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New Brazilian corruption probes and their consequences

Thu, 04/20/2017 - 07:49

THE latest revelations of wrongdoing in high places struck Brazil with the force of a Netflix release: they are riveting, but so far have left the real world undisturbed. On April 12th Edson Fachin, the supreme-court justice who is overseeing a vast probe into corruption centred on Petrobras, the state-controlled oil company, authorised prosecutors to investigate eight government ministers, 24 senators, 39 deputies in the lower house of congress and three state governors. He sent dozens of cases to lower courts; they will now consider whether to launch new criminal inquiries into nine more state governors and three former presidents. All the big political parties and most front-runners in next year’s presidential election have been tarnished (see chart).

This fresh scourging of the political class comes at an awkward time. Brazil’s worst recession on record has not ended. Michel Temer, who became president last year after the impeachment of his predecessor, Dilma...

The arrest of two fugitive Mexican governors

Thu, 04/20/2017 - 07:49

ONE of the odder pieces of evidence turned up by investigations of Javier Duarte, a former governor of the state of Veracruz, was an exercise book with his wife’s scrawl. “Sí merezco abundancia” (“Yes I deserve wealth”), she had written, over and over. During six years in charge of the state on the Gulf of Mexico, Mr Duarte allegedly did his best to acquire it. He was arrested at a resort in Guatemala on April 15th, after six months on the run. Five days earlier Tomás Yarrington, an ex-governor of the northern state of Tamaulipas, was nabbed in Florence, Italy. He had been eluding justice for five years.

The two fugitive governors are both former members of the Institutional Revolutionary Party (PRI), to which Mexico’s president, Enrique Peña Nieto, belongs. The attorney-general has investigated at least 11 state governors since 2010, nine of them from the PRI. Mr Peña once praised Mr Duarte and two other tainted governors as exemplars of the PRI’s “new generation”. This does its image no good ahead of an election in June in the State of Mexico, Mr Peña’s political home. The outcome will be a harbinger of next year’s presidential election (in...

Chile in a Spanish mirror

Thu, 04/20/2017 - 07:49

A LONG dictatorship ended in a negotiated transition to democracy. The centre-left took office with a moderate programme, reassured the right by pursuing pro-market economic policies, added better social provision and reconnected the country to the world. Power later switched to the right, which persuaded the country that it had become democratic. Then the centre-left returned, this time as a new generation critical of the compromises of the transition. It veered further left but faced economic difficulties.

Spain? Yes. But Chile, too. Since the dictatorships of Generals Franco and Pinochet, politics in the two countries has run along uncannily parallel tracks, with Chile lagging Spain by ten to 15 years. In Spain, Felipe González, the Socialist prime minister in 1982-96, laid the foundations of democracy, combining liberal economic reforms with a new welfare state and leading the country into Europe. When José María Aznar of the conservative People’s Party (PP) took over, he continued many of Mr González’s policies. Then the Socialists returned under José Luis Rodríguez Zapatero, who confronted the right through progressive social reforms (such as abortion and gay marriage...

A row over the colours in Argentina’s flag

Thu, 04/20/2017 - 07:49

ARGENTINA’S national colours are instantly recognisable. The flag’s sky-blue stripes and golden sun adorn everything from football shirts to fridge magnets. A huge monument in Rosario, a port city, marks the site where Manuel Belgrano, a founding father, raised the first flag in 1812. On the anniversary of his death, June 20th, schoolchildren pledge to honour the “white and sky-blue” colours.

But are they saluting the right shade of blue? A study published in a recent edition of Chemistry Select, a peer-reviewed journal, suggests not. Researchers at Argentina’s scientific research council (CONICET) and Brazil’s Federal University of Juiz de Fora examined silk threads from what is thought to be the oldest surviving flag, the enormous but faded San Francisco flag. The shocking discovery: its blue was ultramarine, a much darker pigment.

This is about more than just getting the tint right. Years of civil war followed Argentina’s independence from Spain in 1816. The Federalists, led by Juan Manuel de Rosas, a bloodstained autocrat, fought for decentralised government with strong provinces under dark-blue colours. The...

Santiago’s transport system is sputtering

Wed, 04/12/2017 - 07:51

Not going round fast enough

TRANSANTIAGO, the Chilean capital’s public-transport system, had its tenth birthday in February, but no one celebrated. Launched with much fanfare, the scheme was supposed to integrate bus and metro lines and speed up traffic. Smog-spewing yellow buses disappeared. Smart cards replaced cash.

