Brazil: Is Marina Silva the PT’s Nemesis?

By Luciano Melo

MarinaSilva

Photo courtesy of the Marina Silva campaign website

No politician in recent years has been able to shake and polarize Brazilian politics as Marina Silva has since becoming the Brazilian Socialist Party (PSB) presidential candidate after its original nominee, Eduardo Campos, died in a plane crash last month. She has an alluring biography: born into an extremely poor family and illiterate until she was 16, she worked as a rubber tapper and rose to become one of the most prominent ecologists and defenders of the Amazon region alongside Chico Mendes, a true Brazilian hero. After earning a degree in history, Silva entered politics in the mid-1980s. Several years later she received the most votes as a state representative for Acre, served twice as a senator, and later became the Minister of Environment in Lula’s administration (a position from which she resigned due to fundamental divergences with the Workers Party and Dilma Rousseff). In 2007 she won the UN’s Champions of the World award, and three years later she ran for President under the Green Party banner, amassing 20 million votes on a platform emphasizing environmental issues and education.

Recent polls find roughly a third of Brazilian voters favoring Silva in the first round of balloting scheduled for October 5, and running even with or slightly ahead of President Rousseff in an anticipated run-off election three weeks later. The Brazilian media suggest that a large part of Silva’s appeal comes from a personal aura of transparency and rectitude – a refreshing change from others competing for Brazil’s top job. She has also demonstrated an old-fashioned ability to compromise in order to form alliances. A committed environmentalist, Silva teamed up with Eduardo Campos, a titan of agribusiness, and now, heading up the PSB ticket, her running mate is Beto Albuquerque, a moderate farmer who can bring a certain level of balance in the economic-environmental equation. On the separation of church and state, however, Marina may face a difficult balancing act. She is an evangelical Christian, winning a large chunk of religious voters in 2010, and she has defended the teaching of creationism in schools, saying that God created even Darwin. She rolled out an agenda for advancing LGBT rights recently, but criticism by Pastor Silas Malafaia, one of Brazil’s main evangelical leaders, forced her to reverse course and abandon her position 24 hours after having presented it.

Although Brazil is a religious country, laïcité – a French version of secularism – is a serious matter for the upper and middle classes, and Silva’s religiosity may cost her votes. She has exposed her core weak spot, which the other candidates will exploit in the upcoming debates and electoral campaigns. But popular concerns about corruption run much deeper in the eyes of the Brazilian people. The fact that presidents Dilma and Lula and the PT have become synonymous with misconduct in general, and mismanagement regarding Petrobrás in particular – a scandal involving 40 PT members in a multi-million real scheme – weakens their ability to counterattack amidst Silva’s continuous rise. What we will see in the elections in October is therefore a battle between the PT’s Bolsa Família – one of the most successful social programs in the history of Brazil – and a candidate who theoretically embodies honesty and honor. Whatever the outcome, it seems that PT has met its biggest challenge in 12 years.

El Salvador: The Maras, Community Action, and Social Exclusion

By Mario Zetino Duarte, Larissa Brioso, and Margarita Montoya

Photo Courtesy of FLACSO-El Salvador

Photo Courtesy of FLACSO-El Salvador

Maras and gangs in El Salvador have become social actors with great power in communities suffering from a high level of social exclusion. They have been linked to violence and organized crime, and they have been blamed for the highest number of homicides, organized criminal actions, and the generalized insecurity in which the country lives. They have brought a sense of isolation to the communities in which they live, as well as a reputation that increases the communities’ exclusion. According to a study being conducted in crime-ridden communities of Santa Tecla (near San Salvador) and Sonsonate (64 km. west of the capital), the maras’ power derives from their ability to cause fear and terror among inhabitants as a result of their effective and organized criminal actions. Their influence has a strong psychological impact and broad influence over people’s lives. The criminal activities of the gangs in the community are generally rejected by inhabitants because they put families at risk, make neighborhoods the target of police operations, and taint both the community and its residents socially – making it hard for people to get or keep jobs.

