Latin America News Round-up
February 14, 2012
Guatemala Says it's Weighing Drug Legalization

For the latest news and developments on Haiti, please see CEPR's blog, "Haiti: Relief and Reconstruction Watch."

For archives of past Round-ups, please click here.

Brazil and Southern Cone
Brazil's Rousseff meets Chinese vice premier Wang. AFP
Brazil Finance Ministry Sees GDP Growth Accelerating In 2012. Dow Jones
Brazil editor killed in rough border town. AP
2014 World Cup Match: FIFA-1, Brazil-? In These Times
Argentine rights workers to Spain: Lay off Garzon. AP
Argentina's tax agency sanctions Monsanto. Reuters
Chile Urges Central Bankers to Consider Curbing Peso Rally. Bloomberg

Northern Andean Region
Chavez still feels the love in Venezuela slums. Reuters
Petrobras gives PDVSA till 2013 to enter refinery. Reuters
Colombia cbank sees 2011 GDP growth at 5.6 pct to 6 pct. Reuters
'Intelligence service colluded in journalist's assassination': Don Berna. Colombia Reports
'FARC will release 4 more hostages': Piedad Cordoba. Colombia Reports

Western Andean Region
Bolivia's Morales seeks to tap reserves to boost industry. Reuters
Lowlands Indians abandon Bolivia's president. AP
Ecuador Seeks to Restart Trade Agreement Talks With Europe. Bloomberg
Peru gay rights activists push for more rights in law. BBC

Mexico, Central America and Caribbean
Exclusive: Mexico told to probe Slim phone collusion charges. Reuters
Guatemala says it's weighing drug legalization. AP
Honduras Finance Minister resigns after IMF mission. Reuters
Legislative Elections in El Salvador: Possible Scenarios and Implications. Americas Quarterly
USAID contractor work in Cuba detailed. AP

Region: Trade, Security, Economy and Integration
Details remain before free trade accords with Panama, Colombia can go into effect. Miami Herald
Mystery disease kills thousands in Central America. AP
The Impact of the Gloomier Global Outlook on Latin America. Huffington Post

Brazil and Southern Cone [contents]

Brazil's Rousseff meets Chinese vice premier Wang
AFP. February 13, 2012

BRASILIA — President Dilma Rousseff held wide-ranging talks Monday with visiting Chinese vice premier Wang Qishan, whose country is Brazil's most important trading partner.

Wang is to attend a meeting of a high-level bilateral commission that tackles political, economic, trade, financial and industrial issues confronting the two emerging powers.

In 2009, China became Brazil's largest trading partner, overtaking the United States, and is now also the largest investor in the South American nation.

Last year, bilateral trade reached $77 billion dollars, with Brazil enjoying a trade surplus of $11.5 billion dollars.

Iron ore and soybeans represent more than 80 percent of Brazil's exports to China, which in turn sells mostly manufactured goods to its fellow member in the so-called BRICS group of emerging powers (Brazil, Russia, India, China and South Africa).

Brazilian manufacturers have been complaining about the influx of cheap Chinese imports.

Brazil is the world's sixth largest economy while China is the second biggest behind the United States.

"Brazil needs to seek greater penetration of its manufactured goods in China," the chief economist of National Confederation of Industry, Flavio Castelo Branco, told AFP.

Brazil is also seeking permission for its industrial groups, such as plane maker Embraer and bus manufacturer Marco Polo, to get a foothold in China.

Rousseff traveled to China last March when both countries signed a host of bilateral trade agreements.
______________________________

Brazil Finance Ministry Sees GDP Growth Accelerating In 2012
Dow Jones. February 13, 2012

BRASILIA (Dow Jones)--Government and private investment in the economy over the course of 2012 should help gross domestic product growth accelerate from 2011, Brazil's finance ministry said Monday in a report.

The ministry reiterated its GDP growth forecast of 4.5% in 2012, and said the economy expanded 3.2% in the first three quarters of 2011 compared with the same period a year earlier. The ministry also maintained its 2012 inflation forecast at 4.7%.

"We're starting 2012 with a more competitive exchange rate, lower interest rates, a solid fiscal and financial system situation, a low unemployment rate, inflation under control, a high level of confidence among consumers and businesses, and a strong public and private investment portfolio for the next few years in various sectors of the economy," the report said.

Government spending in its Growth Acceleration Program, or PAC, will increase 20.3% in 2012 from 2011 to BRL42.6 billion ($24.8 billion), the ministry said in the report.

The country is preparing to host the World Cup soccer championship in 2014, and the summer Olympics in 2016, and investments are being to prepare for both those events.

Large investments are also being made in oil production and transportation infrastructure.

-By Jeffrey T. Lewis of Dow Jones Newswires; +55 61 9278 5267; jeffrey.lewis@dowjones.com
______________________________

Brazil editor killed in rough border town
BRADLEY BROOKS. AP. February 14, 2012

The editor-in-chief of a newspaper that crusaded against corruption in Brazil's rough border region with Paraguay was shot dead, police said Monday, just days after another slain journalist's body was found in a different state.

Paulo Rodrigues, 51, was approached by two men on a motorcycle while driving late Sunday through the town of Ponta Pora in Mato Grosso do Sul state, where his Jornal da Praca newspaper and Mercosulnews.com website are based, police said.

The gunmen fired 12 shots, five of which hit Rodrigues. He died in a hospital hours later.

Rodrigues' killing comes after the shooting death last Thursday in Rio de Janeiro state of Mario Lopes, who wrote against corruption on his website Vassouras na Net. Police said Lopes already survived one attempt on his life last year, when he was hit by five shots while inside his office. He continued writing.

The deaths come at a time when journalism is under threat in Brazil, according to watchdog groups.

Reporters Without Borders said in a January report that Brazil plummeted to 99th place last year on its ranking of freedom of the press in nations around the globe. That was a drop of 41 places from the year before, a tumble attributed to violence against journalists.

The New York-based Committee to Protect Journalists said six Brazilian journalists were killed in 2011.

Leo Veras, a photo journalist who worked alongside Rodrigues, said that despite his scathing articles on corruption, his shooting remains a mystery.

"He was a critic, but he was beloved. We don't understand this cowardly crime at all," Veras said by telephone. "The newspaper defends the poor in our city and Paulo criticized corruption, but he was respected by leaders."

Veras and other another journalist who worked with Rodrigues said they didn't know of any investigative story that would have prompted his killing, despite the region being known for drug and gun trafficking, in addition to political corruption.

"I don't think a drug trafficker is responsible for this -- they don't really have the power nor would they want the attention. Whoever did this is either an idiot or is new to the area and trying to show off some power," he said.

Flavio Kayatt, the mayor of Ponta Pora where Rodrigues died and who in 2009 threatened to sue his newspaper for what he said were misleading articles on municipal corruption, said he considered Rodrigues one of the best journalists of the region.

"He was extremely competent and idealistic. We had to respect his opinions," Kayatt told the Campo Grande News in the state capital. "Of course, he had ideologies that didn't meet ours, but we had a good relationship."

The photo journalist Veras verified that Rodrigues and Kayatt were friendly and often met to discuss various issues facing the city.

"We've been sharply criticizing the mayor for eight years and have never been threatened," Veras said. "We're bewildered by this crime."

Associated Press writer Marco Sibaja contributed to this report from Brasilia.
______________________________

2014 World Cup Match: FIFA-1, Brazil-?
Rebecca Burns. In These Times. February 13, 2012

The proposed law would create exceptions to existing intellectual property law to allow FIFA to trademark anything that it considers an "official symbol."

What is the name of a soccer-loving Swiss nonprofit that demands tax exemptions and concessions on workers’ rights wherever it goes?

The answer, as Brazil is discovering as it prepares to host the 2014 World Cup, is the Fédération Internationale de Football Association (FIFA) – an organization that faces a long list of corruption charges and presents an even longer list of demands for countries hosting the world’s premier sporting event. (FIFA’s status as a charity dates back to its days as a small voluntary organization.)

The Brazilian Congress is being pessured by FIFA to pass a “General World Cup Law” that would alter existing national law in a number of areas the world football body considers key to its interests – including stricter copyright protection and enforcement, ownership of all event-related images and broadcast rights and a reversal of current policy of providing half-price soccer match tickets to students and seniors.

FIFA has scolded Brazil for failing to pass the law sooner. In December 2011, Secretary General Jerome Valcke promised at a press conference following a meeting of the FIFA Executive Committee that the law would be approved by a commission considering it within the Brazilian Congress. But lawmakers decided to delay the vote, asserting that there were still too many problems with the bill and that they had only received the most recent changes to it – including language that would make Brazil broadly responsible for security incidents during the event – hours before a scheduled vote in December. They will likely consider the bill again in February.

Countries submitting bids to host the World Cup must agree to eight conditions – including tax exemption, exclusive commercial rights and visa waivers for FIFA affiliates. In October 2011, Brazilian legislators passed a law granting a comprehensive four-year tax exemption to the soccer body, its member associations and its partners – including Coca-Cola, VISA and Adidas.

Among the most controversial changes proposed by the World Cup law is a provision permitting the establishment of special courts that could try crimes such as the selling of pirated material. Brazilian Supreme Court Justice Gilmar Mendes has said that accepting FIFA’s demands and allowing the creation of separate courts would amount to issuing Brazil a “certificate of banana republic.”

