Political Risk Latin America Blog @PolRiskLatam

Corruption in Colombia: Closer and closer to the top

Posted in News and Articles, Political Risk by politicalrisklatam on August 2, 2011

by S. B. for The Economist – Americas View, July 29th, 2011.

Juan Manuel Santos, Colombia’s president, was one of the star members in the cabinet of his predecessor, Álvaro Uribe. As defence minister from 2006 to 2009, he oversaw many of the most successful attacks in the government’s 45-year-old war against the country’s leftist guerrillas. That record helped catapult Mr Santos to the presidency a year ago.

Several of his colleagues from Mr Uribe’s cabinet, however, have fared rather worse. Within a few days in late July, both Andrés Felipe Arias, the former agriculture minister, and Bernardo Moreno, Mr Uribe’s chief of staff, were jailed while they await trial in separate scandals. Meanwhile, a case against Sabas Pretelt, the former interior minister, involving yet another scandal was sent back to the prosecution because of procedural errors. Numerous officials from Mr Uribe’s government had already been charged with crimes including collaborating with paramilitary warlords, bribing legislators, spying on opponents and corruption. But none of them were as high-ranking or close to the president as Mr Arias and Mr Moreno were.

Mr Arias (pictured) is widely known as “Uribito” or “Uribe-Two” because of his physical likeness to the former president and their shared conservative politics. When Mr Uribe signed a free-trade agreement with the United States in 2006—which has not yet been ratified—Mr Arias introduced a programme of subsidies for small farmers to help them compete with American agricultural products. On his watch, some of the money went to bigger landholders and politicians—as well as to the owner of an influential newspaper, and to a former beauty queen who owned no land. (continue reading… )


An expensive handbag fight

Posted in News and Articles, Political Risk by politicalrisklatam on July 8, 2011

by The Economist – Americas View, July 8th, 2011.

In many countries, teachers’ unions confine themselves to bickering about bureaucracy (in Britain, they even complain when the government tries to remove it). But in Latin America, and especially in Mexico, they are mighty things. Mexico’s National Union of Education Workers (SNTE) is the single biggest union (of any sort, not just education) in Latin America, with more than 1.2m members. Its power is one of the reasons why Mexico’s education system is roughly as good as that of Jordan, which is half as rich.

The union’s boss, Elba Esther Gordillo, is one of Mexico’s most extraordinary political creations. During a lifetime of public service, she has accumulated a fortune that reportedly includes mansions in Mexico City and California and a private jet. “La Maestra” (“the teacher”), as Ms Gordillo likes to be known, was spotted the other day in $1,200 shoes and with a $5,500 handbag, according to a local Mexican paper. The SNTE’s members’ dues run to some $60m a year. A recent audit of one taxpayer-funded education programme found irregularities in the records of 90,000 of its recipients. One teacher was receiving the equivalent of $66,000 a month.

The extent of Ms Gordillo’s political power has recently been revealed in more detail. Last week La Maestra confirmed the long-circulating rumour that before the 2006 election she made a “political arrangement” with Felipe Calderón, now the president, that she would back his candidacy in return for his agreement to appoint allies of hers to posts in the government. Mr Calderón, who won by the narrowest of margins, duly obliged, appointing Miguel Ángel Yunes to head the ISSSTE, the social security agency that deals with public sector workers, including teachers. (continue reading… )

How the mighty have fallen

Posted in News and Articles, Political Risk by politicalrisklatam on June 16, 2011

by The Economist – Americas View, June 14th, 2011.

Voters famously have short memories. Despite their reputation as a sober, well-governed lot, Chileans are no exception. Just six months ago Sebastián Piñera (pictured), the president, was riding high after the miraculous rescue of 33 miners who had been trapped underground for ten weeks. According to Adimark, a pollster, his approval rating reached 63% following the successful operation. The company’s June survey painted a far grimmer picture for Mr Piñera: his support has dropped to just 36%, the lowest figure since he took office in March 2010. Meanwhile, his disapproval rating hit 56%, the highest mark for any Chilean president since the return of democracy in 1990.

