Content from IASW Contributors

Close vote in Brazil reveals a deeply divided nation

By Roger F. Noriega By Roger F. Noriega
Brazil’s President Dilma Rousseff won a second four-year term yesterday, defeating challenger Aécio Neves by a margin of 51.6% to 48.4%. Rousseff waged one of the most negative campaigns in memory, conjuring fears that Neves would cut government anti-poverty programs rather than explaining how she plans to pull the world’s seventh largest economy out of recession.

Don’t Believe Everything You Read About the United States’ Cuba Democracy Program

By José R. CárdenasBy José R. Cárdenas
For the second time in four months, the Associated Press has published a gross distortion of USAID’s Cuba Democracy Program that has made it the subject of unjust derision from the legions of U.S.-Cuba policy critics. Read More-->

Mexico Passes 2015 Budget Revenue Bill After Oil Forecast Cut

| October 30th, 2014 | No Comments »

By Eric Martin and Brendan Case 

Mexico’s Congress passed the revenue side of next year’s budget after lowering its forecast for the price of oil to account for volatility in global crude prices.

The lower house today passed changes approved last night in the Senate, sending the bill to President Enrique Pena Nieto for enactment. The Senate Finance committee this week lowered its estimate for oil exported by Mexico next year to $79 a barrel from the $81 originally passed by the lower house earlier this month. The government had projected the price to be $82 in its budget proposal on Sept. 5.

Mexico is seeking to reduce the deficit in 2015 and erase it in coming years after increasing spending this year in an effort to boost an economy that grew 1.4 percent in 2013, the least since the 2009 recession. Pena Nieto also pushed through ... Read More

Brazil shocks with interest rate hike in wake of election

| October 30th, 2014 | No Comments »

Brazil’s central bank raised interest rates on Wednesday, surprising investors with a move that signals President Dilma Rousseff could make more market-friendly policy changes after her narrow re-election victory on Sunday.

In a divided vote, the central bank’s board decided to raise its benchmark Selic rate by 25 basis points to 11.25 percent. All 43 economists surveyed in a Reuters poll this week expected the bank to keep the Selic at 11 percent.

With the hotly contested presidential race over, the central bank moved swiftly to anchor inflation expectations at a time when markets are doubtful Rousseff is willing to overhaul her policies to regain the trust of investors.

The bank said the balance of inflation risks has become less favorable since its last rate-setting meeting in early September due to more intense price increases.

“In light of that, the committee considered it appropriate to adjust monetary conditions in order to guarantee, at a ... Read More

Mexico: Caught in the crossfire

| October 30th, 2014 | No Comments »
Financial Times

By Jude Webber

Their 43 expressionless faces stare out from a double-page advertisement by Mexico’s government in the national press. The banner headline reads: “Reward”.

But they are not the grainy photos of drug lords with prices on their heads. These underprivileged youths from a rural teacher-training college, missing and feared dead after clashes with local police on September 26 are, as activist priest Alejandro Solalinde says, the brutal reminder that “Mexico is sown with corpses”.

Despite a manhunt for the students and their abductors, the only clues appear to lead to mass graves on the hilltops outside the town of Iguala, 130km south of Mexico City. Residents say the area echoes at night with shots and screams. Pictures on social media of a body dumped in the street after the disappearances spread the horror worldwide: its bloodied face was stripped of skin and its eyes gouged out.

This is not “Mexico ... Read More

In Brazil, reelected President Rousseff’s uphill economic battle has just begun

| October 30th, 2014 | No Comments »

By Jill Langlois

Rousseff will have to find a way to bring the business-minded population that voted for her opponent to the side of her target voters—some 40 million who were pulled out of poverty by her party over the last decade.

Brazil’s financial markets took a plunge on Monday, one day following President Dilma Rousseff’s narrow reelection, as investors continue to express doubts in Rousseff’s ability to unite a divided nation and restore confidence in the country’s economy.

After winning with 51.6% of the vote—a slim margin over pro-business candidate Aécio Neves, who brought in 48.4% in second-round voting—Rousseff will face an uphill battle to meet campaign promises to expand social benefits for the poor while improving Brazil’s economic situation.

During her victory speech, the reelected president promised to “continue to fight inflation and make improvements in the field of fiscal responsibility.” Investors, however, are waiting to see if all of this talk ... Read More

Colombia peace talks enter ‘toad swallowing’ phase

| October 30th, 2014 | No Comments »
From the Washington Post

By Nick Miroff

With every incremental advance in the peace negotiations between Colombian government negotiators and FARC rebel commanders, President Juan Manuel Santos faces an increasingly unpalatable spectacle — the Bogota equivalent of the “Satan sandwich.”

The armistice talks have been taking place in Cuba for nearly two years, and for the process to advance, more and more FARC (Revolutionary Armed Forces of Colombia) commanders are being flown to Havana to participate and take a personal stake in the outcome.

