South America: Venezuela Humanitarian Crisis Roiling Region

By Michael McCarthy*

A line of Venezuelan migrants at a Colombian border checkpoint.

Venezuelan migrants at a Colombian border checkpoint. / Colombia Reports / Wikimedia

The humanitarian crisis driven by both Venezuela’s increasingly dire economic situation and political repression is taxing all of northern South America, with no remedy in sight.  In what UN High Commissioner for Refugees officials call “one of the largest mass-population movements in Latin American history,” an estimated 2.3 million Venezuelans – about 7 percent of the country’s population – have poured out of the country since 2014.  According to UNHCR, more than half of them suffer from malnutrition, and a significant percentage suffer from diseases, such as diphtheria and measles, previously thought to be under control.  The crisis is posing economic and security challenges to neighboring countries:

  • Colombia has seen the greatest flow. About one million refugees have crossed the border since 2015, but arrivals have peaked – reaching about 5,000 per day – as the Venezuelan economy hits new lows.  Venezuelans’ fears that Colombia’s new president, Iván Duque, will close the border have driven part of the surge, but Venezuelan President Nicolás Maduro’s recent policy announcements – including a fórmula mágica that includes controlling inflation by lopping five zeros off current prices – are main drivers, according to most observers.
  • Ecuador received more Venezuelans in the first half of 2018 than in all of 2017 (340,000 to 287,000). Confronted with severe disruptions in border communities, Quito has declared a month-long “emergency” in four border provinces and has sent doctors and other personnel to help mitigate the impact of the arrival of several thousand Venezuelans a day.  Ecuador has announced that it is now denying entry to persons without passports.  Quito last week called for a regional summit on the crisis in mid-September.
  • Peru is the largest refugee hosting country in the Americas, but it has now begun to demand official documentation.
  • Brazil has taken in several tens of thousands of Venezuelans, but the influx is provoking local tensions. A regional judge closed the border – a decision overturned by the Supreme Court – and locals in the border city of Pacaraima took matters into their own hands vigilante-style, burning down a tent city and chasing about 1,200 Venezuelans back across the border.  Argentina and Uruguay, which last granted residency to 31,000 and 2,500 Venezuelans, are beginning to feel pressure to slow the flow.
  • Guyana is also upset because Venezuelans claiming Guyanese citizenship are arriving with claims to properties held by others since at least the 1980s. As the International Court of Justice takes up Georgetown’s case on its decades-old border dispute with Venezuela, the refugees’ arrival is an unwelcome distraction.

The United States and European Union have offered assistance, mostly to Colombia.

  • Earlier this month, Washington announced it would give Colombia an additional US$9 million in aid to provide water, sanitation, hygiene and some medications to Venezuelan migrants – bringing the overall U.S. commitment to over US$46 million over the past two years. USAID has cast the aid as supporting a “regional response” to the problem, but Washington’s closest ally, Colombia, will receive the overwhelming share.  U.S. Defense Secretary Mattis has announced he’s sending a hospital ship, the USNS Comfort, to Colombia and “possibly other destinations” to help.
  • In June, the EU committed €35.1 million (US$40.2 million), mostly for “emergency aid and medium-term development assistance” for people remaining in Venezuela and for neighboring countries affected by the crisis, and the EU Commission promised it would mobilize its migration and asylum program to provide help for migrants.

Assistance from the U.S. and EU, as well as any future help from multilateral development banks, is crucial but, ultimately, these interventions are palliatives.  Durable solutions will have to come from within Venezuela and from regional initiatives.  The summit proposed by Ecuador will produce little without strong leadership that at the moment appears absent.  The Organization of American States seems fatigued by the issue, and its Secretary General’s personalization of the struggle against Maduro over the past year has left him few options as well. UNASUR has been severely weakened – most recently by Colombian President Duque’s announcement of his country’s definitive withdrawal from the group – and its interlocutors from past efforts to find a solution in Venezuela have refrained from public comment.  The leadership of UN refugee specialists is critical, but the Security Council is very divided over the Venezuela crisis and the Secretary General has failed to gain traction with efforts to take a more active political role to address the Venezuelan crisis.  With Maduro’s fórmula mágica for resolving Venezuela’s economic challenges having next to no possibility of helping, the hemisphere should not be surprised that the flow of refugees will surely continue.

