Fausta's Blog

American and Latin American Politics, Society, and Culture

Archives for 2014

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Latin America: Free trade vs. Mercosur

David Lhunow writes on The Two Latin Americas
A Continental Divide Between One Bloc That Favors State Controls and Another That Embraces Free Markets

In 2014, the Pacific Alliance trade bloc (consisting of Mexico, Colombia, Peru and Chile) is slated to grow an average of 4.25%, boosted by high levels of foreign investment and low inflation, according to estimates from Morgan Stanley. MS +1.55% But the Atlantic group of Venezuela, Brazil and Argentina—all linked in the Mercosur customs union—is projected to grow just 2.5%, with the region’s heavyweight, Brazil, slated to grow a meager 1.9%.

Related: Is 2014 Latin America’s “big year”?


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Cuba: Lies, lies, and more lies

For decades, we’ve been subjected to numerous reports on Cuba’s “excellent free healthcare”, when in fact it is an apartheid system where poor Cubans have to provide their own sutures, supplies, and sheets if they’re in the hospital (video in Spanish)

Now we’ve been hearing about Raul Castro’s “reforms”; Mary O’Grady writes about the reality:

It was only two years ago that Castro boasted a loosening of the rules in the state-owned economy. He did it under duress: The bankrupt government couldn’t continue to pretend to pay people who pretend to work. The dictatorship forecast that it had to unload more than a half-million Cubans from state payrolls. To ease the pain and potential social unrest, Castro pronounced 178 trades “legal.”

A gullible foreign press swooned over Castro’s words as if he was getting ready to admit the defeat of the 55-year-old communist revolution and let the market take over.

Which, as we have seen, is not the case.

The regime, he [Raúl Castro] said, is not about let “private business people” go around “creating an environment of impunity and stimulating the accelerated growth of activities that were never authorized for certain occupations.” Illegal activities like “competing excessively with state enterprises,” will not be tolerated, he warned. In other words, Cuban poverty is here to stay.

Fabio Rafael Fiallo points out how Once Again, the Castro Regime Lies:

The fiction of “reform” has once again been in full swing since 2010, as President Raúl Castro has introduced a new set of policy changes labeled as an “updating” of Cuba’s socialism. The purpose of the exercise is to inject the economy with homeopathic doses of capitalism — the very capitalism that the regime took so much care to wipe off.
…

A cornerstone of the “updating” exercise relates to the creationof a “special economic zone” in the west designed to host foreign firms and expected to operate according to criteria other than those applied in the rest of the country.

These kinds of special economic zones have been tested already in a country ruled by another staunch communist regime: the Kaesong Industrial Complex in North Korea, where some 100 South Korean enterprises, staffed by 50,000 North Korean workers, are allowed to operate. The complex has not halted the continued decline of the North Korean economy, nor the recurrent famines. And there is no reason to believe that the Cuban version will perform any better.

And much like North Korea, the Cuban regime fails to realize that it is not by insulating several hundreds of square miles from the rest of the country — so as to keep the bulk of the population immunized from the “virus” of capitalism — that an economy can possibly take off.

Still more unfounded are the expectations that the Cuban regime is trying to nurture the political realm. While Raúl Castro proposes to President Obama to establish a “civilized relationship” between their two countries, the Cuban regime continues to repress members of the dissidence, denying them the right to express their views, beating them brutally and submitting them to recurrent arrests.

Arrests of dissidents have in fact been on the rise: 4,000 in 2011, 5,000 in 2012 and more than 5,300 in 2013. Some leading dissidents — such as Laura Pollán and Oswaldo Payá — lost their lives under strange circumstances.

And more truth on the island-prison: How the Castro brothers observe Christmas in Cuba: Beating children and stealing toys

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Mexico: Another Fast & Furious gun found

Hundreds of Mexicans continue to die,
ANOTHER FAST & FURIOUS GUN TURNS UP AT MEXICAN CRIME SCENE on an attack on the Rocky Point resort area near the Arizona border.

Whether the ATF has “accepted responsibility” or not, Congress has continued to attempt to try and get to the bottom of the failed program despite repeated attempts by Obama’s Attorney General Eric Holder to stonewall the investigation led by Rep. Darrell Issa (R-CA) and Sen. Charles Grassley (R-IA).

And Holder appealed a judge’s ruling allowing the House of Representatives to continue with a contempt case stemming from his refusal to turn over documents related to the Justice Department’s response to the Operation Fast and Furious gunwalking controversy.

Feds consider new gun regsin the USA, after sending thousands of firearms to Mexico, a country with some of the most strict gun laws in our hemisphere (h/t Instapundit).

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Italy: Latin American thieves pick the wrong town to hide

Italian police caught the gang behind the 2012 Buccellati heist (emphasis added):
Gang of Latin American jewelry thieves busted in Italy
‘Behind 2mn-euro Milan heist, others throughout Europe’

Police from Novara, west of Milan, were executing warrants for suspects from Colombia, Venezuela, Guatemala, Ecuador, Peru, Costa Rica and Mexico.
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A 53-year-old Venezuelan woman is said to be the head of the gang. She is still on the loose.

