Latin America News Round-up
September 13, 2012
After Toxic Toll, Peru Plans to Vet Mines Better
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Brazil and Southern Cone
Brazil inflation under control, output recovering: Tombini. Reuters
Transocean Says Court Denied Request to Block Brazil Injunction. Wall Street Journal
Argentina’s YPF Sells 1.5 Billion Pesos of Debt. Bloomberg
Chile's 9-11 toll: 1 dead officer, 255 arrests. AP
IMF upbeat on outlook for Chilean economy. Reuters
Paraguay, its coffers empty, sells $45 million in bonds to cover operating costs. AP
Northern Andean Region
Supporters throw stones in Venezuela pre-election clash. Reuters
Brazil may extend deadline for PDVSA participation in refinery. EFE
Colombia: President Santos’ approval rating soars. AFP
Colombia paying for phantom pupils in multi-million dollar scam – watchdog. TrustLaw
Western Andean Region
Bolivian Miners Blockade Roads To La Paz in Escalating Standoff. Americas Quarterly
After toxic toll, Peru plans to vet mines better. GlobalPost
Peru won’t negotiate with rebels like Colombia – Humala. Reuters
Mexico, Central America and Caribbean
Mexican Senate urges arrest for border killing of Mexican. Reuters
Dole begins payments to Central American banana workers. AFP
Nicaragua puts up fight as crime washes over Central America. McClatchy
Lawyer: Jailed US man to be released in Nicaragua. AP
Region: Trade, Security, Economy and Integration
China Steps Up Push Into Latin America. Wall Street Journal
Brazil and Southern Cone [contents]
Brazil inflation under control, output recovering: Tombini
Reuters. September 13, 2012
BRASILIA: Brazil's central bank chief Alexandre Tombini said on Wednesday that inflation is under control and the Brazilian economy is gradually recovering from a slump, with industrial output showing signs of speeding up.
"Economic activity in Brazil will be more intense in this half of the year," he told a Senate committee hearing.
Tombini said recent measures taken by President Dilma Rousseff's government to stimulate the economy - including a major cut in electricity costs announced on Tuesday - will help contain price pressures in the medium term and bring about more vigorous and sustainable growth.
Employment, real income and credit continue to sustain demand in the Brazilian economy and retail sales continue to expand, the central bank governor said.
Tombini said annual inflation continues to move toward the center of the official target, although that process is not linear. The outlook remains favorable in the longer term despite supply shocks, he added.
Brazil will enjoy a record grains harvest this year and its services sector is expanding faster than GDP, he said.
The bank cut its benchmark Selic rate for the ninth straight time, to an all-time low of 7.5 percent, on Aug. 29, signaling that it may be done with a year-long easing cycle as the economy starts to show signs of life.
Tombini said the international scenario continues to be "very complex," with high market volatility.
But he said that recent measures taken in Europe have reduced the risk of an "extreme" event in the euro zone.
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Transocean Says Court Denied Request to Block Brazil Injunction
ALISON SIDER. Wall Street Journal. September 12, 2012
HOUSTON—A Brazilian appeals court has denied a request by the national oil regulator to suspend an injunction barring Transocean Ltd. and Chevron Corp. from operating in the country, Transocean Chief Executive Steven Newman said on a conference call Wednesday.
The court responsible for the case couldn't yet confirm the ruling.
A Brazilian court banned the two companies from operating in the country in late July because of their roles in an offshore oil spill last year.
"This is very disappointing, as we believe the injunction order is unwarranted and is flawed legally and procedurally," Mr. Newman said. "Let me assure you that the technical merits of our case are strong, and we are pursuing the many avenues available to us to appeal the preliminary injunction."
Brazil's National Petroleum Agency, ANP, sanctioned Chevron and said it would fine the company for any wrongdoing relating to the spill. The ANP cleared Transocean.
The agency requested that the court suspend the injunction.
Despite the incident, ANP officials have said they would meet with Chevron to discuss restarting output at the Frade field, which the company voluntarily shuttered in March.
A spokesman for Chevron didn't respond immediately to a request for comment.
Mr. Newman said Wednesday the court hasn't yet served the company with the injunction and Transocean's rigs are still under contract—the company has 10 rigs in Brazil.
Under the terms of the injunction, Transocean would have to cease activity within 30 days from the date of service.
Guy Cantwell, a spokesman for Transocean, said despite the court decision, there are still avenues for the company to contest the injunction.
"We will use all available resources to prevent a shutdown, even temporarily, of Transocean's operations in Brazil," he said in a statement. He said Transocean's crews and equipment functioned correctly and weren't to blame for the spill.
Mr. Newman said that if the injunction does go into effect without a successful appeal or intervention, he didn't think it would mean the end of the Transocean's contracts in Brazil, though its rigs would stop bringing in money.
"I think the worst-case scenario is that we go to a zero rate environment and the customers don't terminate the contracts," he said.
But that scenario still "doesn't look pretty" for Transocean, which earns about 11% of its revenue in Brazil and would continue to incur costs keeping its rigs ready to work at a moment's notice, Mr. Newman said. Transocean earned $2.575 billion in revenue in the second quarter.
State-run oil giant Petroleo Brasileiro SA, or Petrobras, has contracts with Transocean rigs and has continued to support the company, Mr. Newman said. He said the company had received "unprecedented" support from its customers.
