Latin America News Round-up
August 9, 2012
Cops, Protesters Clash at Student March in Chile
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Brazil and Southern Cone
Brazil approves university affirmative action bill. AP
Toyota plans to invest $495m in Brazil. AFP
Brazil's Central Bank Workers Stage One-Day Strike. Bloomberg
Cops, Protesters Clash at Student March in Chile. EFE
Paraguay to appeal Mercosur sanctions before the The Hague Court of Justice. Mercopress
Paraguay threatens Argentina, Brazil on energy. AFP
Northern Andean Region
Venezuela’s Inflation Rates Lowest Since 2005. Venezuelanalysis
Venezuelan Census Shows Increase in Population, Average Age. Americas Quarterly
Ex-GM Workers Protest in Colombia. Wall Street Journal
Talks will continue between Colombian government and indigenous groups. Colombia Reports
Western Andean Region
Peru, Ecuador Plan Oil Venture After Peace Accord. Bloomberg
Peru seeks to build a new relationship with mining companies. The Guardian
Despite Nationalizations, Bolivia's Resource Sector Attracts Asian Investors. World Politics Review
Mexico, Central America and Caribbean
Mexico’s Peace Movement Heads to the US. Upside Down World
Guatemalan man accused of war crimes in infamous Dos Erres slaughter loses Calgary appeal bid. Calgary Herald
Gangs extort cash from Honduran homeowners. AP
American imprisoned in Nicaragua gets long-awaited appeal hearing. Reuters
Panama Canal works on an upgrade to accommodate bigger ships. McClatchy
Region: Trade, Security, Economy and Integration
India, Latin America to scale up bilateral ties. IANS
Free Trade with China? No, Gracias. Inter-Press Service
Brazil and Southern Cone [contents]
Brazil approves university affirmative action bill
STAN LEHMAN. AP. August 8, 2012
SAO PAULO -- The Brazilian Senate has approved an affirmative action bill that reserves half the spots in federal universities for high school graduates of public schools, and distributes them according to the racial makeup of each state.
The Senate's news agency says the bill that was approved late Tuesday now goes to President Dilma Rousseff, who is expected to approve it.
The reserved spots will be distributed among black, mixed race and indigenous students proportionally to the racial composition of each state, the official agency said.
Sen. Paulo Paim said the bill will benefit most Brazilian students because private schools account for just one of 10 students.
The Supreme Court ruled earlier this year that it was constitutional for universities to use racial quotas.
Brazil has more citizens of African ancestry than any nation other than Nigeria. Fifty-one percent of Brazil's 192 million people are black or of mixed-race,
Backers say the use of scholarships, quotas and other policies aimed at getting more blacks and mixed-race Brazilians into universities is needed to right the historic wrongs of slavery, centuries of stark economic inequality and a society in which whites are overwhelmingly in leadership roles in government and business.
"The bill makes social justice with a majority of Brazil's population," said Senator Ana Rita.
Sen. Aloysio Nunes Ferreira voted against the bill, saying, "It straitjackets universities because it violates their management autonomy."
Toyota plans to invest $495m in Brazil
AFP. August 9, 2012
BRASILIA (AFP) ― Top Japanese automaker Toyota plans to invest $495 million dollars to build an engine plant in Brazil, the company’s president said Wednesday after meeting Brazilian President Dilma Rousseff.
Akio Toyoda made the announcement a day before he was to attend the inauguration of Toyota’s third factory in Brazil, in Sorocaba, located 91 kilometers from Sao Paulo in the country’s southeast.
The engine factory, to be located in Porto Feliz ― 20 miles from Sorocaba ― will be ready in 2015, employ 600 people and churn out engines for Etios and Corolla cars.
Toyota Motor Corp. signage is displayed at a dealership in Richmond, California. (Bloomberg)
It will eventually enable Toyota to produce the two models with 85 percent local content and thus avoid being subject to the 30 percent import tax.
Last April, Brazilian authorities introduced a new directive known as Inovar Auto aimed at spurring innovation by forcing automakers to invest in vehicle and component research and product development.
The move triggered a flood of inward investment in the domestic auto market by companies hoping to avoid the import tax.
Toyota plans to introduce Etios compact cars, currently produced for the Indian and South African markets, in Brazil in September, with engines imported from Japan.
“We can say that the Etios will be a car made by Brazilians for Brazilians,” Toyoda said.
The Japanese automaker said the new investments are aimed at boosting local production “now that the Brazilian auto market is showing signs of consistent growth.”
Sales in Brazil ― the world’s fourth largest auto market after the United States, China and Japan ― fell 1.2 percent in the first half of 2012, compared with the same period last year, according to the National Association of Motor Vehicle Manufacturers.
But government stimulus measures fueled signs of a rebound in June, when sales rose 22.9 percent to 353,200 units, from 287,500 in May, according to the auto trade organization.
Brazil's Central Bank Workers Stage One-Day Strike
Bloomberg. August 8, 2012
Brazilian central bank employees staged their first work stoppage in five years today in pursuit of higher wages, intensifying a wave of civil-servant strikes that are testing President Dilma Rousseff’s fiscal discipline.
The one-day strike among the unionized staff at the bank’s headquarters in Brasilia and at regional branches began at 8 a.m. local time and could compromise some services, said Sergio Belsito, president of the employees' union at the bank.
“The idea is to maintain operations that are most important to the market,” Belsito said by telephone from Brasilia. “But there may be delays at the currency and other operations desks.”
The central bank said it informed the union of the staff needed to operate essential services, including its international monetary reserve management and the bank’s Sisbacen information system, according to a spokesman who asked not to be identified due to internal policies.
The monetary authority is scheduled to announce today capital flows, banks’ currency positions and the commodity price index for July.
Work stoppages by civil servants began in July when staff at public universities, the state-run power company Centrais Eletricas Brasileiras SA and several regulatory agencies walked off the job. They have since spread to include 14 federal agencies and 350,000 workers, according to the union of civil servants in Brasilia.
The central bank union is demanding an average pay increase of 23 percent to compensate for inflation since June 2008, Belsito said. The union may call a longer strike later this month, he added.
The strikes have raised concern about whether the Rousseff administration will be able to contain demands for wage increases of as much as 30 percent, which could fuel inflation and add to already rising government spending this year, said Felipe Salto, a public finance economist at consulting firm Tendencias Consultoria Integrada in Sao Paulo.
“New salary increases and hiring would not be seen well in terms of the quality of public spending and macroeconomic stability,” Salto said by telephone. “The expectation that spending will continue to grow next year will affect inflation.”
The government is analyzing wage demands by unions and would conclude the negotiations by the end of the month, said a spokesman for the Planning and Budget Ministry who declined to be identified citing internal policies.
Economists forecast inflation of 5 percent this year, above the central bank target of 4.5 percent, according to the bank’s latest survey.
Cops, Protesters Clash at Student March in Chile
EFE. August 9, 2012
SANTIAGO – A march on Wednesday by high school students demanding improvements to Chile’s underfunded public education system ended with three buses set ablaze and dozens arrested.
The protest was convened by the ACES high school students association, with support from the groups that represent Chile’s collegians.
Demonstrations also took place in the seaside resort of Viña del Mar, where 11 people were arrested and a pharmacy and supermarket destroyed, the northern town of La Serena and the southern city of Valdivia.
The Santiago regional government refused to issue ACES a permit to march on the city’s main thoroughfare, the Alameda, but the students rejected the two alternative routes proposed by authorities.
Determined to protest on the Alameda, some 5,000 students – according to Santiago Mayor Pablo Zalaquett – gathered at 10:00 a.m. in Plaza Italia square, occupying the sidewalks and forcing traffic to a crawl.
As soon as the students began to move toward the Alameda, Efe saw them met by tear gas, water cannon and truncheon-wielding mounted police.
