Peru: Can the Shamans Save the Glaciers?

By Karsten Paerregaard*

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A ceremony at Mount Huaytapallana during the Andean New Year. / Photo by Karsten Paerregaard.

Peru – one of the countries in the world most vulnerable to climate change – is experiencing a surge in religious ceremonies highlighting the plight of its rapidly shrinking glaciers, but the increased attention has downsides as well.  Peru has 70 percent of the world’s tropical glaciers, which provide most of the country’s fresh water and have been integrally linked to the identity of the Andean people since the Incas.  They are rapidly shrinking, however.  Mount Huaytapallana, a 5,500-meter-high glacier about 300 kilometers east of Lima, has shrunk 50 percent over the past quarter century – with profound implications for life throughout much of Peru.  Shamans in the region, whose ceremonies and offerings have long constituted a critical means of regulating the relationship between society and nature in the Andes, are reviving the practices to draw attention to this environmental crisis.

  • Most participants in ceremonies on Mount Huaytapallana come from Huancayo and other nearby cities in the central highlands, hoping that Huaytapallana will listen to their prayers and bring them good fortune. The Andean New Year on June 24, one of the most spectacular events, attracts more than a thousand people.  They offer food, drinks, candles, and cloths that are burned while the shamans say prayers to Huaytapallana in Quechua.  The event reminds people of the suffering that global warming is causing to the mountain.
  • In the southeastern highlands, Mount Ausungate attracts even bigger crowds. Around the feast of Corpus Christi each year thousands of pilgrims walk up to a sanctuary to pay tribute to an image called Señor de Qoyllur Rit’i (the Lord of the Snow Star), declared an Intangible Heritage Site by UNESCO in 2011.  The image represents Christ, who according the local legend revealed himself at the sanctuary in the 18th century, but it is also a religious relic of a pre-Columbian tradition of worshipping Andean mountain deities.  Dance groups from eight communities of pilgrims, known as naciones, play music and dance around the clock, and men dressed as bears climb the nearby glaciers of Ausungate to set up crosses and until recently set off fireworks.  An estimated 50,000 visited the sanctuary last year.

The glaciers are symbols of both the country’s indigenous past and the damage that global climate change is inflicting.  The growing participation in Andean ceremonies with religious overtones reflects the deepening concern for the profound social, economic, and spiritual implications of the environmental degradation.  It is fueled by a search for alternative answers to problems that global climate change is causing in Peru and that the country’s governments so far have failed to provide.  The surge in interest also, ironically, is cause for concern.  According to the regional government of Junín, responsible for the protection of Huaytapallana’s environment, visitors leave more than four tons of trash on the mountain every year.  The commercialization of the offering ceremonies makes it difficult to hold the shamans accountable for participants’ activities.  At Qoyllur Rit’i, Peru’s Ministry of Culture is in charge of preserving the pilgrimage according to Andean traditions, enhancing people’s awareness of Ausungate’s cultural importance, but pilgrims’ presence on the glaciers remains an issue of continuous dispute.  Shamans and environmentalists are a potentially powerful alliance, but even mitigating the environmental impact of activities by people concerned with climate change is not a simple matter.

February 6, 2017

* Karsten Paerregaard teaches in the School of Global Studies at the University of Gothenburg in Sweden.  He has participated in a CLALS project, funded by the Henry Luce Foundation, on Religion and Climate Change in Cross-Regional Perspective.

