Monthly Archives: April 2012

COHA – Peru Finds Itself Snared in the Falklands/Malvinas Dispute

April 29, 2012

This analysis was prepared by W. Alex Sanchez, Research Fellow at the Council on Hemispheric Affairs

Thirty years after a bloody war between the United Kingdom and Argentina, the longstanding territorial conflict over the Falklands/Malvinas islands continues to simmer. In recent months Buenos Aires has attempted to attract international support for its claim to the islands, particularly from fellow South American countries. Several regional states have stated their perfunctory support for Argentina, in some cases going so far as to accept a blockade on the Falklands, refusing vessels flying the islands’ flag to dock in their ports. One state that is in a particularly troubling position regarding which side to back is the Andean nation of Peru, as exemplified in a recent incident regarding the British frigate HMS Montrose.

Peru and the UK: a Troubled Historical Relationship

Though geographically distant, Peru and the United Kingdom often have had a troubled relationship, due to the Falklands sovereignty dispute, which is part of even greater geopolitical issues troubling South America. Though geographically distant, Peru and the United Kingdom’s relationship is characterized by a rocky past. Current tensions are rooted not only in the Falklands sovereignty dispute, but also in greater geopolitical issues to be found in South America.
In the 19th century, Peru, along with Bolivia as its ally, fought a bloody war against Chile, which became known as the War of the Pacific (1879-1883). The origins of this conflict centered on Chile’s desire for control over the mineral-rich coastal regions of Bolivia (Antofagasta) and Peru (Arica, Tarapaca and Tacna). Towards the end of the conflict with Peru, the Chilean army was able to occupy and then ransack Lima, thanks to Chile’s striking naval advantage. Chile eventually emerged victorious and, as part of the spoils of war, it gained valuable territory from Peru and Bolivia, turning the latter into a landlocked country. The Chilean government and its military have been able to profit from the minerals it gained from to the war, particularly from copper deposits.
What is not so well known is the role of the British Empire during the War of the Pacific, as London was an active supporter of Santiago. The British provided Chile with both warships and experienced naval officers, which proved to be a defining factor in the conflict. Peru has never forgotten the British military’s aid to Santiago, as the War of the Pacific became a critical milestone in Peruvian history, serving as an inspiration and source of nationalism that swept the country and an abiding distrust towards Chile.
Far from being ancient history, this 19th century war would have repercussions in the 20th century, when the military junta in Argentina, facing a crippling economy, decided to launch an ambitious military offensive to gain control of the Malvinas and to distract the Argentine population from problems in the country. During the war, the Peruvian government played a dual role. On the one hand, then-President Fernando Belaunde Terry attempted to serve as a mediator between Buenos Aires and London in order to bring the conflict to an end.[1] Meanwhile, and more critically, Peru provided Argentina with Exocet missiles and Mirage warplanes that were later used against UK forces.[2] In fact, it is believed that a Peruvian Exocet missile was used by Argentina to sink the HMS Sheffield.[3]
It is worth noting that Chile, then ruled by General Augusto Pinochet, provided the UK with critical intelligence data that was used against Argentina’s military.[4] Santiago and Buenos Aires have had a historically tense relationship, not only because of Santiago’s role during the 1982 war, but because of a 1978 incident in which the two countries came close to combat as a result of a border dispute over the Beagle channel that was avoided thanks to Papal intervention.[5]
Most recently, an important incident occurred in 1995 which shook Lima’s position on the Falklands. On that occasion, Ecuador and Peru waged a non-declared military conflict known as the Cenepa War which lasted several weeks over a region that has been contested for decades, serving as the casus belli for two brief wars in 1941 and 1981. What makes this incident germane to the Falklands dispute was that Argentina, under President Carlos Menem, sold weapons to Ecuador, which were used against Peruvian troops.[6] For Peru, this was seen as a stab in the back from an ally to which Lima had previously provided vital military equipment and assistance during the 1982 war. Furthermore, Argentina is, along with the U.S., Brazil and Chile, one of the four guarantors in charge of maintaining the peace between Ecuador and Peru since the 1941 war. In view of Buenos Aires’ backing of Quito during the Cenepa War, Lima, particularly its military circle, may see little reason to continue supporting Buenos Aires regarding the Falklands.
After a 35-month trial, Menem and 17 other members of his government were ultimately found innocent of illegally selling guns to Ecuador and other countries.[7] In an interview with COHA a retired Peruvian colonel, who wanted to remain anonymous, stated that “it’s a shame no one will be punished for this crime, considering the historically close relations between Lima and Buenos Aires.”[8] In addition, Dr. Christian Maisch, an associate dean at the American University argued that “it’s important to stress that the illegal weapon sales were carried out by opportunistic government officials during the Menem government. This was apparently a traición oportunista [opportunistic betrayal] by some corrupt officials and not necessarily a policy formally approved by the Argentine government or supported by the will of the Argentine people.” The diplomatic historian went on to highlight the strong ties between Peru and Argentina, dating back to the 19th century independence movements, particularly the one led by Argentine General José de San Martín, which facilitated Peru’s independence from the Spanish Empire.[9]