August 28, 2018

* Michael McCarthy is a Research Fellow with the Center for Latin American & Latino Studies.  He publishes Caracas Wire, a newsletter on Venezuela and South America.

Prospects for Reproductive Rights Dim with End of “Left-Turn”

By Merike Blofield and Christina Ewig*

A large group of women and men gather in front of statue in a plaza.

A demonstration against abortion in Córdoba, Argentina, shortly after President Mauricio Macri’s election. / Marco Camejo / Flickr / Creative Commons

The end of Latin America’s “pink tide” suggests the region will make little progress in protecting reproductive rights in coming years and may even face some policy reversals.  With five Latin American governments slated to elect new leaders in 2018, and with recent elections of right-leaning governments in Chile and Argentina, Latin America may well be concluding the left-turn that has characterized the region’s politics since the early 2000s.

  • The past two decades of pink tide governments coincided with a flurry of legislative activity on abortion policy – in sharp contrast to previous decades of policy stasis, when high rates of clandestine abortions coexisted with restrictive laws. Since the turn of the millennium, abortion laws have been revised by Latin American legislatures and courts on 11 separate occasions in eight different countries.  Even in countries where legal reforms did not go through, legislatures debated bills at a prevalence not seen before.
  • Several left governments have carried through liberalization in response to public opinion and social mobilization. Last August, for example, the Chilean Supreme Court upheld its Congress’ liberalization of abortion law – to allow for abortion under three circumstances (threat to life; fatal fetal defect; rape) – overturning the absolute prohibition that had been in effect since the last days of the Pinochet military regime in 1989.  Some left governments went even further:  Uruguay legalized abortion in 2012, and Mexico City did so even earlier, in 2007.

Yet left governments have not been unequivocally liberal; some have actively upheld or enacted conservative laws, even absolute prohibitions.  In 2006, the Sandinista Party in Nicaragua reversed course from allowing therapeutic abortion to supporting absolute prohibition, while Ecuadoran President Rafael Correa in 2013 rejected a provision allowing abortion in the case of rape.  The FMLN in El Salvador has doggedly, even brutally, enforced a total prohibition, to the detriment of many (primarily poor) women’s lives.  In a recent study (published in Social Politics), we show this split in policy roughly follows the “institutionalized” vs. “populist” typology of lefts.

  • Institutionalized parties – like those in Chile and Uruguay – have channels in place for civil society organizations, including feminist ones, to have bottom-up influence. Given their respect for the rules of the game, however, the institutionalized lefts are also likely to face well-organized conservative opposition, which slow down reform, shape final legislation, or even veto it altogether.  In Uruguay and Chile, feminists had a voice, but conservatives were also are able to block, slow down, and water down liberalization.  This is why the Uruguayan reform took so long and why in both cases the final legislation is less liberal than the original proposals.
  • By contrast, populist governments, like those of Nicaragua under Daniel Ortega and Ecuador under Rafael Correa, often see advocates for liberalization as political threats – particularly feminists who also represent more general claims for individual autonomy and pluralism. Moreover, an issue like abortion, where the practical costs of a restrictive stance are born almost exclusively by low-income women, is likely to be used by populist leaders as a pawn in a power struggle with well-organized, influential religious forces.

Although we systematically analyzed only abortion politics, we found that sex education, contraceptive access, and other reproductive health policies more broadly have followed similar dynamics in Ecuador, Nicaragua, Chile, and Uruguay.  For example, the Uruguayan left government expanded sex education after assuming power in 2006, while in Ecuador, leaders appointed in health bureaucracies sought to reduce access to publically provided reproductive health services.  Nicaragua, on the other hand, has the highest rate of teenage pregnancies outside sub-Saharan Africa.

As Latin America’s left shift appears to be coming to a close, reproductive health policies promise to remain contentions – and abortion continues to be a public health crisis across most of Latin America even with the limited liberalizations of the past decade.  The Alan Guttmacher Institute recently estimated that 6.5 million abortions are annually performed in the region.  The vast majority are still done in clandestinity, resulting in high maternal mortality and tens of thousands of annual hospitalizations, which affect low-income women the most.  While it is unlikely that recent changes will be reversed in the more institutionalized settings, the rightward shift that is occurring among especially these countries does not bode well for further liberalization and resolution to the abortion crisis.

