Category Archives: Economy

Banco Mundial: Latinoamérica ya no debe temerle a depreciación de monedas

El Comercio

Augusto de la Torre, economista jefe para América Latina del BM, indicó que la depreciación de las monedas locales puede funcionar como un “amortiguador de los impactos externos”

Washington (DPA). En una época en que el extraordinario crecimiento económico de la última década empieza a templarse, América Latina debe superar su histórico miedo a una depreciación de su moneda para aprender a emplear este instrumento como un amortiguador capaz de absorber los impactos externos negativos a los que es tan sensible, sostuvo hoy el Banco Mundial.

“Las monedas depreciadas no sólo reducen el costo de las exportaciones, también elevan el costo de las importaciones, haciendo que las industrias domésticas y de exportación se vuelvan más competitivas, generando más puestos de trabajo”, afirma el BM en su nuevo informe semianual sobre la región, centrado en esta ocasión, incluso desde su título, en “La desaceleración en América Latina y el tipo de cambio como amortiguador”.

El BM y el Fondo Monetario Internacional (FMI) coincidieron en sus últimas previsiones en la ralentización de la economía de la región. Sus estimaciones para América Latina y el Caribe este año son de entre 2,5% y 2,7% que sólo llegará al 3% en 2014, por debajo de lo proyectado anteriormente.

Con todo, según el BM, esto no debe dar pie al “pesimismo” registrado entre algunos expertos porque, afirmó hoy su economista jefe para América Latina, Augusto de la Torre, la región que hoy afronta esta desaceleración no es la misma que enfrentó vientos desfavorables que tanto la desestabilizaron en la década de los 90.

“Tenemos un instrumental anticíclico más completo y las depreciaciones de la moneda ya no deben ser vistas como un problema, sino como parte de la solución, como parte del instrumental con el que América Latina puede absorber los choques”, afirmó De la Torre al presentar hoy en Washington su informe durante las Reuniones Anuales del Grupo Banco Mundial y el Fondo Monetario Internacional.

“Si se analiza la capacidad de las economías regionales de sobrellevar los efectos de un entorno internacional menos favorable, uno se da cuenta de que los días en que depreciar la moneda terminaba en desastre son prácticamente cosa del pasado”, agregó y se declaró “cautelosamente optimista”.

DEPRECIACIÓN EN LOS 90
Según De la Torre, las causas que en los 90 hacían temblar a toda la región con la palabra casi tabú de “depreciación”, ya no se dan hoy en día -en buena parte de la región.

De este modo, las políticas aplicadas en los últimos años en buena parte de América Latina permitieron que hayan “desaparecido” las “tres razones fundamentales para temerle a la depreciación”, subrayó De la Torre.

Y es que la América Latina ha logrado por una parte ampliar su desendeudamiento. “Ahora somos no ya un gran deudor frente al mundo,somos un gran acreedor, le hemos dado la vuelta a la tortilla y si alguien puede ahora denegarle a otro somos nosotros”, celebró De la Torre.

A ello se une una extensa “desdolarización” y “regímenes monetarios más creíbles”.

“En la década de los 90, los ajustes del tipo de cambio como los observados en los últimos meses hubieran resultado en inflación elevada y angustias financieras debido a grandes deudas privadas y públicas en moneda extranjera”, señala el ente financiero.

El organismo calcula que los países que pueden beneficiarse de este instrumento representan entre el 70% y 80% de la población y el PIB de la región.

SIN CONDICIONES
De la Torre reconoció sin embargo que la flexibilización del tipo cambiario no es una herramienta que esté aún al alcance de todos en la región.

Debido a su pequeño tamaño e idiosincrasia particular, que les impide desarrollar una política monetaria completamente independiente, se quedan prácticamente fuera del aprovechamiento de este instrumento Centroamérica y el Caribe.

Tampoco para países “menos globalizados financieramente”, como Bolivia, constituye esta receta una panacea, del mismo modo que es menos aplicable en países que aún están dolarizados o que no han desarrollado marcos institucionales para una política monetaria robusta con flexibilidad cambiaria.

Existe además otro grupo de países donde el índice de dolarización de la deuda es alto aún, y que por ello “tienen menos maniobra”. Son naciones como Perú, Uruguay o Costa Rica, pero De la Torre apuntó hoy como dato positivo el hecho de que en esos países, la dolarización hace no mucho tiempo aún era del 100% y ahora ronda sólo el 40%.

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Washington Post – Mexico wants US aid to focus more on social programs in bid to quell drug violence

By Associated Press, Published: February 14

MEXICO CITY — A top security official says Mexico will ask the U.S. to focus anti-drug aid more on social programs and prevention.

Mexican Assistant Interior Secretary Roberto Campa says only about 2 percent of the current $1.9 billion in American aid under the Merida Initiative is earmarked for social programs. Most goes for intelligence, transport and the training for Mexican law enforcement agencies.

Campa said Thursday the previous administration’s social programs were poorly organized and late.

President Enrique Pena Nieto has pledged to focus less on armed conflict and more on addressing the underlying social issues that fuel the drug violence that has cost more than 70,000 lives since 2006.

That plan includes a $9.2 billion program to provide greater employment and educational opportunities for youths who otherwise might join cartels.

Click here for original article.