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Argentina’s YPF Sells 1.5 Billion Pesos of Debt
Camila Russo. Bloomberg. September 12, 2012
YPF SA (YPFD), Argentina’s biggest oil producer, sold more bonds than it initially offered in its first sale as a state-controlled company.
The company said in a statement that it sold 1.5 billion pesos ($322 million) of debt after offering 1.35 billion pesos in the local market. The results “exceeded management expectations” and the cash is “fundamental to continue in our ambitious investment plan,” according to the statement.
The sale included 100 million of fixed-rate bonds due in 270 days to yield 16.74 percent, 200 million pesos of bonds due in 18 months to yield 3 percentage points above the badlar rate and 1.2 billion pesos of 36-month securities at 4 percentage points above the badlar rate.
The badlar, the rate banks pay for 30-day deposits of more than 1 million pesos, was at 13.81 percent on Sept. 11, according to the latest central bank data.
The Argentine government seized 51 percent of YPF from Spain’s Repsol SA (REP) as it is seeking to halt declining oil output and stem fuel imports that doubled to $9.4 billion last year.
To contact the reporter on this story: Camila Russo in Buenos Aires at crusso15@bloomberg.net
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net
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Chile's 9-11 toll: 1 dead officer, 255 arrests
FEDERICO QUILODRAN. AP. September 12, 2012
SANTIAGO, Chile -- Chile's long night of violence marking the anniversary of a Sept. 11 coup is over, and police tallied up the results on Wednesday: one officer was killed and 26 wounded. There were 255 arrested, including 83 children.
Five public buses were set on fire to make barricades in the streets of the capital, prompting the transportation agency to cancel service for more than a million people. There was widespread looting through the night, and at least 58,000 homes were left without power after hooded protesters threw metal chains onto power lines in at least 12 of Santiago's 35 districts, the electricity company said.
The protests mark the 1973 coup that began Gen. Augusto Pinochet's long dictatorship.
Metropolitan Police Chief Luis Valdes says 27-year-old Officer Cristian Martinez was shot to death trying to stop the looting of a supermarket.
President Sebastian Pinera said his government will do all it can to identify his killers. Valdez said suspects are under arrest.
Deputy Interior Minister Rodrigo Ubilla said the number of arrests had declined since previous years, but the violence had intensified, with firearms being used more than ever. There was "a greater number of gunshots, of weapons and we're also concerned about seeing a greater number of young people in the streets," Ubilla said.
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IMF upbeat on outlook for Chilean economy
Reuters. September 13, 2012
(Reuters) - Chile's "skillful" economic management has helped deliver robust growth and low unemployment, the IMF said on Tuesday, but it urged authorities to be ready to use monetary and exchange rate policies to guard against external economic threats.
"Downside risks remain, stemming from global uncertainties and Chile's vulnerability to commodity price shocks," the International Monetary Fund said in a regular check-up on the health of the country's economy.
As a result, the IMF recommended that Chile be prepared to respond robustly to offset any headwinds, and highlighted the support that monetary and foreign exchange policies could provide if the economy took a sudden hit.
"The current neutral stance of monetary policy is appropriate but should remain responsive to changing economic conditions," IMF executive directors said. "Exchange rate flexibility ... remains an important buffer and first line of defense against volatile capital flows and terms of trade shocks."
The Chilean economy grew strongly in the last two years, buoyed by "exceptionally dynamic" domestic demand that restored momentum after the global financial crisis and a strong earthquake that hit parts of the country in February 2010.
Output expanded at 5.9 percent in 2011, according to IMF data, and is forecast to grow 4.7 percent in 2012, while the Fund sees unemployment declining to a historically low annual average rate of 6.6 percent this year.
The IMF said productivity growth was essential to maintain Chile's strong growth and urged action to get more women into the labor force to help maintain economic performance.
It also encouraged Chilean authorities to strengthen the budget to build up "fiscal buffers" and make up for new spending commitments by permanent increases in revenue.
"In this context, the tax reform to finance education expenditure is welcome. Directors welcomed plans to create a Fiscal Council and broaden the expenditure forecasting framework to include health care and education spending," the IMF said.
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Paraguay, its coffers empty, sells $45 million in bonds to cover operating costs
Pedro Servin. AP. September 12, 2012
ASUNCION, Paraguay - Paraguay's government has run out of money, so put another package of treasury bonds up for sale Wednesday, worth $45 million, to cover a $12 million hole in this year's budget and be able to make upcoming payments on its $2.2 billion in debt.
"We're scraping the bottom of the pot," and so will have to reject any request for more public spending this year, Treasury minister Manuel Ferreira said.
The bond issue was needed in large part because the government collects no income taxes. That will change in November, but the 10 per cent tax applies only to the very wealthiest Paraguayans, and they'll be able to deduct all their spending using official receipts, so it isn't expected to generate any direct revenue.
Also Wednesday, the government announced that it can't accept a $41 million Mercosur loan for a new highway along the Paraguay River because the paperwork arrived with the signature of Venezuelan Foreign Minister Nicolas Maduro.
Venezuela was made a full Mercosur member in June after Paraguay, whose veto power had long blocked the Caribbean country's entry, was suspended from the trade group for impeaching former president Fernando Lugo, an ally of the presidents of Brazil, Uruguay and Argentina. With Paraguay sidelined, the three remaining leaders voted Venezuela in, angering Paraguay's new leaders.
"The decision of Mercosur to grant this loan with the signature of Maduro seems like a trap: If Paraguay takes the money, it accepts Venezuela. And that won't be," said Public Works Minister Enrique Salyn.
