Economist, North America

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Updated: 17 hours 53 min ago

Investors seem confident that an economic recovery is under way

Thu, 08/17/2017 - 07:47

AFTER a grinding two-year recession, the longest in Brazil’s history, a recovery has been slow to materialise. The IMF expects GDP growth of just 0.3% this year. The joblessness rate is 13%. Last year’s fiscal deficit, including large interest payments, was nearly 9% of GDP. Lower-than-expected tax receipts have forced the government to accept that for the next four years the budget deficit will be higher than planned.

But markets seem unperturbed. The Bovespa, Brazil’s benchmark stock index, is back at levels not seen since May, when a leaked recording of the president, Michel Temer, apparently discussing bribes threw politics into chaos and put his future in doubt. The Brazilian currency, the real, strengthened by 6% in July.

Some of the optimism is based on a conviction that after such a long slump, a rebound cannot be far away. Higher prices for commodities are helping: Brazil is a big exporter of many, including soya and iron ore. Interest rates, which were kept...

A dodgy dam in Canada’s east

Tue, 08/15/2017 - 04:45

Latest in a long line

A LOT depends on the convoys of lorries now rumbling through the rugged interior of Labrador in eastern Canada. They are carrying equipment to be installed at Muskrat Falls, a hydroelectric project on the Churchill River. The 824MW dam, scheduled to begin operation in 2020, is supposed to reduce Newfoundland and Labrador’s dependence on fossil fuels and produce surplus power for sale to neighbouring Nova Scotia. But it is shaping up to be the latest in a long series of failed schemes to improve the economy of Canada’s slowest-growing province.

In June the provincial government revealed that the project, including a transmission line to Newfoundland, would cost C$12.7bn ($10bn) to build, more than double the original estimate of C$5bn. To pay for that, electricity rates will nearly double to 23.3 cents per kilowatt hour by 2022, twice what Canadians now pay on average. Indigenous groups that live near the dam, and...

Ecuador’s new president shows an independent streak

Thu, 08/10/2017 - 07:41

WILL Lenín Moreno be his own man? Or will he be the puppet of his forceful predecessor, Rafael Correa? Ecuadoreans have been wondering that since Mr Moreno became president on May 24th. An answer came on August 3rd, when Mr Moreno removed the vice-president, Jorge Glas, from any active role in government. Mr Glas has been friends with Mr Correa since they were boy scouts and was seen as the former president’s agent. Mr Moreno has stripped Mr Glas of his powers and perks, including the use of two presidential jets. He may now undo much of the work of his left-wing predecessor, who spent lavishly and squelched dissent.

Even before the break with Mr Glas, the new president showed an independent streak. He appointed a journalist from the private-sector media to run El Telégrafo, a state-owned newspaper. That is a sign, perhaps, that Mr Moreno will bully the press less. Mr Correa’s overspending had left the economy “at the brink of sustainability”,...

Honduras experiments with charter cities

Thu, 08/10/2017 - 07:41

ONE sunny Wednesday in Amapala, off the coast of Honduras, 33 working-age men settled themselves on rows of chairs on the main street under a tarpaulin to watch a football game. There was not much traffic to disrupt. The dilapidated town on the island of El Tigre had once been a bustling port, dispatching coffee and other commodities to Europe. Herbert Hoover and Albert Einstein thought the place worth visiting. But the German merchants and shipowners who had managed Amapala’s commerce left after the second world war; in 1979 the port moved to the mainland. The football fans now work intermittently as fishermen, farmers and drivers of three-wheeled mototaxis, most earning less than $2 a day. Some of the peeling pastel-coloured buildings bear signs in English, put up in expectation of a tourism revival that never happened.

Honduras’s government is promising a return to the glory days. In 2013 it announced plans to build a “megaport” in Amapala, along with a...

Michelle Bachelet seeks to relax Chile’s abortion ban

Thu, 08/10/2017 - 07:41

Bachelet, feeling empowered

MICHELLE BACHELET’s second term as Chile’s president, which will end next March, has been frustrating. Economic growth has been slow, her reforms of education, tax and labour laws have not worked as planned and her son has been implicated in an influence-peddling scandal. Her approval rating is only 32%.

But Ms Bachelet is bowing out with a reform that she no doubt hopes will secure a more popular legacy: an end to the country’s ban on abortion. On August 3rd congress passed a law to decriminalise abortion in three types of case: when the mother’s life is at risk, when the pregnancy is the result of rape and when the fetus has a fatal defect. The right-leaning opposition and the Catholic church strongly oppose it. The constitutional court will now decide whether it can take effect, even though the constitution “protects the life of the unborn”. If it upholds the new law, Ms Bachelet will be able to claim a robust record of...

