Economist, North America

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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,...

The pros and cons of Mauricio Macri’s gradualism

Thu, 03/16/2017 - 08:55

TO THE deafening beat of big bass drums and the occasional firecracker, tens of thousands of banner-waving trade unionists marched through the heart of Buenos Aires on March 7th, in protest at job losses and inflation. “We’re up to here,” said Silvia Blanchoux, a hospital cleaner, gesturing with a hand across her throat. “My rent has gone up, and my daughter is unemployed.”

The protest coincided with a strike by teachers. This stirring of opposition comes at a delicate time for Argentina’s president, Mauricio Macri, and his efforts to repair the damage inflicted by the populism of his Peronist predecessors, Cristina Fernández de Kirchner and her late husband, Néstor. In October Mr Macri’s centre-right Cambiemos (“Let’s change”) coalition faces a mid-term election for almost half of congress. This will be a symbolic referendum on the government.

In fact, it is surprising that Mr Macri, a former businessman, remains as popular as he is (his approval rating is around 50%). His victory in November 2015 was unexpected. He inherited a country whose future was mortgaged: international reserves were negligible; a dispute with bondholders...

A tragedy at a children’s home in Guatemala

Thu, 03/16/2017 - 08:55

How protesters showed the horror

ON MARCH 7th a team from an international human-rights group arrived in Guatemala to evaluate state-run institutions for disabled people. One stop on their itinerary was the Hogar Seguro (Safe Home) Virgen de la Asunción, a shelter for indigent children, which had been the subject of reports about sexual abuse, violence and overcrowding. The team arrived too late. That night, a fire engulfed a girls’ dormitory, killing at least 40 adolescents and severely injuring a dozen.

A tragedy at Hogar Seguro was preordained. In interviews with survivors, the team from Disability Rights International (DRI) discovered that 800 children were crammed into a home built for 500. At least two staff members have been jailed for sexually abusing residents. Last year, 142 children ran away. Survivors said staff had locked around 60 girls in a room as punishment for a recent escape attempt; when the girls set mattresses ablaze to protest against their confinement, they were unable to get out.

Hogar Seguro is not an isolated case. The fire is “an indictment of the whole social...

How the 19th-century flow of indentured workers shapes the Caribbean

Thu, 03/09/2017 - 09:30

WHEN Anthony Carmona, the president of Trinidad and Tobago, showed up in a Carnival parade last month wearing a head cloth, white shorts and beads like those worn by Hindu pandits, he was not expecting trouble. Nothing seems more Trinidadian than a mixed-race president joining a festival that has African and European roots. But some Hindus were outraged. “[O]ur dress code has never been associated with this foolish and self-degrading season,” huffed a priest. Trinidad’s cultures blend easily most of the time; occasionally, they strike sparks.

The Hindu-bead controversy is not the only one ruffling feelings among Indo-Trinidadians. Another is caused by a proposal in parliament to raise the minimum age for marriage to 18 for all citizens. Currently, Muslim girls can marry at 12, girls of other faiths at 14. Muslim and Hindu traditionalists want to keep it that way.

Another argument has been provoked by the disproportionate number of Trinidadians who have joined Islamic State (IS). About 130 of the country’s 1.3m people are thought to have fought for the “caliphate” or accompanied people who have. That is a bigger share of the...

Brazil’s accidental, consequential president

Thu, 03/09/2017 - 09:30

MOST presidents in Michel Temer’s situation would be called “embattled”. Brazil has yet to recover from its worst recession on record. Some of the president’s closest associates face accusations in the country’s biggest-ever scandal. His approval rating is below 30%; many Brazilians regard his presidency as illegitimate.

Yet, in an interview with The Economist, on a Saturday in a nearly deserted presidential palace, Mr Temer seemed anything but embattled. Collar unbuttoned, sleeves rolled to his elbows, the energetic 76-year-old was untroubled by the scorn that Brazilians heap upon him. Asked about the slogan “Temer out!”, spray-painted on a flyover that he passes on his commute between his official residence and his office, Mr Temer called it “proof of democracy’s vibrancy”. He could arrange to have it painted over, but would not dream of it.