But Transantiago is sputtering. Fare evasion is rampant, journeys are getting slower and the state has spent billions of dollars to prop up private bus operators. Passengers sometimes wait ages at stops scrawled with graffiti with no inkling of when the next bus will arrive. Espacio Público, a think-tank, calls Transantiago Chile’s worst public-policy project since the country returned to democracy in 1990.

Despite all that, Transantiago has brought some improvements. The number of fatal accidents has dropped sharply, as has pollution from exhaust fumes. The system’s 20,000 employees are now on formal contracts and have better working conditions than before. Because bus drivers no longer handle cash, the number of robberies has fallen. Compared with transport in many other Latin American cities, Santiago’s works...

A Brazilian inflation fighter becomes immortal

Wed, 04/12/2017 - 07:51

BRAZILIANS who remember the hyperinflationary 1980s cheered the news on April 7th that prices rose by just 4.57% in the year to March. Inflation has not come that close to the central bank’s target of 4.5% in seven years. In a fitting coincidence, on the same day one of the architects of the Real Plan, which tamed inflation in 1994, donned the gold-and-green livery of the “immortals”, as members of the Brazilian Academy of Letters are known.

Edmar Bacha is just the third economist to join the august group, whose 40 lifetime appointments are reserved for towering intellectuals and the finest wordsmiths. His election last November (by members of the academy) was one of the most contentious in its 120-year history. It may also be a sign of the times.

Besides wrestling with inflation, Mr Bacha was head of the statistics office and the state development bank. He later became an investment banker. He has a way with words. In “Fable for technocrats”, an essay published in 1974, he described Brazil as “Belíndia”, a tiny, rich Belgium surrounded by a vast, poor India. In “End of inflation in the kingdom of Lizarb”—where “everything is back to front”—he skewered...

Eight years after a coup, a heated election in Honduras

Wed, 04/12/2017 - 07:51

IN THE early hours of June 28th 2009 a unit of the Honduran army stormed the house of the president, Manuel Zelaya, disarmed his guard and spirited him onto a plane bound for Costa Rica. The army sent tanks onto the streets, silenced radio and television stations and cut off electricity and water to parts of Tegucigalpa, the capital. A fake letter of resignation from Mr Zelaya was read out to Honduras’s congress, which approved his ousting. It was Latin America’s last real coup.

As a general election approaches in November, those events are uppermost in Hondurans’ minds. That is partly because Mr Zelaya has not gone away; his wife, Xiomara Castro, is a presidential candidate. More important, the current president, Juan Orlando Hernández, is breaking a taboo which Mr Zelaya was thrown out of office to protect: he is running for re-election. That, plus Mr Hernández’s authoritarian style, has made the main election issue the fate of democracy itself.

The authors of the constitution, adopted in 1982, wanted to prevent would-be strongmen from entrenching themselves in power. Unambiguously, the document declares that anyone who has exercised “executive power” may...

Canada agrees on free trade with itself

Wed, 04/12/2017 - 07:51

But is it locally spawned?

DOING business across Canada is not for the impatient. Its ten provinces and three territories see themselves as quasi-countries. They set standards and write laws with little regard for what their neighbours are doing. In Ontario petrol must be at least 5% ethanol; Manitoba insists on an 8.5% blend. Each province has its own ideas of how much grain dust people can be exposed to, and what sort of packages coffee creamer should come in. Ontario requires that toilets at construction sites be equipped with “open-front” seats; Alberta is toilet-seat neutral. If you buy booze in one province you had better drink it there. New Brunswick is pursuing a resident all the way to the Supreme Court for refusing to pay a fine of C$292.50 ($220) when he was caught bringing in beer and wine he had purchased in Quebec. Trade among provinces is less free than it is among the 28 members of the European Union.

So politicians from the regions and federal government were in a self-congratulatory mood after they signed a “Canadian Free-Trade Agreement” on April 7th. Brad Duguid, Ontario’s economy minister, who hosted the gathering, pronounced...

