Political Risk Latin America Blog @PolRiskLatam

Education in Chile: We want the world

Posted in News and Articles, Political Risk by politicalrisklatam on August 11, 2011

by Patricia Navia for The Economist, August 11th, 2011.

A trial of strength between students and the government.

It began on August 4th with the metallic clink of a few pots and pans. By nightfall, thousands of people were on the streets of Santiago banging kitchenware, a form of protest last heard under the dictatorship of General Pinochet. This time the cacerolazos, as they are called, are being staged in the name of educational Utopia—and in response to a cack-handed government ban on marches.

Chile’s school system is the least bad in Latin America, according to the OECD’s PISA tests, which compare educational attainment across countries. But that does not make it good. And the overall performance hides huge disparities. Analysis done in Chile of the test results in the 65 countries that took part finds that it ranked 64th in terms of the variance of the results according to social class. Rich pupils get good private education; poor ones are condemned to underfunded, dilapidated state-funded schools.

This “educational apartheid” as Mario Waissbluth, a campaigner, puts it, is widely blamed for the fact that Chile remains a highly unequal society, despite its dramatic progress over the past quarter of a century in reducing poverty. “The kids from the posh suburbs study in those suburbs, go to university in those suburbs, get jobs as company executives in those suburbs and employ friends from the schools they went to themselves,” says Mr Waissbluth.

The centre-right government of President Sebastián Piñera agrees. Chile inherited from the dictatorship a voucher system under which the government pays money to the school of the parents’ choice. In November the government unveiled a plan to increase the value of the voucher, especially for the poorest children. As well as trying to attract better teachers to state schools, the government will set up 60 lycée-style “schools of excellence” aimed at bright children from poor families.

Students and teachers responded by demanding the abolition of all for-profit education. After they staged big marches along the Alameda, Santiago’s main thoroughfare, Mr Piñera last month sacked his unpopular education minister. The government also said it would draw some $4 billion from its reserve fund of windfall copper revenue to pay for better schools. (continue reading… )



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… )

Buenos Aires’ Mayor: Déjà vu all over again

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

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

On the thin roster of candidates hoping to run against Cristina Fernández de Kirchner in her bid for re-election as Argentina’s president this year, one of the most promising was Mauricio Macri. The son of a wealthy businessman and the former president of Boca Juniors, the country’s most popular football club, Mr Macri was reasonably well-known nationwide even before he was elected mayor of Buenos Aires in 2007. The city’s economy has prospered during his time in office, and he was able to establish a new municipal police force, ending the city’s dependence on federal officers. With his conservative ally, Francisco de Narváez, barred from running for president because he was born abroad to foreign parents, Mr Macri looked like the right’s best shot to take on Ms Fernández.

To the disappointment of his conservative backers, however, Mr Macri has always been politically cautious. In keeping with his family’s business tradition, he is thought to enjoy governing far more than campaigning. Moreover, PRO, the conservative alliance he co-founded in 2005, has made few inroads outside the Buenos Aires area. And Ms Fernández’s popularity has soared since Néstor Kirchner, her husband and predecessor as president, died of a heart attack last October. Rather than offering himself up as a sacrificial lamb to Ms Fernández, Mr Macri announced in May that he would run for a second term as mayor instead.

The president was in no mood to concede continued control of the capital to Mr Macri, with whom she has repeatedly sparred in office, often hindering co-operation between the federal and municipal governments. Just as in 2007, she tapped Daniel Filmus, a former education minister, to run for mayor. Mr Filmus is one of the most moderate and professionally accomplished members of Ms Fernández’s entourage, making him a good fit for the capital’s educated and cosmopolitan electorate. Mr Filmus hammered Mr Macri for abusing his power, noting that the head of the city’s new police force, Jorge Palacios, is being prosecuted for illegal phone tapping. He also criticised the mayor for failing to reduce crime and poverty, and for delays in the expansion of the city’s underground train system. (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… )

Peru’s presidential election: No lesser evil

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

by The Economist, June 2nd, 2011.