AS/COA – The Emerging Atlantic Community

Eric Farnsworth / PODER

 

December 03, 2012

 

Opportunities exist for an alliance similar to that enjoyed by Pacific Rim countries, but the initial approach to Latin America and Africa is crucial.

With wars in the Middle East winding down and Europe in the economic doldrums, Washington has become fixated on Asia. In November 2011 the Obama administration announced a “pivot” to Asia, with a resulting shift in strategic focus including military assets to the region.

Trade policy in the administration centers on the Asia Pacific and negotiations to conclude the Trans-Pacific Partnership. On the campaign trail, Gov. Mitt Romney said repeatedly that he would designate China as a currency manipulator on “day one,” and China was a recurring theme this election cycle.

This is acknowledgement at the highest political levels that the weight of global economic and political influence is shifting toward Asia, away from the traditional North Atlantic relationships that have dominated global affairs since the end of World War II. This gives pause to some in the foreign policy community because the existing Atlantic alliance has been the bulwark for establishing and maintaining the postwar global order. As a result, questions are increasingly being asked whether it’s time to re-energize the Atlantic community as a means to match the dynamism of the Pacific community.

Nonetheless, something is different this time from the usual US-Canada-Europe approach: there is a growing recognition that a true Atlantic community must also include Latin America and Africa, two continents generally shut out of previous discussions. To make this work, a favorable nod from Brazil—Latin America’s largest economy by far, the world’s sixth largest, and geographically a nation positioned in the heart of the Atlantic—is critically important. Beginning under President Lula and continuing with Dilma Rousseff, Brazil has been focused on developing cross-Atlantic ties, particularly with Africa where Brazil has prioritized development and commercial issues. To this point, however, Brasilia has expressed little interest in participating in any full-blown pan-Atlantic arrangement that includes Europe and the United States, particularly given the likelihood that such vision would include, if not center on, formal military or trade frameworks. Brazilian reluctance to commit to a new pan-Atlantic vision, despite a well-known effort to play a larger role in global affairs, is not as surprising as it may sound. Brazil is forging an independent path, and leadership on South-South issues is a priority. This shows itself in a hemispheric trade policy that emphasizes the expansion of MERCOSUL over the moribund Free Trade Area of the Americas; a foreign policy that positions Brazil first and foremost as one of the BRICs; and a development policy that promotes assistance to and cooperation with Africa.

By entering into an Atlantic relationship that includes North America and Europe, Brazil’s interests could be constrained by the traditional North Atlantic partners. Symbolism matters, too: the colonial histories of Latin America and Africa cannot be ignored.

What, then, of the idea of a greater Atlantic community? Like most things, it’s best to begin with a concrete project and build out. This is particularly true given the vast differentials in development, size, and influence among nations in North America, Europe, Latin America, and Africa. The EU began with the coal and steel community of France and Germany; APEC began with the idea of greater economic integration but no explicit final goal; the Trans-Pacific Partnership began as a small “P4” trade negotiation including Brunei, Chile, New Zealand, and Singapore. A similar approach would be appropriate in building a greater Atlantic community, starting with areas of concrete mutual interest, including energy and agriculture.

Confidence-building measures must precede broader agreements to engage Latin America and Africa. Initial progress can be made among willing nations, for example North America with Europe and Mexico, Colombia, and Uruguay, holding the door open for others such as Argentina, Brazil, and Venezuela as well as African nations to see the benefits of joining a moving train.

Meanwhile, the United States and the EU are discussing the possibility of launching negotiations for a trade agreement at some point in 2013, to meet the vibrancy of the trans-Pacific efforts but on an even greater economic scale. To make such an effort fully consistent with U.S. interests in Asia and the Western Hemisphere, Canada and Mexico should also be included at the very beginning of any trade negotiations that kick-off with Europe.

The key is to develop a vision in the greater Atlantic—or the Pacific region or Latin America, for that matter—that is compelling enough for nations such as Brazil to see it and want to join, offering greater advantages for participation than for non-participation. It’s easy to just say “no” to an international grouping that offers little reward. That’s something for Atlanticists to keep in mind as they look for ways to build yet another cross-cutting regional bloc.

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AS/COA – Interview: BRICLab Co-Director Marcos Troyjo on the 2013 Outlook for the BRICs

December 13, 2012

 

After a decade of copying and adapting, [the BRICs] have to move on to a new decade of designing, formulating, and innovating.

Marcos TroyjoMarcos Troyjo serves as an adjunct professor of international affairs and as co-director of Columbia University’s BRICLab, a forum dedicated to the rise of the BRIC countries (Brazil, Russia, India, and China). AS/COA Online’s Rachel Glickhouse spoke to Troyjo about how the BRICs will fare next year in terms of technology and innovation, energy, and economic policies.

AS/COA Online: You’ve mentioned before that the BRICs need to change their DNA in terms of policies. What do you mean by that? 

Marcos Troyjo: One of the reasons the BRICs were considered rising countries back in 2001 is because they were capable of adapting creatively to the global economy. That is, their rise has more to do with adapting and copying practices and benchmarks from other economies instead of coming up with something of their own. So I think that the main way to explain the rise of BRICs from 2001 to 2011 was creative adaptation.

