Monthly Archives: June 2012

Folha de SP – Brazil Trade with Mercosur Falling, Increasing with U.S. and China

Folha de São Paulo reports that, despiste ongoing economic uncertainty in Europe, Brazil’s    trade this year fell faster with other Mercosur members than with the European Union. Brazil sold 10.3 percent less to Argentina, Paraguay, and Uruguay this year than last, while exports to Europe were down 5.1 percent for the same period. Nevertheless, trade with the United States was up 27.5 percent this  year, largely due to oil exports. Trade with China grew 9.3 percent over the same period.

 

Exportação cai para o Mercosul, mas cresce para os EUA

O barulho maior vem da Europa, mas os dados mostram que os problemas mais relevantes para o Brasil no comércio exterior estão no Mercosul. Neste ano, as vendas para o bloco sul-americano estão caindo em ritmo mais forte do que as exportações para a União Europeia.

De janeiro a maio, o Brasil vendeu para Argentina, Paraguai e Uruguai 10,3% menos que no mesmo período de 2011. É o pior resultado entre os quatro principais destinos das exportações.

Mercado reduz projeção de PIB pela 7ª semana para 2,18% neste ano
Barreiras comerciais da Argentina reduzem interesse de empresários
Endividamento alto e expansão do crédito no Brasil preocupam o BIS

O bloco europeu, em grave crise, cortou as compras do Brasil em 5,1% no período.

O aumento da demanda de China e Estados Unidos está compensando a queda das exportações para os dois blocos. O que mais surpreende é a forte recuperação das vendas para os EUA, que crescem 27,5% em 2012.

A queda no Mercosul é especialmente preocupante, pois a região é a principal importadora de industrializados do Brasil. No ano passado, os três países consumiram US$ 25 bilhões em manufaturas brasileiras, 27% do total exportado por nós.

Neste ano, até maio, a total venda de manufaturados do Brasil sobe 5,2%, mas recua 9,5% para o Mercosul.

Além da desaceleração econômica do bloco, as vendas para o Mercosul caem, principalmente, por causa do aumento das barreiras comerciais na Argentina.

Em meio à crise europeia e ao esfriamento da demanda doméstica, é mais um fator que puxa nosso crescimento brasileiro para baixo. A aposta mediana do mercado é que o Brasil cresça 2,3% em 2012.

A indústria, que desde 2011 tem desempenho pífio, é o setor mais prejudicado, já que 90% do que o Mercosul compra de nós é manufatura.

“O protecionismo argentino se intensificou e a economia do país está muito fragilizada. As exportações vão cair ainda mais neste ano”, diz Roberto Giannetti, diretor de comércio exterior da Fiesp.

RETOMADA AMERICANA

O forte aumento das vendas para os EUA em 2012 é puxado pela alta de 70% na exportação de petróleo, mas também houve crescimento expressivo em itens como laminados, aviões, carros e transformadores.

Segundo José Augusto de Castro, da Associação de Comércio Exterior do Brasil, o país foi beneficiado pela decisão política dos EUA de diversificar seus fornecedores de petróleo. O item já representa mais de um quarto da demanda americana por produtos brasileiros.

Para Gabriel Rico, presidente da Câmara de Comércio Brasil-EUA, a alta também reflete uma recomposição dos estoques das empresas americanas, devido à retomada da economia do país.

Passado esse efeito, diz ele, o crescimento das vendas para os EUA tendem a perder fôlego. “A economia está se recuperando, mas é gradual.”

A secretária de Comércio Exterior, Tatiana Prazeres, diz que esse é um ano difícil por causa da crise externa. Até maio, o total das nossas exportações sobe apenas 3,4%, e a expectativa não é de melhora. Em 2011, o crescimento total foi de 27% ante 2010.

“Se conseguirmos crescer 3% em 2012, ou mesmo manter o valor exportado no ano passado, já será um resultado bastante positivo”, diz ela.

Editoria de Arte/Folhapress
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COHA – The Failures of NAFTA

On December 8, 1993, a triumphant President Bill Clinton signed the North American Free Trade Association (NAFTA) bill into law. Reflecting popular sentiment, he praised this monumental economic treaty by stating, “I believe we have made a decision now that will permit us to create an economic order in the world that will promote more growth, more equality, better preservation of the environment, and a greater possibility of world peace.” Initially, NAFTA supporters promised a plethora of benefits for the countries of North America. American proponents promised that NAFTA would create more jobs reflecting higher wages in the United States,(1) while also reducing the U.S. trade deficit with Mexico and Canada.(2) Mexican leaders claimed that the bill had the potential to create a sizable and revitalized middle class in Mexico by raising wages and strengthening living conditions for its impoverished citizens. Mexican President Carlos Salinas, whose administration had been tarnished by charges of corruption, proclaimed that NAFTA would, at long last, enable Mexico to join the developed world.(3) Likewise, leaders from both countries pitched NAFTA as a solution to illegal migration across the U.S.-Mexico border; with more and better-paying jobs, as well as cheaper goods in Mexico, the United States would no longer be an attractive land of opportunity.(4) Regrettably, the majority of these promises never materialized. The limited benefits that have resulted from NAFTA have been overshadowed by its numerous failures, which have both negatively affected the United States and greatly harmed Mexico, especially in the agricultural sector.