Nonetheless, many citizens in these communities have a positive assessment of the maras when it comes to providing important neighborhood security, due to a lack of national or local authority. In Santa Tecla and Sonsonate, the Salvadoran government, the municipality, international organizations, and other institutions have invested heavily in programs to stem the tide of mara violence, with mixed results. These communities suffer from low levels of employment, education, and social security, particularly among women. Afraid of retribution, citizens in these communities do not turn to state institutions to report crimes or to request protection, and they instead approach the maras to take actions regarding conflicts with neighbors and situations related to domestic violence. The void in institutional services, which has been permanent in some communities, is being filled by the maras and their members, making them the primary support for the local Asociaciones de Desarrollo and implementers of development plans.

Changes in the community philosophy of the National Civilian Police (PNC) in one of the communities of the study offers a useful example of how new approaches can help improve citizens’ lives. The PNC’s new approach to the community and its underlying social and security problems has also led to the evolution of the maras’ role as community actors and their legitimacy in the people’s eyes, primarily based on the fear they instill. This has benefited some communities.  Likewise, international cooperation – which has played an essential role – and the recent implementation of community policing practices as a model within the national security strategy to reduce gang criminality have driven debate on how communities can confront violence and crime in a sustained manner. The problems are far from resolved, but the gangs, the police, and the state each appear to be redefining strategies and roles. It remains to be seen whether these actions are sustainable and applicable in other territories – and whether the maras’ involvement in development programs can help create conditions for citizens to cope with the violence and social exclusion that plague their communities.

* Mario Zetino Duarte, Larissa Brioso, and Margarita Montoya are researchers at FLACSO-El Salvador.  Their study is funded by the International Development Research Centre.

Latin America United Against Violence in Gaza

By Aaron T. Bell

Sergio / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Sergio / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Israel’s assault on Gaza this summer provoked sharp criticism from Latin American governments.  Condemnation came not only from Cuba, a long-time critic of Israel, and from Bolivia, Venezuela, and Nicaragua, which have been without diplomatic ties to Israel since cutting them after previous conflicts in Gaza in 2009 and 2010.  This summer’s UN-estimated 1,500 civilian deaths also provoked outrage from center-left governments, as Brazil, Chile, Ecuador, El Salvador, and Peru all withdrew their ambassadors.  At the Mercosur summit at the end of July, Brazil, Venezuela, Uruguay, and Argentina issued a joint statement in which they criticized Israel’s “disproportionate use of force…which has almost exclusively affected civilians.”  And one of the largest popular demonstrations worldwide against the Israeli action took place in Chile, home to hundreds of thousands of Palestinian descendants.

Latin American interest in Israeli-Palestinian affairs is deeply rooted in the past.  Waves of immigration beginning a century ago have made the region home to the largest Palestinian diaspora outside the Arab world.  Latin American governments provided crucial support for the 1947 UN Partition Plan for Palestine that led to the creation of the state of Israel, but they roundly condemned the occupation of the Gaza Strip 20 years later.  In the Cold War era, Israel provided military hardware to rightwing military regimes in the region while the Palestine Liberation Organization, more leftist than Islamic in its revolutionary views, lent political and economic support to the Sandinista government in Nicaragua.  Contemporary Latin American governments have taken a balanced approach in their relations with Israel and the Palestinians.  All but Colombia, Mexico, and Panama have recognized a Palestinian state based on national borders prior to the 1967 Arab-Israeli war, and trade with Israel has flourished.  Brazil is the top destination for Israeli exports, totaling over $1 billion per year.  In addition, Israel signed free trade agreements with Mercosur in 2007 and 2010; became an official observer to the Pacific Alliance (Chile, Colombia, Mexico, and Peru) in 2013; and in May 2014 approved a four-year, $14 million plan to boost trade with the PA nations and Costa Rica.  Israel’s recent efforts to further trade in Latin America ironically developed out of a desire to shrug off some of its dependency on Europe, where criticism of Israeli policy has become widespread and boycotts of Israeli goods are being organized by advocates of the Palestinian cause.

