Political Risk Latin America Blog @PolRiskLatam

President of Argentina Easily Prevails in Primary Election

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

by Charles Newbery for The New York Times, August 15th, 2011.

President Cristina Fernández de Kirchner far outpolled her rivals on Sunday in Argentina’s first national primary, suggesting that she is likely to win re-election easily in the vote on Oct. 23.

To avoid a runoff, the winning candidate in October must get at least 45 percent of the vote, or at least 40 percent with a lead of 10 points or more over the closest contender. Early results in the primary indicated that Mrs. Kirchner, 58, had handily exceeded those thresholds, winning 49 percent of the vote. Ricardo Alfonsín of the centrist Radical Civic Union Party was second with 13 percent of the votes, while a former president, Eduardo Duhalde of a conservative faction of the Peronist Party, was third, with 12 percent.

Voting was mandatory, and people could cast their ballot for any candidate regardless of party affiliation. (continue reading… )

President of Argentina Easily Prevails in Primary Election

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Rise of Consumer Credit in Chile and Brazil Leads to Big Debts and Lender Abuses

Posted in News and Articles, Political Risk by politicalrisklatam on July 25, 2011

by Alexei Barrionuevo for The New York Times, July 23rd, 2010.

For Ana María Silva, what began as purchases of perfume and two pairs of shoes spiraled into a credit card nightmare, as her debt multiplied tenfold in five years — and not all because of her spending.

Ms. Silva was among 418,000 clients in Chile who fell behind on their payments and had their debts repackaged by the retailer La Polar, which raised interest rates and extended loan terms without their knowledge. In early June, it came to light that executives at La Polar had been unilaterally renegotiating clients’ debts for more than six years. The news stunned Chileans and has become one of the biggest financial scandals of Chile’s 20-year economic boom.

“I share blame in this, but this company should have been more honorable and transparent,” said Ms. Silva, 30. “They were targeting people with more modest means. This became a vicious cycle that was never going to end.”

The scandal has underscored how South American countries — including Chile and Brazil, two of the region’s healthiest economies — are going through growing pains as the use of credit grows. The credit-fueled spending has driven extensive economic growth. But it has also opened the door to abuses, as credit issuers have used predatory techniques to lure customers, particularly young and less affluent ones, in countries where regulation is scant, annual interest charges can top 220 percent and consumers cannot seek bankruptcy protection, economists and consumer defense groups say. (continue reading… )

a María Silva, what began as purchases of perfume and two pairs of shoes spiraled into a credit card nightmare, as her debt multiplied tenfold in five years — and not all because of her spending.

Despite Violence, U.S. Firms Expand in Mexico

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

by Randal C. Archibold for The New York Times, July 10th, 2011.

When the latest bloody headlines from the drug war in Mexico reach headquarters in New York, Ken Chandler, the manager of an American electronics manufacturing plant here, jumps on the phone.

He is not begging to come home. He is begging to stay.

“We try to put them at ease, to say it is not time to pack up,” said Mr. Chandler, who oversees the company’s operations in this border city, where the military arrived last week to help purge drug cartel members from the police department.

Not that his employer, Spellman High Voltage, needs much assurance. Like a crop of other manufacturers at the border, including six companies in this city alone, Spellman is expanding its operations, with a new plant under construction after making a calculation that offers one of the starker paradoxes of these violent days in Mexico. (continue reading… )

China’s Interest in Farmland Makes Brazil Uneasy

Posted in News and Articles, Political Risk by politicalrisklatam on May 27, 2011

by Alexei Barrionuevo for The New York Times, May 26th, 2011.

When the Chinese came looking for more soybeans here last year, they inquired about buying land — lots of it.

A new railroad line in Uruaçu, Brazil, will carry soybeans to a port for shipping to China. Brazil’s economic links with China have helped it prosper, but Brazil is selling mostly raw materials.

Officials in this farming area would not sell the hundreds of thousands of acres needed. Undeterred, the Chinese pursued a different strategy: providing credit to farmers and potentially tripling the soybeans grown here to feed chickens and hogs back in China.

“They need the soy more than anyone,” said Edimilson Santana, a farmer in the small town of Uruaçu. “This could be a new beginning for farmers here.”