Why English-language newspapers in Latin America are struggling

Thu, 08/03/2017 - 07:50

THE Buenos Aires Herald had a reputation for fearlessness. During Argentina’s “dirty war” in the 1970s it was the only newspaper that denounced the disappearances of thousands of Argentines under the military regime. The editor, Robert Cox, and news editor, Andrew Graham-Yooll, went into exile. Mr Graham-Yooll wrote “A State of Fear”, a harrowing account of the descent into dictatorship. But the Herald, the capital’s English-language newspaper, could not survive technological progress. On July 31st the 141-year-old paper said it would close.

William Cathcart, a Scot, founded the Buenos Ayres Herald for Britons drawn to Argentina to work on the country’s expanding railways. Its first edition was a single sheet, with advertising on the front and shipping news on the back. As its coverage expanded, it sometimes scooped richer Spanish-language rivals.

It had counterparts across Latin...

Venezuela’s shameless and colossal vote-rigging

Thu, 08/03/2017 - 07:50

“IT WAS a result that was so big, so surprising,” said Tibisay Lucena, the head of Venezuela’s electoral authority, late on July 30th. She was announcing that 8m people had voted in an election for a new, all-powerful constituent assembly dreamed up by President Nicolás Maduro. In fact, it was not surprising and probably not big. A fortnight earlier the opposition had got more than 7m to vote to reject the new assembly in an unofficial plebiscite. So it was predictable that Mr Maduro’s regime would claim a higher turnout. No matter that the electoral authority’s own count—leaked to Reuters—showed that only 3.7m had voted before the polls were due to close. Many said that they did so only because they feared losing government jobs or food rations. The firm that runs the electronic voting system said it had been “tampered with”.

Vote inflation on this shameless scale is “without precedent” in Latin America, according to Carlos Malamud, a historian at the Elcano Institute, a think-tank...

Brazil’s congress decides not to put Michel Temer on trial

Thu, 08/03/2017 - 03:33

How many thumbs will Temer need?

BRAZILIANS care little for Michel Temer, their scandal-plagued president. More than a month after the chief prosecutor, Rodrigo Janot, indicted him for accepting bribes, his approval rating stands at 5%. But Mr Temer retains support where it counts most: in congress. On August 2nd lawmakers in the lower house voted not to refer the case against him to the supreme court, which has the power to try him. A vote the other way would probably have led to Mr Temer’s suspension from office. After an uproarious debate, to which anti-Temer deputies brought suitcases stuffed with fake cash, the president won a comfortable victory: 263 deputies voted against referring the case to the supreme court while 227 voted in favour. Mr Temer needed just 172 votes to block the motion.

But his troubles are not over. Mr Janot is expected to bring at least two more indictments against him, which may be put to a similar vote in the lower house. The...

What comes after a farcical “election” in Venezuela

Wed, 08/02/2017 - 13:48

IT IS to be the dawn of “a new Venezuela”, proclaimed the president, Nicolás Maduro. He was celebrating the election on July 30th of a constituent assembly, which will now become the supreme power in the country. A day later Venezuelans got a taste of what the new Venezuela might look like. Before first light, agents of Sebin, the state security agency, swooped into the houses of two opposition politicians and hauled them off to prison. Leopoldo López, the country’s most prominent political prisoner, had been transferred to house arrest in July. He expected re-incarceration: he had recorded a video urging supporters to “fight for” Venezuela, to be released when it happened. Antonio Ledezma, the former mayor of Caracas, was still in his pyjamas when agents forced him into a car. Someone took a mobile-phone video of the arrest, in which a woman can be heard screaming “dictatorship” at the abductors.

To Venezuela’s opposition, a large share of its citizens and many foreign...

Mexico becomes a destination for migrants

Thu, 07/27/2017 - 07:47

THE Suchiate river is the southernmost stretch of Mexico’s border with Guatemala. At Ciudad Hidalgo there are two ways to cross it. You can use the bridge, which guarantees an encounter with an immigration official. Or you can walk down to the river bank, hire a raft (planks tied to the inner tubes of two tractor wheels) and get yourself punted across. Many passengers are Guatemalans who want to shop in Ciudad Hidalgo, where goods are cheaper. The Mexican border guards ignore the flotilla below them and its duty-dodging cargoes; they bring the town a lot of business.

Such rafts are also popular with Central Americans heading farther north, to the United States. But their number has dropped in recent months, says Alexander, who has piloted a raft for four years. Occupancy at the Casa del Migrante in nearby Tapachula has fallen by more than a third since 2016, says Julver Gordillo, who works at the hostel. Immigration police are catching far fewer Central Americans without the right...