This summer’s fighting in Gaza chilled diplomatic relations between Latin American governments and Israel.  The Israeli Foreign Ministry described the withdrawal of Latin America ambassadors as a “hasty” decision that would only encourage Hamas radicalism, and it struck a nerve in Brazil when dismissing its “moral relativism” as an example of “why Brazil, an economic and cultural giant, remains a diplomatic dwarf.”  But both Israel and Latin America stand to gain from stronger economic ties, and with the exception of Chile’s suspension of trade talks, there are no pending signs that economic relations will suffer further now that this round of fighting in Gaza has come to an end.  The significance of this summer’s events lies instead in the autonomous decision by Latin American governments of all political stripes to act in favor of peaceful conflict resolution and the protection of civilians enveloped by the violence of war.  The Assad regime’s massacre of its own citizens in Syria in recent years provoked a more reticent condemnation from Latin America’s center-left governments and regional blocs, which backed a negotiated solution to the conflict while strongly opposing the possibility of foreign military intervention.  Without the specter of a wider conflict looming over this summer’s Gaza crisis, Latin American governments seized the opportunity to stake out a firmer position.  The region’s reaction to future atrocities – which may come sooner rather than later as the US prepares to battle the “Islamic State” in Syria and Iraq – will show how durable this new approach will be.

Preparing the West Indies for the Demise of PetroCaribe

By Thomas Andrew O’Keefe*

ariwriter / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

ariwriter / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

The English-speaking Caribbean nations – whose heavy dependence on imported diesel and fuel oil to generate electricity has placed them among the most heavily indebted countries in the world (on a per capita basis) – will face massive headaches if PetroCaribe collapses.  They eagerly signed up for the Venezuelan initiative, which sells them petroleum with one- or two-year grace periods and long repayment schedules ranging from 15 to 25 years at 1 or 2 percent interest.  Participating countries can even pay with products or services in lieu of hard currency.  In the case of Guyana, Haiti, Jamaica, and the Eastern Caribbean mini-states, PetroCaribe’s financing scheme represents an estimated 4 to 7 percent of their annual GDP.  The worsening economic turmoil in Venezuela, however, raises serious concerns about PetroCaribe’s future.  According to recent media reports, PdVSA, the Venezuelan national petroleum company, is shortening repayment periods and increasing interest rates.

No doubt this is one reason why the Obama administration launched the Caribbean Energy Security Initiative (CESI) in June.  CESI seeks to diversify the Caribbean’s energy matrix away from its current heavy reliance on fossil fuels by using Overseas Private Investment Corporation (OPIC) loans and credit guarantees to encourage private sector investment in renewable energy.  It is premised upon the Caribbean’s huge potential to generate energy from the sun, wind, geothermal sources, and maritime currents.  In the past, the principal bottlenecks to harnessing these abundant resources have been hefty startup costs and small populations that make it difficult, if not impossible, for the private sector to recover profits within a reasonable period of time.  Although the initial capital investment for solar- and wind-based technology has dropped considerably in the last few years, it is unrealistic to expect Caribbean nations to make a full switch to renewable energy resources anytime soon.  A more realistic, short- to medium-term alternative is to make greater use of natural gas.  Although still a fossil fuel, gas is more efficient – and therefore the generated electricity is less costly – than fuel oil and diesel.  Moreover, electricity generated from natural gas emits 70 percent as much carbon dioxide as oil, per unit of energy output.