Creative adaption meant different things for Brazil, Russia, India, and China. For China, creative adaptation meant reorganizing their productive capacities to become an export-led country. So China received Most Favored Nation status in its trade with the United States. China devised a very intelligent program of public-private partnerships that allowed for the necessary capital to expand infrastructure. It capped wages and other factors of production, including the exchange rate, to provide for this competitive image.

Brazil’s creative adaption meant a policy of import substitution 2.0. Brazil was using the surpluses it acquired from commodities, particularly agriculture and mineral commodities trade with China. Brazil discovered rich deepwater offshore oil reserves, and was also able to devise one of the most advanced biofuels programs in the world. So these three characteristics created the necessary resources to allow for import substitution.

India adapted creatively in the past 25 years by providing cheaper alternatives in areas such as information technology, pharmaceuticals, and textiles. It also developed services such as call centers that could be outsourced from other countries.

Now, the traditional markets of the United States and Europe are stalled. Therefore, BRIC countries have to change their DNA in the sense that they have to grow not because of creative adaptation, but because of creative destruction. BRIC countries have to direct resources towards innovation. After a decade of copying and adapting, they have to move on to a new decade of designing, formulating, and innovating. If the BRICs are able to perform that DNA change, I think that they will continue to be some of the most dynamic growth markets in the world. If they’re not able to change their DNA, then they face a bumpy road ahead.

AS/COA Online: Local content policies require companies to purchase or produce a certain percentage of goods or services domestically in order to operate in a given country. In your opinion, how do local content policies impact the BRIC economies and trade strategies? Do you foresee any changes to these policies in the coming year?    

Troyjo: Local content is essential for the BRIC countries, although each of the BRIC countries approaches local content in different ways.

China, for example, is now implementing a number of countercyclical measures that have local content at the core. If you are an aircraft manufacturer and you want to sell your product to the most important client in China, which today is the Chinese government, you have to produce essentially 70 percent of those aircraft in China—therefore generating local taxes and local jobs. China has foreign exchange reserves at around $3.7 trillion as a countercyclical measure in order for companies to divert their production capacities to China and to have China as the final destination for their products. So China is operating a DNA change from export-led growth to growth that will also be fostered by domestic consumption.

Brazil’s local content policies are important in the sense that it has an industry to protect. Brazil has been deindustrializing very rapidly due to global competition, particularly Asia. One of the ways the Brazilian government came up with to reindustrialize is local content policies, especially by the so-called Brazilian champions: the large multinational corporations in which the Brazilian government owns the golden share. That is the case of Petrobras, Embraer, and Vale. Many of these companies play the role of the leading local content implementers.

Petrobras, for example, has to buy approximately 20 big oil tankers a year. If Petrobras were to buy these tankers in South Korea, China, or Singapore, the average price tag would be $65 million. Petrobras is prepared to pay $125 million for each of those ships if 65 percent of the ships are produced in Brazil. What’s the logic behind paying a $50 million premium on each ship? It’s that Brazil believes that there is a learning curve for the entire production chain in this particular sector—engineers, welders, technicians—that will allow for a 50 percent reduction in production costs over a period of 10 years. The remainder of the premium has to do with labor and fiscal regulation reforms to make the country’s companies more competitive.

Do I see any changes in how these countries will approach local content in the next few years? I don’t think so, because when it comes to international trade and investment, I think we’re about to see a much more de-globalized set of agreements and institutions in the next couple of years. That’s because countries are very much turned inward with insular policies.

AS/COA Online: You’ve discussed innovation and technology as key areas for the BRICs to invest in. How does Brazil compare to the other BRICs in terms of innovation and technology?

Troyjo: I think innovation is the result of the interplay of four factors: a stock of knowledge, a stock of capital, a stock of entrepreneurship, and the atmosphere that you have to create in order for these three to operate efficiently.

In this sense, Brazil did very well, as in the case of biofuels or aircraft. Look at Embraer, for example; it’s one of the top three air manufacturers in the world. In biofuels, when research was applied to industrial ends, Brazil fared very well. Today, eight out of 10 Brazilian automobiles run on flex fuel, which uses biofuel. Look at the case of agriculture. Brazil has a great research and development company called Embapra, which is responsible for raising the competitive advantages of seeds and of shortening the maturation process of some crops.

But when it comes to overall science and technology investments directed toward innovation, I am less optimistic. Brazil is only investing 1 percent of its GDP in research and development, whereas a country like South Korea—which many acknowledge as one of the top examples of growth through innovation—is investing in excess of 3 percent of its GDP in R&D. Ten years ago, China directed only 0.6 percent of its GDP to R&D. Now, it invests 1.5 percent, and by the time China overtakes the United States as the world’s largest economy between 2022 and 2025, China will be investing 2.5 percent of its GDP in research and development.

In India, we have a very uneven situation. When it comes to IT, biotechnology, and pharmaceuticals, it is very advanced, with a great deal of investment from the private sector. Multinational corporations do their research in India because of the relatively low cost of production and high level of intellectual human capital there. But throughout society, you will not find the same enthusiasm for R&D investment, and this is one of the reasons why you find such disparities. Today in India, there are more cell phones than toilets. There are more billionaires than in the UK and France put together. But it’s also a country where there are more poor people than on the entire African continent. I think that’s all a result of the many disparities that you have in research, development, and innovation investments.