Return of the Monroe Doctrine: Making Latin America Irate Again

By Max Paul Friedman*

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Uncle Sam stakes his claim in the Western Hemisphere in a political cartoon outlining the basic tenants of the Monroe Doctrine (1912). / Wikimedia / Creative Commons

A vigorous resuscitation of the Monroe Doctrine may well be at hand under U.S. President Donald Trump, even though history shows us that it will contradict another favored policy – “America First” – which signals a desire to return to the most notorious isolationist organization in U.S. history.  The Monroe Doctrine, first articulated in 1823 as a means of blocking external interference in the Western Hemisphere, was the central pillar of U.S. policy toward Latin America until Barack Obama’s Secretary of State, John Kerry, told a roomful of Latin American diplomats in 2013 that “the era of the Monroe Doctrine is over.”  The statement was part of an effort to rehabilitate the U.S. image in a region long accustomed to seeing the United States as seeking to control it through persuasion when possible, and force when necessary.  In a policy paper published last December, Craig Deare, a dean at the U.S. National Defense University and now Trump’s top Latin America advisor on the National Security Council staff, denounced Kerry’s statement “as a clear invitation to those extra-regional actors looking for opportunities to increase their influence.”  He specifically mentioned China.

A revitalized Monroe Doctrine, however, contradicts the Administration’s other strong impulse, present in its statements far beyond Latin America, toward isolationism.  Trump is promising to build a literal wall between Latin America and the United States, but the Monroe Doctrine was decisively unilateral and interventionist.  It stated that the United States would not intervene in European affairs if European powers did not intervene in the Americas, but Monroe carefully did not state that the United States would not intervene in the region.  Indeed, Presidents James Monroe (1817-1825) and John Quincy Adams (1825-1829) and other U.S. leaders desired and expected the future annexation of parts of what was then Spanish or Latin American territory in Cuba, northern Mexico (later Texas), and beyond.  Later, even in the “isolationist” early decades of the 20th century, the United States was vigorously engaged in military intervention and outright occupation of several countries in Latin America.  The Marines were in Nicaragua (1912-33), Haiti (1915-34), and the Dominican Republic (1916-24).

  • Latin American resistance prompted Franklin Roosevelt’s “Good Neighbor Policy,” which supplanted the Monroe Doctrine’s unilateralism with respect for national sovereignty, but during World War II, FDR threatened Latin American governments with economic embargoes and other measures if they didn’t round up and intern thousands of Germans, Italians, and Japanese. After the tide in the war turned in 1943, the Latin American deportation and internment program was continued by U.S. officials seeking to turn the program to economic advantage by crushing commercial rivals.

Even Obama had difficulty reversing the United States’ longstanding desire to guide political and economic developments in Latin America – continuing, for example, Washington’s “democracy promotion” efforts in Cuba and elsewhere – but steps toward normalization of relations with Cuba and other initiatives made important strides toward assuaging Latin American irritation with U.S. imperiousness.  Obama went further than any president since FDR in restoring good relations, and ended the Cold War in Latin America.  Donald Trump’s competing impulses – the interventionism of Monroe and the isolationism of “America First” – will keep U.S.-Latin America relations on edge.  His unilateralist style has already hit its first victim, Mexico’s President Enrique Peña Nieto, and is likely to claim more soon.  If Trump revives the Monroe Doctrine’s unilateralism more broadly in response to a perceived threat from China throughout the region, he is likely to succeed only in making Latin America irate again.

February 2, 2017

* Max Paul Friedman is a Professor in the History Department at American University and author of Rethinking Anti-Americanism: The History of an Exceptional Concept in American Foreign Relations.

Brazil’s Prison Violence Reflects Deeper Social Problem

By Andrew Johnson*

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An interim detention center in São Paulo, Brazil. / Rovena Rosa / Agência Brasil / Wikimedia / Creative Commons

It has been a horrific start to 2017 in the Brazilian prison system, and reversing the trend will take much more than increased public funding.  A wave of violence began on New Year’s Day when 56 inmates were killed during a riot inside of a penitentiary in Manaus.  A series of deadly inmate uprisings followed that massacre, bringing the number of inmates killed this month to 120.  Macabre images of inmates’ decapitated corpses strewn about prison yards captured on cellphone cameras and posted to the internet reminded Brazilians that overcrowding, a weak state presence, and institutionalized gang power have combined to make Brazilian prisons – with over 600,000 inmates – tinderboxes ready to ignite at almost any time.

