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Analysis Beyond the Echo Chamber

The Americas Blog seeks to present a more accurate perspective on economic and political developments in the Western Hemisphere than is often presented in the United States. It will provide information that is often ignored, buried, and sometimes misreported in the major U.S. media. For more information, sign up for our Latin America News Roundup or visit the archives.

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Ending a very close race, incumbent Juan Manuel Santos won a decisive five-point victory Sunday in Colombia’s second round of presidential elections, beating challenger Óscar Iván Zuluaga, who had won the first round in an upset. The campaign centered on one issue: the future of the Santos-led peace process under way in Havana between the Colombian government and the rebel group FARC that may have the potential to end a half century of civil war.

Zuluaga, who had been hand-chosen by Santos’ predecessor, Alvaro Uribe, and ran in opposition to the peace talks (though he had softened his position after the first round), quickly conceded defeat this Sunday. Uribe, however, wasted no time in claiming that the elections had been marred by “massive fraud,” a charge quickly rejected by international electoral observers. 

Santos’ victory has certainly dealt a major blow to ‘Uribismo,’ as the rightwing movement around Uribe is known. Colombians largely seem to support the peace process as well as efforts to improve relations with neighboring countries Venezuela and Ecuador, and it looks as though few were convinced by Uribe’s wild charges during the campaign that the peace process would open the path to “Castrochavismo,” allowing the “FARC to run this country from Havana.” Uribe has long loomed over Colombian politics, but Zuluaga’s defeat signals that his influence may be waning, even on the political right. Meanwhile, Santos’ support of the peace talks won him the backing of some of Colombia’s most prominent business people, in addition to endorsements from indigenous groups and left-wing coalitions.  

Uribe might have thought twice about investing so much political capital in opposing the negotiations. While it is true that the peace talks had the support of Venezuela and Cuba, they also had the support of virtually every other country in the region, as well as the United Nations, in addition to broad domestic support. More to the point, the peace talks have the support of the United States. Just a month ago, on May 18th, U.S. Secretary of State John Kerry reaffirmed U.S. support for the peace process, which, given that they were the main election issue, arguably amounted to an endorsement of Santos.

The Rio de Janeiro city government inaugurated the most expensive public works project officially connected to the World Cup last week.  Although construction of some of the stations is expected to continue throughout the next few months, a new Bus Rapid Transit (BRT) corridor called the Transcarioca now connects Galeão International Airport to the wealthy beachside neighborhood of Barra da Tijuca, 39 kilometers away, without going anywhere near the city’s downtown, Maracanã soccer stadium or the tourist hotel neighborhoods on the city’s south side. The final cost of the project is estimated at R$2.2 billion (approximately US$970 million). Photos and videos of shoddy workmanship have cropped up on the Internet, and according to O Dia, a local newspaper, the inaugural voyage had only one paying passenger.

Despite spending around R$4 billion preparing for the World Cup, Rio de Janeiro, with a metropolitan area of over 12 million people, remains one of the world’s largest cities with no direct public transportation link between its international airport and downtown. Officially billed as a means by which World Cup tourists will move around the city during the games, the only apparent use of the Transcarioca will be to connect tourists to nearby metro or train lines which could have just as easily been connected to the airport if it weren’t for what author and geographer Chris Gaffney calls the “mafiaesque” influence that the city’s 49 private bus companies have on the city’s transportation policy.

The Brazilian government estimates that it has allocated R$25.8 billion on the World Cup, divided roughly in thirds between stadium construction and reformation; airport and infrastructure improvement; and public transportation projects. Although there is a large public outcry from across the political spectrum over the amount of money spent, especially on stadiums, some of the comparisons made with things like health and education have been blown out of proportion.  Even Folha de São Paulo newspaper, a traditional enemy of the ruling PT party, admitted recently that: 1) the total amount spent on the World Cup over the course of seven years is equivalent to around one month’s spending on public education; 2) most of this money was lent by the BNDES (the Brazilian National Economic and Social Development Bank); and 3) a large proportion of the money lent went to the private sector, as in the case of stadium construction and reformation in cities like São Paulo and Curitiba, and will be paid back with interest.

On Sunday U.S. Secretary of State John Kerry published an op-ed in the Miami Herald, in which he gave the official Washington view on democracy and economic progress in Latin America.

“Not so long ago, naysayers doubted that the growth of democracy in Mexico and elsewhere across the Americas would translate into better lives for the people who live there,” he writes.