Treasury Minister Manuel Ferreira said the government will finance it instead by selling more bonds in January.
Northern Andean Region [contents]
Supporters throw stones in Venezuela pre-election clash
Daniel Wallis and Diego Ore. Reuters. September 13, 2012
CARACAS (Reuters) - Rival supporters in Venezuela's presidential election fought and threw stones on Wednesday before a campaign stop by opposition leader Henrique Capriles less than a month before the October 7 vote.
Both sides blamed each other for the worst flare-up since the campaign began in July. Several people were hurt as dozens clashed around an airport in Puerto Cabello - even chasing each other across the runway - where Capriles had been due to land.
One pickup truck carrying opposition campaign materials was set on fire, and at least one other car was smashed up.
There have already been a handful of clashes on the campaign trail as Capriles tries to unseat President Hugo Chavez and end 14 years of the socialist leader's self-styled revolution.
"These acts are not spontaneous. There is someone responsible," Capriles, the 40-year-old governor of Miranda state, told a rally after the clashes, blaming the president personally.
"It is him, and I say this directly: it is you who wants this scenario, you who wants to spread fear, you who wants Venezuelans to continue fighting each other."
The election has so far generated much less violence than some locals had feared. But there is a huge number of guns in public hands, and with tempers becoming frayed as voting day nears there remains the risk of a more serious confrontation.
State media said more than 20 people had been hurt, while an opposition TV network gave a lower number of wounded.
Chavez's supporters blamed the opposition for the clash in Puerto Cabello, which closed the main road to the airport and forced Capriles to arrive in the area by a small boat instead.
"We were surprised by a shower of rocks, fireworks and petrol bombs ... which caused a large number of casualties," Rafael Lacava, the local mayor and a Chavez ally, told state TV.
"We were attacked by an advance group, which (Capriles) always sends on ahead when he holds these type of events."
Puerto Cabello is 60 miles (100 kms) west of Caracas in central Carabobo state. Puerto Cabello's mayor is a "Chavista", but the governor of the state is an opposition supporter.
The head of Chavez's campaign team told a weekly news conference in the capital that it had photographs of members of the Carabobo state police "lashing out" at Chavez supporters during the clashes. But he did not show the pictures to reporters.
Chavez did not mention the disturbance during a two-hour televised speech to a campaign event in the evening with members of a social development project called "Mothers of the Slum".
The 58-year-old leads the majority of Venezuela's best-known opinion polls, but they are notoriously controversial and divergent in the country of 29 million people, and one major pollster puts Capriles ahead.
Among the myriad local polling companies, respected Datanalisis had Chavez ahead by 12 points in July, though Capriles' numbers have been creeping up and another well-known pollster, Consultores 21, has them neck-and-neck. Both sides discount unfavourable polls and say their candidate is ahead.
The president remains hugely popular with many of Venezuela's poor majority, partly due to generous oil-funded welfare projects such as subsidized food stores, and because of his own humble roots and folksy charisma.
He frequently accuses opposition leaders of planning to scrap his social "missions" if they win power. Capriles rejects that, saying he will launch new missions, keep the current ones and improve those which he says do not work.
United Nations data support the government's line that poverty has been reduced under Chavez, but the opposition says he should have achieved much more given the huge oil revenue his administration has received since he took office in 1999.
(Additional reporting by Mario Naranjo, Eyanir Chinea and Hugh Bronstein; editing by Philip Barbara)
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Brazil may extend deadline for PDVSA participation in refinery
EFE. September 12, 2012
Brazil may extend the deadline for Venezuelan state oil firm Petroleos de Venezuela S.A. to provide loan guarantees and secure its participation in the bi-national Abreu e Lima heavy-oil refinery, the CEO of Brazilian state-controlled energy company Petrobras said.
Maria das Gracas Foster said PDVSA is in the "final" phase of securing a loan needed to pay for its 40 percent stake in the refinery, although the November deadline is approaching.
"If they don't present the guarantees in November, I'm going to discuss a new deadline because I want them (PDVSA) to be a part of this project," Foster said in a Senate hearing.
The two companies agreed in 2005 to jointly build the 230,000-barrel-per-day refinery in the northeastern Brazilian state of Pernambuco. According to the joint-venture terms, Petrobras is to have a 60 percent stake and PDVSA the remaining 40 percent.
Petrobras began building the refinery in 2007 with its own funds while waiting for PDVSA to assume its portion of a loan extended by Brazilian state development bank BNDES to finance the project.
BNDES has thus far denied the loan to PDVSA due to lack of sufficient collateral.
Petrobras has set different deadlines for its joint-venture partner to meet its component of the financing arrangement and the next one expires in November.
For PDVSA to participate in the project, it must acquire a 40 percent stake in Abreu e Lima, assume responsibility for that same proportion of the BNDES loan to fund the project and cover 40 percent of the costs Petrobras has already incurred in the construction phase.
Foster also denied reports by the controller general's office that the cost of the project has spiraled far above what was included in the initial budget.
Foster, who took the helm of Petrobras in February, said the higher price tag is due to mistakes made thus far, exchange-rate fluctuations and the fact the budget did not include the interest the companies must pay on the loan.
According to the U.S. Energy Information Administration, Petrobras plans to increase its Brazilian refining capacity to more than 3.1 million barrels per day by 2020 to meet rising domestic demand.