Mr Piñera’s poll numbers have tumbled primarily because of his support for the Hidroaysén electricity scheme, a plan to build five dams on two rivers in the pristine wilds of Patagonia, which would flood 5,900 hectares (14,573 acres) of nature reserves. His government approved the project on May 9th, failing to anticipate staunch opposition from environmentalists. More than 30,000 people marched last month through Santiago, the capital, urging the government to halt the project.

The Hidroaysén case might not have unnerved the public quite so much had it not fit with their preconceived notions of Mr Piñera’s management style. Unlike Michelle Bachelet, his popular, consensus-minded predecessor, Mr Piñera is a former business tycoon. He has centralised decision-making in his own office and rarely goes through a broad consultation process before making up his mind. As a result, when he approved the dams, many Chileans suspected that he had become too cosy with Endesa, the Spanish company leading the construction. And since his ministers are seen to have little authority, Mr Piñera himself has become a lightning rod for all criticism of his government. (continue reading… )

Ecuador’s politics: Not over yet

Posted in News and Articles, Political Risk by politicalrisklatam on June 1, 2011

by S.K. for The Economist – Americas View, June 1st, 2011.

After being trapped for hours in a hospital during a police mutiny last September, Rafael Correa, Ecuador’s president, bet much of his political capital on an attempt to shore up his power through a constitutional referendum. On May 7th, he put to voters a package of ten amendments that would allow him to increase his control over the courts and media. The early results suggested a split decision, with most of the proposals narrowly passing but two key measures falling short. However, towards the end of the drawn-out vote-counting process, the Yes camp pulled ahead on both questions. Its lead held up: the National Electoral Council (CNE) announced on May 19th that all nine amendments put to a national vote had been approved, albeit mostly by very slim margins. (The final question, on whether to ban killing animals for public entertainment, was settled at the local level).

The opposition has cried fraud, and filed hundreds of legal appeals. Its leaders have honed in on low-income neighbourhoods in Guayaquil, the country’s biggest city, as the likely site of the government’s mischief. Many polling stations there reported more than the maximum of 400 voters. Electoral officials have argued the numbers were caused by high turnout from the police and army. But Martha Roldós, an opposition leader, notes that the rolls from those locations include high numbers of women. Even one of the CNE’s directors, Marcia Caicedo, has accused her colleagues of favouring the government and dragging its feet on the opposition’s complaints. Mr Correa’s rivals say they hope their appeals will at least delay the publication of the official results of the referendum and the implementation of its most controversial measures.

The president, by contrast, has focused on locking in his tenuous gains, touting the outcome as a “ten to zero” landslide. The referendum’s changes to the judiciary will automatically take effect as soon as the CNE releases its final results. But legislative approval is required for its provisions on regulating the media, outlawing “unjustified” wealth, closing for-profit gambling operations and criminalising employers’ failure to register their workers with the social-security service. (continue reading… )

Education in Brazil’s north-east: The missing link

Posted in News and Articles, Political Risk by politicalrisklatam on June 1, 2011

by H.J. for The Economist – Americas View, May 27th, 2011.

As noted in last week’s print edition, Brazil’s long-impoverished north-east is catching up fast to the rest of the country. Infrastructure projects like ports and railways, as well as scores of new factories, are going up across the region. Yet no matter how much physical capital the north-east can accumulate, in the end its prosperity will depend on its human capital. And when it comes to education and training, notes Alexandre Rands of Datamétrica, a consultancy, a “crystallised gap” still yawns between the north-east and the rich south. Around one-fifth of the region’s adults are illiterate, twice the proportion in Brazil at large.

The lot of poor nordestinos (north-easterners) has certainly improved over the last two decades. Fernando Henrique Cardoso, Brazil’s president from 1995 to 2002, conquered the hyperinflation that hit their income hardest. His successor, Luiz Inácio Lula da Silva, built on Mr Cardoso’s income-transfer programmes and increased the minimum wage. Nearly six in ten of working-age nordestinos with an income earn no more than the minimum wage—more than twice the proportion in the south-east.

At one mega-construction site in the town of Salgueiro, where two branches of a railway leading to the ports are being built, the least-qualified employees earn around 600 reais ($375) a month on top of their living costs, and sleep four to a prefabricated room. Nonetheless, the rooms are air-conditioned, neat and comfortable. Nearby are shared television rooms and games rooms with pool tables and subutteo. A film is shown every night and at weekends there are religious services. (continue reading… )

Catch him if you can

Posted in News and Articles, Political Risk by politicalrisklatam on April 13, 2011

by The Economist – Americas View, April 12th, 2011.