The protesters responded by hurling rocks and other projectiles as the cops, vandalizing public property and trying to erect barricades on the surrounding streets.
Some in the crowd also destroyed private vehicles and damaged an insurance company office and an auto dealership.
Three public buses were burned and witnesses said hooded militants had previously ordered the passengers off the vehicles.
The students, however, said the buses were traveling empty and accused authorities of staging a set-up.
The disturbances went on for at least five hours, resulting in dozens of arrests and leaving six police injured, official sources told Efe.
Wednesday’s events “have nothing to do with the problems of education,” government spokesman Andres Chadwick told reporters, insisting that “no one is above the law” or can claim “the right to convene illegal marches.”
“Minister Chadwick, we don’t feel we are above the law. Those who have been above the law are those who have profited at the cost of our dreams,” the leader of the University of Chile student organization, Gabriel Boric, replied on Twitter.
Chilean student took to the streets in large numbers more than 40 times in 2011 to denounce a highly stratified education system that funnels state subsidies to private institutions even as public schools in poor areas struggle.
Chile’s public schools and universities were neglected by the 1973-1990 dictatorship of the late Gen. Augusto Pinochet, who embraced doctrinaire free market policies.
Private schools mushroomed under the military regime and the trend continued after democracy was restored, even during the 1990-2010 tenure of the center-left Concertacion coalition.
President Sebastian Piñera, a right-wing billionaire who thrived during the Pinochet era, has taken some steps to make college more affordable for low-income students and is now asking Congress to pass a tax reform bill that would generate as much as $1 billion in additional education funding.
Critics dismiss that figure as woefully inadequate.
“The tax burden today is 20 percent of GDP in total. Now there’s a violent fight about whether it grows from 20 percent to 20.3 percent,” the president of the Education 2020 Foundation, Mario Waissbluth, told Efe. EFE
Paraguay to appeal Mercosur sanctions before the The Hague Court of Justice
Mercosur. August 9, 2012
The Paraguayan government had decided to appeal before the International Court of Justice in The Hague the suspension imposed on Paraguay by the governments of Argentina, Brazil and Uruguay as a sanction for the removal of Fernando Lugo as president of the country, last June 22.
Foreign Affairs minister Jose Fernandez Estigarribia said Paraguay was only waiting for the report from a Spanish jurist who had been consulted on the issue and thus strengthen the arguments to be presented in The Hague against the decision from the three presidents.
Paraguay rejects the sanctions and also the decision to accept Venezuela into the regional block since it considers the measure “void and null” since it was adopted ignoring the opinion of Paraguay, the fourth full and founding member of Mercosur.
Fernandez Estigarribia acknowledged that his ministry already has two juridical reports with contradicting positions on the issue.
The minister was quick to ensure that currently “there are no negotiations” with the other members of Mercosur for the lifting of the suspension which is to hold until national elections scheduled to take place April 2013.
Paraguayan president Federico Franco meeting with journalists at Government House revealed he had information from the Organization of American States Permanent Council that will be holding a special session at the end of the month to decide on the situation of the country.
OAS has yet to state a position regarding the suspension of Paraguay from Mercosur, including the impeachment process of Fernando Lugo and his replacement by Federico Franco at the end of last June. While Mercosur and Unasur have sanctioned Paraguay, the OAS is divided.
President Franco also revealed that he is planning to attend the UN annual General Assembly next September, when leaders from all over the world meet to discuss global issues.
“God providing, I have plans to address the General Assembly and tell the world what really happened in Paraguay”, said Franco during a ceremony delivering books and an internet centre to school children.
Paraguay threatens Argentina, Brazil on energy
AFP. August 9, 2012
Paraguay's President Fernando Lugo (front L), Vice President Federico Franco (front C) and his wife Emilia Alfaro attend a mass to commemorate the country's 201st year of independence, at the Metropolitan Cathedral of Asuncion, in Asuncion May 14, 2012.
Asuncion - Paraguay's new President Federico Franco is talking tough with Argentina and Brazil, threatening not to “give away” energy to his neighbors and instead use power generated by joint projects at home.
“When are Brazil and Argentina going to respect us? When the government tells them, 'Actually, we are going to use our own energy. Paraguay is changing its position. It is no longer going to give away its energy',” Franco said.
“Is it fair to pay the same price for power for 50 years?” the president said Wednesday in a speech on energy policy at the defense ministry.
“I refuse to accept that Paraguay has to give its energy away as a gift.”
Brazil and Paraguay jointly operate the massive Itaipu hydroelectric dam on their common border. Argentina and Paraguay have a similar arrangement for the Yacyreta power station.
Argentina and Brazil have pulled their ambassadors out of Asuncion and do not recognize the government of Franco, who replaced Fernando Lugo after he was abruptly ousted from power in June over his handling of a deadly land dispute.
The Mercosur regional trading bloc suspended Paraguay from participating until new elections are held in the South American country. The bloc includes Argentina, Brazil and Uruguay, and recently welcomed Venezuela as a member.
Brazil reacted cautiously to Franco's statement, with foreign ministry spokesman Tovar Nunes saying it would maintain good relations with Paraguay with respect to the Itaipu project. - Sapa-AFP
Northern Andean Region [contents]
Venezuela’s Inflation Rates Lowest Since 2005
Tamara Pearson. Venezuelanalysis. August 8, 2012
Mérida, August 8th 2012 (Venezuelanalysis.com) – Venezuela’s accumulated inflation for the first seven months of this year stands at 8.6% , down from 16% during the same period last year, and where annual inflation has averaged 26% per year since 1999.
Yesterday Venezuela’s finance minister Jorge Giordani informed that July’s inflation was 1% and the year’s accumulated inflation was 8.6%. Yearly inflation (between June 2011 and July 2012) is 19.4%, down from the highest annual inflation rate over the past three years of 31.3%.
Inflation in July 2011 was 2.7%, and annual inflation in December last year was 27.6%. In 2010, the accumulated inflation rate in the first seven months amounted to 18%, and in 2011 it stood at 16%.
The Venezuelan government had predicted lower inflation rates this year, mostly as a result of it gradually implementing price limits on some products, but Giordani said the results are even below the government’s predictions. The government had based its 2012 budget on a yearly inflation rate of 20 to 22%.
"A one-digit inflation rate has not been reported in Venezuela since 1986," said Nelson Merentes, president of the Central Bank of Venezuela.
However Merentes added that product shortage in July was higher (14.2%) compared to June (11.7%), while the product diversity index declined from 173.2 to 162.8.
Analysing the results, Giordani noticed that the food products with the highest inflation rates were those with reduced supply, such as vegetables. Hence, he concluded, that increased production of such products would help slow down inflation further.
Merentes said the country’s “economic panorama”, with its low unemployment and sustained economic growth (of 5.6% in the first quarter of 2012) meant he could project that inflation would continue to decrease in August and September. Elias Eljuri, president of the National Institute of Statistics, also said inflation would likely continue to decrease, due to increased productivity, greater availability of goods and services, and the state’s fight against speculation.
Eljuri also attributed the low inflation to the creation of the National Superintendency of Costs and Prices (Sundecop), which so far this year has applied price limits to 19 types of products, including baby food, juices, hygiene products, and other food products. The National Assembly passed the law of fair costs and prices one year ago.
Merentes said the government was aiming for one digit inflation, and had put together a One Digit Inflation Committee.
“If we achieve one digit [inflation] we’ll be in a better condition to be able to participate in the economic events ahead for us in the geopolitical dynamic of Mercosur [Common Market of the South] as well as with everything that has to do with the political dynamic of Unasur [Union of South America Nations],” Merentes said.
While inflation peaked at 103% in 1996 in Venezuela, its average during the years of Hugo Chavez’s government, between 1999 and 2012, has been 26%.
