Haiti’s Electoral Crisis Finally Concludes, for Now

By Emma Fawcett*

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Newly inaugurated Haitian President Jovenel Moïse speaks with the Dominican press. / Karla Sepúlveda / Presidencia República Dominicana / Flickr / Creative Commons

Haitian President Jovenel Moïse, inaugurated this week following an 18-month electoral crisis, is likely to have a short honeymoon before the country’s multiple crises hit him hard.  While the transfer of power was long overdue – after a year of transitional rule by interim President Jocelerme Privert – questions remain about Moïse’s ability to govern.  He is a 48-year-old businessman with no political or governing experience.  The election delays suppressed voter turnout to a paltry 21 percent, so the 55 percent of votes that he won amounts to just 9.6 percent of registered voters.  Tensions remain high among the other 53 former presidential candidates.

  • Challenges to Moïse’s term in office have already emerged. While Haitian presidential terms are five years, some constitutional experts believe that Moïse lost a year due to the electoral crisis – that interim President Privert’s year in office counted – and therefore that he has only four years remaining.
  • Moïse already faces allegations of corruption. In a case he claims is politically motivated, he has been under investigation for money laundering since irregularities in his bank transfers were first discovered in 2013.  Four opposition senators last week requested additional information about the investigative judge’s findings, and another former presidential candidate has filed as a plaintiff in the case.  The judge’s order and the prosecutor’s intentions have not been made public, but the investigation has been expanded to include interviews of Moïse’s wife and several other associates.  Several senators boycotted the inauguration in protest.

Haitian economic and social problems remain severe.  The mandate for MINUSTAH, the UN peacekeeping mission that has been in place for the last 12 years, expires in mid-April.  Foreign assistance has continued to decline, although Hurricane Matthew caused $2.8 billion in damage last October and another 30,000 cases of cholera are expected this year.  Thousands of Haitians have fled the island, including about 5,000 currently awaiting entry on the US-Mexico border.  Inflation exceeds 14 percent a year, and growth for 2017 is expected to be -0.6 percent.  Even the budget for Moïse’s inauguration was slashed by 50 percent in light of austerity measures, although several foreign presidents and a U.S. delegation led by Omarosa Manigault, a former reality TV star and assistant to President Trump, attended.

Moïse faces tremendous challenges – without anything resembling a popular mandate.  If he is prosecuted, moreover, Haiti could be rapidly plunged back into political instability.  But  foreign media indicate that many Haitians hope that his business background as a banana exporter and auto parts dealer will help him revive the economy, especially the agricultural and textile sectors.  Moïse has indicated repeatedly that he hopes to preserve and expand Haiti’s preferential trade agreements with the United States: “President Trump and I are entrepreneurs, and all an entrepreneur wants is results, and therefore I hope we’ll put everything in place to make sure we deliver for our peoples.”  With the electoral uncertainty finally over, Moïse is slightly better positioned than his two most recent predecessors – transitional President Privert and embattled President Michel Martelly – to foster political stability, engage the diaspora, and encourage foreign direct investment.  But with so many competing priorities and the distraction of his money laundering case, it will be enormously difficult for the new president to serve “all Haitians” as his inaugural address promised.

February 9, 2017

 Emma Fawcett is an Adjunct Professorial Lecturer at American University.  Her doctoral thesis focused on the political economy of tourism and development in four Caribbean countries: Haiti, Dominican Republic, Cuba, and the Mexican Caribbean.

2017: Happy New Year in Latin America?

By Eric Hershberg and Fulton Armstrong

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Brazilian President Michel Temer surrounded by members of his party in mid-2016. His government will continue to face questions of legitimacy in 2017. / Valter Campanato / Agência Brasil / Wikimedia / Creative Commons

The year 2016 laid down a series of challenges for Latin America in the new year – not the least of which will be adapting to a radically different administration in Washington.  Last year saw some important achievements, including an elusive peace agreement in Colombia ending the region’s oldest insurgency.  Several countries shifted politically, eroding the “pink tide” that affected much of the region over the past decade or so, but the durability and legitimacy of the ensuing administrations will hinge on their capacity to achieve policy successes that improve the well-being of the citizenry.  The legitimacy of Brazil’s change of government remains highly contested.  Except in Venezuela, where President Maduro clung to power by an ever-fraying thread, the left-leaning ALBA countries remained largely stable, but the hollowing out of democratic institutions in those settings is a cause for legitimate concern.  Across Latin America and the Caribbean, internal challenges, uncertainties in the world economy, and potentially large shifts in U.S. policy make straight-line predictions for 2017 risky.