 January 18, 2018

 * Merike Blofield is Associate Professor of Political Science at the University of Miami.  Christina Ewig is Professor of Public Affairs and Director of the Center on Women, Gender and Public Policy at the Humphrey School of Public Affairs, University of Minnesota.

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.

Ignoring MERCOSUR and UNASUR at Your Peril

By Thomas Andrew O’Keefe*

Mercosur map

Participating countries in MERCOSUR. Image Credit: Immanuel Giel (modified) / Wikimedia / Creative Commons

Pundits who dismiss MERCOSUR and the Union of South American Nations (UNASUR) as failed attempts at Latin American economic integration should look again.  MERCOSUR has presided over an explosion in intra-regional trade among its four original member states (Argentina, Brazil, Paraguay, and Uruguay) from just over US$ 5 billion at its launch in 1991 to US$ 43 billion by 2014.  UNASUR, for its part, is credited with thwarting a coup attempt against Evo Morales in 2008 and putting a damper on continental arms races.

  • MERCOSUR and UNASUR member countries have taken additional important steps toward convergence since 2014, when MERCOSUR’s highest governing body adopted “CMC Decision 32,” which allows initiatives pursued by either collective to be binding on both if they arise from a set of goals and objectives common to both. The document reaffirms the UNASUR founding treaty stipulation that “South American integration shall be achieved through an innovative process that includes all of the achievements and advances by the processes of MERCOSUR and CAN [Andean Community].”  Chile has spearheaded this effort as a means of reducing duplication of efforts, and is also attempting to bridge ideological differences between the Pacific Alliance (Chile, Colombia, Mexico, and Peru) and MERCOSUR to further build Latin American unity.

Given the relentless negative assessment of both integration projects, multinational pharmaceutical companies were caught off guard when MERCOSUR and UNASUR forced them late last year to make substantial price cuts for public-sector purchases of Darunavir, an antiretroviral to combat HIV-AIDS, as well as Sofosbuvir, used with other medications to treat Hepatitis C.  Both drugs are on the World Health Organization’s List of Essential Medicines.  As a result of CMC Decision 32/14, the Ministers of Health of all the South American nations met in Montevideo on September 11, 2015, and launched a joint MERCOSUR/UNASUR committee to negotiate with multinational pharmaceutical companies on the prices for bulk purchases of certain high-priced drugs.  The committee, made up of representatives from each government’s agency responsible for purchasing medicines, won major price cuts last November – a steep reduction for Darunavir from Hetero Labs as well as lower prices with Gilead for Sofosbuvir.  The new costs were premised on the lowest amount charged to any one of the member governments, and enabled Chile’s Ministry of Health to pay 90 percent less than what it previously paid for Darunavir.  The South American governments as a whole are expected to save US$ 20 million in 2016 on purchases of this anti-retroviral.  A proposed 14 percent reduction in the cost of the combination Sofosbuvir-Ledispaver drug for Hepatitis C – if accepted by the MERCOSUR/UNASUR committee – would enable further savings.

The South American governments have their eyes set on several additional high-priced medications, with a particular focus on drugs used to treat cancer.  In order to aid the committee’s work, UNASUR is creating a data bank of the prices charged by the multinationals for specified medicines purchased by the public health sector in each member state.  The fact that the purchases are made jointly through the Pan American Health Organization’s already existing Strategic Fund opens the possibility that countries in Central America and the Caribbean can benefit as well.  It also means that all these countries can access the Fund’s capital account and do not need to have the cash in hand to acquire medications required to address public health emergencies.  MERCOSUR and UNASUR – often dismissed as ineffective – are demonstrating that integration produces tangible results.

February 11, 2016

* Thomas Andrew O’Keefe is President of San Francisco-based Mercosur Consulting Group, Ltd. and is former chair of Western Hemisphere Area Studies at the U.S. State Department’s Foreign Service Institute (2011-15).

Correction: Due to an editing error, an earlier version of this post mistakenly stated that “a 14 percent reduction in the cost of its combination Sofosbuvir-Ledispaver drug for Hepatitis C will enable Chile’s Ministry of Health to pay 90 percent less than what it previously paid for Darunavir.”  The outcomes of the cost negotiations for the two medications are unconnected.

What Does Macri’s Victory Mean for Latin America’s Left Turns?