The proposed law would also create exceptions to existing intellectual property law to allow FIFA to trademark anything that it considers an “official symbol” and create new categories of crimes – among them, “undue utilization of official symbols.” Trademarks registered by FIFA during the 2010 World Cup in South Africa included “World Cup 2010,” “South Africa 2010” and even “2010.” According to the Peoples’ Cup Committees (PCC), a group of activists from Brazil’s 12 World Cup host cities who oppose the bill, FIFA has already applied for more than 1,000 such trademarks in Brazil.

FIFA insists that the Brazilian government has already agreed to the conditions contained in the World Cup law, but PCC activists contend that the concessions required by FIFA were never made public. An agreement between the Brazilian executive branch and FIFA “does not have the ability to require legal changes,” a PCC representative says.

The 2010 World Cup in South Africa resulted in a record $3 billion in income for the organization, $100 million of which it contributed to development projects in the country. At the end of 2010, FIFA had $1.2 billion in reserve.

Meanwhile, the South African Government spent $4.3 billion preparing for the games while attracting an estimated $1.1 billion in tourism spending – an outcome that contradicts the Brazilian government’s claim that the Cup will provide an economic boost.

According to StreetNet International, a group that organizes street vendors, as many as 100,000 informal traders lost their livelihoods in South Africa due to laws prohibiting them from selling merchandise in the vicinity of the stadiums. Such “exclusion zones” are also included in Brazil’s proposed World Cup Law, and StreetNet and local labor organizations are calling for amendments that guarantee street vendors’ right to operate in the municipalities where they are registered. The imposition of anti-labor provisions in the run-up to the World Cup, says Maira Vannuchi, a team member of StreetNet Brazil, “shows that the federal government is more concerned with having an image as a big emerging country than with the welfare of the citizens.”
ABOUT THIS AUTHOR

Rebecca Burns, an In These Times staff writer, holds an M.A. from the University of Notre Dame's Kroc Institute for International Peace Studies, where her research focused on global land and housing rights. A former editorial intern at the magazine, Burns also works as a research assistant for a project examining violence against humanitarian aid workers.
______________________________

Argentine rights workers to Spain: Lay off Garzon
AP. February 13, 2012

(AP)  BUENOS AIRES, Argentina — The president of the Argentine human rights group Mothers of the Plaza de Mayo said Friday that Spain's prosecution of crusading judge Baltasar Garzon is an "assault on the entire human race."

Hebe de Bonafini said she is filing a habeus corpus petition with Spain and the European human rights court demanding an end to the trials that have already effectively ended Garzon's career.

Garzon is a hero in Latin America for filing charges against dictactors in Chile and Argentina long before those countries were able to handle their own human rights trials.

De Bonafini said it's time for Argentines to speak out against what she called a threatened comeback of the same forces that supported right-wing leaders from the dictatorship era such as Adolf Hitler, Francisco Franco, Benito Mussolini and Alfredo Stroessner.

"You have to be very careful: These bugs are like cockroaches, and after the atomic bomb hits them, everybody thinks they're dead, but no," she said. "Germany still has its Nazis, Spain its Franquistas, Italy its Mussolinistas and in Paraguay you can see how the people of Stroessner still act. So you have to be very careful."

Garzon was convicted Thursday in Spain of illegally approving wiretaps in a domestic corruption probe and barred from the bench for 11 years.

Next up are trials related to his human rights work. Garzon is accused of overstepping his authority by investigating alleged right-wing abuses committed during and after the Spanish Civil War that Franco's forces won, despite an amnesty.
______________________________

Argentina's tax agency sanctions Monsanto
Reuters. February 13, 2012

Argentina's AFIP tax agency has suspended Monsanto from a registry of grains traders, a step that will temporarily cost the company tax benefits but should not affect its operations, Monsanto said in a statement.

AFIP, which published the measure in the government's Official Gazette, did not say why the U.S. biotech giant had been suspended from the registry. Monsanto is registered due to its grains elevator activities.

Tax inspectors in Argentina, one of the world's biggest suppliers of soybeans, corn and wheat, have been probing dozens of agricultural exporters for suspected evasion and several have been suspended from the registry pending.
______________________________

Chile Urges Central Bankers to Consider Curbing Peso Rally
Randall Woods and Sebastian Boyd. Bloomberg. February 13, 2012

Feb. 13 (Bloomberg) -- Chile’s central bank should consider joining its peers and resume dollar purchases to curb a rally in the peso, South America’s best-performing currency in the past month, Deputy Finance Minister Julio Dittborn said.

“Obviously it’s a concern that the peso is strengthening so much,” he said in a telephone Feb. 10 interview, when he was acting Finance Minister during Felipe Larrain’s vacation. “The central bank should evaluate whether it is appropriate to intervene again or not like it’s done in previous years.”

The peso has appreciated 6.2 percent in the past month and 8.1 percent since the central bank ended daily auctions on Dec. 16 through which it bought $12 billion last year. The currency of the world’s largest copper producer may continue to strengthen on rising metal prices, Leonardo Suarez, chief economist at Larrain Vial SA, said on Feb. 9.

The government, whose fiscal policy doesn’t have a “strong” influence on the exchange rate, isn’t studying measures to weaken the peso, Dittborn said. The ministry instead will take care not to implement measures that strengthen the currency. Whether to buy dollars is a decision for the central bank, he said.

Colombia started buying at least $20 million a day to weaken its currency on Feb. 6, while Brazil’s central bank bought dollars in the currency forwards market on Feb. 3 for the first time since July.

‘Red-Flag Zone’

The Chilean peso gained 0.7 percent to 476.13 per U.S. dollar as of 8:30 a.m. in Santiago, according to prices from Datatec, an interbank and over-the-counter trading system.

“As we approach the red-flag zone of 470 to 460 pesos, the first thing you’d expect to see is government verbal intervention,” said Alex Pigatto, a trader at Nomura Securities Inc. in New York.

If the central bank keeps its benchmark interest rate on hold at 5 percent, the probability of a central bank intervention in the currency increases, he said.

“It’s important to us that prices in the economy remain aligned with long-term prices,” Dittborn said. “If the price of the dollar falls a lot now, it’s a concern for some assets.”

Chile’s fruit producers’ federation, known as Fedefruta, has asked the central bank to take steps to weaken the peso, Antonio Walker, president of the industry group, said by telephone last month.

Not Time

Chile’s central bank, which operates under a flexible exchange-rate regime, intervened in the currency twice under the former bank President Jose De Gregorio.

Rodrigo Aravena, chief economist at Banchile Inversiones in Santiago, said it was premature to expect Chile’s central bank to resume dollar purchases now.

“We’re far from an intervention,” he said by phone Feb. 10. “The real exchange rate is above the levels of the previous interventions. It’s not the right time.”

The peso would have to strengthen to 463 per dollar for the real exchange rate to match levels when the central bank intervened in 2011, Jorge Selaive, chief economist at Banco de Credito & Inversiones, said by telephone Feb. 10.

Policy makers could achieve the same effect on the peso as they did in 2011 by buying $3 billion in dollars because the bank has started to reduce borrowing costs, he said. By contrast, the central bank raised its key interest rate five times in the first half of last year.

“Any exchange-rate intervention would probably be more successful than in 2011 because the monetary policy tendency is for easing,” Selaive said.

Stimulus Measures

The government also is “far” from taking steps to stimulate growth, with the economy expected to expand between 4 percent and 5 percent this year, Dittborn said.

The jobless rate was 6.6 percent in the three months through December, the lowest rate since before the recession of 2009, while gross domestic product expanded an estimated 6.3 percent in 2011, he said.

Dittborn, 60, has a Master’s in Economics from the University of Chicago and has taught at schools including the University of Chile, the Pontifical Catholic University of Chile and Andres Bello University. He was a member of Congress from 1997 to 2009.

--Editors: Philip Sanders, James Attwood.

To contact the reporter on this story: Randall Woods in Santiago at rwoods13@bloomberg.net.

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

Northern Andean Region [contents]

Chavez still feels the love in Venezuela slums
Andrew Cawthorne. Reuters. February 14, 2012

CARACAS (Reuters) - Even the cats and dogs love Hugo Chavez in the backstreets of La Vega.

At least that is what grateful owners joke as they line up with their pets to take advantage of the latest initiative by the socialist Venezuelan president's network of grassroots organizations: subsidized neutering.

"If the opposition takes over, we lose all these services that Chavez has given us. We go back to zero," said Laura De Pernalete, helping organize the sterilization program in the poor Caracas neighborhood.

"La Vega is 100 percent behind Chavez."

The plethora of "missions" bringing services to Venezuela's slums and impoverished rural areas - from subsidized food to Cuban-staffed health clinics - has underpinned the socialist Chavez's popularity among the poor during 13 years in power.

He is successfully stoking fears that his signature welfare projects, such as the "Barrio Adentro" ("Inside the Slum") healthcare network, will be dismantled should the opposition win the country's presidential election on October 7.

Despite opposition euphoria at selecting a young and streetwise unity candidate - Miranda state governor Henrique Capriles - to fight the election, Chavez's foes know how tough it will be to win over his loyal and passionate support base.

Piling money into more social projects in a pre-election spending spree, Chavez has an edge in polls ahead of the vote.

Yet there is disillusionment among some "Chavistas", as his supporters are known, and surveys show that about a third of Venezuelans remain undecided.

