Latin America News Round-up
July 2, 2012
Mexico's Old Rulers Return but Without Strong Mandate

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

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

Brazil and Southern Cone
Rousseff still popular despite Brazil's economic lull. Reuters
Brazil factory activity falls for 3rd month in row. Reuters
In Unique Turn, Brazil Union Seeks Less Workplace Regulation. Dow Jones
Paraguay Suspended From Mercosur, No Sanctions. AP
OAS fact-finding mission on the Paraguayan situation arrives in Asuncion. Mercopress
Land Reform, Paraguay's Ticking Political Bomb. AP
Paraguay’s Destructive Soy Boom. New York Times

Northern Andean Region
Chavez, Capriles launch Venezuela presidential race. AFP
Venezuelan TV Network Pays $2.1 Million to Avoid Larger Penalty. EFE
Colombia Keeps 5.25% Rate for Fourth Month as Economy Slows. Bloomberg
Colombia Says Urban Unemployment Rose in May From Year Ago. Dow Jones
'No coup' in Paraguay: Colombia. Colombia Reports

Western Andean Region
Ecuador still deciding on Assange asylum: Correa. AFP
Ecuador's economy grew 4.8 pct in 1st quarter –Correa. Reuters
New Amazon highway 'would put Peru's last lost tribes at risk'. The Guardian
Chinese miner builds high-altitude experiment in Peru. Reuters
Bolivia: TIPNIS Marchers Reach La Paz, Following Police Strike and Coup Allegations. NACLA

Mexico, Central America and Caribbean
Weary Voters Turn to Party of Mexico’s Past, Polls Say. New York Times
Mexico's old rulers return but without strong mandate. Rueters
Worries about vote buying despite Mexican reforms. AP
Exit polls: Leftist to win Mexico City mayorship. AP

Region: Trade, Security, Economy and Integration
Mercosur welcomes Venezuela, suspends Paraguay. Reuters
Mercosur rejects bid to raise trade tariffs. AP

Brazil and Southern Cone [contents]

Rousseff still popular despite Brazil's economic lull
Hugo Bachega. Reuters. June 29, 2012

BRASILIA, June 29 (Reuters) - President Dilma Rousseff is enjoying record approval ratings as Brazilians laud her efforts to lower interest rates and jumpstart the country's stalled economy, a poll showed Friday.

The Rousseff administration's approval rating climbed to 59 percent, according to the poll by the National Industry Confederation (CNI) and the Ibope polling institute. That was a three-point increase from the previous survey in March.

Rousseff's personal approval rating, already one of the highest for any elected leader worldwide, remained stable at 77 percent.

The approval, the pollster said, is largely the result of Rousseff's efforts to revive growth in Latin America's biggest economy. Indeed, 49 percent of those polled approved of her handling of the economy compared to 33 percent three months ago.

After nearly a decade-long investment boom, Brazil's economy in recent quarters has stalled because of the financial crisis in Europe, global uncertainty, and falling demand for commodity exports.

LOWER RATES, HAPPY SHOPPERS

Rousseff has introduced a series of tax breaks and other stimulus measures, and successfully prodded the central bank to lower the country's historically-high interest rates. A series of seven consecutive cuts by the central bank lowered the benchmark rate to its current level of 8.5 percent, a record low.

Not content with easing by the central bank alone, though, Rousseff also pressured Brazil's giant commercial banks to follow suit - something they haven't always done in a country with a history of economic volatility. By getting state-owned banks to lower their rates - and publicly upbraiding private lenders for keeping theirs high - she managed an across-the-board reduction by all.

The lower rates have kept credit flowing for Brazilians eager to continue the consumer binge that fueled much of the country's recent growth. Though loan defaults in recent months have climbed to levels that are troubling some economists, continued access to credit has kept most Brazilians happy.

"They aren't feeling the crisis very much," said Renato da Fonseca, head of polling for CNI, a private industry confederation. "The worsening economy still hasn't had any impact on the government."

Rousseff, 64 years old, had a tough act to follow when she took office in 2011.

A little-known bureaucrat and former minister during the administration of President Luiz Inacio Lula da Silva, her predecessor, she was elected because of his immense popularity, his campaigning, and the soaring economy at the time.

With little of the charisma or common touch that gave Lula such widespread support, however, analysts say her star could fall quickly if Brazil's economic woes worsen.
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Brazil factory activity falls for 3rd month in row
Silvio Cascione. Reuters. July 2, 2012

SAO PAULO, July 2 (Reuters) - Brazil's manufacturing output in June shrank for the third straight month in the latest sign that a battery of government stimulus measures have yet to spur economic growth, a survey showed on Monday.

The HSBC Purchasing Managers' Index (PMI) for the Brazilian manufacturing sector fell to 48.5 in June from 49.3 in May after seasonal adjustments, the lowest since October and below the 50 mark that divides growth from contraction.

Both showed both output and new orders posted the strongest pace of decline in eight months as demand remained weak, prompting companies to cut jobs for the third month in a row.

The PMI data could stir renewed concern among policy-makers who, anxious to revive growth, have chopped benchmark interest rates, granted new tax breaks and pledged to step up government buying of industrial goods.

It also highlights the impact of weak global demand over the world's No. 6 economy, expected this year to have the weakest annual performance since a shallow recession of 0.3 percent in 2009.

Despite a relatively weak foreign exchange rate for the Brazilian currency in June, the PMI survey showed export orders declined at the same pace they did in May - extending the negative trend recorded for that component of the survey notched each month since April 2011.

A mix of high taxes, lack of skilled labor force and infrastructure bottlenecks is frequently blamed for Brazil's manufacturing sluggishness, offseting all-time low interest benchmark interest rates of 8.5 percent.

"The manufacturing sector kept struggling with competitiveness," said Andre Loes, HSBC Brazil chief economist.

"A weaker real and lower interest rates may provide some relief in the medium term, but the breakdown of the survey suggests that in the short term, things are likely to remain challenging for manufacturers."

As private investments wane, President Dilma Rousseff announced last week an increase in government purchases this year of 6.6 billion reais ($3.2 billion), saying the government would "take all the necessary measures to protect production and jobs in our country."

The next day, Brazil's central bank sharply cut its 2012 growth forecast to a meager 2.5 percent. Most analysts expect the economy could slow even further. Brazil's economy grew 2.7 percent in 2011 and 7.5 percent in 2010.

Official industrial output data for May will be released on July 3 by Brazil's national statistics agency IBGE.

Markit, which compiled the PMI data for HSBC, added that stocks of finished goods were depleted for the tenth straight month and backlogs of work fell further in June.

Input costs rose, continuing the period of input price inflation started in September 2009. Raw materials such as oil and oil-related products were particularly mentioned by panelists, while a number of firms also commented on exchange rate fluctuations, Markit added.
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In Unique Turn, Brazil Union Seeks Less Workplace Regulation
Tom Murphy. Dow Jones. June 29, 2012

SAO PAULO--Labor reform designed to loosen rather than tighten regulation has gained an unlikely ally in Brazil via one of the country's largest, and most symbolically freighted, industrial unions.

"Brazil's economy is entering the 21st century, but labor relations are stuck in the 19th," said Sergio Nobre, president of Sao Paulo's ABC region metal-workers union.

Mr. Nobre occupies the same modest office, in the same military-green union hall in the Sao Paulo suburbs, where Luiz Inacio Lula da Silva launched the modern Brazilian labor movement in the 1970s, a movement that would make Lula two-term president of Brazil three decades later.

Mr. Nobre wants to continue that modernization.

"The reigning mentality in Brazil is that relations between labor and capital should be managed by the government," he said. "We want to change that. The root of most labor problems in Brazil is the lack of direct dialog between workers and managers."

To that end, the ABC metal workers have drawn up their own legislative proposal, which enjoys warm support from Brazilian President Dilma Rousseff and many in Congress. The proposal allows for a loosening of the regulatory straitjacket in cases of mutual agreement between unions and management.

"This is the most innovative approach to industrial relations we've seen in decades," said University of Sao Paulo labor economist Helio Zylberstajn. "Companies get a less regulated workplace. In return, unions get recognition as bargaining agents on the shop floor."

Mr. Nobre expanded on that view. "The way it is now, even minor disputes are settled by a labor ministry inspector. Why not have a shop steward instead? Why not create the healthy habit of face-to-face negotiation?"

Brazil's Consolidated Labor Code, or CLT in Portuguese, dates from 1943. It is a dictionary-sized tomb filled with rules and regulations that nominally protect labor rights but leave even industrial workers frustrated.

"Our women members wanted to modify maternity leave rules so they could work half time over a more extended period," Mr. Nobre said. "Labor officials killed the idea because there's no provision for it in the code."

Said Zylberstajn, "Even if both sides agree, it's still illegal. That's crazy."

Another case involved construction workers at a remote dam site in the Amazon. The contractor proposed a plan for 15 straight work days followed by 30 days off. "The workers jumped at it," said Mr. Nobre. "But it's not in the code. So, instead of visiting their families, workers spend their weekends in the crummy boom towns that spring up around Amazon construction sites."

The ABC union's proposal would loosen rigid controls on a host of issues, so long as basic rights are observed and both sides agree. It has been endorsed by Brazil's big umbrella unions such as the Central Workers Congress. It also earns kudos from business leaders.

"The proposal gives us hope we can build a more modern framework for labor-management relations," said conservative Senator Armando Monteiro, a former president of the National Confederation of Industries.

But labor regulation is always a temptation for both government inspectors and populist politicians.

For example, labor outsourcing, although an increasingly common practice, isn't formally recognized under the code. "Anybody who outsources does so at his own risk," said Monteiro.

University of Sao Paulo economist Jose Pastore noted another danger: "If all the bills, currently before congress, providing additional time off for workers were passed, nobody in Brazil would ever work a day."

But supporters are optimistic.

"The ABC union's proposal could pass congress in short order," said Monteiro.

Congressman Paulo Pereira da Silva, a former union leader, said, "There's no climate in congress now for comprehensive labor reform, but the ABC initiative is a winner."

Write to Tom Murphy at tom.murphy@dowjones.com

Gerald Jeffris in Brasilia contributed to this article
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Paraguay Suspended From Mercosur, No Sanctions
AP. June 29, 2012

MENDOZA, Argentina (AP) — The Mercosur trade bloc suspended Paraguay's membership on Friday for having impeached and ousted its president but will not slap economic sanctions on the poor, landlocked country.