Russia is one of the classic examples of the distance between pure research and research applied to markets. In the late 1970s, four out of 10 scientists in the world were working in the Soviet Union. This country was able to perform things that were really remarkable, like sending a man to outer space, but it couldn’t produce an alarm clock that would ring on time. So Russia’s problem is transforming its great level of science that it has into a market. Many of the market mechanisms that are so common in the United States—start-up capital, projects financed by companies, individual entrepreneurship—are not present in Russia. These are the bottlenecks that keep Russia from playing an even more important role in terms of innovation. Some of the more democracy-oriented characteristics of society that are so important for technological entrepreneurship are still missing in Russia.

AS/COA Online: President Dilma Rousseff is making efforts to reduce the so-called “Brazil cost,” a combination of insufficient infrastructure, high taxes, and bureaucracy that hinder businesses in Brazil. What legislation or reforms under consideration could have an impact on the Brazil cost next year? 

Troyjo: To be very honest, I see tactical movements by the Brazilian authorities, but I do not see anything that is either essential or structural. But I think that’s understandable.

Let me give the example of fiscal reform. In Brazil, the overall tax burden on society is about 37 percent of GDP, whereas in South Korea, for example, it’s only 26 percent. Why is Brazil’s tax burden so high? The Brazilian government is too big and this is a choice by society. Brazil keeps saying that it has achieved near full employment with one of the lowest unemployment rates in the Western Hemisphere. But if you analyze the organic composition of employment, you realize too many people are employed either by the city, state, or federal branches of government or in state companies and activities.

Not only is the government too big, but it’s too inefficient and too expensive. One structural reform to be enacted would be to reorganize Brazilian administration to allow for a decrease in the fiscal burden. It could happen, but it takes a lot of political will. The Brazilian government would have to sacrifice in the short term for the benefit of the long run. Because we have an electoral cycle every four years in a democracy, that’s a difficult bet to make. That’s true especially in Dilma’s case, where in terms of economic growth, the first two years of her administration have been nearly lost. Brazil only grew 2.7 percent last year and this year it’s only going to grow around 1 percent.

Labor reform would also be important. Labor costs are enormous in Brazil right now. The minimum wage is three times the minimum wage base in countries like Indonesia or Vietnam. If you’re a company establishing yourself in Brazil, you’re probably going to hire someone and pay one salary to the employee and the equivalent of another salary to government due to the absurd medieval requirements when it comes to labor protection and pensions. Once again, the government could enact reform in that area. It would have to pick a fight with the labor unions. Does it want to do so in the long term? I don’t think so.

But I do not see these two reforms on the radar in any way, shape or form in the next couple of years.  Whatever the government comes up with in terms of reforms is only tactical and short-term.

AS/COA Online: One of the Brazilian industries to watch in coming year is in oil and gas, as the first round of concessions in five years is due to take place in 2013. What are some of the opportunities and challenges in Brazil’s energy sector that will be important next year?

Troyjo: Well, I think there are three dimensions. One is the challenge related to the deepwater, pre-salt oil, so immense in scope that Petrobras will probably leave some of the onshore exploration opportunities to foreign companies or companies that could partner with other Brazilian players. So I see a lot of things coming from onshore, which is really not the tradition in Brazil and is really not where most of the attention is. But because Petrobras’ challenges in pre-salt oil are so huge, something is going to be left behind as far as onshore oil.

When it comes to pre-salt oil, it’s obvious that the technological challenge is huge. Think about the kind of remote robotics you have to have, the chemicals used in taking oil and gas out of a depth of about 7,000 meters (22,965 feet). Technological partnerships are key. The companies that are able to understand the workings of Petrobras, the requirements of local content, and mapping the area of technological demands can be very successful.

The third area of opportunity is biofuels. More and more countries are interested in the Brazilian model of flex fuel engines. Countries in Scandinavia are very interested; Sweden, for example, is already the top destination for Brazilian ethanol in Europe. The companies that want to partner in Brazil with biofuels will be able to join the Brazilian locomotive that may be destined to make ethanol a global commodity. If that happens, all of those companies that partnered with Brazilian companies in extending the global outreach of biofuels—particularly sugar cane-based biofuels—will have a lot to profit from.

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FA – How Chavez Does Business

Twenty-First-Century Socialism and Venezuela’s Soaring Stock Market

October 4, 2012

After almost 14 years in office, and with an impressive record of electoral victories behind him, Venezuelan President Hugo Chávez now faces the most challenging campaign of his political career. Venezuela’s economy is weak, and, for the first time since 1998, Chávez, who has cancer, could suffer defeat when the country goes to the polls, on October 7.

The conventional wisdom is that Chávez’s prospects will depend, as they have in the past, on his strong support from the country’s poor. He has spent years developing social programs to dole out state funds to those in need, and the tactic has made him wildly popular. But that strategy alone might not work this time around. Chávez’s electoral fortune today depends not so much on his connections to the poor but on his approach to Venezuela’s private sector.

Chávez has long undercut private enterprise, which has resulted in a weak economy that is hurting his appeal to voters. (Click the image to the right to see how.) But he can also use economic troubles to demonize the private sector and rally ideological voters. This complicated relationship to the private sector explains why, this this time around, Chávez’s candidacy is damaged but still afloat.

