Around Latin America

-It's been a really busy week. For starters, Manuel Zelaya has apparently returned to Honduras, but what's going to happen next is anybody's guess.

...UPDATE: Apparently he entered briefly, but has returned to Nicaragua to avoid arrest. We'll see what follows...

-Brazil has agreed to allow Paraguay to sell its surplus energy from the Itaipu dam to Brazilian companies other than the state-run Eletrobras. The Itaipu issue has been a stickler for years - Brazil needs more energy as it grows, and Paraguay has had a surplus thanks to the agreement to share power from the dam between the two countries when it was built back in the 1970s. Although Lula had originally said he would not review the contract from the 1970s when Lugo won election, he has since taken a more diplomatic stance (as is characteristic of his administration), and it now seems I was correct in suggesting that this would not be nearly the diplomatic crisis between the two countries that some scholars thought it would be.

-There's also great news on how Brazil has stemmed the spread of AIDS:

Two decades ago, it would have been hard to imagine finding an upside to an HIV crisis of the scope that Brazil had on its hands. The World Bank estimated that 1.2 million Brazilians would be infected by the turn of the century — by far the highest number of any country in the region. But today, there is plenty of good news to go around. Thanks to aggressive intervention, Brazil has only about half as many HIV cases as predicted. And the country's popular President Luiz Inácio Lula da Silva, or Lula for short, has taken the show on the road: HIV/AIDS assistance is becoming a powerful tool in the president's growing diplomatic chest.

The article traces how Brazil's government offered free antiretroviral medicine to victims beginning in 1996 and aggressively launching both treatment and prevention programs (in what is simultaneously a reminder that government health programs can and do work, and that even Fernando Henrique Cardoso got some things right in his administration). It also links those efforts to Brazil's broader diplomatic accomplishments since Lula took office in 2002, and is well worth reading in its (relatively brief) entirety.

-I've commented before on Brazil's efforts to build alliances with African countries. Those efforts have not gone unnoticed, as Mozambique President Armando Guebuza this week called Lula's government "a true ally and partner in the fight against poverty." I've said it before, and I'll say it again: when discussing Brazil's ascendance as a global economic and political actor, one cannot overstate the strides made via Lula's insistence on negotiating with any legitimate government, regardless of ideology, if the other governments had things to offer Brazil and vice versa. By refusing to exclude countries like Venezuela or China or the U.S. over ideological issues, Brazil has greatly strengthened its presence globally, and has made many friends where other countries and regions like the U.S., the EU, and others have been alienating countries. And Lula's focus on Africa has seemed genuine and useful for both Brazil and Africa, and I can only hope (though with baited breath) that the next Brazilian president will continue this trend.

-While things are goign smoothly between Brazil and Paraguay, the same cannot be said for Brazil and Budweiser's owning company, AmBev - the anti-trust organs in Brazil are hitting AmBev with a record-setting fine of $150 million reais ($79 million dollars US) for "anti-competitive practices" dating back to 2004 in Brazil. Although the fine only marked 1% of AmBev's 2003 income, the announcement was enough to make stocks drop in Brazil Wednesday.

-In broader economic terms, Latin America may have gotten some good news this week, as Nouriel Roubini, known as "Dr. Doom" for his depressing-but-ultimately-accurate prediction of the economic crisis the world began to face last year, offered some rare optimism in discussing Latin America's outlook:

Major emerging powers such as China, India and Brazil are among nations that may recover fastest once the global economy picks up, Roubini told reporters at the conference. He also mentioned Chile, Uruguay, Colombia and Peru as countries better- positioned to grow. Countries facing the biggest challenges include emerging markets in Eastern Europe, such as Hungary, Bulgaria and Ukraine, he said.

-In a stomach-churning story of despicable actions, a jury is considering a lawsuit against a Florida hospital that deported a brain-injured illegal immigrant back to Guatemala in 2003.

The lawsuit seeks nearly $1 million to cover the estimated lifetime costs of his care in Guatemala, as well as damages for the hospital's alleged "false imprisonment" and punitive damages to discourage other medical centers from taking similar action.

Jimenez was a Mayan Indian who was sending money home to his wife and young sons when in 2000, a drunken driver plowed into a van he was riding in, leaving him a paraplegic with the mental capability of a fourth grader. Because of his brain injury, his cousin Montejo Gaspar was made his legal guardian.

Jimenez spent nearly three years at Martin Memorial before the hospital, backed by a letter from the Guatemalan government, got a Florida judge to OK the transfer to a facility in that country. Gaspar appealed.

But without telling Jimenez's family - and the day after Gaspar filed an emergency request to stop the hospital's plan - Martin Memorial put Jimenez on a $30,000 charter flight home early on July 10, 2003.