An admirer of Brazil's model of free-market economics with a solid social conscience, Capriles insists he would keep the best of Chavez's welfare programs, and even build on them.

"I want to expand them, and get rid of the corruption and inefficiency that characterizes them," Capriles told Reuters on a recent campaign tour, adding that more than half the Barrio Adentro clinics in his Miranda state were abandoned.

That message, however, has not reached those in the queue for animal neutering in La Vega.

"The opposition wants to stop all this," said Hilda Jimenez, cradling a couple of cats. "Governments did nothing for the poor in the past. Only Chavez has bothered with us."

OMNIPRESENT CHAVEZ

The opposition paraphernalia plastered all over middle-class Caracas neighborhoods was entirely absent from the tatty streets around her. Instead, the ubiquitous red of Chavez's ruling Socialist Party, and images of "El Comandante", were everywhere.

Down the hill, dozens lined up to shop in a state-run Mercal store, where basic products like milk, chicken, oil, rice, beans and sugar are sold at a quarter of the normal price.

Shop workers scoffed when asked about photos in opposition media showing largely empty Mercal stores.

"As soon as products come in, people buy them immediately because the prices are incredible!" one said. "It's laughable the right-wing tries to present that as something bad."

Despite their visceral hatred of opposition leaders, whom they broadly view as representatives of an old, discredited political elite who never had any interest in Venezuela's poor majority, grassroots Chavez activists are realistic.

They know they have a fight on their hands to stop the energetic Capriles from developing momentum. They plan to highlight his "bourgeois" background in contrast to Chavez's humble upbringing by his grandmother in a rural shack.

They will also seek to target Capriles for his role in a murky episode at the Cuban embassy in 2002 when he was accused of fomenting a riot during the chaos surrounding a short-lived military coup against Chavez. He says he was mediating.

"We can hang his dirty linen out. He's a coupster. He comes from a privileged background. He has never lived like us," said Eriberto Hurtado, who works for one of the thousands of 'communal councils' Chavez has set up around Venezuela.

"Capriles does have strong support though, I'm not doubting that. We have to encourage our people to work hard."

"SOCIALIST" CARWASH

One Caracas district opposition activists rarely dare enter is the militantly pro-Chavez "January 23" slum set on hillsides perched above his Miraflores presidential palace.

Named for the date when a Venezuelan dictator fell, the neighborhood is heavily armed and locals played a major role taking to the streets and demanding Chavez's return after the brief putsch against him in 2002.

Chavez habitually votes at a school there, says he often stares up to the jumble of houses piled on top of each other when meditating in his office, and has a strong emotional connection with residents.

"They don't have a chance here. Come up here? They'd be crazy. I don't even want to talk about that garbage," said Martin Campos, 42, a former soldier and Chavez loyalist.

"We want Chavez until 2021, and then Rosines," he laughed, referring to the president's daughter.

Now working on logistics for Chavez's public events and caravans, Campos runs a busy small business in his spare time cleaning vehicles: "The Socialist Carwash".

Such marketing fits in well in an area where Chavez's figure and words adorn walls next to other Latin American radicals like Ernesto "Che" Guevara, Emiliano Zapata and Fidel Castro.

A rare poster for Capriles remains on one street - but is covered with obscene graffiti and a stencil of an AK-47 assault rifle.

(Editing by Daniel Wallis and Kieran Murray)
______________________________

Petrobras gives PDVSA till 2013 to enter refinery
Reuters. February 13, 2012

Feb 13 (Reuters) - Brazil's Petrobras will allow its Venezuelan counterpart PDVSA to assume its stake in the Abreu e Lima refinery as late as 2013 when operations are expected to begin, Petrobras' supply director Paulo Roberto Costa said on Monday.

Venezuela's state oil company PDVSA said last week it had managed to extend until the end of March a deadline to make its contribution to a long-delayed refinery project in northeast Brazil.

PDVSA had failed earlier in February to secure a $10 billion loan from Brazil's state-development bank BNDES that it was counting on to pay its 40-percent stake in the Abreu e Lima facility.

This was the latest of several deadlines that the Venezuelan company had missed in a six-year saga.

FUEL IMPORTS

Chief Executive Jose Sergio Gabrielli said last week that Petrobras' fourth-quarter earnings fell 26 percent in part because of its need to import record amounts of gasoline in December.

Gabrielli said it was impossible for the company to foresee demand for the automobile fuel growing at such a high multiple of economic growth.

This did not stop Costa from forecasting the company's 2012 imports of the motor fuel to be similar to last year's imports.

He also said that gasoline imports by Petrobras in January were up 36 percent from a year ago. The company had to import gasoline in early 2011 as well due to the spike in ethanol prices after the main cane region entered the interharvest period and production of the biofuel declined.

This prompted motorists to switch to gasoline because it was a better buy than ethanol in terms of the mileage for the price of each of the fuels. Millions of cars in Brazil have flex-fuel technology that enables them to run on either or both mixed.

Costa said in December that Petrobras gasoline imports had reached a record 70,000 barrels per day. (Reporting by Rodrigo Viga Gaier; Writing by Reese Ewing; Editing by Lisa Shumaker)
______________________________

Colombia cbank sees 2011 GDP growth at 5.6 pct to 6 pct
Reuters. February 13, 2012

Feb 13 (Reuters) - Colombia's central bank chief Jose Dario Uribe said on Monday that the economy likely grew between 5.6 percent and 6.0 percent in 2011, up from an expansion of 4.3 percent in 2010.

He also said that economic growth in the fourth quarter last year was probably 5.6 percent to 5.7 percent. (Reporting by Jack Kimball)
______________________________

'Intelligence service colluded in journalist's assassination': Don Berna
Charles Parkinson. Colombia Reports. February 13, 2012

Former AUC paramilitary commander "Don Berna" has implicated a senior intelligence official in the 1999 assassination of journalist Jaime Garzon, reported Colombian media Monday.

According to Diego Fernando Murillo, alias Don Berna, then-Assistant Director of Colombia's DAS intelligence service Jose Miguel Narvaez was complicit in the assassination of Garzon, who was believed to be a member of the FARC.

Murillo's testimony claims that Narvaez was not content with the original assassination plan prepared by then-AUC commander Carlos Castaño, and colluded to provide military intelligence regarding Garzon's work and travel activities to facilitate the assassination.

According to Murillo the crime was planned in a rural location in the northwestern department of Cordoba, which was Castaño's headquarters at the time.

On Friday August 13 in 1999 Garzon was driving to work when two men on a motorbike with hidden plates rode up to his car and shot him five times. The death of the popular journalist, comedian, presenter and peace activist caused an outpouring of grief in Colombia and has remained one of the most prominent unsolved assassinations of recent decades.
______________________________

'FARC will release 4 more hostages': Piedad Cordoba
Mary Cecelia Bittner. Colombia Reports. February 13, 2012

Ex-senator and peace activist Piedad Cordoba has announced the FARC will now release a total of ten hostages, reported local media Monday.

The additional four planned releases were reported by Cordoba Sunday shortly after Colombian President Juan Manuel Santos announced that he would allow the use of Brazilian helicopters in the hostage release operation. She announced, "I am speaking for the FARC, who want to give Colombia the good news that they are working towards the unilateral goal of the liberation of ten hostages."

She said preparations for the release and reception of the hostages by the Red Cross had begun.

Although she could not commit to a release date, Cordoba estimated that the process could take up to six weeks.

The six hostages who the FARC has been promising to release since December are Army Officer Alfonso Beltran Carlos Franco, and policemen Jose Duarte, Cesar Augusto Lasso Monsalve, Jorge Trujillo Solarte, Jorge Humberto Romero, and Jose Libardo Forero. The names of the four new hostages are unknown.

The rebels suspended their release "indefinitely" after Colombia said it would not use Brazilian helicopters, but President Juan Manuel Santos retracted that position Sunday.

Western Andean Region [contents]

Bolivia's Morales seeks to tap reserves to boost industry
Carlos Quiroga. Reuters. February 14, 2012

LA PAZ, Feb 13 (Reuters) - Bolivia's President Evo Morales outlined plans on Monday to use about 10 percent of the central bank's record foreign reserves to foment industry in one of Latin America's least-developed economies.

Morales, a leftist who has tightened state control over the economy by nationalizing natural gas fields, mines and utility companies, says large-scale infrastructure and industrial projects are key to fighting entrenched poverty in the Andean country.

The former coca farmer said he had sent a bill to Congress that would set aside an initial $1.2 billion in currency reserves to establish a state-run industry development fund.

"This is a fund for productive industrialization. This fund will only be used to add value to what we produce," Morales told reporters as he outlined the proposal, which will likely win approval in the ruling party-controlled Congress.

"It's a small part of the foreign reserves, which will go toward industrializing our natural resources," he added.

Morales, who has long considered the possibility of tapping the reserves to help finance investments, said the Fund for the Productive Industrial Revolution, or FINPRO, would be used for state company projects and mixed private-public schemes.

Bolivia is South America's leading natural gas exporter - supplying neighbors Argentina and Brazil - and is rich in metals including silver, zinc and tin.

RECORD HIGH RESERVES

Surging commodities exports in recent years have lifted the central bank's foreign currency reserves to a record high of $12.4 billion, just over half of the country's gross domestic product.

When Morales took office in 2006, the reserves stood at $1.7 billion. He told Reuters in a 2010 interview that he would only consider tapping the reserves if they exceeded $10 billion.

