Latin America News Round-up
May 14, 2012
Unasur Defence Spending One of the Lowest in the World

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

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Brazil and Southern Cone
Rousseff Expands Brazil Welfare Benefits to Target Child Poverty. Bloomberg
Slower economy justifies Brazil's rate cuts: Tombini. Reuters
Brasília cheers the real’s decline. Financial Times
Brazil: truth commission members named. AP
Worst drought in 50 years takes toll in northern Brazil. AFP
Elliott's Argentina Bond Case Wins Backing From Ex-Bush Official. Bloomberg
Argentina's renationalization of YPF: A push to manage oil on its own terms. Christian Science Monitor
Chilean High Court Blocks Patagonia Dam Project. EFE

Northern Andean Region
Venezuela's Chavez Says Radiation Treatment in Cuba a Success. EFE
Venezuela's PDVSA confirms $3 billion bond. Reuters
FARC rebels in Colombia to free French hostage. AFP
Former Colombia Militia Boss Admits Funding Uribe’s Campaign. EFE
Colombian authorities arrest 11 politicians for paramiitary ties. Colombia Reports
Colombia's resistance to corporate mining excess has lessons for the world. The Guardian
Colombia: Attempted Shooting of Rights Lawyer Raises Questions of Political Will. Huffington Post

Western Andean Region
Sacred Lake Titicaca Is Being Drowned by Pollution. Indian Country Today
Peru protests cast shadow on mining confab. Reuters
Peru's coffee growers turn carbon traders to save their farms from climate change. The Guardian

Mexico, Central America and Caribbean
Police Find 49 Bodies by a Highway in Mexico. New York Times
Mexico's leading presidential candidate is handsome, popular and still a mystery. Washington Post
Mexican presidential candidate paid journalists for media 'mentions'. The Guardian
Guatemala's land grab and massacre. Al Jazeera
El Salvador gears up for 2014 presidential elections. Al Jazeera
Spanish Government Says It Supports End to U.S. Embargo on Cuba. EFE

Region: Trade, Security, Economy and Integration
Unasur defence spending one of the lowest in the world: average 0.91% of GDP. Mercopress

Brazil and Southern Cone [contents]

Rousseff Expands Brazil Welfare Benefits to Target Child Poverty
Carla Simoes. Bloomberg. May 14, 2012

Brazil will increase benefits for the Bolsa Familia social welfare program by boosting payments to families with young children and expanding access to day care and health care, President Dilma Rousseff said in a radio and television address yesterday.

Each family below a certain income level will receive a minimum stipend from the government of 70 reais ($35) per month for each child aged 0 to 6, Rousseff said in a Mother Day’s speech broadcast yesterday evening.

The government will also increase access to day care and fight anemia, vitamin A deficiency and asthma by expanding health insurance, she said.

The Bolsa Familia program today reaches about 13.4 million families who receive benefits of 32 reais to 306 reais per month, depending on their monthly income and number of children up to age 17. Last year, the Rousseff government spent 17.3 billion reais on the program.

To contact the reporter on this story: Carla Simoes in Brasilia at csimoes1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net
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Slower economy justifies Brazil's rate cuts: Tombini
Reuters. May 14, 2012

RIO DE JANEIRO: Brazil's interest rates are falling because economic conditions allow it to ease monetary policy and not because of any pressure from the government, Central Bank President Alexandre Tombini said in a newspaper interview published on Sunday.

Tombini told O Estado de Sao Paulo that Brazil's economy, which almost slid into recession in late 2011, is entering a warm-up phase and should pick up steam in the second half of 2012, but a recently worsened outlook abroad will hurt exports.

The central bank governor has been fending off accusations lately that he had yielded to pressure from the administration of President Dilma Rousseff to lower rates and speed growth when he embarked on an aggressive series of interest rate cuts.

The bank has trimmed 350 basis points off its Selic benchmark rate since August and hinted it could cut rates to record lows as inflation eases and the economic recovery remains weak. The rate is currently at 9 percent, only 25 basis points above the record low.

"The Selic is falling, leading to a significant reduction in the real interest rate, because of a specific combination of internal and external factors and not to please President Dilma," Tombini told O Estado de Sao Paulo.

That dovish stance is at the heart of Rousseff's drive to revive an economy that is still struggling to recover. Tombini told the paper the bank would not hesitate to raise rates again when necessary. But he said any future increases would occur in the context of lower real interest rates, or rates adjusted for inflation, which he said would stay lower.

Brazil's government has pushed hard this year for banks to cut the cost of loans by trimming the margins they earn on them. The government said their spreads were among the world's highest and held back economic growth that it is now trying to rekindle.

Banks, led by the state-controlled Banco do Brasil and Caixa Economica, have lowered margins in response but argue that their spreads were justified by the high costs they face as well as rising loan defaults.

WARM-UP PHASE

Tombini told the newspaper that the economy was now in a warming-up phase that would eventually reduce loan defaults. He described economic growth of 4 percent as satisfactory for the country, and said 2010's blistering 7.5 percent growth was more an anomaly than a reflection of Brazil's true potential.

He said the economy would grow more in the second half of this year than in the first.

Latin America's biggest economy grew only 2.7 percent last year as its manufacturers struggled under the weight of a stronger currency that has triggered an avalanche of cheaper imports from emerging market peers like China and Mexico.

The government aims to achieve growth of no less than 4 percent this year, while a weaker currency, which has lost about 5 percent of its value against the dollar this year, is now helping by making export-focused industries more competitive.

Tombini ruled out resorting to macroprudential measures to avoid raising interest rates as they were best used for managing imbalances in financial and credit markets rather than the broader economy. He said adjustments to the benchmark Selic rate remained the best way to control inflation while such imbalances were absent.
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Brasília cheers the real’s decline
Joe Leahy. Financial Times. May 14, 2012

For Guido Mantega, the Brazilian finance minister, last week marked the culmination of 18 months of hard work spent talking down Brazil’s currency, the real.

Battered by a weak domestic and global economic outlook and falling interest rates, the real has depreciated more than 4 per cent this year to about R$1.95 to the dollar, cheered on by Mr Mantega and others in President Dilma Rousseff`s team.

After the real touched R$1.9717 against the dollar during trade last week, its weakest since July 2009, Mr Mantega said its fall in value was “no cause for concern” while his colleague, development minister Fernando Pimental, said it was a “good level”.

The decline of the real marks a tactical victory for Brazil in this phase of its “currency war”, its battle against what it claims are the competitive devaluations of exchange rates by advanced economies.

The question now is how much further the government is willing to let the real depreciate. While a weaker currency makes Brazil’s industries more competitive, too much depreciation could reignite inflation, forcing Brazil to raise interest rates again.

“The debate is whether the currency will increase inflation through the pass-through effect,” says Flavia Cattan-Naslausky, a markets strategist at Royal Bank of Scotland.

If Brasília is worried about inflation, it is not showing it. This year President Rousseff took up the currency war baton from Mr Mantega, personally complaining to her German and US counterparts about what she called a “tsunami” of liquidity in advanced economies.

Loose monetary policy in the US and then in Europe was pursued without accompanying fiscal programmes to absorb the money. This led to excess flows into emerging markets that have inflated the value of their currencies and rendered local industry uncompetitive, Brasília argues.

In the past few months, President Rousseff has backed up the currency rhetoric with an “interest rate war”. The central bank has cut Selic overnight rates by 350 basis points over the past eight months to 9 per cent and is expected to cut them again to a 15-year low of about 8.5 per cent at the end of this month.

While the central bank says it has done this independently based on a subdued outlook for global growth and therefore inflation, the government has played its part by reducing guaranteed returns on a popular savings scheme that were seen as putting a floor under Brazil’s high rates.

The policies, coupled with the central bank’s buying of dollars between February and April, have contributed to an 11 per cent decline in the value of the real in three months.

The fall has been so significant that some analysts are predicting the government may have had enough. Nick Chamie, Royal Bank of Canada’s head of global foreign exchange strategy, wrote that the government may intervene to defend the real if it weakens much beyond R$1.98 to the dollar.

“There has been an increasing chorus of finance officials suggesting that current Brazilian real levels are already supportive for local industry,” he said in a report.

Crédit Agricole said that further depreciation could exacerbate fears over inflation in the coming months. While industry continues to be lacklustre, Brazilian unemployment is at record lows, driving up wages and ensuring domestic demand remains strong.

“We expect the dollar/Brazilian real rate to stay in the R$1.85-R$2.00 range,” Crédit Agricole said. “Levels beyond 2.00 would create inflation pass-through concerns that in the midst of aggressive rate cuts would intensify inflation scares in the months ahead once growth resumes.”

Indeed, there remain some fears that the government could overshoot in its eagerness to cut interest rates and weaken the currency. Even now, in the depths of a slowdown that has produced a contraction in domestic industrial production, inflation is far from subdued, running at about 5.1 per cent, or still above the centre of the official target of 4.5 per cent plus or minus 2 percentage points.

But while the president’s efforts to reduce Brazil’s exorbitant interest rates are worthy, analysts point out that without underlying improvements to the country’s competitiveness and lagging productivity levels, inflation will return once the country starts growing fast again. That would mean high interest rates again, which would in turn attract renewed speculative inflows from abroad. In short, a new phase in the currency war.

