Latin America News Round-up
June 8, 2011
Colombia 'Most Dangerous Place' for Labor Unionists

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Brazil and Southern Cone
Top Aide to Brazilian Leader Steps Down Amid a Scandal. New York Times
Argentina's Alfonsin Tacks To Right In Presidential Campaign With Alliance. Dow Jones
Argentina Won't Export Gas Even If Domestic Reserves Rise –Minister. Dow Jones
Chile growth slows in April, small rate hike seen. Reuters

Northern Andean Region
Crime Drops in Caracas, Venezuela. Venezuelanalysis
Ecuador, Venezuela: No need for OPEC to up output. MarketWatch
Venezuela and Brazil Deepen Strategic Cooperation. Venezuelanalysis
Colombia 'most dangerous place' for labor unionists. Colombia Reports
Displaced leader assassinated on Medellin bus. Colombia Reports
Colombia Supports Mexico’s Carstens IMF Bid, Echeverry Says. Bloomberg

Western Andean Region
Chávez, Correa hold meeting in favor of integration. El Universal
Bolivia to strengthen ties with Peru's new government. Xinhua
Benavides Says Peru Central Bank Can Pause on Inflation, Loan Slowdown. Bloomberg
Peru's Humala urges calm, says economy is solid. AFP
Brazil Makeover Helped Humala Shed His Chávez Image. Wall Street Journal
With Ollanta Humala's Win, Peru Joins Latin America's Left Turn. The Nation
Hope in the Andes: What Ollanta Humala’s Victory Means for Peru. Upside Down World

Mexico, Central America and Caribbean
Drug gangs using homemade “narco-tanks’’. The Miami Herald
Felipe Calderón's cartel war dead-end. The Guardian
Guatemalan presidential hopeful takes an unusual route to power. The Guardian
Golding in Washington for high-level talks. Jamaica Observer

Region: Trade, Security, Economy and Integration
Latin America Growth Will Slow to 4.5% in 2011, World Bank Says. Bloomberg
Families in Action pays mothers to improve health. Los Angeles Times
O.A.S. Promises to Tackle Drug Trafficking and Crime. New York Times
Agitator by trade unhappy with Obama. The Hill
Latin America's former first ladies bid to break macho presidential mould. The Guardian
The Future of Andean Trade Preferences. Americas Quarterly

Brazil and Southern Cone [contents]

Top Aide to Brazilian Leader Steps Down Amid a Scandal
ALEXEI BARRIONUEVO. New York Times. June 7, 2011

SÃO PAULO, Brazil — A top cabinet official in the government of President Dilma Rousseff resigned Tuesday amid reports that he had enriched himself while a federal lawmaker, deepening the first political crisis for Ms. Rousseff since she took office in January.

Opposition leaders in the Senate had been calling for the resignation of the official, Antonio Palocci, who was Ms. Rousseff’s chief of staff, even after Brazil’s federal prosecutor-general on Monday shelved an investigation into accusations that Mr. Palocci had increased his personal wealth twentyfold as a corporate consultant while he was a congressman and the coordinator of Ms. Rousseff’s 2010 presidential campaign.

Mr. Palocci said in a statement Tuesday night that while he believed that the decision of the prosecutor, Roberto Gurgel, had “confirmed the legality and rectitude” of his activities, he had decided to resign to quell the political confrontation.

Opposition senators were enraged by Mr. Gurgel’s finding that there was no evidence of wrongdoing by Mr. Palocci. The opposition said before the resignation on Tuesday that it was within four votes of the 27 needed to initiate a Senate investigation, which would have the power to look at bank and telephone records relating to Mr. Palocci’s consulting arrangements.

Mr. Palocci, 50, was the third chief of staff of the last four to hold the office to resign amid accusations of wrongdoing dating back to 2005, when Luiz Inácio Lula da Silva was president. Ms. Rousseff was the only chief of staff under Mr. da Silva who was not forced from office.

The chief of staff’s office under the Workers Party governments of Mr. da Silva and Ms. Rousseff had “turned into a type of haunted house,” said Alvaro Dias, the leader of the Social Democratic Party in the Senate.

Political analysts and opposition leaders said the contention over Mr. Palocci had weakened Ms. Rousseff’s sway with Congress and her image as a leader. Mr. Dias lamented the “excessive interference” by Mr. da Silva, who had urged legislators and Ms. Rousseff to keep Mr. Palocci in the post.

Mr. Palocci, in interviews on Friday, acknowledged that he had made substantial money as a consultant from 2006 to 2010 while a federal legislator, saying companies had found his experience as a finance minister under Mr. da Silva “useful.” But he said he had not broken the law.

Even with Mr. Palocci’s resignation, Mr. Dias vowed to continue to investigate whether there was a connection between Mr. Palocci’s business dealings and Ms. Rousseff’s campaign.
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Argentina's Alfonsin Tacks To Right In Presidential Campaign With Alliance
Shane Romig. Dow Jones. June 7, 2011

BUENOS AIRES -(Dow Jones)- Argentina's leading opposition presidential candidate, Ricardo Alfonsin, has moved a step to the right after his attempts to build a left-wing coalition ahead of October's election were rebuffed by the Socialist Party.

Over the weekend, Alfonsin struck an alliance with Francisco de Narvaez, a center-right lawmaker and wealthy businessman who enjoys considerable influence in the sprawling urban area that surrounds the capital.

Those municipalities in Buenos Aires Province are home to about a quarter of Argentina's 40.1 million citizens, and will play a key role in deciding the presidential election this October.

Recent polls show that incumbent President Cristina Fernandez might garner enough support to win the Oct. 23 election outright without having to go to a second-round election in November. Fernandez has yet to announce her candidacy, but is widely expected to seek reelection.

De Narvaez pledged to back Alfonsin in Buenos Aires Province, while Alfonsin will support de Narvaez's bid to become the next governor of Argentina's most populous province.

"We're going to have a program that's much more progressive and transformative than that of the current government, although that's not too hard to do," Alfonsin said at a rally celebrating the alliance.

"We're going to end with [this policy] of stealing, but getting things done. We're going to do things and not let one peso be robbed," de Narvaez said Saturday, alluding to allegations of corruption that have surfaced in recent years against the Fernandez administration.

Alfonsin's tie-up with de Narvaez comes just days after he named a relatively conservative voice to his ticket by picking former central bank president and economist Javier Gonzalez Fraga as his running mate.

However, nearly all of Argentina's mainstream parties, including Alfonsin's Union Civica Radical party, are anchored well to the left of the political spectrum by U.S. standards.

Alfonsin's shift toward the right probably isn't ideological in nature, but rather a marriage of convenience. He unsuccessfully courted the socialist governor of Santa Fe Province and presidential hopeful Hermes Binner to run as his vice president.

The Socialist Party refused to join a ticket that included de Narvaez, because his conservative views clash with the goals of the socialists, said Binner's spokesman, Ricardo Attala.

The Socialist Party is expected to anoint Binner as its official candidate on Saturday. Some analysts see an independent campaign by Binner as helping Alfonsin's more conservative platform as the socialists might give votes away from Fernandez's populist platform.

Leftists who are fed up with corruption are likely to turn to the socialists, said Rosendo Fraga, political analyst and director of the Centro Union para la Nueva Mayoria think tank, in an emailed statement.

If a significant number of Fernandez's supporters end up backing Binner, that could push the vote to a runoff, where the outcome is uncertain, political analyst Federico Thomsen said.

Fernandez is riding high in the polls thanks in part to an upswell of public sympathy following the sudden death of her husband, former President Nestor Kirchner, last year. Kirchner's combative style and rhetoric alienated many potential voters, but his death gave a boost to Fernandez, who previously had been considered a vulnerable incumbent.

Voters look prepared to give her a second term thanks largely to the eight years of political stability and gang-buster economic growth the country has enjoyed since Kirchner took office in 2003.

The Union Civica Radical, or UCR, the country's No. 2 party, can boast neither a legacy of economic nor political accomplishments.

UCR presidents have fared poorly since Argentina's return to democracy in 1983. Ricardo's father, Raul Alfonsin, resigned in 1989 before the end of his first term amid hyperinflation, while a deep economic crisis and riots led Fernando de la Rua to step down in 2001.

Alfonsin's choice of Fraga as his vice president appears to be aimed at addressing his lack of economic credentials, Thomsen said.

-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@ dowjones.com
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Argentina Won't Export Gas Even If Domestic Reserves Rise -Minister
Dow Jones. June 7, 2011

BUENOS AIRES (Dow Jones)--Argentina won't become a natural gas exporter under the current government even if potentially massive deposits of unconventional gas turn out to more than enough to supply the domestic market, a top minister said Tuesday.

It's not the policy of the administration of President Cristina Fernandez to export gas, Planning Minister Julio De Vido told reporters.

Even if the gas reserves are found to be very large, they will be earmarked for local consumption, especially by industry, he said.

Argentina is thought to hold significant deposits of shale gas that companies have only recently started to explore.

In a report published earlier this year, the U.S. Energy Information Administration said that Argentina could be home to the largest technically recoverable shale gas resources in South America, with an estimated 774 trillion cubic feet. Brazil trailed as a distant No.2 with 226 trillion cubic feet.

Last December, Argentina's largest oil and gas producer, YPF SA (YPF) said that it had found an estimated 4.5 trillion cubic feet of unconventional gas in the southern province of Neuquen.