Abreu e Lima is one of five new refineries the company will build to achieve that objective, the EIA said in a report earlier this year. EFE
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Colombia: President Santos’ approval rating soars
AFP. September 12, 2012
BOGOTÁ, Colombia – The imminent launch of a peace process between the Colombian government and Revolutionary Armed Forces of Colombia (FARC) terrorists, which is approved by 77% of citizens, brought President Juan Manuel Santos’ positive image to 60%, according to a survey published on Sept. 11.
The study, conducted by Ipsos Napoleón Franco for various media in Colombia, states that 23% of the 1,200 respondents disapprove Santos’ decision to initiate a peace process with the FARC.
However, 54% said they are optimistic about the outcome of the talks, while 41% expressed pessimism.
The announcement of the start of negotiations was made last week, leading 52% to believe the country is on the right track.
Meanwhile, 42% believe that the country will remain the same in the next six months, while 36% said they will improve and 22% think it will worsen.
The survey also asked about the perception of the administration of President Santos, who went from a 42% approval in July to 57% this month, up 15 points as a result of the announcement of the negotiations, according to pollsters.
Regarding the results arising from the negotiations, only 27% of respondents agreed the FARC guerrillas should be forgiven if they lay down their weapons, while 68% disagreed.
Similarly, 72% rejected allowing FARC leaders to stand as candidates in popular elections, and only 23% agreed with that possibility.
The poll was held from Sept. 7-9 and its margin of error is 3.1 percentage points.
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Colombia paying for phantom pupils in multi-million dollar scam - watchdog
Anastasia Moloney. TrustLaw. September 12, 2012
BOGOTA (TrustLaw) – The Colombian government has spent tens of millions of dollars in education subsidies for some 145,000 students who were falsely enrolled in state schools across the country, Colombia’s Comptroller General has found.
In some cases, fraudulent subsidies were paid twice for the same pupil - nearly 46,750 students in total – and pupils who had never set foot in school. In other cases, they were paid for nearly 19,000 students who had dropped out of school and for 262 pupils who had died, according to a report by the Comptroller General.
The scam was uncovered following an audit of school enrollment lists during the first three months of this year by Colombia’s Comptroller General, an autonomous state entity that examines how government funds and resources are being spent.
“It’s very important that these resources aren’t being lost because it means children who deserve to access public education are not getting the opportunity to do so,” Mario Solano, an official working for the Comptroller General told a local television news channel.
The government pays local education authorities up to $720 a year for each pupil to attend school. The loss in state funds could total more than $100 million, Solano said.
The audit findings have been passed to the attorney general's office for further investigation to check that registered pupils exist and are not phantom children, he added.
The problem of falsifying enrollment lists was particularly prevalent in schools in Colombia’s northern provinces along the Caribbean coast, the audit found.
This is not the first time widespread corruption in school subsidies has been raised.
In December 2011, Colombia’s education ministry uncovered a scam involving some 180,000 students who were falsely enrolled following a nationwide audit of school enrollment lists.
Western Andean Region [contents]
Bolivian Miners Blockade Roads To La Paz in Escalating Standoff
Americas Quarterly. September 13, 2012
Hundreds of Bolivian miners are continuing to block road access to La Paz in an escalating standoff between miners and the Bolivian government over access to the Colquiri tin and zinc mine. The Bolivian government expropriated the Colquiri mine from the Swiss company Glencore in June, leading to a dispute over which Bolivian mining groups should take over.
On Monday, a group of protesting miners set up blockades on three major roads leading into La Paz. The protesters, from the Federación Departamental de Cooperativas Mineras de La Paz (Fedecomin), are protesting their exclusion from the Colquiri mine by a rival group.
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At the same time, miners employed by the state-run Bolivian Mining Corporation (Comibol) are currently blocking access to Colquiri. They have announced plans to march to La Paz to demand that the government prevent other mining groups from tapping into the mine’s richest vein, known as the Rosario vein.
Bolivian Interior Minister Carlos Romero urged the rival groups to remain peaceful, saying that they “can’t deny each other’s rights and exclude each other as if they were irreconcilable enemies.” Romero unsuccessfully attempted to organize a dialogue with the protesting miners on Tuesday, but the Fedecomin miners said that they would only consent to negotiate with Bolivian President Evo Morales himself, with whom they have requested a meeting.
“We will only talk with President Evo Morales. Anything less makes no sense because the Minister does not have decision-making power,” said Fedecomin President Miguel Manuel Cañaja.
The Fedecomin miners said they will not end their blockade of Bolivia’s roads until the “salaried” miners employed by the government agree to lift their blockade of the Colquiri mine and let other groups in.
The government has asked the miners to cease their respective blockades, citing concerns that some of the protesters on both sides of the dispute have dynamite in their possession. Meanwhile, transport workers have begun to clash with the protesters, who are blocking their routes.
President Morales has asked the warring factions to respect each other’s rights: “Both sectors…have constitutional rights and have an obligation to understand each other and work together to exploit the natural resources that are so important for Bolivians.”
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After toxic toll, Peru plans to vet mines better
Simeon Tegel. GlobalPost. September 13, 2012
LIMA, Peru — Green groups have cautiously welcomed a planned shake-up of Peru’s troubled mining sector.
Mining dominates the country’s economy, accounting for 62 percent of the South American country’s exports and 32 percent of its tax revenues. But its impacts on local communities are controversial, with many accusing companies of polluting their water and lands and even poisoning their families.