“All of this underscores the same problem – they have too many objectives,” says Ms Cattan-Naslausky. “They want a weaker currency to stimulate industry but they want to cut rates at the same time and they want to keep inflation in the target band. Something has to give.”
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Brazil: truth commission members named
JULIANA BARBASSA. AP. May 11, 2012

RIO DE JANEIRO -- The names of those who will make up a Truth Commission charged with investigating human rights abuses under Brazil's 1964-1985 dictatorship were published Friday, taking the country a step closer to accountability for the past crimes.

The seven appointees include the attorney who represented President Dilma Rousseff when she was a leftist guerrilla detained and tortured by the military in the early-1970s. It will have two years to investigate abuses committed under military rule.

The commission's report won't result in prosecutions because of a 1979 law granting amnesty for political crimes committed during that era. The commission does, however, have subpoena powers, and public servants and military personnel are legally obligated to cooperate.

Advocates say that investigating who was involved in torture, murders and disappearances is essential if the country is to move forward. Other South American countries that had repressive regimes, including Argentina, Chile and Uruguay, have punished those involved in abuses.

The November law authorizing the commission's creation met with great resistance from conservative segments of the military, who expressed concern the current left-leaning government would use it as an instrument of revenge.

Rousseff invited all of Brazil's living presidents since the end of military rule to take part in the commission's seating on Wednesday, a gesture to make clear that its mission is sanctioned by the state, and is not a project espoused only by the president and her Workers' Party. A statement from the president's press office said all the former living presidents had accepted the invitation.
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Worst drought in 50 years takes toll in northern Brazil
AFP. May 14, 2012

RIO DE JANEIRO (AFP) - Severe drought gripping northeastern Brazil -- the worst in a half-century -- is taking its toll on more than 1,100 towns, even triggering fighting in rural areas, local media reported Sunday.

An average of one person a day is being killed in "water wars" in rural areas, while scores of animals are wasting away before perishing, the O Globo newspaper reported over the weekend.

Short water supplies have devastated farm output, the report said, endangering the lives of local people and their livestock.

Many people in the area have lost half their livestock, and the Brazilian government has reduced forecasts for corn, soy and bean crops.

In Pernambuco, 66 municipalities are on water emergencies, rivers have run completely dry and animals looking for water in the riverbed can only find the odd muddy puddle.
Local dams in the region are running dry, and abuses are rife. In one cited example, water truck drivers make deliveries -- but only if customers promise to vote for certain local candidates.
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Elliott's Argentina Bond Case Wins Backing From Ex-Bush Official
Drew Benson and Bob Van Voris. Bloomberg. May 13, 2012

May 12 (Bloomberg) -- Elliott Management Corp., the hedge fund founded by billionaire investor Paul Singer, won support from a former official in President George W. Bush's administration as it seeks payment on bonds Argentina defaulted on in 2001.

Kenneth Dam, who was deputy U.S. Treasury secretary under Bush, urged the U.S. Court of Appeals in New York last month to uphold rulings directing Argentina to settle in full with Elliott's NML Capital unit when it makes payments on bonds issued in 2005 and 2010 restructurings. The court is scheduled to hear oral arguments on the appeal the week of June 18.

Dam's "friend of the court," or amicus, brief follows one filed in April on behalf of the Argentine government by the U.S. Justice Department, which said lower-court rulings in favor of NML's so-called pari passu argument could hurt other restructurings by rewarding investors who hold out while punishing participants.

"Elliott is presumably trying to offset the Justice amicus brief by bringing in a former Treasury official," said Mark Weidemaier, a law professor at the University of North Carolina at Chapel Hill who conducts research on international financial contracts.

NML Capital has won five judgments totaling $1.6 billion and has six other lawsuits pending judgment, according to court filings. The fund has yet to receive any payout from its Argentina-related court awards.

'Pari Passu'

Manhattan U.S. District Judge Thomas P. Griesa's Feb. 23 ruling, which Argentina is appealing, interprets "pari passu" clauses in sovereign debt contracts to mean that NML Capital's judgments related to defaulted debt should be treated with equal ranking as restructured debt.

Dam wrote in his brief that collective action clauses, which allow a defined majority of bondholders to impose debt restructuring terms on all bondholders, have eliminated the threat from holdouts.

"The U.S. expresses concern in its brief that the district court's 'equal treatment' interpretation of the pari passu clause will negatively affect the ability of countries to restructure their debt," Dam wrote. "Given the widespread prevalence today of collective action clauses -- about 83 percent of the presently outstanding bonds of foreign sovereigns issued under New York law contain them -- this concern has no real basis."

Solicitor General

Dam, now a professor emeritus at the University of Chicago Law School, has also held positions in the U.S. State Department and the White House Office on Economic Policy, according to his filing. Former Bush U.S. Solicitor General Theodore Olson, now a lawyer at Gibson Dunn & Crutcher LLP, is representing Singer's fund before the appeals court.

Dam didn't return a phone message and e-mail sent to his law school office seeking comment on the filing. Peter Truell, a spokesman for New York-based Elliott Management, declined to comment.

Carmine Boccuzzi, a lawyer with Cleary Gottlieb Steen & Hamilton LLP representing Argentina, didn't immediately return a call seeking comment.

The case is NML Capital Ltd. v. Republic of Argentina, 12-00105, U.S. Court of Appeals for the Second Circuit (Manhattan).

--Editors: Andrew Dunn, Peter Blumberg

To contact the reporters on this story: Drew Benson in New York at abenson9@bloomberg.net Bob Van Voris in New York at rvanvoris@bloomberg.net

To contact the editors responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net; Michael Hytha at mhytha@bloomberg.net
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Argentina's renationalization of YPF: A push to manage oil on its own terms
Jonathan Gilbert and Whitney Eulich. Christian Science Monitor. May 14, 2012

As glitter rained down over 100,000 screaming fans in a Buenos Aires soccer stadium late last month, President Cristina Fernández de Kirchner trumpeted her government's takeover of Argentina's biggest oil company, YPF.

"We have recovered one of the most emblematic companies in Argentina," said President Kirchner, who expropriated the majority shares held by Spanish energy giant Repsol. "This government is looking for new forms of intervention: The state cannot turn away from its economic and social responsibilities."

Amid the largely youthful crowd waving pro-government banners and singing in vociferous support was Marcos Huenchullán, who traveled 1,000 miles from Bariloche to attend the rally. "In time, we will all reap the rewards of state control of YPF," said Mr. Huenchullán, calling the renationalization "historic."

Kirchner's approval rating in Argentina has jumped from 42 percent to 60 percent since the controversial renationalization April 16. Many in the United States and Europe have criticized Kirchner's move as a populist bid that is likely to isolate Argentina from the global economy — and perhaps a sign that she is moving toward a Hugo Chávez-style model of nationalization on a broad scale. But the takeover is in line with changing power dynamics in the region, where countries with lucrative natural resources want to — and can — take control of their own resources, despite what outside players might prefer.

In a sign of strong national support, the bill to expropriate Repsol's shares received expedited approval in both the Argentine Senate and Congress, where it was even backed by opposition parties.

"What you're really seeing is a renationalization that reflects, I think, very important power changes," says Terry Karl, professor of Latin American Studies at Stanford University in Palo Alto, Calif.

That may not mean a devastating drop-off in foreign investment in Argentina, as many are predicting, however. The country recently discovered new shale and gas oil reserves, and has more than once defied dire predictions about its economy.

After a severe economic recession in the late 1990s, Argentina defaulted on nearly $93 billion in foreign debt, winning the country a reputation as a pariah. But it recovered using its own approach — against the advice of the international community.
Alienation and isolation

Kirchner insists that YPF needs to be controlled by the state so that Argentina can stop importing energy — $9.4 billion last year — and become self-sufficient. But as part of a broader protectionist policy, which includes foreign-exchange controls and restrictions on imports, the renationalization could drive away even more investors.

"This is a decisive moment for Argentina: With the expropriation of YPF, it is confirming its isolation," says Jorge Castro, a political analyst in Buenos Aires. "The arbitrary confiscation of YPF from Repsol, which broke international law, will alienate Argentina from the world."

The move to renationalize YPF, which was privatized in 1992, spurred the European Union to announce it would limit imports of Argentine biodiesel. The US and other countries condemned the expropriation: Even neighboring Brazil expressed concern.

Dr. Castro says Argentina needs to attract capital, not push it away, if it wants to maintain the economic growth of the past decade. Currently, only about 10 percent of all foreign investment in South America goes to Argentina, far less than to countries such as Brazil, Colombia, and Chile. Argentina is facing a fiscal deficit and a reported inflation rate of more than 20 percent. Critics say the expropriation of YPF is a short-term move designed to placate the masses and deflect attention away from domestic economic problems.

The YPF takeover sends a chilling message, says Boris Segura, a Latin America analyst at New York investment bank Nomura. "The hostile business environment in Argentina has kept investors away for a while," Mr. Segura says. "Even if YPF does not represent the beginning of a politics of expropriation, the damage is done: Argentina is perceived as a risk."
On their own terms

Despite Kirchner's less than diplomatic approach to nationalizing YPF — directors were forced to leave their Buenos Aires offices after government officials moved in via an emergency decree to take control — she has recognized the need for foreign investment. Just days before her Buenos Aires rally, the economy vice minister and minister of planning met with international oil companies, including Chevron and ExxonMobil, to discuss joint exploitation of the huge Vaca Muerta shale and gas oil reserves discovered late last year in southwest Argentina. Some point to this as a signal that the government is encouraging foreign investment in the sector, but on its own terms.

Investment in the oil sector is a risk some companies will be willing to take, despite the hostility of the Kirchner regime, Segura says.