Morales' decision to dip into the savings could raise eyebrows on Wall Street as the country considers returning to global credit markets for the first time in more than 70 years.

Meanwhile, Bolivia's long-announced intention to resume global bond sales has been delayed despite ratings upgrades by Fitch Ratings, Moody's Investors Service and Standard & Poor's, which have praised Morales' "prudent" macroeconomic policies.

Morales, a fierce critic of U.S. foreign policy and an ally of Venezuela's Hugo Chavez, is not the only Latin American leader seeking to take advantage of years of healthy foreign currency inflows.

In Argentina, President Cristina Fernandez has earmarked billions of dollars of central bank reserves to make debt payments for a third consecutive year, a policy that has allowed her to maintain generous levels of state spending.

While Morales' drive to boost the state's role in the economy pleases his support base, it has rattled foreign investors and energy companies operating in the country.

Despite high-profile government announcements of industrial initiatives in the energy and mining sectors, few projects have come on line. Some analysts say weak adminsitration in newly strengthened state companies is to blame. (Writing by Helen Popper, Editing by Dan Grebler, Gary Crosse)
______________________________

Lowlands Indians abandon Bolivia's president
CARLOS VALDEZ. AP. February 13, 2012

LA PAZ, Bolivia -- Bolivia's long-downtrodden indigenous majority adored President Evo Morales as he championed a new constitution that promised the nation's 36 ethnicities unprecedented autonomy.

But three years after voters overwhelmingly approved that document, making poor, landlocked Bolivia a "plurinational" republic, the country's first indigenous president is under attack for essentially ignoring it.

Lowlands Indians have quit his Movement Toward Socialism over his insistence, without seeking their consent, on building a road across a virgin jungle preserve and for forging ahead with natural-gas projects on their traditional lands.

Neither marathon marches nor weeks-long occupation strikes have swayed Morales, an Aymara Indian who was a rabble-rousing coca growers' union leader before first winning the presidency in December 2005.

Fellow native Bolivians, ironically, likely now represent the biggest threat to Morales' goal of winning re-election in 2014 to a third term. Even his allegiance among the Aymara and Quechua who dominate Bolivia's more populous highlands is flagging.

Lowlands peoples' anger with Morales was on display at a Jan. 25 banquet in the eastern city of Santa Cruz, where leaders of Bolivia's main lowlands indigenous federation, known as CIDOB, forged an alliance with Santa Cruz's business-friendly Gov. Ruben Costas, Morales' arch-nemesis.

Three years earlier, federation activists had battled Costas' confederates in the streets with sticks and rocks, defending Morales' revolution against a pro-autonomy campaign by the wealthy agribusinessmen Costas represents.

Now the two groups were breaking bread at an exclusive club where Bolivia's indigenous were more accustomed to waiting tables.

"Traitors are never scarce," a wounded Morales complained afterward. "I don't understand how some of our leaders can sign agreements with representatives of big landowners, with the oppressors of the past."

Morales had, after all, expropriated tens of thousands of acres of land the government had declared fallow or ill-gotten from major landowners and turned it over to indigenous groups with historic claims.

Nothing formal was signed at the Santa Cruz banquet, but formerly implacable foes entered a marriage of convenience.

The target was Morales.

No longer could the Aymara Indian who knew hunger as a child count on the unwavering support of the more than three in five Bolivians of native origin who re-elected him in December 2009 with 63 percent support - a symbol of native empowerment after centuries of suppression.

The new constitution he championed, which voters approved earlier that year, stipulates without specifying how that Bolivia's indigenous be consulted in matters affecting their lives and traditional lands.

In practice, Morales ignored a central aspect of the charter, his critics say.

CIDOB calls Morales a hypocrite for insisting on reviving plans to build a 190-mile (300-kilometer) highway across a virgin jungle preserve where 15,000 indigenous people live off hunting, fishing, gathering fruit and subsistence farming. Park inhabitants fear the road would bring an influx of settlers who would destroy their habitat by felling trees and polluting rivers.

Morales had suspended the plans to splice Amazon jungle with the Brazilian-funded highway after protesters marched on the capital last year. A ham-fisted attempt by security forces to disperse the marchers by force failed, triggering the resignations of several top Morales ministers.

Last week Morales scheduled a June regional referendum to vote on the highway.

CIDOB has called for a boycott, arguing that migrants and coca-growers who are relative newcomers to the 4,600-square-mile (12,000-square-kilometer) Isiboro-Secure Indigenous Territory National Park, or TIPNIS, will outvote its native inhabitants.

CIDOB's ranks encompass most of Bolivia's ethnicities, including the Guarani, the country's third-largest.

Its disaffection has prompted five allied congressmen to defect from Morales' party, stripping it of its two-thirds majority in the lower house though it still holds that margin in the Senate.

The Guarani inhabit southeastern provinces rich in natural gas, Bolivia's No. 1 export, yet most live in poverty. They have recently blocked several key energy projects over not being consulted, demanding compensation for anticipated environmental damage.
Guarani protesters in the community of Takovo Mora held up construction of a natural gas liquefaction plant there with a two-week occupation in January because the government approved its environmental impact study without their input.

They demanded $39 million as compensation but stood down after Morales promised a good-faith solution.

"We feel trampled upon. The constitution and the laws require that the indigenous be consulted. But they aren't heeded," said Higinio Coca, a Guarani leader in Takovo Mora.

"We live in a rich region but there's not a single quality health clinic. Education is basic. Our kids must walk to other towns after primary school."

Former hydrocarbons minister Jose Luis Gutierrez, defending Morales, accused indigenous leaders of using the 2009 constitution as a pretext for economic blackmail.

"They are looking for a cut. They want 10 percent of every project. That's a lot," he said.

Bienvenido Zacu, an ethnic Guaraya congressman and longtime ally of Morales, puts the blame squarely on the president.

"The problem with the indigenous emerged because the government refuses consultation," he said.

Morales argues that the disputed highway through TIPNIS, like gas and oil development, are essential to reducing Bolivia's 54 percent poverty rate.

"This is a problem of poverty," he told a Feb. 9 news conference. "Development and the environmental are not in conflict. That's false."

Maria Teresa Zegada, a sociologist at Cochabamba state university, says that once the new constitution passed "Morales distanced himself from his initial rhetoric of empowering the indigenous and took a pragmatic turn."

That helps explain why his approval rating has been hovering around 40 percent for the past year, she says.

Luckily for Morales, prices for natural gas and minerals remain high. Bolivia earned a record $9.1 billion from exports last year, up 29 percent from 2010.

It also helps that the traditional opposition is weak.

Most of Morales' main non-indigenous foes either face trial on corruption charges or have been forced into exile. They say they are targets of political persecution, noting that Morales' government has not been immune from corruption.

Last month, a former close Morales ally was sentenced to 12 years in prison for taking bribes and influence-peddling while president of the state-owned oil company.

Associated Press writer Frank Bajak contributed to this report from Lima, Peru.
______________________________

Ecuador Seeks to Restart Trade Agreement Talks With Europe
Nathan Gill. Bloomberg. February 14, 2012

Ecuador is seeking an “affirmative response” from the European Union to restart trade talks stalled since the government of South America’s seventh-biggest economy stopped negotiations in 2009.

Ecuador, the world’s biggest banana exporter, wants a “commercial agreement for development” that includes technology and knowledge transfer, Francisco Rivadeneira, deputy minister of commerce at the Foreign Ministry, said today in an e-mailed statement. President Rafael Correa has said he won’t sign a traditional free trade agreement.

“There is openness on the part of the European bloc to have a dialogue about all issues,” Rivadeneira said. “We hope the questioning process is concluded.”

Negotiations have stumbled over intellectual property rights and public purchases, Foreign Minister Ricardo Patino said last week. Rivadeneira met with Antonia Van Gool, the chief of the EU’s mission for Ecuador, in Quito today to work out details of talks ahead of Patino’s planned visit to Brussels on March 19, according to the statement.

Ecuador broke off negotiations with the EU in 2009 amid a dispute over tariffs on Ecuador’s banana exports.

To contact the reporter on this story: Nathan Gill in Quito at ngill4@bloomberg.net

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

Peru gay rights activists push for more rights in law
Mattia Cabitza. BBC. February 13, 2012

On 12 February 2011, the Peruvian police beat a group of gay, lesbian, bisexual and transgender people who were kissing in the capital's main square to protest against discrimination.

A year later, Lima's gay movement is renaming the anniversary as Peru's Stonewall, in reference to the riots in New York in 1969 which gave rise to the global gay rights movement.

But much remains to be done for LGBT [lesbian, gay, bisexual and transsexual] people in Peru.

For more than seven years, Crissthian Olivera has been trying to get justice for what he says was discrimination because of his sexual orientation.

It was August 2004, and he and his then partner were sitting at a cafe inside a supermarket in the Peruvian capital.

"We were looking at each other in a romantic way," he recalls.

"We weren't kissing or hugging.

"But a member of staff came over and told us that we had to change our behaviour."

The staff told them they had to sit facing each other, and refrain from showing affection there because there were children and families around.

"From being customers at the establishment," he says, "we were suddenly treated almost like criminals, basically because of our sexual orientation.

"They don't speak like this to heterosexual couples."

Mr Olivera sued the supermarket for discrimination. But his case was dismissed by the courts.