By Eric Hershberg and Fulton Armstrong

South America right

Photo Credits: Douglas Fernandes and _Butte_ / Flickr / Creative Commons

Argentine President-elect Mauricio Macri’s actions since his historic victory last week indicate a rightward shift in domestic and foreign policy that some observers are tempted to proclaim as part of a broader Latin American trend.  He has reiterated promises of broad economic reforms and appointed a cabinet – including former JP Morgan executive and ex-Central Bank chief Alfonso Prat-Gay as his finance minister – to implement them.  He has further pledged to reverse outgoing President Fernández de Kirchner’s protectionist trade policies.  (During the campaign, advocates of unbound capitalism cheered when he named Ayn Rand’s “The Fountainhead” as one of his favorite books.)  Macri has named Susana Malcorra, a senior aide to UN Secretary General Ban Ki-moon with strong diplomatic credentials, to be his foreign minister and, for starters, directed her to reverse policies he judged to coddle Venezuela. The President-elect, who takes office on December 10, is speaking with the confidence of a President elected with more than a 3-point margin over Kirchnerista candidate Daniel Scioli and with control over more than the 91 seats (one third of the total 257 seats) that his Cambiemos coalition won in the lower house of Congress.  (His party is the first, however, to control simultaneously the Province of Buenos Aires, the City of Buenos Aires, and presidency.)

The temptation in some quarters to declare Macri’s victory as the beginning of the end for Latin America’s “Left Turns” is understandable but nonetheless premature.  To be sure, the Argentine electoral results coincide with other major setbacks for various currents of the Latin American left:  The Chavista project in Venezuela is crashing; Brazilian President Rousseff and her party are mired in a corruption morass and economic crisis whose combined effects may cut short her time in office; President Correa, facing a dire economic situation in Ecuador, is increasingly talking about abandoning efforts to run yet again in 2017.  Chilean President Bachelet’s low popularity and declining public support for the Vázquez government in Uruguay may be additional signs that the prospects for the “pink tide” are very much in doubt.

But in Argentina and beyond, the jury is still out.  Through no action of its own, the South American left enjoyed the multiple benefits of the decade-long commodity boom that began in 2003.  Just as its electoral successes did not indicate wholesale shifts to the left in the region – indeed political scientists have long questioned whether the evidence supports claims of a leftward shift in popular preferences – today’s parallel crises may reflect the end of of the boom rather than a rejection of left-leaning governments.  Many of the policies advanced by various currents of the “pink tide” may remain highly popular, even while they are no longer affordable.  Another tempting explanation is that Latin Americans are rejecting leaders who they perceive as corrupt, irrespective of their placement on the left-right spectrum.  In Argentina, notably, Macri hasn’t rejected the Kirchneristas’ redistributive agenda but has instead emphasized the confusing, corrupt way it has been pursued for the past 12 years.  (Never before has an Argentine rightist portrayed eliminating poverty as a core priority.)  It may well be that voters understand economic slowdowns and dysfunction as a product of corruption rather than the fallout from declines in historically high commodity prices.

Regardless of the underlying drivers of electoral change and public disillusion with incumbents, it’s fair to ask if the left’s current travails and the right’s resurgence will open the way toward more accountable political leadership, whatever its ideological proclivities, or just signal an alternation of power.  Like Macri in Argentina, a new cohort of Latin American leaders will have to prove that they are more than outsiders drawing on sentiment to throw out the incumbent rascals.  The question is whether they pursue policies that make democracy more transparent, expand meaningful political participation, and sustain the social gains that have been achieved by the pink tide governments that now appear to be on the ropes.