Oil is a limited resource. Oil company executives have "recognized that economic energy nationalism is the new reality in town," says Miguel Tinker Salas, professor of Latin American history at Pomona College in Claremont, Calif. "Unless you can find dramatic reserves elsewhere, you just know you are dealing with state-owned energy."
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Chilean High Court Blocks Patagonia Dam Project
EFE. May 13, 2012

SANTIAGO – Chile’s Supreme Court has blocked a hydroelectric plant project in the Patagonia region, accepting an appeal filed by environmental groups.

The high court’s ruling shot down a decision by the southern Aysen region’s Environmental Impact Assessment System, or SEIA, which had given the green light for the Rio Cuervo Hydroelectric Project earlier this month, judiciary officials confirmed Friday.

The decision stated that the SEIA acted illegally in approving the 640 MW project and ignoring the National Geology and Mining Service’s recommendation that the joint venture behind the plant – Swiss firm Xstrata Copper and Australian energy retailer Origin Energy – carry out a new soil survey.

The Supreme Court ruled that the new study must be conducted before the $645 million project, part of that joint venture’s $3.6 billion Energia Austral hydroelectric project in Patagonia, can be approved.

The Rio Cuervo project was approved on May 8 by the Aysen region’s SEIA despite the opposition of environmental groups and some lawmakers.

Other hydroelectric projects are also planned in Patagonia as part of energy-hungry Chile’s attempts to increase electricity output.

A consortium made up of Endesa Chile, a unit of Spain’s Endesa and the South American country’s largest electric utility, and Chile’s Colbun is building the 2.75 GW HidroAysen megaproject in Patagonia that involves the construction of five dams on the Pasca and Baker rivers and the flooding of 5,000 hectares (12,350 acres).

The Supreme Court gave the green light for that $3.2 billion project in April, rejecting appeals filed by lawmakers, regional organization and environmental groups.

Plans for the megaproject sparked large-scale protests last year in the Patagonia region and in Santiago.

Northern Andean Region [contents]

Venezuela's Chavez Says Radiation Treatment in Cuba a Success
EFE. May 12, 2012

CARACAS – Venezuelan President Hugo Chavez returned home from Cuba after an 11-day absence for cancer treatment, saying his latest round of radiation therapy had ended successfully and he is very optimistic about his recovery.

“I should say that over these past several days we successfully concluded the entire cycle of radiation therapy just as the medical team had planned,” Chavez told the media after walking down the airplane steps Friday night at the Simon Bolivar International Airport, which serves Caracas.

Wearing the track suit that has become his regular attire on his medical trips to Cuba, Chavez said that “besides a few discomforts that are very normal in this treatment, absolutely nothing happened that forced it to be stopped, to suspend it or to alter the initial plan.”

Rumors had surfaced during his trip about possible complications during the treatment and there was even speculation that the president was unable to walk.

“I’m arriving and we’re arriving with great optimism that this treatment will produce the desired effects and always asking the Most High, our Lord God, Christ the Redeemer, to help us by continuing to give us the miracle of life, precisely so we can continue carrying out God’s commandments,” the socialist president said.

Chavez had left for Cuba on April 30 to continue the radiation treatment he began after undergoing surgery on Feb. 26 to have a second malignant tumor removed. The first tumor was extracted last June.

Both of those operations also took place on the Communist-ruled island, which has become Venezuela’s main ally under Chavez.

The loquacious Venezuelan president, who was largely silent during his latest stay in Havana except for various messages on Twitter, has said only that the cancer is located in his pelvic region but has not given details on its precise location or seriousness.

Chavez said after stepping off the plane and being greeted by Vice President Elias Jaua and other top officials that he is aware of “the permanent speculation by certain individuals, certain sectors that hurl all kinds of rumors” about his health.

He said he must recover from the impact of the treatment over the next few days and will “gradually” get back into the “first line of battle.”

“Now in this phase over the next few days I need to rigorously follow the medical instructions to continue recovering from the normal, expected effects of the full radiation treatment,” the president said.

“As the hours and the coming days pass, I’m sure ... I’ll be gradually getting back to where I should be in the first line of battle, along with the Venezuelan people, driving the socialist revolution, the revolution of peace, the revolution of love,” Chavez said.

Chavez, who later inspected a group of soldiers in formation on the runway and sang a popular Venezuelan song, also noted that he had arrived in time for Mother’s Day, which will be celebrated on Sunday in Venezuela.

The president, in office since 1999, will seek re-election once again in October when he faces off against opposition hopeful Henrique Capriles.

Chavez, who said the economy was performing well and that results will show strong GDP growth in the first quarter, lashed out at the political opposition and Capriles.

“Unfortunately the right seems spent, desperate, like those boxers who throw wild punches that don’t hit anything, while behind them they have a concealed hammer or knife,” he said.
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Venezuela's PDVSA confirms $3 billion bond
Reuters. May 12, 2012

CARACAS May 11 (Reuters) - Venezuela's state oil company PDVSA confirmed on Friday it was issuing up to $3 billion of bonds with a 9.75 percent coupon in a private offer for the Central Bank and other state banks.

The widely-anticipated issue is mainly intended to supply the Central Bank's Sitme foreign exchange system, which sells dollars to Venezuelans, sources close to the operation said.

The bonds will mature in 2033, 2034 and 2035, PDVSA said in a statement, adding that the offer was intended to finance its investments, including in welfare programs.

The issue is Venezuela's first of the year and might kickstart further borrowing to help President Hugo Chavez boost public spending ahead of an October election.

In recent years, PDVSA has enjoyed growing profits thanks to high global oil prices, but has also issued record amounts of debt to cover its own operating budget, transfers to central government, and heavy spending on social programs.

Sitme swaps dollar-denominated bonds through a system that provides hard currency at a rate of 5.3 bolivars to individuals and companies, whose requests for dollars at the official exchange rate of 4.3 bolivars per dollar, were not met.

It supplies less than 10 percent of dollars for imports, but has steadily increased sales to reach $40 million to $60 million per day from a historic average of $20 million per day.

Venezuela and PDVSA together issued around $17.5 billion in debt last year, with coupons that have approached 12 percent.

The country's bonds have jumped in 2012 on signs that Chavez's health may be worsening during cancer treatment, which investors believe could pave the way for a change in government that would promote more market-friendly policies. (Reporting by Deisy Buitrago and Andrew Cawthorne; Editing by Bernard Orr)
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FARC rebels in Colombia to free French hostage
AFP. May 13, 2012

BOGOTA — Marxist rebels holding French journalist Romeo Langlois hostage for almost a month said Sunday they will free him, according to a Red Cross official.

"We have received the statement directly from the group... We are pleased with the announcement of the (planned) release, and we are ready to help organize the operation anywhere and as soon as possible," said Jordi Raich, head of the International Committee of the Red Cross in Colombia.

Raich said the group indicated it was prepared to free the Frenchman in a demobilized area to a group that would include ICRC representatives, an envoy of French president-elect Francois Hollande and former senator and mediator Piedad Cordoba.

"When we get word on the place and time, we can travel by road or river anywhere, as we have done many times," Raich said.

Langlois, 35, was accompanying soldiers who destroyed five cocaine production labs in southern Colombia when a firefight broke out April 28 and he was captured by rebels from the Revolutionary Armed Forces of Colombia.

The FARC rebels have called Langlois a "prisoner of war" because he had been wearing a military helmet and flak jacket when he went missing.

At war with the Colombian government since 1964, the guerrilla group is believed to have some 9,000 fighters in mountainous and jungle areas, according to government estimates.

Successful government strikes have weakened the FARC in the past years, but the rate of the guerrilla attacks has recently been on the rise.

In February, the group publicly announced it would abandon kidnapping for ransom. It released its last military and police hostages in early April.

Olga Gomez, president of the Free Country Foundation, however estimates the FARC is holding more than 400 civilians hostage. The FARC says the foundation's numbers are false and biased, but has released no figures of its own.

The last French national held by the FARC was Ingrid Betancourt, a former Colombian senator and presidential candidate. She was abducted during her presidential campaign in February 2002, along with her assistant, Clara Rojas.

Betancourt and 14 other hostages -- including three US military contractors -- were freed in an operation by the Colombian military in July 2008.
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Former Colombia Militia Boss Admits Funding Uribe’s Campaign
EFE. May 12, 2012

BOGOTA – The former military chief of Colombia’s AUC militia federation, extradited four years ago to the United States on drug charges, said Friday he and his now-demobilized organization supported and financed the 2006 re-election campaign of then-President Alvaro Uribe.

“I backed President Uribe’s re-election, both with the support we provided in the communities and with money,” Salvatore Mancuso said in an interview with Caracol Radio from a U.S. federal prison in Warsaw, Virginia.

The funds were allocated so “they could hire buses, do advertising, for food, for all these things in President Uribe’s campaign,” Mancuso said, adding “of course we did it.”

A U.S. State Department cable disseminated by WikiLeaks blamed the AUC, which was designated a terrorist group by the U.S. government in 2001, for more than 250,000 deaths in Colombia.

Uribe was re-elected in 2006 after his allies pushed through a constitutional amendment ending the ban on a president’s serving two consecutive terms.

Mancuso said he had already acknowledged his and the AUC’s support for Uribe’s re-election in testimony to prosecutors since 2007.

In the same interview, the former paramilitary leader admitted that he also had meetings with Uribe but declined to provide specific dates and places.

“These are issues I’d rather not discuss,” said Mancuso, a former cattle rancher who rose to become one of the AUC’s top commanders along with brothers Carlos and Vicente Castaño, both killed by rival members of the paramilitary federation.

