Monthly Archives: July 2012

Blunt appraisal of Guatemala from ANCLAS student

ANCLAS Honours student Luci Foote-Short recently spent research time in Guatemala. Her blunt assessment is that the country faces some very significant challenges.

Guatemala is considered lower middle income by the World Bank, which presents an image of modest hope for Guatemala. This is incorrect. Guatemala is facing problems so severe that moving towards a better future is going to take huge amount of work.

Like most of Latin America, Guatemala has high inequality and social division. A small group of elites control the country, like they did during the civil war, only now it is under a façade of democracy. Democracy has not been consolidated in Guatemala, whilst competitive party elections are held every four years the result means little for Guatemalans. Corruption is widespread and widely acknowledged. The Vice President Roxanna Baldetti recently announced that 11 arrest warrants would be issued to members of the previous government, which was led by Álvaro Colom. A lack of electoral campaign reform has meant that campaigns finances are unregulated and funded by business elites and drug trade organisations at the local and national level. There is no sense that the government is a mechanism for representation in Guatemala.

The National Civil Police force (PNC) is believed to be rotten with corruption, lacking resources to fight crime and an income high enough to prevent grafts. They are unable and in some cases unwilling to protect is citizens. Reforms demanded in the Peace Accords in 1996, which transitioned Guatemala to democracy have not been correctly carried out. The PNC worked as section of the military during the civil war, instituting terror as a mechanism for control, conducting massacres, tortures and social cleansing. Poorly organised retraining and recruitment, after the end of the war means that many involved in the violence are now charged with preventing it, and they are failing. The Minister of the Interior, Mauricio López Bonilla, announced that the government is to purchase weapons for the PNC, who have a deficit of 250,000 weapons according to the government.  One young man in Guatemala City told me – “if there is a robber in your house, it is better to tell the police that you have shot him and could they please come and take away the body, rather than ask for help”.  The PNC lacks the capacity to fight narcotrafficking, which is becoming an increasingly apparent problem in Guatemala. And internal security is again become part of the Guatemalan Army’s role, deploying Special Forces or Kaibiles, to fight narcotrafficking. The Kabilies committed extreme atrocities during the civil war, and are trained in combat, rather than civilian and state defence, but they are the only resource Guatemala has to fight the narcotraffickers.

The US refuses to provide military aid until those responsible for Human Rights violations that occurred during the civil war are bought to justice. But with an impunity rate measured at 98% by the UN’s special Guatemalan Mission, justice is hard to come by and any widespread investigation into crimes committed during the war, of which the state is responsible for 93%, would fracture the entire system. Which according to a journalist I spoke to, is entirely based on impunity, obvious in the fact that the current President Otto Peréz Molina is suspected of committing such abuses during the war.

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Filed under Analysis, Corruption, Democracy, Guatemala, Uncategorized

Brazil Exports to Africa up 5% in first half of 2012

The Brazilian newspaper O Globo is noting that Brazilian exports to Africa are up 5% in the first half of 2012 to reach R$5.532 billion (about AUD$2.6 billion). Carlos Abijaodi, director of operations for the Brazilian National Confederation of Industry (CNI), is quoted as saying “We have important competitive advantages [in Africa], principally in the countries that speak Portuguese. Our government has gotten closer to the continent, created partnerships. Our climate and soils are very similar, our products are already tropicalized, and thus ideal for Africa.”

The numbers are not anything like as impressive as those seen in trade flows to China, Europe, South America or the US, but do point to some success from getting in at the ground level and engaging in patient market-opening work.

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Filed under Africa, Brazil, News brief, Trade

Fernando Henrique Cardoso’s Kluge Prize Acceptance Speech

Fernando Henrique Cardoso, former president of Brazil and leading international scholar on development and democracy, was recently awarded the prestigious Kluge Prize by the Library of Congress. The $1 million Kluge Prize recognizes and celebrates work of the highest quality and greatest impact in areas that advance understanding of the human experience.

President Cardoso’s acceptance speech is worth reading because it neatly ties together different strands of his path-breaking academic work and links it tightly to his impressive political and public policy accomplishments. A transcript of his acceptance speech can be found here. Many of the ideas and processes he sets out in the speech continue to resonate throughout Brazilian public policy on both the left and the right.

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News Brief: Venezuela on for Mercosur; Air Dilma ready to launch in Brazil?

Brazil appears set to hold course and bring Venezuela into Mercosur at a special meeting of the bloc at the end of July. Venezuelan president Hugo Chávez has reportedly tweeted that Dilma has invited him to the Merocsur meeting.

 

Meanwhile, Dilma’s recent lengthy voyages appear to have caused her to loose patience with the ‘Air Lula’ Airbus A319 that bought shortly before Lula started his globe-trotting presidential foreign policy ways. Apparently four different sources have told Reuters that Dilma is talking to Boeing about buying the same sort of 747 as used for Air Force One. Dilma’s gripe is that she will be undertaking at least one trip a year to India and China and that Air Lula lacks the legs to do the trip with anything less that two refueling stops. This wastes time and, worse for the nervous flyer Dilma, requires more take offs and landings.

The wider story flagged by Reuters is that Dilma’s talks with Boeing might be a sign that the US aircraft maker is going to crack the Brazilian market and might also show that it has a leg up on the competition for the Brazil’s long-delayed FX-2 fighter contract. Of course, it could also become a consolation prize if the lucrative air force renovation project goes to the French or Swedish bidders. This particular soap opera has being going on since the dying days of the Cardoso administration.