December 2, 2015

OAS: Almagro’s Challenges

By Fulton Armstrong and Eric Hershberg

Photo Credit: OEA – OAS / Flickr / Creative Commons

Photo Credit: OEA – OAS / Flickr / Creative Commons

The OAS’s new Secretary General, Luis Almagro Lemes, appears to be steering his organization toward a coordinating role that, he hopes, places it above the fray of hemispheric tensions.  He has not chafed at Washington’s version of democracy promotion, and indeed has embraced elements of it.  He has readily admitted the “inexorable conclusion” that the OAS needs to be “revamped and modernized”; that it needs to “reinforce its legitimacy”; and that its structure and resources need to be better realigned with the four pillars of its mission—democracy, human rights, security, and integral development.  His promises of internal reform so far have not been radically different from those put forth by his beleaguered predecessor, José Miguel Insulza, or even diverged from proposals embodied in U.S. legislation passed in 2013.  They have been articulated, however, in the sort of Washington consultancy language that might help his cause in the U.S. capital, such as references to evolving “from the OAS’s traditional command and control toward an organization that operates like a matrix geared to results in which the hemispheric and national dimensions feed into and enrich each other.”  Elected in March and inaugurated in May, in June Almagro received a mandate from the OAS General Assembly to restructure the General Secretariat, reorganize old offices into new ones, and implement other aspects of his plan.

Regional reactions to Almagro’s election and reform plan have been positive if sometimes not overly enthusiastic.  At the General Assembly meeting, U.S. Deputy Secretary of State Blinken spoke of a “new chapter … in the history of the OAS” and said, “We have a new secretary general, a new strategic vision statement, and renewed attention to genuine reform.”  South America’s preeminent power has been generally aloof toward the OAS, but the Brazilian Senate in mid-July approved a new OAS permanent representative, and last week Brasilia paid $3 million of its $18 million in late dues—modest relief from the slow strangulation caused by dire cash-flow issues because of non-payment by several key countries.  Almagro has also won support in Latin America through his repeated signals of a desire to work more closely with other hemispheric bodies—even CELAC, which was created in 2011 as a direct challenge to the OAS and supposed U.S. influence over it.  He pledged to “seek out areas where we can complement the work of other bodies,” citing by name CELAC, UNASUR, SICA, CARICOM, and MERCOSUR.  According to press reports, his close cooperation with UNASUR as Foreign Minister of Uruguay in 2010‑15 lends credibility to that promise.  Almagro also has won regional praise for pledging to continue efforts for bring Cuba back into the OAS as a full member—building on the success of the Summit of the Americas in April driven by the Washington-Havana rapprochement.

Outgoing Secretary General Insulza was a relatively easy act to follow because, often unfairly, his image was tattered after 10 years in the crossfire between Washington and the countries pushing to undermine U.S. influence in Latin America.  Almagro appears eager to push the re-set button, and the success of the Summit of the Americas and his pledges on democracy, reform, and hemispheric cooperation have given him a good start.  But leading the OAS is going to take more than artful rhetoric, internal restructuring, and a few reforms.  President Obama’s move on Cuba removes one major irritant from hemispheric relations, but an effective Secretary General is going to have to navigate the shoals of longstanding North-South tensions.  The “spirit of genuine and equal partnership” that Deputy Secretary Blinken spoke of wanting with the OAS will be difficult to achieve, and the supporters of CELAC, UNASUR, and other alternatives to the OAS will find it equally tough to accept the OAS as a valid venue for debate and compromise.  Almagro will also have to show that he can run the organization in a professional and modern way to overcome the perception left by his predecessor of weak management of the institution.  He has declared himself a man of practical solutions, not ideology, but pleasing everyone—trying to be a coordinator who threatens no one’s interests—may not be a workable strategy for long.  If the OAS is to fulfill its mission, moreover, the United States and others will have to give Almagro the space to do his job.

July 27, 2015

OAS: New Leadership, Old Challenges

By Aaron Bell and Fulton Armstrong

José Miguel Insulza and Luis Almagro Lemes Photo Credit: OEA - OAS / Flickr / Creative Commons

José Miguel Insulza and Luis Almagro Lemes Photo Credit: OEA – OAS / Flickr / Creative Commons

Uruguayan diplomat Luis Almagro, elected secretary general of the Organization of American States (OAS) last week, says he wants to revitalize the hemispheric organization – a herculean, if not impossible, task.  Almagro was the only candidate remaining after Guatemalan Eduardo Stein and Peruvian Diego García-Sayán withdrew from the race – the former for health concerns, and the latter due to a perceived lack of support from his government.  Almagro previously served as Foreign Minister under former president José Mujica and is a member of his Movimiento de Participación Popular, whose left-leaning sympathies led observers to wonder whether Almagro could draw sufficient backing even running unopposed.  But Almagro received formal support from several prominent nations ahead of time, including Brazil, Argentina, Mexico, and the United States, and he got 33 of 34 votes (Guyana abstained) to secure his election.  Following the election, U.S. Deputy Secretary of State Antony Blinken called for the new Secretary General to “lead the OAS through this genuine reform process by helping to refocus the OAS on its core pillars – democracy, human rights, sustainable development, and citizen security,” all while resolving its fiscal challenges.  “We look to [him] for his leadership, but we want him to know that he does not stand alone.”  His five-year term begins in May.