Mexico is growing less pessimistic about Donald Trump

Thu, 04/06/2017 - 07:42

IN THE anxious days before Donald Trump was inaugurated in January the outlook for Mexico seemed bleak indeed. Mexicans worried that the president-elect would do what he said: tear up or drastically revise the North American Free-Trade Agreement (NAFTA), build a wall on the United States’ southern border and deport millions of their countrymen. Between election day in November and mid-January the peso lost 15% of its value against the dollar.

Now, 11 weeks into Mr Trump’s shambolic administration, the mood has lightened somewhat. Mexicans watch with mounting glee as judges block his executive orders. They are encouraged, too, by the impression that he cannot get bills through Congress and is hobbled by probes into connections between some of his advisers and Russia.

Now they have reason to hope that Mr Trump’s protectionism will be less calamitous than feared. Wilbur Ross, the United States’ commerce secretary, talks of making a “very sensible” agreement with Mexico. A leaked draft letter to Congress by the acting trade representative, Stephen Vaughn, proposes updating NAFTA to make it more like the Trans-Pacific Partnership (TPP), an 11-country trade...

The Venezuelan government’s abortive power grab

Thu, 04/06/2017 - 07:42

“THE world knows this is a dictatorship,” jeered masked students confronting a rank of national guardsmen on April 4th in Caracas. With tear-gas swirling around Avenida Libertador, one of the capital’s main streets, what had begun as a march to parliament became a stand-off between youths with stones and soldiers with machineguns. One placard bore the image of a military boot trampling a map of Venezuela.

Protests against the authoritarian regime, which has ruled since 1999, are no rarity. In 2014, 43 people died on both sides in massive demonstrations. But this week’s confrontation felt both angrier and more hopeful than recent ones have been. That is because of a series of extraordinary events, which began on March 29th.

Venezuela’s supreme court, which obeys the regime, started things off with a ruling that claimed for itself the powers of the opposition-controlled legislature. That was only the latest in a series of measures to kneecap the assembly after the opposition won elections in 2015. But the formal usurpation of its rightful powers provoked new outrage. Chile, Colombia and Peru withdrew their ambassadors. Luis Almagro, the secretary-general of the...

A row over re-election in Paraguay

Thu, 04/06/2017 - 07:42

IT SHOULD have been a public-relations triumph. The annual meeting of the Inter-American Development Bank (IADB), held in Asunción from March 30th to April 2nd, was a chance to boast of landlocked Paraguay’s economic achievements. It is the world’s fourth-biggest exporter of soyabeans and number seven in beef. On the opening night the president, Horacio Cartes, unveiled the results of a national branding exercise: a logo of flora, lorries and silos in soothing blues and greens.

A day later, Paraguay’s congress was in flames. Protesters were battling police and an opposition activist, Rodrigo Quintana, lay dead. Police had shot him in the back at the headquarters of the Liberal Party.

The violence was triggered by Mr Cartes’s desire to run for re-election in 2018. The constitution of 1992 forbids presidents from serving more than one five-year term, a safeguard against dictatorship, under which Paraguay suffered from 1954 to 1989. Allies of Mr Cartes, a rich businessman, argue that Paraguay’s democracy no longer needs such swaddling. Besides, he is the only plausible presidential candidate from his right-wing Colorado Party, which has held power for all...

What to expect from Ecuador’s new president

Wed, 04/05/2017 - 04:20

The laughing Latin Lenín

IT WAS hardly a ringing endorsement. With nearly all the votes counted, Lenín Moreno, the political heir of Ecuador’s left-wing president, Rafael Correa, won the presidential election by barely more than two percentage points. That victory brings to an end a series of defeats for left-wing governments in Latin America. Mr Moreno will try to continue Mr Correa’s free-spending populism, but he will have less money and will exercise less power than his predecessor did during more than a decade in office.

Mr Moreno’s narrow victory on April 2nd came after an ugly fight with Guillermo Lasso, a conservative former banker. Mr Moreno’s party, Alianza PAIS, unjustly attacked his rival as one of the authors of Ecuador’s financial crisis in 1999-2000. (Mr Lasso was briefly finance and economy minister at the time, but quit because he opposed Ecuador’s decision to default on its bonds.) Mr Lasso’s connection to Opus Dei, a conservative Catholic organisation, probably counted against him.

One respected exit poll gave the edge to Mr Lasso, who has so far refused to concede. His supporters have been holding large demonstrations to demand a recount. But Mr Moreno’s victory seems likely to stand. Luis Almagro, secretary-general of the Organisation of American States, which had sent...

