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Monday Memo: Michelle Bachelet – Gustavo Petro – USAID in Ecuador – FARC Ceasefire – Kidnappings in Mexico

December 16, 2013

by AQ Online

Likely top stories this week: Former President Michelle Bachelet wins Chile’s presidential elections; Protesters rally in support of ousted Bogotá Mayor Gustavo Petro; USAID plans to pull out of Ecuador by September 2014; the FARC’s 30-day ceasefire goes into effect; a study finds that Mexico leads the world in kidnappings.

Michelle Bachelet Wins Chilean Elections: Former Chilean President Michelle Bachelet won Sunday's runoff election to become president of Chile again, easily defeating conservative opponent Evelyn Matthei with 62 percent of the vote. Matthei, meanwhile, captured only 37 percent of the vote—the poorest showing by the Chilean Right in two decades. Bachelet served as president from 2006 to 2010 and left office with an 84 percent approval rating, and will be sworn in in March 2014.

Thousands of Colombians March For Mayor Petro: Supporters of Bogotá's recently-dismissed mayor, Gustavo Petro, rallied in the streets last Friday to protest Petro's removal from office. On December 9, Inspector General Alejandro Ordóñez accused Petro of mismanagement of Bogotá's trash collection system and barred him from holding political office for 15 years. Protesters say that Ordóñez, who is not an elected official and is an ally of former Colombian President Álvaro Uribe, has no authority to remove Petro from office.

USAID Makes Plans to Leave Ecuador: The U.S. Agency for International Development (USAID) is expected to pull its $32 million aid program out of Ecuador by September 2014, according to a letter written Thursday by USAID Mission Director Christopher Cushing. The move comes six months after Bolivian President Evo Morales ordered USAID to leave his country. USAID has not been successful at renegotiating its contract with Ecuadorian President Rafael Correa, and Correa has said he suspects the organization of meddling in his country's affairs.

FARC Ceasefire Begins: A 30-day ceasefire by the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia—FARC) began on Sunday as the rebels continue peace negotiations with the Colombian government in Havana. The ceasefire was declared on December 8 after a rebel bomb in the department of Cauca killed nine people. However, the rebels have said that the removal from office of Bogotá Mayor Gustavo Petro, a former M-19 guerrilla, will have an impact on the peace process. The Colombian government, meanwhile, will continue its operations against the FARC.

Mexcio Leads the World in Kidnappings: The new RiskMap 2014 report from the security company Control Risks found that Mexico had more kidnappings-for-ransom than anywhere else in the world this year, followed by India, Nigeria, Pakistan and Venezuela. Twenty percent of all kidnappings that happened in the world this year occurred in Mexico, according to the report.

Tags: Colombia, FARC peace negotiations, Ecuador, Mexico, Chile, Michelle Bachelet

The No Re-election Taboo is Lifted in Mexico

December 12, 2013

by Arjan Shahani

In the midst of a heated national debate on political reform, December 4 marked a milestone in Mexico’s electoral politics, as the upper house of Congress voted on legislation modifying 29 articles in the country’s constitution to allow consecutive re-election for mayoral and legislative positions.

Re-election will go into effect in 2018, and will allow mayors to run for two consecutive terms, while legislators can run for the same position for up to 12 years—though they’re required to run under the same political party they originally ran under. (This raises a number of questions regarding officials running under flimsy party alliances, which come and go faster than the seasons.) The president of Mexico and the mayor of Mexico City will be limited to serving one six-year term, however.

One of Mexico’s most ingrained mottos, born during the Revolution, has been “Effective Suffrage; No Re-election.” Back then, it was understandable that the country would unite under such a slogan, as the revolutionary objective was to overthrow Porfírio Diaz’ 31- year presidential tenure (with only one four-year break from 1880 to 1884).

Since then, however, political life in Mexico has evolved in ways in which allowing re-election could be positive.

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Tags: Mexico, Mexican Elections, election reform

Mexican Senate Passes Energy Reform Bill

December 11, 2013

by AQ Online

The Mexican Senate voted 95 to 28 to pass President Enrique Peña Nieto’s signature energy reform bill Wednesday morning, just one week after the body approved the electoral reform bill that the conservative Partido Acción Nacional (National Action Party—PAN) set as a precondition to bringing the controversial measure to the Senate floor. If passed by the Chamber of Deputies, the bill would loosen the state’s control over the oil industry.