The $7 billion agreement signed last month — to produce six million tons of soybeans a year — is one of several struck in recent weeks as China hurries to shore up its food security and offset its growing reliance on crops from the United States by pursuing vast tracts of Latin America’s agricultural heartland.

Even as BrazilArgentina and other nations move to impose limits on farmland purchases by foreigners, the Chinese are seeking to more directly control production themselves, taking their nation’s fervor for agricultural self-sufficiency overseas.

“They are moving in,” said Carlo Lovatelli, president of the Brazilian Association of Vegetable Oil Industries. “They are looking for land, looking for reliable partners. But what they would like to do is run the show alone.”

(continue reading… )

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Heat Damages Colombia Coffee, Raising Prices

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

by Elisabeth Rosenthal for The New York Times, March 9th, 2011.

Like most of the small landowners in Colombia’s lush mountainous Cauca region, Luis Garzón, 80, and his family have thrived for decades by supplying shade-grown,rainforest-friendly Arabica coffee for top foreign brands like Nespresso and Green Mountain. A sign in the center of a nearby town proclaims, “The coffee of Cauca is No. 1!”

But in the last few years, coffee yields have plummeted here and in many of Latin America’s other premier coffee regions as a result of rising temperatures and more intense and unpredictable rains, phenomena that many scientists link partly to global warming.

Coffee plants require the right mix of temperature, rainfall and spells of dryness for beans to ripen properly and maintain their taste. Coffee pests thrive in the warmer, wetter weather. (continue reading… )

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In Colombia, New Gold Rush Fuels Old Conflict

Posted in News and Articles, Political Risk by politicalrisklatam on March 4, 2011

by Simon Romero for The New York Times, March 3rd, 2011.

Officers pored over intelligence reports describing the movements of two warlords with private armies. Then the helicopters lifted off at dawn, carrying an elite squad armed with assault rifles to the newest front in this country’s long war: gold mines.

Seizing on the decade-long surge in gold prices, combatants from multiple sides of the conflict are shifting into gold mining, among them leftist guerrillas from the Revolutionary Armed Forces of Colombia, or FARC, and fighters from the shadowy armed groups that rose from the ashes of right-wing paramilitary squads.

Their move into gold underscores the many difficulties of ending Colombia’s devilishly complex four-decade war. Even as the Colombian authorities claim victories in bombing top rebel commanders and eradicating vast tracts of coca — the plant used to make cocaine, long the financial lifeblood of the insurgents — resilient factions are exploring new sources of money.

“These groups are metamorphosing to take advantage of the opportunities they see,” said Jeremy McDermott, a director based in Medellín of InSight, a research organization that focuses on criminal enterprises in Latin America. “They know there’s a huge new revenue stream within their grasp, and they’re grabbing it.” (continue reading… )

 

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Suddenly, Emerging Markets Look Complicated Again

Posted in News and Articles, Political Risk by politicalrisklatam on February 28, 2011

by Paul J. Lim for The New York Times, February 26th, 2011.

Late last year, when demand for emerging-market stocks reached new heights, investors viewed the threat of global inflation as yet another reason to keep betting on them.

That’s because the fortunes of many companies based in fast-developing regions like Asia and Latin America are linked to commodity production, which stands to benefit when inflation rises. That would explain why nearly three-quarters of professional money managers surveyed by Russell Investments late last year described themselves as “bullish” on emerging-market equities, even as inflation worries began to climb.

Yet after the first real signs of inflation surfaced this year — in January, consumer prices in Europe and core wholesale prices in the United States both climbed to their highest level in two years — emerging-market stocks experienced their first real setback since the global financial panic of 2008. The average mutual fund that invests in a diversified basket of emerging-market shares has lost nearly 6 percent of its value so far this year, according to Morningstar. The Standard & Poor’s 500 index of domestic stocks, meanwhile, has climbed by 5 percent.

This development would seem to underscore the growing complexity of investing in emerging markets — as well as their growing risks, strategists say.

On the one hand, the poor performance of these markets reflects a simple fact: Many developing markets have become a victim of their recent success. (continue reading… )

 

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In a First, Brazil Elects a Woman as President

Posted in News and Articles, Political Risk by politicalrisklatam on November 1, 2010

by Alexei Barrionuevo for The New York Times, October 31st, 2010.