France's Total SA (TOT), Exxon Mobil Corp. (XOM) and Apache Corp. (APA) are also exploring for shale gas in Neuquen Province.

Argentina used to be a major supplier of natural gas to Chile until 2004, when it essentially cut shipments to its neighbor to ensure sufficient supplies at home.

Argentina's proven natural gas reserves fell 51% to 13.3 trillion cubic feet between 2000 and 2009 because of rapid economic growth and government price caps that have spurred demand while providing little incentive to search for more gas.

As a result, Argentina has become a net importer of gas.

It has a contract with Bolivia to import 7 million cubic meters of natural gas a day, with that amount scheduled to increase to 11 million cubic meters next year. Liquefied natural gas is also brought in from Trinidad & Tobago.

Even so, supplies are so tight that in the coldest periods of the southern hemisphere winter, usually July, the government is forced to cut gas to industry to satisfy residential demand.

Unconventional gas can cost twice as much as traditional gas to extract, as it requires horizontal drilling and hydraulic fracturing to unlock the gas from shale rock formations or tight sands.

To attract investment, the government in 2008 unveiled a program known as Gas Plus that allows producers of unconventional gas to charge significantly higher prices than is the case with natural gas from conventional sources.

Only time will tell if the higher rates will be enough to coax significant quantities of shale gas from Argentina's hinterland.

-By Ken Parks, Dow Jones Newswires; 54-11-4103-6740, ken.parks@dowjones.com
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Chile growth slows in April, small rate hike seen
Reuters. June 7, 2011

SANTIAGO, June 6 (Reuters) - Growth in Chile's economy slowed to 0.3 percent in April compared to March, the central bank said on Monday, bolstering views that the bank will raise its interest rate in June but at a slower pace.

The bank revised upward its IMACEC indicator of economic activity to 0.6 percent in March against February, originally reported as a 0.3 percent rise.

On a year-on-year basis CLIP=ECI the economy expanded 6.3 percent, slowing sharply from the 15.2 percent jump seen in March and below market expectations of 7 percent. March's figure was unusually high due to a low comparison base after a devastating earthquake in February 2010 that hit the economy.

Many in the market are raising year-end economic growth forecasts on strong first-half domestic demand but expect the economy to slow in coming months and converge with its real potential. A higher comparison base in the second half of 2010 should lower coming economic growth readings.

The central bank expects the economy of Chile, the world's top copper producer, to grow between 5.5 and 6.5 percent in 2011. It grew 9.8 percent in the first quarter.

"Some moderation in activity (is) expected for the second half of 2011 on the back of reduced monetary and fiscal stimulus and a tighter labor market," Goldman Sachs' senior analyst Alberto Ramos said in a note to clients.

The central bank has raised rates by 175 basis points so far this year -- the fastest tightening pace in Latin America -- in a bid to curb inflation.

The bank is expected to ease the pace of rate hikes after inflation expectations fell. The market is betting on a 25-basis-point increase when the bank meets on June 14.

The bank calculates its month-on-month IMACEC data in seasonally adjusted terms. A monthly gauge, the IMACEC measures more than 90 percent of the components comprising Chile's gross
domestic product, which is published quarterly.

(Reporting by Alonso Soto and Maria Jose Latorre; Editing by James Dalgleish)

Northern Andean Region [contents]

Crime Drops in Caracas, Venezuela
Tamara Pearson. Venezuelanalysis. June 6, 2011

Mérida, June 6th 2011 (Venezuelanalysis.com) – Due to the work of the National Bolivarian Police (PNB), crime is down by 53% in Caracas, according to the Chief of Police. However, Venezuelan President Hugo Chavez criticised the killing of three prisoners in a cell of the CICPC, Venezuelan’s crime investigation body. He also assigned more money to the government’s prison transformation plan.

On Saturday the head of the PNB, Luis Fernandez, said that thanks to operations of the force, which was formed last year, the violent crime rate had decreased by 52.78%. So far, the PNB is only active in Caracas. In March this year, the infamously corrupt Metropolitan Police of Caracas was formally disbanded.

Fernandez said homicides in Caracas were down by 48.61% so far this year, and police have arrested 2,569 people, and dismantled 249 gangs, 221 of which were drug gangs, 20 were robbery based ones, and 8 focused on kidnapping.

In the Caracas metro, known for small-scale robberies, Fernandez said the crime rate was down 71.7% compared to last year, with 344 people detained.

So far this year the PNB have confiscated 177 guns, compared to 159 in 2010, Fernandez said.

The PNB was formally created in 2009, and became active in the streets in early 2010. Its police are trained in the new National Experimental Police University, and the force is one of the government’s main policy initiatives aimed at combating the high crime rate and police corruption.

Mistreatment of prisoners

Yesterday Chavez criticised the death of three prisoners at the hands of CICPC police. The detained youths were beaten to death in detention on 26 May.

However the minister for justice and interior affairs, Tareck El Aissami, said the prisoners’ death was an “isolated incident”, and “our commitment is with good police practices”. El Aissami condemned the killing and said he has requested an investigation. The public prosecutor’s office also said it had detained eight members of the CICPC for questioning, and put out four arrest warrants.

“This thing of beating or torturing prisoners has got to end, once and for all,” Chavez said on his nationally broadcast, weekly television show, Alo Presidente. He recognised the need to continue “cleansing” the police.

“I call on the senior police, I congratulate the majority who are doing their job well, but ... a rotten apple contaminates the rest,” he said. “The human rights of the prisoners need to be respected.”

Furthermore, last week Chavez approved 413 million bolivars (US$ 96 million) towards the government’s prison system transformation plan, which aims to “guarantee respect and support” to the prisoners.

One of the key prongs of the plan is helping the prisoners reinsert themselves in society, and includes a prison symphonic orchestra. 1,500 prisoners in six different prisons are studying music, according to the newspaper Correo del Orinoco.

Homicides in Venezuela rose from 5,974 in 1999, to over 12,000 in 2009, according to government and private media sources.

In 2009, during a speech to aspirants to the PNB, Chavez said that crime in Venezuela had become a “fifth counter revolutionary column” that was ruining the plans of the Bolivarian revolution. He stated the need for a police force that was respected, run by the people, and preventative rather than repressive.

Some of the main causes of high crime rates in Venezuela, all of which go back decades, include high police corruption, little human rights training of police, high number of guns in circulation, the drug trade, inequality and consumerism, and a “crime culture” facilitated by centuries of invasion, military governments, coups, and state terrorism and repression.
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Ecuador, Venezuela: No need for OPEC to up output
Mercedes Alvaro. MarketWatch. June 8, 2011

QUITO (MarketWatch) -- Ecuador President Rafael Correa and Venezuela President Hugo Chavez said Tuesday that the oil market is well supplied and the Organization of Petroleum Exporting Countries should maintain its production quotas when it meets Wednesday.

After a bilateral meeting in Salinas, Ecuador, Chavez said that a price of about $100 a barrel is "fair." Correa said that level is "reasonable."

Chavez said that OPEC will need to increase production when demand grows.

OPEC members are split on whether to raise quotas or actual production Wednesday with some Gulf members, led by Saudi Arabia, the world's biggest oil exporter, advocating an increase.
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Venezuela and Brazil Deepen Strategic Cooperation
Tamara Pearson. Venezuelanalysis. June 7, 2011

Mérida, June 7th 2011 (Venezuelanalysis.com) – On Sunday President Hugo Chavez began his short tour of Latin America which includes stops in Brazil, Ecuador, and Cuba. On Monday he met with President Dilma Rousseff in Brasilia, Brazil, to strengthen cooperation between the two countries.

Speaking to press from an air base in Brasilia, Chavez said that during his meeting with Rousseff they discussed financing, public works, energy, and food cooperation.

“Now there’s a very big group of projects, programs, and possibilities,” he said.

“We’ve been forming this strategic alliance since [Luiz Inacio] Lula [da Silva] became the president of Brazil [in 2003] and we’ve strengthened it with Dilma [Rousseff],”he said.

The 14 concrete agreements the two countries signed included financing for the National Bank of Economic and Social Development (BNDES), the construction of a petroleum boat ship yard in Venezuela’s Sucre state, as well as financing of the private sector.

Venezuela and Brazil also signed an agreement to strengthen Venezuela’s housing mission. The agreement aims to strengthen exchange and “economic complementation” with productive sectors in Brazil. Brazil is considered an expert country in construction and has important machinery and primary material suppliers.

The two presidents also signed a Memoranda of Understanding (MOU) between Petroleos de Venezuela (PDVSA), the Instituto de Pesquisa Economica Aplicada (the Institute of Economic Applied Investigation- Ipea) and Brazil’s Caixa Economica Federal.

The MOU aims to study “integral planning” in Venezuela’s Orinoco Oil Belt. Brazilian advisers will help put together a project “for the social, economic, urban, and housing development of the region”.

Chavez said the priority in the current global context, where “imperialist governments are promoting invasions and wars” was to “consolidate our Latin America and South America as a peace zone, because we don’t want any more wars, nor invasions, nor bombing, nor coup d’états.”

Rousseff agreed, saying, “Our countries are connected and we want to achieve a zone of peace, democracy, cooperation, and economic growth in the region. Venezuela can be assured that Brazil will stand by it in the struggle for integration and the creation of harmonious cooperation”.

According to Rousseff, Venezuela increased its exports to Brazil by 43% last year. Both countries have maintained a strategic association treaty since 2005, and are currently negotiating around thirty new agreements.