President Peña Nieto has advocated for various reforms since he took office in 2012, including telecommunications and education laws, but the energy reform bill has been seen as the centerpiece of his efforts to boost the Mexican economy. If passed, the bill would allow for private investment, exploration and profit sharing with the state-owned Pemex. Those actions were banned 75 years ago when President Lazaro Cardenas nationalized the oil industry.

While the alliance between the PAN and the ruling Partido Revolucionario Institucional (Institutional Revolutionary Party—PRI) has majorities in both chambers, there has been vocal opposition to the passage of the bill. Legislators from the leftist Partido de la Revolución Democrática (Democratic Revolution Party—PRD) interrupted debate on the measure on Tuesday in an effort to keep it from passing before the end of the year. The PRI and PAN have been accused of “treason” by PRD members for championing the bill that would inject private capital into the industry that seen a downward trend in recent years.

Despite the opposition, the Chamber of Deputies is expected to pass the energy reform bill before the winter recess on December 15. It would then need to be approved by more than half of Mexico’s 31 states and the federal district. 

Tags: Mexico, Enrique Peña Nieto, Mexico energy reform

The Outlook for Pemex Reform

December 5, 2013

by Lauren Eades

This month, Mexico’s Congress is debating the long-anticipated reform of Pemex, the country’s state-owned oil company.

This reform comes at a critical moment for Mexico’s energy industry, as oil production has declined steadily since 2004, and Pemex will need to more than double its investment to reverse the trend. The latest energy reform legislation in Congress would ease the financial pressure facing Pemex (which currently supplies one-third of the government’s annual budget), and would allow for some form of foreign investment in Mexico’s energy development.

If the bill passes, however, the results will be neither immediate nor guaranteed.

Even if Mexico’s Congress scrapes together the necessary votes to pass the bill in the coming days, the energy legislation rollout is likely to take several years. Any constitutional reform must be approved by half of Mexico’s 31 state legislatures. This process will likely take several more months, and may not be complete until the middle of 2014. At this rate, a substantial increase in foreign investment cannot be expected before 2015 or even 2016.

Then, the all-important ley secundaria (secondary legislation) will be decided, with significant implications for the types and levels of investment that the reform will produce.

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Tags: Mexico, Pemex, Mexico energy reform

Mexican Electoral Reform Opens Path for Energy Bill

December 4, 2013

by AQ Online

The Mexican Senate approved a bill on electoral reform early this morning with a vote of 106-15 and one abstention. The bill, which would strengthen the legislative branch and includes constitutional amendments to eliminate term limits for legislators and mayors while curbing the power of the executive branch, was championed by  the conservative Partido Acción Nacional—National Action Party (PAN) as a precondition to moving forward with President Enrique Peña Nieto’s ambitious energy reform plan.

The electoral reform bill, which also allows the president to opt for a coalition government, passed its first hurdle in the Senate committees on Tuesday before the overwhelming vote on the floor in the early hours this morning. It allows for Senators and Deputies to serve for up to 12 years—Senators terms are six years while Deputies are three—and eliminates the barriers to direct reelection beginning in 2018; it is expected to pass in the lower chamber this week.

The passage of electoral reform was seen as a necessary step to shore up support amongst PAN legislators, allies on of the ruling Partido Revolucionario Institucional—Institutional Revolutionary Party (PRI) on energy reform, after the leftist Partido de la Revolución Democrática—Party of the Democratic Revolution (PRD) pulled out of the cross-party pact that led to the passage of President Peña Nieto’s economic reforms last year.

The proposed energy reform, which aims to reverse declining crude output and boost economic growth, would open up the Mexican oil sector to private investment, and would allow for investors to share profits of oil exploration and production with Pemex, the state-owned oil monopoly. The reform bill would also affect the telecommunications and banking sectors. 

The lower chamber is expected to vote on energy reform on December 15 before Congress breaks for recess.