The South American bloc also announced that Venezuela will become its fifth full member starting July 31.

Paraguayan President Fernando Lugo was impeached by the country's Congress a week ago in a fast-track trial triggered by a land eviction that killed 17 people in clashes between police and landless peasants.

Argentine President Cristina Fernandez told other heads of state at a Mercosur summit Friday that the "democratic order was broken" in Paraguay because it carried out a two-hour trial where Lugo was not allowed a proper defense. It will remain suspended from Mercosur until it holds presidential elections next year.

But Fernandez said Paraguay would not be slapped with economic sanctions because "they never hurt governments. They always hurt the people."

Paraguay is among South America's poorest nations and any economic sanction by the bloc would have been disastrous since half its trade is with fellow Mercosur founding members, Argentina, Brazil and Uruguay.

Mercosur barred Lugo's replacement, former Vice President Federico Franco, from attending the summit. Franco says the transition of power in Paraguay was carried out according to the law.

Lugo said at first that he would attend the meeting in order to plead his case with regional leaders but later changed his mind. He then spoke out against retaliatory economic sanctions, which he said would only hurt ordinary Paraguayans.

The landlocked country is highly dependent on beef and soybean exports and is already suffering from a recent drought that parched soy fields and an outbreak of foot-and-mouth disease last year that forced the slaughter of hundreds of cattle heads to prevent the spread of the contagious disease.

Paraguay has a long history of dictatorships and fragile democracies. The removal of Lugo, a former Roman Catholic bishop whose presidency was eclipsed by a cancer diagnosis and several paternity scandals, plunged the country into a political crisis and became a top priority for regional leaders. Several governments called back their ambassadors and some called his ouster a coup.

The Union of South American Nations, or UNASUR, will hold an emergency meeting Friday and could also suspend Paraguay from its organization, arguing that Lugo was not granted the defense that he deserved.

"We're sorry about the absence of Paraguay due to not having a legitimate government!" Venezuelan President Hugo Chavez said on his Twitter account.

At the summit, Fernandez also announced that Venezuela will become a full member of the trade bloc during a ceremony in Rio de Janeiro on July 31. Venezuela, an associate member, had been trying to get full status for years. Lugo supported the full-membership because he said its oil could help smaller members of the grouping, but the move had been blocked by Paraguayan lawmakers.

"This is great news ... Venezuela's full status into the Mercosur is a positive sign for more investment and integration," Alicia Barcena, head of the U.N.'s regional economic body, ECLAC, told reporters on the sidelines of the summit.

"This is one of the richest regions in minerals, fuels, we have a third of the world's water reserves and cultivable lands, more than 45 percent of soy and copper output," Barcena said. "Now with Venezuela's integration we hope that the energy integration will become a reality in the future."

Associated Press writers Luis Andres Henao reported from Mendoza, Argentina, Almudena Calatrava and Debora Rey in Buenos Aires, Argentina, and Ian James in Caracas, Venezuela contributed to this report.
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OAS fact-finding mission on the Paraguayan situation arrives in Asuncion
Mercopress. July 2, 2012

The OAS delegation headed by Secretary General Jose Miguel Insulza left Washington on Sunday together with the standing representatives before OAS from the United States, Canada, Haiti, Honduras and Mexico. On their return the mission has to elaborate a report to be presented to the OAS Permanent Council.

“We have information that there could be attempts to give a false image of the country and the current situation when the ambassadors arrive. That is why we have a Crisis committee with delegates from Foreign Affairs, the police, military, minister or Justice, minister of Interior analysts and Defence”, said Interior minister Carmelo Caballero.

However the minister promised there would be no restrictions on demonstrations, marches or other free expression peaceful activities as long as “they don’t become punishable crimes”.

The delegation headed by Insulza was scheduled to arrive in Asuncion early Monday morning and will collect information on the ground regarding recent events and plans to meet former president Lugo and his ‘resistance cabinet’ as well as current officials and protagonists involved in the impeachment process.

Last week following the impeachment that removed Lugo from office and had him replaced by Vice-president Federico Franco, the OAS Permanent Council could not reach a consensus on the situation and decided to send the fact-finding on the ground mission.

United States has yet to take a position regarding the Paraguayan impeachment and pledged to do so once the OAS Permanent Council receives all the information. Canada on the other hand has recognized the new government alleging the removed president Lugo publicly accepted the Congressional ruling.
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Land Reform, Paraguay's Ticking Political Bomb
PETER ORSI. AP. June 29, 2012

Along Avenida Republica in downtown Asuncion stands the gleaming facade of the $20 million Legislative Palace, where well-tailored congressional aides on their cellphones come and go and armed police guard the legislature that just impeached one president and installed another.

Across the street, a trash-strewn tent camp dominates a public park where residents of a shantytown scheduled for demolition have been protesting for the last year and a half. Pigs and dogs root in the dirt, as flames lap at the grate of a rudimentary cooking pit.

The stark contrast tells the story of a divided people living under the same red-white-and-blue-striped flag.

In one Paraguay, GDP has risen for three straight years and tony nightclubs and steak dinners are commonplace. In the other Paraguay, comprising more than half of the country's 6.5 million people, putting food on the table is a daily struggle and home may be a dirt-floor shelter with no electricity, toilets or running water.

The political crisis in this South American nation is grounded in the tensions between the landed and the landless, which came into sharp relief June 15 when a clash over disputed property left 17 people dead and provoked the impeachment a week later of President Fernando Lugo.

But the roots of the crisis stretch back 140 years, and prevail through an intractable pattern that keeps about 1 percent of the population in control of 77 percent of arable land, while 55 percent of Paraguayans are poor and 31 percent live in extreme poverty by a U.N. count.

Paraguay's poor hoped they had found their savior when Lugo, the bearded and sandal-clad "bishop of the poor," won the presidency in 2008 on campaign promises to deliver land reform, ending the conservative Colorado Party's six decades of single-party rule.

Yet during four years in office, Lugo achieved little meaningful reform.

"It's amazing how that land question again has become the Achilles' heel of Paraguayan politics and of this government in particular," said Miguel Carter, a Paraguayan political scientist specializing in South American land issues at American University in Washington. "Symbolically, the fact that this massacre of 17 people triggered this onslaught is telling."

Agriculture keeps the tiny economy of landlocked Paraguay sputtering along. The two largest exports are soy and beef, and the farm sector last year generated nearly 30 percent of the government's annual revenues of $8 billion.

Yet with big agribusiness dominant, the average countryside dweller sees little of that wealth. Between 74,000 and 300,000 people are landless, according to varying estimates. Paraguay is the region's most unequal in land concentration, trailing countries like Brazil, where land problems are at least cushioned by a more industrialized economy.

In Paraguay, the imbalance dates back to around 1870 when the country began unloading terrain to pay off a crippling war debt. The selloff sped up under strongman Gen. Alfredo Stroessner's 1954-1989 rule, when large agribusiness took hold and 8 million hectares (20 million acres) passed to private buyers, many of them friends of the regime.

The post-Stroessner constitution gives lawmakers wide leeway in checking the president. With weak support in congress against strong conservative opposition, the 61-year-old Lugo apparently never felt confident enough to push comprehensive land reform.

He also didn't keep promises to hold a nationwide survey to untangle an out-of-date land registry in which many titles vastly understate the amount of land controlled by large soy and cattle farms. By some accounts the listed holdings exceed the country's total square acreage. In some cases, multiple people lay claim to the same land and in others owners have apparently illegally claimed adjacent terrain as their own.

Lugo also lost budget battles that could have funded land acquisitions. During his administration, Congress passed Paraguay's first income tax, but delayed its implementation until 2013, just months before Lugo's term would have ended. An agreement struck with Brazil to triple the amount of energy it pays for energy from a shared river dam to $360 million annually, but Congress kept tight control of the windfall.

Against strong opposition and impeachment talk that swirled long before his recent troubles, Lugo "never was up to tackling what was Paraguay's biggest social problem," said Alfredo Boccia Paz, a Paraguayan political columnist. But he acknowledged that "If he had done much more, he probably would have fallen sooner."

Colorado leader Horacio Cartes denied the impeachment was a power grab, saying his party was motivated by Lugo's "bad governance." There is "only one way for the Colorado party to return to power: by winning the 2013 elections," he said.

Only belatedly, after one of Lugo's appointees was immersed in scandal, did he order a clean-up at the agency responsible for land reform.

"The idea was to recover lands that Stroessner fraudulently gave to his friends and families," said Belarmino Balbuena, leader of the Paraguayan Peasants' Movement. "That idea couldn't move forward because the courts put the brakes on any attempt to recover them, in compliance with laws that protect the rich, not the poor."

With a 1.8 percent annual population growth rate, small plots of land can't sustain large families and the industrial sector is too small to absorb the overspill. So many peasants migrate to construction jobs in places like Buenos Aires, or to shantytowns in Asuncion.

"It's this model of development that has become a curse on Paraguay. It concentrates land, it doesn't lead the country to industrialization, therefore it creates large segments of the population living in poverty," said Carter, the American University political scientist.

Lugo gets credit for sincerely wanting to lift the rural poor, and for publicly legitimizing discussion of fishy land transfers. He also funded programs to distribute seeds to poor farmers and teach them about fighting crop disease and raising livestock.

But in 2010, just 30,000 titles were granted under land reform, according to Eugenio Alonso, who then oversaw the land agency.

The president couldn't implement land reform quickly because the government didn't have any land under its control to distribute, said Luis Aguayo, leader of Paraguay's largest landless movement group with about 60,000 members. "But he was advancing, administratively, to recover terrain controlled by the big landowners."

But at the same time, during Lugo's administration police launched 300 operations to clear invading protesters from private holdings.

Now his successor, former Vice President Federico Franco of the Liberal Party, has to make land reform a central issue of his own foreshortened term, which ends August 2013. Franco on Wednesday ordered the Agriculture Ministry to conduct the national land survey as quickly as possible, saying a solution to Paraguay's agrarian problem is "long-awaited."
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Paraguay’s Destructive Soy Boom
JEREMY HOBBS. New York Times. July 2, 2012

Fernando Lugo is the latest victim of Paraguay’s “soy war.” Elected president in 2008 as a “champion of the poor,” Lugo was impeached late last month, plunging this poorest of South American countries into uncertainty.

