Argentina: From Bad to Worse?

By Arturo C. Porzecanski*

Argentina’s new Economy Minister, Silvina Batakis / Government of Argentina / Creative Commons license

Argentina’s mismanagement of fiscal, monetary, and exchange-rate policies – and its business-unfriendly, interventionist policies destructive of investor confidence – have delivered an increasingly unpopular mix of economic stagnation and accelerating inflation. While the government most likely will muddle through until the next national elections in October 2023, there is a non-negligible risk that remaining public confidence could collapse and lead to uncontrolled inflation, deepening recession, social unrest, and even the resignation of President Alberto Fernández.

  • By early 2021, the Argentine economy had already recovered from the 15 percent drop in real GDP caused by the pandemic in the second quarter of 2020. That was a relatively easy feat because the economy was already in a recession; real GDP in the first quarter of 2020 stood 11 percent below that in the fourth quarter of 2017. So far this year, the pace of economic activity has remained below that 2017 peak, and it has started to drop some more, with the latest consensus forecast projecting GDP declines in the second and third quarters, followed by stagnation in the fourth trimester.
  • Inflation has accelerated from a yearly average pace of under 50 percent in 2020 and 2021 to an annualized rate of 85 percent in the first half of this year. This month’s inflation rate may well have three digits once annualized. To slow down inflation, the government has resorted to price controls on staples sold by supermarkets; import and capital controls to prevent the currency from devaluing faster; export quotas on beef, corn, and wheat to keep domestic supplies higher and prices lower; and hefty subsidies to state-owned and private companies that supply electricity, gasoline, natural gas, mass transit, and water and sewer services to consumers. As a result, the headline inflation rate is underestimated by at least 10 percentage points, while the subsidies are keeping the fiscal deficit about 4 percent of GDP wider than otherwise.

By now Argentina wasn’t supposed to be in such lamentable economic shape. Barely four months ago, the government and the International Monetary Fund (IMF) completed negotiations on a $44 billion loan under an Extended Fund Facility (EFF). The country was granted an up-front disbursement of almost $10 billion, plus $4 billion more in late June.

  • The IMF program has three main targets for this year. The first is a modestly narrower fiscal deficit – 2.5 percent of GDP rather than last year’s 3 percent (measured excluding interest payments on the public debt). The second calls for a nearly $6 billion accumulation of central bank net international reserves, which would take the year-end total to over $8 billion. And the third requires a reduction in central bank financing of the government’s budget deficit, to the equivalent of 1 percent of GDP from 3.7 percent in 2021.
  • The program’s rather modest fiscal and monetary objectives are based on optimistic assumptions, however, and its structural reforms fall way short of what is required to spark confidence and a sustainable economic recovery. Populist economic measures – advocated mainly by the Peronist faction led by Vice President Cristina Kirchner – have greatly harmed the country’s business and investment climate.
  • It is an open secret in Argentina that the main purpose of the IMF loan is really to help the government avoid defaulting on the $44 billion the Fund previously loaned (in 2018-19) to President Mauricio Macri’s administration. That loan is scheduled for repayment in full between September 2021 and mid-2024, and the present government had made it plain to the IMF that it had no means to do so absent a reprofiling or a quid pro quo. Therefore, in Argentina, the new IMF loan is widely understood to be a fig leaf over what is an indirect debt rescheduling on an installment plan – and it is characterized as a debt refinancing by the government itself.

Even the mild conditionality attached to the new IMF loan has already proven difficult to meet and has claimed its first significant victim –Economy Minister and Fernández ally Martín Guzmán resigned on July 2. His replacement is Silvina Batakis, a heterodox Peronist economist handpicked by Cristina Kirchner.

  • All indications are that the government missed the IMF targets for end-June, especially once discounting any window dressing, and that, failing to take restrictive fiscal and monetary measures soon, it will miss the goals for the full year. Argentina’s financial markets have been reacting badly. The stock market index has been trailing far behind inflation; the government’s dollar-denominated bonds have plunged to distressed levels, mostly below 25 cents on the dollar; and the Argentine peso, whose value is set artificially by the central bank under a rationing system, trades in parallel (but legal) and black markets at less than half its official value.
  • Social and political tensions are on the rise, largely because wages and pensions are incapable of keeping up with inflation. On July 9, Independence Day celebrations were marred by nationwide protests against the government, though at least they were peaceful. On July 13, farmers staged a one-day strike to complain against punishing taxes, damaging currency controls, and a scarcity of diesel fuel that has hit them during the harvest season. New Economy Minister Batakis will need to walk a fine line between introducing unpopular corrective measures to break the inflation spiral – restrictive fiscal and monetary policies, in particular – and pleasing political masters who seem to be persuaded that a muddling-through scenario of tightening controls and ignoring market realities is still viable. A miscalculation could lead to triple-digit inflation, widespread social unrest, and the early exit of President Alberto Fernández.

July 14, 2022

*Dr. Arturo C. Porzecanski is Research Fellow at American University’s Center for Latin American and Latino Studies, and Global Fellow at the Woodrow Wilson International Center for Scholars.

Costa Rica: The First Months of an Atypical President

By Ilka Treminio*

President Rodrigo Chaves Robles speaking before the Costa Rican Legislative Assembly / Julieth Méndez, Office of the President of Costa Rica / Wikimedia Commons / Creative Commons license

Costa Rica’s new President, in office for less than 90 days, is struggling to establish his credibility and launch his agenda. A political neophyte, Rodrigo Chaves Robles presented himself as the candidate of the recently created Progreso Social Democrático (PSD) party. He had no political career beyond serving as Minister of Finance for six months. He studied economics and was a professional on the staff of the World Bank, where he held senior positions for 27 years.