Yesterday Chavez also visited Ecuador, and he is expected to visit Cuba today. His tour was planned for last month, but due to a knee injury, had to be delayed.
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Colombia 'most dangerous place' for labor unionists
Jim Glade. Colombia Reprots. June 8, 2011

The International Confederation of Trade Unionists (CIS) reported 55% of trade unionist murders worldwide occurred in Colombia making it "the world's most dangerous place for trade unionists," Caracol Radio reported Tuesday.

According to the report which will be presented by the CIS at the International Labor Conference in Geneva, 49 unionists were murdered in Colombia in 2010.

In addition, the report counted 20 attacks or attempted assassinations of union representatives, in particular against representatives from the mining industry.

Latin America as a whole ranks as the world's most dangerous region for trade unionists with an especially alarming amount of 100 kidnappings reported the CIS.

The laws set to protect unions and their members from interference and violence are not yielding results, reported the CIS. Impunity enjoyed by masterminds of the persecution lead to more "systematic" persecution, the NGO added.

Interior and Justice Minister German Vargas Lleras announced on May 16 that Colombia had complied with the requisite of ensuring safety for union leaders and hoped that the U.S.-Colombian FTA will go through shortly. Colombian labor union leaders fired back rejecting government's claims that human rights and trade unionist protection have improved, denigrating symbolic gestures aimed at securing the U.S. free trade agreement, which they say will help multinational companies over Colombian workers.
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Displaced leader assassinated on Medellin bus
Adriaan Alsema. Colombia Reports. June 8, 2011

A leader of victims of forced displacement is assassinated Tuesday while traveling on a bus in Colombia's second largest city Medellin.

According to several media, community leader Ana Fabricia Cordoba was shot dead on a bus in the north-eastern neighborhood of Santa Cruz where she had taken up the role of leader of displaced families fighting to be returned their lands.

Cordoba fled her home region of Uraba in 2001 after her husband was killed by paramilitary forces.

While in Medellin, the woman increasingly got involved in defending the rights of displaced and had filed several complaints before authorities about crimes committed against members of the displaced community.

Little less than a year ago, Cordoba's son was also murdered. The displaced leader had said the police was responsible for the killing of her son.

Despite having received death threats related to her work, Cordoba was never granted protection. "They're going to kill me and they haven't done anything," she was quoted as saying by newspaper El Tiempo.

According to Spanish press agency EFE, 16 displaced leaders have been killed since October when the government of Juan Manuel Santos announced to begin returning stolen land to its rightful owners.
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Colombia Supports Mexico’s Carstens IMF Bid, Echeverry Says
Helen Murphy. Bloomberg. June 7, 2011

Colombia will back Mexico central bank Governor Agustin Carstens to lead the International Monetary Fund, Finance Minister Juan Carlos Echeverry told reporters in Bogota.

Colombia joins Uruguay as the second country to endorse Carstens to succeed Dominique Strauss-Kahn as managing director. Brazil has said it will support French Finance Minister Christine Lagarde.

“In conversations with the Mexican government we have manifested our support for Carstens,” Echeverry said.

Carstens, 52, has said he expects emerging markets to support his candidacy once there is a final list of nominees to serve as the IMF’s next managing director. Any of the IMF’s 187 member nations has until June 10 to nominate candidates for the position, the fund said in a May 20 statement.

Canadian Finance Minister Jim Flaherty said today his government hasn’t decided yet who to back. Flaherty, speaking to reporters in Montreal, said he knows both leading candidates well and that there could be other candidates who come forward.

Carstens, in Canada today, will visit Washington on June 13.

Editors: Bill Faries, Harry Maurer

To contact the reporter on this story: Helen Murphy in Bogota at hmurphy1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

Western Andean Region [contents]

Chávez, Correa hold meeting in favor of integration
El Universal. June 8, 2011

Diplomacy
The 11th Presidential Meeting between Ecuador's Rafael Correa and Venezuela's Hugo Chávez began on Tuesday in the Ecuadorian seaside resort of Salinas, where they made a call for Latin American integration.

"We are working on regional integration and not only working, but to achieve," said Chávez upon his arrival in the Citizens' Service Center in the Province of Santa Elena, Efe reported.

Correa and Chávez arrived in a four-wheel drive vehicle driven by the Ecuadorian president and before entering the venue of the meeting they greeted dozens of supporters and a number of journalists.

The Venezuelan president stressed that the Union of South American Nations (Unasur) is one of the most appropriate options to further regional integration in Latin America.

"We are living a very important moment," Chávez added, the Unasur has been created and next July 5 the Community of Latin American and Caribbean Countries (ECLAC) will be born in a meeting to be held in Caracas.

"The relationship between Ecuador and Venezuela is an engine for Latin American integration," added Chávez, who said that in the meantime the governments of countries known as "hegemonic" -referring to the United States and its allies- have bombed Arab nations like Libya.

That action, which has been deployed amidst the silence of most countries in the world, seeks above all to seize the North African oil in the ground, said the Venezuelan president.

Consequently, Chavez said, integration is intended to turn Latin America into "a zone of peace and democracy" that fights further invasions or destabilization processes by powerful foreign players.

Finally, after the opening of the meeting, the Venezuelan president encouraged Correa to hold their next bilateral meeting in three months in Caracas.

Correa, meanwhile, ruled out media reports that both presidents had grown apart, because the meeting they held on Tuesday was delayed for several months.

"Work, work and more work for our peoples," Correa offered and agreed that the objective of the two leaders is the unity in Latin America.

"We have no right to fail, to waste time," said Correa.

The two leaders are reviewing several joint projects and agreements, in order to check their progress.

They are expected to sign two agreements on tourism and science and technology, and a joint declaration on bilateral projects on energy, trade, production and social matters.
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Bolivia to strengthen ties with Peru's new government
Xinhua. June 8, 2011

Bolivia pledged on Tuesday to strengthen relations with the new government of Peruvian President-elect Ollanta Humala who will take office on July 28.

The Bolivian Foreign Ministry issued a statement to congratulate Peru on its democratic electoral process and said the two countries are experiencing one of "the best moments in the bilateral relations."

"The triumph of Ollanta Humala will contribute significantly to strengthening the bilateral relations, considering that both countries are united by historical ties of brotherhood and cooperation," the statement said.

The ministry also mentioned the advances in bilateral relations in the past decades, especially the Bolivian-Peruvian Presidential Meeting held in Ilo city last year, which allowed Bolivia to continue to use Peru's Ilo Port for 99 years.

Bolivian President Evo Morales has on many occasions expressed his sympathy for Humala. Political analysts say as Humala shares Bolivia's political ideology, Morales hopes that the new Peruvian government will be sympathetic to Bolivia's demand against Chile for getting a sea outlet, which was taken by Chile in 1882.
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Benavides Says Peru Central Bank Can Pause on Inflation, Loan Slowdown
John Quigley. Bloomberg. June 8, 2011

Peru’s falling consumer prices and slower credit growth means the central bank can refrain from raising interest rates again when it meets tomorrow, Finance Minister Ismael Benavides said.

“It’s the central bank’s decision but inflation is negative and there’s nothing on the horizon in terms of imported inflation,” Benavides said in an interview in Lima yesterday. “There’s less demand for credit, which helps ease inflation.”

Consumer prices fell for the first time in seven months in May and eased from a three-year high reached in March as food costs decline. Prices fell 0.02 percent from April and the annual inflation rate slowed to 3.07 percent from 3.34 percent. An easing of government spending growth and increases in the benchmark rate have helped tame inflation, Benavides said.

The central bank raised its benchmark rate to 4.25 percent from 4 percent last month, its tenth increase in 13 meetings. Bank policy makers will raise the rate by a quarter-point to 4.50 percent tomorrow, according to 11 of 15 of analysts in a Bloomberg survey. Four economists expect the bank not to move.

Barclays Capital Inc. said in a June 6 e-mailed note to investors that the central bank will keep rates unchanged and will maintain the pause until the economic outlook is clearer in the wake of Ollanta Humala’s victory in the country’s presidential elections.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.
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Peru's Humala urges calm, says economy is solid
Jose Luis Varela and Luis Jaime Cisneros. AFP. June 8, 2011

LIMA — Peru's president-elect Ollanta Humala appealed for calm, emphasizing that the country's economic fundamentals were solid one day after his election victory sent markets tumbling.

Peru's stock market ended the day up 6.97 percent after nose-diving a record 12.5 percent on Monday despite a mid-session halt to trading and early close to try to limit the damage.

The ex-lieutenant colonel's victory in Sunday's presidential run-off against legislator Keiko Fujimori has raised fears of a Venezuela-style upheaval in a country that is a vital supplier of precious metals to the global market.

Arlen Laura of the stock traders' association said there was some slight investor optimism Tuesday, "with people thinking that the uncertainty (ahead of the election runoff) could end on a positive note."

In a move to reassure the jittery markets, Humala named a transition team that includes moderate economists and well-known security experts.

The market bounce-back "shows us that the Peruvian economy is solid," Humala said in an interview with AFP.

Peru's economy "has been growing for more than eight years at a rate of seven to eight percent, which shows that in real terms the economy is solid, and that the Monday (downturn) was market speculation," Humala said.

Humala earlier in the day called on Peruvians "to remain calm. We are doing our best and we must continue to work."