Lugo’s election on a promise to redistribute land and carry out agrarian reform was popular but ultimately unachievable because of the interests ranged against him. Earlier in June, 11 campesinos and 6 police officers were killed during an operation to evict squatters from a huge farm used by a large-scale land owner and opponent of Lugo. Using this as a pretense, the Senate impeached Lugo a week later.

But it’s the rise of the humble soy plant — and the oceans of land upon which it grows in Paraguay — that links Lugo’s ouster in a historical struggle between the country’s powerful landed elite and its poverty-stricken farmers, on the one hand, and a world that has no apparent limit to its appetite for soy-fed animal meat and biofuels, on the other.

Paraguay is not the first country to lose a government over land disputes. It will not be the last. After decades of cronyism and corruption, 77 percent of Paraguay’s arable land is owned by just 2 percent of the population. Globally in the past 10 years, deals have been struck for 203 million hectares of land — nearly six times the size of Germany — at a pace and scale that is outstripping the ability of governance structures to respond. The cracks, as in Paraguay, are never far from the surface.

Paraguay is now the world’s fourth-largest exporter of soy and demand is surging, driven primarily by China and Europe for cattle feed and biofuels. Paraguay’s agricultural landscape has altered dramatically on the back of this boom. Since 1996, more than 1.2 million hectares of forest have been cut down to grow soy rather than food and other crops. Brazilian settlers — the brasiguayos — have set up large-scale soy farms, provoking a prolonged conflict over what locals say is “earth robbery.” Over the last 20 years 100,000 small-scale local farmers have migrated to city slums or to other countries or have become landless. Each year in Paraguay 9,000 rural families are evicted by soy production and nearly half a million hectares of land are turned into soy fields.

Ironically, in a country where 40 percent of the population still lives in poverty and 11 percent are undernourished, Paraguay’s macroeconomy is booming. Its G.D.P. grew by 15 percent in 2010 — the second-fastest-growing economy in the world — on the back of soy exports worth $1.6 billion.

The Paraguay soy boom — made in China and Europe and grown upon the lands of the political elite — is controlled by the boardrooms of Big Business. As much as 70 percent of Paraguay’s soy is exported each year and of that the multinational grain giants Cargill, ADM and Bunge account for about 70 percent.

In 2004, the agribusiness Syngenta caused indignation by publishing an advertisement of a map that shaded a large area of Argentina, Brazil, Bolivia, Paraguay and Uruguay and called it the “United Soy Republic.”

But Paraguay has been unable to add significant value to its soy exports: In 2010, 5.7 million tons of its total harvest were exported as raw bean while only 1.5 million tons were processed. Other actors seem to be gaining more from this part of the United Soy Republic than ordinary Paraguayans are.

There is ample cause for concern about law and order and the democratic process in Paraguay. In the event of any conflict, it is always the poor who suffer most. The international community needs to give more support to the people of Paraguay in order to build a more fair and inclusive country. They must give greater focus to rural development and sustainable food production, and to more equitable land rights, so that the poorest farmers are better protected from the global demand for land.

The I.M.F. believes that Paraguay’s economy will grow next year to the tune of 8.5 percent — a fantastic prospect but only if the benefits of this can be fairly shared. More widely than that, corporate and political leaders who have helped to spur Paraguay’s soy boom need to look hard at its sustainability and how fairly it is returning benefits to ordinary Paraguayans.

More than half of the soy grown in Paraguay is exported to Argentina, and much of this is turned into diesel either in Argentina or in Europe to fuel Europe’s cars. In a world where a billion people go to bed hungry every night, policies that convert arable land from growing food to fuel are surely wrong-headed, and are only likely to increase competition and conflict over a scarce natural resource.

Jeremy Hobbs is executive director of Oxfam International.

Northern Andean Region [contents]

Chavez, Capriles launch Venezuela presidential race
Valeria Pacheco. AFP. July 1, 2012

CARACAS — Venezuela's President Hugo Chavez on Sunday staged a huge rally despite his lingering health problems as he and rival Henrique Capriles formally launched their campaigns ahead of October elections.

After 13 years in power, the firebrand Chavez is facing his first serious election challenge as he vies for a new term that would cement his legacy both at home and as Latin America's leading leftist in the post-Fidel Castro era.

Chavez -- who has been battling cancer for more than a year -- could rack up 20 years in office if he is re-elected on October 7 and serves out his full term.

Dressed in a jacket and his trademark red beret, Chavez kicked off his campaign in the town of Mariara in Carabobo state, where he was greeted by a red tide of thousands of supporters who chanted, "Chavez isn't leaving!"

He then left in an open-top truck -- part of a boisterous caravan that travelled 18 kilometers (10 miles) to the nearby town of Maracay, where he delivered a fiery 90-minute speech.

Putting on a show of force to naysayers who have raised doubts about his health, the 57-year-old president sang the national anthem a cappella, accompanied by some of his ministers, before launching into his address.

"I would like to first thank Christ the Redeemer for allowing me to get through this difficult year and be with the Venezuelan people to start this battle," said Chavez, who insists he is fully recovered and fit to lead.

"We will fight every day, and night after night, to find 10 million votes and give the bourgeoisie another explosive knockout," he added, describing his opponent as "boring."

The youthful and telegenic Capriles, 39, is the former governor of Miranda state.

Venezuela's sometimes fractious opposition has united behind Capriles, who opened his campaign in the remote indigenous community of Kumarakapay near the Brazilian border.

"We will be better because Venezuela deserves to be better," said Capriles, wearing a native headdress and a shirt bearing the colors of the national flag.

"There is nothing that can beat the storm of progress."

He was due to travel later to the other end of the country to the town of Guajira in northwestern Zulia state near the Colombian border, in an attempt to show the Chavez government has neglected those areas.

Most opinion polls put Chavez firmly in the lead, but Capriles is counting on undecided voters -- estimated at 35 percent of the electorate -- to help him win.

Capriles has claimed he will handily defeat Chavez, even predicting a 10-point margin of victory. He has vowed to tackle what he calls the country's three main problems -- poverty, unemployment and violence.

The Venezuelan government has disclosed few details about Chavez's health. In May, Chavez sought treatment in Cuba, his closest regional ally, after a recurrence of the cancer he first disclosed last year.

Doctors in Havana removed a tumor from his pelvic area last June, but after pronouncing himself fully recovered from cancer, Chavez reported a new lesion in February and returned to Cuba for additional surgery and radiotherapy.
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Venezuelan TV Network Pays $2.1 Million to Avoid Larger Penalty
EFE. June 29, 2012

CARACAS – Globovision television handed over $2.1 million to the Venezuelan government on Friday rather than see $5.6 million of the network’s assets frozen for refusing to pay a fine levied last October.

The money was paid “under protest” and represents an “enormous sacrifice” for the network, Globovision legal counsel Ricardo Antela told reporters outside the Supreme Court.

He said Globovision expects to wins its appeal against the original fine and get the $2.1 million back.

The Conatel regulatory agency imposed the penalty last October in connection with the network’s coverage of a prison uprising in June 2011.

Globovision, which takes a critical line toward leftist President Hugo Chavez, was accused of editing video and audio material to present a misleading account of the events at the prison outside Caracas,

Conatel said the network’s coverage was so slanted that it constituted a defense of criminal acts.

The outlet challenged the fine in the courts and said it would delay paying pending a final judicial resolution of the case. On Thursday, however, the Venezuelan Supreme Court embargoed $5.6 million of Globovision assets.

Network Vice President Carlos Zuloaga said he expects the embargo to be officially lifted on Monday. EFE
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Colombia Keeps 5.25% Rate for Fourth Month as Economy Slows
Matthew Bristow and Andrea Jaramillo. Bloomberg. June 29, 2012

Colombia’s central bank kept borrowing costs unchanged for a fourth straight month as growth cools and prices drop for the Andean nation’s commodities exports.

The seven-member board, led by bank chief Jose Dario Uribe, voted to keep the overnight lending rate at a three-year high of 5.25 percent today, matching the forecast of all 33 economists surveyed by Bloomberg.

Colombia flouted a trend for lower interest rates last year as credit growth and record foreign investment in oil and mining helped spur the fastest economic growth since 2007. Since then, the economy has slowed faster than expected, meaning that the central bank’s next move is likely to be a cut, said Camilo Santana, an analyst at Cia. De Profesionales de Bolsa SA brokerage in Bogota.

“This won’t cause the bank to start stimulating the economy right now, but it probably will further down the road if the growth situation remains bad,” Santana said in a telephone interview before the rate decision. “They are very conservative, and need to be sure that the scenario calls for more stimulus.”

If household consumption remains weak, and gross domestic product is sluggish in the second quarter, the central bank will cut rates in September or October, Santana said.

Finance Minister Juan Carlos Echeverry, who forms part of the central bank’s policy committee, told reporters in Bogota this week that Colombia will cut rates this year “if needed,” and that this will depend on the international scenario. The last time the central bank lowered borrowing costs was in April 2010.
Credit Concern

The central bank raised interest rates nine times between February 2011 and February 2012. Colombia now has higher borrowing costs than Chile, Peru and Mexico, though lower than the 8.5 percent benchmark rate in Brazil.

Retail sales slumped 2.8 percent in April from a year earlier, a worse result than all 16 forecasts in a Bloomberg survey of economists, whose median estimate was for a 4.1 percent increase.

Industrial output also fell unexpectedly, while urban unemployment rose and building permits fell 29.7 percent from a year earlier.

With some members of the central bank’s board still worried about the pace of credit growth it will be difficult for policy makers to reach an agreement that rate cuts are needed unless growth slows even more, said Francisco Rodriguez, a New York- based economist at Bank of America Merrill Lynch. Credit expanded 19.4 percent in April from a year earlier.
Peso

“We don’t see evidence that deceleration has reached the point that would lead the bank to say yes this is getting serious enough for us to cut,” Rodriguez said in a telephone interview before the rate decision.

Colombia’s economy grew 4.7 percent in the first quarter from a year earlier, its slowest pace since 2010, as the world’s biggest currency rally this year hurt farmers and manufacturers, while spending on public works slumped.

The peso has strengthened 8.7 percent to 1,781.60 per dollar this year, the biggest gain of 170 currencies tracked by Bloomberg. President Juan Manuel Santos told coffee growers in Medellin this week that he wants the central bank to take “more aggressive” action to weaken the peso.
Inflation, Oil

Santos said the country could increase its international foreign currency reserves by about $8 billion to $10 billion. Colombia had reserves of $34 billion in April.