Mancuso reiterated previous accusations that multinational companies such as U.S.-based Chiquita Brands and Dole and domestic firms like Postobon helped fund the militia organization.

He also said rancher Santiago Uribe – Alvaro’s brother – and Pedro Juan Moreno, a close associate of the former president who died in a helicopter crash, both had ties to the paramilitaries.

Mancuso said Moreno, acting at Uribe’s behest, advised the militiamen on creating security cooperatives when the latter was governor of the northwestern province of Antioquia, enabling the AUC to “continue expanding the fight against subversion, combining all elements of struggle, legal and illegal.”

The AUC disbanded in mid-2006 as part of a peace process with Uribe’s 2002-2010 government.

The talks led to the gradual demobilization of more than 31,000 members of the organization, which was formed in the mid-1980s with the ostensible aim of protecting farmers and ranchers from leftist guerrillas but degenerated into a loose alliance of death squads whose commanders grew wealthy from drugs, extortion, cattle rustling and land seizures.

Mancuso and 12 other erstwhile AUC leaders were extradited in May 2008 to the United States, where they were prosecuted on drug-trafficking, money laundering and terrorism-financing charges. EFE
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Colombian authorities arrest 11 politicians for paramiitary ties
Christan Leonard. Colombia Reports. May 14, 2012

Colombian authorities have captured 11 of at least 60 politicians who are accused of having signed pacts with paramilitary organization AUC, Radio Caracol reported Sunday.

Colombia's Prosecutor General's Office is currently pursuing former mayors, former councilmen, deputies, and even some current councilmen from Colombia's central Magdalena valley who signed the "Chivolo" and "Pivijay" pacts with the AUC in the early 2000s.

Prosecution investigators have not announced which politicians have been arrested.

Prosecutor General Eduardo Montealegre announced last week that his office was ready to release 60 more arrest warrants for politicians with ties to the paramilitaries.

In the Chivolo Pact, which was signed by more than 400 leaders in the village of La Estrella on September 28, 2000, local leaders aligned with extradited paramilitary leader Rodrigo Tovar Pupo, alias "Jorge 40" in order to receive his electoral "blessing."

In the Pivijay Pact, another group of politicians joined forces with Jorge 40 in order to receive support and votes for the 2002 congressional campaigns of Jose Gamarra, Dieb Maloof, Jorge Castro and Gustavo Orozco. The pact was signed in the municipality of Pivijay, Magdalena department on November 22, 2001.

Since 2006, hundreds of politicians have been sentenced for making deals with the AUC, which was determined a terrorist organization by the U.S. until its official demobilization between 2003 and 2006.
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Colombia's resistance to corporate mining excess has lessons for the world
Jonathan Glennie. The Guardian. May 14, 2012

I was recently sent a new film by an old friend, Hollman Morris. Morris was once the bete noire of the Colombian political class. His searing and powerful attacks on the role of the state in violence and displacement prompted the country's former president, Álvaro Uribe, to describe him as a "publicist for terrorism". Today, Morris is the boss of Bogota's regional TV channel, Canal Capital.

His latest film, produced with Minority Rights Group International, is about a community of small-scale gold miners in the Cauca department of Colombia and their resistance against a mining company's attempts to dig on their land. The community has worked the mud and rivers of their territory for decades, even centuries, eking a living from the small finds they make. They have engaged in a successful campaign to defend their way of life, which is as important to them for its culture as its steady (if minimal) income.

The film, which tells a story I have seen and heard so many times, prompted reflection on how much has actually changed in the world of mining after decades of work by civil society and UN representatives to force mining companies to behave better. For all the talk of corporate social responsibility (CSR) and new ways of doing business, can we be any more confident that large-scale mining activities will benefit the communities they almost always displace?

This is not just a Colombian story – although the link between multinationals and paramilitary violence is a well-known phenomenon that makes the Colombian experience particularly gruelling – but a global one. Colombia aside, I have visited mines as far apart as Peru and the Philippines, and the story of community upheaval is invariably the same. The promise of progress is bound up with provisos, but the threat to wellbeing is real and brutal, prompting communities to resist.

In Morris's moving film, one woman compares the community's treatment by those seeking to exploit their land to the experience of her ancestors arriving in slave ships from Africa. "They don't believe we have souls or hearts," she says. In many ways she is right – the job of a mining company, following the inexorable logic of the market and seeking to drive down costs, is to remove obstacles from the picture as quickly as possible. The international norm of free, prior and informed consent (FPIC), which demands that communities give their assent to any proposed exploration, is honoured only in its flagrant abuse.

I was chatting to a very senior member of the Colombian government last week, who said his administration would ensure that communities get a good deal from the arrival of mining companies. If it manages that, it will be the first government in history to do so. Precedent does not bode well – the promise of revenue from foreign firms usually outweighs concerns for the people on the frontline. That's why national legal processes are seldom sufficient to protect communities.

So what can be done? Have the voluntary guidelines so beloved of mining executives and the CSR lobby made any difference? Doubtful. The environmental harm done by mining has reduced over the years, but that is down to the imposition of hard-nosed legal sanctions and technological advances that mitigate the most heinously destructive impacts.

But the social harm continues unabated. If voluntary action works, we would expect to see a whole host of examples where FPIC has been respected and/or communities have benefited from the encroachment of mining without a) law being applied and b) lengthy struggles for justice by the communities in question with the support of national and international civil society and the media.

But there are none, only endless accounts of communities losing everything. If you are aware of any, please let me know. Mining company annual reports don't count.

The era of voluntary guidelines has not only been ineffective, it has been worse than useless. Although they may have led to incremental improvements in some areas, their real purpose has been to undermine attempts to develop effective legal sanction, both national and international, which is the only thing that will ultimately keep the destructive instincts of mega-wealthy companies at bay.

So with mining companies behaving as vilely as ever – and until the long campaign to develop meaningful international law bears fruit – the work done by civil society and media in conjunction with affected communities remains critical. Without the spotlight of scrutiny, there is not a chance that mining companies will deliver anything approaching a decent deal for communities.
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Colombia: Attempted Shooting of Rights Lawyer Raises Questions of Political Will
Barbara Becker. Huffington Post. May 13, 2012

Mónica Roa did not think twice when the lights went out in her office at 5:00 p.m. last Monday. Power outages are a common occurrence in Bogotá, so Roa, a well-known human rights attorney, and two colleagues continued on with their meeting. But at 6:30 pm, a bullet hit the window next to Roa's desk, sending glass shards into the room. As she raced to the stairwell to alert others, she heard another shot. Her bodyguard, who was outside when the attack happened, counted six shots in total.

In all likelihood, the attack against Roa was timed with this week's sixth anniversary of Colombia's landmark Constitutional Court decision revising one of the world's most prohibitive abortion laws. Roa, the program director of the international rights group Women's Link Worldwide, had filed the closely-watched case, which eventually liberalized the no-exceptions law and allowed for abortion in the instances of rape, incest, severe fetal abnormality, or when there is a risk to the life or physical or mental health of the woman.

The country watched spellbound as the first person to seek an abortion under the new law came forward -- an 11-year-old girl who had become pregnant after being raped by her step-father. Her grandmother had heard about the change in the law and brought her to a local hospital. Women's Link Worldwide represented the girl as the hospital, which had been unaware of the legal change, at first resisted and then sought to make sense of its new obligations.

That was just the start of the struggle to implement the law. Women's rights activists say the Constitutional Court ruling and subsequent case law are exceptionally clear in defining how the decision should be implemented. However, the country's most powerful legal officer, Procurador General and author of The Gender Ideology: Tragic Utopia or Cultural Subversion, Alejandro Ordoñez, has been throwing up roadblocks to enforcing the decision, rooted in his personal religious beliefs.

Especially unsettling is a criminal complaint filed against Roa earlier this year by Ordoñez's deputy Ilva Miriam Hoyos. The charges against Roa appear to be a response to a new case that has now reached the Constitutional Court by Women's Link Worldwide along with over 1,200 Colombian women. The case requests that the Procurador and his deputies give true and accurate information on sexual and reproductive rights, complying with the Constitution and the jurisprudence of the Court. News of the Hoyos complaint was leaked from the press office of Ordoñez, pointing to his participation in the persecution of a private citizen.

Women's Link recently launched a campaign that seeks to spotlight the need to have a Procurador who complies with his/her Constitutional duties and defends the rights of all Colombians.

Ordoñez's position is up at the end of 2012; however, he is seeking another four-year term. Ordoñez's staunch conservatism presents an embarrassing challenge for Colombian President Juan Manuel Santos, who TIME Magazine recently featured on its cover as one of the 100 most influential people in the world. There is quiet speculation that President Santos could eventually be favored for the secretary general position at the United Nations.

The UN is clear on abortion. The Committee on the Elimination of Discrimination against Women has strongly disapproved of restrictive abortion laws, especially those that prohibit and criminalize abortion in all circumstances. It has also confirmed that such legislation does not prevent women from obtaining unsafe illegal abortions and has framed restrictive abortion laws as a violation of the rights to life, health and information. The Committee on the Rights of the Child, the Human Rights Committee, and the Committee against Torture have all expressed similar concerns.

Approximately 25 per cent of the world's population lives under legal regimes that prohibit all abortions except for those following rape or incest, as well as those necessary to save a woman's life. The 2006 high court decision launched Colombia as a regional and global beacon in advancing reproductive rights. Any harm to citizens like Roa, and any legal backsliding on women's rights would only be a poor reflection on the country and its promising leadership.