And then the bait and switch: “The last decade has been a story of democracy and economic achievement in Latin America and the Caribbean. The region’s economies grew at a rate of 4 percent a year, trade with the United States nearly tripled, and more than 73 million people were lifted out of poverty.”

Now the part about the regional growth rate is true. But Mexico didn’t share in the recovery:

Figure 1. Mexico and Latin America: Average Annual Real Per-Capita GDP Growth, 1960-2013
Mexico v LA blogpostimage

The above figure used GDP growth per person, which is a better measure than the overall growth rate that Kerry uses (since population growth doesn’t increase living standards). Note that Latin America and the Caribbean did in fact experience a growth rebound in the past decade. Average annual growth was just 0.4 percent annually from 1980-2000 – a long-term growth failure that is uncommon in the history of capitalism.

The region grew at a vastly better 2.0 percent annual rate from 2000-2013, despite the Great Recession. But not Mexico, which averaged only 0.6 percent annually, slightly worse than during the lost decades. The poverty rate in Mexico in 2012 (52.3 percent) was as bad is it was in 1994 (52.4 percent). So much for “democracy and economic achievement” in Mexico. The U.S. government of course is reluctant to acknowledge this because Mexico has been run by friendly right-wing governments for decades, and NAFTA has been the model for subsequent commercial agreements.

Last week, Secretary of State John Kerry received a letter regarding “egregious violations of human rights” in Honduras signed by 108 members of Congress. The letter represents the latest in an ongoing effort by social movements and citizens’ organizations in Honduras, diaspora community groups, U.S. solidarity activists and many others to reverse the trend of political repression and human rights abuses since the 2009 coup ousting President Manuel Zelaya.

Rep. Jan Schakowsky (D- IL), who circulated the letter, and early signers Rep. “Hank” Johnson (D- GA) and Rep. Sam Farr (D – CA) have all been engaged on this issue for years. The signers are concerned with human rights violations that have been documented under the National Party governments of President Porfirio Lobo and the current president, Juan Orlando Hernández. In terms of U.S. foreign policy, the most important change they are calling for is an end to U.S. government support and training for groups and individuals responsible for these human rights abuses.

The situation in Honduras is alarming. That country has the highest homicide rate in the world, with an average of 19 murders each day in 2013. Since targeted and politically-motivated killings have become an almost regular occurrence, people struggling for justice put their lives at risk. Based on the government’s record keeping, at least 33 journalists were killed during the previous president Porfirio Lobo’s term (2010-2014). As the congressional letter says, other targeted groups include “members of the LGBT community and indigenous and campesino activists.” Many lands rights activists have been killed, and the letter to Secretary Kerry explains how the Honduran government has allowed the homicides to take place with impunity:

Locked out of international capital markets since its 2001 default, Argentina cleared a major hurdle on Thursday when it reached an agreement with the Paris Club, a grouping of 19 major economies, to resume debt payments and clear outstanding arrears. The Paris Club issued a statement, noting that:

The scheme offers a framework for a sustainable and definitive solution to the question of arrears due by the Argentine Republic to Paris Club creditors, covering a total stock of arrears of USD 9.7 billion, as of 30 April 2014. It provides a flexible structure for clearance of arrears within five years including a minimum of USD 1150 million to be paid by May 2015, the following payment being due in May 2016.

Economy Minister Axel Kicillof, who led the negotiations for the Government of Argentina, told a local radio station that, “Argentina is continuing its path of regularizing and paying off the debt that 40 years of neoliberalism left us,” Reuters reported.

Long thought to be a lynchpin of any possible deal, Argentina secured the settlement without the involvement of the IMF. President Fernández told the press, “It is the first time that a country negotiates without the intervention of the International Monetary Fund (FMI), and without ceding our independence.”

Argentina’s 2001 default followed years of following IMF prescriptions, which only exacerbated the crisis. Argentina broke off relations with the IMF in early 2006, paying back all of its outstanding debt to the Fund in one move. In a statement following the current deal, Eric LeCompte, Executive Director of Jubilee USA, praised the lack of IMF involvement:

“Argentina negotiated an agreement that keeps the IMF out of Argentina... IMF austerity programs have wreaked havoc in both poor and wealthy countries.”

Business News Americas reported that the creditors agreed to exclude the IMF “in return for a larger down payment by Argentina.”