Venezuelan Census Shows Increase in Population, Average Age
Americas Quarterly. August 9, 2012
Yesterday Venezuela’s Instituto Nacional de Estadística (National Institute of Statistics—INE) presented the preliminary results of its 2011 Census, revealing an estimated population of 28,946,101—a 25-percent increase from the previous demographic measure in 2001.
In presenting some of the preliminary results, INE director Elias Eljuri noted that the population under the age of 15 had diminished, while the population of women—especially above the age of 64—had increased. The average age in Venezuela today is 27 years, compared with 18 years in 1950.
In reporting the findings, Eljuri also highlighted that 50.3 percent of Venezuela’s population is female and 49.7 percent is male, and that the majority of Venezuelan households are headed by men.
Even with most households still being headed by men, data from the Organization for Economic Cooperation and Development’s May 2012 Social Institutions and Gender Index (SIGI) indicates that women’s role in Venezuelan households has changed due to economic necessity and a shift of attitudes toward gender equality. For instance, the percentage of women aged 15 or over who did not work outside the home fell from 46 percent to 31 percent between 1994 and 2007.
Venezuela is ranked number 16 of 86 non-OECD countries in the 2012 SIGI Index. Although countries in Latin America tend to perform well on this index, certain laws, regulations and practices still obstruct women’s equality and rights in the region.
Read more about why it is critical to increase women’s political representation and economic empowerment in Latin America in Michelle Bachelet’s article in AQ’s Summer issue.
Ex-GM Workers Protest in Colombia
DAN MOLINSKI. Wall Street Journal. August 8, 2012
BOGOTA—A small group of former workers for General Motors Co. GM -0.20% in Colombia on Wednesday began their second week of a hunger strike, during which they have sewn shut their mouths as they continue to protest in front of the U.S. Embassy in Bogota.
The hunger strike by the former workers at GM's Colombian unit Colmotores marks the latest labor problems to hit GM's South American branches. In Brazil, GM agreed not to cut 1,840 jobs at a factory there following union protests and government threats that the job cuts could lead to the reinstatement of taxes cut earlier in the year. GM had planned to shut down passenger-car production at the plant as demand for the models produced there fell."
In Colombia, the GM protests are being led by Asotrecol, the association of workers and former workers of GM's assembly plant in Bogota. The former workers claim they were fired from GM more than a year ago because of serious on-the-job injuries sustained while lifting heavy objects, doing repetitive movements on the assembly line and doing other work.
In an emailed statement, the car maker rejected those claims.
"GM Colmotores is respectful of the law and has never put the health or the well-being of its employees at risk," it said. "Furthermore, the company would like to reassure and reaffirm that no employee has been discharged for health reasons."
GM says that of the ex-employees who filed legal claims, 95% of the cases have been resolved in GM's favor. "In the only two cases where the decision was in favor of the plaintiff, the company has fully complied with the provisions of the relevant authorities," GM said.
The half-dozen or so workers who stitched thick string through their upper and lower lips said they chose the grounds next to the U.S. Embassy to stage the hunger strike because of a labor action plan agreed to between Colombia and the U.S. last year under the countries' free trade agreement, which took effect May 15.
They and other unions in Colombia say the labor plan, which was supposed to improve labor standards in Colombia, has been virtually ignored by both governments and multinational companies, including GM.
Colombia for years has been one of the most dangerous countries in the world for labor unions, with several dozen union activists murdered each year on average, although the number of killings has declined in recent years.
Workers in Colombia are also paid less than in most of Latin America's other major economies. Colombia's monthly minimum wage is about $300, a nearly 6% increase from 2011.
The former GM workers began their protests at the embassy about a year ago, but didn't get much notoriety until they began sewing their mouths shut last week.
A statement from the U.S. Embassy on Wednesday said, "The U.S. Embassy has been following the General Motors-Asotrecol case closely. During this time, mission and congressional representatives have actively engaged with both parties and the Colombian government. We will continue to monitor the situation closely with particular concern for the health of those on a hunger strike."
GM began operating in Colombia more than 50 years ago, and currently has more than 1,800 employees.
—Paulo Winterstein in Brazil contributed to this article.
Talks will continue between Colombian government and indigenous groups
Victoria Rossi. Colombia Reports. August 9, 2012
The Colombian government will resume talks with indigenous groups protesting in the southwest part of the country, local media reported Wednesday.
At the end of a nearly five-hour meeting, the country’s interior minister read a statement outlining rules for the talks that he pledged would continue between Colombia and indigenous groups in the troubled Cauca department.
In turn, indigenous representatives promised that the marches planned in the Cauca capital Popayan on Aug. 10 and Aug. 14, expected to draw more than 10,000, would be peaceful. The government pledged it would respect the march.
Jesus Chavez, a representative from the Regional Indigenous Council of Cauca, also invited President Juan Manuel Santos to attend the next meeting scheduled for Aug. 14.
The indigenous groups in Cauca have been demanding that both the Colombian government and left-wing guerrillas leave their territory at once, claiming the presence of each group puts their lives at risk.
President Juan Manuel Santos refused to withdraw troops from the tribal territory, but his interior minister, Federico Renjifo, announced a multi-million dollar investment plan for the department
Western Andean Region [contents]
Peru, Ecuador Plan Oil Venture After Peace Accord
Nathan Gill. Bloomberg. August 8, 2012
Peru and Ecuador are planning a joint venture to explore for oil on the Ecuadorean side of their shared border 13 years after signing a peace accord that ended more than a century of conflict.
Petroleos del Peru SA and PetroEcuador, the nations’ state- owned oil companies, are seeking a partnership to participate in bidding for new oil concessions in southeastern Ecuador scheduled for October, Ecuador’s Non-Renewable Natural Resources Minister Wilson Pastor said today to reporters in Quito. The two countries also signed a $300 million agreement to connect their oil pipelines to carry Ecuadorean crude to Peru’s northern port of Bayovar, he said.
The pipeline deal and planned joint venture are fruits of the 1998 peace accord which ended border wars dating from the 19th century, Pastor said. The pipeline will take three years to build and will attract investors into bidding for the exploration blocks in Ecuador’s Amazon rainforest, he said.
“Today things have changed because there is a very different attitude between our governments after the peace on the border,” Pastor said at a signing ceremony for the pipeline deal. “Now we intend to make the Amazon basin’s oil infrastructure an example of energy integration.”
To contact the reporter on this story: Nathan Gill in Quito at email@example.com
To contact the editor responsible for this story: James Attwood at firstname.lastname@example.org
Peru seeks to build a new relationship with mining companies
Mattia Cabitza. The Guardian. August 8, 2012
Peru is among the richest mineral nations in the world and it seems as if everyone wants to tap into its immense wealth. Much of the Andean and coastal areas, from north to south, are divided into allotments loaned to mining companies to exploit. In one southern region alone, Apurímac, mining concessions account for 58.8% of the land; in Cajamarca in the north, home to the largest gold mine in Latin America, they cover 48% of the total territory.
But this land is not an unpopulated sand desert where nothing grows. Most Peruvians live in the very rural areas from which tons of gold, zinc, tin and lead are extracted year after year, often with social and environmental consequences. This year alone, 10 people were killed in anti-mining protests in three Peruvian regions, following clashes with the police. The most recent deaths, in Cajamarca in early July, came after months of opposition to the construction of a multibillion-dollar gold mine, which residents are worried will leave the agricultural and cattle-ranching area without water.
Mining can bring jobs and wealth to whole regions. Newmont, a US company involved in the gold project in Cajamarca, stresses its mineral extraction would not jeopardise the environment. But as the protests continue, all parties involved in trying to find a way out of this and other mining conflicts – that is to say, the central and regional governments, the mining companies, and local residents – say they are ready to build a new relationship based on trust and respect.