  • Latin America’s two largest countries are in a tailspin. The full impact of Brazil’s political and economic crises has yet to be fully felt in and outside the country.  President Dilma’s impeachment and continuing revelations of corruption among the new ruling party and its allies have left the continent’s biggest country badly damaged, with profound implications that extend well beyond its borders.  Mexican President Peña Nieto saw his authority steadily diminish throughout the course of the past year, unable to deal with (and by some accounts complicit in) the most fundamental issues of violence, such as the disappearance of 43 students in 2014.  The reform agenda he promised has fizzled, and looking ahead he faces a long period as a lame duck – elections are not scheduled until mid-2018.
  • The “Northern Triangle” of Central America lurches from crisis to crisis. As violence and crime tears his country apart, Honduran President Hernández has devoted his energies to legalizing his efforts to gain a second term as president.  Guatemala’s successful experiment channeling international expertise into strengthening its judicial system’s ability to investigate and prosecute corrupt officials is threatened by a weakening of political resolve to make it work, as elites push back while civil society has lost the momentum that enabled it to bring down the government of President Pérez Molina in 2015.  El Salvador, which has witnessed modest strides forward in dealing with its profound corruption problems, remains wracked with violence, plagued by economic stagnation, and bereft of decisive leadership.
  • Venezuela stands alone in the depth of its regime-threatening crisis, from which the path back to stability and prosperity is neither apparent nor likely. The election of right-leaning governments in Argentina (in late 2015) and Peru (in mid-2016) – with Presidents Macri and Kuczynski – has given rise to expectations of reforms and prosperity, but it’s unclear whether their policies will deliver the sort of change people sought.  Bolivian President Morales, Ecuadoran President Correa, and Nicaraguan President Ortega have satisfied some important popular needs, but they have arrayed the levers of power to thwart opposition challenges and weakened democratic institutional mechanisms.
  • As Cuban President Raúl Castro begins his final year in office next month, the credibility of his government and his successors – who still remain largely in the shadows – will depend in part on whether the party’s hesitant, partial economic reforms manage to overcome persistent stagnation and dissuade the country’s most promising professionals from leaving the island. Haiti’s President-elect Jovenel Moise will take office on February 7 after winning a convincing 55 percent of the vote, but there’s no indication he will be any different from his ineffective predecessors.

However voluble the region’s internal challenges – and how uncertain external demand for Latin American commodities and the interest rates applied to Latin American debt – the policies of incoming U.S. President Donald Trump introduce the greatest unknown variables into any scenarios for 2017.  In the last couple years, President Obama began fulfilling his promise at the 2009 Summit of the Americas in Trinidad and Tobago to “be there as a friend and partner” and seek “engagement … that is based on mutual respect and equality.”  His opening to Cuba was an eloquent expression of the U.S. disposition to update its policies toward the whole region, even while it was not always reflected in its approach to political dynamics in specific Latin American countries.

 Trump’s rhetoric, in contrast, has already undermined efforts to rebuild the image of the United States and convince Latin Americans of the sincerity of Washington’s desire for partnership.  His rejection of the Trans-Pacific Partnership – more categorical than losing candidate Hillary Clinton’s cautious words of skepticism about the accord – has already closed one possible path toward deepened ties with some of the region’s leading, market-oriented economies.  His threat to deport millions of undocumented migrants back to Mexico and Central America, where there is undoubtedly no capacity to handle a large number of returnees, has struck fear in the hearts of vulnerable communities and governments.  The region has survived previous periods of U.S. neglect and aggression in the past, and its strengthened ties with Asia and Europe will help cushion any impacts of shifts in U.S. engagement.  But the now-threatened vision of cooperation has arguably helped drive change of benefit to all.  Insofar as Washington changes gears and Latin Americans throw up their hands in dismay, the region will be thrust into the dilemma of trying to adjust yet again or to set off on its own course as ALBA and others have long espoused.

 January 4, 2017

Cuba: Preparing for President Trump

By Fulton Armstrong

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Photo credit: Day Donaldson / Flickr / Creative Commons

Cubans are already calibrating their expectations for relations with the United States under President Trump – hoping the normalization process does not unravel but preparing for a return to a sanctions-based policy from Washington.  Conversations in Havana reveal deep concern that the President-elect’s tweets and statements about Cuba, Mexico, and Latinos in the United States will translate into efforts to slow, stop, or reverse normalization.  The past two years of dialogue have focused on mutual interests, without ignoring remaining differences between capitals but not allowing them to blot out hopes of mutually beneficial cooperation.  Cuba will interpret a return to bombastic rhetoric, exaggerated conditions to reach a “deal,” and the pressure tactics of the pre-Obama era as a sign of U.S. willingness to put bullying a small neighbor eager for improved ties ahead of its own national interests.