Failures for the United States

In 1992, Gary Hufbauer, a NAFTA enthusiast from the Institute of International Economics, predicted that “NAFTA will generate a $7 to $9 billion [USD] surplus that would ensure the net creation of 170,000 jobs in the U.S. economy the first year.”(5) However, quite the opposite occurred; the U.S. trade deficit with both Mexico and Canada increased, costing the United States an estimated 150,000 jobs in 1994 alone.(6) According to the United States Census Bureau, while the United States actually had a trade surplus with Mexico of approximately $1 billion USD in both 1993 and 1994, by 2007 the growing trade deficit with Mexico had reached an all-time high, at $74 billion USD.(7) Although U.S. exports to Mexico did increase slightly under NAFTA, the U.S. encountered the new problem of “revolving door exports.” Most U.S. exports to Mexico have consisted of mechanical parts, which are used to assemble goods in Mexican factories that are then imported back into the United States for cheap, a process known as the maquiladora system. Such exports have doubled since the implementation of NAFTA, leading only to more imports from Mexico and a deepening trade deficit.(8)

The combination of increased imports from Mexico and a growing trade deficit have led to job losses, mostly in high-wage, non-college-educated manufacturing positions, in all 50 U.S. states and the District of Colombia.(9) When these displaced American workers later re-enter the job market, they find difficulty securing new jobs and often have to settle for markedly lower wages. As of March 2011, the United States has lost approximately 700,000 jobs due to disruptions in supply chains brought about by NAFTA.(10)

Failures for Mexico

Although NAFTA has been detrimental for the United States, the free trade agreement has been far worse for Mexico. While proponents touted NAFTA as ostensibly a beneficial social policy, the income gap in Mexico has in fact widened since NAFTA’s implementation, with this development creating even more poverty in a country already afflicted with the concentration of wealth in too few hands. The poverty rate in Mexico rose from 45.6 percent in 1994 to 50.3 percent in 2000, and the number continues to climb.(11) In 2010, the World Bank reported the most recent poverty rate in Mexico at 51.3 percent.(12)

Perhaps the most devastating blow dealt by NAFTA to the Mexican economy was the near destruction of Mexico’s agricultural sector, in which 2 million farm workers lost their jobs and 8 million small-scale farmers were forced to sell their land at disastrously low prices, or desert it, due to sharply declining food prices.(13) Importantly, the U.S. government subsidizes many domestically produced agricultural products, allowing the products to be sold to Mexico at prices 30 percent below the cost of production.(14) Thus, after NAFTA’s inauguration, U.S. agricultural exports crowded out Mexican agriculture produce, and the United States became the main food supplier of Mexico. In one case, U.S. corn exports, by maintaining subsidized prices, have all but rendered Mexican corn cultivation obsolete and non-competitive. Corn, or maize, had been one of the main crops and an integral part of the identity of the Mexican people since pre-Columbian days, but due to subsidized U.S. agricultural products, this tradition has all but come to an end. Thus, NAFTA has not only negatively impacted Mexico’s economy, but also altered its national identity by infringing on ancestral traditions.

Due to the decline in the competitiveness of Mexican agricultural products, the rural population has been pushed from the countryside into the cities to seek employment in the booming manufacturing sector, one of the many paradoxical consequences of NAFTA. Many American corporations took advantage of this plethora of cheap labor and constructed factories along the U.S.-Mexico border, creating the maquiladora system. While these factories, or maquilas, created 1.3 million jobs in the export-manufacturing sector, they still were not able to counterbalance jobs lost in the agricultural sector, and it was not long before foreign competition threatened these newly created jobs.(15) Since 2001, one third of all NAFTA-created manufacturing jobs in Mexico have disappeared as North American corporations continue to offshore operations to China, where manufacturing wages are about an eighth of those in Mexico.(16) Although NAFTA is not the only cause of the economic distress Mexico has faced in the past decade, the economic pact failed to generate a Mexican economy capable of competing in a global market, thus negating what little economic benefit it brought Mexico.

Moreover, even with the creation of new manufacturing jobs, Mexican living conditions have consistently declined since NAFTA’s advent. In the pact’s first five years, real wages in Mexico fell by 20 percent, and workers in the manufacturing sector now earn about a fourth of their pre-NAFTA wages.(17) Additionally, the prices of most goods in Mexico have significantly increased. The cost of tortillas, which represent 75 percent of the daily caloric intake for Mexico’s poor, increased by 571 percent in the first six years of NAFTA, rendering meager wages even more insufficient than before NAFTA’s implementation(18) and making it increasingly difficult for families to meet basic needs. Wage disparities between Americans and Mexicans have also widened. In 1994, Mexicans earned 23 percent of what Americans earned overall; by 2006, the differential had dropped to 12 percent.(19) With this wage reduction, the lower class in Mexico has expanded, pushing more poverty-stricken individuals into areas that were already troubled by inadequate housing, healthcare, and public safety,(20) and generating further problems for the Mexican state, such as drug violence and urban sprawl.