The president-elect campaigned on vows to share out Peru's mineral wealth -- including gold, silver and copper -- in a bid to overturn huge social and poverty divides.

Mercedes Araoz, a former economy minister under President Alan Garcia, said there is concern over how exactly Humala will deliver on these assurances. "Expectations are high because on the campaign trail, a lot of promises were made," she said.

There is sharp income disparity in Peru, where the prosperous capital Lima, home to almost one third of the population of 29 million, and the coastal areas have ignored the poor, indigenous Andean and Amazonian regions of Peru's interior for centuries.

The country has seen a decade of unprecedented economic growth, including 8.7 percent last year alone, but one in three Peruvians still live in poverty and have gained little or nothing from the boom.

Humala's Gana Peru party released a list of 20 people that will handle the transition as the president-elect prepares to take office on July 28.

Among them were a former economy minister, the former head of the Andean country's central bank, and a former mines minister. All are seen as political moderates.

Former interior minister Ketin Vidal, who was the head of the counter-terrorist police who led the arrest in 1992 of Abimael Guzman, the head of the Maoist Shining Path rebels, also joined the transition team.

Humala's victory over Fujimori turns a new page in Peruvian politics, in the left's first return to power since the 1968-1975 military regime of Juan Velasco Alvarado.

The president-elect said that he moved toward the political center after a failed bid at the presidency in 2006 backed by Venezuela's firebrand President Hugo Chavez. He now looks to Brazil's more moderate left for advice.

In the interview, Humala said he was especially happy that the first foreign leader to congratulate him on his victory was Chilean President Sebastian Pinera.

During the campaign Humala focused on nationalism and Peru's historic rivalry with Chile. Peruvian nationalists, especially in the military, are still sore over losing an 1879-1883 war with Chile.

"It was an important gesture for us," Humala told AFP. "It says a lot about (Pinera's) qualities. We are going to visit Chile to improve relations."

Today, nearly 100,000 Peruvians live in Chile, while Chilean businesses have invested heavily in Peru, especially in retail and construction.

Humala spoke ahead of a planned trip that will take him to Brazil, Uruguay, Argentina and Chile.

In the interview, Humala also said that Peru's institutions, including the armed forces and the country's political parties, need to be strengthened in order to consolidate democracy.

In the Sunday vote Humala defeated Keiko Fujimori, daughter of jailed ex-president Alberto Fujimori whose government was tarnished by authoritarianism and corruption.
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Brazil Makeover Helped Humala Shed His Chávez Image
PAULO PRADA And MATT MOFFETT. Dow Jones. June 7, 2011

SAO PAULO—Leftist candidate Ollanta Humala won Peru's presidential election in part by borrowing a page from its Brazilian neighbor, which also stands to expand its influence in the region.

Mr. Humala, who lost the election in 2006 because he was seen as too closely tied to Venezuelan strongman Hugo Chávez, adopted Brazilian ex-president Luiz Inácio Lula da Silva as his model this time.

Mr. Humala's campaign sought inspiration in Mr. da Silva's makeover from a leftist who was rejected three times by voters to a moderate who won two terms in office and left beloved by Brazilians.

Mr. Humala's nimble campaign against the conservative Keiko Fujimori also benefitted from the advice of two former consultants from Mr. da Silva's governing Workers Party, which officials say began a dialogue with Mr. Humala after his last run for office.
Valter Pomar, the head of the Workers Party's committee for international relations, said Mr. Humala would be "an ally in the process of continental integration."

Brazil's interest in Peruvian politics reflects Peru's growing strategic importance as a gateway to markets in the Pacific. As the economies of both countries have grown in recent years, business between Brazil and Peru has ballooned. Trade between the two countries, just $565 million at the end of 2000, by last year grew to $2.9 billion, according to Brazilian government figures. The increase in Brazil's exports has been especially marked, soaring from $354 million a decade ago to just over $2 billion last year.

"The two countries mostly ignored each other for decades," said Luiz Augusto Castro Neves, a former Brazilian diplomat now at the Brazilian Center for International Relations, a Rio de Janeiro think tank. "Even though we share a border, Peru always looked west, while Brazil always looked to the east."

Brazil in recent years has increasingly been using Peruvian ports to ship goods to China, India, and other fast-growing markets in Asia. "Much of the relationship has to do with Brazil's need to get across the other side of the continent," said Paulo Fleury, a logistics expert and business professor at the Federal University of Rio de Janeiro.

Miguel Vega Alvear, a former Peruvian senator who is president of the Peruvian Brazilian Chamber of Integration and Commerce, said that the two countries signed a "strategic alliance" in 2005 to work on a series of infrastructure and energy projects and he was confident Mr. Humala would expand the partnership. "The Atlantic was the key to the 20th century but the Pacific will be the key to the 21st," he said.

The two countries in recent years have worked to complete a transcontinental highway linking Brazil's agricultural heartland and industrial south directly to Peruvian ports. The project, traversing the Amazon and scaling the Andes, remains under construction, but other, less direct links between the two countries are improving, too. Brazil's government even commissioned a study, still underway, to determine the feasibility of a rail link between the two countries.

Meanwhile, Peru's fast-growing economy presents a big opportunity for many Brazilian companies well-placed to take advantage of massive infrastructure and energy projects now planned or underway. Companies like Odebrecht SA and Camargo Correa SA, two big construction and engineering firms, are active in Peru's ongoing building boom, while energy giant Petrobras SA pumps and explore for oil and gas in Peru's Amazon and off its Pacific coast. Companhia Vale do Rio Doce has a port concession. Grupo Gerdau has steel operations in Peru.

Brazil's interest in Peru fits with "its very mercantalstic model of foreign policy," said William Summerhill, a University of California at Los Angeles historian. "Brazil is a country with global ambitions, and that's no secret to anyone."Mr. Summerhill said that by involving itself at the ground floor level of the Peru's presidential campaign, Brazil "paves the way for the avoidance of future conflict." By befriending Mr. Humala now, "Brazil solves problems before they become problems."

He notes that Brazil has been mired in continuing trade spats with Argentina. In Bolivia, the leftist government of Evo Morales government moved to abrogate contracts of foreign energy companies like Brazil's Petrobras. "The first thing (Boliva) wanted to do was throw out gringos," he said. "Well in Bolivia, the Brazilians were the gringos."
—Paulo Prada and Matt Moffett
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With Ollanta Humala's Win, Peru Joins Latin America's Left Turn
Greg Grandin. The Nation. June 7, 2011 

Add Peru to the list of Latin American countries that have turned left. On Sunday, Peruvians voted in a second-round run-off ballot and elected Ollanta Humala, a 48-year old former army officer, president. This is Humala’s second try for the office. In 2006, he came close to winning, but Wikileaks cables reveal that Peru’s establishment politicians put aside their differences and beat a path to the US embassy, asking for help smearing Humala as a Peruvian Hugo Chávez.

Wikileaks also reveals that that same year the Mexican right and the US State Department worked together to defeat the populist presidential candidate Andrés Manuel López Obrador, leading many in the US to gloat that the “left turn” in Latin America had run its course.

Humala’s victory suggests otherwise. Here’s just some of what has happened since 2006: In Bolivia, Evo Morales presided over the ratification of a new social-democratic constitution and was re-elected as president in 2009 with 64 percent of the vote. In Ecuador, Rafael Correa also easily won reelection and ratified a new constitution that guarantees social rights and puts tight limits on privatization. Recently, Ecuadorians likewise voted on ten progressive ballot initiatives, passing them all. They included the strict regulation of two blood sports: banks are now banned from speculation and bulls can no longer be killed in bull fights.

And last year in Brazil, the trade unionist Luiz Inácio Lula da Silva left office the most popular politician on the planet, handing over the presidency of one of the world’s largest economies to Dilma Rousseff, a former urban guerrilla and economist who vows to continue to try to make Brazil a more humane and equal nation.

All of these national left political projects—from Venezuela to Uruguay—have their problems and shortcomings, and are open to criticism on any number of issues by progressive folk. But combined, the Latin American left can claim a remarkable achievement: It has snatched the concept of democracy away from neoliberals and the corporate privateers who came close to convincing the world that democracy equals deregulated capitalism and returned the term to its more humane, sustainable definition. In Latin America, democracy means social democracy. So considering the otherwise bleak global landscape, the return of the Latin American left, now well into its second decade, is cause for great cheer.

What does Humala’s victory mean for Peru? Most importantly in the short run, it has halted the return of Alberto Fujimori’s style of death-squad neoliberalism. Humala’s opponent was Fujimori’s daughter, Keiko, who pledged to free her jailed father, who was convicted of murder, kidnapping and corruption.

In the long run, many Peruvians, particularly those outside of Lima, voted for Humala because they have seen little benefits from the country’s celebrated macroeconomic performance over the last decade, driven by the high price of silver, zinc, copper, tin, lead and gold—which comprise sixty per cent of the country's exports.

Over thirty per cent of Peru's thirty million people live in poverty and eight per cent in extreme poverty. In rural areas, particularly in indigenous communities, more than half of all families are poor, many desperately so. Humala has promised to address this inequity with a series of pragmatic measures—a guaranteed pension to people over 65; expanding health care in rural areas, including the construction of more provincial hospitals; an increase in public sector salaries, to be paid for with a windfall profit tax on the mining sector.

In terms of foreign policy, Humala’s election is another victory for Brazil in its contest with Washington for regional influence. If Fujimori had won, she would have aligned Peru politically with Washington and economically with US and Canadian corporations.