  • The Costa Rican elections were characterized by several key factors, including the lowest voter participation (56.76 percent) since the country’s return to democracy in 1948; the highest number of political parties (25); and a campaign aggressively focused on allegations of abuse by candidates. Chaves was accused of sexual harassment during his time at the World Bank. His main opponent, José María Figueres of the Partido Liberación Nacional (PLN), was alleged to have participated in various acts of corruption as President in the 1990s. Chaves’s PSD is accused of creating a parallel campaign finance tool that the Tribunal Supremo de Elecciones (TSE) is now investigating.  

Chaves assumed office in May with several immediate challenges. As happened in the 2014 and 2018 elections, the President — who won only 10 of the 57 seats — took office with a parliamentary minority. The strongest party, with 19 congressmen, remains the PLN, and another four parties have members of the Legislative Assembly as well. Of all of them, only the Frente Amplio (FA) is left-of-center; the others are in the center and on the right, which augurs a significant shift of the social and economic models of the country.

  • The Legislative Assembly in May held an historic vote to name Rodrigo Arias as its legislative director — a PLN operator who’d served twice as Minister of the Presidency to his brother, popular ex-President Óscar Arias Sánchez (1986-90 and 2006-10). At the top of the new legislative director’s priorities is a state reform law drafted by a special commission headed by Eliécer Feingzaig, widely known for his anti-state agenda. The commission is expected to draft legislation that will reduce or close public institutions and advocate other policies to diminish government.

Chaves’s style suggests that he wants to even out the competing powers between the Executive and Legislative, although at the risk of showing a propensity for emitting decrees.  

  • His most important measures so far have dealt with economic matters, such as one that made the so-called regla fiscal— a complex budget rule that limits government spending to GDP growth and controls on national debt — more flexible, so that he can pursue programs he ran on. He has been criticized because such flexibility was why he resigned as Finance Minister in the past. Another measure was to double senior government officials’ salaries at a time of austerity and reduced spending.
  • Chaves hasn’t been very effective with the Judiciary either.  In an exchange with the President of the Supreme Court of Justice about a ruling on citizens’ rights to speak out against him, his words prompted the court to admonish him for failing to respect the separation of powers.

President Chaves in his first months has been different from his predecessors. His speeches and actions seem guided more by impulse than the deployment of government strategies, which is odd for a technical expert from the World Bank. That approach might appear attractive to certain sectors of the population, but it entails risks for the country’s institutions by appearing personalistic and critical of established institutional procedures. The leadership of Rodrigo Arias in the legislature can be key for the country’s more conservative and traditional sectors — and undermine Chaves’s agenda.

  • Chaves himself is a conservative, but he is more prone to talk with non-traditional sectors and to listen to them. His unusual Presidential style is provoking expectations that he will perform. He seems to be seen by many Costa Ricans as caring about institutional actors, human rights defenders, and some communications media. Over time, however, he will have to watch out that he does not get blamed by disgruntled sectors of society as the man responsible for their unhappiness. Even if his political opponents push the policies that undermine people’s livelihoods — slow government institutions, economic decline, ineffective pacts between political forces, slow progress for the rights of women, LGBTQI+, immigrants, and others — he is the one who would pay the biggest price.

July 6, 2022

Ilka Treminio Sánchez is the director of La Facultad Latinoamericana de Ciencias Sociales (FLACSO) in Costa Rica, and a lecturer and researcher at the University of Costa Rica, specializing in electoral processes, political behavior, presidential reelection, and Latin American comparative politics.

What to Make of Trends in Latin American Presidential Elections?

By Eric Hershberg*

No Left Turn road sign/ Frisky007 / Wikimedia Commons / Creative Commons license

The results of the June 19 presidential election in Colombia will surely fuel claims about a putative shift to the left in Latin American politics, but as with the so-called “pink tide” that reached a crest during the 2000s, that is probably not the most significant takeaway from the triumphs of Gustavo Petro and other left-leaning candidates in Latin America. To be sure, over the course of the past year and a half the pandemic-plagued region has witnessed left victories at the polls in Peru, Bolivia, Chile, Honduras, and now Colombia. But dig deeper and there’s much more to be said.

Scholars, journalists, and pundits are always inclined to think of political trends in Left-Right terms, reflecting the competing political options in Latin America over the past 30 years as elsewhere. When “neo-liberal” governments promoted market-oriented reforms in the 1990s, and were frequently re-elected after restoring macro-economic stability to economies buffeted by inflation and debt, it was seen as a rejection of the statist development models associated with the Latin American left and of “populism.” When the “pink tide” governments abandoned some neoliberal tenets and opted toward more redistributive policies in the 2000s, the notion was that the pendulum had swung in the opposite direction, and when inequality diminished modestly amidst a commodity boom, a number of presidents secured re-election. Then, briefly, one heard that a new phase carrying to office leaders such as Macri, Lacalle, Bolsonaro, Duque, Moreno/Lasso, Bukele, and others signaled the triumph of conservatism in the region.

These conclusions ignore, however, that Latin American public opinion has overall been remarkably stable on citizen self-placement along the left‑right divide, with only a modest, and non-linear, shift toward the left. More significantly, the driving logic of Latin American politics since the advance of democracy in the 1980s has been to punish leaders who have presided over a decline in wellbeing, and to reward presidents who are perceived to have delivered material or symbolic rewards to large segments of the population.