The outcome of the case could play a major role in how hospitals deal with illegal immigrants in the future, making the case of major importance not just to health-care, but to immigration issues, as well as the basic decency of treating any person, regardless of nation, race, or creed, respectfully and tenderly.

-Many people are aware that the Atacama Desert is the driest place on earth; some parts of the desert in Northern Chile have never seen recorded rainfall. It is, suffice to say, extremely dry, and any rainfall can cause major problems. And I mean any rainfall, as this week, .001 inches of rain led to a state of emergency that led to power outages and school closings.

-In the "politically-charged pension awards" category, Argentina is giving a "special pension" to 18 individuals who hijacked a plane with the hopes of gaining control of the Malvinas/Falkland Islands back in 1966. "will grant a special pension to the nationalist group of 18 civilians who in 1966 took command of a commercial flight to Rio Gallegos and had it re-routed to the Falkland Islands with the purpose of taking over the Malvinas for Argentina."

-In the "racial stereotype? or just not funny?" department, apparently the "Yo quiero Taco Bell" chihuaha died this week at the age of 15. And in the funniest pet-news I've heard since learning that the lady-magnet Spuds Mackenzie was female, it turns out that that male-voiced symbol was "Gidget".

-Extinction of any species sucks. Here's hoping that the 90-something year old Galapagos giant tortoise "Lonesome George" is rescuing his breed from the brink of extinction.

-Finally, in touching and sad news, a woman has been arrested for killing twin Mexican midget wrestlers. El Espectrito II and La Parkita, 35, were found dead in a hotel room. Prosecutors suspect the anonymous, 65-year-old suspect and a friend posed as prostitutes and planned to poison the wrestlers to unconsciousness and rob them as part of a broader wave of female gangs robbing men. Unfortunately, the normal dosage of drugs to knock a man unconscious was enough to kill the two wrestlers. The memorials (fans showing up at the funeral in masks) have been touching, and for all the senselessness in so many violent acts, this one seems particularly senseless.

Lula and Obama Meet

Lula and Obama met this weekend in what was Obama's first meeting with a Latin American leader, demonstrating how Brazil has really emerged as a global power , which also indicates that the U.S. is going to have to (and seems willing to) deal with Brazil and Latin America in general on much more balanced (if not perfectly equal) footing than in the past. Publicly, the discussions were, as Boz says, no surprise - Doha, energy, the global economy. I am curious if/how the Venezuela talks played out privately - I suspect if there is anything, we'll only know more later. Overall, the meeting seemed to have went well, and just the overall demeanor and relationship between the two men already is just another reminder of what a radical change and galactic-sized improvement we are witnessing between Bush's administration and Obama's when it comes to foreign policy and representing the United States globally. It's really too early to say much about the consequences of the meeting, but it's definitely a good step, and will be interesting to watch Obama's, Lula's, and the rest of Latin America's actions leading up to the Summit of the Americas in April.

Money, money, money

So this NY Times article talks about how the "Rising Dollar Lifts the U.S. but Adds to the Crisis Abroad." Ok, duh. The value of the dollar is going up, so everyone living on a different currency is hurt. But what does this mean for countries that depend on remittances from the US? For Mexicans with family members working in the US and sending money back, the rising dollar is both a blessing and a curse. The falling peso means that it is even more necessary for family members to work in the US, but it also means that the money sent back from the US will go a lot further compared to the peso. So, are we going to be seeing more immigration because of the value of the dollar? Or less because jobs are so hard to find right now in the US?

And on a slightly related yet different topic: right now the peso is at around 15 to the dollar (up (or down?) from 10 pesos to the dollar less than a year ago). Most Mexicans know the exchange rate because unfortunately the global economy demands that they know what their currency is worth compared to the dollar standard. Aside from other study abroad students, I don't know any on the US that knows any current exchange rates at all. Such is the luxury of living in the US...

The Shock Doctrine

We're watching the collapse of capitalism in real time, slow motion.

The economic crisis was largely the result of a vast speculative bubble, one that inevitably had to burst, and those in charge of U.S. and global economic policy knew this, but did nothing to prepare for the impending crisis. The effect was magnified thanks to a deliberate ongoing campaign of ideologically-motivated deregulation for the sake of deregulating. In other words, this didn't just happen in a vacuum. It didn't sneak up. It was very much deliberate.

Naomi Klein's book The Shock Doctrine details exactly how we got to this point. The book came out in 2007, but right now serves as kind of a 'how did we get here,' with 'here' being the new Depression.

It's a fairly well-known and well-read book in progressive circles, and yet neither Matt nor I had read it yet. With the bottom falling out of the economy, and inspired by Erik and Rob's posts on From Colony to Superpower, we decided not just to read the book, but to blog it, reading chapter by chapter, in two places, to see what we each draw from it.