The Immigration Problem

In an argument that helped push the bill through the U.S. Congress, Janet Reno, attorney general during the Clinton administration, proclaimed that NAFTA would decrease illegal immigration by two-thirds in six years.(21) However, this too was a hollow promise. Prior to 1994, illegal immigration across the U.S.-Mexico border was declining, but eight years after NAFTA’s enactment, this trend had reversed, resulting in a 61 percent increase.(22) In 1995, there were 2.5 million illegal Mexican immigrants in the United States; by 2006, there were more than 20 million,(23) two-thirds of whom came to the country after the implementation of NAFTA in 1994.(24)

Every year, some 500,000 Mexicans risk their lives to cross the border because they can no longer make a living in the destroyed Mexican manufacturing and agricultural sectors. Proponents of NAFTA promised the Mexican people a decent living, but 18 years later more and more Mexicans have little choice but to leave Mexico for the United States each year, resulting in growing concerns in the United States over these trends. Americans’ concerns about losing their jobs to “illegals,” especially since the economic crisis of 2008, have become a dominant part of American political dialogue. However, there exists another, less acknowledged discussion—one that understands that the presence of illegal immigrants is partially beneficial to the U.S. economy. Because of the abundance of undocumented workers, American farmers can pay wages that are a fraction of the $10 an hour they are required to pay legal U.S. residents.(25) While this is certainly a nefarious practice, the American public derives much benefit from it: If these farms employed only legal residents, prices on American goods would skyrocket. For example, it is estimated that orange juice would cost upwards of $20 per gallon if only documented workers picked oranges on Florida’s orange farms.(26) The U.S. government has increased spending on border control without taking into account these various factors.(27)

Overall, neither the United States nor Mexico has seen the benefits promised from NAFTA, but Mexico should be most disappointed. The writers of the bill failed to provide equitable stipulations for labor conditions, environmental protection, or investment regulations. Laborers on both sides of the border saw their collective bargaining powers diminish after NAFTA. Mexico, the United States, and Canada must transform NAFTA from a “free” trade agreement to a “fair” trade agreement through revisions that create jobs instead of destroying them, protect workers, and create an environment that allows Mexicans to stay in their home country and earn a living wage.

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NYT – Senate’s Vote Ousts Leader of Paraguay After a Clash

http://www.nytimes.com/2012/06/23/world/americas/senates-vote-ousts-paraguay-president-after-clash.html?ref=world

Senate’s Vote Ousts Leader of Paraguay After a Clash

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RIO DE JANEIRO — Paraguay’s Senate voted on Friday to remove President Fernando Lugo from office, plunging the country into a political crisis. Mr. Lugo said he accepted the results of the hastily arranged vote, despite describing the efforts to remove him as an “express coup d’état.”

Jorge Adorno/Reuters

Fernando Lugo

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“Today it is not Fernando Lugo who is receiving a coup, but Paraguay’s history, its democracy,” said Mr. Lugo, 61, a former Roman Catholic bishop. He was elected in 2008 with unusually high expectations to ease tension over disparity in landholdings, breaking six decades of one-party rule in Paraguay, one of South America’s poorest countries.

Legislators quickly swore in the vice president, Federico Franco, a medical doctor and a former supporter of Mr. Lugo, as Paraguay’s new leader.

Mr. Lugo’s abrupt removal points to a new phase of political instability in Paraguay, a renowned hub for the trafficking of contraband and drugs. The landlocked country has gone through periods of upheaval since the long, repressive dictatorship of Alfredo Stroessner ended in 1989, including the resignation of one president in 1999 and the impeachment of another in 2003.

The Senate vote came after Paraguay’s lower house of Congress voted Thursday to impeach Mr. Lugo over a clash this month between squatters and the police that left 17 dead. The clash led to the resignation of Mr. Lugo’s interior minister and his chief of police.

The Senate gave Mr. Lugo just two hours to defend himself in a public trial; he declined to appear, sending lawyers to request 18 days to prepare his defense. They were rebuffed by the Senate president, Jorge Oviedo, leading to the vote of 39 to 4.

The removal of Mr. Lugo, who had about a year left in his five-year term, and was not eligible to run for re-election, put Paraguay’s neighbors on alert. The Union of South American Nations, or Unasur, a political bloc in which Brazil wields broad influence, sent a diplomatic mission to Asunción, Paraguay’s capital.

In a statement reflecting the unease with which the region watched the events unfold, Unasur issued a statement saying that the ouster of Mr. Lugo “did not respect due legal process.”

The rapidity of the removal may have reflected anger over the clash between the police and squatters. But he faced other accusations in Paraguay’s Congress, including a claim that he broke the law by allowing leftist parties to hold a meeting at an army base. In addition, his opponents were incensed that he signed an agreement allowing Unasur to exert pressure on any of its members if an elected leader was overthrown.