  • That is what drove re-elections of leaders who a) conquered inflation during the 1990s (Cardoso, Menem, Fujimori), or b) increased incomes during the commodity boom of the early 21st century, including the Workers’ Party in Brazil, the Kirchners in Argentina, Chávez in Venezuela, the Frente Amplio in Uruguay, Correa in Ecuador, and Morales in Bolivia. The dynamic has undercut both sides. Neoliberals suffered in the late ‘90s and early 2000s, but “pink tide” governments lost power a few years ago where economic stagnation combined with growing popular disgust at corruption. Countries such as Chile and Colombia were swept by protests prior to the pandemic, and alienation from those in power intensified with the impacts of the pandemic.
  • Leaders and governments typically categorized as “left” are by no means a monolith. Max Cameron and I argued 15 years ago the “pink tide” was a series of “Left Turns,” plural. Chavismo shared little with Uruguay’s Frente Amplio, and the Bachelet governments in a highly institutionalized political system such as Chile’s were never plausibly going to resemble those of Rafael Correa in institutionally hollowed-out Ecuador. Today, the Castillo administration emerges from a fractured party system that makes Peruvian politics extraordinarily different than those of Argentina or Brazil, with their enduring Peronist and Workers’ Party institutions.

In the era of Trump and Bolsonaro, when many political actors across the ideological spectrum are running roughshod over basic norms of democratic governance, it is hugely important that failed rightwing candidates in Honduras, Chile, and Colombia have promptly recognized the victories of Xiomara Castro, Gabriel Boric, and now Gustavo Petro. It is encouraging to see instances where electoral counts were clean and even the most unlikely democrats behaved in ways consistent with democratic rule. This opens space for guarded optimism regarding prospects for Brazil, which is holding elections in November, and even conceivably could bolster the cause of electoral democracy in the United States two years later.

  • In Honduras, Chile and Colombia, the margins were not as close as anticipated, in part because of high turnout (particularly among increasingly mobilized youth, who do seem often to tilt toward the left) and because of painstaking efforts by social justice advocates to mobilize their constituencies politically. Pressures from Latin America’s left, which borrowing political theorist Benjamin Arditti’s account can be understood to represent those sectors of the polity that aim to advance the ideals of the French Revolution –drove important cycles of political protest before the pandemic hit and were sustained over the course of the electoral campaigns of the past year. That poses both opportunities and a real challenge for governments in places like Honduras, Chile, and Colombia, which though vastly different in all sorts of ways find themselves with newly elected progressive leaders having to govern amidst tough economic times and restive populations.

June 21, 2022

*Eric Hershberg is Director of the Center for Latin American and Latino Studies and Professor of Government at American University.

Colombia: Inspector General Tipping Scales Against Petro

By Charles H. Roberts*

Secretary General Luis Almagro (second from right) of the Organization of American States (OAS) meets with Colombian Inspector General Margarita Cabello (second from left)/ OAS / Flickr / Creative Commons license

Colombia’s Procuraduría General de la Nación (PGN) – constitutionally barred from intervening in politics – has taken actions during the 2022 election campaign to the detriment of left-of-center candidate Gustavo Petro (Pacto Histórico), undermining its own image and casting a shadow over the second-round vote on Sunday. It has disciplined officials of other parties too, but the pattern of its actions – and inaction – reflect a clear bias against Petro.

  • Last month the PGN, invoking its authorities as the Office of the Inspector General, suspended for three months the mayor of Medellín for tacitly endorsing Petro. That mayor and another were accused of violating Article 60 of the Disciplinary Code, on “breaches related to intervention in politics,” because they publicly indicated support for one of the presidential candidates. The disciplinary actions were taken with no finding of criminal liability by a court of law – a violation of Article 23 of the American Convention on Human Rights (ACHR), according to the consistent case-law of the Inter-American Court of Human Rights.
  • The PGN has failed, however, to take equally decisive action when senior officials who favored Petro’s opponents in the presidential election – Federico “Fico” Gutiérrez (Coalición Equipo por Colombia) and Rodolfo Hernández (Liga de Gobernantes Anticorrupción) – made similar partisan statements. President Iván Duque, Defense Minister Diego Molano, and Army chief Gen. Eduardo Zapateiro all spoke out explicitly – and in violation of constitutional and statutory prohibitions – against positions taken by Petro and his campaign. (The Law on Electoral Guarantees of 2005 contains specific prohibitions on the President and Vice President’s activities, and the Constitution expressly prohibits members of the military and oversight agencies like the PGN “from taking part … in political controversies.”) Legal experts and civil rights activists, long concerned about PGN politicization, cite such actions as compromising its neutrality.

The failure of Procuradora General Margarita Cabello to refrain from involvement in political matters is part of a broader trend in the Duque Administration to weaken the rule of law and judicial independence. She was Minister of Justice under Duque until January 2021 and was nominated by him for her current job. Critics say she has violated the very same principle – that public servants should remain above politics – that she claims she is enforcing by suspending officials she believes cross the line. When Duque attacked Petro, she did not even reprimand him despite precedent: In the 1970 elections, then-IG Mario Aramburo chastised President Carlos Lleras Restrepo for intervening in the election debate.

  • Cabello’s actions ignore decisions by the Inter-American Court of Human Rights. When then-IG Alejandro Ordóñez removed Gustavo Petro as Bogotá mayor in 2013-2014, the Court found that the action violated Petro’s political rights and those of the voters of Bogotá who had elected him by acting without “sentencing by a competent court in criminal proceedings.” The Inter-American Commission on Human Rights issued a precautionary measure that Colombia implemented, restoring Petro to office just one month after his removal. In its July 2020 final judgment in the Petro case, the Court told Colombia to modify its regime to bring it into compliance with the ACHR, and gave it until October 2021 to do so. (Colombia ratified the ACHR in 1973 and integrated it into its 1991 Constitution.) The Court, whose position is that the PGN is an administrative organ and therefore cannot exercise judicial powers, in a November 2021 resolution found Colombia out of compliance with its judgment. The government has yet to comply. 