  • During a year I spent conducting fieldwork inside jails and prisons in Rio de Janeiro for a book and documentary film in 2011, I saw inmates crammed into cells at three and four times their intended capacity. On the worst nights, men unable to find space on the floor or a concrete bunk tied their torsos to the steel gates with t-shirts and attempted to sleep while standing.
  • The Comando Vermelho and other gangs controlled entire cellblocks and used smuggled cell phones and strategic visitors to maintain regular contact with leadership. This communications capability and weapons caches inside the cellblocks enabled them to act as the de facto government. Prison guards knew that they were outgunned and outnumbered, and they knew their off-duty lives could be easily extinguished by an order initiated inside the prison.  January’s riots revealed how thin the veneer of state control really is inside.

Impassioned pleas, prompted by the riots, to reduce overcrowding and provide more resources to Brazil’s prison system are being launched in a time of austerity.  The Brazilian Senate recently approved legislation that could freeze public spending for the next 20 years.  Public investment would certainly reduce the likelihood of future riots, but the crisis in Brazil’s jails and penitentiaries is not caused simply by underfunding.  It is the result of decades of the state treating inmates, and the residents of the neighborhoods where most of them were born, as less than full citizens.  Pastor Antonio Carlos Costa, leader of the human rights organization Rio de Paz, told me the state and public’s reactions to the many thousands killed by the police and hundreds murdered in prisons each year were limited because “they are poor people, people with dark skin, people considered killable.  These are deaths that don’t shock us, they don’t make the Brazilian cry.”

There is no excuse or justifiable defense for the inmates involved in the 120 murders that occurred inside Brazilian prisons this month.  It was an inhumane slaughter propelled by gangs, greed, and a power grab.  But the solution to Brazil’s profoundly troubled prison system lies much deeper than increasing public spending or reducing overcrowding.  Refusing to treat people as killable, gang-affiliated or not, is a goal that may take decades and will require a commitment that is much costlier than any public spending intervention or new legislation.  Laws protecting human rights would have to be enforced for all Brazilians, including prisoners.  Law abiding middle and upper-class citizens would have to push back and no longer tolerate some of the world’s highest murder rates and jails where 80 men squeeze into a cell built for 20.  Transformation this profound would be a difficult message to sell on the campaign trail, but anything less than that sort of social and cultural change from the government and the public will fall short of fixing the deeply rooted problems with Brazil’s prison system.

January 27, 2017

*Andrew Johnson is a Research Associate with the Center for Religion and Civic Culture’s Religious Competition and Creative Innovation (RCCI) initiative at the University of Southern California.

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

China, Latin America, and the New Globalization

By Andrés Serbin*

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Chinese President Xi Jinping received a medal of honor from the Peruvian Congress during his tour of South America last month, which included the Asian-Pacific Economic Cooperation summit in Lima. / Ministerio de Relaciones Exteriores, Peru / Flickr / Creative Commons

In Latin America and elsewhere, the world is undergoing tectonic movements that indicate the birth of a new world order with new rules of play.  For much of the past decade, dynamism in world commerce and finance has been shifting from the Atlantic basin to the Pacific.  While the international economy has shown fragility and the developed economies – particularly the European Union and the United States – have shown slow growth since the crisis of 2008, China and the emerging economies of the Asian-Pacific region have experienced sustained growth.  China, now the second biggest economy in the world, has been the driver of that growth and, according to most projections, is poised to overtake the United States as the biggest.  After several centuries in which power has been concentrated in the West, the emergence of new powers in a multi-polar world will naturally bring about changes in the norms and rules governing the international agenda.

In Latin America and other regions, there is growing awareness of this process – with China and its own version of globalization at its center.  The region has witnessed the paralysis of the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the United States as well as U.S. President-elect Donald Trump’s declaration that he will withdraw the United States from the Trans-Pacific Partnership (TPP) as part of a broader anti-globalization policy.  Trump’s announcement drew two different reactions from participants from TPP country leaders at the Asian-Pacific Economic Cooperation summit in Lima late last month.  One was the express decision to proceed with TPP even without the United States, and the other was a clear receptivity to Chinese President Xi Jinping’s invitation that they join regional economic groups that he is pushing – the Regional Comprehensive Economic Partnership (RCEP) and the Free Trade Area of the Asia-Pacific (FTAAP).