Annual inflation slowed to 3.44 percent in May, the second- lowest rate after Chile of 13 Latin American economies tracked by Bloomberg, from 3.73 percent at the start of the year.

The central bank targets inflation of 3 percent, plus or minus one percentage point.

Oil exports rose 70 percent to $28 billion dollars last year, while exports of coal rose 40 percent to $8.4 billion. Oil accounted for 49 percent of the country’s sales abroad last year. The price of crude has slumped 17 percent this year.

The yield on Colombia’s benchmark 10 percent peso- denominated bond due in July 2024 fell one basis point to 6.99 percent, according to the central bank.

To contact the reporters on this story: Matthew Bristow in Bogota at mbristow5@bloomberg.net; Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net
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Colombia Says Urban Unemployment Rose in May From Year Ago
Dow Jones. June 29, 2012

BOGOTA--Colombia's urban-unemployment rate, traditionally the main measurement tool for joblessness in the country, rose in May from the year-ago period, the latest sign that the economy in this Andean nation is slowing.

Colombia's urban-unemployment rate rose to 11.9% last month from 11% a year ago, the national statistics institute, known as DANE, said Friday. The increase halts a trend of lower unemployment readings when compared with the year-ago period in the country's biggest cities over the last few months.

The figure also represents an increase from April, when urban unemployment, which is highly seasonal, stood at 11.4%.

In a nationwide measure, which economists say produces a less exact indicator of the job market, unemployment fell to 10.7% from 11.2% a year earlier.

Colombia's stubbornly high unemployment rate represents one of the top economic challenges for President Juan Manuel Santos, who has pledged to create 2.5 million jobs over the coming years by easing labor laws and making it cheaper for small companies to hire workers that are starting their first jobs.

The decrease in the urban-unemployment rate, based on a survey of 13 metropolitan areas, comes amid signs of slower economic growth. After expanding 5.9% in 2011, the Colombian economy grew 4.7% in the first quarter of the year. For 2012, the Colombian central bank expects the economy to grow about 5%.

Write to Darcy Crowe at darcy.crowe@dowjones.com.
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'No coup' in Paraguay: Colombia
Adriaan Alsema. Colombia Reports. July 1, 2012

The recent impeachment of Paraguay's ex-president was "irregular" but no coup, said Colombia's foreign minister Sunday.

In an interview with newspaper El Tiempo, Foreign Minister Maria Angela Holguin said the "impeachment of President Fernando Lugo was irregular," adding that "we believe that you can't speak of a coup."

According to Holguin, "what is clear is that there was no respect for due process; they did not allow President Lugo a process with the minimal guarantees that come with the universal principles of defense."

While Colombia disagrees from other South American countries like Argentina and Venezuela who consider the overthrowing of Paraguay's former head of state illegitimate, Holguin said "there is unanimity in the region" that "without a doubt the constitutional order of Paraguay was altered."

Colombia supports country union Unasur's decision to suspend Paraguay. However, Bogota will not expel Paraguay's ambassador.

The leftist Lugo took office in 2008, but has faced strong opposition from a primarily conservative House of Representatives and Senate, who dismissed Lugo only months before the elections.

Western Andean Region [contents]

Ecuador still deciding on Assange asylum: Correa
AFP. July 1, 2012

QUITO — Ecuador is still considering whether to grant political asylum to WikiLeaks founder Julian Assange, who faces extradition to Sweden over sexual assault allegations, President Rafael Correa said Saturday.

"We are analyzing the case with full responsibility and, as we have said a thousand times, we have no deadline to make a decision," Correa said.

"That decision will be absolutely sovereign and ... (show) respect for human rights," he added.

Assange remained holed up at Ecuador's embassy in London on Saturday, defying a British police order to turn himself in for extradition to Sweden where he is sought on sex crime allegations.

The 40-year-old Australian insists those allegations are part of a politically-motivated effort to get him extradited to the United States, where he fears he could be put on trial for espionage or other crimes.

WikiLeaks enraged Washington by publishing a flood of secret information about the wars in Iraq and Afghanistan, as well as more than 250,000 confidential US diplomatic cables.

Assange's supporters paint him as a whistle-blowing hero but his critics denounce him as a traitorous anarchist. He sought refuge at Ecuador's embassy in London on June 19.

Correa has often been at odds with Washington and offered Assange asylum in 2010.
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Ecuador's economy grew 4.8 pct in 1st quarter -Correa
Reuters. June 30, 2012

QUITO, June 30 (Reuters) - Ecuador's economy grew 4.8 percent in the first quarter this year compared to the same period last year, slowing from a year-on-year growth rate of 6.1 percent in the previous quarter, President Rafael Correa said on Saturday.

Higher oil export revenues together with increased tax collection have allowed the government to ramp up welfare spending in recent years, which has spurred economic growth.

"In the first three months of 2012, and this is official data from the Central Bank, we've had a growth rate of 4.8 percent," Correa said in his weekly television address.

Ecuador's economy grew 7.8 percent in 2011, more than double the 2010 growth rate. The OPEC nation expanded 3.6 percent in 2010 and 0.4 percent in 2009.

The government has vowed to continue spending heavily to spur growth in 2012 as it heads toward a presidential election scheduled for February 2013. Correa is expected to run for re-election but has yet to make an official announcement.

The Andean nation forecasts that the gross domestic product will expand 5.4 percent in 2012.

The country's good economic performance led Standard & Poor's to upgrade Ecuador's long-term sovereign rating to B from B-minus in early June.

However, the Correa government has failed to diversify the economy away from its dependence on oil exports and Ecuador could suffer if crude prices continue falling.

Ecuador's 2012 budget forecasts oil prices at an average of $79.70 per barrel this year. Correa said that Ecuador's oil sold at an average of $106 per barrel in the first six months of the year.

"We're doing quite well. The first semester was extraordinary and we'd only fail with the budget if oil prices fall below $53 (on average in the next six months), and that's very difficult, although not impossible," Correa said.

He said the country has at least $600 million in spare funds to finance public spending if oil revenues fall sharply.

Ecuador produces around 500,000 barrels of crude oil a day and i s OPEC's smallest member.
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New Amazon highway 'would put Peru's last lost tribes at risk'
Gethin Chamberlain. The Observer. June 1, 2012

A fierce row has broken out over a controversial plan to drive a road through pristine Amazon rainforest, imperilling the future of some of the world's last uncontacted tribes.

The 125-mile (200km) road would pass through the Alto Purús national park in Peru, connecting a remote area to the outside world but opening up the most biologically and culturally important area of the upper Amazon to logging, mining and drug trafficking. Opponents of the plan fear it will threaten the existence of uncontacted tribes such as the Mashco-Piro. The first detailed photographs of members of the tribe made headlines around the world earlier this year after they were spotted on a riverbank.

The majority indigenous population of the region appears to be largely united in its opposition to the road, which would run parallel to the Brazilian border, connecting the towns of Puerto Esperanza and Iñapari. Conservationists warn it would cause irreparable harm to the environment and the area's people.

But the road has the support of many mixed-race settlers – or mestizos – who make up roughly one fifth of the region's population. With the Alto Purús currently accessible only by plane, they believe that the road would improve their quality of life, bringing lower prices for fuel and food and creating profitable development opportunities.

The campaign to build the road has been led by an Italian missionary, Miguel Piovesan, who claims that indigenous people are being kept isolated and denied the chances for development available to the rest of the population. He first proposed the road in 2004, around the time the Peruvian government announced that the Alto Purús was to become the country's largest national park.

Piovesan's plan's met with little initial enthusiasm, but his long and determined campaign, using his own radio station and parish website, has been so successful that the country's Congress is now due to debate a bill to allow construction to start. Piovesan has been scathing about his opponents, particularly international organisations such as Survival International and the WWF, which he accuses of profiting from keeping the tribes in isolation.

"These international organisations gain money because they present themselves as the saviours of the Indians, this is what it's all about. So if the Indians evolve, they [the NGOs] lose their business," he said on a recent radio show. Last week he told the Observer that the reality was that the indigenous people were being kept in a condition of "captivity and slavery incompatible with the true ecology".

But Piovesan's opponents suspect that he is more interested in gaining access to potential converts for his church. Reports from Peru say that he has denied the existence of the uncontacted tribes. The main indigenous organisation in Puerto Esperanza, Feconapu, has demanded that the Vatican remove the priest, accusing him of insulting and humiliating the native population.

One indigenous leader, Julio Cusurichi, warned that building the road would amount to "ethnocide" of the uncontacted tribes. According to the last census, in 2007, there are only about 3,500 people living in the region, including eight known tribes and an unknown number of uncontacted Indians living in the Madre de Díos territorial reserve. The 6.7m-acre national park is also home to wildlife including jaguar, scarlet macaw and giant river otter.

The Upper Amazon Conservancy, which works with the indigenous population, has been one of the most vocal critics of the road. Its director, Chris Fagan, accused the road's supporters of short-sighted greed and said the majority of the population were vehemently opposed.

"They depend on the forest and rivers for daily sustenance. They see the highway as just the latest example of mestizo greed and exploitation – of rubber, their religion, animal skins, mahogany, and now a highway accessing their homelands," he said. "It will ruin one of the wildest and culturally important places on Earth. Will reason or greed prevail?"

Rebecca Spooner, Survival International's Peru campaigner, said building the road would devastate entire peoples: "These uncontacted tribes live either side of the Peru-Brazil border. Building this road through their forest tramples over their rights, imposing so-called 'development' upon them. Congress has the opportunity to step in before it's too late. This road should not be approved."

The issue of access to areas inhabited by uncontacted tribes came to the fore in January when the Observer exposed the plight of the Jarawa tribe of the Andaman Islands, whose women and girls were being persuaded to dance semi-naked for tourists in return for gifts of food.

Last month India's government finally took action to end the abuse, introducing a law to create a 5km buffer zone around the Jarawa's reserve and making breaches of the law punishable with up to seven years in jail.