Colombia’s banks open accounts for fighters who once robbed them

Thu, 07/27/2017 - 07:47

DURING their decades-long war against the Colombian state, the supposedly pro-peasant guerrillas of the FARC were fond of bombing and torching branches of Banco Agrario in remote parts of the country. A state-owned bank lending to farmers and rural-development projects, it was a tempting target on two counts: attacks were a blow against the state, and they often yielded sackfuls of cash.

With the ratification of a peace accord between the government and the FARC last year, the terrorist-target relationship is becoming more of a customer-company one. After laying down their arms, more than 7,000 FARC guerrillas are opening bank accounts and picking up debit cards, many for the first time. As part of their integration into law-abiding society, they are to receive from August a monthly stipend of 663,945 pesos ($220). Each person will also get a one-time payment of 2m pesos to start a business. The government has designated Banco Agrario, which has reopened dozens of bombed-out...

Latin America’s disappointing economic growth

Thu, 07/20/2017 - 07:44

SCAN the Latin American newspapers and it is hard to find much sign of a convincing economic recovery. True, Brazil’s industrial production is perking up after a two-year slump. Mexico’s energy reform is starting to pay off, at last, with a big new oil discovery by an international consortium. And Peruvian restaurateurs celebrated “National Char-roasted Chicken” day on July 16th, hoping to dispatch a million birds, up from last year’s 720,000.

Otherwise, animal spirits are in short supply. After five years of deceleration and one of recession, Latin America should register modest economic growth of 1-1.5% this year, according to forecasters. The picture varies from country to country. The return to aggregate growth is largely thanks to Brazil and Argentina, which are coming out of recessions. Venezuela’s economy is collapsing. Mexico, Chile, Colombia and Peru are expanding at a sluggish rate of 2-3%. Only in Central America, the Dominican Republic and Bolivia is growth a respectable 4% or...

The outlines of NAFTA 2 emerge

Thu, 07/20/2017 - 07:44

FOR months President Donald Trump has veered between threatening to terminate the North American Free-Trade Agreement (NAFTA) and merely proposing to bring it “up to date”. On July 17th, in a letter to Congress, the United States trade representative, Robert Lighthizer, made the administration’s intentions clearer. They are closer to revision than destruction, which is a relief for Mexico and Canada, the United States’ NAFTA partners. But alongside conventional-sounding negotiating objectives are flashes of Trumpian aggression and hints that the United States will demand painful changes to the deal.

The stakes are high. A quarter of American trade in goods and services is with Mexico and Canada. The three economies tend to grow or shrink together and have integrated supply chains. Fears that the United States would abandon NAFTA have caused volatility in the markets for the Mexican peso and Canadian dollar, and talk of possible recessions.

Mr Lighthizer’s letter,...

Challenging the cult of Che Guevara

Thu, 07/20/2017 - 07:44

Hard to erase

CHE GUEVARA was born in Rosario, then Argentina’s second-largest city, in 1928 but did not stay long. Less than a year later his family moved away. Yet his birthplace has not forgotten the left’s warrior-saint. A red banner marks the posh apartment block where he was born. A four-metre-high (13-foot) bronze statue stands in Che Guevara Square. The city council finances CELChe, a centre devoted to the study of his life, and celebrates “Che week” around his birthday in June. CELChe will stage a concert to commemorate the 50th anniversary of his death on October 9th.

Not everyone in Rosario thinks the bereted revolutionary, who was captured by soldiers in Bolivia and killed on the orders of the country’s pro-American dictator, deserves such reverence. Fundación Bases, a liberal think-tank based in the city, has launched a petition to persuade the city council to remove the monuments. The martyr was himself a killer, says Franco Martín López,...

Venezuelans sell sex in Colombia to survive

Thu, 07/20/2017 - 07:44

ON SATURDAY night in Parque Poblado in Medellín, young people gather to drink, smoke and chat. Barbara and her cousin Sophia have more serious business: they hope to make enough money from selling sex to live decently after fleeing Venezuela, where survival is a struggle.

Barbara, who is 27, prefers her former occupation as the owner of a nail and hair business in Caracas, Venezuela’s capital. But polish and shampoo are as hard to find as food and medicine, and so she has come to Medellín. In an hour a sex worker can make the equivalent of a month’s minimum wage in Venezuela. Colombian pesos “are worth something”, unlike Venezuela’s debauched currency, the bolívar, Barbara says. “At least here one can eat breakfast and lunch.”