The 2012 Montrose Incident

The year 2012 marks the 30th anniversary of the Falklands/Malvinas war and unanticipated tensions between Argentina and the United Kingdom have reignited. For example, Buenos Aires officials have declared that London is militarizing the South Atlantic. [10] This aggressive statement was in response to the deployment of a British warship to the islands, as well as the deployment of Prince William, a RAF search and rescue pilot, to the archipelago.[11] London stated that such military deployments are routine, but, in all fairness, a critical development regarding this particular move was that London had originally dispatched a frigate, the HMS Montrose, to the South Atlantic. The Montrose’s posting in the region was abbreviated, however, when it was decided that it should be replaced by another vessel, the destroyer HMS Dauntless, considered to be one of the most modern warships in the world.[12] The conservative Daily Mail stated that “naval chiefs admit sending the warship [the Dauntless] to the region will deliver a strong signal that Britain has no intention of relinquishing the Falklands.”[13]
Peru fits in this latest round of tensions between Buenos Aires and London, as the Ollanta Humala government has also declared its support for Argentina’s claim to the islands. The problem arose when Lima also authorized the HMS Montrose to make a port of call in Callao, the major Peruvian port next to Lima. From what is understood, the Peruvian Congress, originally declared that the Montrose could dock in Callao but, shortly afterwards, the Peruvian executive reversed this decision and said the British warship could not do so.[14] These somewhat confusing instructions proved to be an embarrassment for the Ollanta government, as the international media argued that Peru was breaking rank from South America’s strong support of Argentina. [15] Peruvian opposition parties stated that Peru was having a “contradictory” and even subservient relationship with Argentina.[16]
In the end, the Peruvian government maintained its solidarity with Argentina,[17] while the British government called Lima “unfriendly” for cancelling the Montrose’s visit.[18] In an interview with COHA, a British diplomat, who asked to remain anonymous, explained that “we think that the Montrose visit would have added another element of co-operation to the bilateral relationship. And that is very much our ambition.”[19] Meanwhile, a Peruvian Congresswoman, Lourdes Alcorta, stated that “acá metieron la pata totalmente. Una cosa es la actitud solidaria que pueda haber con Argentina por el tema de las Malvinas, pero no se puede maltratar otros países” (“everyone here screwed up. One thing is that we should have a solidarity act with Argentina over the Malvinas, but we cannot be rude to other countries”).[20]

Photo property of the Royal Navy (

After the incident, the Peruvian Defense Minister, Alberto Otarola, declared that “in the [Defense Ministry] we were in favor of accepting the frigate’s visit.”[21] The Peruvian Defense Minister also stated that it is the Peruvian Congress and Ministry of Foreign Affairs that formulate Peruvian foreign policy, including which foreign ships can dock in Peruvian ports. While true, this can also be interpreted as the Peruvian defense ministry and military indirectly indicating that they wished to have stronger defense links with the British military, but that the civilian government was ultimately responsible for the failure of the Montrose to obtain the requisite docking permission in some Peruvian facility. Ultimately, the Montrose sailed on to Colombia and Panama and the British warship was allowed to dock in those countries. The aforementioned British diplomat explained to COHA:
I am not aware that either of those governments came under Argentine pressure or were challenged about compromising regional solidarity. They took the view, as do most in the region, that it is perfectly possible to have a full and productive bilateral relationship with the UK whilst maintaining a difference of view on the Falklands issue.[22]
Hence, it is debatable why Lima was so keen to reject the HMS Montrose to the point of becoming a regional embarrassment, when two other Latin American nations welcomed the British warship within their territorial waters.

