May 27, 2015
Brazilian President Dilma Rousseff met Tuesday with Mexican President Enrique Peña Nieto in Mexico City to foster a closer relationship between the two largest markets in Latin America and the Caribbean. This event was Rousseff’s first official visit to Mexico since she first became president in 2011.
Rousseff kicked off her official visit to Mexico on Monday evening and was welcomed by the Minister of Foreign Relations José Antonio Meade. She arrived with a delegation of business representatives interested in exploring investment opportunities in Mexico.
On Tuesday, Rousseff and Peña Nieto signed investment agreements and other accords to increase air travel and tourism. They also agreed to review their bilateral preferential trade agreement (the acuerdo de complementación económica Brasil–México, known as ACE 53) in an effort to lower tariffs overall and extend reduced tariffs to over 6,000 new products. As ACE 53 currently stands, less than half of the products that Brazil exports to Mexico are included in the list of goods with reduced tariffs.
Together, the Brazilian and Mexican economies comprise 62 percent of Latin America’s GDP and make up 58 percent of Latin America’s exports. The bilateral trade between the two countries stood at $9.2 billion in 2014, up from $ 5.7 billion in 2006. With the new agreements, the countries hope to double their trade within the next decade.
Brazil invests a little over $2 billion per year in Mexico, while Mexico’s investments in Brazil total over ten times that amount at $23 billion. Brazil is Mexico’s second largest investment destination after the United States—particularly in telecommunications, food and industrial production. Brazil has investments in steel plants in Mexico and is interested in investing in the Gulf of Mexico through its state-owned oil company, Petrobras.
Since 2013, Mexico and Brazil said they would consider cooperation between Mexico’s Pemex and Brazil’s Petrobras. However, joint projects have yet to be launched.
May 18, 2015
Chinese Premier Li Keqiang begins an eight day trip to South America today, landing in Brazil with a promise of some $50 billion in Chinese investments in Brazilian infrastructure. This trip follows on and is consistent with the promise that President Xi Jinping made in January to invest $250 billion in Latin America and the Caribbean over the next 10 years.
Talk about checkbook diplomacy: whether each of these investments is ultimately consummated—and China has a history of big announcements that go unfulfilled—Latin American and Caribbean nations are paying attention.
The promise of infrastructure development is not unwelcome, even by the United States, which sees chronic underinvestment in Latin America’s creaking infrastructure to be a limiting factor in regional development. Resources are insufficient, and Chinese largesse meets a need. At the same time, China is not pursuing charity. Investments up to this point and into the future are clearly focused on the procurement of strategic natural resources, including energy and agriculture, and also the infrastructure to bring them to market—i.e. get them to China.
Monday Memo: Guatemalan Protests—Costa Rican Discrimination—Chinese Investment—Guyana Election—Technology in Honduras
May 18, 2015
Demonstrators Call for Pérez Molina’s Resignation: Thousands of protestors marched across 13 cities in Guatemala on Saturday to call for President Otto Pérez Molina’s resignation. The protests came as a response to a customs tax fraud scandal uncovered by the Comisión Internacional contra la Impunidad en Guatemala (International Commission Against Impunity in Guatemala—CICIG) in April that led to the resignation of Vice President Roxana Baldetti earlier this month, though she denies involvement in the scheme. The protests were organized via social media, without any clear leadership. While Pérez Molina had originally announced his intent to let CICIG’s mandate expire, the scandal later prompted the president to announce that he will request a two-year extension.
Costa Rica orders Executive Action against LGBT Discrimination: In honor of International Day against Homophobia, Transphobia, and Biphobia on May 17, Costa Rican Vice President Ana Helena Chacón announced new legislation that will punish public workers found discriminating against others on the basis of sexual orientation or gender identity. While the decree does not outline what the sanctions for discrimination will be or how they will be issued, the decree does mandate training on equal access for employees of public organizations, as well as the redefining of a couple or partner to include same-sex partners for all institutions under the executive branch. Chacón, who has long been a supporter of LGBT rights, announced the decree on Friday at Costa Rica’s Casa Presidencial. Despite the new measure, same-sex marriages and civil unions are currently not recognized in Costa Rica.
May 18, 2015
Brazil is up for sale, and bargain-hunters from Sam Zell to Stephen Schwarzman are looking for deals.
If the country’s economy could be spread onto a monopoly board, distressed domestic utilities like Companhia Energética de Minas Gerais S.A. (Cemig) would be selling for a bargain, while infrastructure like airports and railroads would be begging for investment. Meanwhile, any of the dozens of companies implicated in a massive corruption scandal at state-run oil company Petróleo Brasileiro S.A. (Petrobras) might seem impossible to give away amid the ongoing risk of legal liability and financial fallout.
In that context, foreign investors are rolling the dice that Brazil will stage a turnaround. C’mon snake eyes!
It takes a certain type of investor to be drawn to the country right now. The economy is expected to contract more than 1 percent this year. The government is in a state of political paralysis amid calls for President Dilma Rousseff’s resignation and Congress’ refusal to sign off on belt-tightening measures meant to avert a sovereign credit downgrade. Rich Brazilians are fleeing for Miami.