IG Cabello’s recent actions raise serious doubts about the Procuraduría’s neutrality and has prompted renewed debate about reform and the need to protect democracy and the rule of law. In a recent interview after the latest suspensions, Gustavo Gallón, director of the Comisión Colombiana de Juristas, highlighted the need to “oversee the overseer.” Other long-time observers, such as Rodrigo Uprimny of Dejusticia, have called for shutting the office down, noting that its functions are all redundant with other oversight institutions – or, at a minimum, for it to comply with the Court’s decision. 

  • Candidate Petro advocates placing the Procuraduría under the Office of the Attorney General (Fiscalía). His opponent, Rodolfo Hernández, is running on an anti-corruption platform, but he hasn’t made public remarks on the PGN’s recent actions. Given the PGN’s tilt against Petro and apparent willingness to wade into political waters, however, an Hernández presidency may well seek to harness the office to spearhead his promised anti-corruption drive. No matter who wins the election, Colombian democracy is weakened when the PGN, a unique institution with unique powers, turns its back on Colombia’s commitments to democracy and human rights. 

June 17, 2022

*Charles H. Roberts is a lawyer and translator based in Washington, D.C. He is the author of Top-down Accountability vs. Electoral Democracy: The Case of Colombia’s Inspector General (and in Spanish), published by the Accountability Research Center in March 2021.

Latin America: Lessons Learned from Abortion Rights Struggle

by Brenda Werth and Katherine Zien*

A protestor tying green scarves to a fence at a pro-abortion demonstration in Argentina / Fotomovimiento / Flickr / Creative Commons license

With the U.S. Supreme Court apparently poised to strike down Roe v. Wade, U.S. supporters of women’s reproductive rights could learn from the strategies of their Latin American counterparts, who have made important advances even if they still feel they must struggle for implementation. The decision will put the United States out of step with global progress being made in sexual and reproductive rights, according to the Secretary General of Amnesty International. In the last 25 years, around 50 countries have increased legal access to abortion. Latin America, a traditionally Catholic region, has been at the forefront of decriminalizing and legalizing abortion rights.

  • In 2012, Uruguay legalized abortion of fetuses up to 12 weeks. In January 2020, Argentina became the largest Latin American nation to legalize abortion, allowing pregnancies to be terminated up to 14 weeks. Mexico followed suit and decriminalized abortion in September 2021, and in February 2022, Colombia decriminalized abortion up to 24 weeks. Chile, if its new Constitution is approved, will be the first country in the world to make abortion a constitutional right. While abortion rights are more limited in 10 countries in Latin America and the Caribbean, these represent major strides forward.

The progress in Latin America comes on the heels of a revolution in gender and sexuality rights across the region catalyzed by feminist mobilization against gender violence and femicide in movements and street protests such as NiUnaMenos (Argentina), Un Violador en tu camino (Chile), and NiUnaMás (México). Abortion rights – framed as crucial to protecting reproductive health – were integrated into a preexisting human rights framework. Feminist groups have argued that the prohibition of access to legal and safe abortion is an act of gender violence.

  • The path toward legalization is clearest in Argentina, where a human rights culture created initially by groups like Madres de Plaza de Mayo during the last dictatorship (1976-83) led to feminist movements such as NiUnaMenos and the Marea verde (Green Tide), symbolized by the green handkerchiefs donned by supporters of the Campaign for Legal, Safe and Free Abortion. The Campaign also used inclusive language to expand the definition of those entitled to abortion rights to include anyone capable of gestation, including gender non-conforming individuals. The struggle has also been intergenerational (Barbara Sutton, “Intergenerational Encounters”). Sometimes referred to as the “revolución de las hijas” or “las pibitas,” a young generation including high schoolers took to the streets and transformed public spaces and social perceptions of abortion rights in Argentina.
  • Abortion rights in Argentina thus intersected with progressive legislation on gender and sexuality rights. In 2020, President Alberto Fernández, who described abortion as “a matter of public health” during his campaign, introduced the bill in Congress legalizing abortion. His predecessor, conservative President Mauricio Macri (2015‑2019), had allowed the bill to be debated in Congress, and before him, left-wing President Cristina Fernández de Kirchner (2007‑2015) supported progressive legislation on sexual and gender rights even though she refused to support abortion reform because of personal views.

The “doble militancia” (Debora Lopreite, “The Long Road”) – the popular mobilizations and political coalition-building pushing for reproductive rights as issues of human rights, public health, and social justice – contributed to Argentina’s landmark law. Activists continue to be vigilant, however, as abortion access has been hindered by opponents and the high percentage of doctors, particularly in the northwest provinces, who declare themselves “conscientious objectors.”

  • Argentina’s path has been very different from that of the United States. The right to abortion in the United States was nested within the umbrella of privacy rights and became a federal policy via the judiciary rather than the legislature. U.S. activists have not strategically framed it as a human right firmly in the context of public health and social justice. To achieve lasting change, they could shift discourse away from abortion as a single issue, an anti-religious position, or an abstract philosophical debate, and situate it firmly in the context of public health and social justice. Grassroots social mobilization across generations, strategic coalition-building, and transversal relationships between activists and policymakers don’t guarantee irreversible change, but they are more reliable drivers of change than the shifting political winds affecting Supreme Court justices.