"His case is common," says Giovanny Romero, the president of MHOL, the Homosexual Movement of Lima.

"In Peru, democracy is neither democratic nor inclusive. There are people like us who live in the margins of the margins of society.

"We are liberal only in economic terms. But as far as human rights, we still live in the Middle Ages."
'No complaints'

Carlos Chipoco, a lawyer at the Commission for Justice and Human Rights in the Peruvian Congress, says gay people need to speak up more to protect their rights.

"Every day, we receive complaints about violations of human rights," he says, "but nothing from the gay community.

"They should try to push for constitutional actions that protect their rights.

"But it's not just about having laws. Many of our laws are not respected.

"What we need are movements that demand that judges apply sanctions to those who don't respect our laws."

Giovanny Romero rejects such criticism. MHOL, he says, has brought a legal action against a clinic that forbade one of its members from donating blood.

He adds that the movement, as well as other organisations, has long pushed for recognition of LGBT rights in the courts and through better legislation.

The need for more protection of this minority group is hard to ignore.

According to an investigation by MHOL, one person is killed each week in Peru because of his or her sexual orientation or gender identity.

Yet, confronted with such homophobia - which Carlos Chipoco himself recognises is widespread - the Peruvian Congress has yet to debate proposed legislation that would severely sanction all hate crimes.

"It would be the first step of a country that begins to value our lives," says Mr Romero.
Continue reading the main story

"It's about protecting the right of people to live, and sanction in an exemplary way all hate crimes."

Mr Chipoco agrees that the law is needed, but he says that consensus is hard to reach among politicians.

"There are many who are very conservative and have a religious belief that homosexuality is a sin," he says.

"But we will probably present the draft legislation again, and let's hope it can advance."
'Keep fighting'

Mr Olivera believes achieving better rights in Peru will be difficult.

He recounts the story of Jefry Pena, a transsexual woman who in 2007 was brutally beaten by a group of men, after the police refused to help her when she was being chased by her attackers.

Such hate crimes are not particular to Peru, but the country lags behind some others in the region on LGBT rights.

Argentina recognises gay marriage and adoptions; Colombia has progressive public awareness campaigns; and "Brazil Without Homophobia" has been a government initiative there for years.

Nevertheless, Mr Olivera remains optimistic, and wants his case to be heard at the Inter-American Commission of Human Rights.

"We need to change our society and culture," he says, "and to erase all those prejudices about homosexuality.

"Our rights will not magically fall from the sky. That's why we need to keep on fighting."

Mexico, Central America and Caribbean [contents]

Exclusive: Mexico told to probe Slim phone collusion charges
Patrick Rucker. Reuters. February 13, 2012

(Reuters) - A court has ordered Mexico's competition watchdog to investigate claims of collusion between businesses controlled by telecommunications tycoon Carlos Slim and Spain's Telefonica, according to a court document seen by Reuters on Sunday.

The federal court asked the Federal Competition Commission (Cofeco) to determine whether there was anything improper in Isidro Faine, a vice-chairman on the Telefonica (TEF.MC) board, also sitting on the board of Slim's financial group Inbursa (GFINBURO.MX).

"(It) could possibly mean that the said companies find it easier to make deals ... that reduce competition," the court said in the January 30 document, a copy of which was obtained by Reuters.

The ruling is the latest twist in a legal complaint brought against Slim and Telefonica last year by companies owned by Mexico's two top broadcasting moguls, Emilio Azcarraga of Televisa and Ricardo Salinas of TV Azteca, who are keen to challenge Slim's dominance of the telephone market.

The Organisation for Economic Co-operation and Development has slammed the lack of competition in Mexico and estimates the country's phone and internet users were overcharged $13.4 billion each year from 2005 to 2009.

Azcarraga's Bestphone and Operbes, along with Salinas' Iusacell and Unefon, are among the companies which brought the March 2011 complaint.

Cofeco earlier this month rejected a bid by Televisa to buy 50 percent of Iusacell, citing concerns about the proposed alliance between the two top broadcasters.

Slim's telephone companies dominate Mexico with home phone giant Telmex controlling about 80 percent of landlines while Telcel has 70 percent of the country's mobile phone customers.

Telefonica has about 22 percent of Mexico's cell market, and the two companies are also leaders in much of the Latin American telecoms market.

A Telefonica spokesperson declined to comment on the court order, and a spokesman for Slim had no immediate comment. Faine was not immediately available for comment.

Cofeco said it had been notified of the court's demand in the Slim-Telefonica case. "Cofeco is aware of the court order and will act accordingly," an official at the regulator said.

Early in 2011, the companies linked to Televisa and TV Azteca asked Cofeco to investigate Faine's board positions, as well as a bilateral deal reached in late 2010 for Telefonica to pay much higher rates to access Slim's phone network than others in the market were willing to pay.

The court has not ruled on the merit of the claims made in the complaint but instead ordered an investigation to look at the possible conflict of interest that Faine faces as a board member of both a Slim company and of one of Slim's major rivals.

Cofeco declined to investigate the charges in 2011, saying the complaint did not provide enough evidence of collusion. The court order means that the regulator must now take up the matter again, or challenge the order in a federal appeals court.

(Additional reporting by Jean Luis Arce)
______________________________

Guatemala says it's weighing drug legalization
ROMINA RUIZ-GOIRIENA. AP. February 13, 2012

GUATEMALA CITY -- U.S. inability to cut illegal drug consumption leaves Guatemala with no option but to consider legalizing the use and transport of drugs, President Otto Perez Molina said Monday, a remarkable turnaround for an ex-general elected on a platform of crushing organized crime with an iron fist.

Perez said he will try to win regional support for drug legalization at an upcoming summit of Central American leaders next month. He got his first public support on Monday at a security meeting with El Salvador President Mauricio Funes, who said he too is willing to consider legalization.

"We're bringing the issue up for debate. Today's meeting is intended to strengthen our methods of fighting organized crime," Perez said with Funes. "But if drug consumption isn't reduced, the problem will continue."

But after returning to El Salvador, Funes said he personally doesn't support legalization because it would "create a moral problem," though he supports Perez's right to bring up the issue for consideration.

"Imagine what it would mean," Funes said. "Producing drugs would no longer be a crime, trafficking drugs would no longer be a crime and consuming drugs would no longer be a crime, so we would be converting the region in a paradise for drug consumption. I personally don't agree with it and I told President Otto Perez so."

Perez's proposal comes as drug cartels have taken over large swathes of Guatemala and other Central American countries, fueling some of the highest murder rates in the world. A May 2011 report by the U.S. Congressional Research Service said that 95 percent of all cocaine entering the United States flows through Mexico and its waters, with 60 percent of that cocaine having first transited through Central America.

In just a month in office, Perez has transformed himself from one of Latin America's toughest advocates of military action against drug cartels to one of the region's strongest voices for drug legalization. His stance provoked strong criticism from the United States over the weekend, and intense discussion inside the country, where Guatemalans argued for and against his proposal in the streets and on radio talk shows.

One analyst said Perez's about-face could be designed to pressure the U.S. into providing military aid, currently banned by the U.S. Congress because of past human rights abuses.

"This is kind of like a shot across the bow, saying if you don't help us, this is what we can do," said Anita Isaacs, a Guatemala expert and professor of political science at Haverford College.

But Perez's backers said the change grew out of the realization that if demand continues in the U.S., the small country will never have the resources to fight the flow of illegal drugs from producers in South America to the world's largest consumer market in the U.S.

"Are we going to be responsible to put up a war against the cartels if we don't produce the drugs or consume the drugs? We're just a corridor of illegality," Eduardo Stein, a former Guatemalan vice president who headed Perez's transition team.

"The issue of drug trafficking and consumption is not on the North American political agenda. The issue of drugs in the U.S. is very marginalized, while for Guatemala and the rest of Central America it's very central," he added.

U.S. President Barack Obama would cut funds to fight drug trafficking in Latin America in 2013, according to his budget proposal released Monday. While the Obama administration has promised to shift anti-drug resources from law enforcement and military intervention to treatment and prevention, funding would be restored to slightly higher than 2011 levels in the proposal after suffering a cut in 2012.

A growing number of former Latin American leaders have come out in favor of legalization, saying the U.S. efforts to fight drug trafficking in Latin America have only caused more violence and sucked up resources.

Colombia President Juan Manuel Santos has said he would be open to legalization if the entire world agreed.

"It's a theme that must be addressed," Colombia's Foreign Minister Maria Holguin told reporters in Cartegena Monday. "The war on drugs definitely hasn't been the success it should be and it's something the countries should discuss."

Honduras, another major transit country, has never formally considered legalization. Mexico President Felipe Calderon has said it wouldn't make sense to legalize drugs in the region as long as they remain illegal in the U.S.

Perez, 61, was elected in November and took office last month on a platform of cracking down on the country's rampant crime, a product of gang and cartel violence, along with the legacy of a bloody 1960-1996 civil war.

Army, police and paramilitary are blamed for killing the vast majority of 200,000 victims, most of whom were Mayan.

More than half of Guatemalans live in poverty in a nation of 14 million overrun by organized crime and Mexican drug cartels. Perez's predecessor, former President Alvaro Colom, sent troops to retake some provinces from the Zetas drug gang.

Perez, the first former general to be elected president since peace accords were signed in 1996, also took office with the mission of ending a long-standing U.S. ban on military aid imposed during the civil war because of concerns over human rights abuses.

