Just keep scrubbing.

In Brazil, the Car Wash carries on scrubbing.  Yesterday, final hearings took place to wrap up plea bargains made by no fewer than 77 former executives of infrastructure and construction conglomerate Odebrecht; proceedings even featured a special guest appearance from ex-CEO Marcelo Odebrecht, currently serving 19 years in a federal penitentiary in Paraná for his role in the Petrolão bribery scandal at state oil giant Petrobras.

One much-lamented absence was that of Teori Zavascki, the justice of the Supreme Federal Court (STF) overseeing the waves of trials coming out of the corruption probe. Mr Zavascki was one of five killed when his plane came down off the coast of Rio de Janeiro state last Thursday. Though preliminary investigations have indicated pilot error may have been to blame, given Mr Zavascki’s side-line in supervising investigations against high-profile political figures – in May, upholding the impeachment process against former President Dilma Rousseff and, more recently, overseeing charges against former Speaker of the Lower House Eduardo Cunha – the news naturally had the conspiracy theorists of the Brazilian blogosphere running wild.

So where does Teori Zavascki’s death leave the Lava Jato investigation? While he had been noted as a particularly independent voice, from a purely practical point of view, not much changes: as yesterday’s hearings demonstrate, the judicial proceedings will rumble on regardless. And on the business of investigating – a process that it is not so much “draining the swamp” as “dredging the Pantanal with an eggcup” – household name and probably-not-partisan federal judge Sérgio Moro remains on the case.

At the same time, the political consequences of a hold-up in the probe would be potentially devastating. This month, Ipsos Brasil polling found that 96% of respondents believed that Lava Jato should be pursued to the end “no matter the consequences”. There is clearly no appetite from the Brazilian public for any let-up in rooting out corruption and Brazilian politicians need not be reminded that “people power” has been a major feature of the domestic political landscape in recent years, with not-inconsiderable effect

More broadly, how is Lava Jato impacting Brazil?

As the country struggles to claw its way out of its worst recession in modern history, the drip feed of sleaze – Petrolão and more besides has demolished public faith in the political class and confidence in the country’s institutions is rock-bottom. Admittedly, the year-end saw positive noises coming from the Brazilian economy and much-needed reforms to cut prohibitive social spending were approved in December. However, in one important growth area, Lava Jato presents a particularly interesting challenge.

As most economists will tell you, well-targeted investment in infrastructure can have a stimulating effect on the economy: post-2008, Chinese infrastructure investment leapt to 16% of GDP, helping to maintain – officially at least – almost double-digit growth rates while much of the rest of the world languished in the economic doldrums (though the consequences of that particular splurge may become clear sooner than anticipated).

Few would suggest that Brazil now go on an East Asian-style poured-concrete bonanza. But Latin America’s biggest economy quite clearly has ground to make up – the World Economic Forum Global Competitiveness Report 2016/17 ranked Brazil 116th out of 138 countries for overall quality of infrastructure – and addressing this long-neglected issue would be a welcome source of jobs and investment for the economy and a raison d’être for President Michel Temer’s short-sell-by-date administration.

Thus far, Mr Temer has been – atypically – praised for his open and pragmatic approach to solving the infrastructure problem. Last September brought with it the launch of the Investment Partnership Programme, putting infrastructure high on the agenda and seeking a joined up approach between state and private interests.

But one question remains: How does this or any future Brazilian government manage the political consequences of harnessing the economic potential of a sector whose leading lights – Odebrecht, Camargo Corrêa, Engevix, UTC and others – have been savaged by corruption allegations and convictions and have dragged the reputation of former national jewel-in-the-crown Petrobras through the dirt? Answers on a postcard please.

 

Posted in Brazil, Corruption, Infrastructure, Politics | Leave a comment

Mexican Machinations

This week saw the return of Luis Videgaray to the frontline of Mexican politics. On the international scene, Mr Videgaray made a name for himself back in August as the Finance Minister who lobbied for then presidential candidate Donald Trump to visit Mexico during his bid for the White House.

