Argentine Debt and the U.S. Dollar

By Leslie Elliott Armijo

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

Multiple economic and political challenges have called into question the future status of the U.S. dollar as the world’s dominant reserve currency, but backlash from Argentina’s recent spat with the United States over defaulted bonds appears to be fueling interest in reforms that may have beneficial implications.  According to the IMF, some 61 percent of the world’s known foreign exchange reserves held by central banks around the world remain in low-yielding dollar-denominated assets, mainly U.S. Treasury bonds.  The United Nations Conference on Trade and Development (UNCTAD), China, and heavyweights in the Global South, including Brazil, are calling for international trade agreements that would give emerging economies “policy space” – allowing national governments to impose capital controls, fund exports, subsidize local industry, and keep financial services national.  Private U.S. banks, however, claim that continued U.S. dominance of world capital markets – a crucial pillar of continued reserve currency status – requires ever more open trade in financial services.  The BRICS complain about the U.S. government’s “exorbitant privilege” as the reserve currency country, with some of the sharpest complaints coming from joint statements by Brazil, Russia, India, China and South Africa. Chinese officials, though, worried about their own large dollar investments and ambivalent about the implications of renminbi internationalization, more than once have pulled the group toward a softer tone.

Argentina’s ongoing sovereign debt negotiations provide a different window onto the dollar’s reserve currency status.  Like most countries, Argentina has held a large chunk of its government’s savings in the U.S. and hired private U.S. financial institutions as its international bankers.  Today it is trying to extricate itself from U.S. markets and do its saving and financial intermediation elsewhere. Iran and Russia are doing the same, but Argentina has no foreign policy quarrel with the Obama Administration – and is not subject to U.S. financial sanctions over nuclear or military adventurism.  Buenos Aires is among those who chafe at U.S. power through the dollar, but it is primarily motivated by the U.S. Supreme Court’s decision in July to let stand a lower court judgment in favor of investors holding bonds from Argentina’s $82 billion sovereign debt default in December 2001.  Although 92 percent of the original bondholders accepted the Argentine government’s restructured (lower value) bonds in 2005 and 2010, New York Federal District Court Judge Thomas P. Griesa ruled that Argentina’s failure to settle with the holdouts means that any U.S. financial institutions, or their international affiliates, that intermediate funds enabling Argentina to stay current on payments to the majority will themselves be in contempt of court.  This has sent Argentina into “technical default.” Argentina is suing the U.S. in the International Court of Justice (whose jurisdiction the U.S. refuses to recognize) and in the court of global public opinion – pushing, for example, a recent proposal for global financial reform before the U.N. General Assembly. It has also welcomed an $11 billion currency swap agreement with China, and Chinese state banks have since pledged $6.8 billion in new infrastructure loans.  Some observers speculate that the very first loan of the New Development Bank, newly organized by the BRICS countries, could go to Argentina.

The Argentine bond case harms the perceived fairness and credibility of U.S. financial markets and, by extension, the strength of the U.S. dollar because the recent legal judgments seem capricious to many.  Senior figures at the IMF have long supported the routine inclusion in all international sovereign bond issues of a so-called “collective action clause,” which would make any restructuring accepted by two-thirds of bondholders binding on all.  The European Union already has ruled that sovereign bonds issued within the EU, including many for troubled Eastern or Southern European governments, must contain such clauses.  Moreover, the International Capital Markets Association, representing more than 400 of the world’s largest private investment institutions, has just issued a position paper endorsing obligatory collective action clauses, placing it on the same side of this issue as non-governmental organizations advocating financial architecture reform such as the New Rules for Global Finance and the Jubilee Debt Campaign.  This would give taxpayers in emerging economies – the ultimate backstop of the creditworthiness of their governments – the same bankruptcy rights as firms and households.  It is not in the interest of Latin American and other emerging economies for U.S. currency and financial dominance to end anytime soon – a tripolar reserve currency system based on the dollar, euro, and reniminbi does not yet appear able to sustain the worldwide growth and prosperity of recent decades and may in fact entail significant risks – but fairer rules for sovereign financing would benefit everyone.