The shale gas boom in the United States generated by innovations in hydraulic fracturing has led to calls to lift restrictions on U.S. natural gas exports to those countries with which it does not have a free trade agreement.  The Caribbean is potentially a major target market of this natural gas in liquefied form (LNG), but this would be a big mistake.  Lifting restrictions on exports will inevitably raise natural gas prices in the U.S., thereby hurting consumers and putting the nascent revival of domestic manufacturing at risk.  It would also require building expensive LNG offloading and regassification facilities in the West Indies, which would run up against the same economies of scale limitations (except in Jamaica and Hispañola) that have undermined a mass transition to renewable energy.  A more realistic alternative is to revive plans to build a natural gas pipeline from Trinidad and Tobago to Barbados, and then up through the Eastern Caribbean.  Proposed back in the early 2000s, it was scuttled with the appearance of PetroCaribe in 2005.  Trinidad and Tobago has ample reserves of natural gas; at one point before the shale gas revolution it was the largest source of imported LNG in the United States.  The pipeline would link islands with populations of under 100,000, where LNG is economically unviable, with the more densely populated French dominions of Guadalupe and Martinique.  It would also help revive the floundering Caribbean Common Market and Community (CARICOM).

* Thomas Andrew O’Keefe is President of San Francisco-based Mercosur Consulting Group, Ltd.

Children and Migrant Teens: Trapped with No Way Out

By Ursula Roldán Andrade*

Alaks / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Alaks / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

The 56,000 Central American children involved in the humanitarian crisis along the Mexico-United States border are trying to reach the United States not only to reunite with their families.  They are also driven by poverty, social exclusion and violence in their home countries of northern Central America.  The response of U.S. and Central American authorities, however, seems to be only to strengthen the barriers to migration – not only along the Mexico-United States border but also between Mexico, Guatemala, El Salvador, and Honduras.  The United States has emphasized immediate deportation, and its request for funding includes an increase in the number of courts to expedite deportations and in enhanced border security with military and police forces.  The Obama Administration also seeks resources to address the consequences of emigration in Central America, where the governments have done little more than begin criminal prosecutions against the “coyote” network.  In Guatemala there are rumors that parents responsible for migrating children could face criminal charges.  Caring for would-be migrants is a much lower priority; there are only two shelters, of a capacity of less than 80 children, in charge of the Social Work Program of the Office of the First Lady of Guatemala (SOSEP), which has also proposed the improvement of child reception conditions.

A mass media campaign in Guatemala promotes the idea of children staying to fulfill the “Guatemalan Dream” rather than risk their lives attempting to live the “American Dream.”  Yet, the “Guatemalan Dream” that authorities are referring to is lacking.  The Human Rights Office of the Archbishop of the Catholic Church of Guatemala (ODHAG), which has tracked human rights for children in the nation for the past 15 years, reported in 2011 that simply being alive in Guatemala means surviving health risks, food insecurity, and violence.  The report’s most revealing data show that over 48 percent of Guatemalan children suffer from chronic malnutrition.  According to ODHAG, 51 percent of the deaths of minors in 2011 were teenagers between the ages of 13 and 17.  The report called on the state to take preemptive measures to protect children and adolescents from malnutrition, hunger, violence, abuse, and human trafficking networks, but the government still spends only 3.1 percent of GDP on this population, whereas other Central American countries invest 6 percent.

Central American children are caught in the crossfire of political discourse in the United States – a migrant population that either gains protection or is cast aside, sometimes with xenophobic or even racist overtones.  Partisan politics, interest in cheap labor, and other factors short-circuit debate, creating conditions for exploitation of migrants without recognition of their citizenship, families, or rights.  The Guatemalan government neglects its vulnerable population, is rife with political corruption, and is cursed with the narrow-mindedness of its economic elite, which does not, in the least, attempt to change the structural conditions that exclude and eventually expel their countrymen.  Solutions to the resulting humanitarian crisis will remain elusive as long as Central American governments do not guarantee fundamental rights and undertake policies aimed at the defending the higher interests of children and adolescents. 

* Dr. Roldán Andrade specializes on migration issues at the Center for Research and Policy Management (INGEP) at the Universidad Rafael Landívar in Guatemala.