I can’t imagine why would any foreigners think Novara is a good place to hide. I lived in Novara briefly years ago, and, unless the town has drastically changed since, it was a small industrial town, rarely visited by tourists, where almost no one would speak anything but Italian, unwelcoming to strangers, and where any foreigner would stick out (quite literally, since I was taller than nearly any of the locals) like a sore – and alien – thumb.

H/t Gates of Vienna.


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Cuba: The new car

For the first time since the 1959 revolution, Cubans will have the right to buy new and used vehicles from the state without government permission, at a price:

Which means Cubans Now Allowed to Buy $263,182 Peugeots.

UPDATE:
Linked to by Dustbury. Thank you!

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Is 2014 Latin America’s “big year”?

Alexa L. McMahon asks, 2014: Is This Latin America’s Big Year?

In fact, thanks to its strong economic growth and growing international influence, 2014 has the potential to be Latin America’s best year yet.

Latin America’s economic growth will only increase in its upward trajectory in 2014, driven by countries such as Brazil, Chile and particularly Mexico. According to the U.N., “Based on promising signs of private consumption and manufacturing, the region will see [expected] growth rates of 3.6 in 2014 and 4.1 percent in 2015, according to World Economic Situation and Prospects 2014, a report that launches in January.” The U.N. Economic Commission on Latin America forecasts that Latin-American Economic development will be the highest of all global regions for 2014. Brazil is slowing down compared to its explosive performance in recent years, but still very strong. Brazilian finance minister Guido Mantega said in December that foreign direct investment continues to be robust and, according to the Wall Street Journal, “pointed to $8.3 billion in foreign direct investment posted in November as a strong signal investors continued to favor the country. In October, the figure was $5.4 billion.”

McMahon looks at Mexico, Chile and Brazil, and concludes,

All in all, things are looking up for Latin America next year, and as they’ve shown in multiple avenues, the sky’s the limit.

I wish I could share her optimism.

I am cautiously optimistic about Mexico: their recent (and very overdue) reforms may have staying power, which will propel a new era of growth and prosperity – if the opposition allows it.

I’m not optimistic on Chile: re-elected president Michelle Bachelet has promised to amend the constitution, and to expand the welfare state by raising tax rates and taxing shareholders on retained earnings along with the dividend taxes they already pay. She’s also asking for an “exhaustive review” of the Trans-Pacific Partnership; the Partnership was one of the few authentically good news of 2013 for the region,

The goal of the alliance is to create a free-trade corridor of all countries in the Americas with a Pacific coast. The hope is that dropping barriers on labor, finance and trade will help the Alliance become a hub for commerce with Asia.

If Bachelet’s changes include changing the way proceeds from copper are used (since 2000 this process has been carried out according to a rule that requires generating a structural surplus equal to 0% of the Gross Domestic Product), Chile may be in for disastrous economic policies. She had attempted to use those mining revenues during her first term, and promised “likely changes to include altering mining royalties and funding programs” during her re-election campaign.

McMahon is very bullish on Brazil hosting the World Cup this year and the Olympics in 2016, because of the “worldwide media attention,”

which will help Brazil, and Latin America more broadly, brand itself on the global stage as vibrant and culturally rich a place as any in Europe or the United States.

Some of us thought it already is “as vibrant and culturally rich a place as any,” but the question is, how will Brazil emerge financially after the billions of dollars spent on these two hugely expensive events?

Just a month ago, The Economist published this:
Brazil’s economy
The deterioration
Slow growth, stubborn inflation and mounting deficits

McMahon states, and I hope she’s right,

Brazil is projected to be the world’s fifth largest economy by the time they host the Olympics in just two short years

But the facts right now point to a flat economy that may lapse into recession.

Turning a profit on World Cups and Olympics is a risky business, and Brazil rolled the dice twice, once for the World Cup, and once for the Olympics; the structural problems of slow growth, inflation and deficits will remain, regardless of the outcome, because of its government’s current economic policies.

Two other large economies, Argentina, with a GDP of $716.4 billion, and Venezuela, with a GDP of $374.1 billion – compared with Chile’s GDP of $299.6 billion – are in dire trouble. In Argentina:

The policy mix of harsh capital controls, restrictions on imports, and a series of nationalizations has severely undercut economic freedom. Regulatory pressure on the private sector has continued to rise, with populist spending measures and price controls further distorting markets. The central bank’s independence was essentially destroyed in 2012 when its charter was changed to allow the government unlimited use of the bank’s reserves to pay its debts. Efforts to reform the rigid labor market have long been stalled.

As it collapses into communism, Venezuela‘s,

overall score has recorded one of the 10 largest declines in the 2013 Index

In Colombia ($472.0 billion GDP), lingering institutional shortcomings undermine prospects for broad-based long-term economic development, but at least is making progress. Likewise, Peru ($302.0 billion GDP), whose economy has grown in the last few years, still has weak property rights and weak institutions impeding progress.

Indeed, I hope McMahon is right in saying “the sky’s the limit;” but from where I see it, there’s a lot of pie-in-the-sky there.


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