Political Risk Latin America Blog @PolRiskLatam

Cuban Parliament Holds off on Deeper Economic Reforms

Posted in News and Articles, Political Risk by politicalrisklatam on August 3, 2011

by Roque Planas for Americas Society / Council of the Americas, August 2nd, 2011.

Cuban head of state Raúl Castro surprised observers Monday by announcing the possibility reforming the island’s restrictive immigration laws. Cuba remains one of the few countries that requires its citizens to apply for permission to leave. Castro said the rule made sense in the 1960s when the revolutionary government adopted it as a way to protect itself from hostile political exiles, but did not make sense today, given that most Cuban migrants leave for economic reasons. Castro has previously indicated intentions of reforming a state-dominated economy that has grown sluggishly since the onset of the worldwide recession in 2008, posting GDP growth of 1.4 percent in 2009 and 1.5 percent in 2010. While the possibility of immigration reform stole the show at Monday’s day-long congressional session, the National Assembly did not publicly address Cuba’s many pressing economic challenges.

Some observers expected the Cuban Parliament to finalize game-changing rules permitting home sales at its Monday meeting for the first time since the 1960s. The body did not do so. Despite putting the task off, the Cuban government says it will finish crafting rules governing home sales by the end of the year. Even without the law on their side, The Miami Herald points out that Cubans have already begun advertising their homes on Revolico—a website for classified announcements. And foreigners may soon get the right to buy Cuban property. Canadian company Standing Feather International, which has a contract to build a luxury golf resort in Holguín, says the Cuban government will allow both foreigners and nationals to purchase property there in perpetuity. Previously, foreigners could only lease Cuban property for 50 years, a ceiling Raúl Castro raised to 99 years in September of last year.

Cuba is also struggling just to feed itself. In preparation for Monday’s legislative meeting, Minister of Agriculture Gustavo Rodríguez announced Friday that the government would have to import even more food this year than planned, because the state failed to produce as much as it anticipated in 11 categories of foodstuffs during the first six months of 2011. It was the second time this year the government was forced to bump up its outlay for foreign food purchases. Costs continue to mount despite a 2009 agricultural reform that distributed usufruct rights to 150,000 families to farm fallow land. BBC correspondent Fernando Ravsberg says the reform has yet to boost production because it does not address the main problem of lack of access to basic resources such as fertilizers, tools, seeds, tractors, and other inputs. Cuba imports somewhere between 60 percent and 80 percent of its food (official and private estimates vary widely).  (continue reading… )

Hugo Chávez Convalesces in Cuba, as Problems Mount at Home

Posted in News and Articles, Political Risk by politicalrisklatam on June 24, 2011

by Roque Planas for Americas Society / Council of the Americas, June 23rd, 2011.

It may be the first time in years that the political opposition has demanded that Venezuelan President Hugo Chávez speak. Since undergoing emergency surgery for a pelvic abscess on June 10 during a state visit to Cuba, the normally omnipresent Chávez, 56, has hardly appeared on television or radio, with the exception of a phone interview with the Venezuelan state press and the release of photographs of him with the Castro brothers, diffused by Cuban state media. The social media-savvy leader who normally posts at least one upbeat, exclamation-pointed tweet to his 1.6 million followers per day has not updated his Twitter account since June 4. His brother Adán, who just returned from visiting the Venezuelan president in Havana, told state television Wednesday Hugo Chávez will return in 10 to 12 days. Despite Chávez’s prolonged absence, Vice President Elías Jaua says there’s no need to make him acting president, and Chávez continues to sign decrees from a Cuba.

Problems mount while Chávez convalesces. Venezuela’s inflation stands at 23 percent and, last week, Energy Minister Alí Rodríguez announced that Venezuela would begin rationing energy in several as-yet-unnamed provinces due to recurrent blackouts. Perhaps most importantly, the Venezuelan government has yet to retake control of El Rodeo prison complex in the state of Miranda, which erupted into violence June 12 between opposing gangs, killing 19 people and wounding 20 more. In Chávez’s absence, the Venezuelan government sent some 4,000 National Guard troops to restore order, but the violence has yet to stop. In the wake of the riot, opposition legislators in the National Assembly called for an investigation into corruption, as well as weapons- and drug-trafficking in Venezuela’s prisons. Chávez supporters, who hold a majority in the unicameral legislature, said Wednesday they would launch an official investigation into what they said was slanted news coverage of the riot.  (continue reading… )

Rousseff’s New Cabinet Picks Tasked with Handling Coalition

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

by Roque Planas For Americas Society/Council of the Americas, June 14, 2011.