"We need to design and implement a new approach to the relationship that mining activities have with the environment and the exploitation of natural resources, based on a balanced management of the land and a rational use of water resources," said President Ollanta Humala during his address to the nation on 28 July.
Days earlier, a Newmont executive in Lima, Carlos Santa Cruz, reiterated his company's intention "to listen, to dialogue and to build together more opportunities for everybody". And in Cajamarca, a local protest leader, Edy Benavides, spoke about the need to avoid repeating the mistakes of the past. "What mining companies do is exploit the mineral and then leave," he said. "What we need is development that is sustainable for future generations."
Last month, the Peruvian government set up a permanent commission aimed at fostering this new relationship. It is yet to make its proposals, but José de Echave, who resigned last year from the ministry of the environment due to the government's handing of the Cajamarca protests, says the commission needs to realise that in Peru, as elsewhere, it is possible to mine without leaving a negative impact on residents and the environment.
"In any serious country in the world with lots of natural resources, the government's environment authority is strong, puts into place strong regulations and strongly sanctions companies that pollute," he said. "In Peru, we are not asking for something out of proportion."
De Echave believes the Andean country can implement tough environmental laws, like Australia's or Canada's, without fearing that mining companies will flee. Mineral prices are high and deposits harder to find, so he believes multinationals will adapt to stricter conditions. "What's more, if one looks at their ethical codes of conduct, they say that their operations always meet the best global standards," he says.
De Echave is now a spokesman for Tierra y Libertad (Land and Freedom), a political movement that aims to protect human and environmental rights and has sent a letter to President Humala urging him to promote better international standards and sustainable development. "It can't just be all about economic growth," he says. "There are three factors to development: economic, social and environmental. All of these need to work together."
But De Echave recognises that, by nature, mining does not exploit a sustainable resource. "I think the idea is to find a balance," he concludes, "so that mining can be complemented by other economic activities that may be relevant, meaningful, sustainable and, perhaps, more friendly to nature and social environments."
Humala says he also wants this and is seeking congressional support to make access to water a fundamental human right inscribed in the constitution. The proposal aims to protect natural resources such as water from predatory and uncontrolled mineral exploitation.
Critics say these announcements alone are not enough, arguing a radical change to how mining companies operate in Peru is necessary. Regions such as Huancavelica and Cajamarca sit on mineral riches but, despite experiencing decades of exploitation, their residents are the poorest in the country. With fewer resources around, and continuing social conflict, De Echave says change will be painful to implement, but now seems inevitable.
Despite Nationalizations, Bolivia's Resource Sector Attracts Asian Investors
Marcelo Ballvé. World Politics Review. August 9, 2012
While foreign investors might be feeling a lot of uncertainty about Bolivia’s resource sector policy, one thing is perfectly clear: Bolivian President Evo Morales is firmly in control of any foreign-funded project seeking to develop the country's natural resource wealth.
And when partnerships with foreign investors turn sour, he has not hesitated to seize the underlying assets. That has occurred with surprising frequency this year. In the past four months, Bolivia has nationalized a Canadian company’s silver mine, a tin and zinc mine operated by the Swiss commodities giant Glencore and a Spanish electric grid operation. To say nothing of the government’s strong-arm negotiating tactics, which have resulted in rollbacks of once-hyped investments.
But while nationalizations seem to be on the rise in Bolivia, Asian investors continue to plow money into the country. Late last month, for example, China’s ambassador signed a preliminary agreement for Hydrochina Corporation to build a 400-megawatt dam in eastern Bolivia.
In one of his first acts upon taking office as president in 2006, Morales nationalized Bolivia’s natural gas resources. Nevertheless, foreign capital has not shunned the country since then. Net inflows of foreign direct investment totaled $859 million in 2011, according to Bolivia’s central bank, a 34 percent increase over 2010 and a giant leap of 135 percent over 2007, Morales’ second year in office.
Meanwhile, the credit ratings agencies remain bullish, with both Moody’s and Standard and Poor’s upgrading Bolivia’s rating recently. The agencies noted healthy economic growth -- averaging 4.7 percent annually in the past five years -- and the government’s low debt load of just 31 percent of GDP.
All the rosy numbers, however, don’t assure smooth sailing for foreign investors, and, as an ill-fated India-Bolivia partnership shows, it is not just Western investors that have run into trouble. On July 16, India’s Jindal Steel and Power canceled a promised $2.1 billion multiyear investment to exploit a giant iron ore deposit named El Mutún in eastern Bolivia, near the Brazilian border.
According to Jindal, the problems revolved around natural gas the company had been promised to power operations at El Mutún. The Bolivian government, which in 2007, according to Jindal, had committed to providing 10 million cubic meters per day, changed its tune since then, saying it could only provide a quarter of that volume from 2014 onward.
Natural gas is Bolivia's principal export. In the Bolivian media, analysts speculated that the government simply could not spare as much gas as it had originally promised to Jindal given rising internal consumption and agreements to allocate certain volumes to regional partners Brazil and Argentina.
Meanwhile, Mario Virreira, Bolivia's minister of mines, claimed the Indian steelmaker had backed away from the iron ore deposit due to "economic weakness" that prevented it from fulfilling promised investments, and "absolutely not due to any pressure from the Bolivian government."
Bolivia will now seek a new partner to invest in the mine, a process that could take up to six months, Virreira said.
The recent rash of takeovers raises the question of whether Bolivia is stepping up its nationalization campaign.
In a May interview with World Politics Review, Bolivian Economy and Public Finance Minister Luis Arce said his administration would only nationalize assets that had formerly been privatized -- or “stripped away,” as he put it -- under past governments. Most of Bolivia’s mining sector, for instance, was opened to private investment in the 1980s after decades of state monopoly.
And Arce stressed that foreigners’ investments would be protected as long as they complied with Bolivian law, including paying taxes, obeying regulations and providing employment.
But Mallku Khota, the silver mine owned by a subsidiary of Canada’s South American Silver and seized by the government on Aug. 1, wasn’t the product of a pre-Morales privatization scheme. In fact, in the decree officially announcing its takeover, Bolivia’s government deployed a single direct justification for seizing the mine: defusing the threat of violence from mining conflicts in the area that had spun out of control. Disputes among unauthorized local miners and labor unrest at Mallku Khota itself, the government said, had made the situation untenable.
“With the end of preserving the peace and a return to normality . . . government intervention has become necessary,” reads the nationalization decree signed by Morales.
South American Silver, meanwhile, counters that it enjoyed support from the majority of indigenous communities in the area. The company has vowed to pursue just compensation, for which it has been lobbying both at home and in Bolivia. Canadian diplomats have tried to mediate the dispute on behalf of the mining company, according to both South American Silver and Bolivia’s government.
"We will continue to pursue all channels available to us,” CEO Greg Johnson said in a press release. "This . . . includes the prospect of negotiating a resolution of the situation with the Bolivian government, or, if required, the pursuit of compensation for the full value of the project through international arbitration.”
Trying to sound a positive note, South American Silver pointed out that other nationalizations in Bolivia have resulted in compensation payments. And the company implied that it is open to remaining at Mallku Khota in a joint venture with the Corporación Minera de Bolivia, the state-owned enterprise the Morales administration has revived via nationalizations.
“In the oil and gas sector specifically, past affected companies subsequently negotiated new joint venture agreements with the Bolivian government,” South American Silver said in the press release.
Bolivia’s natural resources offer rewards tantalizing enough that foreign capital will bear risks and even a dose of humiliation to share in the long-term rewards. Meanwhile, some investors are too deeply rooted in the country to pull away easily, such as Japanese conglomerate Sumitomo and its San Cristobal silver, zinc and lead mine.