London – Lima Relations Today

While perhaps not London’s major interest in Latin America, it is important to highlight that Peru and the United Kingdom currently have generally good relations, particularly regarding trade. The UK is the second biggest foreign investor in Peru; UK imports from Peru rose by 14% last year, and overall bilateral trade went up 17%. According to the online daily, The Peruvian Times, British businesses have more than US$4.45 billion invested in Peru.[23]
The aforementioned British diplomat explained to COHA that “we had an excellent bilateral trade event in London only last month, at which our Minister for the Americas, Jeremy Browne, gave a keynote address. And our Financial Secretary met with Peru’s Economy and Finance Minister.”[24] After the Montrose incident, there were concerns that Lima-London relations would suffer, but Minister Browne and Peru’s Minister for Foreign Affairs, Rafael Roncagliolo, spoke on the phone and stated that both governments are committed to maintaining and strengthening relations.[25] In another attempt to generate closer relations, according to the aforementioned The Peruvian Times, a group of high-profile Peruvian officials visited London this month as part of a business delegation. The delegation included the Peruvian Minister of Finance, Luis Miguel Castilla, Central Bank president Julio Velarde, and Roberto Hoyle, president of the Lima Stock Exchange, as well as the British Ambassador to Peru, James Darius.[26]
The tensions surrounding the Falklands/Malvinas occurred at a time when London was reorganizing its foreign policy to reach out to areas like Latin America, the Caribbean and Africa. Because of its economic boom in recent years Peru is a high-profile target for British diplomatic and investments opportunities. On the other hand, at the time of the Montrose incident, Alfredo Ferrero, a former Peruvian Minister for External Trade and Tourism, critiqued Argentina’s economic model. He stated that the Argentine government is very protectionist and bilateral trade between Lima and Buenos Aires is not the best. He also said that “tenemos problemas para venderles nuestros productos” (“we have problems selling them our products”).[27]
Unraveling Geopolitics in South America
The Falklands have demonstrated just how complex South American politics are, and the recently concluded Summit of the Americas held in Cartagena, Colombia, is a perfect example. In a not-so-surprising development, Argentine President Cristina Fernández de Kirchner stormed out of the Summit after the attending heads of state could not agree on a declaration regarding the Falklands/Malvinas dispute (and the controversy over Cuba’s attendance).[28] To be fair, the Summit had little chance of accomplishing any kind of groundbreaking resolution, as there were at least three divisive topics on the table: the Falklands/Malvinas, Cuba, and the future of the hemispheric war on drugs, including the debate on possibility ending drug prohibition in favor of decriminalization.
Members of Union of South American Nations (Union de Naciones Suramericanas – UNASUR), generally have declared themselves in favor of Argentina’s position, but this does not exactly mean that a blank check has been drawn in support for Buenos Aires. The Uruguayan government, for example, supports Argentina, but Montevideo has not prevented its citizens from carrying out business with the islanders. For example, in early February 2012, a group of Uruguayan businessmen traveled to the islands,[29] without Montevideo preventing them from doing so.[30] Then again, Uruguay’s support for Buenos Aires has been tenuous at best as the two countries have had a heated, if bloodless, border dispute for years over a proposed pulp mill that Uruguay had wanted to construct close to the border with Argentina, which would have heavily polluted water sources along the border.[31]
In any case, Argentina is relying on a statement by UNASUR for regional unity.[32] In fact, it was arguably UNASUR’s support of Buenos Aires that provided the additional pressure on Lima to deny the Montrose entry. Then again, diplomatic pressure was not enough to move Colombia and Panama (not a UNASUR member) to deny the British frigate its decision to make a port call.
A final factor regarding Lima’s decision to bow to Argentina’s pressure may have to do with a maritime border dispute Lima has with Santiago. The Chilean government lays claim to a sizable amount of Peruvian territorial waters, and there are concerns over what would happen if the dispute escalates.[33] For the time being, the dispute is at a stalemate as both countries have turned to the International Court of Justice (ICJ) in The Hague, which is set to issue a finding by 2013.[34] Peru may be trying to gain international support for its case; hence Lima is supporting Argentina over the Falklands/Malvinas. Dr. Maisch argues that “Lima should maintain its current and historical position regarding the Falkland/Malvinas dispute because it is the right thing to do, both legally and politically.” He does not believe, however, that “Peruvian support for Argentina will necessarily translate in Argentine support for Peru in the latter’s dispute with Chile.” He thinks:
Switching support from Argentina to the United Kingdom on the Falkland/Malvinas dispute would make Peru look inconsistent and would not likely result in any diplomatic benefits for Lima in its maritime dispute with Santiago. Chile and the United Kingdom have had strong historical ties going back over a century, and even if Lima was to change its position on the Falkland/Malvinas dispute, there is little chance that London would support Peru in its maritime dispute with Chile. Moreover, that maritime dispute has already moved from the field of diplomatic negotiations (where allies can sometimes play a helpful role) to the realm of judicial adjudication before the ICJ, where cases should be decided on their legal merits.[35]

