Americas Quarterly Politics, Business & Culture in the Americas Wed, 24 Nov 2021 22:29:35 +0000 en-US hourly 1 https://wordpress.org/?v=6.1.1 https://americasquarterly.org/wp-content/uploads/2020/08/cropped-AQ_social_-32x32.png Americas Quarterly 32 32 Inside the dramatic turnaround that made Colombia’s second city a model for water management. https://americasquarterly.org/inside-the-dramatic-turnaround-that-made-colombias-second-city-a-model-for-water-management/ Fri, 18 Oct 2019 23:01:48 +0000 http://live-aqimportwithimages.pantheonsite.io/?p=12091 MEDELLÍN— For much of the 20th century, the Medellín River was an open sewer, collecting the untreated human and industrial waste of the Aburrá Valley. Stretching through the valley’s center, Medellín — a fast-growing city with a reputation for entrepreneurship— turned its collective back and closed its collective nose. Warehouses and rail tracks buffered the city from the rank ... Read more

The post Inside the dramatic turnaround that made Colombia’s second city a model for water management. appeared first on Americas Quarterly.

]]>
Reading Time: 10 minutes

MEDELLÍN— For much of the 20th century, the Medellín River was an open sewer, collecting the untreated human and industrial waste of the Aburrá Valley.

Stretching through the valley’s center, Medellín — a fast-growing city with a reputation for entrepreneurship— turned its collective back and closed its collective nose. Warehouses and rail tracks buffered the city from the rank waters, fed by the hundreds of creeks that started out crystalline high above the city but collected raw sewage as they slalomed their way through the often informal neighborhoods that gradually expanded up into the hills.

“The river had very strong odors,” recalled Lucia Restrepo, 82, who has lived in the Conquistadores neighborhood near the river for the last three decades. “The water would be colored: one day red, and the next day blue.”

“Now it looks normal.”

She spoke as she strolled with her 29-year-old granddaughter, Verónica Bustamante, along a stretch of Parques del Río, an elegant riverside green space that, when completed, will straddle a short stretch of the river, with parks on either side connected by pedestrian bridges. With its boardwalk, art installation and methodically sown native vegetation, it is strikingly reminiscent of New York City’s High Line.

Lucia Restrepo said the water was once “red, then blue, but now looks normal.”

The park is routinely packed on weekends. But even on that weekday afternoon, families strolled, a couple wearing T-shirts of the popular soccer team Atlético Nacional smooched on a bench, and a half-dozen kites soared overhead. A stretch of the highway that once roared along the river now runs, invisibly and silently, through a tunnel underneath.

The construction of the park complex is one of several steps Medellín has taken to make it what many experts call Latin America’s most dramatic turnaround story in the conservation and management of water. While it’s true Medellín is relatively blessed with an annual 65 inches of rainfall, that’s no guarantee of success in this field; São Paulo, with 53 inches, had to resort to severe water rationing as recently as 2014. Plus, it’s true that water management is not just a question of water quantity, but also quality— and here, Medellín has truly become the envy of its peers.

The most recent milestone was the 2018 inauguration of Aguas Claras, a state-of-the-art, 1.6 trillion pesos (almost $500 million) water treatment plant that can process 6.5 cubic meters of water per second, 24 hours a day. Logs of sludge that result from the process go through a dehydration centrifuge and end up as biosolids, distributed to local farmers. The resulting output of biogas — largely methane and carbon dioxide — will eventually provide for a portion of the plant’s energy needs. All told, it and another plant now treat 84% percent of the valley’s wastewater, compared to less than 40% in Latin America and the Caribbean as a whole and an astonishing figure in a country where some cities treat next to none.

Not all is perfect; much of the river’s banks remain sandwiched in by parallel highways, and marred in several spots by trash. But the story of how Medellín got this far spans several decades and a wide variety of disciplines. It is not a story about money per se, but about careful management, effective community relationship-building, and an unusually comfortable mix of private- and public-sector values. Medellín has also earned praise over the years for transforming what was the world’s murder capital in the 1990s era of Pablo Escobar into a much safer city today; the 80% decline in its homicide rate is routinely studied in security policy circles. It turns out it’s something of a celebrity in the global water community as well.

“They are learning to take care of the resource, something they feel very proud about,” said Julián Cardona, water security coordinator for The Nature Conservancy for the northern Andes and southern Central America.

“Medellín is one of the most successful cases in the developing world.”

Medellín’s new treatment plant helps reuse wastewater and produces biogas.

Public, but independent

The central character in any discussion of water here is Empresas Públicas de Medellín (EPM). Established in 1955 with the participation of local business leaders who believed dependable public utilities were crucial to the entrepreneurial city’s workforce, EPM is a venerated public entity with a presence in the city that is difficult to exaggerate. Its loopy EPM logo is ubiquitous, not just on workers’ uniforms but on office buildings, parks, libraries and even a spiffy Museum of Water; part of its profits is pumped back into city coffers; and it has a foundation that oversees extensive educational, cultural and community projects. Its subsidiaries work in other regions of Colombia, and extend into Central America and down to Chile.