Ahead of a House vote to pass sanctions against Venezuelan officials today, 14 members of Congress sent a letter [PDF] to Secretary Kerry yesterday urging against sanctions, warning that they could undermine the dialogue process between the Venezuelan government and the opposition. Instead, the members - who include John Conyers (D-MI) and Hank Johnson (D-GA) - suggested that the U.S. should exchange ambassadors with Venezuela. The sanctions bill passed the House this afternoon with the support of a number of Venezuelan ex-pats in the U.S. who are mostly “from the middle class and upper middle class,” and is championed by anti-Cuba hawks in the House such as Ileana Ros-Lehtinen (R-FL), and Marco Rubio (R-FL) and Robert Menendez (D-NJ) in the Senate.

The letter also notes - unlike statements by sanctions proponents such as Ros-Lehtinen - that opposition protesters are responsible for some of the killings and other human rights abuses over the past few months, and that the Venezuelan government has taken steps to hold perpetrators accountable, with at least 19 arrests of "state agents." The letter states:

at least 42 people have died, including opposition activists, government supporters, bystanders and security agents.   Government security forces have been implicated in killings and accused of human rights abuses, and at least 19 state agents have been jailed in relation to these alleged abuses.  A number of fatalities and injuries have reportedly been caused by protesters themselves.  Security forces and civilians have been shot and killed while trying to remove barricades erected by protesters and motorcyclists have been beheaded by wire stretched across the road by protesters.

It also notes that the U.S. would be isolated regionally in sanctioning Venezuelan officials, as

While the United States government does not have to agree with its neighbors in the Western Hemisphere, it should take their opinions into account, as it takes European or African governments’ opinions into account in those regions.  The Union of South American Nations (UNASUR), the Caribbean Community (CARICOM), and the Organization of American States (by a 29-3 vote) have all issued statements that are in various ways supportive of the Venezuelan government and that call for the respect of the country’s democratic institutions.  A number of presidents and governments, including Michelle Bachelet of Chile, have publicly warned against attempts to forcibly remove the democratically elected government of Venezuela. As State Department spokesperson Jen Psaki noted on Wednesday, there are “no indications that other Latin American countries at this time would support sanctions on Venezuela.”

En español | Em português

 

In their latest article on U.S. government spying for The Intercept, Ryan Devereaux, Glenn Greenwald and Laura Poitras review and publish leaked documents that show that the U.S. government may have used the Drug Enforcement Administration (DEA) to aid the National Security Agency (NSA) to spy on U.S. citizens and non-citizens in foreign countries. The NSA is shown to have assisted the DEA with efforts to capture narcotraffickers, but the leaked documents also refer to “a vibrant two-way information sharing relationship” between the two intelligence agencies, implying that the DEA shares its information with the NSA to aid with non-drug-related spying. This may explain how the NSA has gathered not just metadata but also the full-take audio from “virtually every cell phone conversation on the island nation of the Bahamas.”

The authors write,

The DEA has long been in a unique position to help the NSA gain backdoor access to foreign phone networks. “DEA has close relationships with foreign government counterparts and vetted foreign partners,” the manager of the NSA’s drug-war efforts reported in a 2004 memo. Indeed, with more than 80 international offices, the DEA is one of the most widely deployed U.S. agencies around the globe.

But what many foreign governments fail to realize is that U.S. drug agents don’t confine themselves to simply fighting narcotics traffickers. “DEA is actually one of the biggest spy operations there is,” says Finn Selander, a former DEA special agent who works with the drug-reform advocacy group Law Enforcement Against Prohibition. “Our mandate is not just drugs. We collect intelligence.”

What’s more, Selander adds, the NSA has aided the DEA for years on surveillance operations. “On our reports, there’s drug information and then there’s non-drug information,” he says. “So countries let us in because they don’t view us, really, as a spy organization.”

Sunday, May 11 marked the grim two-year anniversary of a tragic incident that CEPR has investigated and frequently blogged about: the DEA-related killing of four indigenous villagers in the northeastern Moskitia region of Honduras.  The victims – two women, a fourteen year-old boy, and a young man – were in a small passenger boat headed to the town of Ahuas when they were shot dead by a counternarcotics team made up of DEA and Honduran agents.  Four other boat passengers were injured.  When Honduran police authorities described the drug interdiction operation as “successful,” local authorities and human rights groups protested, pointing out that those killed all had legitimate reasons for traveling on the river and that there was no evidence that police agents had fired in “self-defense” as the DEA alleged.  

Congressman Hank Johnson (D-GA), who initiated a congressional letter demanding a full U.S. government investigation of the incident back in January of 2013, has authored an opinion piece for Al Jazeera America that was published on the two-year anniversary date.  The piece laments the DEA’s response – or lack of response – to the congressional letter, which was signed by 58 members of the House of Representatives:

Sadly, the response we received from the DEA failed to address key questions about the U.S. agents’ role in the incident and showed no indication that measures would be taken to avoid future accidents of this kind. Though the official reply to the letter made no reference to our request for an investigation, an anonymous DEA official told the press that there would be “no separate investigation.”