Prison Reform in Latin America: Lessons from Costa Rica

By Geoff Thale and Adriana Beltran*

Steven and Darusha / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Steven and Darusha / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Prison overcrowding is a widespread problem in Latin America, primarily because of harsh drug-sentencing laws and inadequate budgets, but Costa Rica may be setting a useful example for dealing with it.  In most countries, guards control the perimeter, but groups of prisoners or criminal gangs organize and control life inside the prison compound.  Rehabilitation and re-integration programs are limited.  Not surprisingly, there is little political leadership for prison reform; the issue wins few points with the general public.  Even dramatic events – like prison riots in Venezuela or prison fires in which hundreds of young men die as in Honduras – don’t generate interest in prison reform.  A key component of the criminal justice system – as a deterrent, a punishment, and as a provider of rehabilitation and reintegration services that will reduce recidivism – the prisons are often neglected.

While Costa Rica faces growing drug-related problems, a multi-country analysis by the Washington Office on Latin America of persistent criminal justice and prison problems in Latin America – aimed at identifying strategic solutions – indicates that the country stands out as having undertaken at least modest reforms of its prisons to prevent them from becoming the breeding grounds for increasingly hardened criminals and gangs.  Prison conditions in Costa Rica have not been among the worst in Latin America, although the U.S. State Department said in its Human Rights Report for 2013 report that they were “harsh” and that “overcrowding, inadequate sanitation, difficulties obtaining medical care, and violence among prisoners remained serious problems.”  Until very recently, when new drug sentencing laws and tough anti-crime measures pushed the prison population up, the system generally did not exceed capacity.  Even today, the system is at 140 percent of capacity – far less than the 200-300 percent seen in other countries.  Prison conditions also seem less abusive than those seen in other countries.  An external oversight body was created to protect the rights of prisoners.  Moreover, the government, with support from the Inter-American Development Bank (IDB), is reaching out to local businesses to support vocational training programs for inmates.

This process has been driven by reformers inside the government and prison system, in contrast to most reforms elsewhere in the hemisphere driven by international donors.  This is a rare example of how reformers inside and outside the system worked to achieve institutional changes that increase citizen security while respecting human rights.  In this case, long-standing mid-level and senior staff of the penitentiary system, with the support of successive Ministers of Justice appointed by President Laura Chinchilla, played a key role in resisting pressures from legislators who want to toughen sentencing, which would increase prison populations.  They have advocated measures to ease overcrowding and ensure proportionality in sentencing.  At the same time, they have also used the IDB loan to both defend and expand the rehabilitation and re-insertion programs in the prison system.  Every country’s situation is unique, and Costa Rica has advantages — a relatively low crime rate, a relatively strong state structure, a relatively well-established respect for the rule of law – that others lack, but San José has shown that reform in this difficult, politically sensitive area is possible.

*Geoff Thale and Adriana Beltran, of the Washington Office on Latin America (WOLA), recently led a small delegation to visit Costa Rican prisons.

Resources and the New Developmentalism

By Paul A. Haslam*

María del Carmen Ortiz / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

María del Carmen Ortiz / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Resource nationalism is driving the most significant shift in Latin American development policies of the past decade.  It is rarely talked about yet is constituting a new developmental model that is being adopted by governments of diverse ideological inclinations.  It has involved reforming taxation regimes dating from the 1990s to extract more “rent” from natural-resource intensive industries; strengthening and extending state capacity; using rents to support social spending by the state, including anti-poverty programs; and – most importantly – linking resource abundance with industrial policy.  It is the basic framework of the post-neoliberal development model, and examples are many.  The splashier headlines in the past decade focus on various instances of nationalization, including the expropriation of YPF in Argentina (2012); Venezuela’s erratic nationalization program; and Bolivia’s dramatic military occupation of foreign-owned gas facilities in 2006 – all intended to achieve these goals.  Early this month, the provincial government of San Luis, Argentina, presented a project-law to create a new provincially owned mining company, San Luis Minera (SAPEM) – joining many fellow provinces that have created or breathed new life into state-owned enterprises (SOEs), particularly in the mining sector.