June 9, 2022

* Brenda Werth is an Associate Professor of Latin American Studies and Spanish at American University. Katherine Zien is an Associate Professor of Drama and Theater at McGill University

South America: Future Global Green Hydrogen Hub?

by Thomas Andrew O’Keefe*

An oil rig off the coast of Brazil / Redacción EFEverde / Creative Commons license

A handful of South American countries have long produced hydrogen using fossil fuels for their domestic hydrocarbon, steel, and petrochemical industries, but early efforts by Brazil, Chile and Uruguay to shift to renewable and carbon-free energy sources, along with the emergence of new lower-cost technologies, could position the continent as a leading global green hydrogen supplier.

  • Hydrogen is the most abundant element in the universe and can be produced from water utilizing the electrolysis process whereby a direct current is applied to separate hydrogen and oxygen molecules. The hydrogen gas that is produced can be either burned – for heat or to generate electricity – or stored in fuel cells that produce electricity to power transportation.
  • South America has been producing hydrogen for several decades. Many countries on the continent are already important hydrogen producers for the steel and petrochemical industries, including the manufacture of fertilizers, as well as for refining heavy-crude petroleum products. The electricity to facilitate electrolysis in South America currently relies exclusively on fossil fuels. This explains why hydrogen production is today a major source of greenhouse emissions in some South American countries.
  • Countries with substantial hydrocarbon reserves such as Argentina, Bolivia, Brazil, Colombia, and Peru also have the potential to utilize natural gas to produce so-called “blue” hydrogen, which incorporates carbon-capture and storage technology. The technologies to ensure the elimination of all greenhouse house emissions associated with the extraction, transport, and use of natural gas have yet to be developed.

Three South American countries have a jump on producing “green” hydrogen, made exclusively with renewable and carbon-free energy resources such as geothermal, hydro, solar, wind, and even nuclear power for electrolysis.

  • In 2020 the outgoing administration of Sebastián Piñera of Chile launched an ambitious plan to convert the country into a major global exporter of green hydrogen by 2030. An Australian company at the end of 2021 announced plans to invest $8.2 billion to build a major export-oriented green hydrogen complex in the southern Argentine province of Rio Negro. A pilot project in Argentina has been producing small amounts of electrolytic hydrogen from wind power since 2008.
  • Chile and Uruguay are best positioned to attract green hydrogen investment projects, given their long-term national energy plans forged through extensive stakeholder consensus-building efforts as well as stable economic policies and predictable regulatory frameworks. These factors contributed to putting both countries at the forefront of the continent’s transition to a greener energy matrix. The Santiago metro system, for example, is now powered exclusively by renewable energy, while Uruguay is often ranked behind Denmark as a global leader in terms of wind-generated electricity.

Converting South America into a major global green hydrogen exporter will require new and less costly technologies to produce, transport, and consume it. Ideally, South American governments should encourage regional research and development of new technologies to reduce the current high costs to produce green hydrogen, perhaps with funding from the Development Bank of Latin America (CAF), which is now based in Montevideo, or the Fund for the Structural Convergence of the MERCOSUR (FOCIM). Regional economic integration schemes such as the Andean Community and MERCOSUR can also facilitate the creation of new supply chains for manufacturing competitively priced inputs such as fuel cells and electrolysers to produce hydrogen from water. Another missing piece is a low-cost way to overcome hydrogen’s comparatively low energy density. At present you need about three times more space to store hydrogen to make the equivalent level of energy sourced from natural gas. Retrofitting existing pipeline networks and devising innovative ways to more cheaply transport hydrogen over long distances, is also necessary.

  • South American countries would be wise to decarbonize domestic transport and industry through wide-spread use of green hydrogen before making the leap to global exports. Serving global markets sustainably will also require the deployment of low-carbon transport options to replace the current fleet of long-distance ships that rely on highly polluting diesel. Utilizing liquid hydrogen or ammonia and even methanol produced with green hydrogen to power ocean-going vessels may provide the solution.

June 3, 2022

* Thomas Andrew O’Keefe is President of Mercosur Consulting Group, Ltd. and a lecturer with the International Relations Program at Stanford University.

Argentina: Is China Nostalgic for the Macri Era?

by Patricio Giusto*

Argentine President Alberto Fernández and Chinese President Xi Jinping at the Great Hall of the People in Beijing, China / Casa Rosada / Wikimedia Commons / Creative Commons license

Argentina’s return to Peronism with the victory of President Alberto Fernández and Cristina Kirchner in 2019 has not led to a rapprochement between Argentina and China as widely predicted. After the first half of the Fernández’s presidency, relations with China are riddled with unfulfilled promises, political and bureaucratic obstacles, detrimental economic measures, and other challenges. To some extent, paradoxically, Beijing might be missing center-right President Mauricio Macri’s times (2015-2019).

Fernández and other key figures of the Argentinean government frequently refer to the country’s “deep friendship” and “strategic relationship” with China. Under Fernández, Argentina has just joined the Belt and Road Initiative (BRI) and, according to the official line, bilateral links are very strong. Of China’s top priorities for the relationship, however, almost nothing has been accomplished with Fernández. Fierce political struggles within the Fernández coalition have contributed to an erratic foreign policy that lacks of a comprehensive strategy on China. Mounting U.S. pressure on certain critical issues has also been a factor.

  • When Fernández traveled to Beijing to sign the BRI agreement three months ago, the two governments announced more than $13 billion in infrastructure investments, but they have released no details on projects or their financing.