* Leslie Elliott Armijo is a Visiting Scholar at Portland State University and a Research Fellow at CLALS.  She has just published The Financial Statecraft of Emerging Powers: Shield and Sword in Asia and Latin America (London: Palgrave, 2014).

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.

Nicaragua’s Canal: Great Leap (of Faith) Forward?

By CLALS Staff

Mike and Karen / Flickr / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

Mike and Karen / Flickr / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

The Nicaraguan government and a Chinese telecom tycoon took a big step on Monday toward the country’s long-held dream of having its own canal, but their prediction of supertanker traffic starting as soon as 2020 seems a bit far-fetched.  The project will cost $40 billion and, according to government officials, will create 50,000 jobs immediately, 1 million jobs over the life of the project, and will help lift another 400,000 people out of poverty.  President Daniel Ortega’s supporters claim the economy – currently projected to grow at 4.5 percent a year until 2020 without the project – will grow as much as 15 percent a year with it. The Chinese company, HKND, will enjoy a 100-year lease on the canal, with 1 percent of it reverting back to Nicaragua each year.  The proposed route for the canal is 278 kilometers long – about three times longer than the Panama Canal – and will be deep and wide enough to handle ships much larger than the “New Panamax” vessels.  Officials say the canal would “complement” the Panama waterway, which they say will be overcapacity even after its current expansion, and will save shippers some 800 miles on their way to the U.S. east coast.

Opposition from some politicians and environmentalists has been strong.  According to media reports, Nicaragua’s Supreme Council for Private Enterprise (COSEP) and other business organizations are generally positive but skeptical, with one leader calling Monday’s press conference “just an initial flow of information.”  Congressman Eliseo Núñez of the Independent Liberal Party (PLI), however, has been widely quoted as calling Monday’s announcement a “propaganda game” and blamed the media for generating “false hopes for the Nicaraguan people.”  Former Vice President Sergio Ramírez says that handing over national territory for development is a violation of the country’s sovereignty, and other critics claim the project violates 32 provisions of the Constitution.  Concerns about damage to Lake Nicaragua, an important source of fresh water that is already polluted, remain. Chinese investor Wang Jing told the press that avoiding environmentally sensitive areas was a major factor in determining the route, and he has promised that a full environmental impact study will be conducted before construction starts.  Opponents of the project doubt he will make the report public.

Ortega’s statement last year that a Nicaraguan canal “will bring wellbeing, prosperity, and happiness to the Nicaraguan people” may well be right – if the project gets off the ground and so many jobs are created.  However romantic that vision is, construction is still far from certain to begin this December, as claimed, or even within the next year or so.  Wang says that he has lined up “first-class investors,” but none has been identified yet.  In addition, criticism of his business record – opponents say his telecom company is poorly run – has hurt his credibility. And accusations that he’s a stalking horse for the Chinese government, which he says has had “no involvement,” will be difficult to dispel in view of Beijing’s other interests in the region and in shipping.  Equally troubling, as the ongoing expansion in Panama has shown, the shadow that corruption and inefficiency cast over any major project tempers optimism and argues against premature celebration.

Building State Capacity in Brazil

By Katherine Bersch, Sérgio Praça, and Matthew M. Taylor*

Photo Credit: Metrix X / Foter / Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

Photo Credit: Metrix X / Foter / Creative Commons Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0)

As the World Cup fades out and Brazilians turn their focus to the October elections, public debate will shift back to economic growth, social services, corruption, and – central to them all – the role of the state.  Is the federal government too big, inefficient and meddlesome, as the opposition argues, or does it need to be strengthened to play a leading role in Brazil’s state capitalist economy, as the incumbent Workers Party has sought?  In a recent paper (click here for draft), based on publicly available data of about 326,000 civil servants working within the 95 most important federal agencies in Brazil, we found a very diverse federal government, with agencies distributed widely on both capacity and autonomy.