By and large, these enterprises exist to associate with multinationals, following the trail blazed by Argentina’s YMAD (in Catamarca) and Fomicruz (in Santa Cruz) during the dawn of Argentina’s mining boom in the late 1990s.  The SOEs typically offer the rights to prime potential lands claimed by the state, handle the administrative and regulatory requirements of the province, and in some cases, negotiate the social licence with nearby communities.  In exchange, they get a small net profits interest (typically around 8-10 percent), which results in rent for the province.  The multinational does everything else: raises the money; plans, builds and operates the mine, and sells the mineral.

These are not the rent-seeking policies typical of low-capacity governments.  The enduring principles of the liberal regime (such as low royalty rates) have pushed revenue-hungry governments to explore creative options such as these to capture rent from their mining sectors.  The new SOEs are also an institutional innovation that aims at leveraging natural resource wealth for economic development, as governments also expand resource-funded social spending.  One of the objectives of Morales’s “nationalization” of Bolivia’s oil and gas resources, for example, was to “revitalize” the state-owned YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) as an engine of development.  Nor is this “resource nationalism” exclusively a project of the left: Chile increased royalty rates in a “Special Tax” on the mining sector in 2005, and Colombia and Peru have hiked taxation on mining as well.  Brazil has continued to use of SOEs like PETROBRAS.  It’s still an open question, however, how successfully the rents generated by this new model can be combined with industrialization or development strategies that deliver enduring benefits. 

*Dr. Haslam teaches at the School of International Development and Global Studies, University of Ottawa, Canada.

Drug Dealing in Costa Rica: A Perverse Path toward Social Inclusion

By Rodolfo Calderón Umaña*

Antonio / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Antonio / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Central America’s emergence as a principal transit route for illicit drugs from South America to the U.S. has given rise to local retail markets supplying users within the region.  A study of three Costa Rican communities – one in greater San José and two along the Caribbean coast – highlights several factors that determine the scale and consequences of these local markets.  Among the most important are the high levels of social exclusion experienced by households in these localities and residents’ motivation to become involved in the business because it offers resources (money, power and prestige) that cannot be achieved through the legitimate channels of education or quality employment.  Other factors include the proximity of the communities to drug trafficking routes and the extent of previously existing demand from local consumers.

One of the most significant characteristics of local drug markets in these communities, as elsewhere, is that they are socially and territorially bounded because trust is the key factor shaping relationships between suppliers, sellers and consumers.  Some local suppliers maintain direct ties to cartels, but they operate their businesses independently.  Youth are assigned the most vulnerable tasks and are thus disproportionately represented among those arrested and convicted of crimes.  Violence serves as the principal instrument for controlling and regulating the drug trade, and the result is that for youth in these settings violence becomes normalized as a routine form of behavior.  This spawns a generalized climate of fear and insecurity, and the typical response of community residents is to retreat from public space and to isolate themselves inside their homes.

These findings support calls for new responses to the drug trade at the community level.  Central American governments, encouraged to a significant degree by U.S. programs, have tended to emphasize repressing and “combatting” the scourge of drug trafficking, yet where this approach has been implemented – particularly in Central America’s Northern Triangle — social problems have only gotten worse.  In Costa Rica, it’s not too late to undertake a comprehensive strategic review of policies in this domain and to bolster programs to stabilize affected areas.  Particularly if designed and implemented from the bottom up, programs can identify and reach out to vulnerable residents before they are drawn into drug micro-markets as vendors, consumers, or both.  Vocational training programs matched to real employment opportunities are absolutely fundamental – to reduce residents’ social exclusion.  Our research findings indicate that enhancement of public spaces where community residents can congregate and initiatives focused on building trust between communities at risk and representatives of the state can also be highly productive.  Costa Rica is at a critical juncture: it can either sustain and expand the participatory policy frameworks that buttress community cohesion and resilience or run the risk of falling into the devastating spiral of delinquency and violence that has plagued its neighbors in the Northern Triangle.