Tags: Mexico, energy reform, Electoral Reform

Mexican Senate Committees Pass Financial Reform

November 21, 2013

by AQ Online

An overhaul of Mexico’s private-sector lending system was approved by four key Senate committees on Wednesday, moving President Enrique Peña Nieto’s financial reform one step closer to passage. The housing, public credit, justice, and legislative studies committees all voted to pass the bill, following its passage in the Chamber of Deputies. The full Senate will discuss the 70 provisions of the bill today, with an expected vote on Tuesday. If any major changes are introduced, the bill would go back to a lower chamber for approval. Otherwise, it will go to President Peña Nieto to sign into law.

The bill, part of the Pacto por México (Pact for Mexico) reforms agreed upon by President Pena Nieto's Partido Institucional Revolucionaria (Institutional Revolutionary Party—PRI) and the country's main opposition parties, would increase lending among Mexico’s banks, lower interest rates on loans and make credit more accessible to small and medium enterprises. The governor of Mexico’s Central Bank, Augustín Carstens, said in May that the proposed reform could help grow the economy by 0.5 percent over the next two to three years.

President Peña Nieto, who will reach his one year anniversary in office next month, has staked significant political capital in the Pacto por México reforms, ranging from education and energy to security and telecommunications. The most controversial reform thus far has been the proposed privatization of Petróleos Mexicanos (Pemex), the state-owned petroleum company to help attract investment and technology to Mexico’s ailing energy sector.

Tags: Mexico, Enrique Peña Nieto, Finance reform

El Estado de Michoacán: De Paraíso a Infierno

November 5, 2013

by Rodrigo Borja

El estado mexicano de Michoacán es famoso por sus bellezas naturales y sus hermosas ciudades. Cuna de la antigua civilización purépecha, posee importantes sitios arqueológicos y pueblos coloniales declarados como Patrimonio de la Humanidad por la UNESCO, así como fiestas declaradas también Patrimonio Intangible de la Humanidad. Sus artesanos están considerados como grandes maestros en el mundo entero, y año a año llegan a Michoacán millones de mariposas monarca provenientes de Canadá en busca de un clima más moderado para pasar el invierno.

Sin embargo, nada de esto le ha permitido a esta región sustraerse del clima de violencia provocada por el narcotráfico en su lucha con las autoridades. Buena parte de su geografía está en poder del grupo de narcotraficantes conocido como “Los Templarios,” que pelean el territorio con Los Zetas y el Cartel del Golfo. Ni el ejército ni la policía han podido impedir esto y, de hecho, la corrupción en este último cuerpo de seguridad ha propiciado que, más que defender a los ciudadanos del estado, muchos policías participen en labores de protección de los grupos delictivos.

La ausencia de un gobierno estatal estable ha contribuido significativamente al caos que reina en la entidad. El gobernador anterior, Leonel Godoy, del Partido de la Revolución Democrática (PRD), dejó el cargo en medio de serias acusaciones de corrupción. El nuevo gobernador, Fausto Vallejo, del Partido Revolucionario Institucional (PRI), ha ejercido de manera intermitente el poder por motivo de una salud muy deteriorada, dejando las riendas del mismo durante sus constantes ausencias en manos de Jesús Reyna, su secretario de gobierno. Este vacío de poder ha provocado un aumento en la fuerza de los grupos delictivos y ha propiciado que algunos grupos pidan que el Congreso de la Unión declare la desaparición de poderes en el estado.

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Tags: Mexico, Michoacán, Drug Cartels in Mexico, violence in Mexico

Monday Memo: Brazil’s Economy – Argentine Debt – Tropical Storm Sonia – Honduran Police Abuses – Uruguayan Marijuana

November 4, 2013

by AQ Online

Likely top stories this week: Brazil will reduce lending by 20 percent next year; Argentina wins a stay on its $1.33 billion payment; Tropical Storm Sonia Hits Mexico; Honduras’ police chief denies abuses; Brazilian delegation opposes Uruguayan marijuana legalization.

Brazil to Reduce Lending Due to Budget Deficit: Brazilian Finance Minister Guido Mantega said Friday that Brazilian development bank BNDES will reduce lending by 20 percent next year, down to about 150 billion reais ($66.6 billion) from this year's estimated 190 billion reais. The announcement came after an Oct. 31 report showed Brazil’s budget deficit widened to 3.3 percent of gross domestic product, the most since November 2009. Some experts speculate that Brazil's credit rating could be cut.