According to Santiago Ochoa Posada, vice president of water and sanitation for EPM, the entity’s success is, in part, a result of being partially shielded from four-year mayoral election cycles. Though Medellín’s mayor is chairman of EPM’s board of directors, the company has historically operated with a considerable amount of autonomy. “Unlike what happens in the rest of Colombia and other Latin American countries,” Posada said, “this has permitted the company to make more long-term plans, beyond the single term of a mayor.” (Colombian mayors cannot serve two consecutive terms.)

It is, to be sure, far from perfect. Its project to build Colombia’s largest hydroelectric dam on the Cauca River, a project known as the Ituango Dam or Hidroituango, has fallen years behind and generated public outrage after a series of near-calamities. But EPM is still regarded with great reverence. Business leaders ranked it the most admired company in Colombia in 2015, 2016 and 2017; after Hidroituango it dipped to second in 2018.

“EPM is a very strong institution,” Sergio Fajardo, the city’s mayor from 2004 to 2007 and now a major figure in national politics, told AQ. “It’s an extraordinary example, a company that generates public wealth, wealth for the community, and has excellent relationships with the private sector, even though it’s a public entity.” Headquartered downtown in a hulking building with balconies bursting with greenery and its interior looking more like Google than government, the company is known for its generous benefits and professional development programs.

But as a public company it can focus less on maximizing profit, critical in a region where the experience of privatized water suppliers has been mixed. “For a long time — I’d say since the 1960s — this company has had a mission of bringing services to the whole city,” said Ochoa.

He does mean the whole city. Even more extraordinary than the 84% of wastewater EPM manages to treat is the 97% of homes that are connected to the official water system and the 95% to sewers — both figures are huge outliers in Latin America. The most recent push has been Unidos por el Agua, a multifaceted program to connect homes that, for one reason or another, are not part of the official system. It is slated by the end of 2019 to connect more than 40,000 additional families to official water and sanitation services.

Federico Gutiérrez, mayor of Medellín

The extra uphill mile

Most of those homes are located in the hillsides above downtown Medellín, in neighborhoods like Unión de Cristo, a collection of improvised brick and tin houses draped over steep slopes first settled — or squatted on, if you prefer — by Colombians facing violence in places like the Pacific department of Chocó.

On one sunny afternoon in September, Fabián Matallana and Arnulfo Álvarez, employees of a contractor working as part of the Unidos por el Agua program, were crouching over the foot-deep opening in a narrow footpath in Unión de Cristo. In orange vests and yellow helmets, the men were preparing to connect a line of high-density polyethylene piping that will bring potable, metered city water to the house of a man they know as Don Pedro.

Critically, Unidos por el Agua is not just about water — it has aspects of a community outreach program as well. Matallana, 36, and Álvarez, 25, were among 20 or so workers on the project who were hired from the neighborhood, which is why they kn0w Don Pedro. “Here we’re all united,” said Matallana, who lives a few blocks away with his wife and six-year-old daughter. “Wherever we’re working, someone comes out and says ‘What’s going on, neighbor?’ and then another comes out. They know us everywhere.” That has helped the program avoid the kind of skepticism or outright hostility that sometimes faces utility workers in similar neighborhoods in other Latin American cities.

Unidos por el Agua has also effectively brushed aside a question often asked of such initiatives: Does hooking “irregular” neighborhoods up to utilities encourage more such neighborhoods to appear? City officials have preferred to focus instead on the public health benefits, and a broader message of inclusion. “It’s our way of saying to people, look, you are a part of a society, you are not alone,” Federico Gutiérrez, the current mayor, told AQ. “It’s a comprehensive program, it’s not just water. Water is an excuse for going in, so that the government can come in with comprehensive interventions.” Medellín also famously has a cable car system that links poorer neighborhoods in the hills to Colombia’s only metro.

Source: World Health Organization SDG 3.9.2

The city is also flexible when it comes to regulations designed for more “formal neighborhoods,” recognizing that installing water systems in low-income neighborhoods often brings unique complexities. In some areas, for example, it would be impossible to install pipes as deep as standards require without risk of destabilizing the earth, potentially leading to landslides. Yet that earth was already being destabilized by what the Colombians call “artisanal” water and sewage systems installed by local residents so, the argument went, loosening the rules would actually lead to safer results.

The work goes beyond manual labor. “We generate ownership and empowerment within the community,” said Oscar Betancur, a planning and social development specialist with epm. He calls the work “70% social and 30% technical. They construct it as their own, really their own.”

That helps with establishing a culture of payment for water services — for many, it is the first time paying for water — and reduces the chances of vandalism.

The job also involves a certain amount of conflict mediation. On a recent afternoon, Betancur was walking in La Iguaná, a neighborhood recently connected by Unidos por el Agua, when he was approached by an irritated María del Rosario Aristizabal, who urgently wanted to lodge a complaint about an equipment box for the house next door that workers had installed on her property.

“I may be ignorant because I haven’t studied, but I know my rights,” she said. Betancur calmed her down and took down her information. It was, he said later, an example of just how sensitive residents can be about the property they may not even hold legal title to. Another day, in Unión del Cristo, he pointed out an EPM forestry engineer who had been called in to see if a beloved casco de vaca tree could be saved during construction.