PROBLEMS TO THE PEOPLE

This round of voting is especially significant, because more than at any point in recent memory, stability is an issue: the ruling party is heavily armed, and the opposition is highly charged. (Last weekend, three followers of the opposition were killed; click here to see a timeline of Chávez’s rise to power.) Neither side trusts the other, nor the rules by which the other plays. The outcome could be close — the numbers vary, but two reputable pollsters have shown the opposition candidate, Henrique Capriles Radonski, to be closing the gap — and there is a risk that neither party will recognize unfavorable results. In other words, the threat of violence is very real in a country that is the fourth most important source of oil for the United States.

At least in theory, Chávez shouldn’t be having so many problems. In Latin America, incumbents have a huge advantage because the office of the president is often the most powerful branch of government; the fact is all the more true in Caracas. More, Chávez has presided over one of the most extraordinary oil booms in history, generating nearly $1 trillion since the early 2000s. Yet the president’s political prospects look very much like his physical health: he is not quite dying, but he is not thriving either.

Chávez’s main problem is that social spending may have reached a saturation point. Since the 2010 parliamentary elections, the urban poor have largely split politically. Some poor continue to trust Chávez as their patron saint, awed by his “missions,” as his varied social assistance programs are known. His latest project — handing out some 244,000 free houses to low-income Venezuelans — has captured headlines for its imaginativeness and grandiosity.

But the other half of the urban poor seems to have had enough. These people feel besieged by the worst crime wave in the world — this year, experts expect the homicide rate to reach 70 murders per 100,000 inhabitants (in the United States, the rate is about 4 per 100,000). They are frustrated by declining real wages and scarce job prospects. They are tired of empty promises; many of the new giveaway houses, for instance, are proving to be uninhabitable. And they are frustrated by infrastructure that is collapsing around them. In the last several months alone, a bridge on a major interstate highway collapsed, and an oil refinery exploded, killing 41 people. The electricity grid is in such disrepair that Caracas now schedules daily power outages.

BUSINESS IN A VISE

Chávez’s real hope, then, is his relationship with the business class. Contrary to what conservative analysts claim, Chávez is no Bolshevik. He says that he wants to “pulverize” capitalism, but the truth is that he is not intent on obliterating the country’s private sector. He wants to keep it alive — but small, uncompetitive, and dependent on the state.

On that score, he has succeeded. Since the mid-2000s, Chávez has nationalized approximately 100 major firms and almost 900 minor ones, while expanding public-sector employment from 15 to 19 percent of the labor force. He has saddled the private sector with onerous regulations and price controls, overburdening firms with heavy costs. He deliberately overvalues the country’s currency, which discourages exports and overstimulates imports. To survive, private firms have had to become import retailers rather than local producers. Thus, imports have increased and private-sector exports have virtually collapsed, down in 2010 by 55 percent since 1998. And finally, firms can’t access dollars on their own because they are not exporting; the only way for them to get cash is to go knocking on the government’s door. But Caracas sells dollars only at very high prices and under strict controls. Businesses are forced to maintain very good connections with the state.

The result is a reduced, highly unproductive, increasingly state-dependent yet very profitable private sector. The Venezuelan stock market says it all — the bourse has skyrocketed during Chávez’s tenure, appreciating by 870 percent between 2000 and 2010, far outstripping stock markets in the more avowedly capitalist countries of Chile (275 percent), Brazil (299 percent), and Mexico (554 percent). Firms make profits by acquiring import licenses or a privileged exchange rate, or by bribing the state for contracts and exemptions to regulations. Few firms seek profits by investing in their own businesses.

The Venezuelan stock market outshines not just stock markets in other countries but, ironically for a socialist state, workers’ earnings at home. Real wages in Venezuela have collapsed by almost 40 percent since 2000 (see the interactive graphic). Elsewhere in the region, real wages have either improved or remained stable.

This odd relationship with the private sector explains both Chávez’s not-so-high electoral ceiling and his not-so-low electoral floor. Whereas in most countries governments experiment with different forms of partnerships with the private sector to advance development, in Venezuela the state tries to go it alone. Consequently, Chávez cannot tout achievements in job growth, salary growth, infrastructure improvement, expansion of the middle classes, and jumps in education seen elsewhere in emerging markets. This is a burden on his campaign.

But the underperformance of the private sector works wonders ideologically, as it allows Chávez to bluster on with his anti-capitalist rhetoric. On the campaign trail, he regularly accuses the private sector of predatory hoarding. He complains that businesses are not producing enough or creating jobs fast enough. He blames them for relying on imports and expatriating profits (and thus being in cahoots with international capitalism). His rhetoric about a faltering private sector allows the state to portray itself as the only hope for the poor. To move the masses into the ranks of the middle class, the state cannot act alone — the private sector must also generate well-paying jobs. But that is not happening in Venezuela, despite the fact that it has everywhere else in Latin America. In many ways, of course, Chávez is correct. The private sector is atrophied. What he fails to mention is the problems are government-induced.

So Chávez’s strategy has been to keep the election discussion at the ideological level, emphasizing the problems of capitalism. Since these problems are so visible in Venezuela, his ideological attack resonates. And because there has been some poverty alleviation but not enough growth of the middle class, there is still a constituency for Chávez’s self-description as the country’s greatest-ever welfare provider.