One of the Cuban government’s most legitimate criticisms of the United States involves its handling of Luis Posada Carriles. A Havana-born Venezuelan citizen, Mr Posada helped organise the failed Bay of Pigs invasion that sought to topple Fidel Castro’s regime in 1961. He later headed Venezuela’s intelligence service, and worked for the CIA in operations to undermine Mr Castro and support Nicaragua’s right-wing Contra guerrillas. In 1976 two employees of Mr Posada’s private detective agency blew up a Cuban airplane, killing 73 people, including the country’s entire national fencing team. Over 20 years later he was implicated in a series of bombings of Havana hotels.

Mr Posada has largely managed to evade punishment for these crimes. He was acquitted by a Venezuelan military tribunal in the airplane bombing, and escaped from prison while awaiting a civilian trial for the same attack. He was recaptured and held without a conviction for eight years, but then escaped again. In 2000 Panama found him guilty of plotting to kill Mr Castro during a summit meeting. However, Mireya Moscoso, Panama’s president, gave him a controversial pardon shortly before she left office in 2004.

The following year, Mr Posada sneaked into the United States using false documents and sought political asylum. After Venezuela requested his extradition, he withdrew his asylum application and was arrested. Nonetheless, a Florida judge refused to deport him to Venezuela because of the risk that he might be tortured—a curious ruling, given that Hugo Chávez’s government has no significant track record of torture, while the conditions to which America subjected its detainees in Abu Ghraib and Guantánamo were already well-known. (continue reading… )


The populist crowd

Posted in News and Articles, Political Risk by politicalrisklatam on April 12, 2011

by The Economist – Americas View, April 11th, 2011.

In 2006 Ollanta Humala, a populist former army colonel backed by Venezuela’s Hugo Chávez, won the first round of Peru’s presidential election with 31% of the vote. In the subsequent run-off, however, he lost by five percentage points to Alan García. History repeated itself on April 10th, when Mr Humala, now presenting himself as a moderate centre-left candidate, again topped the first-round field. With 90% of the ballots counted, he has received the same 31% of the vote.

This time, however, he is likely to face another populist—albeit a conservative one—in the second round. The runner-up to Mr Humala will almost certainly be Keiko Fujimori (above), a 35-year-old congresswoman. Her father, Alberto Fujimori, was an autocratic right-wing president in the 1990s and is now in jail for corruption and human-rights abuses. Collectively, the three candidates who embodied Peru’s restored democracy as well as its orthodox fiscal and monetary policies received nearly half the vote. But Pedro Pablo Kuczynski, a former finance minister who leads that group with 19% of the vote, currently trails Ms Fujimori by four percentage points. As a result, the politics of a country that has been impressively stable since Mr Fujimori left office in 2000 have suddenly become highly volatile. The local stock market fell by 1.32% on the news.

Peruvians voted for politicians who might change their country’s highly successful approach to government for two reasons. First, the fruits of its GDP growth have not been shared broadly enough. Although the percentage of Peruvians living in poverty has fallen sharply in recent years, access to basic public services remains spotty and crime is on the rise. Polls taken before the vote found that more than 77% of voters expressing an opinion wanted to modify the country’s development model, although just 37% said they wanted to do so radically. (continue reading… )


Peru’s presidential election: Still wide open

Posted in News and Articles, Political Risk by politicalrisklatam on April 5, 2011

by The Economist – Americas View, April 5th, 2011.

In Peru ‘s closely fought presidential race, the televised debate held on April 3rd was the candidates’ last opportunity to change the course of the campaign decisively before the vote on April 10th. In the past six months, four different candidates have taken the lead in the polls. The current front-runner is Ollanta Humala, the only left-winger in the race, who has surged to first place in six different nationwide surveys, with an average support of 24%. He is followed by Alejandro Toledo, a former president who finished second in three of the most recent polls; Pedro Pablo Kuczynski, a former World Bank official and finance minister, who was the runner-up in two more; and Keiko Fujimori, the second-place finisher in one survey, whose father is another former president, Alberto Fujimori. The top two candidates in the first round will advance to a run-off scheduled for June 5th. The polls suggest Mr Humala would lose in a head-to-head matchup against any of his main rivals, meaning that if he comes in first next week, the presidency will probably go to whichever candidate finishes second.