But in a sign that Delhi has a fight on its hands to protect the tribe, the Andaman administration responded by instructing its police force to think very carefully before taking any action against settlers living around the buffer zone.
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Chinese miner builds high-altitude experiment in Peru
Caroline Stauffer. Reuters. July 2, 2012

MOROCOCHA, Peru (Reuters) - High in the Andes mountain range, a Chinese mining company is now in the housing construction and demolition business as it works to relocate a Peruvian town that sits in the way of its $2.2 billion Toromocho copper mine.

By late July, state-owned miner Chinalco says it will finish building a new city of paved roads and multi-story homes for 5,000 people currently living on the side of a giant red mountain of copper 15,000 feet above sea level.

Residents from the poor, ramshackle town of Morococha, where children attend school steps away from discarded mine tailings, will get access to amenities they currently lack, like modern water, sewage and electrical systems. They will all also own their homes and no one will need to pay rent.

Chinalco calls the new $50 million town the biggest privately funded social project in Peru's mining history and it may help the company avoid community opposition that has stalled other major projects, like U.S. miner Newmont's $4.8 billion Conga project in the northern Andes.

If Chinalco persuades residents to move to Nueva Morococha, or "New Morococha," 15 minutes away by car - a feat that is still not certain - it could change ideas about corporate responsibility as President Ollanta Humala struggles to resolve hundreds of conflicts over natural resources that threaten $50 billion in pledged private investments.

"A project of this size has generated very high hopes," said Pedro Salazar, Chinalco's representative in Nueva Morococha, standing in front of rows of homogenous homes with white walls and red roofs. "Other mining firms are looking at this as a point of reference."

Toromocho is expected to open in late 2013, operate for 35 years, and produce 250,000 tonnes of copper a year - nearly a quarter of Peru's 2011 output. A free-trade agreement with China will ease exports of the red metal to the world's No. 2 economy.

The town of Nueva Morococha, if successful, could improve the reputation of Chinese companies operating far from home. Many have been accused of running roughshod over workers and residents in Peru and other developing countries in the past.

Chinalco says 75 percent of Morococha residents support the move. It says residents were consulted about the new town's layout - which will have a central plaza, a school, a hospital and churches. It looks a bit like a Peruvian version of Levittown, the suburban towns built in the United States in the 1940s and 1950s.

NO PLANS TO MOVE

Chinalco expects to persuade more residents to move by taking them on visits to the new town that broke ground two years ago. Nueva Morococha sits in a shallow valley near picturesque alpine lagoons but, because it is still under construction, lacks the organic feel of a living town.

"Some want to move to the new city because now they live in rented rooms. Others don't want to go because the company hasn't taken account of all of our needs," said Rebeca Antonio. She sells trinkets and sodas from a stall and worries there won't be enough foot traffic in the new town for her to make a living.

Residents in favor of the move said they would prefer to have homes with new kitchens and to live at a slightly lower altitude in a new place that isn't surrounded by mine tailings. They say Chinalco does more for them than their mayor in the town 92 miles east of Lima, Peru's capital.

But some villagers and local government officials are not sold on the idea, fearing they are losing control over their livelihoods without adequate compensation for their homes in a community with a tumultuous mining history.

"Nothing is certain. We don't have any plans to move," said Vilma Pariona, general manager of the municipality of Morococha.

Morococha's mayor led protests two years ago against Chinalco that were attended by some 100 people. Protesters said Chinalco hadn't offered enough to buy existing properties and the location for the new town, chosen arbitrarily, was humid.

Chinalco's Salazar said holdouts, along with people who weren't given houses because they arrived in Morococha after the company's 2006 enrollment deadline, will not delay the mine's opening next year. Residents could, in theory, stay put for five more years - if they can put up with the grit and noise.

They do not have much legal recourse as the town sits inside the mining concession granted by the government - which also required the miner to relocate residents.

Despite a decade-long economic boom helped by China's voracious appetite for the metals that Peru exports, around 60 percent of rural Peruvians remain poor, fueling distrust and discontent.

Critics say Humala's predecessor Alan Garcia, who approved the Chinalco deal, welcomed foreign mining investment almost unconditionally. Humala has asked some firms, including Newmont, to improve their social and environmental plans but has generally backed big companies since taking office a year ago.

Humala says he needs revenue from mining to keep Peru's economy humming and fund initiatives to tackle poverty, which has fallen to around 30 percent at a national level.

NEFARIOUS HISTORY

In rugged areas like Morococha where government-run social programs are scarce and residents chew coca leaves to ward off hunger and altitude sickness, companies say they are forced to play the role of the state and build schools, roads and medical facilities, or face bouts of unrest.

At least 10 people have died in disputes over natural resources since Humala took office a year ago, according to the government human rights office. Some 174 people died in clashes with police that often pit poor villagers against large multinational firms during Garcia's term.

Chinese firms have at times been flashpoints.

The stalled Rio Blanco copper project in northern Peru was stymied by bouts of violence before and after it was bought in 2007 by Zijin of China. A Peruvian iron ore mine owned by China's Shougang Group has been dogged by labor and safety tensions since it was bought in 1992.

Chinalco and other firms say they are trying to chart a different course, responding to pressure from the government and communities to be more socially responsible.

"Companies that have recently entered Peru are taking note of the conflicts and are trying to have better relations with local populations," said Carlos Monge, regional coordinator of the NGO Revenue Watch.

Mining memories in towns like Morococha in Peru's central Andes go back centuries. Residents still talk of a mining accident that killed 27 people in 1928 and many have toiled in the mines that have helped make Peru a top producer of copper, zinc, silver and gold.

Morococha also sits about 20 miles away from La Oroya, often ranked as one of the world's most polluted places because of a polymetallic smelter that is now shuttered.

People in Morococha live above abandoned tunnels and say that the mine tailings from earlier ventures were dumped into reservoirs surrounding them and cause respiratory and digestive problems.

"We don't want to be a part of this nefarious history," said Chinalco's Salazar in the tidy streets of the still uninhabited city of Nueva Morococha.

(Additional reporting by Reuters television; Editing by Terry Wade and Kieran Murray)
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Bolivia: TIPNIS Marchers Reach La Paz, Following Police Strike and Coup Allegations
Emily Achtenberg. NACLA. July 2, 2012

Some 1,500 indigenous marchers and their allies arrived in La Paz on June 27, after a 62-day, 360 mile trek from the Amazonian lowlands to protest the Bolivian government’s proposed highway through the Isiboro-Sécure Indigenous Territory and National Park (TIPNIS). 

This second national TIPNIS march arrived at a moment of high tension, even for conflict-prone Bolivia. Just hours earlier, President Evo Morales had settled a violent national police mutiny that roiled the capital city for six days. Morales also attracted international attention with allegations that a right-wing coup, implicating both the police and the TIPNIS protesters, was in the making.

Between June 20 and June 24, armed rank-and-file officers (and their wives) engaged in a series of violent provocations, including attacks on the national police headquarters and other elite police facilities,  to underscore their demand for wage parity with the armed forces. As the protest shut down police operations in La Paz and spread to other departmental capitals, Morales deployed troops into the streets of Bolivia’s major cities.1082 Police mutiny. Hernan Andia, Los Tiempos.

Morales claimed that conservative opposition forces had infiltrated the police protest in an effort to set the stage for a political coup.  Further,  according to Vice President Alvaro García Linera, the government had evidence of a “Plan TIPNIS,”  a right-wing strategy to link the police mutiny with the approaching TIPNIS march in order to destabilize and overthrow the Morales government. As one MAS (Movement Towards Socialism) governor cautioned, “both the police mutiny and the indigenous march are seeking violence or confrontation, as well as deaths, in order to blame the government.”

Fernando Vargas, president of the TIPNIS Subcentral, was quick to refute the charge. “Our mobilizations were never  [intended] to overthrow the government but, on the contrary, have been to redirect government policies that have gone astray,” he stated.

Police rebels, too, insisted that their mobilization was strictly a labor action. According to the Andean Information Network (AIN), the police have had legitimate grievances against Morales, whom they perceive as exacerbating traditional rivalries between the police and the military. Prior to the strike settlement, rank-and-file police officers earned 30% less than their armed forces counterparts. Resentment has mounted due to shrinking police budgets, removal of ID card and drivers’ license administration (a substantial source of unregulated income) from police control, and Morales’ recent installation of an unpopular  new National Police Commander.

The police also feel scapegoated for their role in managing social conflicts, such as the first TIPNIS march, where Morales blames rogue (or politically-motivated)  police  for the violent repression of indigenous marchers at Chaparina. The police insist that they were only acting under government orders.

It’s not the first time that Morales has accused protest movements—including the TIPNIS marchers—of links to outside forces (such as the US Embassy and right-wing opposition groups) who are seeking to destabilize his government. Protest leaders view these allegations largely as a tactic to undermine their credibility and mobilize support for the government.

1084 TIPNIS march arrives in La Paz. Credit: Hernan Andia, Los Tiempos.Coming on the heels of the recent coup against leftist president Fernando Lugo in Paraguay, the charges in this case may have seemed plausible to many. Also, Bolivians have not forgotten the events of Febrero Negro (Black February) in 2003, where a police revolt—over a tax increase—left at least 18 dead and 80 wounded after a shootout with the army in the Plaza Murillo, setting the stage for the popular revolt that ousted neoliberal president Gonzalo Sánchez de Lozada 8 months later. To date, though, the government has offered little in the way of concrete evidence to back up its case for a coup in the making.

As Kathryn Ledebur of AIN recently told Al Jazeera, “There are legitimate demands and political issues; its always a combination of complex factors in Bolivian protests.” Still, she argues, it strains credibility to imagine that the police, who are widely regarded as corrupt and inefficient, could muster enough popular support to engineer a coup.

At the end of the day, the police strike was resolved fairly quickly through a negotiated settlement with the government, including a $15 per month (22%) pay increase, improved retirement benefits, scuttling of the problematic new disciplinary code, and a promise of protection against reprisals for rebel leaders. As ex-MAS governor Rafael Puente notes, no coup in history has been warded off so easily. A more credible view is that the police protesters took advantage of the imminent arrival of the TIPNIS marchers to position the government and negotiate the best possible settlement they could get.

For their part, the TIPNIS marchers purposefully delayed their arrival into La Paz until after the police strike was settled, to avoid any appearance of collusion between the two protests. Back on duty, the same police who just a few hours earlier were exercising their own right to protest lost no time in pepper-spraying the marchers to keep them away from the Plaza Murillo. The marchers responded by taunting them with a chant: “Vendidos por $100 bolivianos!” (sold out for $15 a month).