May 14, 2015
On Wednesday, Brazil’s Chamber of Deputies passed its second austerity bill in a week, just hours before approving an amendment that changed the bill’s direction and increased federal spending for retirees. If passed by the Senate, the amended bill faces a possible presidential veto and represents a roadblock to the government’s strategy for increasing revenues.
The initial bill, which passed by 277 votes to 178, limited sick leave and restricted access to social security pensions for relatives of deceased employees in an attempt to save an estimated 7.5 billion reais ($2.47 billion) in public funds. The measure was a key component of the government’s strategy to balance fiscal accounts and avoid an impending credit downgrade, and its initial passage represented a win for President Dilma Rousseff’s current fiscal agenda.
However, amid backlash from the country’s largest labor union, the Central Única dos Trabalhadores (Unified Workers' Central—CUT) and members of the president’s Partido dos Trabalhadores (Workers’ Party—PT), the lower house passed the amendment with a vote of 232 to 210. Nine PT members approved the changes to the bill, while five did not attend the vote. O Globo reports that the bill would not have been changed had all PT members in the lower house voted against the amendment.
Bloomberg called the amendment to the austerity measure the “first major setback” for Finance Minister Joaquim Levy, who has pushed an austerity agenda in order to reduce a growing federal deficit. Levy called last week’s approval of a bill reducing social-security benefits a “victory for all of society.”
Rousseff has threatened to veto the second bill after Wednesday night’s amendment passed, and is negotiating with labor unions and lawmakers to avoid a congressional override of the veto.
Seven more amendments to the bill were scheduled for a vote on Thursday.
May 8, 2015
A proposed government austerity package may keep Brazil from a credit rating downgrade, but could cost President Dilma Rousseff some of her biggest supporters: the country’s labor unions.
Lawmakers in Brazil’s lower house passed a proposed bill this week that would limit thousands of workers’ access to social security benefits. The MP 665 bill was approved by a narrow 252-227 vote during a heated debate late Wednesday.
Finance Minister Joaquim Levy called the legislative decision a “victory” and said it could potentially lower government spending by 18 billion reais ($5.9 billion) this year.
“It’s a victory for all of society,” Levy told journalists in Brasília on Thursday. “We will meet our objectives so that we can start an agenda that goes beyond the fiscal adjustment.”
Earlier this week, representatives from the Central Única dos Trabalhadores (Unified Workers’ Central—CUT) met with the ruling Partido dos Trabalhadores (Workers’ Party—PT) congressional leadership and said they were against the bill.
CUT is considered one of the largest unions in the country and one of the PT’s founding groups, and has been a strong supporter of Rousseff and former President Luiz Inácio Lula da Silva’s governments.
May 8, 2015
The number of Latin Americans with access to the Internet will increase by 20 percent over the next twelve months, according to the Latin American and Caribbean Internet Address Registry (LACNIC). The Uruguay-based NGO is one of five Regional Internet Registries in the world that assigns and administers IP addresses to local Internet service providers—it also advocates for Internet development in the region.
LACNIC’s director, Oscar Robles, shared his organization’s prediction of increased Internet usage in a private breakfast with news reporters on Thursday in Montevideo. Robles, who is from Mexico and was appointed director of the organization in April, said that predicted growth in Internet usage could be attributed to improved regulations and new education initiatives. He estimated that at the end of 2015, there will be 370 million Internet users in Latin America and the Caribbean, which is more than half the region’s population.
Internet availability still varies among countries in the region, and Robles said that governments should democratize access by “providing a certain level of promotion and awareness that the Internet is necessary to meet the needs of society”.
Robles praised specific countries for leading the region in Internet expansion. In Brazil, government regulations allow multiple service providers to operate in the country, encouraging connection in both urban and remote locations. In Uruguay, the Plan Ceibal initiative equips school buildings with WIFI and provides laptops for students.
Robles also stated that Bolivia, Ecuador and Peru are the Latin American countries most ready to implement the new version of Internet Protocol (IPv6), which will replace the previous version (IPv4) and assigns a unique alphanumeric address to computers on networks and also routes Internet traffic.
“While IPv4’s days are numbered, the fact that certain technologies exist that can help mitigate this situation have provided operators with a false sense of security, Robles wrote in April. “In some countries of the Latin American and Caribbean region, a significant percentage of networks (ASN) support IPv6 and are currently ready to handle IPv6 traffic.”
On Thursday, Robles also suggested that IPv6 would secure a greater sense of Internet autonomy for the region—referring to revelations from whistleblower Edward Snowden in 2013 that the U.S. National Security Agency had spied electronically on other countries.
Monday Memo: Brazilian Corruption—Bolivian Opposition—Bolivia-Chile Dispute—Marijuana in Puerto Rico—Chemical Leak in Costa Rica
May 4, 2015
This week’s likely top stories: Former Brazilian president investigated; Opposition gains influence in Bolivia; ICJ hearing on Bolivia-Chile border dispute begins; Puerto Rico legalizes medical marijuana; Costa Rican coast suffers chemical spill.