Our findings empirically confirm a long literature that highlights the coexistence of so-called “islands of excellence,” with high capacity and high autonomy, alongside low-capacity, low-autonomy laggards.  “Islands of excellence” include Brazil’s Foreign Ministry (Itamaraty), the Central Bank, the Finance Ministry, the Justice Ministry, and the relatively young Comptroller General’s Office (CGU), created in 2001.  Laggards include almost all of the infrastructure agencies, as well as the Ministry of Sports, perhaps helping to explain the recent World Cup construction snafus.  Also interesting are the agencies with high capacity and low autonomy (such as the Federal Highway Police, which most state governors seek to empower and control within their own states), as well as agencies with low capacity and high autonomy, which few politicians seek to control (such as the Public Defenders Office).

We found solid evidence that agency corruption – one of the driving forces behind last year’s political angst and popular protests – is correlated with lower capacity and lower autonomy.  This finding could help frame debate in the upcoming campaigns and beyond: the keys to reducing corruption are to build agencies’ capacity and increase their autonomy from political partisans.  The debate over the role of the state has been ongoing since the return to democracy in the 1980s.  No matter who wins the October elections, the expansion of this data set and measurement effort will provide useful empirical data to more realistically evaluate the evolving performance of the Brazilian state, as well as to recognize the enormous differences and best practices within that state. 

*Katherine Bersch is a doctoral candidate at the University of Texas at Austin.  Sérgio Praça teaches Public Policy at the Federal University of the ABC in São Paulo.  Matthew Taylor, a regular contributor to AULABLOG, teaches at American University.

El Salvador’s Former Guerrilla – and New Commander in Chief

By Héctor Silva Ávalos

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Salvadoran President Salvador Sanchez Ceren with Secretary of State John Kerry during his visit to Washington, D.C. [State Department photo/ Public Domain]

Twenty-two years after participating in the signing ceremony of the UN-brokered peace accord that ended El Salvador’s civil war, Salvador Sánchez Cerén, one of the FMLN’s top guerrilla commanders, was sworn-in as president last Sunday.  The political reforms mandated by the Chapultapec agreement launched the country onto a sometimes tumultuous path toward a new democratic landscape that, at least on paper, included the alternation of power: for 20 years the ARENA party, representing the hard-right, ruled the country; in 2009, moderate Mauricio Funes, a popular TV journalist, and the FMLN established an alliance that took them to the Presidential Palace.  Through the prism of Sánchez Cerén’s recent victory, Funes’s was a transitional government.  El Salvador now begins its first period under the rule of the former guerrilla party that fought an insurrectional war against the allies of Ronald Reagan´s Washington during the last years of the Cold War.

Sánchez Cerén and the FMLN’s challenges are many – a stagnant economy; a private sector not used to a political system that doesn’t respond resolutely to its economic interests; a dysfunctional fiscal system; and one of the worst security situations in the world – with 14 homicides a day, growing gangs, and a reign of impunity inherited from the war years and perpetuated by organized crime’s success infiltrating state and political institutions.

The new leadership will also have to deal with the interests of El Salvador’s most powerful neighbor and ally, the United States.  The Obama administration sent a third-level delegation to Sánchez Cerén’s inauguration, and Secretary of State John Kerry did receive him in Washington before that.  Among the first items on the bilateral agenda is El Salvador’s access to funds in a second compact with the Millennium Challenge Corporation (MCC), a $400 million program aimed at bringing fresh money to the underdeveloped and poor coastal areas.  The program is on hold because MCC is not satisfied with the country’s Anti-Money Laundering and Asset Law and because San Salvador has not yet caved to pressure from the U.S. Trade Representative to buy agricultural products – mainly seeds – within the CAFTA region, which would favor U.S. producers.  Washington’s reluctance to work with FMLN officers in law enforcement and security issues is another obstacle.