Morales may indeed be ramping up nationalizations. But his strategic calculation that commodity-hungry foreign capital will nonetheless continue to bet on Bolivia might just be proved correct.
Marcelo Ballvé is a freelance writer and a former AP reporter in the Brazil and Caribbean bureaus. He is based in New York.
Mexico, Central America and Caribbean [contents]
Mexico’s Peace Movement Heads to the US
Paul Imison. Upside Down World. August 9, 2012
Few, if any, of the recent post-election protests in Mexico have matched the size of the 200,000-strong March for Peace that flooded the Mexican capital on May 8, 2011. Led by the poet and journalist Javier Sicilia, whose 24-year old son was an innocent victim of the country’s gang-related violence in March last year, it was the day that the Movement for Peace with Justice & Dignity truly took a foothold in the national consciousness. Presenting a manifesto entitled “The National Pact for Peace”, the movement denounced not only the violent gangs battling over the drug trade but its own government’s “war on drugs”, sponsored by both the George W. Bush and Barack Obama administrations.
On August 12, the Movement for Peace will begin a four-week tour of the United States, beginning in San Diego, California, and taking in 27 cities on its way to Washington, D.C. According to Javier Sicilia, the goal of “The Peace Caravan” is to “promote dialogue with American civil society and its government regarding the following themes: the need to stop gun-trafficking; the need to debate alternatives to drug prohibition; the need for better tools to combat money-laundering; and the need to promote bilateral cooperation in human rights and human security...”
On July 23, after Mexican President Felipe Calderón had effectively vetoed the Ley General de Víctimas (General Victims’ Law) proposed by the movement to compensate victims of the “Drug War”, Sicilia wrote an open letter to the executive, which began as follows:
“Dear Mr. President,
I say ‘dear’ because, despite your treachery and lack of respect for the victims and the nation that you govern, I continue to believe that a human being is more than his mistakes and wrongdoings and deserves love and respect. I also say it because with this letter I want to reach Felipe Calderón the man, not the mask of power whose falsity distorts him, and speak to his heart from the truth...”
The passage of the General Victims’ Law was one of the principal goals of the National Pact for Peace. It would oblige the government to provide psychological and financial support for the tens of thousands of survivors of Mexico’s violence, who have lost their homes, spouses, parents and children to the “war”. Yet on July 1, Calderón sent the bill back to lawmakers, claiming it placed too much strain on the federal government and delaying its passage for up to nine months. Critics claim that the government – which has spent over US$15 billion on equipment and training for its security forces – is simply reluctant to accept responsibility for its role in the violence.
Mexico’s “Drug War”
What’s called the Mexican “Drug War” is a six-year period of brutal violence and astonishing impunity that began in December 2006 when Calderón, newly-sworn in as president, launched a militarized crackdown on the country’s drug-trafficking cartels. Many of these groups had existed in one form or another for decades.
Today, according to the US Drug Enforcement Administration (DEA), 97% of the cocaine on American streets flows along the Central American-Mexican corridor along with Mexican exports of marijuana, heroin and methamphetamine. As such, there are, in fact, two “drug wars” in Mexico: the crackdown by the government against (some of) the “cartels”, and a conflict raging between various criminal factions for control of the trade.
The overwhelming majority of the 60,000-100,000 victims of the conflict have come from the ranks of the country’s marginalized poor. Calderón has always claimed that the drug gangs “kill amongst themselves” and that 94% of the victims are criminals involved in the illicit trade. Yet in 2010, a leaked report from the Procuraduría General de la República (PGR), or Attorney General’s Office, revealed that up until that point, only 2% of the so-called “Drug War” murders had even been investigated.
The Bush and Obama administrations have between them contributed some $2 billion to Mexico’s “war on drugs ” (which has since been repackaged by both Calderón and Washington as “the war on organized crime” to disguise its obvious limitations). Yet, there has been no discernible drop in the amount of narcotics smuggled across the border, or a significant fall in the violence. Calderón boasted of a halt in the rise of gang-related homicides in 2011 – not a decrease – but the government’s murder statistics have always been fiercely contested by independent researchers.
What’s more, since 2006, nearly 5,000 complaints have been filed against the Mexican military for human rights abuses. Some of the most high-profile victims of the “Drug War”, who have struggled for years to make their voices heard, claim their loved ones were killed or tortured by the very security forces deployed to protect them. The military and law enforcement agencies are routinely accused of targeting specific drug-trafficking organizations while collaborating with and facilitating others. High-ranking cabinet members close to Calderón, along with elected representatives – many still in office – have also been accused of protecting traffickers.
While Calderón’s controversial six-year term ends on December 1, the “Drug War” strategy is likely to continue relatively unchanged under incoming president Enrique Peña Nieto of the Institutional Revolutionary Party (PRI). Prior to the Mexican election on July 1, US Vice-President Joe Biden traveled to Mexico to meet with the three principal presidential candidates, imploring each one to continue the bilateral strategy.
Under the Same Skies
During its tour of the US, the Peace Caravan will meet with civil society groups throughout the country to build solidarity for a re-think of both US drug policy and gun laws. Two buses filled with a total of 110 people – half of them victims of the violence in Mexico – will make up the caravan. Vigils, rallies and public forums will be held along the way.
The Movement for Peace backs the proposal for the decriminalization of drugs that has been advocated by several regional leaders, but criticially, not by Barack Obama at the 6th Summit of the Americas in April. It also calls for greater regulation of firearms in the US, some 68,000 of which have been seized at Mexican crime scenes in the past few years.
Javier Sicilia acknowledges that few US citizens may be engaged in what is happening across the border, or aware of the enormous suffering in Mexico on account of a Washington-funded conflict. Yet he points to the “silent victims” of the war on drugs on American soil as well. “It’s not just Mexicans – or Colombians, or Central Americans – affected,” he told me in an interview in April. “Look at the families destroyed in the US by this war. Most people in prison on drug-related offenses [in the US] are either black or Hispanic. They are poor people.”
The movement admits that it may be up against the odds in its timing for the caravan with the US presidential election taking place in November. Neither candidate is likely to express support for either the decriminalization of drugs or a halt to the funding of Mexico’s security forces at such a crucial juncture, yet while policy change is the overwhelming goal, the movement hopes to build coalitions and alliances that may be invaluable in the long-term struggle.
The Peace Caravan begins in San Diego on August 12 and will arrive in Washington, D.C, on September 11, visiting 27 US cities along the way. A full itinerary can be found in Spanish at http://movimientoporlapaz.mx and in English at http://www.globalexchange.org/mexico/caravan
Guatemalan man accused of war crimes in infamous Dos Erres slaughter loses Calgary appeal bid
Sherri Zickefoose. Calgary Herald. August 8, 2012
A man accused of participating in a 1982 massacre of Guatemalan villagers has lost his chance to appeal his extradition order.
In a seven-page ruling, an Alberta Court of Appeal judge denied Jorge Vinicio Orantes Sosa’s application.
“It is my view that Mr. Sosa’s appeal is hopeless,” Justice Brian O’Ferrall wrote in the decision released today.
“Nor is there any injustice in requiring him to answer the perjury charges in the United States.”
Sosa remains in custody under an extradition committal order.
The judge did grant him more time to file notices after Sosa complained of being unfamiliar with court procedures.
In his reasons for the decision on Sosa’s application for an extension of time to appeal, O’Ferrall wrote that Sosa was in the Calgary remand centre, without counsel, unfamiliar with court procedures, and unable to secure and prepare the necessary notice until after the time for giving notice of appeal had expired.
“Having heard Mr. Sosa’s explanation of the difficulties he encountered, I am prepared to extend the 30-day time limit. I accept Mr. Sosa’s explanation for late filing of his notice of appeal.