Cubans present the stiff upper lip in conversations and, not surprisingly, defiantly note that they’ve already survived decades of U.S. pressure, but their disappointment is palpable.

  • Most concerned are entrepreneurs in Cuba’s small but growing private sector, who depend on investment from U.S.-based relatives and friends. More than 100 Cuban private businessmen wrote a letter to Trump last week urging restraint.
  • Nationalism has precluded Cubans from saying that normalization would be a major driver of their long-promised economic reforms, but few deny that improving ties with the United States would eventually present Havana important opportunities. U.S. retrenchment will remove important incentives for the government to move ahead with its reform strategy.
  • Rumors about tensions between Cuban proponents of normalization and conservative opponents may have some merit, but Cubans across the spectrum will close ranks if Trump gets aggressive.

Cuba’s reactions to Trump’s election, including President Raúl Castro’s congratulatory message to him, so far suggest that it will hold its tongue and resist being provoked.  A U.S. return to full-bore Cold War tactics would not pose an existential threat to Cuba, even considering the country’s difficulties dealing with unrelated problems such as the crisis in Venezuela.  Popular reactions to the passing of Fidel Castro last month are being construed as evidence of residual political legitimacy for the government and support for it to deliver on promised improvements.  Moreover, Cuba’s progress in normalization; its effective contribution to the Colombia peace accord; its new political dialogue and cooperation agreement with the European Union; and the recent Havana visit of Japanese Prime Minister Abe have boosted the country’s international image – and blame for collapse of normalization will surely fall solely upon the United States.  However difficult it will be for the proud people of Cuba to resist rising to whatever bait the Trump Administration throws its way, showing forbearance in the bilateral relationship and moving “without hurry but without pause,” as Raúl Castro said, with its national reform plan would protect the investment that Cuba has already made in normalization.

December 19, 2016

What does “Canada is back” mean in the Americas?

By Stephen Baranyi*

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Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau during the “Tres Amigos Summit” in Ottawa, June 2016. / Presidencia de la República Mexicana / Flickr / Creative Commons

Canadian Prime Minster Justin Trudeau and his cabinet ministers’ statements following their election in October 2015 that “Canada is back” reflect a global strategy that is likely to give a boost to Canada-Latin America relations.  Canada never “left” the Americas during the decade of Conservative governments led by Prime Minister Harper, but the new administration is patching up its predecessors’ mixed record.  Building on the Americas Strategy launched in 2007, Ottawa signed new bilateral free trade agreements with Colombia, Peru and others; broadened its engagement in regional security affairs; and greatly increased its whole-of-government engagement in Haiti.  Canada played a major role at the Summit of the Americas in Panama (April 2015) and hosted the Pan American Games (July 2015).  Yet the revelation of Canada’s espionage in Brazil, visa restrictions on Mexicans, the poor reputation of some Canadian mining firms in the region, and its inability to reach a trade agreement with the Caribbean Community fed a growing desencanto in Canada’s relations with the region.

Through mandate letters issued to ministers in late 2015, the Trudeau government made clear that the Americas would remain an important priority, despite renewed emphasis on Asia and Africa, and that inclusive growth, the responsible governance of Canadian extractive activities abroad, and women’s and indigenous peoples’ rights would get emphasis in the region.  In June, Canada hosted the “Tres Amigos Summit” with NAFTA partners United States and Mexico.  Ottawa also announced that by December, Mexican citizens would no longer need visas to enter Canada, removing a big irritant in Canada-Mexico relations.  The government reaffirmed its partnership with Colombia by indicating its desire to make bilateral free trade more inclusive and announcing projects to support the implementation of peace accords.

  • Ottawa has opportunities for deeper involvement in these countries. In Mexico, Canadian interests will be served through a better balance between pursuing economic opportunities in sectors like petroleum and supporting Mexicans struggling to strengthen rule of law in a system compromised by corruption.  Colombia also requires a sophisticated whole-of-Canada engagement strategy, particularly since the failure of its referendum on the peace accords on Sunday.  Ottawa has signaled interest in continuing to support the rule of law and broader development in Haiti, but Trudeau’s ability to justify large expenditures there will depend on the completion of legitimate elections by February 2017.