So far, Sánchez Cerén and his cabinet have tried to play the U.S. relationship smart.  But managing ties is not going to be a walk in the park.  Despite public winks and carefully worded statements, neither side really trusts the other.  But the bilateral connection is important to both.  Roughly one third of all Salvadorans live in the United States, and, in the last several decades, Washington has appreciated El Salvador’s importance in a region where it is losing influence.  The new government has sent a number of signals to Washington by visiting the State Department, engaging in most of the Treasury’s and USTR’s conditions on the MCC compact and launching an early dialogue with the international financial institutions.  But Sánchez Cerén has made it clear that he will also heed El Salvador’s natural allies, albeit for practical rather than ideological reasons.  Just this week, El Salvador requested formal acceptance to Petrocaribe, the Venezuelan economic and financial aid program.  Dealing with violence, insecurity and financial problems will require fresh resources that the government will welcome wherever their origin.  But it also seems possible that the new commander in chief´s patience with Washington’s style of diplomacy – such as pressure tactics to buy American agricultural goods – could be much shorter than that of his predecessors.  

Trans-Pacific Partnership: A Framework for U.S.-Latin America Relations?

By Eric Hershberg


President Obama’s desire to move forward with the Trans-Pacific Partnership (TPP) appears likely to founder amidst Congressional resistance to granting him “fast-track” authority, but it does signal a noteworthy initiative by an administration eager to grow trade relations with some Latin American countries.  Originally formed by Chile, New Zealand, Brunei and Singapore in 2006, TPP is currently negotiating the accession of five new members, including the United States and Peru.  Mexico, Colombia, Costa Rica, Panama, Canada, and Japan are also considering joining.  U.S. Undersecretary for International Trade Francisco Sanchez said last year that agreement on a framework for the United States to join TPP represents “a landmark accomplishment because it contains all of the elements of a modern trade accord.”  It eliminates all tariff and non-tariff trade barriers; takes a regional approach to promote development of production and supply chains; and eases regulatory red tape.  The White House’s senior official responsible for Latin America has also emphasized the importance of the Partnership.

The Administration for the most part has tried to sell the pact as a domestic economic issue – the argument being that more trade and harmonized regulations translate into more jobs – or as integral to a strategic focus on strengthening economic ties to the dynamic economies of Asia, rather than as a policy that has the potential to redefine economic relations with Latin America.  But lobbying on Capitol Hill has so far been ineffective, and Obama’s own Democratic Party has denied him the “fast-track authority” needed for an effective negotiation.  The Administration’s diplomatic strategy has not progressed smoothly either.  During Obama’s recent four-nation swing through Asia, he and Japanese Prime Minister Abe failed to sign an agreement widely seen as crucial for moving ahead with TPP.  Negotiators from all 12 TPP countries met in Vietnam last week, and – despite claims of progress – press reports generally suggest a gloomy prognosis for progress soon.

President Obama has made much of his “pivot” to Asia, and the push for TPP situates Latin America relations in Washington’s wider foreign policy agenda.  The emphasis on the TPP signals that liberalizing trade remains the core principle guiding U.S. thinking about economic relations in the hemisphere, in effect continuing a paradigm that has reigned for decades and that is embodied by proposals such as the now-abandoned Free Trade Area of the Americas.  Unable to secure broad South American buy-in for that U.S.-minted vision for economic cooperation, the administration seems to have settled on trying to work with a “coalition of the willing” comprised of Chile, Colombia, Mexico and Peru.  For governments elsewhere in the region, however, the not-so-particularly-new approach has elicited scant enthusiasm.  One could imagine ambitious proposals from Washington for hemispheric cooperation around energy, climate, infrastructure, technological innovation or even, eventually, labor market integration. But that would require visionary leadership, a commodity that is in strikingly short supply nowadays in the U.S. capital.  Rather than leading the articulation of a novel, shared agenda for a 21st century economic transformation of the Americas, Washington has chosen for now to repackage the last century’s prioritization of trade.