Close advisers say he supports meeting the conditions set by various U.S. congressional appropriations acts for restoring aid that was first eliminated in 1978, including reforming a weak justice system and prosecuting war criminals.

But both U.S. and Guatemala officials agree that a reverse on the ban won't happen any time soon. Among other reductions, Obama's budget proposal cuts military aid to the region for fighting drugs by $5 million.

Perez first made his drug proposal over the weekend.

Political analyst Alvaro Pop said Guatemala would benefit from legalization "because it would get us out of a fight that has blocked our chances of developing as a country." But he added that Perez would have to carefully define exactly what he wants to legalize.

The U.S. Embassy in Guatemala issued a statement Sunday saying that legalizing drugs wouldn't stop transnational gangs that traffic not only drugs, but also people and weapons.

Associated Press writers Katherine Corcoran and Michael Weissenstein contributed to this report from Mexico City and Vivian Sequera from Bogota, Colombia.
______________________________

Legislative Elections in El Salvador: Possible Scenarios and Implications
Julio Rank Wright. Americas Quarterly. February 13, 2012

El Salvador is heading toward another important electoral event within the next month. On March 11 Salvadorans will cast their votes to elect 262 mayors and 84 deputies to the Legislative Assembly. The results, especially for the legislative election, will shape the remaining two years of the Funes presidency.

The latest polls show a strong political opposition led by the conservative Alianza Republicana Nacionalista, ARENA, with higher voter preference over Funes’ governing, left of center, Frente Farabundo Marti para la Liberacion Nacional, FMLN. President Mauricio Funes still maintains high approval ratings however it seems like his apparent likeability among voters isn’t translating into potential votes for his party. Some argue that this may be the result of Funes (and the FMLN) maintaining a complex relationship filled with public disagreements on some issues and coincidences on others.

If the polls remain the same for the next month the big looser may be the orthodox leadership of the FMLN. Pressure has been mounting on the traditional, hard line leadership of the FMLN, from their base to break away completely from Funes. These militants perceive Funes as too much to the right and not pushing for radical reform. However, if ARENA does well and the FMLN doesn’t perform as expected this would leave President Funes in an awkward position as he would effectively become a “presidente sin partido” (president with no party). Should this scenario occur Funes would most certainly look for refuge in one of the smaller political parties and face a difficult two years characterized by attacks from both the left and right of the political spectrum.

The upcoming election will take place under new rules and their implications on voter turnout and preference won’t be clear until after the election. Last year the country’s political institutions decided, after a long and arduous battle led by civil society organizations, that the voting system had to be reformed. The traditional blocked list system was ruled unconstitutional by the Constitutional Chamber of the Supreme Court of Justice.

This year, for the first time, the electorate will receive a large voting sheet with the names and pictures of each candidate and will be free to either vote for whomever they like as long as they are from the same party or to mark the party symbol. ARENA opted for running a campaign stressing the importance of voting for people whereas the FMLN made a strategic decision to run a campaign reinforcing the popularity of their symbol asking voters to mark their symbol on the voting ballot. One month prior to the election the Supreme Electoral Tribunal hasn’t engaged in mass media campaigns informing voters on how to vote due to a stale mate in their internal decision-making process. Luckily, the political parties themselves and some civil society organizations have initiated modest attempts to educate voters on voting procedures.

In sum, El Salvador may very well be the smallest country in Central America but it remains one of the United States’ main allies in the region. Understanding the potential outcomes of the 2012 election is important in order to comprehend possible changes in tone, attitude and programs from the Funes administration both within and beyond El Salvador.

*Julio Rank Wright is contributing blogger to AQ Online. He is from San Salvador, El Salvador, but temporarily living in Washington DC.
______________________________

Honduras Finance Minister resigns after IMF mission
Reuters. February 13, 2012

Feb 13 (Reuters) - Honduras' finance minister resigned on Monday after the International Monetary Fund (IMF) said the country did not reach its deficit and monetary targets for 2011, as the country negotiates a new agreement with the fund.

President Porfirio Lobo accepted the resignation of William Chong Wong who had served as finance minister since the beginning of his administration in January 2010.

The minister's resignation comes at a time when Honduras is negotiating a new 18-month stand-by agreement with the IMF to replace the current one expiring in March.

In a statement last week after concluding a mission to Honduras, the IMF said some structural reform targets set by a 2010 agreement had not been met.

"The mission confirmed that the target deficit of the combined public sector was achieved, but noted that the deficit of the central government was higher than expected," the statement said.

"In addition, the mission observed that the monetary targets under the program (net international reserves and central bank domestic assets) were not met," the IMF added.

Honduras is the third poorest country in the hemisphere, following Haiti and Nicaragua. It currently faces insufficient growth and a fiscal deficit covered partly by international aid and internal debt, which has worsened the country's finances.

The president will announce Chong Wong's replacement on Wednesday, government spokesman Miguel Bonilla said.

Separately on Monday, Lobo accepted the resignation of the commerce minister Francisco Zelaya after his alleged involvement in an improper rice import deal. (Reporting by Gustavo Palencia; Writing by Isabella Cota; Editing by Diane Craft)
______________________________

AP IMPACT: USAID contractor work in Cuba detailed
DESMOND BUTLER. AP. February 13, 2012

Piece by piece, in backpacks and carry-on bags, American aid contractor Alan Gross made sure laptops, smartphones, hard drives and networking equipment were secreted into Cuba. The most sensitive item, according to official trip reports, was the last one: a specialized mobile phone chip that experts say is often used by the Pentagon and the CIA to make satellite signals virtually impossible to track.

The purpose, according to an Associated Press review of Gross' reports, was to set up uncensored satellite Internet service for Cuba's small Jewish community.

The operation was funded as democracy promotion for the U.S. Agency for International Development, established in 1961 to provide economic, development and humanitarian assistance around the world in support of U.S. foreign policy goals. Gross, however, identified himself as a member of a Jewish humanitarian group, not a representative of the U.S. government.

Cuban President Raul Castro called him a spy, and Gross was sentenced last March to 15 years in prison for seeking to "undermine the integrity and independence" of Cuba. U.S. officials say he did nothing wrong and was just carrying out the normal mission of USAID.

Gross said at his trial in Cuba that he was a "trusting fool" who was duped. But his trip reports indicate that he knew his activities were illegal in Cuba and that he worried about the danger, including possible expulsion.

One report says a community leader "made it abundantly clear that we are all 'playing with fire.'"

Another time Gross said: "This is very risky business in no uncertain terms."

And finally: "Detection of satellite signals will be catastrophic."

The case has heightened frictions in the decades-long political struggle between the United States and its communist neighbor to the south, and raises questions about how far democracy-building programs have gone -- and whether cloak-and-dagger work is better left to intelligence operatives.

Gross' company, JBDC Inc., which specializes in setting up Internet access in remote locations like Iraq and Afghanistan, had been hired by Development Alternatives Inc., or DAI, of Bethesda, Maryland, which had a multimillion-dollar contract with USAID to break Cuba's information blockade by "technological outreach through phone banks, satellite Internet and cell phones."

USAID officials reviewed Gross' trip reports and received regular briefings on his progress, according to DAI spokesman Steven O'Connor. The reports were made available to the AP by a person familiar with the case who insisted on anonymity because of the documents' sensitivity.

The reports cover four visits over a five-month period in 2009. Another report, written by a representative of Gross' company, covered his fifth and final trip, the one that ended with his arrest on Dec. 3, 2009.

Together, the reports detail the lengths to which Gross went to escape Cuban authorities' detection.

To avoid airport scrutiny, Gross enlisted the help of other American Jews to bring in electronic equipment a piece at a time. He instructed his helpers to pack items, some of them banned in Cuba, in carry-on luggage, not checked bags.

He once drove seven hours after clearing security and customs rather than risk airport searches.

On his final trip, he brought in a "discreet" SIM card -- or subscriber identity module card -- intended to keep satellite phone transmissions from being pinpointed within 250 miles (400 kilometers), if they were detected at all.

The type of SIM card used by Gross is not available on the open market and is distributed only to governments, according to an official at a satellite telephone company familiar with the technology and a former U.S. intelligence official who has used such a chip. The officials, who spoke on condition of anonymity because of the sensitivity of the technology, said the chips are provided most frequently to the Defense Department and the CIA, but also can be obtained by the State Department, which oversees USAID.

Asked how Gross obtained the card, USAID spokesman Drew Bailey said only that the agency played no role in helping Gross acquire equipment. "We are a development agency, not an intelligence agency," he said.

Cuba's communist government considers all USAID democracy promotion activities to be illegal and a national security threat. USAID denies that any of its work is covert.

Gross' American lawyer, Peter J. Kahn, declined comment but has said in the past that Gross' actions were not aimed at subverting the Cuban government.

Cuban authorities consider Internet access to be a matter of national security and block some sites that are critical of the government, as well as pages with content that they deem as counterrevolutionary. Most Cubans have access only to a severely restricted island-wide Intranet service.

Proponents of providing Internet access say it can undermine authoritarian governments that control the flow of information to their people. Critics say the practice not only endangers contractors like Gross, but all American aid workers, even those not involved in secret activities.

"All too often, the outside perception is that these USAID people are intelligence officers," said Philip Giraldi, an ex-CIA officer. "That makes it bad for USAID, it makes it bad for the CIA and for any other intelligence agency who like to fly underneath the radar."