  • Both agreements explicitly exclude the United States and abandon norms customarily pushed in free trade by the West. They emphasize reducing tariffs and give no consideration to labor and environmental regulations and non-tariff measures.
  • They complement China’s “one belt, one road” initiative, a modern-day revitalization of the Silk Road creating trade links between China’s western regions with Russia, Central Asia, and eventually to Europe, developing land and maritime routes along the way. The Shanghai Cooperation Organization (SCO) – an economic and security pact linking China, Russia, four Central Asian nations, and now welcoming India and Pakistan – is explicitly linked to RCEP.

Washington’s pending rejection of TPP eliminates a central part of President Obama’s “pivot” strategy to counter China’s rapidly expanding influence in Southeast Asia and the South China Sea, but it also has implications for Latin America and the Caribbean as China moves in rapidly to fill the void left by U.S. withdrawal.  While President-elect Trump has pledged to “renegotiate” NAFTA – which he called “probably the worst trade deal ever agreed to in the history of the world” – China last month presented to Latin America a detailed document proposing a new era in relations with “comprehensive cooperation” in all areas and reaffirming a “strategic association” with the region.  In sharp contrast with the new U.S. President’s views of Latin America, Beijing calls Latin America and the Caribbean “a land full of vitality and hope,” praises the region’s “major role in safeguarding world peace and development,” and calls it “a rising force in the global landscape.”  While some analysts suggest that globalization is slowing if not ending, these developments more strongly indicate that it is rather taking on a new form within a new world order that clashes with the visions and values of the West.  We appear to be transitioning into a world that is genuinely multi-polar with globalization under new rules.

December 13, 2016

* Andrés Serbin is the president of the Coordinadora Regional de Investigaciones Económicas y Sociales (CRIES), a Latin American think tank.  This article is adapted from an essay in Perfil, based in Buenos Aires.

Latin America: Wait-and-See Reaction to Trump – For Now

By Catie Prechtel and Carlos Díaz Barriga*

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An effigy of Donald Trump in Mexico City. / Sequence News Media / Daniel Becerril / Wikimedia / Creative Commons

Most Latin American leaders publicly reacted with caution to Republican presidential candidate Donald Trump’s victory in last week’s U.S. elections, but reactions will sharpen quickly if Trump tries to make his campaign rhetoric about the region and Latino immigrants into policy.  Mexico and Central America showed clear anxiety over the implications for their economies and regional migration pressures.  Some South American presidents expressed mild enthusiasm and voiced hope for a positive relationship with the new administration, although Trump’s avowed opposition to the Trans-Pacific Partnership trade accord – under discussion at the APEC summit in Lima this week – has fueled concerns about the future of free trade.  Fear that the new U.S. President, who takes office on January 20, will deport millions of undocumented migrants from Mexico and Central America and force U.S. firms to shut factories in those countries has seized the media there.