Keeping a coherent governing coalition together in Brazil is not easy. The country boasts 27 officially inscribed political parties, making it difficult for any one to come out on top. With the resignation of her Chief-of-Staff Antonio Palocci over allegations of ethics violations, Dilma Rousseff’s job of keeping the 15 parties in her coalition on the same page just got harder. The task now falls to Gleisi Hoffmann and Ideli Salvatti, whose diplomatic skills have yet to be tested on such a scale.

A towering political figure, Palocci began his political career as a far leftist and helped found the governing Workers Party (PT) in 1980. As he ascended politically, however, he grew closer to Brazil’s private sector, first as treasury minister under the Luiz Inácio “Lula” da Silva administration and then as a congressman from 2006 to 2010. Palocci became one of the few major PT figures to weather the “mensalão” scandal of 2005, in which high-ranking PT officials were accused of paying monthly salaries to minor legislators to support the Lula administration’s congressional agenda. But Palocci resigned on June 7, after the A Folha de São Paulo revealed he had multiplied his assets 20 times and purchased luxury properties between 2006 and 2010 through his consultancy.

Losing Palocci created a vacuum. According to The Economist, the president recruited Palocci into her administration “to act as the political enforcer to keep Rousseff’s unwieldy coalition in line.” He accomplished that goal partly by usurping the role of congressional liaison. So when Rousseff accepted his resignation, she also accepted that of Luiz Sérgio, head of Institutional Relations, the ministry charged with coordinating relations between the executive and Congress. He was widely considered ineffective at managing the differences among the governing coalition.  (continue reading… )

Raúl Castro Pitches Term Limits amid Cautious Reform Proposals

Posted in News and Articles, Political Risk by politicalrisklatam on April 18, 2011

by Roque Planas for Americas Society/Council of the Americas, April 18th, 2011.

Cuba’s Communist Party gathered on April 16 to mull over a battery of reforms designed to soften the state’s grip on the island’s economy. But while the proposed economic reforms occupied most participants’ minds, Cuban head of state Raúl Castro’s call for political reform caught media attention. Many observers, including Phil Peters of the Lexington Institute, expected the Congress to clarify which leaders will inherit the Revolution by finally retiring Fidel Castro from his position as first secretary of the Communist Party and elevating Raúl to the top spot from his current position as second secretary. Raúl Castro’s replacement, in turn, could turn out to be the Castro brothers’ successor.

Instead, Castro opted for much broader change at the Party’s first Congress since 1997. He proposed a term limit of two five-year periods in order to rejuvenate a political system devoid of young leaders. “Today, we are faced with the consequences of not having a reserve of well-trained replacements with sufficient experience and maturity to undertake the new and complex leadership responsibilities in the Party, the State and the Government,” Castro said in his speech opening the Congress Saturday. Critics point out that the term limits probably will not have much effect on Raúl Castro himself, who took over in 2008 and could still govern until 2018, when he will be 86 years old. Oscar Espinosa Chepe, a Cuban independent economist,told The Miami Herald by telephone that term limits won’t “resolve our essential problem, which is the monopoly on power by a group whose policies have failed for 50 years.” Regardless, the reform, if enacted, would clear the way for a new generation to take a greater role in Cuban politics and prevent future leaders from installing themselves in power for five decades at a time. Several Cubans interviewed by foreign news agencies applauded the proposal.

But the term-limit announcement overshadowed what is shaping up to become Cuba’s most far-reaching economic reform since the government inaugurated its communist system in the 1960s. Castro called the Party Congress to discuss the “Guidelines to Social and Economic Policy,” a 32-page policy paper that envisions an increased role for private initiative, at the expense of the island’s cumbersome and notoriously inefficient state. The document also proposes phasing out the dual currency and ration card system. Castro views economic reform as his most urgent goal and called attention to examples of wasteful subsidies that drain state resources during his speech opening the Congress on Saturday.  (continue reading… )

Peru Votes: Humala and Fujimori Advance to Second Round

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

by Roque Planas for the Council of the Americas – Americas Society, April 11th, 2011.

The first round of Peru’s presidential election proved what a difference a few weeks can make in a campaign cycle. Nationalist Ollanta Humala won, with 29.88 percent of the vote as of the morning after the election and with 80 percent of ballots counted. He will face conservative Keiko Fujimori, who garnered 23.03 percent of the vote, in the June 5 runoff. Fujimori, in turn, edged out Pedro Pablo Kuczynski, a centrist and former finance minister, who won 20.55 percent. Former President Alejandro Toledo—the frontrunner less than a month ago—earned just over 15 percent of ballots to take the fourth spot, raising questions about how the ground shifted in the election.