U.S. Court Upholds Stay on Argentine Debt Payment: The 2nd U.S. Circuit Court of Appeals ruled in favor of Argentina on Friday by denying a motion that would have forced the country to start paying $1.33 billion to holdout bondholders. Friday’s decision will permit Argentina to make a second appeal to the U.S. Supreme Court before it is forced to pay the $1.33 billion to NML Capital Ltd and other holdout bondholders who did not accept a debt swap in 2005 and 2010.

Tropical Storm Sonia Hits Mexican Coast: Tropical Storm Sonia hit Mexico's Pacific Coast on Monday morning near the city of El Dorado in Sinaloa. By the time the storm made landfall, it was downgraded to a tropical depression and winds had decreased to about 35 mph. Though the storm is weakening, the U.S. National Hurricane Center said it could still cause floods and landslides in the region. Mexican authorities issued storm warnings from Mazatlan north to Altata on Sunday, and the government of Sinaloa state canceled classes on Monday in five municipalities.

Honduran General Denies Role in Police Abuses: In an interview, Honduran general and police chief Juan Carlos Bonilla denied knowledge or involvement in a wave of police abuses this year in which at least seven detainees have gone missing or been killed in police custody. He also said that he was not involved in setting up death squads starting in 1998, as reported by the police department's internal affairs section in 2002.

Brazilian Delegation Concerned About Uruguayan Marijuana: Brazilian political leaders from the southern state of Rio Grande do Sul will travel to neighboring Uruguay this Tuesday to oppose Uruguayan legislation that will legalize marijuana sale and consumption in the country. The Brazilian delegation will testify before the Uruguayan Senate's health committee in an attempt to prevent the country from moving ahead with legalization.

Tags: Mexico, Honduras, Argentina, Brazil

Women in Mexico’s Workforce

November 1, 2013

by Arjan Shahani

“Women are not doing well because they want to do it all. They want to study, go out and get a job and be housewives as well. Well, that is really difficult to achieve.”

These were recent and controversial words spoken by Ricardo Salinas Pliego, president of Grupo Salinas and owner of TV Azteca, one of the two television media conglomerates in the country. Salinas made the remarks during the Mexico Cumbre de Negocios (Mexico Business Summit) on October 20-22.

Salinas went on to say that women should receive a salary from their husbands “so that their work at home as caretakers […] is monetized and better valued.”  

Unfortunately, his ignorant point of view on gender equality is not as unusual in Mexico as some may think. Even in this day and age, many talented Mexican women face such myopic views as an obstacle to their professional development. 

Given the growing number of women with advanced graduate degrees in Mexico—currently 50.4 percent, according to a recent study by the Asociación Nacional de Universidades e Instituciones de Educación Superior (National Association of Universities and Higher Educational Institutions—ANUIES)—forward-thinking companies have begun to understand the need to tap into a talent pool they didn’t used to, given prejudices in hiring and professional development processes.

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Tags: Mexico, women in the workforce, Gender Equality

PRI Supports Tax Increase on Junk Food

October 24, 2013

by AQ Online

Mexico’s ruling Partido Revolucionario Institucional (Institutional Revolutionary Party—PRI) announced its support on Wednesday for an opposition proposal to increase the 5 percent tax on junk food set out in President Enrique Peña Nieto’s fiscal reform plan. The tax would be applied to purchases of high-calorie foods including chocolates, sweets, puddings, potato chips and ice cream, but would not be applied to hamburgers or tacos.

Last week, the lower house of Congress approved the fiscal reform package with a 5 percent tax on junk food, and Armando Rios Piter, a Senate finance expert from the Partido de la Revolución Democrática (Democratic Revolution Party—PRD), proposed increasing the tax to 8 percent. On Wednesday, PRI Senate leader Emilio Gamboa said that his party would “undoubtedly support” the tax increase. If Piter’s plan is formally adopted, the reform bill would go back to the lower house, before being sent to the Senate for a final vote.

If the bill is passed by both chambers with the 8 percent tax provision included, the reform will contribute nearly 2.7 percent of GDP to government coffers by 2018 according to Deputy Finance Minister for Revenue Miguel Messmacher. The tax reform bill is a key part of the President Peña Nieto’s Pacto por México, a series of reforms agreed upon by Mexico’s three main political parties in 2012 that range from education and energy to security and telecommunications.

 

Tags: Mexico, Partido Revolucionario Institucional (PRI), junk food

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