But in this campaign, Chávez is pushing new boundaries. On the stump, he has portrayed his regime as the country’s guarantor of order, and thus, the best choice for business and business-friendly voters. On several occasions this year, Chávez has actually said that to vote for him is to vote for stability and, in turn, more profits. In Latin America, the argument that the state exists to protect the country, and especially businesses, from political unrest dates back to the military juntas of the 1970s. It is the essence of reactionary ideology.

Chávez is campaigning not just on ideological grounds but also, schizophrenically, on both extremes of the ideological spectrum: he is portraying himself as Venezuela’s savior from capitalism and as Venezuela’s savior of capitalism.

ARMED WITH A SECOND-BEST ARGUMENT

This puts the opposition in a corner. The 40-year-old center-left Capriles Radonski, known as el Flaco (the Skinny One), has run a successful campaign. He has united a fragmented opposition, avoiding getting personal when responding to the government’s ad hominem attacks. (When Chávez accused him of being a Nazi sympathizer and thus betraying his grandmother, a Holocaust survivor, Capriles Radonski simply responded, in so many words, I’ve never messed with your family; don’t mess with mine. Last Sunday, he led one of the largest marches ever to take place in Caracas. Capriles Radonski has widened the appeal of the opposition with a conciliatory, rather than vengeful, discourse. He has forced the government to recognize some of its own failings, including an admission by Chávez in June that crime is a “serious problem” that social spending alone cannot cure — an admission that not long ago would have been unimaginable.

But when it comes to the business class, Capriles Radonski is stuck. He understands that the foremost curse on Venezuela today is not so much the tyranny of oil but the noncompetitiveness of the private sector. To say as much openly, however, would only play into Chávez’s accusation that this newcomer is out to serve the elites.

So Capriles Radonski has focused on the next best tactic. Rather than promising better management of the business sector, he is promising better management of the state’s businesses: improving garbage collection, ending power outages, easing traffic jams, ensuring water provision, making social spending more transparent, and, of course, fighting crime. Anyone who has visited Venezuela recently knows the dismal state of its public services, and a campaign built around making things better resonates widely.

The election will come down to a showdown between a relentlessly ideological incumbent and a man running as the handyman-in-chief. Chávez wants to be all things ideological while his adversary wants to be all things competent. Chávez’s strategy is risky and desperate, and it will not win over the millions of Venezuelans who long for a better-functioning state. Such voters might go with Capriles Radonski. But he faces his own risks — of overstating his powers as a repairman and of disappointing those who want to know which tasks he’ll address first, and how. Thus, Chávez’s ideological approach won’t convince everyone, but he could end up convincing at least half of Venezuelan voters. And that’s all he needs to eke out one more victory.

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Reuters – Analysis: Brazil’s Rousseff boldly shuns base, embraces business

By Brian Winter

BRASILIA | Wed Aug 22, 2012 2:12pm EDT

(Reuters) – When President Dilma Rousseff announced a $65 billion privatization of Brazilian highways and railroads last week, she could hear air horns and furious chanting coming from outside the presidential palace.

“Dilma, why have you abandoned us?” read a hand-made sign held up by one of the several hundred striking public-sector workers who had gathered to demand wage increases.

For anyone who follows Brazilian politics, the juxtaposition was surprising: a left-leaning president from the Workers’ Party, which has its roots in the 1980s trade union movement, auctioning off government property to private investors while jilted public servants protested outside.

Yet the scene was no accident. Rousseff has in recent weeks deepened her embrace of the business world while playing hardball with her leftist base, a bold shift she hopes will protect public finances while providing a needed jolt of investment for Brazil’s lackluster economy.

Her tactics have heartened many on Wall Street, but they could backfire on several fronts.

While most of the public sector is still functioning normally, strikes by federal police and other workers have sporadically crippled operations at airports and some key ministries. Other areas of the economy, from agricultural exports to public-sector banks to Brazil’s preparations for the World Cup soccer tournament in 2014, could be disrupted if the unrest spreads.

Rousseff’s approval rating is high at 75 percent, and public opinion appears to be with her rather than the strikers, who already enjoyed healthy raises in recent years. Yet a protracted conflict could put renewed strain on Rousseff’s multi-party coalition, which she has struggled to manage since taking office, especially as October municipal elections draw closer.

Senior officials told Reuters that Rousseff is willing to negotiate higher wages within a small margin, but she will go to court if necessary to get striking workers to go back to work.

Meanwhile, Rousseff has said she will announce plans for more concessions to the private sector — this time, for airports and seaports — in coming weeks.

“The number-one priority right now is stimulating the economy while controlling inflation,” said one aide close to the president. “If you look at our recent actions, we’re acting on both fronts.”

The confrontation has physically transformed Brasilia’s Esplanade of Ministries — the complex of modernist government buildings designed by famed architect Oscar Niemeyer in the late 1950s. Red flyers with slogans like “Raises, now!” cover many of the buildings, while striking public workers in jeans and T-shirts mill about aimlessly in the parking lots outside.

“Dilma! Dilma! Dilma! Negotiate with public servants!” blares one of the songs played repeatedly over loudspeakers.

“She has no choice but to give us what we want,” said Almiro Rodrigues, a federal policeman. “The government says there’s no money, but we know that to be false.”