Ottawa’s appointment of a new Ambassador to the Organization of American States (OAS) and commitment to revitalizing it as “the premier multilateral organization of the Americas” points to broader engagement on a regional level.  The Trudeau administration could join the Latin American and Caribbean trend on drug policy by decriminalizing the sale of marijuana at home and supporting reforms to OAS and UN counterdrug programs.  Assisting the implementation of the UN Small Arms Treaty, which Ottawa is poised to ratify, could also contribute to rule of law and security in the Americas.  Canada will also find many partners (from Chile to Costa Rica) to promote gender equality.  With regard to First Nations, Ottawa may be tempted to focus on funding new aid projects; yet Canada’s credibility will remain suspect until it ratifies the American Convention on Human Rights and ensures that all Canadian mining firms respect the rights of indigenous communities to free and prior informed consent in large-scale extractive activities.  The Trudeau government will probably monitor the multi-dimensional crisis in Venezuela, the situation in Brazil, and other challenges in the region – over which it probably lacks the leverage to make a significant difference but can lend moral authority to solutions.  Given its clear commitment to a global, rather than regional, strategy, the current administration is wise to carefully select entry points on which its thematic priorities align with opportunities in particular countries.

October 5, 2016

* Stephen Baranyi is an Associate Professor at the University of Ottawa’s School of International Development and Global Studies.  He also chairs the Latin America and Caribbean Group (LACG) of the Canadian International Council.  The author acknowledges his LACG colleagues’ input into this blog, while taking responsibility for its limitations.

Cuba: Time to Move Ahead with Reforms

By Ricardo Torres*

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Oil drums and a tobacco curing hut near Viñales, Cuba / Adams Jones / Flickr / Creative Commons

The economic challenges that Cuba currently faces probably do not signal the beginning of a new Período Especial – the profound crisis Cuba experienced in the 1990s – but they are a painful reminder of the country’s chronic structural problem: the inability to generate enough hard currency to develop the economy and the failure of efforts to overcome that obstacle so far.  The immediate predicament was caused by a combination of internal and external factors, including the Venezuelan crisis and the low prices for certain Cuban exports.  (Ironically, oil byproducts from a refinery in Cienfuegos, which Cuba jointly owns with Venezuela’s PDVSA, have become a leading export.)  Venezuela is affecting income from services that Cuba sells there (in particular that of medical doctors) as well as a drop in the supply of oil products, which has covered about a half of Cuba’s needs.  This has placed extreme stress on Cuba’s external finances and forced a significant economic adjustment.  The government has imposed restrictions on energy consumption and a reduction in imports and investments – with important recessionary effects on an economy that desperately needs growth.  The energy rationing has fueled fears that the country could repeat the deep shortages of the early 1990s and again experience one of the most powerful symbols of that period: blackouts.

The situation is serious, but a crisis on the scale of the Special Period does not appear to be on the horizon.  Cuba today has a more diversified economy and produces a significant portion of its own energy, and the majority of the population has other sources of income to cushion themselves during bad times.  Most creditors and suppliers have shown confidence in their ability to move ahead.  In July, important contracts were announced for French companies to expand and operate Havana’s airport, which has been overwhelmed by the increase of international visitors (one of the few bright spots in the economy this year) in tandem with the improvement in relations with the United States.  Early this month, Cuban officials made presentations to firms from around the world on the government’s timely interest in renewable energy.  They emphasized the great opportunities that exist, not just current problems.

Once again, a close partner’s difficulties have put Cuba in a bind – too many times in too short a period.  Moreover, these problems arise at a politically sensitive moment.  Cubans are discussing the new model and development strategy through 2030, and – while Cubans are expecting results after six years of reform – President Raúl Castro has little time remaining in office.  The current complications can further delay essential monetary and exchange reforms.  Cuba needs to fix its foreign trade to supply oxygen for dynamic activities, such as its booming private sector.  Its development potential can’t rely just on its mystique as la Perla del Caribe.  Today’s challenges are an opportunity to remove the obstacles to changes that already have been announced, such as by accelerating the heretofore slow and ineffective implementation of agreed policies on foreign investment.  Some multilateral financial institutions can help, but Havana’s recent agreement with the Corporación Andina de Fomento (CAF), while a positive signal, is not enough.  The short-term answer is clear:  Only a combination of structural measures can guarantee that this latest economic crunch will be the last.