Mujica’s Liberal Experiment: Model for the Latin American Left?

By Robert Albro

President José Mujica on stage with SIS Dean James Goldgeier

President José Mujica on stage with SIS Dean James Goldgeier

Uruguayan President José “Pepe” Mujica, whose recent trip to Washington included a stop at American University, is doubtless Latin America’s most unconventional president.  A former leftist guerrilla who spent 14 years in prison, Mujica gives away 90 percent of his salary, refuses to live in the presidential mansion, grows chrysanthemums, and has twice been nominated for the Nobel Peace Prize.  He was elected in 2009 as candidate of the center-left Frente Amplio, and his accomplishments have transformed him into an international figure – and turned Uruguay into an intriguing experiment in social liberalism.  He has avoided the populist tendencies and overt anti-Americanism of other Latin American leftists, while promoting programs of social inclusion alongside a pro-business economic agenda.  Under Mujica, Uruguay has enacted an affirmative action law, legalized abortion in the first trimester, and legalized gay marriage. Most discussed has been his administration’s controversial launch this year of a legal government-licensed and -regulated marijuana market.

Mujica is notably less popular at home than abroad, however.  After plunging to 36 percent in late 2012, his approval rating has since hovered around 47 percent.  With national elections (in which he cannot run) looming in October, a poll last month showed the Frente Amplio losing significant ground to the opposition.  Mujica has consistently dismissed the polls.  He went ahead with legalizing pot, for example, despite a September 2013 poll indicating that 63 percent of Uruguayans still did not support the measure.  His asylum offer for up to six Guantanamo detainees, based on humanitarian concerns, has also not been popular, with only 23 percent of Uruguayans approving.  Uruguay ranks among the safest countries in the Americas, with 5.9 homicides per 100,000 people, and yet the perception of insecurity is widespread.  In a 2012 poll 56 percent of Uruguayans still reported crime and violence to be the country’s most pressing problem.  If celebrated by advocates of social liberalism, Mujica’s policy measures often appear out of kilter with popular perceptions and priorities.

Mujica is often cited as offering a potential alternative to the Bolivarian brand of “21st century socialism.”  But, in what is arguably Latin America’s most socially liberal country, the former Marxist has governed as a pragmatist.  Uruguay has a lot going for it, including: a stable banking system, free and secular education, low levels of corruption and social inequality, robust press freedoms, and stable governance with functional political parties.  It is second in South America behind Argentina on International Living’s quality of life index.  It has the third highest GDP per capita – triple that of Ecuador and Bolivia – and under Mujica has sustained stable economic and wage growth, and increased foreign investment in farming, forestry and pulp mills.  However, while he gets points for his international celebrity, austere lifestyle, and colorful persona, Mujica risks alienating the many citizens who care more about unemployment, inflation, crime and insecurity than about the environment, cannabis and gay marriage.  It is not clear whether over time Uruguayans will support Mujica’s particular left-liberal pragmatic brand of governance and whether his is a model embraced by other Latin American leaders. 

Colombian President Santos’s Challenges Now … and Later

By Fulton Armstrong


Colombian polls continue to give President Santos a comfortable margin in a second-round re-election victory, but the gap is closing – and an array of issues plaguing his campaign suggest serious challenges ahead for a second term.  The economy grew 4.3 percent last year, and optimism about future growth is so strong that the central bank is implementing measures to keep inflation under control.  The peace process with the FARC has been tedious – yielding agreements on only two of five main agenda items over 17 months of talks – but the fundamental drivers of the talks, including fatigue on both sides, remain strong.  But a number of political messes are swirling around the President:

  • The Army was caught red-handed spying on Santos’s top advisors in the FARC negotiations, suggesting disloyalty to him as Commander in Chief.  (The intercept center that police last week [6 May] raided was not the Army’s.  It was staffed by contractors reporting to the Centro Democrático, the party of former President Uribe and Santo’s leading rival in the election, Óscar Iván Zuluaga.)
  • Uribe, who in March won a seat in the Colombian Senate, has been a relentless critic and drawn Santos into public spats.  Santos recently called on the former President to “stop causing the country harm” and to stop politicizing the Armed Forces.
  • An agricultural strike launched in late April has revived memories of a nasty confrontation last year and threatens food supplies in the run-up to the election.  Santos has mobilized police and military assets to keep highways open, but a political solution has eluded him.
  • In late April, the courts forced Santos to reinstate Bogotá mayor Gustavo Petro, whom he had removed a month earlier because the nation’s inspector general, an Uribe partisan, found that the mayor’s decision to cancel private garbage-collection contracts did not follow proper procedure.  Santos had gone ahead with the firing over the objections of a unanimous Inter-American Human Rights Commission.
  • Santos’s political message has been off target.  He has made the peace talks his top priority and proclaimed that “the second term will be about peace,” but polls indicate that only 5 percent of voters say the peace process is their top concern.

If the polls are correct, Colombians voting in the first round on May 25 and second round on June 15 feel little enthusiasm for Santos, but even less for Zuluaga and Uribe’s party.  A recent surge in support for former Bogota mayor Enrique Peñalosa suggests, on the other hand, that voters could turn on both candidates.  Behind the numbers is a country eager to consolidate its democracy, maintain stability and – probably – end the 50-year insurgency.  But the red flags – such as the security service’s continued penchant for spying on government officials – are not inconsequential.  Santos, who was Defense Minister during Uribe’s presidency, should have earned the military’s confidence, will have to decide how far to push the military to respect democratically elected civilian leadership.  The farmers’ demands, including relief from low-priced, low-quality imports facilitated by Colombia’s free trade agreements, will also be difficult to satisfy.  A peace deal with the FARC will be an historic achievement, but the political reality is probably that any assistance to demobilized combatants will be minuscule compared to that given to the former paramilitaries – increasing the likelihood that ex-insurgents, like the paramilitaries, will join the bandas criminales (BACRIM) who continue to maraud throughout large swaths of the country.  Santos’s second term, should he win one, will not be easy.

Equal Pay Day in Latin America

By Yazmín A. García Trejo*


For Latin American women, “Equal Pay Day” – observed on April 8 in the United States – would be in mid-May.  The day symbolically marks the time of year that women’s earnings finally catch up to men’s earnings during the previous year.  In the United States women make, on average, 77 cents for every dollar that men do.  Women have made great advances in Latin America, but they still earn 36 percent less than men, according to the International Labor Organization (ILO).  In many countries of the region, the gender gap in education has closed; now women and men have similar levels of education, and the World Bank’s Gender at Work report indicates that women increased labor force participation by 35 percent between 1990 and 2012.  Nonetheless, women have to work an additional four and a half months to catch up with men’s earnings.  According to an AmericasBarometer survey in 2012, this inequality also occurs within families; 54 percent of working women earn less than their partners.

The debate around the pay gap points to individual and institutional factors as the main causes.  For various personal and social reasons, according to “New Century, Old Disparities,” a 2012 co-publication of the Inter-American Development Bank and the World Bank, women tend to gravitate toward occupations with lower pay ascribed to traditional gender roles such as education (teachers) and healthcare (nurses).  Women are also more likely to settle for lower salaries when hired, and work more in part-time jobs due to their dual responsibilities as providers and caretakers of children or elderly parents.  Institutionally, women still experience pay discrimination and have less access to managerial occupations.  Public policies on women in the workplace reinforce the dual role of working women in Latin America.  According to the 2013 Global Gender Gap Report, Latin American and Caribbean women get an average of 14 weeks of maternity leave, but men get paternity leave in only 9 of the 15 countries – and then only for an average of about one week.