Inside the city, the march was forced to detour to avoid a pro-government counter-march convoked by MAS government officials to defend the government against the alleged coup threat. Some 2,000 campesinos, miners, and highland indigenous leaders from the 20 provinces of La Paz, and from trade union and neighborhood sectors in El Alto—the traditional bastions of MAS support—participated in this mobilization. Meanwhile, thousands of Pacenos expressed their solidarity with the TIPNIS marchers by forming a human chain along their route to shield them from potential reprisals.1085 Welcoming the TIPNIS marchers. Credit: La Razon,

The TIPNIS marchers have vowed to remain in the capital until the Morales government meets their demands—principally, cancellation of the consulta that the government is carrying out with TIPNIS communities to decide the fate of the proposed road, which the protesters regard as illegitimate.  To date, the government has refused to meet with march leaders because of their alleged involvement in a variety of criminal activities (such as wood trafficking, gambling, and minor drug smuggling). The protesters have observed the irony of this position, coming from a government whose vice-president served 5 years in prison for insurrection and terrorism, and a cocalero president who was frequently jailed for resisting the US-led drug wars.

Despite this apparent stalemate, the second TIPNIS march has already achieved a great deal. In addition to Morales’ cancellation of the TIPNIS road contract last April, which also terminated its financing, Bolivia’s Plurinational Constitutional Tribunal recently ruled that the consulta can only be carried out legitimately if consensus is first achieved among the affected indigenous communities. While the government argues that 65% of  the TIPNIS communities support the consulta, many observers believe that the current process will have to be suspended to comply with the court’s ruling as it affects the other 35%. At a minimum, the timeframe for the consulta will likely be extended, perhaps indefinitely.

Indirectly, the TIPNIS march has also provided a two-month "window of opportunity" for a variety of other sectors—including doctors, health workers, miners, and now police officers—to press their claims with the Morales government, taking advantage of an opportunity when the government might be incentivized to offer concessions. It’s a far cry from a coup conspiracy, but a good example of pragmatic protest politics at work in Bolivia.

Mexico, Central America and Caribbean [contents]

Weary Voters Turn to Party of Mexico’s Past, Polls Say
RANDAL C. ARCHIBOLD. New York Times. July 1, 2012

MEXICO CITY — The party that ruled Mexico for decades with an autocratic grip appears to have vaulted back into power after 12 years in opposition, as voters troubled by a bloody drug war and economic malaise gave its presidential candidate, Enrique Peña Nieto, a comfortable victory on Sunday, according to preliminary returns and exit polls.

The victory was a stunning reversal of fortune for the centrist Institutional Revolutionary Party, known as the PRI, which was thought to be crippled after its defeat in the 2000 presidential election ushered in an era of real multiparty democracy here.

Buoyed by a strong machine across several states, by the youthful Mr. Peña Nieto’s capture of the television spotlight and by voters’ unhappiness with the direction of the country, the PRI defeated both the incumbent conservative party and the candidate who nearly beat the conservatives last time.

A “quick count” based on a sampling of returns from across the country, announced by election officials late Sunday night, showed Mr. Peña Nieto with 38 to 39 percent of the vote and a 7-point lead over Andrés Manuel López Obrador, a former Mexico City mayor who lost narrowly in 2006 and is a member of the left-leaning Party of the Democratic Revolution.

Monday morning, with 81 percent of the vote counted, Mr. Peña Nietos lead had narrowed slightly, to around 5 percentage points, and  Mr. Lopez Obrador had not yet conceded.

He said late Sunday night that he would wait for complete vote tallies in the coming days. ¨The final word has not been said,¨he told supporters.

In 2006 Mr. Lopez Obrador refused for 48 days to accept defeat and led street demonstrations demanding a full recount.

The conservative candidate, Josefina Vázquez Mota, a former cabinet secretary who sought to become Mexico’s first woman president, was running third with 25 to 26 percent. Earlier in the evening, exit polls released by several news organizations pointed to similar results, though with a somewhat wider lead for Mr. Peña Nieto.

He addressed supporters shortly before midnight, repeatedly saying that “Mexico won,” promising to govern openly and with accountability, and trying to knock down any suggestion that he would reach accommodations with criminal groups, as his party has been accused of doing in the past.

“There will be no deals or truce with organized crime,” he said.

Though Mr. Peña Nieto was declared the winner and President Felipe Calderón telephoned to congratulate him, the preliminary results suggested that he had not won an unequivocal mandate, garnering fewer than half the total votes and trailing in some of the most violence-plagued states.

Ms. Vázquez Mota made a concessionary speech soon after the polls closed. Without mentioning Mr. Peña Nieto directly, she alluded to concerns about the PRI, saying she would continue to fight against “the return of authoritarianism, of corrupt rule, impunity and capitulating to organized crime.”

Mr. Peña Nieto, who has visited Washington and New York several times in the past year to introduce himself to lawmakers and opinion leaders, has promised more efficient, expanded trade with the United States and predicted that relations would be strong. But Washington will be watching closely for any hint of his administration’s easing the pressure on drug traffickers.

In his campaign, he promised to refocus the drug war more on combating the violence afflicting Mexicans, and hardly mentioned attacking drug trafficking itself or taking down cartel leaders.

That stance might have been meant to distance him from Mr. Calderón, whose militarized approach to the drug war left many Mexicans uneasy over the heavy civilian toll — more than 50,000 drug war-related deaths in recent years — and eager for a better strategy. Mr. Calderón acknowledged Mr. Peña Nieto’s victory in remarks late Sunday night.

That some in Washington intend to watch Mr. Peña Nieto closely on the drug war issue was demonstrated minutes after the preliminary results were announced, when Representative Michael McCaul, Republican of Texas, issued a statement that combined congratulations with a warning.

“I am hopeful that he will not return to the PRI party of the past, which was corrupt and had a history of turning a blind eye to the drug cartels,” Mr. McCaul said of Mr. Peña Nieto in the statement. 

No single issue dominated the campaign — not the drug war or the economy, which is growing but leaving the poor behind and lagging in raising wages.

Instead, polls indicated that voters felt a general malaise and fatigue after 12 years of rule by the conservative National Action Party, and disenchantment with Mr. Calderón, whose six-year term ends in December. Mexican presidents are limited by law to a single term in office.

Mr. Peña Nieto, 45, a former governor of Mexico State, which nearly surrounds Mexico City and is the nation’s most populous, rose rapidly from obscurity through his party’s ranks in the state, where relatives of his had played prominent roles.

Critics suspected the party’s old guard was hiding behind his fresh face, and in an interview last month he staunchly defended the party, saying that opponents focused too much on its misdeeds and overlooked the economic growth and social programs the party fostered in its heyday.

He campaigned without an ideological bent, as he had when running for governor, and presented himself as a pragmatic manager, publicly signing pledges to get things done.

He made the economy his centerpiece, saying that he would create jobs and lift wages, and that he planned to shore up Pemex, the country’s national oil monopoly and a vital source of public revenue, by opening the company to private investment.

Mr. Peña Nieto took a lead in the polls that he maintained even as his opponents attacked his party, suggesting that it would try to bring peace in the streets by making deals with the drug networks and would rule by corruption and patronage, as it had in the past.

University students held demonstrations against him — some protesters briefly blocked his path as he tried to vote Sunday — and accused the major television channels of favoring him with biased coverage, especially Televisa, the largest network. Mr. Peña Nieto appeared frequently on Televisa in news coverage, advertisements and infomercials, and is married to one of the network’s most popular soap opera stars, Angélica Rivera, who campaigned prominently for him.

The atmosphere at PRI headquarters Sunday night was jubilant. Supporters wearing the party’s signature red T-shirts waved Mexican and party flags as reggaeton and cumbia music pounded on speakers, and cheers erupted with every new bit of news. In addition to the presidency, the exit polls indicated that the party may have made gains in the federal legislature and picked up control of at least two more states, bringing its total to 22 out of 31.

Some voters said on Sunday that they favored the PRI out of tradition, or a sense of nostalgia for what they remembered as a more stable time.

“Better the old one you know than the new to get to know,” Jorge Osorio, 70, said, recalling the words of his grandfather as he voted near Mexico City for the PRI candidate.

Still, such is the taint of the PRI, which kept power for decades through rigged elections, corruption and patronage, that many people were reluctant to admit on Sunday that they supported Mr. Peña Nieto. Leonor Acosta Chavira, 77, who waited to vote with about 300 people in Tijuana, said she was worried that others would get angry if they knew of her choice.

“I vote for the party, no matter the candidate,” she said.

Many others declined to divulge their choice because of government admonishments for a “voto secreto.” But some said they could not stomach giving the PRI another chance.

“The PRI had its opportunity for 70 years, and the country didn’t progress,” said Moisés Basilio, 29, of Guerrero State, a supporter of Mr. López Obrador. “We’re a country with great potential. The problem is the government has never made the people a priority.”

Liliana Patiño, 33, a voter in Ciudad Nezahualcóyotl, outside Mexico City, said she backed Ms. Vázquez Mota, the candidate of the incumbent party, because she “wanted to give them more time to complete what they started.”

Nearly 80 million Mexicans were eligible to vote, with turnout estimated at 62 percent, slightly higher than in 2006. Federal election authorities said the voting had gone smoothly despite some bumps, and a group of observers from the Organization of American States said there had been few problems.

At some polling stations, there were reports of a shortage of ballots and missing paperwork, and watchdog groups were collecting reports of vote-buying and other irregularities. Social media sites flared with depictions of disorganization and delays at some polling stations. In one video circulated on YouTube and Twitter, the chairman of the PRI was seen cutting ahead in line to vote, to a chorus of catcalls of “Corrupt!”

A government hot line set up to receive reports of fraud had received more than 1,300 calls by midafternoon, but it was unclear whether the problems were any more numerous than in previous elections, or had merely been documented by more voters with smartphones.

There were also reports of security problems at some sites, but government officials did not give specifics; they said that over all, feared drug-related violence had not come about.

Mr. Osorio, the PRI supporter, said his name had already been crossed off a list of voters when he arrived at his polling station. Election workers decided it was an error and let him vote.

All the parties have been accused of giving voters money and goods in exchange for support, but the PRI has a reputation for being particularly adept at it.