Most appalling, though, was the news months later that the DEA had ignored Honduran investigators’ requests to interview the U.S. agents involved in the operation and perform forensic tests on their weapons. Given that Honduran police told the investigating team from the Public Ministry that the DEA had led the mission and ordered a helicopter gunman to fire on the passenger boat, this lack of cooperation could only heighten suspicions of DEA responsibility for the deaths.  

As we’ve described before, there is much controversy surrounding the World Bank’s International Finance Corporation’s investment in palm oil production in the Bajo Aguan, Honduras. Wealthy landowners have been engaged in a violent conflict with campesinos, resulting in the deaths and forced evictions of many campesinos at the hands of security forces both governmental and private. The company at the heart of the investigations and recent media scrutiny is Dinant, owned by the man many consider to be Honduras’ wealthiest and most powerful, Miguel Facussé.

As we have previously noted, Facussé has admitted the killings of some campesinos by his security forces. A 2011 human rights report from the Food First Information and Action Network, the International Federation for Human Rights and other groups details a number of killings, kidnappings, torture, forced evictions, assaults, death threats and other human rights violations that victims, witnesses and others attribute to Facussé’s guards.

Facussé has attempted to clean up his public image before, such as a notable December 2012 interview with the Los Angeles Times in which he made the case that just because he keeps a gun on his desk, and just because he “keeps files of photos of the various Honduran activists who are most vocal against him,” and just because one of his private planes was used to fly the foreign minister out of the country (against her will) during the 2009 coup, and just because he was aware of the coup plans before the coup, he’s really not a “bad guy.” And sure, he admitted he “probably had reasons to kill" attorney Antonio Trejo Cabrera, who worked on behalf of campesino groups in the Aguan, but Facussé said, "I'm not a killer."

Now Dinant has demonstrated a similar PR savviness. Writing in the Guardian after a series of articles examining the IFC/Dinant controversy, Dinant corporate relations director Roger Pineda Pinel noted among other things that “We have never engaged in forced evictions of farmers from our land; such evictions are undertaken exclusively by government security forces acting within the law and under instruction from the courts.”

Last week the Wall Street Journal interviewed Colombia's president Juan Manual Santos and described his thoughts on the controversial ouster of Bogotá mayor Gustavo Petro:

Mr. Santos said he didn't want to oust Mr. Petro, but he had to follow the law, even though it hurt him politically. He said he was ready to reinstate Mr. Petro if some judge ordered him to do so.

Well, lucky for Santos, he got his wish. The New York Times reported on April 23:

But a judge in Bogotá on Tuesday found that Mr. Santos had acted improperly when he ignored a request by the Inter-American Commission on Human Rights to suspend the ouster because it could violate the mayor’s rights.

“Some might like it and others not, but my obligation as president of the country is to obey the law and the rulings of judges,” Mr. Santos said, adding that he had no choice but to reinstate Mr. Petro.

All’s well that ends well? Perhaps not. On April 25, the Associated Press reported:

Colombian President Juan Manuel Santos says he'll appeal a court ruling that forced him to reinstate the capital's mayor a month after the official was removed for administrative irregularities.

And why would he do such a thing, if he was indeed “ready to reinstate Mr. Petro if some judge ordered him to do so”, as “some judge” had in fact done? The AP explains:

Santos said Friday said that he will appeal the decision because it has put the government's credibility at risk.

French Economist Thomas Piketty, author of the best-selling “Capital in the Twenty-First Century,” came to Washington DC today for a series of discussions with other economists and the public. The book itself, whose author has made enormous contributions over the past 15 years analyzing the distribution of income and wealth, is very rich in historical and data-driven economic analysis and has been widely reviewed. It could very well become one of the most influential books on economics in decades. This is not a review but rather a brief commentary on some of the extraordinarily interesting discussion – not often seen in “This Town” – that Piketty’s visit inspired.

One of Piketty’s main concerns is the increasing concentration of wealth that has characterized the past few decades, in the United States and other developed economies. He describes this phenomenon in great detail but also abstractly and usefully as r > g; in other words, the more that the rate of return on capital exceeds the rate of growth of the economy, the more wealth is concentrated at the top. Piketty noted a number of times, in response to questions, that he sees – as do many Americans – the main problem with inequality reaching what he called “extreme” levels is that it makes it “impossible to have proper functioning of democratic institutions.” His principal proposal for reversing this trend is a progressive tax on wealth.