  • Mexican newspapers headlines screamed “Be afraid!” and warned of a “Global shakedown.” Reports recited the many promises Trump had made against Mexico, including his proposal to build a border wall (and make Mexico pay for it); revising NAFTA and raising taxes on Mexican imports, putting conditions on remittances, and charging more for visas. The peso suffered three consecutive days of losses before recovering slightly following interviews by Trump and his team suggesting a softer stand on the wall and free trade.  President Peña Nieto phoned Trump with congratulations and agreed to meet soon to discuss bilateral issues, including presumably the wall.
  • Guatemala’s Prensa Libre reported businessmen are worried Trump’s rejection of free trade could have a direct impact on the economy and described the possible mass deportations as a “social bomb” for the country. In Nicaragua, newspapers speculated that Trump’s victory will give a boost to U.S. legislation, the Nicaragua Investment Conditionality Act (NICA), which calls for economic sanctions if President Daniel Ortega doesn’t take “effective steps” to hold free and fair elections.  In El Salvador, the main concern is the deep economic stresses of mass deportations of Salvadorans in the United States.  Honduras shares those concerns but apparently was more wrapped up in President Juan Orlando Hernández’s announcement confirming his intention to make a controversial bid for reelection.
  • Venezuelan President Nicolas Maduro, often given to bombastic rhetoric, has focused on working with Washington in the closing months of the Obama Administration. In a phone conversation with Secretary of State John Kerry, he stressed the need to establish an agenda with the next administration that favors bilateral relationships, but he specifically called on Obama to “leave office with a message of peace for Venezuela” and rescind a determination that Venezuela is a “threat to the United States.” Obama himself last April said the designation was exaggerated.
  • Media in Colombia speculated that Trump will be less committed to aid and support for finalizing and implementing a peace accord with the FARC. Argentina, Brazil, and Chile offered calm reactions to the news.  For Buenos Aires and Santiago, the biggest concern was potentially strained commercial relationships and free trade agreements with the United States, according to press reports.  Brazil offered little reaction to the news, but Trump’s win brought four consecutive days of losses for the real – weakening 7.6 percent since the election.

The political leaders’ cautious reactions conceal a broad and deep rejection for President-elect Trump’s values and intentions as he stated them during the campaign.  Former Mexican President Vicente Fox once again tweeted his disapproval for Trump, while José Mujica, former President of Uruguay, expressed dismay on Twitter, summing up the situation in one word: “Help!”  Press reports and anecdotal information indicate, moreover, that large segments of Latin American society have shown a widespread distaste for Trump’s win.  Their general wait-and-see attitude will end when and if Trump proves himself the unpredictable and reactionary he seemed on the campaign trail.  Latin American leaders have a lot of work ahead as they navigate a new relationship with the United States.

November 15, 2016

* Catie Prechtel and Carlos Díaz Barriga are CLALS Graduate Assistants.

Brexit: Limited Implications for Latin America

By Arturo C. Porzecanski*

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Photo Credit: Elionas2 / Pixabay / Creative Commons

The June 23rd British referendum result – a 52-to-48 percent vote to leave the European Union (EU) – has roiled the world’s leading financial markets, but contrary to many opinions issued in the referendum’s wake, the economic and financial implications of Brexit for Latin America have been either mild or favorable.  Hard line Brexit statements made earlier this month by UK Prime Minister Theresa May, and various rebukes from policymakers on the Continent, have had financial-market repercussions for the pound.  Most notably, sterling has fallen sharply, and it is now down more than 15 percent from its high on the day of the fateful vote, plummeting to three-decade lows against the dollar.

  • The market reaction initially led to a mostly regional (UK and Europe) correction in stock prices. Even this was short-lived: for example, the FTSE 250, an index of domestically focused UK firms, at first dropped by 14 percent but recovered fully by early August – and has since been trading above the pre-referendum level.  Moreover, the UK recession many feared did not materialize, at least not during 3Q16.
  • Financial markets priced in fairly quickly the conclusion that the Brexit shock would lead to greater dovishness among the world’s major central banks. Most relevant to Latin America and the emerging markets (EM) generally, the Brexit helped to persuade the U.S. Federal Reserve to delay its tightening until at least the end of 2016.  While Latin America’s trade and investment ties to Europe are not insignificant, the region’s major economies are far more dependent on the health of the U.S. economy and on the mood in the U.S. financial markets, and secondarily on trends in China.
  • If the UK and the Eurozone had stumbled and were headed for a recession, however, one likely casualty of Brexit would have been a noticeable drop in world commodity prices, with strong implications for the major economies of Latin America. While commodity prices have softened somewhat (non-oil commodities have averaged 2¼ percent lower since the Brexit vote, and oil has traded 7½ percent below), confirmed expectations of loose monetary conditions in the U.S. and Europe during 3Q16 have more than compensated.  This is why most EM stocks, bonds and currencies have rallied, with the parade led by the Brazilian Real (BRL), so far the best-performing of 24 EM currencies tracked by Bloomberg (up about 20 percent year-to-date).