Mr. Lugo’s popularity had already been damaged by paternity claims from his time as a bishop. He admitted in 2009 to fathering one child with a former parishioner, and this month he acknowledged that he was the father of another child, a 10-year-old boy, from a different liaison.

Mr. Lugo’s removal presents a test for Brazil’s leadership in South America. Brazil’s president, Dilma Rousseff, signaled Friday that Paraguay could face sanctions, which could potentially include its expulsion from Mercosur, a trade bloc, and other multilateral groups.

The involvement of Brazil in Paraguay politics is a delicate issue because of its deep economic influence there, exemplified by Itaipu, a huge hydroelectric dam that straddles the Paraná River between the countries. There are also hundreds of thousands of Brazilians and their descendants living in Paraguay.

Mr. Franco, Paraguay’s new president, promptly said after he was sworn in that Paraguay needed to redirect its energy policies to promote industrialization, including a review of electricity exports to Brazil and Argentina.

It remains to be seen how much legitimacy Mr. Franco will have in Paraguay. Yenny Villalba, the executive director of Pojuaju, an association of nongovernmental groups, said Mr. Lugo’s removal, while viewed as legal, “is not legitimate.”

“This is a very risky maneuver that has put the entire population in check,” Ms. Villalba said. “They pushed to breaking point the political equilibrium.”

Lis Horta Moriconi contributed reporting.

COHA – Land Reform Issues Intensify as Paraguay Enters Into a Political Crisis

This analysis was prepared by Eric Stadius, Research Associate at the Council on Hemispheric Affairs

  • Lugo risks expulsion from office by an unlikely coalition of the Liberal and Colorado parties
  • Both parties use the police-campesino clash as a self-serving ignition for the impeachment process, but fail to address any solutions to the fundamentals of Paraguay’s land tenure problems
  • Extra-constitutional expulsion threatens the democratic legitimacy of the Paraguayan state and defies the OAS prohibition of extra-constitutional changes

The historic antagonism in Paraguay between the campesinos and the elites over land tenure morphed into a violent conflict in Curuguaty on June 15. In the aftermath of the clash, political, social, and religious leaders have expressed serious concerns over President Fernando Lugo’s administration’s ability to control internal security. When President Lugo took office in 2008, he promised sweeping agrarian reforms as well as a reduction in violence and corruption within the government. However, since his election the Paraguayan citizenry has seen a rise in both crime and congressional support for corrupt officials. In Curuguaty, Paraguayans witnessed the consequence of policies that have long sacrificed land reforms for elite interests. Horacio Cartes, the leader of the Colorado Party and a potential presidential candidate in the 2013 elections, has led the movement to impeachment Lugo, an action that has politicized the Curuguaty deaths and thereby threatens to sweep the underlying social concerns under the rug. The police-campesino clash in Curuguaty highlights the Lugo administration’s ultimate failure: its inability to protect and provide basic social rights for the Paraguayan citizenry across the entire socio-economic continuum. But more tellingly, the political coup initiated by the Colorado Party not only threatens Paraguay’s democratic legitimacy, but also exhibits the continued power-driven actions that have prevented any agrarian reforms as well as further distanced the political process from the majority of Paraguayans.

Land Tenure in Paraguay

The basis of the internal conflict lies in Paraguay’s historic unequal land distribution, a trend that the military dictator Alfredo Stroessner aggravated during his 35-year rule. Stroessner frequently doled out massive parcels of land to military officials, civilian supporters, and foreign corporations while giving smaller lots to local Colorado Party caciques so as to build grassroots support for the party in the peasantry.(1) Repeatedly decrees enacted by Stroessner forcefully evicted campesinos, many of whom had resided on the land for years without formal title, to allow for these favors. Because corruption and land concentration issues have long plagued Paraguay’s legal system, the campesinos’ pleas for land reform went all but unheard and their land rights went unenforced. As the Christian Science Monitor reported at the end of the dictatorship, “Over the generations, the lack of available land led to a shady tradition of land-use practices that [left] duplicate and triplicate titles to a single piece of land, [influenced] fake land sales [as well as] the occasional government distribution of infertile land to peasants.”(2)

The Truth and Justice Committee (CVJ) was created to investigate human rights abuses carried out between 1954 and 2003. It has been noted that under Colorado Party leadership, wealthy Paraguayans and foreigners had illegally acquired over 64 percent of their lands through government handouts or simply by seizing the land from campesinos.(3) Many campesinos, therefore, believe that the land handed out by the government during this period technically still belongs to the state, and have undertaken a protracted fight to retake their land tracts, resulting in frequent human rights abuses by the Colorado Party leadership against the indigenous population.