Humala, in contrast, will tilt toward Brazilian economic interests. Indeed, the Peruvian historian Gerardo Rénique said that the election, while representing an important victory for democratic forces, could also be understood in part as a contest between Brazil and the US over Peruvian energy and mineral resources. In this perspective, one could say that it didn’t matter who won the Peruvian election: the Amazon lost.

Here then might be the question that determines the success of Humala’s presidency: As he tries to put into place his “growth with social inclusion” agenda, will he be able to balance the conflicting interests of his Brazilian allies and the social movements that elected him, many of which are fighting for sustainable development and local control of resources?

In addition to reviving social democracy, the other major accomplishment of the renewed Latin American left has been to dilute the entrenched racism that has defined the continent for centuries. In Bolivia, Ecuador, Chile, Brazil, Venezuela and other countries, Native Americans and peoples of African descent have led a remarkable, if still incomplete, democratization of politics and culture. Peru, with its 45 percent Amerindian population, has largely been left out of this process. In fact, some say that racism has deepened over the last decade, with the mining boom wreaking havoc on the dark-skinned Andean countryside and Amazonian lowlands while financing the rise of luxury condos and malls in white, middle-class Lima.

So however hard it might be for Humala to take on international capital—Peru’s stock market plunged 12 percent the day after his election—an equally difficult challenge will be to tackle Peruvian racism. “El Indio Humala” lost Lima by a wide margin, driven mostly not by fears he would turn Peru into Chávez’s Venezuela but into neighboring Indian-governed Bolivia. Candidate Humala did his best to deflect these concerns.

President Humala, however, will have to confront this racism directly if he is to succeed in democratizing Peru. After all, even before all the votes where in, tens of thousands of his supporters began to fill the country’s plazas, including Lima’s. They raised high the rainbow wiphala flag that became ubiquitous in Bolivia, during the rise of the social movements that brought Evo Morales to power. Today, it is waved throughout the Andes as a symbol of indigenous pride and sovereignty.
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Hope in the Andes: What Ollanta Humala’s Victory Means for Peru
Benjamin Dangl. Upside Down World. June 8, 2011

Fried pork rinds, fish, potatoes and eggs were sold by street vendors outside polling stations on election day in Lima, Peru. By nightfall, thousands of people gathered in a central plaza waving the white flags of Ollanta Humala’s political party.

Ollanta is an Incan name meaning “the warrior everyone looks to.” Indeed, all eyes were on the leftist president-elect as he greeted the crowd just before midnight with the words, “We won the elections!”

Humala, a former military officer who led a failed military uprising in 2000, lost the elections in 2006 to Alan Garcia. On the June 5th presidential elections this year, he narrowly defeated Kieko Fujimori, the daughter of ex-president Alberto Fujimori, who was jailed in 2007 for corruption and crimes against humanity. If elected, Kieko would have likely worked to release her father from jail, and carry on his administration’s capitalist and repressive policies.

This election puts Humala among a growing number of leftist presidents in Latin America and offers hope to the poorest sectors of Peruvian society.

The poverty rate in Peru is just over 31 percent; in the countryside, two in three people live under the poverty line. In Sunday’s elections, it was the impoverished rural areas that went for Humala over Kieko Fujimori.

"You cannot speak of Peru advancing if so many Peruvians live in poverty,” Humala said in his victory speech, explaining that he would work to make sure that the government functioned “above all for the poorest people in the country.”

Peru’s economy has been booming for the past decade, with 7 percent growth expected this year – one of the highest growth rates internationally. Sixty five percent of the country’s export income comes from the mining industry, and investors are expected to provide over $40 billion in the coming decade for mining operations.

Yet many Peruvians have not benefited from this growth. This is partly because former administrations have not been interested in redistributing wealth to the poor through social and development programs.

Humala wants to change that. He plans to redistribute wealth by increasing taxes on the lucrative mining industry. The new government funds will go to expanding access to water, electricity and homes, and providing free school lunches and preschool care. The president-elect has also pledged to expand pensions and healthcare for the poor, and lower gas exports to reduce the cost of this resource for Peruvians.

Such plans for economic and social reform contributed in Humala's victory on Sunday. Yet his first months in office will likely be anything but peaceful. Over 230 protests, road blockades and strikes took place in Peru during the month of April alone. Most of these occurred in poor and rural areas of the country, and were focused on social and environmental issues.

Walter Aduviri, the president of the Front for the Defense of Natural Resources in Southern Puno, has been active in protests against the government’s licensing of Canadian Bear Creek Mining Corp’s silver mining in Peru's border region with Bolivia. The protesters believe the mining would lead to the contamination of land and water, and that local communities would not benefit from the private operation.

While protests and blockades were postponed for election day, activists have threatened to restart the mobilizations. Aduviri told reporters, “The election of Humala was positive, but the promises of the candidates should be reflected in documents and agreements.”

Mexico, Central America and Caribbean [contents]

Drug gangs using homemade “narco-tanks’’
TIM JOHNSON. The Miami Herald. June 6, 2011

MEXICO CITY -- Mexico’s rival crime gangs are in an arms race, and the latest sign of that are the homemade “Mad Max”-type heavily armored vehicles they deploy to withstand fierce clashes with each other.

The army found two more “narco tanks” over the weekend in Ciudad Camargo in Tamaulipas state along the border with Texas.

In earlier discoveries in April and May, armored vehicles found by authorities contained swiveling turrets, snipers’ peepholes and gadgets to dump oil and scatter tire-puncturing nails on roadways.

The latest discovery showed that the gangs are upping their game.

The two armored vehicles were cloaked in inch-thick steel plating. Built on a three-axle truck bed with a heavily armored cabin, the latest “narco tanks” are far larger than previous versions.

“You can easily fit 20 armed people in here,” an unidentified army officer told El Porvenir TV as he showed the inside of one of the vehicles.

The officer said the vehicles could withstand fire from 50-caliber mounted weapons and grenade blasts, and contained a vicious pointed steel battering ram.

An army patrol found the tanks after soldiers spotted two armed men along a road on the highway from Nuevo Laredo to Reynosa, just outside Camargo, authorities said.

The men ran into a warehouse

. Inside, soldiers found the two armored trucks and a workshop to fabricate more.

Two more trucks were in the process of being fitted with steel armor.

Each of the armored trucks had special synthetic insulation to deaden the sound of incoming rounds and air conditioning for the compartment.

Mexican media have dubbed the homemade armored vehicles “Los Monstruos,” or The Monsters, while security consultants label the cumbersome vehicles “rhino trucks.”

None have been used in confrontations with Mexico’s army.

“It is believed that they are manufactured to try to intimidate rival groups,” said an army PowerPoint presentation sent to McClatchy in May after a previous seizure of a homemade tank.
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Felipe Calderón's cartel war dead-end
Rodrigo Camarena. The Guardian. June 8, 2011

    "The fact that there are those who are corrupt, criminal or abuse of their public office does not make a state criminal or corrupt. We should not extrapolate the actions of individuals as those of the state … Mexico is not Arizona."

So remarked Mexico's sub-secretary of Latin America and the Caribbean, Ambassador Ruben Beltran Guerrero, on 5 April, following the release of report by the government of El Salvador accusing Mexican authorities of human rights violations against 250 El Salvadorian immigrants in 2010.

El Salvador's complaints against Mexican authorities have gained greater weight with the recent imprisonment of over 40 members of Mexico's National Immigration Institute (INM in Spanish) –for charges ranging from statutory rape, human trafficking, extortion, kidnapping, murder and collusion with organised crime– as well as the release of a report by the country's Human Rights Commission (CNDH) detailing at least 128 complaints against the INM thus far this year. They also highlight a growing pattern of abuse against migrants following the recent discovery of mass graves in the northern states of Durango and Tamaulipas (with 223, and 183 bodies, respectively), where many of the dead are believed to have been migrants kidnapped by organised crime groups while en route to the United States."

While Mexico is, indeed, unlike Arizona – where anti-immigrant laws are passed by politicians in an effort to appeal to certain political interest groups – it is very similar to countries like China, India and the Philippines, where poor law enforcement and oversight has led to the enrichment of government officials through human trafficking and complicity with organised crime. For Mexico's cartels human trafficking is a $15-20bn dollar industry second only to drug trafficking, and is especially rampant in Mexico, due to the country's function as a conduit for migrants travelling to the United States.

The public furore brought on by the recent scandals involving Mexico's immigration institute have led the federal government to join the chorus of complaints against the INM and make clear their efforts to clean up the country's dysfunctional immigration agency. This effort has included dramatic helicopter rides by government officials along Mexico's "migrant route", the purging of seven high-ranking INM officials (after three years of complaints in some cases), and a series of indignant-sounding speeches by cabinet members calling for the "modernisation" of Mexico's National Immigration Institute.

Mexican legislators from the country's main political parties have gone further and demanded inquiries into the immigration agency's management, as well as the congressional testimony of the current and former heads of the INM, which include Cecilia Romero Castillo, now secretary general of Mexican President Felipe Calderón's National Action party (PAN). The federal government's new line is striking in that it makes tacit recognition of the INM's systemic corruption, and contrasts sharply with the response of Ambassador Ruben Beltran Guerrero to the allegations made by El Salvador.