At the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, my colleague Dean Baker strongly agreed with Piketty’s proposal to tax wealth, but argued for a “Plan B,” among other reasons because Plan A may prove to be politically difficult or impossible for some time to come. Baker’s proposals were interesting in that they were designed to lower “r” while at the same time raising “g.” He went through several sectors of the economy where there are large “economic rents” that can be captured through taxation or other reforms, while at the same time increasing the overall efficiency of the economy and therefore the growth of output. The financial sector is obviously target number one, where even a small financial transactions tax could capture tens of billions of dollars of annual revenue while reducing wasteful and even harmful trading (Baker referred to Michael Lewis’ “Flash Boys” as a prime example). Then there are patents, where we in the U.S. pay $380 billion per year for drugs whose price is composed of something like 80 or 90 percent monopoly rents – about 2 percent of GDP lifted from the non-super-rich; plus the impediments to the advancement of medical science and actual harm to human health, as pharmaceutical companies hide their data, lie about their results, and promote the use of patented drugs for inappropriate purposes. (As one critic of the pharmaceutical industry put it, there are a lot more healthy people than sick people out there, so if you are a pharmaceutical company with a patented drug, you want to get some of those healthy people into your market).

en español

Despite the fact that the New York Times had to run a correction on February 26 for claiming that Globovisión in Venezuela was “[t]he only television station that regularly broadcast voices critical of the government,” Daniel Wilkinson of Human Rights Watch (HRW) repeats the same error in the New York Review of Books yesterday, writing that:

Two of the four private stations voluntarily dropped their critical coverage; a third was forced off the air; and the fourth was hounded by administrative sanctions and criminal charges until the owner sold it last year to investors reportedly linked to the governments, who have dramatically curtailed its critical content.

In fact, the stations he claims have “dropped their critical coverage,” Venevisión and Televen, regularly run coverage that is critical of the government, as documented here.

Since the claim that these stations have “dropped their critical coverage” is demonstrably false, the NYRB, like the New York Times, should run a correction.

The fourth station he refers to is Globovisión. During the run-up to last April’s presidential elections, according to a Carter Center study, Globovisión gave nine times as much coverage to opposition presidential candidate Henrique Capriles as to governing party candidate Nicolás Maduro. Readers who are familiar with right-wing TV in the United States will note that this would not be possible for Fox News, for example, to get away with. So, if Globovisión “dramatically curtailed” its anti-government bias – Wilkinson offers no data -- because it was bought by someone who wanted to practice mainstream journalism, the station could still have a lot of room to trash the government.

Nate Silver, who became famous for his use of polling data to accurately project U.S. elections, launched a new blog – FiveThirtyEight.com last month.  It’s been off to a rough start, “something between a disappointment and a disaster” as Paul Krugman wrote soon after its launch, because of some pieces that handled data rather badly. “[S]loppy and casual opining with a bit of data used, as the old saying goes, the way a drunkard uses a lamppost — for support, not illumination,” says Krugman.

I leave it to the reader to decide whether the FiveThirtyEight article on March 17 by Dorothy Kronick on Venezuela fits this description.  While it has become acceptable to publish almost anything about Venezuela, so long as it makes the government look bad, here at CEPR we apply the same standards to all products.

The thesis of the article is strange.  Correctly noting that the political polarization in Venezuela is overwhelmingly along class lines, with the upper income groups tending to support the protests and lower-income Venezuelans supporting the government, she asks  rhetorically “why the divide?” and answers: 

They disagree over a political vision for their country in part because they measure Chavismo against two different benchmarks: Chavistas compare the present to Venezuela’s pre-Chávez past, while the opposition contrasts the current economic situation with more recent developments in the rest of Latin America.

I think what she means to say is that Chavismo looks better as compared with Venezuela’s pre-Chávez era, than it does compared with the rest of Latin America. The first part is a no-brainer: per capita GDP actually fell by more than 15 percent in the 20 years prior to Chávez (1978-1998).   However there is no evidence that the two sides are making any such different comparisons.  Do voters anywhere in the world judge their government based on a comparison to its peers?  If that were the case in the U.S., for example, President Obama’s approval ratings would be very high and the Democrats would be sailing to a landslide victory in November’s congressional elections because the relevant income-level comparison for the U.S. is Europe, which has done vastly worse in the recovery from the Great Recession since 2009.     