“There are some situations that are only resolved on a day-to-day basis,” he said.

Learning to pay

Similar programs elsewhere have collapsed — or struggled with low resources — because new customers don’t pay their water bills. Several programs make services more manageable for families that previously got free, if unofficial and undependable, water. The city’s Mínimo Vital de Agua Potable, a 10-year-old program that has since spread elsewhere in Colombia, provides qualifying low-income households with the 2.5 cubic meters (about 660 gallons — derived from World Health Organization estimates of minimum water requirements) per person at no charge. As part of the program, social workers train participants to save water by, say, turning off faucets while washing dishes or brushing teeth and reusing water from the final cycle of the washing machine to wash the bathroom.

“They come every year” said Adriana Amalla López, who lives in La Iguaná. “They update our information, ask how we’re doing, and always congratulate us since we use less than we’re allotted, so the bill comes to zero.” About half of the 51,000 participating families avoid payment altogether.

For the others, there’s the prepaid option, where residents pay for water as they go, much the way they would for a prepaid cell phone plan. Even that rate is subsidized: Colombia divides its population into six official socioeconomic strata, with each stratum paying utilities (among other things) on a sliding scale. Strata 5 and 6 subsidize 1, 2 and 3; strata 4 pays market rate.

With pollution dramatically reduced, a riverside park is now under construction.

Meanwhile, Medellín and the region are pushing their citizens to interact with the water supply in ways that go beyond the waterside park. Years ago, as water tanks situated in the surrounding hills were engulfed by urban expansion sprouting up around them, many ended up as forbidding, dark spaces, surrounded by fencing and guarded by security forces. Fourteen in the city (and two outside) have now been transformed into strikingly attractive community centers and parks called UVAs, or Unidades de Vida Articulada.

“One of the UVAs’ objectives was to illuminate the dark corners of Medellín,” said Edison Raigoza, an educator who teaches workshops at UVA La Armonía, in the Santa Inés neighborhood.

La Armonía is a bit different from other UVAs: its water tank is underground, its top exposed, giving it more the look of a pool, complete with a “geyser” spraying water high into the sky. There’s no swimming in the city’s drinking water, but on a recent afternoon, children played in regularly erupting spouts along its edge, as two 18-year-olds, Dayron Rodas and Cristián Durán, members of a local performing arts school, practiced a male duo salsa routine nearby.

This new park in the La Armonía neighborhood sits on top of a giant water tank.

“It’s a really pleasant space,” said Rodas, “because it’s not just a park to play in, but a place that integrates arts and culture.” It attracts so many visitors day and night — there is a regular film series — that businesses have sprung up around it, like Cafeteria UVA and a restaurant called Delicias La Armonía.

That afternoon, teenagers crouched over their phones outside the center’s five classrooms, sucking up the free wi-fi, and a group of grade schoolers were participating in a class on digital storytelling run by a teacher from the University of Antioquia. She had asked students to identify the emotions portrayed by the faces she was flashing on the screen, including smiling children (“Happiness!”) and a scowling Malcolm McDowell from A Clockwork Orange. (“Anger! Revenge!”)

Considering Medellín’s plentiful water resources and the mammoth presence of EPM, it is tempting to conclude that the city might be a difficult example to follow. Mayor Gutiérrez, however, disputes that.

“We started at some point,” he said. “I think that any city, any society can pursue the objectives and the model of city that it wants. And it’s also a message that what is public can also be efficient. People have often said that public entities are inefficient, a policy of the left. But for me, bringing water to a community is not a matter of right or left.”

“It’s like security: it’s a human right.”

The post Inside the dramatic turnaround that made Colombia’s second city a model for water management. appeared first on Americas Quarterly.

]]>
Disrupt Latin America https://americasquarterly.org/disrupt-latin-america/ Thu, 07 May 2015 20:54:22 +0000 https://www.aqdrupalwithimages.dev.cc/2015/05/07/disrupt-latin-america/ Microfinance revolutionized the financial services sector in Latin America over 40 years ago. Millions of individuals who were excluded from traditional financial institutions obtained access to a variety of financial products and services for the first time. Inevitably, there were gaps in coverage. In recent years, various players have been looking beyond microfinance to find ... Read more

The post Disrupt Latin America appeared first on Americas Quarterly.

]]>
Reading Time: 5 minutes

Microfinance revolutionized the financial services sector in Latin America over 40 years ago. Millions of individuals who were excluded from traditional financial institutions obtained access to a variety of financial products and services for the first time. Inevitably, there were gaps in coverage. In recent years, various players have been looking beyond microfinance to find ways to fill those gaps. Their main weapon has been the disruptive force of new technology.

Across the region, evolving government policy on digital finance and the digitization of information, coupled with the falling costs of mobile services, has spurred more competition, thus improving the quality and speed of financial product offerings. However, it is not just banking institutions that are driving this change; many of these new technologies and business models are being designed and piloted by financial technology (fintech) startups.

Meanwhile, regulators have had a hard time keeping up with the pace of innovation in areas such as big data, crypto-currencies and electronic money.