Violent clashes between stone-throwing villagers and police have become common here and 12 people have died since President Ollanta Humala took office in July 2011. He had campaigned on a pledge to put citizens’ rights ahead of foreign corporations.
The issue has so convulsed Peru that Humala has been forced to sack two prime ministers in the last 12 months and freeze the proposed $4.8 billion Conga copper and gold mine, which would have been the country’s largest-ever foreign direct investment.
Now, Environment Minister Manuel Pulgar-Vidal has unveiled plans to shake up government oversight of environmental impact assessments — key studies used to determine whether mining (or other major projects such as roads, dams and oil drilling) should be allowed in the first place.
In Peru all major projects require them, yet those for mining are approved — they are almost never rejected — by the energy and mining industry here. Critics say that’s a clear conflict of interest.
In almost every other Latin American country, the environment minister oversees environmental impact assessments and decides whether a project would trigger too much ecological damage.
Now, according to Pulgar-Vidal, that decision will be made by a panel involving five ministries but chaired by the Environment Ministry, marking a major shift in the fledgling department’s battle for power with the influential mining sector.
“[This] will improve the relationship between the government, which evaluates, supervises and emits laws [allowing new mines] and the population, which wants to be able to trust in the authorities,” he told a press conference.
Environmentalists and human rights campaigners declared the move a significant advance but warned that the proposal contained big loopholes.
“It is a positive step forward but we still have many concerns,” Emma Gomez, of human rights and development group Cooperaccion, told GlobalPost. “But ultimately, approving an environmental impact study will still be a political rather than a technical decision. In other words, it will not be an objective judgment.”
Meanwhile, Pedro Solano, director of Peru’s largest green nonprofit, the Peruvian Society for Environmental Law, said in a statement that it had been “absurd” that the environmental ministry had not previously been involved in evaluating environmental impact assessments.
“The government is building a new role for itself regarding investments, where it should act not just as a promoter of investments but principally as a guarantor that they will be environmentally and socially compatible.”
Nevertheless, both activists were quick to pinpoint shortcomings they noticed in the new format. These include the fact that municipal governments will not be consulted, and a clause that would allow the government to bypass the committee and simply approve some environmental impact assessments by decree.
Gomez described that last provision as a “Pandora’s box” just waiting to be abused by an autocratic or arrogant president. Solano added that it was a “dangerous open door.”
Meanwhile, Pedro Martinez, president of the Peruvian Association of Mining, an industry group, told GlobalPost that his team was still analyzing the bill and could not therefore comment on it publicly.
The new law would also mark a major beefing-up of the powers of the Environment Ministry, which was only reluctantly created in 2009 by the administration of then President Alan Garcia, to comply with Washington’s conditions for signing a US-Peru trade treaty.
Since then the ministry has been starved of funds and overshadowed by the Mining and Energy Ministry, among others.
The result, green groups say, is that mining and oil companies’ frequently abuse local communities.
According to Peru’s official human rights watchdog, the country had 168 “social conflicts” in July, in which communities refuse to accept, sometimes violently, mining and other extractive activities on local land.
In one recent case, Antamina, the world’s third-largest zinc and eighth-largest copper mine, allegedly poisoned hundreds of local people in the village of Cajacay, high in the Andes, after spilling an estimated 45 tons of copper concentrate.
Environmentalists describe cases such as this as all too typical.
At least 69 were children, and 42 were hospitalized. Yet, two weeks after the spill Antamina has still failed to give local people — or doctors — precise details of the chemicals contained in the toxic stew.
The company did not respond to requests for comment.
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Peru won’t negotiate with rebels like Colombia – Humala
Reuters. September 12, 2012
LIMA (Reuters) – Peru will crack down on the political wing of the Shining Path and quash armed remnants of the insurgency, President Ollanta Humala said on Wednesday, dismissing the idea of holding peace talks with the rebels.
The Maoist insurgency that nearly toppled the state was severely weakened after its founder Abimael Guzman was captured in 1992, but it did not disappear altogether.
The government says the Shining Path’s political arm, known as Movadef, is trying to rebuild by infiltrating labour unions and environmental groups. Electoral authorities have rejected Movadef’s request to form a political party.
At the same time, the government continues to battle hundreds of rebels who have never put down their weapons and still ambush the police and army in remote jungles rife with cocaine-trafficking.
“We can’t negotiate with terrorists,” Humala said when asked if he would follow the lead of neighbouring Colombia, where President Juan Manuel Santos has agreed to hold peace talks with leftist FARC rebels after half a century of conflict.
“They are cold-blooded killers, who kidnap children, don’t respect basic rights, and try to use terror and extortion to change the democratic nature of the country,” Humala told Peru’s foreign press club.
He defended a controversial law he wants Congress to pass that would jail anyone who denies Shining Path’s role in the war it started in 1980 that killed 69,000 people.
The bill aims to prevent Movadef from spreading its radical message. Critics say it would violate the constitution’s free speech protections.
“This law isn’t aimed a hurting freedom of expression. It falls within the guidelines of (the Inter-American Court of Human Rights), which says you can’t defend terrorism, death and hate,” he said.
Humala said the state had been too permissive over the last decade. Up to 20,000 people with alleged ties to Shining Path or the smaller Tupac Amaru insurgency were detained. Most were released; 654 remain behind bars.
“We can’t say that terrorism is over. I think the state has committed an error by resting on its laurels after important arrests and not going after what remains of the organization,” said Humala, a former army officer who fought against the Shining Path.