Some 4,500 Venezuelan prostitutes are thought to be working in Colombia; the trade is legal in both countries. But until recently they were often rounded up by police and deported back to Venezuela by the busload. That changed in...

What the unjailing of Leopoldo López means for Venezuela

Thu, 07/13/2017 - 08:21

ON JULY 5th, independence day, a pro-government mob armed with sticks, metal poles and pistols charged into Venezuela’s golden-domed national assembly building and beat up parliamentarians. Some of the victims, dazed and bloodied, staggered around the legislature’s gardens. Two went to hospital; with fractured skulls, it was feared. The thugs were responding to a summons by Tareck el Aissami, the country’s vice-president. The assembly, under opposition control since elections in December 2015, had been hijacked by an “oligarchy”, he declared; “patriots” should defend it. The national guard, responsible for the legislature’s security, made little effort to stop them.

Three days later, Venezuela’s thuggish regime showed its nicer face. In the dead of night Leopoldo López, the country’s most prominent political prisoner, was transferred from the Ramo Verde military prison to his house, where he will remain confined. The supreme court, which obeys the government, ordered the transfer on...

The conviction of Lula and the future of Brazil’s political purge

Thu, 07/13/2017 - 03:35

ALMOST three-and-a-half years after it began as a seemingly routine probe into money-laundering, Operation Lava Jato (“Car Wash”) has reached a critical stage. On July 12th Sérgio Moro, a federal judge, sentenced Luiz Inácio Lula da Silva, a former president, to almost ten years in prison, ruling that he was given an apartment worth 2.2m reais ($690,000) by a construction firm that had received padded contracts for work on an oil refinery. Congress this week began debating whether to allow a trial of the current (centre-right) president, Michel Temer, who is charged with benefiting from a bribe of $150,000, which he denies.

With the political establishment mortally threatened, calls for the corruption probes to be reined in have mounted. Lula’s lawyers say he is the innocent victim of “a politically motivated investigation”. He will remain free while he appeals, but the sentencing makes it harder for him to run for president again in 2018. It will also intensify debate as to whether...

Archaeologists discover a gruesome tower of skulls in Mexico City

Thu, 07/06/2017 - 07:50

Montezuma’s grim harvest

THE Aztecs were not gracious victors. Their prisoners of war were frequently used for human sacrifice, as part of spectacles in which their hearts would be ripped from their bodies by priests, to be offered, still beating, to the gods. Their heads fared no better, usually ending up in a kind of skull wall, called a tzompantli in Nahuatl, the Aztec language. In its typical form it consisted of a platform, with posts connected by crossbeams onto which skulls would be threaded. Tzompantlis were generally placed in front of temples, so that friend and foe alike would be awed by the state’s power.

In 2015 archaeologists identified the Huey (Great) Tzompantli, a particularly impressive version. It stood near the main temple of Tenochtitlán, the Aztec capital on whose remains Hernán Cortés founded Mexico City after the Spanish conquest in 1521. As the digging season wrapped up last month,...

The Brazilian army is turning into a de facto police force

Thu, 07/06/2017 - 07:50

FEW places illustrate the modern role of the Brazilian army better than Tabatinga, a city of 62,000 on the shared border point between Brazil, Colombia and Peru. The frontier, protected by Amazon rainforest, has not budged since the Portuguese built a now-ruined fort there in the 1700s. But Júlio Nagy, a local commander, has his sights trained on unconventional threats. In February and March his troops intercepted 3.7 tonnes of cannabis. Last year they destroyed an airstrip built by illegal gold miners. Inside a small army-run zoo—home to toucans, a jaguar and even a manatee—garish macaws rescued from animal traffickers squawk intermittently.

...

Turmoil in British Columbia could endanger a Canadian climate pact

Thu, 07/06/2017 - 07:50

CANADA is a country of balancing acts. It treasures its reputation as an upstanding global citizen while pumping heavy oil from its tar sands. Its relatively weak federal government must strike compromises among provinces with varying ideologies, cultures and languages. Both of those tasks may have become harder after the fall of the Liberal Party’s government in British Columbia (BC) on June 29th.

Among the signature policies of Justin Trudeau, the Liberal prime minister, is an effort to meet Canada’s commitments under the Paris accord by requiring its provinces to impose a price on carbon. In exchange for the assent of provincial premiers, he approved three big energy projects, including a pipeline that would ship oil from Alberta to BC’s Pacific coast. By tripling exports to overseas markets, this would reduce Canada’s economic dependence on the United States.

BC pioneered the trade-off Mr Trudeau would later trumpet. Since 2001 it has been ruled by the...

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