Dilma Rousseff was elected the country’s first female president on Sunday, as Brazilians voted strongly in favor of continuing the economic and social policies of the popular president, Luiz Inácio Lula da Silva. Ms. Rousseff, who served as Mr. da Silva’s chief of staff and energy minister, joins a growing wave of democratically elected female leaders in the region and the world in the past five years, including Michelle Bachelet in Chile, Cristina Fernández de Kirchner in Argentina and Angela Merkel in Germany.

Ms. Rousseff, 62, defeated José Serra, the former governor of São Paulo, with 56 percent of the vote to 44 percent, official numbers showed. In choosing Ms. Rousseff, who has no elected political experience, voters sent a message that they preferred to give the governing Workers Party more time to broaden the successful economic policies of Mr. da Silva, whose government deepened economic stability and lifted millions of Brazilians out of poverty and into the lower middle classes.

In her victory speech, Ms. Rousseff pledged to focus on eradicating poverty, which she described as an “abyss that still keeps us from being a developed nation.” She has indicated that she favors giving the state greater control over the economy, especially the oil industry, potentially steering the country further to the left. After serving two four-year terms, Mr. da Silva was barred from seeking re-election, and he hand-picked Ms. Rousseff to be his successor, campaigning tirelessly for her. “He treated this campaign like a re-election campaign,” a sociologist, Demétrio Magnoli, said on television on Sunday night. (continue reading… )

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Argentine Ex-Leader Dies; Political Impact Is Murky

Posted in News and Articles, Political Risk by politicalrisklatam on October 28, 2010

by Alexei Barrionuevo for The New York Times, October 27th, 2010.

Néstor Kirchner, the former president of Argentina who led his country out of a crippling economic crisis before being succeeded by his wife, died unexpectedly early Wednesday, apparently of a heart attack, opening a period of intense political uncertainty in the nation.

After complaining of flu symptoms Tuesday night, Mr. Kirchner, 60, lost consciousness early Wednesday and was rushed to a hospital in El Calafate, a town in the southern Argentine province of Santa Cruz. Doctors there pronounced him dead at 9:15 a.m. local time, according to an official in Mr. Kirchner’s inner circle.

Luis Buonomo, the presidential doctor, said Mr. Kirchner died from sudden cardiac arrest, according to reports in Argentine newspapers. He had undergone two procedures in the past year to clear arterial blockages, the most recent in September.

Mr. Kirchner’s death, coming on a national holiday to conduct the census, throws next year’s elections and the presidency of his wife and political partner, Cristina Fernández de Kirchner, into a sudden state of flux. Not only did Mr. Kirchner and his popularity as president help her be elected, but he also exercised substantial influence behind the scenes of her government, playing a hands-on role in the running of the economy and recently serving as the head of their Peronist party.

Together they formed one of the world’s most powerful political couples, dubbed the “penguins” for Mr. Kirchner’s close association with his Patagonian home province, Santa Cruz. As president, Mrs. Kirchner was more often the public face of their partnership, while he was the master political operator, pulling the levers of the Peronist machinery. Mr. Kirchner held the disparate governing coalition intact by inspiring loyalty in lower-level politicians and unions with subsidies and patronage, and by growing the economy at a swift pace, even at the cost of inflation. (continue reading… )

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Ecuador Police Chief Resigns After Uprising

Posted in News and Articles, Political Risk by politicalrisklatam on October 4, 2010

by Simon Romero for The New York Times, October 1st, 2010.

 Ecuador’s police chief resigned on Friday, a day after an uprising by police officers who held President Rafael Correa captive for more than 10 hours. Soldiers patrolled the streets of Quito, the capital, and other cities, enforcing a state of emergency.

The police chief, Freddy Martínez, submitted his resignation hours after President Correa vowed to overhaul the force. On Thursday, police officers protested a new law that would cut their benefits and salaries; the shakeup of their leadership emerged along with new details about the military operation involving more than 500 soldiers that rescued Mr. Correa from a police hospital, where he had been surrounded by striking officers.

The state news agency, Andes, distributed photographs on its Web site of the president’s armored sport-utility vehicle, with damage to its windshield from what the agency said was a shot fired during the rescue operation. (continue reading… )

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