*Dr. Calderón Umaña is a researcher at FLACSO-Costa Rica.  The study is being conducted by FLACSO-Costa Rica with funding from the International Development Research Centre.

Sanctions on Venezuela: Why?

By Eric Hershberg and Fulton Armstrong

Photo credit: NCinDC / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Photo credit: NCinDC / Flickr / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

 

 

 

 

 

 

 

 

 

 

The sanctions against Venezuela that the Obama Administration announced last week respond to political pressure to punish alleged human rights violators in Caracas, but they have no immediately apparent policy objective.  The State Department announced that it has suspended the U.S. visas of “a number of Venezuelan government officials who have been responsible for or complicit in … human rights abuses” during protests earlier this year, which resulted in the deaths of at least 40 people, injury of hundreds more, and jailing of dozens of activists.  The Department did not release a list of sanctioned individuals nor divulge the information used to compile the list, but press reports indicate that 24 officials have been targeted and include cabinet members, presidential advisers, police, and military officials.  The sanctions do not affect bilateral trade or Venezuela’s place as the United States’ fourth biggest foreign supplier of oil.

U.S. condemnation of the Venezuelan government and the blacklisted officials has been strident, but there has been no public explanation of what Washington expects the sanctions to achieve.  The statements of U.S. Principal Deputy Assistant Secretary of State John Feeley, made to a Colombian radio station and reported by El Universal in Caracas, strongly suggest the sanctions are intended to show solidarity with the Venezuelan opposition and U.S. disapproval of the government of President Nicolás Maduro.  “Social protests have been a genuine war cry from people oppressed by the lack of democracy,” Feeley is reported as saying.  “The [sanctions] were intended to note that the U.S. cannot allow, for the sake of its values, that a supposedly democratic government represses the legitimate expression of the people’s voice.”  The State Department has not demanded, however, any particular action by Caracas to lift the sanctions, such as an investigation into the abuses, re-launching a national dialogue, or compensating victims.  Feeley suggested that the governments of Colombia and Brazil – with which he said the U.S. government had “meditated” about the issue – supported the sanctions, but regional support for them has been muted at best.  Indeed, the Administration had responded to last May’s House of Representatives vote in favor of sanctions by indicating that these would be counterproductive and could undermine efforts at mediation by these same countries.  The one dissenting voice in the House, Congressman Greg Meeks (D-NY), explained his vote as opposing unilateralism, adding that its passage was a message to Latin American governments that we don’t care what they think.

The Venezuelan government has repeatedly and credibly asserted that a significant portion of the violence has been perpetrated by protestors rather than the state or government supporters, and a number of officials have been charged.  Nonetheless, no U.S. sanctions have been brought against opposition members who planned or participated in violent actions.

Some observers have attributed the U.S. action to pique that Aruban and Dutch officials several days earlier rejected its request that they extradite to the U.S. Venezuela’s new consul in Aruba, a former chief of intelligence whom Washington suspects of trafficking in drugs with the Colombian FARC – despite Vienna Convention provisions regarding diplomatic immunity.  More likely, the sanctions are a reaction to a realization that the quixotic “salida” campaign, which many in Washington somehow imagined could bring down the Maduro government only months after it had won an election, had all but petered out, leaving the opposition in disarray and the government in a renewed position of strength.  Sanctions also are a bow to congressional pressure on the Obama Administration to act against Caracas, which has continued to grow even after the salida campaign has run out of gas.  Just hours after the sanctions were announced, Senator Marco Rubio issued a press release taking credit for them, and other conservatives – led by the Cuban-American congressional delegation – called for even tougher measures.  Without clear objectives, however, the sanctions seem to be mostly a moral and political statement – pushing relations into yet another dead end from which neither government is disposed to find a way out.  Indeed, Venezuelan officials, calling the sanctions “a desperate cry from a nation that realizes the world is changing,” are turning the diplomatic adversity to domestic political advantage, just as administration officials had wisely predicted in pushing back against the Congressional saber rattling last spring.