Western Andean Region [contents]

Sacred Lake Titicaca Is Being Drowned by Pollution
Sara Shahriari. Indian Country Today. May 14, 2012

Brown, rolling plains that seem to stretch on to eternity are suddenly broken by the brilliant blue of Lake Titicaca. The lake, which sits on the border between Peru and Bolivia, has supported indigenous farming and fishing communities for thousands of years. But what was once a sacred place to the Inca is now in danger from pollution, as population growth in the Titicaca watershed overwhelms the area’s infrastructure.

The most famous creation stories in this part of the world come from the Inca, the last indigenous culture to control the region before the Spanish arrived in the 1500s. Those stories say the god Viracocha rose from the waters of Lake Titicaca. Some say Viracocha created mankind, while others say he made the first Inca, Manco Capac and Mama Ocllo. The lake is still considered a sacred place, and honored with a pilgrimage that draws thousands of people each year to a church on the lakeshore in Copacabana, Bolivia.

The New Urban Landscape

Over the past decade Aymara Indian farmers from all over Bolivia’s high plains were drawn to the city of El Alto in search of education and employment. But as the population of that city has recently grown to more than one million people, it scrambles to provide basic services with a budget that is always stretched thin. Many Bolivian cities do not treat much of their used water, but what makes El Alto important is that its wastewater ends up in Lake Titicaca, just 40 miles away.

About 80 percent of the people in El Alto have access to potable water, but at best just 50 percent of its homes and businesses connect via sewers to the city’s only wastewater treatment plant. The rest of the water goes directly into rivers, which now display a sickly rainbow of colors—red with blood from slaughterhouses, green with chemicals from tanneries, and a deep orange from mineral processing waste. Their banks are lined with trash—from tires to bottles to dead dogs—and the rivers are also toilets for many people who don’t have bathrooms in their homes.

“The water keeps getting dirtier,” says 17-year-old Susi Mamani from El Alto as she walks along a bank of the Seco River. She says that for many households the river is the closest and easiest way to dispose of trash, especially when garbage trucks fail to collect it week after week. “I hope we can clean the water and learn not to throw our trash in the rivers,” she says. “I want to see them cleaner, with more plants.”

Dirty water and piles of trash can have deadly results. Children playing along the riverbanks and families picking through the piles of garbage are exposed to chemicals and feces; many people here carry harmful intestinal parasites and thousands of children die each year from diarrhea related to inadequate sanitation.

Budgets Stretched Thin

“There is no complete and structured treatment of wastewater,” says Marco Ribera Arismendi of the Environmental Defense League in La Paz, which monitors pollution in El Alto and the lake. “The things governments have done so far are like giving an aspirin to someone who has been shot.”

A second wastewater treatment plant for the city, which will rely largely on international funds for completion, is planned. But that addition may not be enough to deal with industrial pollutants. “Most of the medium and small businesses are dispersed through the city, and plastic, paint, detergents and metals from factories go into the rivers and then the lake,” says Ribera Arismendi. What El Alto really needs, he adds, is an industrial park that would group all the factories in one area and a water-treatment plant that can remove metals and chemicals.

El Alto’s budget depends on Bolivia’s central government and gains very little from local taxes. Edgar Patana Ticona, El Alto’s mayor, says that wastewater treatment often takes a backseat to necessities such as potable water, schools and health centers. When the city does try to enforce environmental laws, he says it is often met with insurmountable resistance from people trying to maintain their livelihoods. “If we monitor a specific business then the people who work there, the owner and all the neighbors begin to protest,” he says. “And not so that we enforce the rules—but so the business can continue operating.”

Trouble Downstream

The Pallina River is one of several in the network that connects El Alto to Lake Titicaca. Rigoberto Rios Miranda, an Aymara farmer, has lived on its banks for more than 60 years. “When I was a child the Pallina River was clean, the water was crystalline. About 15 or 20 years back they contaminated it. There were fish here—then one day waters came—I don’t know from where, but all the fish were dead,” he says.

Rios Miranda, like many farmers, is digging wells on his property after deciding that it was not safe to have livestock drink from the river. The Pallina soon meets the Katari River, the last step on the journey to the lake. Policarpio Lopez is an Aymara dairy farmer whose land sits close to the Katari on a broad floodplain on the edge of Lake Titicaca. Every year when the rains come the Katari runs strong toward the lake, and the waters that inundate his land bring a tide of trash.

“In this pasture we can find every kind of garbage. Plastic bottles, cosmetics, radios, televisions, dolls, basketballs, volleyballs,

sandals and clothes,” he says, looking out over his land. Every year brings more, and his only defense is to collect it.

Fishermen are also affected. Lake Titicaca’s shallow shore water is a breeding ground for several species of fish that locals depend on for their livelihood. Donato Corani is from Suriqui, an island in Titicaca a few miles from where the Katari River enters the lake. “Pollution has changed the fish in many ways,” he says. According to Corani, young fish that formerly grew to maturity in warm shore waters have migrated deeper into the lake, resulting in diminished population and size. Corani says pollution, combined with serious overfishing, has pushed many former fishermen to migrate to cities in search of work.

A Multifaceted Problem

Though El Alto is creating a problem in Lake Titicaca, it is not the only source of water pollution there. Smaller towns also lack wastewater treatment plants, while some Peruvian gold-mining operations use a smelting process that releases mercury into rivers that lead to the lake. Even the cattle that graze along the shore affect the water, as their manure loads it with excess nutrients. Those help a plant called duckweed to proliferate, that in turn blocks sunlight and sucks up oxygen other aquatic species need to survive.

Tourism is another challenge for Lake Titicaca. National and international visitors bring in money that improves the standard of living in the impoverished region, but also means towns with poor sewage treatment facilities take in large influxes of visitors. Grover Rivera Ballesteros, an engineer and instructor at Bolivia’s Universidad Mayor de San Andrés, says constructing treatment plants for those communities is more complicated than it might seem.

“Water treatment plants must be in accordance with local conditions, because people from the town are going to operate them, and the people from the community have to pay for the maintenance,” he says. “If I build a plant that isn’t in accordance with those needs, then it may function well but later go to pieces.”

The Search for Solutions

Lake Titicaca is bigger than the state of Delaware. That size makes it resilient, and most of lake’s water is still clean. Yet the presence of distant clean waters is cold comfort to people in riverside or shoreline communities who see their livelihoods affected.

There are many small projects underway to help people living in the Lake Titicaca watershed. One organization, Fundación Sumaj Huasi, helps people without sewer service build ecological toilets. Another project helps dairy farmers maintain healthy herds of cows and build compost centers where, instead of washing into the lake, manure is collected and later sold as fertilizer.

Despite the successes of these and other projects, there is a powerful feeling downstream that unless El Alto makes a big move to treat its wastewater nothing will change. People say that laws are passed and promises made, but nothing happens. For instance, in 2004 the government of then-president Carlos Mesa passed a law declaring four rivers, including the Pallina, environmental disaster zones. When action didn’t follow the law, people who live near the Pallina blocked a key highway leading toward Bolivia’s capital and demanded a cleaner river. Although the protest called attention to the issue of pollution, the Pallina remains a foamy, opaque green.

Rivera Ballesteros, the engineer, says better cooperation between organizations working on water pollution and trash collection would be a step in the right direction. “There are institutions doing this kind of work, but it would be good to have more coordination, to work together, form teams and join forces,” he says.

Rocio Butron, who works for the municipality of Pucarani, Bolivia agrees that more cooperation is essential. She says local governments often lack the trained staff to take on large environmental projects, and, as in El Alto, key issues such as health care and education take precedence over sanitation in the municipal budget. “There should be a bigger push from the central government and the departmental government to tackle these issue and get the municipalities involved to contribute,” she says.

Butron hopes that leaders and projects from all the affected areas stretching from El Alto down to Lake Titicaca will meet and hammer out an overarching plan. After all, she says, downstream communities are powerless to push back the tide of contamination alone.

Reporting for this story was funded by a grant from the Pulitzer Center on Crisis Reporting.
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Peru protests cast shadow on mining confab
Patricia Velez and Teresa Cespedes. Reuters. May 11, 2012

LIMA, May 11 (Reuters) - Social and environmental protests that threaten billions of dollars in planned mining exploration and project development in Peru, Latin America's biggest gold producer, will top the agenda at the Lima gold and silver symposium, set for early next week.

U.S.-based Newmont Mining Corp must decide whether to move forward with its stalled $4.8 billion Conga gold project after demonstrators worried about water supplies halted construction on what would be the most expensive mine ever built in Peru.

The government has made fresh recommendations on the project in hopes of appeasing protesters, who have demanded that the project be halted permanently for fear a string of alpine lakes Newmont plans to replace with artificial reservoirs will leave insufficient water supplies for farmers.

President Ollanta Humala has said Newmont should improve its environmental mitigation plan by keeping two of the lakes intact and building larger reservoirs, based on recommendations from independent European auditors. The existing environmental impact study was approved by the previous government.

If Conga is built, it will cement Humala's reputation as a friend of big business who also retains support from rural communities. But if it is abandoned, Humala could scare off $50 billion in private investment destined for mining in Peru, one of Latin America's fastest-growing economies.

"I think the precedent of revising a previously approved study and making additional demands generates uncertainty for investors," said former Mine and Energy Minister Carlos Herrera, who was replaced amid anti-Conga protests in December.