September 12, 2016

*Ricardo Torres is a professor at the Centro de Estudios de la Economía Cubana at the University of Havana and a former CLALS Research Fellow.

Cuba: Implications of U.S. Tourism

By Emma Fawcett*

Tourists on beach in Cuba

Photo Credit: Emmanuel Huybrechts / Wikimedia / Creative Commons

U.S. regulations still technically ban tourist travel to Cuba by U.S. citizens, but the Obama Administration’s policies have already spurred significant growth in visitor arrivals to the island – with implications for Cuba and its Caribbean neighbors.  Over the last year, Cuba has experienced a 17 percent increase in total visitors, and a 75 percent increase in arrivals from the United States since Washington expanded the categories of permitted travel and, according to observers, relaxed enforcement.  An agreement to begin commercial airline operations between the two countries promises even more travel.  Other elements of the embargo continue to complicate U.S. travel: most U.S.-issued credit cards still do not work on the island; phone and internet connections are limited; and visitors often face persistent shortages of food items, consumer goods, and hotel rooms.  But the surge almost certainly will continue.

The onslaught of U.S. tourists challenges the Cuban tourism industry’s capacity.  Cuba has one the lowest rates of return visits (less than 10 percent) in the Caribbean; on the other islands, 50 percent to 80 percent of tourists make a return visit.  It has serious weaknesses:

  • While Cuba’s unique appeal may draw in millions of first-time visitors, the still relatively poor quality of service apparently discourages tourists from making the island a regular vacation spot. Sustaining arrivals requires higher marketing costs.  Average spending per visitor, moreover, has been on a fairly steady decline since 2008.
  • About 70 percent of Cuba’s tourists come for sun-and-beach tourism – a sector under state control – but private microenterprises have already demonstrated more agility in responding to demand than the state-owned hotels or joint ventures. The government reported last year that 8,000 rooms in casas particulares, or bed-and-breakfasts in Cubans’ homes, were for rent, and the number is growing steadily.
  • Cuba’s “forbidden fruit” factor may have a limited shelf life as visitors sense the imminent end to Castroism and the arrival of McDonalds, Starbucks, and their ilk. Questions remain about how long Cuba’s current environmental protections will continue when tourist arrivals increase.  Nicknamed the “Accidental Eden,” Cuba is the most biodiverse country in the Caribbean because of low population density and limited industrialization.  But rising visitor arrivals (and the effects of climate change) are likely to increase beach erosion and biodiversity loss.

Ministers of tourism in the other Caribbean countries have downplayed fears about competition from Cuba, but their optimism is sure to be tested.  A successful Cuban tourism sector could conceivably spur region-wide increases in visitor arrivals, but it could also cause other Caribbean countries to lose significant market share.  The official Communist Party newspaper, Granma, has suggested the government’s goal is to almost triple tourist arrivals to 10 million per year.  President Danilo Medina of the Dominican Republic, the most visited country in the region (at about 5.5 million tourists a year), has also set a goal of reaching 10 million arrivals by 2022 – setting that country to go in head-to-head competition with Cuba.  Jamaica, the third most visited country in the region, has instead pursued a multi-destination agreement with Cuba, designed to encourage island-hopping and capitalize on Cuba’s continued growth.  Previous attempts at regional marketing and multi-destination initiatives have had mixed success.  But as Cuba’s tourism sector continues to expand, Caribbean leaders – in what is already the most tourism-dependent region in the world – undoubtedly sense that Cuba is back in the game and could very well change rules under which this key industry has operated for the past six decades.

July 25, 2016

*Emma Fawcett is a PhD candidate in International Relations at American University.  Her doctoral thesis focuses on the political economy of tourism and development in four Caribbean case studies: Haiti, Dominican Republic, Cuba, and the Mexican Caribbean.

Haiti: Crisis Upon Crisis

By Fulton Armstrong

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OAS Secretary General Almagro visits Haiti. Photo Credit: OAS / Flickr / Creative Commons

Haiti is stumbling, again, from one crisis into another, but the timing of this ongoing mess puts the United States and other international partners in a particularly bad position.  The country’s political institutions are dysfunctional, without an elected executive nor fully legitimate legislature, and efforts to rebuild them continue to be haphazard.  Under Interim President Jocelerme Privert (formerly leader of the Senate), the government has missed another deadline for resolving disputes over the first round of presidential elections held last October and re-running them or scheduling the second round.  Instead, Privert, who assumed the Presidency in February, on 28 April formed a five-member “verification panel” to take yet another look at allegations of first-round fraud and determine which candidates should participate in the runoff, with a 30-day deadline.  The deadline for Privert to step down passed on 14 May.