Should Peru Have a Bigger Role in the Falklands/Malvinas?

After the Montrose incident, President Ollanta Humala stated to the Peruvian media that “no somos satelite, ni colonia de nadie, no aceptamos imposiciones de nadie” (“we are not a satellite, no one’s colony, we do not accept impositions from anyone”).[36] While such statements are bold, it seems likely that Lima did not bend to pressure from London, but from Buenos Aires and UNASUR. On the other hand, Colombia and Panama agreed to host the HMS Montrose and it did not end in Argentina breaking its diplomatic relations with either country. Hence, it could be argued that Peru could have withstood the diplomatic heat from Buenos Aires and UNASUR if it had gone through and accepted a visit from the British warship.
Should Peru become more engaged in the Malvinas/Falkland dispute? An argument can be made that the Peruvian diplomatic corps could try promoting a confidence building mechanism such as multinational naval exercises in the South Atlantic combining British naval forces (like the Dauntless and Montrose) with those from Argentina and other regional states (such as the U.S. Brazil, Uruguay and Peru). Considering that the Argentine government has declared that London is militarizing the South Atlantic, multinational exercises would ideally serve to demonstrate that the British navy is not a threat to Argentine national security. Finally, such multinational military exercises would be good for the Peruvian navy, as it would have the opportunity to carry out highly desirable naval exercises with the more developed and better-equipped British navy.
Unfortunately, such an idea, while theoretically viable, is unlikely to happen. London has stated that it is willing to discuss any kind of initiative regarding the disputed islands, including regional naval exercises, aside from sovereignty. On the other hand, if Argentina participates in such exercises, it could be perceived as an indirect validation of the presence of the British navy in the area, which would amount to political suicide for any administration in the Casa Rosada.
As for Peru’s role, it would probably be best for Lima to maintain its neutrality regarding the dispute of the islands instead of trying to become an active participant in mediation attempts between Buenos Aires and London, as this could easily backfire. With that said, while it makes sense for the Peruvian government to maintain its historical pro-Argentina stance for the sake of regional unity, Lima should continue strengthening financial and defense relations with London, by promoting more investment and accepting a routine port of call by a warship from a friendly foreign government. Finally, while Peru can certainly carry out naval exercises with other states that possess modern navies (like the U.S. or other European countries) it is certainly in Lima’s (and its military’s) best interest not to restrict itself from gaining the valuable military expertise it could gain from the British navy, simply to maintain diplomatic unity towards Argentina and its protracted territorial dispute. It is in Peru’s national interest to maintain solidarity with friendly nations, but this policy should not mean missing the possibility to strengthen defense relations with other friendly nations. In other words, Lima’s support for Buenos Aires on the Malvinas/Falklands and stronger defense relations with the British navy should not be seen as mutually exclusive objectives.

References for this article can be viewed here:

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Argentina: closer to Venezuela than to Brazil

The Washington Post – Radical left at crossroads in Latin America

BOGOTA, Colombia — Quite suddenly, whether intentional or not, Argentine President Cristina Fernandez de Kirchner became the standard-bearer of populist nationalism in Latin America when her country seized a Spanish oil company last week.

The takeover of YPF enthralled Argentines and drew praise from nationalists as far away as Venezuela, even as the radical political left in Latin America struggles with questions about its future.