Currently, Brazil and Peru are leaders in allowing non-banking institutions to issue e-money.1 In late 2014, Peru introduced Modelo Perú, an initiative that creates a level playing field for banks, telecoms and third-party providers by establishing a mobile payment ecosystem based on a shared e-money platform.2 To meet this opportunity, Peruvian banks have banded together to provide a unified offering through the Asociación de Bancos del Perú (Peruvian Bank Association—ASBANC) headed by Peru’s former minister of development and social inclusion, Carolina Trivelli.3

In countries where Bitcoin is gaining popularity, however, governments have taken a different approach. Regulators in Argentina, Bolivia, Colombia, and Ecuador have restricted or banned Bitcoin operations.4 Other Latin American countries are more open to learning about harnessing the power of the back end of Bitcoin, or the blockchain (a public ledger of all transactions in the Bitcoin network), to make banking and government more efficient. Both the Bank of Mexico and Colombia’s Central Bank, for example, issued a cautionary warning last year regarding the use of Bitcoin, but stopped short of regulating it, declaring they would maintain a close watch on how the virtual currency network developed.5

On the telecom front, the increased involvement of financial services has created both tension and opportunity for startups. Brazil may have been the initial regional leader in branchless banking, but the trend is now slowly spreading throughout Latin America. According to the World Bank, 98 percent of the region’s population has a mobile cell signal, while 84 percent subscribes to some kind of mobile service, making mobile banking feasible on a large scale.6

Harnessing Change

How can the power of this ubiquitous connectivity be harnessed? It’s a question that many countries outside of Latin America are asking themselves as well.

Kenya may have cracked the code early on. More than 70 percent of its population now uses mobile money—but that success has not translated directly to other African countries. However, Latin America is catching up. The region had the second-largest number of planned deployments of mobile financial services in the world in 2013, after sub-Saharan Africa. The models range from those that are similar to the African model, in which the mobile operator assumes most of the functions in the value chain (e.g. Tigo Money), to more divergent models, in which banks acquire mobile virtual network operators (MVNOs) to offer mobile financial services independently of mobile operators (e.g. Bancolombia’s Ahorro a la Mano).7

The changes in the mobile landscape offer huge opportunities for governments to reduce corruption and establish systems that maximize transparency, control and audit capabilities, while also vastly reducing costs. But they also present serious challenges. Rules and regulations outlining the roles of the various actors are more necessary than ever. In particular, concerns about data privacy underscore the need for new policies that can empower individuals to access and benefit from the use of their own information to secure capital.

Finally, the trend toward digitization of key information has changed financial reporting across the region. Numerous Latin American countries have implemented mandatory e-invoicing, allowing local tax authorities to better track the activity of buyers and sellers. Using an e-invoice system pioneered by Chile a decade ago, countries like Brazil and Mexico are processing transactions in cyberspace.8 This has provided an exciting opportunity for startups to enter the value chain, and for small businesses to gain access to alternative forms of financing—such as real-time receivables lending and e-invoice discounting. The processes allow companies to use receivables as collateral in agreements with financial institutions and to draw money against sales invoices before the customer has actually paid. This type of financing was typically reserved for medium or large enterprises, but due to the digitization of these documents—and the possibility for instant verification via electronic invoicing that this provides—there are much lower costs and fewer barriers for financial institutions to evaluate small and microenterprises.

Lean LATAM Startups

Startups have been a key component in the development of new financial technologies. The combination of an outside perspective, a lean, nimble operating model and a can-do attitude allows them to see opportunities and act on them more quickly than traditional institutions. Many of the innovations emerging in Latin America stem from regional and sectorwide changes in micro-, small- and medium-size enterprise (MSME) lending, remittances and alternative data.

Lending to MSMEs in Latin America has often been difficult and expensive—the costs associated with assessing creditworthiness are high compared to the rate of return. But that is changing with the proliferation of e-invoices and online business data in the region. Companies like Konfío—which has the ability to analyze thousands of data points and verify and disperse credit lines in less than 72 hours—are lending to MSMEs in Mexico at better rates than traditional lenders.

Others, like MR Presta—available in Argentina, Brazil and Mexico—analyze data from the e-commerce site Mercado Libre to assess credit payment capacity. They then integrate those findings with their online stores for easy repayment. Meanwhile, in Brazil, Intoo is creating an online marketplace where existing buyers of small enterprise e-invoices (funds known as FIDCs) can aggregate their demand and build a custom portfolio of investments.

Streamlining Remittances

Remittances have long been a focus of attention in Latin America. The competition among players has not, however, translated into lowered transaction costs for consumers. That is, until now. The remittance space is one of the most exciting areas we see being transformed by technology.

Some of the companies that are making it easier and cheaper to send money to Mexico, the fifth largest remittance destination in the world, are the following.

Xoom, a digital money transfer company, allows users to transfer money online. Xoom charges a flat fee of $5 to $6 per transaction. Most remittances are deposited in cash and withdrawn as cash, but Xoom has managed to persuade the majority of its customers to make their transfers from bank accounts.

Boom (formerly m-Via), a mobile application founded in 2008, allows users to send remittances to Haiti, Mexico and the United States. Members can load cash at one of 15,000 Boom partners and send money via text message
from their Boom account.