  • The move coincides with growing perceptions that Privert is enjoying the perquisites of the job and may be dragging things out on purpose. Both sides to the contested elections – supporters of Jovenel Moïse, former President Martelly’s hand-picked successor, and the opposition party’s Jude Célestin – are mobilizing crowds, some numbering thousands, for almost-daily protests.  Calls for Privert to resign are growing intense as suspicions of his own ambitions and imputed bias for or against one of the candidates surge.  Several dozen gunmen, allegedly directed by an enemy of Privert, shot up a police station in the southern city of Les Cayes earlier this week, resulting in six dead.
  • International reactions to Privert’s delays have been mixed but predictably of frustration.  The former leader of an official OAS mission to Haiti in early April supported the verification process, and OAS Secretary General Almagro said recently that elections “shouldn’t be rushed.”  But U.S. Secretary of State John Kerry last month condemned “this process of delay” and urged Haiti’s “so-called leaders” to act.  His Special Coordinator for Haiti Affairs, veteran diplomat Kenneth Merten, called the new verification process a “black box” and said it was “opaque and non-democratic.”

The political mess coincides with other serious challenges.

  • The World Food Program (WFP) is increasingly concerned about hunger caused by a three-year drought, aggravated by El Niño, and the country’s economic situation. Some 3.6 million Haitians (one third of the population) face “food insecurity,” including 1.5 million who are “severely food insecure.”  A U.S. program to send Haiti surplus peanuts, which is one of Haitian farmers’ most successful crops, has deflated prices and further hurt local food production.
  • Shortages of medical supplies, worsened by corruption, have prompted doctors to conduct strikes. High-profile cases, including the death of a bleeding pregnant woman at the entrance of the Port-au-Prince General Hospital, have led to dramatic demonstrations, on at least one occasion parading around a victim’s corpse.
  • Fear of spread of the Zika virus is rampant. The University of Florida recently confirmed that Zika was present in Haiti before the outbreak in Brazil last year.  (Carried by the same mosquito, Aedes aegypti, it was mistakenly identified as chikungunya, which has almost identical symptoms except microencephaly.)  Haiti’s cholera epidemic, which has killed 9,200 people since 2010, continues to claim about 50 lives a month, according to some estimates.

The usual threats by the United States and Haiti’s other international partners to suspend aid if the government doesn’t resolve the political impasse have been muted presumably because they’re unlikely to be credible while such major threats to Haitian citizens’ wellbeing loom large.  Haiti’s political and economic elites assume that the outsiders will care for the Haitian people and continue bailing the country out while they pursue their internecine struggles.  Former President Martelly, who is not free from blame for the elections impasse, has been in Miami these days to promote his autobiography ($50 a copy) and reestablish himself as a naughty boy Kompa musician.  The international community is, once again, in a lose-lose situation.  A previous caretaker government, headed by Gérard Latortue, lasted two years (2004-2006).  The United States and others can ill afford a deeper humanitarian disaster, so while Haitian elites fiddle, outsiders will try to put out the fires.

May 19, 2016

Latin America (Overall) Embraces Paris Climate Accord

By Fulton Armstrong

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Heads of delegations at the 2015 United Nations Climate Change Conference in Paris. Photo Credit: Presidencia de la República Mexicana / Flickr / Creative Commons

Latin American support for the landmark climate agreement signed at the United Nations last week may not have been enthusiastic during the negotiations, but all but Nicaragua seem eager for early ratification and implementation of measures to mitigate the harm of global warming.  A record-breaking 175 countries signed the accord in one day, including a number from Latin America, committing them to take concrete steps to keep the increase in global temperatures from rising 2 degrees Celsius (or, ideally, 1.5 degrees) over preindustrial levels.  To take effect, at least 55 countries producing 55 percent of global emissions must ratify the agreement.  Fifteen small island nations, including several in the Caribbean, already presented their ratification papers last Friday.  China and the United States, the two greatest emitters of greenhouse gasses, have said they’ll ratify this year – as have France and other EU countries.