He was not expecting to become president. Until last May, he was the largely powerless vice-president under Dilma Rousseff, of the left-wing Workers’ Party (PT). He took over when she was impeached for manipulating government accounts. To her allies, Mr Temer is a...

Will Venezuela’s dictatorship survive?

Thu, 03/09/2017 - 09:30

HUGO CHÁVEZ owed much to Raúl Baduel. When in 2002 Chávez was forced to step down as Venezuela’s president following a massacre of protesters in Caracas, it was General Baduel, an old political ally, who restored him to power after an opposition junta had illegally suspended the constitution. In gratitude, Chávez made General Baduel defence minister. But in retirement the general dared to oppose Chávez’s drive to abolish term limits. He was accused of stealing $10m and jailed. Two days before completing his sentence, this month General Baduel was charged with treason.

His treatment shows how cornered the government of Nicolás Maduro, Chávez’s chosen successor, feels. Mr Maduro has an approval rating of just 18% according to Datanálisis, a pollster. The economy is in freefall because of mismanagement and lower oil prices. To service its foreign debt, the government slashed imports to a third of their level in 2012.

Venezuelans are suffering privation previously unheard of in what was once South America’s richest country. According to a study by three universities, 82% of households now live in poverty. That compares with 48% in 1998,...

How Latin America deals with campaign finance

Thu, 03/02/2017 - 08:56

FOR months before elections, Latin Americans are bombarded by campaign publicity. In Brazil an obligatory nightly hour of political broadcasts sees a succession of attention-seeking pledges from presidential candidates and local hopefuls. In Peru walls and even mountain boulders are painted with the names of candidates. Although social media are increasingly important, many of the region’s politicians still line the streets with posters and hold rallies, plying supporters with food, T-shirts and even cash.

Who pays for all the paraphernalia of electoral democracy, and what might they get in return? Revelations of corrupt political donations in several Latin American countries by Odebrecht and other Brazilian construction firms are sparking demands to tighten the rules on campaign finance. Nadine Heredia, the wife of Peru’s former president, Ollanta Humala, denies having received a $3m donation from Odebrecht for her husband’s victorious campaign in 2011. A former Colombian senator who admitted pocketing an Odebrecht bribe claims, without proof, that $1m went to President Juan Manuel Santos’s campaign in 2014.

Popular wisdom holds that...

Using tourism to teach Mexicans about corruption

Thu, 03/02/2017 - 08:56

THE Estela de Luz (“stele of light”) is not one of Mexico City’s glories. The 104-metre (341-foot) tower, built from panels of quartz, was supposed to celebrate the bicentennial of Mexico’s independence from Spain in 2010. But it was inaugurated in 2012, 16 months later than planned, and cost 1.3bn pesos ($100m) to build, more than treble its original budget. The federal government paid the bill. Eight former officials involved in the tower’s construction were arrested after its completion.

The delay and cost overruns earned the tower a place on the “Corruptour”, a new twice-a-week bus tour that shows off the capital’s monuments to graft, fraud and mismanagement. There are plenty of them. Tourists board a converted school bus, stripped of its roof and emblazoned with tabloid-style headlines, and visit ten sights, or nine when the traffic is bad. They include the Balderas metro station in the city’s centre. A recorded commentary tells the saga of the metro system’s Line 12. Its stations were so shoddily built that half of them had to close temporarily.

The bus pulls up at the institute of social security, Mexico’s third-biggest public-...

A battle for the soul of Canada’s Conservative Party

Thu, 03/02/2017 - 08:56

THE annual Manning Centre conference in Ottawa is popularly known as Woodstock for Canadian Conservatives. It is not obvious why. At this year’s edition, held from February 23rd to 25th, booths manned by clean-cut millennials offered pamphlets on such subjects as child discipline and taxing carbon emissions. A few delegates sported “Make America Great Again” caps. Not a man bun was to be seen.