Voters find it hard to choose between Keiko Fujimori and Ollanta Humala

Eight weeks is an unusually long time for the campaigning in a run-off election. It has been long enough to polarise Peru and to create some unusual political bedfellows. But it has not established a clear winner in the vote on June 5th, nor thrown much light on the prospects for the country’s democracy and its economic boom in the coming years.The last opinion polls before a pre-election ban on their publication, placed Keiko Fujimori, the daughter of a former president, and Ollanta Humala, a nationalist former army officer, within a point or two of each other. Both are populists with weak democratic credentials; they benefited from the dispersal of the centrist vote among three defeated candidates. Both are trying hard to seem moderate.Ms Fujimori’s father, Alberto, is serving a 25-year sentence for authorising a death squad that killed 25 people when, as Peru’s president between 1990 and 2000, he defeated the Shining Path, a Maoist terror group. He allowed his spy chief, Vladimiro Montesinos, to run a systematic corruption racket. But Ms Fujimori is evoking her father’s liberal economic reforms which rescued Peru from economic collapse and laid the foundations for today’s boom. She promises to stick with investor-friendly policies. She has backed away from an earlier pledge to pardon her father, saying she would respect the decisions of the courts. And she admits that “mistakes” were made by her father’s government, in which she acted as first lady after her parents separated. (continue reading… )

Brazil’s president: Dilma’s first big test

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

by The Economist, June 2nd, 2011.

The political wounding of Antonio Palocci, the president’s right-hand man, comes at an awkward time, when the battle to cool the economy has only just begun

The honeymoon Dilma Rousseff has enjoyed since becoming president of Brazil on January 1st has suddenly ended. She faces a modest but steady and damaging rise in inflation. She must push through unpopular measures to cool the economy and sustain growth in the medium term, and to fulfil her promise to make the state more efficient. Her vast but disparate coalition in Congress is showing the first signs of political infighting. Her difficulties are embodied in the travails of the man appointed to manage the politics of this economic balancing act, Antonio Palocci, her chief of staff.

Last month the Folha de S. Paulo, a newspaper, published confidential information showing that between 2006 and 2010, when Mr Palocci was a federal congressman, his personal wealth rose 20-fold as a result of consultancy work. Elected politicians in Brazil are allowed a business sideline. Mr Palocci refuses to give details of who paid him, or for what, on the grounds of client confidentiality. His enemies insinuate that it was not his political insights that were worth so much, but his influence and connections. His business dealings are now being investigated by the public prosecutor’s office. (continue reading… )

Brazil’s Economy: Too hot

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

by The Economist, June 2nd, 2011.

Latin America’s biggest economy is more fragile than it appears

Brazil has a lot to be proud of. A decade of faster growth and progressive social policies has brought a prosperity that is ever more widely shared. The unemployment rate for April, at 6.4%, is the lowest on record. Credit is booming, particularly to the swelling numbers who have moved out of poverty and into the middle class. Income inequality, though still high, has fallen sharply. For most Brazilians life has never been so good.

That success is partly thanks to good luck, in the form of booming commodity prices. But it is also the result of good policies. A country once known for its macroeconomic incompetence has maintained an enviable stability, deftly navigating the 2008 financial crisis as well as the more recent influx of foreign capital. Not surprisingly, perhaps, many of Brazil’s economic officials now have an air of smugness about them, as they argue that the rest of the world has more to learn from Brazil than vice versa.

The timing of such complacency could not be worse. The economy is overheating. The government is stalling on a deeper reform agenda that is essential to boost Brazil’s long-term growth and fiscal stability. President Dilma Rousseff’s growing political problems do not help: her chief of staff, Antonio Palocci, is under fire over fat consulting fees (see article). All this adds up to a warning: Brazil’s economy is heading for trouble. (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… )