The pow-wow was widely regarded as a fiasco: the failure to stem the flow of inflammatory rhetoric on walls and criminal imports emanating from the Trump campaign made a mockery of Mexican efforts to exert international influence and the very presence of Mr Trump south of the border went down like a cup of cold sick with the domestic press and Mexican people at large. (Fewer than 2% of Mexicans hold a positive view of the incoming American Commander-in-Chief, which is hardly surprising given the tone of his campaign).

Mr Videgaray was replaced less than a week later, and few in Mexico can have been too upset to see him go. Presumably President Enrique Peña Nieto swung the axe with a heavy heart: he and Mr Videgaray go back some way, with the latter serving as Finance Minister for the State of Mexico when Mr Peña Nieto was governor and going on to coordinate his presidential campaign during 2012.

But beyond Mexico’s borders, there was one saddened by the departure. Somewhere in Trump Towers, the Twitter feed whirred into gear, lamenting the loss of Mr Videgaray to the Mexican administration and mourning the premature demise of the “wonderful deals” that a Trump-Videgaray partnership could have brought to fruition.

So one can only imagine the delight in the Trump transition team when Mr Videgaray was named as the new Mexican Secretary of Foreign Affairs this week.

From a Mexican perspective, the benefits of the appointment are subtle yet tangible. By his own admission, Luis Videgaray is not a diplomat and there will be a lot of “learning on the job” to be done.

But if there is one thing that the composition of the administration currently taking shape in Washington – not to mention the emergence of “UK Special Envoy” Farage – has taught us, it is that close personal relationships will be an important part of influencing US policy initiatives over the next four years.

By appointing as Foreign Affairs Secretary the Mexican politician most closely associated with the incoming US President and his team, the Peña Nieto government looks keen to leverage those personal ties to foster good bilateral relations and establish a clear Mexican position from the get-go.

Mr Videgaray’s return is a bold statement of intent to guide US policy on Mexico and, following August’s debacle, repair the government’s domestic credibility on international affairs. With elections just over the horizon in 2018 and the popularity of the governing PRI at a historic low of 23%, quick wins are needed.

There has been no word – either official or in under 140 characters – from the Trump transition team on Mexico’s new Foreign Affairs Secretary. But if the Trump Twitter feed is to be believed, Mr Videgaray will have a job on his hands in his first few weeks in office: Mexican-American “Car Wars” are just around the corner.

 

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A taste of your own medicine: ¡Viva el Generalissimo Trump! & meddling in elections

Earlier in the week the Electoral College ratified the result of the U.S. general election. It’s official; Trumptime begins in January.

Sadly, this is certain to have far-reaching consequences for Latin America. The United States is a significant trading partner across the continent. Prospects of further rate hikes and a strengthening Dollar threaten dollar-denominated debt. Perhaps most alarmingly, the incidence of xenophobia, racism and intolerance in the U.S. have spiked in the wake of the election, and a great uncertainty remains as to the political relationships between Uncle Sam and his neighbours.

With this gloomy context in mind, the recent allegations of Russian state-sponsored involvement in the U.S. elections might elicit a wry smile from those south of the Rio Grande. Of course, this flagrant incursion by a foreign power is deplorable, but it is a tactic with which Americans should be familiar.

The United States has acted unilaterally and in spite of domestic politics time and again in Latin America.

Today, allegations of American adventurism from politicians in the region are all too familiar. Some like Rafael Correa in Ecuador or the erstwhile president of Argentina, Cristina Kirchner do so to disguise their own inadequacies and cast blame for their countries’ economic problems. Others, like the late Fidel Castro or the Chavista Nicolás Maduro demonise the US to legitimize their own autocratic rule and Human Rights abuses.

During the Cold War, U.S. involvement in Latin American politics was de rigueur. Giving the stamp of approval for a particularly unpleasant anti-democratic movement was a rite of passage for an administration. Some Commanders in Chief, like Reagan, pursued this with a fanatical fervour. From Chile to Nicaragua, Uncle Sam has played Kingmaker and intervened in support of atrocious dictatorships. The sleaze and illegality surrounding Reagan’s support of the Contras in Nicaragua, and Nixon’s backing of CIA involvement in Chile seem two prime examples of democratic convention being thrown by the wayside (disregard for national sovereignty being a given).