The region’s most bombastic leader, Venezuelan President Hugo Chavez, who says his self-styled revolution should replace what he calls “savage capitalism,” is so ill with cancer that he has taken to pleading with God in public to spare his life. And in Cuba, the 53-year-old Castro government is resorting to reforms to keep a moribund economy afloat.

So Argentina’s announcement last week, complete with a defiant speech by Fernandez and the unceremonious removal of YPF executives from their Buenos Aires office, bolstered those who firmly believe that the state trumps the interests of private companies in Latin America.

“It’s the correct position,” Rafael Ramirez, Venezuela’s mining and oil minister, told reporters. “You cannot permit that a country with important internal consumption and with Argentina’s growth projections watches as transnational companies exploit and take away oil while not investing to increase production capacities.”

But even as Argentina’s senate prepared to approve the expropriation this week, Fernandez’s move underscored the gulf that exists between a group of nationalist countries led by charismatic populists and the economic centrists who govern much of the rest of the region, most notably in Brazil.

Locked out of world financial markets for defaulting on $100 billion in debt a decade ago, Argentina restricts imports, imposes currency and price controls, and has used a nationalized pension system and central bank reserves to pay off debt.

With the nationalization of YPF, the country has come to look increasingly like the state-interventionist model of the fiery general Juan Peron, who remains a guiding light for the current government 60 years after his first turn at ruling.

Indeed, Argentina has more in common with a group of four other Latin American countries, led by Chavez, that have centralized power in the executive while taking greater control of institutions such as the courts and employing state power to weaken the press.

Venezuela’s economy has become increasingly dependent on oil under Chavez, private investment has dried up and power shortages are the norm. In Ecuador, President Rafael Correa’s government focuses much of its attention on corralling the press, with the president filing libel suits against reporters he accuses of subverting his rule.

And Bolivia and Nicaragua — led respectively by Evo Morales, an Aymara Indian, and Daniel Ortega, a former guerrilla — remain two of the hemisphere’s poorest countries.

“Populism is running out of gas in Latin America,” said Arturo Porzecanski, a Uruguayan economist who teaches finance at American University in Washington. “The most ambitious charismatic personalities are fading because of age and health reasons, but their possible successors have their hands full dealing with their domestic problems and are not in position to take the mantle to develop a regional agenda, let alone pay for it.”

A shift to the center

The model that has instead started to take hold across Latin America is one cited by President Obama at a summit of regional leaders last weekend in Carta­gena, Colombia. Seated at a forum with the presidents of Brazil and Colombia, Obama gushed about how “a lot of the old arguments on the left and the right no longer apply” as governments focus instead on strengthening institutions and generating growth.

“You do business well when you know that it’s a well-functioning society and that there’s a legitimate government in place that is going to be looking out for its people,” he said.

The model Obama referred to is one that also includes Chile, Mexico, Peru and Uruguay, all led by presidents who are largely centrist ideologically, orthodox in their approach to economics but attuned to social needs. All also believe in sustaining strong ties with Washington and Europe, even if they diverge on such prickly themes as how to deal with Cuba.

“They have all been moving in the direction of insertion into the broader international economic sphere,” said Claudio Loser, an Argentine and former International Monetary Fund economist consulting in Washington.

Indeed, Brazil, whose president was a 1960s-era guerrilla, is privatizing its biggest airports and drawing record levels of foreign investments as it expands oil production and prepares for the 2016 Olympics. And countries such as Colombia and Uruguay recently received investment grade status from credit-rating agencies.

Movement ‘in disarray’

The countries that have taken the other road — among them Argentina — can still record solid growth rates. “As long as commodity prices remain high, there’s a lot of margin for these governments to continue to do what they’re doing,” said Christopher Sabatini, editor of Americas Quarterly.

But the price Argentina may pay in the long run for nationalizing YPF could be high.

The little foreign investment Argentina receives could dry up. And it remained unclear how Argentina, which is short of cash, will come up with the billions of dollars needed to jack up crude production and develop its recent finds of shale oil and gas.

Spain’s prime minister, Mariano Rajoy, on Tuesday warned other investors a the World Economic Forum in Mexico: “What happened yesterday could happen to any other investment.”