The region’s leaders have made significant contributions to the accord over the years.  Mexico and Peru, which were hosts of crucial international conclaves leading up to it, have given it a Latin American imprint, and others supported the final round of talks in Paris last December.  Brazilian President Dilma Rousseff’s reference in her speech to her political troubles back home overshadowed Brazil’s leadership, including its commitment to reduce its greenhouse gas emissions by 43 percent of 2005 levels by 2030.  In the past, ALBA countries complained loudly that the wealthy, developed nations, which produce the vast majority of climate-harming gasses, should shoulder the burden of reducing them and should compensate poorer countries for harm that environmental measures cause them.  All but Nicaragua, however, have submitted national plans (called an Intended Nationally Determined Contribution, INDC) required for full participation in international efforts under the Paris Accord.  Nicaraguan Representative Paul Oquist told the media that “voluntary responsibilities is a path to failure” and that wealthy countries should compensate Nicaragua for the $2 billion cost the measures would entail.

Latin America has clear incentives to support the accord.  Various scientific studies underscore the impact of global warming on the region, with potentially dire consequences.  The World Bank and Intergovernmental Panel on Climate Change have reported that failure to act would cause further extreme weather threatening agriculture; rapid melting of Andean glaciers that provide much-needed fresh water; erosion of coastal areas; catastrophic damage to Caribbean coral reefs; and dieback of Amazon forests.  ALBA demands for compensation may be overstated but contain a grain of truth – they aren’t prodigious producers of greenhouse gasses – and skepticism that the big guys will meet their targets isn’t entirely unwarranted.  President Obama has repeatedly demonstrated his personal commitment to addressing the problem, but obstacles posed by the U.S. Senate (which must ratify the agreement), Supreme Court (which in February stalled implementation of his Clean Power Plan), and politicians seeking the Republican Presidential nomination (who have sworn opposition to deals like the Paris Accord) have all but shut down U.S. movement toward ratification.  The ALBA outliers, on the other hand, have made their complaints heard and appear likely to join the rest of Latin America and the Caribbean in pushing for ratification and quick implementation – and probably will soon renew the push for even tougher measures by industrialized nations.

April 25, 2016

How are the Americas Faring in an Era of Lower Oil Prices?

By Thomas Andrew O’Keefe*

Gas Station Guatemala

Photo Credit: Josué Goge / Flickr / Creative Commons

The sharp drop in global oil prices – caused by a combination of a slowing Chinese economy hurting commodities sales and efforts by Saudi Arabia to retain market share – has both downsides and advantages for Latin America and the Caribbean.  By keeping production levels steady, despite decreased demand, so that a barrel of crude remains below US$40, the Saudis’ hope is to put U.S. shale oil producers and Canadian tar sands producers out of business.  The drop in oil prices has had a varied impact elsewhere in the Americas:

  • The effect in Venezuela, already reeling from over a decade of economic mismanagement, has been catastrophic. The ripple effect is being felt in those Caribbean and Central American countries that grew to depend on PetroCaribe’s generous repayment terms for oil imports that allowed savings to be used for other needs.  In 2015, for example, this alternative funding mechanism in Belize was slashed in half from the previous year.  The threat of interest rate hikes on money that must eventually be repaid for oil imports also pushed the Dominican Republic and Jamaica to use funds raised on international capital markets to reduce their debt overhang with Venezuela.  (For those weening themselves off PetroCaribe dependency, however, the lower prices are a silver lining.)
  • Low oil prices have also knocked the wind out of Mexico’s heady plans to overhaul its petroleum sector by encouraging more domestic and foreign private-sector investment.
  • In South America, the decline has undermined Rafael Correa’s popularity in Ecuador because the government has been forced to implement austerity measures. The Colombian state petroleum company, Ecopetrol, will likely have to declare a loss for 2015, the first time since the public trading of its shares began nine years ago.  In Brazil, heavily indebted Petrobras has seen share prices plummet 90 percent since 2008, although that is as much the result of the company being at the center of a massive corruption scandal that has discredited the country’s political class.
  • On the other hand, lower petroleum prices have benefitted net energy importers such as Chile, Costa Rica, Paraguay, and Uruguay.

The one major oil producer in the Americas that has not cut back on production and new investment is Argentina – in part because consumers are subsidizing production and investment by the state petroleum firm YPF, which was renationalized in 2012 and now dominates domestic end sales of petroleum products.  Prices at the pump remain well above real market values.  While successive Argentine governments froze energy prices following the 2001-02 implosion of the Argentine economy, this time policy is keeping some energy prices high.  This encourages conservation and efficiency and spurs greater use of renewable alternatives, but it becomes unsustainable during a prolonged dip because it will, among other things, make the country’s manufacturers uncompetitive.  The Argentine example underscores that predictions of a pendulum shift in Latin America in favor of private-sector investment in the hydrocarbons sector over state oil production are still premature.