Executives from top global firms attending the biennial conference from Monday through Wednesday in the world's No. 6 gold producer and second-largest copper and silver producer will also scrutinize price outlooks.

Many analysts bet demand from emerging markets and scarce supplies of gold will compensate for concerns over the European debt crisis, keeping spot gold prices steady.

"Large quantities of gold have not been found, and with the uncertainty in Europe, I believe prices will be stable," said Jose Luis Morales, head of the gold committee at Peru's private Society of Mining, Energy and Oil.

$2,000 PER OUNCE?

Gold, normally a refuge for investors in times of economic turmoil, has recently traded in line with risk assets like base metals and stocks. On Friday it fell to $1,573 per ounce, a four-month low, on worries over debt-ridden Greece and Spain.

But Morales said solid demand from China, which could surpass India as the world's top gold consumer, would later support prices. GFRMS Thomson Reuters forecasts a record price of $2,000 per ounce for 2013.

Strong demand and record-high prices last year drew increased interest in projects like Gold Field's Cerro Corona project in Peru. The company has increased its investment in Cerro Corona to $1.2 billion from $750 million.

But to attract new projects, even with strong demand, Peru needs to show it can rally community support for mining and resolve what the national ombudsman estimates to be 200 active social conflicts, most of them over natural resource extraction.

"Obviously in Peru there is some reduced enthusiasm for exploration, because in places like Canada, where there aren't social conflicts, exploration is expanding," said Morales.

Smaller gold producers in Latin America have also faced disputes over mining. Barrick Gold's giant Pascua Lama project on the border between Chile and Argentina has spurred protests over water supplies.

Humala in September signed a law unique to the region that requires firms to consult indigenous communities about future mining and oil extraction, hoping increased participation in project development would limit opposition to firms working on their ancestral lands.

Many companies supported the law and said they are willing to improve their social and environmental programs.

"We want to continue to be part of the government's social inclusion efforts and the development of the country through responsible mining," said Newmont's Chief Executive Officer Richard O'Brien on a recent conference call.

He warned, however, that the company could invest elsewhere if its Conga project is not profitable. (Reporting by Patricia Velez and Teresa Cespedes; Writing by Caroline Stauffer; Editing by David Gregorio)
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Peru's coffee growers turn carbon traders to save their farms from climate change
Lucy Siegle. The Observer. May 13, 2012

In the foothills of the Andes, in the Sierra Piura region of Peru, the problems faced by coffee farmers are clear. Up to 6,600 farmers produce here for the Central Piurana de Cafetaleros co-operative (Cepicafe), growing 4,000 tonnes a year of the finest Peruvian coffee on family plots scattered across the mountainside. Together, year in, year out, they bring in this special harvest, the arabica coffee cherries, which are painstakingly picked by hand, processed and dried in the sun.

However, thanks to "weather change", a continual topic of conversation in the area, the harvest is unpredictable. Last year, there was too little rain in the region. This year there has been a deluge: in some areas an increase of 500% on the "norm".

"I still think coffee is worthwhile," says 47-year-old Gusto Regis. "It's not yet as bad as 1983." That was when the El Niño weather system hit, and landslides and flooding drove his family away to find work labouring in an adjoining region. "Of course we had no land and no money so we needed to come back. I don't know what we would do if we had to leave again."

In the neighbouring village, Alejandro Reyes Ruiz talks his co-farmers through a giant diagram he has drawn explaining likely "weather changes". Paul Santos Santos, 24, a trainee teacher, sings an instructive song about climate and coffee. I explain that where I'm from not everybody thinks that climate change exists. "They should come here and try to grow coffee," Alejandro says.

Peru is rated among the top three nations likely to be most affected by climate change in the world by the Tyndall Centre for Climate Change Research at the University of East Anglia.
Peru farmers wheels bicycle across swollen stream A farmer wheels his bicycle across a stream swollen by heavy rainfall. Photograph: Stanton Media

In the Sierra Piura there have been many efforts to adapt, from the installation of a pulley system that takes coffee sacks across swollen rivers to fortifications for the local reservoir which have prevented two low-lying villages from being wiped out in a flash flood. But as the uncertainties grow, so will the bill for tackling them.

A report published today by the UK's leading ethical hot drinks brand Cafédirect (Cepicafe is one of its suppliers) warns that the effects of climate change on arabica production are likely to lead to worldwide shortages and an exodus from coffee growing by small-scale producers. However the company, which was formed 21 years ago to protect small-scale producers from poverty after the collapse of the coffee price, has come up with a potential game changer: a unique way of playing the carbon market to the advantage of the poor that will fund long-term strategies to adapt to climate change.

Up in the Choco region, at an elevation of 3,100m, subsistence farmers – their lineage part Inca, part Spanish conquistador – are unexpectedly trading on the carbon market. In the village the air is full of the smell of wood stoves, which gives a clue as to Choco's big environmental problem: deforestation. As "weather change" hits, the deforestation has exacerbated flash flooding. There is simply no buffer in Choco any longer and the coffee farmers 2,000m below are in danger of being wiped out as a consequence.

"Of course we approached the carbon market cautiously as it doesn't have the best reputation and there was absolutely no blueprint," said Wolfgang Weinmann, head of strategic development at Cafédirect, who for a decade farmed coffee in Ecuador. Carbon-credit schemes are more associated with turbo-charged financial markets looking for a quick buck than the poor on the frontline, but as Cafédirect has worked with local non-governmental organisations, notably Progreso, they have built confidence.
Location of Piura in Peru Location of Piura in Peru.

In the nursery that nurtures the pine saplings that represent the first phase of reforestation (the next round will be native trees), it seems they might just have found a workable system that links the poor to the carbon market. For every tonne of carbon captured by the newly planted trees the community receives a carbon credit; later these can be sold on the global market to the benefit of the community. In practice, Cafédirect encourages partners along the supply chain to buy credits, such as Dublin-based Bewley's which roasts the coffee.

Cafédirect's report warns that the major multinational coffee retailers and brands must take urgent action too. This will be hard for multinationals to achieve without major change. Unlike Cafédirect, the big players do not have a relationship with their suppliers, as even fair trade beans are bought anonymously at market. Nothing short of a coffee industry revolution will protect the livelihoods of 25 million small-scale producers who produce 75% of high-quality coffee.

If Cafédirect's project succeeds it could provide a blueprint for indigenous communities all over the world.

Peru's vice president, Marisol Espinoza, said: "Climate change is a huge worry for us in Peru and we hope this initiative in Sierra Piura can be rolled out to other regions too. It is so important because Peruvian coffee is special. It protects biodiversity, and it's about development of whole communities. It also has an amazing aroma and taste. That's the taste of social justice."

Back in Piura, at the coffee-processing plant – which exported 161,000 quintals (7,400 tonnes) of top-quality green coffee last year all over the world – they are gearing up for quality checks. They are acutely aware that in the international coffee market the "taste of social justice" does not necessarily cut it.

"Luckily, we have amazing quality too," beams the factory manager.

In a few weeks the harvest should begin arriving from the mountain. The fight is on to make sure it continues.

Mexico, Central America and Caribbean [contents]

Police Find 49 Bodies by a Highway in Mexico
KARLA ZABLUDOVSKY. New York Times. May 13, 2012

MEXICO CITY — Forty-nine mutilated bodies were found dumped along a highway on Sunday near Monterrey, Mexico’s third-largest city, according to officials.

The security spokesman for the state of Nuevo León, which includes Monterrey, said that it would be difficult to identify the victims — 6 women and 43 men — because their heads, hands and legs had been cut off. It was not immediately clear when the people were killed; the bodies already showed signs of decay, officials said.

A message left near the scene suggested that the extremely violent Zetas drug cartel was responsible.

The bodies were found less than a week after officials authorized extending the army’s presence in Nuevo León and the neighboring state of Tamaulipas until the end of November. President Felipe Calderón began sending federal troops to fight organized crime syndicates in many parts of the country when he took office in 2006; violence related to the drug cartels and the crackdown on them has claimed more than 50,000 lives, most of them in states like Nuevo León near the American border.

The state attorney general, Adrián de la Garza, said the bodies were found in Cadereyta Jiménez, which is just east of Monterrey and 105 miles southwest of McAllen, Tex. Mr. de la Garza said the victims might have been migrants headed for the United States, though he pointed out that some of the bodies had tattoos of the “Santa Muerte,” the Mexican skeletal saint of death.

As the drug cartels have diversified their activities to include extortion, money laundering and human trafficking, they have taken aim at Central and South Americans passing through Mexico on their way north. Last year, the bodies of 193 people who were believed to have been migrants were discovered in a grave in San Fernando in Tamaulipas. A year earlier, 72 massacred migrants were found in the same area. The Zetas, one of the most ruthless of Mexico’s gangs, are believed to have been responsible for both mass killings.

The Zetas began as assassins for the powerful Gulf cartel, but split off in 2010 and have been waging a turf war with other criminal gangs, including the Sinaloa cartel, since then.

There have been a series of grisly discoveries in Mexico recently, including 23 bodies found in Nuevo Laredo bearing signs of torture, and 18 dismembered bodies found in vans a week later near Guadalajara, Mexico’s second-largest city. In September 2011, 26 bodies were dumped in the heart of Guadalajara, and a month later at least 60 bodies were found in Veracruz State.