Eber Alvarez, 23, a dental student in Ciudad Nezahualcóyotl, said 15 of his relatives and friends had been paid up to 500 pesos each by the PRI, while the Party of the Democratic Revolution and the National Action Party never seemed to offer more than 400, and typically less. He said he did not receive anything himself, but registered a small protest by drawing a giant X across his ballot. “I annulled it,” he said. “The system is a joke.”

During the PRI’s rule, its leaders were credited with modernizing the economy and creating lasting social programs — the poet Octavio Paz called them “philanthropic ogres” — but they stifled political dissent and rigged elections, and were eventually undone by economic crises and corruption scandals.

The National Action candidate, Ms. Vázquez Mota, 51, struggled to find a message and ran a gaffe-prone campaign that sank her into third place. Mr. López Obrador, 58, hoped to capture the anti-PRI vote with blistering attacks on the party and on Mr. Peña Nieto, and made a point of campaigning in PRI-run states.

Still, Amado Domínguez Hernández, 43, who lives in Ciudad Juárez, across the border from El Paso and one of the Mexican cities most affected by drug violence, said he had chosen Mr. Peña Nieto in the end because he believed Mr. Peña Nieto would improve security.

“Honestly, I think he is going to change the country and he’s going to change it for the better,” he said.
_______________________________

Mexico's old rulers return but without strong mandate
Dave Graham and Mica Rosenberg. Reuters. July 2, 2012

MEXICO CITY (Reuters) - Mexico's old rulers have regained power following 12 years in opposition but likely will have to forge alliances with other parties to push through reforms after winning the presidency by a much narrower margin than polls had forecast.

Enrique Pena Nieto of the Institutional Revolutionary Party, or PRI, declared himself the winner of Sunday's presidential election after a quick count by Mexico's electoral authorities gave him a clear lead.

Promising to reinvigorate the economy and reduce rampant drug violence, the telegenic 45-year-old will take office in December for a six-year term as president, restoring the party that dominated Mexican politics for most of the past century, at times ruthlessly.

Opinion polls in the last few days before the election had forecast Pena Nieto winning by a margin of between 10 to 15 percentage points, but with 85 percent of returns in, he was only 5.4 percentage points ahead of his leftist rival, Andres Manuel Lopez Obrador.

Pena Nieto had 37.6 percent support compared to 32.2 percent for Lopez Obrador and 25.4 percent for ruling party candidate Josefina Vazquez Mota.

"Mexicans have given our party another chance. We are going to honor it with results," a visibly moved Pena Nieto told followers packed inside the PRI headquarters in Mexico City, where confetti rained down on jubilant supporters.

Although Lopez Obrador said on Sunday night it was too early to concede defeat, a senior electoral official said the PRI candidate's lead was "irreversible" and outgoing President Felipe Calderon congratulated Pena Nieto on his triumph.

The conservative Calderon's ruling National Action Party (PAN) suffered a crushing defeat, hurt by his failure to bolster economic growth and curb the fierce violence of a drug war that has killed tens of thousands of people and battered Mexico's image.

Pena Nieto will take over at a time when Mexico's finances are in good order and the economy is beginning to improve, although it still cannot generate enough work for the growing population.

Although the PRI earned a reputation for unscrupulous and often corrupt politics when it ruled between 1929 and 2000, its 71-year stranglehold on power allowed it to sell itself in this campaign as the party that best knows how to govern.

And its candidate, renowned as much for his unfailingly well-groomed appearance as his political skills, persuaded many voters that his party has learned the lessons of its past.

"The PRI have learned to listen to the people, they have learned they are not kings ... to engage with people, understand them, and rule in a coalition with the people," said 20-year-old student Hector Perez.

It was still unclear how the parties would stack up in Congress, but the incomplete results suggested the PRI could struggle to capture a working majority, leaving it reliant on other parties to pursue its reform agenda.

Having run Mexico as a virtual one-party state for most of the 20th century, the PRI was ousted in an election 12 years ago and was seen by many as near death when it finished way back in third place in the 2006 presidential vote.

Pena Nieto, a handsome former state governor, gave it a presidential candidate to rally around and had led opinion polls for more than two years.

GROWTH

He has promised to lift economic growth to about 6 percent a year, create jobs and draw the heat out of a drug war that has killed more than 55,000 people since late 2006. His main reform proposals include allowing more private investment in Mexico's state-run oil industry.

Lopez Obrador could still choose to challenge the election, as he did six years ago when he narrowly lost to Calderon and launched months of protests, alleging fraud.

He has said in recent weeks that this election campaign was also plagued with irregularities, raising concerns that he might again call his supporters onto the streets. On Sunday night, he said only that he would wait until all the results are in.

The PAN raised high hopes when it was elected in 2000, but the economy has grown only at an average of 2 percent a year since then and the drug war has battered Calderon's reputation.

"Nothing has improved since the PAN got in," said Mexico City plumber Raimundo Salazar, 44. "The PRI understands how things work here. And it knows how to manage the drug gangs."

Pena Nieto built his reputation as governor of the State of Mexico in 2005-2011, where he oversaw solid economic growth and brought down the state government's debt.

"He did a really good job ... building lots of hospitals, roads and schools," said Lino Posadas, 30, a parking attendant from the town of San Jose del Rincon in the state.

To his critics, Pena Nieto is a product created by Mexico's main television companies to serve as a proxy for the country's biggest businesses and the ruling elites in the PRI.

"He's been imposed on us by powerful interests like the TV stations and old presidents," said Javier Aguilar, 62, a biochemist. "How can it be that a country this miserable is home to the world's richest man?" he said, referring to tycoon Carlos Slim.

PRI'S RISE AND FALL

Created after the turmoil of the Mexican Revolution, the PRI laid the foundations for modern Mexico. It started out as a socialist party that nationalized the oil industry in the 1930s before drifting to the center to establish a corporatist model of rule once described as the "perfect dictatorship."

But Mexicans tired of rampant corruption, rigged elections and heavy-handed rule under the PRI, and finally voted it out of power at the turn of the century.

The PAN took over under former Coca-Cola executive Vicente Fox, promising strong growth and more democratic government. But the economy underperformed its peers in Latin America for most of the 12-year rule by the PAN, which never had a majority in Congress and was unable to push through many reform plans.

When Calderon succeeded Fox in 2006, he deployed the army against warring drug gangs. Instead of quelling the violence, it soared to new heights and the relentless wave of beheadings and massacres turned even more voters away from the PAN.

Bit by bit, the PRI began to recover ground and Pena Nieto vowed to stamp out the undemocratic excesses, misuse of public funds and shady acts of political patronage that tarnished the PRI's decades in power.

Yet analysts say he will be challenged to keep the PRI clean, even if he is not already compromised by the deals he had to make to win the support of party barons.

Wary of becoming bogged down in a drug war that has dominated Calderon's presidency, Pena Nieto says he will put more emphasis on reducing violent crime than on targeting drug barons.

"The fight against crime will continue, yes, with a new strategy to reduce violence and above all protect the lives of all Mexicans," Pena Nieto said on Sunday night.

However, he dismissed accusations by opponents that the PRI might try to make cut deals with the cartels. "Let it be very clear: There will be no deal, no truce with organized crime."

(Additional reporting by Miguel Angel Gutierrez, Daniel Trotta, Ioan Grillo and David Alire Garcia.; Editing by Kieran Murray and Will Dunham)
_______________________________

Worries about vote buying despite Mexican reforms
MARK STEVENSON. AP. June 30, 2012

MEXICO CITY -- Political reforms in Mexico have made it much harder to steal an election, officials say. But a lot of people think you can still buy one.

As voters go to the polls Sunday to elect a new president, allegations are flying that candidates are offering money and swag, flouting campaign-spending limits in the process. Most allegations are aimed at the old guard Institutional Revolutionary Party, or PRI, which polls say holds a sizeable lead after being kicked out of the top office by voters 12 years ago.

The PRI held on to Mexico's presidency for 71 years, using vote-buying and other kinds of fraud when deemed necessary, until it was defeated in 2000 by the National Action Party, or PAN. The PRI claims to have changed, and political reforms instituted since 1988 have made Mexican elections far harder to steal.

But in the latest contest, the PAN accused the PRI candidate Enrique Pena Nieto's campaign of acquiring about 9,500 prepaid gift cards worth nearly $5.2 million (71 million pesos) to give away for votes.

Pena Nieto has also been dogged by allegations that he overspent his $330 million campaign funding limit and bought favorable coverage from Mexico's television giant, Televisa.

With a double-digit lead in most polls, Pena Nieto has seldom felt the need to respond to the attacks." We are going to win with your vote, with your free participation, nothing coerced or conditioned," he told a crowd last week at a closing rally in southern Chiapas state.

But the election fraud unit of Mexico's Attorney General's Office says that since the campaign officially began March 30 it has opened investigations into 585 alleged electoral crimes, largely involving complaints that voters were being bought off or coerced to vote for a certain candidate. They have arrested 380 people and convicted 58.

"In a country so poor, with so much inequality, there are undoubtedly forces that will try to take advantage of that," said Ricardo Becerra, coordinator of the institute's election advisers.

On Sunday, Mexico's more than 79 million voters will elect a president, who serves one six-year term, as well as 500 congressional deputies and 128 senators. There are governors' races in six of Mexico's 31 states, plus Mexico City, as well hundreds of local offices up for grabs. For president, voters will choose among Pena Nieto and his chief rivals: Andres Manuel Lopez Obrador of the Democratic Revolution Party; Josefina Vazquez Mota of the ruling National Action Party and Gabriel Quadri of the New Alliance.

Becerra said ballot fraud is "materially impossible" because 92 percent of the 143,151 polling stations nationwide will have registered representatives from all three major parties. At the start of the day, all three must sign off on the ballots, ensuring they are blank. At the end of the day, the marked ballots will be counted again and stamped at the polling place, so counterfeits cannot be brought in.

There will also be about 700 international observers, the largest contingent from the Organization of American States. But that's down from more than 900 in the 1994 and 2000 elections, when Mexico's emerging democracy was under much more pressure.

The PRD and PAN, as well as the PRI, have been accused of giving out gift cards and groceries to garner votes. Technically, parties are allowed to give away anything they want, as long as they report the expense, don't exceed spending limits and don't make people feel the gift is payment for their vote.

In practice, such distinctions are not always clear.