En español

A new investigation by the Associated Press into a U.S. Agency for International Development (USAID) project to create a Twitter-style social media network in Cuba has received a lot of attention this week, with the news trending on the actual Twitter for much of the day yesterday when the story broke, and eliciting comment from various members of Congress and other policy makers. The “ZunZuneo” project, which AP reports was “aimed at undermining Cuba's communist government,” was overseen by USAID’s Office of Transition Initiatives (OTI). AP describes OTI as “a division that was created after the fall of the Soviet Union to promote U.S. interests in quickly changing political environments — without the usual red tape.” Its efforts to undermine the Cuban government are not unusual, however, considering the organization’s track record in other countries in the region.

As CEPR Co-Director Mark Weisbrot described in an interview with radio station KPFA’s “Letters and Politics” yesterday, USAID and OTI in particular have engaged in various efforts to undermine the democratically-elected governments of Venezuela, Bolivia, and Haiti, among others, and such “open societies” could be more likely to be impacted by such activities than Cuba. Declassified U.S. government documents show that USAID’s OTI in Venezuela played a central role in funding and working with groups and individuals following the short-lived 2002 coup d’etat against Hugo Chávez. A key contractor for USAID/OTI in that effort has been Development Alternatives, Inc. (DAI).

More recent State Department cables made public by Wikileaks reveal that USAID/OTI subversion in Venezuela extended into the Obama administration era (until 2010, when funding for OTI in Venezuela appears to have ended), and DAI continued to play an important role. A State Department cable from November 2006 explains the U.S. embassy’s strategy in Venezuela and how USAID/OTI “activities support [the] strategy”:

(S) In August of 2004, Ambassador outlined the country team's 5 point strategy to guide embassy activities in Venezuela for the period 2004 ) 2006 (specifically, from the referendum to the 2006 presidential elections). The strategy's focus is: 1) Strengthening Democratic Institutions, 2) Penetrating Chavez' Political Base, 3) Dividing Chavismo, 4) Protecting Vital US business, and 5) Isolating Chavez internationally.

Among the ways in which USAID/OTI have supported the strategy is through the funding and training of protest groups. This August 2009 cable cites the head of USAID/OTI contractor DAI’s Venezuela office Eduardo Fernandez as saying, during 2009 protests, that all the protest organizers are DAI grantees:

¶5. (S) Fernandez told DCM Caulfield that he believed the [the Scientific, Penal and Criminal Investigations Corps'] dual objective is to obtain information regarding DAI's grantees and to cut off their funding. Fernandez said that "the streets are hot," referring to growing protests against Chavez's efforts to consolidate power, and "all these people (organizing the protests) are our grantees." Fernandez has been leading non-partisan training and grant programs since 2004 for DAI in Venezuela."

I sometimes complain about U.S. media coverage of Venezuela, which is mostly one-sided and sometimes terribly inaccurate. But compared to most of the Latin American media, U.S. reporting is practically “fair and balanced.” Check out this amazing front page banner headline of Peru’s biggest newspaper, El Comercio, on Sunday, March 16 (photo below). Translation: “94 percent of Peruvians reject the Chavista model”; sub-headline: “82 percent of those interviewed consider the government of Venezuela to be a dictatorship.”

Imagine the New York Times running a headline like this. How ridiculous would they look? People would wonder: is this news in the U.S.? What percentage of the U.S. population knows or cares what the “Chavista model” is, or has an informed opinion on whether Venezuela’s democratically-elected government is actually a “dictatorship?” Not to mention that you would be hard-pressed to find a political scientist who specializes in Latin America who would accept the label 'dictatorship' for Venezuela.

Now I know what you are thinking. Peru is a bit closer to Venezuela and is part of South America. Peruvians speak the same language as Venezuelans. So, maybe there is some kind of buzz about “the Chavista model” in Peru or some great concern among the masses about the state of constitutional democracy in Venezuela.

Well, no. Peruvians are no more likely than residents of the United States to know anything about “the Chavista model” or about Venezuela in general. This “journalism” looks pretty much as irrelevant and strange in Peru as it would be if the New York Times had run the same headlines. The only qualifier I would add is that, since the media and right-wing politicians scream about Venezuela as in this headline, they are able to create a certain McCarthyist fear among some sectors. Sometimes they use this fear – without necessarily any real connection -- against political opponents (e.g. as they did successfully in defeating the current President Ollanta Humala’s first presidential bid in 2006). But that is not much different from what the Florida Cuban-American U.S. Representatives and their neocon allies are doing in the U.S. Congress right now.