Speaking to reporters on Sunday, Jorge Domene, the Nuevo León state security spokesman, mentioned some of the recent massacres. But he said that the violence was taking place between criminal gangs. “This is not an attack against the civil population,” Mr. Domene said.
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Mexico's leading presidential candidate is handsome, popular and still a mystery
Nick Miroff and William Booth. Washington Post. May 14, 2012

ATLACOMULCO, Mexico - In his campaign for president, Mexico’s handsome front-runner Enrique Peña Nieto looks down from towering billboards with a movie star smile. "Tu me conoces," he says. You know me.

But the fact is, many don’t.

With the July 1 presidential vote just six weeks away, Peña Nieto holds a solid double-digit lead in polls, and yet Mexican voters and U.S. observers confess they do not really know what the candidate stands for. Nor are they sure how he would govern Mexico, a vital trade partner for the United States and ally in the fight against drug cartels.

"Do people really know him?” said pollster Roy Campos. “No. But they want to get to know him."

Disparaged by his opponents as a pretty puppet and a telegenic con man, the 45-year-old Peña Nieto is in fact a masterful retail politician, who through message discipline and sophisticated marketing has made himself the new face of the old Institutional Revolutionary Party, the PRI, the autocratic political machine that ran Mexico through a blend of corruption and coercion for 71 years.

Pena Nieto was born into the PRI here in this quiet farm town a few hours drive northwest of the capital. He learned politics at the family dinner table. Even as a child, his hair was neatly combed, his manners impeccable. He appears to have approached his life as a ceaseless campaign.

"Instead of playing with other boys his age, he always wanted to be with the adults, talking about politics," said one of his aunts, Berta del Mazo. "They told him even then, you're going to govern some day."

A cadre of old style political bosses known as the Atlacomulco Group schooled young Enrique in the lessons of patronage and power.

Five men from his family served as governor of the state of Mexico, the country's most populous, by the time Peña Nieto was ready for his turn at the job in 2005, setting him on a path to this year's presidential run.

One of his mentors was family member Arturo Montiel, who proceeded him as governor and later faced charges he enriched himself with public money.

"Who is Enrique Peña Nieto, really?" said Andres Manuel Lopez Obrador, the left's presidential candidate, at the first debate, expressing aloud a question on many minds.

"He's been following a script all along. It's like a storyboard," said Jenaro Villamil, a reporter with the muckraking Mexican newsweekly Proceso, who depicts the candidate as the made-for-TV creation of Televisa, the country's dominant media conglomerate.

In his books and articles, now cited by Pena Nieto’s rivals, Villamil claims that as governor Peña Nieto gave millions to the network in advertising contracts to guarantee maximum exposure on Televisa programming, charges the candidate rejects.

Pena Nieto says the Mexican people want change, and he is the agent. Current Mexican President Felipe Calderon of the ruling National Action Party is constitutionally barred from running for re-election.

The stiff, stubborn Calderon often cast himself a military general, whether battling Mexico's criminal mafias or the entrenched political class -- dominated by Peña Nieto’s PRI -- that blocked passage of Calderon's agenda.
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Mexican presidential candidate paid journalists for media 'mentions'
Roy Greenslade. The Guardian. May 14, 2012

A Mexican presidential candidate paid thousands of pounds to journalists for "mentions" in the media.

According to an article in the Mexican newspaper, Reforma, and another in the magazine, Proceso, a current presidential candidate, Enrique Peña Nieto, paid roughly £1.5m for journalistic "mentions" during his tenure as a state governor.

One broadcaster - Joaquín López Dóriga, news host for the main Mexican broadcaster, Televisa - is said to have received about £420,000 between January 2006 and July 2007.

Reforma obtained receipts through a freedom of information request that also revealed payments made to two radio stations by Peña Nieto for interviews and broadcasts about his administration.

In his own defence, the presidential candidate (who is standing for the Institutional Revolutionary Party, said the payments were not made to receive favourable journalistic coverage but were for sponsorships that aired before the journalists' comments.

According to opinion polls, Peña Nieto is favoured to win the Mexican presidential election on 1 July.
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Guatemala's land grab and massacre
David Mercer. Al Jazeera. May 12, 2012

I meet activist, land evictee and massacre survivor Carlos Chen in front of the Catholic Church in the town of Rabinal.

A solid man in his late-50s, Carlos shakes my hand gently and suggests we go to his village to discuss filming plans for the following day.

While walking along a dusty side street we pass a small museum dedicated to the local Maya Achi culture. Poking my head inside one of the rooms a shiver runs down my spine.

Staring at me are the portraits of hundreds of people murdered during Guatemala's civil war.

Two entire walls are stacked with images of those massacred in Rio Negro, a community that refused to leave their land to make way for the Chixoy hydroelectric dam.

The photographs are taken from government-issued ID cards, and the paper is cracked and yellowing.

Many of the faces are young and innocent-looking. It's impossible to believe they were the dreaded guerillas that Guatemala's war-time government claimed them to be.

Carlos points to a row of photos and lists the family members shown: wife, brother, aunt, uncle. There are no photos of his children; they were too young to be issued government IDs.

Pacux

The army-built village where Carlos was forced to move to is indeed poor. Pacux's clapboard houses are crammed together. Children walk barefoot in the dirt streets. And there is a palpable air of desperation.

Calling this place a "model community", as the government has, is a cruel joke.

Carlos tells me about the way the Guatemalan army would turn indigenous communities against each other.

Soldiers would enter a village and force men into so-called Civilian Defence Patrols. If the men refused they might well face death.

The Patrols carried out much of the army's dirty work in neighbouring villages, including torture and murder.

For many years Carlos says he would see some of the men who killed his family on the streets of Rabinal.

The dam

Getting to the site of Rio Negro involves a fair amount of co-ordination. We need a 4WD, a boat, and permission to cross over the dam. And we need three hours for the journey.

The mountains ringing the reservoir are majestic. No buildings, livestock or people can be seen.

We reach the site of Rio Negro in less than an hour. Carlos and the boat driver discuss in their native Achi where Carlos' house used to be. They move the boat into position.

"It’s 100 metres down, everything that used to belong to the Chens," he tells me as I film him with my camera. 

We scramble up a rocky slope that marks the high point of the reservoir during the rainy season. Just above this we pass the simple wooden house of our boat driver Sebastian.

Sebastian's and 15 other families have chosen to leave the army-built "model communities" and have returned to the land of their ancestors.

Despite a three-hour hike to the nearest road, he says he prefers to live here. Here firewood is abundant. They can fish, tend to their livestock, and grow corn. Their families can live well.

Strangely, despite having lost nearly everything to make way for Guatemala’s largest hydroelectric dam, there is no electricity here. The irony is not lost on Carlos.

Carlos tells me that despite what they've suffered, his people are not against hydroelectric dams. They simply want to be paid the $150m in reparations as agreed to by the Guatemalan government.

And more importantly, they want to ensure that something like this never happens again.
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El Salvador gears up for 2014 presidential elections
Mike Allison. Al Jazeera. May 13, 2012

Scranton, PA - El Salvador's three biggest political parties - the Farabundo Martí National Liberation Front (FMLN), the Nationalist Republican Alliance (ARENA), and the Grand National Alliance (GANA) - have begun to set their sights on the 2014 presidential elections, following March's legislative and municipal elections.

The FMLN hopes to win the presidency that they thought that they had won in 2009. ARENA will look to stop bleeding support and to prevent the country's leftward drift. Finally, for GANA, the 2014 elections will provide a chance to break the FMLN and ARENA's dominance of the country's political system.
Falling crime levels coincide with gang truce in El Salvador

The leftist FMLN won the presidency of El Salvador in 2009, nearly 30 years after the revolutionary group formed in 1980. The FMLN would spend the next 12 years fighting against the US-backed military and Salvadoran government in a war that killed approximately 75,000 Salvadorans, the majority of whom were civilians. Following the 1992 peace accords, the FMLN worked to remake itself as a viable political party. After becoming the legislative assembly's largest political bloc in 2000, the FMLN finally captured the elusive presidency in 2009. To do so, however, the revolutionary FMLN had to enter into an alliance with a non-revolutionary, Mauricio Funes. In many ways, then, the FMLN still hasn't controlled the presidency.

Funes, the moderate

Funes is more reformist than revolutionary, which has caused some problems during the past three years. Both prior to and following the 2009 elections, the FMLN has stated its intention of withdrawing El Salvador from the Dominican Republic - Central American Free Trade Agreement with the United States (DR-CAFTA), joining Venezuelan President Hugo Chavéz's Bolivarian Alliance for the Americas (ALBA), and removing the US dollar as the country's national currency. While Funes re-established diplomatic relations with Cuba shortly after his inauguration, he has done little more than that to improve El Salvador's relationship with the communist country. Instead, he has strengthened political and economic ties with the US, recently welcoming home 22 soldiers who served on a special mission in Afghanistan and accepting the transfer of two Uighur detainees who had been imprisoned at Guantanamo Bay for nearly the past ten years.

Three years into Mauricio Funes' five-year term, the FMLN has begun to set its sights on the 2014 presidential election. However, to do so, the FMLN has to make a choice between a more moderate presidential candidate, who presents the party with a greater likelihood of victory; and a more traditional FMLN militant, who would have a harder time winning.

Oscar Ortíz, the popular FMLN mayor of Santa Tecla, would seem to be the party's best chance at securing victory. He worked in the trade union movement and fought in the FMLN's East Front during the war. Following the end of the armed conflict, Ortíz represented the FMLN in the assembly from 1994-2000, and was mayor of Santa Tecla from 2000 onwards. He was re-elected with 58 per cent of the vote in March and is popular among most Salvadorans. As mayor, Ortíz has worked well with representatives of other political parties and local business leaders in turning Santa Tecla into what some have referred to as a "model of development".