The medium-term implications of Brexit for Latin America will depend on how much “noise” emanates from London, Brussels and other European capitals during the negotiation process (likely, 2Q17-2Q19).  Prime Minister May has now made three statements that define her bargaining position: Article 50 (exit) negotiations will begin by next March; the imposition of migration controls on EU citizens coming to the UK is non-negotiable; and the UK will no longer be under the jurisdiction of the European Court of Justice.  The latter two points mean that Britain cannot remain a member of the single market, and is therefore committed to forging a customized free-trade agreement with the EU, which could sow uncertainty and thus depress economic growth in Europe and beyond.

The most probable scenario – slow and halting Brexit negotiations, with progress hard to achieve until close to the end (in 2019) – will encourage uncertainty and speculation among economic agents and thus will be a drag on economic growth especially in the UK, and much less so in the rest of the EU.  However, it need not generate the kinds of waves that will reach, never mind derail, Latin America’s economic trajectory.  It is much more likely that what does or does not happen in Buenos Aires, Brasilia, Caracas or Mexico City, and above all in Washington, DC – courtesy of the Fed, the White House, and the U.S. Congress, in that order – will overshadow just about any headlines generated by the Brexit negotiations in Europe.  There is room for Latin America to clock higher GDP growth numbers in the years ahead when compared to the disappointing regional averages of 1 percent growth in 2014, zero growth in 2015, and a contraction of about -0.6 percent in the current year (as per IMF estimates).  This assumes that the Fed’s tightening is gradual (namely, no more than 0.25 percent increases in the Fed’s target rate per trimester) and that the UK’s divorce proceedings are not overly hostile.  This scenario foresees that creditworthy governments, banks and corporations in Latin America will retain access to the international capital markets on reasonable terms, despite some initial retraction in investor interest ahead of, and right after, the resumption of the Fed tightening cycle.

 October 17, 2016

*Dr. Porzecanski is Distinguished Economist in Residence at American University and Director of the International Economic Relations Program at its School of International Service.

Colombia: University Professors Appeal for post-Referendum Solution

By Eric Hershberg and Fulton Armstrong

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At a march for peace in Bogotá, Colombia, a woman holds a sign that states, “We are the generation of peace.” / Agencia Prensa Rural / Flickr / Creative Commons

A group of Colombian university professors have organized an appeal to their colleagues in and outside the country to sign a petition “requesting an effective solution without delay” to overcome the impasse created by rejection of the peace accord on October 2.  The text of the petition, which currently has more than 1,700 cosigners, is as follows:

[We] university professors, from different disciplines, universities, and regions, join our voices with those underscoring the urgent need to reach, as soon as possible, a final Accord to end the conflict with the FARC.  Delay poses enormous risks.  It is essential to set, with all urgency, an agenda for talks limited to points requiring discussion, with concrete and viable proposals for modifying the existing text.  Reflecting the extremely close results in the October 2 plebiscite, the agenda should address the concerns of the No voters, who won the vote, while respecting the voice of the equally numerous Yes voters, who supported a text that cannot be wholly reevaluated, as well as those who did not speak at the polls.

The result of the plebiscite on Sunday [2 October] provides the unique opportunity to adjust the existing Accord in a way that draws a majority of society.  Capitalizing on that opportunity is the responsibility of all sides:  the FARC, the representatives of No, and those of Yes.  The plebiscite leaves no doubt – and the mobilizations in the streets and social media confirm – that society demands that all be flexible in their positions.  That’s what the youth demand as they convoke marches and other actions to push a quick Agreement, and which we support without hesitation.