TRADITION OF PRAGMATISM

Rousseff’s stance does not come as a total shock. During a decade in power, the Workers’ Party has practiced a much more pragmatic leftism than ruling parties in Venezuela and Argentina, exercising relative fiscal discipline while also cultivating investment from businesses at home and abroad.

However, her predecessor — Luiz Inacio Lula da Silva, the Workers’ Party founder and a former union leader himself — was far less shy about spending on public salaries. Brazil’s public sector wage bill more than doubled in nominal terms during Lula’s 2003-2010 presidency, well outstripping inflation.

Rousseff has been more tight-fisted — largely out of necessity. A burst of government spending during Lula’s final year helped him to secure Rousseff’s election victory in 2010, but also left a legacy of heavy inflationary pressure for her to deal with.

Rousseff’s current offer to public-sector unions is a wage increase of about 16 percent over the next three years — which might not even keep up with inflation.

Any raise beyond that could imperil several policy goals, including her quest to drive down interest rates. The central bank’s most recent inflation report, published in June, identified wage negotiations as “an important risk” to future price movements.

Whatever raise Rousseff grants to the public sector will serve as a baseline in the private sector, where unions in the oil, automobile and other sectors are also engaged in contentious wage talks for next year.

Complicating matters further, the economy has ground to a near-halt as years of under-investment in infrastructure, and over-reliance on consumer credit as a motor for growth, appear to have finally caught up with Brazil. Growth was just 2.7 percent in 2011, and an even more lackluster 1.7 percent expansion is expected this year.

PRIVATE CONCESSIONS

That backdrop also explains Rousseff’s decision to embrace a private concession model as a way to boost infrastructure spending. That decision, more than any other, was seen as heresy by many in the party after Lula spent most of his political career loudly denouncing privatizations made in the 1990s.

Rousseff herself decried privatizations in her 2010 presidential campaign. The topic is so sensitive that the Workers’ Party president, Rui Falcão, issued a five-paragraph statement on the night of Rousseff’s announcement explaining why it would not result in “scandalous highway tolls” or other repeats of past mistakes.

Still, the decision seems destined to mark a milestone in Rousseff’s relationship with big business, which was already reasonably good. Bernardo Figueiredo, a top aide charged with overseeing the infrastructure plan, told Reuters the policy had been designed after extensive consultations with Brazilian business leaders. Wall Street brokerages including Morgan Stanley praised Rousseff for taking measures to stimulate supply rather than focusing primarily on consumer demand.

The reaction from mainstream parties has been relatively muted. That indicates that Rousseff is likely to face little resistance to her upcoming plans to involve private enterprise in airports in Rio de Janeiro and elsewhere — key to efforts to prepare for the World Cup and the 2016 Olympic Games.

Yet, more broadly, her recent decisions have opened up an opportunity for many politicians — especially among the wide gamut of parties on the hard left — to accuse Rousseff of being unfair to some of the country’s most powerful unions.

That criticism could become more poignant if the economy fails to pick up in coming months.

“(Rousseff) has a policy of freezing salaries,” Ana Luiza Figueiredo, candidate for mayor of Sao Paulo from the far-left party PSTU, said in an interview with local newspaper O Estado de S.Paulo. “She’s not negotiating and she’s criminalizing workers’ movements.

“The Workers’ Party is divorcing itself from its history,” she said.

(Additional reporting by Alonso Soto in Brasilia and Silvio Cascione in Sao Paulo; Editing by Todd Benson and Kieran Murray)

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BBC – Venezuela en el Mercosur: optimistas, pesimistas y todos los demás

Abraham Zamorano

BBC Mundo, Caracas

Martes, 31 de julio de 2012

Lo último que se esperaban los parlamentarios paraguayos cuando depusieron a Fernando Lugo era que servirían en bandeja el acceso de Venezuela al Mercosur, pero así fue, casi a trompicones.

El presidente Hugo Chávez certifica este martes en Brasilia la entrada de Venezuela al bloque mientras en su país está abierto un intenso debate entre optimistas y pesimistas.

Chávez, a la cabeza de los optimistas, habla de “una bendición” que va a generar cientos de miles de empleos y que puede atraer la instalación en su país de grandes empresas brasileñas y argentinas atraídas por la energía y la materia prima barata con puertas al Caribe.

Los más pesimistas, economistas e internacionalistas –muchos de oposición– lo dudan porque recuerdan que Venezuela es una economía monoexportadora de petróleo (que representa hasta el 95% de lo que vende al exterior) y muy dependiente de las importaciones (hasta el 70% de los alimentos que consume viene de fuera). Aseguran que el ganador evidente es Brasil.

Más allá de ese debate, están las dudas en torno a cómo van a encajar en el Mercosur los acuerdos económicos de Caracas con China, dónde queda la Alianza Boliviariana de las Américas (ALBA) o las intenciones del presidente Chávez de salirse del Sistema Interamericano de Derechos Humanos.

En cualquier caso, por delante quedan largas negociaciones pues el protocolo de adhesión, firmado en 2006, contempla que Caracas tendrá cuatro años para adaptarse a los muchos cambios que derivarán de incorporarse al bloque sudamericano.