The main business of this year’s gathering was to help decide which of 14 candidates should lead the Conservative Party, which lost an election in October 2015 after almost a decade in power and has been leaderless since. The choice, to be made on May 27th, will determine what sort of opposition the Liberal prime minister, Justin Trudeau, will face. It will set a new course for a party that has governed for 65 of the 150 years since Canada’s creation.

For much of that time, it was hard to tell the two biggest parties apart. The Progressive Conservatives, as they were known from 1942 to 2003, endorsed the welfare state and the multicultural values espoused by the Liberals. That changed under Stephen Harper, who fused the Progressive Conservatives...

A new hunt for remains of victims of Peru’s internal conflict

Thu, 03/02/2017 - 08:56

What makes forgiving hard

THE threat posed to Peru’s democracy by the Shining Path, a leftist guerrilla army, has ended, but memories of the war it waged against the state in the 1980s and 1990s are still raw. Nearly 70,000 people died or disappeared during the conflict. A truth and reconciliation commission issued a report in 2003, apportioning guilt roughly evenly between the government and the Maoist rebels. It did not foster understanding between the vast majority of Peruvians who despise the insurgents—who often behaved more like terrorists than guerrillas—and the few who are still drawn to it.

Recently Peruvians have been reminded of their differences. Last year a mausoleum for members of the Shining Path who died in a prison uprising in 1986 opened in Lima, the capital. Politicians denounced it; the biggest party in congress introduced legislation in November to add symbols and monuments to the list of things that could be classified as an “apology for terrorism”, a criminal act. On February 14th this year Peruvians marched to commemorate the 25th anniversary of the murder in Lima of María Elena Moyano, a leftist...

Why Chileans dislike business leaders

Thu, 02/23/2017 - 08:44

LAST year ended triumphantly for Andrónico Luksic, head of Chile’s richest family. On December 23rd he won a slander suit against a politician who had called him a “criminal” and “a son of a whore”. But his sense of vindication was clouded by pain. Four days earlier, as he left the courthouse, a mob, angry about a hydroelectric project in which he had invested, threw stones at him. One struck him on the head; police whisked him away.

Plutocrats are unpopular in lots of places, but Chileans seem to regard theirs with particular suspicion. MORI, a polling firm, asked Chileans in 2015 to choose which among five power centres had the most clout: 59% chose businessmen over the government, the presidency, congress and the media. Asked by Latinobarómetro, another pollster, if they had any confidence in private enterprise, just 32% said yes, the second-lowest rate among 18 countries. Chileans often say that seven families “own” the country. Together, their wealth is the equivalent of 17% of GDP. The Luksics alone are worth $14bn, equivalent to about 6% of GDP, according to Forbes.

Chile is in many ways the most...

The costs of Latin American crime

Thu, 02/23/2017 - 08:44

THIS month police in the Brazilian state of Espírito Santo went on strike for ten days, during which 143 people were murdered and all hell broke loose in Vitória, the state capital. In Reynosa, on Mexico’s border with the United States, two alleged robbers were beaten, bound with duct tape and dangled from a footbridge, with a message from a drug baron pinned to them. On February 17th a gunman killed five people and injured nine at a shopping centre in Lima. A day later in Flores Costa Cuca, a small town in western Guatemala, an 83-year-old woman and her disabled grandson were murdered, prompting calls for the army to patrol the streets.

A casual scan of newspapers in Latin America and the Caribbean in any week reveals a grave problem: violent crime has become an epidemic. The region accounts for only 9% of the world’s population but 33% of its murders. Its homicide rate of 24 per 100,000 people is four times the world average. Worryingly, murders have become more common even as socioeconomic conditions have improved (see chart). Robberies are increasing, too; some 60% involve violence. No wonder polls show that crime has replaced...