Bolivia will most likely join Brazil and Argentina (Bolivia’s largest trading partners) by becoming the sixth member of the MERCOSUR group. Since 2006, Bolivian trade with MERCOSUR has grown by 17 percent. A recent study published by Desarrollo de Negocios Internacionales found that over the last 10 years Bolivia has experienced the second highest export growth rate in South America. This is remarkable considering that on average landlocked developing countries (LLDC) trade 30 percent less [PDF] than coastal countries [1]. As a result, for most landlocked countries transportation infrastructure plays a crucial part in facilitating intraregional trade. Since 2005, industrialization has become a key aspect of Bolivian President Evo Morales’ economic policy, particularly in the area of transportation, which in 2013, accounted for 30 percent of total [PDF] public investment [2]. The chart below shows levels of public investment in transportation as a percentage of total GDP since 2005:

nate-bolivia-blog-figure

Source: International Monetary Fund and Ministerio de Economía y Finanzas Pública Estado Plurinacional de Bolivia

Venezuelan opposition politicians and their allies in the U.S. frequently decry Cuba’s alleged influence on the Venezuelan government. Ironically however, there seems to be an important and growing nexus between the Venezuelan opposition and the anti-Cuba lobby in the U.S. Cuban-American lawmakers recently introduced sanctions legislation targeting Venezuelan officials that appears to be designed to push U.S. policy toward Venezuela in the same direction as policy toward Cuba.

Meanwhile, the New York Times reports on the Venezuelan opposition’s ire for Cuba and the role it has played in the ongoing protests in Venezuela:

Enraged as they are by their nation’s leaders, many of the protesters who have spilled onto Venezuela’s streets have their eyes fixed on another government altogether, one they resent perhaps just as bitterly as their own: Cuba’s.

Their rancor is echoed by the Cuban opposition, which has thrown itself behind the Venezuelan protesters’ cause with gusto, sharing photos and videos of protests and police abuse on Twitter, urging Venezuelans to resist and even rapping an apology for what they call Cuba’s meddling.

The Venezuela protests have “energized” members of Cuba’s opposition, reports the Times. Orlando Luis Pardo Lazo, an anti-Castro blogger in the U.S., told the Times, “The fate of Castro-ism may be at play in Venezuela…What we were not able to topple in Cuba, we may be able to topple there.”

Yet despite near constant claims from the Venezuelan opposition that Cuba is in control of their country (for instance, when it was announced that Venezuelan congresswoman Maria Corina Machado would be investigated and possibly stripped of her position, she responded that “It’s clear to me that it was the Castro brothers who gave the order”), the Times notes that:

Such convictions are held by critics in both countries, although they offer little hard evidence to back their suspicions. And while some former Venezuelan military officers say that Cubans are involved in decision-making in the armed forces, some protesters go further, professing to see what they call “the hairy hand” of Cuba everywhere: saying they have detected Cuban “infiltrators” at street protests; seeing a Cuban hallmark in the tactics of Venezuela’s armed forces; and circulating unsubstantiated Internet reports that Cuban special forces, or Black Wasps, are operating in Venezuela.

The Times report follows a number of pieces from the Tampa Bay Tribune, which discuss the relations between anti-Castro exiles, specifically in South Florida, and the opposition in Venezuela. In early March, Paul Guzzo wrote:

From Tampa to the Senate floor in Washington, and throughout the United States, Cuban Americans who defend continued isolation of the Communist island nation are throwing their support behind Venezuelan Americans in their efforts to bring order to the South American country.

It says something about overall media coverage of a subject when some of the most important news appears in the form of corrections.  On February 26, the New York Times corrected a false statement in a news report that had incorrectly referred to Globovision as “[t]he only television station that regularly broadcast voices critical of the government.” This was false, and it was easy to show that other major television stations regularly broadcast opposition views.

Today the Times corrected an even more important false statement that appeared in an op-ed by jailed Venezuelan opposition leader Leopoldo López.  López had written that “more than 30” protesters had been killed in Venezuela in the recent protests. In fact the “more than 30” number cited by López includes all protest-related deaths, a fraction of whom appear to be protesters.  Although it has not been mentioned in major media coverage, a compilation of press reports indicates that the protesters themselves – not security forces – are responsible for about half of the deaths.  These include six national guardsmen who were shot, five additional people apparently shot while trying to remove barriers erected by protesters, and seven people who were killed apparently from crashing into protesters’ barriers (including two motorcyclists beheaded by wire strung across the road).