Los Optimistas

Quienes reciben con satisfacción la entrada de Venezuela al bloque destacan que la superpotencia petrolera, en tanto una economía de tamaño medio, aportará energía y equilibrios a lo que hasta ahora eran dos grandes (Argentina y Brasil) ante dos pequeños (Paraguay y Uruguay). “Su incursión en el bloque regional rompe ese círculo vicioso”, afirmó el brasileño Emir Sader.

Según el analista e internacionalista Nícmer Evans, “Venezuela entra en un momento perfecto para ser además, dentro de la polaridad entre las dos grandes potencias, ser un punto medio perfecto, una bisagra que va a permitir estabilizar aún más, generar más equilibrio”.

“Mercosur nace con esencia neoliberal, no lo podemos negar, pero ha evolucionado como consecuencia de las disparidades, los mecanismos de integración han tenido que irse afinando para evolucionar de una estructura de competencia y libre mercado a una solidaridad y complementariedad que toma en cuenta las asimetrías, si no fuese así, ya Uruguay y Paraguay estarían quebrados y no tendrían beneficios de mantenerse”, le dijo Evans a BBC Mundo.

Evans no niega la debilidad del sector exportador no petrolero de Venezuela, pero se muestra optimista ante el hecho de que “se abre un mercado de 400 millones de personas”. “Y de principio podemos potenciar energéticamente al granero del mundo en función de las búsquedas de los equilibrios”.

“El Estado está empezando a asumir la inversión para la expansión de la capacidad productiva y tener capacidad de exportación. Eso no va a pasar de un día para otro, tendrá que pasar un mediano tiempo, pero se abre la posibilidad”, comentó.

“Los que critican el ingreso al Mercosur son los que aplaudirían el ingreso al ALCA. ¿Qué es más perjudicial entrar a competir con EE.UU. o tratar de generar un mercado de equilibrios y compensaciones con Argentina, Brasil, Uruguay y Paraguay? Sin duda alguna, nuestros vecinos y hermanos son la alternativa lógica”.

Los Pesimistas

Sobre todo desde las filas de la oposición a Hugo Chávez se han alzado voces críticas con la adhesión al Mercosur, con la forma aparentemente precipitada en que al final ha resultado y con la perspectiva de peligros que puede representar para el sector productivo interno la apertura del mercado sudamericano.

Las exportaciones no petroleras de Venezuela no alcanzaron los US$4.500 millones. Es decir, de cada US$100 que entraron al país, US$95 provenían de petróleo. Las importaciones representaron casi el 33% del Producto Interno Bruto. Esto, junto a una inflación de más del 25% y una moneda sobrevaluada por el estricto control de cambios se traduce en una debilidad severa de la capacidad exportadora de cualquier cosa que no sea petróleo.

Así, a los países del Mercosur no se les escapa el apetecible mercado que representará Venezuela, a priori, incapaz de competir fuera de sus fronteras.

“Preocupa el efecto en la industria nacional, que no puede competir en buena lid por los controles de precios y cambiarios, que va a seguir funcionando. Temo que va a destruir muchas empresas nacionales, que están muy controladas y perturbadas en su funcionamiento”, le dijo a BBC Mundo Jorge Luis Suárez, experto en integración internacional.

Además, lo que desde el chavismo se ve como positivo, el hecho de que el Mercosur amplíe sus fronteras más allá de lo estrictamente económico y el impulso que Venezuela pretende dar en ese sentido, en la oposición se denuncia como prueba de las oscuras intenciones del mandatario.

“Para Chávez, más que la incorporación a un esquema de integración, el ingreso es un fin político. Él ha dicho que quiere un Mercosur moderno y quiere que se ocupe más de cuestiones políticas”, le dijo a BBC Mundo el diplomático e internacionalista Adolfo Taylhardat.

Y todos los demás

Con la integración venezolana, Chávez pone sobre la mesa las mayores reservas probadas de petróleo del mundo, pero también un no demasiado transparente acuerdo económico con China así como su compromiso con la Alianza Bolivariana para América (ALBA).

Según Nícmer Evans, “Mercosur no limita la posibilidad de la profundización o la autodeterminación de las políticas estratégicas con otros países sin necesidad de que sean del bloque”.

“Aun cuando el Mercosur tiene una política específica con China, Venezuela tiene otra que quizás pueda servir para discutir si el bloque se pliega o se mantienen como están. La relación de Venezuela y China tiene condiciones distintas al resto, pero no hay limitación seguramente deberá establecerse mecanismos de control”, agrega el analista.

No en vano, en principio, como es natural en todo bloque, el Mercosur negocia este tipo de tratados en conjunto. Así, los acuerdos de Caracas con terceros no son en esencia incompatibles con el grupo sudamericano, pero tienen que ser estudiados para determinar su validez.

“A futuro, el Mercosur va a poder exigir revisar ciertos tratados que considere que choquen con su bloque”, afirma Suárez. “También lo de China, aunque pudiera ser que se observe que hay compatibilidad, para eso es necesario un inventario que debió haberse hecho antes de decidir entrar o no”.

Según el experto en integración, “ha pasado un poco lo de ponerse primero los zapatos y luego las medias”, pues no ha habido tal inventario de los ajustes debidos: “Ha habido mucho interés político y petrolero en lugar de verdadera revisión de la situación”.

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