In his acceptance speech, Almagro stated that he intends to rise above the role of crisis manager and facilitate “the emergence of a revitalized OAS,” but major challenges await him:

  • The political crisis in Venezuela has long challenged the OAS, and an escalation in sanctions and rhetoric from the United States has made its balancing act harder. Current Secretary General José Miguel Insulza criticized the Obama administration’s national security warnings while also calling out the Maduro government for the arrest of opposition leader Antonio Ledezma and its resistance to dialogue with the opposition.  Almagro has been critical of U.S. sanctions as well, and quietly worked behind the scenes to encourage negotiations between political opponents in Venezuela, but his public silence on abuses by the Maduro government worries his critics.
  • The Cuba issue will also put Almagro in a tight spot. Havana’s participation in the Summit of the Americas is likely to build pressures for its readmission to the OAS, and Almagro’s record shows he’ll be sympathetic.  But the process could be fraught with risks for the new Secretary General.  Outgoing Secretary General Insulza bears scars attesting to U.S. Senators’ penchant for personalizing attacks when the OAS doesn’t go their way.
  • Any reform agenda is going to get battered from both sides. The OAS mandates are broad and expensive, and members don’t agree on priorities.  As Deputy Secretary Blinken’s comments suggest, Washington wants the organization to focus on its agenda, but much of South America, particularly the ALBA countries, wants the OAS to pull away from U.S. influence.  Nor do differences lie strictly along North-South lines, as made clear by protests during last year’s general assembly against Brazil’s resolution condemning discrimination based on sexual orientation and gender identity.

Almagro seems to have the experience and temperament to be an excellent choice for the job, and his coming from Uruguay, whose good offices have credibility virtually everywhere, may serve the OAS well.  But the challenges will be daunting.  He faces several ongoing crises, particularly in Venezuela, and ongoing splits within the region over the OAS’s role.  One tempting option would be for Almagro to try to distance himself and the organization from Washington – a difficult task at best.  Not only is his headquarters several hundred meters from the White House and the State Department, but the United States government (and to a lesser extent Canada) provides substantially more funding for the OAS’s general fund and through special donations than any other member state.  Almagro’s actions will also be watched closely by U.S. conservatives who, stung by President Obama’s move toward diplomatic relations with Cuba, are looking for a fight over Venezuela, Ecuador, Argentina, and even on some issues with Brazil.  Whatever Almagro does, it will be with the black cloud of the OAS’s financial difficulties over him, and the possibility that failing to successfully balance all of these issues may weaken the OAS and benefit regional organizations like CELAC and UNASUR, which are smaller and less well established, but independent of North American influence.

March 23, 2015

Pension Reform: Uneven Progress

By Christina Ewig*

Two Women

Nathan Gibbs / Flickr / Creative Commons

Recent pension reforms in Latin America show promise for greater gender equity across the region, but progress remains uneven in coverage and generosity.  Since 2007, 13 countries have either introduced or expanded some form of non-contributory pension, offered to defined groups as a social right, while others have made reforms to their existing pension systems that specifically compensate for gender inequalities.  These reforms in several instances were conceived with the participation of gender equity advocates.

  • The introduction of non-contributory pensions has equalized pension coverage between women and men in the region, according to a comprehensive study by the Organización Iberoamericana de Seguridad Social.
  • The equalization of men’s and women’s retirement age in the Dominican Republic, Mexico, and Uruguay makes it easier for women to attain the minimum number of working years for eligibility for a minimum pension.
  • The use of gender-neutral mortality tables in Bolivia and a return to the state-run defined-benefit system that treats men and women equally in Argentina, are also improvements.
  • More innovatively, in the 2007 expansion of the non-contributory pension in Bolivia and the 2008 reforms of the traditional pension systems in Chile and Uruguay, women were given credit toward their pensions for children born or adopted, to compensate for time out of the labor market.