Still, full recognition of the immigration agency's problems is far from universal. The current head of the INM, Salvador Beltrán del Río, continues to deny that his agency has any endemic faults, while Ambassador Ruben Beltrán Guerrero insists that Mexico is not Arizona (apparently, it's worse), and that the recent scandals are not symptomatic of a larger institutional malady.

As the Mexican authorities slowly begin to understand the relationship between the corruption in the country and its battle with organised crime, Mexico's human rights record has only become direr. Demonstrating the extent of the government's role in abusing the rights of migrants, a report released Tuesday analysed the complaints by migrants in more detail and identified similar patterns of abuse by Mexico's federal police force, the country's refugee commission (Comar) and the special prosecutor's office on crimes against migrants.

What these recent events now make overwhelmingly clear is that although Mexico is not yet a failed state, many of its most important institutions have failed. Organised crime survives by exploiting sectors of the economy where the rule of law and the state is not present (even if that includes government institutions themselves). As a recently released independent Global Commission on Drug Policy shows, the current prohibition-based approach to battling the illegal drug trade has mostly led to massive collateral damage, while increasing global consumption and promoting the trade of more dangerous drugs. As Mexico enters its fifth year of militarised conflict against organised crime, it would serve the federal government well to recognise the mounting evidence of failure of its national security strategy.
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Guatemalan presidential hopeful takes an unusual route to power
Rory Carroll. The Guardian. June 7, 2011

She carries a Maya-style satchel for the petitions handed to her at rallies and tells supporters: "I know you love me, but I love you even more." Sandra Torres may lack Evita Peron's charisma, but no one doubts her populist flair and single-minded pursuit to become Guatemala's first female president.

She recently divorced her "beloved husband", President Alvaro Colom, to circumvent a constitutional ban on incumbents' relatives succeeding them in office.

She was sacrificing a happy, eight-year marriage in order to marry the people, she said. "I am not going to be the first or the last woman who decides to get a divorce, but I am the only woman to get a divorce for her country."

Torres, 56, moved out of the presidential palace, not least because Colom is banned from supporting her or any other candidate's campaigns, but she hopes to defy polls which show her trailing a conservative rival, Otto Perez, and move back in after September's election.

A graduate in communication studies and politics, she was widely seen as the power behind Colom's throne. As head of the government's anti-poverty programme, Torres chose how and where to spend money in impoverished slums and rural areas.

She earned the gratitude of thousands of families who consider "Doña Sandra" a champion, but critics said the spending seemed designed to build political support and that some of the neediest areas were overlooked.

Colom backed her decision to run, saying more than one million people signed a petition demanding she succeed him. "It was a difficult, complicated decision for us but there was a lot of grassroots pressure for Sandra's candidacy," he said. The couple still had an "excellent relationship", he added.

At a campaign rally in Guatemala City's gritty Zone 12 neighbourhood, many people said they did not approve of the divorce but that inflation and crime mattered more. "It was a strange thing to do but I think she keeps her promises," said Maria-Jose Diaz, 18, a fruit seller. "It would be nice to have a woman running things."
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Golding in Washington for high-level talks
Jamaica Observer. June 7, 2011

PRIME Minister Bruce Golding arrived in the United States on Sunday for a five-day visit that will feature a series of high-level meetings. The first meeting was held yesterday at the US State Department between Golding and US Secretary of State Hillary Rodham Clinton. The prime minister also met with deputy manager of the International Monetary Fund, Nayuki Shinohara; World Bank President Robert Zoellick and president of the Inter-American Development Bank (IDB), Luis Alberto Moreno. The day's activities culminated with the official launch of the IDB/Caribbean American art exhibition at the IDB Cultural Centre.

Today, Golding will deliver a lecture at the Prestigious Brookings Institute, following which he will be recognised on the floor of the United States Senate and meet with Senate Majority Leader Harry Reid. The prime minister will also attend a high-level investor's luncheon and hold talks with chairman of the RLJ Company, Robert Johnson, and president of the Shaw Group, Jeff Jenkins.

The prime minister will wrap up his visit on Thursday when he delivers the keynote address at the IDB's International Forum on Caribbean Investment and Development, which provides a platform for representatives of the public sector, private sector and non-governmental organisations to address issues affecting trade and access to finance for persons doing business in the Caribbean.

Golding is accompanied by the financial secretary Dr Wesley Hughes; director general of the Planning Institute of Jamaica, Dr Gladstone Hutchinson; President of JAMPRO Sancia Templer; special advisor to the prime minister, Christopher Zacca; and permanent secretary in the Office of the Prime Minister, Onika Miller.

The prime minister will return to the island on Friday.

Region: Trade, Security, Economy and Integration [contents]

Latin America Growth Will Slow to 4.5% in 2011, World Bank Says
Randy Woods. Bloomberg. June 8, 2011

Latin American and Caribbean economic growth will slow to 4.5 percent this year from an estimated 6 percent in 2010 as policy makers lift lending costs to control inflation, the World Bank said in a report today.

Peru will lead growth at 6.9 percent in 2011 as Brazil, the region’s largest economy, expands 4.2 percent and Mexico climbs 4.4 percent, according to estimates for gross domestic product at market prices. In an April report, the Washington-based lender forecast Latin America and the Caribbean would grow 4 percent to 5 percent this year .

Countries face the risk of overheating because of higher commodity prices and an increase in capital inflows, according to today’s “Global Economic Prospects” report. Authorities need to pursue a more frugal fiscal policy and ensure that lending costs increase fast enough to control rising inflationary pressures, the bank said.

“If policy makers in the region fail to rebuild policy buffers, vulnerability to future crisis would be much increased,” the report said. “If exit from the fiscal stimulus is delayed, countries will rely more on monetary tightening to keep inflation under control.”

To contact the reporter on this story: Randy Woods in Santiago at Rwoods13@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman@bloomberg.net.
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Families in Action pays mothers to improve health
Chris Kraul. Los Angeles Times. June 8, 2011

An innovative social program taking hold in Latin America may have left Luz Dary Lopez a single mother, but it has helped her and hundreds of other poor women in this central Colombian city gain a measure of financial independence, self-respect and better living standards for their families.

Partly funded by the World Bank, the program, called Families in Action, pays Lopez and 4,200 other poor mothers in Tunja about $100 a month as long as they attend diet and hygiene classes, get their children to school and have them undergo medical exams. The cash is a significant bonus for Lopez and other families who make less than $250 a month.

In addition to the money, and health and education benefits, the program gave Lopez the courage to leave her abusive husband. She learned in "empowerment" classes that she didn't have to tolerate his violent attacks and that she had a right to a look for a job, something her machista spouse had prohibited.

Now separated from her husband and raising three children on her own, Lopez is pursuing a career as a hairdresser.

"Too many men in this city think that all women are good for is having children and keeping house. We've learned we don't have to accept those limits," said Lopez, who now sports a bright henna-colored hairdo and distinctively polished nails, signs, she said, of her newfound independence.

Because mothers must meet requirements to receive the payments, the schemes are called "conditional cash transfer" programs. For example, women must take their children age 6 and younger to four medical exams a year to check their weight and vision, as well as to test for bacterial infections.

Children ages 7 to 18 must be present for 80% of their school days, and adolescents must receive family planning classes. Peer pressure also comes into play because mothers meet in neighborhood groups to review monthly printouts showing which families are complying.

Programs like Families in Action are offered in 19 Latin American countries. The cost in Colombia is about $1 billion a year, and $12 billion across the region. That's not insignificant, but economist Ferdinando Regalia of the Inter-American Development Bank in Washington believes that the schemes are a cost-effective means of reducing poverty and delivering health and education services.

"They represent the most important innovation in social programs and assistance in Latin America in the last 15 years," Regalia said. "They've proved very effective."

Humberto Araque, an administrator with the Tunja mayor's office, agrees.

He said family violence claims are up because women have become more assertive of their rights. Meanwhile, measles outbreaks have fallen from 100 cases in 2007 to "almost nothing" this year because the program requires that children be vaccinated

Perhaps most encouraging to him is that poor women in the program have become more politically active. Tunja's 70 neighborhood councils had no female members five years ago, but there are now 15 women on the council, most of them program participants, Araque said.

The Families in Action program may have saved the life of 2-year-old Paula Parra. Her mother, Viviana, an impoverished domestic worker, was unaware that Paula was severely undernourished until last summer when she took her daughter for a medical exam to qualify for the monthly stipend.

Doctors immediately placed the emaciated infant with 24 other children in a special recuperation center set up by the state of Boyaca to fight malnutrition, a problem in the region. But the center's director said Paula may have already suffered developmental damage from malnutrition.

"Before the program, all we knew was how to fill our kids up with potatoes and rice. Now we know how to give them nutrition," said Olga Benavides, a mother of two.

Since the first large-scale conditional cash transfer program started in Mexico in the mid-1990s, the programs have grown to cover 112 million people in Latin America, or 19% of the region's population, according to United Nations figures.

With 10.4 million people covered, Colombia ranks behind only Brazil (with 51.6 million people) and Mexico (23.2 million) in population enrolled.

Helena Ribe, a World Bank economist who oversees the bank's financial support and management participation in the programs in Latin America, said in an interview in Bogota that the benefits of the programs across the continent are indisputable.

"The objectives are to lower poverty in the short term and raise human capital in the long term," Ribe said. "Lower poverty rates in countries like Brazil and Mexico, and the fact there is less child labor and malnutrition in Colombia, reflect progress toward both goals."

