Latin America this week: Cuba, Mexico, Guatemala, Bolivia, Colombia, and Brazil

Cuba:
Even The Economist has theories on the “announcement”:

So just before October 10th, the date of Cuba’s declaration of independence from Spain in 1868, expect another wave of rumours in Miami that Mr Castro has passed away.

I won’t believe any rumors until the Cuban government produces
a. a corpse,
and b. DNA for corroboration.
As far as I’m concerned, it ain’t over until Horatio sings.

Babalu blog has links to John Stossel’s 20/20 entire program on healthcare.

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Mexico:

On September 10th six explosions ripped through gas pipelines in the state of Veracruz, disrupting oil and natural-gas supplies, shutting down factories and forcing thousands from their homes. It was the third such attack in the past three months, and the most severe. Left-wing rebels claimed responsibility. Pemex, the state oil company, says it hopes to restore a full service within the next few days.

Who was behind the explosions?

Group that attacked pipeline in Mexico is financed by Chavez

The subversive group Revolutionary Popular Army (EPR, left), that attributed yesterday the attacks against six gasoductos of state Mexican Petroleums (PEMEX), is financed by the government of Hugo Chavez, according to a report of press based on the Mexican intelligence service.

Yesterday Mary Anastasia O’Grady wrote about Calderon’s misguided economic reforms,

Having one win under his belt, Mr. Calderon moved this summer to introduce a fiscal reform designed to close revenue shortfalls. A better course of action, with oil topping $80 a barrel, would have been opening the oil market to private investment. But this would have challenged the theology that says that the inefficient state-owned oil monopoly Pemex is sacred. Mr. Calderon apparently has decided, for now, against questioning that taboo.

Instead, he chose to go after the productive private sector of the economy, where at least some large companies are known to take advantage of a complex, exemption-ridden regime to dodge tax payments. The choice has not been fruitful.

As I reported in my July 2 column, Hacienda Minister (Treasury Secretary) Agustin Carstens, formerly of the International Monetary Fund, chose not to seek growth through lower corporate tax rates and simplification. Instead, he crafted a plan to create a corporate alternative minimum tax. The proposal raised the cost of labor on some part of the work force and complicated the code.

This has the rancid odor of a tax hike, not that of a flat tax, and as such it will not lead to growth and prosperity.

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Colombia:
Also at The Economist, an article on Uribe’s move to involve Chavez in the FARC negotiations,

The bigger risk is that by bringing in Mr Chávez, Mr Uribe has granted the FARC an avenue to international legitimacy. If that were the prelude to serious peace talks, so much the better. But Mr Chavez, an elected president but one who has ridden roughshod over his country’s institutions, is hardly best placed to persuade the FARC to accept the rules of democracy.

Uribe has accepted a European proposal on a safe haven, and Sarko is also pressing for a hostage accord, since French-Colombian hostage Ingrid Betancourt, has become a cause celebre in France, even when in Colombia she’s another high-profile hostage among many.

Quite frankly, adding Chavez to this equation strikes me a insane.

Venezuela News and Views has an excellent post on this “very confusing situation where everyone involved is at least playing a double game.”

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Argentina:
Guess who‘s meddling in the elections?

There is a divide among governments in Latin America and the left is making a comeback, with a backlash against free-market reforms and US policies. The “responsible” camp is led by two socialists who have become very pragmatic. In Brazil, President Luiz Inácio Lula da Silva has followed moderate macroeconomic policies, with some innovative initiatives on hunger, land reform and energy. In Chile, President Michelle Bachelet has successfully led a coalition with the Christian Democrats and achieved strong growth and reductions in poverty. Felipe Calderon, Mexico’s conservative president, is following a similar course.

The “irresponsible” camp is led by Hugo Chavez, the Venezuelan president, seeking to spread his “21st-century socialism” across Latin America with populist, nationalistic policies fuelled by the country’s rising oil revenues. He has nationalised private assets, forced the departure of US companies, cracked down on the media and other opposition outlets and funded his own corps of leftist candidates throughout Latin America. He has proposed a “Bank of the South” to replace the US-backed International Monetary Fund and recommended a change in the constitution that would allow him to serve for life. On Mr Chavez’s side are Bolivia, Ecuador and, of course, Cuba.

Argentina has been teetering on the brink of the Chavez camp and the signals from Ms Fernandez are not promising. Since Argentina’s economic collapse in 2001, its government has repudiated billions of dollars in debts to foreign lenders, accepted billions more of Venezuela’s petrodollars and flirted with Mr Chavez’s anti-American policies. Mr Kirchner accepted an offer from Mr Chavez for nearly $4bn to pay off International Monetary Fund debt. In exchange, he lent his support to Venezuela’s bid to join Mercosur, the regional trade bloc, and to Mr Chavez’s proposed Bank of the South. Brazil has thrown cold water on the bank proposal and Mr Chavez has been forced to put off his bond sales, reputedly for lack of buyers.

Ms Fernandez has an opportunity to shift course and join the responsible camp. The country is back on its feet with about $44bn in foreign reserves from the boom in commodity prices. In 2006 it recorded a fiscal surplus equal to 3.5 per cent of gross domestic product. It is time the country moved away from Venezuela and joined Brazil, Chile and Mexico. There are several steps Ms Fernandez should take. First, Argentina should take no more Venezuelan funds. Second, it should drop its support for a Bank of the South. Third, it should clean up its investment climate so it can re-enter international capital markets.

Let’s hope they do.

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Guatemala:
The NYT has recently started to run insightful articles on Latin America. Last week Marc Lacey explored the reasons behind Rigoberta Menchu’s defeat in Guatemala. The article is under Times Select, but you can read it at the HACER website,

She was not from around here. That was obvious to anyone who scrutinized the details of the embroidery on the traditional Mayan clothes she wore to campaign. She is a Quiche Mayan, from the midwestern highlands. Her indigenous language is different, unintelligible to a local Tz’utujil speaker. Nineteen other Mayan groups live in Guatemala, each linguistically distinct. Because of the rivalries and conflicts among Mayans, Ms. Menchú had to win over Mayan voters just like any other outsider.

Read the rest.

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Bolivia;
Simon Romero, also at the NYT, says that Evo Morales is bringing stability to Bolivia.

Unfortunately Evo’s vision for Bolivia involves totalitarianism, reliance on oil and gas (and coca) instead of economic development and wealth creation, and closer ties with Iran,

On the political front, critics say Mr. Morales is tilting toward authoritarianism, with rough verbal treatment of opponents and a proposal by supporters to be re-elected indefinitely. And some policies seem erratic and inspired by President Hugo Chávez of Venezuela, like his moves this month to establish diplomatic ties with Iran while announcing visa requirements for American visitors.

“Chávez sees the creation of a great Latin American fatherland, a vision that I share,” said Mr. Morales, defending his aid from Venezuela, while criticizing foreign assistance that requires conditions like coca eradication. He remains the leader of the Federacion del Tropico, saying he would return to growing coca when his presidency ends.

Meanwhile, last month the parliamentarians came to blows over corruption. It won’t be the last time.

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Brazil:
Aside from becoming a propaganda vehilce, I see no benefit to the government opening a government-run TV station in a country with 600 TV channels.

Special thanks to Eneas of Hispanic American Center for Economic Research for the links.

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