But that means Santos must guarantee safe passage to Cuba for the same rebel leaders whom government forces have been battling in Colombia’s jungles. Notorious FARC commanders who haven’t been seen in years are suddenly showing up on Colombian TV reports wearing sunglasses and guayaberas in Havana.

Santos’s political opponents have seized on this, saying the FARC is using the talks to allow its top figures to escape capture. Some of the president’s rivals have ... Read More

Bitter Race in Brazil Exposed Nation’s Social and Economic Fault Lines

| October 29th, 2014 | No Comments »
Wall Street Journal WSJ-01


SÃO PAULO, Brazil—President Dilma Rousseff won a second term on Sunday, defeating the conservative Aécio Neves in an acrimonious race that inflamed social and economic divisions in an emerging giant humbled by falling commodity prices.

With 99.7% of the ballots in, Ms. Rousseff had 51.6% of the vote, compared with 48.4% for Mr. Neves.

The victory was a testament to the endurance of Ms. Rousseff’s left-wing Workers’ Party, which came to power in 2003 and engineered a come-from-behind win against difficult odds. Ms. Rousseff ran as an incumbent in a country with a stagnant economy and a large population clamoring for change. Barely a year ago, protests over the poor quality of government services made her seem vulnerable.

But Brazil’s first female president won four more years by nurturing deep support among Brazil’s poor, who have benefited under a major expansion of the welfare system, and with a ... Read More

Brazilian Leaders Call for Unity after Vicious Presidential Race

| October 29th, 2014 | No Comments »
From Time

By Dom Philips

After what was the most aggressive Presidential election in recent Brazilian history, both the winner and loser have called for unity, striking a tone of reconciliation following the close of a nail-biting campaign that resulted in a second term for the incumbent, Dilma Rousseff. The Workers’ Party leader only just kept her job, securing 51.64% of the vote in a weekend run-off vote against Aécio Neves, the candidate of the center-right Brazilian Social Democracy Party who took 48.36%.

In her victory speech on Oct. 26, Rousseff, whose party has been in power since 2003, said the election had mobilized “at times contradictory ideas and emotions, but moved by a common feeling—a search for a better future.” Neves said he had “fought a good fight” and that the main priority for Rousseff should be “to unite Brazil.”

The two made common cause after a riveting ... Read More

Hopes for Rebound in Brazil Rest With Dilma Rousseff, Re-elected President

| October 29th, 2014 | No Comments »
The New York Times

By Dan Horch

SÃO PAULO, Brazil – Business leaders and market strategists are hoping that Brazil, one of the world’s largest economies, can regain its footing in the wake of the re-election of Dilma Rousseff as president.

After Ms. Rousseff’s victory, markets, as expected, swooned on Monday. Brazil’s currency, the real, fell 2.7 percent against the dollar, while the stock market fell 2.8 percent, largely in reaction to the election. For the year, the Brazilian markets have been stuck in a malaise, down 2 percent this year, after a slide of 15.5 percent in 2013.

Since Ms. Rousseff took office in January 2011, the stock market has fallen 27 percent. Taking the currency’s depreciation into account, the loss for a foreign investor, in dollar terms, has been nearly 50 percent.

Against this backdrop, the newly re-elected president must contend with a stagnant economy and a growing budget deficit while seeking to ... Read More

Andrew Selee: Bloodshed and resilience in Mexico

| October 29th, 2014 | No Comments »
Dallas News

By Andrew Selee

A few weeks ago, 43 students at a teachers college in Mexico’s southern state of Guerrero disappeared. From what we know so far, police in the city of Iguala handed them over to a local drug gang, affiliated with the mayor, and they were almost certainly killed.

Public authorities have yet to locate the graves where the students are buried, but in searching for them they have turned up several other mass graves that testify to the gruesome gangland war going on around the city over the past few years.

Mexicans have reacted with understandable horror and nationwide protests against the wave of violence that still simmers in many parts of their country. The political fallout so far has included Guerrero Gov. Angel Aguirre, who effectively stepped down under pressure.

To be fair, there has been a lot of good news ... Read More

Mexico’s State-Owned Oil Giant, Pemex, Is in Uncharted Waters

| October 29th, 2014 | No Comments »
The New York Times

By Elisabeth Malkin

LA MURALLA IV, Gulf of Mexico — The computer screens lining the bubblelike control room on this giant floating platform monitor pressure levels in a narrow shaft cut through bedrock to a reservoir of valuable natural gas three miles below sea level.

For six months, an international team hired by a contractor for Petróleos Mexicanos, Mexico’s state-owned oil monopoly, has been drilling an exploratory well here. Now, the work is nearly done. Drill pipes are stacked like sentries. An underwater robot has been pulled back up from the deep seafloor. A wireline sensor is gathering data to determine how much oil and gas lie below.