Alejandro Toledo’s opening remarks at the presidential debate on April 3 marked the changing tenor of the campaign cycle. “You have to decide not between five candidates,” Toledo said. “But rather between the future of growth and democracy that we represent, and leaping into the abyss.” Former President Toledo, a centrist and an economist by profession, went on to criticize the possibility of scaring away foreign investment and jeopardizing Peru’s enviable economic growth by increasing the role of the state in the economy. Toledo did not name names, but given that four of the five candidates for the April 10 election favored maintaining the country’s free-market model, he clearly aimed his comments at left-wing candidate Ollanta Humala. Last week, polls indicated a major jump for Humala, who had trailed behind Toledo and conservative candidate Keiko Fujimori for most of the campaign. With Humala’s rise, the role of the state in the economy came to dominate the presidential election more than any other issue.

Peru’s business community reacted to the news of Humala’s rise—and win—with nervousness, throwing the country’s currency and financial markets into a tizzy, according to Reuters. Humala has played to the center this campaign, using strategists from Brazil’s Workers Party to cultivate an image comparable to center-left ex-President Luiz Inácio Lula da Silva. But Peru’s business community remembers Humala’s unsuccessful 2006 bid, when he associated himself more closely withVenezuelan firebrand Hugo Chávez. Humala has indicated that he would nationalize the gas industry in the southern part of the country. A greater role for the state in Peru’s economy could bring uncertainty to some $40 million in mining and oil projects planned by the current government. (continue reading… )

No Clear Leader in Peru’s Presidential Race

Posted in News and Articles, Political Risk by politicalrisklatam on March 29, 2011

by Roque Planas for Americas Society / Council of the Americas, March 25th, 2011.

With a couple of weeks to go before Peruvians head to the polls to elect their next president, new polls fail to indicate a clear frontrunner. Former President Alejandro Toledo led by a comfortable margin until his poll numbers began to dip on March 20. While Toledo never secured enough support to avoid a runoff election, his slipping lead makes Peru’s presidential race highly uncertain. According to Alfredo Torres, executive director of pollster Ipsos Apoyo, at this point any of the five leading candidates could break into the runoff election. The first round takes place April 10. Should no candidate snatch up more than 50 percent of the vote, a second round will take place on June 5.

Alejandro Toledo, who served as president from 2001 to 2006 and is the Peru Posible candidate, plays to Peru’s political center. Beginning his working life as a shoeshiner and in other informal jobs, Toledo rose from poverty to become a Stanford PhD-holding economist. His election as the first indigenous president in a country with an indigenous population of 45 percent symbolized a milestone in Peru’s struggle against racism. Toledo proposes to invest heavily in infrastructure and education, while increasing Peru’s agricultural exports and developing value-added products for the international market. Referring to poverty as “an economic, cultural, and ethical problem,” he hopes to eliminate extreme levels of it through the expansion of Juntos, a cash-transfer program inaugurated in 2005 by his prior administration.

Ollanta Humala of the Peruvian Nationalist Party appears to have benefitted most from Toledo’s drop in popularity, according to two recent polls. As Toledo slipped from 28 to 23 percent, Ipsos Apoyo found that Humala hopped forward one percentage point to place third, with 17 percent. The Datum poll puts Humala in second place, with 18.5 percent. A self-described nationalist, Humala eschews the political categories of “right” and “left,” though most observers view him as a leftwing. In an interview with journalist Paul Alonso, Humala described his economic philosophy as “the firm commitment of the state to its national industries, the construction of national economic groups, the maintenance of national ownership of natural resources, including subsoil rights.” (continue reading… )

Obama’s Latin Spring

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

by Roque Planas and Carin Zissis for Americas Society / Council of the Americas, February 28th, 2011.

U.S. President Barack Obama has never traveled to South America before, but the month of March will mark an uptick in Latin America-related meetings for him. On March 3, he hosts Mexican President Felipe Calderón at the White House. Then, from March 19 through 23, Obama heads to Brasilia to kick off a five-day trip that will also take him to Rio, Santiago, and San Salvador. AS/COA Online looks at the issues likely to be discussed when Obama meets with the presidents of Mexico, Brazil, Chile, and El Salvador.

Mexico

Calderón and Obama’s fifth bilateral meeting on March 3 comes within three weeks after the murder of a U.S. Immigration and Customs Enforcement (ICE) agent in the Mexican state of San Luis Potosi. Since gunmen ambushed a diplomatic vehicle, killing ICE Agent Jaime Zapata and injuring his colleague Victor Avila, both countries arrested a number of individuals linked to transnational crime. On February 23, Calderón and Obama spoke regarding Mexico’s arrest of six members linked to the Zetas gang and to Zapata’s death. On the same day, U.S. authorities arrested over 450 individuals suspected of having ties to Mexican drug trafficking organizations. (continue reading… )