Even before he delivered the special SIM card, Gross noted in a trip report that use of Internet satellite phones would be "problematic if exposed." He was aware that authorities were using sophisticated detection equipment and said he saw workers for the government-owned telecommunications service provider conduct a radio frequency "sniff" the day before he was to set up a community's Wi-Fi operation.

U.S. diplomats say they believe Gross was arrested to pressure the Obama administration to roll back its democracy-promotion programs. The Cuban government has alleged without citing any evidence that the programs, funded under a 1996 law calling for regime change in Cuba, are run by the CIA as part of an intelligence plan to topple the government in Havana.

While the U.S. government broadly outlines the goals of its aid programs in publicly available documents, the work in Cuba could not exist without secrecy because it is illegal there. Citing security concerns, U.S. agencies have refused to provide operational details even to congressional committees overseeing the programs.

"The reason there is less disclosure on these programs in totalitarian countries is because the people are already risking their lives to exercise their fundamental rights," said Mauricio Claver-Carone, who runs the Washington-based Cuba Democracy Advocates.

USAID rejected the notion that its contractors perform covert work.

"Nothing about USAID's Cuba programs is covert or classified in any way," says Mark Lopes, a deputy assistant administrator. "We simply carry out activities in a discreet manner to ensure the greatest possible safety of all those involved."

The U.S. National Security Act defines "covert" as government activities aimed at influencing conditions abroad "where it is intended that the role of the United States Government will not be apparent or acknowledged publicly."

USAID's democracy promotion work in Cuba was spurred by a large boost in funding under the Bush administration and a new focus on providing communications technology to Cubans. U.S. funding for Cuban aid multiplied from $3.5 million in 2000 to $45 million in 2008. It's now $20 million.

Gross was paid a half-million dollars as a USAID subcontractor, according to U.S. officials familiar with the contract. They spoke only on condition of anonymity because they are not authorized to discuss the case.

USAID head Raj Shah said democracy promotion is "absolutely central" to his agency's work. The Obama administration says its Cuba programs aim to help politically repressed citizens enjoy fundamental rights by providing humanitarian support, encouraging democratic development and aiding the free flow of information.

U.S. officials say Gross' work was not subversion because he was setting up connections for Cuba's Jewish community, not for dissidents. Jewish leaders have said that they were unaware of Gross' connections to the U.S. government and that they already were provided limited Internet access. USAID has not said why it thought the community needed such sensitive technology.

Asked if such programs are meant to challenge existing leaders, Lopes said, "For USAID, our democracy programs in Cuba are not about changing a particular regime. That's for the Cuban people to decide, and we believe they should be afforded that choice."

Others disagree.

"Of course, this is covert work," said Robert Pastor, President Jimmy Carter's national security adviser for Latin America and now director of the Center for Democracy and Election Management at American University in Washington. "It's about regime change."

To read the rest of the article, click here.

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

Details remain before free trade accords with Panama, Colombia can go into effect
MIMI WHITEFIELD. Miami Herald. February 13, 2012
mwhitefield@MiamiHerald.com

A U.S. official said Monday that implementation of long-awaited free trade agreements with Colombia and Panama is expected in a matter of months.

When the U.S. Congress passed the two trade accords, as well as one with South Korea, in October, it also approved implementing measures, said Jose W. Fernandez, assistant secretary for business and economic affairs. But the other countries still need to ratify measures that will make the agreements reality.

Touted as job creators, the free trade accords will phase out most duties on trade between the U.S. and the three countries. South Florida’s international community has followed the progress of the Colombia and Panama pacts especially closely because Colombia is already the region’s second-largest trading partner and Panama is this area’s 16th most important trade partner.

Both Latin American countries are working on implementation issues, said Fernandez, who stopped in Miami enroute to Colombia and Peru where he plans to meet with government officials, U.S. companies working there, and students.

To answer Congressional concerns about violence against labor unionists in Colombia and get the long-stalled agreement with Colombia moving last spring, the U.S. and Colombia agreed to an action plan that established benchmarks and timetables for the Andean country to strengthen and better enforce labor laws and enhance protection of unionists.

“They are on track. They are taking the steps that are necessary,’’ said Fernandez. “The action plan is what takes time.’’

Asked when he expected the FTA’s to take effect, Fernandez said, “Most of the things are really up to them.’’ But he added, “It’s more a question of months, rather than years.’’

Fernandez’s trip comes as some have questioned the administration’s commitment to its Latin American neighbors in light of President Barack Obama’s trip to Asia last fall. The president announced plans to greatly expand the Trans Pacific Partnership, which includes the United States, and seemed to be putting the Pacific Rim at the forefront of U.S. foreign policy. U.S. exports to Latin America also have fallen since 2000.

But Fernandez called the United States’ relationship with the Western Hemisphere “second to none’’ and pointed out that 40 to 45 percent of U.S. exports still head to the Western Hemisphere.

The United States, he said, is still the largest foreign direct investor in Latin America and Secretary of State Hillary Clinton has visited the region 26 times since taking office.

He also noted that Brazilian President Dilma Rousseff is scheduled to make a state visit to the United States on April 9 — just days before the April 14-15 Summit of the Americas in Cartagena, Colombia.

“Brazil, in many ways, is an example of what you can achieve with the right policies,’’ he said. “They were able to grow by bringing millions of people into the middle class.’’
______________________________

Mystery disease kills thousands in Central America
FILADELFO ALEMAN and MICHAEL WEISSENSTEIN. AP. February 13, 2012

CHICHIGALPA, Nicaragua -- Jesus Ignacio Flores started working when he was 16, laboring long hours on construction sites and in the fields of his country's biggest sugar plantation.

Three years ago his kidneys started to fail and flooded his body with toxins. He became too weak to work, wracked by cramps, headaches and vomiting.

On Jan. 19 he died on the porch of his house. He was 51. His withered body was dressed by his weeping wife, embraced a final time, then carried in the bed of a pickup truck to a grave on the edge of Chichigalpa, a town in Nicaragua's sugar-growing heartland, where studies have found more than one in four men showing symptoms of chronic kidney disease.

A mysterious epidemic is devastating the Pacific coast of Central America, killing more than 24,000 people in El Salvador and Nicaragua since 2000 and striking thousands of others with chronic kidney disease at rates unseen virtually anywhere else. Scientists say they have received reports of the phenomenon as far north as southern Mexico and as far south as Panama.

Last year it reached the point where El Salvador's health minister, Dr. Maria Isabel Rodriguez, appealed for international help, saying the epidemic was undermining health systems.

Wilfredo Ordonez, who has harvested corn, sesame and rice for more than 30 years in the Bajo Lempa region of El Salvador, was hit by the chronic disease when he was 38. Ten years later, he depends on dialysis treatments he administers to himself four times a day.

"This is a disease that comes with no warning, and when they find it, it's too late," Ordonez said as he lay on a hammock on his porch.

Many of the victims were manual laborers or worked in sugar cane fields that cover much of the coastal lowlands. Patients, local doctors and activists say they believe the culprit lurks among the agricultural chemicals workers have used for years with virtually none of the protections required in more developed countries. But a growing body of evidence supports a more complicated and counterintuitive hypothesis.

The roots of the epidemic, scientists say, appear to lie in the grueling nature of the work performed by its victims, including construction workers, miners and others who labor hour after hour without enough water in blazing temperatures, pushing their bodies through repeated bouts of extreme dehydration and heat stress for years on end. Many start as young as 10. The punishing routine appears to be a key part of some previously unknown trigger of chronic kidney disease, which is normally caused by diabetes and high-blood pressure, maladies absent in most of the patients in Central America.

"The thing that evidence most strongly points to is this idea of manual labor and not enough hydration," said Daniel Brooks, a professor of epidemiology at Boston University's School of Public Health, who has worked on a series of studies of the kidney disease epidemic.

Because hard work and intense heat alone are hardly a phenomenon unique to Central America, some researchers will not rule out manmade factors. But no strong evidence has turned up.

"I think that everything points away from pesticides," said Dr. Catharina Wesseling, an occupational and environmental epidemiologist who also is regional director of the Program on Work, Health and Environment in Central America. "It is too multinational; it is too spread out.

"I would place my bet on repeated dehydration, acute attacks everyday. That is my bet, my guess, but nothing is proved."

Dr. Richard J. Johnson, a kidney specialist at the University of Colorado, Denver, is working with other researchers investigating the cause of the disease. They too suspect chronic dehydration.

"This is a new concept, but there's some evidence supporting it," Johnson said. "There are other ways to damage the kidney. Heavy metals, chemicals, toxins have all been considered, but to date there have been no leading candidates to explain what's going on in Nicaragua ...

"As these possibilities get exhausted, recurrent dehydration is moving up on the list."

In Nicaragua, the number of annual deaths from chronic kidney disease more than doubled in a decade, from 466 in 2000 to 1,047 in 2010, according to the Pan American Health Organization, a regional arm of the World Health Organization. In El Salvador, the agency reported a similar jump, from 1,282 in 2000 to 2,181 in 2010.

Farther down the coast, in the cane-growing lowlands of northern Costa Rica, there also have been sharp increases in kidney disease, Wesseling said, and the Pan American body's statistics show deaths are on the rise in Panama, although at less dramatic rates.