The energy sector has been particularly messy for China with Fernández in charge.

  • An $8 billion nuclear power project with Hualong One technology has stalled as Argentina tries to renegotiate the financial conditions during a severe economic crisis – and faces tough diplomatic pressure from Washington to abandon the project. The Santa Cruz hydroelectric dams, the largest Chinese investment project in Argentina, have suffered constant economic restraints and union strikes for two years. An Argentinian financial default has provoked the total interruption of Chinese finance. PowerChina filed an official complaint about handling of its bid to build a Chihuidos hydroelectric dam in Neuquén province. The Belgrano II thermal power plant project with China’s CNTIC – financed by the U.S. EXIM Bank – has mysteriously never started. The oil company Sinopec, weary of economic volatility and strikes, sold its assets in Argentina in early 2020, affecting its operations.

The Argentinian government has slowed other forms of cooperation, apparently for security reasons, as well.

  • Buenos Aires announced, for example, that it alone would fund the Antarctic Logistics Pole project in Tierra del Fuego province that it had discussed with China. It has not acted on the long-awaited purchase of Chinese J-17 fighter jets and wheeled armored vehicles because of financial constraints and U.S. pressure, according to Ministry of Defense sources.
  • On another flagship project, management the Paraná-Paraguay waterway, the country’s most strategic fluvial corridor, Fernández decided to nationalize part of the operation and determined that only a Belgian company was a qualified partner.
  • In the agricultural sector, Fernández has also dismissed a Chinese investment project estimated to be worth $3.7 billion to develop the pork industry through the installation of mega-factories in different parts of the country.

Some Fernández policies have hurt Argentina’s interests directly as well. He suspended beef exports to China last year – supposedly to curb domestic inflation – but inflation continued to rise while Argentina lost hundreds of millions of dollars from exports and hurt Chinese buyers’ confidence. The country’s bilateral trade deficit with China reached a record $7.3 billion in 2021, after having decreased to $2 billion a year in Macri’s times.

The repeated friendly rhetoric and gestures between Argentinian and Chinese counterparts do not conceal the fact that the relationship under Fernández has been full of obstacles and frustrations for Beijing. President Macri’s international approach was openly pro-West and he had clear ideological differences with China, but there is no doubt that relations then were much more fluent and fruitful for both Argentina and China.

  • The second half of Alberto Fernández’s term is likely to be similarly plagued, with the critical issues blocking progress unlikely to be resolved. Argentina’s economic situation will almost certainly continue to worsen, depriving it of resources to hold up its side of any deal with China. U.S. pressure will continue being a key factor, aimed at restricting cooperation with China in critical issues for Washington’s agenda, such as telecommunications and defense. On the other hand, the two countries’ desire to find ways to cooperate will remain strong no matter who wins the Argentinian presidency in 2023, and China – if patient enough with the ups and downs of the relationship – will continue to be an irreplaceable partner for Argentina.

June 1, 2022

* Patricio Giusto is executive director of the Sino-Argentinian Observatory, an advisor to the Argentinian National Senate, and a visiting professor at Zhejiang University. He is also a researcher and associate professor at Pontifical Catholic University of Argentina.

U.S.-Guatemala: What does Washington Really Want?

by Ricardo Barrientos*

Guatemalan President Alejandro Giammattei and Attorney General Consuelo Porras / Government of Guatemala / Flickr / Creative Commons license

Central America’s ongoing political, economic, migration, and narcotics-trafficking crises would normally allow a potential ally like Guatemalan President Alejandro Giammattei to wriggle his way into Washington’s good graces, but his repeated efforts to thwart scrutiny of his and his allies’ corruption have been so blatant that the United States can no longer keep turning a blind eye.

  • Daniel Ortega’s Nicaragua is now clearly authoritarian – elected fraudulently, arresting opponents, and openly supporting Russia’s invasion of Ukraine. In El Salvador, Nayib Bukele is increasingly aggressive in his anti-democratic and authoritarian actions, and explicitly defiant of the United States. Honduran Juan Orlando Hernández is in jail, but Xiomara Castro faces the monumental task of rebuilding the state – in the face of doubts, if not opposition, from many in Washington concerned about her supposed leftist views. All this comes against a backdrop of surging migration, massive drug-trafficking, and a hemisphere-wide “great powers competition” with China and some Russian advances in the region. Until recently, Guatemala could have put itself forward as a partner that, while regional problems festered, could – even if not as a friend – help the U.S. pursue its interests.

Nevertheless, Guatemala is now far from the ideal U.S. partner in Central America. In an explicitly defiant action, Giammattei reappointed Consuelo Porras as Attorney General in spite of the U.S. State Department’s inclusion of her on the so-called Engel List, because of her involvement in significant corruption. She has been blocking investigations of corrupt acts and allowed impunity by several individuals, including Giammattei himself. 

  • Giammattei has been unable to give Washington even the minimum image as a credible and reliable ally as his two most recent corrupt predecessors managed to do. Weak from the start, his presidency has been wracked by mismanagement of the pandemic, persistent scandals, and anti-democratic actions. Lacking the popularity levels of Bukele or even Ortega, he has had to purchase political support from tainted sponsors including former military officers accused of committing crimes against humanity and genocide during the civil war; businesspeople accused of tax fraud or illicit electoral campaign financing; and corrupt officials – in return for promises that he preserve the impunity mechanisms that have so effectively protected them in the past. (Neo-Pentecostal groups are also an important part of his base.) For Giammattei, keeping control of the Attorney General’s office was paramount to fulfill that promise.
  • Under Giammattei, moreover, the government is failing in areas of direct interest to Washington, particularly addressing the “root causes” of the migration that ranks high on the U.S. agenda. Men widely suspected of collaborating with the drug cartels occupy high-ranking positions in Congress and government, making Guatemala a highway for drugs heading north. Cartel allies stand to increase their power in elections scheduled for June 2023.