By the time of Lugo’s election, Paraguay’s land distribution inequality had risen to the highest level of any Latin American country. Roughly 2 percent of the population controlled over 77 percent of the fertile land while small farmers, 40 percent of the population, owned merely 5 percent of all arable farmland. This growing inequality has led to significant pressure from campesinos over land regulation and the questionable ownership of at least 30 percent of Paraguay’s territory. Much of this land is located along the Brazilian border; in Alto Paraná alone, large landowners, predominately Brazilians, exercised their quick-handedness by grabbing more than 550,000 hectares of land—nearly 40 percent of all available land, arable and non-arable, in the region. The CVJ found that “the increasing penetration of Brazilians in Paraguayan territory, displacing indigenous people from the land they have been granted,” aggravates the situation.(4) But these Brazilians represent the powerful influence of the soy farmers, whose products have driven the recent boom in Paraguay’s economy.

As detailed in a 2010 COHA report, “It is no coincidence that the soy industry has grown in tandem with the increased violent oppression of small farmers and indigenous communities,” and that these “soy wars” came to reflect Lugo’s “business-government dichotomy caught up in the booming soy industry.”(5) Conflicts over the growth of soy, in conjunction with the corrupt land tenure laws, have become increasingly common in recent years but exploded into violence with the June 15 incident.

President Lugo, Curuguaty, and Impeachment

The government-supported unequal land tenure system has completely undermined President Lugo’s moniker as the “president of the poor,” which he artfully gained during his 2008 campaign. The Curuguaty affair came to represent the most disturbing moment of this trend. The conflict arose when 150 carperoscampesinos living in tents or carpas on the reserve—refused to vacate a forestry reserve owned by Colorado Party official Blas Riquelme, which the carperos claimed as state property due to illegal seizure.  During the eight-hour gunfight, a consequence of the carperos’ growing desperation to regain land, the police killed 10 campesinos and sustained seven casualties themselves. Lugo condemned the incident almost immediately, and as a result both the interior minister and the police chief tendered their resignations. However, due to the extensive outcry by both the political opposition and the indigenous-rights groups, Curuguaty has quickly become a watershed event in Lugo’s presidency and a referendum on his complete failure to effectively address pressing agrarian reform issues. As José Rodriguez, an advisor to many campesino-rights groups, argued, “Lugo cannot fix a grave social problem: the recovery of state lands seized decades ago by people like Riquelme who were not subject to land reform. This is a serious situation and it will only worsen because the poor need a piece of land.”(6)

President Lugo was unable to address land reform because the Colorado Party, whose coalition remains loyal to the landed elite and presides over a majority in the Paraguayan Congress, frequently blocked his land reform legislation, which they consider populist. Meanwhile, a growing number of Paraguayans have grown impatient with the president as he focuses on gaining transnational investment to support the farming sector. Social groups believe that Lugo, by giving into business and elite influences, has sacrificed reform for an anachronistic land tenure policy and the country’s corrupt legal system that supports these policies. Further, Lugo has failed to dislodge the elite class that frequently exploits the campesinos and the indigenous population.

While the impeachment process will inevitably remove Lugo from power and throw Paraguay into mass turmoil, the investigation will also hopefully reveal the institutionalized cracks within the Paraguayan government that prevent agrarian reform. Nevertheless, the political jockey surrounding the impeachment process threatens any true progress regarding the larger social issues at hand. The liberal coalition turned on the president, citing his lack of transparency concerning Curuguaty as well as Lugo’s appointment of conservative sympathizers to replace the deposed liberal ministers in Lugo’s cabinet. The major opposition came from Senator Cartes’ Colorado Party, which jumped on every opportunity to criticize Lugo in the party’s attempt to regain the presidency in 2013, a position that it held for much of the last century. The Colorado Party condemned Lugo’s apparent support for the carperos, as it wished to see elites’ traditional property rights upheld and the carperos evicted from the land. Moreover, the Colorado Party continues to support widespread corruption in the Paraguayan legal sector, highlighted in May by the Colorado-affiliated senators’ attempt to push a measure to extend additional funds to the Supreme Court for Electoral Justice, the body that regulates all elections and has been connected to widespread election fraud.(7) Despite President Lugo’s veto, the senators voted the bill through the upper chamber before mass protests in Asunción influenced the lower chamber to accept the president’s actions. Thus, the Colorado Party hardly seems the suitable option to replace President Lugo, although its victory in next year’s election appears all but inevitable.

Conclusion

Curiously enough, the Curuguaty incident presents Paraguay with an optimal opportunity to enact serious agrarian reform, addressing the internal security concerns voiced throughout Paraguay. Sadly, however, the incident will likely digress into another bickering match among the omnipotent, elite-dominated political parties. President Lugo has clearly failed in his electoral promise to the Paraguayan populace to protect campesinos from prosecution, eviction, and discrimination, but a viable figure to enact such necessary changes has yet to rise to the national forefront as a serious candidate. By impeaching President Lugo, an action that UNASUR and such South American leaders as Ecuador’s Rafael Correa and Bolivia’s Evo Morales already have condemned, Paraguayan Congress thus removes the citizenry from the political process and defies Paraguayan governmental legitimacy, essentially overseeing a political coup that defies the OAS charter banning extra-constitutional changes in power. Therefore, the true tragedy of the Curuguaty clash not only lies in the unjustified loss of life by both police and campesinos, but also in the government’s sacrifice of agrarian reforms at the hands of a power-grabbing ploy. These failures can lead only to a grim malaise, if not a protracted national crisis.