Upgrading Brazil’s political class

Thu, 03/30/2017 - 07:48

“DECENCY now!” That slogan, on a banner at a demonstration in São Paulo on March 26th, sums up what Brazilians want from their politicians. They have come to expect the opposite. Rodrigo Janot, the chief prosecutor, has asked the supreme court to open 83 investigations into politicians whom he suspects of taking part in a scheme to extract billions of dollars in bribes from construction firms, which in turn benefited from inflated public contracts. Eight ministers in the cabinet of President Michel Temer, the Speakers of both houses of congress and grandees from all the main parties are reportedly on the list. (All deny wrongdoing.) That adds to the dozens of officials already caught up in the Lava Jato (“Car Wash”) investigations into the scandal, which is centred on Petrobras, the state-controlled oil company.

Revelations of misdeeds by politicians have turned Brazilians’ attention to the question of how to elect better ones. Today’s system encourages political diversity at the expense of quality. Any new party that secures 486,000 signatures (from a pool of 143m voters) has a right to money from the state and to free television time. There is no nationwide vote threshold...

What the tourist industry reveals about Cuba

Thu, 03/30/2017 - 07:48

TOURISTS whizz along the Malecón, Havana’s grand seaside boulevard, in bright-red open-topped 1950s cars. Their selfie sticks wobble as they try to film themselves. They move fast, for there are no traffic jams. Cars are costly in Cuba ($50,000 for a low-range Chinese import) and most people are poor (a typical state employee makes $25 a month). So hardly anyone can afford wheels, except the tourists who hire them. And there are far fewer tourists than there ought to be.

Few places are as naturally alluring as Cuba. The island is bathed in sunlight and lapped by warm blue waters. The people are friendly; the rum is light and crisp; the music is a delicious blend of African and Latin rhythms. And the biggest pool of free-spending holidaymakers in the western hemisphere is just a hop away. As Lucky Luciano, an American gangster, observed in 1946, “The water was just as pretty as the Bay of Naples, but it was only 90 miles from the United States.”

There is just one problem today: Cuba is a communist dictatorship in a time warp. For some, that lends it a rebellious allure. They talk of seeing old Havana before its charm is “spoiled” by visible signs of prosperity...

When is it OK to shoot a child soldier?

Thu, 03/30/2017 - 07:48

ONE of the worst dilemmas soldiers face is what to do when they confront armed children. International law and most military codes treat underage combatants mainly as innocent victims. They offer guidance on their legal rights and on how to interrogate and demobilise them. They have little to say about a soul-destroying question, which must typically be answered in a split second: when a kid points a Kalashnikov at you, do you shoot him? Last month Canada became the first country to incorporate a detailed answer into its military doctrine. If you must, it says, shoot first.

Such encounters are not rare. Child soldiers fight in at least 17 conflicts, including in Mali, Iraq and the Philippines. Soldiers in Western armies, sometimes acting as peacekeepers, have encountered fighters as young as six on land and at sea. More than 115,000 young combatants have been demobilised since 2000, according to the UN. For the warlords who employ them, children offer many advantages: they are cheap, obedient, expendable, fearless when drugged and put opponents at a moral disadvantage. Some rebel armies are mostly underage.

In 2000 a group of British peacekeepers in...

As Cuba’s economy flat-lines, retirement has become notional

Thu, 03/23/2017 - 08:44

NORBERTO MESA, a 66-year-old grandfather, stands in the hot sun 11 hours a day, six days a week, guiding cars in and out of the parking spaces in front of a bustling farm stand. The 4,000 Cuban pesos ($170 at the official exchange rate) he earns each month in tips is more than ten times his monthly old-age pension of 340 pesos. Without it, the retired animal geneticist could not afford fruit and meat, or help his children, who work for low salaries, to feed his four grandchildren.

Though revolutionary Cuba had one of the region’s earliest and most comprehensive pension systems, in recent years retirement has almost vanished. Without further economic reform, and the cheap oil that used to come from Venezuela, the economy has stalled. Pensions have been frozen, and their value eaten up by inflation. According to the most recent government statistics, from 2010, a third of men past retirement age are working. Three-fifths of older people say they often have to go without necessities.

The insular socialist paradise supposedly offers a social safety-net, cradle to grave. But it is full of holes. Medical care is free, but most medicine is not. Retirement...