Furthermore, I believe that it is in the interests of justice that Mr. Sosa be given an opportunity to seek leave or permission to appeal,” O’Ferrall wrote
Sosa is fighting extradition to the United States to face perjury charges.
According to court records supplied by the United States for the extradition hearing, Sosa misled American authorities about his military service and participation in the crimes when he applied for U.S. citizenship in California in 2008.
Sosa is accused of being one of several commanding officers of a squad of “Kaibiles,” an elite commando force accused of massacring the villagers of Dos Erres in December 1982.
A 60-person unit of fighters killed almost 200 people in what is considered one of the bloodiest events of the 36-year Guatemalan civil war.
Sosa, who was arrested while visiting family in Lethbridge in January 2011, is also being sought by Guatemalan authorities who accuse him of war crimes.
He was to have filed his appeal of the extradition order within 30 days, by Oct. 2, but did not do so until Oct. 19. He filed a second notice of appeal on Jan. 24.
The federal minister of citizenship and immigration will have to sign an order before Sosa can be surrendered to American authorities.
According to the American extradition case, the Guatemalan peasants were blindfolded, interrogated and killed by sledgehammer. Women and children were raped, and villagers were thrown into a well.
According to the U.S.’s witnesses, Sosa fired a 12-gauge shotgun into the well after hearing the wails of the villagers. He then dropped a grenade on the civilians. Sosa was in his early 20s at the time of the killings.
Gangs extort cash from Honduran homeowners
ALBERTO ARCE. AP. August 8, 2012
TEGUCIGALPA, Honduras -- Alejandro Duron's life changed in minutes when the envelope appeared under his front door.
The note inside demanded that the 34-year-old systems analyst pay $2,500 for the privilege of remaining in the house in a high-end neighborhood. It detailed Duron's daily routine so he would know the threat was serious. "If you don't pay, we will kill you," the message warned.
He and his girlfriend, Helen Ocampo, who had grown up in the home, fled immediately.
"We went to sleep in another place and asked the neighbor to feed the dog," Duron said.
Extortion of homeowners is a chilling new crime trend in Honduras, already among the world's most dangerous countries. By demanding people pay to stay in their own homes, gang members have emptied some neighborhoods and have changed the way many live. While authorities have no numbers about how widespread the crime has become, a survey by The Associated Press of police in a dozen neighborhoods indicates at least hundreds of families have been affected.
The police, the prosecutor's office and the U.N. agencies working in Honduras say that the problem is increasing even if numbers are hard to come by because many victims, like Duron, fear reporting the crime in the violence-wracked country.
"The number of extortions is much higher than reported," said Rafael Espinosa, who heads the security program for the U.N. delegation in Honduras. "People do not dare to report because there are few stations, few agents, and because they don't trust the authorities."
The problem has become so widespread that the National Police have set up special units in areas where entire blocks have been abandoned, trying to halt a crime that first appeared four years ago and is growing rapidly.
The gangs have their roots in the prisons of Southern California, where some refugees of the region's civil wars sowed violence in the 1980s. Increased U.S. deportations of criminals in the 1990s sent many of those gang members back home to Honduras, Guatemala and El Salvador, where they practiced their brutality in countries with weak police and criminal justice systems.
Terrorized by street gangs and members of Mexican drug cartels, this Central American capital of about 1.2 million people recorded 1,149 murders last year - more than 87 for every 100,000 residents. Honduras has the world's worst homicide rate, according to U.N. figures.
That creates fear that backs up threats of extortion of many sorts, which has become one the gangs' biggest businesses.
Gang extortion is common throughout Central America and it also has devastated Mexican cities such as Ciudad Juarez on the U.S. border, where blocks upon blocks of businesses were shuttered or torched during the peak of a crime wave there in 2010. In Guatemala, bus drivers have been targeted by assassins on motorbikes after refusing to pay gangs to let them operate.
In Honduras, taxi drivers and business owners are also used to extortion. But the practice now has reached into the one place many people considered their last remaining safe haven: their home.
"Here, a gang is charging a tax just to live," said deputy police chief Brian Dominguez, who heads a recently formed unit to fight home extortion.
Among the hot spots is a rough Tegucigalpa neighborhood, a maze of dirt roads and dangerous stairways on the side of a ravine where the houses seem to be always under construction, with empty window frames awaiting panes of glass.
Last week, 82-year-old Oscon Armando Ochoa was shot seven times at close range inside his home because he couldn't pay an extortion fee, which Dominguez said is about $15 a week. Ochoa, who sold sodas and snacks to make ends meet, was found amid a pile of cans and bags of potato chips.
"They've taken him, they've taken him. This is an injustice. We are poor and they have taken him for not paying," his relatives told police officer Jose Maldonado, who was at the crime scene.
Dominguez's task force set up shop in April, just a few hundred yards from where Ochoa died, aiming to evict gang members who had taken over an entire block of homes. Even after the outlaws were evicted, the owners didn't return. Police now use one house as a command headquarters, where officers camp out on a dozen mattresses on the floor. The number "18" is still marked on a wall, the sign of the gang that terrorizes the neighborhood. Other homes have become trash dumps.
Remaining neighbors ran away when an AP reporter tried to interview them.
"The law of silence rules," Dominguez said. "They know anyone can be a lookout ... We maintain a strong presence in the neighborhood, but we know over there, in front of the school, gang members continue to hide in those homes after they kick out the owners."
He said other neighborhoods are experiencing the same kind of flight, with gangs sometimes taking over houses, or even renting them out after owners leave.
"In some neighborhoods there is even a curfew imposed by the gangs," said Jose Corea, an inspector with the Honduran police's newly formed extortion unit.
Corea said the unit has received 506 complaints of extortion involving homes, taxis and businesses in Tegucigalpa in the first half of 2012. He can't compare it to previous years because the unit just started collecting numbers.
But a 2010 U.N. study showed that 30 percent of Hondurans interviewed had been victims of extortion, 26 percent more than once.
Chief officer Martinez warned that home extortion is growing more sophisticated, and the victims are sometimes relatives of migrants living abroad.
"We know the gangs are identifying vulnerable people, for example, women who have children with their husbands in the U.S.," he said. "The minute they make an improvement to their home, they knock on the door and force them to sell the property for a 10th of its value. They even make some visits with a lawyer."
The problem extends beyond the poor outskirts.
Francisco Moncada lives in downtown Tegucigalpa in one of the grandest houses near the city's Central Park. He joins neighbors to chat or smoke a cigar outside his home and other nights he walks his dog. But in recent years he has started carrying a gun.
"I am scared of painting my house," he said. "The gang members would know I have money and would threaten me, like the business next door."
Duron and his girlfriend say there were a series of petty robberies at their former home that they believe were related to the subsequent extortion attempt. They now rent out the home through a real estate agency.
Unlike friends who have fled to Spain or the U.S., they don't plan to abandon their city, though.
"I'm not leaving because of the security" situation, said Ocampo, 28. "If I'm not willing to fight for change in my country, who will?"
American imprisoned in Nicaragua gets long-awaited appeal hearing
Mary Slosson. Reuters. August 9, 2012
(Reuters) - A U.S. citizen serving a 22-year prison sentence in Nicaragua for drug trafficking and money laundering who a United Nations group has said was wrongly convicted has been granted an appeals hearing, his supporters announced on Wednesday.
Jason Puracal, 35, was detained by Nicaraguan authorities in November 2010 and later found guilty by a trial judge along with 10 Nicaraguan co-defendants despite their testimony that they had never met or worked with Puracal, his legal team said. It added that the prosecution's own witnesses said he was innocent.
Puracal has become a cause cÃ©lÃ¨bre for human rights activists in the United States and around the world, with U.S. lawmakers appealing to Nicaraguan President Daniel Ortega and a former high-ranking U.S. Drug Enforcement Administration official launching a massive petition drive on Puracal's behalf.