The irony is undeniable.

America’s justification for intervention was always to prevent the spread of a pernicious ideology, or the rise to power of a belligerent demagogue who threatened democratic institutions and American values. Sound familiar?

From aggressively protectionist trade policies and contradictory public spending plans to machismo and anti-immigration vitriol, Trump’s speeches read like the liturgy of a Latin American Caudillo. The wildly irresponsible and fact-free allegations are straight out of a Strongman’s handbook. See the POTUS elect’s comments about electoral fraud or that, most infamously, Mexican’s are rapists. Is the Donald’s rhetoric surrounding Mexicans and undocumented immigrants reminiscent of Rafael Trujillo’s Anti-hatianism? In some ways, yes. Is Trump a Trujillo in the making, probably not. But to ignore the obvious similarities is dangerous.

Of course Mr. Trump simultaneously exploits and encourages the Russian hacking of the DNC and DCCC, while he flatly denies Russian complicity in his election success. To a Caudillo who has created something of a personality cult (see Art of the Deal or any other piece of shameless self-propaganda) the truth is plastic. It is unsurprising that the President-elect has already rubbed up against the CIA, an organization that abhors instability and unpredictability. What’s more, their findings are inconvenient and contradict his mythology.

If Mr. Trump thinks so little of the CIA perhaps the agency would be best served taking its business elsewhere, it’s not just the Russians who are confounded by American politics. Anyone for crowd-funding an intervention in Washington? (donation link to follow)

¡Viva la Revolución!

 

Posted in Corruption, Elections, Politics | Leave a comment

Farewell Fidel

With the death of Fidel Castro, the world has lost a statesman and a political icon of the 20th Century. Whether his 47 years of rule in Cuba – in particular, a memorable fortnight in October 1962 – are remembered fondly depends entirely on political persuasions: to his Marxist-Leninist followers, he will always be the instigator of the Cuban Revolution, the overthower of dictator Fulgencio Batista and constructor of a people’s paradise of high literacy and low mortality; to those less fond of Comrade Fidel, he is likely to be memorialized as the dogmatic tyrant at the head of a politically-fossilized state little better than the one it replaced.

Either way, Fidel Castro is beyond mortal judgement. Only history can deliver a verdict now, and on this count, Mr Castro had always been bullish. At his trial after a failed coup attempt in Cuba in 1953, he gained international notoriety for goading the court: “Condemn me. It does not matter. History will absolve me.” Only in 2016 will we begin to see whether the reality matches up to the rhetoric.

Much of that depends on what the future brings. For all its momentousness and symbolism, Mr Castro’s death does not change very much in Havana. Dogged by periods of ill-health, he had handed over the reins of power to younger brother Raúl in 2008, removing himself from the formal business of government whilst retaining considerable influence, especially in the realm of foreign affairs. The blessing of the elder Castro leant legitimacy to the younger and established Raúl as the ideal continuity candidate, a position that was confirmed as recently as the Communist Party Congress in April. Raúl has operated independently as First Secretary of the party for almost a decade and there is no reason to expect this – or his politics, a facsimile of his brother’s but with a little more diplomacy and pragmatism – to change on account of his older sibling’s death.

Of greater immediate significance are events on the other side of the Straits of Florida. Whilst it would be too much to say that the Revolutionary of the 20th Century has now given way to the Revolutionary of the 21st, the relationship between Cuba and President-Elect Trump is shaping up to be an unpredictable one.

Things have started inauspiciously. There was more than an air of celebration in Mr Trump’s four-word Twitter reaction to the news of Mr Castro’s death. And whereas this time last year Mr Trump called the emerging Obama deal with Cuba “fine”, more recently on the campaign trail he branded it a “very weak agreement”, stressing that it was largely achieved by executive order and could therefore be reversed. More concretely, the appointment of Mauricio Claver-Carone – a vocal critic of the Obama administration’s approach to Cuba – to his transition team signals the possible taking of a tougher stance on relations with Havana.

So with one Castro deceased, another very much in his twilight years and a US President-Elect who is an enigma on foreign policy, a cloud of uncertainty hangs over Cuba’s future and, for all his bluster 63 years ago, Fidel Castro’s final legacy.