An operation like this would attract little attention in the northern part of the gulf, where dozens of deepwater platforms are part of the mosaic fueling America’s energy ... Read More

Brazilians close their eyes and hope for the best

| October 29th, 2014 | No Comments »
From CNN

By Rogerio Simoes

(CNN) – Uncertainty normally comes with the new. This year’s Brazilian presidential elections, though, have been like no other. After Sunday’s polls gave President Dilma Rousseff, from the left-wing Worker’s Party (PT), another four-year term with a narrow margin of victory, Brazilians embarked on a guessing exercise about what her next government will look like.

On the surface it doesn’t seem a vote for change, but the President knows it should be. There were exuberant celebrations in the PT camp and frustration in the faces of supporters of the defeated centrist candidate, Aecio Neves, from PSDB. But no one could say for sure what the result means for the next four years.

Since massive street protests in June 2013 called for change in Brazilian politics and economy, that word has been around in almost every political statement — including Rousseff’s victory speech on ... Read More

Venezuela’s Decision To Import Oil Is The Perfect Example Of Just How Screwed The Country Is

| October 29th, 2014 | No Comments »
Business Insider

By Mike Bird

Despite being one of the largest oil producers in the world, Venezuela has started buying light crude oil from Algeria for the first time, Bloomberg reports.

Until recently, the Venezuelan government had been buying naphtha on open markets to treat its oil. That’s because the extra heavy crude produced by Venezuela needs to be diluted before it can be exported. But a combination of falling oil prices (which makes the country’s major export less profitable) and devalued currency (which makes buying things abroad increasingly expensive) has created a conundrum.

Naphtha is more expensive than buying light crude, which is mixed with the heavy crude to dilute it. Earlier in October, sources told Reuters that Venezuela was also importing light crude from Russia.

While the government holds an official exchange rate of 6.2 Venezuelan bolivars to the dollar, the bolivar is worth far less on the black market and the dollar is worth far more.

The shortage of ... Read More

Venezuela’s debts to China – well, that’s alright then

| October 29th, 2014 | No Comments »

By John Paul Rathbone

When oil prices fall, it’s a fair bet that Venezuela’s economy will suffer. After all, that has been the case every time oil prices have fallen in the past. When Venezuela’s official gazette then publishes a legal notice on October 10 saying that its oil-for-loans scheme with China had been tweaked, it is also a fair bet that this would be taken as a sign of Venezuelan economic distress and maybe even a default on loans from its closest ally, China. That is how beyondbrics and many others understood it. How wrong one can be — sort of.

A quick re-cap. Under the amended agreement, Caracas no longer has to send a minimum 330,000 barrels per day of oil to Beijing to service some of the $50bn China has loaned to Venezuela since 2006. Instead, Caracas can decide what the minimum oil shipments will ... Read More

Dilma Wins, Brazil Loses

| October 28th, 2014 | No Comments »
Investor's Business Daily

Socialism: Brazil’s markets tanked after the leftist PT party’s victory — and the prospect of four more years of stagnation. It’s a warning about the dangers of dependency.

There’s no getting around it: Brazil opted to be the country of the future, as the old saw has it, “now and forevermore,” by re-electing the tired old socialist Worker’s Party candidate, Dilma Rousseff, over the strikingly dynamic center-right pro-free market candidate, Aecio Neves of the Social Democracy Party, and his impressive Green Party ally, Marina Silva. (Don’t let the party names fool you; they had a near-Reaganite platform.)

Stocks tanked 4.3% (see chart) as both foreign and domestic capital bailed out at the open. State-linked companies fell even further, with Petrobras dropping nearly 15%, while Brazil’s currency nose-dived 3%, bringing its total losses for the year to 12% as the opportunity to shift course evaporated.

It was as strong a statement of crushed hopes at ... Read More

The Market Votes on Brazil

| October 28th, 2014 | No Comments »
Wall Street Journal WSJ-01

Brazilians had their democratic say on Sunday, voting narrowly to re-elect President Dilma Rousseff of the left-leaning Workers’ Party to another four-year term. On Monday the world voted on Brazil’s choice, and this time the result was a resounding no confidence.

Brazil’s currency, the real, fell almost 2% and was trading at about 2.52 against the dollar at the end of Monday, close to its lowest point in a decade. Brazil’s main stock market index was down 2.8% to its lowest close in six months. Those markets had rallied some in the last few weeks as challenger Aécio Neves had come close to Ms. Rousseff in the polls. So the Monday selloff was a case of investors pricing in the discount of continuing bad economic policy. A Brazil credit downgrade to “junk” status is likely on present trend.