The need for such reforms is great globally and in Latin America.  Women face much greater risks than men of poverty in old age due to workplace discrimination and gender imbalances in family carework responsibilities – the “motherhood wage gap” – during their working years.  Women are employed in smaller numbers than men in the formal economy, and they are often concentrated in the lower-paid and less-stable informal sector.  Domestic workers, primarily women, are in a sector notorious for employers’ evasion of pension payments.  Women in Latin America are also more likely than men to be found among the ranks of the unemployed or partially employed.  When employed full time in the formal sector, they face a diminishing but still substantial wage gap, earning 17 percent less on average than similarly educated men, according to the Inter-American Development Bank.  While the original pay-as-you-go pension systems were based on a male-breadwinner model that envisioned women as “dependents,” the 1990s push toward pensions that relied entirely on individual earnings magnified the effects of these discriminatory employment contexts and carework imbalances.  Moreover, in the individual capital account model, practices such as the use of differential mortality tables to determine monthly payments further reduced women’s income in old age, due to their greater expected longevity.

Despite the progress toward greater gender equity in pension policy, the issue deserves wider attention because advances have been uneven.  For example, while most countries in the region have adopted some form of non-contributory pensions, the percentage of the population eligible for these varies dramatically – as does the monthly payment.  Moreover, while the gap in pension coverage between men and women has narrowed, the compensation levels remain dramatically unequal.  Reforms, like those of Bolivia, Uruguay and Chile, that build-in compensation for market and carework inequalities deserve wider replication. 

February 26, 2015

*Dr. Ewig is Associate Professor of Gender and Women’s Studies and Political Science at the University of Wisconsin-Madison.  She is the author of Second-Wave Neoliberalism: Gender, Race and Health Sector Reform in Peru.

The Impact of Falling Oil Prices on the Western Hemisphere

By Thomas Andrew O’Keefe*

L.C. Nøttaasen / Flickr / CC BY-NC 2.0

L.C. Nøttaasen / Flickr / CC BY-NC 2.0

The sharp drop in the benchmark Brent crude price of oil from just under US$115 per barrel in June 2014 to its current perch around US$50 has important ramifications for the Western Hemisphere.  For Venezuela, which earns some 95 percent of its foreign exchange from petroleum exports, it is a potential disaster.  Underlying political tensions will be exacerbated if there is no money to continue funding social welfare programs or heavily subsidizing gasoline.  It probably also spells the end of PetroCaribe’s generous repayment holidays and what are in essence below-market interest loans for Caribbean and Central American nations.  Sharply lower oil prices also put at risk major energy projects such as the development of Brazil’s pre-salt reserves, which require a minimum price of $50 to $55 to be economically viable.  Equally tenuous are Argentine efforts to regain energy self-sufficiency by exploiting its vast shale oil and gas reserves and Mexican plans to attract foreign investors to participate in deep-water oil exploration and drilling.  The minimum price for a barrel of oil below which new investment projects in Canada’s oil sands are no longer attractive is around $65.  Shale oil producers in the United States are also being squeezed by low petroleum prices.

On the other hand, net energy importers such as Chile, Paraguay and Uruguay benefit from sharply lower oil prices.  Although being weaned off  PetroCaribe will be painful for the Caribbean and Central America in the short term, they will be able to seek oil at the lower prices elsewhere.  The pressure on the Obama administration to lift the ban on U.S. crude oil exports, in response to a glut of domestic shale oil production, could also redound in favor of the Caribbean and Central America by lowering international oil prices further through increased global supply.  Already, 2015 began with U.S. companies authorized to export an ultralight crude called condensate.

In hopes of rallying OPEC to stabilize oil prices, Venezuelan President Maduro last weekend rushed off to lobby Saudi Arabia, which just two months ago refused to decrease production in order to raise prices, but oil industry sources say there’s little chance of a policy change.  Meanwhile, the environment may turn out to be among the biggest beneficiaries of lower oil prices.  Less investment in shale oil production reduces the risk of leaks of methane, a potent greenhouse gas, as well as decreases flaring.  Similarly, slowing down oil sands production in Alberta and Saskatchewan means that the very high levels of greenhouse gas emissions associated with extracting crude oil from bitumen (not to mention the negative impact on water resources) is diminished.  Although lower fossil fuel prices traditionally have undermined incentives to move to greater reliance on renewable and non-traditional energy resources, this may no longer be true.  For one thing many governments around the world are now embarked on ambitious efforts to reduce carbon emissions by, among other things, raising the costs associated with petroleum usage through cap and trade regimes that force companies to buy government-issued pollution permits.  Still others have enacted outright carbon taxes on utilities and large factories per metric ton of carbon dioxide emissions.  In addition, the heavy initial capital investment that was previously associated with things like wind, solar and geothermal power are falling.  For example, a combination of technological advances and Chinese overproduction have resulted in much lower prices for solar panels so that the cost of generation from a large photovoltaic solar plant is now almost 80 percent less than five years ago.  Geothermal energy may be the renewable that most benefits as drilling rigs idled by lower oil prices are now available at a lower cost for geothermal projects.  