Reading The Shock Doctrine allows us to examine a series of cataclysmic events that have occurred over the past 50 years, so we can hopefully avoid repeating the same mistakes (or allowing the same warped, Utopian ideals to usurp the public debate).

Most importantly, to prevent the same tactics from being applied now, in the wake of the biggest global economic shockwave yet.

Because the more we read, the more imperative we think it is to tie Klein's thesis and investigations into what's happening right now, as Friedmanite ideologues continue to preach the doctrine of deregulation and tax cuts as panacea.

So starting tomorrow, we'll have posts up once a week, mine here, his at his blog. We agree on lots of things, but come from different backgrounds and areas of expertise, so I'm hoping we'll be able to draw different readings of the book. We're inviting all of you, whether you've read the book or not, to join in the discussion, and hope we can cross some of our audiences back and forth and gain some insight into the global economic mess.

Intro to Socioeconomics in Mexico

The other day, we went to the market for an activity in small groups.  We were supposed to buy certain items and price some others.  Then we did some calculations to figure out how many hours a person earning the Morelos minimum wage would have to work in order to be able to buy them.  Then we figured out the price U.S. consumers would have to pay if they had to work the same numbers of hours as a Mexican worker in order to purchase the same thing.  Here are the calculations from my group:

1 kilo of avocados = 25 pesos = $1.92 = 4 hours of work = $26.20

1/2 kilo of green chiles = 8 pesos = $0.62 = 1.3 hours of work = $8.52

Magazine "Uno más uno" = 10 pesos = $0.77 = 1.6 hours of work = $10.48

Kids school shoes = 120 pesos = $9.23 = 19.3 hours of work = $126.42

Shampoo = 50 pesos = $3.85 = 8 hours of work = $52.40

People think that the cost of living in Mexico is really low, but that is only because things are really cheap compared to what we earn in U.S. dollars.  In actually the cost of living here is really high if you are living off the wages paid here.  It is also estimated that 50% of Mexicans work in the informal sector, which means that they don't receive a paycheck or benefits.

The minimum wage in the state of Morelos is 49.5 pesos per day ($3.80/day), which is the highest minimum wage in Mexico.  So even if Mexican immigrants in the U.S. don't earn minimum wage (which many don't because they can't complain if they are undocumented), they can earn more money in an hour of work in the U.S. than for an entire day of work in Mexico.  And people wonder why they try to work in the states....

Remittances to Latin America see Slowdown

The Latin Americanist points towards an interesting article that shows "the rate of remittances sent to Latin America has grown at a slower pace than in previous years."

A significant part of this slowdown, according to the article, is remittances to Brazil. These have slowed down for a number of reasons, including Brazil's strong economy (various aspects of which I have previously discussed), the drop of the dollar, the collapse in the housing market (and the effect that has on construction workers, some of whom are from Brazil), and the simple fact that many Brazilians are returning to Brazil because of the economy and because of anti-immigrant sentiment. I'm not sure any one of these factors is dominant - the Times did a good article late last year about Brazilians returning to Brazil after years in the U.S. And the value of the real to the dollar has radically changed (unfortunately for me), dropping from 2.25 reais to the dollar to 1.65 (and one day a couple weeks ago dropping down to 1.61) in the last 18 months alone.

I'm not an economist, and economy isn't my strong suit, so I don't know if 2007 will mark an unusual aberration, or is the start of a new trend that sees growth slow down or even stop. Simply guessing blindly, I'd suspect it's the latter, given the fact the U.S. economy is doing so poorly compared to others, among other factors. The slowdown in remittances is far from being radical - a record 66.5 billion dollars were still shipped from the U.S. to Latin America last year, but, as the Latin Americanist summarizes, the 7% growth rate is the first time it's dipped below double-digit growth recently. It will be interesting to see how this situation plays out, and what its effects will be both on the U.S. and on Latin American economies.

Thoughts on Brazil and Cotton (yes, Cotton)

There will be plenty coming from me soon about the airport situation in Brazil (lots has happened in the two weeks I was in Brasília), but first, the exciting world of cotton subsidies (yes, cotton subsidies). Boz points us to a blurb on how Brazil has successfully demonstrated to the World Trade Organization that the U.S. failed to overhaul subsidies by overproducing cotton in an effort to drive down global cotton prices, hurting other cotton producing countries. Even to me, this is generally extremely boring stuff (I just don't care that much about international economies at that level), but what Randy points out gives the story a lot more merit beyond the international economics framework. Brazil didn't just represent itself in this complaint - it also represented Mali, Burkina Faso, and other cotton-producing African nations that may not have had the resources to ably contest the U.S.'s excesses.

