Top stories this week are likely to include: Mexico’s presidential candidates debate; Dilma and the forestry law; Humala and Santos travel to Asia; and Venezuela proposes an alternative to the IACHR.
Challengers Hammer Peña Nieto in Presidential Debate: The leading presidential candidates in Mexico held their first debate last night, and frontrunner Enrique Peña Nieto of the Partido Revolucionario Institucional (PRI) was the biggest target of attacks from candidates Josefina Vázquez Mota (Partido Acción Nacional) and Andrés Manuel López Obrador (Partido de la Revolución Democrática). Peña Nieto’s challengers painted him as a corrupt politician who oversaw a poor economy in Mexico state. During the debate, Peña Nieto noted that Vázquez Mota and López Obrador “seem to have come to an agreement… they’re coming with knives sharpened.” However, political analyst Jorge Zepeda opined that “Peña Nieto survived…I don’t think the debate will have a big impact.” Adds AQ Senior Editor Jason Marczak: “Without a clear winner in last night's debate, look for the campaign to turn increasingly hostile as candidates seek to make up ground against Peña Nieto.” Now that the candidates have squared off in their first debate—the next one will be held in June—look for how the Mexican electorate responds on the campaign trail.
Dilma May Partially Veto the Forestry Law: In a political setback to Brazilian President Dilma Rousseff, Brazil’s legislature approved a controversial forest code on April 26 at the urging of the powerful farmers’ lobby. The code gives way for further deforestation of the Amazon and provides an amnesty from being fined for illegally clearing trees. Rousseff is now being pressured by environmentalists to veto the law, especially ahead of next month’s Rio+20 global summit on sustainable development. Advisors in Brasilia are now indicating that the president may issue a partial veto to two particularly controversial clauses: one on amnesty from prior deforestation and another on reducing vegetation on the margins of the rivers. Look for news this week.
Humala to Asia: Peruvian President Ollanta Humala will make his first official trip to Asia this week, aiming to sell his country as a trans-Pacific destination for trade and investment. Humala arrives in Japan tomorrow for trade talks with Prime Minister Yoshihiko Noda and Emperor Akihito, then continues to South Korea where he will sign a declaration of strategic association with Prime Minister Lee Myung-Bak. “Coming on the heels of nationalizations in Argentina and Bolivia, Humala will likely use the trip to exhibit the stability for investments in Peru,” notes AQ’s Jason Marczak.
Santos in Singapore and China: Colombian President Juan Manuel Santos landed in Singapore yesterday for a six-day trip to Asia that will also include a state visit to China. Santos is accompanied in Singapore by a business delegation and his ministers of commerce, mining, transport and agriculture, and foreign affairs. He lands in China tomorrow to build “a much closer framework of cooperation between the two countries,” according to Xinhua and will depart on Saturday.
Venezuela Proposes IACHR Alternative: After suggesting last week that his country should withdraw from the Inter-American Commission on Human Rights (IACHR), Venezuelan President Hugo Chávez and his administration have proposed an alternative human rights body for Latin American states that would exclude the United States. Chávez has accused the IACHR, under the aegis of the Washington-based Organization of American States, of being a tool of the U.S. government. However, the informal proposal of an alternate commission issued over the weekend in Cartagena, Colombia, by Venezuelan Foreign Minister Nicolas Maduro should bring cause for concern that Venezuela is flouting its international commitments. The move has been criticized by Venezuelan human rights groups and the United Nations. Look for formalized proposals going forward.
It is no secret that China is now a major economic presence in Latin America. For countries such as Brazil, Argentina, Chile, Ecuador, and Venezuela this has meant money to help keep their economies going, to build power plants, to provide loans to business, to increase the consumption and trade of agricultural goods, and to create new opportunities for both foreign and domestic investment. China also has overtaken the U.S. to become Brazil’s largest trading partner.