 

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Take it or leave it: elections in Nicaragua

Nicaraguans going to the polls today will find a familiar name on the ballot: Daniel Ortega, ruler of Nicaragua from 1979 to 1990 and again from 2007 onwards is seeking re-election. Moreover,  armed with a decision not invite foreign observers to monitor the proceedings, the leader of the Sandinista National Liberation Front (FSLN) and hero of the Nicaraguan Revolution only seems prepared to present voters with a political “Hobson’s choice”.

In June, Nicaragua’s Constitutional Court banned Eduardo Montealegre, leader of the Independent Liberal Party (PLI) and Mr Ortega’s foremost rival in the previous two elections, from putting forward his presidential candidacy. The court similarly barred his successor, Luis Callejas, taking it upon themselves to nominate Pedro Reyes – a man regarded by many in the opposition as an Ortega stooge – as PLI leader. When 28 opposition legislators objected, the court flexed its constitutional muscles once again, removing them from the National Assembly and authorising Reyes to find replacements. To top it off, in September, Mr Reyes himself resigned his presidential candidacy, leaving the Mr Ortega’s opponents leaderless in the run-up to November’s election.

While the shenanigans of the summer have left the primary opposition in carefully-orchestrated chaos, other candidates will be on the ballot paper. However, for the most part, they are a salad of electoral first-timers, social conservatives and left-wing factionalists, none of whom have the political capital and infrastructure to mount a serious challenge to another five years of Ortega rule.

Mr Ortega’s actions – delivered by proxy through the constitutional court – bear all the hallmarks of political consolidation. Since January 2014, when the National Assembly voted to allow him to seek indefinite re-election, and now with another presidential term all-but guaranteed through to 2021, the question has become not so much how the Ortega grip on power is dislodged as how it is passed down.

Step forward Rosario Murillo, the flamboyant First Lady of Nicaragua. A distinguished poet and revolutionary in her own right, Ms Murillo has grown in stature during her husband’s latest term of office, as a spokesperson and public face for FSLN government. In this latest round of elections, she is seeking to formalise her position, running for vice-president alongside her moustachioed spouse to establish a firm family grip on domestic rule. The marital duo will certainly make a novel addition to the Nicaraguan political scene – normally Article 147 of the Nicaraguan Constitution prevents the president’s immediate relations from holding high office, but earlier this year, the ever-reliable constitutional court found that this rule applies only to consanguinity and not relationship by marriage. How fortuitous!

In the second decade of the 21st Century, the Ortega clan is beginning to bear an eerie resemblance to the Somoza dynasty, the family regime that ruthlessly ruled over Nicaragua for much of the 20th Century and against whom Daniel Ortega and his fellow Sandinistas fought so hard in the 60s and 70s.

Certainly, they wouldn’t be the first revolutionaries to morph into their erstwhile enemies. But it is important to take into account the relatively large popular mandate that their political programme attracts. Mr Ortega enjoys consistently positive approval ratings, some of the highest for any Latin American leader. Opposition activists may point to a Nicaraguan population inured to decades of petty caudillismo and a government that has little compunction about getting its message across at the expense of a free media. On the other hand, the regime’s supporters will gladly refer you to a national GDP growth rate of almost 5% per annum – a surge that is reflected in the per capita increase in wealth – and a broad portfolio of policies to improve the nation’s social infrastructure, reducing poverty and improving access to healthcare

This is not to say that all is rosy in the garden: ambitious, wealth-creating infrastructure plans have flopped, with a Chinese-backed project to build a canal to rival Panama’s famous waterway running aground. And while the government has not published any employment statistics since 2011, estimates suggest that the rate of low-paid, informal work remains stubbornly high, encompassing roughly 60% of the Nicaraguan population. However, serious though these problems may be for any developing nation, they pale in comparison to the violence and degradation the country experienced in the final decades of the 20th Century, now memorialized in Managua’s Parque de la Paz.

From a purely practical point of view, what Nicaragua lacks in its rigged electoral processes and nobbled judiciary, it makes up for in the rare peace and stability that de facto one-party rule facilitates. Whether the security brought by the nascent Ortega dynasty can be maintained across the political generations remains to be seen. In Nicaragua, the lesson from the Somozas is that it is easier said than done.