Maria Dolores Flores Sandoval, 66, works the unpaved roads of her Mexico state slum neighborhood in Tultitlan looking to sign up voters for Pena Nieto, saying she has been promised she'll get paid for her work "once they get into office."

"I work at bringing the people out to vote," she said. "I hope it happens soon," she said of her payment, "if not, I'm going to die of hunger."

Cesar Solaris hands out discounted, $7.50-per pair eyeglasses worth three or four times that much at a Pena Nieto campaign office in Mexico City in what he calls "part campaign work, part social work."

A video posted on social networks shows a huge warehouse stuffed with election give-away groceries in the Gulf coast state of Veracruz. The PRD held a press conference Wednesday to display 3,000 gift cards from the Soriana department store that it said were worth about $75 (1,000 pesos) each and had been distributed to voters in the State of Mexico by the PRI in exchange for promises of support in Sunday's election.

PRI leader Pedro Joaquin Caldwell hotly denied his party was involved in any of the card schemes, and has suggested that opposition party members who are far behind in the polls are crying "'fraud" because they know they'll lose.

"It is a completely implausible accusation," Caldwell said. "The PRI has already opened its books ... let me remind you that in spending reports on the pre-campaign (primary races), the PRI was the only party that complied with all the rules."

Becerra acknowledged that technology allows some new methods for vote-buying, but he doubts they could swing an election.

"You could say that, in the past, some cacique (political boss) would hand out envelopes filled with cash at his house, and now it could be a credit card with a certain pre-paid amount," Becerra said. "But I find it unlikely that could be done a thousand times with nobody seeing it, or reporting it."

He said one safeguard is that no matter what voters take or promise, they can still vote freely once inside the curtain-draped booth.

"You can't really tell a man who's poor not to take that (gift)," Becerra said.

At least three groups have set up sophisticated websites where citizens can upload complaints and videos or other material to document irregularities. There are also social media sites for reporting alleged fraud in real time, something unthinkable in the 2006 contest, when Twitter was a few months old.

"Six years ago we didn't have the have the tools we have now," said Carlos Gershenson, a leader of the Contamos election watchdog group.

Lopez Obrador is Pena Nieto's closest challenger, but is behind by at least 10 points in most recent polls. He charged that his narrow loss in 2006 to President Felipe Calderon was because of fraud, though he never proved it. He has been the most vocal against allegations of vote-buying, leading many to fear he won't concede if he loses and will lead his supporters into clogging Mexico City's streets in protest as he did six years ago.

Even Lopez Obrador acknowledges that "2012 is not 2006."

"Things have changed. In 2006 we lacked organization, now we are organized," he said, referring to his party's near-complete coverage of polling observers.

Voter fraud was a well-practiced tradition under PRI rule, including the delivery of ballot boxes to polling stations with the votes already marked. Among the most dramatic examples of alleged vote stealing was the 1988 presidential election, which many people believe Cuauhtemoc Cardenas of the PRD won. Cardenas was ahead until a power outage shut down the count. When the power came back, Carlos Salinas of the PRI was winning and became the next president.

After more than two decades of political reforms, such a maneuver would be impossible today. But handouts are still practiced by all parties, which is legal if the expenses are reported.

Supporters for all parties are brought by bus to massive campaign rallies and given lunch and other gifts in a long-standing Mexican electoral tactic known as the "acarreo," which roughly translates as "trucking in."

At Contamos, whose name can be translated as either "We Count" or "We Tell," activists skew largely young, Internet-savvy and anti-Pena Nieto. They say the PRI accounts for 85.4 percent of the 1,000 or so complaints the site has received about campaign overspending or vote-buying and have seen some new schemes.

In one such alleged scheme, voters would carry pre-marked ballots to deposit at the polls then take out their blank ballot to present for pay. Becerra said the new ballots are hard to counterfeit and are specially stamped when they arrive at the polls.

In another, candidates' supporters allegedly have sought to "borrow" the voting credentials of people planning to vote against them for a fee, returning them after election day. The elections institute ran ads during the 90-day campaign reminding voters that such practices are illegal.

There have also been reports that voters have been offered cash if they agree to take cellphone photographs inside the voting booths, showing their ballot marked for a certain candidate. Authorities have not found decisive proof that practice is occurring.

Even if a candidate is found to have vastly overspent his campaign limit, the result is simply a fine after the election, not the reversal of the results.

"Someone could say, 'Yes, I spent ten times more the than the campaign spending limit, fine me whatever you want'," said Jesus Zambrano, the leader of the leftist Democratic Revolution Party.
_______________________________

Exit polls: Leftist to win Mexico City mayorship
AP. July 1, 2012

MEXICO CITY -- Mexico's main leftist party appears to have won big in the Mexico City mayor's race.

Miguel Angel Mancera of the Democratic Revolution Party says exit polls favor his victory after voting in the capital ended Sunday.

His closest challenger, Beatriz Paredes of the Institutional Revolutionary Party, says none of the exit polls favor her. The conservative National Action Party's candidate, Isabel Miranda de Wallace, has not commented on the voting.

The PRD has struggled in the rest of Mexico, but it has held a lock on Mexico City since the mayorship became an elected position in 1997.

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

Mercosur welcomes Venezuela, suspends Paraguay
Guido Nejamkis and Ana Flor. Reuters. June 30, 2012

MENDOZA, Argentina (Reuters) - The Mercosur trade bloc - which includes regional heavyweights Brazil and Argentina - will make Venezuela a full member next month, uniting South America's biggest grains and energy exporters.

At a presidential summit on Friday, Mercosur's leftist leaders also decided to extend Paraguay's suspension over the ouster of President Fernando Lugo until democracy is restored via new elections, scheduled for April 2013.

No economic sanctions were adopted against Paraguay but its officials will be banned from participating in Mercosur meetings. The suspension opened the way for Venezuela to be incorporated into the bloc since opposition in Paraguay's Congress was the only remaining obstacle after a six-year wait.

Brazilian President Dilma Rousseff praised the joining of forces, saying "food and energy security are becoming more and more relevant" globally.

The Mercosur customs union - which groups Brazil, Argentina, Uruguay and Paraguay - also agreed to allow individual members to raise tariffs on imports from outside the bloc to up to 35 percent on 200 products to protect local industry.

This doubled the number agreed in December and reflected worries that dumping could increase as global growth drags.

Argentine President Cristina Fernandez called on South America to band together more broadly to better confront global economic woes, just after making the announcement on Venezuela's membership.

Venezuela has the world's biggest crude oil reserves and belongs to OPEC. Socialist firebrand Hugo Chavez has governed there since 1999 and he is running for re-election again this year, despite his battle with cancer.

The Andean nation will be fully incorporated into Mercosur on July 31 at a meeting in Rio de Janeiro.

"This is a historic day for ... integration," Chavez told Telesur television station by telephone. "This is win-win for everybody."

Alicia Barcena, head of the United Nations' Economic Commission for Latin America and the Caribbean, said she viewed the move positively.

"Mercosur has a third of the world's water reserves, a third of arable lands, more than 45 percent of soy production ... and now with Venezuela's incorporation there's an expectation that energy integration could increase," she said on the sidelines of the summit in the western Argentine city of Mendoza.

INFIGHTING, CHINA

Being a full member of Mercosur requires that countries end tariffs between member states and adopt a common tariff that ranges up to 20 percent, with some exceptions.

The bloc is rife with internal divisions, however. Brazil and Argentina, which are often at odds over trade, have limited each other's imports despite Mercosur accords that promote free trade among member countries.

Argentine officials said earlier this month that they had reached a deal with Brazil to ease the entry of Argentine goods including lemons, king prawns and medicines.

However, Brazilian Industry Minister Fernando Pimentel told Reuters: "There's still no agreement that would motivate a change on the (non-automatic import) licenses."

Chinese Premier Wen Jiabao proposed this week that his country and Mercosur evaluate a possible free-trade agreement.

Mercosur did not address this in its final declaration. But a separate, joint statement was later released, saying officials from China and Mercosur would meet to "explore mechanisms and actions aimed at increasing and facilitating trade."

Analysts say Brazil and Argentina would probably be wary of a deal with China as both nations take protectionist measures aimed at shielding local industry from imported goods.

PARAGUAY PUNISHED

Paraguay's suspension from Mercosur meetings came after its Senate dismissed Lugo from office a week ago in an impeachment trial that lasted a matter of hours.

Neighboring governments wanted to send a stern warning about the consequences of removing a democratically elected leader, but they ruled out penalties that could hurt ordinary people in Paraguay - one of South America's poorest countries.

"We are not in any way applying economic sanctions because our aim is to improve our people's quality of life," Fernandez said. "(But we cannot) tolerate these 'gentle coups' or movements that - under a veneer of institutional correctness - shatter the constitutional order."

Paraguay is a landlocked, soy-exporting nation of 6 million people, sandwiched between Brazil, Argentina and Bolivia. It has a long history of political instability and military rule.

The country's new president, Federico Franco, was Lugo's vice president and one of his fiercest critics. Franco has defended the constitutionality of the impeachment trial, which Paraguay's top court upheld.

Just after the Mercosur gathering, the UNASUR group of South American nations met in Mendoza to discuss Lugo's swift removal, which was sparked by clashes over a land eviction that killed 17 police and peasant farmers.

UNASUR also suspended Paraguay, saying democracy was best defended through regional unity.

Paraguay's new foreign minister said the decision to suspend his country from Mercosur and incorporate Venezuela was "illegal."

"The government deplores that other member states have sanctioned Paraguay and its government so as to incorporate a new member before the conclusion of a necessary approvals process," minister Jose Felix Fernandez Estigarribia said.

(Additional reporting by Daniela Desantis in Asuncion and Jeb Blount in Rio de Janeiro; writing by Hilary Burke and Helen Popper; editing by Mohammad Zargham)
_______________________________

Mercosur rejects bid to raise trade tariffs
AP. June 29, 2012

MENDOZA, Argentina -- The Mercosur trade bloc has rejected a planned hike on regional trade tariffs in a bid to protect local industries.

Argentina and Brazil had proposed raising the Common External Tariff (CET) from 22 percent to 35 percent in an effort to curb a flood of cheap imports coming from places including China and Europe during the global economic downturn. That's the maximum allowed by the World Trade Organization.

But Mercosur members decided Friday to reject the blanket hike during the bloc's summit in Mendoza, Argentina. Instead, each country is being allowed to decide whether to hike import tariffs on 200 selected products.

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