All of this matters for one very simple reason: Brazil has spent the last 5 years building alliances with the "developed" and the "developing" world. Whereas the previous administration of Fernando Henrique Cardoso was basically interested in increasing dependency on nations like France and the United States by privatizing anything and everything he could in Brazil, Lula has had a more open approach that has looked as much to relations with developing nations for economic growth and global reputation as it has to the U.S. and Europe. He has had no problem trying to set up trade deals with states like Saudi Arabia, China, and many nations in Africa. In short, Lula has talked to anybody and everybody, from Bush to Chavez, from King Faud to Hu Jintao.

The importance of this cannot be overstated. Certainly, some of the efforts to trade relations and friendship-formation between Brazil and other countries may not play out, but that doesn't ultimately matter. By simply branching out and extending Brazil's relations to other developing countries, Brazil has managed to lay the foundation for a future as a global leader within the international community in ways it has never achieved thus far while increasing its economic growth via trade agreements with non-traditional (but still completely useful) trade partners.

The narrative in the United States by and large emphasizes that Venezuela's Chavez is the only leader challenging the U.S.'s hegemony and building alliances with non-European/non-North American governments. Certainly it may seem that way - without question, Chavez is more boisterous, louder, adn more confrontational. But while he launches all his rhetoric and has his photo taken with leaders of Iran or Zimbabwe, Lula has been quietly moving around the world, talking as much with Bush (see the recent talks between Lula and Bush in the area of ethanol development) as with leaders of Africa, Latin America, and Europe, even while taking on the U.S. where it hurts Brazil's own growth (as in the case of the cotton subsidies or in Lula's current insistence that, this time, Brazil will not back down in the global trade talks in Doha) and the growth of other countries in the developing world, as the filing of the cotton-subsidies case against the U.S. on behalf of African countries demonstrates. By quietly building such relationships, downplaying bombast and quietly negotiating, Lula has spent the last five years building very fruitful international relations that will only improve over time, and while the middle-class in Brazil may hate him now, there can be no question that, in this arena, Lula has done better than any president in recent memory in helping Brazil to truly grow.

Brazil, China, and Farming

There is an article worth looking at at the New York Times on China's growing need for Brazilian soy production, and the ties that is creating between the two states. The article is a little "old" (it appeared late last week, but I was out of town), but it offers some important insights into markets, trade relations, and even the impact of environmental degradation on the global economy.

The article does a fairly good job showing the role Brazil is playing in global trade among developing countries. It highlights the potential for economic growth between two countries as China expands its market and other developing-world countries (in this case, Brazil) form trade agreements beyond the U.S. What goes unsaid is how this relationship between Brazil and China is part of a broader effort on Brazil's part to reap strong economic relations between Brazil and other developing countries in Africa, Asia, and the Americas. The goal here has been to break depndency on American and European markets (which have generally cast aside Latin America when it is convenient, leaving the American economies to suffer severely). As with any buisness venture, such an approach has its risks, but the agreements the Brazilian government, particularly under Lula, have made promise much more profit than setback for Brazil, as well as the added incentive of not relying on the U.S. with its tariffs and with the World Bank and IMF dictating terms all the time.

As for the cons of the production, the article is a little...vague. Certainly, it is true that Brazil's soy production in the state of Mato Grosso (which, as the article says, is 1/3 of the country's production) have been plagued recently by drought, and the highway infrastructure here in Brazil....well, it isn't the U.S. interstate system. Farmers of course always run the risk of drought, and many may not have seen the profit they had hoped for, but it is also worth taking into account that the article only talks about Mato Grosso - I have no idea what the production status is of the other 2/3 of the country, but the article doesn't say, either.

More problematic is the complaint that sales of primary items like soy makes Brazil's economy too dependent on obtaining secondary items. Frankly, I think this argument rings a little hollow. It's true, Brazil is reaping a pretty good windfall from these sales, and if it were only soy that were driving Brazil's economy, that could cause problems. But it isn't. Brazil's secondary and tertiary production rates are growing rapidly too, so I think the complaint is a little too cautious in this regard. Additionally, while the article doesn't say exactly who is raising the critiques, there is no doubt opposition from some of the neo-liberal politicians (many of whom have a foundation in dependency theory from the 1970s-1980s), so it is definitely worth taking with a grain of salt.

Environmentally, it touches upon a few key items, too. First, there is the declining water resources in China, which are fueling its global expansion in trade. Erik has talked before about the role of water (or lack thereof) in China's (and India's) ability to continue growing and the article definitely hits upon that aspect rather throughly, with little I can add.

However, there are also important implications for the Brazilian environment here. Just because the article claims that Brazil can double its 175 million acres of production without touching the rainforest doesn't mean farmers won't leave the forest untouched. This is a particuarly dangerous area, for the vast increase of profits from soy production via trade with China may lead to soy-plantation-owners spreading into ecologically endangered areas, doing decades of damage to the forest for the proverbial quick buck. This doesn't mean they will encroach upon the forest for certain, but given the past, it is certainly an issue worth keeping an eye on.