While some of the rising numbers may be due to better record-keeping, scientists have no doubt they are facing something deadly and previously unknown to medicine.

In nations with more developed health systems, the disease that impairs the kidney's ability to cleanse the blood is diagnosed relatively early and treated with dialysis in medical clinics. In Central America, many of the victims treat themselves at home with a cheaper but less efficient form of dialysis, or go without any dialysis at all.

At a hospital in the Nicaraguan town of Chinandega, Segundo Zapata Palacios sat motionless in his room, bent over with his head on the bed.

"He no longer wants to talk," said his wife, Enma Vanegas.

His levels of creatinine, a chemical marker of kidney failure, were 25 times the normal amount.

His family told him he was being hospitalized to receive dialysis. In reality, the hope was to ease his pain before his inevitable death, said Carmen Rios, a leader of Nicaragua's Association of Chronic Kidney Disease Patients, a support and advocacy group.

"There's already nothing to do," she said. "He was hospitalized on Jan. 23 just waiting to die."

Zapata Palacios passed away on Jan. 26. He was 49.

Working with scientists from Costa Rica, El Salvador and Nicaragua, Wesseling tested groups on the coast and compared them with groups who had similar work habits and exposure to pesticide but lived and worked more than 500 meters (1,500 feet) above sea level.

Some 30 percent of coastal dwellers had elevated levels of creatinine, strongly suggesting environment rather than agrochemicals was to blame, Brooks, the epidemiologist, said. The study is expected to be published in a peer-reviewed journal in coming weeks.

Brooks and Johnson, the kidney specialist, said they have seen echoes of the Central American phenomenon in reports from hot farming areas in Sri Lanka, Egypt and the Indian east coast.

"We don't really know how widespread this is," Brooks said. "This may be an under-recognized epidemic."

Jason Glaser, co-founder of a group working to help victims of the epidemic in Nicaragua, said he and colleagues also have begun receiving reports of mysterious kidney disease among sugar cane workers in Australia.

Despite the growing consensus among international experts, Elsy Brizuela, a doctor who works with an El Salvadoran project to treat workers and research the epidemic, discounts the dehydration theory and insists "the common factor is exposure to herbicides and poisons."

Nicaragua's highest rates of chronic kidney disease show up around the Ingenio San Antonio, a plant owned by the Pellas Group conglomerate, whose sugar mill processes nearly half the nation's sugar. Flores and Zapata Palacios both worked at the plantation.

According to one of Brooks' studies, about eight years ago the factory started providing electrolyte solution and protein cookies to workers who previously brought their own water to work. But the study also found that some workers were cutting sugar cane for as long as 9 1/2 hours a day with virtually no break and little shade in average temperatures of 30 C (87 F).

In 2006, the plantation, owned by one of the country's richest families, received $36.5 million in loans from the International Finance Corp., the private-sector arm of the World Bank Group, to buy more land, expand its processing plant and produce more sugar for consumers and ethanol production.

In a statement, the IFC said it had examined the social and environmental impacts of its loans as part of a due diligence process and did not identify kidney disease as something related to the sugar plantation's operations.

Nonetheless, the statement said, "we are concerned about this disease that affects not only Nicaragua but other countries in the region, and will follow closely any new findings."

Ariel Granera, a spokesman for the Pellas' business conglomerate, said that starting as early as 1993 the company had begun taking a wide variety of precautions to avoid heat stress in its workers, from starting their shifts very early in the morning to providing them with many gallons of drinking water per day.

Associated Press reporters saw workers bringing water bottles from their homes, which they refilled during the day from large cylinders of water in the buses that bring them to the fields.

Glaser, the co-founder of the activist group in Nicaragua, La Isla Foundation, said that nonetheless many worker protections in the region are badly enforced by the companies and government regulators, particularly measures to stop workers with failing kidneys from working in the cane fields owned by the Pellas Group and other companies.

Many workers disqualified by tests showing high levels of creatinine go back to work in the fields for subcontractors with less stringent standards, he said. Some use false IDs, or give their IDs to their healthy sons, who then pass the tests and go work in the cane fields, damaging their kidneys.

"This is the only job in town," Glaser said. "It's all they're trained to do. It's all they know."

The Ingenio San Antonio mill processes cane from more than 24,000 hectares (60,000 acres) of fields, about half directly owned by the mill and most of the rest by independent farmers.

The trade group for Nicaragua's sugar companies said the Boston University study had confirmed that "the agricultural sugar industry in Nicaragua has no responsibility whatsoever for chronic renal insufficiency in Nicaragua" because the research found that "in the current body of scientific knowledge there is no way to establish a direct link between sugar cane cultivation and renal insufficiency."

Brooks, the epidemiologist at Boston University, told the AP that the study simply said there was no definitive scientific proof of the cause, but that all possible connections remained open to future research.

In comparison with Nicaragua, where thousands of kidney disease sufferers work for large sugar estates, in El Salvador many of them are independent small farmers. They blame agricultural chemicals and few appear to have significantly changed their work habits in response to the latest research, which has not received significant publicity in El Salvador.

In Nicaragua, the dangers are better known, but still, workers need jobs. Zapata Palacios left eight children. Three of them work in the cane fields.

Two already show signs of disease.

Associated Press writer Filadelfo Aleman reported this story in Chichigalpa, Nicaragua, and Michael Weissenstein reported from Mexico City. AP writers Marcos Aleman in Bajo Lempa, El Salvador, and Romina Ruiz-Goiriena in Guatemala City contributed to this report.
______________________________

The Impact of the Gloomier Global Outlook on Latin America
Nicolás Eyzaguirre. Huffington Post. February 13, 2012

The IMF has sharply marked down its forecast for world growth and it now expects a mild recession in the euro area. Naturally, weaker world growth will affect economic activity in Latin America and the Caribbean.

Concretely, the Fund expects the world economy to grow by just 3.25 percent in 2012, three-quarter percentage points lower than our September forecasts.

In contrast, our forecast for the U.S. economy for 2012 is unchanged, as incoming data signal a stronger -- but still sluggish -- domestic recovery that will offset a weaker global environment. Commodity prices will be affected by ebbing global demand, with oil projected to fall about five percent and non-oil commodities about 14 percent.

Softer growth

As for Latin America and the Caribbean, as I foreshadowed in my recent blog, a weaker world economy and softer commodity prices translate into a gloomier outlook (see table). We've marked down our growth forecasts for the region as a whole by about 0.5 percent for this year. The overall markdown for Latin America is a bit smaller than for the globe, because much of the region's economies still enjoy good domestic momentum and stable financial systems.

Moreover, commodity prices remain well above their long-term trend, despite the recent decline, and external financing remains relatively cheap and readily available (see chart). While global uncertainties have sparked volatility in capital inflows, we have yet to observe a reversal.

But to be sure, there is a lot of variation in our forecast revisions within the region.

    In South America, which until recently was growing well above trend, less favorable external conditions are expected to crimp output growth, dampening brewing overheating pressures.

    The outlook for Mexico and Central America is broadly the same as in October, as we've left our U.S. outlook unchanged.

    Meanwhile, growth in the Caribbean will continue to lag, held back by weak tourism flows from advanced countries and high public debt.

Take precautions

But let me emphasize, the outlook for the region hinges on policy action in Europe. Policymakers there need to intensify their efforts to contain the crisis, and put an end to the rise in sovereign spreads and the cutback in bank lending that threaten the global economy in 2012. These efforts should be supported by appropriate policy actions elsewhere in the advanced and emerging world. Otherwise, as the downside scenario in the IMF's recent global outlook suggests, world growth in 2012 could be some 2 percentage points lower, dragging down commodity prices and heightening financial strains. For our region, this would mean more sluggish exports, worse terms of trade, and tighter borrowing conditions.

To add this all up: how should policymakers in our region react? It's always good practice -- as the expression goes -- to hope for the best (or at least better times), but to prepare for the worst. More specifically, they should take action on three fronts:

    Rebuild fiscal buffers, to maintain fiscal credibility -- the euro crisis vividly illustrates the costs of losing it -- and prepare for a further deterioration in global conditions.

    Be ready to ease monetary policy, where strong institutions and low inflation would permit it. Watch financial systems closely for signs of stress.

    Maintain flexible exchange rates -- our research shows that these buffer shocks, particularly from commodity prices.

From iMFdirect blog and Diálogo a Fondo

Nicolás Eyzaguirre is the Director of the IMF’s Western Hemisphere Department

Center for Economic and Policy Research, 1611 Connecticut Ave, NW, Suite 400, Washington, DC 20009
Phone: (202) 293-5380, Fax: (202) 588-1356

The Center for Economic and Policy Research is an independent, nonpartisan think tank that was established to promote democratic debate on the most important economic and social issues that affect people's lives. CEPR's Advisory Board includes Nobel Laureate economists Robert Solow and Joseph Stiglitz; Janet Gornick, Professor at the CUNY Graduate Center and Director of the Luxembourg Income Study; and Richard Freeman, Professor of Economics at Harvard University.

Subscribe • Update Subscriptions • Unsubscribe • CEPR RSS Feed • Become our fan on Facebook • Follow us on Twitter

If you enjoy CEPR’s unique perspectives on Latin America and the global economy, please consider making a tax-deductible contribution to the Center for Economic and Policy Research. We depend on the generosity of individuals like you to support our work. Federal employees can support CEPR through the Combined Federal Campaign, CFC #79613.