The professors are an important voice of society and, as the statement explicitly states, of young people throughout the country who aspire to have a peaceful future.  The statement dodges specifics on what needs to be changed in the accord, but its assumption that sufficient pressure can be brought on all parties, including those who opposed the accord, to find common ground is credible.  Appeals such as this – unprecedented in the sheer number as well as in the wide range of institutions, disciplines, and regions that are represented – will be a good test of the capacity of Colombian civil society, such as the Academy, to push compromise, and for others, such as the economic elites, to achieve compromise.  Agreement may emerge, for example, to move discussion of certain social issues, such as those that riled some religious groups, into another venue so they aren’t an obstacle to agreement on war-and-peace issues.  The professors have their finger on the pulse of the nation and grasp the underlying political, economic, and social drivers of peace – and their optimism that neither side will come to a new negotiating table with dealbreakers is probably more warranted than anyone else’s.

Click here to see the original Spanish version of the petition.

October 14, 2016

Challenging Assumptions about Supercycles in Peru and Latin America

By Claudia Viale and Carlos Monge*

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A Southern Copper Corporation train heading towards the Peruvian mines of Toquepala and Cuajone. / David Gubler / Wikimedia Commons / Creative Commons

The commodity-fueled “supercycle” that has propelled Latin American economies for the past decade and a half is ending, but careful analysis of other ongoing cycles will help countries cushion the blow.  ECLAC economist Jean Acquatella has identified four significant global cycles in which Latin America has actively participated as a raw materials exporter through the 20th and 21st centuries: U.S. industrialization; post-war European reconstruction and Japan’s industrialization; the post-1973 OPEC-driven oil boom; and, most recently, urbanization and industrialization in Asia, especially China.  During this fourth cycle – considered a supercycle because of sustained record levels of commodity prices and demand – resource-rich countries in Latin America experienced high growth rates, fiscal abundance, and a decrease in poverty rates as well as an increase in social conflict over the extraction of natural resources.  Slower Chinese growth has since reduced global demand and prices for the region’s minerals and energy, but the impact has been less severe than at the end of previous cycles.

  • José de Echave, of CooperAcción, has emphasized the need to differentiate the recent supercycle from what he terms the “extractive boom,” which started in the early 1990s as a result of the privatization of state mining and hydrocarbons assets and pro-market legislative reforms. His analysis indicates that the extractive boom will outlast the supercycle as long as large-scale projects mature and pro-investment policies continue in place.

The concessions, investments, production and fiscal rent during the past decade and a half in Peru and other countries indeed point to other cycles, some of which have enduring momentum.  Peru has experienced a “concessions cycle” for exploration activities; “investment cycles” as a result of privatization of state assets in the ‘90s and as a result of successful explorations and increased demand and prices starting in 2002; “productive and export cycles” as a result of investments; and a “fiscal cycle” of abundant public revenue.  Several cycles will obviously decline, but the country’s pro-investment policies remain in effect.  The new government of President Pedro Pablo Kuczynski is deepening policies started under former President Humala: reducing corporate income taxes, making environment compliance less onerous, and curtailing the oversight capacities of the Ministry of the Environment.  Investments made in the last five to ten years are, in many cases, only now beginning production.  Thus, as contradictory as it might sound, Peru is poised to double its copper production in the next five years.

The complex differences between “extractive booms” and “supercycles” have deep political implications.  The end of a supercycle could mean a substantial reduction in social conflict between local populations and extractive enterprises and government, but the current “race to the bottom” driven by pro-investment policies could fuel new tensions.  The Las Bambas project in the South Andean region of Apurimac, Peru, illustrates the point.  New legal procedures adopted in 2014 easing approval of environmental impact assessments (EIA) have allowed the Ministry of Energy and Mines to approve substantial changes in the project’s design and EIA without informing the local population and authorities, generating a violent local social reaction.  Available data shows analogous phenomena underway in Bolivia, Colombia, and Ecuador.  The implications will vary for each country, of course, but careful analysis is needed if state policies and civil society activism are to be on solid ground.

October 11, 2016

Claudia Viale and Carlos Monge are Program Associate and Latin America Director at the Natural Resource Governance Institute in Lima.

 

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.