"The 11-month wait for Jason's hearing is over. The one-year anniversary of his conviction will be August 29, and we really hope to have him home by then. We're optimistic, and we just ask that people continue to stay engaged," said Eric Volz, founder of an international crisis resource group called the David House Agency that has been helping push for Puracal's release.
Puracal's appeal will come before a three-judge panel on August 16 in a hearing that is expected to last five days, supporters said. A decision could come anywhere from five days to months after the hearing concludes.
Neither prosecutors nor the Nicaraguan government immediately responded to requests for comment.
Supporters have been pushing for the appeal to be heard for nearly a year, and heightened those efforts in the past week after finding out that Puracal, who has been in solitary confinement, was put on suicide watch by Nicaraguan authorities.
Puracal's sisters Janis and Jaime flew to Nicaragua this week and started knocking on the doors of government officials and visited the appeals court in person, supporters said.
"Within four hours, Jason's attorney got a phone call being notified of the date that was being set for the hearing. That's the main reason we believe this is finally moving," Volz told Reuters.
Volz was himself convicted of murder in the same Nicaraguan courtroom in 2006, eventually serving 14 months of a 30-year sentence in the same La Modelo prison in Tipitapa, just east of the capital Managua. A Nicaraguan appeals court overturned his conviction last year.
The United Nations Working Group on Arbitrary Detention said in May that Puracal was arbitrarily imprisoned and recommended that he be immediately freed.
A U.S. citizen born in Washington state, Puracal became a resident of Nicaragua after serving there as a Peace Corps volunteer in 2002, and he has married a Nicaraguan woman.
Before his arrest, he was working at a real estate office in the Nicaraguan city of San Juan del Sur, a surfing destination on the Pacific Coast.
Puracal's supporters said he came under suspicion due to his job as a real estate agent, which gave him control over large sums of money held in escrow for property transactions and drew the attention of Nicaraguan law enforcement authorities.
(Reporting by Mary Slosson in Sacramento, California; Additional reporting by Ivan Castro in Managua, Nicaragua; Editing by Cynthia Johnston and Lisa Shumaker)
Panama Canal works on an upgrade to accommodate bigger ships
Tim Johnson. McClatchy Newspapers. August 8, 2012
PANAMA CITY, Panama -- The nature of global trade is about to change.
Soon the Panama Canal will have a third lane that can accommodate mega-ships nearly three times larger than any vessel that ever transited the isthmus during the past century.
It might not seem like earthshaking news. But the impact will ripple around the world, from shipyards in South Korea to highways in Texas to coalfields in Colombia and soy plantations in Brazil's northeast. Entire nations will see trade patterns shift.
Ports up and down the U.S. Atlantic seaboard are in a frenzied race to get ready for the larger, slower, more efficient
ships that will ply the oceans one day.
They are dredging harbors, expanding rail lines, taking a look at port facilities and distribution centers and, in the case of the New York City area, preparing to elevate the roadway on the Bayonne Bridge so that bigger vessels can slip underneath to Newark Harbor.
"It's been said that it's a game changer. Yes, it is," said Alberto Aleman, a Texas A&M-educated engineer who has been administrator of the canal for 16 years during a period in which the U.S. handed off control to Panamanian hands.
Since the SS Ancon became the first ship to slide through the locks of the Panama Canal on Aug. 15, 1914, the roughly 50-mile-long waterway has saved cargo lines the journey around Cape Horn and through the stormy Drake Passage at the southern tip of South America. More than a million ships have transited the canal, and about 5% of all world trade moves across the isthmus each year.
But the Panama Canal always was constrained by locks that permit no vessel longer than 965 feet, wider than 106 feet and with a draft greater than 39 feet to pass through. Ships suitable for the canal became known as Panamax vessels and could carry nearly 5,000 20-foot shipping containers.
When the third lane opens in late 2014, the canal's capacity will more than double. Ships as long as 1,200 feet and up to 160 feet wide, with drafts as deep as 50 feet, will be able to transit. The largest vessels will carry as many as 13,200 containers -- at least double the dry weight of bulk cargo that can pass through today.
Panamax vessels are long, slim and require a lot of water ballast to maintain balance. New mega-ships will be wider, more stable and will consume up to 16% less fuel -- meaning a smaller environmental footprint and lower costs for their operators.
Shipyards are seeing a surge in orders for what are called post-Panamax vessels.
"The economies of scale mean it is only one ship moving twice the amount of cargo," Aleman said.
The Panama Canal widening will affect inland railway hubs such as Kansas City and ports along the gulf coast, according to a study the U.S. Army Corps of Engineers released in June. As shipping becomes cheaper, rail lines that handle cargo coming from Asia that is offloaded at Pacific ports and rolled across the country may notice a slowdown, it said.
Yet it will be a boon for the Midwest farm belt as grain exports moving through the gulf coast become more competitive in Asia, it said.
"This could have a significant impact on both the total quantity of U.S. agricultural exports and commodities moving down the Mississippi River for export at New Orleans," the study predicted.
More goods will move through Texas ports, too, and motorists are certain to groan at clogged highways. In May, Texas officials created the Panama Canal Stakeholder Working Group to figure out how highways like I-35 between Dallas and San Antonio, which already handles about 200,000 vehicles a day, will cope.
Traffic already is bustling at the canal, too. The number of shipping containers aboard freighters transiting the canal rose from 200,000 in 1995 to 6.6 million last year.
Once the third lane opens, mammoth ships will take advantage of economies of scale to carry containers for the Walmarts and Targets of the world.
One problem is that some of the ports along the Atlantic seaboard don't have channels deep enough to accommodate such seagoing behemoths.
That's why the White House announced July 19 that it issued orders to expedite dredging projects to deepen harbors and approaches in Miami, Jacksonville, Fla., Savannah, Ga., Charleston, S.C., and the Port of New York and New Jersey.
"It's not only about the ports," Aleman said. "It's the roads, the trains, the distribution centers and actually it's about jobs."
With bigger ships, bottlenecks can happen.
"The bigger a vessel is and the more cargo it carries, the slower it is to load and unload. So the ports become more important," said trade expert Francisco Bustamante, a former economist for the Inter-American Development Bank in Washington.
The widening of the canal will affect trade across Latin America.
Very large ships carrying coal from northeastern Colombia and iron ore from Brazil will be able to take the raw material to China through Panama more cheaply, giving a boost to those industries and creating jobs. Chilean copper producers will find it easier to export to European markets.
"There's LNG (liquefied natural gas) coming out of Trinidad & Tobago today that goes to Chile, and that has to go around the Cape," Aleman said. Once the canal expansion is completed, it can go through the canal, shaving hundreds of sea miles from the trip to Chile.
Panama, a diminutive country of 3.5 million people, took a huge risk financing the canal widening. But the payoff will be bountiful.
The U.S. ran the canal as a break-even operation. Once Panama took over in 1999, it increased tolls to make a profit. This year, the canal will contribute $1 billion to government coffers. By 2025, projections are for Panama to earn $4 billion a year from the tolls.
With the widening, Panama hopes to transform itself from just a transit point for cargo into a logistical hub where ships can be overhauled in dry dock, containers sorted for onward passage and industrial parks set up for final assembly of goods.
Already, major multinationals including Caterpillar, Procter & Gamble, Dell and Mexico's Cemex have turned to Panama as a headquarters for regional operations.
"All of America is coming here to Panama," said Adolfo Quintero, an economist at the University of Panama.
Positioned as the geographic center of the Americas, Panama boasts five fiber-optic trunk cables, giving it the best digital connectivity in the Western Hemisphere outside the U.S. Its airline offers flights to 29 countries, more than any other hub in the region.