This correction is extremely important because most people who see the daily death toll from protests in Venezuela understandably assume that these are people killed by state agents.  Although the reporters are not intending to mislead, we can see the effect of this reporting in that López himself, and whoever edited, placed, or provided other assistance with the op-ed for him also were very much mistaken.  The net result of this widespread false impression is to greatly strengthen the opposition strategy, supported by many politicians and pundits in the U.S., to portray Venezuela as a violent, repressive, and illegitimate government. 

While most of the news from Venezuela has been focused on protests, something that is probably more important for the future of the country has taken place. The black market value of the dollar has plummeted by one-third in the past three weeks, on news that the government is introducing a new, market-based exchange rate. According to the plan, known as SICAD 2 (Sistema Cambiario Alternativo de Divisas), Venezuelans will be able to purchase dollars legally from various vendors including private brokers and banks.

In November of last year I wrote a short piece for Folha de Sao Paulo arguing that the black market dollar price was a bubble, comparable to the real estate bubble in the U.S. in 2006 (or stock market in 1999), and that the government could burst it at any time. Some people were buying dollars because they needed them for various purposes; but also some were making what they thought was a one-way bet. They thought that the dollar was a good store of value because it would continue to rise indefinitely against the domestic currency. Much of the media promoted the idea that Venezuela was headed for hyperinflation (some even erroneously call it that), and so the domestic currency (bolivar fuerte) would continue to lose value until it collapsed.

At the time I wrote about the bubble the dollar was at about 60 bolivares fuertes, but it was already well into bubble territory; it continued to rise to 88 and has now fallen to 58.3. It’s likely to fall further as the SICAD 2 system supplies dollars that were previously being sold on the black market. And if the black market dollar falls, it will bring down inflation, since this has been the main cause (see graph below) of the sharp increase in inflation since October of 2012. There should also be some relief of shortages, since it will be easier for importers to get dollars. Since PDVSA (the state oil company) can sell dollars on this market as well, this should also reduce the government budget deficit.

Of course there are other economic problems, including the pilfering of billions of dollars in foreign exchange at the official rate through the setting up of fake companies, and smuggling subsidized food and gasoline across the Colombian border. But the exchange rate system has been the central economic imbalance, and if SICAD 2 functions as planned it could go a long way towards resolving Venezuela’s current economic problems.

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Reading the daily reports on Venezuela’s protests, we find that “At least 31 people have died” (CNN) or the headline “Venezuela death toll rises to 33” (Reuters) and dozens of similar statements in television and radio reports. There is nothing inaccurate about this on its face, and no one can accuse the journalists involved of having exaggerated anything.

But let’s look at this for a moment from the perspective of the reader or listener, who is generally not an expert on Venezuela. What do they think when they read or hear these statements? If you want to find out, just ask anyone who happens to be near you when you are reading this right now: “Who is responsible for most of these deaths?” Unless they have done their own research, they will tell you that the government and/or security forces are responsible.

In fact, it appears that the majority of the deaths described in the headline “Venezuela death rises to 33” appear to have been caused by protesters. The average reader, of course, has plenty of reason to think the opposite; that it was the state security forces that were responsible for most of the deaths. In most countries where street protests take place and there is violence, the vast majority of the violence is indeed caused by police or armed forces. Even in places where protesters engage in violent acts, they will generally provoke greater violence from the state.  

So because this situation is so contrary to what people are understanding from the reports, perhaps reporters should include a simple statement that he majority of deaths appear to have been caused by protesters, not security forces. Otherwise, although it is not intentional, these reports continually reinforce the widespread belief, which is promoted by U.S. politicians and pundits who want Americans to believe it, that the government of Venezuela is violently “cracking down” on “peaceful protesters.”

Earlier this week, in a highly irregular move, Panama offered its seat at the regular meeting of the OAS Permanent Council today to Venezuelan opposition lawmaker María Corina Machado. Machado, along with Leopoldo López, are the leaders of the “La Salida” -- “The Exit” -- campaign, which calls for street protests to oust the current government.

At the beginning of the meeting, the OAS representative from Nicaragua called for a vote on whether the meeting should be public or private. After much debate, 22 countries voted to make the meeting private, while 11 countries voted in favor of it being public. It should be noted that this is far from the first time the OAS Permanent Council has held a meeting that was closed to the media. Many of the meetings that occurred after the Honduras coup, for example, were also closed to the media.

Many within the Venezuela opposition and the media were quick to cast the vote as a move to censor Machado and prevent her message from being heard. Others have presented the vote as a barometer of support for the Venezuelan government and opposition. Brazil, which voted to make the meeting private, has quite a different explanation:

The objective of this meeting is not to turn itself into a circus for an outside audience as some representatives have shown they want to do.


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