Reducing Brazil’s pension burden

Thu, 02/23/2017 - 08:44

THE faded modernist façades along Copacabana’s beachfront hark back to Brazil’s optimistic past. The seaside promenade, where walking sticks outnumber G-strings, offers a glimpse of its demographic future. A quarter of the inhabitants of this part of Rio de Janeiro are 65 or older, making it one of the oldest places in Brazil. But the rest of the country is catching up fast, thanks to a drop in birth rates and rising life expectancy. Over-65s, who make up 8.5% of the population now, will reach Copacabana’s share by 2050. The country is dangerously unprepared for that shock. 

To see why, visit the Copacabana branch of the National Institute of Social Security (INSS), which administers state pensions for Brazilians employed in the private sector. Elizete Ribeiro, a vivacious masseuse, does not look ready to be pensioned off. She is just 56 years old. But, having paid into the system for 30 years, she is entitled to a basic pension worth the minimum wage (937 reais, or $304, a month). The lawyer helping her, Jorge Freire, benefits from a separate public-sector scheme. He retired as an employee of Rio de Janeiro’s state court system when he was 52...

Breeding cows that can defend themselves against jaguars

Thu, 02/23/2017 - 08:44

Red hide, black belt

RANCHERS in Colombia’s Meta department can be vengeful folk. From time to time jaguars emerge from a clump of forest, streak across the savannah and attack one of a panic-stricken herd of cows. When that happens, ranchers hunt the offender down and shoot it. That practice is endangering the cats’ survival. Panthera, a charity that manages “corridors” for jaguars that stretch from Argentina to Mexico, guesses that just 5,000 of the cats are left in los llanos, Colombia’s scorching savannah. It has come up with a less violent way of protecting both the jaguars and the cattle.

The idea is to teach cattle self-defence, or rather to breed the instinct into them. The cows that graze in los llanos are mostly Zebu, which are popular with ranchers for their fast growth, large size and white hides. But they have an unfortunate habit of fleeing in all directions when danger approaches. Panthera’s idea is to replace panicky Zebu with cattle that stand their ground, or to interbreed the two. Esteban Payán, who directs...

Justin Trudeau charms Donald Trump

Thu, 02/16/2017 - 08:44

A good hombre, apparently

GIVE Justin Trudeau credit for emotional intelligence. Paying his first visit to Washington after Donald Trump took office, on February 13th, the Canadian prime minister brought his host the perfect gift: a photograph of the president in his youth with Mr Trudeau’s father, Pierre, a glamorous prime minister of the 1970s. The subtle caress of Mr Trump’s vanity seemed to go down well. Mr Trudeau went home with Mr Trump’s promise that Canada has little to fear from his plan to renegotiate the North American Free Trade Agreement (NAFTA), which gives Canada, Mexico and the United States preferential access to each other’s markets.

Before the meeting, the Canadians were nervous. Mr Trump’s repeated threats either to renegotiate NAFTA or to rip it up were aimed almost entirely at Mexico (which, unlike Canada, has a big trade surplus with the United States). Yet Canada has almost as much to lose if the United States rescinds the 23-year-old agreement or demands one-sided revisions. The value of Canada’s trade worldwide is equivalent to 65% of its GDP; the United States buys three-quarters of Canada’s...

What to expect from Ecuador’s elections

Thu, 02/16/2017 - 08:44

WHEN Rafael Correa first ran for Ecuador’s presidency in 2006, supporters at his rallies brandished belts in homage to their candidate, whose surname means “belt” or “strap”. “Dale correa,” or “give them a whipping,” the crowds roared. It was a demand to punish what they regarded as the corrupt elites who had governed Ecuador since the return of democracy in 1979. Mr Correa promised he would. He won that election and then two more. His presidency brought a rare spell of political stability. Living standards rose and public services improved. But few would say that he kept his promise to clean up government. This year’s national elections, which begin on February 19th, are shrill with accusations of corruption. 

Mr Correa, who has a respectable approval rating of 42%, is not a candidate. He is counting on Lenin Moreno, a former vice-president, and his running mate, Jorge Glas, the current vice-president, to carry on his “citizens’ revolution”. Mr Moreno, who shares his alarming first name with 18,000 other Ecuadoreans, hopes to win in the first round by capturing the bulk of Mr Correa’s support and adding to it. To do...

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