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COHA – Paraguay’s Nascent Occupy Movement Cut Short by Political Crisis

This analysis was prepared by Gustavo Setrini, Guest Scholar and former Research Associate at the Council on Hemispheric Affairs

  • Fernando Lugo, whose presidency ended 60 years of Colorado-Party rule in Paraguay, faces impeachment charges and is unlikely to finish his term.
  • The Paraguayan Congress began impeachment procedures in the aftermath of violent land conflicts that left 11 landless farmers and 6 policemen dead in the country’s rural interior.
  • Today, four Liberal Party Ministers resigned as their party withdrew support from President Lugo and joined the opposition Colorado Party to vote the president out of office.
  • The power grab by the two major parties comes nine months before the country’s general elections and following a successful wave of popular protests modeled on the Occupy Movement.

 

The Paraguayan lower house impeached President Fernando Lugo this morning in a vote of 76 to 1. The vote came six days after a land conflict in the rural district of Curugauty turned violent, claiming the lives of 11 landless farmers and 6 policemen. Paraguay is the world’s fifth largest soy exporter and a major exporter of beef. The country also has one of the world’s most unequal land distributions. While development experts agree that land reform is vital to improve the country’s economic and social performance, traditional landed elites make up a majority of the political class and have remained hostile to the idea. Polarizing land conflicts pit landless peasant organizations against the traditional landed elite and the Brazilian-dominated soy industry in a struggle to claim ownership over land with unclear or absent titles.

Land-owners accuse Lugo’s government of sympathizing with land invasions, inciting violence, and failing to protect their property. Lugo came to power in 2008, marking the first democratic change of power in the country’s history and ending 60 years of one-party rule in Paraguay. He was elected on a promise to bring about the political change and social progress desired by his ideological supporters in leftist parties and political movements, including peasant organizations. However, the bulk of Lugo’s electoral support came from the Liberal Party, which is dominated by landed elites. The Liberals threw their support behind Lugo in exchange for the Vice-Presidential nomination, the promise of multiple ministerial appointments, and the prospect of removing their traditional rivals, the Colorado Party, from power.

Lugo’s rule was compromised from the start, after the elections granted the President’s leftist allies only 6 out of 80 seats in the country’s lower house and 3 of 45  seats in the Senate. Furthermore, the Colorado Party received pluralities in both houses, setting the stage for the series of unstable and ideologically incoherent legislative coalitions that have presided over the legislature during Lugo’s presidency. Political maneuvering, rather than public policy, has occupied much of the legislature’s energy, and, under these conditions, little progress has been made on land reform and the economic and social demands of the country’s citizens.

The massacre in Curuguaty provided the impetus to unite the soybean-farming and land-owning interests within the rival Colorado and Liberal Parties against Lugo. These groups blamed Carlos Filizzola, Lugo´s Minister of Interior, for the death of the policemen and threatened Lugo with road blocks and impeachment unless the President named a new official who was committed to securing the countryside. Lugo replaced Fillizola, a member of the left-leaning Partido País Solidario, with Rubén Candia Amarilla, a Colorado Party Member who held the post of Attorney General in the last Colorado government and was associated with the repression of landless peasant organizations.

Following Filizolla´s dismissal on June 16, Lugo’s government quickly lost its grip on power. Today the Liberal Party withdrew its support from the government and asked its members to resign their posts. The country’s Minister’s of Education, Agriculture, Industry and Trade, and Justice and Labor resigned today following the announcement. Meanwhile Liberal legislators collaborated with the Colorado party to begin impeachment proceedings in the Paraguayan congress. The Paraguayan constitution permits impeachment of the president for “poor performance of his functions, crimes committed in his duties and common crimes,” but provides no specific criteria for impeachment. This morning, the lower house approved an accusation of impeachment offenses by a vote of 76 to 1, citing insecurity and national security threats as their principle motivation.  The impeachment trial must now be carried out by the senate, where the Liberals, Colorados, and the opposition UNACE party will easily reach the supermajority needed to impeach the president.  The senate vote will occur by the end of the day on Friday.

Meanwhile, peasant organizations have announced their support for Lugo and begun to mobilize their members to the capital. Thousands of peasants are set to arrive in Asuncion this evening and occupy the legislative plaza along with members of the leftist social organizations that supported Lugo’s candidacy and hoped to gain a foothold on power during his government. Impeachment supporters have also taken to the Plaza, creating a potentially explosive environment, as the opposing groups attempt to put popular pressure on the Senate. Past responses to social protest in Paraguay have set a violent precedent. In March 1999, peasant-organized protests blocked an attempted coup by General Lino César Oviedo but resulted in the shooting of six demonstrators.