(Reporting By Terry Wade and Marco Aquino; editing by Mohammad Zargham)
Mexico, Central America and Caribbean [contents]
Mexican Senate urges arrest for border killing of Mexican
Dave Graham. Reuters. September 12, 2012
MEXICO CITY (Reuters) - Mexico's Senate urged President Felipe Calderon's administration on Tuesday to pressure the United States to find and extradite the U.S. border patrol agent Mexico blames for the fatal shooting of a Mexican on the border with Texas last week.
The killing on September 3 was the second time in two months Mexico complained of one of its nationals being shot over the frontier by U.S. border agents.
In a statement, the Mexican Senate urged Calderon to start a joint investigation with U.S. authorities over the incident, in order to make an arrest "with the aim of extraditing the agent responsible."
U.S. media reports said the man identified by the Mexican Senate as Guillermo Arevalo Pedraza was shot after rocks were thrown at agents across the border and that the United States had begun an investigation of the incident.
Officials for the U.S. Border Patrol could not immediately be reached for comment.
Laura Rojas, a senator belonging to Calderon's conservative National Action Party, or PAN, said the incident, which took place between Nuevo Laredo in Mexico and Laredo, Texas, was part of a "pattern of repeated violence" against Mexicans.
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Dole begins payments to Central American banana workers
AFP. September 12, 2012
U.S. fruit giant Dole Food Company, Inc. this week began paying a settlement to some 5,000 former Central American banana workers who sued the company for exposing them to the harmful pesticides Nemagon and Fumazone while they worked for the company.
The agreement terminates 38 lawsuits filed in the United States and Nicaragua alleging pesticide-related injuries, the company said.
The complaints concerned pesticides sprayed on crops to control worms for over two decades, before they were banned in 1977 following reports of infertility among male workers exposed to them.
The terminated lawsuits included two Nicaraguan judgments totaling $907.5 million.
The agreement was reached with Provost Umphrey law firm, which had represented the foreign plaintiffs, Dole said, without providing further information about the possible value of the settlement.
“The termination of these 38 lawsuits takes Dole completely out of all Provost Umphrey DBCP litigation ... and moves Dole closer to the eventual elimination of all DBCP lawsuits,” Dole’s Executive Vice President C. Michael Carter said in a statement last week.
“Though there is no reliable scientific basis for alleged injuries from the agricultural field application of DBCP, Dole has been willing to consider possible agreements which recognize that there is no causal connection between DBCP and plaintiffs’ allegations.”
The company had refused to pay until lawsuits against it had been dismissed and each of the plaintiffs had signed a release agreeing not to sue Dole again for injuries linked to the chemicals.
The settlement covers 3,157 Nicaraguans, 780 Costa Ricans and 1,000 Hondurans who worked for Dole during the period from 1973 to 1980 when the company used the pesticides.
Many of the workers spent 16 years struggling to win a settlement.
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Nicaragua puts up fight as crime washes over Central America
Tim Johnson. McClatchy Newspapers. September 12, 2012
MANAGUA, Nicaragua — The biggest drug trafficking trial in Nicaragua’s history unfolds in a modest air-conditioned courtroom. The 24 defendants sit in a crowded dock, joking and waving to relatives. Behind them, police commandos wearing black hoods and toting assault weapons add unmistakable gravitas to the proceedings.
Calling witness after witness, prosecutors lay out their case that a strip club operator, a former national elections official and 22 others helped launder tens of millions of dollars in cocaine profits.
The trial has captivated Nicaraguans, and no fewer than eight television cameras capture the proceedings to air on newscasts.
The trial, which began late last month and involves 84 witnesses, offers a snapshot of one facet of the avalanche of organized crime and drug-trafficking activity washing over parts of Central America as gangsters move in from Colombia and Mexico.
Recent weeks have brought successes in intercepting narcotics and in capturing alleged cartel couriers. But unmistakable evidence mounts that the magnitude and nature of the drug contagion are growing more complex, drawing stronger U.S. interest and the deployment of hundreds of U.S. Marines.
The nations of Central America’s northern region (Guatemala, El Salvador, Honduras, Belize and Nicaragua) once were considered only transshipment points for cartels, then later storehouses. Now, drug gangs are increasingly bringing semi-processed coca paste here for final processing. The gangs’ corruptive influence also is reaching into higher levels of governments.
Honduras agents discovered a cocaine-processing laboratory in Atlantida province on the Caribbean coast Aug. 28, seizing a half-ton of coca paste. It marked the second time in 18 months that Honduras had found a clandestine production laboratory, a sign that cocaine processing is moving north from Amazonian jungles.
Recent narcotics seizures in Guatemala underscore the inventiveness of traffickers in finding routes that are more circuitous and difficult to detect.
In mid-August, Guatemala intercepted 17.6 tons of cocaine paste in a shipping container arriving from Taiwan. Weeks later, in the largest heroin seizure in Guatemala’s history, agents found 221 pounds of heroin, some of which arrived from France. The origin of the heroin is unclear.
“These are really puzzling seizures,” said Antonio Luigi Mazzitelli, regional chief for the United Nations Office on Drugs and Crime.
Mazzitelli said traffickers apparently send narcotics around the globe to throw off law enforcement, then ship them back to the West.
“They are rerouting the final product through a non-suspicious location in order to make it to the North American market,” he said.
Once cocaine powder is processed, perhaps in Central America, “you might send the same container back to Taiwan, then send it on to the U.S.,” Mazzitelli said.