Given the closeness of the contest, a particularly strong or weak showing in the last of the campaign’s three debates could have easily determined who makes it to the second round. As it happened, however, they battled to a draw. “Nothing happened”, read the headline of Peru 21, a daily newspaper.

If anyone came out ahead, it was probably either Mr Humala or Ms Fujimori—candidates that Mario Vargas Llosa, the country’s Nobel-winning novelist, has compared to a choice between cancer and AIDS. In 2006 Mr Humala won the first round but lost the run-off, thanks to his fiery rhetoric and ties to Hugo Chávez, Venezuela’s leftist president. This time, he traded in his red campaign shirts for a grey suit and steel-blue tie, spoke fondly of free markets and cited World Bank reports to support his points. Although he looked stilted while delivering his pre-prepared responses, he avoided gaffes that the hostile media could hold against him. He refused to respond to Mr Toledo’s repeated efforts to paint him as a lightweight version of Mr Chávez. (continue reading… )

A state of insecurity

Posted in News and Articles, Political Risk by politicalrisklatam on March 22, 2011

by Americas View – The Economist, March 22nd, 2011.

Nearly four months after the release of the first Wikileaks cables, it is surprising that the second ambassador to lose his job over the affair should be Carlos Pascual, Washington’s man in Mexico City. Mr Pascual, who had been in the job for little more than a year and a half, resigned on Saturday. Hillary Clinton, the United States’ secretary of state, said that he had stepped down “to avert issues raised by [Mexico’s president, Felipe Calderón] that could distract from the important business of advancing our bilateral interests.” By that she meant Wikileaks.

The Mexico City cables were in fact milder than most. The only other ambassador to have been removed following the leaks so far is Gene Cretz, head of the embassy in Tripoli, whose cables detailed Muammar Qaddafi’s reliance on a “voluptuous” Ukrainian nurse and described his fear of flying and love of flamenco dancing. Diplomats in Ottawa wrote that Canadians “always carry a chip on their shoulder”, partly because they think their country “is condemned to always play ‘Robin’ to the U.S. ‘Batman’.” The ambassador there survived. By contrast, Mr Pascual’s missives were pretty dry.

But his frank assessments of Mexico’s misfiring drug war and the uninspiring senior members of Mr Calderón’s National Action Party (PAN) were apparently too much to bear. Mr Calderón had made clear for several weeks that he believed Mr Pascual should go, publicly criticising his “ignorance”. Some of the PAN’s would-be presidential candidates were deeply miffed by Mr Pascual’s private comment that they were mostly rather “grey”. Following Mr Pascual’s resignation the labour secretary, Javier Lozano, posted a sarcastic message on  Twitter: “How we will miss him. Pascual had such a good eye for evaluating the candidates of the PAN.” (continue reading… )


A Gross miscarriage of justice?

Posted in News and Articles, Political Risk by politicalrisklatam on March 15, 2011

by D.A. for The Economist – Americas View, March 15th, 2011.

Barack Obama has tried to encourage Cuba’s government to liberalise by promoting “people-to-people” contact with the United States. Since becoming president, he has relaxed most limits on travel and money transfers to the island. Cuba’s ruling Castro brothers have indeed shown increasing flexibility of late, releasing dozens of political prisoners and legalising some private economic activity. Nonetheless, they do not seem interested in reciprocating America’s gestures of rapprochement. On March 12th Cuba sentenced Alan Gross, an employee of a company contracted by the United States Agency for International Development (USAID), to 15 years in jail for crimes against the state.

Mr Gross, who worked for a firm called Development Alternatives Inc., was participating in a programme to improve internet access for Cuba’s Jews, which the government deemed “subversive”. His job allegedly involved distributing internet-connectivity devices, which are strictly controlled by the state, and possibly satellite equipment as well, which is banned. Foreigners arriving in the country are specifically asked to declare to customs officials whether they are carrying any satellite devices, and any that are found are swiftly confiscated. (continue reading… )