Washington’s frustration with Giammattei is understandable, even though inconsistencies and favoritism in its own Central America policies have contributed to the estrangement. Guatemala’s democracy appears to be in its death throes – full of desperate people eager to risk their lives at the hands of a human-trafficking coyotes. While it remains high season for corruption, the government gives scant attention to public health (with the lowest vaccination rate and highest child malnutrition rate in Central America), and education. For many Guatemalans, the only hope of finding a better life is trying to reach the United States or cooperate with the burgeoning drug cartels.

  • Washington’s pressure on Giammattei (or any Guatemalan president) is long overdue, but it’s unclear whether it is driven by U.S. hubris at his failure to dump a corrupt Attorney General, or whether it represents a strategic shift toward a policy based on democratic values, wisdom, and prudence. Whatever the reason, the Biden Administration doesn’t seem to have learned the lessons of the failed Alliance for Prosperity that he strongly supported as Obama’s Vice President, appealing to Central American leaders to clean up their acts. A passive, laissez faire stand on Guatemala is not the proper way to address complex issues like the cartels, corruption, poverty, violence, and the other “root causes” of migration that Vice President Kamala Harris pledged to combat.
  • The day after Giammattei announced that he would not attend the Summit of the Americas in Los Angeles next month, Washington sent his formal invitation – adding to the confusion about U.S. intentions toward him. Many Guatemalans wonder if the Biden Administration puts issues like migration and drug trafficking before democracy and combatting impunity.

May 25, 2022

Ricardo Barrientos is a senior economist at the Central American Institute for Fiscal Studies (ICEFI).

U.S.-Cuba: Putting the “Sonic Attacks” Myth behind Us?

by Fulton Armstrong and Philip Brenner*

The U.S. Embassy in Havana, Cuba / Ajay Suresh / Wikimedia Commons / Creative Commons license

The Biden Administration’s recent announcement that it is resuming “limited” consular functions at the U.S. Embassy in Havana suggests that it’s prepared to put the “sonic attacks” meme – President Donald Trump’s stated rationale for closing the Consulate in 2017 – behind it, but Washington still appears unlikely to restart the normalization process. U.S. and Cuban officials met last month for the first time in four years to discuss implementation of a migration accord signed in 1995. Orderly migration is only one among several interests the United States could advance if it were willing to resume discussions with Cuba. But the Biden administration has placed electoral politics ahead of U.S. interests and appears unlikely to do more.

  • A State Department official told reporters that consular officers will process applications from only the Cuban parents of U.S. citizens, and that persons in all other non-emergency categories will still have to go to Guyana or another third country to apply. A few of the vice-consuls reportedly will fill previously permanent slots, but others will be assigned to the Embassy on a temporary basis.
  • When it ceased consular services in 2017, the State Department unilaterally abrogated a bilateral agreement, which enjoyed bipartisan support for two and a half decades, to process visas in a manner that would keep migration legal and safe. Renewing limited services, officials cited the surge in “irregular Cuban migrants” to the United States “via land and maritime routes.” Cubans are the second largest group arriving on the Southwest border – 16,531 in February alone, according to U.S. Customs and Border Protection. The U.S. Coast Guard has interdicted more than 1,000 Cubans in the Florida Strait since October.

The State Department has not publicly reconciled its consular decision with its repeated allegations of a Cuban role in, or at least failure to prevent, the “sonic attacks” that the Trump Administration cited, after months of inaction, as reason for reducing the Embassy. Now referred to as “Havana Syndrome” and “unexplained health incidents” by the Biden Administration, those allegations have never been substantiated.

  • Various reports have seriously challenged the official claims, but the U.S. Government has continued efforts to find scientists who will corroborate them. As early as November 2018, scientists of the prestigious JASON advisory group concluded that the reported sounds “most likely” were caused by Caribbean short-tailed crickets; it found they were “highly unlikely” from ultrasound or microwave equipment as alleged. A half-dozen investigations later, CIA officials last January said that all but two dozen of the 1,000 reported cases could be explained by environmental conditions, undiagnosed medical conditions, or stress rather than a global campaign by a foreign power. (Director of National Intelligence Avril Haines and CIA Director William Burns soon came forward to stress that “while we have reached some significant interim findings, we are not done.”)

The “sonic attacks” in Havana initially took place in late 2016, but the Trump Administration did not mention them in announcing its first round of measures in June 2017 to slow and eventually reverse President Obama’s normalization policies – perhaps because it too didn’t take the allegations seriously. Public complaints by self-identified victims in August 2017 found a receptive audience on Capitol Hill, however, and legislators pressed the Trump Administration to use it as pretext to reduce the U.S. Embassy in Havana (and to force Cuba to cut back its Embassy staff in Washington). The Biden Administration embraced the same rationale three and a half years later, despite overwhelming evidence that the blame on Cuba was misplaced, with literally hundreds of victims from around the world (even in Washington, DC) coming forward with similar claims of unexplained head injuries. The Biden Administration seems now to seek a quiet way back to addressing a migration crisis for which it, like the Trump Administration, has been complicit.