Late last month, some 200 U.S. Marines and four UH-1N Huey helicopters began counter-drug operations in Guatemala, the first major U.S. military intervention there since the CIA ran a covert operation nearly 60 years ago that overthrew elected leftist President Jacobo Arbenz.
Nicaragua has surged into regional headlines for two seemingly unrelated events that both illustrate the transnational tentacles of crime groups.
One of the events appeared, well, made for television. The other has provided daily fodder for newscasts.
Tipped off by an anonymous caller, Nicaraguan police on Aug. 20 intercepted a caravan of six vehicles entering from Honduras and bearing the logotype of Televisa S.A., the huge Mexican television network. Televisa denied any link to the detainees, who became known in headlines as the “fake journalists.”
Upon examining the vehicles, equipped with sophisticated broadcast equipment, police said they found $9.2 million in cash and residues of cocaine.
The detainees included a police officer from Mexico’s Durango state and a cousin of a prominent newscaster for TV Azteca, a rival network.
The circumstances of the arrests surprised Nicaraguans.
“Nobody ever thought the drug traffickers would use news vehicles as a cover,” said a former head of Nicaragua’s police anti-narcotics unit, who spoke on condition of anonymity for fear of reprisals from gangsters.
Whatever the mission of the crew might have been – hypotheses range from simply transporting drug profits to running entire drug operations – some analysts viewed the arrests as a wakeup call.
“We are at a watershed,” said Robert Orozco Betancourt, a security analyst in Managua at the Institute of Strategic Studies and Public Policies. “We believe that the Central American situation will grow worse in the very short term.”
The anonymous call that alerted police likely came from a rival narcotics gang, said Francisco Bautista Lara, a former deputy national police chief, a sign that rival bands will seek vengeance with greater force.
“In the short to medium term, this will generate a violent response,” he said.
Apparently unrelated to the “fake journalists” case is the trial of Henry Farinas, a 41-year-old impresario and owner of Elite, a chain of strip clubs in Honduras, Nicaragua, Costa Rica and Panama. He and 23 co-defendants face organized crime and money laundering charges.
Farinas surged into the news on July 9, 2011, when a hit squad in Guatemala City gunned down Argentine folk singer Facundo Cabrales. Police suspect Cabrales was an accidental victim and Farinas, who drove with him in the same vehicle, was the real target.
The shooting set off a region-wide probe, and months later, Farinas accused a Costa Rican, Alejandro Jimenez, of orchestrating the shooting. Prosecutors later said that Farinas and Jimenez worked for gangs, Los Charros and Los Fresas, respectively, that transported cocaine for larger Colombian and Mexican groups, and had tangled over a lost drug shipment.
Among those in the dock with Farinas is Julio Cesar Osuna, a former substitute magistrate with the Supreme Electoral Council, a quasi-autonomous branch of state in Nicaragua. Osuna is the highest-ranking Nicaraguan official ever implicated in drug activity.
On a recent day at the court complex, police frisked and wanded all those entering, including two dozen journalists and a smaller number of relatives.
Presiding Judge Adela Cardoza, a stern presence at the bench, warned defense attorneys that witnesses that day would be wearing black hoods to protect their identity, a practice she said was permitted since Nicaragua had agreed to a U.N. convention on transnational organized crime.
Witnesses recounted how Osuna had taken repeated trips to Costa Rica, chatting up border guards, talking with one about a potential narcotics purchase, and describing how he had been friends with Farinas since they were teenagers.
On another day, criminal investigators detailed how the gang had laundered nearly $30 million in drug profits through their businesses.
Judicial authorities say much is at stake with the trial, and that is why news teams and cameras are allowed into the courtroom.
“We want to offer an example to Central America and to the world,” Roberto Larios, spokesman for the court system, told the el19digital.com Website.
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Lawyer: Jailed US man to be released in Nicaragua
ADRIANA GOMEZ LICON and LUIS MANUEL GALEANO. AP. September 13, 2012
MANAGUA, Nicaragua -- A U.S. citizen jailed for nearly two years on money-laundering and drug charges in Nicaragua will be freed after a court unanimously upheld his appeal, his lawyer said Wednesday.
Attorney Fabbrith Gomez said the appeals court vacated the charges against Jason Puracal, 35, of Tacoma, Washington, and ordered him released immediately.
"We are happy, everyone that worked for this is happy," he said.
Gomez said it could be a matter of hours or days before the American who worked as a real estate agent in Nicaragua is released from the prison right outside Managua, the capital. He said the three-judge panel also ordered the release of the other defendants in the case.
The court was supposed to have announced its ruling by Sept. 4, according to Nicaraguan law, but Gomez said he wasn't notified until Wednesday.
Eric Volz, managing director for the Los Angeles-based David House Agency that helped Puracal file petitions and publicize the case, said the order for his release had not been handed over to the prison.
"The family is thrilled to hear the news that they are another huge step closer to bringing Jason home," Volz said in an emailed statement. "There is one thing we have known all along over the past two years: Jason is innocent. The annulment of the oral and public trial is testament to this fact."
Details of the decision to free Puracal were not immediately available. There was no immediate confirmation from court officials.
Gomez had argued to the appeals court that Puracal's home sales were legitimate business deals and were not related in any way to drug traffickers.
The University of Washington graduate made the Pacific coast surfing town of San Juan del Sur his home after a two-year stint in Nicaragua with the Peace Corps. He married a Nicaraguan woman and they had a son with Down syndrome in March 2007.