*Thomas Andrew O’Keefe is President of San Francisco-based Mercosur Consulting Group, Ltd. and teaches at the Villanova University School of Law.

January 13, 2015

Uruguay: Another Center-Left Victory

By Aaron Bell

Frente Amplio Uruguay / Flickr / CC BY-NC 2.0

Frente Amplio Uruguay / Flickr / CC BY-NC 2.0

The Frente Amplio (FA) emerged from Sunday’s general elections in Uruguay looking stronger than observers had forecast – and signaling Latin Americans’ confidence in the center-left.  Despite a rough campaign season, which included polls showing the FA’s support stuck in the low 40s, and public sniping between the party’s leaders – candidate Tabaré Vázquez and current president José Mujica – just days before the election, the FA gained last-minute momentum in the polls and won 47.9 percent of the vote.  As expected, Vázquez received less than the outright majority needed to avoid a second round of voting on November 30 against the candidate of the Partido Nacional (PN), Luis Lacalle Pou, who won 31 percent of the vote.  But the FA preserved its majority in the lower chamber of parliament, and it can have the edge in the senate if Vázquez wins in November, as his vice president, Raúl Séndic, would hold the deciding vote.  The Partido Colorado (PC) candidate, Pedro Bordaberry, won only 12.9 percent of the vote and placed third in every department.

The elections revolved around Vázquez and Lacalle Pou’s leadership identity and policies; neither candidate argued for substantial structural changes.  In exit interviews, those who voted for the FA credited it with positive changes in its decade at the helm.  The 41-year-old Lacalle Pou has run as a youthful leadership alternative to the 74-year-old former president Vázquez, and he promised fresh ideas for taking on crime and education, considered leading concerns for Uruguayan voters.  While exit interviews suggest that this message appealed to his party’s voters, it did not translate into substantial youth support.  Polling by Factum prior to the election showed that 51 percent of voters aged 18-37 preferred the FA.  Public security has been the leading concern for Uruguayan voters, and both traditional center-right parties, the PN and PC, supported a referendum (also held on Sunday) that would have lowered the age of criminal responsibility for major crimes from 18 to 16.  But long-term polling trends have shown a decrease in the number of Uruguayans prioritizing security from its peak last year, and indeed the referendum failed with 47 percent of the vote; almost the entirety of undecided voters ultimately chose to oppose it.

The FA now has momentum and is well positioned to win the second round and enjoy the support of a parliamentary majority.  A likely PN-PC voting bloc in the second round once held a slight lead over the FA but now appears likely to fall short because of tensions between them.  The PC’s underwhelming performance at the polls has been compounded by Bordaberry’s decision on Sunday night to support Lacalle Pou without consulting PC officials, and his offensive off-the-cuff verbal attack on the Vázquez camp during a conversation with a PN official that same night, for which he has since apologized.  The left-leaning Partido Independiente, which came in fourth place with 3.1 percent of the vote, will make a decision on which candidate to support this week; their votes alone would be enough to push the FA over the top.  As a result, barring a major turn of events, it appears as though the incumbent pink tide will prevail in Uruguay – with implications, perhaps, beyond.  Indeed, a second-round FA victory will be the sixth this year for a left-leaning party, following the pattern set by Chile, Costa Rica, El Salvador, Bolivia, and Brazil.  While the citizenry may be impatient with the pace of progress in Latin America following nearly a decade of left-leaning governance, voters seem to be eschewing the right and maintaining the modestly but consistently leftward tilt that has characterized the region’s politics for much of the 21st century.

October 30, 2014