The lower prices do not appear likely to harm the region’s continuing substitution of natural gas for coal and oil as a transitional fossil fuel to greener sources of energy.  Natural gas prices remain at their lowest levels in over a decade, and the expansion of liquefied natural gas plants allows for easier transport of natural gas to markets around the world.  They are also unlikely to dent the global shift to greater reliance on renewable energy resources driven by the international consensus that climate change can no longer be ignored and something must be done to address it.  At the UN climate change talks in Paris last December, for example, countries agreed to keep temperature increases “well below” 2 degrees centigrade above pre-industrial levels and made a specific commitment “to pursue efforts” to achieve the much more ambitious target of limiting warming to no more than 1.5 degrees centigrade.  The year 2015 was the second consecutive year in which energy-related carbon emissions remained flat in spite of 3 percent economic growth in both years. 

March 24, 2016

*The author is the President of San Francisco-based Mercosur Consulting Group, Ltd.  He chaired the Western Hemisphere Area Studies program at the U.S. State Department’s Foreign Service Institute between July 2011 and November 2015.

U.S.-Cuba: Migration Policy Growing Tortuous, Dangerous

By Fulton Armstrong

Cuban migrants

Photo Credit: Coast Guard News / Flickr / Creative Commons

The surge in Cuban migration – prolonged at this point by U.S. policy paralysis – may show a dip soon but is growing tortuous and dangerous.  Since January 12, chartered aircraft and buses have been carrying about 360 Cubans a week from Costa Rica to El Salvador, and then through Guatemala and Mexico to the United States, where they are admitted with special status.  The US$550 cost of the trip is being paid by the migrants or unidentified “donors.”  The air bridge has begun relieving pressure on Costa Rica, which has been caring for 8,000 Cubans since Nicaragua in October halted the underground railway transporting them up the Central American isthmus.  (Three thousand more are reportedly stuck in Panama.)  Despite the progress, an estimated 1,500 migrants have left holding facilities and turned to alien-smugglers to take them to Mexico (for $800) or to the United States ($1,500), according to press reports.

  • Cubans’ fear of a change in U.S. migration policy since reestablishment of U.S.-Cuba diplomatic relations is most often cited as causing the surge, estimated at some 40,000 in 2015. It does not explain the estimated 20,000 who crossed into Texas in 2014 and before, when alien-smuggling networks were less developed.
  • Ecuador’s agreement to establish visa requirements for Cubans promises to slow the immediate flow, but the crisis has revealed corruption among migration authorities throughout the region, which will make stopping it difficult.
  • Central American resentment of the welcome Washington gives illegal migrants from Cuba is growing – aggravated in part by the arrival of airplanes from the United States full of deported citizens in the same timeframe. Senior officials from Costa Rica, El Salvador, and Guatemala have blamed the surge in trafficked Cubans on the preferences the United States gives them.

The U.S. Coast Guard reports an increase in the volume and violence of seaborne migration.  Migrants interdicted in Fiscal Year 2015 (ending September 30) grew to almost 3,000 – 900 more than the previous year – and, according to press reports, surged to 1,500 in the last quarter of 2015.  The Coast Guard says the migrants have concluded that Cuba’s economy will not improve even after U.S.-Cuba normalization, and they want to go before U.S. migration policy changes.  The service has reported a spike in violent confrontations with Coast Guard officers, violence against fellow migrants, and even suicide threats..

The U.S. government’s mantra that it will not change policy toward either overland or seaborne migrants is not working – and could even be backfiring by reminding Cubans of the special treatment they receive upon arrival.  The airlift and bussing of thousands of migrants from Costa Rica to the United States helps Costa Rica deal with its crisis, but also signals yet again to Cubans remaining on the island how far the United States will go to bring them in.  Violence among seaborne migrants has traditionally been rare, but the increased aggressiveness suggests that migrants have the impression that they can act with impunity and still be welcomed into the country.  Overland migrants’ preference to use coyotes, known for violence, is another red flag.  The United States has expended political capital by washing its hands of the Cuban migrant mess in Central America, and grumbling among the region’s leaders suggests that options like airlifts will disappear soon.  U.S. law, including the Cuban Adjustment Act, fully empowers the President to turn off the green light to undocumented Cuban migration – and reality could very well nudge him in that direction soon.

February 4, 2016