Volabit, a mobile e-wallet, allows individuals to transfer money across borders (in pesos or bitcoins), opens access to e-commerce offerings and, importantly, offers affordable online financial services to customers that do not have a formal bank account.

Quippi, an international gift card, enables U.S. residents to send cards to Mexico without fees for senders or recipients.

Finally, with the ever-increasing amount of data that is being collected on individuals in Latin America, companies like Chile-based Destacame are harnessing the power of alternative data, such as records of utility payments and mobile phone usage, to enable financial institutions to lend to underserved clients—those with little or no credit history. This online platform allows individuals to use their payment, credit history and digital footprint to gain better access to financial products, while also helping financial institutions expand their client base and reduce default rates.

This is hardly a complete list of the hundreds of startups we have seen operating in Latin America, but it’s certainly enough to get excited about. Realizing the promise of financial inclusion is not easy, and the adoption and implementation of these new technologies and services that disrupt traditional forms of banking takes time. But judging by the record thus far, it seems likely that Latin America will continue to benefit from its extraordinarily innovative—and expanding—group of fintech entrepreneurs.

Endnotes

The post Disrupt Latin America appeared first on Americas Quarterly.

]]>
Argentina’s Debt: A Conflict of Principles https://americasquarterly.org/argentinas-debt-a-conflict-of-principles/ Tue, 03 Feb 2015 23:16:17 +0000 https://www.aqdrupalwithimages.dev.cc/2015/02/03/argentinas-debt-a-conflict-of-principles/ The reverberations of Argentina’s loss in NML Capital Ltd. vs. Republic of Argentina continue. The conflict stems from a 2012 decision by United States District Court for the Southern District of New York (SDNY) Judge Thomas Griesa in a case brought by the hedge fund NML Capital Ltd. and others (NML), over $1.3 billion of ... Read more

The post Argentina’s Debt: A Conflict of Principles appeared first on Americas Quarterly.

]]>
Reading Time: 2 minutes

The reverberations of Argentina’s loss in NML Capital Ltd. vs. Republic of Argentina continue.

The conflict stems from a 2012 decision by United States District Court for the Southern District of New York (SDNY) Judge Thomas Griesa in a case brought by the hedge fund NML Capital Ltd. and others (NML), over $1.3 billion of bonds they hold, issued by Argentina under a 1994 Fiscal Agency Agreement and governed under New York law, that Argentina defaulted on in 2001. Argentina conducted exchange offers in 2005 and 2010 that canceled approximately 93 percent of bonds governed by various foreign laws as well as Argentine-law governed U.S. dollar bonds. Subsequently, Argentina settled with some of its official sector creditors as well.

NML, which did not participate in these exchanges and still holds defaulted Argentine bonds, came up with a novel legal theory to try to collect from Argentina. Instead of just asking the judge to grant a money judgment (something NML already had done for other bonds it owns), it asked the judge to give it equal treatment on the grounds that when Argentina made payments to bondholders who had accepted the exchange, it was violating the pari passu clause (in other words, that all creditors get equal footing) of the 1994 Fiscal Agency Agreement. Judge Griesa agreed, and on February 23, 2012, Judge Griesa issued his equal treatment order, whereby Argentina, whenever it wanted to make a payment on the new bonds that the Argentina government had issued in the 2005 and 2010 exchange offers, would also have to make a “ratable payment” to NML and co-plaintiffs.

The “ratable” piece requires Argentina, when making full payment to the exchange bondholders of any amounts owed, to make full payment to NML, which in this case means 100 percent of NML’s claim.

What makes the equal treatment order so powerful is that not only does it prohibit Argentina from making the payments, but the order also prohibits any entity acting in concert with Argentina from aiding Argentina in making payments.

Judge Griesa’s order specifically mentioned Bank of New York Mellon (BNYM) as a trustee and paying agent under the new bonds, as well as The Depository Trust Company (DTC), and Euroclear and Clearstream, Luxembourg. The bonds that Judge Griesa made subject to the equal payment order were all issued under the exchange offers conducted in 2005 and 2010. Those exchange offers included three types of bonds plus new bonds tied to Argentina’s economic growth (GDP warrants)…

The post Argentina’s Debt: A Conflict of Principles appeared first on Americas Quarterly.

]]>
Mexico’s Foreign Policy Agenda in Central America https://americasquarterly.org/mexicos-foreign-policy-agenda-in-central-america/ Tue, 03 Feb 2015 23:08:45 +0000 https://www.aqdrupalwithimages.dev.cc/2015/02/03/mexicos-foreign-policy-agenda-in-central-america/ In the past decade, Mexico has made strengthening ties with Latin America a top priority, reorienting its gaze from north to south. This is the product of two factors: criticism that Mexico was ignoring its southern neighbors, and strategic concern over Brazil’s assertion of leadership in the region. Starting in the 1990s with the implementation ... Read more

The post Mexico’s Foreign Policy Agenda in Central America appeared first on Americas Quarterly.

]]>
Reading Time: < 1 minute

In the past decade, Mexico has made strengthening ties with Latin America a top priority, reorienting its gaze from north to south. This is the product of two factors: criticism that Mexico was ignoring its southern neighbors, and strategic concern over Brazil’s assertion of leadership in the region.