But China is not the only Eastern nation playing in Latin America’s sandbox. Japan has also amassed a great deal of assets, investment gains and trade opportunities—most notably in Brazil. Japanese foreign direct investment in Brazil totals just over $4 billion—well behind that of China ($17 billion) and the U.S. ($8.2 billion) but not insignificant. Brazil has just what Japan needs: commodities, natural resources and high-yielding interest rates on investment.
Chilean President Sebastián Piñera leaves today on a seven day trip to Japan to attend the Asia-Pacific Economic Cooperation (APEC) meetings being held on November 13 and 14 in Yokohama. He will then travel to Beijing on his first official state visit to China. The President will stay through the 40th anniversary of Chinese-Chilean bi-lateral relations on November 17.
This year’s APEC meetings will continue to work on establishing a regional free-trade zone, envisioned to encompass all of Asia despite on going disputes regarding foreign exchange and monetary policies. President Piñera’s participation will be focused around Chile’s participation in the Trans-Pacific Partnership (TPP) protocol, currently including Brunei, New Zealand, Australia, Singapore, the United States, and Chile, which reduces tariffs for trade between APEC countries and the other non-Asian participants. Malaysia has recently joined TPP, and much speculation is on Japan and South Korea to follow suit.
Piñera’s itinerary will include meetings with local officials in Tokyo on Monday before departing to China where he is scheduled to meet Chinese President Hu Jintao, Prime Minister Wen Jiabao and Chairman of the National Assembly Wu Bangguo. The President returns to Santiago, Chile, on November 18.
As soon as I arrived in Paraguay last week, I could see that the country was in the grips of football fever. It was impossible to forget, even for a minute, that the World Cup was on and that Paraguay’s team was doing extremely well. Every public space was draped with a Paraguayan flag. Every bar had its television on, blaring sports commentary. Taxi drivers and night watchmen carried around transistor radios so as not to miss the latest developments.
The 2010 World Cup will not soon be forgotten. Even with the Quarterfinal loss to Spain last weekend, Paraguayans proudly welcomed home their team yesterday. After all, this team advanced further than any previous Paraguayan squad. This is a big deal for Paraguay, which otherwise suffers from an identity crisis.
“Nobody knows what our country is,” said Bechy, a young woman waiting for a flight out of Asunción’s airport. “People always confuse us with Uruguay.” It doesn’t help, she added, that Paraguay is sandwiched between regional superpowers Brazil and Argentina.
Prior to the economic crisis that began exactly one year ago with the Lehman Brothers collapse, Latin America was on an economic tear. For over five years the region had enjoyed historic economic growth, reducing poverty and building the small but growing middle class. Growth was based primarily on the commodities trade; Asian nations, particularly China, were sucking up virtually everything Latin America could grow, mine or drill. Many Latins are now looking at the prospects for renewed mid-term growth in Asia as the key to restoring their own economic fortunes. On the surface, that makes sense. But if the idea is simply to return to the previous model exporting primary commodities, with a healthy dose of politics thrown in, the result may not be as lucrative for Latin America as the immediate past proved to be.
Primary commodities face competition no matter where they come from; there is generally little product differentiation absent efforts to add value through processing and refinement, technology, manufacturing, branding, or other knowledge-based inputs. This is particularly true in energy, and a major new project off the west coast of Australia could, in extremis, challenge Latin America’s development model.
The Gorgon Project, according to the Financial Times, among the world’s most ambitious and costly natural gas projects, is set to be given the official go-ahead this week. Once fully on-line, the project will catapult Australia to the top ranks of global producers, changing the pan-Pacific energy profile, particularly with reference to liquefied natural gas, or LNG. The project will help China and Japan reduce their dependence on coal while amplifying Australia’s role in supplying the Asian nations—China, Japan, India, and South Korea—that Latin America has targeted for commodities exports. In contrast, Latin Americans continue to tie themselves in knots over basic questions of ownership, production and basic supply arrangements in the natural gas sector, even to the point of foregoing uncertain gas supplies from immediate neighbors such as Bolivia and Argentina to import LNG from Asia.