Brazil is proof that democracy is no guarantee of prosperity. A country rich in ... Read More

Brazil’s Currency, Shares Plummet on Rousseff Re-Election

| October 28th, 2014 | No Comments »

By Rogerio Jelmayer and Nicole Hong

SÃO PAULO—Investors sold Brazil’s currency and stocks on Monday after President Dilma Rousseff ’s re-election heightened concerns the world’s seventh-largest economy would keep struggling through a period of stagnation.

Hopes that Ms. Rousseff would be defeated by business-friendly candidate Aécio Neves caused Brazilian assets to rally on and off for weeks. But her victory now reduces the likelihood that Brazil’s government will aggressively pursue policies aimed at pulling the country’s economy out of a prolonged slump.

Ms. Rousseff faces the tough challenge of keeping Brazil out of a recession at a time when inflation is high and business confidence is low. Investors and analysts are questioning whether Ms. Rousseff has enough political support to push through tough reforms, such as simplifying tax laws and cutting subsidies for electricity and gasoline. Latin America’s largest economy is expected to grow by less than 0.5% this year and expanded by just ... Read More

Brazil Vote Highlights a Rift Linked to Economics

| October 28th, 2014 | No Comments »
The New York Times

By Simon Romero

RIO DE JANEIRO — One politician took to Twitter to circulate a map of Brazil with a barrier separating the relatively prosperous south from President Dilma Rousseff’s support in the poorer north — along the lines of the Berlin Wall.

During the bitter presidential race that led to her re-election on Sunday, Ms. Rousseff’s predecessor mocked the main challenger by calling him the “candidate of the bankers.”

Even as Ms. Rousseff’s supporters celebrated her victory, the divisions gripping Brazil came into sharp relief Monday. Large banks and hedge funds expressed their distrust of the president with a sell-off, pushing down Brazil’s main stock index by 3.7 percent and clipping the currency by 2.7 percent.

“We’re emerging from an election that has revealed a rift between economic classes,” said Murillo de Aragão, the president of Arko ... Read More

Colombia leader seeks Europe’s help for ‘last chance’ peace

| October 28th, 2014 | No Comments »
Yahoo News-01

By Philippe Zygel

Bogota (AFP) – Colombian President Juan Manuel Santos says he hopes Europe can provide funds to help him strike a “last chance” deal with leftist guerrillas after half a century of conflict.

During a lightning tour of six countries in five days next week, Santos will lobby for the creation of a European fund for the post-conflict period, should his government clinch a historic deal with the Revolutionary Armed Forces of Colombia (FARC).

“It’s the oldest conflict in the Western world,” Santos told AFP in an interview at the presidential palace in Bogota — his first with an international news agency since his re-election in June.

“If we manage to secure peace, it will have an impact far beyond Colombia’s borders.”

The center-right leader is expected to discuss gains made in nearly two years of peace ... Read More

Venezuela Asks For Revision of Exxon Arbitration Award

| October 28th, 2014 | No Comments »
Wall Street Journal WSJ-01

By Kejal Vyas

CARACAS—Venezuela has applied for a revision to the $1.6 billion award that an international arbitration panel earlier this month ordered it to pay Exxon Mobil Corp. for oil assets expropriated in 2007.

Enforcement of the award has been temporarily put on hold, the World Bank’s International Center for Settlement of Investment Disputes said in a brief statement on its website.

Venezuela’s Foreign Minister Rafael Ramirez, who previously served as the country’s longtime oil czar, celebrated the ICSID court’s Oct. 9 verdict in the arbitration case as a triumph for the government. The ruling awarded Exxon about a 10th of what it had initially demanded in compensation for the takeover of its Cerro Negro heavy oil project.

After discounting payments made by Venezuela to Exxon for a separate but related case, the country is expected to pay around $1 billion, analysts say.

Spokesmen at Exxon and Venezuela’s state energy giant Petróleos de Venezuela SA, or PdVSA, ... Read More

Apretada elección en Brasil muestra a una nación profundamente dividida

| October 27th, 2014 | No Comments »

[Traducción por IASW]

El día de ayer, la presidenta de Brasil, Dilma Rousseff, consiguió reelegirse para un segundo mandato de cuatro años. Rousseff obtuvo el 51.6% de los votos en contra de Aécio Neves, quien obtuvo el 48.4%. Rousseff libró una de las campañas más negativas en la historia contemporánea de Brasil, despertando temores de que Neves cortaría programas contra la pobreza del gobierno. No explicó, sin embargo, como pretende sacar a Brasil de la recesión económica en la que se encuentra.

El resultado tan apretado muestra a una nación políticamente, socialmente y geográficamente dividida. Anoche, Rousseff se comprometió a iniciar un diálogo y ser “una mejor presidente de lo que he sido hasta ahora.” A pesar de que Rousseff se comprometió durante la campaña a reemplazar a su ministro de finanzas, la manera en la que defendió la situación actual da pocas razones para esperar que abandonará sus políticas económicas intervencionistas ... Read More

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