Starting in the 1990s with the implementation of the North American Free Trade Agreement (NAFTA), Mexico focused its economic and diplomatic energy north, neglecting Latin America. This began to change in the late 1990s, in part due to pressure from Mexico’s southern neighbors.

Equally motivating, however, was the desire to counter Brazil’s ambition of becoming the regional heavyweight. As Brazil created new institutions that exclude Mexico, such as the Unión de Naciones Suramericanas (Union of South American Nations—UNASUR), and sought a permanent seat on an expanded UN Security Council, Mexico attempted to extend its own profile and leadership in the region. Key to this effort was reinforcing its relationship with Central America.

Each successive president since Vicente Fox (2000–2006) has promised to engage more with Central America. The realignment has intensified under President Enrique Peña Nieto, who has made strengthening the relationship with Latin America a priority on his administration’s foreign policy agenda…

The post Mexico’s Foreign Policy Agenda in Central America appeared first on Americas Quarterly.

]]>
Venezuela’s Post-Chávez Foreign Policy https://americasquarterly.org/venezuelas-post-chavez-foreign-policy/ Tue, 03 Feb 2015 23:03:40 +0000 https://www.aqdrupalwithimages.dev.cc/2015/02/03/venezuelas-post-chavez-foreign-policy/ President Nicolás Maduro inherited a dramatically changed country—and economic situation—when he came to power following Chávez’ death from cancer in 2013. Within a year of Maduro’s election in March 2013, oil prices had started a steady decline. And as investment in the industry also dropped, production fell to 2.62 million barrels per day (bpd) from ... Read more

The post Venezuela’s Post-Chávez Foreign Policy appeared first on Americas Quarterly.

]]>
Reading Time: < 1 minute

President Nicolás Maduro inherited a dramatically changed country—and economic situation—when he came to power following Chávez’ death from cancer in 2013. Within a year of Maduro’s election in March 2013, oil prices had started a steady decline. And as investment in the industry also dropped, production fell to 2.62 million barrels per day (bpd) from 3.48 million bpd when Chávez was sworn in to office.1 To complicate matters, the rapidly deteriorating economy, combined with Maduro’s lack of charisma and narrow margin of victory in the election—1.49 percent—were further domestic constraints on Chávez’ handpicked successor.

While Maduro has continued to espouse the same aggressive, revolutionary rhetoric, the deterioration of both his domestic standing and of Venezuela’s international economic and diplomatic leverage raises the question of whether the former bus driver-turned-president will pursue a more isolationist, even pragmatic, foreign policy. And perhaps just as critically, it has raised doubts about whether the internationalization of the Bolivarian Revolution started by Chávez will continue.

There is a long history of foreign policy activism in Venezuela. The president’s domestic political power and his corresponding ability to assert executive autonomy in pursuing his definition of the national interest abroad are two of the determining factors for assertive foreign policy. A third is the scope for action provided by objective international conditions. When these conditions are not in place, Venezuela lowers its foreign policy profile.

Three distinct phases illustrate this: the Betancourt Doctrine under President Rómulo Betancourt (1959–1964); The Great Venezuela under President Carlos Andrés Pérez’ first term (1974–1979), and the Bolivarian Revolution under President Hugo Chávez (1999–2013)…

View Endnotes

The post Venezuela’s Post-Chávez Foreign Policy appeared first on Americas Quarterly.

]]>
Cuba and the Summits of the Americas https://americasquarterly.org/cuba-and-the-summits-of-the-americas/ Wed, 05 Nov 2014 10:34:55 +0000 https://www.aqdrupalwithimages.dev.cc/2014/11/05/cuba-and-the-summits-of-the-americas/ In the coming months, the United States is going to face a tough choice: either alter its policy toward Cuba or face the virtual collapse of its diplomacy in Latin America. The upcoming Summit of the Americas, the seventh meeting of democratically elected heads of state throughout the Americas, due to convene in April 2015 ... Read more

The post Cuba and the Summits of the Americas appeared first on Americas Quarterly.

]]>
Reading Time: 2 minutes
In the coming months, the United States is going to face a tough choice: either alter its policy toward Cuba or face the virtual collapse of its diplomacy in Latin America. The upcoming Summit of the Americas, the seventh meeting of democratically elected heads of state throughout the Americas, due to convene in April 2015 in Panama, will force the Barack Obama administration to choose between its instincts to reset Cuba policy to coincide more closely with hemispheric opinion and its fears of a domestic political backlash.

During her visit to Washington on September 2, Panama’s Vice President Isabel Saint Malo indicated her intention to invite Cuba to the Summit—reaffirmed in her meeting with Cuban President Raúl Castro in Havana on September 18—but public U.S. statements have failed to commit President Obama’s attendance.

The periodic inter-American summits have become more important than ever for U.S. regional diplomacy, but our Latin American neighbors have said—firmly and unanimously—that unless Cuba is invited, their chairs will be empty. At a meeting in New York on September 22 cosponsored by Americas Society/Council of the Americas, Colombian President Juan Manuel Santos said bluntly, “if Cuba doesn’t go, then probably no Summit.” At the same time, the specter of photos of Presidents Barack Obama and Raúl Castro conversing around the same table, apparently as equals, will set off a political reaction among Cuban-American hardliners, Democrats and Republicans alike—a thought that gives the White House politicos heartburn.