Floods in Peru are just the latest blow to its economy

Thu, 03/23/2017 - 08:44

Time for a clean-up

MORE than 75 people have been killed, and more than 100,000 left homeless, as Peru’s coast has been battered by the strongest rains seen in decades. Millions are without running water; more than 2,000km of roads and at least 175 bridges have been destroyed. The devastation has been caused by a “coastal El Niño”, a localised version of the global El Niño weather cycle that brings warm currents from Australia to the Pacific coast of the Americas. Peru had been braced for a big El Niño in 2016, but it did not arrive. It was not expecting a coastal version, especially of such magnitude.

But even if it had known what was coming, it would not have been prepared. “This is not a natural disaster, but a natural phenomenon that has led to disaster because of the informal way this country has developed,” says Gilberto Romero, the head of the Centre for Disaster Research and Prevention, a local NGO. “We need to re-think and re-engineer our cities.”

Pedro Pablo Kuczynski, the newish president, has pledged to work with mayors to stop homes from being rebuilt in vulnerable areas, and wants hydrological studies along river...

Coca-growing in Colombia is at an all-time high

Thu, 03/23/2017 - 08:44

THE hills surrounding Sinaí, a village in south-west Colombia, are blanketed in a green patchwork, ranging from the bright chartreuse of coca-plant seedlings to a darker clover colour that indicates the leaves are ripe for picking and processing into cocaine. It is areas like this that have helped to boost Colombia’s estimated cocaine output 37% since 2015 to an all-time high of 710 tonnes in 2016, according to America’s government. Some 188,000 hectares of land is now planted with coca, up from a low of 78,000 in 2012.

One reason for the rise seems counter-intuitive: the signing last November of a peace deal between the government and the FARC rebel group. It was supposed to reduce coca cultivation; the FARC had extorted a tax on coca crops and trafficked cocaine, and under the peace deal it is to support the government’s eradication efforts. But the deal’s terms were years in the crafting, and many of its provisions were clear well in advance—including that there would be payments for coca-farmers who shifted to different crops. The government created a perverse incentive to plant more.

And as the peace talks progressed, the government scaled back aerial...

There has never been a better time for Latin American integration

Thu, 03/23/2017 - 08:44

IT IS Saturday lunchtime, and about 30 trucks are parked at each of the customs posts on either side of the bridge across the broad Uruguay river that marks the border between Argentina and Uruguay. Both countries are members of Mercosur, a would-be customs union that also embraces Brazil and Paraguay. In theory, internal borders should not exist in Mercosur. In practice, customs, sanitary inspections and other paperwork mean that the trucks are delayed for up to 24 hours, says Oscar Terzaghi, the mayor of Fray Bentos, on the Uruguayan side.

This represents an improvement. For three years before 2010, access to the bridge—the shortest land route between the two capitals, Buenos Aires and Montevideo—was blocked by Argentine environmentalists with the support of the country’s president, Cristina Fernández. They claimed that a planned paper mill at Fray Bentos would pollute the river. The dispute ended only when the mill was operating and the International Court of Justice ruled that there was no evidence of pollution.

For the past half-century, Latin American politicians have talked incessantly about regional integration. But they have struggled to make it...

Mexico’s populist would-be president

Thu, 03/16/2017 - 08:55

WHEN Andrés Manuel López Obrador winds up a stump speech in the main square of Jilotepec, a small town in the eastern state of Veracruz, the crowd surges forward. It takes him 15 minutes to pass through the commotion of backslapping, selfies and jabbing microphones to reach the car parked outside the tent where he spoke. The point of the rally is to promote Mr López Obrador’s party, Morena, in municipal elections to be held in Veracruz in June. But his main goal is much bigger: to win Mexico’s presidency on his third attempt, in 2018.

That is a prospect that thrills some Mexicans and terrifies others. A figure of national consequence for more than 20 years, AMLO, as he is often called, has fulminated against privilege, corruption and the political establishment. Sweep away all that, he tells poor Mexicans, and their lives will improve. Many others hear in that message the menace of a charismatic populist who would punish enterprise, weaken institutions and roll back reforms. The biggest worriers view him as a Mexican version of the late Hugo Chávez, an autocrat who wrecked Venezuela’s economy and undermined its democracy.

But Mexico,...