Regalia of the Inter-American Development Bank said the school enrollment of children whose mothers are in the programs has grown by double digits in countries such as Nicaragua, Colombia and Mexico, an encouraging sign in a region where youths lag behind the rest of the world by most educational standards.

Some economists worry about the programs' sustainability. Although the cash transfer programs are relatively cheap when compared with other social programs, such as pensions and social security, Colombian economist Francisco Thoumi fears they may be discontinued if the region, now enjoying a commodities-fueled economic boom, suffers a downturn.

On the other hand, Simone Cecchini, an economist with the U.N.'s social development office in Santiago, Chile, believes the programs are so popular and cost-effective that leaders will maintain them to avoid political backlash.

Cecchini and Regalia said they were aware of concerns that politicians could use the programs to reward supporters, and that administrators might not enforce the conditions strictly enough. In countries such as Ecuador and Honduras, one official said "conditions are too soft" and the social benefits have not been as pronounced as in areas where "conditionality is enforced."

Ana Hamon, a Families in Action administrator in charge of the Tunja program, said her biggest worry was that the programs may have become too successful, creating more demand for medical and education services than governments can meet.

"Demand for services has increased, but institutions weren't ready for it," Hamon said.

In her state of Boyaca, enrollment in the program exploded from an initial 6,000 poor families in 2001 to 80,000 in 2009. But because of government funding limits, the program has not accepted new enrollees since 2009.

"Many who would like to join sadly cannot," she said.

Kraul is a special correspondent.
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O.A.S. Promises to Tackle Drug Trafficking and Crime
RANDAL C. ARCHIBOLD. New York Times. June 7, 2011

SAN SALVADOR — Goaded by what they say are extraordinary levels of violence, the Central American nations and their allies are moving closer to a transnational strategy to attack drug trafficking and organized crime.

The Organization of American States — which concluded its annual meeting here on Tuesday, with “citizen security” as its theme — promised to help develop a plan to guide the broader effort.

At the same time, diplomats continued to lay the ground work for a regional meeting in Guatemala on June 22 and 23 involving the Central American nations, Colombia, Mexico and the United States. That meeting is expected to generate agreements among several nations and develop a multimillion-dollar investment from international donors. Secretary of State Hillary Rodham Clinton plans to attend, State Department officials said.

Officials from the Inter-American Development Bank and the World Bank also are set to attend, a reflection of the concerns in the business community over the increasing violence and its economic costs.

The track record in getting governments in the region to share resources and information has been spotty, and several diplomats said any concrete action might depend on the United States jump-starting the process — at a time when the Obama administration is focused on other regions that are a higher national security priority and the State Department’s chief diplomat for Latin America is preparing to leave for academia.

Nonetheless, the severity of the violence in Central America, which the United Nations has called among the worst in any corner of the world that is not in a war zone, is pushing the nations to the table in a way they have not been before, said Ennio Rodriguez, the Central America specialist at the Inter-American Development Bank.

“We are not being romantic about it,” he said. “Building trust is not going to be easy for governments of different political standpoints. But a trusting platform is being developed.”

Central America has some of the highest murder rates in the world, brought on in part by transnational drug traffickers that are pushing an increased amount of narcotics through the region and expanding into kidnapping, extortion and money laundering.

Last month, 27 people — farmworkers and their families — were massacred in northern Guatemala near the Mexican border, an attack that the authorities blamed on one of Mexico’s most notorious gangs, the Zetas.

José Miguel Insulza, the secretary general of the O.A.S., said in an interview that it would probably take years to reduce the crime rate, with an overhaul of the region’s justice systems a priority.

“The main problem is impunity,” he said. “There is no point in having police if the judge is going to let the guys go.”

Analysts said the Central American nations must overcome mistrust of one another’s law enforcement agencies and militaries. It took the United States and Mexico several years to reach a level of cooperation that satisfies both sides, though American investigators only work with Mexican law enforcement units that they have vetted. American diplomats have also complained of a lack of coordination among Mexican agencies.

“Countries have enough problems within themselves coordinating various security agencies and sharing information,” said Shannon K. O’Neil, a fellow at the Council on Foreign Relations in New York who studies Latin America. “Doing that across countries just adds to the complexity and escalates the levels of mistrust.”

Kevin Casas-Zamora, a former vice president of Costa Rica and a fellow at the Brookings Institution in Washington, said that Central American nations have worked together on economic accords to smooth trade, but have not been as successful on political matters.

“There are different levels of political and institutional development in the region,” he said. “The Costa Ricans are extremely suspicious of anything that smacks of political integration. They see their institutions as much better than those in Nicaragua or Honduras.”

And there will not be much regional cooperation, he said, unless the United States takes an active role.

President Obama, in a visit here to El Salvador in March, promised $200 million to combat organized crime in Central America, but diplomats and government officials in the region say it is not nearly enough.

“It’s a drop in the bucket,” Oscar Alvarez, the security minister of Honduras, said Monday.

Arturo Valenzuela, the United States assistant secretary of state overseeing Latin America, is leaving his post this summer, after less than two years, to return to teaching. He attended the assembly here and, in an interview, said the United States would press for more coordination among the nations. But, he said, relying on the United States to deliver ever more aid was “an outdated view.”

“It’s more a problem of strategy and how to make it effective,” he said. “It’s not just a matter of resources.”
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Agitator by trade unhappy with Obama
Vicki Needham. The Hill. June 7, 2011

Lori Wallach doesn’t sugarcoat her disappointment with President Obama.

“We face a situation with the Obama administration’s trade policy that is equal parts damaging, heartbreaking, infuriating and disgusting,” she told The Hill in an interview.

Wallach had hoped Obama’s election in 2008 was the moment when her years of advocacy on trade policy would pay off. She expected the pending U.S. trade deals with South Korea, Colombia and Panama would be renegotiated with workers in mind.

But that optimism is dead and gone.

“The president is on the wrong side,” she said.

Wallach is the longtime director of Public Citizen’s Global Trade Watch and among the most widely cited liberal experts on trade policy. The Wall Street Journal once dubbed her “Ralph Nader with a sense of humor,” and she’s living up to her firebrand reputation as she tries to put the brakes on the Obama administration’s accelerated trade push.

“[Obama] made commitments in 2008 that was critical to his winning,” Wallach said. “Now he’s flip-flopped and blurred those distinctions.

“I expected delivery of promises made,” she said.

Wallach, who was a year ahead of Obama at Harvard Law School, says the administration took up the mantle of George W. Bush by making only negligible changes to the trade deals that were hammered out while he was in office.

“He’s reviving Bush-era agreements and making those his own. It’s inexplicable,” Wallach said.

She is particularly incensed by the Korea accord, which she said could have been a “first step toward a new model” if major changes had been made. That it wasn’t handled that way, she says, “is particularly tragic, because an agreement between two developed countries was probably the easiest one to try to work out some longstanding problems.”

Wallach dismisses the actions taken by the administration to change the trade pacts as mere window-dressing — the “most modest, kabuki-dance go-through-the-motions” stuff imaginable.

Her fury is shared by the labor movement, which broadly opposes the trade deals and sees betrayal in the White House’s decision to champion them.

Wallach said unions have good reason to be miffed. She said the Obama administration could have easily removed a ban on the International Labor Organization (ILO) from the trade conventions — which she said was added by the Bush White House as a “f--k you” to labor — but chose not to.

The Colombia pact is a sore point for labor because of the country’s poor record on protecting union organizers. The issue is deeply personal, as many know union officials who were killed there.

Wallach has said the administration’s “action plan” to address the concerns about labor rights in Colombia was a “remarkably cynical maneuver” to push along an agreement forged during the Bush administration.

She accused the White House of selling out its most devout supporters for political gain and predicted the repercussions will be evident in the 2012 campaign.

“You’re guaranteeing that your own base is going to feel betrayed, so they’re not going to vote, and you’re not going to get kudos from the other side.”

Wallach says Obama committed to changing trade policy when he was running for president in 2008. His platform included ensuring that all trade agreements include binding obligations that protect collective bargaining rights and other labor standards recognized by the ILO, she said.

“He’s the guy who we thought would fix and replace NAFTA, who’s now working with Republicans,” she said.

She says Obama’s problem is that he’s surrounded by an economic team of “unrepentant NAFTA lovers” who have steered the administration back toward the substance of the Bush-era trade deals and away from making any notable changes.

Wallach concedes she probably wouldn’t have a job if the White House and Congress would agree on several changes to current trade agreements and says she finds it humorous when she’s labeled an isolationist.

“We’re not against trade,” she said. “Again, if the issues were really about trade, we wouldn’t be involved,” she said.

Wallach’s no-nonsense style has won her admirers on Capitol Hill, where she is known as a skilled vote counter. In the last Congress, she helped craft a bill that won the backing of 120 lawmakers, led by Rep. Mike Michaud (D-Maine), to provide guidance to negotiators on trade deals.

“She is a dedicated advocate for fair trade and always puts the interests of America’s workers first,” Michaud said.

Her entry into the trade arena happened mostly by accident.

After graduating from Harvard, she landed with Public Citizen’s litigation group, combing through cases in the basement of the Supreme Court in an effort to help under-resourced lawyers.

A year later she joined the group’s Congress Watch and began following issues like food safety, clean water, clean air, pesticides and, eventually, trade.

The a-ha moment came when she realized that developing trade agreements were shifting from deliberations on tariffs and quotas to domestic issues.

