries “can be protagonists and play a first line role” looking forward. Jose Morales Disso, President of Peru’s National Confederation of Private Business Instructions (CONFIEP), noted that this agreement will strongly benefit Peru’s economy and microenterprises as Peru attempts to reach a wider market—maximizing its recent trade pacts with Asian markets.

The Pacific Agreement should not be confused with the Trans-Pacific Partnership (TPP), which seeks to integrate Western and East Asian/Australasian economies through a Pacific Ocean free trade zone. Brunei, Chile, New Zealand, and Singapore are current signatories. Australia, Malaysia, Peru, United States, and Vietnam are presently negotiating to join the TPP.

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In Peru, Deciding Between “Left” and “Right”

April 13, 2011

Peru is about to be divided, again. With the vote count nearly complete, it looks like the pre-election polls were spot on: first place is Ollanta Humala and second place is Keiko Fujimori. Exit polls also indicate that their two respective parties, Gana Perú and Fuerza 2011, won the most seats in Congress.

What would an Ollanta Humala presidency look like? Would he live up to his campaign promise to be a more center-left candidate, or would he backtrack on his recent character transformation? The problem is: no one knows. During the campaign, he appealed to the mainstream Peruvian electorate by portraying himself as a political centrist and Catholic conservative, and by shying away from his close ties with Presidents Hugo Chávez and Evo Morales. He has tried to portray himself as more like former Brazilian President Luiz Inácio Lula da Silva. However, many Peruvians—including several investors—believe this is just a façade. Predictions of an Humala victory have contributed to the biggest jump in the cost of insuring Peruvian sovereign debt in five years and the Peruvian Nuevo Sol has declined by 1.6 percent since March 20. We do know that Humala has said he might try to reform the constitution, redistribute wealth through a “national market economy,” and start a government pension program for the elderly.

And, what would a Fujimori presidency look like? It is possible it would look a lot like her father’s, with the first step being a pardon for Alberto Fujimori who is serving a 25-year sentence for human rights abuses and corruption. Nevertheless, Keiko Fujimori appealed to some voters because of her father’s record on the economy, anti-terrorism and populism—he frequently gave away goods and services to remote regions overlooked by other governments. Her presidency is not expected to be much different and there is no guarantee that she would adhere to democratic principles.

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