Report of an Inquiry into Lula Shocks Brazil: On Friday, Brazilians were shaken by news of a probe regarding possible influence-peddling by former president Luiz Inácio Lula da Silva (2003-2010). The anti-corruption division of the Public Ministry is examining da Silva’s relationship with Odebrecht, one of the largest companies in Brazil, and whether he used his position as president to get loans for Odebrecht from the Banco Nacional de Desenvolvimento Econômico e Social (Brazilian National Development Bank—BNDES). An Odebrecht spokesperson denied any misconduct, and da Silva did not address the investigation on Friday when speaking on International Worker’s Day. The inquiry will determine whether or not there is reason to open a wider investigation. The governing Partido dos Trabalhadores (Workers’ Party—PT) has suffered recently, with current President Dilma Rousseff, da Silva’s successor, also tainted by a corruption scandal involving the PT and the state-owned oil firm, Petrobras. However, investigations have not uncovered any wrongdoing by Rousseff.
Opposition Wins Runoff in Bolivia: On Sunday, Bolivian citizens from Beni and Tarija voted in runoff municipal elections after the initial elections failed to produce clear winners. The ruling Movimiento al Socialismo party (Movement Towards Socialism—MAS) prevailed in five of nine states in March 2015. The opposition won in both Beni and Tarija yesterday, giving the opposition a stronghold in the four richest states in Bolivia, which includes La Paz. Carlos Dellien from Nacer beat Alex Ferrier of MAS in Beni. In Tarija, Adrián Oliva of the Unidad Demócrata coalition (Democratic Unity) beat Pablo Canedo by a wide margin (61 percent to 38 percent).
ICJ Hearing on Bolivia-Chile Maritime Dispute Begins: On Monday, the International Court of Justice (ICJ) in The Hague will hear preliminary arguments on the maritime case that Bolivia brought against Chile in April of 2013. Felipe Bulnes, the former Chilean ambassador to the U.S., will speak today, arguing Chile’s position that their border dispute was already settled in 1904 by a previous agreement, and that the ICJ does not have jurisdiction over the matter. On Wednesday, the Bolivian delegation is expected to speak, reiterating the Bolivian right to sovereign access to the sea. The ICJ will have until the end of 2015 to determine whether or not the case is under its jurisdiction. The maritime dispute has been a source of tension between the two countries for decades.
April 28, 2015
Inês Etienne Romeu, a former political prisoner and the only person to survive the infamous Casa da Morte (House of Death), a clandestine torture site in Petrópolis used by Brazil’s military dictatorship, died in her sleep yesterday morning. She was 72.
Romeu, who had been a member of the Vanguarda Popular Revolucionária (Popular Revolutionary Vanguard) during Brazil´s period of military rule, was committed to speaking out about her experience at the Casa da Morte. As the sole survivor of the torture site, her accounts were key to identifying several of her torturers. Notably, her accounts led to the identification of Amílcar Lobo, a medical doctor who allegedly was responsible of keeping victims of the Casa da Morte alive during their torture. Lobo’s medical license was subsequently revoked.
Romeu also provided important testimony to Brazil´s National Truth Commission, which published its official report late last year. The report unequivocally established that “under the military dictatorship, repression and the elimination of political opposition became the policy of the state, conceived and implemented based on decisions by the president of the republic and military ministers.”
Following her release from the Casa da Morte in 1971, Romeu’s family and lawyers decided that she should turn herself into the state and be formally imprisoned to escape future torture. After eight years, she was released under the terms of Brazil’s Amnesty Law. According the National Truth Commission, the same law that freed Romeu is one of the final obstacles impeding the prosecution of the country’s 191 alleged perpetrators of human rights violations.
April 13, 2015
Anti-government protesters once again took to the streets across Brazil on Sunday, this time in smaller numbers, but with the same demands for President Dilma Rousseff to leave office.
This is the second march in less than a month in which Brazilians have spoken out against Rousseff and the ruling Partido dos Trabalhadores (Workers’ Party—PT). At least 500,000 people gathered in 24 cities throughout the country, chanting slogans like “Out with Dilma” and “Impeachment Now.”
On March 15, nearly two million people participated in one of the largest protests in Brazil’s recent history. Discontent over unpopular austerity measures and a kickback scandal involving state-run oil giant Petrobras and the PT were major catalysts.
“The Workers Party failed Brazil,” Cristiano Jacobs, a Rio de Janeiro businessman, said during the march. “They have left Brazil broke.”
Rousseff is facing historically low approval ratings. In a recent Datafolha poll, 60 percent of Brazilians said they believe she is doing a "bad" or “terrible” job. 2,834 people were interviewed April 9 and 10, with a margin of sampling error of 2 percentage points. The same poll showed that 63 percent of those interviewed support opening the impeachment process against Rousseff.