Piñera’s First Six Months Bring Strong Economy, Shaky Polls

by David Gacs for The Americas Society and the Council of the Americas, August 12th, 2010.

Almost six months have passed since an 8.8-magnitude earthquake struck Chile, wrecking havoc weeks before President-elect Sebastián Piñera began his term in office. The country’s first conservative leader in two decades hit the ground running, visiting affected areas and deploying emergency relief efforts. The earthquake put a dampener on Piñera’s ambitious economic campaign promises—damages to infrastructure and industrial output figured at $30 billion—leaving the incoming government with the task of covering the price tag. Nonetheless, Chile’s sound fiscal policies buoyed the economy post-earthquake and helped it retain its sound economic position. However, despite the country’s strong economic showing post disaster, Piñera’s approval ratings have slumped. This, together with as-yet unfulfilled campaign promises and burgeoning social disquiet, could begin to pose significant challenges for the new administration.

Piñera came in on a vote against what many perceived was a stale ruling party. Introducing a cabinet heavily drawn from the private and academic sectors, the Harvard graduate promised to refresh the previous government’s successful economic policies and create one million new jobs along the way. “Our target of growing at 6 percent a year will allow us to achieve development in eight years, before the end of this decade, beating the level of per capita income of southern European countries,” said the newly-elected president at his first state-of-the-union speech. These figures, considered ambitious in a normal economy, were rendered near-impossible after the February 27 earthquake.

The self-made billionaire’s management-oriented government has looked for ways to fund recovery efforts and foment growth without drawing too deeply into the country’s sovereign wealth fund, an off-shore stabilizer fed on copper profits that financed the previous government’s stimulus spending and insulates the country from external market turbulence. Proposals include a $1.5-billion bond issuance, a replacement sliding-scale fuel tax estimated to save Chile over $2 billion, sizable tax reforms, and a modernized and technologically advanced bureaucracy. Furthermore, the government is adding to Chile’s 25 trade agreements, the most recent signed with Kuwait, with three more—Malaysia, Nicaragua, and Vietnam. (continue reading… )

Hezbollah, Radical but Rational

by Scott Stewart for Stratfor, August 12th, 2010.

When we discuss threats along the U.S.  /Mexico border with sources and customers, or when we write an analysis on topics such as violence and improvised explosive devices along the border, a certain topic inevitably pops up: Hezbollah.

We frequently hear concerns from U.S. and Mexican government sources about the Iranian and Hezbollah network in Latin America. They fear that Iran would use Hezbollah to strike targets in the Western Hemisphere and even inside the United States if the United States or Israel were to conduct a military strike against Tehran’s nuclear program. Such concerns are expressed not only by our sources and are relayed not only to us. Nearly every time tensions increase between the United States and Iran, the media report that the Hezbollah threat to the United States is growing. Iran also has a vested interest in playing up the danger posed by Hezbollah and its other militant proxies as it tries to dissuade the United States and Israel from attacking its nuclear facilities.

A close look at Hezbollah reveals a potent capacity to conduct terrorist attacks. The group is certainly more capable and could be far more dangerous than al Qaeda. An examination also reveals that Hezbollah has a robust presence in Latin America and that it uses its network there to smuggle people into the United States, where it has long maintained a presence. A balanced look at Hezbollah, however, shows that, while the threat it poses is real — and serious — that threat is not new and it is not likely to be exercised. There are a number of factors that have limited Hezbollah’s use of its international network for terrorist purposes in recent years. A decision to return to such activity would not be made lightly, or without carefully calculating the cost. (continue reading… )