Posted in Elections, Nicaragua, Politics | Leave a comment

Recalling Mr Maduro

Until reasonably recently, it could at least be argued that Nicolás Maduro had democracy on his side.  After all, following a bad-tempered campaign and opposition calls for a full audit of votes cast, Hugo Chávez’s appointed successor had seen off MUD candidate Henrique Capriles in the election of April 2013 –  by a margin of 1.5%,  the closest election in Venezuela since 1968 – and had been duly sworn in as President of the Bolivarian Republic. The victory may have been a narrow one, but it was a victory nonetheless.

But the events of the past week cast doubts over Mr Maduro’s mandate, his only shield in the crises currently besetting his government and the country as a whole.

On Friday, the National Electoral Council (CNE) suspended opposition attempts to subject Mr Maduro to a recall referendum. Under Article 72 of the 1999 Constitution, a vote to recall the president is permitted provided 20% of the electorate across all 24 states come out in favour. The opposition – still doggedly lead by Mr Capriles – had gone a signature drive to get the petition over the required threshold. But recent rulings by 4 state courts opined that there was fraud in the initial round of signature-gathering earlier this year, invalidating the proceedings. In the light of these verdicts, the National Electoral Council has suspended the recall vote, pending further investigation.

So are Friday’s events the despotic thwarting of legitimate opposition or merely the slow-turning gears of political procedure? Taken on its own, the suspension of the recall process is little more than a symptom of sclerotic bureaucracy. However, this latest hindrance to opposition in Venezuela forms part of a patchwork of measures taken by the Maduro government to consolidate its position, irrespective of its fundamental political legitimacy.

On the 14th of this month, President Maduro signed off on the national budget for 2017, a document promising 8 trillion Bolívars – about $8 billion – of spending over the next budgetary year. Usually, the process for putting pen to paper on the budget would involve putting it before the National Assembly, conforming to the head of state’s constitutional obligations. But on this occasion, Mr Maduro was granted a special dispensation by the Supreme Court to allow him to bypass the legislature, on the basis that several opposition leaders in the Assembly were in contempt of court for ignoring earlier rulings. Presumably the fact that the National Assembly is controlled by the opposition MUD and represents one of the last bastions of resistance to the Maduro regime in the formal law-making process is neither here nor there.

The functionaries at the National Electoral Council have also been particularly busy of late. Not only have their labours borne fruit in the suspension of the recall process, this week also saw the postponement of elections for state governorships, which had been due for December but will now take place in mid-2017. No explicit reason was provided by the Council, but the decision does provide welcome respite for a government suffering from consistently disastrous approval ratings.

Last but by no means least was Mr Capriles’ online publication of a court order prohibiting him and several other prominent opposition figures from leaving the country. The order relates to the allegations of fraud in the early stages of the recall petition, but has been branded a nakedly political “act of gratuitous aggression” by the opposition and provoked allegations of dictatorial behaviour by Mr Maduro. By contrast, on the government side, Diosdado Cabello, vice-president of the ruling PSUV, expressed his hope that the accused “are imprisoned for their deceit.”

Inflammatory rhetoric is likely to be a feature of Venezuelan politics during the coming months (as if it wasn’t already). Notably, Mr Capriles has been upping the ante, calling for protests next Wednesday and imploring Venezuelans to “defend their constitutional rights”. But more worrying than blustering language is the observable tendency of the Maduro government to bypass essential democratic and legal processes when it deems them inconvenient. The weakness and lack of independence of the Venezuelan judicial system has been known for some years, but it is only really now that matters are coming to a head in the country that these fundamental deficiencies are being laid bare.

Venezuela now has a full-blown political and judicial crisis to add to its coterie of social and economic woes.

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FARC Peace Accords: Back to the drawing board.