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Filed under Brazil, Foreign Policy / Diplomacy, MERCOSUR, News brief, Venezuela

Great op-ed in Melbourne Age on Mexican elections, media ownership, and comparisons to Australia

La Trobe University Institute of Latin American Studies research fellow Randal Sheppard has a very good opinion editorial in the Melbourne Age. Sheppard draws on his experience as an election observer during the recent presidential election in Mexico to offer some penetrating observations about the implications of media ownership concentration for democratic processes.

 

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Filed under Democracy, Mexico

Paraguay’s suspension from Mercosur: Implications for Australian trade policy

ANCLAS Senior Associate Sean Burges has just had a short analytical article published by the site The Conversation looking at what impact Paraguay’s presidential disruptions might have on Australian trade policy in the region. His conclusions are that there could be problems:

“Brazil’s enormous internal market and large economy is the real prize for Australian trade policy, with Uruguay being a pleasant addition. The catch is that any trade agreement with Brazil or Uruguay would have to come through a deal with the entirety of Mercosur. Venezuela’s full membership in Mercosur makes a deal with Australia as likely as a 2014 repeat of Uruguay’s 1950 World Cup defeat of Brazil in Rio de Janeiro’s Maracanã stadium.”

The full article, entitled “Paraguay’s ‘coup’ puts a dent in Australian-South American trade dreams” can be seen here.

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Filed under Brazil, Democracy, MERCOSUR, Trade, Uruguay, Venezuela

Brazil being a forward thinker by pulling Venezuela into Mercosur?

Dilma Rousseff’s government in Brazil has been heavily criticized by a large number of internal and external critics for cynically branding Lugo’s ouster in Paraguay a coup. This was promptly followed by the decision, along with Argentina and a reluctant Uruguay, to suspend Paraguay’s political rights in Mercosur, thereby negating the Paraguayan Congress’s veto over Venezuela’s  accession to the South American trade bloc. Uruguay’s justified complaints of marginalization aside, Venezuela’s entry into the bloc raises serious questions about the economic rationality of the grouping. Hugo Chávez is likely to be a huge barrier to a further widening of the bloc and a successful tackling of the myriad internal economic contradictions plaguing the trade arrangement. The chief complaint is that the Dilma/Cristina decision has effectively killed the economic logic of Mercosur and turned it into little more than a political plaything.

A quiet riposte to this critique is being whispered into the ether by Mercosur country officials (posted outside Australia). Their argument is that Brazil took a long view on Venezuela’s membership in Mercosur. Venezuela has become a good export market for Brazil, and officials not only hope it will continue to grow, but also will grow faster in the post-Chávez era, whenever that is.

Does this make sense?

The quick answer is perhaps, but you need to be a little bit optimistic. While Venezuela is not an insignificant market for Brazil, it is a bit of a volatile one thanks to the vagaries in oil prices.

Drawing on trade data from the Inter-American Development Bank Trade and Integration unit we get a picture of Venezuela as generally being under 2% of Brazil’s exports over the last decade. More to the point, we don’t really see any sustained growth past the 2007-2008 spikes in oil prices which predated the most aggressive period of the Brazilian real’s appreciation against global currencies.

Perhaps of more interest to Brazilian policy makers is  Venezuela’s share of exports from Brazil’s value-added industries. These are the economic sectors that create wider spread employment.

First, the total value-added export picture.

Over the last ten years Venezuela’s share of Brazilian value added exports has oscillated between 1.3% and 5.4% of the total, but in general has been fairly flat and in decline since 2007.

The picture is pretty much the same if we look at Brazil’s market share in Venezuela.

Brazil’s share of Venezuelan imports is relatively stable, experiencing a rise in share from when Lula was elected to the presidency in Brazil, but then entering into a period of sustained, if mild decline.

The significant point is that in the Chávez era the spikes in value-added exports from Brazil closely follow oil prices.

Again, the picture is rather mixed. Exports to Brazil as a percentage of total Brazilian exports vary with shifts in oil prices. But, what matters for Brazilian exporters struggling with competition from China is the rising importance in sectors such as textiles and ceramics.

There are two problems with this rosy spin. First, Venezuelan imports appear to be tightly tied to oil prices and are in decline.

The second is that Brazil appears to be losing value-added market share in Venezuela.

The overall message from the IADB/Intal trade data is that while the Venezuelan market matters for Brazil, it is not nearly as important as Argentina, Europe or the US. Clearly the hope behind the whispers is that this will change with Venezuela’s full accession to Mercosur. Of course, this leaves the question of how the bloc’s internal trade spats are going to become easier to manage with the entrance of another member, and a decidedly vocal and anti-capitalist member at that.

The spoiler in the negative analysis presented here is an account of business that Brazilian construction companies are doing in Venezuela and FDI flows, both of which are extremely difficult to track with any accuracy. Although exports in services (i.e., engineering services) do not show through the IADB trade stats, the transport equipment line in the last chart gives a sense of the importance of service exports — Brazilian firms have played a major role in projects such as expansion of the Caracas subway system.

Still, trade flows are not overwhelming and do raise questions about why there was suddenly a need to rush Venezuela into the bloc over the objections of Paraguay’s congress. Asunción’s beef was with Chávez (partly as a proxy for Lugo), not Venezuela, presumably making it likely that the Paraguayan Congress would have removed its veto fairly quickly once Chávez is out of office. Maybe Brazilian policy makers feel they can capture markets and contacts before the post-Chávez era begins. Of course, links to Chávez of any kind could be a major handicap should there be a major political change in Venezuela.

At the moment the whisper’s slipping into the ether are a tempting, but not quite a convincing explanation.

–Sean Burges

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Filed under Analysis, Brazil, Foreign Policy / Diplomacy, MERCOSUR, Trade, Uncategorized, Venezuela