While tracking food-safety issues on Capitol Hill in the early 1990s, Wallach was struck by what she heard from corporate representatives. They said they weren’t fond of a bill that mandated new pesticide standards and improved meat and fish labeling, but were nonplussed because the changes would be blocked by U.S. trade deals.

“I started to get very concerned about it,” Wallach said, and told her boss there was “something very fishy going on.”

She took a week off work, found a draft text of the WTO framework and confirmed her suspicions that the rules in the agreement consisted of binding international law enforceable with monetary sanctions.

Taking a closer look, Wallach said she found that trade actually “dug into all of our business” and imposed domestic policy constraints such as restrictions on what Congress could change as far as pesticide laws and a broad range of other issues, including intellectual property.

“It was kind of elegantly genius,” she said. “Trade isn’t about fighting over tariffs anymore. It’s a backdoor way to implement rules, a framework for deregulation.”

That was a turning point.

Taking to educating and organizing — two of her proven strengths — Wallach pieced together a coalition of unusual allies, leading to the creation of the Citizens Trade Campaign in 1992.

“We created a debate where there wasn’t one before,” she said of the group, which consists of civil rights, labor unions, family farms, think tanks and environmentalists, among others.

In the next 20 years on the trade beat, Wallach became a walking casebook of trade law as she fought through round after round of negotiations on global accords. The years of work are evident in her Capitol Hill office, where dog-eared copies of trade agreements line the shelves.

Win or lose, Wallach says she doesn’t subscribe to inertia, aiming to out-research, outsmart, outwork and out-organize her opponents — the majority of which are corporations.

“There’s a powerful set of special interests on the other side,” she said.

“The public is with us and our case is strong.”
_______________________________

Latin America's former first ladies bid to break macho presidential mould
Rory Carroll. The Guardian. June 7, 2011

Hillary Clinton failed to make the transition, but former first ladies across Latin America are following in her footsteps and campaigning to become presidents, in what may become a fresh wave of female heads of state in the region.

Former "primeras damas" in Guatemala, Honduras and Argentina have waded into traditionally macho Latino politics in the hope of staying in, or returning to, presidential palaces.

Their ambitions have provoked excitement and controversy, with supporters acclaiming a breakthrough for women – and critics concerned at the prospect of entrenched political dynasties.

In Guatemala, Sandra Torres divorced her husband, President Alvaro Colom, in order to run in September's election and circumvent a constitutional ban on relatives succeeding an incumbent. "I am getting married to the people," she tells rallies.

Some first ladies are depicted as proxies for husbands constitutionally barred from running again - but not even her harshest critics accuse Torres, 56, of that. She was widely viewed as the dominant character in the marriage and built up a political base while heading the government's anti-poverty programmes.

The Catholic church condemned the divorce, saying the institution of marriage was not negotiable, and election rivals called it electoral fraud. Otto Perez, a retired general who leads her in the polls, mockingly calls her "señorita" rather than "señora".

In Honduras, Manuel Zelaya, a former president ousted in a coup and freshly returned from exile, has tipped his wife Xiomara Castro to succeed him.

"The one who is engaged in politics is the first lady, I'm just a simple citizen," he told a news conference.

The announcement delighted supporters who were frustrated that Zelaya is constitutionally barred from standing again. The former first lady hinted she was ready to run. "Before the coup, I always thought that once the term finished, I would return to the house and dedicate myself to my family," she told AFP. "But I have talked about it with my children and things have changed."

Argentina's Cristina Kirchner, who succeeded her husband Nestor in 2007, is expected to win a landslide re-election in October thanks to a robust economy, a fractious opposition and sympathy over Nestor's death earlier this year.

"I'm not dying to be president, I already gave all I had to give," she said last month, suggesting she may not run again. But analysts said it was a ruse to build up "clamour". One senior ally said Cristina, as she is almost universally known, will confirm a re-election bid later this month.

It is a remarkable comeback for a combative veteran written off as a lame duck just last year after losing control of congress and, it seemed, the political agenda.

That so many first ladies were running for the presidency showed the hybrid nature of democracy in Latin America, said Michael Shifter, head of the Washington-based Inter-American Dialogue thinktank. "Opportunities in the political realm are clearly opening up for women, which is very heartening. At the same time, the first lady option reveals the fragility of institutions and the temptation to perpetuate oneself in power though a circuitous path."

The trend was not restricted to Latin America and was partly inspired by Hillary Clinton's 2008 bid for the Democratic nomination, said Shifter. "The phenomenon is self-reinforcing and is bound to spread as 'success' stories appear, such as the case of Cristina [Kirchner] in Argentina."

Women were kept largely on the sidelines of Latin American politics for centuries, not least by traditionalist leaders. Argentina broke the mould first in the form of Eva Peron, who was never president, but became a role model for first ladies by championing social programmes and mobilising support for her husband Juan's presidency until her death in 1952.

When Peron himself died in 1974 his third wife and vice-president, Isabel, was sworn in as his successor at Argentina's seat of government, the Casa Rosada. It was not a successful stint: she failed to control violent extremists from the left and right and lost power two years later. In 2007, she was charged with the disappearance of an activist in 1976, but fended off extradition and remained in Spain. Several "presidentas" have made it to the top without riding their husbands' presidential coat-tails: Nicaragua's Violeta Chamorro, elected in 1990, Chile's Michelle Bachelet, elected in 2006, and Costa Rica's Laura Chinchilla and Brazil's Dilma Rousseff, both elected last year.

Former first ladies inherit political machines but also their husbands' enemies. In April, a revolt in the ruling party of the Dominican Republic's president, Leonel Fernandez, forced his wife Margarita Cedeno to abandon presidential ambitions.

Peru's Keiko Fujimori – who became first lady in the 1990s after her father Alberto divorced her mother – lost last Sunday's presidential election after failing to shake off memories of corruption and human rights abuses during her father's administration.
_______________________________

The Future of Andean Trade Preferences
Kezia McKeague. Americas Quarterly. June 7, 2011

As U.S. trade policy has returned to the headlines in 2011, much of the discussion is focused on  packaging the three pending pacts (Colombia, Panama and South Korea) into one large bill or sequencing the consideration of each individual free-trade agreement (FTA). And more recently talk is centered on the impasse over Trade Adjustment Assistance (TAA).  But less attention is on other components of the broader trade agenda awaiting congressional action, namely extension of trade preference programs.

Back in February, Republicans scrapped a House of Representatives vote on extension of the Andean Trade Preferences Act (ATPA) to protest the lack of a firm timetable for moving the Colombia and Panama FTAs.  The result: duty-free treatment expired for Colombian and Ecuadorian imports.  Since then, the Obama administration has pressed for renewal, even as the future of this 20-year-old program remains in doubt.  Could the next renewal of ATPA be its last?

Initial ATPA participants included Colombia, Peru, Bolivia, and Ecuador.  The goal was a noble one: to encourage a shift away from illegal drug production by expanding alternative export sectors and promoting economic growth.  In 2008, Bolivia was suspended from the program when the Bush Administration deemed it incompliant with eligibility criteria related to counter-narcotics cooperation, and in 2010, Peru was dropped from the list of beneficiaries following approval of its FTA with the United States.

Now, only Colombia and Ecuador are left.  In Colombia’s case, the argument for one more renewal is sound.  Exporters are counting on a retroactive extension that will cover tariff costs since February, and they’ll continue to need the preferences until the FTA enters into force, assuming all goes well in Congress this summer.  The bigger picture is that Colombia is a key U.S. ally that deserves better than the uncertainty created by short-term extensions.  The most recent ATPA renewal, in December 2010, lasted only six weeks.

Looking ahead, the overdue ratification of the U.S.-Colombia FTA would leave Ecuador as the sole beneficiary of the regional preference program.  But congressional support is quite low for renewing Ecuador’s ATPA status.  Some business groups have long called for a review of Ecuador’s fulfillment of ATPA eligibility requirements, and the recent expulsion of the U.S. ambassador in Quito hasn’t helped Ecuador’s case.

Even with the restoration of diplomatic relations with Ecuador, a one-country preference program is not likely to endure.  Legislation to add Paraguay as a beneficiary country was introduced in the last Congress but hasn’t gained any traction, while Bolivia’s reinstatement would require an act of Congress—not on the table as long as bilateral relations remain at a standstill.

Nevertheless, ATPA should be viewed as a bipartisan success story.  The program became an important tool of commercial interchange between the United States and the Andean region, spurring job creation and investment in alternative industries.  From a foreign policy perspective, it helped institutionalize engagement with a set of countries whose long-term stability is crucial for U.S. interests.

These benefits are no less relevant for Bolivia and Ecuador, and a strong case could be made for maintaining trade preferences despite the deterioration of diplomatic ties.  For one thing, U.S. policymakers should be interested in discouraging drug production while sustaining legitimate economic sectors that face stiff competition in the absence of duty-free market access.

Yet Capitol Hill is unlikely to allow trade preferences to become automatic privileges for countries hostile to U.S. foreign policy.  Instead, developing countries in the region may be better served by a comprehensive reform of U.S. preference programs—an initiative that has gained congressional champions but has yet to advance in any serious way.

In the 20 years since Congress first passed ATPA, the Andean region has changed dramatically.  It’s no surprise that an effective trade policy would also change based on new realities.

*Kezia McKeague is a guest blogger to AQ Online. She is director of government relations at the Council of the Americas in Washington DC.

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