Government bureaucracies are particularly ill-equipped to sort out such tough trade-offs regarding Cuba, and officials are reluctant to sacrifice one goal for the other—for each goal commands ardent defenders of roughly equal rank.

So it falls to senior leaders in the White House to make the decision. But when it comes to Cuba, leadership has so far been in short supply in this administration. Rather, it’s been the chair of the Senate Foreign Relations Committee—the unyielding senior senator from New Jersey, Robert Menendez—who has presided over policy toward his family’s native island.

To escape the impending train wreck, the U.S. can stick to its old policy, or it can use the opportunity to reframe both its Cuban and its hemispheric policies.

The post Cuba and the Summits of the Americas appeared first on Americas Quarterly.

]]>
A Skeptic’s View on the “Peace Dividend” https://americasquarterly.org/a-skeptics-view-on-the-peace-dividend/ Wed, 05 Nov 2014 10:34:55 +0000 https://www.aqdrupalwithimages.dev.cc/2014/11/05/a-skeptics-view-on-the-peace-dividend/ On July 20, 2010, President Juan Manuel Santos promised the 9 million voters who had just elected him to his first term that he would build on the foundation created “by a giant, our President Álvaro Uribe.”1 He declared that Colombia could now look to the future with hope, thanks to the multiple successes that ... Read more

The post A Skeptic’s View on the “Peace Dividend” appeared first on Americas Quarterly.

]]>
Reading Time: < 1 minute

On July 20, 2010, President Juan Manuel Santos promised the 9 million voters who had just elected him to his first term that he would build on the foundation created “by a giant, our President Álvaro Uribe.”1 He declared that Colombia could now look to the future with hope, thanks to the multiple successes that Uribe had achieved during his eight years in power.

In his televised speech to the nation that night, the president-elect also told Colombians that he would continue his predecessor’s “democratic security strategy” until the terrorist groups operating in the country accepted three specific conditions, the so-called tres inamovibles (three immovables). He listed them: (1) renounce kidnapping and terrorist acts against civilians; (2) stop child recruitment; and (3) renounce narcotrafficking.2

Since 2010, the story has encountered some unexpected twists. To start with, the relationship between Uribe and Santos is now completely broken, and there is no reason to expect the two men will patch up their differences. Second, Santos is pursuing negotiations with the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia—FARC)—and will probably soon enter into a conversation with the Ejércto de Liberación Nacional (National Liberation Army—ElN)—before the tres inamovibles have been met.

In its defense, the Santos administration claims that the circumstances were “right” to initiate the conversations and that it is in the best interest of the country to end the bloody conflict quickly. The government also argues that the economic benefits of peace will be enormous. Finance Minister Mauricio Cárdenas subsequently predicted to local financial reporters that a final agreement with the FARC will boost Colombia’s annual growth rate from current levels of 4.7 to 4.8 percent to 6 percent.3

I disagree. Here are four reasons why the government’s prediction of a peace dividend is exaggerated…

View Endnotes

The post A Skeptic’s View on the “Peace Dividend” appeared first on Americas Quarterly.

]]>
Post-Conflict Campesinos: Recovering Rural Colombia https://americasquarterly.org/post-conflict-campesinos-recovering-rural-colombia/ Wed, 05 Nov 2014 10:34:55 +0000 https://www.aqdrupalwithimages.dev.cc/2014/11/05/post-conflict-campesinos-recovering-rural-colombia/ Armed conflict and the presence of non-state armed actors harm both agricultural production and rural households’ well-being, for at least two broad reasons. First, conflict disrupts economic activities by hampering access to critical inputs and markets. As a result, producers may reduce or curtail planting or harvesting. Second, rural producers face an unpredictable environment for ... Read more

The post Post-Conflict Campesinos: Recovering Rural Colombia appeared first on Americas Quarterly.

]]>
Reading Time: < 1 minute
Armed conflict and the presence of non-state armed actors harm both agricultural production and rural households’ well-being, for at least two broad reasons. First, conflict disrupts economic activities by hampering access to critical inputs and markets. As a result, producers may reduce or curtail planting or harvesting. Second, rural producers face an unpredictable environment for making economic decisions. Armed actors may “tax” producers, coerce them into growing particular crops (licit and illicit) or require them to follow their rules regarding production and land use. In these cases, farmers grow what will produce the least risk to their quality of life and safety.

Research has demonstrated a relationship between land use and the length of time a region has been under armed occupation. Farmers modify land use the longer an area has been in a conflict zone, often resulting in less productive yields. For example, evidence gathered from four rural micro-regions indicates that in regions with at least one year of non-state armed actors’ presence, households use a higher share of their land for pastureland, idle land and perennial crops (such as coffee, sugar cane and fruits). Both pastures and perennials, which regenerate every year, are more suitable for regions under conflict, since they require less attention from farmers.