Puracal was featured in a 2007 episode of HGTV's "House Hunters International" showing beachfront homes to Americans. The same year he got a Re/Max real estate franchise with three other Americans living in Nicaragua.
On Nov. 11, 2010, masked policeman carrying AK-47 assault rifles raided his real estate office and took him to Nicaragua's maximum-security prison. Prosecutors charged that Puracal was using his business as a front for money laundering in a region used to transport cocaine from Colombia to the United States.
He was convicted in August 2011 of all charges and later sentenced to 22 years in prison.
Puracal's family and friends and human rights groups maintained the charges were false. Seeing the case marred with inconsistencies, U.S. lawmakers supported Puracal by sending letters to Secretary of State Hillary Rodham Clinton and Nicaraguan President Daniel Ortega asking to intervene.
Defense attorneys complained the judge who convicted Puracal and 10 other defendants was not fully certified with Nicaragua's Supreme Court and had just been appointed.
Gomez also said that if authorities had been building a strong case against Puracal years before his arrest, as they claimed, he wouldn't have obtained his residency from the Nicaraguan government days before the arrest.
The U.N. Working Group on Arbitrary Detention had ruled that Puracal should have been freed because he had not received a fair trial and was arrested illegally in a raid conducted without a warrant.
Puracal's family claimed that he was suffering from unsanitary conditions at La Modelo prison and was denied food, drinking water and medical care. They said he lost more than 40 pounds before he was moved earlier this year to solitary confinement.
The David House Agency helped Puracal's family navigate international justice. Volz, the founder, was convicted in Nicaragua of the 2006 strangling death of his ex-girlfriend but absolved by an appeals court and released from prison.
Associated Press writer Adriana Gomez Licon reported this story from Mexico City and Luis Manuel Galeano reported in Managua.
Region: Trade, Security, Economy and Integration [contents]
China Steps Up Push Into Latin America
COLUM MURPHY. Wall Street Journal. September 12, 2012
SHANGHAI—Chinese companies are looking to increase their investments in Latin America and expand beyond their focus on mining and resources—a development that experts say could be needed if China wants to avoid tensions in the region.
In Africa especially, China has been criticized for channeling much of its investment into natural-resource extraction, for importing Chinese labor on infrastructure construction projects and for swamping local markets with cheap goods.
The concern now is that a similar pattern could emerge in Latin America. "China gets what it wants but Latin America doesn't think the same," said Wu Guoping, assistant director of the Institute of Latin American Studies, Chinese Academy of Social Sciences, at a conference this week on Chinese investment in Latin America.
Warning that trade and investment between China and Latin America wasn't "complementary" and entailed risks, he added, "China has to look for a new strategy for Latin America."
Chinese foreign investment in Latin America surged to $10.54 billion in 2010, the most recent figure available, from $7.33 billion in 2009. That investment, plus increasingly active lending in the region, has given China greater sway in an area long considered a bulwark of U.S. influence.
Much of China's focus has been in resources. In 2010, state-owned China Petrochemical Corp., or Sinopec, purchased 40% of Repsol YPF SA's Brazilian unit for $7.1 billion in one of the largest Chinese oil acquisitions ever.
But China is looking for new markets to manufacture and sell more sophisticated products such as cars and power-generation equipment. It could also help avoid tensions such as those with African countries—a subject of discussion during a visit by African leaders to Beijing in July.
During a trip to Latin America in June, Chinese Premier Wen Jiabao proposed a $5 billion cooperation fund for infrastructure investment and a $10 billion credit line to support the construction and infrastructure industries in the region.
Liu Xia, an overseas investment official with the National Development and Reform Commission, China's top economic planning body, reiterated China's pledge to diversify investment to include infrastructure, manufacturing, agribusiness and forestry. "Pushing infrastructure investment will help improve the quality of our industries," Ms. Liu said, adding that the China-Latin America relationship would become even "more crucial" over time.
Enoque Flausino of São Paulo-based merger and acquisition company Serfinan, said Lenovo Group Ltd.'s recent decision to purchase Brazilian consumer-electronics group CCE for $147 million in cash and stock was a cause for optimism. "We want to see it as a new sign of Chinese investment in broader sectors such as consumer goods," he said.
Mr. Flausino estimated there was around one deal a month on average involving Chinese investment in the region, ranging in value between $200 million and $300 million for each deal. Around 40% were in Brazil and most still involved natural resources.
Chinese car maker Foton Motor Co. will invest $300 million to build an auto plant in the Brazilian state of Bahia, the state government said Tuesday.
XCMG Construction Machinery Co. Ltd. is setting up two factories in Brazil—a market where its annual sales reached $200 million last year—and says it is considering building more plants in other Latin American countries.
Weichai Power Co. is exploring opportunities, too, including possible commercial vehicle manufacturing in the region. Shanghai Electric Power Generation Group wants to move from supplying power-generation equipment to constructing and possibly operating power plants in target markets including Ecuador, Chile, Colombia and Peru.
However, not everyone embraces investment by Chinese companies in the area. Brazilian manufacturers are especially concerned by the prospect of a more active China in the region, said June Teufel Dreyer, professor of political science at University of Miami.
"Chinese-made shoes are cutting into the shoe industry there and Chinese cars have the potential to bankrupt locally made ones," she said. "Still, it's a matter of whose ox is being gored. Many sellers of raw materials are very happy to have the Chinese market."