  • The Administration seems to think its policies will help it win hearts and minds in Florida, but its failure to provide leadership on issues like “sonic attacks” is further narrowing its political space. Now it faces challenges not only from the usual characters in Congress who oppose normalization, but also moderates such as Democratic Senators Jeanne Shaheen (New Hampshire) and Mark Warner (Virginia), who cosponsored the “HAVANA Act.” In addition to permanently linking the issue to Havana, the legislation, which Biden signed into law last October, has contributed to a surge in alleged cases of anomalous symptoms by offering compensation to “victims.”
  • Neither does the Administration seem concerned about the implications of its Cuba policies for U.S. interests throughout Latin America – one of the main drivers of President Obama’s pivot on the island in 2014. Mexican President Andrés Manuel López Obrador’s statement this week that he will not attend the Summit of the Americas that Biden is hosting in Los Angeles next month if Cuba is not invited is a blow. Similarly, Ambassador Ronald Sanders of Antigua & Barbuda, widely seen as “dean” of the Caribbean diplomatic corps, declared that Biden’s continued embrace of Trump policies on Cuba and Venezuela “has continued to haunt US‑Caribbean relations.”

May 13, 2022

* Fulton Armstrong directs AULABLOG. Philip Brenner is Emeritus Professor of International Relations and History at American University. His latest books are Cuba Libre: A 500-Year Quest for Independence and Cuba at the Crossroads.

Ecuador: Is Coca Codo Sinclair a Bellwether for China in Latin America?

by Julie Radomski*

Mega project Coca Codo Sinclair inaugurates its new tunnel / Carlos Rodriguez / Agenda de Noticias ANDES / Wikimedia Commons / Creative Commons license

Ecuador’s Coca Codo Sinclair hydroelectric project – celebrated as a triumph of then-President Rafael Correa’s Revolución Ciudadana and a harbinger of the promise of South-South Cooperation when inaugurated in November 2016 – today appears to be a lightning rod for debate around China’s preferred form of international cooperation. The project was emblematic of the new relationship between Latin American countries and development finance’s new regional leaders, Chinese policy banks. Five years into its operations, Coca Codo is riddled with uncertainties and dramas at local, national, and global scales. 

  • The 1500 Mw project consists of a diversion dam; 24.8 km of tunnel to channel water under the Andean foothills; a compensation reservoir; pipes dropping the water 620 meters; and an eight-turbine powerhouse. It supplies Ecuadorians with 30 percent of their electricity, helping to edge out expensive and fossil fuel-driven thermoelectricity.

The project was a crowning jewel of efforts since the mid-2000s by Chinese policy banks – the China Development Bank and China Export-Import Bank – to provide Latin American countries with billions of dollars in loans, the majority for large infrastructure projects of the variety once financed by multilateral development lenders like the World Bank. Indeed, between 2005 and 2018, the total lending to the region by these two Chinese banks was greater than that of the World Bank and Inter-American Development Bank combined. Coca Codo was financed by a 2010 loan from the China Export-Import Bank and constructed by Chinese state company Sinohydro.

  • However, since 2015 lending has trended steeply downwards, and since 2019 Chinese policy banks have provided no new loans to Latin American countries or state-owned enterprises. While this by no means indicates a downgrading of China-Latin America relations, the nature of this political and economic relationship is no longer oriented around multibillion-dollar state-to-state infrastructure lending like that which made Coca Codo Sinclair possible. This is likely due, at least in part, to the increased hesitancy on the part of Chinese lenders following political controversies surrounding such projects.

The impacts of the projects of this period are still very much an ongoing and controversial issue for countries like Ecuador.

  • Although vital in providing Ecuadorians inexpensive and emissions-friendly electricity, to this day the project has not been fully turned over to the Ecuadorian government, primarily because its distributors (snail-shaped pipes that channel water to each of the powerhouse’s eight turbines) exhibit thousands of fissures that Sinohydro has been unable to repair despite years and millions spent trying. New fissures continue to emerge that experts say indicate “imminent danger” of equipment failure, or even collapse.
  • The diversion dam is also in danger of collapse due to a rare and catastrophic process of “headward” erosion (erosión regresiva o remontante) along the Coca River. The erosion, resulting from the collapse of the famed 150-meter San Rafael waterfall in February 2020, has so far caused two major oil spills, the loss of houses and land, and the repeated destruction of a major roadway connecting the Amazonian region to Ecuador’s capital. The Ecuadorian state power company, CELEC-EP, is investing millions in new infrastructure to attempt to contain the erosion before it reaches the dam. They are also studying the possibility of building an entirely new dam that could be reconnected to the existing powerplant.

The scientific community is debating the extent to which the dam itself may have contributed to the disastrous erosion. Lack of rigorous environmental assessments and monitoring mean that there may never be definitive evidence either exonerating the dam or proving its guilt in the current social, economic, and environmental crisis. There is, however, broad agreement that, given the instability of the Coca River basin, the dam should not have been constructed at the current location and scale due to environmental risks.

Critics of Chinese global economic expansion have seized on Coca Codo Sinclair as a symbol of the danger of China’s influence in Latin America. Other observers argue that the project’s downsides are a result of national institutional failures, irrespective of the “Chineseness” of its finance, engineering, and construction. Either way, recent patterns in Chinese lending indicate that the country’s decisionmakers no longer see this type of project as the basis of win-win development or mutual cooperation. It appears that environmentally sensitive, politically polarizing mega-infrastructure will not be the face of China-Latin America cooperation going forward. Regardless, Ecuadorians are faced with the return of expensive and unreliable electricity, an irrevocably altered Amazonian River basin, and about $3 billion at risk of being carried away by the river.

May 6, 2022

*Julie Radomski is a PhD Candidate and Fulbright-Hays Fellow at American University specializing in development studies.