These developments come nine months before Paraguay´s general elections and following a novel wave of political organizing and protest by urban and youth groups, modeled after the occupy movement in the U.S. Thousands of protestors occupied the plaza last month demanding greater accountability from Congress and demanding that they reject plans to fund 10,000 patronage hires at a cost of US$15 million. This expression of citizen´s opposition triggered an about face in the senate and emboldened Paraguay´s occupiers to press for further electoral reforms. The political crisis unleashed by the impeachment trial has upset their plans and divided their ranks. While, Paraguay´s occupiers are united in their disdain for Paraguay´s political class, they hold mixed attitudes toward Lugo and are not natural allies of the President´s rural supporters.

Thus, the optimism that followed such sudden and unexpected gains by social protesters has been replaced by ambivalence deep political uncertainty that is unlikely to be resolved soon. Should the impeachment succeed, Liberal Vice President, Federico Franco, will assume the presidency, and a new Vice President will be chosen by majorities of both houses. The parties must then negotiate with the new president to claim the vacant Ministerial posts, a valuable prize and source of patronage during the electoral season. Should Lugo´s allies succeed in defending his government, the president must finish his term with a tenuous grip on power and in a weak position to name his successor.

Please accept this article as a free contribution from COHA, but if re-posting, please afford authorial and institutional attribution.

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AS/COA – Why the U.S. Can’t Afford to Ignore Latin America

Christopher Sabatini and Ryan Berger CNN Global Public Square June 13, 2012

Speaking in Santiago, Chile, in March of last year, President Obama called Latin America “a region on the move,” one that is “more important to the prosperity and security of the United States than ever before.”
Somebody forgot to tell the Washington brain trust.
The Center for a New American Security, a respected national security think tank a half-mile from the White House, recently released a new series of policy recommendations for the next presidential administration. The 70-page “grand strategy” report only contained a short paragraph on Brazil and made only one passing reference to Latin America.

Yes, we get it. The relative calm south of the United States seems to pale in comparison to other developments in the world: China on a seemingly inevitable path to becoming a global economic powerhouse, the potential of political change in the Middle East, the feared dismemberment of the eurozone, and rogue states like Iran and North Korea flaunting international norms and regional stability.
But the need to shore up our allies and recognize legitimate threats south of the Rio Grande goes to the heart of the U.S.’ changing role in the world and its strategic interests within it.
Here are three reasons why the U.S. must include Latin America in its strategic calculations: 1. Today, pursuing a global foreign policy requires regional allies.
Recently, countries with emerging economies have appeared to be taking positions diametrically opposed to the U.S. when it comes to matters of global governance and human rights. Take, for example, Russia and China’s stance on Syria, rejecting calls for intervention.
Another one of the BRICS, Brazil, tried to stave off the tightening of U.N. sanctions on Iran two years ago. And last year, Brazil also voiced its official opposition to intervention in Libya, leading political scientist Randall Schweller to refer to Brazil as “a rising spoiler.”
At a time of (perceived) declining U.S. influence, it’s important that America deepens its ties with regional allies that might have been once taken for granted. As emerging nations such as Brazil clamor for permanent seats on the U.N. Security Council and more representatives in the higher reaches of the World Bank and the International Monetary Fund, the U.S. will need to integrate them into global decision-making rather than isolate them.
If not, they could be a thorn in the side of the U.S. as it tries to implement its foreign policy agenda. Worse, they could threaten to undermine efforts to defend international norms and human rights.
2. Latin America is becoming more international.
It’s time to understand that the U.S. isn’t the only country that has clout in Latin America.
For far too long, U.S. officials and Latin America experts have tended to treat the region as separate, politically and strategically, from the rest of the world. But as they’ve fought battles over small countries such as Cuba and Honduras and narrow bore issues such as the U.S.-Colombia free-trade agreement, other countries like China and India have increased their economic presence and political influence in the region.
It’s also clear that countries such as Brazil and Venezuela present their own challenges to U.S. influence in the region and even on the world forum.
The U.S. must embed its Latin America relations in the conceptual framework and strategy that it has for the rest of the world, rather than just focus on human rights and development as it often does toward southern neighbors such as Cuba. 3. There are security and strategic risks in the region.
Hugo Chavez’s systematic deconstruction of the Venezuelan state and alleged ties between FARC rebels and some of Chavez’s senior officials have created a volatile cocktail that could explode south of the U.S. border.
FARC, a left-wing guerrilla group based in Colombia, has been designated as a “significant foreign narcotics trafficker” by the U.S. government.
At the same time, gangs, narcotics traffickers and transnational criminal syndicates are overrunning Central America.
In 2006, Mexican President Felipe Calderón launched a controversial “war on drugs” that has since resulted in the loss of over 50,000 lives and increased the levels of violence and corruption south of the Mexican border in Guatemala, El Salvador, Honduras and even once-peaceful Costa Rica. Increasingly, these already-weak states are finding themselves overwhelmed by the corruption and violence that has come with the use of their territory as a transit point for drugs heading north.
Given their proximity and close historical and political connections with Washington, the U.S. will find it increasingly difficult not to be drawn in. Only this case, it won’t be with or against governments — as it was in the 1980s — but in the far more complex, sticky situation of failed states.
There are many other reasons why Latin America is important to U.S. interests.
It is a market for more than 20% of U.S. exports. With the notable exception of Cuba, it is nearly entirely governed by democratically elected governments — a point that gets repeated ad nauseum at every possible regional meeting. The Western Hemisphere is a major source of energy that has the highest potential to seriously reduce dependence on Middle East supply. And through immigration, Latin America has close personal and cultural ties to the United States. These have been boilerplate talking points since the early 1990s.
But the demands of the globe today are different, and they warrant a renewed engagement with Latin America — a strategic pivot point for initiatives the U.S. wants to accomplish elsewhere.  We need to stop thinking of Latin America as the U.S. “backyard” that is outside broader, global strategic concerns.