Michael Shifter, president of the Inter-American Dialogue in Washington, said Argentina’s move was an effort to scrape the barrel, collect much-needed funding and buy time. It is a process, he said, that has taken place repeatedly in countries such as Venezuela and Ecuador and reflects what he calls a leftist populist movement “in disarray.”

“There’s really no sense of forward movement, there’s no sense of moving toward fulfilling some alternative vision and some utopian ideal,” he said. “There is a sense of just stagnation and just trying to hold on to power, which is really not a very attractive leftist project.”

O Globo – Ilhas Malvinas: Brasil apoiou tráfico de armas para Argentina

During the Falklands war, Brazil was part of a clandestine arms supply to Argentina, orchestrated by the USSR and negotiated by Cuba. Peru, Libya and Angola were also part of the operation. Most interestingly, the Russians called the Cubans to  help a extremely anti-Communist military dictatorship to confront America’s great ally within NATO.

Click here for the full article (in Portuguese).

PJ Media – Argentina’s President Kirchner Flunks Economics: Why Argentina is headed for a crisis

Back in February, after Argentine authorities inexplicably seized the contents of a U.S. military plane that was delivering equipment for a routine police-training exercise, a local official in the Buenos Aires city government summed up the dismal state of her country’s foreign policy: “Our only friend right now is Hugo Chávez.”

On April 16, President Cristina Kirchner poisoned yet another bilateral relationship when she announced the nationalization of a majority stake in Argentina’s biggest oil company, YPF, which is owned by the Spanish firm Repsol. Her move prompted outrage in Madrid and threats of retaliation. Meanwhile, the Spanish technology company N2S abruptly canceled plans to establish an Argentine office. “Argentina really looked like a very attractive market for us and we believed it was serious in its commitment to foreign investment — until Monday’s decision,” N2S managing director Francisco de la Peña told the New York Times. “I’m sure that a lot of other Spanish companies are as disappointed and worried about what has just happened as we are.”

The decision may have surprised Mr. de la Peña, but it did not surprise anyone who has watched President Kirchner launch one economically destructive power grab after another. As Brazilian journalist Míriam Leitão wrote in response to the YPF seizure, “Argentina’s capacity to err seems unlimited.”

After all, Kirchner is the same leader who in 2008 nationalized both her country’s private pension system and its largest airline (Aerolineas Argentinas). She is the same leader who in 2010 fired Argentine central-bank governor Martín Redrado for his refusal to transfer $6.7 billion of foreign reserves to help Buenos Aires repay defaulted debt. She is the same leader who has produced soaring inflation and massive capital flight, the latter of which increasedby 89 percent between 2010 and 2011. And she is the same leader who has systematically doctored inflation and economic data, to the point that The Economist recently announced it would no longer be publishing the official Argentine statistics. (“We are tired of being an unwilling party to what appears to be a deliberate attempt to deceive voters and swindle investors,” the venerable weekly said in an editorial.)

Speaking of The Economist, it notes that Argentina is now a net energy importer, despite its abundant resources. While the government has blamed its energy trade deficit on YPF’s reluctance to invest more generously in domestic production, independent analysts generally agree that “the real cause of Argentina’s declining energy trade balance is its maze of price controls and subsidies, which makes investment unprofitable and encourages excess consumption.”

By nationalizing YPF, Kirchner hopes to boost Argentina’s financial position and also score political points through the demonization of a foreign energy giant. But her timing couldn’t be worse, given that her country (in the words ofFinancial Times commentator John Gapper) “has deep fiscal problems, no access to international capital markets and a looming investment challenge.” Indeed, how will Argentina now entice foreign multinationals to invest in its capital-starved energy sector (or any other sector, for that matter)? How can it expect to maintain the trust of the global business community when it treats private assets like state piggy banks? As Mexican president Felipe Calderón declaredfollowing the YPF maneuver, “Nobody in his right mind invests in a country which expropriates investments.”

Of course, if you look solely at Argentina’s annual GDP growth, which topped 9 percent in both 2010 and 2011, you may wonder what all the fuss is about. Didn’t Kirchner win an easy reelection last fall, receiving more than 54 percent of the vote? And doesn’t she deserve credit for her country’s rapid economic expansion? The answers are yes and no, respectively.