When a conflict has lasted between one and three years, farmers return to a more balanced approach between perennial crops and seasonals (such as vegetables, cereals and legumes). This equilibrium falls apart, however, if the conflict environment lasts seven years or longer. At that point, farmers allocate more acreage to pasture and idle land, to the detriment of perennial crops, while overall land use decreases. In effect, investment declines and greater emphasis is placed on less lucrative crops…

The post Post-Conflict Campesinos: Recovering Rural Colombia appeared first on Americas Quarterly.

]]>
Double Trouble: Currency Unification in Cuba https://americasquarterly.org/double-trouble-currency-unification-in-cuba/ Wed, 05 Nov 2014 10:34:55 +0000 https://www.aqdrupalwithimages.dev.cc/2014/11/05/double-trouble-currency-unification-in-cuba/ After nearly 20 years, the dual currency system enacted by Cuba to help mitigate the economic shock from the collapse of the Soviet Union is set to be retired. As part of the government’s efforts to develop the country’s socialist economy, the Cuban government recently announced that it would unify its complicated currency system. In ... Read more

The post Double Trouble: Currency Unification in Cuba appeared first on Americas Quarterly.

]]>
Reading Time: 2 minutes
After nearly 20 years, the dual currency system enacted by Cuba to help mitigate the economic shock from the collapse of the Soviet Union is set to be retired. As part of the government’s efforts to develop the country’s socialist economy, the Cuban government recently announced that it would unify its complicated currency system.

In practice, the dual currency system has meant the simultaneous circulation of two domestic currencies: Cuban Pesos (CUP) and Convertible Cuban Pesos (CUC), which is pegged to the U.S. dollar. Today, the system includes multiple exchange rates: one for households that allows individuals to exchange 24 CUP for one CUC in Casas de Cambio SA (Currency Exchange House—CADECA) and the official exchange rate for companies and the public sector of one CUP for one CUC. This system operates under an institutional framework that differentiates markets and prices depending on the currency of transaction and whether the exchanges are made by citizens or enterprises.

Initially, this arrangement was successful in reinserting Cuba into the global economy while maintaining a modicum of economic equilibrium and growth domestically. Launched during the deep economic crisis of the 1990s, also known as the Special Period, the dual system stimulated production in the then-emerging sectors of tourism and foreign direct investment. It also helped to reduce the large fiscal deficit, and used international prices as a reference to set national prices and develop internal markets.

Despite its successes, the prolonged use of this system has adversely affected Cuba’s efficiency. Among the most significant consequences has been the damage exacted on the export sector by the higher prices of Cuban goods on the international market. It has also distorted prices, corporate balance sheets and public finances.

To fully unify its currency, Cuba must take into account at least three steps: devalue the official exchange rate, adjust the price system, and begin circulating one currency domestically. These three measures raise challenging questions. What will be the effect on competitiveness internationally and domestically? Which enterprises will be potential winners or losers? How can the government deal with the threat of inflation that typically accompanies this process? What risks and advantages does currency unification bring to the foreign investments that are currently a top priority for Cuba?

The post Double Trouble: Currency Unification in Cuba appeared first on Americas Quarterly.

]]>
Protest U. https://americasquarterly.org/protest-u/ Mon, 28 Jul 2014 12:00:00 +0000 https://www.aqdrupalwithimages.dev.cc/2014/07/28/protest-u/ Millions of students have taken to the streets across Latin America in recent years in protests that reflect an unprecedentedly broad mobilization of popular opinion. Following massive demonstrations led by secondary school students in 2006 in Chile, university students launched a series of protests in May 2011. Powered by a coalition of public and private ... Read more

The post Protest U. appeared first on Americas Quarterly.

]]>
Reading Time: 2 minutes

Millions of students have taken to the streets across Latin America in recent years in protests that reflect an unprecedentedly broad mobilization of popular opinion.

Following massive demonstrations led by secondary school students in 2006 in Chile, university students launched a series of protests in May 2011. Powered by a coalition of public and private university students, the protests succeeded in shutting down most of the university system as well as major technical higher education institutions. Since their initiation, popular support for the students’ demands—more affordable and equitable education, and better government regulation of fraudulent practices in the education industry—has run as high as 80 percent.1

In the same year, student protests in Colombia’s most prestigious public and private universities eventually expanded to include universities and technical schools across the country, and, as in Chile, earned the support of millions of sympathizers. Students demanded that the government withdraw a proposed educational reform that would privatize student services in public universities and create private for-profit universities.

In Puerto Rico, students began to mobilize at a handful of campuses at the Universidad de Puerto Rico, the commonwealth’s sole public university, in 2010. By 2011, the movement, which sought to stop massive budget cuts and the elimination of an important student fee waiver, encompassed the entire public university system, successfully shutting down all 11 campuses.

Although student protests in Puerto Rico were supported by key groups in civil society—including the unions—unlike in Colombia and Chile, students lacked the support of university authorities. As a result, the movement was met with a harsh response from the government. While the Chilean protests faced a sporadic and somewhat inconsistent police response (ranging from tolerance to repression), in Puerto Rico the government applied anti-terrorist laws, setting in motion systematic police repression. Police occupation of campuses and surrounding neighborhoods led to violent clashes between students and riot police.

The post Protest U. appeared first on Americas Quarterly.

]]>