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FP – Petrostate Blues

Posted By Francisco Toro   Wednesday, June 20, 2012 – 5:07 PM

With 19,000 murders a year, constant power failures, periodic shortages of basic food staples, and rampant corruption throughout the state, you might think Venezuela would make an exceptionally tough place for an incumbent seeking re-election. Add the fact that the incumbent is visibly dying, and it seems like it should be a done deal, right?

No, not right. Not by a long shot. In fact, with most recent polls putting him somewhere between 5  and 16 points ahead, President Chávez is in a strong position to be voted back in for a third six year term — if he can stay ahead of those cancer cells, at any rate. His supporters attribute his remarkably resilient popularity to the advances of his self-styled “Bolivarian revolution” in health, housing, and social welfare. But the real secret to his success is simpler than that: He leads a country that sits on top of an enormous lake of petroleum at a time of booming oil prices.

Indeed, 2011 saw Venezuela take in $128 billion in oil revenues — a huge number for a country of just 29 million people. This being an election year, the oil windfall sent the government into a torrid spending binge. In the first quarter of 2012, public sector construction grew57% compared to the same period of the previous year, while public sector housing construction grew at a head-spinning 131% over its 2011 levels. Overall public spending grew a staggering 28% from its first quarter 2011 level, while imports rose 48.5% from a year earlier.

Indeed, Chávez’s popularity is no mystery at all. When money pours in at the frenetic rates the oil industry facilitates, it doesn’t take an economic genius to engineer a consumption boom in the months before an election.

People vote with their pocketbooks; incumbents everywhere are exposed when times are tough, and are strong when times are good. U.S. election watchers fixate on the monthly job-creation number: They know the president’s prospects in November hinge crucially on it. That the performance of the president has only the most tenuous of relations with that number on any given month is neither here nor there — U.S. presidents are expected to answer for them nonetheless.

You could argue that, in most Western democracies, pocketbook voting is a rough-and-ready heuristic, a short-cut to rational voting. Of course all kinds of factors add “noise” to the usefulness of your pocketbook as guide to your vote. (Americans voters, for instance, may very well punish Barack Obama for mistakes Greek finance ministers made years before he reached the White House.) But, in the long run, pocketbook voting arguably introduces an element of accountability, creating major incentives for politicians to make sensible economic policies.

In a petrostate, though, it’s much harder to make that argument, because the link between the government’s competence and your pocketbook is fundamentally screwed up. Venezuela’s latest consumption boom has happened as the country increasingly deindustrialized and lost competitiveness in every other tradable sector of the economy. These days, Venezuela even importsits coffee , a coal-to-Newcastle absurdity that speaks volumes about Dutch Disease gone out of control. The result has been to turn Venezuela increasingly into a parasite of the world oil market: A country happy to export oil, import everything else. As one economist sarcastically put it: “Why would we want to work? We have oil!”

Worse yet, petrostates have no trouble finding foreigners willing to lend them cash, so Venezuela has piled up debts throughout the fat years, further fueling the consumption spree. The unsustainability of the arrangement is underlined by the extraordinary spreads Venezuelan bonds command — and the country thinking nothing wrong with borrowing at Credit Card rates. Issuing bonds at 12% is common, with yields in the secondary market sporadically hitting 18%. In Europe, 7% is the threshold that triggers a freak-out followed by a bail-out, but then Ireland doesn’t sit on top of 300 billion barrels of crude oil, and Spain doesn’t make $350 million dollars a day out of thin air just by shipping black goop stateside.

In the 1960s, Venezuela’s energy minister famously dubbed oil “the devil’s excrement” — and we see why. The unpredictable gyrations of world oil markets, and the massive windfall it generates now and then, distort every aspect of Venezuelan public life. It distorts an economy where no other tradable product can be produced profitably, and it distorts the political system, where the fortunes of politicians are radically disengaged from their actual performance and placed in the hands of Olympus. But it also distorts the values of a society that can discern no clear link between investment and consumption, between effort and reward, between what you do, and what you get.

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