The social and political implications of the wage gap are far-reaching.  Women with lower earnings not only are unable to create wealth as men in similar positions can; they cannot secure a retirement plan that provides them and their families security.  Lower wealth, moreover, translates into lower political participation. According to the 2012 AmericasBarometer survey, wealthier people are more likely to vote, are generally more knowledgeable about how government works, feel they understand national politics, tend to participate more on leadership roles at the community level, and are more actively involved in electoral campaigns.  A disadvantage on wealth and longer work hours undermine women’s ability to invest in learning about or participating in politics.  “Equal Pay Day” in Latin America in the next two weeks would mark not just women’s reduced financial clout but an obstacle to their broader contributions to society as well.  With pay inequality, we all lose.

*Yazmín A. García Trejo is a PhD candidate at the University of Connecticut’s Department of Political Science and a Research Fellow at CLALS.

Is Affirmative Action in the U.S. Dead?

By Lázaro Lima*

Photo credit: commonwealth.club / Foter / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

Photo credit: commonwealth.club / Foter / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

The U.S. Supreme Court’s decision two weeks ago to uphold a law that prohibits colleges from considering applicants’ race in the admissions process underscored U.S. conservatives’ power on the issue – but also the forceful vision of Justice Sonia Sotomayor.  In the decision of “Schuette v. Coalition to Defend Affirmative Action,” six out of the nine Justices supported Michigan’s “Proposal 2”; Sotomayor and one other opposed it, and Justice Kagan, who had worked on the case as President Obama’s Solicitor General, recused herself.  Ironically named “Michigan Civil Rights Initiative,” MCRI was passed in a state referendum with the support of 58 percent of Michigan’s voters in 2006.  It outlawed the use of all race considerations in public college admissions, resulting in a decline of 25-30 percent of the minority population at universities and colleges in the state.  The majority argued that “there is no authority in the Constitution of the United States or in this court’s precedents for the judiciary to set aside Michigan laws that commit this policy determination to the voters.”  They cited it as a case of respecting states’ rights and claimed that “it is demeaning to the democratic process to presume that the voters are not capable of deciding an issue of this sensitivity on decent and rational grounds.”

In a 58-page dissent, Justice Sonia Sotomayor made the case against the law, arguing that Michigan schools were within their rights and responsibilities to society to take reasonable steps to encourage minority presence on state university and college campuses.  She plaintively stated the obvious: “The way to stop discrimination on the basis of race is to speak openly and candidly on the subject of race and to apply the Constitution with eyes open to the unfortunate effects of racial discrimination.”  She wrote: “Yet to know the history of our Nation is to understand its long and lamentable record of stymieing the right of racial minorities to participate in the political process. [...] And race matters for reasons that really are only skin deep, that cannot be discussed any other way, and that cannot be wished away.”

The U.S. debate on affirmative action has deep roots and will surely continue.  The Supreme Court decision – and Sotomayor’s candid and necessary assessment of race relations – came over 35 years after the Court in 1978 ordered a University of California medical school to admit a white man who claimed that affirmative action unfairly led to the rejection of his application.  The “Bakke Decision” outlawed racial and gender quotas and delimited “race” to the managerial interests of academic institutions and employers.  Historical accounts of affirmative action policies often trace back to President John F.  Kennedy’s Executive Order 10925 of 1961, which required government contractors to “take affirmative action to ensure that applicants are employed and that employees are treated during employment without regard to their race, creed, color, or national origin.”  President Lyndon Johnson extended these mandates through the Civil Rights Act and with his own executive order.  But it was Sotomayor, decades later, who shined in her statement last month.  When she read her dissent from the bench, for the first time in her five years, her colleagues – who already had made up their minds – were not her intended audience.  Her audience was the democratic commons.

*Lázaro Lima is a professor of Latin American literature and Latino Studies at the University of Richmond, and a CLALS research fellow.

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