Mexico and NAFTA: Lessons Learned?

By Robert A. Blecker*

Photo credit: Alex Rubystone / Foter / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Photo credit: Alex Rubystone / Foter / Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (CC BY-NC-SA 2.0)

Twenty years after the North American Free Trade Agreement (NAFTA) went into effect, it is clear that the promises made by Mexican President Carlos Salinas and U.S. President Bill Clinton – that the accord would make Mexico “a first-world country” and halt the migration of Mexican workers to the United States – have not been fulfilled.  In Salinas’s famous words, Mexico would “export goods, not people.”  But the number of undocumented Mexican immigrants in the United States rose by a conservatively estimated 3 to 4 million during the first two decades of NAFTA, and millions more were apprehended at the border and deported.  The reasons why immigration flows accelerated post-NAFTA are not hard to discern.

  • NAFTA fostered integration of Mexican industries into global supply chains targeted at the U.S. market, accelerating Mexico’s transformation into a major exporter of manufactured goods.  Nearly one million manufacturing jobs were created there in the first seven years of NAFTA (1994-2000).  But this job growth was offset by similar job losses in agriculture, and manufacturing employment has fallen by about a half million since 2001.  The net increase in manufacturing employment from 1993 to 2013 was only about 400,000, less than half of the annual growth in the Mexican labor force.
  • Real hourly earnings in Mexican manufacturing were no higher in 2013 than in 1994, and Mexico’s per capita income has stagnated relative to that of the United States.  In 2012, typical Mexican manufacturing workers received only 16 percent as much per hour as their U.S. counterparts, down from 18 percent in 1994.  Even adjusted for the lower cost of living, workers without a college degree in Mexico still earn only about one-quarter to one-third of what they can earn by moving to the United States.

The benefits of NAFTA for Mexico have been attenuated by several factors.  First, Mexican export industries still largely follow the maquiladora model of doing assembly work using imported inputs, so their value-added is only a fraction of the gross value of their exports and they have few “backward linkages” to the domestic economy.  Second, the Mexican government has frequently allowed the peso to become overvalued, making Mexico less competitive and driving multinational firms to locate in other countries.  Third, the tremendous penetration of Chinese imports into all of North America (Canada, Mexico and U.S.), especially since China joined the World Trade Organization in 2001, has displaced significant amounts of actual or potential Mexican exports.  A revaluation of China’s currency, rising Chinese wages and increasing global transportation costs have recently led to some “reshoring” of manufacturing to Mexico, but employment in Mexican export industries has grown only modestly as a result.

The increased integration of North American industries through NAFTA has proved to be a mixed blessing for Mexico.  U.S. booms have helped Mexico grow, but only for temporary periods, and being dependent on the U.S. market has held Mexico back since the U.S. financial crisis of 2008-2009 and the ensuing “Great Recession” and sluggish recovery.  Of course, NAFTA is but one of Mexico’s constraints.  The country’s restrictive monetary and fiscal policies, frequent currency overvaluation, monopolization of key domestic markets and inadequate investments in physical and human capital have also held it back.  The Mexican economy still suffers from a profound dualism, in which only about one-fifth of all non-agricultural, private-sector workers are employed in large, highly productive firms, while the vast majority are employed in small- or medium-sized enterprises with low, stagnant or even falling productivity.  Mexico’s experience under NAFTA certainly argues against portrayals of international trade agreements, such as the proposed Trans-Pacific Partnership, as panaceas for the economic ills of Mexico or any other country.  Whatever one thinks of the “reform” agenda of President Enrique Peña Nieto – which is focused on areas such as energy, education, and telecommunications – these reforms are unlikely to help Mexico break out of its slow growth trap if the foundations of the country’s trade and macroeconomic policies remain untouched.

*Dr. Blecker is a professor of economics at American University.

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