We must remember that Kirchner was running for reelection against a weak, divided opposition, and that her approval ratings have since fallen. As for the economy, Argentina’s recent growth has been fueled by high global soybean prices, which in turn have been fueled by ravenous Chinese demand. The country has also benefited from strong growth in Brazil, its largest trading partner. Now that the Brazilian and Chinese economies are both cooling down, Argentine growth will slow considerably.

Moreover, because Argentina’s Kirchner-era expansion has been accompanied by surging double-digit inflation, it has not raised living standards for the poor and the middle class. “The poverty level is higher now than the worst moments of the 1990s,” former Argentine economy minister Domingo Cavallo told the New York Times in early 2011. “Without a doubt, inflation is increasing poverty.”

President Kirchner has relied on a mirage of economic vitality to conceal the effects of her policy failures. But as Argentina continues to lose investment and suffer from debilitating inflation, more and more of her countrymen are waking up to the harsh reality that they are much poorer — and much closer to a crisis — than they had thought.

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Cristina Kirchner’s Populist Moves

Earlier this month, the Argentine President Cristina Kirchner responded to high inflation and massive capital flight by picking up a diplomatic fight with London over the Falkland Islands, in U.K. possession since 1833. The renewal of Argentina’s demands over the islands were nicely timed to precede with the 30th anniversary of of the 1982 war with Great Britain, when Argentina tried to militarily reestablish sovereignty over the islands. Fortunately, the diplomatic skirmish did not escalate – again – into a militarized conflict.

Kirchner’s attempt to must regional support for her country’s claim to the Falkland Islands during the last Summit of the Americas (held in Cartagena, Colombia on April 14-15) did not go so well. Moreover, according to the Financial Times, here was behind-the-scenes talk, too, that Argentina might be kicked out of the Group of 20 leading industrial and developing nations.

After those bad news, back in Buenos Aires, Cristina returned to the offensive by announcing the re-nationalization of  YPF, a Spanish-controlled oil company. Argentina’s Senate is expected on Wednesday to approve a bill to nationalise YPF and expropriate a 51 per cent stake from Repsol of Spain by a comfortable majority, slashing the Spaniards’ holding to 6.4 per cent. The bill would then pass to the lower house of Congress, where it is expected to be passed into law speedily. And Less than a week after Argentina incurred international condemnation for plans to nationalise Spanish-controlled oil company YPF, it was out seeking joint energy ventures with Brazil.

What will Kirchner do next after the nationalist dust of the YPF re-nationalization settles down?

AS/COA – Dominican Officials Reveal Alleged Haiti Overthrow Plot

On April 12, senior government officials in the Dominican Republic revealed an alleged plot to overthrow Haitian President Michel Martelly by former Dominican Colonel Pepe Goico, who works for Dominican presidential candidate Hipólito Mejía’s security team. Goico was caught on a tapped phone call with Haitian businessman Pierre Kanzki discussing the destabilization of Martelly’s government. Though Goico and Kanzski deny the plot, the Haitian government is investigating the two men.

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AS/COA – US suggests possibility of Brazil’s permanent seat at UNSC

Secretary Clinton Promotes Bilateral Cooperation in Brazil

U.S. Secretary of State Hillary Clinton traveled to Brazil this week after attending the Summit of the Americas in Colombia. In Brasilia on Monday, Clinton met with Petrobras CEO Maria das Graças Foster to discuss expanding U.S.-Brazilian cooperation for deep-water oil exploration. Clinton spoke before the National Confederation of Industry, where she praised U.S.-Brazilian bilateral trade, but said the two countries could do more to foster collaboration. She discussed the possibility of a double taxation treaty, a bilateral investment treaty, and a potential future free-trade agreement. In a meeting with Brazilian Foreign Minister Antonio Patriota, Clinton gave hope to Brazil’s mission for a permanent UN Security Council seat, stating: “[I]t would be very hard to imagine a future UN Security Council that wouldn’t include a country like Brazil.” On Tuesday, Clinton met with Brazilian President Dilma Rousseff at a high-level meeting of the Open Government Partnership, a multi-country initiative to promote government transparency. The United States and Brazil are co-chairs of the partnership. During the meeting, a group of non-profits launched the Brasil Aberto movement to promote transparency and citizen participation in promoting open government.

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