Unfortunately, while Ortíz is someone who shares many of the same critiques of the Salvadoran political and economic system as others in the FMLN, he is not someone who toes the party's line. Ortíz is generally associated with the internal factions that have sought to make the FMLN more transparent and responsive to its members, going so far as to challenge the legendary Schafik Handal for the party's nomination in the 2004 presidential election. The party's internal bodies, including the Political Committee and National Council, have been structured to prevent someone such as Ortíz from winning the party's nomination. Given the difficulties that the party has endured with the moderate Mauricio Funes, it is difficult to envision the party nominating another individual in the Funes mould.

Instead, it appears that the FMLN is counting on Salvador Sánchez Cerén - currently the vice president and minister of education - to bring about deeper social, economic and political reforms. Sánchez Cerén was the commander of the Popular Liberation Forces (FPL), one of the five groups that made up the FMLN during the war, and has led the revolutionary socialist wing of the party ever since the end of the war. He is the candidate who will reportedly [Sp] represent "the interests of the party" and move it forward on the road towards socialismo cuscatleco [socialism of uniquely Salvadoran heritage].

The FMLN's alliance with Mauricio Funes was designed to be a temporary one that would help the Salvadoran people overcome its fear of an FMLN militant as president. Salvadoran voters overwhelmingly rejected FMLN commanders in two previous elections. It is possible that with five years of Funes/FMLN governance, a less confrontational administration in Washington, and a less outspoken Hugo Chávez in Venezuela, a candidate such as Sánchez Cerén could emerge victorious in 2014. This is still less likely than an Ortíz victory, but given that he represents the party's socialist origins, his victory would result in a more coherent governing agenda than the current one.

Resurgent ARENA

During the civil war, El Salvador's oligarchy formed death squads to protect their economic and political position - as well as a political party, ARENA. The party occupied the presidency from 1989 until its defeat in the 2009 elections. Observers speculated that the 2009 defeat would force the party to engage in some soul-searching. Instead, the party fought over whom to blame.

But now, ARENA is in a strong position following March's election, which left them in control of a plurality of legislative seats and a majority of the country's mayoral offices. The party stands a good chance of regaining the presidency with either of the two candidates whose names have been most frequently tossed about, San Salvador mayor Norman Quijano or Ana Vilma de Escobar. While some do not think that Quijano is quite up to the job intellectually, ARENA could do a lot worse than support a candidate who is a two-time mayor of the capital.

Quijano seems to be popular outside ARENA, which would help garner support among independents. Escobar, a former vice-president, did very well in March's election - receiving more votes than any other candidate - and will represent the department of San Salvador in congress.
 El Salvador's bitter civil war legacy

However, there are persistent rumours that a group of ARENA deputies is considering abandoning the party to either create a new party - or to jump ship to GANA.

The third-party alternatives

GANA, formed by ex-president Elias Antonio Saca after he was expelled from ARENA in 2009, was formulated as a humanitarian alternative to what he characterised as a corrupt ARENA. Days after the March 2012 election, posters went up around town championing the "Civic Movement for Change". However, corruption allegations against Saca contributed to the FMLN's victory in 2009. However disappointed Salvadorans were when his administration ended in 2009, he remains surprisingly popular and is in a strong position to affect the next election.

Being a third-party alternative is both an advantage and a disadvantage for GANA. On the one hand, GANA appears to have taken some votes from the Salvadoran right and center. However, it does not currently appear as if a GANA presidential candidate would be able to win in 2014. While Salvadorans have been critical of both ARENA and the FMLN, voters have remained wedded to these political parties that emerged from the war, which typically receive about 75 to 85 per cent of the vote.

GANA is more of a viable third force, however, than other parties such as the Concertación Nacional (CN) or the Party of Hope (PES). Neither the CN nor the PES is in a position to support a credible candidate from within. As a result, Guillermo Gallegos of GANA has reached out to these two political parties, as well as to ARENA, in order to gauge their interest in supporting a single, shared presidential candidate in 2014. While it is still too early to tell whether they will be able to overcome their programmatic and personality-based divisions, it does appear certain that as long as GANA continues to insist that Saca should be any potential coalition's candidate, a coalition of all political forces on the right is unlikely to become reality.

While the parties' choice of candidates will be important in 2014, the main factor that will determine who wins will be the performance of the incumbent administration of Mauricio Funes. In March, the Catholic Church mediated a truce between two of the country's most notorious gangs, the MS-13 and the Dieciocho. The truce has cut the country's homicide rate by more than half during its first six weeks in existence, with the country even experiencing its first homicide-free day in nearly three years. Should the truce continue to stick, the FMLN will be in much better position for 2014 - even if it doesn't appear that Funes or the FMLN were the primary force behind the negotiations.

The FMLN will also need the economy to rebound after sluggish growth in 2010 and 2011. Meanwhile, public spending and debt have soared past expectations. Government spending has been important in expanding access to social services for the poor, but the FMLN still needs the economy to rebound before the elections.

Even though the FMLN has been frustrated with many of President Funes' policy decisions, especially his resistance to strengthening relations with other leftist governments in the region, their best opportunity to win in 2014 will be to help Funes succeed. Should the gang truce break down and violence return to 2011 levels - or should the economy fail to rebound - ARENA is likely to recapture the presidency, regardless of who the FMLN chooses as its candidate.

Mike Allison is an associate professor in the political science department and a member of the Latin American and Women's Studies Department at the University of Scranton in Pennsylvania.  He blogs on Central American politics here.
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Spanish Government Says It Supports End to U.S. Embargo on Cuba
EFE. May 13, 2012

MADRID – Spain considers it “necessary to end the trade, economic and financial blockade imposed on Cuba by the United States” since it “violates the basic rules of international trade,” the Spanish government said in response to a question posed in Parliament.

Prime Minister Mariano Rajoy’s government was responding to a question posed last week in Parliament by United Left, or IU, spokesman Jose Luis Centella.

The government’s written response noted that the U.S. embargo against Cuba “has been condemned on different occasions by the United Nations General Assembly.”

IU included the government’s written response in a statement.

Rajoy’s government also noted that Spain has “unequivocally” supported condemnations of the embargo at the U.N. and other forums.

Centella said he was satisfied with the government’s clear “and forceful” response, adding that he expected “greater activity” at the European Union and United Nations to end the embargo on the basis of “the international legality broken by the blockade.”

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

Unasur defence spending one of the lowest in the world: average 0.91% of GDP
Mercopress. May 14, 2012

Union of South American Nations (Unasur) member states released a report detailing each country’s military spending. Ministers and diplomats from the twelve nation regional bloc also pledged further military integration, proposing the creation of a Citizen Security Council.

The report, released by the Centre of Strategic Defense Studies (CEED), reveals defense spending in the period 2006–2010. CEED supports the work of the South American Defense Council, a Unasur body which encourages cooperation in regional security matters, transparency in military spending, and provides assistance in peace missions and natural disasters.

The report shows that between 2006-2010 Unasur countries spent 126 billion dollars on defense while accumulated spending increased sharply, from 17.6 billion in 2006 to 33.2 billion in 2010.

Brazil, the most populous country in the continent, headed the list, accounting for 43% of South America’s spending total. Colombia was second, with 17%, and Venezuela third, accounting for 10.7% of the Unasur military expenditure. However Chile stands close with 9%; Argentina, 8.3%; Ecuador, 4.5% and Peru, 4%.

The overall expenditure on defence in the region as percentage of GDP remains stable averaging 0.91%, said CEED. The percentage for the years considered is as follows: 0.90% in 2006; 0.86% in 2007; 0.92% in 2008; 0.95% in 2009 and 0.93% in 2010.

“The evolution of Unasur defence budgets does not register significant variations in the period analyzed and does not enable to establish an armamentism tendency or a militarization of the region”, points out the report. Further more the indicator shows South America is well below other regions of the world.

Taking military budgets individually in 2010 Ecuador was the country which most invested in defence, 2.74% of GDP; followed by Colombia, 1.89%; Surinam, 1.49%; Bolivia, 1.47%; Chile, 1.4%; Guyana, 1.31% and Uruguay, 1.06%. The rest of the countries were below 1%.

This means that the average regional expenditure per person between 2006 and 2010 was 67.4 dollars and the number of soldiers per 1.000 populations was three.

According to the CIA World Fact-book, the US spends around 4% GDP on its military, Colombia 3.4%, and Chile 2.7%.

Ecuadorian Minister of Foreign Affairs Ricardo Patiño commented on the importance for Unasur that member states share details of their defense spending “to establish ties of mutual trust” in the region.

The act of sharing such information is “historic” according to Unasur General Secretary Maria Emma Mejia, who argued that the report breaks both the myths of Latin American militarization and that military spending is detrimental to social development.

“This spending supports the security and safety of South American citizens…because we can attend to citizens with logistics and emergency services. It is a benefit for social peace,” she said.

The report also said that on average 58.7% of military spending was to pay personnel, 23.5% for operations, 17.3% for investment, and 0.5% for research.

At the meeting, held in Quito, Ecuador, representative of the UN General Secretary for Disarmament, Angela Klein, stated that the sharing of military spending information was “an exercise in transparency unseen in any other region of the world and a fundamental step in the construction of regional trust”.

A meeting is scheduled for 5 June in Asuncion, Paraguay, to formalize the report and present its analysis by defence ministers

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