There was to be no “Neville Chamberlain moment” for Colombian president Juan Manuel Santos yesterday as his proposed peace process with the FARC guerrilla movement was rejected by voters by a paper-thin majority of 50.2% to 49.8%. No matter how slight, the result is a bitter blow for Mr Santos, who had staked the legacy of his 2 terms in office on a successful peace deal. More broadly, the outcome of the vote is a setback for Colombia, ushering in a new era of political and economic uncertainty which threatens not just Mr Santos’ reputation but the status of the country as one of Latin America’s most exciting developing nations.

Colombia is no stranger to failed peace deals, even in recent times: from 1999-2002, the Pastrana government pursued an active policy of talks with guerrilla and paramilitary groups and the creation of demilitarized zones throughout Colombia. Ironically, this approach resulted in one of the most violent periods in recent Colombian history and gave way to the election of hardliner Álvaro Uribe, the same chap who has just led the “No” campaign to victory.

So why did the Colombian people reject the deal?

Firstly, take geography into consideration. The vote saw a relatively weak turnout of 60%, with greater public participation taking place in Colombia’s towns and cities. The conflict between the government and rebels has been a primarily rural one and urban populations, relatively untouched by conflict, saw less of an immediate need for peace than rural areas that have seen 52 years of on-off fighting, preferring to hold out for the “right” – and potentially more punitive – deal.

The vexed question of getting the “right” deal has been at the heart of the Uribe-led “No” campaign. Mr Uribe has been a consistently fierce critic of the concessions made by the Santos government in the interests of ending the conflict with the FARC, particularly on the thorny moral aspects of the peace. 2 areas have proven especially problematic:

  • Under the terms of the deal, a Peace Tribunal had been proposed to investigate alleged atrocities during the conflict, with the power to hold members of both the FARC and the Colombian Armed Forces to account. In the eyes of Mr Uribe – and as it turns out, many Colombians – this represents an unacceptable equating of the nation’s defence forces and a banned terrorist group.
  • The deal included a proposal to include drug trafficking in list of pardonable “political crimes”, under the rationale that the cultivation and export of drugs – primarily cocaine – provided the FARC with the resources to fight a political conflict: one estimate from 2014 put FARC income from narcotics at over $200 million per year. For voters, this was a clearly a troubling blurring of the lines between a just war and a profoundly illegal trade.

Broader political considerations also swung the vote. The accord guaranteed representatives of the FARC 10 unelected seat in Congress until 2026. While it is one thing to make concessions to rebels in the interests of peace and stability, it is quite another to invite them into the legislature, particularly when the group has suffered a series of setbacks in recent years and occupies a distinctly shaky negotiating position.

The outcome also represents a backlash against Mr Santos’ wider reform agenda. Success in the referendum and public ratification of the peace deal would have given the incumbent president the political capital to push through a series of fiscal and agricultural reforms, including revenue-raising tax hikes, particularly on VAT. Defeat in the referendum will stall these broadly unpopular measures, which had been due to be tabled this month.

This climb-down on tax is likely to set the tone for the next few months, if not the rest of Mr Santos’ term through to 2018. Failure in the referendum is likely to see Mr Santos’ approval ratings take another dip – having been none-too-healthy previously – which, combined with an inability to pass legislation due to a perceived lack of legitimacy and the fact that peace accords will now remain at the top of the legislative “in tray”, paves the way for something of a crisis in Colombian government.

And as ever, the gears of government seizing up spells stagnation in wider society. News that the peace deal had been rejected saw the Colombian stock market take a tumble, a deficit it is unlikely to make up as proposed pro-business market reforms are shelved and uncertainty about the stability of the country rears its head again.

But all is not yet lost. Just as Mr Santos convened a meeting with Mr Uribe and other leading “No” campaigners the day after the result to plan a way forward, so FARC leader Rodrigo “Timochenko” Londoño affirmed his group’s commitment to finding a peaceful solution to the conflict:

“Las FARC-EP mantienen su voluntad de paz y reiteran su disposición de usar solamente la palabra como arma de construcción hacia el futuro.”

Doubtless the FARC – not to mention the other rebel groups not included in this deal – will use this hiatus to bolster their negotiating positions ahead of future talks. But at least – and certainly in contrast to the 1999-2002 peace process – the will to do business is still there.

Posted in Colombia, FARC, Politics, Security | Leave a comment