The nation is bustling as port complexes are being built on the Atlantic and Pacific ends of the canal.
On the canal itself, pilots await a new era of mega-ships inching ever so carefully through the locks on the larger third lane.
"There are lots of questions about how currents, wind and the hydrodynamics (of the locks) will work," said master towboat Capt. Gerardo Martinez, one of 230 tugboat pilots guiding ships through the canal.
The one sure thing, he added, is "the stress will be bigger."
India, Latin America to scale up bilateral ties
Region: Trade, Security, Economy and Integration [contents]
IANS. August 8, 2012
New Delhi, Aug 8 — Chila, Cuba and Venezuela, the troika of Latin America's premier grouping, Wednesday sought closer strategic and economic partnership with India and described New Delhi as "an emerging power" that can play an important role in transforming the region.
Seeeking to scale up ties with India in diverse areas, Chile's Foreign Minister Alfredo Moreno Charme listed the many advantages of India and the Latin American region working together to transform their societies and economies.
"India is an emerging power and the largest democracy in the world. Closer coopweration will open new areas of cooperation in economic, social and cultural fields," Charme said here.
He was speaking at a seminar organised by the Indian Council of World Affairs (ICWA) on "recent developments in the Latin American and Caribbean (LAC) region".
Charme listed advantages of closer partnership with the Community of Latin American and Caribbean States (CELAC) region.
"The CELAC region has stable financial system and is the largest food exporter in the world. It is the third largest energy exporter and has the largest fresh water reserves in the world. It is one of the most peaceful regions in the world," he said.
He rued that India's trade with the region was 10 times less than of China.
M. Ganapathi, secretary (west) in the external affairs ministry, also made a strong pitch for an all-round acceleration of ties.
"It is a win-win situation. The opportunities are manifold and tremendous. We are looking for a pan-continental engagement with CLEAC," he said.
"The LAC region was once considered a distant horizon for Indian diplomacy. Now there is a multi-dimensional transformation of relations," said Rajiv Bhatia, director-general of ICWA.
India held the first foreign minister-level talks with the CELAC's troika of Chile, Venezuela and Cuba Tuesday, signalling a diplomatic acceleration in the region where China has surged ahead with over $250 billion trade.
The India-troika meeting culminated in both sides agreeing to set up joint committees in diverse sectors including trade, agriculture and energy security.
Chile is the current chair of CELAC.
The CELAC, a grouping of 33 countries of Latin America and the Caribbean region (LAC) region, has emerged a powerful platform for asserting Latin American identity and its collective regional aspirations.
The region is home to 600 million people, nearly half the population of India. It has a landmass five times more than India.
Free Trade with China? No, Gracias
Marcela Valente. Inter-Press Service. August 8, 2012
BUENOS AIRES, Aug 8 2012 (IPS) - There is little likelihood that South America’s Mercosur trade bloc will take up China’s proposal to establish a free trade agreement, at least in the short term. Experts and industrialists fear an invasion of cheap Chinese goods, and unequal competition.
Although the sources consulted by IPS agreed that trade and investment between Mercosur (Southern Common Market) and China will continue to expand, they said a free trade deal was unrealistic under the present circumstances.
Chinese Premier Wen Jiabao expressed interest in such an agreement on his Jun. 25 visit to Buenos Aires, in a videoconference with Presidents Cristina Fernández of Argentina, Dilma Rousseff of Brazil, and José Mujica of Uruguay.
The four leaders welcomed the idea of forging closer trade ties between Mercosur and China.
Paraguay, Mercosur’s fourth founding member, has been suspended from the bloc since that country’s legislature removed President Fernando Lugo in a lightning-quick impeachment trial on Jun. 22.
At any rate, Paraguay is facing the dilemma of maintaining diplomatic relations with Taiwan or agreeing to cut off ties in order to negotiate with Beijing.
The fifth full member of Mercosur, Venezuela, had not yet been admitted to the bloc at the time of the videoconference. It officially joined on Jul. 31 in Brasilia.
At the last Mercosur summit, held in the Argentine province of Mendoza four days after Wen’s visit, the governments of Argentina, Brazil and Uruguay agreed to strengthen cooperation with China.
They also approved a proposal to send a joint trade mission this year to China ‘s commercial hub, Shanghai.
But they did not elaborate on the Asian giant’s suggestion of freeing up trade, which analysts agree will be a long, complex process.
Mauricio Mesquita Moreira, an Inter-American Development Bank (IDB) expert on international trade, said the conditions are not in place for reaching a free trade deal in the near future.
“On one hand, Argentina and Brazil have industries that are highly vulnerable to competition from Asia. And on the other, the state still has too much of an influence in the promotion of industry in the Chinese economy for Mercosur to accept a liberalisation of trade,” the Brazilian economist told IPS.
“The smaller partners, Uruguay and Paraguay, lack industrial structure, and could benefit from an agreement with China. But being in Mercosur also gives them benefits such as privileged access to the bloc’s larger markets,” he said.
Mesquita Moreira was in Buenos Aires this month to present a study carried out by the IDB together with experts from the Asian Development Bank Institute, which analyses the future of ties between Asia and Latin America.
The study recommends an increase in trade and investment between the two regions.
Argentine economist Guillermo Rozenwurcel, director of the Centre for Research on Economic Development in South America (IDEAS), said “the Chinese proposal is not viable in the least, over the next 10 to 15 years.
“The presidents gave a diplomatic response to the Chinese interlocutors, to show that they had listened to the proposal. But until the playing field is level, there are few prospects for real discussions on free trade,” he told IPS.
Rozenwurcel also said there was little “political margin” for considering the question.
On the other hand, “there is a challenging and complex, but possible, outlook” for boosting trade, investment and scientific and technological cooperation between this region and Asia, he added.
According to the study by the IDB and the Asian Development Bank Institute, trade between Latin America and Asia has grown by an average of 20.5 percent a year since 2000, to 442 billion dollars today.
With that sharp increase over the last 12 years, China, Asia’s biggest supplier of imports to Latin America, is now the region’s second largest trading partner, after the United States.
But the pattern of trade between the two regions is based mainly on exports of raw materials from Latin America and sales of manufactured goods from Asia, experts point out.
Abeceb, a private consultancy in Argentina, reported that trade between Mercosur and China climbed from 10.3 billion dollars a year in 2003 to 77.9 billion dollars in 2011, and could reach 200 billion dollars by 2016.
But Abeceb also noted that in the same period, Argentina’s purchases of manufactured goods from Brazil such as textiles, capital goods, plastics or pharmaceutical products fell as a result of competition from lower-cost imports from China.
In the case of textiles, for example, 56 percent of Argentina’s imports came from Brazil in 2003, but today that proportion is less than 23 percent. Meanwhile, purchases of textiles from China grew from two to 34 percent of the total.
And while footwear imports from Brazil fell from 79.2 percent to 37.5 percent between 2003 and 2011, purchases from China rose from 12.6 to 36 percent in the same period.
The president of Argentina’s toy industry chamber, Miguel Faraoni, said a free trade accord between Mercosur and China “would be very counterproductive.”
“Competition is impossible due to the differences between the policies of each one. China produces between 75 and 80 percent of the toys sold around the world, which means it would be an unequal fight,” he said.
Faraoni said the share of locally produced toys sold on the domestic market has gone up from 10 percent in 2002 to 50 percent today. He also noted that the number of foreign companies producing toys in Argentina has increased.
“Production, employment and investment in machinery and new technologies have grown, and we are exporting eight percent of what is produced to the region and to the Latino market in the United States,” he said.
Faraoni stated that Argentine industry could compete in terms of price and quality with Brazil, “which has the same rules of the game,” but that “opening up the market to China would reverse the gains made in the last few years.”